<PAGE>
As filed with the Securities and Exchange Commission on September 16, 1998
Registration No. 333-60767
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM F-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
DAIMLERCHRYSLER AG
as successor corporation to
DAIMLER-BENZ AKTIENGESELLSCHAFT
(Exact name of Registrant as specified in its charter)
DAIMLERCHRYSLER CORPORATION
(Translation of Registrant's name into English)
<TABLE>
<S> <C> <C>
FEDERAL REPUBLIC OF GERMANY 3700 98-0190736
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
------------------------
Epplestrasse 225
70567 Stuttgart
Germany
011-49-711-17-0
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
------------------------------
<TABLE>
<S> <C>
Mr. Timotheus R. Pohl Richard D. Houtman, Esq.
Daimler-Benz North America Corporation Chrysler Corporation
375 Park Avenue 1000 Chrysler Drive
New York, New York 10152 Auburn Hills, Michigan 48326
USA USA
(212) 909-9700 (248) 512-5532
</TABLE>
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C> <C>
J. Michael Schell, Esq. Dr. Siegfried Schwung Paul H. Wilson, Jr., Esq.
Margaret L. Wolff, Esq. Daimler-Benz Aktiengesellschaft Meredith M. Brown, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP Epplestrasse 225 Debevoise & Plimpton
919 Third Avenue 70567 Stuttgart 875 Third Avenue
New York, New York 10022 Germany New York, New York 10022
USA 011-49-711-17-0 USA
(212) 735-3000 (212) 909-6000
</TABLE>
------------------------------
Approximate date of commencement of proposed sale to the public: With regard
to each of the Daimler-Benz Exchange Offer, the Chrysler Merger and the
Daimler-Benz Merger (as such terms are defined herein) as soon as practicable
after this Registration Statement becomes effective and all the conditions to
the consummation of the Daimler-Benz Exchange Offer, the Chrysler Merger and the
Daimler-Benz Merger, respectively, have been met.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / ___
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ___
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Amount Proposed Maximum Proposed Maximum Amount
Title of Each Class of Securities to be Offering Price Per Aggregate Offering of Registration
to be Registered Registered(1) Share(2) Price(2) Fee(3)
<S> <C> <C> <C> <C>
Ordinary Shares, no par value......... 488,609,248 $91.53 $44,720,749,644 $13,192,621.15
</TABLE>
(1) Consists of (i) 430,390,545 DaimlerChrysler Ordinary Shares to be issued
in the Chrysler Merger and pursuant to certain Chrysler Stock plans (based
on the U.S. Exchange Ratio of .6235), (ii) 46,774,962 DaimlerChrysler
Ordinary Shares to be issued upon the exchange or conversion of Daimler-Benz
Ordinary Shares held by U.S. persons (as such term is defined in Rule 902(a)
of Regulation S) in the Daimler-Benz Exchange Offer and Daimler-Benz Merger
(based on an exchange ratio of 1.005), and (iii) 11,443,741 DaimlerChrysler
Ordinary Shares to be issued upon the exchange or conversion of Daimler-Benz
American Depositary Shares in the Daimler-Benz Exchange Offer and the
Daimler-Benz Merger (based on an exchange ratio of 1.005).
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(f) and Rule 457(c) on the sum of (i) the product of (a) $56.50
(the average of the high and low prices of Chrysler Common Stock on August
4, 1998) times (b) 690,281,547 (the number of shares of Chrysler Common
Stock outstanding plus those reserved for issuance pursuant to certain
Chrysler stock plans on July 31, 1998), plus (ii) the product of (a) $99.01
(the average of the high and low prices for the Daimler-Benz Ordinary Shares
on the Frankfurt Stock Exchange on August 4, 1998 converted to dollars at
the Noon Buying Rate of 1.7802 on such date) times (b) 46,542,251 (the
number of Daimler-Benz Ordinary Shares held by U.S. Persons to be exchanged
or converted into DaimlerChrysler Ordinary Shares in the Daimler-Benz
Exchange Offer and the Daimler-Benz Merger), plus (iii) the product of (a)
$97.63 (the average of the high and low prices for Daimler-Benz American
Depositary Shares on August 4, 1998 on the New York Stock Exchange Composite
Tape) times (b) 11,386,807 (the number of Daimler-Benz American Depositary
Shares outstanding on August 4, 1998).
(3) Previously paid.
------------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains a Proxy Statement/Prospectus (the
"Proxy Statement/Prospectus") relating to (i) the offering and issuance of
Ordinary Shares, no par value (the "DaimlerChrysler Ordinary Shares"), of
DaimlerChrysler AG ("DaimlerChrysler AG") pursuant to the proposed merger of a
newly incorporated Delaware corporation with and into Chrysler Corporation (the
"Chrysler Merger") and the solicitation of proxies in connection with the
Chrysler Merger and (ii) the offering and issuance of DaimlerChrysler Ordinary
Shares in connection with the proposed merger of Daimler-Benz Aktiengesellschaft
("Daimler-Benz") with and into DaimlerChrysler AG (the "Daimler-Benz Merger").
The complete Proxy Statement/Prospectus in connection with the Chrysler Merger
and the Daimler-Benz Merger follows immediately after this Explanatory Note.
After such Proxy Statement/Prospectus are the following alternate pages in
connection with the Offering Circular-Prospectus (the "Offering
Circular-Prospectus") of DaimlerChrysler AG relating to the offering of
DaimlerChrysler Ordinary Shares in connection with the offer (the "Daimler-Benz
Exchange Offer") of DaimlerChrysler AG to exchange DaimlerChrysler Ordinary
Shares for American Depositary Shares of Daimler-Benz and DaimlerChrysler
Ordinary Shares for no par value Ordinary Shares of Daimler-Benz: the cover
page; "Table of Contents"; "Questions and Answers about the Daimler-Benz
Exchange Offer"; "Summary--The Daimler-Benz Exchange Offer"; "The Daimler-Benz
Exchange Offer"; and the back cover page. In addition, the Offering
Circular-Prospectus will not include the following sections which are contained
in the Proxy Statement/Prospectus: "Questions and Answers About the Business
Combination"; "Summary--The Special Meetings"; "Summary--United States Federal
Income Taxes of the Transactions--The Chrysler Exchange" (and all references to
Chrysler stockholders in "Summary--United States Federal Income Tax Consequences
of the Transactions"); "The Chrysler Special Meeting"; "The Daimler-Benz Special
Meeting"; "Certain Tax Consequences--United States Federal Income Tax
Consequences of the Transactions-- Consequences of the Chrysler Exchange to U.S.
Holders" (and all references to holders of Chrysler Common Stock and the
Chrysler Effective Time in "Certain Tax Consequences--United States Federal
Income Tax Consequences of the Transactions") and "Comparison of Certain Rights
of Stockholders of Chrysler and DaimlerChrysler AG." In the Offering
Circular-Prospectus, all references to Proxy Statement/Prospectus are deemed to
be changed to "Offering Circular-Prospectus" for purposes of the Daimler-Benz
Exchange Offer. The Daimler-Benz Exchange Offer will commence promptly following
the receipt of the necessary stockholder approvals in connection with the
Chrysler Merger, the Daimler-Benz Exchange Offer and the Daimler-Benz Merger.
<PAGE>
[LOGO]
CHRYSLER CORPORATION
1000 Chrysler Drive
Auburn Hills, Michigan 48326-2766
August 6, 1998
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders of
Chrysler Corporation which will be held at 9:00 a.m., local time, on September
18, 1998, at the Hotel du Pont, 11th and Market Streets, Wilmington, Delaware.
At the Chrysler Special Meeting, you will be asked to approve and adopt the
amended and restated Business Combination Agreement among Daimler-Benz
Aktiengesellschaft, Chrysler and DaimlerChrysler AG, and the transactions
contemplated by that agreement, including the merger of a newly incorporated
Delaware corporation with and into Chrysler (the "Chrysler Merger"). The
Chrysler Merger and the other transactions described in the attached Proxy
Statement/Prospectus together will have the effect of combining the businesses,
stockholder groups, managements and other constituencies of Chrysler and
Daimler-Benz in a "merger-of-equals" transaction. DaimlerChrysler AG will bring
together two companies with equal financial strength under the joint leadership
of both management groups and with its common equity about evenly split between
the two shareholder groups.
In the Chrysler Merger, each outstanding share of common stock of Chrysler
will be converted into the right to receive .6235 of an Ordinary Share of
DaimlerChrysler. The DaimlerChrysler Ordinary Shares have been approved for
listing, subject to notice of issuance, on the New York Stock Exchange.
The attached Proxy Statement/Prospectus provides you with information
regarding the proposed transactions.
Your Board of Directors has unanimously approved the Business Combination
Agreement and determined that the transactions contemplated by it, including the
Chrysler Merger, are fair to and in the best interests of Chrysler and
Chrysler's stockholders. Your Board of Directors unanimously recommends that
stockholders of Chrysler vote FOR approval and adoption of the Business
Combination Agreement and the transactions contemplated by it, including the
Chrysler Merger.
To ensure your representation at the meeting, you can authorize the
individuals named on your proxy card to vote your shares by calling a toll-free
telephone number, by using the Internet, or by signing, dating and mailing your
proxy card. Your shares will then be voted at the meeting as you specify or, if
you do not specify a choice, as recommended by your Board of Directors. You may
revoke your proxy by voting in person at the meeting, or by submitting a written
revocation or a later dated proxy (including a proxy by telephone or Internet)
that is received by Chrysler before the meeting. Telephone and Internet voting
provide convenient, cost effective alternatives to returning your card by mail.
Instructions for voting by telephone or Internet are included in your proxy
card. (If you hold shares through a broker or other custodian, please check the
voting form used by that firm to see if it offers telephone or Internet voting.)
Sincerely,
Robert J. Eaton
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
<PAGE>
CHRYSLER CORPORATION
1000 Chrysler Drive
Auburn Hills, Michigan 48326-2766
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
A special meeting (the "Chrysler Special Meeting") of stockholders of
Chrysler Corporation, a Delaware corporation ("Chrysler"), will be held at 9:00
a.m., local time, on September 18, 1998, at the Hotel du Pont, 11th and Market
Streets, Wilmington, Delaware.
The purpose of the Chrysler Special Meeting is:
1. To consider and vote upon a proposal (the "Chrysler Merger
Proposal") to approve and adopt the Amended and Restated Business
Combination Agreement (the "Combination Agreement"), dated as of May 7,
1998, among Daimler-Benz Aktiengesellschaft, a stock corporation
(AKTIENGESELLSCHAFT) organized and existing under the laws of the Federal
Republic of Germany ("Daimler-Benz"), Chrysler and DaimlerChrysler AG, an
AKTIENGESELLSCHAFT organized and existing under the laws of the Federal
Republic of Germany, formerly named Oppenheim Aktiengesellschaft
("DaimlerChrysler AG"), and the transactions contemplated thereby, including
the merger of a newly incorporated Delaware corporation with and into
Chrysler (the "Chrysler Merger"), including at any adjournment or
postponement of the Chrysler Special Meeting;
2. To consider and vote upon a proposal to postpone or adjourn the
Chrysler Special Meeting, if proposed by the Board of Directors of Chrysler;
and
3. To transact such other business as may properly come before the
Chrysler Special Meeting or any adjournment or postponement thereof.
The Combination Agreement provides, among other things, for the Chrysler
Merger pursuant to which (a) Chrysler will become a wholly owned subsidiary of
DaimlerChrysler AG, and (b) each issued and outstanding share of common stock,
par value $1.00 per share, of Chrysler (the "Chrysler Common Stock"), will be
converted into the right to receive .6235 (the "U.S. Exchange Ratio") of an
Ordinary Share of DaimlerChrysler AG. The U.S. Exchange Ratio has been
determined in accordance with the formula set forth in the Combination
Agreement. See "Summary--The Transactions--The Chrysler Merger--U.S. Exchange
Ratio." As contemplated by the Combination Agreement, an affirmative vote on the
Chrysler Merger Proposal will become effective upon consummation of the
Daimler-Benz Exchange Offer described in the accompanying Proxy Statement/
Prospectus.
The Chrysler Merger is one in a series of transactions described in the
attached Proxy Statement/ Prospectus which together will have the effect of
combining the respective businesses, stockholder groups, managements and other
constituencies of Chrysler and Daimler-Benz in a "merger-of-equals" transaction.
Only holders of record of shares of Chrysler Common Stock at the close of
business on July 20, 1998, the record date for the Chrysler Special Meeting (the
"Chrysler Record Date"), are entitled to notice of and to vote at the Chrysler
Special Meeting and any adjournment or postponement thereof. A list of such
stockholders will be available for inspection by any stockholder of Chrysler at
the Chrysler Special Meeting.
The accompanying Proxy Statement/Prospectus describes the Combination
Agreement and related transactions. Please read the Proxy Statement/Prospectus
carefully and in its entirety, and then complete, sign and date the enclosed
proxy card and return it in the enclosed envelope. If you attend the Chrysler
Special Meeting you may vote in person if you wish, even if you have previously
returned your proxy card.
<PAGE>
ADMISSION TICKETS. Attendance is limited to stockholders who owned Chrysler
Common Stock on the Chrysler Record Date, or their authorized representatives.
Admission tickets will be issued in advance of the meeting upon written request
to: Chrysler Corporation, 1000 Chrysler Drive, Auburn Mills, MI 48326-2766,
Attention: Investor Relations, CIMS 485-06-07. If you hold your shares through a
broker or other custodian, please include a copy of your voting form or other
proof of ownership.
By order of the Board of Directors
William J. O'Brien
VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY
August 6, 1998
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE
CHRYSLER SPECIAL MEETING, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE OR VOTE YOUR SHARES BY CALLING A
TOLL-FREE TELEPHONE NUMBER OR BY USING THE INTERNET (AS EXPLAINED IN YOUR PROXY
CARD). IN THE EVENT YOU CHOOSE TO ATTEND THE CHRYSLER SPECIAL MEETING, YOU MAY
REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
DO NOT SEND IN ANY STOCK CERTIFICATES WITH YOUR PROXY CARD.
2
<PAGE>
Subject to completion, dated August 6, 1998.
CHRYSLER CORPORATION
PROXY STATEMENT
For a Special Meeting of its Stockholders to be held on September 18, 1998
------------------------
DAIMLERCHRYSLER AG
PROSPECTUS
Ordinary Shares of No Par Value
------------------------
This Proxy Statement/Prospectus is being furnished to holders of shares of
common stock, par value $1.00 per share (the "Chrysler Common Stock"), of
Chrysler Corporation, a Delaware corporation ("Chrysler"), in connection with
the solicitation by its Board of Directors of proxies for use at a special
meeting of Chrysler's stockholders to be held on September 18, 1998, or any
adjournment or postponement thereof (the "Chrysler Special Meeting"). The
Chrysler Special Meeting is being called to consider and vote upon a proposal to
approve and adopt the Business Combination Agreement, dated as of May 7, 1998
(as amended and restated, unless the context otherwise requires, the
"Combination Agreement"), among Daimler-Benz Aktiengesellschaft, a stock
corporation (AKTIENGESELLSCHAFT) organized and existing under the laws of the
Federal Republic of Germany ("Daimler-Benz"), Chrysler and DaimlerChrysler AG,
an AKTIENGESELLSCHAFT organized and existing under the laws of the Federal
Republic of Germany ("DaimlerChrysler AG"), and the consummation of the
transactions contemplated thereby, including the merger of a newly incorporated
Delaware corporation ("Chrysler Merger Sub") with and into Chrysler (the
"Chrysler Merger"). The Chrysler Merger is one in a series of transactions
described in this Proxy Statement/Prospectus which together will have the effect
of combining the respective businesses, stockholder groups, managements and
other constituencies of Chrysler and Daimler-Benz in a "merger-of-equals"
transaction. The Combination Agreement is attached as Annex A and is
incorporated herein by reference. As a result of the Chrysler Merger and after
consummation of the Transactions (as hereinafter defined), former Chrysler
stockholders as well as former Daimler-Benz stockholders will be stockholders of
a company incorporated in Germany.
The Combination Agreement provides that, promptly following receipt of the
votes necessary to obtain the Daimler-Benz Stockholder Approval (as hereinafter
defined) at the Daimler-Benz Special Meeting (as hereinafter defined) and the
Chrysler Stockholder Approval (as hereinafter defined) at the Chrysler Special
Meeting, which meetings are scheduled to be held on the same day:
(i) DaimlerChrysler AG will commence an offer (the "Daimler-Benz
Exchange Offer") to (a) the holders of no par value Ordinary Shares of
Daimler-Benz (the "Daimler-Benz Ordinary Shares"), to exchange one no par
value Ordinary Share of DaimlerChrysler AG (a "DaimlerChrysler Ordinary
Share") for each Daimler-Benz Ordinary Share held by such holder, and (b)
the holders of American Depositary Shares of Daimler-Benz each representing
one Daimler-Benz Ordinary Share (the "Daimler-Benz ADSs"), to exchange one
DaimlerChrysler Ordinary Share for each Daimler-Benz ADS held by such
holder; PROVIDED that, if the Minimum Condition (as hereinafter defined) is
satisfied so that the Transactions can be accounted for as a
pooling-of-interests, then each exchanging holder will receive 1.005
DaimlerChrysler Ordinary Shares for each share exchanged (such ratio
referred to in the foregoing clauses (a) and (b), as it may be so adjusted,
being referred to herein as the "Daimler-Benz Exchange Offer Ratio");
(ii) Immediately following consummation of the Daimler-Benz Exchange
Offer, the Chrysler Merger will be consummated. In the Chrysler Merger, each
share of Chrysler Common Stock (other than Chrysler Common Stock held in
treasury or by a wholly owned subsidiary of Chrysler) will be converted into
the right to receive .6235 (the "U.S. Exchange Ratio") of a DaimlerChrysler
Ordinary Share; and
(iii) As soon as possible following the consummation of the Chrysler
Merger, the merger of Daimler-Benz with and into DaimlerChrysler AG (the
"Daimler-Benz Merger" and, together with the Chrysler
<PAGE>
(COVER PAGE CONTINUED)
Merger, the "Mergers") will be consummated. As a result of the Daimler-Benz
Merger, (a) each outstanding Daimler-Benz Ordinary Share will be converted
into the right to receive that number of DaimlerChrysler Ordinary Shares
equal to the Daimler-Benz Exchange Offer Ratio and (b) each outstanding
Daimler-Benz ADS will be converted into the right to receive that number of
DaimlerChrysler Ordinary Shares equal to the Daimler-Benz Exchange Offer
Ratio (such exchange ratio being referred to herein as the "Daimler-Benz
Merger Exchange Ratio").
The Daimler-Benz Exchange Offer and the Mergers (including the U.S. Share
Exchange (as hereinafter defined)) are collectively referred to herein as the
"Transactions." Immediately after consummation of the Transactions, based upon
the number of shares of Chrysler Common Stock and Daimler-Benz Ordinary Shares
issued and outstanding on July 20, 1998, the former stockholders of Chrysler
will own approximately 42% and the former stockholders of Daimler-Benz will own
approximately 58% of the outstanding DaimlerChrysler Ordinary Shares. If the
Daimler-Benz Exchange Offer Ratio is changed to 1.005 DaimlerChrysler Ordinary
Shares for each share exchanged the respective percentages would remain
approximately the same, exclusive of the issuance of 30 million shares of
Chrysler Common Stock to satisfy the pooling-of-interests requirements.
The Chrysler Board of Directors has unanimously approved the Combination
Agreement and determined that the transactions contemplated by the Combination
Agreement are fair to and in the best interests of Chrysler and Chrysler's
stockholders. The Chrysler Board of Directors unanimously recommends that
stockholders of Chrysler vote FOR approval and adoption of the Combination
Agreement and the transactions contemplated thereby, including the Chrysler
Merger. The Transactions have also been unanimously approved by the Daimler-Benz
Supervisory Board (AUFSICHTSRAT) and Daimler-Benz Board of Management
(VORSTAND).
The Daimler-Benz Exchange Offer is conditioned upon, among other things, the
tender of at least 90% of the outstanding Daimler-Benz Ordinary Shares,
including Daimler-Benz Ordinary Shares represented by Daimler-Benz ADSs (the
"Minimum Condition"); PROVIDED, HOWEVER, that if the number of Daimler-Benz
Ordinary Shares and Daimler-Benz ADSs tendered does not satisfy the Minimum
Condition but equals at least 75% of the issued and outstanding Daimler-Benz
Ordinary Shares on a primary basis, including Daimler-Benz Ordinary Shares
represented by Daimler-Benz ADSs, at the time of registration with the
commercial register (HANDELSREGISTER) of the capital increase relating to the
DaimlerChrysler Ordinary Shares being issued in exchange therefor (the "75%
Minimum"), the Minimum Condition shall mean the 75% Minimum. Consistent with the
Private Letter Ruling (as hereinafter defined) received from the Internal
Revenue Service on September 4, 1998 and in accordance with the provisions of
the Combination Agreement (as hereinafter defined), Daimler-Benz and Chrysler
have agreed to the 75% Minimum which represents a reduction from the requirement
set forth in the Combination Agreement that shares representing at least 80% of
the capital stock of Daimler-Benz on a fully diluted basis (the "80% Minimum")
be tendered in order to satisfy the 80% Minimum and permit the Minimum Condition
to be redefined as the 80% Minimum. If the Minimum Condition is satisfied, and
the Transactions are consummated, they will be accounted for as a
"pooling-of-interests" under United States generally accepted accounting
principles ("U.S. GAAP"). However, if the Daimler-Benz Exchange Offer is
consummated as a result of the satisfaction of the 75% Minimum, the Transactions
will be accounted for using the purchase method of accounting. See "Selected
Historical and Pro Forma Combined Financial Data-- Selected Pro Forma Combined
Financial Data," "Unaudited Pro Forma Combined Financial Information" and "The
Transactions--Anticipated Accounting Treatment." The Daimler-Benz Exchange Offer
is subject to certain other conditions. See "The Combination Agreement--The
Daimler-Benz Exchange Offer." The consummation of the Mergers is also subject to
various conditions, including, among other things, the Daimler-Benz Stockholder
Approval and the Chrysler Stockholder Approval, the receipt of required
regulatory approvals, and, in the case of the Chrysler Merger, receipt of a
private letter ruling from the United States Internal Revenue Service (the
"IRS") addressing certain issues under Section 367(a)(1) of the Internal Revenue
Code of 1986, as amended (the "Code")(which private letter ruling was received
from the IRS on September 4, 1998), and consummation of the Daimler-Benz
Exchange Offer. See "The Combination Agreement--Conditions to Closing."
This Proxy Statement/Prospectus is also being furnished to "U.S. persons"
(as defined in Rule 902(a) of Regulation S promulgated under the Securities Act
of 1933, as amended) who own Daimler-Benz ADSs and
<PAGE>
(COVER PAGE CONTINUED)
Daimler-Benz Ordinary Shares in connection with the invitation by the
Daimler-Benz Board of Management (VORSTAND) for the Daimler Benz Special Meeting
and constitutes the prospectus of DaimlerChrysler AG for use in connection with
the offer and issuance of DaimlerChrysler Ordinary Shares pursuant to the
Chrysler Merger and the Daimler-Benz Merger.
There is currently no trading market for the DaimlerChrysler Ordinary
Shares. However, because holders of Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs will have the right to exchange one Daimler-Benz Ordinary
Share or one Daimler-Benz ADS for one DaimlerChrysler Ordinary Share (or 1.005
DaimlerChrysler Ordinary Shares, as the case may be) pursuant to the
Daimler-Benz Exchange Offer, Daimler-Benz expects that the market price of a
DaimlerChrysler Ordinary Share received in the Chrysler Exchange or the
Daimler-Benz Exchange Offer should be substantially equivalent to the market
price of a Daimler-Benz Ordinary Share immediately prior to the consummation of
the Daimler-Benz Exchange Offer. Because the market price of the Daimler-Benz
Ordinary Shares will fluctuate and the U.S. Exchange Ratio will not be adjusted
as a result of any such fluctuation, the value of the consideration to be
delivered in connection with the Chrysler Merger will fluctuate. Based on the
closing price of Daimler-Benz Ordinary Shares on the Frankfurt Stock Exchange
(the "FSE") on August 5, 1998, the implied per share market value of .6235 of a
DaimlerChrysler Ordinary Share was $60.86 (based on an exchange rate of DM
1.7724=$1.00, the Noon Buying Rate on such date). The DaimlerChrysler Ordinary
Shares are expected to be approved for listing on the FSE. The DaimlerChrysler
Ordinary Shares have been approved for listing on the New York Stock Exchange,
Inc. (the "NYSE"), subject to official notice of issuance, and will be traded
thereon under the symbol "DCX." Stockholders of Chrysler are urged to obtain
current market information prior to making any decision with respect to the
Chrysler Merger.
This Proxy Statement/Prospectus and the accompanying forms of proxy are
first being mailed to stockholders of Chrysler on or about August 10, 1998.
See "Risk Factors" beginning on page 24 of this Proxy Statement/Prospectus
for certain information which should be considered by Chrysler stockholders and
other prospective investors in DaimlerChrysler Ordinary Shares.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is August 6, 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
AVAILABLE INFORMATION...................................................................................... 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................................................ 4
ENFORCEABILITY OF CIVIL LIABILITIES........................................................................ 5
CURRENCY PRESENTATION AND EXCHANGE RATES................................................................... 5
FORWARD-LOOKING INFORMATION................................................................................ 6
SUMMARY.................................................................................................... 7
The Companies............................................................................................ 7
The Special Meetings..................................................................................... 8
The Transactions......................................................................................... 11
Recent Developments...................................................................................... 20
Introduction of the Single European Currency............................................................. 22
Risk Factors............................................................................................. 23
RISK FACTORS............................................................................................... 24
Fixed Exchange Ratio..................................................................................... 24
Government Approvals..................................................................................... 24
Uncertainties of Integrating Business Operations and Achieving Synergies................................. 24
Industry and Market Factors Affecting DaimlerChrysler AG................................................. 24
German Valuation Proceeding (SPRUCHVERFAHREN)............................................................ 26
Uncertainty of Accounting Treatment of Transactions...................................................... 26
Effect of Delay of Daimler-Benz Merger................................................................... 26
Inclusion of DaimlerChrysler AG in the S&P 500 Index..................................................... 27
Year 2000................................................................................................ 27
MARKET PRICES.............................................................................................. 28
Trading on the New York Stock Exchange................................................................... 28
Trading on the Frankfurt Stock Exchange.................................................................. 31
SELECTED HISTORICAL AND PRO FORMA COMBINED FINANCIAL DATA.................................................. 33
Selected Historical Financial Data of Daimler-Benz....................................................... 33
Selected Historical Financial Data of Chrysler........................................................... 36
Selected Pro Forma Combined Financial Data............................................................... 38
UNAUDITED COMPARATIVE PER SHARE DATA....................................................................... 39
Pooling-of-Interests Accounting.......................................................................... 39
Purchase Accounting...................................................................................... 41
DIVIDENDS.................................................................................................. 42
THE CHRYSLER SPECIAL MEETING............................................................................... 43
Place, Date and Time..................................................................................... 43
Purpose of the Chrysler Special Meeting.................................................................. 43
Record Date.............................................................................................. 43
Proxies.................................................................................................. 43
Revocation of Proxies.................................................................................... 43
Required Vote............................................................................................ 43
Security Ownership of Management......................................................................... 44
Stockholder Agreement.................................................................................... 44
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
-----
<S> <C>
Quorum................................................................................................... 44
Solicitation of Proxies.................................................................................. 44
Miscellaneous............................................................................................ 45
THE DAIMLER-BENZ SPECIAL MEETING........................................................................... 46
Place, Date and Time..................................................................................... 46
Purpose of the Daimler-Benz Special Meeting.............................................................. 46
Shares Entitled to Vote.................................................................................. 46
Required Vote............................................................................................ 46
THE TRANSACTIONS........................................................................................... 47
Background of the Transactions........................................................................... 47
Recommendations of the Chrysler Board and Reasons for those Recommendations.............................. 50
Opinion of Financial Advisor of Chrysler................................................................. 53
Recommendations of the Daimler-Benz Management Board and Reasons for those Recommendations............... 59
Opinion of Financial Advisor of Daimler-Benz............................................................. 60
Composition of DaimlerChrysler Management Board and Integration Committee................................ 65
Interests of Certain Persons in the Chrysler Merger...................................................... 68
Certain Tax Consequences................................................................................. 71
Anticipated Accounting Treatment......................................................................... 78
Issuance of Additional Shares of Chrysler Common Stock................................................... 79
Affiliates' Restrictions on Sale of DaimlerChrysler Ordinary Shares...................................... 79
Regulatory Approvals..................................................................................... 79
Stock Exchange Listings.................................................................................. 80
Appraisal Rights......................................................................................... 81
Chrysler Preferred Share Purchase Rights................................................................. 81
German Valuation Proceeding (SPRUCHVERFAHREN)............................................................ 81
Certain Litigation....................................................................................... 82
THE COMBINATION AGREEMENT.................................................................................. 83
General.................................................................................................. 83
The Daimler-Benz Exchange Offer.......................................................................... 83
The Chrysler Merger...................................................................................... 84
The Daimler-Benz Merger.................................................................................. 89
Fractional Shares........................................................................................ 92
Antidilution Protection.................................................................................. 93
Option to Issue DaimlerChrysler American Depositary Shares............................................... 93
DaimlerChrysler AG Governance After the Chrysler Effective Time.......................................... 93
Representations and Warranties........................................................................... 94
Conduct of the Business Pending the Chrysler Effective Time.............................................. 94
Employee Benefit Matters................................................................................. 96
No Solicitation.......................................................................................... 97
Additional Agreements.................................................................................... 98
Indemnification, Exculpation and Insurance............................................................... 101
Conditions to Closing.................................................................................... 102
Termination.............................................................................................. 103
Governing Law............................................................................................ 104
Fees and Expenses........................................................................................ 104
Reservation of Right to Revise Transaction............................................................... 104
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION......................................................... 105
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
-----
<S> <C>
INFORMATION ABOUT CHRYSLER................................................................................. 122
INFORMATION ABOUT DAIMLER-BENZ............................................................................. 122
OWNERSHIP OF CHRYSLER COMMON STOCK......................................................................... 124
Beneficial Ownership by Management of Chrysler........................................................... 124
Beneficial Ownership of Certain Stockholders............................................................. 125
DESCRIPTION OF DAIMLERCHRYSLER ORDINARY SHARES............................................................. 126
Voting Rights............................................................................................ 126
Dividends and Other Distributions........................................................................ 127
Record Dates............................................................................................. 128
Liquidation Rights....................................................................................... 128
Preemptive Rights........................................................................................ 128
Notices and Reports...................................................................................... 128
Inspection of Transfer Books............................................................................. 129
Charges of Transfer Agents............................................................................... 129
General.................................................................................................. 129
COMPARISON OF CERTAIN RIGHTS OF STOCKHOLDERS OF CHRYSLER AND DAIMLERCHRYSLER AG............................ 130
General.................................................................................................. 130
Duties of Directors...................................................................................... 130
Size and Classification of the Board of Directors........................................................ 132
Removal of Directors; Filling Vacancies on the Board of Directors........................................ 132
Stockholder Nominations.................................................................................. 133
Action by Written Consent................................................................................ 134
Stockholder Meetings..................................................................................... 134
Stockholder Proposals.................................................................................... 135
Required Vote for Authorization of Certain Actions....................................................... 135
Amendment of Corporate Charter and By-Laws............................................................... 135
Appraisal Rights......................................................................................... 136
Preemptive Rights........................................................................................ 136
Stock Repurchases........................................................................................ 137
Anti-Takeover Statutes................................................................................... 137
Limitation on Directors' Liability....................................................................... 138
Indemnification of Officers and Directors................................................................ 138
Cumulative Voting........................................................................................ 139
Conflict-of-Interest Transactions........................................................................ 139
Dividends................................................................................................ 139
Loans to Directors....................................................................................... 140
Stockholder Suits........................................................................................ 140
Rights of Inspection..................................................................................... 141
ENFORCEABILITY OF JUDGMENTS................................................................................ 142
LEGAL MATTERS.............................................................................................. 142
EXPERTS.................................................................................................... 143
ANNEX A--Business Combination Agreement.................................................................... A-1
ANNEX B--Opinion of Credit Suisse First Boston Corporation................................................. B-1
ANNEX C--English Translation of Opinion of Goldman, Sachs & Co. oHG........................................ C-1
ANNEX D--English Translation of the Articles of Association (SATZUNG) of DaimlerChrysler AG................ D-1
</TABLE>
iii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION
THE FOLLOWING QUESTIONS AND ANSWERS ARE INTENDED TO PROVIDE BRIEF ANSWERS TO
CERTAIN COMMONLY ASKED QUESTIONS. THESE QUESTIONS AND ANSWERS DO NOT, AND ARE
NOT INTENDED TO, ADDRESS ALL QUESTIONS THAT MAY BE PERTINENT TO CHRYSLER
STOCKHOLDERS AND OTHER PROSPECTIVE INVESTORS, AND ARE QUALIFIED IN THEIR
ENTIRETY BY REFERENCE TO THE MORE DETAILED INFORMATION CONTAINED ELSEWHERE IN
THIS PROXY STATEMENT/PROSPECTUS, THE ANNEXES ATTACHED HERETO AND THE DOCUMENTS
REFERRED TO OR INCORPORATED HEREIN BY REFERENCE.
Q: Why is Chrysler combining with Daimler-Benz?
A: Chrysler believes that combining with Daimler-Benz will provide Chrysler
stockholders with an opportunity to participate in a leading global
automotive company with a broad product line, strong financial resources and
the prospect of future growth, while receiving a premium over historic
market price for their Chrysler shares. CHRYSLER'S BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS VOTING IN FAVOR OF THE PROPOSED MERGER.
Q: What will I receive in exchange for my Chrysler shares?
A: You will receive .6235 of a DaimlerChrysler Ordinary Share for each share of
Chrysler Common Stock you own. Cash will be paid with respect to fractional
shares. For example, a holder of 100 shares of Chrysler Common Stock would
receive 62 DaimlerChrysler Ordinary Shares, plus a cash payment with respect
to the .35 fractional DaimlerChrysler Ordinary Share. The DaimlerChrysler
Ordinary Shares will be listed principally on the New York Stock Exchange
and the Frankfurt Stock Exchange.
Q: Will I continue to receive dividends?
A: The Daimler-Benz Management Board and the Chrysler Board of Directors have
determined, and the prospective DaimlerChrysler AG Management Board has
indicated its concurrence, that an appropriate dividend policy for
DaimlerChrysler AG under current business and economic conditions would
result in DaimlerChrysler AG paying approximately the same annual dividend
amount currently paid to Chrysler stockholders (after giving effect to the
change in share ownership resulting from the U.S. Exchange Ratio). The
dividend would be paid annually after the DaimlerChrysler AG annual
stockholders meeting, subject to stockholder approval. There can be no
assurance as to the actual level of dividends that will be paid in any year.
Q: Can I continue to receive dividends in dollars?
A: Yes. After the Chrysler Merger, when you send in your Chrysler stock
certificates for exchange, you will be able to elect whether to receive
dividend payments in dollars or in marks.
Q: How do the stockholder rights of Chrysler and DaimlerChrysler AG compare?
A: Stockholder rights of DaimlerChrysler AG are governed by German law and the
provisions of the DaimlerChrysler AG Articles of Association (SATZUNG) (an
English translation is attached to this Proxy Statement/Prospectus as Annex
D). For a summary of certain differences between the rights of Chrysler
stockholders under Delaware law and the rights of DaimlerChrysler AG
stockholders under German law, see page 130.
Q: What do I need to do now?
A: Please vote now by toll-free telephone or by Internet (as explained in your
proxy card), or by signing and mailing your proxy card in the enclosed
return envelope as soon as possible, so that your shares may be represented
at the Chrysler Special Meeting.
Q: Should I send in my stock certificates now?
A: No. After the Chrysler Merger is completed, we will send you written
instructions for exchanging your share certificates.
Q: If my shares are held in "street name" by my broker, will my broker vote my
shares for me?
A: Your broker will vote your shares only if you provide instructions on how to
vote. Your broker can give you directions on how to instruct your broker to
vote your shares.
<PAGE>
Q: May I change my vote after I have mailed my signed proxy card?
A: Yes. Just send to Chrysler, at the address specified for Chrysler, a written
notice that you are revoking your proxy, send a later dated proxy card, vote
again by telephone or Internet or attend the Chrysler Special Meeting and
vote your shares.
Q: Are there risks to be considered?
A: The number of DaimlerChrysler Ordinary Shares you will receive for each
share of Chrysler Common Stock will not change even if the market prices of
Daimler-Benz Ordinary Shares and Chrysler shares change before the business
combination is completed. Accordingly, the market value of DaimlerChrysler
Ordinary Shares to be received by Chrysler's stockholders in the business
combination may be less or more than the current market value of the
comparable number of Daimler-Benz Ordinary Shares. In addition, there are
risks that the synergies expected from the Transactions will not be obtained
to the extent and as promptly as now expected, and risks relating to the
valuation proceeding (SPRUCHVERFAHREN) available under German law to certain
Daimler-Benz stockholders. For a discussion of these and certain other
risks, see page 24.
Q: Will Chrysler stockholders have appraisal rights?
A: Under Delaware law, Chrysler stockholders will not have appraisal rights.
Q: When will the business combination be completed?
A: We are working toward completing the business combination as quickly as
possible. We expect to complete the business combination in November 1998;
however, delays in fulfilling closing conditions, including the receipt of
governmental approvals, could postpone the business combination.
Q: When and where will the Chrysler Special Meeting be held?
A: The special meeting of Chrysler's stockholders will be held at 9:00 a.m.,
local time, on September 18, 1998, at the Hotel du Pont, 11th and Market
Streets, Wilmington, Delaware.
Q: What other matters will be voted on at the Chrysler Special Meeting?
A: We do not expect to ask you to vote on any other matter at the Chrysler
Special Meeting.
Q: How will I be taxed on the Chrysler Merger?
A: Stockholders should not recognize taxable gain or loss for United States
federal income tax purposes upon the exchange of Chrysler Common Stock for
DaimlerChrysler Ordinary Shares, except with respect to any cash received
with respect to a fractional share of a DaimlerChrysler Ordinary Share. The
holding period for the DaimlerChrysler Ordinary Shares received by Chrysler
stockholders in the business combination, which determines how any gain or
loss should be treated for United States federal income tax purposes upon
future sales of DaimlerChrysler Ordinary Shares, generally will include the
holding period for the Chrysler Common Stock exchanged in the business
combination. For a fuller description of United States federal income tax
considerations, see page 71.
WHO CAN HELP ANSWER YOUR QUESTIONS?
If you have more questions about the business combination or would like
additional copies of this Proxy Statement/Prospectus, you should contact:
Georgeson & Company Inc., telephone number (800) 223-2064 (toll free), or
Chrysler Corporation, 1000 Chrysler Drive, Auburn Hills, Michigan 48326-2766,
Attention: Investor Relations, CIMS 485-06-07, telephone number (248) 512-2950.
<PAGE>
As used in this Proxy Statement/Prospectus, unless the context otherwise
requires: "Chrysler" refers to Chrysler Corporation and its consolidated
subsidiaries, and "Daimler-Benz" refers to Daimler-Benz Aktiengesellschaft and
its consolidated subsidiaries, in each case prior to the consummation of any of
the Transactions. As used in this Proxy Statement/Prospectus, unless the context
otherwise requires, the term "DaimlerChrysler AG" refers to DaimlerChrysler AG
and its consolidated subsidiaries as the successor corporation to Daimler-Benz
Aktiengesellschaft and its consolidated subsidiaries following the consummation
of the Daimler-Benz Exchange Offer and the Daimler-Benz Merger. All information
contained in or incorporated by reference in this Proxy Statement/Prospectus
relating to Daimler-Benz and DaimlerChrysler AG was provided by Daimler-Benz.
All information contained in or incorporated by reference in this Proxy
Statement/ Prospectus relating to Chrysler was provided by Chrysler.
------------------------
AVAILABLE INFORMATION
Daimler-Benz and Chrysler are each subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports and other information with the Securities and
Exchange Commission (the "Commission"). Chrysler also files proxy statements
with the Commission. Daimler-Benz, as a foreign private issuer, is exempt from
the rules under the Exchange Act prescribing the furnishing and content of proxy
statements, and its officers, directors and principal stockholders are exempt
from the reporting and "short-swing" profit recovery provisions contained in
Section 16 of the Exchange Act. Reports and other information filed by
Daimler-Benz or Chrysler with the Commission can be inspected and copied at the
Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549 and at the Commission's Regional Offices located at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade Center, New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Room of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. Information on the operation of the Commission's
Public Reference Room may be obtained by calling the Commission at
1-800-SEC-0330. Certain reports, proxy statements and other information filed by
Chrysler may also be obtained at the Commission's World Wide Web site, located
at http://www.sec.gov. In addition, material filed by each of Daimler-Benz and
Chrysler can be inspected at the offices of the NYSE at 20 Broad Street, New
York, New York 10005.
Daimler-Benz furnishes the depositary (the "Depositary") for the
Daimler-Benz ADSs with annual reports in English, which include annual audited
consolidated financial statements of Daimler-Benz and its subsidiaries prepared
in conformity with U.S. GAAP, except for the use of the proportionate method of
consolidation for certain joint ventures. Under U.S. GAAP, joint ventures would
be accounted for using the equity method of accounting. The Depositary has
undertaken to mail such reports, promptly upon receipt thereof, to all holders
of record of Daimler-Benz ADSs. Daimler-Benz also furnishes the Depositary with
unaudited consolidated financial statements for the first six months of each
fiscal year. The Depositary makes such reports available for inspection by
holders of Daimler-Benz ADSs. In addition, Daimler-Benz furnishes the Depositary
with summaries in English of all notices of stockholders' meetings and other
reports and communications that are made generally available to stockholders of
Daimler-Benz. The Depositary arranges for the mailing of such summaries to all
record holders of Daimler-Benz ADSs. As of September 1, 1998 (the "Succession
Date"), The Bank of New York ("BNY") succeeded Citibank, N.A. ("Citibank") as
Depositary for the Daimler-Benz ADSs, and assumed all of the rights and powers
of the Depositary under the Deposit Agreement, dated as of September 1, 1993, as
amended (the "Deposit Agreement"), among Daimler-Benz, Citibank, and the holders
from time to time of Daimler-Benz ADSs. In addition, as of the Succession Date,
(i) Citibank was removed as registrar for the registry of Daimler-Benz ADSs on
all stock exchanges or securities markets in the United States, and BNY is
acting as substitute registrar, in accordance with the terms and provisions of
the Deposit Agreement, and (ii) Citibank's custodian ceased to act as custodian
of the Daimler-Benz ADSs, and a custodian or custodians appointed by BNY became
the substitute custodian. In accordance with the terms of the Deposit Agreement,
on September 24, 1998, the Depositary notified the holders of Daimler-Benz ADSs
that effective on the Daimler-
3
<PAGE>
Benz Exchange Offer Expiration Date, the Deposit Agreement will be terminated
and, as a result, the Depositary's duties thereunder will cease. In addition,
the Deposit Agreement will be amended and as a consequence, all remaining
Daimler-Benz ADSs will represent solely the right to receive DaimlerChrysler
Ordinary Shares.
Following consummation of the Transactions, DaimlerChrysler AG will, with
respect to itself, furnish the U.S. Transfer Agent referred to under
"Description of DaimlerChrysler Ordinary Shares" with reports, financial
statements and other communications similar to those previously furnished by
Daimler-Benz to the Depositary. The U.S. Transfer Agent, in turn, will mail or,
to the extent appropriate, make available for inspection such materials to
holders of DaimlerChrysler Ordinary Shares in the United States. See
"Description of DaimlerChrysler Ordinary Shares--Notices and Reports."
This Proxy Statement/Prospectus constitutes part of a registration statement
on Form F-4 (together with all amendments and exhibits thereto, the
"Registration Statement") filed by DaimlerChrysler AG, as successor corporation
to Daimler-Benz, with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the offering and issuance of
DaimlerChrysler Ordinary Shares in connection with the Daimler-Benz Exchange
Offer, the Chrysler Merger and the Daimler-Benz Merger. This Proxy
Statement/Prospectus does not contain all of the information set forth in the
Registration Statement, certain portions of which are omitted in accordance with
the rules and regulations of the Commission. Statements contained in this Proxy
Statement/Prospectus or in any document incorporated by reference or deemed to
be incorporated by reference herein with respect to the contents of any contract
or other document referred to herein or therein are not necessarily complete,
and in each case reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement or such other
document, each such statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Chrysler with the Commission
under the Exchange Act are incorporated herein by reference:
(a) Chrysler's Annual Report on Form 10-K for the year ended December
31, 1997 (File No. 1-9161);
(b) Chrysler's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998 and June 30, 1998 (File No. 1-9161);
(c) Chrysler's Current Reports on Form 8-K, dated February 6, 1998
and May 7, 1998 (File No. 1-9161); and
(d) The description of the Chrysler Common Stock contained in
Chrysler's Registration Statement on Form 8-B (File No. 1-9161)
filed with the Commission on May 23, 1986.
The following documents previously filed by Daimler-Benz with the Commission
under the Exchange Act are incorporated herein by reference:
(a) Daimler-Benz' Annual Report on Form 20-F for the fiscal year
ended December 31, 1997 (File No. 1-2356); and
(b) Daimler-Benz' Report of Foreign Private Issuer on Form 6-K for
the month of July 1998.
All documents filed by Chrysler pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act, all Forms 20-F filed by Daimler-Benz pursuant to the
Exchange Act and all Forms 6-K filed by Daimler-Benz pursuant to the Exchange
Act that indicate on the cover page thereof that such Forms 6-K are to be
incorporated by reference, after the date of this Proxy Statement/Prospectus and
prior to the date of the consummation of the Transactions shall be deemed to be
incorporated by reference into this Proxy Statement/Prospectus and to be a part
hereof from the date of filing of such documents.
4
<PAGE>
Any statements contained herein, or in a document incorporated or deemed to
be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of this Proxy Statement/ Prospectus to the extent that a
statement herein, or in any other subsequently filed document that is or is
deemed to be incorporated by reference herein, modifies or supersedes such
previous statement. Any statement so modified or superseded shall not be deemed
to constitute a part hereof except as so modified or superseded.
------------------------
This Proxy Statement/Prospectus incorporates documents by reference that are
not presented herein or delivered herewith. These documents (other than exhibits
to such documents, unless such exhibits are specifically incorporated by
reference herein) are available, without charge, upon oral or written request by
any person to whom this Proxy Statement/Prospectus has been delivered, in the
case of documents relating to Chrysler, from the Director, Investor Relations,
CIMS 485-06-07, Chrysler Corporation, 1000 Chrysler Drive, Auburn Hills,
Michigan 48326-2766, telephone number (248) 512-2950; and in the case of
documents relating to Daimler-Benz from either the Investor Relations Department
of Daimler-Benz Aktiengesellschaft, Epplestrasse 225, 70567, Stuttgart, Germany,
telephone number 011-49-711-17-92285 or Daimler-Benz North America Corporation,
375 Park Avenue, New York, New York 10152-3001, attention: Kerstin Arthurs,
telephone number (212) 909-9724. In order to ensure timely delivery of the
documents, any request should be made by October 16, 1998.
------------------------
No person has been authorized to give any information or make any
representations not contained or incorporated by reference in this Proxy
Statement/Prospectus and, if so given or made, such information or
representation must not be relied upon as having been authorized by
DaimlerChrysler AG, Daimler-Benz, Chrysler or any other person. This Proxy
Statement/Prospectus does not contain an offer to sell or a solicitation of any
seller to buy any securities other than those offered hereby or an offer to sell
or a solicitation of any seller to buy any securities in any jurisdiction in
which, or to any person to whom, it is unlawful to make such offer or
solicitation. Neither the delivery of this Proxy Statement/Prospectus nor the
sale of any securities hereunder shall, under any circumstances, create an
implication that there has been no change in the affairs of either
DaimlerChrysler AG, Daimler-Benz or Chrysler since the date hereof or that the
information herein is correct as of any time subsequent to its date.
------------------------
ENFORCEABILITY OF CIVIL LIABILITIES
DaimlerChrysler AG is a stock corporation (AKTIENGESELLSCHAFT) organized
under the laws of the Federal Republic of Germany. Following the Transactions
most of the members of the Supervisory Board (AUFSICHTSRAT) and a number of the
members of the Board of Management (VORSTAND) and certain of the officers of
DaimlerChrysler AG and certain experts named herein will reside outside the
United States. As a result, it may not be possible for investors to effect
service of process within the United States upon such persons or to enforce, in
courts outside the United States, judgments against such persons obtained in
United States courts and predicated upon the civil liability provisions of the
federal securities laws of the United States. Furthermore, since a substantial
portion of the assets of DaimlerChrysler AG will be located outside the United
States, any judgment obtained in the United States against DaimlerChrysler AG
may not be collectible within the United States. The Daimler-Benz legal
department has advised that German courts will enforce judgments of United
States courts for liquidated amounts in civil matters subject to certain
conditions and exceptions. Such counsel has expressed no opinion, however, as to
whether the enforcement by a German court of any judgment would be effected in
any currency other than in German marks ("marks" or "DM") and, if in marks, the
date of determination of the applicable exchange rate from United States dollars
("dollars" or "$") to marks. The Daimler-Benz legal department has further
advised that there may be doubt as to the enforceability, in original actions in
German courts, of liabilities predicated solely upon the federal securities laws
of the United States.
5
<PAGE>
CURRENCY PRESENTATION AND EXCHANGE RATES
For the convenience of the reader, this Proxy Statement/Prospectus contains
translations of certain mark amounts into dollar amounts, and dollar amounts
into mark amounts, at specified exchange rates. Unless otherwise indicated, the
translation of marks into dollars and of dollars into marks herein has been made
at the indicated noon buying rate in New York City for cable transfers in
foreign currencies as certified for customs purposes by the Federal Reserve Bank
of New York (the "Noon Buying Rate") on June 30, 1998, which was DM 1.8033 per
$1.00. Such rate may differ from the actual rates used in the preparation of the
consolidated financial statements and the selected consolidated financial data
of Daimler-Benz and the pro forma financial information for DaimlerChrysler AG
included or incorporated by reference in this Proxy Statement/Prospectus, which
are expressed in marks. Accordingly, dollar amounts appearing herein may differ
from the actual dollar amounts that were translated into marks in the
preparation of such financial statements, data and information.
Fluctuations in the exchange rate between the dollar and the mark will
affect the dollar equivalent of the mark price of DaimlerChrysler Ordinary
Shares traded on the German stock exchanges and, as a result, are likely to
affect the market price of the DaimlerChrysler Ordinary Shares on the NYSE. Such
fluctuations will also affect the dollar amounts received by holders of
DaimlerChrysler Ordinary Shares on the conversion by the U.S. Transfer Agent
into dollars of cash dividends declared in marks on the DaimlerChrysler Ordinary
Shares.
The following table sets forth, for the periods and dates indicated, the
average, high, low and period-end Noon Buying Rates for marks expressed in marks
per $1.
<TABLE>
<CAPTION>
Year ended December 31, Average(1) High Low Period-End
- ------------------------------------------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
1993.................................................. DM 1.6610 DM 1.7405 DM 1.5675 DM 1.7395
1994.................................................. 1.6119 1.7627 1.4920 1.5495
1995.................................................. 1.4261 1.5612 1.3565 1.4345
1996.................................................. 1.5070 1.5655 1.4354 1.5387
1997.................................................. 1.7394 1.8810 1.5413 1.7991
1998 (through September 15, 1998)..................... 1.8018 1.8542 1.6889 1.6895
</TABLE>
- ------------------------
(1) The average of the Noon Buying Rates on the last business day of each
month during the relevant period.
FORWARD-LOOKING INFORMATION
This Proxy Statement/Prospectus contains or incorporates by reference
certain forward-looking statements and information relating to DaimlerChrysler
AG, Daimler-Benz and Chrysler that are based on the beliefs of their respective
managements as well as assumptions made by and information currently available
to each of DaimlerChrysler AG, Daimler-Benz and Chrysler. When used in this
document, the words "anticipate," "believe," "estimate," "expect," "plan" and
"intend" and similar expressions, as they relate to DaimlerChrysler AG,
Daimler-Benz or Chrysler or their respective managements, are intended to
identify forward-looking statements. Such statements reflect the current views
of each such company with respect to future events and are subject to certain
risks, uncertainties and assumptions. Many factors could cause the actual
results, performance or achievements of DaimlerChrysler AG or Chrysler to be
materially different from any future results, performance or achievements that
may be expressed or implied by such forward-looking statements, including, among
others, changes in general economic and business conditions, changes in currency
exchange rates, introduction of competing products by other companies, lack of
acceptance of new products or services by DaimlerChrysler AG's or Chrysler's
targeted customers, changes in business strategy, risks that the synergies
anticipated from the Transactions may not be fully realized and various other
factors, both referenced and not referenced in this Proxy Statement/Prospectus.
See "Risk Factors." Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described herein as anticipated, believed,
estimated, expected, planned or intended. None of DaimlerChrysler AG,
Daimler-Benz or Chrysler intends, or assumes any obligation, to update these
forward-looking statements.
6
<PAGE>
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS PROXY STATEMENT/PROSPECTUS. THIS SUMMARY IS NOT, AND IS NOT INTENDED TO BE,
COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE DETAILED
INFORMATION CONTAINED ELSEWHERE IN THIS PROXY STATEMENT/PROSPECTUS, THE ANNEXES
ATTACHED HERETO AND THE DOCUMENTS REFERRED TO OR INCORPORATED HEREIN BY
REFERENCE. STOCKHOLDERS ARE URGED TO REVIEW THIS PROXY STATEMENT/ PROSPECTUS,
THE COMBINATION AGREEMENT ATTACHED HERETO AS ANNEX A AND THE OTHER ANNEXES
ATTACHED HERETO.
The Companies
DAIMLER-BENZ AKTIENGESELLSCHAFT. Daimler-Benz Aktiengesellschaft, a stock
corporation (AKTIENGESELLSCHAFT) organized and existing under the laws of the
Federal Republic of Germany, is the largest industrial group in Germany with
1997 revenues of DM 124 billion. Daimler-Benz operates in four business
segments-- Automotive (Passenger Cars and Commercial Vehicles), Aerospace,
Services and Directly Managed Businesses. Daimler-Benz is primarily active in
Europe, North and South America and Japan and is continuing to expand in markets
such as Eastern Europe and East and Southeast Asia, which are also assuming
strategic importance as production locations. Daimler-Benz' principal executive
offices are located at Epplestrasse 225, 70567 Stuttgart, Germany, and its
telephone number is 011-49-711-17-0. See "Information About Daimler-Benz."
CHRYSLER CORPORATION. Chrysler Corporation, a Delaware corporation,
operates in two principal industry segments: Automotive Operations and Financial
Services. Automotive Operations include the research, design, manufacture,
assembly and sale of cars, trucks and related parts and accessories.
Substantially all of Chrysler's automotive products are marketed through retail
dealerships, most of which are privately owned and financed. Financial Services
include the operations of Chrysler Financial Corporation and its consolidated
subsidiaries, which are engaged principally in providing consumer and dealer
automotive financing for Chrysler's products. Chrysler's principal executive
offices are located at Chrysler World Headquarters, 1000 Chrysler Drive, Auburn
Hills, Michigan 48326-2766, and its telephone number is (248) 576-5741. See
"Information About Chrysler."
DAIMLERCHRYSLER AG. DaimlerChrysler AG is a newly formed AKTIENGESELLSCHAFT
organized and existing under the laws of the Federal Republic of Germany that
has not, to date, conducted any activities other than those incident to its
formation, its execution of, and performance of its obligations under, the
Combination Agreement and related agreements, and its participation in the
preparation of this Proxy Statement/Prospectus. DaimlerChrysler AG will be the
successor corporation to Daimler-Benz following consummation of the Daimler-Benz
Exchange Offer and the Daimler-Benz Merger. As a result of the Transactions, the
business of DaimlerChrysler AG and its subsidiaries will be the businesses
currently conducted by Chrysler and Daimler-Benz. Immediately upon consummation
of the Mergers, based upon the number of shares of Chrysler Common Stock and
Daimler-Benz Ordinary Shares issued and outstanding on July 20, 1998, the former
stockholders of Chrysler will own approximately 42% and the former stockholders
of Daimler-Benz will own approximately 58% of the outstanding DaimlerChrysler
Ordinary Shares. If the Daimler-Benz Exchange Offer Ratio is changed to 1.005
DaimlerChrysler Ordinary Shares for each share exchanged, the respective
percentages would remain approximately the same, exclusive of the issuance of 30
million shares of Chrysler Common Stock to satisfy the pooling-of-interests
requirements.
The following table sets forth the respective percentage contributions of
Daimler-Benz and Chrysler to the pro forma total revenues and pro forma income
before income taxes of DaimlerChrysler AG for the year ended December 31, 1997
and for the six months ended June 30, 1998, and to the pro forma net assets of
DaimlerChrysler AG as at June 30, 1998, in all cases assuming
pooling-of-interests accounting treatment for the Transactions. If the
Transactions were accounted for under the purchase method, the respective
contributions for pro forma total revenues would be the same as those below. The
respective contributions to pro forma income before income taxes and net assets
assuming purchase accounting for the Transactions are not
7
<PAGE>
provided because the resulting goodwill and related amortization and higher
depreciation charges from the revaluing of Chrysler's assets would make the
comparison of respective contributions not meaningful.
<TABLE>
<CAPTION>
Pooling-of-Interests
-------------------------
Daimler-Benz Chrysler
------------ -----------
<S> <C> <C>
Pro Forma Total Revenues
Year ended December 31, 1997........................................................ 54% 46%
Six months ended June 30, 1998...................................................... 53% 47%
Pro forma Income Before Income Taxes
Year ended December 31, 1997........................................................ 35% 65%
Six months ended June 30, 1998...................................................... 40% 60%
Pro forma Net Assets at June 30, 1998................................................. 56% 44%
</TABLE>
------------------------
There are currently no plans for the combined company to change the nature
of the business operations of Daimler-Benz and Chrysler described above.
Following consummation of the Chrysler Merger, DaimlerChrysler AG will have its
registered seat in Stuttgart, Germany and will maintain two operational
headquarters -- one located at the current Chrysler headquarters, 1000 Chrysler
Drive, Auburn Hills, Michigan 48326-2766, and one located at the current
Daimler-Benz headquarters, Epplestrasse 225, 70567 Stuttgart, Germany.
The Special Meetings
This Proxy Statement/Prospectus is being furnished in connection with the
solicitation by the Board of Directors of Chrysler (the "Chrysler Board") of
proxies from holders of Chrysler Common Stock for use at the Chrysler Special
Meeting. At the Chrysler Special Meeting, the holders of Chrysler Common Stock
will be asked to approve and adopt the Combination Agreement and the
transactions contemplated thereby, including the Chrysler Merger (the "Chrysler
Merger Proposal").
In addition, this Proxy Statement/Prospectus is being furnished to "U.S.
persons" (as defined in Rule 902(o) of Regulation S promulgated under the
Securities Act) who own Daimler-Benz Ordinary Shares or Daimler-Benz ADSs in
connection with the invitation by the Daimler-Benz Board of Management
(VORSTAND) (the "Daimler-Benz Management Board") for the special meeting of
Daimler-Benz stockholders (the "Daimler-Benz Special Meeting"). At the
Daimler-Benz Special Meeting, the holders of Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs will be asked to approve the consummation of the transactions
contemplated by the Combination Agreement, including the Daimler-Benz Exchange
Offer, and to approve the Daimler-Benz Merger and the German Merger Agreement
(as hereinafter defined) (collectively, the "Daimler-Benz Business Combination
Proposal").
THE CHRYSLER SPECIAL MEETING
TIME, DATE AND PLACE. The Chrysler Special Meeting will be held at 9:00
a.m., local time, on September 18, 1998, at the Hotel du Pont, 11th and Market
Streets, Wilmington, Delaware.
PURPOSE OF THE CHRYSLER SPECIAL MEETING. The purpose of the Chrysler
Special Meeting is to consider and vote upon the Chrysler Merger Proposal and to
transact any other business that is properly brought before the Chrysler Special
Meeting.
RECORD DATE; QUORUM; REQUIRED VOTE; SHARES OUTSTANDING AND ENTITLED TO
VOTE. Only holders of record of Chrysler Common Stock at the close of business
on July 20, 1998 (the "Chrysler Record Date") will be entitled to notice of and
to vote at the Chrysler Special Meeting. The presence, in person or by proxy, of
the holders of at least a majority of the shares entitled to vote at the
Chrysler Special Meeting is necessary to constitute a quorum. Each holder of
record of shares of Chrysler Common Stock on the Chrysler Record Date is
entitled to cast one vote per share on the Chrysler Merger Proposal and on any
other matter properly submitted for the vote of the Chrysler stockholders at the
Chrysler Special Meeting. The affirmative vote of a majority (the
8
<PAGE>
"Chrysler Stockholder Approval") of the outstanding shares of Chrysler Common
Stock entitled to vote is required to approve the Chrysler Merger Proposal. The
Chrysler Stockholder Approval will become effective upon consummation of the
Daimler-Benz Exchange Offer. As of the Chrysler Record Date, there were
647,304,195 shares of Chrysler Common Stock outstanding and entitled to vote at
the Chrysler Special Meeting. The actions proposed in this Proxy
Statement/Prospectus are not matters that can be voted on by brokers holding
shares for beneficial owners without the owners' specific instructions.
Accordingly, all beneficial owners of Chrysler Common Stock are urged to return
the enclosed proxy card marked to indicate their votes, or to cast their vote by
telephone or by Internet.
SECURITY OWNERSHIP OF MANAGEMENT. As of July 20, 1998, directors and
executive officers of Chrysler and their affiliates beneficially owned an
aggregate of 8,211,204 shares of Chrysler Common Stock (approximately 1.21% of
the Chrysler Common Stock then outstanding), including 6,804,399 shares under
option. Chrysler expects that all of such directors and executive officers will
vote their shares (other than shares under option) in favor of the Chrysler
Merger Proposal.
STOCKHOLDER AGREEMENT. Tracinda Corporation, a Nevada corporation
("Tracinda"), and Mr. Kirk Kerkorian have entered into the Stockholder Agreement
with Daimler-Benz and Chrysler (the "Chrysler Stockholder Agreement"), pursuant
to which Tracinda has agreed, among other things, to vote all of the shares of
Chrysler Common Stock owned by it in favor of the Chrysler Merger Proposal. As
of July 30, 1998, Tracinda beneficially owned 71,753,992 shares of Chrysler
Common Stock, representing approximately 11% of the outstanding shares of
Chrysler Common Stock on the Chrysler Record Date. The Chrysler Stockholder
Agreement is filed as an exhibit to the Registration Statement and is
incorporated herein by reference. See "The Chrysler Special Meeting--Stockholder
Agreement" and "Ownership of Chrysler Common Stock--Beneficial Ownership of
Certain Stockholders."
RECOMMENDATION OF THE CHRYSLER BOARD; REASONS FOR THE CHRYSLER MERGER. The
Chrysler Board has unanimously approved the Combination Agreement, has
unanimously determined that the Chrysler Merger is fair to, and in the best
interests of, Chrysler and its stockholders, and unanimously recommends that
Chrysler stockholders vote FOR the Chrysler Merger Proposal.
For a discussion of the factors considered by the Chrysler Board in
approving the Combination Agreement, see "The Transactions--Recommendations of
the Chrysler Board and Reasons for those Recommendations."
OPINION OF FINANCIAL ADVISOR OF CHRYSLER. On May 6, 1998, Credit Suisse
First Boston Corporation ("CSFB") delivered to the Chrysler Board a written
opinion that, as of such date, and based upon and subject to the matters set
forth therein, the U.S. Exchange Ratio was fair from a financial point of view
to the holders of Chrysler Common Stock (not including Daimler-Benz and its
affiliates). As discussed in "The Transactions-- Recommendations of the Chrysler
Board and Reasons for those Recommendations," CSFB's opinion and presentation to
the Chrysler Board were among the factors considered by the Chrysler Board in
reaching its determination to approve the Combination Agreement. A copy of the
CSFB opinion is attached as Annex B to this Proxy Statement/Prospectus and is
incorporated herein by reference. CSFB has consented to the use of its opinion
in this Proxy Statement/Prospectus, and a copy of its consent has been filed as
an exhibit to the Registration Statement of which this Proxy
Statement/Prospectus forms a part. Stockholders are urged to, and should, read
the CSFB opinion carefully and in its entirety for a description of the
procedures followed, assumptions made, matters considered and limitations on the
review undertaken by CSFB in connection therewith. See "The
Transactions--Opinion of Financial Advisor of Chrysler."
INTERESTS OF CERTAIN PERSONS IN THE CHRYSLER MERGER. In considering the
recommendation of the Chrysler Board with regard to the Chrysler Merger
Proposal, stockholders of Chrysler should be aware that certain members of
Chrysler's management and the Chrysler Board have interests in the Chrysler
Merger that are in addition to and may be different from the interests in the
Chrysler Merger of holders of Chrysler Common Stock, including employment
agreements with Chrysler, severance benefits, accelerated vesting of stock
options and other stock-based awards, employment agreements with DaimlerChrysler
AG (in the case of the
9
<PAGE>
Chrysler senior officers who are to become members of the DaimlerChrysler AG
Board of Management (VORSTAND)), interests in certain Chrysler benefit plans
and, in the case of Mr. Robert J. Eaton, Chairman and Chief Executive Officer of
Chrysler, an increase in pension benefits intended to encourage Mr. Eaton to
remain in DaimlerChrysler AG's and Chrysler's employ following the Chrysler
Merger. Stockholders should also be aware that certain of such officers and
directors will become officers and directors of DaimlerChrysler AG following the
Chrysler Merger. See "The Transactions--Composition of DaimlerChrysler
Management Board and Integration Committee," "The Transactions--Interests of
Certain Persons in the Chrysler Merger" and "The Combination
Agreement--DaimlerChrysler AG Governance After the Chrysler Effective Time."
As described in greater detail in "The Transactions--Interests of Certain
Persons in the Chrysler Merger," subject only to the consummation of the
Chrysler Merger and their continued employment until such time, each of the
following Chrysler executive officers will receive the following cash payments,
the following number of DaimlerChrysler Ordinary Shares in respect of his
unvested Chrysler Equity Units (as hereinafter defined) and the right to share
in the appreciation from and after the Chrysler Merger in the following number
of DaimlerChrysler Ordinary Shares: Mr. Eaton, $3,727,785; 628,277
DaimlerChrysler Ordinary Shares ($66,214,158) and stock appreciation rights with
respect to 2,267,579 DaimlerChrysler Ordinary Shares; Mr. Lutz, $1,326,097;
244,314 DaimlerChrysler Ordinary Shares ($25,748,240) and stock appreciation
rights with respect to 683,380 DaimlerChrysler Ordinary Shares; Mr. Stallkamp,
$1,500,433; 222,947 DaimlerChrysler Ordinary Shares ($23,496,425) and stock
appreciation rights with respect to 379,384 DaimlerChrysler Ordinary Shares; Mr.
Valade, $1,056,206; 210,586 DaimlerChrysler Ordinary Shares ($22,193,659) and
stock appreciation rights with respect to 442,685 DaimlerChrysler Ordinary
Shares; Mr. Pawley, $944,372; 204,104 DaimlerChrysler Ordinary Shares
($21,510,485) and stock appreciation rights with respect to 298,657
DaimlerChrysler Ordinary Shares. In addition, in the event that any of these
executive officer's employment is terminated in a qualifying termination
following the Chrysler Merger, such officer will also receive the following lump
sum severance payment; Mr. Eaton, $24,435,997; Mr. Lutz $0; Mr. Stallkamp,
$5,487,445; Mr. Valade, $4,601,383; and Mr. Pawley, $3,946,166. Mr. Eaton will
also receive an additional monthly pension benefit not in excess of $30,000 in
the event that he completes three years of service following the Chrysler
Merger. See "The Transactions--Interests of Certain Persons in the Chrysler
Merger."
NON-CONSUMMATION OF TRANSACTIONS. If the Transactions are not consummated,
Chrysler would continue to operate its businesses as it does currently, and
would continue to focus on opportunities it considers appropriate to expand its
activities outside of North America.
THE DAIMLER-BENZ SPECIAL MEETING
TIME, DATE AND PLACE. The Daimler-Benz Special Meeting will be held at
10:00 a.m., local time, on September 18, 1998, at the Hanns-Martin Schleyer
Halle, Stuttgart, Germany.
PURPOSE OF THE DAIMLER-BENZ SPECIAL MEETING. The purpose of the
Daimler-Benz Special Meeting is to consider and vote upon the Daimler-Benz
Business Combination Proposal.
QUORUM; REQUIRED VOTE; SHARES OUTSTANDING AND ENTITLED TO VOTE. Only
holders of Daimler-Benz Ordinary Shares, including Daimler-Benz Ordinary Shares
represented by Daimler-Benz ADSs (the "Daimler-Benz Voting Shares"), on the date
of the Daimler-Benz Special Meeting will be entitled to vote at the Daimler-Benz
Special Meeting. There are no quorum requirements for the Daimler-Benz Special
Meeting. Each holder of a Daimler-Benz Voting Share on the date of the
Daimler-Benz Special Meeting is entitled to cast one vote for every such
Daimler-Benz Voting Share held by such stockholder; PROVIDED holders of
Daimler-Benz Ordinary Shares (including Daimler-Benz Ordinary Shares represented
by Daimler-Benz ADSs) comply with the requirements of the German Stock
Corporation Law (AKTIENGESETZ) and the Daimler-Benz Memorandum and Articles of
Association (SATZUNG) with respect to the deposit (HINTERLEGUNG) of such
holders' Daimler-Benz Ordinary Shares in a blocked account and to the voting of
such securities, and holders of Daimler-Benz ADSs comply with the requirements
imposed by the Depositary for the Daimler-Benz ADSs, with respect to the deposit
of such holders' Daimler-Benz ADSs in a blocked account and to the voting of
such securities. The affirmative vote of
10
<PAGE>
the holders of 75% of the Daimler-Benz Voting Shares represented at the
Daimler-Benz Special Meeting is required to approve and adopt the Daimler-Benz
Business Combination Proposal (the "Daimler-Benz Stockholder Approval"). As of
June 30, 1998 there were 569,340,329 Daimler-Benz Voting Shares outstanding.
Holders of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs will receive a
separate mailing with respect to the Daimler-Benz Special Meeting.
RECOMMENDATIONS OF THE BOARD OF MANAGEMENT (VORSTAND). The Daimler-Benz
Management Board and the Supervisory Board of Daimler-Benz (the "Daimler-Benz
Supervisory Board") each have unanimously approved the Combination Agreement and
the transactions contemplated thereby. The Daimler-Benz Management Board
unanimously recommends that the Daimler-Benz stockholders vote FOR approval and
adoption of the Daimler-Benz Business Combination Proposal.
For a discussion of the factors considered by the Daimler-Benz Management
Board in approving the Combination Agreement, see "Recommendations of the
Daimler-Benz Management Board and Reasons for those Recommendations."
OPINION OF FINANCIAL ADVISOR OF DAIMLER-BENZ. On May 6, 1998, Goldman,
Sachs & Co. oHG ("Goldman Sachs") delivered its oral opinion to the Daimler-Benz
Management Board and the Daimler-Benz Supervisory Board that, as of the date of
such opinion, the Daimler-Benz Exchange Ratio (as defined in the opinion of
Goldman Sachs attached hereto as Annex C) pursuant to the Combination Agreement
is fair from a financial point of view to the holders of Daimler-Benz Ordinary
Shares (including those Daimler-Benz Ordinary Shares represented by Daimler-Benz
ADSs). Goldman Sachs subsequently confirmed its earlier opinion by delivery of
its written opinion, dated as of May 8, 1998.
The full text of the written opinion of Goldman Sachs, which sets forth
assumptions made, matters considered and limitations on the review undertaken in
connection with the opinion, is attached hereto as Annex C and is incorporated
herein by reference. The opinion of Goldman Sachs referred to herein does not
constitute a recommendation as to how any holder of Daimler-Benz Ordinary Shares
or Daimler-Benz ADSs should vote with respect to the Transactions or whether or
not any holder of Daimler-Benz Ordinary Shares or Daimler-Benz ADSs should
tender such securities in connection with the Transactions. Holders of Daimler-
Benz Ordinary Shares or Daimler-Benz ADSs are urged to, and should, read such
opinion in its entirety. The opinion and advice provided by Goldman Sachs is not
and should not be considered a value opinion (BEWERTUNG Z.B. IM RAHMEN EINER
VERSCHMELZUNG) as usually rendered by qualified auditors based on the
requirements of German law. See "The Transactions--Opinion of Financial Advisor
of Daimler-Benz."
The Transactions
Set forth below is a brief description of certain of the provisions set
forth in the Combination Agreement, including the Transactions. As a result of
the Transactions, Chrysler will become a wholly owned subsidiary of
DaimlerChrysler AG, and Daimler-Benz will be merged with and into
DaimlerChrysler AG, with DaimlerChrysler AG remaining as the surviving entity.
The former stockholders of Chrysler and of Daimler-Benz will own all of the
issued and outstanding DaimlerChrysler Ordinary Shares. The Transactions will
have the effect of combining the respective businesses, stockholder groups,
managements and other constituencies of Chrysler and Daimler-Benz in a
"merger-of-equals" transaction. DaimlerChrysler AG will commence the
Daimler-Benz Exchange Offer promptly after receipt of the Daimler-Benz
Stockholder Approval and the votes necessary to obtain Chrysler Stockholder
Approval. Upon consummation of the Daimler-Benz Exchange Offer, the certificate
of merger with respect to the Chrysler Merger will be filed with the Secretary
of State of the State of Delaware causing the Chrysler Merger to become
effective. The Daimler-Benz Merger will be effected as soon as possible
following the consummation of the Chrysler Merger and will become effective in
accordance with applicable law by registration of the Daimler-Benz Merger in the
commercial register (HANDELSREGISTER) for Daimler-Benz and DaimlerChrysler AG,
which is located in Stuttgart, Germany. At some point following completion of
the Transactions, it is expected that Chrysler will change its corporate name
from "Chrysler Corporation" to "DaimlerChrysler Corporation."
11
<PAGE>
The diagrams set forth below are intended to provide a graphic illustration
of the corporate mechanics and the immediate corporate structuring results of
(1) the Daimler-Benz Exchange Offer and the Chrysler Merger and (2) the
Daimler-Benz Merger.
[SCHEMATIC DIAGRAM OF THE DAIMLER-
BENZ EXCHANGE OFFER AND THE CHRYSLER MERGER APPEARS HERE]
12
<PAGE>
[SCHEMATIC DIAGRAM OF THE DAIMLER-BENZ MERGER APPEARS HERE]
13
<PAGE>
THE DAIMLER-BENZ EXCHANGE OFFER
GENERAL. Pursuant to the Daimler-Benz Exchange Offer, DaimlerChrysler AG
will make an offer to (i) the holders of Daimler-Benz Ordinary Shares to
exchange the number of DaimlerChrysler Ordinary Shares equal to the Daimler-Benz
Exchange Offer Ratio for each Daimler-Benz Ordinary Share held by such holder,
and (ii) the holders of Daimler-Benz ADSs to exchange the number of
DaimlerChrysler Ordinary Shares equal to the Daimler-Benz Exchange Offer Ratio
for each Daimler-Benz ADS held by such holder. The Daimler-Benz Exchange Offer
will be made in accordance with applicable law. See "The Combination
Agreement--The Daimler-Benz Exchange Offer." Daimler-Benz stockholders who
tender their Daimler-Benz securities in the Daimler-Benz Exchange Offer will not
be able to participate in a German valuation proceeding (SPRUCHVERFAHREN). See
"The Transactions--German Valuation Proceeding."
CONDITIONS TO THE DAIMLER-BENZ EXCHANGE OFFER. The Daimler-Benz Exchange
Offer is subject to certain conditions including, among others, receipt of the
Daimler-Benz Stockholder Approval and the Chrysler Stockholder Approval and that
at the expiration of the Daimler-Benz Exchange Offer there shall have been
tendered and not withdrawn that number of Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs which in the aggregate represent at least 90% of the
outstanding Daimler-Benz Ordinary Shares, including Daimler-Benz Ordinary Shares
represented by Daimler-Benz ADSs (the "Minimum Condition"); PROVIDED, HOWEVER,
that if the number of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs
tendered does not satisfy the Minimum Condition but equals at least 75% of the
issued and outstanding Daimler-Benz Ordinary Shares on a primary basis,
including Daimler-Benz Ordinary Shares represented by Daimler-Benz ADSs, at the
time of registration with the commercial register (HANDELSREGISTER) of the
capital increase relating to the DaimlerChrysler Ordinary Shares being issued in
exchange therefor (the "75% Minimum"), the Minimum Condition shall mean the 75%
Minimum. Consistent with the Private Letter Ruling and in accordance with the
provisions of the Combination Agreement, Daimler-Benz and Chrysler have agreed
to the 75% Minimum which represents a reduction from the requirement set forth
in the Combination Agreement that shares representing at least 80% of the
capital stock of Daimler-Benz on a fully diluted basis (the "80% Minimum") be
tendered in order to satisfy the 80% Minimum and permit the Minimum Condition to
be redefined as the 80% Minimum. See "The Transactions-- The Daimler-Benz
Exchange Offer" and "The Combination Agreement--Conditions to Closing."
DAIMLER-BENZ EXCHANGE OFFER EXPIRATION DATE. The Daimler-Benz Exchange
Offer will be scheduled to expire initially 30 days after commencement of the
Daimler-Benz Exchange Offer and may be extended from time to time as described
herein (such date, as it may be extended from time to time, the "Daimler-Benz
Exchange Offer Expiration Date"). See "The Combination Agreement--The
Daimler-Benz Exchange Offer."
THE CHRYSLER MERGER
GENERAL. Pursuant to the Combination Agreement, Chrysler Merger Sub, a
newly formed Delaware corporation, will be merged with and into Chrysler, with
Chrysler continuing as the surviving corporation in the Chrysler Merger (the
"U.S. Surviving Corporation").
EFFECT ON CHRYSLER STOCKHOLDERS. At the time the Chrysler Merger becomes
effective in accordance with applicable law (the "Chrysler Effective Time"),
each share of Chrysler Common Stock issued and outstanding immediately prior to
the Chrysler Effective Time (other than any shares held in treasury or by any
wholly owned subsidiary of Chrysler, which will be cancelled) will be converted
into the right to receive, upon surrender of the certificate formerly
representing such share of Chrysler Common Stock, .6235 of a DaimlerChrysler
Ordinary Share (the "U.S. Exchange Ratio"). See "The Combination Agreement--The
Chrysler Merger." As soon as possible after the Chrysler Effective Time,
DaimlerChrysler AG will issue the DaimlerChrysler Ordinary Shares to be issued
in the Chrysler Merger to the U.S. Exchange Agent (as hereinafter defined) for
the account of the former stockholders of Chrysler, and the U.S. Exchange Agent
will contribute, for the account of the former stockholders of Chrysler, all of
the issued and outstanding common stock of U.S. Surviving Corporation to
DaimlerChrysler AG as a transfer in kind (the "U.S. Share Exchange" and,
together with the Chrysler Merger, the "Chrysler Exchange").
14
<PAGE>
U.S. EXCHANGE RATIO. The U.S. Exchange Ratio has been determined in
accordance with the exchange ratio formula (the "U.S. Exchange Ratio Formula")
described under the heading "The Combination Agreement-- The Chrysler Merger."
EFFECT ON CHRYSLER STOCK PLANS. Immediately prior to the Chrysler Effective
Time, each outstanding option to purchase or acquire a share of Chrysler Common
Stock granted by Chrysler under a stock option plan will become exercisable and
be deemed to be exercised (and such option will be extinguished) and will then
be converted into a right to receive DaimlerChrysler Ordinary Shares in
accordance with the appropriate formula described under the heading "The
Combination Agreement--The Chrysler Merger--Treatment of Chrysler Stock Plans."
In addition, Chrysler has certain other stock-based compensation plans under
which outstanding awards will vest at the Chrysler Effective Time. The
Combination Agreement generally provides that awards under such plans will be
settled in DaimlerChrysler Ordinary Shares. For a further description of the
treatment of the awards under such stock-based compensation plans, see "The
Combination Agreement--The Chrysler Merger--Treatment of Chrysler Stock Plans."
APPRAISAL RIGHTS. Under the Delaware General Corporation Law (the "DGCL"),
the holders of Chrysler Common Stock will not have appraisal rights with respect
to the Chrysler Merger. See "The Transactions-- Appraisal Rights."
THE DAIMLER-BENZ MERGER
GENERAL. As provided in the Combination Agreement, pursuant to the German
Merger Agreement (the "German Merger Agreement") to be entered into by
DaimlerChrysler AG and Daimler-Benz, as soon as possible following the Chrysler
Merger, the Daimler-Benz Merger will be effected in accordance with applicable
law, and DaimlerChrysler AG shall continue as the surviving entity. The time the
Daimler-Benz Merger becomes effective is hereinafter referred to as the
"Daimler-Benz Effective Time."
EFFECT ON DAIMLER-BENZ STOCKHOLDERS. At the Daimler-Benz Effective Time,
the stockholders of Daimler-Benz (other than DaimlerChrysler AG) will
automatically become stockholders of DaimlerChrysler AG, and each Daimler-Benz
Ordinary Share (other than those held by DaimlerChrysler AG or Daimler-Benz)
will be converted into solely the right to receive that number of
DaimlerChrysler Ordinary Shares equal to the Daimler-Benz Merger Exchange Offer
Ratio in exchange for such Daimler-Benz Ordinary Share. The DaimlerChrysler
Ordinary Shares to be issued in the Daimler-Benz Merger are referred to herein
as the "Daimler-Benz Merger Consideration." See "The Combination Agreement--The
Daimler-Benz Merger."
EFFECT ON DAIMLER-BENZ STOCK PLANS. At the Daimler-Benz Effective Time, all
outstanding convertible bonds, nominal value DM 1,000 each (the "Daimler-Benz
Employee Stock Options"), will become stock options of DaimlerChrysler AG in
accordance with Section 23 of the German Transformation Act (UMWANDLUNGSGESETZ)
(or such other instruments as shall meet the requirements of Section 23 and
shall be agreed to by Chrysler and Daimler-Benz), and from and after the
Daimler-Benz Effective Time, shall be convertible into DaimlerChrysler Ordinary
Shares in accordance with their terms; PROVIDED that the number of whole
DaimlerChrysler Ordinary Shares subject to each such Daimler-Benz Employee Stock
Option shall equal the number of Daimler-Benz Ordinary Shares subject thereto
multiplied by the Daimler-Benz Merger Exchange Ratio and the per share exercise
price thereof shall be divided by the Daimler-Benz Exchange Ratio. For a further
description of the treatment of such options, see "The Combination
Agreement--The Daimler-Benz Merger--Treatment of Daimler-Benz Stock Plans."
EFFECT ON HOLDERS OF DAIMLER-BENZ WARRANTS. At the Daimler-Benz Effective
Time, all of the warrants issued by Daimler-Benz in connection with the 4 1/8%
Deutsche Mark Bearer Notes of 1996/2003 issued by Daimler-Benz Capital
(Luxembourg) AG (the "Warrants") which are convertible into newly issued
Daimler-Benz Ordinary Shares will become Warrants of DaimlerChrysler AG in
accordance with Section 23 of the German Transformation Act (UMWANDLUNGSGESETZ)
and, from and after the Daimler-Benz Effective Time, all Warrants will entitle
the holder thereof to purchase DaimlerChrysler Ordinary Shares in accordance
with their terms. With respect to the Warrants which are exercisable for
outstanding Daimler-Benz Ordinary Shares, DaimlerChrysler AG and Daimler-Benz
will take all actions necessary to ensure that such Warrants will be exercisable
for, as of
15
<PAGE>
the Daimler-Benz Effective Time, DaimlerChrysler Ordinary Shares in accordance
with their terms and Section 23 of the German Transformation Act
(UMWANDLUNGSGESETZ).
EFFECT ON DAIMLER-BENZ SUBORDINATED MANDATORY CONVERTIBLE NOTES. At the
Daimler-Benz Effective Time, the 5 3/4% Subordinated Mandatory Convertible Notes
due June 14, 2002 (the "Notes"), including Notes represented by American
Depositary Notes ("ADNs") and DM Book Entry Securities ("DM BESs"), issued by
Daimler-Benz will become Notes of DaimlerChrysler AG in accordance with Section
23 of the German Transformation Act (UMWANDLUNGSGESETZ) and, from and after the
Daimler-Benz Effective Time, the Notes will be convertible into DaimlerChrysler
Ordinary Shares (rather than Daimler-Benz Ordinary Shares) in accordance with
their terms and Section 23 of the German Transformation Act (UMWANDLUNGSGESETZ).
GERMAN VALUATION PROCEEDING (SPRUCHVERFAHREN). Under the German
Transformation Act (UMWANDLUNGSGESETZ), any person who does not participate in
the Daimler-Benz Exchange Offer and who retains Daimler-Benz Ordinary Shares,
including those formerly represented by Daimler-Benz ADSs, after the
Daimler-Benz Exchange Offer and holds such shares at the time of the
Daimler-Benz Merger (each such person, a "Remaining Stockholder") may bring a
court valuation proceeding (SPRUCHVERFAHREN) within two months after effective
publication of the registration of the Daimler-Benz Merger. The purpose of such
a proceeding would be for the court to determine the adequacy of the
Daimler-Benz Merger Exchange Ratio.
If the court were to determine that the Daimler-Benz Merger Exchange Ratio
is too low, DaimlerChrysler AG would be required to make supplemental
compensatory cash payments to all of the Remaining Stockholders. Such payments
would be in addition to the Daimler-Benz Merger Consideration such holders had
received as a result of the Daimler-Benz Merger. Daimler-Benz believes that the
Daimler-Benz Merger Exchange Ratio has been properly determined and is fair to
the holders of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs.
DaimlerChrysler AG plans to defend vigorously against any such action. See "The
Transactions--German Valuation Proceeding (SPRUCHVERFAHREN)."
GOVERNANCE OF DAIMLERCHRYSLER AG FOLLOWING THE CHRYSLER MERGER
Daimler-Benz, Chrysler and DaimlerChrysler AG have agreed that following the
Chrysler Effective Time, DaimlerChrysler AG shall have a corporate governance
structure reflecting that the Transactions contemplate a "merger-of-equals." The
parties have agreed to recommend to their respective stockholders and
organizational bodies the following:
(i) that the Articles of Association (SATZUNG) of DaimlerChrysler AG
and the Management Board (VORSTAND) Rules of Procedure
(GESCHAFTSORDNUNG) of DaimlerChrysler AG, in each case, following the
Chrysler Effective Time, shall be in form and substance reasonably
acceptable to Daimler-Benz and Chrysler. An English translation of the
Articles of Association (SATZUNG) of DaimlerChrysler AG, as agreed to by
Daimler-Benz and Chrysler, is attached to this Proxy
Statement/Prospectus as Annex D.
(ii) that until the Supervisory Board (AUFSICHTSRAT) of
DaimlerChrysler AG (the "DaimlerChrysler Supervisory Board") has to be
composed in accordance with Germany's Co-determination Law of 1976, the
DaimlerChrysler Supervisory Board shall be composed of twelve members
representing the stockholders, six of whom shall have been recommended,
immediately prior to the Chrysler Effective Time, by Daimler-Benz from
the then-current non-employee representative members
(ANTEILSEIGNERVERTRETER) of the Daimler-Benz Supervisory Board and six
of whom shall have been recommended, immediately prior to the Chrysler
Effective Time, by Chrysler from the then-current outside members of the
Chrysler Board. For the period thereafter, the DaimlerChrysler
Supervisory Board shall consist of twenty members; five of the members
of the restructured DaimlerChrysler Supervisory Board shall have been
recommended by Daimler-Benz from non-employee representative members
(ANTEILSEIGNERVERTRETER) of the Daimler-Benz Supervisory Board, five of
the members shall have been recommended by Chrysler from the outside
members of the Chrysler Board, and the remaining ten members shall be
employee representatives. The German metalworkers union IG Metall and
the United Automobile Workers union (the "UAW") have announced that IG
Metall will nominate a UAW member for election to one of the three seats
on the DaimlerChrysler Supervisory Board reserved for nominees of IG
Metall.
16
<PAGE>
(iii) that for a period of not less than two years following the
Chrysler Effective Time, the current Chairman of Daimler-Benz'
Supervisory Board (AUFSICHTSRAT) shall continue as the Chairman of the
DaimlerChrysler Supervisory Board.
(iv) that the Management Board (VORSTAND) of DaimlerChrysler AG (the
"DaimlerChrysler Management Board") shall initially consist of 18
members. In general, 50% of such members shall be those designated by
Chrysler, and 50% of such members shall be those designated by
Daimler-Benz, and there will be two additional members with
responsibility for Daimler-Benz' non-automotive businesses. For three
years following the Effective Time, Jurgen E. Schrempp and Robert J.
Eaton shall be the Co-CEOs and Co-Chairmen (VORSTANDSVORSITZENDE) of the
DaimlerChrysler Management Board and members of the Office of the
Chairmen of DaimlerChrysler AG. Mr. Eaton has indicated his intention to
retire from such position after three years. For a discussion of the
proposed composition of the DaimlerChrysler Management Board, see "The
Transactions--Composition of DaimlerChrysler Management Board and
Integration Committee."
Furthermore, the Combination Agreement provides that (a) the DaimlerChrysler
Management Board shall establish an Integration Committee with a consultative
function which shall consist of the Co-Chairmen of the DaimlerChrysler
Management Board, who shall also serve as Co-Chairmen of the Integration
Committee, and 12 or more members (including such Co-Chairmen), 50% of whom
shall be designated by Chrysler and 50% of whom shall be designated by
Daimler-Benz; (b) following the Chrysler Effective Time, DaimlerChrysler AG
shall maintain two operational headquarters, one located at the current
headquarters of Daimler-Benz, and one located at the current headquarters of
Chrysler; and (c) following the Chrysler Effective Time, English shall be the
official language for the management of DaimlerChrysler AG.
The Combination Agreement contains no provisions that would bar governance
changes after the Transactions have been consummated.
CONDITIONS TO THE TRANSACTIONS
Consummation of the Transactions is subject to various conditions,
including, among others, the following:
- the expiration or termination of any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act")(which waiting periods were terminated as of July 30, 1998); and the
granting of approval of the transactions contemplated by the Combination
Agreement by the Commission of the European Union (which approval was
granted on July 22, 1998);
- receipt of the Chrysler Stockholder Approval and the Daimler-Benz
Stockholder Approval[, both of which have been obtained];
- satisfaction of all the conditions (including the Minimum Condition) to
the Daimler-Benz Exchange Offer (and, in the case of the obligations of
Chrysler to effect the Chrysler Merger, the consummation of the
Daimler-Benz Exchange Offer);
- if the transactions are to be accounted for as a pooling-of-interests, the
issuance by Chrysler of such number (estimated to be approximately 30.0
million shares) of shares of Chrysler Common Stock as are necessary so
that the Transactions can be accounted for as a pooling-of-interests (the
"Chrysler Stock Issuance"); and
- the receipt of tax opinions from the respective tax counsel of
Daimler-Benz and Chrysler regarding certain United States federal income
and German tax consequences of the Transactions and the receipt by
Chrysler of a private letter ruling from the IRS (which private letter
ruling was received from the IRS on September 4, 1998).
Except for the Minimum Condition and the required regulatory and stockholder
approvals, the conditions to the Transactions may be waived by the party
entitled to assert the condition. Waiver of the Minimum Condition would require
the written consent of both Daimler-Benz and Chrysler. Neither Daimler-Benz nor
Chrysler intends to waive the condition for receipt of the tax opinions;
Chrysler will not waive this condition without first recirculating revised proxy
materials and resoliciting the vote of its stockholders. See "The
Transactions--Certain Tax Consequences--United States Federal Income Tax
Consequences of the Transactions."
17
<PAGE>
TERMINATION OF THE COMBINATION AGREEMENT
The Combination Agreement may be terminated at any time prior to the
Chrysler Effective Time by the mutual consent of Chrysler and Daimler-Benz and
by either of them under certain specified circumstances, including the
following:
- if the Chrysler Merger and the Daimler-Benz Exchange Offer are not
consummated by January 31, 1999; PROVIDED that this termination right is
not available to any party whose failure to perform any of its obligations
under the Combination Agreement results in the failure of the Chrysler
Merger, the U.S. Share Exchange and the Daimler-Benz Exchange Offer to be
consummated on or prior to such date; and PROVIDED FURTHER that the
Combination Agreement may be extended for up to 30 days by either Daimler-
Benz or Chrysler if the Daimler-Benz Exchange Offer or the Chrysler Merger
shall not have been consummated as a direct result of Daimler-Benz or
Chrysler having failed to receive all regulatory approvals required to be
obtained with respect thereto;
- if the Chrysler Stockholder Approval or the Daimler-Benz Stockholder
Approval is not obtained at the Chrysler Special Meeting or the
Daimler-Benz Special Meeting, respectively; or
- if any judgment, order, decree, statute, law, ordinance, rule or
regulation, entered, enacted, promulgated, enforced or issued by any
governmental entity of competent jurisdiction or other legal restraint or
prohibition (a "Restraint") shall be in effect (i) preventing the
consummation of the Daimler-Benz Exchange Offer, the Chrysler Merger, the
U.S. Share Exchange or the Daimler-Benz Merger, or (ii) which otherwise is
reasonably likely to have a material adverse effect on Chrysler or
Daimler-Benz; PROVIDED that each of Chrysler, Daimler-Benz and
DaimlerChrysler AG shall have used its reasonable best efforts to prevent
the entry of any such Restraint and to appeal as promptly as possible any
such Restraint that may be entered.
The Combination Agreement may also be terminated (i) by Daimler-Benz if (a)
Chrysler shall have breached or failed to perform in any material respect any of
its representations, warranties, covenants or other agreements contained in the
Combination Agreement, which breach or failure to perform (1) would give rise to
the failure of certain conditions to Daimler-Benz' obligation to consummate the
Transactions, and (2) is incapable of being cured by Chrysler or is not cured
within 45 days after receipt of written notice thereof; or (b) prior to receipt
of the Daimler-Benz Stockholder Approval, if Daimler-Benz receives a Superior
Proposal (as hereinafter defined) and after receiving advice from outside
counsel determines that its fiduciary duties may be breached if it fails to
terminate the Combination Agreement; and (ii) by Chrysler if (a) Daimler-Benz or
DaimlerChrysler AG shall have breached or failed to perform in any material
respect any of its representations, warranties, covenants or other agreements
contained in the Combination Agreement, which breach or failure to perform (1)
would give rise to the failure of certain conditions to Chrysler's obligation to
consummate the Transactions, and (2) is incapable of being cured by Daimler-Benz
or DaimlerChrysler AG or is not cured within 45 days after receipt of written
notice thereof; or (b) prior to receipt of the Chrysler Stockholder Approval, if
Chrysler receives a Superior Proposal and after receiving advice from outside
counsel, determines that its fiduciary duties may be breached if it fails to do
so. See "The Combination Agreement--Termination."
STOCK EXCHANGE LISTING
The DaimlerChrysler Ordinary Shares have been approved for listing, subject
to official notice of issuance, on the NYSE and will trade thereon under the
symbol "DCX," and it is expected that the DaimlerChrysler Ordinary Shares will
be approved for listing on the FSE. In addition, it is expected that
DaimlerChrysler Ordinary Shares will be traded on the Chicago, Pacific,
Philadelphia, London, Paris, Montreal, Toronto, Swiss, Vienna and Tokyo stock
exchanges as well as all German stock exchanges. There is currently no public
market for the DaimlerChrysler Ordinary Shares. However, because holders of
Daimler-Benz Ordinary Shares and Daimler-Benz ADSs will have the right to
exchange one Daimler-Benz Ordinary Share or one Daimler-Benz ADS for one
DaimlerChrysler Ordinary Share (or 1.005 DaimlerChrysler Ordinary Shares, as the
case may be) pursuant to the Daimler-Benz Exchange Offer, Daimler-Benz expects
that the market price of a DaimlerChrysler Ordinary Share received in the
Chrysler Exchange or the Daimler-Benz Exchange Offer should be substantially
equivalent to the market price of a Daimler-Benz Ordinary Share immediately
prior to the consummation of the Daimler-Benz Exchange Offer. See "Market
Prices" and "Risk Factors."
18
<PAGE>
ANTICIPATED ACCOUNTING TREATMENT
Each of Chrysler, Daimler-Benz and DaimlerChrysler AG intends that the
Transactions will qualify as a "pooling-of-interests" under Opinion No. 16
Business Combinations of the Accounting Principles Board ("APB No. 16") of the
American Institute of Certified Public Accountants (a "pooling-of-interests").
If, however, fewer than 90% of the outstanding Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs are tendered in the Daimler-Benz Exchange Offer, and the
Minimum Condition is consequently changed to the 75% Minimum or if the Chrysler
Stock Issuance is not consummated, the Transactions will be accounted for using
the purchase method of accounting rather than the pooling-of-interests method of
accounting. See "Risk Factors" and "The Transactions--Anticipated Accounting
Treatment."
DIVIDENDS
The Daimler-Benz Management Board and the Chrysler Board have determined,
and the prospective DaimlerChrysler Management Board has indicated its
concurrence, that an appropriate dividend policy for DaimlerChrysler AG under
current business and economic conditions would result in DaimlerChrysler AG
paying approximately the same annual dividend amount currently paid to Chrysler
stockholders (after giving effect to the change in share ownership resulting
from the U.S. Exchange Ratio). The dividend would be paid annually after the
DaimlerChrysler AG annual stockholders meeting, subject to stockholder approval.
There can be no assurance as to the actual level of dividends that will be paid
in any year.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTIONS
THE CHRYSLER EXCHANGE. The obligation of Chrysler to consummate the
Chrysler Exchange is conditioned upon the receipt by Chrysler from Debevoise &
Plimpton of an opinion, based in part on a private letter ruling from the IRS
addressing certain issues under Section 367(a)(1) of the Code, substantially to
the effect that for United States federal income tax purposes, the Chrysler
Exchange should be treated as a non-recognition transfer of Chrysler Common
Stock by the holders thereof in exchange for DaimlerChrysler Ordinary Shares.
The Chrysler Exchange also is conditioned upon the receipt by Chrysler of the
IRS private letter ruling described in the preceding sentence (which private
letter ruling was received from the IRS on September 4, 1998). Assuming the
Chrysler Exchange is treated as a non-recognition transfer of Chrysler Common
Stock by the holders thereof in exchange for DaimlerChrysler Ordinary Shares, no
gain or loss will be recognized for United States federal income tax purposes by
U.S. Holders (as hereinafter defined) who exchange their Chrysler Common Stock
for DaimlerChrysler Ordinary Shares pursuant to the Chrysler Exchange.
THE DAIMLER-BENZ EXCHANGE OFFER. The obligation of Daimler-Benz to
consummate the Daimler-Benz Exchange Offer is conditioned upon the receipt by
Daimler-Benz from Skadden, Arps, Slate, Meagher & Flom LLP of an opinion
substantially to the effect that for United States federal income tax purposes,
the Daimler-Benz Exchange Offer should be treated as a non-recognition transfer
of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs by the holders thereof in
exchange for DaimlerChrysler Ordinary Shares. Assuming the Daimler-Benz Exchange
Offer is so treated, no gain or loss will be recognized for United States
federal income tax purposes by U.S. Holders who exchange their Daimler-Benz
Ordinary Shares or Daimler-Benz ADSs for DaimlerChrysler Ordinary Shares
pursuant to the Daimler-Benz Exchange Offer.
THE DAIMLER-BENZ MERGER. The United States federal income tax treatment of
the Daimler-Benz Merger depends on whether the Daimler-Benz Merger is integrated
with the Daimler-Benz Exchange Offer for United States federal income tax
purposes. If the Daimler-Benz Merger and the Daimler-Benz Exchange Offer are so
integrated, no gain or loss should be recognized for United States federal
income tax purposes by U.S. Holders who exchange their Daimler-Benz Ordinary
Shares or Daimler-Benz ADSs for DaimlerChrysler Ordinary Shares pursuant to the
Daimler-Benz Merger. If the Daimler-Benz Merger is not so integrated with the
Daimler-Benz Exchange Offer, a U.S. Holder who exchanges Daimler-Benz Ordinary
Shares or Daimler-Benz ADSs for DaimlerChrysler Ordinary Shares pursuant to the
Daimler-Benz Merger will recognize gain or loss for United States federal income
tax purposes equal to the difference between the aggregate fair market value of
the DaimlerChrysler Ordinary Shares received and the aggregate tax basis of the
Daimler-Benz Ordinary Shares or Daimler-Benz ADSs surrendered in exchange
therefor.
19
<PAGE>
Chrysler and Daimler-Benz stockholders are urged to consult their own tax
advisors with respect to the tax consequences to them of the Transactions and of
holding DaimlerChrysler Ordinary Shares. For a more detailed discussion of the
tax consequences of the Transactions and of holding DaimlerChrysler Ordinary
Shares, see "The Transactions--Certain Tax Consequences."
GOVERNMENTAL AND REGULATORY MATTERS
The consummation of the Transactions requires, among other things, the
expiration or termination of the applicable waiting periods under the HSR Act
(which periods were terminated as of July 30, 1998) and the approval or deemed
approval of the Transactions by the Commission of the European Union under
regulation (EEC) No. 4064/89 of the Council of the European Union (which
approval was granted on July 22, 1998). See "The Transactions--Regulatory
Approvals."
CERTAIN LITIGATION
On May 7 and 8, 1998, two purported class actions were filed in the Court of
Chancery of the State of Delaware, New Castle County, naming Chrysler and its
directors as defendants. The plaintiffs in such actions allege that Chrysler and
its directors breached their fiduciary duties to stockholders by failing to
obtain the best price for the shares of Chrysler Common Stock in the Chrysler
Merger. The complaints seek injunctive relief or, alternatively, monetary
damages. Chrysler intends to defend against such allegations vigorously, if and
when it is served with these actions. See "The Transactions--Certain
Litigation."
Recent Developments
CHRYSLER'S RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 1998
Chrysler's revenues for the first six months of 1998 were $33.8 billion
compared with $30.5 billion for the first six months of 1997. For the first six
months of 1998, Chrysler reported earnings before income taxes of $3,274
million, compared with $2,515 million for the first six months of 1997. Net
earnings for the first six months of 1998 were $2,055 million compared with
$1,512 million for the first six months of 1997.
Earnings for the first six months of 1998 compared to the first six months
of 1997 reflect an increase in vehicle shipments, improved product mix and
decreased warranty costs, partially offset by an increase in average sales
incentives and higher profit-based employee compensation. The increase in
average sales incentives per vehicle was attributable to an increasingly
competitive market environment. The decrease in warranty costs was primarily
related to several voluntary customer service actions and recalls initiated in
the first six months of 1997.
Earnings for the first six months of 1997 included an estimated unfavorable
impact of approximately $730 million ($438 million after taxes) related to a
29-day strike at an engine plant in Detroit, Michigan. The full-year estimated
impact of the strike was $590 million ($364 million after taxes) after taking
into account the effect of a partial recovery of production losses that occurred
during the remainder of 1997.
For the first six months of 1998, Chrysler Financial Corporation ("CFC")
reported earnings before income taxes of $338 million compared with $297 million
for the first six months of 1997. CFC's net earnings for the first six months of
1998 were $228 million compared with $196 million for the first six months of
1997. The increase in net earnings primarily reflects higher gains and servicing
fees from sales of finance receivables.
Chrysler's worldwide vehicle shipments in the first six months of 1998 were
1,675,089 units compared with 1,519,692 units in the first six months of 1997.
The increase in worldwide shipments primarily reflects the unfavorable impact of
a 29-day strike in 1997 and shipments of Chrysler's all-new Dodge Durango in
1998. Chrysler's vehicle shipments outside of the U.S., Canada and Mexico in the
first six months of 1998 were 107,691 units compared with 125,160 units in the
first six months of 1997. The decrease in shipments outside of the U.S., Canada
and Mexico is primarily caused by continued economic difficulties in Asian
markets. Chrysler's worldwide vehicle production in the first six months of 1998
was 1,613,751 units, an increase of 146,000 units or 10%, as compared with the
first six months of 1997.
DAIMLER-BENZ' RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 1998
Daimler-Benz revenues for the first six months of 1998 were DM 67.7 billion,
a 21.1% increase from the DM 55.9 billion of revenues achieved in the same
period of 1997. Revenues of Daimler-Benz' Passenger Car
20
<PAGE>
division rose 22.7% to DM 30.6 billion compared to DM 25.0 billion in the first
half of 1997, while revenues of Daimler-Benz' Commercial Vehicle division
increased 21.5% from DM 17.8 billion to DM 21.7 billion. Daimler-Benz' Aerospace
segment revenues in the first half of 1998 were DM 7.6 billion and exceeded
revenues for the comparable period in 1997 (DM 6.7 billion) by 13.2%. Revenues
in Daimler-Benz' Services segment improved by 21.7% and revenues of Directly
Managed Business segment decreased 6.0%. Excluding the 1997 revenues of the
semiconductor business of Daimler-Benz sold in the first half of 1998, revenues
of the Directly Managed Business segment increased 19.2%.
Cost of sales and selling, administrative and other expenses, in the
aggregate, decreased as a percentage of revenues from 93.8% to 92.1%.
In the first half of 1998 Daimler-Benz had an operating profit of DM 3.8
billion compared to DM 1.8 billion in the first six months of 1997. The business
segment contributions to Daimler-Benz' operating profit in the first half of
1998 were as follows: Passenger Car division, DM 2.1 billion (first half of
1997: DM 1.5 billion); Commercial Vehicle division, DM 0.9 billion (first half
of 1997: break even); Aerospace, DM 0.3 billion (first half of 1997: DM 0.1
billion); Services, DM 0.4 billion (first half of 1997: DM 0.2 billion); and the
Directly Managed Businesses, DM 0.2 billion (first half of 1997: DM 0.1
billion).
Net income of Daimler-Benz for the first six months of 1998 was DM 2.0
billion, compared to DM 1.0 billion for the same period in 1997.
Worldwide unit sales of the Daimler-Benz' Passenger Car division during the
time period from January 1 to June 30, 1998 were 427.7 thousand, an increase of
27.4% compared to the first six months of 1997 (335.8 thousand cars). Unit sales
for the Commercial Vehicle division rose 19.2% from 192.0 thousand units to
228.9 thousand units. In the first six months of 1998, the Passenger Car
division produced 433.1 thousand automobiles, 28.7% more than during the same
period of the previous year, while production of commercial vehicles increased
21.3% from 202.0 thousand to 245.0 thousand vehicles.
Incoming orders at Daimler-Benz Aerospace for the first six months of 1998
were DM 13.4 billion compared to DM 6.5 billion in the first six months of 1997.
SPECIAL DISTRIBUTION AND RIGHTS OFFERING
On June 15, 1998, Daimler-Benz paid a special distribution (the "Special
Distribution") of DM 20 (DM 19.63 after adjustment to reflect the approximately
20% discount to market value at which the Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs were sold in the Rights Offering (as hereinafter defined)) per
Daimler-Benz Ordinary Share/ADS (approximately DM 10.3 billion in the
aggregate). The source of funds for the Special Distribution was Daimler-Benz'
retained earnings, including DM 2.9 billion attributable to a German tax refund
resulting from a 20% differential in the tax rates to which Daimler-Benz is
entitled by reason of the Special Distribution (I.E., the difference between the
50% German tax rate (TARIFBELASTUNG) paid in prior years on retained corporate
earnings to be distributed and the current 30% tax rate (AUSSCHUTTUNGSBELASTUNG)
on distributed earnings).(1)
On June 8, 1998, Daimler-Benz issued to holders of Daimler-Benz Ordinary
Shares, Daimler-Benz ADSs and Daimler-Benz Notes rights ("Rights") to acquire up
to an aggregate of 52,379,675 newly issued Daimler-Benz Ordinary Shares. The
total offering (the "Rights Offering") consisted of 52,379,675 Daimler-Benz
Ordinary Shares (including Daimler-Benz Ordinary Shares represented by
Daimler-Benz ADSs issued in respect of Daimler-Benz Ordinary Shares).
Daimler-Benz raised approximately DM 7.5 billion ($4.2 billion), net of
expenses, from the Rights Offering. The purpose of the Rights Offering was to
raise the funds necessary to
- --------------------------
(1) The German system of taxation of domestic corporate earnings provides for
two different levels of taxation: 45% (50% prior to January 1, 1994) on
retained earnings (TARIFBELASTUNG) and 30% on earnings distributed to
stockholders (AUSSCHUTTUNGSBELASTUNG). When the earnings are distributed to
stockholders, the corporation's tax burden is reduced to 30%, resulting in a
tax refund to the corporation. The German tax law further provides that
corporate earnings for years prior to 1994 that were originally taxed at 50%
and that are not distributed prior to January 1, 1999 will be combined with
post-1993 earnings that were originally taxed at 45%. In this event, the
amount of the tax refund would decrease from 20% to 15%. In order for the
corporation to receive the same tax refund, a substantially larger
distribution would be required. A significant portion of Daimler-Benz'
undistributed earnings at December 31, 1997 related to earnings generated
prior to 1994 that were taxed at the 50% rate. If such earnings were not
distributed prior to the end of 1998, they would be combined with
Daimler-Benz' post-1993 earnings that were taxed at the 45% rate. In an
effort to maximize the tax refund, in early 1998, the Daimler-Benz
Management Board and the Daimler-Benz Supervisory Board jointly proposed the
Special Distribution at the Annual General Meeting.
21
<PAGE>
restore to Daimler-Benz' paid-in capital the amount of the reduction in retained
earnings created by the Special Distribution. The U.S. Exchange Ratio takes into
account the effects of the Rights Offering and the Special Distribution. See
"The Combination Agreement--The Chrysler Merger."
Introduction of the Single European Currency
On January 1, 1999, eleven member states of the European Union - Austria,
Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands,
Portugal and Spain - will introduce the Euro as a common legal currency among
those states for "paperless" transactions, pending the substitution of Euro
banknotes and coins for the national currencies of the participating member
states. As of that date, fixed exchange rates will be introduced, according to
which funds denominated in the currency of one participating member state will
be converted into the currency of another participating member state. It is
anticipated that by July 1, 2002, the Euro will be the official legal tender for
the participating member states and that the national currencies of those member
states will be withdrawn from circulation.
Daimler-Benz has committed to adopting the Euro as its corporate currency
throughout its operations beginning January 1, 1999. Recognizing its significant
manufacturing and transactional activity within Europe, Daimler-Benz believes
that it will realize significant long-term benefits from adoption of the Euro by
capitalizing on the greater transparency and market efficiency resulting from
the institution of a single European currency. Daimler-Benz believes that its
revenue and cost results with respect to products which it manufactures,
exports, markets and sells in the eleven participating member states will be
exchange rate neutral, and therefore the introduction of the Euro is likely to
enhance the overall operating results of the Daimler-Benz group to some degree.
As sales and production costs will both be calculated in Euros, it will also be
easier for Daimler-Benz to monitor its price competitiveness relative to its
competitors in the participating member states. In addition, the introduction of
the Euro should, over varying periods of time, produce the following effects:
BUSINESS AND COMPETITIVE IMPLICATIONS. Daimler-Benz is reviewing the
various ways in which the introduction of the Euro will affect its business
and competitive position. It is expected that the introduction of the Euro
will result in greater market efficiency and will foster a more competitive
economic environment within and among the participating member states. This
is largely a function of the fact that the pricing of products and services
will be more transparent through the use of a single common currency within
the participating member states. Daimler-Benz believes there will be
significant opportunities as a result of these potential developments of
which it plans to take advantage by, for example, enhancing its marketing
strategies and reducing production costs. Costs of funds may be relatively
lower due to increased competition among financial intermediaries resulting
in downward pressure on fees and other transaction costs due to the
elimination of, for example, currency exchange and hedging activities due to
the introduction of the Euro. There can be no assurance, however, whether
and to what extent the introduction of the Euro will affect the business,
financial condition and results of operations of DaimlerChrysler AG, or
whether it will be able to realize any strategic or operational benefits
from the introduction of the Euro.
SYSTEMS ANALYSIS. The introduction of the Euro will necessitate changes
in information technology and other systems in order to accommodate the use
of the Euro in corporate transactions and in financial reporting.
Daimler-Benz is also currently preparing all of its internal processes and
systems for the transition to the Euro and expects to spend approximately DM
200 million in completing this project. Daimler-Benz will continue to
monitor closely this modification process and to identify and address
additional information technology issues as they arise during this process.
CURRENCY AND FOREIGN EXCHANGE EXPOSURE. The introduction of fixed
exchange rates among the participating member states and the ultimate
transition to the Euro will eliminate the need for currency exchange
transactions in the national currencies of these states, resulting in
transaction cost savings to companies, such as Daimler-Benz, based in those
states. In addition, interest rate differences between the participating
member states will also disappear, eliminating the basis for hedging and
other derivative transactions with respect to such national currencies and
thereby creating further opportunities for
22
<PAGE>
transaction cost savings. The substitution of the Euro for existing national
currencies in the participating member states will also trigger the need to
modify many financial instruments, including derivatives. These instruments
will most likely be replaced by instruments denominated in Euros or subject
to exchange rates or interest rates based on the Euro. Financial innovation
with respect to these new Euro-based financial instruments could expand the
range of financial options for companies such as Daimler-Benz, and may
enable such companies to raise funds on more advantageous terms. Additional,
positive effects are expected to stem from the elimination of speculative
runs on member state currencies as a result of the introduction of fixed
exchange rates, as well as an expanded source of liquidity for the companies
resulting from the replacement of the separate markets of the individual
member states with a new "Euro-zone" comprised of the entire area of the
participating member states. To the extent that Daimler-Benz engages in
significant hedging and other investment transactions in the national
currencies of the participating member states, it expects that its foreign
exchange rate exposure will be significantly reduced once the Euro has been
introduced. Moreover, Daimler-Benz believes that DaimlerChrysler AG will
realize considerable annual savings due to reduced transaction and foreign
currency hedging costs. There can be no assurance, however, when and to what
degree DaimlerChrysler AG will ultimately realize these benefits from the
introduction of the Euro.
Daimler-Benz intends to continue exploring various strategic and operational
measures with respect to the introduction of the Euro with a view to enhancing
its overall financial position, operating results and market position. These
strategic and operational options will be shaped to some extent by both European
and national rules and regulations regarding the particular measures required to
complete the transition to the Euro as the legal currency of the participating
member states.
Risk Factors
In considering an investment in the DaimlerChrysler Ordinary Shares,
investors should carefully review and consider the following: the value of the
consideration to be received by holders of Chrysler Common Stock is subject to
fluctuation; consummation of the Transactions is conditioned upon the receipt of
certain governmental approvals; risks relating to the integration of the
companies; and risks relating to the valuation proceeding available under German
law (SPRUCHVERFAHREN). See "Risk Factors."
23
<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS
AS WELL AS THE OTHER INFORMATION CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS IN
EVALUATING AN INVESTMENT IN THE DAIMLERCHRYSLER ORDINARY SHARES.
Fixed Exchange Ratio
Because the U.S. Exchange Ratio is a fixed exchange ratio, determined
pursuant to the formula contained in the Combination Agreement, the number of
DaimlerChrysler Ordinary Shares that will be received by Chrysler stockholders
in the Chrysler Merger will not increase if there is a decline in the market
price of Daimler-Benz Ordinary Shares between the signing of the Combination
Agreement and the closing of the Chrysler Merger. On the other hand, the number
of DaimlerChrysler Ordinary Shares that will be received by Chrysler
stockholders in the Chrysler Merger will not be reduced if there is an increase
in the market price of Daimler-Benz Ordinary Shares between the signing of the
Combination Agreement and the closing of the Chrysler Merger. Daimler-Benz
Ordinary Shares will be exchanged for DaimlerChrysler Ordinary Shares on a
one-for-one basis (or a 1.005-for-1.000 basis, under the circumstances described
under "The Combination Agreement--The Daimler-Benz Exchange Offer").
Government Approvals
The consummation of the Transactions is conditioned upon, among other
things, (i) the termination or expiration of any applicable waiting periods
under the HSR Act (which were terminated as of July 30, 1998) and (ii) the
approval or deemed approval of the Commission of the European Union (which
approval was granted on July 22, 1998). In addition, the antitrust and
competition laws of certain other non-U.S. jurisdictions require (or in some
instances, provide for on a voluntary basis) notification of certain
transactions and the observance of pre-consummation waiting periods. Chrysler
and Daimler-Benz are seeking to obtain all required regulatory approvals prior
to the consummation of the Transactions; however, there can be no assurance that
all required government approvals will be obtained without conditions that may
require operating restrictions or divestitures of business operations. See "The
Transactions--Regulatory Approvals."
Uncertainties of Integrating Business Operations and Achieving Synergies
Although the managements of Chrysler and of Daimler-Benz expect the
Transactions will produce substantial synergies, the integration of two large
companies, incorporated in different countries, with geographically dispersed
operations, and with different business cultures and compensation structures,
presents significant management challenges. There can be no assurance that this
integration, and the synergies expected to result from that integration, will be
achieved as rapidly or to the extent currently anticipated.
Industry and Market Factors Affecting DaimlerChrysler AG
DaimlerChrysler AG will be affected by a variety of social, political and
economic factors, developments and conditions in the United States, Germany and
the European Union, and by economic and competitive conditions affecting the
industries and markets in which it operates. Examples of these factors,
developments and conditions include, among other things:
- The worldwide automotive industry is highly competitive in several
specific respects, including vehicle quality, pricing, development and
introduction time, reliability, safety, fuel economy, customer service and
financing terms. The influence of these factors may differ in various
geographical markets and often with respect to individual product
segments. Moreover, during cyclical economic downturns, overcapacity in
the industry is a particular risk. While DaimlerChrysler AG believes that
it will have the financial and human resources and products necessary to
compete successfully, there can be no assurance that it will be successful
in all geographic markets or in all product segments.
- The marketability of DaimlerChrysler AG's automotive products and the
profitability of its automotive businesses will to some degree depend on
the ability of DaimlerChrysler AG to comply on an ongoing basis with
government regulations applicable to its products. Regulations and
standards relating to emission controls, fuel economy, safety and recalls
are applicable to new motor vehicles, engines and
24
<PAGE>
equipment manufactured for sale in the United States, Canada, Europe and
elsewhere. Because a large portion of DaimlerChrysler AG's automotive
products will be sold in the United States, DaimlerChrysler AG will be
particularly affected by regulations and standards in the United States.
At the present time, these regulations and standards include the National
Traffic and Motor Vehicle Safety Act of 1966, the Clean Air Act, Titles I
and V of the Motor Vehicle Information and Cost Savings Act and the Noise
Control Act of 1972.
- Incoming orders in the civil aircraft industry are highly cyclical as a
result of the industry's dependency on the development of global air
traffic and the profitability and fleet renewal cycles of airlines
worldwide. The future success of Airbus Industrie, in which Daimler-Benz
Aerospace is the German participant, will depend on its ability to
continue to compete successfully in terms of price and product quality and
innovation with Boeing as the largest manufacturer of civil aircraft after
its merger with McDonnell Douglas.
- As a consequence of the global nature of the combined businesses of
Chrysler and Daimler-Benz, DaimlerChrysler AG will be exposed to market
risks from changes in interest rates and foreign currency exchange rates
which may adversely affect its results of operations and financial
condition. DaimlerChrysler AG's currency risk exposure will primarily
affect DaimlerChrysler AG's automotive businesses to the extent sales are
denominated in currencies other than those in which manufacturing costs
are incurred. Similarly, revenues generated by DaimlerChrysler AG's
Aerospace business through the sale of aircraft, aircraft engines and
certain other aerospace related products will continue to be mainly
denominated in dollars due to the requirements of the marketplace, but the
products are manufactured exclusively in Germany. DaimlerChrysler AG will
seek to minimize the risks from interest rate and foreign currency
exchange rate fluctuations through its regular operating and financing
activities and, when deemed appropriate, through the use of derivative
financial instruments. DaimlerChrysler AG does not expect to use financial
instruments for trading or other speculative purposes. DaimlerChrysler AG
expects that its foreign exchange rate exposure will be somewhat lower as
a result of the introduction of a single European currency in 1999.
- DaimlerChrysler AG, a German stock corporation with a large portion of its
operations and manufacturing activities located in Germany, will be
affected by all social, political and economic conditions in Germany.
Labor costs, corporate taxes and employee benefit expenses in Germany are
high and weekly working hours are shorter compared to many other European
Union member states, the United States and Japan.
- By virtue of its significant operations outside Germany and the United
States, DaimlerChrysler AG will be subject to the risks normally
associated with cross-border business transactions and activities,
principally those relating to delayed payments from customers in certain
countries or difficulties in the collection of receivables generally. In
addition, DaimlerChrysler AG will be exposed to the risk of changes in
social, political and economic conditions in the countries where it
engages in business, particularly in portions of Asia and Latin America
and in Eastern Europe. Political and economic instability could adversely
affect DaimlerChrysler AG's business activities and operations in these
regions. Unexpected changes in regulatory requirements, tariffs and other
trade barriers and price or exchange controls could limit operations and
make the repatriation of profits difficult. In addition, the uncertainty
of the legal environment could limit DaimlerChrysler AG's ability to
enforce effectively its rights in certain markets.
See the discussion under the heading "Operating Environment" in "Item 1.
Description of Business" and the discussion in "Item 9A. Quantitative and
Qualitative Disclosure About Market Risk" in Daimler-Benz' 1997 Annual Report on
Form 20-F, and the discussion under the heading "Automotive
Operations--Government Regulation" and the discussion in Part II of "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" in Chrysler's Annual Report on Form 10-K, both of which are
incorporated herein by reference.
25
<PAGE>
German Valuation Proceeding (SPRUCHVERFAHREN)
Under the German Transformation Act (UMWANDLUNGSGESETZ), any Remaining
Stockholder (which does not include any Daimler-Benz stockholder whose shares
are tendered in the Daimler-Benz Exchange Offer), who continues to hold
Daimler-Benz Ordinary Shares, including those formerly represented by
Daimler-Benz ADSs, may, within two months following effective publication of the
registration of the Daimler-Benz Merger, bring a court valuation proceeding
(SPRUCHVERFAHREN) seeking a determination that the Daimler-Benz Merger Exchange
Ratio is inadequate, even if such stockholder acquired Daimler-Benz Ordinary
Shares after the date of the Daimler-Benz Special Meeting or if such stockholder
voted in favor of the Daimler-Benz Merger. Should such an award be made, all
Remaining Stockholders, not just holders who voted against the Daimler-Benz
Merger or who brought such a proceeding, would be entitled to a supplementary
cash payment, without having to surrender the DaimlerChrysler securities
received by them in the Daimler-Benz Merger. Regardless of the outcome of the
proceeding, DaimlerChrysler AG would bear the cost of the proceeding unless the
court determined that it would be inequitable for DaimlerChrysler AG to do so.
Daimler-Benz stockholders who tender their Daimler-Benz securities in the
Daimler-Benz Exchange Offer will not be able to participate in a German
valuation proceeding (SPRUCHVERFAHREN). See "The Transactions--German Valuation
Proceeding (SPRUCHVERFAHREN)."
Uncertainty of Accounting Treatment of Transactions
As set forth in "Transactions--Anticipated Accounting Treatment," whether
the Transactions will be accounted for using the pooling-of-interests method of
accounting or the purchase method of accounting depends upon the satisfaction of
several conditions. Under the purchase method of accounting, DaimlerChrysler AG
would record as goodwill the difference between the cost of acquiring Chrysler
and the fair values of the tangible and identifiable intangible assets acquired
less the liabilities assumed. Accounting for the Transactions using the purchase
method of accounting would also result in higher asset values that would require
higher depreciation or amortization expenses which would reduce the net income
of DaimlerChrysler AG. On a pro forma basis, assuming the Transactions were
completed as of January 1, 1997, application of the purchase method of
accounting to the Transactions rather than the pooling-of-interests method of
accounting would have reduced DaimlerChrysler AG pro forma net income for the
year ended December 31, 1997 and the six months ended June 30, 1998 by DM 865
million ($480 million) and DM 428 million ($237 million), respectively, assuming
depreciation or amortization of the unallocated excess purchase price over 40
years. If the unallocated excess purchase price were depreciated or amortized
over a weighted average period of 30 years (rather than 40 years)
DaimlerChrysler AG pro forma net income for the year ended December 31, 1997 and
the six months ended June 30, 1998 would have been reduced by an additional DM
458 million ($254 million) and DM 229 million ($127 million), respectively, and
if the unallocated excess purchase price were depreciated or amortized over a
weighted average period of 25 years (rather than 40 years) DaimlerChrysler AG
pro forma net income for the year ended December 31, 1997 and the six months
ended June 30, 1998 would have been reduced by yet another DM 366 million ($203
million) and DM 183 million ($101 million), respectively. If the Transactions
are to be accounted for under the purchase method of accounting, the actual
allocation of the purchase price and the resulting effect on net income may
differ significantly from the pro forma amounts disclosed under "Unaudited Pro
Forma Combined Financial Information--Purchase Accounting."
Effect of Delay of Daimler-Benz Merger
If, following consummation of the Daimler-Benz Exchange Offer, the
Daimler-Benz Merger is delayed for any reason (including a delay by the
commercial register (HANDELSREGISTER) to register the Daimler-Benz Merger), the
holders of Daimler-Benz Ordinary Shares who have not participated in the
Daimler-Benz Exchange Offer will continue to hold Daimler-Benz securities. There
can be no assurance that, during the period of any such delay, an active trading
market will continue to exist for the Daimler-Benz Ordinary Shares or that such
securities will continue to be listed on the exchanges on which they are now
listed. In addition, it is anticipated that the level of dividends that will be
paid in the future on DaimlerChrysler Ordinary Shares will be higher than those
historically paid on Daimler-Benz Ordinary Shares. It is the current intention
of Daimler-Benz to
26
<PAGE>
cause the Daimler-Benz ADSs to be delisted from the NYSE and for the
Daimler-Benz Ordinary Shares and Daimler-Benz ADSs to be deregistered under the
Exchange Act.
Inclusion of DaimlerChrysler AG in the S&P 500 Index
Mutual funds that track stock indices, such as the S&P 500 stock index, do
so by holding shares in the companies represented in those indices. The S&P 500
tracks the performance of 500 stocks considered representative of the U.S.
economy generally. The S&P 500 includes shares of only a few companies
incorporated outside the U.S. Representatives of Daimler-Benz and Chrysler have
made a presentation to the index committee of the S&P 500 explaining the reasons
why they believe DaimlerChrysler Ordinary Shares should be included in the S&P
500 stock index. A decision on inclusion is not likely until October 1998. If
the DaimlerChrysler Ordinary Shares were not included in the S&P 500, mutual
funds currently holding a substantial number of shares of Chrysler Common Stock
would be required to sell such shares (or the DaimlerChrysler Ordinary Shares
they receive in the Chrysler Merger). Such sales could adversely affect the
market price for DaimlerChrysler Ordinary Shares.
Year 2000
Each of Daimler-Benz and Chrysler has conducted an evaluation of the actions
necessary in order to ensure that its computer systems (and, therefore, those of
DaimlerChrysler AG) will be able to function without disruption with respect to
the application of dating systems in the Year 2000. As a result of these
evaluations, each of Daimler-Benz and Chrysler is engaged in the process of
upgrading and replacing certain of its information and other computer systems so
as to be able to operate without disruption due to Year 2000 issues. Chrysler's
remedial actions are scheduled to be completed during the second quarter of 1999
and, based upon information currently available, Chrysler does not anticipate
that the costs of its remedial actions will be material to DaimlerChrysler AG's
results of operations or financial condition. Daimler-Benz' remedial actions are
scheduled to be completed during the second quarter of 1999 and, based upon
information currently available, Daimler-Benz does not anticipate that the costs
of its remedial actions will be material to DaimlerChrysler AG's results of
operations or financial condition. However, there can be no assurance that the
remedial actions being implemented by Daimler-Benz and Chrysler will be able to
be completed by the time necessary to avoid dating systems problems or that the
cost of doing so will not be material. In addition, disruptions with respect to
the computer systems of vendors or customers, which systems are outside the
control of Daimler-Benz and Chrysler, could impair the ability of Daimler-Benz
and Chrysler (and, therefore, DaimlerChrysler AG) to obtain necessary materials
or products or to sell to or service their customers. Disruptions of
DaimlerChrysler AG's computer systems, or the computer systems of
DaimlerChrysler AG's vendors or customers, as well as the cost of avoiding such
disruption, could have a material adverse effect upon DaimlerChrysler AG's
financial condition and results of operations.
27
<PAGE>
MARKET PRICES
The principal trading market for Chrysler Common Stock is the NYSE, and
Chrysler's shares trade under the symbol "C." The Chrysler Common Stock is also
traded on the Philadelphia, Chicago and Pacific stock exchanges, and the stock
exchanges of Frankfurt, Berlin, Munich, Montreal, Toronto and London, and
options on Chrysler Common Stock are traded on the Chicago Board of Options
Exchange. The principal trading market for the Daimler-Benz Ordinary Shares is
the FSE. The Daimler-Benz Ordinary Shares are also traded on the other German
stock exchanges in Berlin, Bremen, Dusseldorf, Hamburg, Hannover, Munchen and
Stuttgart, on the stock exchanges of London, Paris, Tokyo and Vienna and on the
Swiss Stock Exchange. Options on Daimler-Benz Ordinary Shares are traded on the
German options exchange (DEUTSCHE TERMINBORSE) and on the Chicago Board of
Options Exchange. All Daimler-Benz Ordinary Shares have been issued in bearer
form. As of December 31, 1997, Daimler-Benz had approximately 550,000
stockholders. Daimler-Benz believes that approximately 10% of its capital stock
is held in the United States. The Daimler-Benz ADSs are listed on the NYSE and
trade under the symbol "DAI." The DaimlerChrysler Ordinary Shares are expected
to be approved for listing on the FSE. In addition, the DaimlerChrysler Ordinary
Shares have been approved for listing, subject to official notice of issuance,
on the NYSE and will trade on that exchange under the symbol "DCX." It is
expected that DaimlerChrysler Ordinary Shares will also be traded on the
Chicago, Pacific, Philadelphia, London, Paris, Montreal, Toronto, Swiss, Vienna
and Tokyo stock exchanges as well as on all the German stock exchanges.
Trading on the New York Stock Exchange
The following table sets forth, for the calendar periods indicated, the high
and low sales prices per share of Chrysler Common Stock (giving effect to a
two-for-one stock split effected on July 15, 1996) and the high and low sales
prices per Daimler-Benz ADS (giving effect to the dilution caused by the
discount to market at which the Daimler-Benz Ordinary Shares were sold in the
Rights Offering) as reported on the NYSE Composite Tape for the periods
indicated.
<TABLE>
<CAPTION>
Chrysler
Common Stock Daimler-Benz ADSs(1)
------------------------- --------------------------
High Low High Low
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
1996
First Quarter........................... $31 13/16 $25 11/16 $55 $ 49 3/4
Second Quarter.......................... 35 29 9/16 54 5/8 52 1/8
Third Quarter........................... 32 1/16 26 1/4 55 1/8 50 7/8
Fourth Quarter.......................... 36 3/8 28 1/4 67 1/2 53 3/8
1997
First Quarter........................... $36 1/4 $29 $78 7/8 $ 66
Second Quarter.......................... 33 7/16 28 1/8 81 5/8 71 7/8
Third Quarter........................... 38 9/16 32 3/8 85 1/2 71 1/16
Fourth Quarter.......................... 38 1/4 32 83 1/8 61 7/8
1998
First Quarter........................... $44 3/16 $31 1/4 $94 1/16 $ 65
Second Quarter(2)....................... 57 9/16 38 3/8 115 1/8 91 1/4
Third Quarter (through September 15,
1998).................................. 61 44 1/2 105 85
</TABLE>
- ------------------------
(1) Figures for 1996, 1997 and the first and second quarter of 1998 have been
adjusted to reflect the approximately 20% discount to market value at which
the Daimler-Benz Ordinary Shares and Daimler-Benz ADSs were sold in the
Rights Offering. See "Summary-- Recent Developments--Special Distribution
and Rights Offering."
(2) Holders of Daimler-Benz Ordinary Shares on May 27, 1998, the date of the
Annual General Meeting, became entitled to receive the Special Distribution
of DM 20 per share as of that date, and subsequent sales of shares were "ex"
such right. On June 12, 1998, and on June 15, 1998, the Daimler-Benz
Ordinary Shares and the Daimler-Benz ADSs, respectively, began to trade "ex"
the Rights which were distributed to holders of Daimler-Benz Ordinary Shares
and Daimler-Benz ADSs in connection with the Rights Offering. Chrysler
stockholders and Daimler-Benz stockholders are urged to obtain current
quotations for shares of Chrysler Common Stock, Daimler-Benz Ordinary Shares
and Daimler-Benz ADSs.
28
<PAGE>
The following table sets forth the closing price per share of Chrysler
Common Stock and per Daimler-Benz ADS as reported on the NYSE Composite Tape and
the equivalent price per share of Chrysler Common Stock (determined in
accordance with the U.S. Exchange Ratio Formula computed as if the Chrysler
Effective Time had occurred on such date) as of (i) May 5, 1998 (the last full
trading day before public disclosure of the proposed Transactions); (ii) certain
interim dates of significance in relation to dividends; and (iii) September 15,
1998 (the latest practicable trading day prior to the effective date of
Post-Effective Amendment No. 1 to the Registration Statement of which this
Offering Circular--Prospectus forms a part):
<TABLE>
<CAPTION>
Equivalent Price
Chrysler Daimler-Benz of Chrysler
Common Stock ADSs(1) Common Stock(2)
-------------- ------------ ----------------
<S> <C> <C> <C>
May 5, 1998.................................. $ 41.4375 $ 102.0625 $ 55.8486
May 27, 1998................................. 54.7500 95.9375 58.6850
June 12, 1998................................ 53.7500 96.8750 59.2584
June 15, 1998................................ 51.7500 92.0625 57.4010
September 15, 1998........................... 52.5000 91.6875 57.1672
</TABLE>
- ------------------------
(1) Holders of Daimler-Benz Ordinary Shares on May 27, 1998, the date of the
Annual General Meeting, became entitled to receive the Special Distribution
of DM 20 per share as of that date, and subsequent sales of shares were "ex"
such right. In addition, on June 12, 1998, and on June 15, 1998, the
Daimler-Benz Ordinary Shares and the Daimler-Benz ADSs, respectively, began
to trade "ex" the Rights which were distributed to holders of Daimler-Benz
Ordinary Shares and Daimler-Benz ADSs in connection with the Rights
Offering. Chrysler stockholders and Daimler-Benz stockholders are urged to
obtain current quotations for shares of Chrysler Common Stock, Daimler-Benz
Ordinary Shares and Daimler-Benz ADSs.
(2) The U.S. Exchange Ratio Formula included in the Combination Agreement
established a fixed share-for-share exchange ratio as of the May 7 date of
the Combination Agreement, with additional agreed upon arithmetic
adjustments to the exchange ratio that would take into account the
anticipated effects of Chrysler's first quarter dividend and Daimler-Benz'
regular annual dividend, Daimler-Benz' Special Distribution and
Daimler-Benz' Rights Offering. The ratio under the formula before making any
of the prescribed adjustments was 0.5472, and on such date no event had
occurred for which the U.S. Exchange Ratio Formula provides any adjustment.
Accordingly, the prices shown in this column at May 5, 1998 utilizes an
exchange ratio of 0.5472. On May 27, 1998, holders of Daimler-Benz Ordinary
Shares became entitled to receive the regular annual dividend of DM 1.60 and
the Special Distribution, which resulted in an adjustment to the exchange
ratio pursuant to the U.S. Exchange Ratio Formula. Accordingly, the prices
shown in this column at May 27, 1998 and at June 12, 1998 utilize an
exchange ratio of 0.6117. On June 15, 1998, all events for which adjustments
are prescribed had occurred and their effect had been computed under the
U.S. Exchange Ratio Formula. Such adjusted exchange ratio was .6235, which
has been used to compute the price in this column on and after such date.
See "The Combination Agreement--The Chrysler Merger" for a description of
the U.S. Exchange Ratio Formula.
------------------------------
Stockholders are urged to obtain current market quotations for the Chrysler
Common Stock and the Daimler-Benz ADSs.
The DaimlerChrysler Ordinary Shares have not previously been publicly
traded. Following the consummation of the Daimler-Benz Exchange Offer and the
Chrysler Merger, (i) it is intended that the DaimlerChrysler Ordinary Shares
will be listed and traded on the same exchanges as the Daimler-Benz Ordinary
Shares and the Daimler-Benz ADSs and (ii) it is expected that the Daimler-Benz
Ordinary Shares and the Daimler-Benz ADSs will cease to be so listed, and there
will be no active trading market therefor. Depending on the number of
Daimler-Benz Ordinary Shares remaining outstanding following the consummation of
the Daimler-Benz Exchange Offer and the timing of the consummation of the
Daimler-Benz Merger, there may be a period of time following the consummation of
the Daimler-Benz Exchange Offer during which the Daimler-Benz Ordinary Shares
may continue to be publicly traded. See "Risk Factors--Effect of Delay of
Daimler-Benz Merger."
Fluctuations in the exchange rate between the dollar and the mark will
affect the dollar equivalent of the mark price of DaimlerChrysler Ordinary
Shares traded on the German stock exchanges and, as a result, are likely to
affect the market price of the DaimlerChrysler Ordinary Shares on the NYSE. Such
fluctuations will also affect the dollar amounts received by holders of
DaimlerChrysler Ordinary Shares
29
<PAGE>
on the conversion by the U.S. Transfer Agent into dollars of cash dividends paid
in marks on the DaimlerChrysler Ordinary Shares.
Mutual funds that track stock indices, such as the S&P 500 stock index, do
so by holding shares in the companies represented in those indices. The S&P 500
tracks the performance of 500 stocks considered representative of the U.S.
economy generally. The S&P 500 includes shares of only a few companies
incorporated outside the U.S. Representatives of Daimler-Benz and Chrysler have
made a presentation to the index committee of the S&P 500 explaining the reasons
why they believe DaimlerChrysler Ordinary Shares should be included in the S&P
500 stock index. A decision on inclusion is not likely until October 1998. If
the DaimlerChrysler Ordinary Shares were not included in the S&P 500, mutual
funds currently holding a substantial number of shares of Chrysler Common Stock
would be required to sell such shares (or the DaimlerChrysler Ordinary Shares
they receive in the Chrysler Merger). Such sales could adversely affect the
market price for DaimlerChrysler Ordinary Shares.
30
<PAGE>
Trading on the Frankfurt Stock Exchange
The FSE is the most significant of the eight German stock exchanges and
accounted for approximately 80% of the turnover in exchange-traded shares in
Germany in 1997. As of December 31, 1997, equity securities traded on the FSE
included the shares of 1,461 companies, 1,011 of which were non-German.
Trading on the floor of the FSE commences each business day at 8:30 a.m. and
continues until 5:00 p.m. Central European Time ("CET"). Markets in listed
securities are generally of the auction type, but listed securities also change
hands in inter-bank dealer markets both on and off the stock exchange. Price
formation is by open outcry, as determined by state appointed specialists
(AMTLICHE KURSMAKLER) who are themselves exchange members, but who do not, as a
rule, deal with the public. Prices for active stocks, including those of larger
companies, are quoted continuously during stock exchange hours. For all other
stocks, a fixed price is determined by auction around mid-session of each
trading day. Transactions settle on the second business day following the day of
trade execution.
The FSE publishes a daily official list which includes the volume of
recorded transactions in each listed stock, together with the prices of the
highest and lowest recorded trades of the day. The list reflects price and
volume information for trades completed by members on the floor during the day
as well as for inter-dealer trades completed off the floor.
The Daimler-Benz Ordinary Shares are, and the DaimlerChrysler Ordinary
Shares are expected to be, traded on XETRA-Registered Trademark- (Exchange
Electronic Trading), an integrated electronic exchange system introduced by
Deutsche Borse AG in November 1997. XETRA-Registered Trademark- is available
daily from 8:30 a.m. to 5:00 p.m. CET to brokers and banks which are members of
a German stock exchange. Securities traded by this system, which replaces IBIS
(INTEGRIERTES BORSENHANDELS- UND INFORMATIONS-SYSTEM) with respect to all equity
securities, include the thirty stocks of the Deutsche Aktienindex, the leading
index of trading on the FSE ("DAX Index"), and the other 70 stocks included in
the DAX 100 index. XETRA-Registered Trademark- is integrated into the FSE and is
subject to its rules and regulations.
Trading activities on the German stock exchanges are monitored by the
Federal Supervisory Authority for Securities Trading (BUNDESAUFSICHTSAMT FUR DEN
WERTPAPIERHANDEL). Following an amendment in 1995 of the German banks' standard
terms and conditions for securities transactions, all orders from customers to
buy or sell listed securities must be executed on a stock exchange unless a
customer gives specific instructions to the contrary.
31
<PAGE>
The table below sets forth, for the period indicated, the high and low
closing sales price for the Daimler-Benz Ordinary Shares on the FSE (giving
effect to the dilution caused by the discount to market at which the
Daimler-Benz Ordinary Shares were sold in the Rights Offering), as reported by
the FSE, together with the highs and lows of the DAX Index.
<TABLE>
<CAPTION>
Price Per
Daimler-Benz
Ordinary Share(1) DAX Index(2)
-------------------- ----------------------
High Low High Low
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
(DM) (DM)
1996
First Quarter......................................... 81.04 71.35 2,525.42 2,248.86
Second Quarter........................................ 83.59 77.51 2,573.69 2,457.49
Third Quarter......................................... 82.90 75.84 2,666.55 2,447.80
Fourth Quarter........................................ 104.00 81.28 2,909.91 2,655.73
1997
First Quarter......................................... 130.88 102.62 3,460.59 2,848.77
Second Quarter........................................ 139.32 120.43 3,805.29 3,215.24
Third Quarter......................................... 156.29 125.09 4,438.93 3,819.85
Fourth Quarter........................................ 142.85 107.68 4,347.24 3,567.22
1998
First Quarter......................................... 171.00 116.65 5,102.35 4,087.28
Second Quarter(3)..................................... 202.05 164.20 5,915.13 5,018.67
Third Quarter (through September 15, 1998)............ 184.90 153.80 6,171.43 4,737.15
</TABLE>
- ------------------------------
(1) Effective July 1, 1996, the nominal value of the Daimler-Benz Ordinary
Shares was reduced to DM 5 per share from the previous level of DM 50 per
share. This reduction had the effect of a 10 for 1 stock split, which in
turn reduced the price at which one Daimler-Benz Ordinary Share trades to
1/10 of the price at which it previously traded. The figures for the first
and second quarter of 1996 have been restated to reflect this change. In
addition, figures for 1996, 1997 and the first and second quarter of 1998
have been adjusted to reflect the approximately 20% discount to market value
at which the Daimler-Benz Ordinary Shares and Daimler-Benz ADSs were sold in
the Rights Offering. See "Summary--Recent Developments--Special Distribution
and Rights Offering" and Note 3 below.
(2) The DAX Index is a continuously updated, capital-weighted performance
index of 30 German blue chip companies. Daimler-Benz represented
approximately 6.2% of the DAX Index as of December 31, 1997. In principle,
the shares included in the DAX Index were selected on the basis of their
stock exchange turnover and their market capitalization. Adjustments to the
DAX Index are made for capital changes, subscription rights and dividends.
(3) Holders of Daimler-Benz Ordinary Shares on May 27, 1998, the date of the
Annual General Meeting, became entitled to receive the Special Distribution
of DM 20 per share as of that date, and subsequent sales of shares were "ex"
such right. In addition, on June 12, 1998, the Daimler-Benz Ordinary Shares
began to trade "ex" the Rights which were distributed to holders of
Daimler-Benz Ordinary Shares in connection with the Rights Offering.
Chrysler stockholders and Daimler-Benz stockholders are urged to obtain
current quotations for shares of Chrysler Common Stock and Daimler-Benz
Ordinary Shares.
------------------------------
32
<PAGE>
SELECTED HISTORICAL AND PRO FORMA COMBINED FINANCIAL DATA
Selected Historical Financial Data of Daimler-Benz
The selected unaudited consolidated financial data set forth below as of
June 30, 1998 and for the six-month periods ended June 30, 1998 and 1997 should
be read in conjunction with, and are qualified in their entirety by reference
to, the unaudited consolidated financial statements as of June 30, 1998 and for
the six-month periods ended June 30, 1998 and 1997 included in Daimler-Benz'
Report of Foreign Private Issuer on Form 6-K for the month of July 1998 which is
incorporated by reference in this Proxy Statement/Prospectus. The selected
consolidated financial data set forth below as of December 31, 1997 and 1996 and
for each of the years in the three-year period ended December 31, 1997 should be
read in conjunction with, and are qualified in their entirety by reference to,
the consolidated financial statements as of December 31, 1997 and 1996 and for
each of the years in the three-year period ended December 31, 1997 (the
"Daimler-Benz Consolidated Financial Statements") included in Daimler-Benz'
Annual Report on Form 20-F for the fiscal year ended December 31, 1997 which is
incorporated by reference in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
Six Months Ended June 30,
----------------------------------------
<S> <C> <C> <C>
1998(1) 1998 1997
---------- ------------- -------------
<CAPTION>
(in millions, except for Daimler-Benz
Ordinary Share and ADS amounts)
<S> <C> <C> <C>
U.S. GAAP
Income Statement Data:
Revenues.............................................................. $ 37,550 DM67,714 DM55,892
Income before financial income and income taxes....................... 1,868 3,368 1,322
Net income............................................................ 1,115 2,010 992
Basic earnings per Ordinary Share/ADS(2,3)............................ 2.11 3.81 1.89
Diluted earnings per Ordinary Share/ADS(3,4).......................... 2.04 3.68 1.88
Balance Sheet Data (end of period):
Inventories, net of advance payments.................................. 8,839 15,940
Total assets.......................................................... 78,741 141,994
Total borrowings...................................................... 23,048 41,563
Stockholders' equity.................................................. 18,725 33,767
</TABLE>
- ------------------------
(1) Amounts in this column are unaudited and have been translated solely for
the convenience of the reader at an exchange rate of DM 1.8033 = $1.00, the
Noon Buying Rate on June 30, 1998.
(2) Basic earnings per Daimler-Benz Ordinary Share/ADS are calculated by
dividing net income by the weighted average of Daimler-Benz Ordinary
Shares/ADSs outstanding, without regard to options and conversion rights.
Net income represents total income generated by Daimler-Benz after minority
interest.
(3) Basic and diluted earnings per Daimler-Benz Ordinary Share/ADS information
have been adjusted to reflect the approximately 20% discount to market value
at which the Daimler-Benz Ordinary Shares and Daimler-Benz ADSs were sold in
the Rights Offering. See "Summary--Recent Developments--Special Distribution
and Rights Offering."
(4) Earnings per Daimler-Benz Ordinary Share/ADS on a diluted basis reflects
the potential dilution that would occur if all dilutive options to acquire
and rights to convert securities convertible into Daimler-Benz Ordinary
Shares were exercised.
------------------------------
33
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1997(1) 1997 1996 1995 1994 1993
---------- ------------- ------------- ------------- ------------- ------------
<CAPTION>
(in millions, except for Daimler-Benz Ordinary Share and ADS amounts)
<S> <C> <C> <C> <C> <C> <C>
U.S. GAAP
Income Statement Data:(2)
Revenues......................... $ 68,791 DM 124,050 DM 106,339 DM 102,985 DM DM
Income (loss) before interest and
taxes.......................... 2,014 3,631 1,465 (8,162)
Net income (loss)................ 4,460 8,042(3) 2,762 (5,729) 1,052(4) (1,839)
Basic earnings (loss) per
Ordinary Share/ADS(5,)(6)...... 8.48 15.30(7) 5.27 (10.96) 2.11(4) (3.88)
Diluted earnings (loss) per
Ordinary Share/ADS(6,)(8)...... 8.32 15.01(7) 5.25 (10.96) 2.11(4) (3.88)
Regular annual dividends per
Ordinary Share/ADS(6).......... 0.87 1.57 1.08 -- 1.08 0.78
Special Distribution............. 10.89 19.63(9) -- -- -- --
Balance Sheet Data (end of
period):(10)
Inventories, net of advance
payments....................... 7,980 14,390 13,602 14,329
Total assets..................... 76,027 137,099 112,461 102,098 102,635 99,029
Short-term borrowings............ 12,248 22,086 16,011 13,614
Long-term borrowings............. 9,546 17,216 12,839 8,671
Stockholders' equity............. 19,456 35,085 26,393 22,860 29,435 26,281
GERMAN GAAP
Income Statement Data:
Revenues......................... 103,549 104,075 98,534
Results from ordinary business
activities..................... (835) 2,077 (1,473)
Extraordinary results(11)........ (3,884) -- 2,603
Net income (loss)................ (5,734) 895 615
Earnings (loss) per Ordinary
Share/ADS(5,)(6)............... (10.85) 2.12 1.27
Balance Sheet Data (end of
period):
Inventories, net advance of
payments....................... 15,764 14,976 16,945
Total assets..................... 91,540 93,536 90,926
Short-term borrowings............ 16,410 12,524 11,093
Long-term borrowings............. 8,578 10,667 12,174
Stockholders' equity............. 13,842 20,251 18,145
</TABLE>
- ------------------------
(1) Amounts in this column are unaudited and have been translated solely for
the convenience of the reader at an exchange rate of DM 1.8033 = $1.00, the
Noon Buying Rate on June 30, 1998.
(2) Net income (loss) includes other income of DM 1,620, DM 1,402, and DM
1,742, for the years ended December 31, 1997, 1996 and 1995, respectively.
Other income includes gains on sales of property, plant and equipment (DM
186, DM 254, and DM 148 in 1997, 1996, and 1995, respectively), gains on
sales of companies (DM 228 and DM 233, in 1997 and 1996, respectively)
rental income (DM 132, DM 68, and DM 72 in 1997, 1996, and 1995,
respectively), foreign currency exchange gains (DM 69, DM 5, and DM 69 in
1997, 1996 and 1995, respectively), and reductions in certain accruals (DM
302, DM 222, and DM 295 in 1997, 1996, and 1995, respectively).
(3) The amount shown for 1997 includes DM 4,870 ($2,701) of special
non-recurring tax benefits. These tax benefits resulted from the Special
Distribution and the reversal of the remaining valuation allowances
previously established on deferred tax assets on Daimler-Benz books at
year-end which resulted primarily from net operating loss carryforwards of
Daimler-Benz' German group companies
34
<PAGE>
that file a combined tax return (ORGANSCHAFT). The Special Distribution tax
benefit was DM 2,908 and the valuation allowance reversal tax benefit was DM
1,962.
(4) Net income in 1994 includes DM 178 of income for the cumulative effect of
accounting changes. Basic and diluted earnings per Daimler-Benz Ordinary
Share/ADS in 1994 increased by DM 0.36 as a result of such changes.
(5) Basic earnings (loss) per Daimler-Benz Ordinary Share/ADS are calculated
by dividing net income by the weighted average of Daimler-Benz Ordinary
Shares/ADSs outstanding, without regard to options and conversion rights.
Net income represents total income generated by Daimler-Benz after minority
interest. See Note 25 to the Daimler-Benz Consolidated Financial Statements.
(6) Effective as of July 1, 1996, the nominal value of the Daimler-Benz
Ordinary Shares was reduced to DM 5 per share from the previous level of DM
50 per share. This reduction had the effect of a 10 for 1 stock split, which
in turn reduced the price at which one Daimler-Benz Ordinary Share trades to
1/10 of the price at which it previously traded. As a result, earnings
(loss) and dividends per Daimler-Benz Ordinary Share/ADS are calculated on
the basis of a nominal value of DM 5 per Daimler-Benz Ordinary Share.
Earnings (loss) and dividends per Daimler-Benz Ordinary Share/ADS for 1995
and prior years have been recalculated to reflect this change in nominal
value. In connection with the 10 for 1 stock split, Daimler-Benz also
changed the ratio of Daimler-Benz Ordinary Shares to Daimler-Benz ADSs from
its previous 1 to 10 ratio to a 1 to 1 ratio. Accordingly, per Daimler-Benz
ADS amounts are calculated on the basis of one Daimler-Benz ADS for one
Daimler-Benz Ordinary Share. In addition, earnings (loss) per Daimler-Benz
Ordinary Share/ ADS and regular annual dividends per Daimler-Benz Ordinary
Share/ADS and Special Distribution information have been adjusted to reflect
the approximately 20% discount to market value at which the Daimler-Benz
Ordinary Shares and Daimler-Benz ADSs were sold in the Rights Offering. See
"Summary--Recent Developments--Special Distribution and Rights Offering."
(7) The 1997 amounts of basic and diluted earnings per Daimler-Benz Ordinary
Share/ADS include special non-recurring tax benefits. Excluding these
benefits, the basic and diluted earnings per Daimler-Benz Ordinary Share/ADS
in 1997 were DM 6.04 and DM 5.96, respectively.
(8) Earnings per Daimler-Benz Ordinary Share/ADS on a diluted basis reflects
the potential dilution that would occur if all options to acquire and rights
to convert securities convertible into Daimler-Benz Ordinary Shares were
exercised. See Note 25 to the Daimler-Benz Consolidated Financial
Statements.
(9) See "Summary--Recent Developments--Special Distribution and Rights
Offering."
(10) At December 31, 1997 and 1996, current assets (due within one year) were
DM 66,902 and DM 53,332, respectively, and current liabilities (due within
one year) were DM 53,387 and DM 43,029, respectively.
(11) Extraordinary results under German GAAP represent: in 1995, expenses
incurred in connection with the decision to discontinue financial support
for NV Koninklijke Nederlandse Vliegtuigenfabriek Fokker, write-downs and
provisions for certain businesses of AEG Daimler-Benz Industrie held for
sale and closure of AEG Daimler-Benz Industrie's headquarters; and, in 1993,
accounting changes related to provisions, reserves and valuation
adjustments. Under U.S. GAAP the extraordinary results in 1995 would be
included in results from ordinary business activities, and the 1993
extraordinary results would not have arisen.
------------------------------
35
<PAGE>
Selected Historical Financial Data of Chrysler
The unaudited selected consolidated financial data set forth below as of
June 30, 1998 and for the six-month periods ended June 30, 1998 and 1997 should
be read in conjunction with, and are qualified in their entirety by reference
to, the unaudited consolidated financial statements as of June 30, 1998 and for
the six-month periods ended June 30, 1998 and 1997 included in Chrysler's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 which is
incorporated by reference in this Proxy Statement/Prospectus. The selected
consolidated financial data set forth below as of December 31, 1997 and 1996 and
for each of the years in the three-year period ended December 31, 1997 should be
read in conjunction with, and are qualified in their entirety by reference to,
the consolidated financial statements as of December 31, 1997 and 1996 and for
each of the years in the three-year period ended December 31, 1997 included in
Chrysler's Annual Report on Form 10-K for the fiscal year ended December 31,
1997 which is incorporated by reference in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
-------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 1997(1) 1997(2) 1996(3) 1995(4) 1994(5) 1993(6)
--------- --------- --------- --------- --------- --------- ---------
<CAPTION>
(Dollars and Shares in Millions Except Per Common Share Data)
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenues.................... $ 33,801 $ 30,504 $ 61,147 $ 61,397 $ 53,195 $ 52,235 $ 43,600
Earnings before extraordinary item
and cumulative effect of changes
in accounting principles........ 2,055 1,512 2,805 3,720 2,121 3,713 2,415
Basic earnings per common
share*...................... 3.18 2.20 4.15 5.09 2.81 5.13 3.38
Net earnings (loss)............... 2,055 1,512 2,805 3,529 2,025 3,713 (2,551)
Basic earnings (loss) per
common share*............... 3.18 2.20 4.15 4.83 2.68 5.13 (3.81)
Diluted earnings (loss) per
common share*............... 3.12 2.17 4.09 4.74 2.56 4.55 (3.19)
Dividends declared per common
share*.......................... 0.80 0.80 1.60 1.40 1.00 0.55 0.33
Total assets...................... 67,801 61,028 60,418 56,184 53,756 49,539 43,679
Total debt........................ 19,056 16,808 15,485 13,396 14,193 13,106 11,451
Convertible preferred stock (in
shares)......................... 0.01 0.02 0.02 0.04 0.14 1.72 1.72
</TABLE>
- ------------------------
* Per share data have been adjusted to reflect the two-for-one stock split in
1996. In addition, per share data have been restated to reflect the adoption
of Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
per Share," which replaces the presentation of primary earnings per share
("EPS") and fully diluted EPS with a presentation of basic EPS and diluted
EPS, respectively.
(1) Earnings for the first six months of 1997 include an estimated unfavorable
impact of $730 million ($438 million after taxes) related to a 29-day strike
at an engine plant in Detroit, Michigan. The full-year estimated impact of
the strike was $590 million ($364 million after taxes) after taking into
account the effect of a partial recovery of production losses that occurred
during the remainder of 1997.
(2) Earnings for the year ended December 31, 1997, reflect the unfavorable
impact of a 29-day strike which reduced earnings by an estimated $590
million ($364 million after taxes) after considering partial recovery of
production losses from the strike, and a $41 million charge ($25 million
after taxes) for costs related to the decision to discontinue Chrysler's
Eagle brand at the end of the 1998 model year. The effect of these
unfavorable items was partially offset by the recognition of $97 million
($60 million after taxes) of previously deferred profits from the sale of
vehicles from Chrysler to Dollar Thrifty Automotive Group, Inc. ("DTAG,"
formerly Pentastar Transportation Group, Inc.) as a result of the December
1997 initial public offering of Chrysler's common stock interest in DTAG.
(3) Earnings for the year ended December 31, 1996, include a charge of $97
million ($61 million after taxes) for costs associated with a voluntary
early retirement program for certain salaried employees, a charge of $77
million ($51 million after taxes) related to a write-down of Pentastar
Electronics, Inc., a charge of $65 million ($100 million after taxes)
related to a write-down of Thrifty Rent-A-Car
36
<PAGE>
System, Inc., a charge of $50 million ($31 million after taxes) for lump-sum
retiree pension costs related to the 1996 UAW collective bargaining
agreement, and a gain of $101 million ($87 million after taxes) from the
sale of Electrospace Systems, Inc. and Chrysler Technologies Airborne
Systems, Inc.
(4) Earnings for the year ended December 31, 1995, were reduced by a $263
million charge ($162 million after taxes) for costs associated with
production changes at Chrysler's Newark assembly plant and a $115 million
charge ($71 million after taxes) for a voluntary minivan owner service
action. Net earnings in 1995 also include an after-tax charge of $96 million
for the cumulative effect of a change in accounting principle related to the
consensus reached on Emerging Issues Task Force ("EITF") Issue 95-1,
"Revenue Recognition on Sales with a Guaranteed Minimum Resale Value."
(5) Earnings for the year ended December 31, 1994, include favorable
adjustments to the provision for income taxes aggregating $132 million.
These adjustments related to: (1) the recognition of tax credits related to
expenditures in prior years for qualifying research and development
activities, in accordance with an Internal Revenue Service settlement which
was based on U.S. Department of Treasury income tax regulations issued in
1994, and (2) the reversal of valuation allowances related to tax benefits
associated with net operating loss carryforwards.
(6) Results for the year ended December 31, 1993, include a pretax gain of
$205 million ($128 million after taxes) on the sale of Chrysler's remaining
50.3 million shares of Mitsubishi Motors Corporation stock, a pretax gain of
$60 million ($39 million after taxes) on the sale of Chrysler's plastics
operations, a $4.7 billion after-tax charge for the adoption of SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," and a $283 million after-tax charge for the adoption of SFAS No.
112, "Employers' Accounting for Postemployment Benefits."
------------------------------
37
<PAGE>
Selected Pro Forma Combined Financial Data
The selected unaudited pro forma financial information set forth below was
derived from and should be read in conjunction with the Unaudited Pro Forma
Combined Financial Information, including the notes thereto, appearing elsewhere
in this Proxy Statement/Prospectus. Although Daimler-Benz and Chrysler intend
that the Transactions qualify as a "pooling-of-interests" transaction for
accounting and financial reporting purposes under U.S. GAAP, this treatment will
only be available if certain conditions are satisfied. There can be no assurance
that such conditions will be satisfied. If such conditions are not satisfied,
the Transactions will be treated for accounting and financial reporting purposes
as a purchase of Chrysler by Daimler-Benz. Accordingly, the following selected
unaudited pro forma financial information is being provided under both the
"pooling-of-interests" and the purchase methods of accounting.
<TABLE>
<CAPTION>
Six Months Ended June 30,(1) Year Ended December 31,(1)
----------------------------------- ------------------------------------------------
1998(2) 1998 1997 1997(2) 1997 1996 1995
--------- ----------- ----------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
(in millions, except per share amounts)
POOLING-OF-INTERESTS METHOD
Income Statement Data:
Revenues......................... $ 71,152 DM 128,308 DM 106,925 $ 127,131 DM 229,255 DM 198,082 DM 178,551
Net income (loss)................ 3,174 5,721 3,542 7,158(4) 12,906(4) 8,359 (2,689)
Basic earnings (loss) per
Ordinary Share/ADS(3).......... 3.31 5.96 3.62 7.37(4) 13.29(4) 8.44 (2.64)
Diluted earnings (loss) per
Ordinary Share/ADS(3).......... 3.23 5.83 3.60 7.30(4) 13.16(4) 8.41 (2.64)
Balance Sheet Data:
Total assets..................... 148,318 267,462
Total borrowings................. 43,999 79,343
Stockholders' equity............. 33,112 59,711
PURCHASE METHOD
Income Statement Data:
Revenues......................... 71,152 128,308 127,131 229,255
Net income (loss)................ 2,936 5,293 6,678(4) 12,041(4)
Basic earnings (loss) per
Ordinary Share/ADS(3).......... 3.13 5.64 7.01(4) 12.64(4)
Diluted earnings (loss) per
Ordinary Share/ADS(3).......... 3.06 5.52 6.94(4) 12.51(4)
Balance Sheet Data:
Total assets..................... 175,890 317,182
Total borrowings................. 44,620 80,463
Stockholders' equity............. 59,198 106,752
</TABLE>
- ------------------------
(1) The Selected Pro Forma Combined Financial Data should be read in
conjunction with the Unaudited Pro Forma Combined Financial Information,
including the notes thereto, which notes are an integral part of these
Selected Pro Forma Combined Financial Data.
(2) Amounts in this column have been translated solely for the convenience of
the reader at an exchange rate of DM 1.8033 = $1.00, the Noon Buying Rate on
June 30, 1998.
(3) Basic and diluted earnings (loss) per Daimler-Benz Ordinary Share/ADS
information have been adjusted to reflect the approximately 20% discount to
market value at which the Daimler-Benz Ordinary Shares and Daimler-Benz ADSs
were sold in the Rights Offering. See "Summary--Recent Developments--Special
Distribution and Rights Offering."
(4) Includes DM 4,870 million ($2,701 million) of special non-recurring tax
benefits. These tax benefits resulted from the Special Distribution and the
reversal of the remaining valuation allowances previously established on
deferred tax assets on Daimler-Benz' books at year-end which resulted
primarily from net operating loss carryforwards of Daimler-Benz' German
group of companies that file a consolidated tax return (ORGANSCHAFT). The
Special Distribution benefit was DM 2.908 billion and the valuation
allowance reversal was DM 1.962 billion. Excluding such non-recurring tax
benefits, 1997 pro forma combined net income and basic and diluted earnings
per Ordinary Share/ADS would have been as follows:
<TABLE>
<CAPTION>
Pooling-of- interests
method Purchase method
-------------------- --------------------
<S> <C> <C> <C> <C>
Net income......................................................... DM 8,036 $ 4,456 DM 7,171 $ 3,977
Basic earnings per Ordinary Share/ADS.............................. DM 8.28 $ 4.59 DM 7.53 $ 4.18
Diluted earnings per Ordinary Share/ADS............................ DM 8.21 $ 4.55 DM 7.47 $ 4.14
</TABLE>
38
<PAGE>
UNAUDITED COMPARATIVE PER SHARE DATA
The following table sets forth for Chrysler and Daimler-Benz certain
historical and pro forma equivalent per share data as of June 30, 1998 and
December 31, 1997 and for the six-month periods ended June 30, 1998 and 1997 and
for each of the years in the three-year period ended December 31, 1997. The
information presented herein should be read in conjunction with the selected
historical financial data and the unaudited selected combined pro forma
financial information appearing elsewhere in this Proxy Statement/Prospectus.
The pro forma equivalent per share data are presented for both
pooling-of-interests and purchase methods of accounting for the Transactions.
See "Selected Historical and Pro Forma Combined Financial Data" and "Unaudited
Pro Forma Combined Financial Information."
Pooling-of-Interests Accounting
<TABLE>
<CAPTION>
As of or for the Six Months
Ended
June 30, As of or for the Year Ended December 31,
------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998(1) 1998 1997 1997(1) 1997 1996 1995
--------- --------- --------- --------- --------- --------- ---------
Chrysler Historical ($)
Earnings per share(2)
Basic.............................. $3.18 $2.20 $4.15 $4.83 $2.68
Diluted............................ 3.12 2.17 4.09 4.74 2.56
Cash dividends per share............. .80 .80 1.60 1.40 1.00
Book value per share................. 19.77 17.52
Chrysler Historical (DM)(3)
Earnings per Share(2)
Basic.............................. DM 5.74 DM 3.71 DM 7.20 DM 7.27 DM 3.84
Diluted............................ 5.64 3.65 7.09 7.13 3.67
Cash dividends per Share............. 1.45 1.35 2.77 2.11 DM 1.43
Book value per Share................. 35.76 31.40
Daimler-Benz Historical(4)
Earnings (loss) per Ordinary
Share/ADS:
Basic.............................. $2.11 DM 3.81 DM 1.89 $ 8.48 DM 15.30(5) DM 5.27 DM (10.96)
Diluted............................ 2.04 3.68 1.88 8.32 15.01(5) 5.25 (10.96)
Cash dividends per Ordinary
Share/ADS(2)........................ 0.87 1.57 1.08
Special Distribution................. 10.88 19.63(6)
Book value per Ordinary Share........ 32.89 59.31 36.94 66.61
DaimlerChrysler AG Pro Forma(4)
Earnings (loss) per Ordinary
Share:(2)
Basic.............................. $3.31 DM 5.96 DM 3.62 $ 7.37 DM13.29(5) DM 8.44 DM (2.64)
Diluted............................ 3.23 5.83 3.60 7.30 13.16(5) 8.41 (2.64)
Cash dividends per Ordinary
Share(8)............................
Book value per Ordinary Share........ 33.01 59.52 30.72 55.39
DaimlerChrysler AG Pro Forma Equivalent
for Chrysler Stockholders(4,6)
Earnings per share of Chrysler Common
Stock(2):
Basic.............................. $2.06 DM 3.72 DM 2.26 $ 4.60 DM 8.29(5) DM 5.26 DM (1.65)
Diluted............................ 2.01 3.64 2.24 4.55 8.21(5) 5.24 (1.65)
Cash dividends per share of Chrysler
Common Stock(8).....................
Book value per share of Chrysler
Common Stock........................ 20.58 37.11 19.15 34.53
</TABLE>
39
<PAGE>
- ------------------------
(1) Amounts in this column have been presented solely for the convenience of
the reader at an exchange rate of DM 1.8033 = $1.00, the Noon Buying Rate on
June 30, 1998.
(2) Represents earnings before extraordinary item and cumulative effect of
changes in accounting principles.
(3) The Chrysler historical earnings and cash dividends per share information
for the six months ended June 30, 1998 and 1997 and years ended December 31,
1997, 1996, and 1995 have been translated into marks at the weighted-average
rates of exchange for the six months ended June 30, 1998 and 1997 and years
ended December 31, 1997, 1996, and 1995 of $1.00 = DM 1.8064, DM 1.6862, DM
1.7340, DM 1.5048, and DM 1.4331, respectively. The book value per share
amount at June 30, 1998 and December 31, 1997 has been translated into marks
at the June 30, 1998 and December 31, 1997 exchange rates of $1.00 = DM
1.8087 and DM 1.7921, respectively.
(4) Daimler-Benz Historical, DaimlerChrysler AG Pro Forma and DaimlerChrysler
AG Pro Forma Equivalent for Chrysler Stockholders per share data have been
adjusted to reflect the approximately 20% discount to market value at which
Daimler-Benz Ordinary Shares and Daimler-Benz ADSs were sold in the Rights
Offering. See "Summary--Recent Developments--Special Distribution and Rights
Offering."
(5) The 1997 amounts of basic and diluted Daimler-Benz Historical earnings per
Ordinary Share/ADS include special non-recurring tax benefits of DM 9.26
($5.14) and DM 9.04 ($5.02) per Ordinary Share/ADS, respectively. See Note 3
to "Selected Historical and Pro Forma Combined Financial Data--Selected
Historical Financial Data of Daimler-Benz." Excluding these tax benefits,
the Daimler-Benz Historical basic and diluted earnings per Ordinary
Share/ADS in 1997 would have been DM 6.04 ($3.35) and DM 5.97 ($3.30) per
Ordinary Share/ADS, respectively, the DaimlerChrysler AG Pro Forma basic and
diluted earnings per Ordinary Share in 1997 would have been DM 8.28 ($4.59)
and DM 8.21 ($4.55) per Ordinary Share, respectively, and the
DaimlerChrysler AG Pro Forma for Chrysler stockholders basic and diluted
earnings per Ordinary Share in 1997 would have been DM 5.16 ($2.86) and DM
5.12 ($2.84) per Ordinary Share.
(6) See "Summary--Recent Developments--Special Distribution and Rights
Offering."
(7) For purposes of calculating DaimlerChrysler AG pro forma equivalent for
Chrysler stockholders, it has been assumed that each share of Chrysler
Common Stock is exchanged for .6235 of a DaimlerChrysler Ordinary Share,
each Daimler-Benz Ordinary Share is exchanged for 1.005 DaimlerChrysler
Ordinary Shares, and each Daimler-Benz ADS is exchanged for 1.005
DaimlerChrysler Ordinary Shares.
(8) See "Dividends" for information with respect to the expected dividend
policy of DaimlerChrysler AG.
------------------------------
40
<PAGE>
Purchase Accounting
<TABLE>
<CAPTION>
As of or for the Six Months As of or for the Year
Ended June 30, Ended December 31,
------------------------------- ----------------------
<S> <C> <C> <C> <C> <C>
1998(1) 1998 1997 1997(1) 1997
--------- --------- --------- --------- -----------
Chrysler Historical ($)
Earnings per share(2):
Basic............................................... $3.18 $2.20 $ 4.15
Diluted............................................. 3.12 2.17 4.09
Cash dividends per share.............................. .80 .80 1.60
Book value per share.................................. 19.77 17.52
Chrysler Historical (DM)(3)
Earnings per share
Basic............................................... DM 5.74 DM 3.71 DM 7.20
Diluted............................................. 5.64 3.66 7.09
Cash dividends per Share/ADS.......................... 1.45 1.35 2.77
Book value per share.................................. 35.76 31.40
Daimler-Benz Historical(4)
Earnings per Ordinary Share/ADS:
Basic............................................... $2.11 DM 3.81 DM 1.89 $ 8.48 DM 15.30(5)
Diluted............................................. 2.04 3.68 1.88 8.32 15.01(5)
Cash dividends per Ordinary Share/ADS................. 0.87 1.57
Special Distribution.................................. 10.88 19.63(6,)(7)
Book value per ordinary share......................... 32.89 59.31 36.94 66.61
DaimlerChrysler AG Pro Forma(4)
Earnings per Ordinary Share:
Basic............................................... $3.13 DM 5.64 $7.01 DM 12.64
Diluted............................................. 3.06 5.52 6.94 12.51
Cash dividends per Ordinary Share(8)..................
Book value per Ordinary Share DM...................... 60.31 108.75 61.65 111.18
DaimlerChrysler AG Pro Forma Equivalent for Chrysler
Stockholders(4,)(7)
Earnings per share of Chrysler Common Stock:
Basic............................................... $1.95 DM 3.52 $4.37 DM 7.88
Diluted............................................. 1.91 3.44 4.32 7.80
Cash dividends per share of Chrysler Common
Stock(8).............................................
Book value per share of Chrysler Common Stock......... 37.60 67.81 38.44 69.32
</TABLE>
- ------------------------
(1) Amounts in this column have been presented solely for the convenience of
the reader at an exchange rate of DM 1.8033 = $1.00, the Noon Buying Rate on
June 30, 1998.
(2) Represents earnings before extraordinary item and cumulative effect of
change in accounting principles.
(3) The Chrysler Historical per share and cash dividends information for the
six months ended June 30, 1998 and 1997 and for the year ended December 31,
1997 has been translated into marks at the weighted-average rates of
exchange for the six months ended June 30, 1998 and 1997 and for the year
ended December 31, 1997 of $1.00 = DM 1.8064, DM 1.6862 and DM 1.7340,
respectively. The Chrysler book value per share information at June 30, 1998
and December 31, 1997 has been translated into marks at the June 30, 1998
and December 31, 1997 exchange rate of $1.00 = DM 1.8087 and 1.7921,
respectively.
(4) Daimler-Benz Historical, DaimlerChrysler AG Pro Forma and DaimlerChrysler
AG Pro Forma Equivalent for Chrysler Stockholders per share data have been
adjusted to reflect the approximately 20% discount to market value at which
the Daimler-Benz Ordinary Shares and Daimler-Benz ADSs were sold in the
Rights Offering. See "Summary--Recent Developments--Special Distribution and
Rights Offering."
(5) The 1997 amounts of basic and diluted Daimler-Benz Historical earnings per
Ordinary Share/ADS include special non-recurring tax benefits of DM 9.26
($5.14) and DM 9.04 ($5.02) per Ordinary Share, respectively. See Note 3 to
"Selected Historical and Pro Forma Combined Financial Data--Selected
Historical Financial Data of Daimler-Benz." Excluding these tax benefits,
the Daimler-Benz Historical basic and diluted earnings per Ordinary Share in
1997 would have been DM 6.04 ($3.35) and DM 5.97 ($3.30) per Ordinary Share,
respectively, the DaimlerChrysler Pro Forma basic and diluted earnings per
Ordinary Share in 1997 would have been DM 7.53 ($4.18) and DM 7.47 ($4.14)
per Ordinary Share, respectively, and the DaimlerChrysler Pro Forma for
Chrysler Stockholders basic and diluted earnings per Ordinary Share in 1997
would have been DM 4.69 ($2.60) and DM 4.66 ($2.58) per Ordinary Share.
(6) See "Summary--Recent Developments--Special Distribution and Rights
Offering."
(7) For purposes of calculating combined pro forma per share data, it has been
assumed that each share of Chrysler Common Stock is exchanged for .6235 of a
DaimlerChrysler Ordinary Share, each Daimler-Benz Ordinary Share is
exchanged for one DaimlerChrysler Ordinary Share, and each Daimler-Benz ADS
is exchanged for one DaimlerChrysler Ordinary Share.
(8) See "Dividends" for information with respect to the expected dividend
policy of DaimlerChrysler AG.
41
<PAGE>
DIVIDENDS
Dividends will be proposed by the DaimlerChrysler Supervisory Board and the
DaimlerChrysler Management Board, based on the year-end unconsolidated financial
statements of DaimlerChrysler AG, and will be approved in respect of the prior
year at the annual general meeting of DaimlerChrysler AG stockholders. It is
anticipated that the annual general meeting will be convened during the second
quarter of each year. Holders of record of DaimlerChrysler Ordinary Shares on
the date of the general meeting of stockholders at which a dividend is declared
are entitled to receive payment in full of the dividend declared in respect of
the year for which it is declared, less any amounts required to be withheld on
account of taxes or other governmental charges. Cash dividends payable to such
holders will be paid in marks (or, following the changeover by DaimlerChrysler
AG to the Euro, in Euros) and, for purposes of distribution to holders of
DaimlerChrysler Ordinary Shares in the United States, will be converted by the
U.S. Transfer Agent into dollars, at the holder's election. The dollar amount of
dividends received by holders of DaimlerChrysler Ordinary Shares may be affected
by fluctuations in exchange rates. See "Description of DaimlerChrysler Ordinary
Shares--Dividends and Other Distributions." The following table sets forth the
annual dividends paid per Daimler-Benz Ordinary Share in marks, and the dollar
equivalent, for each of the years indicated:
<TABLE>
<CAPTION>
Dividend Paid Per
Daimler-Benz
Year Ended December 31 Ordinary Share(1)
- -------------------------------------------------------------------------- --------------------
<S> <C> <C>
1993...................................................................... DM 0.78 $ 0.47
1994...................................................................... 1.08 0.75
1995...................................................................... -- --
1996...................................................................... 1.08 0.63
1997...................................................................... 1.57 0.87
</TABLE>
- ------------------------
(1) Effective as of July 1, 1996, the nominal value of the Daimler-Benz
Ordinary Shares was reduced to DM 5 per share from the previous level of DM
50 per share. This reduction had the effect of a 10 for 1 stock split, which
in turn reduced the price at which one Daimler-Benz Ordinary share trades to
1/10 of the price at which it previously traded. In addition, Daimler-Benz
Ordinary Shares and Daimler-Benz ADSs were offered on a pro rata basis to
current Daimler-Benz stockholders in the Rights Offering at a 20% discount
from the market value, which has been treated as an approximately 2% stock
split. The dividend amounts in the above table have been recalculated to
reflect this change. The mark dividend amounts are translated solely for the
convenience of the reader into dollars at the Noon Buying Rate on the
dividend payment date, which typically occurred during the second quarter of
the following year.
------------------------------
Subject to stockholder approval, dividends are expected to be declared and
paid annually by DaimlerChrysler AG, although there can be no assurance as to
the particular amounts that would be paid from year to year. The payment of
future dividends will depend upon DaimlerChrysler AG's earnings, financial
condition (including its cash needs), future earnings prospects and other
factors. Dividends paid by DaimlerChrysler AG must be recommended by the
DaimlerChrysler Management Board and the DaimlerChrysler Supervisory Board and
approved by the stockholders of DaimlerChrysler AG at the annual general
meeting. The Daimler-Benz Management Board and the Chrysler Board have
determined, and the prospective DaimlerChrysler Management Board has indicated
its concurrence, that an appropriate dividend policy for DaimlerChrysler AG
under current business and economic conditions would result in DaimlerChrysler
AG paying approximately the same annual dividend amount currently paid to
Chrysler stockholders (after giving effect to the change in share ownership
resulting from the U.S. Exchange Ratio).
For a discussion of the Special Distribution, see "Summary--Recent
Developments--Special Distribution and Rights Offering."
For a discussion of certain U.S. and German tax consequences with respect to
the payment of dividends, see "The Transactions--Certain Tax
Consequences--Certain Tax Consequences of Holding DaimlerChrysler Ordinary
Shares."
42
<PAGE>
THE CHRYSLER SPECIAL MEETING
Place, Date and Time
The enclosed proxy is solicited by and on behalf of the Chrysler Board for
use at the Chrysler Special Meeting which will be held at the Hotel du Pont,
11th and Market Streets, Wilmington, Delaware, on September 18, 1998, commencing
at 9:00 a.m., local time.
Purpose of the Chrysler Special Meeting
The purpose of the Chrysler Special Meeting is to consider and vote upon the
Chrysler Merger Proposal and to transact any other business that is properly
brought before the Chrysler Special Meeting.
Record Date
The Chrysler Board has fixed the close of business on July 20, 1998 as the
Chrysler Record Date for the determination of stockholders entitled to notice of
and to vote at the Chrysler Special Meeting. Only holders of record of Chrysler
Common Stock at the close of business on the Chrysler Record Date will be
entitled to notice of and to vote at the Chrysler Special Meeting. As of the
Chrysler Record Date, there were issued and outstanding and entitled to vote
647,304,195 shares of Chrysler Common Stock.
Proxies
Shares of Chrysler Common Stock represented by properly executed proxies
(including proxies authorized by telephone or Internet) received in time for the
Chrysler Special Meeting will be voted at the Chrysler Special Meeting in the
manner specified on the proxy. Proxies that are properly executed but do not
contain instructions will be voted "FOR" approval and adoption of the Chrysler
Merger Proposal and any proposal to postpone or adjourn the Chrysler Special
Meeting (the "Adjournment Proposal"), if proposed by the Chrysler Board. It is
not expected that any matter other than the Chrysler Merger Proposal and, if
proposed by the Chrysler Board, the Adjournment Proposal will be brought before
the Chrysler Special Meeting, but, if other matters are properly presented, the
persons named in such proxy will have authority to vote in accordance with their
judgment on any other matter, including without limitation, any proposal
otherwise concerning the conduct of the Chrysler Special Meeting.
If you are a Chrysler stockholder, your proxy card represents the Chrysler
Common Stock you own of record and, if you are a participant in Chrysler's
dividend reinvestment plan, any whole shares of Chrysler Common Stock held in
your dividend reinvestment plan account. If you are a Chrysler employee, your
proxy card also serves as voting instructions to the trustee for any Chrysler
Common Stock held on your behalf under an employee benefit plan. Plan trustees
will vote the shares for which no proxy card or instructions are received in the
same proportion as the shares for which instructions are received, excluding any
shares the trustees have been instructed not to vote.
Revocation of Proxies
Any stockholder voting by proxy may revoke the proxy at any time before it
is voted at the meeting, by giving written notice of revocation to Chrysler, by
mailing to Chrysler a later dated proxy which is received by Chrysler prior to
the Chrysler Special Meeting, by voting again by telephone or Internet or by
voting in person at the Chrysler Special Meeting.
Required Vote
All voting rights for the Chrysler Special Meeting are vested exclusively in
the holders of Chrysler Common Stock as of the Chrysler Record Date, with each
share held of record on that date entitled to one vote on any matter that may
properly come before the Chrysler Special Meeting. The affirmative vote of a
majority of the shares of Chrysler Common Stock outstanding on the Chrysler
Record Date is required to approve and adopt the Chrysler Merger Proposal. Under
NYSE rules, brokers and nominees are precluded from exercising
43
<PAGE>
their voting discretion on the Chrysler Merger Proposal and, for this reason,
absent specific instructions from the beneficial owner of the shares, are not
permitted to vote such shares thereon. Because the affirmative vote of a
majority of the shares of Chrysler Common Stock outstanding as of the Chrysler
Record Date is required for approval of the Chrysler Merger Proposal, an
abstention or broker non-vote will have the effect of a vote against the
approval and adoption of the Chrysler Merger Proposal. Any other matter properly
brought before the meeting (including the Adjournment Proposal, if proposed by
the Chrysler Board) will be approved if a majority of the votes cast are in
favor of such matter. Abstentions and broker non-votes are not counted as votes
cast and will not be counted in determining whether any such other matter is
approved.
If you are a Chrysler employee, your proxy card also serves as voting
instructions to the trustee for any Chrysler Common Stock held on your behalf
under an employee benefit plan. Plan trustees will vote the shares for which no
proxy card or instructions are received in the same proportion as the shares for
which instructions are received, excluding any shares the trustees have been
instructed not to vote.
Security Ownership of Management
As of July 20, 1998, directors and executive officers of Chrysler and their
affiliates as a group beneficially owned 8,211,204 shares of Chrysler Common
Stock (approximately 1.26% of the Chrysler Common Stock then outstanding)
including 6,805,399 shares under option. Chrysler expects that all of such
directors and executive officers will vote their shares (other than shares under
option) in favor of the Chrysler Merger Proposal.
Stockholder Agreement
Tracinda Corporation, a Nevada corporation, and Mr. Kirk Kerkorian have
entered into the Chrysler Stockholder Agreement with Chrysler and Daimler-Benz
pursuant to which Tracinda has agreed to vote all of the shares of Chrysler
Common Stock owned by it in favor of the approval and adoption of the Chrysler
Merger Proposal. As of July 30, 1998, Tracinda beneficially owned 71,753,992
shares of Chrysler Common Stock, representing approximately 11% of the
outstanding shares of Chrysler Common Stock on the Chrysler Record Date. This
description of the Chrysler Stockholder Agreement is qualified by reference to
the Chrysler Stockholder Agreement, which is filed as an exhibit to the
Registration Statement and is incorporated herein by reference. See "Ownership
of Chrysler Common Stock--Beneficial Ownership of Certain Stockholders."
Quorum
The DGCL, the Certificate of Incorporation of Chrysler, the By-laws of
Chrysler and the Exchange Act contain requirements governing the actions of
Chrysler at the Chrysler Special Meeting. According to the By-laws of Chrysler,
holders of a majority of the shares of Chrysler Common Stock outstanding on the
Chrysler Record Date must be present in person or by proxy at the Chrysler
Special Meeting to constitute a quorum. Abstentions and broker non-votes are
counted as present or represented for purposes of determining a quorum for the
Chrysler Special Meeting.
Solicitation of Proxies
Chrysler will bear the cost of the solicitation of proxies from its
stockholders, except that Chrysler and Daimler-Benz will share equally the cost
of printing and mailing this Proxy Statement/Prospectus. In addition to
solicitation by mail, the directors, officers and employees of Chrysler and its
subsidiaries may solicit proxies from Chrysler stockholders in person, by
telephone or telegram, or electronically. Such directors, officers and employees
will not be additionally compensated for such solicitation but may be reimbursed
for out-of-pocket expenses in connection therewith. Arrangements will also be
made with brokerage houses and other custodians, nominees and fiduciaries for
the forwarding of solicitation materials to the beneficial owners of shares held
of record by such persons, and Chrysler will reimburse such custodians, nominees
and fiduciaries for their reasonable out-of-pocket expenses in connection
therewith.
44
<PAGE>
Georgeson & Company Inc. will assist in the solicitation of proxies by
Chrysler for a fee of $25,000 plus reasonable out-of-pocket expenses. If you
require additional copies of either this Proxy Statement/Prospectus or the
Chrysler proxy card, or if you have questions, please contact Georgeson &
Company Inc. at 1-800-223-2064 (toll free).
Miscellaneous
Representatives of Deloitte & Touche LLP, Chrysler's independent auditors,
are expected to be present at the Chrysler Special Meeting. Such representatives
will have an opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
45
<PAGE>
THE DAIMLER-BENZ SPECIAL MEETING
Place, Date and Time
The Daimler-Benz Special Meeting will be held at the Hanns-Martin Schleyer
Halle, Stuttgart, Germany, on September 18, 1998 commencing at 10:00 a.m., local
time.
Purpose of the Daimler-Benz Special Meeting
The purpose of the Daimler-Benz Special Meeting is to consider and vote upon
the Daimler-Benz Business Combination Proposal.
Shares Entitled to Vote
Only holders of Daimler-Benz Voting Shares on the date of the Daimler-Benz
Special Meeting will be entitled to vote at the Daimler-Benz Special Meeting.
There are no quorum requirements for the Daimler-Benz Special Meeting. As of
June 30, 1998, there were 569,340,329 Daimler-Benz Voting Shares issued and
outstanding. Holders of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs will
receive a separate mailing with respect to the Daimler-Benz Special Meeting.
Required Vote
All voting rights for the Daimler-Benz Special Meeting are vested
exclusively in the holders of Daimler-Benz Voting Shares as of the date of the
Daimler-Benz Special Meeting, with each holder of a Daimler-Benz Voting Share on
that date entitled to cast one vote for every share held by such stockholder;
PROVIDED, holders of Daimler-Benz Ordinary Shares comply with the requirements
of the German Stock Corporation Law (AKTIENGESETZ) and the Daimler-Benz
Memorandum and Articles of Association (SATZUNG) with respect to the deposit of
such holders' Daimler-Benz Ordinary Shares in a blocked account and to the
voting of such securities, and holders of Daimler-Benz ADSs comply with the
requirements imposed by the Depositary for the Daimler-Benz ADSs, with respect
to the deposit of such holders' Daimler-Benz ADSs in a blocked account and to
the voting of such securities. The affirmative vote of 75% of the Daimler-Benz
Voting Shares represented at the Daimler-Benz Special Meeting is required to
approve and adopt the Daimler-Benz Business Combination Proposal.
46
<PAGE>
THE TRANSACTIONS
Background of the Transactions
In mid-January 1998, Jurgen E. Schrempp, Chairman of the Daimler-Benz
Management Board, visited Robert J. Eaton, Chairman and Chief Executive Officer
of Chrysler, while Mr. Schrempp was attending the Detroit International Auto
Show. Mr. Schrempp discussed with Mr. Eaton some of his thoughts about the
likelihood of consolidation in the worldwide automotive industry and suggested
it might be mutually beneficial if Daimler-Benz and Chrysler were to consider
the possibility of a business combination. Mr. Eaton indicated that Chrysler had
been conducting its own studies of the industry and had similar views of the
likely direction it would be taking. Mr. Eaton indicated that he would telephone
Mr. Schrempp in response to his inquiry within the next couple of weeks. Toward
the end of January, Mr. Eaton telephoned Mr. Schrempp to suggest a meeting early
in February.
On February 5, 1998, the Chrysler Board was briefed on the discussion
between Messrs. Schrempp and Eaton.
On February 12, 1998, Mr. Eaton and Gary C. Valade, Executive Vice President
and Chief Financial Officer of Chrysler, met with Mr. Schrempp and Dr. Eckhard
Cordes, Daimler-Benz Management Board Member responsible for Corporate
Development and Directly Managed Businesses, to discuss the possibility of
combining Daimler-Benz and Chrysler. Following a discussion concerning, among
other things, the consolidation likely to take place in the automotive industry
and the complementary nature of their companies' respective product lines and
markets, they decided to consult with their respective financial advisors and to
meet again on February 18, 1998. Messrs. Schrempp and Eaton believed industry
consolidation was likely because of industry overcapacity and the potential
benefits of combining automotive companies arising from joint product design,
development and manufacturing, combined purchasing, other economies of scale and
brand expansion and diversification. In discussing the possibility of a business
combination between Daimler-Benz and Chrysler, they considered it essential that
their respective companies play a leading role in this process of expected
industry consolidation and choose a partner with optimal strategic fit. In this
respect, both the timing of the proposed business combination and the selection
of the parties thereto were considered highly appropriate in order to secure and
strengthen their respective market positions.
On February 17 and 18, 1998, Drs. Cordes and Rudiger Grube, Director of
Corporate Strategy and Planning for Daimler-Benz, and representatives of Goldman
Sachs met with Messrs. Valade, Thomas P. Capo and William J. O'Brien, Vice
President and Treasurer, and Vice President and General Counsel of Chrysler,
respectively, and representatives of CSFB, financial advisor to Chrysler, to
discuss the combination of the two companies generally and, specifically,
various transaction structures. During the course of that week and the next
week, representatives of Chrysler, CSFB and Debevoise & Plimpton, United States
counsel to Chrysler ("Debevoise"), met with representatives of Goldman Sachs,
Skadden, Arps, Slate, Meagher & Flom LLP, United States counsel to Daimler-Benz
("Skadden, Arps"), and Shearman & Sterling, German counsel to Daimler-Benz
("Shearman"). During the course of these discussions and thereafter,
representatives of Chrysler stated that it was important to Chrysler that any
potential transaction maximize value for its stockholders, that it be tax-free
to Chrysler's U.S. stockholders and tax efficient for DaimlerChrysler AG, that
it have the post-merger governance structure of a "merger-of-equals," that it
have the optimal ability to be accounted for as a pooling-of-interests, that it
result in the combination of the respective businesses of Daimler-Benz and
Chrysler into one public company and that it limit any post-effective
contingencies arising out of the Transactions, including limiting any rights
that might result from a German valuation proceeding (SPRUCHVERFAHREN).
Representatives of Daimler-Benz indicated that it was important to Daimler-Benz
that any potential transaction maximize value for its stockholders, that it be
tax-free to Daimler-Benz' German stockholders and tax efficient for
DaimlerChrysler AG and that the surviving entity of any combination be a German
stock corporation, thereby enhancing the likelihood of acceptance of the
Transactions by all important constituencies of Daimler-Benz. During these
meetings, various tax, corporate and management issues were discussed with a
view to developing a transaction structure that would accommodate the parties'
objectives.
47
<PAGE>
On March 2, 1998, Mr. Schrempp and Dr. Cordes met with Messrs. Eaton and
Valade in Lausanne, Switzerland, to discuss governance and business
organizational structures for a possible combined entity. The organizational
issues discussed by the parties included, among other things, the impact of the
jurisdiction of incorporation of the combined company on its corporate
governance, the composition of the combined company's management and the most
effective way to foster the integration of the two business organizations. Over
the course of their discussions, the parties considered various alternative
transaction structures for the combination of the two enterprises, including
through (1) a newly-incorporated U.S. company, (2) a company incorporated in The
Netherlands and (3) either a newly organized German AKTIENGESELLSCHAFT or
Daimler-Benz itself. The simplest structural solution, a direct merger of
Daimler-Benz and Chrysler, was not possible under German law. The parties
believed that the structure for the Transactions was the preferable alternative
to a combination through a newly-incorporated U.S. company or a company
incorporated in The Netherlands because this structure was believed to be the
most tax efficient for the combined entity on an ongoing basis, could be
tax-free to Chrysler's U.S. stockholders and to Daimler-Benz' German
stockholders and was the only structure which would enable the elimination of
all minority stockholders of Daimler-Benz and Chrysler thereby creating a parent
corporation with one group of stockholders holding a single publicly traded
equity security. The structure for the Transactions was therefore selected
because it best achieved both parties' objectives.
On March 5, 1998, the Chrysler Board was updated concerning the status of
the discussions with Daimler-Benz.
Mr. Valade and Dr. Cordes met on March 6, 1998, to discuss the progress of
their respective working teams. They concluded that the working teams should
continue to meet in an effort to refine the structural alternatives then under
discussion. In addition, Mr. Valade requested that Daimler-Benz provide Chrysler
with its preliminary thoughts on valuation.
On March 5 and 17 representatives from each party's legal and investment
banking teams met in New York to continue their discussion with respect to
alternative transaction structures. On March 19, representatives of Chrysler and
CSFB met with representatives of Daimler-Benz and Goldman Sachs to discuss
valuation matters.
On March 23, the Chrysler Board was updated concerning the status of
discussions with Daimler-Benz. On March 26, representatives of Chrysler and
Daimler-Benz met at the offices of CSFB to discuss the progress of the working
teams, valuation analyses, governance and structural matters.
On April 7, the Chrysler Board was updated concerning the status of
discussions with Daimler Benz. On April 9, at a meeting in London, Messrs.
Schrempp and Eaton agreed that the valuations and preliminary views on the
transaction structure being discussed were approaching a point where they could
each recommend them to their respective Boards, and they discussed a governance
structure for the combined company. During late March and the month of April,
the legal and investment banking teams, including representatives of the law
firm of Bruckhaus Westrick Heller Lober, German counsel to Chrysler, continued
to discuss and refine their analysis with respect to the appropriate business
combination structure.
Major points of discussion during that period and thereafter involved: (a)
valuation, particularly in light of the fact that Daimler-Benz shares have had a
higher price/earnings multiple than Chrysler's, although Chrysler has had higher
earnings; (b) identifying a governance structure that would take into account
the parties' goal of incorporating the best U.S. and German practices; (c)
finding a structure that would (i) result in a tax-free transaction in the
United States and Germany for both companies' stockholders and result in ongoing
tax efficiency, (ii) involve one publicly traded class of equity security, (iii)
minimize the risk of non-consummation, and (iv) create the possibility that the
Transactions would be accounted for as a pooling-of-interests under U.S. GAAP;
(d) determining how best to meet the requirements of a cross-border transaction
between a U.S. corporation and a German stock corporation; and (e) creating a
management organization for the combined company that achieves a meaningful
sharing of management roles consistent with the parties' conception of the
Transactions as a "merger of equals."
48
<PAGE>
The parties recognized that acceptance of the Transactions by important
constituencies of Daimler-Benz (including German stockholders, employees and
management) would be enhanced if the combined parent company were a German stock
corporation (AKTIENGESELLSCHAFT) because such constituencies were familiar and
comfortable with that form of organization. Consequently, the parties decided
that a new company organized under the laws of the Federal Republic of Germany
should be the new public parent company and that the Transactions would be the
best means to accomplish the parties' objectives for a business combination
transaction, including implementing a merger of equals combining both companies'
businesses, stockholder groups, managements and other constituencies, and
further that the governance structure that had been discussed would be an
appropriate management structure for the combined company in the future.
On April 7, 1998, Mr. Schrempp and Dr. Cordes presented the Daimler-Benz
Management Board with an overview of the discussions with Chrysler regarding a
potential transaction.
On April 16, 1998, Mr. Schrempp and Dr. Cordes discussed the status of the
proposed Chrysler transaction with Mr. Hilmar Kopper, the Chairman of the
Daimler-Benz Supervisory Board (AUFSICHTSRAT), and on April 19, 1998, Mr.
Schrempp and Dr. Cordes gave a detailed presentation of the transaction to the
Daimler-Benz Management Board.
On April 21, 1998, Messrs. Eaton and Valade met with Mr. Schrempp and Drs.
Cordes and Grube to refine their thinking with respect to, among other things,
valuation and key governance and management positions. In addition, they agreed
that the working teams should work with the objective of completing all elements
necessary to announce a transaction on May 7, 1998.
Between April 23 and May 6, 1998, members of the working teams met at
various times to negotiate the Combination Agreement and related documentation.
On April 22 and 29, the Chrysler Board was updated concerning the status of
discussions with Daimler-Benz. On May 3, 1998, the Daimler-Benz Management Board
met to review the Transactions and unanimously approved the Combination
Agreement and the Transactions.
At meetings on May 5 and May 6, the Chrysler Board reviewed the proposed
Combination Agreement and the Transactions. At the May 6, 1998 meeting the
Chrysler Board unanimously approved the Combination Agreement and the
Transactions. On May 6, 1998, the Daimler-Benz Supervisory Board met in
Stuttgart and received a full briefing and the recommendation of the Management
Board with respect to the proposed Combination Agreement. Although no resolution
was proposed at the meeting, there was substantial discussion and several
members indicated their general satisfaction with the proposed transaction. The
discussion at the meeting focused on the reasons for the business combination
including, among other things, general consolidation in the automotive industry
and the strong potential for synergies between the constituent companies, the
company profile of Chrysler, the transaction structure, organizational issues
relating to the structure and composition of the DaimlerChrysler Management
Board and Supervisory Board and the prospects for enhancing the value of the
combined entity in the future. The Daimler-Benz Supervisory Board scheduled a
second meeting on May 14, 1998, to consider and vote on the proposed Combination
Agreement.
On May 6, in response to newspaper stories about discussions between
Chrysler and Daimler-Benz, the companies announced that they were in
discussions.
Late in the evening of May 6, 1998, in London, all constituent parties
signed the Combination Agreement. In the morning of May 7, the signing of the
Combination Agreement was publicly announced.
On May 14, 1998, the Daimler-Benz Supervisory Board unanimously approved the
Combination Agreement and the Transactions.
In July 1998, the parties discussed how best to maximize the likelihood that
the Minimum Condition to the Daimler-Benz Exchange Offer would be satisfied in
order to enable the Transactions to be accounted for as a pooling-of-interests.
Both parties believe this accounting treatment is desirable because purchase
accounting would cause reported earnings per share of DaimlerChrysler AG to be
reduced as a result of the amortization of the excess of purchase consideration
over the book value of the net assets acquired. The parties decided to
49
<PAGE>
increase the likelihood of satisfying the Minimum Condition to the Daimler-Benz
Exchange Offer by amending the Combination Agreement to provide that the
Daimler-Benz Exchange Offer Ratio would be 1.005, rather than 1.000, if the
Minimum Condition is satisfied so that the Transactions can be accounted for as
a pooling-of-interests.
Following execution of the Combination Agreement, the parties concluded that
a primary goal of the Transactions was to create a market system for the
DaimlerChrysler Ordinary Shares which is the most efficient, investor friendly
and functionally invisible and which is the most liquid and reliable. The
parties believe that this will translate into a more valuable security and a
more valuable company for the owners of DaimlerChrysler AG. The parties adopted
the objective of integrating the relevant national systems for share ownership,
trading and voting in a manner that makes it a matter of indifference to
investors whether they hold, own, buy or sell shares in Germany, the United
States or any other national market. Accordingly, it was agreed that
DaimlerChrysler AG would issue one equity security--DaimlerChrysler Ordinary
Shares--worldwide in connection with the Transactions.
The changes, reflected in an amendment and restatement of the Combination
Agreement executed by the parties as of July 31, 1998, were presented to and
approved by the Chrysler Board at a meeting on July 30, 1998 and at a meeting of
the Daimler-Benz Supervisory Board and Daimler-Benz Management Board on July 31,
1998. At the July 30 meeting, the Chrysler Board considered the above described
benefits of obtaining pooling-of-interests accounting treatment and determined
that the increased probability of achieving the Minimum Condition so that the
Transactions could be accounted for as a pooling-of-interests substantially
outweighed the fact that each Daimler-Benz stockholder would receive a slightly
higher number of DaimlerChrysler Ordinary Shares if the Minimum Condition were
satisfied. The Board also determined, for the reasons described above, that it
would be preferable for DaimlerChrysler AG to issue one class of equity
securities worldwide, rather than American Depositary Receipts in the U.S. and
ordinary shares elsewhere.
Recommendations of the Chrysler Board and Reasons for those Recommendations
The Chrysler Board was advised of the status of discussions with
Daimler-Benz at meetings of the Chrysler Board on February 5, March 5, March 23
and April 22. The Chrysler Board considered the possibility of a transaction
with Daimler-Benz at meetings on April 7 and April 29, at which meetings
representatives of CSFB, Chrysler's financial advisors, were present in person
or by telephone. The proposed transaction and the proposed Combination Agreement
were further reviewed and discussed by the Chrysler Board at meetings on May 5
and May 6, attended by Chrysler's financial and legal advisors in person or by
telephone. At the May 6 meeting, the Chrysler Board unanimously determined that
it was in the best interests of Chrysler and its stockholders to enter into the
proposed business combination with Daimler-Benz; approved the Combination
Agreement; and recommended that Chrysler's stockholders approve and adopt the
Combination Agreement, the Chrysler Merger and the other transactions
contemplated by the Combination Agreement. The Chrysler Board has unanimously
approved the Combination Agreement and determined that the transactions
contemplated by it, including the Chrysler Merger, are fair to and in the best
interests of Chrysler and Chrysler's stockholders. The Chrysler Board
unanimously recommends that the stockholders of Chrysler vote FOR the approval
and adoption of the Combination Agreement and the transactions contemplated
thereby, including the Chrysler Merger.
Following are the material factors that led to the foregoing determination,
approval and recommendation by the Chrysler Board:
- The likelihood that the automotive industry will undergo significant
consolidation, resulting in a smaller number of larger companies surviving
as effective global competitors.
- The Chrysler Board's view that Daimler-Benz was the best partner for a
business combination with Chrysler. While each company was strong by
itself, the combined company would be stronger than either one
individually, because of the two companies' complementary strengths.
Daimler-Benz is stronger in luxury and higher end automobiles; Chrysler,
in sport-utility vehicles and minivans;
50
<PAGE>
Daimler-Benz is stronger in Europe; Chrysler, in North America.
Daimler-Benz' reputation for engineering complements Chrysler's reputation
for product development. Moreover, the combined company will have greater
financial strength with which to enter new markets.
- The financial condition, results of operations, business and prospects of
each of Chrysler and Daimler-Benz. The financial condition of both
companies was strong; the results of operations of both companies
reflected profitable operations; the businesses of the two companies were
highly successful, with each operating at or near full capacity
manufacturing products that appeal to customers in the relevant market
sectors; and the prospects of both companies were promising given their
existing and planned products and their manufacturing and distribution
networks.
- The opportunities for significant synergies afforded by a combination of
Chrysler and Daimler-Benz-- based not on plant closings or lay-offs, but
on such factors as shared technologies, distribution, purchasing and
know-how. Management expects benefits of $1.4 billion in the first year of
merged operations, and annual benefits of $3 billion within three to five
years.
- The fact that Chrysler's stockholders would be able to participate in the
combined company's future growth, because Chrysler stockholders would
receive DaimlerChrysler Ordinary Shares.
- The "merger-of-equals" corporate governance structure contemplated by the
Combination Agreement, which, in the view of the Chrysler Board, means
that Chrysler's directors and senior management will be in a position to
help bring about the realization of the enhanced growth prospects and
synergies expected from the combination of the two companies, for the
benefit of stockholders of DaimlerChrysler AG (including former
stockholders of Chrysler). See "--Composition of DaimlerChrysler
Management Board and Integration Committee" and "The Combination
Agreement--DaimlerChrysler AG Governance After the Chrysler Effective
Time."
- The exchange ratio for the Chrysler Merger, and the fact that the exchange
ratio implied a market value (based on the closing price of Daimler-Benz
ADSs on May 5, the last trading day before the parties confirmed that
discussions were ongoing between them) for each share of Chrysler Common
Stock reflecting a premium of more than 34% over the closing price of
Chrysler Common Stock on that date.
- The fact that the U.S. Exchange Ratio is a fixed ratio (subject to
adjustment for Daimler-Benz' previously announced Rights Offering and the
Special Distribution), which means that Chrysler's stockholders will
participate in any increase in the market price of Daimler-Benz Ordinary
Shares between signing and closing (although they would also participate
in any decrease in the market price of Daimler-Benz Ordinary Shares).
- The opinion of CSFB, delivered to the Chrysler Board on May 6, that, as of
that date and based upon and subject to the matters set forth in the
opinion, the U.S. Exchange Ratio was fair to the holders of Chrysler
Common Stock from a financial point of view, and the analyses of CSFB
underlying that opinion.
- The fact that Chrysler's obligations under the Combination Agreement are
conditioned upon receipt of a favorable opinion of counsel and ruling from
the IRS, so that the Chrysler Exchange should be tax-free for United
States federal income tax purposes.
- The expectation that the Transactions will be accounted for as a
pooling-of-interests for financial reporting purposes, although the
Chrysler Board recognized that either party could request DaimlerChrysler
AG to reduce the Minimum Condition to the Daimler-Benz Exchange Offer,
which would have the effect of causing the transaction to be inconsistent
with the criteria for pooling-of-interests accounting and, therefore, to
be accounted for as a purchase. The Chrysler Board recognized that
purchase accounting treatment would have no impact on cash generation or
on the business logic for the transaction, although it would reduce
reported earnings because of the need to account for and to amortize
goodwill.
51
<PAGE>
- The terms of the Combination Agreement, including the fact that Chrysler
could furnish information and conduct negotiations with a third party,
and, after notice to Daimler-Benz, could terminate the Combination
Agreement prior to receipt of stockholder approval in order to enter into
an agreement relating to a Superior Proposal (as hereinafter defined), in
either case if the Chrysler Board determined, after receiving advice of
counsel, that failure to do so may result in a breach of fiduciary duty.
- The fact that, based on the most recently reported stockholdings in
Chrysler and Daimler-Benz, no one stockholder would control
DaimlerChrysler AG or be in a position by itself to block the sale of
DaimlerChrysler AG following closing of the business combination.
- The fact that Chrysler's largest stockholder, Tracinda, and Daimler-Benz'
largest stockholder, Deutsche Bank AG, had each indicated its support of
the proposed transaction.
While the Chrysler Board considered each of the foregoing factors in
reaching its determination, different directors may have attached different
importance to different factors. In view of the number and wide variety of
factors considered in connection with its evaluation of the Transactions, the
Chrysler Board did not consider it practicable, nor did it attempt, to assign
relative weight to the specific factors considered in reaching its
determination.
In addition to these factors, all of which supported the decision of the
Chrysler Board to recommend the Chrysler Merger, the Chrysler Board also
recognized that certain members of the Chrysler Board and of Chrysler management
have interests in the Transactions that are in addition to and may be different
from the interests in the Chrysler Merger of holders of Chrysler Common Stock,
including employment agreements with Chrysler, severance benefits, accelerated
vesting of stock options and other stock-based awards, employment agreements
with DaimlerChrysler AG (in the case of the Chrysler senior officers who are to
become members of the DaimlerChrysler Management Board) and interests in certain
Chrysler benefit plans, and, in the case of Mr. Eaton, an increase in pension
benefits intended to encourage Mr. Eaton to remain in DaimlerChrysler AG's and
Chrysler's employ following the Chrysler Merger. See "--Interests of Certain
Persons in the Chrysler Merger."
In addition, the Chrysler Board considered a number of potential risks
relating to the Transactions, including:
- the difficulties inherent in integrating two large enterprises with
geographically dispersed operations, incorporated in different countries;
- the risk that the synergies and benefits sought in the Transactions might
not be fully achieved;
- the risk that the Transactions would not be consummated;
- the risks associated with a possible post-closing German valuation award
proceeding (SPRUCHVERFAHREN); and
- the substantial expenses expected to be incurred by Chrysler and by
Daimler-Benz in connection with the Transactions.
The Chrysler Board believed that these potential risks and disadvantages
were greatly outweighed by the potential benefits anticipated from the
Transactions. See "Risk Factors."
The Chrysler Board believed that a combination with Daimler-Benz represented
a unique strategic opportunity for Chrysler and its stockholders, who could
continue to participate as stockholders in the combined company. In addition,
the terms of the Combination Agreement permit Chrysler to negotiate and accept a
Superior Proposal (as hereinafter defined). Therefore, the Chrysler Board did
not seek a transaction with any other company.
52
<PAGE>
Opinion of Financial Advisor of Chrysler
Chrysler retained CSFB to act as its exclusive financial advisor in
connection with the Chrysler Merger based upon CSFB's experience and expertise.
On May 6, 1998, CSFB delivered to the Chrysler Board its oral opinion,
subsequently confirmed in writing, that, based upon and subject to the factors
and assumptions set forth therein, as of such date, the U.S. Exchange Ratio was
fair from a financial point of view to the holders of Chrysler Common Stock.
CSFB subsequently delivered to the Chrysler Board its written opinion, dated May
6, 1998 (the "CSFB Opinion"), that, based upon and subject to the factors and
assumptions set forth therein, as of such date, the U.S. Exchange Ratio was fair
from a financial point of view to the holders of Chrysler Common Stock.
At the meeting of the Chrysler Board on July 30, 1998, CSFB orally advised
the Chrysler Board that the change to 1.005 in the Daimler-Benz Exchange Offer
Ratio and the Daimler-Benz Merger Exchange Ratio if the Minimum Condition is
satisfied did not affect the CSFB Opinion. The Chrysler Board did not request an
updated opinion from CSFB.
THE FULL TEXT OF THE CSFB OPINION, WHICH SETS FORTH THE PROCEDURES FOLLOWED,
ASSUMPTIONS AND QUALIFICATIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE
REVIEW UNDERTAKEN BY CSFB, IS ATTACHED AS ANNEX B TO THIS PROXY
STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. STOCKHOLDERS OF
CHRYSLER ARE URGED TO READ THE CSFB OPINION CAREFULLY AND IN ITS ENTIRETY. THE
CSFB OPINION WAS PROVIDED TO THE CHRYSLER BOARD FOR ITS INFORMATION IN
CONNECTION WITH ITS CONSIDERATION OF THE TRANSACTIONS AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY CHRYSLER STOCKHOLDER AS TO HOW TO VOTE ON THE CHRYSLER
MERGER PROPOSAL. THE SUMMARY OF THE CSFB OPINION SET FORTH IN THIS PROXY
STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF THE CSFB OPINION SET FORTH IN ANNEX B AND INCORPORATED HEREIN BY REFERENCE.
In preparing the CSFB Opinion, CSFB performed a variety of financial and
comparative analyses, including those described below. The summary of CSFB's
analyses set forth below does not purport to be a complete description of the
analyses underlying the CSFB Opinion or the presentation made by CSFB to the
Chrysler Board. The preparation of a fairness opinion is a complex analytic
process involving various determinations as to the most appropriate and relevant
methods of financial analyses and the application of those methods to the
particular circumstances, and, therefore, such an opinion is not readily
susceptible to partial analysis or summary description. In arriving at its
opinion, CSFB did not attribute any particular weight to any analysis or factor
considered by it, but rather made qualitative judgments as to the significance
and relevance of each analysis and factor. Accordingly, CSFB believes that its
analyses must be considered as a whole and that selecting portions of its
analyses, without considering all analyses, would create an incomplete view of
the process underlying the CSFB Opinion.
In performing its analyses, CSFB made numerous assumptions with respect to
Chrysler, Daimler-Benz, industry performance, general business, economic, market
and financial conditions and other matters, many of which are beyond the control
of Chrysler or Daimler-Benz. No company, transaction or business used in such
analyses as a comparison is identical to Chrysler, Daimler-Benz or the proposed
Transactions, nor is an evaluation of the results of such analyses entirely
mathematical; rather, such analyses involve complex considerations and judgments
concerning financial and operating characteristics and other factors that could
affect the acquisition, public trading or other values of the companies,
business segments or transactions being analyzed. Any estimates contained in the
analyses performed by CSFB are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than suggested
by such analyses. Additionally, estimates of the value of businesses or
securities do not purport to be appraisals or to reflect the prices at which
such businesses or securities might actually be sold. Accordingly, such analyses
and estimates are inherently subject to substantial uncertainty. In addition,
the CSFB Opinion and CSFB's presentation to the Chrysler Board were among
several factors taken into consideration by the Chrysler Board in making its
determination to approve the Transactions. Consequently, the CSFB analyses
described below should not be viewed as, and were not, determinative of the
opinion of the Chrysler Board or Chrysler's management with respect to the U.S.
Exchange Ratio or the proposed Transactions.
53
<PAGE>
In arriving at its opinion, CSFB reviewed certain publicly available
business and financial information relating to Chrysler and Daimler-Benz, as
well as a draft of the Combination Agreement. CSFB also reviewed certain other
information, including financial forecasts, provided to it by Chrysler and
Daimler-Benz, and met with the managements of Chrysler and Daimler-Benz to
discuss the business and prospects of Chrysler and Daimler-Benz. CSFB also
considered certain financial and stock market data of Chrysler and Daimler-Benz,
compared that data with similar data for other publicly held companies in
businesses similar to those of Chrysler and Daimler-Benz and considered the
financial terms of certain other business combinations and other transactions
which have recently been effected. In addition, CSFB considered such other
information, financial studies, analyses and investigations and financial,
economic and market criteria that it deemed relevant.
In connection with its review, CSFB did not assume any responsibility for
independent verification of any of the foregoing information and relied on such
information being complete and accurate in all material respects. With respect
to financial forecasts, CSFB assumed that they were reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
managements of Chrysler and Daimler-Benz as to the future financial performance
of Chrysler and Daimler-Benz. CSFB also assumed, with Chrysler's consent, that
the Transactions would be consummated in the manner and on the terms set forth
in the Combination Agreement and that in the course of obtaining the necessary
legal, regulatory and third party consents and approvals no restrictions would
be imposed that would have a material adverse effect on the contemplated
benefits of the Transactions. CSFB was not requested to make, and did not make,
an independent evaluation or appraisal of the assets or liabilities (contingent
or otherwise) of Chrysler or Daimler-Benz, nor was it furnished with any such
evaluations or appraisals. CSFB was not requested to, and did not, solicit third
party indications of interest in acquiring all or any part of Chrysler. No other
limitations were imposed by the Chrysler Board upon CSFB with respect to
investigations made or procedures followed by CSFB in rendering its opinion. The
CSFB Opinion is necessarily based upon financial, economic, market, exchange
rate and other conditions as they existed and could be evaluated on the date
thereof. CSFB did not express any opinion as to what the actual value of the
DaimlerChrysler Ordinary Shares actually will be when issued to Chrysler's
stockholders pursuant to the Chrysler Merger or the prices at which the
DaimlerChrysler Ordinary Shares will trade subsequent to the Chrysler Merger or
the other Transactions.
The following is a summary of the analyses performed by CSFB in connection
with the preparation of the CSFB Opinion.
COMPARATIVE STOCK PRICE PERFORMANCE ANALYSIS. CSFB reviewed the per share
daily closing prices of the Chrysler Common Stock and of the Daimler-Benz ADSs
over the period from May 1, 1997 to May 4, 1998 compared with the performance of
other U.S. and European automobile manufacturers including General Motors
Corporation, Ford Motor Company, Bayerische Motoren Werke AG, Fiat SpA, PSA
Peugeot Citroen, Renault SA, Volkswagen AG and Volvo AB. CSFB also reviewed the
ratios of Chrysler's to Daimler-Benz' high, low and average per share daily
closing stock prices for the twelve month period ending May 4, 1998, as well as
the closing stock prices on May 4, 1998, and computed the premium or discount of
the U.S. Exchange Ratio in relation to the aforementioned prices. The ratios of
the various stock prices of Chrysler to Daimler-Benz for the period ending May
4, 1998 ranged from 0.398 to 0.477, and CSFB observed that the U.S. Exchange
Ratio represented a premium ranging from approximately 15% to 37% over those
ratios.
EQUITY ANALYST PRICE TARGETS ANALYSIS. CSFB reviewed the per share price
targets of the Chrysler Common Stock and of the Daimler-Benz ADSs from selected
investment research reports. CSFB also reviewed the ratios of Chrysler's to
Daimler-Benz' target stock prices and computed the premium or discount of the
U.S. Exchange Ratio in relation to the aforementioned ratios. The ratio of
target stock prices of Chrysler to Daimler-Benz was 0.471 for the mean price
targets, and CSFB observed that the U.S. Exchange Ratio represented a premium of
approximately 16% over that ratio.
CHRYSLER DISCOUNTED CASH FLOW ANALYSIS. CSFB performed a discounted cash
flow analysis for fiscal years 1998 to 2002 to estimate the present value of the
stand-alone unlevered free cash flows that Chrysler is
54
<PAGE>
expected to generate if Chrysler performs in accordance with scenarios based on
certain financial forecasts. For purposes of this analysis, unlevered free cash
flows were defined as unlevered net income plus depreciation plus amortization
less capital expenditures less investment in working capital.
CSFB performed its analyses based on financial forecasts provided to it by
Chrysler for two separate business scenarios: a base case (the "Chrysler Base
Case") and a sensitivity case (the "Chrysler Sensitivity Case"). The Chrysler
Base Case reflects Chrysler's current business plan, including Chrysler
management forecasts for fiscal years 1998 through 2002. The Chrysler
Sensitivity Case includes management's adjustments to the Chrysler Base Case to
provide for an industry downturn, lower market share and higher sales
incentives.
The Chrysler Base Case projections included (i) projected revenues of $63.7
billion, $71.1 billion, $71.2 billion, $76.4 billion and $80.5 billion in 1998,
1999, 2000, 2001 and 2002 and (ii) projected net income of $3.1 billion, $3.3
billion, $3.3 billion, $4.1 billion and $4.9 billion in 1998, 1999, 2000, 2001
and 2002.
Chrysler informed CSFB that the Chrysler Base Case projection were based on
several significant assumptions. The Chrysler Base Case projections are
influenced significantly by North American vehicle sales, the level of retail
incentives per unit and the success of new product models. The Chrysler Base
Case projections assume North American vehicle sales of approximately 16.6
million in 1998 and remaining relatively constant through 2002. The assumed
level of retail incentives in 1998 was approximately $1,250 per unit with slight
increases in the incentive levels for 1999 and 2000 during the launch of new
models and declines in incentive levels during 2001 and 2002 after the
successful launch of the new models.
CSFB calculated terminal values for Chrysler by applying a range of
multiples of earnings before interest, taxes, depreciation and amortization
("EBITDA") to the fiscal year 2002 EBITDA from 3.00x to 3.75x in each of the
above two scenarios. These EBITDA multiples were based on Chrysler's and
comparable U.S. automobile manufacturers' trading multiples of fiscal year 1997
EBITDA. The unlevered free cash flow streams and terminal values were then
discounted using a range of discount rates from 12.5% to 13.5%. The discount
rate range was selected based on an analysis of Chrysler's weighted average cost
of capital. Based on this analysis, the implied equity values for Chrysler
ranged from approximately $49 to approximately $58 per fully diluted share of
Chrysler Common Stock for the Chrysler Base Case and approximately $30 to
approximately $35 per fully diluted share of Chrysler Common Stock for the
Chrysler Sensitivity Case.
DAIMLER-BENZ DISCOUNTED CASH FLOW ANALYSIS. CSFB performed a discounted
cash flow analysis for fiscal years 1998 to 2002 to estimate the present value
of the stand-alone unlevered free cash flows that Daimler-Benz is expected to
generate if Daimler-Benz performs in accordance with scenarios based on certain
financial forecasts. For purposes of this analysis, unlevered free cash flows
were defined as unlevered net income plus depreciation plus amortization less
capital expenditures less investment in working capital.
CSFB performed its analyses based on financial forecasts provided to it by
Daimler-Benz for two separate business scenarios: a base case (the "Daimler-Benz
Base Case") and a sensitivity case (the "Daimler-Benz Sensitivity Case"). The
Daimler-Benz Base Case reflects Daimler-Benz' current strategic plan, including
Daimler-Benz management forecasts for fiscal years 1998 through 2000 and
forecasts developed by CSFB for fiscal years 2001 through 2002 based upon the
first three years' projected performance. The Daimler-Benz Sensitivity Case was
developed by CSFB after discussions with Daimler-Benz management to reflect
adjustments to the Daimler-Benz Base Case to provide for slower sales growth and
lower operating margin expansion.
CSFB was informed by Daimler-Benz that the Daimler-Benz Base Case included
projections of each of its major operating segments. Passenger Cars projections
included (i) projected revenues of DM59.4 billion, DM66.6 billion and DM69.2
billion in 1998, 1999 and 2000 and (ii) earnings before interest and taxes
("EBIT") of DM3.4 billion, DM5.4 billion and DM5.9 billion in 1998, 1999 and
2000. Commercial Vehicles included (i) projected revenues of DM40.2 billion,
DM42.4 billion and DM44.2 billion in 1998, 1999 and 2000 and (ii) EBIT of DM1.3
billion, DM2.1 billion and DM2.3 billion in 1998, 1999 and 2000. DASA
projections included (i) projected revenues of DM16.0 billion, and DM17.6
billion and DM17.8 billion in 1998, 1999 and 2000 and
55
<PAGE>
(ii) EBIT of DM0.5 billion, DM1.3 billion and DM1.5 billion in 1998, 1999 and
2000. Directly Managed Businesses projections included (i) projected revenues of
DM8.4 billion, DM9.9 billion and DM10.9 billion in 1998, 1999 and 2000, debis
projections included (i) projected revenues of DM17.3 billion, DM20.4 billion
and DM23.5 billion in 1998, 1999 and 2000 and (ii) EBIT of DM0.5 billion, DM0.7
billion and DM1.0 billion in 1998, 1999 and 2000. Corporate Eliminations
projections included (i) projected revenues of DM(5.9) billion, DM(7.2) billion
and DM(7.4) billion in 1998, 1999 and 2000 and (ii) EBIT of DM(0.5) billion,
DM(0.4) billion and DM(0.4) billion in 1998, 1999 and 2000.
Daimler-Benz informed CSFB that the Daimler-Benz Base Case projections were
based on several significant assumptions. The growth in Passenger Car revenues
and EBITDA stem from the assumed successful launch of the new S-class automobile
and the continued growth of the recently introduced C-class and the M-class
lines. The continued growth in Commercial Vehicle revenues and the increases in
its EBITDA arise from the assumed improvement in the European truck market and
the successful launch of its new line of vehicles. The revenue increases for
DASA are assumed to arise from the high demand in the commercial aircraft
business and from increased European defense spending while the improvements in
EBITDA in addition stem from the continued successful implementation of the
restructuring program of this business segment. The improvement in the Directly
Managed Businesses is assumed to continue after the successful rationalization
of the businesses in this segment and the success of recently entered into joint
ventures. The growth in debis' revenues and EBITDA are assumed to track the
growth of the Passenger Car segment and the continued growth of its
telecommunication and information technology services.
CSFB calculated terminal values for Daimler-Benz by applying a range of
multiples of EBITDA to the fiscal year 2002 EBITDA from 5.5x to 6.5x for the
passenger cars business segment; from 5.0x to 7.0x for the commercial vehicles
business segment; from 8.0x to 10.0x for the aerospace (DASA) business segment;
from 8.0x to 9.0x for the non-financial services businesses within the debis
business segment; and from 7.0x to 9.0x for the Directly Managed Businesses
(DMB) business segment in each of the above two scenarios. These EBITDA
multiples were based on current comparable companies trading multiples of fiscal
year 1997 EBITDA. CSFB calculated terminal multiples for Daimler Benz' financial
services business within the debis business segment by applying a range of net
income multiples for the fiscal year 2002 net income from 16.0x to 17.0x. These
net income multiples were based on current comparable companies (including, in
the case of the passenger cars segment, comparable European automobile
companies) trading multiples of fiscal year 1997 net income. The unlevered free
cash flow streams and terminal values were then discounted using a range of
discount rates from 9.5% to 10.5% for the passenger cars business segment; from
9.5% to 10.5% for the commercial vehicles business segment; from 9.0% to 10.0%
for the aerospace (DASA) business segment; from 11.0% to 13.0% for the financial
services businesses within the debis business segment; from 9.0% to 10.0% for
the non-financial services businesses within the debis business segment; and
from 10.0% to 12.0% for the Directly Managed Businesses (DMB) business segment
in each of the above two scenarios. The discount rate ranges for the business
segments were selected based on an analysis of the comparable companies'
weighted average cost of capital. Based on this analysis, the equity values for
Daimler-Benz ranged from approximately DM 183 to approximately DM 221 ($102 to
$123 assuming DM/US$ exchange rate of 1.80/1.00) per fully diluted Daimler-Benz
Ordinary Share for the Daimler-Benz Base Case and approximately DM 143 to
approximately DM 172 ($79 to $95 assuming DM/US$ exchange rate of 1.80/1.00) per
fully diluted Daimler-Benz Ordinary Share for the Daimler-Benz Sensitivity Case.
CSFB reviewed the ratios of Chrysler's to Daimler-Benz' discounted cash flow
equity valuation per fully diluted share based on the discounted cash flow
analysis and computed the premium or discount of the U.S. Exchange Ratio in
relation to the aforementioned ratios. The ratios of equity valuations per fully
diluted share of Chrysler to Daimler-Benz for the Chrysler Base Case and the
Daimler-Benz Base Case ranged from 0.472 to 0.480. CSFB observed that the U.S.
Exchange Ratio represented a premium of approximately 14% to 16% over the ratios
of Chrysler's to Daimler-Benz' discounted cash flow equity valuations per fully
diluted share.
CHRYSLER COMPARABLE COMPANIES ANALYSIS. Using publicly available
information, CSFB compared selected financial, operating and stock market data
for Chrysler to corresponding data of selected companies in the U.S.
56
<PAGE>
automobile industry, consisting of General Motors Corporation and Ford Motor
Company (the "Selected Companies"). This analysis indicated, among other things,
ranges of multiples for the Selected Companies of estimated fiscal 1998 earnings
per share ("EPS") of 8.0x to 9.5x and ranges of multiples for the Selected
Companies of estimated fiscal 1999 EPS of 8.0x to 9.0x. Applying these multiples
to Chrysler's Base Case and First Call 1998 and 1999 EPS forecasts resulted in
an implied equity reference range for Chrysler of approximately $40 to
approximately $50 per fully diluted share of Chrysler Common Stock. First Call
is a frequently quoted earnings estimate and financial news survey. CSFB did not
review the methodologies or assumptions used by First Call in compiling its
earnings estimate, and First Call was not asked to consent to the use of its
name herein.
DAIMLER-BENZ COMPARABLE COMPANIES ANALYSIS. Using publicly available
information, CSFB compared selected financial, operating and stock market data
for Daimler-Benz to corresponding data of selected companies in the European
passenger car industry including Bayerische Motoren Werke AG, Fiat SpA, PSA
Peugeot Citroen, Renault SA, Volkswagen AG and Volvo AB; in the commercial
vehicle industry including MAN AG, Navistar International Corporation, Oshkosh
Truck Corporation, PACCAR Inc., Scania AB and Western Star Trucks Holdings Ltd.;
in the aerospace and defense industry including The Boeing Company, Bombardier
Inc., British Aerospace Plc, Dassault Aviation SA, Lockheed Martin Corporation,
Northrop Grumman Corporation, Raytheon Company and Thomson-CSF; and the
financial services industry including Associates First Capital Corp., Household
International, Inc., The CIT Group, Inc. and The FINOVA Group Inc. This analysis
indicated respective multiples of estimated fiscal 1998 sales and EBIT of 0.3x
to 0.5x and 8.1x to 16.8x for European passenger cars; 0.3x to 1.0x and 5.2x to
11.1x for commercial vehicles; and 0.8x to 1.5x and 7.3x to 15.2x for aerospace
and defense. For Financial Services, CSFB calculated multiples of book value and
estimated fiscal 1998 net income which ranged from 2.4x to 4.1x and 17.0x to
22.0x, respectively. Applying these multiples to corresponding financial data of
Daimler-Benz resulted in an implied equity reference range for Daimler-Benz of
approximately DM 110 to approximately DM 189 ($61 to $105 assuming DM/US$
exchange rate of 1.80/1.00) per fully diluted Ordinary Share of Daimler-Benz.
CSFB reviewed the ratios of Chrysler's to Daimler-Benz' comparable companies
equity valuation per fully diluted share and computed the premium or discount of
the U.S. Exchange Ratio in relation to the aforementioned ratios. The ratios of
equity valuations per fully diluted share of Chrysler to Daimler-Benz ranged
from 0.476 to 0.656. CSFB observed that the U.S. Exchange Ratio represented a
discount of approximately (17%) under, to a premium of approximately 15% over,
the ratios of Chrysler's to Daimler-Benz' comparable companies equity valuations
per fully diluted share.
CSFB observed that the implied premium indicated from this analysis was
consistent with the results of other analyses, but that this analysis also
indicated the U.S. Exchange Ratio represented a potential discount to the ratios
of Chrysler's to Daimler-Benz' comparable companies equity valuation per fully
diluted share. CSFB noted this potential discount, but as stated above, this
analysis was just one of several analyses used by CSFB to reach its fairness
determination.
PRECEDENT "MERGER-OF-EQUALS" TRANSACTIONS. CSFB analyzed the Transactions
as a strategic business combination not involving a sale of control of Chrysler
and, accordingly, reviewed and analyzed the terms, to the extent publicly
available, of 16 major announced or completed "merger-of-equals" transactions
(the "Precedent MOE Transactions") in various industry sectors such as
automotive, telecommunications, utilities, financial services, consumer products
and pharmaceuticals. For each of the Precedent MOE Transactions, CSFB reviewed
and analyzed the stock price premium/(discount) from each constituent company's
perspective based on the relevant exchange ratio versus both (i) the market
exchange ratio one day prior to the announcement of the transaction and (ii) the
market exchange ratio based on the average stock prices for the 20 trading days
prior to the announcement of the transaction. CSFB also reviewed the pro forma
ownership of the combined company by each constituent company's stockholder
base, each constituent company's representation on the board of directors of the
combined company and each constituent company's share of senior management
positions. CSFB grouped the Precedent MOE Transactions based on whether each
constituent company had even or uneven representation on the board of directors
of the combined company. CSFB noted that twelve of
57
<PAGE>
the Precedent MOE Transactions had even representation on the board of directors
of the combined company: (i) BANC ONE CORPORATION and First Chicago NBD
Corporation; (ii) Travelers Group Inc. and Citicorp; (iii) TransCanada Pipelines
Limited and NOVA Corporation; (iv) The Royal Bank of Canada and Bank of
Montreal; (v) Union Bank of Switzerland and Swiss Bank Corporation; (vi) CUC
International Inc. and HFS Incorporated; (vii) Grand Metropolitan PLC and
Guinness PLC; (viii) Dean Witter Discover & Co. and Morgan Stanley Group Inc.;
(ix) AXA SA and UPA Group; (x) Autoliv AB and Morton International, Inc.'s
Automotive Safety Products; (xi) Bell Atlantic Corporation and NYNEX
Corporation; and (xii) Sandoz Ltd. and Ciba Geigy Group; and that three of the
Precedent MOE Transactions had uneven representation on the board of directors
of the combined company: (i) NationsBank Corporation and BankAmerica
Corporation; (ii) American Electric Power Company Inc. and Central & South West
Corporation; and (iii) SBC Communications Inc. and Pacific Telesis Group.
CSFB's analysis indicated that the exchange ratios for the Precedent MOE
Transactions were generally negotiated within a reasonably narrow band around
the market exchange ratio implied by recent pre-announcement stock market prices
(both using stock prices one day prior to public announcement and over the 20
trading days prior to public announcement), and that one party to a given
transaction typically received a modest premium to such pre-announcement stock
market prices whereas the other party to the transaction received a modest
discount to such recent pre-announcement stock market prices. For the twelve
Precedent MOE Transactions where each of the constituent companies had even
representation on the combined company's board of directors, the premiums ranged
from 0.5% to 21.7% and the discounts ranged from (1.2%) to (13.1%), with the
premiums and discounts each being less than 15% in seven of the ten transactions
where premiums and discounts could be calculated. For the three Precedent MOE
Transactions where each of the constituent companies had uneven representation
on the combined company's board of directors, the premiums ranged from 0.0% to
39.0% and there were no discounts, with the premiums being less than 15% in only
one of the three transactions. CSFB noted that the U.S. Exchange Ratio resulted
in the following one-day and average 20-day premiums/(discounts) compared to the
Market Exchange Ratio (as defined below) as of May 4, 1998: premium of 38.0% and
premium of 32.0%, respectively, from Chrysler's perspective. CSFB also noted
that as a result of the Chrysler Merger, each of Chrysler and Daimler-Benz would
have even stockholder representation on the DaimlerChrysler Supervisory Board
and would share key senior management positions.
CSFB noted that none of the Precedent MOE Transactions was identical to the
Transactions and that, accordingly, any analysis of the Precedent MOE
Transactions necessarily involved complex considerations and judgments
concerning differences in industry dynamics, stock market valuation parameters,
financial and operating characteristics and various other factors that would
necessarily affect the U.S. Exchange Ratio as compared to the exchange ratios
for the Precedent MOE Transactions.
PRO FORMA ANALYSIS. Based on the Chrysler Base Case forecasts and the
Daimler-Benz Base Case forecasts, CSFB analyzed the pro forma EPS for
DaimlerChrysler for fiscal years 1999 and 2000. The analysis showed, on an
equivalent share basis, the Transactions would lead to pro forma EPS in 1999 and
2000 less than the Chrysler Base Case forecast and greater than the Daimler-Benz
Base Case forecast. While CSFB noted these pro forma EPS effects, CSFB also
considered the pro forma share price effects. CSFB compared the share prices of
Chrysler and Daimler-Benz to the theoretical trading value of a DaimlerChrysler
AG share, on an equivalent share basis, based on the pro forma EPS for
DaimlerChrysler AG and a range of potential price/earnings multiples based on
the Chrysler and Daimler-Benz comparable companies analyses. This analysis
indicated that, on an equivalent share basis, the share price of DaimlerChrysler
AG would be greater than the share prices of Chrysler or Daimler-Benz on a
stand-alone basis.
Pursuant to a letter agreement, dated February 1, 1998, between Chrysler and
CSFB, Chrysler agreed to pay CSFB for services rendered thereunder (i) a fee of
$15 million, payable upon announcement of the Transactions, (ii) a fee of $20
million, to be paid upon the closing of the Transactions and (iii) an additional
fee equal to 0.11% of the change in Chrysler's fully diluted equity market value
on December 31, 1997 compared to the fully diluted equity market value of the
DaimlerChrysler shares received by Chrysler's stockholders in the Chrysler
Merger to be paid 65 calendar days following the time of closing, subject to a
maximum of $20 million. Chrysler also agreed to reimburse CSFB for all
out-of-pocket expenses, including the fees and expenses of its legal counsel and
any other advisor retained by CSFB, resulting from or arising out of the
engagement. Chrysler
58
<PAGE>
further agreed to indemnify CSFB and certain related persons and entities for
certain losses, claims, damages or liabilities (including actions or proceedings
in respect thereof) related to or arising out of, among other things, its
engagement as financial advisor. To the extent that Chrysler issues additional
shares of Chrysler Common Stock in connection with the Transactions, CSFB will
perform certain investment banking services for Chrysler related thereto and
receive customary fees for such services.
In the past, CSFB has performed certain investment banking services for
Chrysler and has received customary fees for such services. CSFB is an
internationally recognized investment banking and advisory firm. CSFB, as part
of its investment banking business, is continuously engaged in the valuation of
businesses and securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for corporate
and other purposes. In the ordinary course of business, CSFB and its affiliates
may actively trade the debt and equity securities of both Chrysler and
Daimler-Benz for their own accounts and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
Recommendations of the Daimler-Benz Management Board and Reasons for those
Recommendations
The Daimler-Benz Management Board received comprehensive status briefings
concerning discussions with Chrysler at meetings of the Daimler-Benz Management
Board on April 7 and April 19. On May 3, 1998, the Daimler-Benz Management Board
met to review the Transactions and unanimously approved the Transactions and the
proposed Combination Agreement.
The Daimler-Benz Management Board has unanimously determined that the
Daimler-Benz Exchange Offer and the Daimler-Benz Merger are fair to and in the
best interests of Daimler-Benz and its stockholders. In addition, the
Daimler-Benz Management Board unanimously resolved to recommend that the
Daimler-Benz stockholders approve the consummation of the transactions
contemplated by the Combination Agreement, including the Daimler-Benz Exchange
Offer, to accept the Daimler-Benz Exchange Offer and tender their shares
pursuant to the Daimler-Benz Exchange Offer and to approve the Daimler-Benz
Merger.
The material factors taken into account by the Daimler-Benz Management Board
in reaching such conclusions and formulating its recommendation are set forth
below:
- In light of the likelihood of international consolidation in the
automobile industry, automobile companies that consolidate currently are
likely to enjoy the most attractive prospects for materially enhancing
their long-term competitive position. The Daimler-Benz Management Board
viewed the combination with Chrysler as an opportunity to strengthen
Daimler-Benz' competitive position through an immediate expansion of its
automotive product range to cover virtually the entire market and through
a geographic expansion in the U.S. on the same scale as Daimler-Benz
presently maintains in Europe.
- The proposed combination with Chrysler will create the third largest
automotive company in the world in terms of revenues, market
capitalization and earnings. Daimler-Benz believes that these attributes
will create a combined company which is stronger and better positioned in
the marketplace than Daimler-Benz would be as an independent entity. In
addition, Daimler-Benz believes that the increase in market capitalization
will provide enhanced liquidity for Daimler-Benz stockholders.
- The combination with Chrysler will help reduce the risk associated with
the dependency on the premium segment of the automobile market by
introducing brand diversity.
- The potential short-term synergies in purchasing, distribution and
research and development, and the potential long-term synergies in the
development and growth of markets expected from the combination.
Daimler-Benz anticipates benefits from the combination of approximately
$1.4 billion in the first year of combined operations, and annual benefits
of approximately $3 billion within three to five years.
- With Daimler-Benz' non-automotive businesses, including aerospace,
services and rail systems, diesel engines and automotive electronics
operations, the combined company will be a world leader in the areas of
traffic and transportation. These businesses will continue to be managed
within DaimlerChrysler AG as independent divisions.
59
<PAGE>
- The Daimler-Benz Management Board's belief that the Daimler-Benz Merger
Exchange Ratio, when considered in light of the U.S. Exchange Ratio,
conforms in both theory and practice with the relevant generally accepted
German valuation principles. For a discussion of such applicable German
valuation principles, see "The Transactions--German Valuation Proceeding
(SPRUCHVERFAHREN)."
- The opinion of Goldman Sachs to the Daimler-Benz Management Board and the
Daimler-Benz Supervisory Board, provided orally on May 6, 1998 that, as of
the date of such opinion, the Daimler-Benz Exchange Ratio (as defined in
the Goldman Sachs opinion attached hereto as Annex C) pursuant to the
Combination Agreement is fair from a financial point of view to the
holders of Daimler-Benz Ordinary Shares (including those Daimler-Benz
Ordinary shares represented by Daimler-Benz ADSs). Such opinion was
subsequently confirmed in writing on May 8, 1998.
- The fact that DaimlerChrysler AG will be a stock corporation
(AKTIENGESELLSCHAFT) organized under the laws of the Federal Republic of
Germany, thereby enhancing the likelihood of acceptance of the
Transactions by all important constituencies of Daimler-Benz.
Although the Daimler-Benz Management Board considered each of the foregoing
factors in reaching its determination, different members of the Daimler-Benz
Management Board may have attached different importance to different factors. In
view of the variety of factors considered in connection with its evaluation of
the Transactions, the Daimler-Benz Management Board did not discuss or consider
relative weights for the specific factors considered in reaching its
determination.
Opinion of Financial Advisor of Daimler-Benz
On May 6, 1998, Goldman Sachs delivered its oral opinion to the Daimler-Benz
Management Board and Daimler-Benz Supervisory Board that, as of the date of such
opinion, the Daimler-Benz Exchange Ratio (as defined in the Goldman Sachs
opinion attached hereto as Annex C) pursuant to the Combination Agreement is
fair from a financial point of view to the holders of Daimler-Benz Ordinary
Shares (including those Daimler-Benz Ordinary Shares represented by Daimler-Benz
ADSs). Goldman Sachs subsequently confirmed its earlier opinion by delivery of
its written opinion dated as of May 8, 1998. Thereafter, Goldman Sachs orally
advised the Daimler-Benz Management Board and Daimler-Benz Supervisory Board
that (i) the change to 1.005 in the Daimler-Benz Exchange Offer Ratio and the
Daimler-Benz Merger Exchange Ratio if the Minimum Condition is satisfied and
(ii) the change of the 80% Minimum to the 75% Minimum did not affect the Goldman
Sachs opinion. Neither the Daimler-Benz Management Board nor the Daimler-Benz
Supervisory Board requested an updated opinion from Goldman Sachs.
The full text of the written opinion of Goldman Sachs dated May 8, 1998,
which sets forth assumptions made, matters considered and limitations on the
review undertaken in connection with the opinion, is attached hereto as Annex C
to this Proxy Statement/Prospectus and is incorporated herein by reference.
Holders of Daimler-Benz Ordinary Shares or Daimler-Benz ADSs are urged to, and
should, read such opinion in its entirety. The opinion and advice provided by
Goldman Sachs is not and should not be considered a value opinion (BEWERTUNG
Z.B. IM RAHMEN EINER VERSCHMELZUNG) as usually rendered by qualified auditors
based on the requirements of German corporate law.
In connection with its opinion, Goldman Sachs reviewed, among other things,
(i) the Combination Agreement; (ii) the Annual Reports to Stockholders of
Daimler-Benz and Chrysler for the five years ended December 31, 1997; (iii)
Annual Reports on Form 10-K of Chrysler for the five years ended December 31,
1997; (iv) Annual Reports on Form 20-F of Daimler-Benz for the four years ended
December 31, 1997; (v) certain interim reports to stockholders of Daimler-Benz
and Chrysler and Quarterly Reports on Form 10-Q of Chrysler; (vi) certain other
communications from Daimler-Benz and Chrysler to their respective stockholders;
and (vii) certain internal financial analyses and forecasts for Daimler-Benz and
Chrysler prepared by their respective managements including the cost savings
projected by the Daimler-Benz and Chrysler managements to result from the
Transactions. Goldman Sachs also held discussions with members of the senior
management of Daimler-Benz and Chrysler regarding the strategic rationale for,
and potential benefits of, the Transactions and the past and current business
operations, financial condition, and future prospects of their respective
60
<PAGE>
companies. In addition, Goldman Sachs reviewed the reported price and trading
activity for the Daimler-Benz Ordinary Shares and Daimler-Benz ADSs and Chrysler
Common Stock, compared certain financial and stock market information for
Daimler-Benz and Chrysler with similar information for certain other companies
the securities of which are publicly traded, reviewed the financial terms of
certain recent business combinations in the automotive manufacturing industry
specifically and in other industries generally and performed such other studies
and analyses as it considered appropriate.
Goldman Sachs relied upon the accuracy and completeness of all of the
financial and other information reviewed by it and has assumed such accuracy and
completeness for purposes of rendering its opinion. In addition, Goldman Sachs
has not made an independent evaluation or appraisal of the assets and
liabilities of Daimler-Benz or Chrysler or any of their respective subsidiaries
and Goldman Sachs has not been furnished with any such evaluation or appraisal.
Goldman Sachs has assumed that the financial forecasts, including, without
limitation, the cost savings projected by Daimler-Benz and Chrysler managements
to result from the Transactions, have been reasonably prepared on the basis
reflecting the best currently available judgment and estimates of Daimler-Benz
and Chrysler managements and that such forecasts will be realized in the amount
and at the times contemplated thereby. Goldman Sachs did not express any opinion
as to the prices at which DaimlerChrysler Ordinary Shares may trade if and when
they are issued. The opinion of Goldman Sachs referred to herein was provided
for the information and assistance of the Daimler-Benz Management Board and the
Daimler-Benz Supervisory Board in connection with their consideration of the
Transactions and such opinion does not constitute a recommendation as to how any
holder of Daimler-Benz Ordinary Shares or Daimler-Benz ADSs should vote with
respect to such Transactions or whether or not any holder of Daimler-Benz
Ordinary Shares or Daimler-Benz ADSs should tender such securities in connection
with such Transactions. In addition, the opinion and advice provided by Goldman
Sachs is not and should not be considered a value opinion (BEWERTUNG Z.B. IM
RAHMEN EINER VERSCHMELZUNG) as usually rendered by qualified auditors based on
the requirements of German corporate law.
The following is a summary of certain of the financial analyses used by
Goldman Sachs in connection with providing its oral opinion to the Daimler-Benz
Management Board and Daimler-Benz Supervisory Board on May 6, 1998. Goldman
Sachs utilized substantially the same type of financial analyses in connection
with providing the written opinion attached hereto as Annex C.
HISTORICAL STOCK TRADING ANALYSIS. Goldman Sachs reviewed the monthly
indexed historical trading prices of Daimler-Benz Ordinary Shares and
Chrysler Common Stock and the relationship between movements of such
securities and movements in a composite index of (i) European automobile
manufacturers (the "European Composite"); (ii) United States automobile
manufacturers (the "United States Composite"); and (iii) Japanese automobile
manufacturers (the "Japanese Composite"). The European Composite is composed
of the following companies: Bayerische Motoren Werke AG, Daimler-Benz (used
only in the review of Chrysler Common Stock), Fiat SpA, PSA Peugeot Citroen,
Renault SA, Volkswagen AG ("Volkswagen") and Volvo AB. The United States
Composite is composed of the following companies: Chrysler (used only in the
review of Daimler-Benz Ordinary Shares), Ford Motor Company and General
Motors Corporation. The Japanese Composite is composed of the following
companies: Honda Motor Co., Ltd., Mazda Motor Corp., Mitsubishi Motors
Corp., Nissan Motor Co., Ltd., Suzuki Motor Corp. and Toyota Motor Corp.
Such analysis indicated that during such period the Daimler-Benz Ordinary
Shares outperformed each of the United States Composite, the European
Composite and the Japanese Composite and the Chrysler Common Stock (i)
traded in line with the United States Composite, (ii) underperformed the
European Composite and (iii) outperformed the Japanese Composite.
SELECTED COMPANIES ANALYSIS. Goldman Sachs reviewed and compared
certain financial information relating to Daimler-Benz and Chrysler to
corresponding financial information, ratios and public market multiples for
the companies included in the European Composite, the United States
Composite and the Japanese Composite (the "Selected Companies"). The
Selected Companies were chosen because they are publicly-traded companies
with operations that for purposes of analysis may be considered similar to
Daimler-Benz and Chrysler. Goldman Sachs calculated and compared various
financial multiples and ratios. The multiples and ratios for Daimler-Benz,
Chrysler and each of the other Selected Companies were
61
<PAGE>
calculated using closing prices on April 29, 1998 and were based on the most
recent publicly available information. Estimated information for the
Selected Companies was provided by Goldman Sachs research, except for
Volkswagen and estimated 1999 earnings per share ("EPS") estimates for the
companies in the United States Composite were based on estimates by the
Institutional Brokers Estimate System ("IBES"). IBES is a data service that
monitors and publishes compilations of earnings estimates by selected
research analysts regarding companies of interest to institutional
investors. Goldman Sachs did not review the methodologies or assumptions
used by IBES in compiling its earnings estimate, and IBES was not asked to
consent to the use of its name herein. With respect to the Selected
Companies, Goldman Sachs considered levered market capitalization (i.e.,
market value of common equity plus book value of debt less cash) as a
multiple of revenues and as a multiple of earnings before interest, taxes,
depreciation and amortization ("EBITDA").
Goldman Sachs' analyses of the Selected Companies indicated that (a)
levered multiples of estimated 1997 revenues for (i) the United States
Composite ranged from a low of 0.26x to a high of 0.36x (with a mean of
0.31x), (ii) the European Composite ranged from a low of 0.29x to a high of
0.71x (with a mean of 0.48x) and (iii) the Japanese Composite ranged from a
low of 0.28x to a high of 1.01x (with a mean of 0.60x), as compared to 0.66x
for Daimler-Benz and 0.36x for Chrysler; (b) levered multiples of estimated
1998 revenues for (i) the United States Composite ranged from a low of 0.27x
to a high of 0.34x (with a mean of 0.31x), (ii) the European Composite
ranged from a low of 0.28x to a high of 0.68x (with a mean of 0.47x) and
(iii) the Japanese Composite ranged from a low of 0.27x to a high of 0.95x
(with a mean of 0.58x), as compared to 0.66x for Daimler-Benz and 0.34x for
Chrysler and (c) levered multiples of estimated 1999 revenues for the
European Composite ranged from a low of 0.27x to a high of 0.65x (with a
mean of 0.44x), as compared to 0.57x for Daimler-Benz. Goldman Sachs'
analyses of the Selected Companies also indicated that (a) levered multiples
of estimated 1997 EBITDA for (i) the United States Composite ranged from a
low of 2.4x to a high of 3.0x (with a mean of 2.7x), (ii) the European
Composite ranged from a low of 3.9x to a high of 7.9x (with a mean of 5.9x)
and (iii) the Japanese Composite ranged from a low of 3.5x to a high of
12.8x (with a mean of 8.1x), as compared to 7.9x for Daimler-Benz and 2.7x
for Chrysler; (b) levered multiples of estimated 1998 EBITDA for (i) the
United States Composite ranged from a low of 2.4x to a high of 3.1x (with a
mean of 2.8x), (ii) the European Composite ranged from a low of 3.3x to a
high of 6.8x (with a mean of 5.0x) and (iii) the Japanese Composite ranged
from a low of 3.2x to a high of 12.0x (with a mean of 7.6x), as compared to
6.6x for Daimler-Benz and 2.9x for Chrysler and (c) levered multiples of
estimated 1999 EBITDA for the European Composite ranged from a low of 2.9x
to a high of 6.5x (with a mean of 4.5x), as compared to 5.4x for
Daimler-Benz.
In addition, Goldman Sachs' analyses of the Selected Companies indicated
that (a) price/earnings ratios for estimated 1997 for (i) the United States
Composite ranged from a low of 8.7x to a high of 9.9x (with a mean of 9.3x),
(ii) the European Composite ranged from a low of 13.4x to a high of 35.4x
(with a mean of 21.9x) and (iii) the Japanese Composite ranged from a low of
(32.9)x to a high of 25.2x (with a mean of 5.0x), as compared to 24.4x for
Daimler-Benz and 9.9x for Chrysler; (b) price/earnings ratios for estimated
1998 for (i) the United States Composite ranged from a low of 8.0x to a high
of 9.4x (with a mean of 8.5x), (ii) the European Composite ranged from a low
of 11.2x to a high of 30.7x (with a mean of 18.2x) and (iii) the Japanese
Composite ranged from a low of 8.1x to a high of 124.1x (with a mean of
34.4x), as compared to 27.2x for Daimler-Benz and 8.1x for Chrysler and (c)
price/earnings ratios for estimated 1999 for (i) the United States Composite
ranged from a low of 8.5x to a high of 8.7x (with a mean of 8.6x) and (ii)
the European Composite ranged from a low of 9.8x to a high of 28.4x (with a
mean of 15.8x), as compared to 18.0x for Daimler-Benz and 8.5x for Chrysler.
Estimated 1999 price/earnings ratios for the Japanese Composite were not
available.
SELECTED TRANSACTION ANALYSIS. Goldman Sachs analyzed certain
information relating to comparably sized transactions. Specifically, Goldman
Sachs performed a transaction premium analysis on forty (40) announced
transactions larger than $10 billion from January 1984 to April 1998 (the
"Selected Transactions"). Such analysis indicated that for the Selected
Transactions the premium paid in such transactions as compared to (i) the
price one day prior to the announcement date ranged from a low of (5.0)% to
a high of 95.1% (with a median of 27.3% and a mean of 32.3%) and (ii) the
price four weeks prior to the
62
<PAGE>
announcement date ranged from a low of (5.7)% to a high of 100.9% (with a
median of 30.8% and a mean of 35.9%), as compared to 30.5% in the
Transactions (based on closing prices on April 29, 1998, for Daimler-Benz
Ordinary Shares and Chrysler Common Stock). Goldman Sachs did not calculate
the premium to be paid in the Transactions one day prior to the announcement
date because the analyses underlying its fairness opinion delivered to the
Daimler-Benz Management Board and Daimler-Benz Supervisory Board on May 6,
1998 were prepared prior to such date.
DISCOUNTED CASH FLOW ANALYSIS. Goldman Sachs performed a discounted
cash flow analysis assuming an EBIT growth rate of 2% from estimated
calendar year 2002 to estimated calendar year 2007. Goldman Sachs calculated
a net present value of free cash flows for the years 1998 through 2007 using
discount rates ranging from 10.0% to 12.0%. The range of discount rates was
selected based in part on an analysis of comparable companies' weighted
average costs of capital and the experience and professional judgment of
Goldman Sachs with respect to the automotive manufacturing industry. Goldman
Sachs calculated Chrysler's terminal values in the year 2007 based on
nominal perpetual free cash flow growth rates ranging from 0.0% to 4.0%.
These terminal values were then discounted to present value using discount
rates ranging from 10% to 12%. Using nominal perpetual free cash flow growth
rates ranging from 0.0% to 4.0% and a discount rate of 10%, the implied
price per share of Chrysler Common Stock ranged from $86.10 to $109.92.
Using nominal perpetual free cash flow growth rates ranging from 0.0% to
4.0% and a discount rate of 11%, the implied price per share of Chrysler
Common Stock ranged from $78.53 to $95.57. Using nominal perpetual free cash
flow growth rates ranging from 0.0% to 4.0% and a discount rate of 12%, the
implied price per share of Chrysler Common Stock ranged from $72.27 to
$84.82.
ANALYSIS OF PURCHASE PRICE. Goldman Sachs calculated the levered
consideration (including the cost of options and new shares to be issued by
Chrysler to qualify for pooling-of-interests accounting treatment) to be
paid by Daimler-Benz in the Transactions based on a per share price for
Chrysler Common Stock of $52.73 which represented a 30% premium over the
$40.56 price per share of Chrysler Common Stock on April 29, 1998. Goldman
Sachs calculated such per share price consideration as a multiple of (i)
sales revenues (based on estimates of Chrysler management), (ii) EBITDA,
(iii) earnings before interest and taxes ("EBIT") and (iv) net income (based
on estimates of Chrysler management). For purposes of EBITDA and EBIT,
equity income from Chrysler subsidiaries was excluded and Chrysler EBITDA
and EBIT were based on pretax income from Chrysler estimates after taking
into account an adjustment to interest income. With respect to sales
revenues, this analysis indicated that (i) for 1997 sales revenue of $56.9
billion the multiple was 0.53x, (ii) for estimated 1998 sales revenue of
$62.4 billion the multiple was 0.48x and (iii) for estimated 1999 sales
revenue of $68.0 billion the multiple was 0.44x, as compared to multiples of
0.38x, 0.34x and 0.32x for 1997, estimated 1998 and estimated 1999,
respectively, using a per share price of $40.56 for Chrysler Common Stock.
With respect to EBITDA, this analysis indicated that (i) for 1997 EBITDA of
$5.8 billion the multiple was 5.20x, (ii) for estimated 1998 EBITDA of $6.8
billion the multiple was 4.45x, and (iii) for estimated 1999 EBITDA of $7.2
billion the multiple was 4.17x, as compared to multiples of 3.72x, 3.18x and
2.98x for 1997, estimated 1998 and estimated 1999, respectively, using a per
share price of $40.56 for Chrysler Common Stock. With respect to EBIT, this
analysis indicated that (i) for 1997 EBIT of $3.3 billion the multiple was
9.15x, (ii) for estimated 1998 EBIT of $3.9 billion the multiple was 7.78x,
and (iii) for estimated 1999 EBIT of $4.4 billion the multiple was 6.82x, as
compared to multiples of 6.55x, 5.57x and 4.88x for 1997, estimated 1998 and
estimated 1999, respectively, using a per share price of $40.56 for Chrysler
Common Stock. With respect to net income, this analysis indicated that (i)
for 1997 net income of $2.8 billion the multiple was 12.82x, (ii) for
estimated 1998 net income of $3.0 billion the multiple was 11.95x, and (iii)
for estimated 1999 net income of $3.3 billion the multiple was 10.77x, as
compared to multiples of 9.77x, 9.10x and 8.21x for 1997, estimated 1998 and
estimated 1999, respectively, using a per share price of $40.56 for Chrysler
Common Stock.
CONTRIBUTION ANALYSIS. Goldman Sachs reviewed certain historical and
estimated future operating and financial information (including, among other
things, market capitalization, sales, EBITDA, EBIT, net income and total
assets) for Daimler-Benz, Chrysler and the pro forma combined entity based
on Daimler-
63
<PAGE>
Benz and Chrysler managements' consensus financial forecasts for each of
Daimler-Benz, Chrysler and the pro forma combined entity. In addition, for
purposes of EBITDA and EBIT, equity income from Chrysler subsidiaries was
excluded. Goldman Sachs also analyzed the relative income statement
contribution of Daimler-Benz and Chrysler to the combined companies on a pro
forma basis based on actual 1997 and estimated years 1998 and 1999, based on
financial data and on the assumptions provided to Goldman Sachs by
Daimler-Benz and Chrysler managements. This analysis indicated that (i) for
1997, Daimler-Benz would have contributed 66.4% to market capitalization,
55.4% to sales, 50.5 % to EBITDA, 38% to EBIT, 46.7% to net income and 56.1%
to total assets, (ii) for estimated 1998, Daimler-Benz would have
contributed 54.7% to sales, 53.0 % to EBITDA, 44.8% to EBIT and 39.1% to net
income and (iii) for estimated 1999, Daimler-Benz would have contributed
55.3% to sales, 58.0 % to EBITDA, 54.0% to EBIT and 47.1% to net income.
PRO FORMA MERGER ANALYSIS. Goldman Sachs prepared a pro forma analysis
of the financial impact of the Transactions. Using earnings estimates for
Daimler-Benz and Chrysler prepared by their respective managements for 1998,
1999 and 2000, and assuming pre-tax annual synergies ranging from $0 to $1.6
billion. Goldman Sachs compared the EPS of Daimler-Benz Ordinary Shares, on
a standalone basis, to the EPS of the common stock of the combined entity on
a pro forma basis. Goldman Sachs performed this analysis based on a price of
DM 175.7 per share (the per share price on April 29, 1998) of Daimler-Benz
Ordinary Shares and $40.56 per share (the per share price on April 29, 1998)
of Chrysler Common Stock and assuming that Chrysler issues 27 million shares
of Chrysler Common Stock for purposes of qualifying for pooling-of-interests
accounting treatment. This analysis indicated that, assuming synergies of
$0, $1 billion, $1.2 billion, $1.4 billion and $1.6 billion, the proposed
Transactions (i) for estimated 1998, would result in EPS accretion to the
holders of Daimler-Benz Ordinary Shares of 47.3%, 65.9%, 73.1% and 76.6%,
respectively, (ii) for estimated 1999, would result in EPS accretion to the
holders of Daimler-Benz Ordinary Shares of 23.2%, 35.3%, 37.6%, 39.9% and
42.2%, respectively and (iii) for estimated 2000, would result in EPS
accretion to the holders of Daimler-Benz Ordinary Shares of 13.8%, 24.3%,
26.3%, 28.3% and 30.4%, respectively. As part of the foregoing analysis,
Goldman Sachs also analyzed the potential impact of the Transactions on the
price/earnings ratios of Daimler-Benz Ordinary Shares using estimated 1999
price/earnings ratios ranging from a high of 16.5x (the estimated 1999
price/earnings ratio for Daimler-Benz on a standalone basis) to a low of
13.5x (the estimated 1999 price/earnings ratio for the combined entity on a
weighted average basis after taking into account the relative earnings
contributions of Daimler-Benz and Chrysler to the combined entity). This
analysis indicated that the financial impact of the Transactions would be
positive to the holders of the Daimler-Benz Ordinary Shares.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its fairness determination,
Goldman Sachs considered the results of all such analyses and did not reach
separate conclusions as to each analysis that it performed. Rather, Goldman
Sachs reached a single conclusion as to fairness based on its experience and
professional judgment and the analysis as a whole. As such, in providing its
oral opinion to the Daimler-Benz Management Board and Daimler-Benz Supervisory
Board on May 6, 1998, Goldman Sachs did not indicate how each of the analyses
described above supported its fairness determination. No company or transaction
used in the above analyses as a comparison is directly comparable to
Daimler-Benz or Chrysler or the contemplated Transactions. The analyses were
prepared solely for purposes of Goldman Sachs' providing its opinion to the
Daimler-Benz Management Board and Daimler-Benz Supervisory Board as to the
fairness from a financial point of view of to the holders of Daimler-Benz
Ordinary Shares (including those Daimler-Benz Ordinary Shares represented by
Daimler-Benz ADSs) of the Daimler-Benz Exchange Ratio (as defined in the Goldman
Sachs opinion attached as Annex C) pursuant to the Combination Agreement and do
not purport to be appraisals or necessarily reflect the prices at which
businesses or securities actually may be sold. Analyses based upon forecasts of
future results are not necessarily indicative of actual future results, which
may be significantly more or less favorable than suggested by such analyses.
Because such analyses are inherently subject to uncertainty, being based upon
numerous factors or events beyond the control of the parties or their respective
advisors, none of DaimlerChrysler AG,
64
<PAGE>
Daimler-Benz, Chrysler, Goldman Sachs or any other person assumes responsibility
if future results are materially different from those forecast. As described
above, Goldman Sachs' opinion to the Daimler-Benz Management Board and
Daimler-Benz Supervisory Board was one of many factors taken into consideration
by the Daimler-Benz Management Board and Daimler-Benz Supervisory Board in
making its determination to approve the Combination Agreement. The foregoing
summary does not purport to be a complete description of the analysis performed
by Goldman Sachs and is qualified by reference to the written opinion of Goldman
Sachs set forth in Annex C hereto.
Goldman Sachs and its affiliates, as part of their investment banking
business, are continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate
and other purposes. Daimler-Benz selected Goldman Sachs as its financial advisor
because it is an internationally recognized investment banking firm that has
substantial experience in transactions similar to the Transactions. Goldman
Sachs is familiar with Daimler-Benz having acted as its financial advisor in
connection with the sale of TEMIC Semiconductor GmbH in 1998; the acquisition of
a defense electronics business from Siemens AG in 1998; the merger of Mercedes
Benz AG with Daimler-Benz in 1997; the sale of 80% of Dornier Luftfahrt GmbH of
Daimler-Benz Aerospace AG in 1996; the merger of AEG AG into Daimler-Benz in
1996; the sale of 80% of Dornier Medizintechnik GmbH in 1996; a series of
capital market transactions including a number of equity and equity-linked
offerings from 1994 to 1997; and sponsorship and advisory services pertaining to
Daimler-Benz' NYSE listing in 1993. Goldman Sachs has also provided certain
investment banking services to Chrysler from time to time including serving as a
co-manger in the issuance of $600 million 7.45% Debentures due 2027 and $500
million 7.4% Debentures due 2097 in February 1997 and July 1997, respectively.
Goldman Sachs and its affiliates provide a full range of financial, advisory
and brokerage services and, in the course of its normal trading activities, may
from time to time effect transactions and hold positions in the securities,
including derivative securities, of Daimler-Benz or Chrysler for its own account
and for the account of customers. As of the date hereof, Goldman Sachs held net
long position of 242,442 shares of Daimler-Benz Ordinary Shares and net long
position of 128,946 shares of Chrysler Common Stock. To the extent that Chrysler
issues additional shares of Chrysler Common Stock in connection with the
Transactions, Goldman Sachs will perform certain investment services related
thereto and receive customary fees for such services.
Pursuant to a letter agreement dated April 14, 1998 (the "Engagement
Letter"), Daimler-Benz engaged Goldman Sachs to act as its financial advisor in
connection with the Transactions. Pursuant to the terms of the Engagement
Letter, Daimler-Benz has agreed to pay Goldman Sachs a fee of $15 million, to be
paid three weeks after public announcement of the Transactions, a fee of $10
million, to be paid three weeks after the Transactions are approved by holders
of Chrysler Common Stock, a fee of $10 million, to be paid three weeks after the
Transactions are approved by holders of Daimler-Benz Ordinary Shares and an
additional fee equal to 0.25% of the increase in the combined market
capitalization of Daimler-Benz and Chrysler during the six-month period
following completion of the Transactions (such fee to be at least $5 million but
not greater than $25 million). Daimler-Benz has agreed to reimburse Goldman
Sachs for all expenses pursuant to section 670 of the German Civil Code and to
indemnify Goldman Sachs against certain liabilities.
* * * * *
The Daimler-Benz Management Board (VORSTAND) determined that the
Daimler-Benz Merger Exchange Ratio was properly determined and is adequate under
German valuation principles applicable to transactions such as the Daimler-Benz
Merger. In addition, the auditors for the Daimler-Benz Merger
(VERSCHMELZUNGSPRUFER) appointed by the German court pursuant to the German
Transformation Act (UMWANDLUNGSGESETZ) have reviewed the Daimler-Benz Merger
Exchange Ratio and have reported that it was correctly determined in accordance
with applicable German valuation principles and is adequate. The report of such
auditors will be made available via the Internet on the Daimler-Benz web site to
holders of Daimler-Benz Ordinary Shares and otherwise in accordance with
applicable German law. For a discussion of such applicable German valuation
principles, see "The Transactions--German Valuation Proceeding
(SPRUCHVERFAHREN)."
65
<PAGE>
Composition of DaimlerChrysler Management Board and Integration Committee
The Combination Agreement contemplates that following the Chrysler Effective
Time, DaimlerChrysler AG will have a corporate governance structure reflecting
that the Transactions contemplate a "merger-of-equals." Daimler-Benz, Chrysler
and DaimlerChrysler AG have agreed that they will recommend to their respective
stockholders and organizational bodies that the DaimlerChrysler Management Board
shall consist of 18 members. Ten of such members will be those initially
designated by Daimler-Benz, including two members with responsibility for
Daimler-Benz' non-automotive businesses, and eight of such members will be those
initially designated by Chrysler. Set forth in the chart below are the names and
areas of responsibilities of those persons expected to be members of the
DaimlerChrysler Board of Management following the Chrysler Effective Time.
The Combination Agreement also provides that the DaimlerChrysler Management
Board will also establish an Integration Committee with a consultative function
which will consist of the Co-Chairmen of the DaimlerChrysler Management Board
(VORSTANDSVORSITZENDE), who will also serve as Co-Chairmen of the Integration
Committee, and 12 or more members (including such Co-Chairmen), 50% of whom will
initially be designated by Chrysler and 50% of whom will initially be designated
by Daimler-Benz. There will also be a Chairmen's Integration Council which will
consist of the persons identified on the chart set forth below.
The DaimlerChrysler Management Board (VORSTAND) is responsible for managing
DaimlerChrysler AG and representing DaimlerChrysler AG in its dealings with
third parties. The DaimlerChrysler Supervisory Board appoints and removes the
members of the DaimlerChrysler Management Board and oversees the management of
DaimlerChrysler AG, but is prohibited by the German Stock Corporation Law
(AKTIENGESETZ) from making management decisions. The German Stock Corporation
Law (AKTIENGESETZ) prohibits simultaneous membership on the board of management
and the supervisory board of a company. The Integration Committee will be a
stockholders advisory body including the Co-Chairmen and consisting principally
of the stockholder representatives on the DaimlerChrysler Supervisory Board. The
Integration Committee will provide advice to the Management Board (VORSTAND) of
DaimlerChrysler AG in connection with the combined businesses and operations of
DaimlerChrysler AG following consummation of the Transactions. The Chairmen's
Integration Council (Office of the Chairmen) will be responsible for, among
other things, managing the integration of Chrysler and Daimler-Benz.
66
<PAGE>
[CHART OF THE DAIMLERCHRYSLER BOARD OF MANAGEMENT APPEARS HERE.]
<PAGE>
Interests of Certain Persons in the Chrysler Merger
Certain members of Chrysler's management and the Chrysler Board may have
interests in the Chrysler Merger that are different from, or in addition to, the
interests of Chrysler stockholders generally, and that these interests may
create potential conflicts of interest. The Chrysler Board was advised of these
interests and considered them, among other factors, in approving the
Transactions. These interests are summarized below.
As described in greater detail below, subject only to the consummation of
the Chrysler Merger and their continued employment until such time, each of the
following Chrysler executive officers will receive the following cash payments,
the following number of DaimlerChrysler Ordinary Shares in respect of his
unvested Chrysler Equity Units (as defined below) and the right to share in the
appreciation from and after the Chrysler Merger in the following number of
DaimlerChrysler Ordinary Shares: Mr. Eaton, $3,727,785; 628,277 DaimlerChrysler
Ordinary Shares ($66,214,158) and stock appreciation rights with respect to
2,267,579 DaimlerChrysler Ordinary Shares; Mr. Lutz, $1,326,097; 244,314
DaimlerChrysler Ordinary Shares ($25,748,240) and stock appreciation rights with
respect to 683,380 DaimlerChrysler Ordinary Shares; Mr. Stallkamp, $1,500,433;
222,947 DaimlerChrysler Ordinary Shares ($23,496,425) and stock appreciation
rights with respect to 379,384 DaimlerChrysler Ordinary Shares; Mr. Valade,
$1,056,206; 210,586 DaimlerChrysler Ordinary Shares ($22,193,659) and stock
appreciation rights with respect to 442,685 DaimlerChrysler Ordinary Shares; Mr.
Pawley, $944,372; 204,104 DaimlerChrysler Ordinary Shares ($21,510,485) and
stock appreciation rights with respect to 298,657 DaimlerChrysler Ordinary
Shares. In addition, in the event that any of these executive officer's
employment is terminated in a qualifying termination following the Chrysler
Merger (as described in greater detail below), such officer will also receive
the following lump sum severance payment: Mr. Eaton, $24,435,997; Mr. Lutz, $0;
Mr. Stallkamp, $5,487,445; Mr. Valade, $4,601,383; and Mr. Pawley, $3,946,166.
Mr. Eaton will also receive an additional monthly pension benefit not in excess
of $30,000 in the event that he completes three years of service following the
Chrysler Merger (determined based on the assumptions set forth below).
DAIMLERCHRYSLER AG GOVERNANCE ARRANGEMENTS. The Combination Agreement
contains certain agreements relating to the corporate governance of
DaimlerChrysler AG after the Chrysler Merger. See "--Composition of
DaimlerChrysler Management Board and Integration Committee" and "The Combination
Agreement--DaimlerChrysler AG Governance After the Chrysler Effective Time."
CHRYSLER STOCK PLANS. If the Chrysler Merger is consummated, each
outstanding option to purchase or acquire shares of Chrysler Common Stock (the
"Chrysler Stock Options"), each outstanding Chrysler performance share
("Chrysler Performance Shares"), each outstanding Chrysler stock unit ("Chrysler
Stock Units") and each outstanding Chrysler restricted stock unit ("Chrysler
Restricted Stock Units" and, together with the Chrysler Stock Options, the
Chrysler Performance Shares and the Chrysler Stock Units, the "Chrysler Equity
Units"), in each case whether vested or unvested, will be converted into a right
to receive a certain number of DaimlerChrysler Ordinary Shares in accordance
with the appropriate formula described under the heading "The Combination
Agreement--The Chrysler Merger--Treatment of Chrysler Stock Plans." Each of
Chrysler's executive officers and directors holds Chrysler Equity Units that
would not otherwise be vested or exercisable, but will be converted into
DaimlerChrysler Ordinary Shares. Assuming a per share price of Chrysler Common
Stock of $65.71 and a Daimler-Benz Exchange Offer Ratio of 1:1, each of the
following persons or groups would receive the following number of
DaimlerChrysler Ordinary Shares in respect of their unvested Chrysler Equity
Units: Mr. Eaton, 628,277 shares ($66,214,158), Mr. Lutz, 244,314 shares
($25,748,240), Mr. Stallkamp, 222,947 shares ($23,496,425), Mr. Valade, 210,586
shares ($22,193,659), Mr. Pawley, 204,104 shares ($21,510,485), all non-employee
directors as a group, 24,704 shares ($2,603,603), and all executive officers as
a group (30 individuals including those named above), 3,533,234 shares
($372,367,573).
EMPLOYEE BENEFITS. Under the Combination Agreement, DaimlerChrysler AG has
agreed that for a period of at least two years following the Chrysler Effective
Time, it will provide or cause to be provided to current and former employees
and directors of Chrysler and its subsidiaries compensation and benefits
(including, without limitation, retiree medical and life insurance benefits)
that are at least as favorable in the aggregate as the
68
<PAGE>
compensation and benefits they were entitled to receive immediately prior to the
Chrysler Effective Time. In addition, DaimlerChrysler AG will, and will cause
its subsidiaries to, recognize service with Chrysler and its subsidiaries prior
to the Chrysler Effective Time for all purposes under any benefit plans of
DaimlerChrysler AG or its subsidiaries. See "The Combination Agreement--Employee
Benefit Matters." As a result of these arrangements, current and former members
of Chrysler's management and the Chrysler Board would continue to receive
compensation and benefits following the Chrysler Merger at least as favorable as
those currently provided to them by Chrysler.
EMPLOYMENT CONTINUATION AGREEMENTS. Chrysler has in effect employment
continuation agreements with each of its executive officers. These agreements
are intended to assure the affected officer of continued employment for a period
of two years following any event that constitutes a change in control for
purposes of such agreements. If Chrysler terminates the employment of any such
officer without cause, or the officer terminates his employment for good reason,
within the two-year period following a change of control, such officer will
receive a single lump sum severance payment equal to three times, in the case of
Messrs. Eaton, Stallkamp and Valade, and two times, in the case of the other
Chrysler executive officers, the sum of the individual's base salary and the
average annual bonus payable to him over the three years preceding the date of
termination, plus the value of certain additional retirement benefits. These
agreements also provide for the continuation of certain employee benefits, such
as medical coverage, for a period corresponding to the period for which
severance is payable. These agreements also provide that in the event that any
payment thereunder or under any other plan or agreement with Chrysler results in
the officer being subject to the excise tax payable under Section 4999 of the
Code, Chrysler shall make additional payments to such officer so that such
officer receives the same net after-tax benefit as the officer would have
received had no excise tax been applicable. As a result, if the employment of
Chrysler's executive officers were terminated within two years after the
Chrysler Merger, such persons would receive, an estimated lump sum severance
payment in the amount of $24,435,997 for Mr. Eaton, $0 for Mr. Lutz, $5,487,445
for Mr. Stallkamp, $4,601,383 for Mr. Valade, $3,946,166 for Mr. Pawley and an
aggregate amount of $96,907,018 for all executive officers as a group (30
individuals including the named executives). Mr. Lutz has voluntarily retired
and will not receive any severance benefits. Chrysler would also be responsible
for continuing employee benefits and the additional tax related payments
described above.
AMENDMENTS TO EMPLOYMENT AGREEMENTS AND EMPLOYMENT CONTINUATION
AGREEMENTS. Chrysler has amended its employment agreements with Messrs. Eaton,
Valade and Stallkamp to (i) add to the events giving rise to "Good Reason" for
an executive to terminate his employment, any failure by DaimlerChrysler AG,
Daimler-Benz or Chrysler to maintain the agreed corporate governance
arrangements and (ii) assure that, if the executive becomes a party to an
employment agreement with DaimlerChrysler AG, such agreement will not adversely
affect the rights of the executive and the obligations of Chrysler under his
employment agreement. Chrysler has also similarly amended its employment
continuation agreements with Messrs. Eaton, Stallkamp, Valade and the other
Chrysler executive officers. Chrysler has further amended the employment
continuation agreements with each of Messrs. Eaton, Valade and Stallkamp to
clarify that each such officer's respective employment agreement shall
automatically be reinstated for a one-year term subject to annual renewals when
the protection afforded under his employment continuation agreement expires.
In order to induce Mr. Eaton to remain employed by DaimlerChrysler AG for at
least three years following consummation of the Chrysler Merger, Chrysler has
amended Mr. Eaton's employment continuation agreement and employment agreement
with Chrysler to provide that (i) for each of the first three years of service
performed by Mr. Eaton after consummation of the Chrysler Merger he shall
receive three years of additional service credit for purposes of determining the
pension benefits payable to Mr. Eaton under Chrysler's supplemental executive
retirement plan (the "SERP"), with a pro-rated pension credit for any partial
year of service completed during such period and (ii) in the event that Mr.
Eaton's employment terminates during such three year period following the
Chrysler Merger due to his death or disability, a termination by Chrysler
without cause or a termination by Mr. Eaton for good reason, Mr. Eaton shall
receive the maximum amount of additional credited service for purposes of the
SERP (nine years additional service credit in the aggregate,
69
<PAGE>
inclusive of any pension credits earned by actual post-Chrysler Merger service
actually completed). The maximum additional monthly amount payable to Mr. Eaton
following retirement as a result of the foregoing changes (excluding amounts
that Mr. Eaton would otherwise be entitled to receive) is estimated to be
approximately $30,000.
INCENTIVE COMPENSATION PLAN. In connection with the Chrysler Merger,
participants in Chrysler's Incentive Compensation Plan (including, without
limitation, Chrysler's executive officers) will receive a distribution of
amounts calculated thereunder in respect of 1998 performance through the date of
the Chrysler Merger. In the ordinary course, under a stockholders' resolution,
the amount accrued under such Plan for the entire calendar year would be
available for award at the discretion of the Management Resources and
Compensation Committees of Chrysler's Board of Directors. Thus, at least a
significant portion of the amounts listed below would likely have been paid to
these officers without regard to the Chrysler Merger. The amount payable on
account of the Chrysler Merger in respect of the Incentive Compensation Plan
will be determined based mainly on the percentage of the 1997 incentive
compensation pool paid to the affected officer, subject to certain adjustments.
Based on these 1997 percentages and the amounts calculated through June 30, 1998
under the stockholders' resolution, the following amounts would be payable to
the following persons: Mr. Eaton, $3,727,785, Mr. Lutz, $1,326,097, Mr.
Stallkamp, $1,500,433, Mr. Valade, $1,056,206, Mr. Pawley, $944,372, and all
executive officers as a group (30 individuals including those named above),
$23,431,868.
In addition to the above amounts, consistent with Chrysler's normal
compensation practices for its senior officers, certain recipients of awards
under the Incentive Compensation Plan will also receive additional IC Retirement
Benefits in respect of the amounts paid under the Incentive Compensation Plan.
The annual amount of such additional retirement benefits will be equal to 6% of
the amount paid to such officers under the Incentive Compensation Plan.
SPECIAL BONUS PLAN. Chrysler may award special cash bonuses, not to exceed
$5 million in the aggregate, to officers and employees (including, without
limitation, executive officers) selected by Chrysler's Management Resources and
Compensation Committees to reward their efforts in connection with the
Transactions.
EQUITY BASED COMPENSATION PLAN. Chrysler has adopted an equity based
compensation plan to take effect upon consummation of the Chrysler Merger, under
which holders of Chrysler Stock Options (including executive officers) at the
time of the Chrysler Merger will have the right to receive cash payments based
on any appreciation following the Chrysler Merger in value on the number of
DaimlerChrysler Ordinary Shares equal to the number of shares of Chrysler Common
Stock subject to any such Chrysler Stock Option multiplied by the U.S. Exchange
Ratio. Each such right will have the same terms and conditions, and expire at
the same time, as the options held by such optionholders under Chrysler's
existing option plans, except that any rights related to Chrysler Stock Options
that were not exercisable immediately prior to the Chrysler Effective Time will
become exercisable in two equal installments, on each of the six-month and
one-year anniversaries of the Chrysler Effective Time. Based on the number of
Chrysler Stock Options held by such persons at May 27, 1998, each of the
following persons or groups will, at the Chrysler Effective Time, receive stock
appreciation rights in respect of the following number of DaimlerChrysler
Ordinary Shares: Mr. Eaton, 2,267,579 shares, Mr. Lutz, 683,380 shares, Mr.
Stallkamp, 379,384 shares, Mr. Valade, 442,685 shares, Mr. Pawley, 298,657
shares, and all executive officers as a group (30 individuals including those
named above), 8,521,319 shares. Non-employee directors will not receive any
stock appreciation rights under this plan. In addition, the plan provides that,
in the event that the aggregate level of benefits (including stock options and
other equity incentives) actually granted to officers and employees of Chrysler
and its subsidiaries by DaimlerChrysler AG, Chrysler and their respective
subsidiaries following the Chrysler Merger is less than the standard of the U.S.
automotive industry or is otherwise limited under local law, Chrysler will
establish an appropriate compensation program to cover the shortfall.
70
<PAGE>
Certain Tax Consequences
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTIONS
The following is a discussion of the material United States federal income
tax consequences to U.S. Holders of Chrysler Common Stock, Daimler-Benz Ordinary
Shares or Daimler-Benz ADSs who exchange such shares for DaimlerChrysler
Ordinary Shares pursuant to the Transactions. This discussion is based upon
existing United States federal income tax law, including legislation,
regulations, administrative rulings and court decisions, as in effect on the
date of the Proxy Statement/Prospectus, all of which are subject to change,
possibly with retroactive effect. For purposes of this discussion, a "U.S.
Holder" is a beneficial owner of Chrysler Common Stock, Daimler-Benz Ordinary
Shares or Daimler-Benz ADSs that is (i) an individual citizen or resident of the
United States, (ii) a corporation created or organized in or under the laws of
the United States, any state thereof or the District of Columbia or (iii) a
partnership, trust or estate treated, for United States federal income tax
purposes, as a domestic partnership, trust or estate. This discussion assumes
that U.S. Holders hold Chrysler Common Stock, Daimler-Benz Ordinary Shares or
Daimler-Benz ADSs, as the case may be, as a capital asset as of the Chrysler
Effective Time, the consummation of the Daimler-Benz Exchange Offer or the
Daimler-Benz Effective Time, as the case may be. This discussion does not
discuss all aspects of United States federal income taxation that may be
relevant to all U.S. Holders in light of their particular circumstances, such as
U.S. Holders whose stock was acquired pursuant to the exercise of an employee
stock option or otherwise as compensation or U.S. Holders who are subject to
special treatment under the United States federal income tax laws (for example,
financial institutions, insurance companies, tax-exempt organizations and
broker-dealers). This discussion also does not address any aspects of state,
local or non-United States tax law.
EACH U.S. HOLDER IS STRONGLY ADVISED TO CONSULT HIS OR HER OWN TAX ADVISORS
AS TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTIONS,
INCLUDING THE PARTICULAR FACTS AND CIRCUMSTANCES THAT MAY BE UNIQUE TO SUCH U.S.
HOLDER, AND AS TO ANY ESTATE, GIFT, STATE, LOCAL OR NON-UNITED STATES TAX
CONSEQUENCES OF THE TRANSACTIONS.
CONSEQUENCES OF THE CHRYSLER EXCHANGE TO U.S. HOLDERS
The Chrysler Exchange is intended to qualify as a reorganization within the
meaning of Section 368(a) of the Code and/or, when integrated with the
Daimler-Benz Exchange Offer and taking into account the Daimler-Benz Merger, to
be treated as a transaction described in Section 351(a) of the Code. The
obligation of Chrysler to consummate the Chrysler Exchange is conditioned upon
the receipt by Chrysler from Debevoise & Plimpton of an opinion, based on a
private letter ruling from the IRS addressing certain issues under Section
367(a)(1) of the Code (the "Private Letter Ruling"), representation letters and
assumptions, substantially to the effect that for United States federal income
tax purposes, the Chrysler Exchange, taking into account the Daimler-Benz
Exchange Offer and the Daimler-Benz Merger, should be treated as a
non-recognition transfer of Chrysler Common Stock by the holders thereof in
exchange for DaimlerChrysler Ordinary Shares (the "Chrysler Tax Opinion"). The
Chrysler Exchange is also conditioned upon the receipt by Chrysler of the
Private Letter Ruling, which must be reasonably satisfactory to Chrysler and
sufficient to enable Debevoise & Plimpton to render the Chrysler Tax Opinion
(which private letter ruling was received from the IRS on September 4, 1998).
Assuming that the Chrysler Exchange does qualify for such non-recognition
treatment, in the opinion of Debevoise & Plimpton, subject to the assumptions
and qualifications set forth under the heading "Certain Tax Consequences--United
States Federal Income Tax Consequences of the Transactions," the following
discussion, to the extent it describes matters of law and legal conclusions,
sets forth the material United States federal income tax consequences of the
Chrysler Exchange to the U.S. Holders of Chrysler Common Stock under the law in
effect as of the date of this Proxy Statement/Prospectus.
A U.S. Holder who receives DaimlerChrysler Ordinary Shares in exchange for
Chrysler Common Stock will not recognize gain or loss upon such exchange (except
as described below with respect to cash that is received with respect to a
fractional DaimlerChrysler Ordinary Share). Accordingly, (i) the aggregate tax
basis of the DaimlerChrysler Ordinary Shares received by the U.S. Holder will be
the same as the aggregate tax basis of the
71
<PAGE>
Chrysler Common Stock surrendered in exchange therefor pursuant to the Chrysler
Exchange (adjusted with respect to fractional shares) and (ii) the holding
period of the DaimlerChrysler Ordinary Shares will include the holding period of
the Chrysler Common Stock surrendered in exchange therefor pursuant to the
Chrysler Exchange. A U.S. Holder who is a "5% shareholder" of DaimlerChrysler AG
in accordance with applicable Treasury Regulations under Section 367(a) of the
Code will qualify for the treatment described in this paragraph only if such
U.S. Holder files a "gain recognition agreement" with the IRS.
A U.S. Holder who receives cash with respect to a fractional DaimlerChrysler
Ordinary Share in the Chrysler Exchange will be treated as having received such
fractional share pursuant to the Chrysler Exchange and then as having sold such
fractional share for cash. The amount of any capital gain or loss attributable
to such sale will be equal to the difference between the cash received with
respect to the fractional share and the ratable portion of the tax basis of the
Chrysler Common Stock surrendered that is allocated to such fractional share. In
the case of an individual U.S. Holder, any such gain will be subject to United
States federal income tax at a maximum rate of 20% if such U.S. Holder has held
such Chrysler Common Stock for more than 12 months at the Chrysler Effective
Time.
Chrysler is permitted under the Combination Agreement to waive (but does not
intend to waive) the receipt of the Chrysler Tax Opinion as a condition to its
obligation to consummate the Chrysler Exchange. Chrysler will not waive this
condition without first recirculating revised proxy materials and resoliciting
the vote of its stockholders. Furthermore, the Chrysler Tax Opinion is not
binding on the IRS or a court and does not preclude the IRS or a court from
adopting a contrary position. Chrysler will not seek a ruling from the IRS as to
the tax treatment of the Chrysler Exchange as a non-recognition transfer, except
with respect to certain issues under Section 367(a)(1) of the Code. If the
Chrysler Exchange is not treated as a non-recognition transfer, a U.S. Holder
would recognize capital gain or loss equal to the difference between the
aggregate fair market value of the DaimlerChrysler Ordinary Shares received and
the aggregate tax basis of the Chrysler Common Stock surrendered in exchange
therefor. In the case of an individual U.S. Holder, any such gain would be
subject to United States federal income tax at a maximum rate of 20% if such
U.S. Holder has held such Chrysler Common Stock for more than 12 months at the
Chrysler Effective Time.
CONSEQUENCES OF THE DAIMLER-BENZ EXCHANGE OFFER TO U.S. HOLDERS
The Daimler-Benz Exchange Offer is intended, when integrated with the
Chrysler Exchange, to be treated as a transaction described in Section 351(a) of
the Code or, if integrated with the Daimler-Benz Merger, to qualify as a
reorganization within the meaning of Section 368(a) of the Code. The obligation
of Daimler-Benz to consummate the Daimler-Benz Exchange Offer is conditioned
upon the receipt by Daimler-Benz from Skadden, Arps, Slate, Meagher & Flom LLP
of an opinion, based on representation letters and assumptions, substantially to
the effect that for United States federal income tax purposes, the Daimler-Benz
Exchange Offer, taking into account the Chrysler Exchange and the Daimler-Benz
Merger, should be treated as a non-recognition transfer of Daimler-Benz Ordinary
Shares and Daimler-Benz ADSs by the holders thereof in exchange for
DaimlerChrysler Ordinary Shares (the "Daimler Tax Opinion"). Assuming that the
Daimler-Benz Exchange Offer does qualify for such treatment, in the opinion of
Skadden, Arps, Slate, Meagher & Flom LLP, subject to the assumptions and
qualifications set forth under the heading "--Certain Tax Consequences--United
States Federal Income Tax Consequences of the Transactions," the following
discussion, to the extent it describes matters of law and legal conclusions,
sets forth, under the law in effect as of the date of this Proxy
Statement/Prospectus, the material United States federal income tax consequences
to U.S. Holders that exchange Daimler-Benz ADSs or Daimler-Benz Ordinary Shares
for DaimlerChrysler Ordinary Shares pursuant to the Daimler-Benz Exchange Offer.
A U.S. Holder who receives DaimlerChrysler Ordinary Shares in exchange for
Daimler-Benz Ordinary Shares or Daimler-Benz ADSs will not recognize gain or
loss upon such exchange (except as described below with respect to cash that is
received with respect to a fractional DaimlerChrysler Ordinary Share).
Accordingly, (i) the aggregate tax basis of the DaimlerChrysler Ordinary Shares
received by the U.S. Holder will be the same as the aggregate tax basis of the
Daimler-Benz Ordinary Shares or Daimler-Benz ADSs surrendered in exchange
therefor pursuant to the Daimler-Benz Exchange Offer (adjusted with respect to
fractional shares) and (ii) the
72
<PAGE>
holding period of the DaimlerChrysler Ordinary Shares will include the holding
period of the Daimler-Benz Ordinary Shares or Daimler-Benz ADSs surrendered in
exchange therefor pursuant to the Daimler-Benz Exchange Offer.
A U.S. Holder who receives cash with respect to a fractional DaimlerChrysler
Ordinary Share in the Daimler-Benz Exchange Offer will be treated as having
received such fractional share pursuant to the Daimler-Benz Exchange Offer and
then as having sold such fractional share for cash. The amount of any capital
gain or loss attributable to such sale will be equal to the difference between
the cash received with respect to the fractional share and the ratable portion
of the tax basis of the Daimler-Benz Ordinary Share or Daimler-Benz ADS
surrendered that is allocated to such fractional share. In the case of an
individual U.S. Holder, any such gain will be subject to United States federal
income tax at a maximum rate of 20% if such U.S. Holder has held such
Daimler-Benz Ordinary Share or Daimler-Benz ADS for more than 12 months at the
consummation of the Daimler-Benz Exchange Offer.
In accordance with recently issued Treasury Regulations under Section 367(a)
of the Code, a U.S. Holder who is a "5% shareholder" of DaimlerChrysler AG will
qualify for the treatment described in the two preceding paragraphs only if such
U.S. Holder files a "gain recognition agreement" with the IRS; a U.S. Holder who
is not a "5% shareholder" of DaimlerChrysler AG is not subject to any special
filing requirements under Section 367 of the Code. The IRS has indicated
informally, however, that it intends to amend these Treasury Regulations with
retroactive effect such that the rules described in the preceding sentence would
apply only if the Daimler-Benz Exchange Offer is not integrated with the
Daimler-Benz Merger for United States federal income tax purposes. If the
Daimler-Benz Exchange Offer is integrated with the Daimler-Benz Merger for
United States federal income tax purposes, it currently is anticipated that such
amendments to the Treasury Regulations will require that each U.S. Holder who
realizes gain upon the exchange of Daimler-Benz Ordinary Shares or Daimler-Benz
ADSs for DaimlerChrysler Ordinary Shares pursuant to the Daimler-Benz Exchange
Offer comply with the notice requirements presently set forth in the Temporary
Regulations under Section 367(b) of the Code in order to qualify for the
treatment described in the two preceding paragraphs and that each "5%
shareholder" of DaimlerChrysler AG will not be required to file a "gain
recognition agreement." DaimlerChrysler AG currently intends to treat the
Daimler-Benz Exchange Offer and the Daimler-Benz Merger as integrated
transactions for United States federal income tax purposes. There can be no
assurance, however, that the Daimler-Benz Exchange Offer will be integrated with
the Daimler-Benz Merger for United States federal income tax purposes or that
the IRS or a court will not otherwise take a contrary position. U.S. Holders
should consult their own tax advisors regarding these rules and any amendments
to such rules.
Daimler-Benz is permitted under the Combination Agreement to waive (but does
not intend to waive) receipt of the Daimler-Benz Tax Opinion as a condition to
its obligation to close the Daimler-Benz Exchange Offer. Furthermore, the
Daimler-Benz Tax Opinion is not binding on the IRS or a court and does not
preclude the IRS or a court from adopting a contrary position. Daimler-Benz will
not seek a ruling from the IRS as to the tax treatment of the Daimler-Benz
Exchange Offer as a non-recognition transfer. If the Daimler-Benz Exchange Offer
is not treated as a non-recognition transfer, a U.S. Holder would recognize
capital gain or loss equal to the difference between the aggregate fair market
value of the DaimlerChrysler Ordinary Shares received (including any fractional
DaimlerChrysler Ordinary Shares that are deemed to be received) and the
aggregate tax basis of the Daimler-Benz Ordinary Shares or Daimler-Benz ADSs
surrendered in exchange therefor. In the case of an individual U.S. Holder, any
such gain would be subject to United States federal income tax at a maximum rate
of 20% if such U.S. Holder has held such Daimler-Benz Ordinary Shares or
Daimler-Benz ADSs for more than 12 months at the consummation of the
Daimler-Benz Exchange Offer.
CONSEQUENCES OF THE DAIMLER-BENZ MERGER TO U.S. HOLDERS
In the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, subject to the
assumptions and qualifications set forth under the heading "--Certain Tax
Consequences--United States Federal Income Tax Consequences of the
Transactions," the following discussion, to the extent it describes matters of
law and legal conclusions, sets forth, under the law in effect as of the date of
this Proxy Statement/Prospectus, the material United States
73
<PAGE>
federal income tax consequences to U.S. Holders that exchange Daimler-Benz
Ordinary Shares or Daimler-Benz ADSs for DaimlerChrysler Ordinary Shares
pursuant to the Daimler-Benz Merger. If the Daimler-Benz Merger is integrated
with the Daimler-Benz Exchange Offer for United States federal income tax
purposes, the Daimler-Benz Merger should qualify as a reorganization within the
meaning of Section 368(a) of the Code, in which case a U.S. Holder who receives
DaimlerChrysler Ordinary Shares in exchange for Daimler-Benz Ordinary Shares or
Daimler-Benz ADSs will not recognize gain or loss upon such exchange (except as
described below with respect to cash that is received with respect to a
fractional DaimlerChrysler Ordinary Share). Accordingly, (i) the aggregate tax
basis of the DaimlerChrysler Ordinary Shares received by the U.S. Holder will be
the same as the aggregate tax basis of the Daimler-Benz Ordinary Shares or
Daimler-Benz ADSs surrendered in exchange therefor pursuant to the Daimler-Benz
Merger (adjusted with respect to fractional shares) and (ii) the holding period
of the DaimlerChrysler Ordinary Shares will include the holding period of the
Daimler-Benz Ordinary Shares or Daimler-Benz ADSs surrendered in exchange
therefor pursuant to the Daimler-Benz Merger.
If the Daimler-Benz Merger is integrated with the Daimler-Benz Exchange
Offer for United States federal income tax purposes, a U.S. Holder who receives
cash with respect to a fractional DaimlerChrysler Ordinary Share in the
Daimler-Benz Merger will be treated as having received such fractional share
pursuant to the Daimler-Benz Merger and then as having sold such fractional
share for cash. The amount of any capital gain or loss attributable to such sale
will be equal to the difference between the cash received with respect to the
fractional share and the ratable portion of the tax basis of the Daimler-Benz
Ordinary Share or Daimler-Benz ADS surrendered that is allocated to such
fractional share. In the case of an individual U.S. Holder, any such gain will
be subject to United States federal income tax at a maximum rate of 20% if such
U.S. Holder has held such Daimler-Benz Ordinary Share or Daimler-Benz ADS for
more than 12 months at the Daimler-Benz Effective Time.
In accordance with recently issued Treasury Regulations under Section 367(a)
of the Code, a U.S. Holder who is a "5% shareholder" of DaimlerChrysler AG will
qualify for the treatment described in the two preceding paragraphs only if such
U.S. Holder files a "gain recognition agreement" with the IRS; a U.S. Holder who
is not a "5% shareholder" of DaimlerChrysler AG is not subject to any special
filing requirements under Section 367 of the Code. The IRS has indicated
informally, however, that it intends to amend these Treasury Regulations with
retroactive effect such that the rules described in the preceding sentence would
not apply. It currently is anticipated that such amendments to the Treasury
Regulations will require that each U.S. Holder who realizes gain upon the
exchange of Daimler-Benz Ordinary Shares or Daimler-Benz ADSs for
DaimlerChrysler Ordinary Shares pursuant to the Daimler-Benz Merger comply with
the notice requirements presently set forth in the Temporary Regulations under
367(b) of the Code in order to qualify for the treatment described in the two
preceding paragraphs and that each "5% shareholder" of DaimlerChrysler AG will
not be required to file a "gain recognition agreement." DaimlerChrysler AG
currently intends to treat the Daimler-Benz Exchange Offer and the Daimler-Benz
Merger as integrated transactions that qualify as a reorganization within the
meaning of Section 368(a) of the Code. There can be no assurance, however, that
the Daimler-Benz Exchange Offer will be integrated with the Daimler-Benz Merger
for United States federal income tax purposes or that the IRS or a court will
not otherwise take a contrary position. U.S. Holders should consult their own
tax advisors regarding these rules and any amendments to such rules.
If the Daimler-Benz Merger is not integrated with the Daimler-Benz Exchange
Offer for United States federal income tax purposes, a U.S. Holder who exchanges
Daimler-Benz Ordinary Shares or Daimler-Benz ADSs for DaimlerChrysler Ordinary
Shares pursuant to the Daimler-Benz Merger will recognize capital gain or loss
equal to the difference between the aggregate fair market value of the
DaimlerChrysler Ordinary Shares received (including any fractional
DaimlerChrysler Ordinary Shares deemed to be received) and the aggregate tax
basis of the Daimler-Benz Ordinary Shares or Daimler-Benz ADSs surrendered in
exchange therefor. In the case of an individual U.S. Holder, any such gain would
be subject to United States federal income tax at a maximum rate of 20% if such
U.S. Holder has held such Daimler-Benz Ordinary Shares or Daimler-Benz ADSs for
more than 12 months at the Daimler-Benz Effective Time.
74
<PAGE>
CERTAIN TAX CONSEQUENCES OF HOLDING DAIMLERCHRYSLER ORDINARY SHARES
The following is a discussion of the material United States federal income
and German tax consequences to Qualified Holders holding DaimlerChrysler
Ordinary Shares. This discussion is based upon existing United States federal
income and German tax law, including legislation, regulations, administrative
rulings and court decisions, as in effect on the date of this Proxy
Statement/Prospectus, all of which are subject to change, possibly with
retroactive effect. For purposes of this discussion, in general, a "Qualified
Holder" means a U.S. Holder that (i) is a resident of the United States for
purposes of the United States-Germany income tax treaty (the "Income Tax
Treaty"), which generally includes an individual United States resident, a
corporation created or organized under the laws of the United States, any state
thereof or the District of Columbia and a partnership, estate or trust, to the
extent its income is subject to taxation in the United States as the income of a
United States resident, either in its hands or in the hands of its partners or
beneficiaries, (ii) does not hold DaimlerChrysler Ordinary Shares as part of the
business property of a permanent establishment located in Germany or as part of
a fixed base of an individual located in Germany and used for the performance of
independent personal services and (iii) if not an individual, is not subject to
the limitation on benefits restrictions in the Income Tax Treaty. This
discussion assumes the Qualified Holder holds DaimlerChrysler Ordinary Shares as
a capital asset. This discussion does not discuss all aspects of United States
federal income and German taxation that may be relevant to all Qualified Holders
in light of their particular circumstances, such as Qualified Holders whose
stock was acquired pursuant to the exercise of an employee stock option or
otherwise as compensation or Qualified Holders who are subject to special
treatment under the United States federal income tax laws (for example,
financial institutions, insurance companies, tax-exempt organizations and
broker-dealers). This discussion also does not address any aspects of state,
local or non-United States (other than certain German) tax law.
EACH QUALIFIED HOLDER IS STRONGLY ADVISED TO CONSULT HIS OR HER OWN TAX
ADVISORS AS TO THE UNITED STATES FEDERAL INCOME AND GERMAN TAX CONSEQUENCES OF
HOLDING DAIMLERCHRYSLER ORDINARY SHARES, INCLUDING THE PARTICULAR FACTS AND
CIRCUMSTANCES THAT MAY BE UNIQUE TO SUCH QUALIFIED HOLDER, AND AS TO ANY OTHER
TAX CONSEQUENCES OF HOLDING DAIMLERCHRYSLER ORDINARY SHARES.
TAXATION OF DIVIDENDS
Under German law, German corporations are required to withhold tax on
dividends in an amount equal to 25% of the gross amount paid to resident and
nonresident stockholders. A partial refund of this 25% withholding tax can be
obtained by Qualified Holders under the Income Tax Treaty (subject to certain
limitations). Qualified Holders generally are subject to United States federal
income tax on dividends paid by German corporations. Subject to applicable
limitations of United States federal income tax law, Qualified Holders may be
able to claim a foreign tax credit for certain German income taxes paid. The
amount of the refund of German withholding tax and the determination of the
foreign tax credit allowable against United States federal income tax generally
depend on whether or not the Qualified Holder is a United States corporation
owning at least 10% of the voting stock of DaimlerChrysler AG (a "10% Holder").
In the case of any Qualified Holder other than a 10% Holder, the German
withholding tax is partially refunded under the Income Tax Treaty, effectively
reducing the withholding tax to 15% of the gross amount of the dividend. In
addition, so long as the German imputation system provides German resident
individual stockholders with a tax credit in respect of dividends paid by German
corporations, the Income Tax Treaty provides that Qualified Holders (other than
10% Holders) are entitled to an additional refund equal to 5% of the gross
amount of the dividend. For United States federal income tax purposes, the
benefit resulting from this additional 5% treaty refund is treated as a refund
received by the Qualified Holder with respect to German corporate taxes equal to
5.88% of the gross amount of the dividend, subject to a German withholding tax
of 0.88% (15% of 5.88%). Qualified Holders (other than, in certain
circumstances, 10% Holders) will not be entitled to the dividends received
deduction with respect to dividends paid by DaimlerChrysler AG.
75
<PAGE>
Thus, for each $100 of gross dividend paid by DaimlerChrysler AG to a
Qualified Holder (other than a 10% Holder), the dividend after partial refund of
the 25% withholding tax under the Income Tax Treaty will be subject to a German
withholding tax of $15. If the Qualified Holder also applies for the additional
5% treaty refund, German withholding tax is effectively reduced to $10; the cash
received per $100 of gross dividend is $90. For United States federal income tax
purposes, the Qualified Holder generally is treated as receiving a total
dividend of $105.88 (to the extent paid out of current or accumulated earnings
and profits of DaimlerChrysler AG as determined for United States federal income
tax purposes), consisting of the $100 gross dividend and the deemed refund of
German corporate tax of $5.88. The notional $105.88 dividend is deemed to have
been subject to German withholding tax of $15.88. Thus, for each $100 of gross
dividend, the Qualified Holder will include $105.88 in gross income and may be
entitled to a foreign tax credit of $15.88, subject to applicable limitations of
United States federal income tax law.
In the case of a 10% Holder, the 25% German withholding tax is reduced under
the Income Tax Treaty to 5% of the gross amount of the dividend. Such 10%
Holders may, therefore, apply for a refund of German withholding tax in the
amount of 20% of the gross amount of the dividend. Subject to applicable
limitations of United States federal income tax laws, a 10% Holder may be
entitled to a foreign tax credit for the 5% German withholding tax on dividends
and for the portion of the total income taxes (trade income tax and corporation
income tax including any surtax) paid by DaimlerChrysler AG attributable to the
distributed profits.
Dividends paid in marks (or Euros) to a Qualified Holder of DaimlerChrysler
Ordinary Shares will be included in income in a dollar amount calculated by
reference to the exchange rate in effect on the date the dividends (including
any deemed refund of German corporate tax) are received or treated as received
by such holder. If dividends paid in marks (or Euros) are converted into dollars
on the date received or treated as received, Qualified Holders generally should
not be required to recognize foreign currency gain or loss in respect of each
dividend.
A surtax on the German withholding tax is currently levied on dividend
distributions paid by a German resident company. Effective January 1, 1998, the
rate of this surtax has been reduced from 7.5% to 5.5%. Based on the new rate,
the surtax amounts to 1.375% (5.5% X 25%) of the gross dividend amount. Under
the Income Tax Treaty, Qualified Holders are entitled to a full refund of this
surtax.
Under Section 904(g) of the Code, dividends paid by a foreign corporation
that is treated as more than 50% owned by United States persons may be treated
as United States source income (rather than foreign source income) for foreign
tax credit purposes, to the extent the foreign corporation earns United States
source income. Such treatment may adversely affect Qualified Holders' ability to
use foreign tax credits. It is possible that, after the Transactions,
DaimlerChrysler AG may be treated as more than 50% owned by United States
persons for purposes of Section 904(g) of the Code.
REFUND PROCEDURES
To claim the refund reflecting the reduction of the German withholding tax
from 25% to 15% (to 5% for 10% Holders), the additional 5% treaty refund and the
refund of the 5.5% German surtax, when applicable, a Qualified Holder must
submit (either directly or, as described below, through the U.S. Transfer Agent)
a claim for refund to the German tax authorities, with the original bank voucher
(or certified copy thereof) issued by the paying entity documenting the tax
withheld within four years from the end of the calendar year in which the
dividend is received. Claims for refund are made on a special German claim for
refund form, which must be filed with the German tax authorities: Bundesamt fur
Finanzen, 53221 Bonn-Beuel, Germany. The German claim for refund forms may be
obtained from the German tax authorities at the same address where the
applications are filed, from the Embassy of the Federal Republic of Germany,
4645 Reservoir Road, N.W., Washington, D.C. 20007-1998 or from the Office of
International Operations, Internal Revenue Service, 1325 K Street, N.W.,
Washington, D.C. 20225, Attention: Taxpayer Service Division, Room 900.
Qualified Holders must also submit to the German tax authorities
certification (IRS Form 6166) of their last filed United States federal income
tax return. Such certification is obtained from the office of the Director of
the Internal Revenue Service Center by filing a request for certification with
the Internal Revenue Service
76
<PAGE>
Center in Philadelphia, Pennsylvania, Foreign Certificate Request, P.O. Box
16347, Philadelphia, PA 19114-0447. Requests for certification are to be made in
writing and must include the Qualified Holder's name, social security number or
employer identification number, tax return form number and tax period for which
certification is requested. The IRS will send the certification directly to the
German tax authorities. This certification is valid for three years and need
only be resubmitted in a fourth year in the event of a subsequent application
for refund.
In accordance with arrangements under the U.S. Transfer Agent Agreement (as
defined herein), the DaimlerChrysler Ordinary Shares held by certain Qualified
Holders will be registered with the U.S. Transfer Agent, which will receive and
distribute dividends to Qualified Holders of DaimlerChrysler Ordinary Shares and
perform administrative functions necessary to claim the refund reflecting the
reduction in German withholding tax from 25% to 15% (to 5% for 10% Holders), the
additional 5% treaty refund and the refund of the 5.5% German surtax, when
applicable, for such holders. These arrangements may be amended or revoked at
any time in the future.
The U.S. Transfer Agent will prepare the German claim for refund forms on
behalf of certain of the Qualified Holders of DaimlerChrysler Ordinary Shares
and file them with the German tax authorities. In order for the U.S. Transfer
Agent to file the claim for refund forms, the U.S. Transfer Agent will prepare
and mail to the Qualified Holders of such DaimlerChrysler Ordinary Shares, and
such holders will be requested to sign and return to the U.S. Transfer Agent,
(i) a statement authorizing the U.S. Transfer Agent to perform these procedures
and agreeing that the German tax authorities may inform the IRS of any refunds
of German taxes and (ii) a written authorization to remit the refund of
withholding to an account other than that of the Qualified Holder. Qualified
Holders must also submit to the U.S. Transfer Agent certification (IRS Form
6166) of their last filed United States federal income tax return. The U.S.
Transfer Agent will attach the signed statement, the IRS Form 6166 and the
documentation issued by the paying agency documenting the dividend paid and the
tax withheld to the claim for refund form and file them with the German tax
authorities.
To the extent Qualified Holders own DaimlerChrysler Ordinary Shares
registered with brokers participating in the Depository Trust Company, it is
expected that such brokers will assist the U.S. Transfer Agent in performing the
procedures described above and, in particular, prepare and forward the German
claim for refund forms together with the required documentation to the U.S.
Transfer Agent. The U.S. Transfer Agent will then file the German claim for
refund forms and any attachments thereto with the German tax authorities.
The German tax authorities will issue refunds denominated in marks (or
Euros). In the case of DaimlerChrysler Ordinary Shares held by certain Qualified
Holders, the refunds will be issued in the name of the U.S. Transfer Agent,
which will convert the refunds to dollars and issue corresponding refund checks
to the Qualified Holders of such DaimlerChrysler Ordinary Shares and brokers.
Such brokers, in turn, will remit corresponding refund amounts to the Qualified
Holders holding DaimlerChrysler Ordinary Shares registered with such brokers.
Qualified Holders of DaimlerChrysler Ordinary Shares who receive a refund
attributable to reduced withholding taxes under the Income Tax Treaty may be
required to recognize foreign currency gain or loss, which will be treated as
ordinary income or loss, to the extent that the dollar value of the refund
received or treated as received by the Qualified Holder differs from the U.S.
dollar equivalent of the refund on the date the dividend on which such
withholding taxes were imposed was received or treated as received by the
Qualified Holder.
TAXATION OF CAPITAL GAINS
Under the Income Tax Treaty, a Qualified Holder will not be liable for
German tax on capital gains realized or accrued on the sale or other disposition
of DaimlerChrysler Ordinary Shares.
Upon a sale or other disposition of DaimlerChrysler Ordinary Shares, a
Qualified Holder will recognize capital gain or loss for United States federal
income tax purposes equal to the difference between the amount realized and the
Qualified Holder's aggregate tax basis in the DaimlerChrysler Ordinary Shares.
In the case of an individual Qualified Holder of DaimlerChrysler ADSs or
DaimlerChrysler Ordinary Shares, any such capital
77
<PAGE>
gain will be subject to a maximum United States federal income tax rate of 20%,
if the individual Qualified Holder's holding period in such DaimlerChrysler
Ordinary Shares is more than 12 months.
GIFT AND INHERITANCE TAXES
The United States-Germany estate tax treaty provides that an individual
whose domicile is determined to be in the United States for purposes of such
treaty will not be subject to German inheritance and gift tax (the equivalent of
the United States federal estate and gift tax) on the individual's death or
making of a gift unless the DaimlerChrysler Ordinary Shares (i) are part of the
business property of a permanent establishment located in Germany or (ii) are
part of the assets of a fixed base of an individual located in Germany and used
for the performance of independent personal services. An individual's domicile
in the United States, however, does not prevent imposition of German inheritance
and gift tax with respect to an heir, donee or other beneficiary who is
domiciled in Germany at the time the individual died or the gift was made.
The United States-Germany estate tax treaty also provides a credit against
United States federal estate and gift tax liability for the amount of
inheritance and gift tax paid in Germany, subject to certain limitations, in a
case where the DaimlerChrysler Ordinary Shares are subject to German inheritance
or gift tax and United States federal estate or gift tax.
GERMAN CAPITAL TAX (VERMOGENSTEUER)
The Income Tax Treaty provides that a Qualified Holder will not be subject
to German capital tax (VERMOGENSTEUER) with respect to the DaimlerChrysler
Ordinary Shares. As a result of a judicial decision, the German capital tax
(VERMOGENSTEUER) presently is not imposed.
OTHER GERMAN TAXES
There are no German transfer, stamp or other similar taxes that would apply
to Qualified Holders upon receipt (including pursuant to the Transactions),
purchase, holding or sale of DaimlerChrysler Ordinary Shares.
UNITED STATES INFORMATION REPORTING AND BACKUP WITHHOLDING
Distributions of dividends on DaimlerChrysler Ordinary Shares paid within
the United States or through certain United States-related financial
intermediaries are subject to information reporting and may be subject to backup
withholding at a 31% rate unless the Qualified Holder (i) is a corporation or
other exempt recipient or (ii) provides a taxpayer identification number and
certifies that no loss of exemption from backup withholding has occurred.
Anticipated Accounting Treatment
Chrysler and Daimler-Benz intend that the Transactions will qualify as a
pooling-of-interests under APB No. 16 for accounting and financial reporting
purposes. If, however, the Daimler-Benz Exchange Offer is consummated after the
Minimum Condition has been changed to the 75% Minimum, the Transactions will be
accounted for using the purchase method of accounting rather than using the
pooling-of-interests method of accounting.
Whether the Transactions are accounted for as a purchase or as a
pooling-of-interests could have a significant impact on the reported financial
position of DaimlerChrysler AG following consummation of the Transactions. In
general, the purchase method accounts for a business combination as the
acquisition of one company by another. Purchase accounting requires that the
purchase price and costs of the acquisition be allocated to all of the assets
acquired and liabilities assumed, based on their fair value. If the purchase
price exceeds the fair value of the purchased company's net assets, the excess
is recorded as goodwill and amortized. Earnings or losses of the purchased
company are included in the buyer's financial statements from the consummation
date of the acquisition. The pooling-of-interests method accounts for the
business combination as the uniting of the ownership interests of two companies
by the exchange of voting securities. Under the
78
<PAGE>
pooling-of-interests method, assets, liabilities and stockholders equity of each
company are carried forward at their previous carrying amounts. Operating
results of both companies are combined for all prior periods prior to the
consummation date. See "Unaudited Pro Forma Combined Financial Information."
Issuance of Additional Shares of Chrysler Common Stock
Because of certain purchases of Chrysler Common Stock by Chrysler within the
past two years, Chrysler, in order to facilitate the treatment of the
Transactions as a pooling-of-interests, intends to issue and sell such number
(estimated at 30.0 million shares) of shares of Chrysler Common Stock as are
necessary so that the Transactions can be accounted for as a
pooling-of-interests. These additional shares will be issued shortly prior to
the Chrysler Effective Time and will be treated for all purposes as issued and
outstanding at the Chrysler Effective Time. Chrysler expects to issue these
additional shares in an underwritten public offering or, alternatively, a "block
sale" to underwriters. These additional shares will not be issued, however, if
the Daimler-Benz Exchange Offer is consummated after the Minimum Condition has
been changed to the 75% Minimum.
Affiliates' Restrictions on Sale of DaimlerChrysler Ordinary Shares
The DaimlerChrysler Ordinary Shares to be issued in the Chrysler Merger will
have been registered under the Securities Act, thereby allowing those shares to
be traded without restriction by all former holders of Chrysler Common Stock who
are not deemed to be "affiliates" of Chrysler at the time of the Chrysler
Special Meeting (as "affiliates" is defined for purposes of Rule 145 under the
Securities Act or for purposes of qualifying the Transactions for
"pooling-of-interests" accounting treatment).
In addition, the Combination Agreement requires each of Daimler-Benz and
Chrysler to use its reasonable best efforts to cause its affiliates to enter
into agreements that restrict the ability of such affiliates to sell Chrysler
Common Stock, Daimler-Benz Ordinary Shares, Daimler-Benz ADSs and
DaimlerChrysler Ordinary Shares received upon consummation of the Transactions,
as the case may be. See "The Combination Agreement--The Chrysler Merger."
Regulatory Approvals
UNITED STATES ANTITRUST NOTIFICATION. Under the HSR Act and the rules
promulgated thereunder by the United States Federal Trade Commission (the
"FTC"), certain acquisition transactions may not be consummated until
notifications have been given and certain information has been furnished to the
Antitrust Division of the United States Department of Justice (the "Antitrust
Division") and the FTC and specified waiting period requirements have been
satisfied. On July 2, 1998, the requisite Notification and Report Forms were
filed with respect to the Transactions with the Antitrust Division and the FTC.
The FTC granted early termination of the waiting periods under the HSR Act as of
July 30, 1998.
The clearance process does not confer antitrust immunity and therefore it is
possible that, at any time before or after the Chrysler Effective Time,
notwithstanding that the HSR Act waiting periods have expired or been
terminated, the FTC or the Antitrust Division could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the consummation of the Transactions or seeking
divestiture of certain assets of Daimler-Benz or Chrysler. In addition, at any
time before or after the consummation of the Transactions, notwithstanding that
the HSR Act waiting periods have expired or been terminated, any state could
take such action under the antitrust laws as it deems necessary or desirable in
the public interest, including seeking to enjoin the consummation of the
Transactions, rescission of the Transactions or divestiture of certain assets of
Daimler-Benz or Chrysler. Private parties may also seek to take legal action
under the antitrust laws under certain circumstances. There can be no assurance
that a challenge to the Transactions on antitrust grounds will not be made or,
if such a challenge is made, with respect to the result thereof.
EUROPEAN ANTITRUST APPROVAL. Under Regulation (EEC) No. 4064/89 of the
Council of the European Union, the Transactions may not be consummated until the
Commission of the European Union has granted its approval thereof or such
approval has been deemed to have been granted. On June 22, 1998, the requisite
79
<PAGE>
notification was filed with respect to the Transactions with the EC Commission.
On July 22, 1998, the Commission of the European Union granted its approval of
the Transactions.
There can be no assurance that a challenge to the decision of the Commission
of the European Union will not be made by private parties or by Member States of
the European Union or, if such a challenge were to be made, what the outcome
would be.
OTHER ANTITRUST NOTIFICATIONS. The antitrust and competition laws of
certain other non-U.S. jurisdictions require (or, in some instances, provide for
on a voluntary basis) notification of certain transactions and the observance of
pre-consummation waiting periods. Daimler-Benz and Chrysler will make any such
other required filings (and, if deemed in Daimler-Benz' and Chrysler's
interests, any such voluntary filings) with the appropriate antitrust and
competition authorities as promptly as practicable. There can be no assurance
that a challenge to the Transactions will not be made on antitrust or
competition grounds or, if such a challenge were to be made, what the outcome
would be.
FEDERAL RESERVE BOARD. Daimler-Benz has conducted itself as a "subsidiary"
of Deutsche Bank AG under the Bank Holding Company Act of 1956 (the "BHC Act")
and the International Banking Act of 1978 because of Deutsche Bank's ownership
of Daimler-Benz Ordinary Shares. The percentage of DaimlerChrysler Ordinary
Shares owned by Deutsche Bank AG following the Transactions will be
substantially smaller than the percentage of Daimler-Benz Ordinary Shares
currently owned by Deutsche Bank AG. Daimler-Benz therefore believes that
DaimlerChrysler AG will not need to conduct itself as a subsidiary of Deutsche
Bank AG under the BHC Act following the Transactions and that no application
will need to be filed with the Federal Reserve Board for prior approval of the
Transactions.
EXON-FLORIO. Under Section 721 of Title VII of the United States Defense
Production Act of 1950 (the "DPA Act"), as amended by Section 5021 of the
Omnibus Trade and Competitiveness Act of 1988 and the Defense National
Authorization Act of 1993 ("Exon-Florio"), the President of the United States or
his designee is empowered to take certain actions in relation to mergers,
acquisitions and takeovers by foreign persons which could result in foreign
control of persons engaged in interstate commerce in the United States. In
particular, Exon-Florio enables the President to block or reverse any
acquisitions by foreign persons which threaten to impair the national security
of the United States.
Under the terms of Exon-Florio, a foreign company or U.S. subsidiary of a
foreign company acquiring a U.S. company may notify the Committee on Foreign
Investment in the United States ("CFIUS") of the proposed transaction, whereupon
CFIUS must decide within 30 days whether to investigate the transaction. Any
investigation must be completed in 45 days. A decision by the President to take
action must be announced within 15 days of the completion of the investigation.
Daimler-Benz and Chrysler filed a notification with CFIUS pursuant to Section
721 of the DPA Act on July 28, 1998. On August 26, 1998, CFIUS concluded that
there are no issues of national security sufficient to warrant an investigation
of the Transactions under Section 721 of the DPA Act.
Stock Exchange Listings
The DaimlerChrysler Ordinary Shares have been approved for listing, subject
to official notice of issuance, on the NYSE, and the DaimlerChrysler Ordinary
Shares are expected to be approved for listing on the FSE. Following
consummation of the Daimler-Benz Exchange Offer, the DaimlerChrysler Ordinary
Shares will be traded on the NYSE under the symbol "DCX." In addition, it is
expected that DaimlerChrysler Ordinary Shares will be traded on the Chicago,
Pacific, Philadelphia, London, Paris, Montreal, Toronto, Swiss, Vienna and Tokyo
stock exchanges as well as all German stock exchanges.
Following the Chrysler Merger, the Chrysler Common Stock will be delisted
from the NYSE. Following the Daimler-Benz Merger, Daimler-Benz Ordinary Shares
and Daimler-Benz ADSs will no longer be outstanding and will no longer be listed
on the FSE or, in the case of the Daimler-Benz ADSs, on the NYSE. See "Risk
Factors."
80
<PAGE>
Appraisal Rights
Chrysler stockholders are not entitled to appraisal rights under the DGCL in
connection with the Chrysler Merger. Accordingly, stockholders who do not wish
to receive DaimlerChrysler Ordinary Shares in exchange for their shares of
Chrysler Common Stock must liquidate their investment by selling their Chrysler
Common Stock prior to the consummation of the Chrysler Merger.
Chrysler Preferred Share Purchase Rights
Chrysler has amended its preferred stock purchase rights plan to provide
that the rights will not become exercisable as a result of the signing of the
Combination Agreement or the consummation of the Transactions.
German Valuation Proceeding (SPRUCHVERFAHREN)
Any Remaining Stockholder following the Daimler-Benz Exchange Offer who
holds Daimler-Benz Ordinary Shares, including those formerly represented by
Daimler-Benz ADSs, at the time of the Daimler-Benz Merger, may, pursuant to
Sections 15 and 305 of the German Transformation Act (UMWANDLUNGSGESETZ), within
two months following the effective publication of the registration of the
Daimler-Benz Merger, initiate a valuation proceeding (SPRUCHVERFAHREN) in the
District Court of Stuttgart to determine the adequacy of the Daimler-Benz Merger
Exchange Ratio and to seek a supplementary cash payment in addition to the
Daimler-Benz Merger Consideration received by such holder in the Daimler-Benz
Merger if the Daimler-Benz Merger Exchange Ratio is deemed to be inadequate. Any
Remaining Stockholder may initiate such a proceeding even if such stockholder
acquired Daimler-Benz Ordinary Shares after the date of the Daimler-Benz Special
Meeting or if such stockholder voted in favor of the Daimler-Benz Merger.
Following initiation of the court procedure, the district court publishes
the petition in the Federal Gazette (BUNDESANZEIGER). Within two months
following such publication other Remaining Stockholders may join the proceeding
by filing their own petition. Thereafter, the district court appoints a common
representative who acts as legal representative for the Remaining Stockholders
who have not filed a petition.
The district court is not bound by the rules of evidence pertaining to a
civil case in such a proceeding but is obligated to hear all evidence it
considers necessary to decide the petition regardless of whether such evidence
was presented by the petitioners or the company. The court may appoint a
certified public accountant or accounting firm as court expert to determine the
per share value of the merging entities. Such expert may conduct a comprehensive
valuation of both constituent companies.
In the event that the court were to find that the Daimler-Benz Merger
Exchange Ratio was too low from the point of view of the Remaining Stockholders,
it would not change the share-for-share exchange ratio in the Daimler-Benz
Merger. The court would, however, award a supplemental cash payment to all
Remaining Stockholders (not only those Remaining Stockholders who filed a
petition in the award procedure) payable by DaimlerChrysler AG. Such award is
payable with interest at 2% above the discount rate of the Bundesbank from the
date of the effective publication of the registration of the Daimler-Benz Merger
in the commercial register (HANDELSREGISTER).
Regardless of the outcome of the proceeding, the company against which the
petition is brought bears the cost of the proceeding, unless the court
determines that it would be inequitable to do so.
There is only one reported case involving valuation proceedings
(SPRUCHVERFAHREN) in corporate mergers under the current law relating thereto,
which was published in June 1998. In addition, there have been no reported
valuation proceedings (SPRUCHVERFAHREN) involving unaffiliated parties.
Consequently, the outcome of any such procedure is difficult to predict. There
can be no assurance that a valuation award proceeding (SPRUCHVERFAHREN) will not
be brought in connection with the Daimler-Benz Merger or that the court will not
award significant supplemental payments to the Remaining Stockholders.
Daimler-Benz believes the Daimler-Benz Merger Exchange Ratio, which is the
result of arm's-length negotiations between representatives of Chrysler and
Daimler-Benz, has been properly determined under
81
<PAGE>
applicable German valuation principles and is fair to the holders of
Daimler-Benz Ordinary Shares and Daimler-Benz ADSs. Accordingly, if a
SPRUCHVERFAHREN were commenced, DaimlerChrysler AG would vigorously defend
against any contrary allegation in such a proceeding. In addition, the auditors
for the Daimler-Benz Merger (VERSCHMELZUNGSPRUFER) appointed by the German court
pursuant to the German Transformation Act (UMWANDLUNGSGESETZ) have reported that
the Daimler-Benz Merger Exchange Ratio was correctly determined in accordance
with applicable German valuation principles and is adequate.
The Business Valuation Committee of the "Institut der Wirtschaftsprufer" has
established accepted methodologies for valuing businesses in connection with
merger transactions. These methodologies are set forth in HFA 2/1983 "Principles
of Conducting Enterprise Valuations" and HFA 6/1988 "Relating to the Merger
Audit Pursuant to Section340b para. 4 of the German Stock Corporation Law
(AKTIENGESETZ)" (also applies to the audit pursuant to Sections 9 to 12 of the
German Transformation Act (UMWANDLUNGSGESETZ)). As a general matter, these
methodologies suggest that each of the constituent parties to the merger should
be valued on a "stand-alone" basis as of the date of the stockholders meeting
called to consider the transaction. The valuation of each of the business
enterprises is based on an analysis of the present value of all future net cash
flows or earnings. Earnings are determined on a segment-by-segment basis with
minority interests deducted at the segment level. To the extent companies are
required to pay guaranteed dividends, they are subtracted from earnings; the
remaining earnings being credited to the consolidated group. The historical
reference period for the analysis is generally defined as the last two completed
fiscal years. In addition, three years of projections are reviewed. The discount
rate utilized for the earnings determination may not be based on subjective
factors but rather the rate of return on government or public securities is used
as a reference point. A risk premium on this capital market interest rate is
generally considered necessary. In addition, a standard income tax burden (35%)
is deducted from the enterprise's earnings through the application of an
alternative discount rate because taxes are believed to influence significantly
the value of an enterprise. Furthermore, only the value of the assets necessary
for the operation of the business are to be included in the determination of
earnings. Assets that may be sold without affecting the operation of the
enterprise as a "going concern" are to be valued separately at their net
realizable sale value after taxes which is then added to the total valuation of
the business enterprise. Pursuant to the prescribed methodologies, the
liquidation value of the business enterprise (I.E., the sum of the obtainable
net proceeds from the sale of assets) is only to be considered when it would be
more advantageous to sell the individual assets of the business rather than
continue as a "going concern." Similarly, net asset values may be considered if
the business enterprise is not to be valued as a "going concern." In addition,
under the accepted German valuation principles, stock market prices are not
considered a reliable indicator of the intrinsic value of an enterprise because
they are affected by a number of special factors which may cause short-term,
unpredictable volatility in market prices, and therefore such prices may have no
relationship to the value of an enterprise. Following application of the
foregoing principles, the auditors for the Daimler-Benz Merger
(VERSCHMELZUNGSPRUFER) concluded that the Daimler-Benz Merger Exchange Ratio was
correctly determined and is adequate.
Certain Litigation
On May 7 and 8, 1998, two purported class actions, respectively entitled
MARYLAND LINOTYPE COMPOSITION CO., ET AL. V. ROBERT ANTHONY LUTZ, ET AL., C.A.
16363 NC and JULES BERNSTEIN V. ROBERT ANTHONY LUTZ, ET AL., C.A. 16369 NC, were
filed in the Court of Chancery of the State of Delaware, New Castle County,
naming Chrysler and its directors as defendants. Plaintiffs, purporting to
represent the stockholders of Chrysler, allege that Chrysler and its directors
breached their fiduciary duties to stockholders by failing to obtain the best
price for the shares of Chrysler Common Stock in the Chrysler Merger. The
complaints seek to enjoin preliminarily the Chrysler Merger or, in the
alternative, damages in the amount of the difference between the value received
for the shares of Chrysler Common Stock and the alleged "best price obtainable."
Chrysler intends to defend against such allegations vigorously, if and when it
is served with these actions.
82
<PAGE>
THE COMBINATION AGREEMENT
THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS OF THE COMBINATION
AGREEMENT, A COPY OF WHICH IS ATTACHED AS ANNEX A TO THIS PROXY
STATEMENT/PROSPECTUS. SUCH SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE COMBINATION AGREEMENT. CAPITALIZED TERMS NOT DEFINED HEREIN SHALL HAVE THE
MEANINGS SET FORTH IN THE COMBINATION AGREEMENT.
General
The Combination Agreement provides for the Daimler-Benz Exchange Offer, the
Daimler-Benz Merger and the Chrysler Merger. DaimlerChrysler AG will commence
the Daimler-Benz Exchange Offer promptly after the Daimler-Benz Stockholder
Approval and the Chrysler Stockholder Approval. The Chrysler Merger will become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware. The Daimler-Benz Merger will become effective in
accordance with applicable law upon the registration of the Daimler-Benz Merger
with the commercial registers (HANDELSREGISTER) for Daimler-Benz and
DaimlerChrysler AG. Such filings are anticipated to take place as soon as
possible following consummation of the Daimler-Benz Exchange Offer. It is
currently anticipated that the Transactions will be completed during the fourth
quarter of 1998. There can be no assurance, however, that the required
regulatory approvals will be obtained, or that the other conditions to the
Daimler-Benz Exchange Offer and the Mergers will be satisfied, by such time. See
"-- Conditions to Closing" and "The Transactions--Regulatory Approvals."
The Daimler-Benz Exchange Offer
THE DAIMLER-BENZ EXCHANGE OFFER. Promptly following the Daimler-Benz
Stockholder Approval and the Chrysler Stockholder Approval, DaimlerChrysler AG
will commence an offer, which may consist of one offer made in the United States
and one made elsewhere, to the holders of Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs to exchange that number of DaimlerChrysler Ordinary Shares
equal to the Daimler-Benz Exchange Offer Ratio for each Daimler-Benz Ordinary
Share or Daimler-Benz ADS held by such holder. The obligation of DaimlerChrysler
AG to issue DaimlerChrysler Ordinary Shares in exchange for Daimler-Benz
Ordinary Shares and Daimler-Benz ADSs will be subject only to the Combination
Agreement not having been terminated and to the satisfaction or waiver of (1)
the Minimum Condition and (2) the conditions described in "--Conditions to
Closing--Conditions to All Parties' Obligation to Close" other than the
condition set forth in clause (i) under "Conditions to All Parties' Obligation
to Close"; PROVIDED, HOWEVER, if the number of Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs validly tendered, not withdrawn and available for purchase
immediately prior to the Daimler-Benz Exchange Offer Expiration Date shall not
satisfy the Minimum Condition, but shall be in excess of 80% of the capital
stock of Daimler-Benz on a fully diluted basis (the "80% Minimum"), the Minimum
Condition shall mean the 80% Minimum unless Chrysler and Daimler-Benz otherwise
agree. Consistent with the Private Letter Ruling and in accordance with the
provisions of the Combination Agreement, Daimler-Benz and Chrysler have agreed
that if the number of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs
tendered does not satisfy the Minimum Condition but equals at least 75% of the
issued and outstanding Daimler-Benz Ordinary Shares on a primary basis,
including Daimler-Benz Ordinary Shares represented by Daimler-Benz ADSs, at the
time of registration with the commercial register (HANDELSREGISTER) of the
capital increase relating to the DaimlerChrysler Ordinary Shares being issued in
exchange therefor (the "75% Minimum"), the Minimum Condition shall mean the 75%
Minimum. The Combination Agreement provides that the Daimler-Benz Exchange Offer
Expiration Date shall initially be the date which is 30 days after commencement
of the Daimler-Benz Exchange Offer and, if any of the conditions to consummation
of the Daimler-Benz Exchange Offer is unsatisfied at such time and if requested
by either Chrysler or Daimler-Benz, or if requested by either Chrysler or
Daimler-Benz pursuant to clause (ii) below, shall be extended by DaimlerChrysler
AG from time to time thereafter until the earliest of (i) the maximum period
permitted under the German Takeover Code (UBERNAHMEKODEX DER
BORSENSACHVERSTANDIGENKOMMISSION BEIM BUNDESMINISTERIUM DER FINANZEN) (the
"German Takeover Code") or as otherwise approved by the Executive Office of the
Takeover Commission (UBERNAHMEKOMMISSION pursuant to the German Takeover Code)
(the
83
<PAGE>
"Executive Office of the Takeover Commission"), (ii) the close of business
(Frankfurt time) on the day on which Daimler-Benz and DaimlerChrysler AG have
publicly announced that all of the conditions to the consummation of the
Daimler-Benz Exchange Offer shall have been satisfied or that they have been
duly waived (or, if later, a date that is five business days following the
initial expiration date, if either Chrysler or Daimler-Benz shall have requested
DaimlerChrysler AG to extend the Daimler-Benz Exchange Offer Expiration Date to
such date) and (iii) such time as the Combination Agreement is terminated as
provided under "--Termination." Subject only to the conditions set forth above,
at the earliest practicable time following the Daimler-Benz Exchange Offer
Expiration Date, DaimlerChrysler AG shall accept for exchange and shall exchange
all Daimler-Benz Ordinary Shares and Daimler-Benz ADSs validly tendered and not
withdrawn (the "German Share Exchange") and shall effect the German Share
Exchange in accordance with applicable law by registering the increase of the
DaimlerChrysler AG stated share capital in kind with the commercial register
(HANDELSREGISTER) for DaimlerChrysler AG. No holder of Daimler-Benz Ordinary
Shares or Daimler-Benz ADSs will be entitled to receive fractional
DaimlerChrysler Ordinary Shares, and if any holder would otherwise be so
entitled then such holder will receive cash in lieu of such fractional share.
GERMAN EXCHANGE OFFER DOCUMENTS. The Combination Agreement provides that as
soon as practicable prior to the date that the Daimler-Benz Exchange Offer
commences, DaimlerChrysler AG shall inform all German stock exchanges on which
the Daimler-Benz Ordinary Shares are listed, the German Federal Supervisory
Authority for Securities Trading (BUNDESAUFSICHTSAMT FUR DEN WERTPAPIERHANDEL)
and the Executive Office of the Takeover Commission about the content of the
Daimler-Benz Exchange Offer. The Combination Agreement also provides that not
later than one day prior to the date that the Daimler-Benz Exchange Offer
commences, DaimlerChrysler AG shall issue a combined listing and sales
prospectus pursuant to the German Stock Exchange Law (BORSENGESETZ) and the
German Sales Prospectus Law (WERTPAPIER-VERKAUFSPROSPEKTGESETZ) (the "German
Prospectus"), and on the date that the Daimler-Benz Exchange Offer commences,
DaimlerChrysler AG shall publish an exchange offer pursuant to the German
Takeover Code, each with respect to the Daimler-Benz Exchange Offer (the "German
Exchange Offer Documents"). The German Exchange Offer Documents shall contain
the recommendation of the Daimler-Benz Management Board that holders of the
Daimler-Benz Ordinary Shares accept the Daimler-Benz Exchange Offer and tender
the Daimler-Benz Ordinary Shares into the Daimler-Benz Exchange Offer.
U.S. EXCHANGE OFFER DOCUMENTS. On the date of commencement of the
Daimler-Benz Exchange Offer, (a) DaimlerChrysler AG shall file with the
Commission a Tender Offer Statement on Schedule 14D-1, which shall contain or
shall incorporate by reference an offer to purchase containing the information
included or incorporated by reference in the Proxy Statement/Prospectus and the
forms of the related letter of transmittal and all other ancillary offer
documents and (b) Daimler-Benz shall file with the Commission a Tender Offer
Solicitation/Recommendation Statement on Schedule 14D-9, which shall contain the
recommendation of the Daimler-Benz Management Board that holders of Daimler-Benz
Ordinary Shares and Daimler-Benz ADSs who are U.S. Persons accept the
Daimler-Benz Exchange Offer and tender their Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs into the Daimler-Benz Exchange Offer.
CONTINGENT DAIMLER-BENZ EXCHANGE RATIO INCREASE. If, upon the expiration of
the Daimler-Benz Exchange Offer, the Minimum Condition (as defined in clause (1)
under the "--The Daimler-Benz Exchange Offer") is satisfied, DaimlerChrysler AG
shall issue and exchange 1.005 DaimlerChrysler Ordinary Shares for each
Daimler-Benz Ordinary Share and each Daimler-Benz ADS tendered in the
Daimler-Benz Exchange Offer and the Daimler-Benz Exchange Ratio shall mean 1.005
to 1.
The Chrysler Merger
THE CHRYSLER MERGER. Pursuant to the Combination Agreement, DaimlerChrysler
AG has appointed The Bank of New York as the U.S. Exchange Agent (the "U.S.
Exchange Agent"). Solely to accommodate the Chrysler Merger and the U.S. Share
Exchange, the U.S. Exchange Agent will hold all of the issued and outstanding
shares of Chrysler Merger Sub. At the Chrysler Effective Time, Chrysler Merger
Sub shall be merged with and into
84
<PAGE>
Chrysler and Chrysler shall be the U.S. Surviving Corporation. The corporate
existence of Chrysler with all its purposes, rights, privileges, franchises,
powers and objects shall continue unaffected and unimpaired by the Chrysler
Merger and, as the U.S. Surviving Corporation, it shall be governed by the laws
of the State of Delaware and succeed to all rights, assets, liabilities and
obligations of Chrysler Merger Sub in accordance with Section 259(a) of the
DGCL. The separate existence and corporate organization of Chrysler Merger Sub
shall cease at the Chrysler Effective Time.
As soon as possible after the Chrysler Effective Time, DaimlerChrysler AG
will issue the DaimlerChrysler Ordinary Shares to be issued with respect to the
Chrysler Merger and delivered to the U.S. Exchange Agent for the account of
former stockholders of Chrysler, and the U.S. Exchange Agent will contribute,
for the account of the former stockholders of Chrysler, all of the issued and
outstanding shares of stock of the U.S. Surviving Corporation to DaimlerChrysler
AG as a transfer in kind. Subject to compliance with various provisions of the
German Stock Corporation Law (AKTIENGESETZ) and the German Transformation Act
(UMWANDLUNGSGESETZ) (together, the "GSCL"), the Combination Agreement provides
that such exchange shall be effected in accordance with Sections 52 and 183 ET
SEQ. (including in particular Section 187) of the German Stock Corporation Law
(AKTIENGESETZ) by registering the contribution in kind agreement
(EINBRINGUNGSVERTRAG) and the increase of the DaimlerChrysler AG stated share
capital with the commercial register (HANDELSREGISTER) for DaimlerChrysler AG.
The Combination Agreement further provides that, at the Chrysler Effective Time,
the obligation of the parties to effect the U.S. Share Exchange shall be
unconditional.
At the Chrysler Effective Time, each share of Chrysler Common Stock issued
and outstanding immediately prior to the Chrysler Effective Time (other than any
shares held by Chrysler as treasury stock or held by any wholly owned Subsidiary
of Chrysler, which shall be canceled) shall be converted into the right to
receive, upon surrender of the certificate (the "Old Chrysler Certificate")
formerly representing such share of Chrysler Common Stock, .6235 of a
DaimlerChrysler Ordinary Share, which results from the following computation:
<TABLE>
<S> <C>
(DP x DAP) + SOP
U.S. Exchange Ratio = 103.4929 x -------------------------
(DAP x DP) x (DAP + SOP)
</TABLE>
As used in the U.S. Exchange Ratio Formula, (1) "DAP" refers to
Daimler-Benz' adjusted price per Daimler-Benz Ordinary Share and is defined to
mean that number of marks equal to 190.8 minus the sum of (i) the per
Daimler-Benz Ordinary Share regular annual dividend in respect of the year 1997
paid on May 28, 1998 (DM 1.60), plus (ii) the per Daimler-Benz Ordinary Share
amount of the Special Distribution paid on June 15, 1998 (DM 20); (2) "SOP"
refers to Daimler-Benz' SCHUTT AUS/HOL ZURUCK share offering proceeds and is
defined to mean (i) the aggregate amount of net proceeds, expressed in marks (DM
7,482,673,200), received by Daimler-Benz in respect of the Rights Offering,
divided by (ii) 523,299,381 and (3) "DP" refers to the Rights Offering
discounted price expressed as a percentage of the then current market price and
is herein defined to mean that decimal fraction carried to four digits (.8009)
determined by dividing (1) the offering price per new Daimler-Benz Ordinary
Share (expressed in marks) in the Rights Offering (DM 144) by (2) the reported
last sale price per Daimler-Benz Ordinary Share on the FSE, as reported by the
FSE, on the last full trading day which immediately precedes the public
announcement of the price at which a holder of a Right will be entitled to
purchase a Daimler-Benz Ordinary Share pursuant to the Rights Offering (DM
179.8).
Accordingly, the U.S. Exchange Ratio can be computed as follows:
<TABLE>
<S> <C> <C>
(.8009 x 169.2) + 14.29902933
U.S. Exchange Ratio = 103.4929 x --------------------------------------- = .6235
(169.2 x .8009) x (169.2 + 14.29902933)
</TABLE>
Notwithstanding the foregoing, prior to the delivery of the DaimlerChrysler
Ordinary Shares to the U.S. Exchange Agent for the account of the former
stockholders of Chrysler in the U.S. Share Exchange, each such stockholder
shall, in addition to his, her or its right to receive such DaimlerChrysler
Ordinary Shares, have a continuing ownership interest in the U.S. Surviving
Corporation identical in all respects to his, her or its ownership interest in
Chrysler immediately prior to the Chrysler Effective Time, such ownership
interest to be
85
<PAGE>
extinguished automatically upon such delivery of DaimlerChrysler Ordinary Shares
to the U.S. Exchange Agent.
PROCEDURES FOR EXCHANGE OF CERTIFICATES. The Combination Agreement provides
that promptly after the Chrysler Effective Time, the U.S. Exchange Agent will
mail to each former record holder of shares of Chrysler Common Stock a form of
letter of transmittal which shall specify that the delivery shall be effected,
and risk of loss and title shall pass, only upon proper delivery of Old Chrysler
Certificates to the U.S. Exchange Agent and instructions for use in effecting
the surrender to the U.S. Exchange Agent of Old Chrysler Certificates in
exchange for DaimlerChrysler Ordinary Shares. The letter of transmittal shall
contain such other terms and conditions as Daimler-Benz and Chrysler reasonably
specify. Upon surrender of an Old Chrysler Certificate to the U.S. Exchange
Agent, together with a letter of transmittal duly executed and completed in
accordance with the instructions thereto, and any other documents reasonably
required by the U.S. Exchange Agent or Daimler-Benz and Chrysler, (i) the holder
of such Old Chrysler Certificate shall be entitled to receive in exchange
therefor (x) a certificate registered in the name of such holder representing
the number of whole DaimlerChrysler Ordinary Shares and cash in lieu of any
fractional DaimlerChrysler Ordinary Share into which the shares previously
represented by such Old Chrysler Certificate shall have been converted at the
Chrysler Effective Time and (y) if applicable, a check payable to such holder
representing the payment of any dividends and distributions described in the
next paragraph, and (ii) such Old Chrysler Certificate shall forthwith be
cancelled. The Combination Agreement also provides that if any cash is to be
paid to, or any certificate representing DaimlerChrysler Ordinary Shares is to
be issued in the name of, a person other than the person in whose name the Old
Chrysler Certificate so surrendered in exchange therefor is registered, it shall
be a condition of the payment or issuance that the Old Chrysler Certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such exchange shall pay any transfer or other
taxes required by reason of the payment of cash to, or the issuance of a
certificate representing DaimlerChrysler Ordinary Shares in the name of, a
person other than the registered holder of the Old Chrysler Certificate so
surrendered or shall establish to the satisfaction of the U.S. Exchange Agent
and DaimlerChrysler AG that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of the Combination Agreement, each
Old Chrysler Certificate shall, at and after the Chrysler Effective Time,
represent for all purposes only the right to receive DaimlerChrysler Ordinary
Shares and any dividends and distributions as provided in the Combination
Agreement, if any. Chrysler stockholders should not send in certificates
representing Chrysler Common Stock with their proxy cards, and should only send
their stock certificates to the depository bank when they receive a letter of
transmittal for this purpose.
The Combination Agreement provides that no dividends or other distributions
declared after the Chrysler Effective Time on DaimlerChrysler Ordinary Shares
and payable to the holders of record thereof after the Chrysler Effective Time
shall be paid to the holder of any unsurrendered Old Chrysler Certificates with
respect to which the DaimlerChrysler Ordinary Shares shall have been issued in
the Chrysler Merger until such Old Chrysler Certificates shall be surrendered
but (i) upon such surrender there shall be paid to the person in whose name the
certificates representing such DaimlerChrysler Ordinary Shares shall be issued
the amount of dividends theretofore paid with respect to such whole
DaimlerChrysler Ordinary Shares as of any date subsequent to the Chrysler
Effective Time, and (ii) at the appropriate payment date or as soon as
practicable thereafter, there shall be paid to such person the amount of
dividends with a record date after the Chrysler Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such DaimlerChrysler Ordinary Shares, subject in any case to any applicable
abandoned property, escheat and similar laws. No interest shall be payable with
respect to the payment of such dividends on surrender of outstanding Old
Chrysler Certificates.
From and after the Chrysler Effective Time, the holders of Old Chrysler
Certificates shall cease to have any rights with respect to such shares except
as otherwise provided in the Combination Agreement or by applicable law. All
rights to receive cash, if any, and DaimlerChrysler Ordinary Shares into which
shares of Chrysler
86
<PAGE>
Common Stock shall have been converted shall be deemed to have been paid or
issued, as the case may be, in full satisfaction of all rights pertaining to
such shares of Chrysler Common Stock.
No DaimlerChrysler Ordinary Shares or cash shall be delivered to a person
who is an affiliate of Chrysler unless such person has executed and delivered an
agreement in the form of Exhibit B-1 to the Combination Agreement or Chrysler
and Daimler-Benz have determined that the Transactions will not be accounted for
as a pooling-of-interests under U.S. GAAP because of other circumstances.
After the Chrysler Effective Time, there shall be no further registration of
transfers on the stock transfer books of the U.S. Surviving Corporation of
shares of Chrysler Common Stock which were outstanding immediately prior to the
Chrysler Effective Time. If, after the Chrysler Effective Time, Old Chrysler
Certificates are presented to the U.S. Surviving Corporation, they shall be
cancelled and exchanged for cash or certificates representing DaimlerChrysler
Ordinary Shares, or both, in accordance with the procedures set forth above. Any
portion of the U.S. Merger Consideration and any dividends or distributions with
respect thereto (together, the "U.S. Exchange Fund") that remains undistributed
one year after the Chrysler Effective Time shall be delivered by the U.S.
Exchange Agent to a depositary bank designated by DaimlerChrysler AG, upon
demand, and any holders of the Old Chrysler Certificates who have not
theretofore complied with the exchange provisions of the Combination Agreement
may thereafter look only to DaimlerChrysler AG or such depositary bank for
payment of their claim for U.S. Merger Consideration and any dividends or
distributions with respect to DaimlerChrysler Ordinary Shares.
Each of the U.S. Exchange Agent and DaimlerChrysler AG shall be entitled to
deduct and withhold from the consideration otherwise payable to any holder of
Old Chrysler Certificates such amounts as it is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision of
state, local or non-U.S. tax law. To the extent that amounts are so withheld by
the U.S. Exchange Agent or DaimlerChrysler AG, as the case may be, such
withholdings shall be treated for all purposes of the Combination Agreement as
having been paid to the holder of the Old Chrysler Certificate in respect of
which such deduction and withholding was made by the U.S. Exchange Agent or
DaimlerChrysler AG, as the case may be.
If any Old Chrysler Certificate is lost, stolen or destroyed, upon making of
an affidavit of that fact and, if required by the U.S. Surviving Corporation,
DaimlerChrysler AG or the U.S. Exchange Agent, the posting of a bond in such
reasonable amount as directed by such entity, the U.S. Exchange Agent will
issue, in exchange for such lost, stolen or destroyed certificate, the U.S.
Merger Consideration and, if applicable, any unpaid dividends and distribution
on DaimlerChrysler Ordinary Shares deliverable in respect thereof, in each case
pursuant to the Combination Agreement.
None of Daimler-Benz, Chrysler, the U.S. Surviving Corporation,
DaimlerChrysler AG or the U.S. Exchange Agent shall be liable to any person in
respect of any DaimlerChrysler Ordinary Shares, any dividends or distributions
with respect to DaimlerChrysler Ordinary Shares or any cash from the U.S.
Exchange Fund, in each case delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
Stockholders of Chrysler should not forward Old Chrysler Certificates with
the enclosed proxy card, nor should they forward Old Chrysler Certificates to
the U.S. Exchange Agent until they have received the packet of information
described above, including the letter of transmittal.
TREATMENT OF CHRYSLER STOCK PLANS. The Combination Agreement provides that,
subject to the consummation of the Chrysler Merger, immediately prior to the
Chrysler Effective Time each outstanding Chrysler Stock Option will become
exercisable, and will be deemed to be exercised, and will then be converted (and
such Chrysler Stock Option will be extinguished) into a right to receive that
number of whole DaimlerChrysler Ordinary Shares and cash in lieu of any
fractional DaimlerChrysler Ordinary Share determined in accordance with the
following formula:
<TABLE>
<S> <C> <C>
Option Shares X (Closing Value - Exercise Price) X 1.02
--------------------------------------------------------- X .6235
Closing Value
</TABLE>
87
<PAGE>
where "Option Shares" is the number of shares of Chrysler Common Stock subject
to the Chrysler Stock Option; "Closing Value" is the closing per share price of
Chrysler Common Stock as reported in THE WALL STREET JOURNAL for the next to
last trading day prior to the Chrysler Effective Time; and "Exercise Price" is
the per share exercise price for shares subject to the Chrysler Stock Option.
Each Chrysler Employee Optionholder shall surrender directly to Chrysler for
cancellation and not for conversion that number of Chrysler Employee Stock
Options necessary to satisfy Chrysler's obligation under the Code, or any
provision of state, local or non-U.S. tax law, to deduct and withhold in respect
of payments made to such Chrysler Employee Optionholder. The value of any such
Chrysler Employee Stock Option surrendered for this purpose shall equal Option
Shares x (Closing Value -- Exercise Price) x 1.02. As soon as practicable
following the Chrysler Effective Time and immediately prior to the U.S. Share
Exchange, Chrysler shall deliver to the U.S. Exchange Agent the aggregate number
of shares of Chrysler Common Stock issuable pursuant to the deemed exercise of
Chrysler Employee Stock Options provided in this paragraph (exclusive of
Chrysler Employee Stock Options which have been cancelled), subject to
compliance with certain provisions of the GSCL, for contribution in kind to
DaimlerChrysler AG by the U.S. Exchange Agent on behalf of the Chrysler
optionholders.
Subject to the consummation of the Chrysler Merger, immediately prior to the
Chrysler Effective Time each outstanding Chrysler performance share award shall
be deemed vested in accordance with the terms of Chrysler's 1991 Stock
Compensation Plan and shall be settled with that number of whole DaimlerChrysler
Ordinary Shares and cash in lieu of any fractional DaimlerChrysler Ordinary
Share determined in accordance with the following formula:
<TABLE>
<S> <C> <C>
Performance Shares X Closing Value X 1.02
------------------------------------------- X .6235
Closing Value
</TABLE>
where "Performance Shares" is the number of shares of Chrysler Common Stock
subject to the performance share award. Each holder of an outstanding Chrysler
performance share award shall surrender directly to Chrysler for cancellation
and not for settlement that number of Chrysler performance share awards
necessary to satisfy Chrysler's obligation under the Code, or any provision of
state, local or non-U.S. tax law, to deduct and withhold in respect of payments
made to such Chrysler performance share award holder. The value of any such
Chrysler performance share award surrendered for this purpose shall equal
Performance Shares x Closing Value x 1.02. As soon as practicable following the
Chrysler Effective Time and immediately prior to the U.S. Share Exchange,
Chrysler shall transmit to the U.S. Exchange Agent the aggregate number of
shares of Chrysler Common Stock subject to outstanding performance share awards
(exclusive of performance share awards which have been cancelled), subject to
compliance with certain provisions of the GSCL, for contribution in kind into
DaimlerChrysler AG by the U.S. Exchange Agent on behalf of the holders of
performance share awards.
Subject to the consummation of the Chrysler Merger, immediately prior to the
Chrysler Effective Time, each outstanding Chrysler stock unit shall be deemed
vested in accordance with the terms of Chrysler's 1996 Non-employee Director
Stock Unit Plan and shall be settled with that number of whole DaimlerChrysler
Ordinary Shares and cash in lieu of any fractional DaimlerChrysler Ordinary
Share determined in accordance with the following formula:
<TABLE>
<S> <C> <C>
Closing Value X 1.02
---------------------- X .6235
Closing Value
</TABLE>
As soon as practicable following the Chrysler Effective Time and immediately
prior to the U.S. Share Exchange, Chrysler shall transmit to the U.S. Exchange
Agent the aggregate number of shares of Chrysler Common Stock subject to
outstanding stock units, subject to compliance with certain provisions of the
GSCL, for contribution in kind into DaimlerChrysler AG by the U.S. Exchange
Agent on behalf of the holders of stock units.
Subject to the consummation of the Chrysler Merger, immediately prior to the
Chrysler Effective Time, each outstanding Chrysler restricted stock unit award
shall be deemed vested in accordance with the terms of Chrysler's 1991 Stock
Compensation Plan and shall be settled with that number of whole DaimlerChrysler
88
<PAGE>
Ordinary Shares and cash in lieu of any fractional DaimlerChrysler Ordinary
Share determined in accordance with the following formula:
<TABLE>
<S> <C> <C>
Restricted Stock Units X Closing Value X 1.02
----------------------------------------------- X .6235
Closing Value
</TABLE>
where "Restricted Stock Units" is the number of shares of Chrysler Common Stock
subject to the restricted stock unit award. As soon as practicable following the
Chrysler Effective Time and immediately prior to the U.S. Share Exchange,
Chrysler shall transmit to the U.S. Exchange Agent the aggregate number of
shares of Chrysler Common Stock subject to outstanding restricted stock unit
awards, subject to compliance with certain provisions of the GSCL, for
contribution in kind into DaimlerChrysler AG by the U.S. Exchange Agent on
behalf of the holders of restricted stock unit awards.
As soon as practicable following the Chrysler Effective Time,
DaimlerChrysler AG shall cause the U.S. Exchange Agent to deliver to the former
holders of Chrysler Employee Stock Options, Chrysler performance share awards,
Chrysler stock units and Chrysler restricted stock unit awards, the
DaimlerChrysler Ordinary Shares payable as described above.
DaimlerChrysler AG and Chrysler shall establish a mechanism whereby each
person who is permitted to sell DaimlerChrysler Ordinary Shares received as
described above without registration under the Securities Act can sell all or a
portion of such DaimlerChrysler Ordinary Shares through open market sales of
such DaimlerChrysler Ordinary Shares to be effected by a broker selected by
Chrysler and reasonably satisfactory to Daimler-Benz. Chrysler shall, at least
ten days prior to the Chrysler Effective Time, identify the broker to whom such
holders may direct sales orders. DaimlerChrysler AG shall deliver (or cause the
U.S. Exchange Agent to deliver) the aggregate number of DaimlerChrysler Ordinary
Shares subject to all such sales orders received prior to the Chrysler Effective
Time to the broker as soon as practicable thereafter, but no later than five
business days after the Chrysler Effective Time and any holder directing such a
sales order shall bear the cost of all expenses, including all commissions,
related thereto.
Pursuant to the Combination Agreement, Chrysler has agreed to use its
reasonable best efforts, if the Transactions shall be accounted for as a
"pooling-of-interests," to take such actions (including, but not limited to,
adopting all required amendments) with respect to (i) all compensation and
benefit plans and arrangements and (ii) all awards outstanding under such plans
or arrangements, in each case that are required to enable the Transactions to be
accounted for as a pooling-of-interests.
REDEMPTION OF CHRYSLER PREFERRED STOCK. Prior to the Chrysler Effective
Time, Chrysler shall have redeemed all outstanding shares of Series A
Convertible Preferred Stock, par value $1.00 per share of Chrysler (the
"Chrysler Preferred Stock") in the manner contemplated by and pursuant to the
terms and procedures set forth in the Certificate of Designation, Preferences
and Rights with respect to the Chrysler Preferred Stock.
CERTIFICATE OF INCORPORATION; BY-LAWS; OFFICERS AND DIRECTORS. The
Certificate of Incorporation of Chrysler Merger Sub, substantially in the form
of Exhibit C to the Combination Agreement, will be the Certificate of
Incorporation of the U.S. Surviving Corporation, and the By-laws of Chrysler
Merger Sub, substantially in the form of Exhibit D to the Business Combination
Agreement, will be the By-laws of the U.S. Surviving Corporation. The officers
and directors of Chrysler Merger Sub immediately prior to the Chrysler Effective
Time will be the officers and directors of the U.S. Surviving Corporation.
The Daimler-Benz Merger
THE DAIMLER-BENZ MERGER. In accordance with the German Merger Agreement and
the GSCL, Daimler-Benz will be merged with and into DaimlerChrysler AG and
DaimlerChrysler AG shall be the surviving corporation in the Daimler-Benz Merger
(the "German Surviving Corporation"). As a consequence of the Daimler-Benz
Merger, the corporate existence of Daimler-Benz will cease and DaimlerChrysler
AG will succeed to all rights, assets, liabilities and obligations of
Daimler-Benz in accordance with the GSCL. At the Daimler-Benz Effective Time, by
virtue of the Daimler-Benz Merger and without any action on the part of the
holder of
89
<PAGE>
any Daimler-Benz Ordinary Shares, the stockholders of Daimler-Benz (other than
Daimler-Benz or DaimlerChrysler AG) shall automatically become stockholders of
DaimlerChrysler AG. Each Daimler-Benz Ordinary Share shall embody solely the
right to receive that number of DaimlerChrysler Ordinary Shares equal to the
Daimler-Benz Merger Exchange Ratio in exchange for such Daimler-Benz Ordinary
Share, and each Daimler-Benz ADS shall embody solely the right to receive that
number of DaimlerChrysler Ordinary Shares equal to the Daimler-Benz Merger
Exchange Ratio in exchange for such Daimler-Benz ADS. No holder of Daimler-Benz
Ordinary Shares or Daimler-Benz ADSs will be entitled to receive fractional
DaimlerChrysler Ordinary Shares, and if any holder would otherwise be so
entitled then such holder will receive cash in lieu of such fractional share.
See "Risk Factors--Effect of Delay of Daimler-Benz Merger."
PROCEDURES FOR EXCHANGE OF DAIMLER-BENZ ADSS. DaimlerChrysler AG shall
instruct the designated exchange agent for accepting Daimler-Benz ADSs and
delivering DaimlerChrysler Ordinary Shares (the "German Exchange Agent") to mail
to each former holder of record of Daimler-Benz ADSs a form of letter of
transmittal which shall specify that the delivery shall be effected, and risk of
loss and title shall pass, only upon proper delivery of Old Daimler-Benz ADRs
(the "Old Daimler-Benz ADRs") to the German Exchange Agent and instructions for
use in effecting the surrender to the German Exchange Agent of Old Daimler-Benz
ADRs in exchange for DaimlerChrysler Ordinary Shares. The letter of transmittal
shall contain such other terms and conditions as DaimlerChrysler AG specifies.
Upon surrender of an Old Daimler-Benz ADR to the German Exchange Agent, together
with a letter of transmittal duly executed and completed in accordance with the
instructions thereto, and any other documents reasonably required by the German
Exchange Agent or DaimlerChrysler AG, (i) the holder of such Old Daimler-Benz
ADR shall be entitled to receive in exchange therefor (x) the number of whole
DaimlerChrysler Ordinary Shares and cash in lieu of any fractional
DaimlerChrysler Ordinary Share into which the shares previously represented by
such Old Daimler-Benz ADR shall have been converted at the Daimler-Benz
Effective Time and (y) if applicable, a check payable to such holder
representing the payment of any dividends and distributions described in the
next paragraph and (ii) such Old Daimler-Benz ADR shall forthwith be cancelled.
The Combination Agreement also provides that if any cash is to be paid to, or
any certificate representing DaimlerChrysler Ordinary Shares is to be issued in
the name of, a person other than the person in whose name the Old Daimler-Benz
ADR so surrendered in exchange therefor is registered, it shall be a condition
of the payment or issuance that the Old Daimler-Benz ADR so surrendered shall be
properly endorsed or otherwise in proper form for transfer and that the person
requesting such exchange shall pay any transfer or other taxes required by
reason of the payment of cash to, or the issuance of a certificate representing
DaimlerChrysler Ordinary Shares in the name of, a person other than the
registered holder of the Old Daimler-Benz ADR so surrendered or shall establish
to the satisfaction of DaimlerChrysler AG that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of the
Combination Agreement, each Old Daimler-Benz ADR shall, at and after the
Daimler-Benz Effective Time, represent for all purposes only the right to
receive DaimlerChrysler Ordinary Shares and any dividends and distributions as
provided in the Combination Agreement, if any.
No dividends or other distributions declared after the Daimler-Benz
Effective Time on DaimlerChrysler Ordinary Shares and payable to the holders of
record thereof after the Daimler-Benz Effective Time shall be paid to the holder
of any unsurrendered Old Daimler-Benz ADR with respect to which the
DaimlerChrysler Ordinary Shares shall have been issued in the Daimler-Benz
Merger until such Old Daimler-Benz ADRs shall be surrendered as provided herein,
but upon such surrender there shall be paid to the person in whose name the
certificate representing such DaimlerChrysler Ordinary Shares shall be issued
and registered the amount of dividends theretofore paid with respect to such
whole DaimlerChrysler Ordinary Shares as of any date subsequent to the
Daimler-Benz Effective Time, and at the appropriate payment date or as soon as
practicable thereafter, there shall be paid to such person the amount of
dividends with a record date after the Daimler-Benz Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole DaimlerChrysler Ordinary Shares, subject to any applicable abandoned
property, escheat and similar laws. No interest shall be payable with respect to
the payment of such dividends on surrender of outstanding Old Daimler-Benz ADRs.
90
<PAGE>
From and after the Daimler-Benz Effective Time, the holders of Old
Daimler-Benz ADRs shall cease to have any rights with respect to the
Daimler-Benz ADSs evidenced thereby except as otherwise provided herein or by
applicable law. All rights to receive cash, if any, and DaimlerChrysler Ordinary
Shares into which Daimler-Benz ADSs shall have been converted shall be deemed to
have been paid or issued, as the case may be, in full satisfaction of all rights
pertaining to such Daimler-Benz ADSs.
No DaimlerChrysler Ordinary Shares shall be delivered to a person who is an
affiliate of Daimler-Benz unless such person has executed and delivered an
agreement in the form of Exhibit B-2 to the Combination Agreement or unless
Chrysler and Daimler-Benz have determined that the Transactions will not be
accounted for as a "pooling-of-interests" under U.S. GAAP because of other
circumstances.
After the Daimler-Benz Effective Time, there shall be no further
registration of transfers on the stock transfer books of the relevant depositary
banks of Daimler-Benz ADSs which were outstanding immediately prior to the
Daimler-Benz Effective Time. If, after the Daimler-Benz Effective Time, Old
Daimler-Benz ADRs are presented to the relevant depositary, they shall be
cancelled and exchanged for cash or certificates representing DaimlerChrysler
Ordinary Shares, or both, in accordance with the procedures set forth above. Any
portion of DaimlerChrysler Ordinary Shares or distributions payable pursuant to
the Combination Agreement that remains undistributed one year after the
Daimler-Benz Effective Time shall be delivered to a depositary bank designated
by DaimlerChrysler AG upon demand by DaimlerChrysler AG, and any holders of the
Old Daimler-Benz ADRs who have not theretofore complied with the exchange
provisions of the Combination Agreement may thereafter look only to
DaimlerChrysler AG for payment of their claim for Daimler-Benz Merger
Consideration and any dividends or distributions with respect to DaimlerChrysler
Ordinary Shares.
DaimlerChrysler AG shall be entitled to deduct and withhold from the
consideration otherwise payable to any holder of Daimler-Benz Ordinary Shares or
the Old Daimler-Benz ADRs such amounts as it is required to deduct and withhold
with respect to the making of such payment under the Code or any provision of
state, local or non-U.S. tax law. To the extent that amounts are so withheld by
DaimlerChrysler AG, such withheld amounts shall be treated for all purposes of
the Combination Agreement as having been paid to the holder of the Daimler-Benz
Ordinary Shares or the Old Daimler-Benz ADRs in respect of which such deduction
and withholding was made by DaimlerChrysler AG.
Stockholders of Daimler-Benz should not forward Old Daimler-Benz ADRs with
the enclosed proxy card, nor should they forward Old Daimler-Benz ADRs to the
relevant depositary bank until they have received the packet of information
described above, including the letter of transmittal.
TREATMENT OF DAIMLER-BENZ STOCK PLANS. Upon effectiveness of the
Daimler-Benz Merger, all outstanding Daimler-Benz Employee Stock Options will
become stock options of DaimlerChrysler AG in accordance with Section 23 of the
German Transformation Act (UMWANDLUNGSGESETZ) (or such other instruments as
shall meet the requirements of such Section 23 and shall be agreed to by
Chrysler and Daimler-Benz), and from and after the effectiveness of the
Daimler-Benz Merger shall be convertible into DaimlerChrysler Ordinary Shares
(rather than Daimler-Benz Ordinary Shares) in accordance with their terms;
PROVIDED that the number of whole DaimlerChrysler Ordinary Shares subject to
each such Daimler-Benz Employee Stock Option shall equal the number of
Daimler-Benz Ordinary Shares subject thereto multiplied by the Daimler-Benz
Merger Exchange Ratio and the per share exercise price thereof shall be divided
by the Daimler-Benz Merger Exchange Ratio.
Pursuant to the Combination Agreement, Daimler-Benz has agreed to take all
actions (including, but not limited to, adopting all required amendments) with
respect to (i) all compensation and benefit plans and arrangements and (ii) all
awards outstanding under such plans or arrangements, in each case that are
required to enable the Transactions to be accounted for as a
pooling-of-interests.
TREATMENT OF DAIMLER-BENZ NEWS AND DAIMLER-BENZ SUBORDINATED MANDATORY
CONVERTIBLE NOTES. Upon effectiveness of the Daimler-Benz Merger, (i) all
Warrants which are convertible into newly issued Daimler-Benz Ordinary Shares
will become Warrants of DaimlerChrysler AG, and (ii) the Notes, including Notes
represented by ADNs and DM BESs, issued by Daimler-Benz will become Notes of
DaimlerChrysler AG, in each case in accordance with Section 23 of the German
Transformation Act (UMWANDLUNGSGESETZ). From and after the
91
<PAGE>
date of effectiveness of the Daimler-Benz Merger, (i) all Warrants will entitle
the holder thereof to purchase DaimlerChrysler Ordinary Shares (rather than
Daimler-Benz Ordinary Shares) and (ii) the Notes will be convertible into
DaimlerChrysler Ordinary Shares (rather than Daimler-Benz Ordinary Shares), in
each case in accordance with their terms and Section 23 of the German
Transformation Act (UMWANDLUNGSGESETZ).
TREATMENT OF DAIMLER-BENZ SINGAPORE DEPOSITARY SHARES. The Combination
Agreement provides that Singapore Depositary Shares of Daimler-Benz
("Daimler-Benz SDSs") shall be treated in the same manner as Daimler-Benz ADSs.
Pursuant to the Combination Agreement, DaimlerChrysler AG and Daimler-Benz shall
make appropriate arrangements with the depositary bank for the Daimler-Benz SDSs
to effect fully this result.
Fractional Shares
As promptly as practicable following the Effective Time, the U.S. Exchange
Agent will determine the excess of (x) the aggregate number of DaimlerChrysler
Ordinary Shares delivered to the U.S. Exchange Agent over (y) the aggregate
number of whole DaimlerChrysler Ordinary Shares to be distributed in connection
with the Chrysler Merger (such excess being referred to herein as the "Chrysler
Merger Excess Shares"). Following the Effective Time the U.S. Exchange Agent
will, on behalf of the former stockholders of Chrysler, sell the Chrysler Merger
Excess Shares at then-prevailing prices on the NYSE.
As promptly as practicable following the Daimler-Benz Exchange Offer
Expiration Date, the Daimler-Benz Exchange Agent will determine the excess of
(x) the aggregate number of DaimlerChrysler Ordinary Shares delivered to the
Daimler-Benz Exchange Agent over (y) the aggregate number of whole
DaimlerChrysler Ordinary Shares to be distributed in connection with the
Daimler-Benz Exchange Offer (such excess being referred to herein as the
"Daimler-Benz Exchange Offer Excess Shares"). Following the Daimler-Benz
Exchange Offer Expiration Date the Daimler-Benz Exchange Agent will, on behalf
of the former stockholders of Daimler-Benz who tendered their Daimler-Benz
Ordinary Shares or Daimler-Benz ADSs in the Daimler-Benz Exchange Offer, sell
the Daimler-Benz Exchange Offer Excess Shares at then-prevailing prices on the
NYSE or the FSE.
As promptly as practicable following the German Effective Time, the German
Exchange Agent will determine the excess of (x) the aggregate number of
DaimlerChrysler Ordinary Shares delivered to the German Exchange Agent over (y)
the aggregate number of whole DaimlerChrysler Ordinary Shares to be distributed
in connection with the Daimler-Benz Merger (such excess being referred to herein
as the "Daimler-Benz Merger Excess Shares"). Following the German Effective Time
the German Exchange Agent will, on behalf of the former stockholders of
Daimler-Benz remaining after the Daimler-Benz Exchange Offer, sell the
Daimler-Benz Merger Excess Shares at then-prevailing prices on the NYSE or the
FSE.
The sale of the Excess Shares by the Exchange Agent will be executed on the
NYSE or the FSE, as the case may be, through one or more member firms and will
be executed in round lots to the extent practicable. The Exchange Agent will use
reasonable efforts to complete the sale of the Excess Shares as promptly
following the Effective Time, the Daimler-Benz Exchange Offer Expiration Date or
the German Effective Time, as the case may be, as, in its sole judgment, is
practicable consistent with obtaining the best execution of such sales in light
of prevailing market conditions. Until the net proceeds of such sale or sales
have been distributed to the holders of Chrysler Common Stock, Daimler-Benz
Ordinary Shares or Daimler-Benz ADSs, as the case may be, the Exchange Agent
will hold such proceeds in trust for such holders (the "Common Shares Trust").
The Exchange Agent will determine the portion of the Common Shares Trust to
which each holder of Chrysler Common Stock, Daimler-Benz Ordinary Shares or
Daimler-Benz ADSs, as the case may be, is entitled, if any, by multiplying the
amount of the aggregate net proceeds comprising the Common Shares Trust by a
fraction, the numerator of which is the amount of the fractional share interest
to which such holder of Chrysler Common Stock, Daimler-Benz Ordinary Shares or
Daimler-Benz ADSs, as the case may be, is entitled (after taking into account
all such shares held at the Effective Time, the Daimler-Benz Exchange Offer
Expiration Date or the German Effective Time, as the case may be, by such
holder) and the denominator of which is the aggregate amount of fractional share
interests to which all holders of Chrysler Common Stock, Daimler-Benz Ordinary
Shares or Daimler-Benz ADSs, as the case may be, are entitled pursuant to the
Chrysler Merger, the Daimler-Benz Exchange Offer or the Daimler-Benz Merger, as
the case may be.
92
<PAGE>
As soon as practicable after the determination of the amount of cash, if
any, to be paid to holders of Chrysler Common Stock, Daimler-Benz Ordinary
Shares or Daimler-Benz ADSs, as the case may be, with respect to fractional
share interests, the Exchange Agent will make available such amounts to such
holders.
Antidilution Protection
The Combination Agreement provides that if, between the date thereof and the
Daimler-Benz Exchange Offer Expiration Date, the Chrysler Effective Time or the
Daimler-Benz Effective Time, as the case may be, the outstanding DaimlerChrysler
Ordinary Shares, Daimler-Benz Ordinary Shares or shares of Chrysler Common Stock
shall have been changed into a different number of shares or a different class
by reason of any reclassification, recapitalization, stock split, combination,
or exchange of shares or a stock dividend or dividend payable in any other
securities shall be declared with a record date within such period, or any
similar event shall have occurred, then the Daimler-Benz Exchange Offer Ratio,
the U.S. Exchange Ratio or the Daimler-Benz Merger Exchange Ratio, as the case
may be, shall be appropriately adjusted to provide to the holders of Daimler-
Benz Ordinary Shares, Daimler-Benz ADSs or Chrysler Common Stock, as the case
may be, the same economic effect as contemplated by the Combination Agreement
prior to such event.
Option to Issue DaimlerChrysler American Depositary Shares
If for any reason relating to the listing of DaimlerChrysler Ordinary Shares
on the NYSE or to the implementation of procedures for transfer, registration,
voting or payments of dividends with respect to DaimlerChrysler Ordinary Shares
in the United States, Daimler-Benz and Chrysler jointly determine that it is
more practical and desirable from a market point of view for DaimlerChrysler AG
to cause American Depositary Shares ("DaimlerChrysler ADSs") evidenced by
American Depositary Receipts to be issued to U.S. holders of Daimler-Benz ADSs,
Daimler-Benz Ordinary Shares and Chrysler Common Stock then DaimlerChrysler AG
shall cause DaimlerChrysler ADSs to be issued to such persons in complete
satisfaction of its obligations under Articles I, II and III of the Combination
Agreement, and all references in Articles I, II and III of the Combination
Agreement to DaimlerChrysler Ordinary Shares issuable to such persons shall mean
DaimlerChrysler ADSs.
DaimlerChrysler AG Governance After the Chrysler Effective Time
Pursuant to the Combination Agreement, Daimler-Benz, Chrysler and
DaimlerChrysler AG have agreed that after the Chrysler Effective Time,
DaimlerChrysler AG shall have a corporate governance structure reflecting that
the Transactions are a merger-of-equals, and that, without the intention to
interfere with the rights and powers of DaimlerChrysler's stockholders meeting,
Supervisory Board (AUFSICHTSRAT) and the Management Board (VORSTAND) and subject
to Sections 95 ET SEQ., Section 84 of the German Stock Corporation Law
(AKTIENGESETZ) and Sections 6 ET SEQ. of the Co-determination Law of 1976, they
will recommend to their respective stockholders and organizational bodies that
(i) the Memorandum and Articles of Association (SATZUNG) of DaimlerChrysler AG
and the DaimlerChrysler AG Management Board Rules of Procedure
(GESCHAFTSORDNUNG) following the Chrysler Effective Time shall be in form and
substance reasonably acceptable to Daimler-Benz and Chrysler; (ii) (A) until the
DaimlerChrysler Supervisory Board has to be composed in accordance with the
Co-determination Law of 1976, the DaimlerChrysler Supervisory Board shall be
composed of twelve members representing the shareholders, six of whom shall have
been recommended, immediately prior to the Chrysler Effective Time, by
Daimler-Benz from the then-current non-employee representative members of the
Daimler-Benz Supervisory Board and six of whom shall have been recommended,
immediately prior to the Chrysler Effective Time, by Chrysler from the
then-current outside members of the Chrysler Board and (B) for the period
thereafter, the DaimlerChrysler Supervisory Board shall consist of twenty
members, five of whom shall have been recommended by Daimler-Benz from
non-employee representative members of the Daimler-Benz Supervisory Board and
five of whom shall have been recommended by Chrysler from the outside members of
the Chrysler Board; (iii) for a period of not less than two years following the
Chrysler Effective Time, Mr. Hilmar Kopper, the current Chairman of the
Daimler-Benz Supervisory Board, shall continue to be Chairman of the
DaimlerChrysler Supervisory Board; (iv) the DaimlerChrysler Management Board
shall consist of 18 members and, in general, 50% of such members shall be
designated by Chrysler and 50% of such
93
<PAGE>
members shall be designated by Daimler-Benz, and there will be two additional
members with responsibility for Daimler-Benz' non-automotive businesses; and (v)
for three years following the Chrysler Effective Time, Jurgen E. Schrempp and
Robert J. Eaton shall be the Co-CEOs and Co-Chairmen of the DaimlerChrysler
Management Board and members of the Office of the Chairmen of DaimlerChrysler
AG. Mr. Eaton has indicated his intention to retire from such position after
three years.
The Combination Agreement provides that the DaimlerChrysler Management Board
shall establish an Integration Committee with consultative function which shall
consist of the Co-Chairmen of the DaimlerChrysler Management Board, who shall
also serve as Co-Chairmen of the Integration Committee, and 12 or more members
(including such Co-Chairmen), 50% of which shall be designated by Chrysler and
50% of which shall be designated by Daimler-Benz. The Combination Agreement also
provides that following the Chrysler Effective Time, (i) DaimlerChrysler AG
shall maintain two operational headquarters, one located at the current
headquarters of Daimler-Benz and one located at the current headquarters of
Chrysler, and (ii) English shall be the official language for the management of
DaimlerChrysler AG. See "The Transactions-- Composition of the DaimlerChrysler
Management Board and Integration Committee."
Representations and Warranties
The Combination Agreement contains various customary representations and
warranties of the parties thereto, including (a) representations by both
Chrysler and Daimler-Benz as to their respective corporate organization and
qualification, the corporate organization and qualification of their respective
Subsidiaries, capital stock, corporate authority, filings with the Commission
and other governmental authorities, no violations, financial statements, absence
of certain changes or events, absence of undisclosed liabilities, litigation,
taxes, employee benefit plans, labor and employment matters, information
provided by the representing parties, ownership of capital stock of the other
party, voting requirements for approval and adoption of the Combination
Agreement and the transactions contemplated thereby, accounting matters,
opinions of financial advisors and finders and advisors; (b) representations by
Chrysler with respect to the non-applicability of state takeover law and
Chrysler's stockholder rights plan; and (c) representations by DaimlerChrysler
AG as to corporate organization and qualification, capital stock, corporate
authority, filings with the Commission and other governmental authorities, no
violations, information provided by DaimlerChrysler AG, ownership of capital
stock of Daimler-Benz and Chrysler, accounting matters, and the absence of any
prior activities by DaimlerChrysler AG. All representations and warranties
expire at the Chrysler Effective Time.
Conduct of the Business Pending the Chrysler Effective Time
The Combination Agreement provides that, from the date thereof until the
Chrysler Effective Time, unless the other party shall agree in writing or except
as otherwise contemplated by the Combination Agreement or in such party's
disclosure schedule, each of the parties thereto shall, and shall cause their
respective Subsidiaries to, conduct their respective businesses in the ordinary
course substantially consistent with past practices and shall use all reasonable
efforts to preserve intact their business organizations and relationships with
third parties (including but not limited to their respective relationships with
customers, suppliers, employees and business partners) and to keep available the
services of their present officers and key employees.
Without limiting the generality of the foregoing, except as otherwise
contemplated by the Combination Agreement or except as contemplated by the
agenda published for the annual general meeting of Daimler-Benz, from the date
of the Combination Agreement until the Chrysler Effective Time, without the
prior written consent of Chrysler, in the case of any action proposed to be
taken by Daimler-Benz or any Subsidiary of Daimler-Benz, or by Daimler-Benz, in
the case of any action proposed to be taken by Chrysler or any Subsidiary of
Chrysler, or by Chrysler and Daimler-Benz, in the case of any action proposed to
be taken by DaimlerChrysler AG (which consent will not be unreasonably withheld
or delayed by any party from whom it is requested):
(a) none of the parties shall, and each shall cause its respective
Significant Subsidiaries not to, adopt or propose any amendment to its
certificate of incorporation, bylaws, Memorandum and Articles of
Association or other similar governing documents;
94
<PAGE>
(b) none of the parties shall, and each shall cause its respective
Subsidiaries not to, (i) declare, set aside or pay any dividend or other
distribution with respect to any shares of its capital stock, except in
the case of Chrysler for regular quarterly cash dividends on the
outstanding shares of Chrysler Common Stock and in the case of
Daimler-Benz for the regular annual cash dividend on the outstanding
Daimler-Benz Ordinary Shares of DM 1.60 per Ordinary Share, the Special
Distribution and the Rights Offering and except for cash dividends or
distributions by a Subsidiary to its parent, (ii) split, combine or
reclassify any of its shares of capital stock, or (iii) issue or
authorize the issuance of any other securities in respect of, in lieu of
or in substitution for shares of such party's or such party's
Subsidiary's capital stock, except for (1) the issuance of shares of
Chrysler Common Stock by Chrysler and Daimler-Benz Ordinary Shares by
Daimler-Benz upon conversion of such party's convertible securities or
upon the exercise of stock options or other rights to acquire such
party's capital stock, in each case which securities, options and rights
are outstanding as of the date of the Combination Agreement and such
issuance is made in accordance with the terms of such securities, options
and rights in effect on the date of the Combination Agreement; (2) the
grant of not more than 100,000 options to purchase shares of Chrysler
Common Stock in the ordinary course of business; (3) the issuance of
Daimler-Benz Ordinary Shares and Daimler-Benz ADSs in connection with the
Rights Offering; (4) the issuance of not more than 2 million Daimler-Benz
Ordinary Shares pursuant to Daimler-Benz' Employee Share Purchase Program
and (5) the issuance by Daimler-Benz of up to a maximum of 10,000,000
Daimler-Benz Ordinary Shares pursuant to The Stock Option Plan of the
Daimler-Benz Group (1998);
(c) none of the parties shall, and each shall cause its respective
Subsidiaries not to, repurchase, redeem or otherwise acquire any shares
of capital stock or other equity or equity equivalent securities of, or
other ownership interests in, such party or such Subsidiary, except that
Chrysler may redeem the Chrysler Preferred Stock in accordance with the
Combination Agreement;
(d) none of the parties shall, and none of the parties shall permit any of
its Subsidiaries to, issue, deliver, sell, pledge or otherwise encumber
or subject to any Encumbrance any shares of its capital stock, any of its
other voting securities or any of its securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting
securities or convertible securities, except as expressly provided in
clause (iii) of paragraph (b) above and except for the issuance by
Chrysler of Chrysler Common Stock in connection with the Chrysler Stock
Issuance as provided in the Combination Agreement;
(e) none of the parties shall, and none of the parties shall permit any of
its Subsidiaries to, merge or consolidate with any other person or
acquire a material amount of assets of or make a material investment in
or otherwise engage in any similar extraordinary business transaction
with any other person, except for transactions in the automotive or
automotive finance businesses in which the party or its Subsidiaries are
currently engaged;
(f) none of the parties shall, and none of the parties shall permit any of
its Subsidiaries to, sell, lease, license or otherwise surrender,
relinquish or dispose of (i) any facility owned or leased by such party
or its Subsidiary and material to such party and its Subsidiaries taken
as a whole or (ii) any assets or property which are material to such
party and its Subsidiaries taken as a whole, except pursuant to existing
contracts or commitments (the terms of which were disclosed to the other
party prior to the date of the Combination Agreement);
(g) none of the parties shall, and none of the parties shall permit any
Subsidiary to, incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for the obligations of any person for
borrowed money, except for indebtedness which will not cause an adverse
change in the ratings of the party's or its Subsidiaries' rated debt
securities by Standard & Poor's Ratings Services and by Moody's Investor
Service, Inc. from those in effect as of the date of the Combination
Agreement;
95
<PAGE>
(h) none of the parties shall, and none of the parties shall permit any of
its Subsidiaries to, take any action that would reasonably be expected to
cause (1) the Chrysler Exchange to (a) fail to qualify as a
reorganization within the meaning of Section 368(a) of the Code or (b)
when integrated with the Daimler-Benz Exchange Offer and taking into
account the Daimler-Benz Merger, fail to be treated as a transaction
described in Section 351(a) of the Code; (2) the Daimler-Benz Exchange
Offer to (a) when integrated with the Chrysler Exchange, fail to be
treated as a transaction described in Section 351(a) of the Code or (b)
if integrated with the Daimler-Benz Merger, fail to qualify as a
reorganization within the meaning of Section 368(a) of the Code; or (3)
the Daimler-Benz Exchange Offer or the Daimler-Benz Merger to result in
the recognition of any gain or loss by DaimlerChrysler AG, Daimler-Benz
or stockholders of Daimler-Benz under German law;
(i) none of the parties shall, and none of the parties shall permit any of
its Significant Subsidiaries to, take any actions which would, or would
be reasonably likely to, prevent accounting for the transactions
contemplated by the Combination Agreement in accordance with the
"pooling-of-interests" method of accounting;
(j) none of the parties shall, and none of the parties shall permit any of
its Significant Subsidiaries to, take any action that would cause any of
its representations and warranties to be untrue or incorrect in any
material respect; and
(k) none of the parties shall, and neither party shall permit any of its
Significant Subsidiaries to, authorize, agree or commit to do any of the
foregoing.
Employee Benefit Matters
Daimler-Benz, Chrysler and DaimlerChrysler AG have agreed that, consistent
with the practices of Daimler-Benz and Chrysler, DaimlerChrysler AG will seek to
attract and retain superior quality executive, managerial, technical and
administrative personnel in every market in which it conducts activities and
will generally implement compensation and benefit plans and policies necessary
to achieve this objective. It is the specific intention that DaimlerChrysler
AG's compensation and benefit programs (including stock options) will be
competitive with those provided generally in the U.S. domestic automotive and
automotive finance industry and the German automotive and automotive finance
industry, respectively, both with respect to the type and variety of programs as
well as the level of benefits afforded.
For at least two years following the Chrysler Effective Time,
DaimlerChrysler AG shall provide or cause to be provided to current and former
employees and directors of Chrysler, Daimler-Benz and their respective
Subsidiaries compensation and benefits that are at least as favorable in the
aggregate as the compensation and benefits they were entitled to receive
immediately prior to the Chrysler Effective Time (including, without limitation,
benefits pursuant to pension plans, savings plans, medical plans and programs,
lay-off policies, deferred compensation arrangements and retiree benefit plans,
policies and arrangements); PROVIDED that, with respect to employees who are
subject to collective bargaining, all benefits shall be provided in accordance
with the applicable collective bargaining or other labor agreements.
DaimlerChrysler AG shall honor, and shall cause its Subsidiaries to honor,
pursuant to their terms all employee benefit obligations to current and former
employees and directors of Chrysler and Daimler-Benz. In addition, from and
after the Chrysler Effective Time, DaimlerChrysler AG shall, and shall cause its
Subsidiaries to, recognize service with Chrysler, Daimler-Benz and their
respective Subsidiaries prior to the Chrysler Effective Time for all purposes
(including, without limitation, eligibility to participate, vesting, benefit
accrual, eligibility to commence benefits (including, without limitation,
subsidized early retirement benefits) and severance) under any benefit plans of
DaimlerChrysler AG or its Subsidiaries in which the particular employee or
former employee of Chrysler or Daimler-Benz (or their respective Subsidiaries)
participates; PROVIDED, HOWEVER, that the foregoing shall not result in any
duplication of benefits. From and after the Chrysler Effective Time,
DaimlerChrysler AG shall, and shall cause its Subsidiaries to, recognize any and
all out-of-pocket expenses of each employee or former employee of Chrysler,
Daimler-Benz and their respective Subsidiaries for purposes of determining such
employee's, former
96
<PAGE>
employee's, beneficiary's and dependent's deductible and copayment expenses.
Without limiting the generality of the foregoing, for at least two years
following the Chrysler Effective Time, DaimlerChrysler AG shall provide or cause
to be provided to retirees and employees of Chrysler, Daimler-Benz and their
respective Subsidiaries who, as of the Chrysler Effective Time, have satisfied
the age and service requirements, or are within five years of satisfying the age
and service requirements, for eligibility to receive retiree medical and life
insurance benefits under the benefit plans, policies and arrangements of
Chrysler, Daimler-Benz and their respective Subsidiaries, as the case may be
(the "Eligible Retirees"), retiree medical and life insurance benefits that are
at least as favorable as the retiree medical and life insurance benefits
provided under such plans, policies and arrangements immediately prior to the
Chrysler Effective Time. DaimlerChrysler AG shall not, and shall cause its
Subsidiaries not to, amend, modify or terminate any retiree medical and life
insurance benefits provided to Eligible Retirees during any two-year period
after the initial two-year period in a manner that would increase the cost of
such benefits to retirees, their dependents and beneficiaries by more than 20%
during any such two-year period.
The Combination Agreement provides that, except as otherwise expressly
provided therein, from and after the Chrysler Effective Time, DaimlerChrysler AG
shall honor, and shall cause its Subsidiaries to honor, in accordance with its
terms, each existing employment, severance and termination agreement between
Daimler-Benz or Chrysler or any of their respective Subsidiaries, and any
officer, director or employee of any such company, so long as such agreement
shall have been identified to the other party in accordance with the Combination
Agreement, if required to be so identified, and to the extent such terms are in
effect on the date of the Combination Agreement. To the extent that any such
employment, severance or termination agreement can be unilaterally amended by
either Daimler-Benz or Chrysler, as the case may be, DaimlerChrysler AG agrees
not to amend, and to cause its Subsidiaries not to amend, any such plan or
agreement prior to the second anniversary of the Chrysler Effective Time in a
manner that will reduce or otherwise impair the benefits that would be payable
to any employee pursuant to such plan or agreement who is covered thereby.
Further, at or prior to the Chrysler Effective Time, DaimlerChrysler AG shall
recommend to the DaimlerChrysler Supervisory Board that DaimlerChrysler AG,
represented by the DaimlerChrysler Supervisory Board (AUFSICHTSRAT), enter into
employment agreements (DIENSTVERTRAG) substantially in the form previously
provided by Daimler-Benz to Chrysler with the Daimler-Benz and Chrysler officers
identified on Exhibit E to the Combination Agreement.
No Solicitation
The Combination Agreement provides that neither party shall, nor shall it
permit any of its Subsidiaries to, nor shall it authorize or permit any of its
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
Subsidiaries to, directly or indirectly through another person, (i) solicit,
initiate or encourage (including by way of furnishing information), or take any
other action designed to facilitate, any inquiries or the making of any proposal
which constitutes a Takeover Proposal or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect to
a Takeover Proposal; PROVIDED, that if the party's Board of Directors (or the
Management Board (VORSTAND) in the case of Daimler-Benz) determines in good
faith, after receiving the advice of outside counsel, that its failure to do so
may result in a breach of its fiduciary duties to its stockholders under
applicable law, such party may, in response to a Takeover Proposal which was not
solicited by it, which did not otherwise result from a breach of the no
solicitation provisions of the Combination Agreement and which is made or
received prior to the effectiveness of the Chrysler Stockholder Approval (in the
case of a Takeover Proposal relating to Chrysler) or the Daimler-Benz
Stockholder Approval (in the case of a Takeover Proposal relating to
Daimler-Benz), and subject to providing to the other party prior written notice
of its decision to take such action and to such party's compliance with Rule
14e-2(a) promulgated under the Exchange Act, (x) furnish information with
respect to such party and its Subsidiaries to any person making a Takeover
Proposal pursuant to a customary confidentiality agreement (as determined by
such party after receiving the advice of its outside counsel) and (y)
participate in discussions or negotiations regarding such Takeover Proposal.
Each party shall promptly notify the other party of any Takeover Proposal
(including, without limitation, the material terms and conditions thereof and
the identity of the person making it) as promptly as practicable after its
receipt thereof
97
<PAGE>
and shall thereafter inform the other party of any material change in the status
of any discussions or negotiations with such third party, and any material
changes to the terms and conditions of such Takeover Proposal and shall promptly
give the other party a copy of any business or financial information related to
Chrysler or Daimler-Benz, as the case may be, delivered to such person which has
not previously been reviewed by such other party.
Except as expressly permitted by the Combination Agreement, neither the
Chrysler Board or any committee thereof nor Daimler-Benz by its Management Board
(VORSTAND) or any committee thereof shall (i) withdraw or modify, or propose
publicly to withdraw or modify, in a manner adverse to the other party, the
approval or recommendation by the Chrysler Board or Daimler-Benz Management
Board (VORSTAND) or any such committee of the transactions contemplated by the
Combination Agreement, (ii) approve or recommend, or propose publicly to approve
or recommend, any Takeover Proposal, or (iii) cause its company to enter into
any letter of intent, agreement in principle, acquisition agreement or other
similar agreement (each, an "Acquisition Agreement") related to any Takeover
Proposal. Notwithstanding the foregoing, at any time prior to the effectiveness
of the Chrysler Stockholder Approval (in the case of Chrysler) or the
Daimler-Benz Stockholder Approval (in the case of Daimler-Benz), the Chrysler
Board or the Daimler-Benz Management Board (VORSTAND), as the case may be, to
the extent that it determines in good faith, after receiving the advice of
outside counsel, that its failure to do so may result in a breach of its
fiduciary duties to its stockholders under applicable law, may (subject to this
and the following sentences) terminate the Combination Agreement solely in order
to concurrently enter into an Acquisition Agreement with respect to any Superior
Proposal, but only at a time that is after the third business day following the
other party's receipt of written notice advising such party that the Chrysler
Board or the Daimler-Benz Management Board (VORSTAND), as the case may be, is
prepared to accept a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal.
"Takeover Proposal" means any BONA FIDE inquiry, proposal or offer from any
person relating to any (1) tender or exchange offer involving 25% or more of the
capital stock of such party, (2) merger, consolidation or other business
combination involving such party or any of its Significant Subsidiaries, (3)
direct or indirect acquisition or purchase of a business that constitutes 25% or
more of the assets of such party and its Subsidiaries, taken as a whole, or 25%
or more of the equity securities of the party, (4) recapitalization or
restructuring of such party or any of its Significant Subsidiaries, or (5) other
transaction similar to any of the foregoing with respect to such party or any of
its Significant Subsidiaries, other than the transactions contemplated by the
Combination Agreement. Effective as of the date of the Combination Agreement,
each party shall immediately terminate any discussions or negotiations with any
other third parties, if any, that may be currently in progress with respect to
any Takeover Proposal and shall request that all confidential information
furnished on behalf of such party to any such third parties be returned.
"Superior Proposal" means any Takeover Proposal on terms that the Chrysler Board
or the Daimler-Benz Management Board (VORSTAND), as the case may be, determines
in its good faith judgment (after receiving the advice of its financial advisor)
to be a superior financial alternative to that party's stockholders when
compared as a whole with the transactions contemplated by the Combination
Agreement and for which financing, to the extent required, is then committed or
which, in the good faith judgment of such Board after receiving the advice of
its financial advisor, is reasonably likely to be obtained by such third party.
Additional Agreements
The Combination Agreement provides that as soon as practicable following the
date of the Combination Agreement, (i) Chrysler, Daimler-Benz and
DaimlerChrysler AG will prepare and file with the Commission the preliminary
Proxy Statement/Prospectus, (ii) Daimler-Benz and DaimlerChrysler AG will
prepare and file with the Commission the Registration Statement, and (iii)
Daimler-Benz and DaimlerChrysler AG will prepare and file with the Commission
the U.S. Exchange Offer Documents. Each of Chrysler, Daimler-Benz and
DaimlerChrysler AG will use their reasonable best efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing. Chrysler will use reasonable best efforts to
cause
98
<PAGE>
the Proxy Statement/Prospectus to be delivered to Chrysler's stockholders,
Daimler-Benz shall use reasonable best efforts to cause the Proxy
Statement/Prospectus to be delivered to Daimler-Benz' stockholders, and
Daimler-Benz and DaimlerChrysler AG shall use reasonable best efforts to cause
the Exchange Offer Documents to be delivered to Daimler-Benz' stockholders
(including the holders of the Daimler-Benz ADSs), in each case as promptly as
practicable after the Registration Statement is declared effective under the
Securities Act. Daimler-Benz and DaimlerChrysler AG will also take any action
reasonably required to be taken under any applicable state securities laws in
connection with the issuance of DaimlerChrysler Ordinary Shares in the
Daimler-Benz Exchange Offer, the U.S. Share Exchange, the Chrysler Merger and
the Daimler-Benz Merger, and Chrysler will furnish all information concerning
Chrysler and the holders of Chrysler Common Stock as may be reasonably requested
in connection with any such action.
Each of Chrysler and Daimler-Benz has agreed to, as promptly as practicable
after the Registration Statement is declared effective under the Securities Act,
give notice of, convene and hold meetings of its stockholders in accordance with
applicable law for the purpose of obtaining the Chrysler Stockholder Approval
and the Daimler-Benz Stockholder Approval and, subject to its rights to
terminate the Combination Agreement in order to enter into an Acquisition
Agreement with respect to a Superior Proposal, shall, through the Chrysler Board
or the Daimler-Benz Management Board (VORSTAND) and the Daimler-Benz Supervisory
Board (AUFSICHTSRAT), as the case may be, recommend to its stockholders the
approval and adoption of the Combination Agreement, the Chrysler Merger or the
Daimler-Benz Exchange Offer and the Daimler-Benz Merger, as applicable, and the
other transactions contemplated by the Combination Agreement. Each of Chrysler
and Daimler-Benz has agreed to schedule and, if necessary, adjourn as
appropriate its stockholder meeting so that the vote necessary to obtain the
Chrysler Stockholder Approval occurs simultaneously with the Daimler-Benz
Stockholder Approval.
Each of Chrysler and Daimler-Benz shall, and shall cause each of their
respective Subsidiaries to, afford to the other party and to the officers,
employees, accountants, counsel, financial advisors and other representatives of
such other party, reasonable access during normal business hours during the
period prior to the Chrysler Effective Time to all their respective properties,
books, contracts, commitments, personnel and records and, during such period,
each of Chrysler and Daimler-Benz shall, and shall cause each of its respective
Subsidiaries to, furnish promptly to the other party (i) a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of U.S. federal or state securities laws or
German securities laws and (ii) all other information concerning its business,
properties and personnel as such other party may reasonably request. Each of
Chrysler, Daimler-Benz and DaimlerChrysler AG has agreed to hold and cause each
of their respective officers, directors, employees, attorneys, investment
bankers and other advisors to hold in strict confidence (unless compelled to
disclose by judicial or administrative process) all Confidential Information.
Prior to the Chrysler Effective Time, unless the Minimum Condition has been
changed to the 75% Minimum, Chrysler has agreed pursuant to the Combination
Agreement to issue and sell, in such a manner as Chrysler reasonably determines
and is reasonably acceptable to Daimler-Benz, approximately 30 million shares of
Chrysler Common Stock (or such greater or lesser number as will allow the
Mergers to be accounted for as a "pooling-of-interests"). Each of Chrysler and
Daimler-Benz has agreed to use its reasonable best efforts (i) to cause the
Chrysler Exchange either (a) to qualify as a reorganization within the meaning
of Section 368(a) of the Code or (b) when integrated with the Daimler-Benz
Exchange Offer and taking into account the Daimler-Benz Merger, to be treated as
a transaction described in Section 351(a) of the Code, (ii) to cause the
Daimler-Benz Exchange Offer either (a) when integrated with the Chrysler
Exchange, to be treated as a transaction described in Section 351(a) of the Code
or (b) if integrated with the Daimler-Benz Merger, to qualify as a
reorganization within the meaning of Section 368(a) of the Code, (iii) to cause
the Daimler-Benz Exchange Offer and the Daimler-Benz Merger not to result in the
recognition of any gain or loss by DaimlerChrysler AG, Daimler-Benz or
stockholders of Daimler-Benz under German law, and (iv) to enable Chrysler to
obtain from the IRS the Private Letter Ruling described in "--Conditions to
Closing" and to meet the conditions thereof.
99
<PAGE>
During the period from the date of the Combination Agreement through the
Chrysler Effective Time, neither Chrysler nor Daimler-Benz shall terminate,
amend, modify or waive any provision of any standstill agreement or waive any
provision of any confidentiality agreement to which it or any of its respective
Subsidiaries is a party, except as provided in the Chrysler Stockholders
Agreement. During such period, Chrysler or Daimler-Benz, as the case may be,
shall enforce, to the fullest extent permitted under applicable law, the
provisions of any such agreement, including by obtaining injunctions to prevent
any breaches of such agreements and to enforce specifically the terms and
provisions thereof in any court of the United States of America or of any state
thereof or any court in Germany or any political subdivision thereof, in each
such case which has jurisdiction of the parties and the subject matter.
Pursuant to the Combination Agreement, Daimler-Benz and Chrysler have agreed
to cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees or any similar taxes
that become payable in connection with the transactions contemplated by the
Combination Agreement that are required or permitted to be filed on or before
the Chrysler Effective Time. Chrysler shall pay, without deduction or
withholding from any amount payable to the holders of Chrysler Common Stock (and
shall not directly or indirectly be reimbursed by Daimler-Benz or
DaimlerChrysler AG for), any such taxes or fees imposed by any taxing authority
(and any penalties and interest with respect to such taxes and fees) on Chrysler
or any holder of Chrysler Common Stock that become payable in connection with
the transactions contemplated by the Combination Agreement. Daimler-Benz shall
pay, without deduction or withholding from any amount payable to the holders of
Daimler-Benz Ordinary Shares or Daimler-Benz ADSs (and shall not directly or
indirectly be reimbursed by Chrysler or DaimlerChrysler AG for), any such taxes
or fees imposed by any taxing authority (and any penalties and interest with
respect to such taxes and fees) on Daimler-Benz or any holder of Daimler-Benz
Ordinary Shares or Daimler-Benz ADSs that become payable in connection with the
transactions contemplated by the Combination Agreement.
The Combination Agreement provides that Daimler-Benz and Chrysler shall
consult with each other before issuing, and provide each other the opportunity
to review, comment upon and concur with and use reasonable best efforts to agree
on, any press release or other public statements with respect to the
transactions contemplated by the Combination Agreement, including the Mergers,
and shall not issue any such press release or make any such public statement
prior to such consultation, except as either party may determine is required by
applicable law, court process or obligations pursuant to any listing agreement
with any national securities exchange.
Upon the terms and subject to the conditions set forth in the Combination
Agreement, each of the parties agrees to use reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by the Combination Agreement,
including (i) the obtaining of all necessary actions or non-actions, waivers,
consents and approvals from Governmental Entities and the making of all
necessary registrations and filings and the taking of all steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging the Combination Agreement or the consummation of the transactions
contemplated by the Combination Agreement, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, the Combination Agreement.
The Combination Agreement further provides that Chrysler and Daimler-Benz
will (i) use their reasonable best efforts to cause to be delivered to each
other two accounting comfort letters as to the Registration Statement from their
respective independent accountants, one such letter dated a date within two
business
100
<PAGE>
days before the Registration Statement is declared effective under the
Securities Act and the second dated a date within two business days before the
Effective Time; (ii) use their reasonable best efforts to cause to be delivered
to each other and their respective accountants two letters from the other's
independent accountants, one dated as of the date the Registration Statement is
declared effective under the Securities Act and the second dated as of the
Closing Date, each such letter stating that accounting for the Mergers as a
"pooling-of-interests" under applicable law is appropriate if the Mergers are
consummated as contemplated by the Combination Agreement; (iii) unless the
Mergers are not accounted for as a pooling-of-interests, as soon as practicable
after the date of the Combination Agreement, deliver to the other party a list
of all affiliates for purposes of qualifying the Combination for
"pooling-of-interests" accounting treatment and complying with Rule 145 under
the Securities Act, and to use reasonable best efforts to cause their respective
affiliates to deliver to the other party a written agreement substantially in
the form of Exhibit B-2 to the Combination Agreement, in the case of
Daimler-Benz Affiliates, or Exhibit B-1 to the Combination Agreement, in the
case of Chrysler Affiliates, not less than 30 days prior to the Chrysler
Effective Time; (iv) as soon as practicable after the date of the Combination
Agreement, prepare and file such documents necessary to obtain approval for the
listing of DaimlerChrysler Ordinary Shares on each of the German exchanges on
which Daimler-Benz Ordinary Shares are currently traded and to use reasonable
best efforts to cause the DaimlerChrysler Ordinary Shares to be approved for
listing on the NYSE; and (v) give the other the reasonable opportunity to
participate in the defense of any stockholder litigation against Chrysler,
Daimler-Benz or DaimlerChrysler AG, as applicable, and their respective
directors in connection with the Transactions.
Indemnification, Exculpation and Insurance
Daimler-Benz and DaimlerChrysler AG shall maintain in effect in accordance
with their terms all rights to indemnification and exculpation from liabilities
for acts or omissions occurring at or prior to the Chrysler Effective Time now
existing in favor of the current or former directors or officers of Chrysler or
Daimler-Benz or any of their respective Subsidiaries as provided in their
respective certificates of incorporation or by-laws (or comparable
organizational documents) and any indemnification agreements of Chrysler or
Daimler-Benz. In addition, from and after the Chrysler Effective Time, directors
and officers of Chrysler who become directors or officers of DaimlerChrysler AG
or Daimler-Benz shall be entitled to the same indemnity rights and protections
as are afforded to other directors and officers of DaimlerChrysler AG or
Daimler-Benz, as the case may be, and Management Board members (MITGLIEDER DES
VORSTANDS) and officers of Daimler-Benz who become directors or officers of
DaimlerChrysler AG or Chrysler shall be entitled to the same indemnity rights
and protections as are afforded to other directors and officers of
DaimlerChrysler AG or Chrysler, as the case may be.
If DaimlerChrysler AG, Daimler-Benz or any of their respective successors or
assigns (i) consolidates with or merges into any other person and is not the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any person, then, and in each such case, proper provision will be made so
that the successors and assigns of DaimlerChrysler AG or Daimler-Benz, as the
case may be, assume the obligations set forth in this section.
From and after the Chrysler Effective Time, Chrysler and DaimlerChrysler AG
will indemnify and hold harmless each present and former director and officer of
Chrysler and its Subsidiaries against any costs or expenses (including
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters existing or occurring at or prior to the
Chrysler Effective Time, to the fullest extent that Chrysler or such Subsidiary
would have been permitted under applicable law and the Certificate of
Incorporation or Bylaws of Chrysler or such Subsidiary in effect on the date of
the Chrysler Combination Agreement to indemnify or to obtain insurance for such
person (and DaimlerChrysler AG or Chrysler shall also advance expenses as
incurred to the fullest extent permitted under applicable law provided the
person to whom expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such person is not entitled to
indemnification).
101
<PAGE>
Conditions to Closing
CONDITIONS TO ALL PARTIES' OBLIGATION TO CLOSE. The obligation of all
parties to consummate the Daimler-Benz Exchange Offer and the German Share
Exchange, the Daimler-Benz Merger and the Chrysler Merger and the U.S. Share
Exchange is subject to the satisfaction on or prior to the consummation of
Daimler-Benz Exchange Offer of the following conditions: (a) expiration or
termination of any applicable waiting period under the HSR Act relating to the
Transactions and the approval (or deemed approval) of the Transactions by the
Commission of the European Union; (b) the Registration Statement shall have
become effective and no stop order suspending such effectiveness shall have been
issued and no proceeding for such purpose shall have been initiated by the
Commission; (c) approval for listing of (i) the DaimlerChrysler Ordinary Shares
on the NYSE, subject to official notice of issuance, and (ii) the
DaimlerChrysler Ordinary Shares on the FSE; (d) receipt of the Chrysler
Stockholder Approval and the Daimler-Benz Stockholder Approval; (e) all
consents, approvals and actions of, filings with and notices to any governmental
entity required of Chrysler, Daimler-Benz or any of their respective
Subsidiaries to consummate the transactions contemplated in the Combination
Agreement, the failure of which to be obtained or taken is reasonably likely to
have a Material Adverse Effect on DaimlerChrysler AG, having been obtained or
made, all in form and substance reasonably satisfactory to Chrysler and
Daimler-Benz, other than the filing of the certificate of merger for the
Chrysler Merger and filings pursuant to the HSR Act and with the Commission of
the European Union; (f) the absence of any judgment, order, decree, statute,
law, ordinance, rule or regulation, entered, enacted, promulgated, enforced or
issued by any Governmental Entity of competent jurisdiction or other legal
restraint or prohibition (i) preventing the consummation of the Daimler-Benz
Exchange Offer, the Chrysler Merger, the U.S. Share Exchange or the Daimler-Benz
Merger, or (ii) otherwise reasonably likely to have a Material Adverse Effect on
Chrysler or Daimler-Benz; (g) receipt of each of Daimler-Benz and Chrysler of
the accountants' comfort letters and (unless the Minimum Condition has been
changed to the 75% Minimum) the accountants' pooling letters contemplated by the
Combination Agreement; (h) completion of the Chrysler Stock Issuance (unless the
Minimum Condition has been changed to the 75% Minimum); and (i) all conditions
to the Daimler-Benz Exchange Offer have been satisfied.
CONDITIONS TO DAIMLER-BENZ' AND DAIMLERCHRYSLER AG'S OBLIGATION TO
CLOSE. The obligation of Daimler-Benz and DaimlerChrysler AG to consummate the
U.S. Share Exchange and the Daimler-Benz Merger is further subject to the
satisfaction on or prior to the Chrysler Effective Time of the following
additional conditions: (a) the representations and warranties of Chrysler being
true and correct both when made and at and as of the Chrysler Effective Time, as
if made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such date), except where the failure of such
representations and warranties to be so true and correct (without giving effect
to any limitation as to "materiality" or "Material Adverse Effect" set forth
therein) would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Chrysler, and receipt by Daimler-Benz of
a certificate of an Executive Vice President of Chrysler to that effect; (b)
performance and compliance by Chrysler, in all material respects, with all
obligations required to be performed or complied with by it under the
Combination Agreement at or prior to the Chrysler Effective Time, and receipt by
Daimler-Benz of a certificate of an Executive Vice President of Chrysler to that
effect; (c) receipt by Daimler-Benz and DaimlerChrysler AG of an opinion from
German tax counsel to Daimler-Benz substantially to the effect that neither the
Daimler-Benz Exchange Offer nor the Daimler-Benz Merger will result in the
recognition of any gain or loss by stockholders of Daimler-Benz or by
Daimler-Benz or DaimlerChrysler AG under German law; (d) receipt by Daimler-Benz
and DaimlerChrysler AG of an opinion, dated as of the expiration date of the
Daimler-Benz Exchange Offer, from Skadden, Arps, Slate, Meagher & Flom LLP,
special counsel to Daimler-Benz and DaimlerChrysler AG, with respect to certain
tax matters; and (e) at any time after the date of the Combination Agreement
there not having occurred and be continuing as of the Chrysler Effective Time
any Material Adverse Effect on Chrysler.
CONDITIONS TO CHRYSLER'S OBLIGATION TO CLOSE. The obligation of Chrysler to
consummate the Chrysler Merger is further subject to the satisfaction on or
prior to the Chrysler Effective Time of the following additional conditions: (a)
the respective representations and warranties of Daimler-Benz and
DaimlerChrysler AG being true and correct both when made and at and as of the
Chrysler Effective Time, as if made at and as of such time
102
<PAGE>
(except to the extent expressly made as of an earlier date, in which case as of
such date), except, in the case of representations and warranties of
Daimler-Benz, where the failure of such representations and warranties to be so
true and correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on
Daimler-Benz, and receipt by Chrysler of a certificate of a member of the Board
of Management (VORSTAND) of Daimler-Benz to that effect; (b) performance and
compliance by Daimler-Benz and DaimlerChrysler AG, in all material respects,
with all obligations required to be performed or complied with by it under the
Combination Agreement at or prior to the Chrysler Effective Time, and receipt by
Chrysler of a certificate of a member of the Board of Management (VORSTAND) of
Daimler-Benz to that effect; (c) receipt by Chrysler from Debevoise & Plimpton,
special counsel to Chrysler, of an opinion, dated as of the Chrysler Merger
Closing Date, with respect to certain tax matters; (d) receipt from the IRS of a
private letter ruling, reasonably satisfactory to Chrysler, addressing certain
issues under Section 367(a)(1) of the Code and sufficient to enable Debevoise &
Plimpton to render their opinion (which private letter ruling was received from
the IRS on September 4, 1998); (e) consummation of the Rights Offering, which
shall have been fully subscribed; (f) consummation of the Daimler-Benz Exchange
Offer and (g) there not being in existence a Material Adverse Effect on
Daimler-Benz as of the Chrysler Effective Time.
FURTHER CONDITION TO OBLIGATIONS OF DAIMLER-BENZ AND DAIMLERCHRYSLER
AG. After the Chrysler Effective Time and the consummation of the U.S. Share
Exchange, the obligations of Daimler-Benz and DaimlerChrysler AG to complete the
Daimler-Benz Merger shall only be conditioned on the absence of any judgment,
order, decree, statute, law, ordinance, rule or regulation, entered, enacted,
promulgated, enforced or issued by any Governmental Entity of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Daimler-Benz Exchange Offer, the Chrysler Merger, the U.S. Share Exchange
or the Daimler-Benz Merger.
Termination
The Combination Agreement may be terminated at any time prior to the
Chrysler Effective Time, and except in the case of clauses (d) or (f) below,
whether before or after the Chrysler Stockholder Approval or the Daimler-Benz
Stockholder Approval: (a) by mutual written consent of Daimler-Benz and
Chrysler; (b) by either Daimler-Benz or Chrysler: (i) if the Chrysler Merger and
the Daimler-Benz Exchange Offer shall not have been consummated by January 31,
1999, PROVIDED that the right to terminate the Combination Agreement pursuant to
this clause (b)(i) shall not be available to any party whose failure to perform
any of its obligations under the Combination Agreement results in the failure of
the Chrysler Merger, the U.S. Share Exchange and the Daimler-Benz Exchange Offer
to be consummated on or prior to such date; and PROVIDED, FURTHER, that the
Combination Agreement may be extended for up to 30 days by either Daimler-Benz
or Chrysler by written notice to the other party if the Daimler-Benz Exchange
Offer or the Chrysler Merger shall not have been consummated as a direct result
of Daimler-Benz or Chrysler having failed to receive all regulatory approvals
required to be obtained with respect thereto; (ii) if the Chrysler Stockholder
Approval or the Daimler-Benz Stockholder Approval shall not have been obtained
at the respective Chrysler Special Meeting or Daimler-Benz Special Meeting or at
any adjournment or postponement thereof; or (iii) if any Restraint preventing
the consummation of the Daimler-Benz Exchange Offer, the Chrysler Merger, the
U.S. Share Exchange or the Daimler-Benz Merger or which is otherwise reasonably
likely to have a Material Adverse Effect on Chrysler or Daimler-Benz shall be in
effect and shall have become final and nonappealable, PROVIDED, that the party
seeking to terminate pursuant to this clause (iii) shall have used its
reasonable best efforts to prevent the entry of and to remove such Restraint;
(c) by Daimler-Benz if Chrysler shall have breached or failed to perform in any
material respect any of its representations, warranties, covenants or other
agreements contained in the Combination Agreement, which breach or failure to
perform (1) would give rise to the failure of a condition described in clause
(a) or (b) under "--Conditions to Closing--Conditions to Daimler-Benz' and
DaimlerChrysler AG's Obligation to Close" and (2) is incapable of being cured by
Chrysler or is not cured within 45 days after receipt of written notice thereof;
(d) prior to receipt of the Daimler-Benz Stockholder Approval, by Daimler-Benz
in order to enter into an Acquisition Agreement with respect to a Superior
Proposal; (e) by Chrysler, if Daimler-Benz or DaimlerChrysler
103
<PAGE>
AG shall have breached or failed to perform in any material respect any of their
representations, warranties, covenants or other agreements contained in the
Combination Agreement, which breach or failure to perform (1) would give rise to
the failure of a condition described in clause (a) or (b) under "--Conditions to
Closing-- Conditions to Chrysler's Obligation to Close" and (2) is incapable of
being cured by Daimler-Benz or DaimlerChrysler AG or is not cured within 45 days
of written notice thereof; or (f) prior to receipt of the Chrysler Stockholder
Approval, by Chrysler in order to enter into an Acquisition Agreement with
respect to a Superior Proposal.
The Combination Agreement further provides that in the event of termination
of the Combination Agreement by either Chrysler or Daimler-Benz as provided
therein, written notice thereof shall be given as promptly as possible to the
other parties hereto and, with certain exceptions, the Combination Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of Daimler-Benz, Chrysler or DaimlerChrysler AG, except
to the extent that such termination results from the willful and material breach
by a party of any of its representations, warranties, covenants or agreements
set forth in the Combination Agreement.
Governing Law
The Daimler-Benz Merger, the Daimler-Benz Exchange Offer (to the extent
conducted in Germany) and the capital contribution in kind included in the U.S.
Share Exchange shall be governed by and effected in accordance with German law.
In all other respects, the Combination Agreement will be governed by and
effected in accordance with Delaware law without regard to the principles of
conflicts of laws thereof.
Fees and Expenses
Subject to the obligations of the parties to pay certain conveyance taxes,
all fees and expenses incurred in connection with the Combination Agreement and
the transactions contemplated thereby shall be borne by the party incurring such
fees or expenses, whether or not the Mergers are consummated, and accordingly
each of Daimler-Benz and Chrysler will pay one-half of the costs and expenses
incurred in connection with the filing, printing and mailing of the Registration
Statement and the Proxy Statement/Prospectus (including the registration and
filing fees of the Commission).
Reservation of Right to Revise Transaction
The Combination Agreement provides that if the implementation and mechanics
prove not to be operable, the parties will use their reasonable best efforts to
change the method of effecting the business combination contemplated thereby,
PROVIDED, that no such change shall (a) alter or change the amount or kind of
consideration to be received by holders of Chrysler Common Stock, Daimler-Benz
Ordinary Shares or Daimler-Benz ADRs, (b) adversely affect the tax treatment to
Chrysler, Daimler-Benz, DaimlerChrysler AG or their respective stockholders as a
result of the Transactions, or (c) materially delay receipt of any material
approval referred to in the Combination Agreement or the consummation of the
transactions contemplated thereby.
104
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
Daimler-Benz and Chrysler intend that the Transactions will qualify as a
pooling-of-interests for accounting and financial reporting purposes under U.S.
GAAP, but this treatment cannot be guaranteed because the occurrence of certain
events outside the control of Daimler-Benz and Chrysler may preclude the use of
the pooling-of-interests method of accounting. The pooling-of-interests method
of accounting for the Transactions will be available only if certain conditions
are satisfied, including (i) the Minimum Condition and (ii) the consummation of
the Chrysler Stock Issuance. If fewer than 90% of the outstanding Daimler-Benz
Ordinary Shares and Daimler-Benz ADSs are tendered in the Daimler-Benz Exchange
Offer, and the Minimum Condition is consequently changed to the 75% Minimum,
Daimler-Benz, Chrysler and DaimlerChrysler AG will consummate the Transactions,
and the Transactions will be accounted for under the purchase method of
accounting. In such latter case, the Transactions will be treated for accounting
and financial reporting purposes as a purchase of Chrysler by Daimler-Benz.
Accordingly, the following unaudited pro forma financial information is being
provided under both the pooling-of-interests and the purchase methods of
accounting.
The pro forma information below does not purport to represent what the
combined results of operations actually would have been if the Transactions had
occurred as of the dates indicated or what those results will be for any future
periods. The information below is presented in accordance with U.S. GAAP and is
qualified in its entirety by, and should be read in conjunction with, (i) the
Daimler-Benz consolidated financial statements as of December 31, 1997 and 1996
and for each of the years in the three-year period ended December 31, 1997,
including the notes thereto, included in the Daimler-Benz Annual Report on Form
20-F for the fiscal year ended December 31, 1997, which is incorporated by
reference in this Proxy Statement/Prospectus, (ii) the Daimler-Benz unaudited
consolidated financial statements as of June 30, 1998 and for each of the
six-month periods ended June 30, 1998 and 1997, including the notes thereto,
included in the Daimler-Benz Report of Foreign Private Issuer on Form 6-K for
the month of July 1998, incorporated by reference in this Proxy Statement/
Prospectus, (iii) the Chrysler consolidated financial statements as of December
31, 1997 and 1996 and for each of the years in the three-year period ended
December 31, 1997, including the notes thereto, included in the Chrysler Annual
Report on Form 10-K for the fiscal year ended December 31, 1997, incorporated by
reference herein, and (iv) the Chrysler unaudited consolidated financial
statements as of June 30, 1998 and for each of the six-month periods ended June
30, 1998 and 1997, including the notes thereto, included in Chrysler's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998, incorporated by
reference herein.
In the Transactions, DaimlerChrysler AG will exchange DaimlerChrysler
Ordinary Shares for all of the Daimler-Benz Ordinary Shares (including
Daimler-Benz Ordinary Shares represented by Daimler-Benz ADSs) and shares of
Chrysler Common Stock, including outstanding Chrysler Stock Options, Chrysler
Performance Shares and other Chrysler equity awards. DaimlerChrysler AG has been
formed for the sole purpose of effecting the Transactions and accordingly has no
material assets or liabilities or revenues or expenses. Accordingly, no separate
presentation of DaimlerChrysler AG has been made in the accompanying unaudited
pro forma combined financial information. The unaudited pro forma combined
financial information below assumes, as is provided in the Combination
Agreement, a 100% exchange of the outstanding Daimler-Benz Ordinary Shares and
shares of Chrysler Common Stock, including outstanding Chrysler Stock Options,
Chrysler Performance Shares and other Chrysler equity awards, net of related
withholding taxes, for DaimlerChrysler Ordinary Shares. The Combination
Agreement also provides that the outstanding options, warrants and convertible
notes of Daimler-Benz will be converted into options, warrants and convertible
notes of DaimlerChrysler AG with substantially the same terms and conditions.
The Combination Agreement provides that each outstanding Daimler-Benz
Ordinary Share and Daimler-Benz ADS will be exchanged in the Daimler-Benz
Exchange Offer and the Daimler-Benz Merger for DaimlerChrysler Ordinary Shares
in the case that 90% or more of the Daimler-Benz Ordinary Shares are tendered in
the Daimler-Benz Exchange Offer, for 1.005 DaimlerChrysler Ordinary Shares or,
in the case that less than 90% of the Daimler-Benz Ordinary Shares are
exchanged, on a one-for-one basis. The Combination Agreement includes a formula
(the U.S. Exchange Ratio Formula) to determine the U.S. Exchange Ratio for the
exchange of shares of Chrysler Common Stock into DaimlerChrysler Ordinary Shares
in the Chrysler Merger. A U.S. Exchange Ratio
105
<PAGE>
of 0.6235 of a DaimlerChrysler Ordinary Share for each share of Chrysler Common
Stock has been established. The precise number of outstanding Daimler-Benz
Ordinary Shares and shares of Chrysler Common Stock to be exchanged in the
Transactions cannot be determined until the Chrysler Effective Time. For all
purposes in the unaudited pro forma combined financial information, the actual
number of outstanding Daimler-Benz Ordinary Shares and Chrysler Common Stock
issued and outstanding at June 30, 1998 has been used to calculate the issuance
of DaimlerChrysler Ordinary Shares pursuant to the Transactions.
POOLING-OF-INTERESTS
The following unaudited pro forma combined balance sheet at June 30, 1998,
and the unaudited pro forma combined statements of income for the six months
ended June 30, 1998 and 1997 and for the years ended December 31, 1997, 1996 and
1995 give effect to the proposed exchange of Daimler-Benz Ordinary Shares,
Daimler-Benz ADSs and shares of Chrysler Common Stock for DaimlerChrysler
Ordinary Shares under the pooling-of-interests method of accounting. The
unaudited pro forma combined balance sheet at June 30, 1998 was prepared as if
the Transactions and other related transactions were consummated as of such
date. The unaudited pro forma combined statements of income for the six months
ended June 30, 1998 and 1997 and years ended December 31, 1997, 1996 and 1995
were prepared as if the Transactions and other related transactions were
consummated as of January 1, 1995. The unaudited pro forma combined financial
information is based on the historical consolidated financial statements of
Daimler-Benz and Chrysler giving effect to the Transactions under the
assumptions and adjustments described in the accompanying Notes to Unaudited Pro
Forma Combined Financial Information Accounted for Under the
Pooling-of-Interests Method of Accounting. Additionally, the unaudited pro forma
financial information gives effect to the sale by Chrysler of 30.0 million
shares of Chrysler Common Stock and the deemed exercise and conversion of all of
the outstanding Chrysler Stock Options, Chrysler Performance Shares and other
Chrysler equity awards, net of related withholding taxes, into DaimlerChrysler
Ordinary Shares determined in accordance with a formula set out in the
Combination Agreement.
106
<PAGE>
DAIMLERCHRYSLER AG
UNAUDITED PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET
(pooling-of-interests method)
June 30, 1998
(in millions)
<TABLE>
<CAPTION>
Historical
------------------------ Pro Forma Pro Forma Pro Forma
Daimler-Benz Chrysler(1) Adjustments Combined Combined(7)
------------ --------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C>
Assets
Intangible assets........................................... DM 1,895 DM 2,758 DM DM 4,653 $ 2,580
Property, plant and equipment, net.......................... 21,528 36,031 57,559 31,919
Investments and long-term financial assets.................. 3,996 1,803 5,799 3,216
Equipment on operating leases, net.......................... 16,461 10,932 27,393 15,190
------------ --------- --------------- --------- ---------
Fixed assets................................................ 43,880 51,524 95,404 52,905
------------ --------- --------------- --------- ---------
Inventories................................................. 15,940 6,241 22,181 12,300
Receivables
Receivables from financial services......................... 29,053 24,779 53,832 29,853
Trade and other receivables and other assets................ 21,099 11,471 32,570 18,061
Securities.................................................. 18,109 6,131 24,240 13,442
Cash and cash equivalents................................... 4,199 12,659 3,425(2) 19,694 10,921
160(4a)
(865)(4b)
856(4c)
(550)(5a)
(70)(5b)
(120)(5c)
------------ --------- --------------- --------- ---------
Current assets.............................................. 88,400 61,281 2,836 152,517 84,577
------------ --------- --------------- --------- ---------
Deferred taxes and prepaid expenses......................... 9,714 9,827 19,541 10,836
------------ --------- --------------- --------- ---------
Total assets................................................ 141,994 122,632 2,836 267,462 148,318
------------ --------- --------------- --------- ---------
------------ --------- --------------- --------- ---------
Liabilities and stockholders' equity
Capital stock............................................... 2,847 1,490 (266)(3) -- --
(2,847)(4a)
(1,224)(4b)
Additional paid-in capital.................................. 12,597 9,440 1,767(2) 20,242 11,225
(7,850)(3)
2,847(4a)
1,224(4b)
(782)(4b)
143(4b)
856(4c)
Retained earnings........................................... 17,356 21,956 (550)(5a) 38,342 21,262
(70)(5b)
(350)(5c)
Accumulated other comprehensive income...................... 1,127 -- 1,127 625
Treasury stock.............................................. (160) (9,774) 1,658(2) -- --
8,116(3)
160(4a)
------------ --------- --------------- --------- ---------
Stockholders' equity........................................ 33,767 23,112 2,832 59,711 33,112
------------ --------- --------------- --------- ---------
Minority interest........................................... 1,057 51 1,108 614
------------ --------- --------------- --------- ---------
Accrued liabilities......................................... 37,873 35,505 (226)(4b) 73,382 40,693
230(5c)
------------ --------- --------------- --------- ---------
Financial liabilities....................................... 41,563 37,780 79,343 43,999
Trade and other liabilities................................. 24,282 16,799 41,081 22,781
------------ --------- --------------- --------- ---------
Liabilities................................................. 65,845 54,579 120,424 66,780
------------ --------- --------------- --------- ---------
Deferred taxes and income................................... 3,452 9,385 12,837 7,119
------------ --------- --------------- --------- ---------
Total liabilities and stockholders' equity.................. 141,994 122,632 2,836 267,462 148,318
------------ --------- --------------- --------- ---------
------------ --------- --------------- --------- ---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRO FORMA COMBINED
FINANCIAL STATEMENTS
107
<PAGE>
DAIMLERCHRYSLER AG
UNAUDITED PRO FORMA COMBINED CONSOLIDATED STATEMENT OF INCOME
(pooling-of-interests method)
For the Six Months Ended June 30, 1998
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical
---------------------------- Pro Forma Pro Forma
Daimler-Benz Chrysler(1) Combined Combined(7)
------------- ------------- -------------- ------------
<S> <C> <C> <C> <C>
Revenues.............................................. DM 67,714 DM 60,594 DM 128,308 $ 71,152
Cost of sales......................................... (53,809) (48,672) (102,481) (56,830)
------------- ------------- -------------- ------------
Gross margin.......................................... 13,905 11,922 25,827 14,322
Selling, administrative and other expenses............ (8,534) (4,520) (13,054) (7,239)
Research and development.............................. (3,123) (1,693) (4,816) (2,670)
Other income.......................................... 1,120 -- 1,120 621
------------- ------------- -------------- ------------
Income before financial income and income taxes....... 3,368 5,709 9,077 5,034
Financial income, net................................. 542 204 746 414
------------- ------------- -------------- ------------
Income before income taxes............................ 3,910 5,913 9,823 5,448
Income taxes.......................................... (1,838) (2,202) (4,040) (2,240)
Minority interest..................................... (62) -- (62) (34)
------------- ------------- -------------- ------------
Net income............................................ 2,010 3,711 5,721 3,174
------------- ------------- -------------- ------------
------------- ------------- -------------- ------------
Pro forma combined earnings per share (6)
Pro forma combined basic earnings per ordinary
share........................................... 5.96(a) 3.31
Pro forma combined diluted earnings per ordinary
share........................................... 5.83(a) 3.23
</TABLE>
- ------------------------
(a) The assumed weighted average number of ordinary shares outstanding for basic
and diluted earnings per share were 960.1 million and 985.2 million,
respectively.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRO FORMA COMBINED
FINANCIAL STATEMENTS.
108
<PAGE>
DAIMLERCHRYSLER AG
UNAUDITED PRO FORMA COMBINED CONSOLIDATED STATEMENT OF INCOME
(pooling-of-interests method)
For the Six Months Ended June 30, 1997
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical
-------------------------- Pro Forma
Daimler-Benz Chrysler(1) Combined
------------ ------------ -------------
<S> <C> <C> <C>
Revenues.............................................................. DM 55,892 DM 51,033 DM 106,925
Cost of sales......................................................... (44,919) (40,791) (85,710)
------------ ------------ -------------
Gross margin.......................................................... 10,973 10,242 21,215
Selling, administrative and other expenses............................ (7,517) (4,610) (12,127)
Research and development.............................................. (2,867) (1,514) (4,381)
Other income.......................................................... 733 -- 733
------------ ------------ -------------
Income before financial income and income taxes....................... 1,322 4,118 5,440
Financial income (expense), net....................................... (111) 123 12
------------ ------------ -------------
Income before income taxes............................................ 1,211 4,241 5,452
Income taxes.......................................................... (263) (1,691) (1,954)
Minority interest..................................................... 44 -- 44
------------ ------------ -------------
Net income............................................................ 992 2,550 3,542
------------ ------------ -------------
------------ ------------ -------------
Pro forma combined earnings per share(6)
Pro forma combined basic earnings per ordinary share.............. 3.62(a)
Pro forma combined diluted earnings per ordinary share............ 3.60(a)
</TABLE>
- ------------------------
(a) The assumed weighted average number of ordinary shares outstanding for basic
and diluted earnings per share were 978.6 million and 987.5 million,
respectively.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRO FORMA COMBINED
FINANCIAL STATEMENTS.
109
<PAGE>
DAIMLERCHRYSLER AG
UNAUDITED PRO FORMA COMBINED CONSOLIDATED STATEMENT OF INCOME
(pooling-of-interests method)
For the Year Ended December 31, 1997
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical
-------------------------- Pro-Forma Pro Forma
Daimler-Benz Chrysler(1) Combined Combined(7)
------------ ----------- -------------- ----------------------
<S> <C> <C> <C> <C>
Revenues........................... DM 124,050 DM 105,205 DM 229,255 $ 127,131
Cost of sales...................... (98,943) (84,879) (183,822) (101,936)
------------ ----------- -------------- --------
Gross margin....................... 25,107 20,326 45,433 25,195
Selling, administrative and other
expenses......................... (17,433) (9,703) (27,136) (15,048)
Research and development........... (5,663) (2,972) (8,635) (4,788)
Other income....................... 1,620 1,620 898
------------ ----------- -------------- --------
Income before financial income and
income taxes..................... 3,631 7,651 11,282 6,257
Financial income, net.............. 618 251 869 482
------------ ----------- -------------- --------
Income before income taxes......... 4,249 7,902 12,151 6,739
Tax benefit relating to a special
distribution..................... 2,908 2,908(a) 1,613
Income taxes....................... 1,074 (3,038) (1,964)(b) (1,089)
------------ ----------- -------------- --------
Total income taxes................. 3,982 (3,038) 944 524
Minority interest.................. (189) (189) (105)
------------ ----------- -------------- --------
Net income......................... 8,042 4,864 12,906(c) 7,158
------------ ----------- -------------- --------
------------ ----------- -------------- --------
Pro forma combined earnings
per share (6)
Pro forma combined basic
earnings per ordinary
share........................ 13.29(c)(d) 7.37
Pro forma combined diluted
earnings per ordinary
share........................ 13.16(c)(d) 7.30
</TABLE>
- ------------------------------
(a) Reflects the nonrecurring tax benefit relating to the Special Distribution.
(b) Includes nonrecurring tax benefits of DM 1,962 relating to the decrease in
valuation allowance as of December 31, 1997, applied to the German
operations that file a combined tax return.
(c) Excluding the nonrecurring income tax benefits, net income and pro forma
combined net income would have been DM 3,172 ($1,759) and DM 8,036 ($4,456)
and pro forma combined basic and diluted earnings per share would have been
DM 8.28 ($4.59) and DM 8.21 ($4.55), respectively.
(d) The assumed weighted average number of ordinary shares outstanding for basic
and diluted earnings per share were 970.8 million and 983.6 million,
respectively.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRO FORMA COMBINED
FINANCIAL STATEMENTS.
110
<PAGE>
DAIMLERCHRYSLER AG
UNAUDITED PRO FORMA COMBINED CONSOLIDATED STATEMENT OF INCOME
(pooling-of-interests method)
For the Year Ended December 31, 1996
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical
----------------------------
Daimler-Benz Chrysler(1) Pro Forma Combined
------------- ------------- -------------------
<S> <C> <C> <C>
Revenues................................................... DM 106,339 DM 91,743 DM 198,082
Cost of sales.............................................. (84,742) (72,262) (157,004)
------------- ------------- -------------------
Gross Margin............................................... 21,597 19,481 41,078
Selling, administrative and other expenses................. (15,955) (8,063) (24,018)
Research and development................................... (5,579) (2,408) (7,987)
Other income............................................... 1,402 -- 1,402
------------- ------------- -------------------
Income before financial income and income taxes............ 1,465 9,010 10,475
Financial income, net...................................... 496 156 652
------------- ------------- -------------------
Income before income taxes................................. 1,961 9,166 11,127
Income taxes............................................... 712 (3,569) (2,857)
Minority interest.......................................... 89 -- 89
------------- ------------- -------------------
Income before extraordinary item........................... 2,762 5,597 8,359
------------- ------------- -------------------
------------- ------------- -------------------
Pro forma combined earnings per share before extraordinary
item(6)
Pro forma combined basic earnings per ordinary share... 8.44(a)
Pro forma combined diluted earnings per ordinary
share................................................ 8.41(a)
</TABLE>
- ------------------------------
(a) The assumed weighted average number of ordinary shares outstanding for basic
and diluted earnings per share were 990.1 and 994.2, respectively.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRO FORMA COMBINED
FINANCIAL STATEMENTS.
111
<PAGE>
DAIMLERCHRYSLER AG
UNAUDITED PRO FORMA COMBINED CONSOLIDATED STATEMENT OF INCOME
(pooling-of-interests method)
For the Year Ended December 31, 1995
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical
---------------------------- Pro Forma
Daimler-Benz Chrysler(1) Combined
------------- ------------- -------------
<S> <C> <C> <C>
Revenues............................................................... DM 102,985 DM 75,566 DM 178,551
Cost of sales.......................................................... (86,686) (62,333) (149,019)
------------- ------------- -------------
Gross Margin........................................................... 16,299 13,233 29,532
Selling, administrative and other expenses............................. (20,834) (6,538) (27,372)
Research and development............................................... (5,369) (2,026) (7,395)
Other income........................................................... 1,742 -- 1,742
------------- ------------- -------------
Income (loss) before financial income and income taxes................. (8,162) 4,669 (3,493)
Financial income, net.................................................. 929 274 1,203
------------- ------------- -------------
Income (loss) before income taxes...................................... (7,233) 4,943 (2,290)
Income taxes........................................................... 1,620 (1,903) (283)
Minority interest...................................................... (116) -- (116)
------------- ------------- -------------
Income (loss) before change in accounting principles................... (5,729) 3,040 (2,689)
------------- ------------- -------------
------------- ------------- -------------
Pro forma combined earnings per share before change in accounting
principles(6)
Pro forma combined basic earnings (loss) per ordinary share........ (2.64)(a)
Pro forma combined diluted earnings (loss) per ordinary share...... (2.64)(a)
</TABLE>
- ------------------------------
(a) The assumed weighted average number of ordinary shares outstanding for basic
and diluted earnings per share was 1,019.0 million.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRO FORMA COMBINED
FINANCIAL STATEMENTS.
112
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
ACCOUNTED FOR UNDER THE POOLING-OF-INTERESTS
METHOD OF ACCOUNTING
(1) The Chrysler historical balance sheet information and related pro forma
adjustments to the unaudited pro forma combined balance sheet as of June
30, 1998, have been translated into marks at the June 30, 1998 rate of
exchange of $1.00 = DM 1.8087. The Chrysler historical statements of income
information for the six months ended June 30, 1998 and 1997 and years ended
December 31, 1997, 1996 and 1995, and related pro forma adjustments to the
unaudited pro forma combined statements of income, have been translated
into marks at the weighted-average rates of exchange for the six months
ended June 30, 1998 and 1997 and the years ended December 31, 1997, 1996
and 1995 of $1.00 = DM 1.8064, DM 1.6862, DM 1.7340, DM 1.5048 and DM
1.4331, respectively. Certain of the Chrysler balance sheet and statement
of income amounts have been reclassified to conform with the financial
statement presentation of Daimler-Benz.
(2) The adjustments reflect the estimated proceeds to be received by Chrysler
from the sale of 30.0 million shares of Chrysler Common Stock in the
Chrysler Stock Issuance held in treasury using an assumed share price of
$65.71 per share (DM 117.09 per share) representing an assumed price per
share of Chrysler Common Stock, and deducting estimated expenses of the
offering of $49.3 million (DM 87.8 million).
(3) The adjustments reflect the cancellation of 146.8 million shares of
Chrysler Common Stock held in treasury, after giving effect to the shares
of Chrysler Common Stock issued in connection with the Chrysler Stock
Issuance discussed in Note 2 above.
(4) The adjustments reflect the issuance of DaimlerChrysler Ordinary Shares by
DaimlerChrysler AG in exchange for the outstanding Daimler-Benz Ordinary
Shares and Chrysler Common Stock and the conversion of Chrysler Series A
Convertible Preferred Stock, Chrysler Stock Options, Chrysler Performance
Shares and other Chrysler equity awards as set forth below:
<TABLE>
<CAPTION>
Daimler-Benz Chrysler
--------------- -----------
<S> <C> <C> <C>
(in millions)
Daimler-Benz Ordinary Shares (nominal value DM5 per share) as of June
30, 1998............................................................. 569.3
Chrysler Common Stock outstanding at June 30, 1998..................... 646.7
Assumed conversion of Chrysler Series A Convertible Preferred Stock.... 0.5
Shares of Chrysler Common Stock issued in connection with shares held
in treasury (see Note 2 above)....................................... 30.0
-----------
677.2
----- -----------
Exchange Ratios........................................................ 1.005 0.6235
----- -----------
572.2 422.2
----- -----------
Conversion of Chrysler Stock Options, Chrysler Performance Shares and
other Chrysler equity awards into DaimlerChrysler Ordinary Shares
(net of related withholding taxes)................................... 8.8
----- -----------
Assumed DaimlerChrysler Ordinary Shares to be issued................... 572.2 431.0
----- -----------
Assumed DaimlerChrysler Ordinary Shares outstanding after completion of
the Transactions..................................................... 1,003.2
---------
---------
</TABLE>
113
<PAGE>
(4)(a) The adjustments reflect the issuance of DaimlerChrysler Ordinary Shares
with no nominal value in exchange for Daimler-Benz DM 5 nominal value
Ordinary Shares and the issuance by Daimler-Benz of its treasury stock.
(4)(b) The adjustments reflect the cancellation and exchange of Chrysler Common
Stock, Chrysler Stock Options, Chrysler Performance Shares and other
Chrysler equity awards for DaimlerChrysler Ordinary Shares and payment of
related withholding taxes.
(4)(c) The adjustments reflect the tax benefit to be received by Chrysler
resulting from the deemed exercise of Chrysler Stock Options.
(5)(a) The adjustments reflect estimated costs of the Transactions, which
include, without limitation, fees and expenses of investment bankers,
legal counsel, accountants and consultants incurred and to be incurred by
Daimler-Benz, Chrysler and DaimlerChrysler AG in connection with or
related to the authorization, preparation, negotiation and execution of
the Combination Agreement and the preparation, printing, filing and
mailing of proxy statements/prospectuses for Daimler-Benz and Chrysler,
soliciting stockholder approvals and all other matters related to the
closing of the Transactions.
(5)(b) The adjustments reflect estimated German transfer taxes to be incurred in
connection with the Daimler-Benz Merger, net of related tax benefits.
(5)(c) The adjustments reflect additional compensation costs, net of tax,
resulting from the deemed conversion of Incentive/Performance Awards and
related costs as a result of the change of control.
The foregoing expenses and German transfer taxes to be incurred to effect
the Transactions have not been reflected in the Unaudited Pro Forma
Combined Statements of Income as they are considered to be nonrecurring.
(6) Pro forma combined basic earnings (loss) per DaimlerChrysler Ordinary
Share for each period presented has been calculated by dividing pro forma
combined net income by the weighted average number of DaimlerChrysler
Ordinary Shares outstanding during each period presented, assuming that
the Transactions occurred on January 1, 1995 and using the Exchange Ratios
as discussed in Note 4 above. Pro forma combined diluted earnings (loss)
per DaimlerChrysler Ordinary Share has been computed assuming the issuance
by DaimlerChrysler AG of DaimlerChrysler Ordinary Shares for all stock
options and other securities of Daimler-Benz which may be converted into
Daimler-Benz Ordinary Shares. In addition, pro forma combined basic and
diluted earnings (loss) per DaimlerChrysler Ordinary Share for each period
presented has been adjusted to reflect the 20% discount to the market
value at which the Daimler-Benz Ordinary Shares were sold in the Rights
Offering.
Assuming that the sale of 52.4 million Daimler-Benz Ordinary Shares in the
Rights Offering had occurred as of January 1, 1998, the pro forma combined
basic and diluted earnings per DaimlerChrysler ordinary Share for the six
months ended June 30, 1998 would have been DM 5.71 and DM 5.60,
respectively.
Assuming that the sale of 52.4 million Daimler-Benz Ordinary Shares in the
Rights Offering had occurred as of January 1, 1997, the pro forma combined
basic and diluted earnings per DaimlerChrysler Ordinary Share for 1997
would have been DM 12.73 and DM 12.61, respectively, and, excluding
nonrecurring tax benefits in 1997 of DM 4.9 billion relating to the
Special Distribution and the decrease in valuation allowance, pro forma
combined basic and diluted earnings per DaimlerChrysler Ordinary Share for
1997 would have been DM 7.93 and DM 7.87, respectively.
(7) Represents translation of DaimlerChrysler AG combined financial
information as of and for the six months ended June 30, 1998 and for the
year ended December 31, 1997 solely for the convenience of the reader, at
the rate of DM 1.8033 = $1.00, the Noon Buying Rate on June 30, 1998.
114
<PAGE>
PURCHASE ACCOUNTING
The following unaudited pro forma combined balance sheet at June 30, 1998,
and the unaudited pro forma combined statements of income for the six months
ended June 30, 1998 and for the year ended December 31, 1997 have been prepared
to give effect to the proposed exchange of Daimler-Benz Ordinary Shares and
Chrysler Common Stock for DaimlerChrysler Ordinary Shares under the purchase
method of accounting assuming the acquisition of Chrysler by Daimler-Benz. The
unaudited pro forma combined balance sheet at June 30, 1998 was prepared as if
the Transactions were consummated as of such date and the unaudited pro forma
combined statements of income for the six months ended June 30, 1998 and year
ended December 31, 1997 were prepared as if the Transactions were consummated as
of January 1, 1997. The unaudited pro forma combined financial information is
based on the historical consolidated financial statements of Daimler-Benz and
Chrysler giving effect to the Transactions under the assumptions and adjustments
described in the accompanying Notes to Unaudited Pro Forma Combined Financial
Information Accounted for under the Purchase Method of Accounting. The unaudited
pro forma statement of income does not give effect to certain nonrecurring
charges that may be incurred in connection with the Transactions.
115
<PAGE>
DAIMLERCHRYSLER AG
UNAUDITED PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET
(purchase method)
June 30, 1998
(in millions)
<TABLE>
<CAPTION>
Historical
-------------------------- Pro Forma Pro Forma
Daimler-Benz Chrysler(1) Adjustments Pro Forma Combined Combined(10)
------------ ----------- -------------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
Assets
Intangible assets............................ DM 1,895 DM 2,758 DM (266)(5c) DM 59,323 $ 32,897
54,936(5i)
Property, plant and equipment, net........... 21,528 36,031 57,559 31,919
Investments and long-term financial assets... 3,996 1,803 5,799 3,216
Equipment on operating leases, net........... 16,461 10,932 27,393 15,190
------------ ----------- -------------- ------------------ ------------
Fixed assets................................. 43,880 51,524 54,670 150,074 83,222
------------ ----------- -------------- ------------------ ------------
Inventories.................................. 15,940 6,241 774(5a) 22,955 12,729
Receivables
Receivables from financial services.......... 29,053 24,779 53,832 29,853
Trade and other receivables and other
assets..................................... 21,099 11,471 32,570 18,061
Securities................................... 18,109 6,131 24,240 13,442
Cash and cash equivalents.................... 4,199 12,659 160(3) 16,269 9,022
(350)(4)
856(5)
(200)(5e)
(120)(5f)
(865)(5g)
(70)(7)
------------ ----------- -------------- ------------------ ------------
Current assets............................... 88,400 61,281 185 149,866 83,107
------------ ----------- -------------- ------------------ ------------
Deferred taxes and prepaid expenses.......... 9,714 9,827 (4,993)(5c) 17,242 9,561
2,694(5h)
------------ ----------- -------------- ------------------ ------------
Total assets................................. 141,994 122,632 52,556 317,182 175,890
------------ ----------- -------------- ------------------ ------------
------------ ----------- -------------- ------------------ ------------
Liabilities and stockholders' equity
Capital stock................................ 2,847 1,490 (320)(2) -- --
(2,847)(3)
(1,170)(4)
Additional paid-in capital................... 12,597 9,440 (9,454)(2) 88,339 48,987
2,847(3)
72,895(4)
14(4)
Retained earnings............................ 17,356 21,956 (21,956)(4) 17,286 9,586
(70)(7)
Accumulated other comprehensive income....... 1,127 -- 1,127 625
Treasury stock............................... (160) (9,774) 160(3) -- --
9,774(2)
------------ ----------- -------------- ------------------ ------------
Stockholders' equity......................... 33,767 23,112 49,873 106,752 59,198
------------ ----------- -------------- ------------------ ------------
Minority interest............................ 1,057 51 1,108 614
------------ ----------- -------------- ------------------ ------------
Accrued liabilities.......................... 37,873 35,505 1,559(5d) 74,941 41,558
230(5f)
(226)(5g)
------------ ----------- -------------- ------------------ ------------
Financial liabilities........................ 41,563 37,780 1,120(5b) 80,463 44,620
Trade and other liabilities.................. 24,282 16,799 41,081 22,781
------------ ----------- -------------- ------------------ ------------
Liabilities.................................. 65,845 54,579 1,120 121,544 67,401
------------ ----------- -------------- ------------------ ------------
Deferred taxes and income.................... 3,452 9,385 12,837 7,119
------------ ----------- -------------- ------------------ ------------
Total liabilities and stockholders' equity... 141,994 122,632 52,556 317,182 175,890
------------ ----------- -------------- ------------------ ------------
------------ ----------- -------------- ------------------ ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRO FORMA COMBINED
FINANCIAL STATEMENTS.
116
<PAGE>
DAIMLERCHRYSLER AG
UNAUDITED PRO FORMA COMBINED CONSOLIDATED STATEMENT OF INCOME
(purchase method)
For the Six Months Ended June 30, 1998
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical
---------------------------- Pro Forma Pro Forma
Daimler-Benz Chrysler(1) Adjustments Pro Forma Combined Combined(10)
------------- ------------- ------------ ------------------- -------------
<S> <C> <C> <C> <C> <C>
Revenues........................ DM 67,714 DM 60,594 DM DM 128,308 $ 71,152
Cost of sales................... (53,809) (48,672) 334(6) (102,147) (56,644)
------------- ------------- ------------ ------------------- -------------
Gross margin.................... 13,905 11,922 334 26,161 14,508
Selling, administrative and
other expenses................ (8,534) (4,520) (615)(6) (13,669) (7,580)
Research and development........ (3,123) (1,693) 9(6) (4,807) (2,666)
Other income.................... 1,120 -- 1,120 621
------------- ------------- ------------ ------------------- -------------
Income before financial income
and income taxes.............. 3,368 5,709 (272) 8,805 4,883
Financial income, net........... 542 204 746 414
------------- ------------- ------------ ------------------- -------------
Income before income taxes...... 3,910 5,913 (272) 9,551 5,297
Income taxes.................... (1,838) (2,202) (156)(8) (4,196) (2,327)
Minority interest............... (62) -- -- (62) (34)
------------- ------------- ------------ ------------------- -------------
Net income...................... 2,010 3,711 (428) 5,293 2,936
------------- ------------- ------------ ------------------- -------------
------------- ------------- ------------ ------------------- -------------
Pro forma combined earnings per
share(9)
Pro forma combined basic
earnings per ordinary
share..................... 5.64(a) 3.13
Pro forma combined diluted
earnings per ordinary
share..................... 5.52(a) 3.06
</TABLE>
- ------------------------
(a) The assumed weighted average number of ordinary shares outstanding for basic
and diluted earnings per share were 938.8 million and 963.7 million,
respectively.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRO FORMA COMBINED
FINANCIAL STATEMENTS.
117
<PAGE>
DAIMLERCHRYSLER AG
UNAUDITED PRO FORMA COMBINED CONSOLIDATED STATEMENT OF INCOME
(purchase method)
For the Year Ended December 31, 1997
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Historical
-------------------------- Pro Forma Pro Forma Pro Forma
Daimler-Benz Chrysler(1) Adjustments Combined Combined(10)
------------ ----------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Revenues............................................... DM 124,050 DM 105,205 DM DM 229,255 $127,131
Cost of sales.......................................... (98,943) (84,879) 662(6) (183,160) (101,569)
------------ ----------- ------------ ------------- -----------
Gross margin........................................... 25,107 20,326 662 46,095 25,562
Selling, administrative and other expenses............. (17,433) (9,703) (1,229)(6) (28,365) (15,729)
Research and development............................... (5,663) (2,972) 17(6) (8,618) (4,779)
Other income........................................... 1,620 -- 1,620 898
------------ ----------- ------------ ------------- -----------
Income before financial income and income taxes........ 3,631 7,651 (550) 10,732 5,952
Financial income, net.................................. 618 251 869 482
------------ ----------- ------------ ------------- -----------
Income before income taxes............................. 4,249 7,902 (550) 11,601 6,434
Tax benefit relating to a special distribution......... 2,908(a) 2,908(a) 1,613
Income taxes........................................... 1,074(b) (3,038) (315)(8) (2,279)(b) (1,264)
------------ ----------- ------------ ------------- -----------
Total income taxes..................................... 3,982 (3,038) (315) 629 349
Minority interest...................................... (189) -- (189) (105)
------------ ----------- ------------ ------------- -----------
Net income............................................. 8,042(c) 4,864 (865) 12,041(c) 6,678
------------ ----------- ------------ ------------- -----------
------------ ----------- ------------ ------------- -----------
Pro forma combined earnings per share(9)
Pro forma combined basic earnings per ordinary
share............................................ 12.64(c)(d) 7.01
Pro forma combined diluted
earnings per ordinary share...................... 12.51(c)(d) 6.94
</TABLE>
- ------------------------------
(a) Reflects a nonrecurring tax benefit relating to the Special Distribution.
(b) Includes nonrecurring tax benefits of DM 1,962 relating to the decrease in
valuation allowance as of December 31, 1997, applied to the domestic
operations that file a combined tax return.
(c) Excluding the nonrecurring income tax benefits, 1997 net income and 1997 pro
forma net income would have been DM 3,172 ($1,759) and DM 7,171 ($3,977) and
pro forma combined basic and diluted earnings per share would have been DM
7.53 ($4.18) and DM 7.47 ($4.14), respectively.
(d) The assumed weighted average number of ordinary shares outstanding for basic
and diluted earnings per share were 952.8 million and 965.5 million,
respectively.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRO FORMA COMBINED
FINANCIAL STATEMENTS.
118
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
ACCOUNTED FOR UNDER THE PURCHASE METHOD OF ACCOUNTING
(1) The Chrysler historical balance sheet information and related pro forma
adjustments to the unaudited pro forma combined balance sheet as of June 30,
1998, have been translated into marks at the June 30, 1998 rate of exchange
of $1.00 = DM 1.8087. The Chrysler historical statement of income
information for the six months ended June 30, 1998 and year ended December
31, 1997 and related pro forma adjustments to the unaudited pro forma
combined statements of income, have been translated into marks at the
weighted-average rates of exchange of $1.00 = DM 1.8064 and DM 1.7340,
respectively. Certain of the Chrysler balance sheet and statement of income
amounts have been reclassified to conform with the financial statement
presentation of Daimler-Benz.
(2) The adjustments reflect the cancellation of 176.8 million shares of Chrysler
Common Stock held in treasury.
(3) The adjustments reflect the issuance of DaimlerChrysler Ordinary Shares with
no nominal value in exchange for Daimler-Benz Ordinary Shares on a one for
one basis and the issuance by Daimler-Benz of its treasury stock.
(4) The adjustments reflect the issuance of DaimlerChrysler Ordinary Shares by
DaimlerChrysler AG in exchange for shares of Chrysler Common Stock, Chrysler
Stock Options, Chrysler Performance Shares, and other Chrysler equity awards
as set forth below:
<TABLE>
<CAPTION>
(in millions, except ratio and per share
amount)
<S> <C>
Chrysler Common Stock outstanding............................... 646.7
Assumed conversion of Chrysler Series A Convertible Preferred
Stock......................................................... 0.5
-------
647.2
U.S. Exchange Ratio............................................. 0.6235
-------
403.5
Conversion of Chrysler Stock Options, Chrysler Performance
Shares and other Chrysler equity awards (net of related
withholding taxes) into DaimlerChrysler Ordinary Shares....... 8.8
-------
Assumed DaimlerChrysler Ordinary Shares to be issued............ 412.3
Assumed DaimlerChrysler Ordinary Share price per share (y)...... 176.8
-------
72,895
Estimated Daimler-Benz acquisition costs, principally financial
advisory services, legal, accounting, stockholder
communications................................................ 350
-------
Total assumed purchase consideration............................ 73,245
-------
</TABLE>
(y) For purposes of determining the purchase price for Chrysler,
Daimler-Benz will use the average market price of Daimler-Benz Ordinary
Shares for a period around the time that the factors in the formula
included in the Combination Agreement were finally determinable, which
occurred on June 5, 1998.
119
<PAGE>
(5) Reflects preliminary adjustments to revalue the assets and liabilities of
Chrysler to fair value and excess of purchase consideration over fair value
of net assets acquired, as follows:
<TABLE>
<CAPTION>
(in
millions)
<S> <C> <C>
Total assumed purchase consideration.............................................................. DM 73,245
Less: book value of net assets acquired........................................................... (23,112)
Tax benefit to be received by Chrysler resulting from exercise of stock options................... (856)
------------
Excess of purchase consideration over book value of net assets acquired........................... 49,277
Preliminary allocation of excess purchase price:
5(a) Inventories (elimination of LIFO reserve).............................................. (774)
5(b) Adjust financial liabilities to fair value............................................. 1,120
5(c) Adjust pension obligations to fair value............................................... 5,259
5(d) Adjust postretirement liability to fair value.......................................... 1,559
5(e) Estimated transaction costs of Chrysler................................................ 200
5(f) Compensation costs due to change of control............................................ 350
5(g) Conversion of stock options and Incentive/Performance Awards and payment of withholding 639
taxes..................................................................................
5(h) Deferred income taxes (statutory tax rate of 37.6%).................................... (2,694)
------------
5(i) Unallocated excess purchase price...................................................... 54,936
------------
</TABLE>
For purposes of the unaudited pro forma combined balance sheet, the
unallocated excess purchase price, as determined above, has not been
allocated to the remaining assets and liabilities of Chrysler at June 30,
1998 because any preliminary estimates of their fair values are subject to
significant uncertainties. Such allocations will be made upon completion of
independent valuations, appraisals, estimates of values and other studies,
which will be undertaken in the event that the purchase method of accounting
is ultimately required to be used to account for the Transactions. For
purposes of the pro forma statements of income, such excess is being
amortized over 40 years. Actual purchase accounting results will differ from
the pro forma information presented once complete information on the fair
value of Chrysler's assets and liabilities is determined. Daimler-Benz and
Chrysler believe that such differences will result principally in the
allocation of an additional portion of the purchase price to certain
tangible and intangible assets and liabilities. However, such additional
purchase price allocations, if any, are not expected to materially affect
the unaudited pro forma combined balance sheet taken as a whole. The
additional purchase price allocations may result in the weighted average
depreciation or amortization of the unallocated excess purchase price over a
period shorter than 40 years. If the unallocated excess purchase price were
depreciated or amortized over a weighted average period of 30 years (rather
than 40 years) the effect on the unaudited pro forma combined statements of
income for the six months ended June 30, 1998 and the year ended December
31, 1997 would be an additional charge against income and to lower net
income by up to DM 229 million and DM 458 million, respectively, and if the
unallocated excess purchase price were depreciated and amortized over a
weighted average period of 25 years (rather than 40 years) the effect on the
unaudited pro forma combined statements of income would be an additional
charge against income and to lower net income by up to DM 412 million and DM
824 million, respectively.
(6) The adjustments reflect preliminary amortization of unallocated excess
purchase price of DM 687 million for the six months ended June 30, 1998 and
DM 1,373 for the year ended December 31, 1997 arising from the acquisition
of Chrysler over a period of 40 years. See Note 5 above with respect to the
preliminary nature of Daimler-Benz' purchase price allocation.
In addition, the adjustments include reductions for the six months ended June
30, 1998 and year ended December 31, 1997 in pension and postretirement
expenses of DM 415 million and DM 823 million, respectively, associated with
amortization of net actuarial losses which would not have been recognized
assuming the acquisition and related purchase accounting had occurred on
January 1, 1997.
120
<PAGE>
(7) The adjustments reflect estimated German real estate transfer taxes to be
incurred in connection with the Daimler-Benz Merger, net of income tax
benefit.
(8) Income tax effects of pension and postretirement statement of income pro
forma adjustments at statutory rates of 37.6% and 38.25% for the six months
ended June 30, 1998 and year ended December 31, 1997, respectively. No
income tax benefit has been assumed with respect to the amortization of the
unallocated excess purchase price.
(9) Pro forma combined basic earnings per DaimlerChrysler Ordinary Share has
been calculated by dividing pro forma combined net income by the weighted
average DaimlerChrysler Ordinary Shares outstanding after completion of the
Transactions, using the Exchange Ratio of 0.6235. Pro forma combined diluted
earnings per DaimlerChrysler Ordinary Share has been computed assuming the
issuance by DaimlerChrysler AG of DaimlerChrysler Ordinary Shares for all
stock options and other securities of Daimler-Benz which may be converted
into Daimler-Benz Ordinary Shares. In addition, pro forma basic and diluted
earnings per DaimlerChrysler Ordinary Share has been adjusted to reflect the
20% discount to the market value at which the Daimler-Benz Ordinary Shares
and Daimler-Benz ADSs were sold in the Rights Offering.
Assuming that the sale of 52.4 million Daimler-Benz Ordinary Shares in the
Rights Offering had occurred as of January 1, 1998, the pro forma combined
basic and diluted earnings per DaimlerChrysler Ordinary Share for the six
months ended June 30, 1998 would have been DM 5.40 and DM 5.29,
respectively.
Assuming that the sale of 52.4 million Daimler-Benz Ordinary Shares in the
Rights Offering had occurred as of January 1, 1997, pro forma combined basic
and diluted earnings per DaimlerChrysler Ordinary Share for 1997 would have
been DM 12.10 and DM 11.98, respectively, and, excluding nonrecurring tax
benefits in 1997 of DM 4.9 billion relating to the Special Distribution and
the decrease in valuation allowance, pro forma combined basic and diluted
earnings per DaimlerChrysler Ordinary Share for 1997 would have been DM 7.20
and DM 7.15, respectively.
(10) Represents the translation of DaimlerChrysler AG combined financial
information as of and for the six months ended June 30, 1998 and for the
year ended December 31, 1997, solely for the convenience of the reader, at
the rate of DM 1.8033 = $1.00, the Noon Buying Rate on June 30, 1998.
121
<PAGE>
INFORMATION ABOUT CHRYSLER
Chrysler was incorporated under the laws of the State of Delaware on March
4, 1986, and is the surviving corporation following mergers with a number of its
operating subsidiaries, including a predecessor corporation which was originally
incorporated in 1925.
Chrysler and its consolidated subsidiaries operate in two principal industry
segments: Automotive Operations and Financial Services. Automotive Operations
include the research, design, manufacture, assembly and sale of cars, trucks and
related parts and accessories. Substantially all of Chrysler's automotive
products are marketed through retail dealerships, most of which are privately
owned and financed. Financial Services include the operations of Chrysler
Financial Corporation and its consolidated subsidiaries, which are engaged
principally in providing consumer and dealer automotive financing for Chrysler's
products.
Chrysler manufactures, assembles and sells cars and trucks under the brand
names Chrysler, Dodge, Plymouth and Jeep-Registered Trademark-, and related
automotive parts and accessories, primarily in the United States, Canada and
Mexico. Passenger cars are offered in various size classes and models. Chrysler
produces trucks in pickup, sport-utility and van/wagon models, which constitute
the largest segments of the truck market. Chrysler also purchases and
distributes certain passenger cars manufactured in the United States by
Mitsubishi Motor Manufacturing of America, a subsidiary of Mitsubishi Motors
Corporation.
Although Chrysler currently sells most of its vehicles in North America,
Chrysler also participates in other international markets through its wholly
owned subsidiaries in Argentina, Brazil, Venezuela, Taiwan, Korea, Japan,
Thailand, Egypt, Austria, Italy, France, Belgium, the Netherlands and Germany, a
joint venture in Austria, and through minority-owned affiliates located in China
and Egypt. Chrysler sells vehicles and parts, and provides related services, to
independent distributors and dealers in various other markets throughout the
world.
INFORMATION ABOUT DAIMLER-BENZ
Daimler-Benz is the largest industrial group in Germany with 1997 revenues
of DM 124 billion. Daimler-Benz and its consolidated subsidiaries operate in
four business segments: Automotive (Passenger Cars and Commercial Vehicles),
Aerospace, Services and Directly Managed Businesses.
AUTOMOTIVE. Daimler-Benz is world renowned for its high quality luxury
Mercedes-Benz passenger cars which reflect a long tradition of exceptional
engineering, performance, service and safety. Daimler-Benz is also the
world's leading manufacturer of trucks over six metric tons ("t") gross
vehicle weight ("GVW") and of buses over 8t GVW. It manufactures and
assembles passenger cars and commercial vehicles in 46 manufacturing plants
and assembly facilities on six continents reaching across all product lines
and has a worldwide distribution and service network. The Automotive segment
contributed approximately 71% of Daimler-Benz' revenues in 1997.
AEROSPACE. Daimler-Benz Aerospace is one of the leading European
aerospace companies and the German partner (with a 37.9% share) in the
European Airbus consortium, Airbus Industrie G.I.E. Principal Aerospace
activities include civil aircraft and helicopters, military aircraft, space
systems infrastructure, satellites, defense and civil systems and
aeroengines. Aerospace contributed approximately 12% of Daimler-Benz'
revenues in 1997.
SERVICES. debis engages in financial services supporting the sale of
Mercedes-Benz cars and trucks and other Daimler-Benz products, insurance
brokerage, information technology services, telecommunications and media
services, trading and real estate management services. debis contributed
approximately 11% of Daimler-Benz' revenues in 1997.
DIRECTLY MANAGED BUSINESSES. This segment consists of rail systems,
automotive electronics and diesel engines. The semiconductor activities
which were part of this segment in 1997 were sold in March 1998. This
segment contributed approximately 6% of Daimler-Benz' revenues in 1997.
122
<PAGE>
Daimler-Benz is primarily active in Europe, North and South America and
Japan, and is continuing to expand in markets such as Eastern Europe and East
and Southeast Asia, which are also assuming strategic importance as production
locations. In 1997, approximately 33% of Daimler-Benz' revenues was derived from
sales in Germany, 25% from sales in other member states of the European Union
and 21% from sales in the United States and Canada.
123
<PAGE>
OWNERSHIP OF CHRYSLER COMMON STOCK
Beneficial Ownership by Management of Chrysler
The following table sets forth information with respect to the shares of
Chrysler Common Stock owned of record and beneficially as of July 20, 1998
(unless otherwise noted), by (i) each named current director of Chrysler, (ii)
each named executive officer of Chrysler, and (iii) all directors and officers
of Chrysler as a group.
<TABLE>
<CAPTION>
Number of
Shares of
Chrysler Stock
Name Common Stock(1) Options(2)
- ----------------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
Lilyan H. Affinito........................................................... 36,390 19,200
James D. Aljian.............................................................. 15,392 3,300
Robert E. Allen.............................................................. 16,830 9,300
Joseph A. Califano, Jr....................................................... 23,249 12,300
Robert J. Eaton.............................................................. 2,648,902 2,406,289
Earl G. Graves............................................................... 25,099 21,300
Kent Kresa................................................................... 35,881 21,300
Robert J. Lanigan............................................................ 29,398 15,000
Peter A. Magowan............................................................. 36,814 4,200
John B. Neff................................................................. 87,290 4,200
Dennis K. Pawley............................................................. 197,490 146,000
Thomas T. Stallkamp.......................................................... 276,968 230,474
G. Richard Thoman............................................................ 1,425 0
Gary C. Valade............................................................... 368,000 267,000
Lynton R. Wilson............................................................. 15,935 9,300
All Directors and Officers, including those named above,
as a group (40 individuals)................................................ 8,211,204(3) 6,804,399
</TABLE>
- ------------------------
(1) Unless otherwise indicated below, each person has sole investment power
and sole voting power with respect to the shares of Chrysler Common Stock
beneficially owned by such person.
(2) This column lists the number of shares of Chrysler Common Stock that can
be acquired within sixty days through the exercise of stock options. These
shares are included in the adjacent column.
(3) Approximately 1.2% of the shares of Chrysler Common Stock outstanding. No
director or officer beneficially owns more than 0.41% of the shares of
Chrysler Common Stock outstanding. The number shown includes shares held
under Chrysler's dividend reinvestment and savings plans, and 33,828 shares
held by immediate family members who hold sole voting and investment power
with respect to such shares (whether or not beneficial ownership has been
disclaimed).
------------------------------
124
<PAGE>
Beneficial Ownership of Certain Stockholders
The following table sets forth information as to stockholders known to
Chrysler to be the beneficial owners of more than 5% of Chrysler Common Stock.
The information with respect to Chrysler Common Stock is based on information
known to Chrysler from public filings as of July 31, 1998. Percentages shown are
based on shares outstanding on the Chrysler Record Date regarding the beneficial
ownership of voting securities of Chrysler.
<TABLE>
<CAPTION>
Shares of Percent of
Chrysler Common Chrysler Stock
Stock Owned Prior to
Name and Address of Beneficial Owners Beneficially Chrysler Merger
- ---------------------------------------------------------------------------- ------------------ -----------------
<S> <C> <C>
Kirk Kerkorian(1)........................................................... 71,753,992 11.11%
Tracinda Corporation
4835 Koval Lane
Las Vegas, NV 89109
Capital Research and Management Company(2).................................. 37,778,800 5.83%
333 South Hope Street
Los Angeles, CA 90071
</TABLE>
- ------------------------
(1) As of July 30, 1998, based on a Schedule 13D filed by Mr. Kerkorian and
Tracinda Corporation, a Nevada corporation wholly owned by Mr. Kerkorian.
Such Schedule 13D and a Schedule 13D filed on July 16, 1998 indicated that
sales of Chrysler Common Stock reported therein were effected to avoid
potential adverse tax effects in connection with the Transactions under
Section 367 of the Code (pertaining to a shareholder owning more than 5% of
the post-merger capital stock of a foreign acquiror). On February 8, 1996,
Chrysler entered into a five-year standstill agreement with Mr. Kerkorian
and Tracinda Corporation under which they have agreed (i) not to increase
their beneficial ownership of voting securities beyond 13.75%, (ii) to sell
voting securities pro rata, as required, in order not to exceed such
percentage as a result of Chrysler repurchases, (iii) to vote on all matters
submitted to shareholders in the same proportion as shares are voted by
other shareholders not affiliated with them, (iv) to not solicit proxies or
enter into any activity aimed at a change of control of Chrysler or its
Board, and (v) that during the term of the agreement, so long as Tracinda or
Mr. Kerkorian beneficially own more than 5% of the outstanding voting
securities, Chrysler's Board of Directors will nominate Mr. James D. Aljian
(or a successor) for election at each meeting of stockholders at which
directors are to be elected.
(2) As of December 31, 1997, based on a Schedule 13G filing dated July 9,
1998. Capital Research and Management Company, an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940, is
deemed to be the beneficial owner of these shares as a result of acting as
investment advisor to various investment companies.
125
<PAGE>
DESCRIPTION OF DAIMLERCHRYSLER ORDINARY SHARES
The share capital of DaimlerChrysler AG consists of DaimlerChrysler Ordinary
Shares issued in registered form. Record holders of DaimlerChrysler Ordinary
Shares will be registered in the share register (AKTIENBUCH) administered on
behalf of DaimlerChrysler AG by Deutsche Bank AG, DaimlerChrysler AG's transfer
agent and registrar in Germany (the "German Transfer Agent"), and The Bank of
New York, DaimlerChrysler AG's transfer agent and registrar in New York, New
York (the "U.S. Transfer Agent" and, together with the German Transfer Agent,
the "Transfer Agents"), pursuant to a Transfer Agency Agreement (the "Transfer
Agent Agreement"). The Transfer Agents will together maintain the register of
stockholders of DaimlerChrysler AG. At July 31, 1998, there were 20,000 issued
and outstanding DaimlerChrysler Ordinary Shares of no par value.
Generally, the share capital of DaimlerChrysler AG may be increased (other
than by contingent capital or authorized capital) in consideration of
contributions in cash or in property by a resolution passed at a general meeting
of the stockholders of DaimlerChrysler AG by a majority of the votes cast or at
least a majority of the issued shares represented at the meeting of the
stockholders at which the resolutions are passed. In advance of each such
meeting, the U.S. Transfer Agent will forward material prepared by
DaimlerChrysler AG relating to such meeting to holders of DaimlerChrysler
Ordinary Shares with addresses in the United States ("U.S. Registered Persons").
Section 21(2) of the Articles of Association (SATZUNG) of DaimlerChrysler AG
(the "DaimlerChrysler AG Articles of Association") permits the DaimlerChrysler
Management Board, with the approval of the DaimlerChrysler Supervisory Board, to
issue new shares at any time during the year bearing the right to the entire per
DaimlerChrysler Ordinary Share annual dividend for the year in which they are
issued. An English translation of the DaimlerChrysler AG Articles of Association
is attached to this Proxy Statement/Prospectus as Annex D and is filed as an
exhibit to the Registration Statement and is incorporated herein by reference.
Voting Rights
Each DaimlerChrysler Ordinary Share entitles the holder thereof to one vote
at general meetings of the stockholders of DaimlerChrysler AG. Resolutions are
passed at a general meeting of the stockholders of DaimlerChrysler AG by a
majority of the votes cast, unless a higher vote is required by law. The German
Stock Corporation Law (AKTIENGESETZ) and the DaimlerChrysler AG Articles of
Association require that, among other things, the following significant
resolutions be passed by a majority of the votes cast and at least 75% of the
issued shares represented in connection with the vote taken on such resolution
- -- certain capital increases (contingent capital and authorized capital),
capital decreases, the exclusion of the preemptive rights (BEZUGSRECHT) of the
stockholders to subscribe for newly issued shares, a dissolution of
DaimlerChrysler AG, a merger of DaimlerChrysler AG into or a consolidation of
DaimlerChrysler AG with another stock corporation or another transformation, a
transfer of all or virtually all of DaimlerChrysler AG's assets and a change of
DaimlerChrysler AG's corporate form.
A general meeting of the stockholders of DaimlerChrysler AG may be called by
the DaimlerChrysler Management Board, the DaimlerChrysler Supervisory Board or
by stockholders holding in the aggregate at least 5% of the issued shares. The
right to attend and vote at a stockholders' meeting is accorded only to those
stockholders who are holders of record of DaimlerChrysler Ordinary Shares on the
date of the meeting and who have notified DaimlerChrysler AG that they wish to
attend the meeting no later than on the third day immediately preceding the
meeting date. Notice of stockholder meetings must be published in the Federal
Gazette (BUNDESANZEIGER) at least one month prior to the last day on which
stockholders may notify DaimlerChrysler AG that they wish to attend the meeting,
which is required to be not later than the third day prior to the date of the
stockholders meeting.
Although notice of each stockholder meeting (whether the annual general
meeting or a special meeting) is required to be given as described above,
neither the German Stock Corporation Law (AKTIENGESETZ) nor the DaimlerChrysler
AG Articles of Association have any minimum quorum requirement applicable to
such meetings.
126
<PAGE>
Amendments to the DaimlerChrysler AG Articles of Association may be proposed
either by the DaimlerChrysler Supervisory Board and the DaimlerChrysler
Management Board or by a stockholder or group of stockholders holding a minimum
of either 5% of the issued shares or at least 200,000 shares (assuming stated
value of DM 5 per share). A resolution amending the DaimlerChrysler AG Articles
of Association must be passed by a majority of the votes cast and at least a
majority of the nominal capital represented at the meeting of stockholders at
which the resolution is considered unless the German Stock Corporation Law
(AKTIENGESETZ) requires that the resolution be passed by at least three-quarters
of the nominal capital represented at the meeting.
Dividends and Other Distributions
Dividends are declared at the annual general meeting of stockholders, which
must be held within eight months from the end of a fiscal year, and are paid
once a year. For each fiscal year, the DaimlerChrysler Supervisory Board and the
DaimlerChrysler Management Board ratify the financial statements and recommend
the disposition of all unappropriated profits, including the amount of net
profits of DaimlerChrysler AG which will be distributed by way of dividend among
the holders of DaimlerChrysler Ordinary Shares to the extent that stockholders,
by action at the annual general meeting, do not specify any other use.
Pursuant to the DaimlerChrysler AG Articles of Association the
DaimlerChrysler Management Board also has the authority, with the approval of
the DaimlerChrysler Supervisory Board, to make a preliminary dividend payment to
the stockholders of DaimlerChrysler AG on the basis of the anticipated
unappropriated profit of DaimlerChrysler AG if the preliminary financial
statements of DaimlerChrysler AG show a profit for the fiscal year for which
payment of a dividend is being proposed. The preliminary payment may not exceed
50% of the anticipated unappropriated profit, after deducting any amounts which
pursuant to the DaimlerChrysler AG Articles of Association must be added to
disclosed reserves, and may not exceed 50% of the unappropriated profits of the
fiscal year preceding the one for which such preliminary dividend is paid.
U.S. Registered Persons will be entitled to elect whether to receive
payments of dividends in marks (or, as the case may be, Euros) or dollars. For
those U.S. Registered Persons who elect to receive payments of dividends in
dollars, the U.S. Transfer Agent will be required, on behalf of such U.S.
Registered Persons, to convert all cash dividends and other cash distributions
which it receives with respect to the DaimlerChrysler Ordinary Shares held by
such U.S. Registered Persons into dollars, prior to payment to such U.S.
Registered Persons. The amount distributed will be reduced by any amounts
required to be withheld by DaimlerChrysler AG or the U.S. Transfer Agent on
account of taxes or other governmental charges. If the U.S. Transfer Agent
determines, following consultation with DaimlerChrysler AG, that in its judgment
any foreign currency received by it cannot be so converted and transferred, the
U.S. Transfer Agent may distribute the foreign currency (or an appropriate
document evidencing the right to receive such currency) received by it or in its
discretion hold such foreign currency for the account of the U.S. Registered
Person entitled to receive the same.
If a distribution by DaimlerChrysler AG consists of a dividend in, or
distribution without consideration of, DaimlerChrysler Ordinary Shares, the
Transfer Agents shall distribute to the holders of outstanding DaimlerChrysler
Ordinary Shares, in proportion to their holdings, the DaimlerChrysler Ordinary
Shares received by the Transfer Agents from DaimlerChrysler AG for distribution
to holders of DaimlerChrysler Ordinary Shares. In lieu of delivering fractional
DaimlerChrysler Ordinary Shares, the Transfer Agents shall sell the number of
DaimlerChrysler Ordinary Shares represented by the aggregate of such fractions
and distribute the net proceeds.
Whenever the Transfer Agents receive any distribution other than cash,
DaimlerChrysler Ordinary Shares or rights, the Transfer Agents will cause such
securities or property to be distributed to holders of DaimlerChrysler Ordinary
Shares in proportion to their holdings. If the Transfer Agents determine that
any such distribution cannot be made proportionately among the holders of
DaimlerChrysler Ordinary Shares entitled thereto or if for any other reason
(including any withholding on account of taxes or other governmental charges or
securities law requirements) the Transfer Agents determine that such
distribution is not feasible or may not
127
<PAGE>
be legally made, the Transfer Agents may, following consultation with
DaimlerChrysler AG, adopt such method as they deem equitable and practicable for
the purpose of effecting such distribution, including the public or private sale
of all or a portion of such securities or property and the distribution by the
Transfer Agents of the net proceeds from any such sale as in the case of a
distribution of cash.
In the event that the Transfer Agents determine that any distribution in
cash or property (including DaimlerChrysler Ordinary Shares or rights to
subscribe therefor) is subject to any tax or governmental charges which the
Transfer Agents are obligated to withhold, the Transfer Agents may use such cash
or dispose, including by public or private sale, of all or a portion of such
property in such amounts and in such manner as the Transfer Agents deem
necessary and practicable to pay such taxes or governmental charges, and the
Transfer Agents shall distribute the net proceeds of any such sale or the
balance of any such cash or property after deduction of such taxes or
governmental charges to the DaimlerChrysler Ordinary Share holders entitled
thereto in proportion to their holdings.
Record Dates
In accordance with the German Stock Corporation Law (AKTIENGESETZ), the
record date to determine the holders of DaimlerChrysler Ordinary Shares entitled
to the payment of dividends or other distributions (whether in cash, stock or
property) will be the date of the general meeting of stockholders at which such
dividends or other distributions are declared. The record date to determine the
holders of DaimlerChrysler Ordinary Shares entitled to vote at a general meeting
will be the date of such general meeting. However, holders of DaimlerChrysler
Ordinary Shares who are registered in the share register (AKTIENBUCH) on the
date of the meeting will be entitled to attend and vote at the meeting only if
such holders have given DaimlerChrysler AG notice of their desire to attend such
meeting no later than the third day immediately preceding the date of such
meeting.
Liquidation Rights
In accordance with the German Stock Corporation Law (AKTIENGESETZ), upon a
liquidation of DaimlerChrysler AG, any liquidation proceeds remaining after
paying off all of DaimlerChrysler AG's liabilities would be distributed among
the holders of DaimlerChrysler Ordinary Shares in proportion to their holdings.
Preemptive Rights
Under the German Stock Corporation Law (AKTIENGESETZ), an existing
stockholder in a stock corporation has a preferential right to subscribe
(BEZUGSRECHT) for any issue by such corporation of shares, debt instruments
convertible into shares and participating debt instruments in proportion to the
shares held by such stockholder in the existing capital of such corporation. The
German Stock Corporation Law (AKTIENGESETZ) provides that this preferential
right can be excluded only by a stockholder resolution passed at the same time
as the resolution authorizing the capital increase. A majority of at least three
quarters of the issued shares represented at the meeting is required for such
exclusion. The exclusion of preemptive rights is permitted if it is objectively
justified, in particular if a capital increase against contributions in cash
does not exceed 10% of the Company's capital stock and the issue price is not
materially below the market price.
Notices and Reports
Upon the giving of notice by DaimlerChrysler AG, by publication or
otherwise, of any meeting of holders of DaimlerChrysler Ordinary Shares or any
adjourned meeting of such holders, or of the taking of any action in respect of
any cash or other distributions or the offering of any rights, DaimlerChrysler
AG will transmit to the U.S. Transfer Agent a copy of the notice thereof in the
form given or to be given to holders of DaimlerChrysler Ordinary Shares. The
U.S. Transfer Agent will, depending on the nature of the communication, arrange
for the prompt mailing of copies of such notices and other reports and
communications which are received by the U.S. Transfer Agent to all U.S.
Registered Persons to the extent not previously mailed.
128
<PAGE>
The Transfer Agents will make available for inspection by the holders of
DaimlerChrysler Ordinary Shares at their principal offices any notices, reports
and communications, including any proxy soliciting materials, received from
DaimlerChrysler AG which are both (a) received by the Transfer Agents or their
nominees and (b) made generally available to the holders of DaimlerChrysler
Ordinary Shares by DaimlerChrysler AG. The U.S. Transfer Agent will also send to
U.S. Registered Persons copies of such notices, reports and communications when
furnished by DaimlerChrysler AG.
Inspection of Share Register
The share register (AKTIENBUCH) of DaimlerChrysler AG will be maintained, on
behalf and under the responsibility of the DaimlerChrysler Management Board, by
the German Transfer Agent and the U.S. Transfer Agent, for registration of any
holder of DaimlerChrysler Ordinary Shares, upon his request, as a shareholder of
DaimlerChrysler AG. The share register will be open for inspection by the
stockholders of DaimlerChrysler AG during normal business hours at the principal
offices of DaimlerChrysler AG in Stuttgart, Germany, and in Auburn Hills,
Michigan.
Charges of Transfer Agents
The Transfer Agents will be paid customary fees for their services under the
Transfer Agent Agreement. Holders of DaimlerChrysler Ordinary Shares will not be
required to pay any fees or charges incident to the transfer and registration of
their shares on the share register of DaimlerChrysler AG, nor will such holders
be required to pay any fees or charges incident to the conversion of dividends
from marks to dollars.
General
Neither the Transfer Agents nor DaimlerChrysler AG will be liable to the
holders of DaimlerChrysler Ordinary Shares if prevented or delayed by law or by
reason of any provision of the DaimlerChrysler AG Articles of Association or by
any circumstances beyond their control from performing their obligations.
129
<PAGE>
COMPARISON OF CERTAIN RIGHTS OF
STOCKHOLDERS OF CHRYSLER AND DAIMLERCHRYSLER AG
General
The rights of stockholders of Chrysler and DaimlerChrysler AG are governed
by and subject to the provisions of Delaware law, including the DGCL, and German
law including the GSCL, respectively. If the Chrysler Merger is consummated, the
stockholders of Chrysler will become stockholders of DaimlerChrysler AG, and
their rights will be governed by German law and the provisions of the
DaimlerChrysler AG Articles of Association (SATZUNG), an English translation of
which is attached to this Proxy Statement/Prospectus as Annex D, rather than the
DGCL and the provisions of the Chrysler Certificate and the Chrysler By-Laws.
The following is a brief summary of certain material differences between the
rights of Chrysler stockholders and the rights of DaimlerChrysler AG
stockholders, and is qualified in its entirety by reference to the relevant
provisions of the DGCL, the Chrysler Certificate, the Chrysler By-Laws, German
law and the DaimlerChrysler AG Articles of Association (SATZUNG). Copies of the
Chrysler Certificate and Chrysler By-Laws have been filed as exhibits to the
Registration Statement. For further information as to where these and other
exhibits to the Registration Statement may be obtained, see "Available
Information" and "Incorporation of Certain Documents by Reference."
Duties of Directors
CHRYSLER
Delaware law provides that the board of directors has the ultimate
responsibility for managing the business and affairs of a corporation. In
discharging this function, directors of Delaware corporations owe fiduciary
duties of care and loyalty to the corporations for which they serve as
directors. Directors of Delaware corporations also owe fiduciary duties of care
and loyalty to stockholders.
Delaware courts have held that the directors of a Delaware corporation are
required to exercise an informed business judgment in the performance of their
duties. An informed business judgment means that the directors have informed
themselves of all material information reasonably available to them.
Delaware courts have imposed a heightened standard of conduct upon directors
of a Delaware corporation who take any action designed to defeat a threatened
change in control of the corporation. The heightened standard has two elements.
First, it must be demonstrated that there is a threat to corporate policy or
effectiveness, and, second, that measure must be found to be reasonable in
relation to the perceived threat posed. In addition, under Delaware law, when
the board of directors of a Delaware corporation approves the sale or break-up
of the corporation, the board of directors may, in certain circumstances, have a
duty to obtain the highest value reasonably available to the stockholders.
A director of a Delaware corporation, in the performance of such director's
duties, is fully protected in relying, in good faith, upon the records of the
corporation and upon such information, opinions, reports or statements presented
to the corporation by any of the corporation's officers or employees, or
committees of the board of directors, or by any other person as to matters the
director reasonably believes are within such other person's professional or
expert competence and who has been selected with reasonable care by or on behalf
of the corporation.
The DGCL does not contain any statutory provision permitting the board of
directors, committees of the board and individual directors, when discharging
the duties of their respective positions, to consider the interests of any
constituencies other than the corporation or its stockholders. It is unclear
under the current state of development of the Delaware law the extent to which
the board of directors, committees of the board and individual directors of a
Delaware corporation may, in considering what is in the corporation's best
interests or the effects of any action on the corporation, take into account the
interests of any constituency other than the stockholders of the corporation. In
addition, the duty of the board of directors, committees of the board and
individual directors of a Delaware corporation may be enforced directly by the
corporation or may be
130
<PAGE>
enforced by a stockholder, as such, by an action in the right of the
corporation, or may, in certain circumstances, be enforced directly by a
stockholder or by any other person or group.
Under Delaware law, it is presumed that the directors of a Delaware
corporation acted on an informed basis, in good faith and in the honest belief
that the action taken was in the best interest of the corporation. This
presumption may be overcome, however, if it is shown by a preponderance of the
evidence that the directors' decision involved a breach of fiduciary duty such
as fraud, overreaching, lack of good faith, failure of the board to inform
itself properly or actions by the board to entrench itself in office.
DAIMLERCHRYSLER AG
As required by the German Stock Corporation Law (AKTIENGESETZ),
DaimlerChrysler AG has a two-tier board system consisting of the DaimlerChrysler
Management Board (VORSTAND) and the DaimlerChrysler Supervisory Board
(AUFSICHTSRAT). The DaimlerChrysler Management Board is responsible for managing
DaimlerChrysler AG and representing DaimlerChrysler AG in its dealings with
third parties, while the DaimlerChrysler Supervisory Board appoints and removes
the members of the DaimlerChrysler Management Board and oversees the management
of DaimlerChrysler AG. The German Stock Corporation Law (AKTIENGESETZ) prohibits
the DaimlerChrysler Supervisory Board from making management decisions. The
DaimlerChrysler Supervisory Board may determine that certain actions and
business measures require its prior approval.
The DaimlerChrysler Management Board must submit regular reports on the
operations of DaimlerChrysler AG to the DaimlerChrysler Supervisory Board, and
the DaimlerChrysler Supervisory Board is also entitled to request special
reports at any time. The German Stock Corporation Law (AKTIENGESETZ) prohibits
simultaneous membership on the board of management and the supervisory board of
a company. The members of the DaimlerChrysler Management Board and the members
of the DaimlerChrysler Supervisory Board owe a duty of loyalty and care to
DaimlerChrysler AG.
In carrying out their duties, members of the DaimlerChrysler Management
Board and the DaimlerChrysler Supervisory Board must exercise the standard of
care of a prudent and diligent businessman and have the burden of proving that
they did so if it is ever contested. The interests of DaimlerChrysler AG are
deemed to include the interests of the stockholders, the interests of the work
force and, to some extent, the common interest, and both the DaimlerChrysler
Management Board and the DaimlerChrysler Supervisory Board must take all these
interests into account when taking actions or decisions. The DaimlerChrysler
Management Board is required to respect the rights of all stockholders to equal
treatment and equal information. The DaimlerChrysler Management Board also has a
duty to maintain the confidentiality of corporate information. Members of the
DaimlerChrysler Management Board who violate their duties may be held jointly
and severally liable by the corporation for any resulting damages, unless their
actions were validly approved by resolution at a stockholders' meeting. The
members of the DaimlerChrysler Supervisory Board have similar liabilities in
respect of the corporation if they violate their duties. Claims of the
corporation against the members of the DaimlerChrysler Management Board and of
the DaimlerChrysler Supervisory Board will be asserted if the stockholders'
meeting so resolves by simple majority or upon request of stockholders holding
in the aggregate at least 10% of the issued shares. The stockholders' meeting or
a court of competent jurisdiction, upon request by stockholders holding in the
aggregate at least 10% (under special circumstances 5%) of the issued shares or
at least 400,000 shares (under special circumstances 200,000 shares, in each
case, assuming stated value of DM 5 per share) shall appoint a special
representative to assert such a claim. For limitations on the liability of
directors, see "--Limitation on Directors' Liability--DaimlerChrysler AG" and
"--Stockholder Suits--DaimlerChrysler AG."
No statutory law or case law exists with respect to the standard of conduct
applicable to the members of the management board and of the supervisory board
of a German AKTIENGESELLSCHAFT in the context of a threatened change in control.
The voluntary German Takeover Code provides that the management board of the
target company may not take any measures that run counter to the interest of the
stockholders in taking
131
<PAGE>
advantage of the tender offer. This recommendation is based on the principle
that the target company's management board has a duty VIS-A-VIS the stockholders
to remain neutral.
Size and Classification of the Board of Directors
CHRYSLER
The Chrysler By-Laws provide that the Chrysler Board shall consist of one or
more members. Such number may be increased by the board of directors. The
Chrysler Certificate provides that the By-Laws may be adopted by a vote of
stockholders to allow for the Chrysler Board to be divided into three classes
and for directors to be elected to serve staggered three-year terms. No such
By-Law has been adopted by the Chrysler stockholders.
DAIMLERCHRYSLER AG
Following the Chrysler Effective Time, the DaimlerChrysler Supervisory Board
will consist of 20 members, 10 of whom will be elected by the holders of
DaimlerChrysler Ordinary Shares, and, in accordance with the Co-determination
Law of 1976, 10 of whom will be elected by the employees of DaimlerChrysler AG.
The Chairman of the Supervisory Board is selected from the members elected by
the stockholders and will have a casting (tie-breaking) vote. The Combination
Agreement provides that for a period of not less than two years following the
Chrysler Effective Time, Mr. Hilmar Kopper, the current Chairman of the
Daimler-Benz Supervisory Board (AUFSICHTSRAT) will continue to be the Chairman
of the DaimlerChrysler Supervisory Board.
The Combination Agreement provides that the DaimlerChrysler Management Board
will consist of 18 members, 50% of which will be designated by Chrysler and 50%
of which will be designated by Daimler-Benz. In addition, there will be two
additional members with responsibility for the non-automotive businesses of
Daimler-Benz. The Combination Agreement also requires that, for a three-year
period following the Chrysler Effective Time, Jurgen E. Schrempp and Robert J.
Eaton will be the Co-CEOs and Co-Chairmen (VORSTANDSVORSITZENDE) of the
DaimlerChrysler Management Board.
The maximum term of office for members of the DaimlerChrysler Management
Board is limited to five years according to the German Stock Corporation Law
(AKTIENGESETZ). According to the DaimlerChrysler AG Articles of Association, the
term of office for members of the DaimlerChrysler Supervisory Board is limited
to four fiscal years, PROVIDED, HOWEVER, that the general meeting of
stockholders may determine that a shorter term of office applies to those
members of the DaimlerChrysler Supervisory Board elected by the holders of
DaimlerChrysler Ordinary Shares. The German Stock Corporation Law (AKTIENGESETZ)
disregards the fiscal year in which the term of office begins and extends the
term until the stockholders' meeting in the year following the fourth fiscal
year. Accordingly, members of the DaimlerChrysler Supervisory Board will have a
term of nearly five years. Members of both the DaimlerChrysler Management Board
and the DaimlerChrysler Supervisory Board may be re-elected for additional
terms, and there is no limit on the number of such additional terms.
Removal of Directors; Filling Vacancies on the Board of Directors
CHRYSLER
The stockholders of Chrysler may remove any director and fill the vacancy
created by such removal at any special meeting called for that purpose. In the
case of vacancies not created by such removals, or where a vacancy created by a
stockholder removal is not filled by the stockholders at the special meeting
called for such removal, the Chrysler By-Laws provide that the vacancy may be
filled by the vote of a majority of the directors remaining in office, although
less than a quorum. Any vacancy in the Chrysler Board resulting from an increase
in the number of directors may be filled by a vote of directors constituting a
majority of the directors in office at the time such increase becomes effective.
132
<PAGE>
DAIMLERCHRYSLER AG
The members of the DaimlerChrysler Management Board may be removed prior to
the expiration of their terms by the DaimlerChrysler Supervisory Board only for
reasons amounting to good cause, such as gross breach of duty, inability to duly
fulfill their responsibilities or revocation of confidence by the stockholders'
meeting. In the case of vacancies, the DaimlerChrysler Supervisory Board may
fill the vacancy by appointing a new member of the DaimlerChrysler Management
Board. Members of the DaimlerChrysler Supervisory Board elected by the
stockholders at the general meeting may be removed upon the affirmative vote of
a majority of at least 75% of all votes cast at a stockholders' meeting. Any
member of the DaimlerChrysler Supervisory Board can be removed for good cause,
including gross breach of duty, by a court decision upon request of the
DaimlerChrysler Supervisory Board. In such case, the DaimlerChrysler Supervisory
Board's determination to take such action requires a simple majority vote with
the member affected having no voting power. In the case of vacancies, the
competent court upon a motion by the management board, by a member of the
supervisory board, by a stockholder or by certain employee representatives, may
fill the vacancy for the interim period until the next election by the
stockholders or the employees, as the case may be.
Stockholder Nominations
CHRYSLER
The Chrysler By-Laws establish procedures that must be followed for
stockholders to nominate individuals for election to the Chrysler Board.
Nominations by stockholders of individuals for election to the Chrysler Board
must be made by delivering written notice of such nomination to the Secretary of
Chrysler not less than 60 days nor more than 90 days prior to the annual meeting
at which directors will be elected, unless less than 70 days notice or prior
public disclosure of the date of the annual meeting is given or made to
stockholders, in which case notice by a stockholder to be timely must be so
received not later than the close of business on the 10th day following the date
on which notice of the date of the meeting was mailed or such public disclosure
was made. The nomination notice must set forth certain information about the
stockholder making the nomination, including name and address and class and
number of shares of capital stock of Chrysler beneficially owned by such
stockholder. The nomination notice must set forth certain information about the
persons to be nominated, including information concerning the nominees'
principal occupations or employment and the class and number of shares of
Chrysler that are beneficially owned by each such person. If the presiding
officer at the stockholders' meeting determines that a nomination was not made
in accordance with these procedures, the presiding officer may so declare at the
meeting and the nomination will not be acted upon.
DAIMLERCHRYSLER AG
If a stockholder wants to nominate individuals for election to the
DaimlerChrysler Supervisory Board other than those recommended by the existing
DaimlerChrysler Supervisory Board, such stockholder can communicate this motion
to DaimlerChrysler AG within one week after the publication of the call of the
stockholders' meeting in the German Federal Gazette (BUNDESANZEIGER). The
nomination must contain the name, the profession, the domicile and memberships
in other supervisory boards or other comparable domestic or foreign supervising
constituencies of the individual to be nominated. If such communication is given
to DaimlerChrysler AG, the DaimlerChrysler Management Board must, within 12 days
after the publication of the calling of the stockholders' meeting in the Federal
Gazette (BUNDESANZEIGER), notify the banks and the stockholders' associations
which at the last stockholders' meeting exercised voting rights for stockholders
or who have requested such notification, of the applications and proposals for
elections by stockholders, including the names of such stockholders and a
possible response by the DaimlerChrysler Management Board. The same notification
has to be submitted by the DaimlerChrysler Management Board to stockholders who
have deposited their shares with DaimlerChrysler AG or who have, after the
publication of the call of the stockholders' meeting in the Federal Gazette
(BUNDESANZEIGER), requested such notification or who are registered in the share
register of DaimlerChrysler AG and whose votes have not been exercised by a bank
at
133
<PAGE>
the last stockholders' meeting. In addition, any stockholder entitled to attend
and vote at the stockholders' meeting can nominate individuals for the
DaimlerChrysler Supervisory Board at the stockholders' meeting.
Action by Written Consent
CHRYSLER
The DGCL provides that unless otherwise specified in the certificate of
incorporation stockholders may take action by written consent in lieu of a
meeting; PROVIDED that consents in writing are signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize such action at a meeting and the other requirements of
Section 228 of the DGCL are complied with. The Chrysler Certificate does not
restrict stockholder action by written consent.
DAIMLERCHRYSLER AG
The German Stock Corporation Law (AKTIENGESETZ) does not permit stockholders
to act by written consent outside of the general stockholders' meeting.
Stockholder Meetings
CHRYSLER
Under the DGCL, if the annual meeting for the election of directors is not
held on a designated date, the directors are required to cause such meeting to
be held as soon thereafter as may be convenient. If they fail to do so for a
period of 30 days after the designated date, or if no date has been designated
for a period of 13 months after the organization of the corporation or after its
last annual meeting, the Court of Chancery may summarily order a meeting to be
held upon application of any stockholder or director.
A special meeting of stockholders of Chrysler may be called only by the
Chrysler Board, the Chairman of the Board or a Vice Chairman of the Board.
A quorum for a meeting of the stockholders of Chrysler generally consists of
the holders of shares constituting a majority of the voting power of the
outstanding shares of Chrysler entitled to vote. A majority of the votes cast is
generally required for an action by the stockholders of Chrysler.
DAIMLERCHRYSLER AG
The DaimlerChrysler AG Articles of Association provide that the annual
general meeting to ratify the actions of the DaimlerChrysler Management Board
and the DaimlerChrysler Supervisory Board, and to approve the disposition of
unappropriated profit, the appointment of the auditor and, if applicable, the
audited financial statements, must take place within the first 8 months of each
fiscal year.
A special meeting of stockholders of DaimlerChrysler AG may be called by the
DaimlerChrysler Management Board or the DaimlerChrysler Supervisory Board. A
special meeting of stockholders must be called by the DaimlerChrysler Management
Board upon request of stockholders holding in the aggregate shares representing
at least 5% of the issued shares. The written request stating the purpose and
reasons for the special meeting must be forwarded to the DaimlerChrysler
Management Board.
There are no quorum requirements for stockholder meetings of DaimlerChrysler
AG. Additionally, resolutions are passed at a general meeting of the
stockholders of DaimlerChrysler AG by a majority of the votes cast, unless a
higher vote or a majority of the shares represented at the meeting is required
by law or the DaimlerChrysler AG Articles of Association.
134
<PAGE>
Stockholder Proposals
CHRYSLER
The Chrysler By-Laws establish procedures that must be followed for a
stockholder to submit a proposal at an annual meeting of stockholders (other
than a proposal submitted under the Commission's stockholder proposal rules). No
proposal for a vote may be submitted to the stockholders by a stockholder unless
such submitting stockholder has timely filed with the Secretary of Chrysler a
written statement setting forth specified information, including a brief
description of the proposal and the reasons for bringing such business before
the annual meeting, the name and address of the person making the proposal, the
class and number of shares of capital stock of Chrysler beneficially owned by
such person, and any material interest of the stockholder in such business. If
the presiding officer at any stockholders' meeting determines that any such
proposal was not made in accordance with these procedures or is otherwise not in
accordance with the law, he or she will so declare at the meeting and such
defective proposal will not be acted upon.
DAIMLERCHRYSLER AG
According to the German Stock Corporation Law (AKTIENGESETZ), stockholders
holding in the aggregate shares representing at least 5% of the issued shares or
holding in the aggregate 200,000 shares (assuming stated value of DM 5 per
share) are entitled to require that a matter is put on the agenda for resolution
and that the board of management submit a proposal at the respective
stockholders' meeting and to publish this proposal in the German Federal Gazette
(BUNDESANZEIGER). The request must be made in writing stating the purpose and
the reasons therefor. Proposals duly published may be submitted to the general
stockholders' meeting for decision. In addition, if the agenda for the meeting
is duly published, then stockholders may nominate individuals for election at
the general stockholder meeting, even if they have not availed themselves of the
procedures to make such nominations in advance of the general stockholders'
meeting and to have the board of management notify stockholders of such
nominations in advance of the general stockholders' meeting. Each stockholder
may also submit at the stockholders' meeting counterproposals to the proposals
submitted by the management board and the supervisory board. See "--Stockholder
Nominations--DaimlerChrysler AG."
Required Vote for Authorization of Certain Actions
CHRYSLER
Under the DGCL, fundamental corporate transactions (such as mergers, sales
of all or substantially all of the corporation's assets and dissolutions)
require the approval of the holders of a majority of the shares entitled to
vote. The DGCL permits a corporation to increase the minimum percentage vote
required. The Chrysler Certificate does not contain any supermajority vote
requirements to approve any fundamental transaction.
DAIMLERCHRYSLER AG
According to German law, the following resolutions may be passed only by a
majority of at least 75% of the issued shares represented at the passing of the
resolution and a simple majority of the votes cast at the stockholders meeting:
certain capital increases (contingent capital; authorized capital), capital
decreases, a dissolution of DaimlerChrysler AG, a merger of DaimlerChrysler AG
or any other form of transformation (UMWANDLUNG) of DaimlerChrysler AG,
including, without limitation, spin-offs (SPALTUNGEN), a transfer of all or
virtually all of DaimlerChrysler AG's assets, a change of DaimlerChrysler AG's
corporate form, and the exclusion of preemptive rights (BEZUGSRECHT).
Amendment of Corporate Charter and By-Laws
CHRYSLER
Under the DGCL, amendment of the certificate of incorporation requires the
approval of the holders of a majority of each class of shares entitled to vote.
Except as prohibited by the DGCL, the Chrysler Certificate
135
<PAGE>
provides that the Chrysler Board may adopt, amend or repeal the Chrysler By-Laws
without the assent or vote of the stockholders. Under the DGCL, a corporation's
by-laws may also be amended by the stockholders.
DAIMLERCHRYSLER AG
Amendments of the DaimlerChrysler Articles of Association may be proposed
either jointly by the DaimlerChrysler Supervisory Board and the DaimlerChrysler
Management Board or by a stockholder or group of stockholders holding a minimum
of 5% of the issued shares or 200,000 shares (assuming stated value of DM 5 per
share). A resolution amending the DaimlerChrysler Articles of Association must
be passed by a majority of the votes cast and a majority of the shares issued
represented at the meeting of stockholders at which the resolution is considered
unless the German Stock Corporation Law (AKTIENGESETZ) requires that the
resolution be passed by at least three-quarters of the shares issued represented
at the meeting.
Appraisal Rights
CHRYSLER
The rights of stockholders to demand payment in cash by a corporation of the
fair value of their shares under certain circumstances are called appraisal
rights under the DGCL. The DGCL does not afford appraisal rights to holders of
shares which are either listed on a national securities exchange, quoted on The
Nasdaq National Market or held of record by more than 2,000 stockholders when
the plan of merger or consolidation converts such shares solely into stock of
the surviving corporation or stock of another corporation (or cash in lieu of
fractional shares) which is either listed on a national securities exchange,
quoted on The Nasdaq National Market or held of record by more than 2,000
stockholders. In addition, Delaware law denies appraisal rights to the
stockholders of the surviving corporation in a merger if such merger did not
require for its approval the vote of the stockholders of such surviving
corporation.
In determining fair value, any valuation methods may be used which are
generally acceptable in the financial community.
DAIMLERCHRYSLER AG
A valuation proceeding (SPRUCHVERFAHREN) is available to DaimlerChrysler
AG's stockholders under the German Stock Corporation Law (AKTIENGESETZ) and the
German Transformation Act (UMWANDLUNGSGESETZ) to determine the adequacy of the
consideration to be paid in certain corporate transactions. These transactions
include (a) a merger; (b) a control and profit transfer agreement between a
controlling stockholder and its dependent company; and (c) the forced withdrawal
of minority stockholders from a corporation upon the corporation's integration
with its parent corporation holding shares representing at least 95% of the
nominal capital of the corporation to be integrated; PROVIDED, in each case the
stockholder complies with the procedural requirements specified in the
respective statutory provisions. See "The Transactions--German Valuation
Proceeding (SPRUCHVERFAHREN)."
Preemptive Rights
CHRYSLER
Under the DGCL, stockholders have no preemptive rights to subscribe to
additional issues of stock or to any security convertible into such stock
unless, and except to the extent that, such rights are expressly provided for in
the certificate of incorporation. The Chrysler Certificate does not provide for
preemptive rights.
DAIMLERCHRYSLER AG
Under the German Stock Corporation Law (AKTIENGESETZ), in general, an
existing stockholder in a stock corporation has a preemptive right (BEZUGSRECHT)
to subscribe for any issue by such corporation of shares, debt instruments
convertible into shares and participating debt instruments in proportion to the
shares held by such
136
<PAGE>
stockholder in the existing capital of such corporation. The German Stock
Corporation Law (AKTIENGESETZ) provides that this preemptive right can be
excluded only by a stockholder resolution. A majority of at least three-quarters
of the issued shares represented at the meeting is required for the exclusion.
See "Description of DaimlerChrysler Ordinary Shares--Preemptive Rights."
Stock Repurchases
CHRYSLER
Under DGCL, a corporation may purchase or redeem its own shares unless the
capital of the corporation is impaired or when such purchase or redemption would
cause an impairment of the capital of the corporation. A Delaware corporation
may, however, purchase or redeem out of capital any of its preferred shares if
such shares will be retired upon acquisition, thereby reducing the capital of
the corporation.
DAIMLERCHRYSLER AG
Under the German Stock Corporation Law (AKTIENGESETZ), a stock corporation
(AKTIENGESELLSCHAFT) like DaimlerChrysler AG may acquire its own shares, (i)
only upon authorization by a stockholders' meeting, PROVIDED, that it acquires
no more than 10% of its issued shares, or (ii) for certain defined purposes
(E.G.,for transfer to employees).
Anti-Takeover Statutes
CHRYSLER
Section 203 of the DGCL contains certain "anti-takeover" provisions that
apply to a Delaware corporation, unless the corporation elects not to be
governed by such provision in its certificate of incorporation or by-laws.
Neither the Chrysler Charter nor the Chrysler By-Laws contain such an election.
Thus, Chrysler is governed by Section 203 of the DGCL, which precludes a
corporation from engaging in any "business combination" (I.E., mergers,
consolidations, sales of substantially all assets, etc.) with any person (other
than the corporation and any direct or indirect majority-owned subsidiary of the
corporation) that owns 15% or more of the outstanding voting stock of the
corporation (except for any such person whose ownership of shares in excess of
the 15% limitation is the result of action taken solely by the corporation) for
a period of three years following the time that such stockholder obtained
ownership of more than 15% of the outstanding voting stock of the corporation.
The three-year waiting period does not apply, however, if (i) prior to the time
such person obtained ownership of more than 15% of the outstanding voting stock
of the corporation, the board of directors of the corporation approved either
the business combination or the transaction which resulted in such stockholder
owning in excess of 15% of such stock, (ii) upon consummation of the transaction
which resulted in the stockholder owning in excess of 15% of the outstanding
voting stock of the corporation, such stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time that the transaction
commenced, or (iii) at or subsequent to such time as the stockholder obtained
more than 15% of the outstanding voting stock of the corporation, the business
combination is approved by the board of directors and authorized at an annual or
special meeting of stockholders, and not by written consent, by the affirmative
vote of at least 66 2/3% of the outstanding voting stock that is not owned by
the acquiring stockholder.
DAIMLERCHRYSLER AG
German law does not specifically regulate business combinations with
interested stockholders. However, certain general principles of German law may
restrict business combinations under certain circumstances.
137
<PAGE>
Limitation on Directors' Liability
CHRYSLER
The DGCL permits a corporation to limit a director's personal liability,
with certain specified exemptions. Such a limitation must be set forth in the
corporation's certificate of incorporation.
The Chrysler Certificate currently eliminates a director's personal
liability for monetary damages to the fullest extent permitted by Delaware law.
As a result, a Chrysler director presently has no monetary liability except for
liability for (i) breach of the duty of loyalty, (ii) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of the
law, (iii) declaration of an improper dividend or an improper redemption of
stock or (iv) any transaction from which the director derived an improper
personal benefit.
DAIMLERCHRYSLER AG
Under compulsory provisions of the German Stock Corporation Law
(AKTIENGESETZ), a stock corporation is not allowed to limit or eliminate the
personal liability of the members of either the board of management or the
supervisory board for damages due to breach of duty in their official capacity.
For a discussion of the standard of conduct of the DaimlerChrysler Management
Board and the DaimlerChrysler Supervisory Board, see "-- Duties of
Directors--DaimlerChrysler AG." DaimlerChrysler AG may, however, waive its
claims for damages due to a breach of duty or reach a settlement with regard to
such claims if more than three years have passed after such claims have arisen,
but only with the approval of the general stockholders' meeting, PROVIDED that
such waiver may not be granted and such settlement may not be reached if
stockholders holding in the aggregate at least 10% of the issued shares file an
objection to the protocol.
Indemnification of Officers and Directors
CHRYSLER
The Chrysler Certificate and the Chrysler By-Laws require indemnification of
its directors and officers to the fullest extent permitted under Delaware law.
The DGCL permits a corporation to indemnify any person involved in a third
party action by reason of his agreeing to serve, serving or formerly serving as
an officer or director of the corporation, against expenses, judgments, fines
and settlement amounts paid in such third party action (and against expenses
incurred in any derivative action), if such person acted in good faith and
reasonably believed that his actions were in, or not opposed to, the best
interests of the corporation and, with respect to any criminal proceeding, had
no reasonable cause to believe that his conduct was unlawful. Furthermore, the
DGCL provides that a corporation may advance expenses incurred by officers and
directors in defending any action upon receipt of an undertaking by the person
to repay the amount advanced if it is ultimately determined that such person is
not entitled to indemnification.
In general, no indemnification for expenses in derivative actions is
permitted under the DGCL where the person has been adjudged liable to the
corporation, unless a court finds him entitled to such indemnification. If,
however, the person has been successful in defending a third party or derivative
action, indemnification for expenses incurred is mandatory under the DGCL.
Under the DGCL, the statutory provisions for indemnification are
nonexclusive with respect to any other rights, such as contractual rights, to
which a person seeking indemnification may be entitled. Delaware law does not
expressly permit such contractual or other rights to provide for indemnification
against judgments and settlements paid in a derivative action. Delaware case law
has not made clear whether and to what extent Delaware courts will enforce such
a broad right of indemnification, which is included in the Chrysler Certificate.
138
<PAGE>
DAIMLERCHRYSLER AG
Under German law, DaimlerChrysler AG may indemnify its officers (LTD.
ANGESTELLTE), and, under certain circumstances, German labor law requires a
stock corporation to do so. However, DaimlerChrysler AG may not, as a general
matter, indemnify members of the DaimlerChrysler Management Board or the
DaimlerChrysler Supervisory Board. A German stock corporation
(AKTIENGESELLSCHAFT) may, however, purchase directors and officers insurance.
Such insurance may be subject to any mandatory restrictions imposed by German
law. In addition, German law may permit a corporation to indemnify a member of
the board of management or the supervisory board for attorneys' fees incurred if
such member is the successful party in a suit in a country, such as the U.S.,
where winning parties are required to bear their own costs, if German law would
have required the losing party to pay such member's attorneys' fees had the suit
been brought in Germany.
Members of the DaimlerChrysler Supervisory Board and the DaimlerChrysler
Management Board and officers of DaimlerChrysler AG will be covered by customary
liability insurance, including insurance against liabilities under the
Securities Act.
Cumulative Voting
CHRYSLER
Under the DGCL, each stockholder is entitled to one vote per share of stock,
unless the certificate of incorporation provides otherwise. In addition, under
the DGCL, cumulative voting in the election of directors is only permitted if
expressly authorized in a corporation's charter. The Chrysler Certificate does
not expressly authorize cumulative voting.
DAIMLERCHRYSLER AG
The German Stock Corporation Law (AKTIENGESETZ) does not allow cumulative
voting.
Conflict-of-Interest Transactions
CHRYSLER
The DGCL generally permits transactions involving a Delaware corporation and
an interested director of that corporation if (a) the material facts as to his
relationship or interest are disclosed and a majority of disinterested directors
consents, (b) the material facts are disclosed as to his relationship or
interest and holders of a majority of shares entitled to vote thereon consent,
or (c) the transaction is fair to the corporation at the time it is authorized
by the board of directors, a committee of the board of directors or the
stockholders.
DAIMLERCHRYSLER AG
In any transaction or contract between DaimlerChrysler AG and any member of
the DaimlerChrysler Management Board, DaimlerChrysler AG is represented by the
DaimlerChrysler Supervisory Board. See "-- Duties of Directors--DaimlerChrysler
AG."
Dividends
CHRYSLER
The DGCL permits dividends to be paid out of (i) surplus (the excess of net
assets of the corporation over capital), or (ii) if the corporation does not
have adequate surplus, net profits for the current or immediately preceding
fiscal year, unless the net assets are less than the capital of any outstanding
preferred stock. In determining the amount of surplus of a Delaware corporation,
the assets of the corporation, including stock of subsidiaries owned by the
corporation, must be valued at their fair market value as determined by the
board of directors, without regard to their historical book value.
139
<PAGE>
DAIMLERCHRYSLER AG
According to the German Stock Corporation Law (AKTIENGESETZ), dividends may
be paid out of the corporation's distributable profits as determined by
resolution of the stockholders general meeting for the preceding fiscal year.
Loans to Directors
CHRYSLER
Under the DGCL, loans can generally be made to officers and directors upon
approval by the board of directors.
DAIMLERCHRYSLER AG
The German Stock Corporation Law (AKTIENGESETZ) requires that any loan made
by DaimlerChrysler AG exceeding a month's salary to any director or general
manager or to their spouses or minor children must be authorized by a resolution
of the DaimlerChrysler Supervisory Board. Loans made by DaimlerChrysler AG to a
member of the DaimlerChrysler Supervisory Board require an affirmative vote of
the DaimlerChrysler Supervisory Board. For purposes of this resolution, the
member of the DaimlerChrysler Supervisory Board who would be the borrower is not
entitled to vote.
Stockholder Suits
CHRYSLER
Under the DGCL, a stockholder may bring a derivative action on behalf of the
corporation to enforce the rights of the corporation. An individual also may
commence a class action suit on behalf of himself and other similarly situated
stockholders where the requirements for maintaining a class action under
Delaware law have been met. A person may institute and maintain such a suit only
if such person was a stockholder at the time of the transaction which is the
subject of the suit or his or her stock thereafter dissolved upon him or her by
operation of law. Additionally, under Delaware case law, the plaintiff generally
must be a stockholder not only at the time of the transaction which is the
subject of the suit, but also through the duration of the derivative suit.
Delaware law also requires that the derivative plaintiff make a demand on the
directors of the corporation to assert the corporate claim before the suit may
be prosecuted by the derivative plaintiff, unless such demand would be futile.
DAIMLERCHRYSLER AG
The German Stock Corporation Law (AKTIENGESETZ) does not provide for class
actions, and does not generally permit stockholder derivative suits, even in the
case of breach of duty by the members of the board of management or the
supervisory board. The stockholders' meeting, acting by a simple majority of the
votes cast, or a minority of the stockholders holding in the aggregate at least
10% of the issued shares, are entitled to request DaimlerChrysler AG to claim
damages, but are not entitled to assert any rights on behalf of DaimlerChrysler
AG. Upon request, the corporation will prosecute such claim. If such request is
not complied with, the court will appoint a special representative upon a motion
of stockholders with either shares representing at least 10% (under special
circumstances 5%) of the issued shares or 400,000 shares (under special
circumstances 200,000 shares, in each case, assuming stated value of DM 5 per
share). The general stockholders' meeting may appoint any disinterested party as
a special representative for these proceedings. To avoid abuse, stockholders
exercising the minority right described above must establish that they have held
their shares for at least three months prior to the general stockholders'
meeting in which they make the request. The stockholder group must reimburse
DaimlerChrysler AG for all costs of litigation if such proceedings are
unsuccessful or only partially successful, but only in the latter case to the
extent that such costs exceed any amounts awarded to DaimlerChrysler AG in such
a proceeding. Each stockholder who was
140
<PAGE>
present at the stockholders' meeting and has objected to the resolution in the
minutes may within one month after adoption of the respective resolution of
stockholders' meeting take action against the company to contest the resolution
(ANFECHTUNGSKLAGE).
Rights of Inspection
CHRYSLER
Under the DGCL, every stockholder, upon proper written demand stating the
purpose thereof, may inspect the corporate books and records during normal
business hours as long as such inspection is for a proper purpose. Under the
statute, a proper purpose is any purpose reasonably related to the interests of
the inspecting person as a stockholder.
DAIMLERCHRYSLER AG
The German Stock Corporation Law (AKTIENGESETZ) does not permit stockholders
to inspect corporate books and records. Section 67(5) of the German Stock
Corporation Law (AKTIENGESETZ), however, does permit stockholders to inspect the
share register upon request, and Section 131 provides each stockholder with a
right to information at the stockholders' meeting, to the extent that such
information is necessary to permit a proper evaluation of the relevant item on
the agenda.
The right to information is a right only to oral information at a
stockholders meeting. Information may be given in writing to stockholders, but
they are neither entitled to receive written information nor to inspect any
documents of the corporation. As a practical matter, stockholders may receive
certain written information about DaimlerChrysler AG through its public filings
with the commercial register (HANDELSREGISTER) and the Federal Gazette
(BUNDESANZEIGER) and other places for publication of the company.
141
<PAGE>
ENFORCEABILITY OF JUDGMENTS
DaimlerChrysler AG is organized under the laws of the Federal Republic of
Germany. Service of process upon directors, officers and the experts named
herein under "Experts" who reside outside the United States may be difficult to
obtain within the United States. Furthermore, since all directly owned assets of
DaimlerChrysler AG are outside the United States, any judgment obtained in the
United States against DaimlerChrysler AG may not be collectible within the
United States.
DaimlerChrysler AG will conduct its operations through direct and indirect
subsidiaries worldwide, many of which are outside Germany. The Daimler-Benz
legal department has advised that there is currently no treaty between the
United States of America and the Federal Republic of Germany providing for the
reciprocal acknowledgment and enforceability of judgments in civil and
commercial matters. Therefore, the general rules of the German Code of Civil
Procedures ("ZPO") govern such issues. ZPO Section 722 requires that an
enforcement action in Germany be based upon a non-appealable foreign judgment
only (cf ZPO Section 723 sub-section 2, sentence 1). As a general rule a German
court will not review the merits of the foreign judgment in any enforcement
proceedings (ZPO Section 723 sub-section 1). It shall, however, dismiss the
enforcement action pursuant to ZPO Section 723 sub-section 2, sentence 2, if the
exceptions regarding the acknowledgment of foreign judgments set forth in ZPO
Section 328 sub-section 1 apply, which exceptions can be generally summarized as
follows:
(i) the foreign court had no personal jurisdiction according to German law;
(ii) no due service of process was effected on the defendant;
(iii) the foreign judgment is irreconcilable with a prior German or other
foreign judgment to be acknowledged in Germany or proceedings on the
same subject matter had been filed in Germany before suit was
instituted in the foreign jurisdiction;
(iv) acknowledgment of the foreign judgment would produce a result in
contravention of German public policy; and
(v) the foreign jurisdiction whose judgment is sought to be acknowledged
does not reciprocate with respect to acknowledgment of judgments entered
in Germany.
As far as reciprocity is concerned, the application of such exception
depends on the law practiced in the relevant state of the United States where
the judgment was rendered and the result may vary from time to time as the law
and practice changes. According to information available as of the date of this
Proxy Statement/ Prospectus, German judgments would be acknowledged and enforced
in the courts of almost all states in the United States and, accordingly, with
respect to such states, reciprocity by German courts is warranted and the
relevant exception does not apply. United States judgments awarding punitive
damages may contravene German public policy and may therefore not be
acknowledged in their full amount or in part pursuant to exception (iv) above.
The Daimler-Benz legal department is, however, not aware of any reasons under
present German law for avoiding enforcement of a judgment of a United States
court on the DaimlerChrysler Ordinary Shares on the ground that the same would
be contrary to German public policy. Moreover, such counsel has expressed no
opinion as to whether the enforcement by a German court of any judgment would be
effected in any currency other than DM, and if in DM, the date of determination
of the applicable exchange rate from United States dollars to DM.
LEGAL MATTERS
The validity of the DaimlerChrysler Ordinary Shares offered hereby will be
passed upon by the Daimler-Benz legal department. In addition, Skadden, Arps,
Slate, Meagher & Flom LLP and Debevoise & Plimpton have delivered opinions to
Daimler-Benz and Chrysler, respectively, as to certain United States federal
income tax matters. Certain members of Skadden, Arps, Slate, Meagher & Flom LLP
have investment and voting authority with respect to an aggregate of 1,000
Daimler-Benz ADSs and 3,151 shares of Chrysler Common Stock.
142
<PAGE>
EXPERTS
The consolidated financial statements and related schedule of Daimler-Benz
as of December 31, 1997 and 1996 and for each of the years in the three-year
period ended December 31, 1997, included in the Daimler-Benz 1997 Annual Report
on Form 20-F incorporated by reference herein, have been audited by KPMG
Deutsche-Treuhand Gesellschaft AG, independent auditors, as set forth in their
reports appearing in the Daimler-Benz 1997 Annual Report on Form 20-F
incorporated by reference herein, and are incorporated herein upon the authority
of such firm as experts in accounting and auditing. The reports of KPMG Deutsche
Treuhand-Gesellschaft AG on the Daimler-Benz consolidated financial statements
and financial statement schedule, as of and for each of the years in the three
year period ended December 31, 1997, contain a qualification as a result of a
departure from U.S. GAAP for Daimler-Benz' accounting for certain joint ventures
in accordance with the proportionate method of consolidation. Under U.S. GAAP,
joint ventures would be accounted for using the equity method of consolidation.
The consolidated financial statements of Chrysler as of December 31, 1997
and 1996 and for each of the three years in the period ended December 31, 1997
incorporated herein by reference from Chrysler's Annual Report on Form 10-K for
the year ended December 31, 1997, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report which is incorporated herein by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
With respect to the unaudited interim financial information of Chrysler for
the periods ended March 31, 1998 and June 30, 1998 which is incorporated herein
by reference, Deloitte & Touche LLP have applied limited procedures in
accordance with professional standards for a review of such information.
However, as stated in their report included in Chrysler's Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1998 and June 30, 1998 and
incorporated by reference herein, they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their report on such information should be restricted in light of
the limited nature of the review procedures applied. Deloitte & Touche LLP are
not subject to the liability provisions of Section 11 of the Securities Act for
their report on the unaudited interim financial information because such report
is not a "report" or a "part" of a registration statement prepared or certified
by an accountant within the meaning of Sections 7 and 11 of the Securities Act.
------------------------
The following information is being disclosed pursuant to Florida law and is
accurate as of the date of this Proxy Statement/Prospectus: Certain subsidiaries
of Daimler-Benz occasionally sell, directly or through their authorized sales
representatives, passenger cars, commercial vehicles, vehicle components and
other products to persons located in Cuba. Current information concerning this
matter may be obtained from the State of Florida Department of Banking and
Finance, The Capital, Tallahassee, Florida 32399-0350 (telephone number
904-488-9805).
143
<PAGE>
Annex A
AMENDED AND RESTATED
BUSINESS COMBINATION AGREEMENT
among
DAIMLER-BENZ AKTIENGESELLSCHAFT
CHRYSLER CORPORATION
and
DAIMLERCHRYSLER AG
Dated as of May 7, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Page
----
ARTICLE I
DAIMLER-BENZ EXCHANGE OFFER
Section 1.1. The Daimler-Benz Exchange Offer..................................................................... A-2
Section 1.2. Daimler-Benz Exchange Agent......................................................................... A-3
Section 1.3. German Exchange Offer Documents..................................................................... A-3
Section 1.4. U.S. Exchange Documents............................................................................. A-3
Section 1.5. Antidilution Protection for Daimler-Benz Exchange Offer Ratio....................................... A-4
Section 1.6. DaimlerChrysler AG Name............................................................................. A-4
Section 1.7. Contingent Daimler-Benz Exchange Ratio Increase..................................................... A-4
Section 1.8. Option to Issue DaimlerChrysler American Depositary Shares.......................................... A-4
ARTICLE II
CHRYSLER MERGER
Section 2.1. Formation of Chrysler Merger Sub.................................................................... A-4
Section 2.2. Chrysler Merger..................................................................................... A-5
Section 2.3. The U.S. Share Exchange............................................................................. A-5
Section 2.4. Conversion of Chrysler Common Stock in the Chrysler Merger.......................................... A-5
Section 2.5. Exchange of Shares of Chrysler Common Stock......................................................... A-6
Section 2.6. Treatment of Chrysler Stock Plans................................................................... A-8
Section 2.7. Redemption of Chrysler Preferred Stock.............................................................. A-10
Section 2.8. Antidilution Protection for U.S. Exchange Ratio..................................................... A-10
Section 2.9. Chrysler Merger Closing............................................................................. A-10
Section 2.10. Certificate of Incorporation........................................................................ A-11
Section 2.11. By-laws............................................................................................. A-11
Section 2.12. Officers............................................................................................ A-11
Section 2.13. Board of Directors.................................................................................. A-11
Section 2.14. Option to Issue DaimlerChrysler American Depositary Shares.......................................... A-11
ARTICLE III
DAIMLER-BENZ MERGER
Section 3.1. Daimler-Benz Merger................................................................................. A-11
Section 3.2. Daimler-Benz Merger Closing......................................................................... A-11
Section 3.3. Conversion of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs in the Daimler-Benz Merger.........
A-12
Section 3.4. Exchange of Daimler-Benz ADSs....................................................................... A-12
Section 3.5. Affiliates Letter................................................................................... A-13
Section 3.6. Treatment of Daimler-Benz Stock Plans............................................................... A-13
Section 3.7. Treatment of Daimler-Benz NEWS...................................................................... A-14
Section 3.8. Treatment of Daimler-Benz Subordinated Mandatory Convertible Notes.................................. A-14
Section 3.9. Antidilution Protection for Daimler-Benz Merger Exchange Ratio...................................... A-14
Section 3.10. Treatment of Fractional Shares...................................................................... A-14
Section 3.11. Withholding Taxes................................................................................... A-15
Section 3.12. Singapore Depositary Shares......................................................................... A-15
Section 3.13. Option to Issue DaimlerChrysler American Depositary Shares.......................................... A-16
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
ARTICLE IV
<S> <C> <C>
DAIMLERCHRYSLER AG GOVERNANCE AFTER THE EFFECTIVE TIME
Section 4.1. DaimlerChrysler AG Governance after Effective Time.................................................. A-16
Section 4.2. Integration Committee............................................................................... A-17
Section 4.3. Operational Headquarters............................................................................ A-17
Section 4.4. Language............................................................................................ A-17
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1. Corporate Organization.............................................................................. A-17
Section 5.2. Subsidiaries........................................................................................ A-17
Section 5.3. Capital Stock....................................................................................... A-18
Section 5.4. Authority........................................................................................... A-19
Section 5.5. Consents and Approvals; No Violation................................................................ A-19
Section 5.6. Financial Statements; SEC Filings................................................................... A-19
Section 5.7. Absence of Changes.................................................................................. A-20
Section 5.8. Absence of Undisclosed Liabilities.................................................................. A-21
Section 5.9. Litigation.......................................................................................... A-21
Section 5.10. Taxes............................................................................................... A-21
Section 5.11. Employee Benefit Plans.............................................................................. A-21
Section 5.12. Labor and Employment Matters........................................................................ A-22
Section 5.13. Information Provided By Representing Party.......................................................... A-22
Section 5.14. Ownership of Capital Stock.......................................................................... A-23
Section 5.15. Voting Requirements................................................................................. A-23
Section 5.16. Accounting Matters.................................................................................. A-23
Section 5.17. Opinion of Financial Advisors....................................................................... A-23
Section 5.18. Finders and Advisors................................................................................ A-23
Section 5.19. State Takeover Statutes; Stockholder Rights Plan.................................................... A-24
ARTICLE VI
DAIMLERCHRYSLER AG REPRESENTATIONS AND WARRANTIES
Section 6.1. Corporate Organization.............................................................................. A-24
Section 6.2. Capital Stock....................................................................................... A-24
Section 6.3. Authority........................................................................................... A-24
Section 6.4. Consents and Approvals; No Violation................................................................ A-24
Section 6.5. Information Provided By DaimlerChrysler AG.......................................................... A-25
Section 6.6. Ownership of Capital Stock.......................................................................... A-25
Section 6.7. Accounting Matters.................................................................................. A-25
Section 6.8. No Prior Activities................................................................................. A-26
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
ARTICLE VII
<S> <C> <C>
CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME
ARTICLE VIII
EMPLOYEE BENEFIT MATTERS
Section 8.1. DaimlerChrysler AG Retention/Personnel Policy....................................................... A-28
Section 8.2. Benefits............................................................................................ A-28
Section 8.3. Employment Agreements............................................................................... A-28
ARTICLE IX
ADDITIONAL AGREEMENTS
Section 9.1. No Solicitation..................................................................................... A-29
Section 9.2. Preparation of the F-4 Registration Statement, the Proxy Statement/Prospectus and the U.S. Exchange
Offer Documents; Stockholders Meetings.............................................................. A-30
Section 9.3. Chrysler Stock Issuance............................................................................. A-31
Section 9.4. Accountants' Comfort Letters........................................................................ A-32
Section 9.5. Accountants' Pooling Letters........................................................................ A-32
Section 9.6. Access to Information; Confidentiality.............................................................. A-32
Section 9.7. Takeover Statute.................................................................................... A-32
Section 9.8. Indemnification, Exculpation and Insurance.......................................................... A-33
Section 9.9. Public Announcements................................................................................ A-33
Section 9.10. Affiliates.......................................................................................... A-33
Section 9.11. Stock Exchange Listings............................................................................. A-34
Section 9.12. Stockholder Litigation.............................................................................. A-34
Section 9.13. Tax Treatment....................................................................................... A-34
Section 9.14. Standstill Agreements; Confidentiality Agreements................................................... A-35
Section 9.15. Conveyance Taxes.................................................................................... A-35
Section 9.16. Certain Obligations of DaimlerChrysler AG........................................................... A-35
Section 9.17. Reasonable Best Efforts............................................................................. A-36
ARTICLE X
CLOSING CONDITIONS
Section 10.1. Conditions to All Parties' Obligation to Close...................................................... A-36
Section 10.2. Conditions to Daimler-Benz's and DaimlerChrysler AG's Obligation to Close........................... A-37
Section 10.3. Conditions to Chrysler's Obligation to Close........................................................ A-37
Section 10.4. Further Condition to Obligations of Daimler-Benz and DaimlerChrysler AG............................. A-38
Section 10.5. Frustration of Closing Conditions................................................................... A-38
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
Section 11.1. Termination......................................................................................... A-38
Section 11.2. Effect of Termination............................................................................... A-39
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
ARTICLE XII
<S> <C> <C>
MISCELLANEOUS
Section 12.1. No Survival of Representations and Warranties....................................................... A-39
Section 12.2. Fees and Expenses................................................................................... A-40
Section 12.3. Counterparts; Effectiveness......................................................................... A-40
Section 12.4. Governing Law....................................................................................... A-40
Section 12.5. Notices............................................................................................. A-40
Section 12.6. Assignment; Binding Effect.......................................................................... A-41
Section 12.7. Severability........................................................................................ A-41
Section 12.8. Enforcement of Agreement............................................................................ A-41
Section 12.9. Entire Agreement; No Third-Party Beneficiaries...................................................... A-42
Section 12.10. Reservation of Right to Revise Transaction.......................................................... A-42
Section 12.11. Extension of Time, Waiver, Etc...................................................................... A-42
Section 12.12. Amendment........................................................................................... A-42
Section 12.13. Interpretation...................................................................................... A-42
Section 12.14. Responsibility for Obligations of DaimlerChrysler AG................................................ A-43
Section 12.15. Consent to Jurisdiction............................................................................. A-43
</TABLE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
<S> <C><C>
Exhibit A -- Annex of Defined Terms
Exhibit B-1 -- Form of Chrysler Affiliate Agreement
Exhibit B-2 -- Form of Daimler-Benz Affiliate Agreement
Exhibit C -- Form of Amended and Restated Certificate of Incorporation of Chrysler Merger Sub
Exhibit D -- Form of By-laws of Chrysler Merger Sub
Exhibit E -- Designated Officers of Chrysler and Daimler-Benz
</TABLE>
iv
<PAGE>
AMENDED AND RESTATED
BUSINESS COMBINATION AGREEMENT
AMENDED AND RESTATED BUSINESS COMBINATION AGREEMENT (this "Restated
Agreement"), dated as of May 7, 1998, among Daimler-Benz Aktiengesellschaft, an
AKTIENGESELLSCHAFT organized and existing under the laws of the Federal Republic
of Germany ("Daimler-Benz"), Chrysler Corporation, a Delaware corporation
("Chrysler"), and DaimlerChrysler AG, which was formerly known as Oppenheim
Aktiengesellschaft, an AKTIENGESELLSCHAFT organized and existing under the laws
of the Federal Republic of Germany ("DaimlerChrysler AG").
WHEREAS, Daimler-Benz and Chrysler desire to combine their respective
businesses, stockholder groups, managements and other constituencies in a
merger-of-equals transaction upon the terms and subject to the conditions of
this Restated Agreement;
WHEREAS, Daimler-Benz, Chrysler and DaimlerChrysler AG desire to make
certain representations, warranties, covenants and agreements in connection with
the transactions contemplated by this Restated Agreement;
WHEREAS, the Supervisory Board (AUFSICHTSRAT) of DaimlerChrysler AG and the
Management Board (VORSTAND) of each of Daimler-Benz and DaimlerChrysler AG and
the Board of Directors of Chrysler have approved the transactions contemplated
by this Restated Agreement in accordance with the laws of their respective
jurisdictions of organization and have authorized the execution and delivery of
this Restated Agreement;
WHEREAS, Deutsche Bank Aktiengesellschaft has informed Daimler-Benz that
such stockholder supports the business combination transaction involving
Daimler-Benz and DaimlerChrysler AG;
WHEREAS, Tracinda Corporation has entered into a Stockholder's Agreement,
dated May 7, 1998, among Daimler-Benz, Chrysler and such stockholder (the
"Chrysler Stockholder's Agreement"), pursuant to which such stockholder has
agreed to vote all shares of Chrysler Common Stock owned by it in favor of the
business combination transactions involving Chrysler, Daimler-Benz and
DaimlerChrysler AG at the Chrysler Stockholders Meeting;
WHEREAS, for United States federal income tax purposes the parties intend
that (i) the Chrysler Exchange (a) will qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and/or (b) when integrated with the Daimler-Benz Exchange Offer and
taking into account the Daimler-Benz Merger, will be treated as a transaction
described in Section 351(a) of the Code, (ii) the Daimler-Benz Exchange Offer
either (a) when integrated with the Chrysler Exchange, will be treated as a
transaction described in Section 351(a) of the Code or (b) if integrated with
the Daimler-Benz Merger, will qualify as a reorganization within the meaning of
Section 368(a) of the Code, and (iii) this Restated Agreement shall be, and is
hereby, adopted as a plan of reorganization for purposes of Section 368(a) of
the Code;
WHEREAS, the parties intend that the Chrysler Exchange will qualify for an
exception to the general rule of Section 367(a)(1) of the Code;
WHEREAS, for German tax purposes the Daimler-Benz Exchange Offer and the
Daimler-Benz Merger are intended not to result in the recognition of any gain or
loss by DaimlerChrysler AG, Daimler-Benz and stockholders of Daimler-Benz;
WHEREAS, for financial reporting purposes the parties intend that the
transactions contemplated by this Restated Agreement will be accounted for as a
"pooling-of-interests" transaction under United States generally accepted
accounting principles ("US GAAP");
WHEREAS, capitalized terms used in this Restated Agreement and not elsewhere
defined shall have the respective meanings set forth in Exhibit A hereto; and
A-1
<PAGE>
WHEREAS, Daimler-Benz, Chrysler and DaimlerChrysler AG found it desirable
and convenient to effect certain amendments to their agreement and to restate
that agreement as so amended, all as authorized and contemplated by Section
12.12 of this Restated Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, Daimler-Benz, Chrysler and DaimlerChrysler
AG agree as follows:
ARTICLE 1
DAIMLER-BENZ EXCHANGE OFFER
Section 1.1. THE DAIMLER-BENZ EXCHANGE OFFER. Promptly after the
Daimler-Benz Stockholder Approval and the vote necessary to obtain the Chrysler
Stockholder Approval and so long as this Restated Agreement has not been
terminated in accordance with Section 11.1, DaimlerChrysler AG shall commence an
offer (the "Daimler-Benz Exchange Offer"), which may consist of one offer made
in the United States and one made elsewhere, to (i) the holders of Ordinary
Shares of DM 5 nominal value each of Daimler-Benz or the corresponding no par
value share, as the case may be (the "Daimler-Benz Ordinary Shares"), to
exchange, subject to the Daimler-Benz Exchange Offer Conditions, one no par
value Ordinary Share of DaimlerChrysler AG in registered form (the
"DaimlerChrysler Ordinary Shares") for each Daimler-Benz Ordinary Share held by
such holder, and (ii) the holders of Daimler-Benz American Depositary Shares
representing Daimler-Benz Ordinary Shares ("Daimler-Benz ADSs") to exchange,
subject to the Daimler-Benz Exchange Offer Conditions, one DaimlerChrysler
Ordinary Share for each Daimler-Benz ADS held by such holder (such one-for-one
exchange offered in the foregoing clauses (i) and (ii), with such adjustments as
may be required pursuant to Section 1.5 or Section 1.7 or both, being referred
to herein as the "Daimler-Benz Exchange Offer Ratio"). The obligation of
DaimlerChrysler AG to issue DaimlerChrysler Ordinary Shares in exchange for
Daimler-Benz Ordinary Shares and Daimler-Benz ADSs, in each case tendered
pursuant to the Daimler-Benz Exchange Offer, shall be subject only to this
Restated Agreement not having been terminated pursuant to Section 11.1 and to
the satisfaction or waiver (if permissible under this Restated Agreement and
effected in accordance with Section 12.11) of (1) the condition that such number
of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs which in the aggregate
represent at least that number of outstanding Daimler-Benz Ordinary Shares
required for the transactions contemplated by this Restated Agreement to be
accounted for as a "pooling-of-interests" under US GAAP shall have been validly
tendered, not withdrawn and available for purchase immediately prior to the
Daimler-Benz Exchange Offer Expiration Date (the "Minimum Condition"); and (2)
the conditions set forth in Article X of this Restated Agreement, other than the
condition set forth in Section 10.1(i) (together with the Minimum Condition, the
"Daimler-Benz Exchange Offer Conditions"). The Minimum Condition shall not be
waived and, except as prescribed in Sections 1.5 and 1.7, the Daimler-Benz
Exchange Offer Ratio shall not be amended without the written consent of both
Chrysler and Daimler-Benz; PROVIDED, HOWEVER, if the number of Daimler-Benz
Ordinary Shares and Daimler-Benz ADSs validly tendered, not withdrawn and
available for purchase immediately prior to the Daimler-Benz Exchange Offer
Expiration Date shall not satisfy the Minimum Condition, but shall be in excess
of 80% of the capital stock of Daimler-Benz on a Fully Diluted Basis (the "80%
Minimum"), the Minimum Condition shall mean the 80% Minimum unless Chrysler and
Daimler-Benz otherwise agree. The expiration date of the Daimler-Benz Exchange
Offer shall initially be the date which is 30 days after commencement of the
Daimler-Benz Exchange Offer (such date, as it may be extended as provided
herein, the "Daimler-Benz Exchange Offer Expiration Date") and, if any of the
Daimler-Benz Exchange Offer Conditions is unsatisfied at such time and if
requested by either Chrysler or Daimler-Benz, or if requested by either Chrysler
or Daimler-Benz pursuant to clause (ii) below, shall be extended by
DaimlerChrysler AG from time to time thereafter until the earliest of (i) the
maximum period permitted under the German Takeover Code (UBERNAHMEKODEX DER
BORSENSACHVERSTANDIGENKOMMISSION BEIM BUNDESMINISTERIUM DER FINANZEN) (the
"German Takeover Code") or as otherwise approved by the Executive Office of the
Takeover Commission (UBERNAHMEKOMMISSION pursuant to the German Takeover Code)
(the "Executive Office of the Takeover
A-2
<PAGE>
Commission"), (ii) the close of business (Frankfurt time) on the day on which
Daimler-Benz and DaimlerChrysler AG have publicly announced that all of the
Daimler-Benz Exchange Offer Conditions shall have been satisfied or that they
have been duly waived (or, if later, a date that is five business days following
the initial expiration date, if either Chrysler or Daimler-Benz shall have
requested DaimlerChrysler AG to extend the Daimler-Benz Exchange Offer
Expiration Date to such date) and (iii) such time as this Restated Agreement is
terminated in accordance with Section 11.1. Subject only to the conditions set
forth above, at the earliest practicable time following the Daimler-Benz
Exchange Offer Expiration Date, DaimlerChrysler AG shall accept for exchange and
shall exchange all Daimler-Benz Ordinary Shares and Daimler-Benz ADSs validly
tendered and not withdrawn (the "German Share Exchange") and shall effect the
German Share Exchange in accordance with applicable law by registering the
increase of the DaimlerChrysler AG stated share capital in kind with the
commercial register (HANDELSREGISTER) for DaimlerChrysler AG. No holder of
Daimler-Benz Ordinary Shares or Daimler-Benz ADSs will be entitled to receive
fractional DaimlerChrysler Ordinary Shares pursuant to this Section 1.1, and if
any such holder would otherwise be so entitled then he, she or it will receive
cash in lieu of such fractional share, the amount of which shall be determined
in accordance with Section 3.10.
Section 1.2. DAIMLER-BENZ EXCHANGE AGENT. DaimlerChrysler AG shall appoint a
bank or trust company or other independent financial institution reasonably
satisfactory to Daimler-Benz and Chrysler to act as exchange agent for the
Daimler-Benz Exchange Offer (the "Daimler-Benz Exchange Agent"). DaimlerChrysler
AG shall enter into an Exchange Agent Agreement with the Daimler-Benz Exchange
Agent in form and substance reasonably satisfactory to Daimler-Benz and
Chrysler, which agreement shall set forth the duties, responsibilities and
obligations of the Daimler-Benz Exchange Agent consistent with the terms of this
Restated Agreement. The Daimler-Benz Exchange Agent shall accept the
Daimler-Benz Ordinary Shares and Daimler-Benz ADSs tendered pursuant to the
Daimler-Benz Exchange Offer and contribute such Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs upon satisfaction or waiver of the Daimler-Benz Exchange Offer
Conditions to DaimlerChrysler AG in exchange for DaimlerChrysler Ordinary
Shares. Subject to Section 9.16, such exchange shall be effected in accordance
with SectionSection 52 and 183 ET SEQ. (including in particular Section 187) of
the German Stock Corporation Law (AKTIENGESETZ) by registering the contribution
in kind agreement (EINBRINGUNGSVERTRAG) and the increase of the DaimlerChrysler
AG stated share capital with the commercial register (HANDELSREGISTER) for
DaimlerChrysler AG.
Section 1.3. GERMAN EXCHANGE OFFER DOCUMENTS. As soon as practicable prior
to the date that the Daimler-Benz Exchange Offer commences, DaimlerChrysler AG
shall inform all German stock exchanges on which the Daimler-Benz Ordinary
Shares are listed, the German Federal Supervisory Authority for Securities
Trading (BUNDESAUFSICHTSAMT FUR DEN WERTPAPIERHANDEL) and the Executive Office
of the Takeover Commission about the content of the Daimler-Benz Exchange Offer.
Not later than one day prior to the date that the Daimler-Benz Exchange Offer
commences, DaimlerChrysler AG shall issue a combined listing and sales
prospectus pursuant to the German Stock Exchange Law (BORSENGESETZ) and the
German Sales Prospectus Law (WERTPAPIER-VERKAUFSPROSPEKTGESETZ) (the "German
Prospectus"), and on the date that the Daimler-Benz Exchange Offer commences,
DaimlerChrysler AG shall publish an exchange offer pursuant to the German
Takeover Code, each with respect to the Daimler-Benz Exchange Offer (the "German
Exchange Offer Documents"). The German Exchange Offer Documents shall contain
the recommendation of the Board of Management (VORSTAND) of Daimler-Benz that
holders of the Daimler-Benz Ordinary Shares accept the Daimler-Benz Exchange
Offer and tender the Daimler-Benz Ordinary Shares into the Daimler-Benz Exchange
Offer.
Section 1.4. U.S. EXCHANGE DOCUMENTS. (a) As promptly as practicable on the
date of commencement of the Daimler-Benz Exchange Offer, DaimlerChrysler AG
shall file with the U.S. Securities and Exchange Commission ("SEC") a Tender
Offer Statement on Schedule 14D-1 (together with all amendments and supplements
thereto, the "Schedule 14D-1"). The Schedule 14D-1 shall contain or shall
incorporate by reference an offer to purchase containing the information
included or incorporated by reference in the Proxy Statement/Prospectus and the
forms of the related letter of transmittal and all other ancillary offer
documents.
(b) As promptly as practicable on the date of commencement of the
Daimler-Benz Exchange Offer, Daimler-Benz shall file with the SEC a Tender Offer
Solicitation/Recommendation Statement on Schedule 14D-9
A-3
<PAGE>
(together with all amendments and supplements thereto, the "Schedule 14D-9"),
which shall contain the recommendation of the Board of Management (VORSTAND) of
Daimler-Benz that holders of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs
who are U.S. Persons accept the Daimler-Benz Exchange Offer and tender their
Daimler-Benz Ordinary Shares and Daimler-Benz ADSs into the Daimler-Benz
Exchange Offer. The Schedule 14D-1 and the Schedule 14D-9 together with all
amendments and supplements thereto are referred to herein collectively as the
"U.S. Exchange Offer Documents." The German Exchange Offer Documents together
with the U.S. Exchange Offer Documents are collectively referred to hereinafter
as the "Exchange Offer Documents."
Section 1.5. ANTIDILUTION PROTECTION FOR DAIMLER-BENZ EXCHANGE OFFER RATIO.
If, between the date of this Restated Agreement and the Daimler-Benz Exchange
Offer Expiration Date, the outstanding DaimlerChrysler Ordinary Shares,
Daimler-Benz Ordinary Shares or shares of Chrysler Common Stock shall have been
changed into a different number of shares or a different class by reason of any
reclassification, recapitalization, stock split, combination, or exchange of
shares or a stock dividend or dividend payable in any other securities shall be
declared with a record date within such period, or any similar event shall have
occurred, the Daimler-Benz Exchange Offer Ratio shall be appropriately adjusted
to provide to the holders of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs
the same economic effect as contemplated by this Restated Agreement prior to
such event.
Section 1.6. DAIMLERCHRYSLER AG NAME. Unless DaimlerChrysler AG's legally
registered name shall previously have been established as such, promptly
following the consummation of the Daimler-Benz Exchange Offer, DaimlerChrysler
AG, Daimler-Benz and Chrysler shall cause the name of DaimlerChrysler AG to be
changed and legally registered in all appropriate jurisdictions as
"DaimlerChrysler AG."
Section 1.7. CONTINGENT DAIMLER-BENZ EXCHANGE RATIO INCREASE. If, prior to
the Daimler-Benz Exchange Offer Expiration Date, the Minimum Condition (as
defined in clause (1) of Section 1.1) is satisfied, DaimlerChrysler AG shall
issue and exchange 1.005 DaimlerChrysler Ordinary Shares for each Daimler-Benz
Ordinary Share and each Daimler-Benz ADS tendered in the Daimler-Benz Exchange
Offer and the Daimler-Benz Exchange Offer Ratio shall mean 1.005 to 1 for all
purposes in this Restated Agreement.
Section 1.8. OPTION TO ISSUE DAIMLERCHRYSLER AMERICAN DEPOSITARY SHARES. If
for any reason relating to the listing of DaimlerChrysler Ordinary Shares on the
NYSE or to the implementation of procedures for transfer, registration, voting
or payment of dividends with respect to DaimlerChrysler Ordinary Shares in the
United States, Daimler-Benz and Chrysler jointly determine that it is more
practical and desirable from a market point of view for DaimlerChrysler AG to
cause American Depositary Shares ("DaimlerChrysler ADSs") evidenced by American
Depositary Receipts to be issued to the U.S. holders of Daimler-Benz ADSs and
Daimler-Benz Ordinary Shares then DaimlerChrysler AG shall cause DaimlerChrysler
ADSs to be issued to U.S. Persons holding Daimler-Benz ADSs and Daimler-Benz
Ordinary Shares in complete satisfaction of its obligations under this Article
I. If Daimler-Benz and Chrysler make the requisite determination under this
Section then all references in this Article I to DaimlerChrysler Ordinary Shares
issuable to U.S. Persons shall mean DaimlerChrysler ADSs.
ARTICLE II
CHRYSLER MERGER
Section 2.1. FORMATION OF CHRYSLER MERGER SUB. As promptly as possible
following the date hereof, DaimlerChrysler AG shall appoint a United States bank
or trust company or other independent financial institution in the United States
reasonably satisfactory to Daimler-Benz and Chrysler to act as exchange agent
for the U.S. Share Exchange and the delivery of the U.S. Merger Consideration to
former stockholders of Chrysler (the "U.S. Exchange Agent"). Following such
appointment, the U.S. Exchange Agent or Chrysler shall cause to be incorporated
pursuant to the DGCL a corporation which shall be a constituent company in the
Chrysler Merger ("Chrysler Merger Sub"). Daimler-Benz, DaimlerChrysler AG and
Chrysler shall enter into an
A-4
<PAGE>
Exchange Agent Agreement with the U.S. Exchange Agent in form and substance
reasonably satisfactory to Daimler-Benz and Chrysler, which agreement shall set
forth the duties, responsibilities and obligations of the U.S. Exchange Agent
consistent with the terms of this Restated Agreement. Solely to accommodate the
transactions described in this Article II, the U.S. Exchange Agent shall hold
all of the issued and outstanding shares of common stock, par value $.01 per
share, of Chrysler Merger Sub (the "Chrysler Merger Sub Common Stock").
Section 2.2. CHRYSLER MERGER. Upon the terms and subject to the conditions
of this Restated Agreement and in accordance with the DGCL, at the Effective
Time, Chrysler Merger Sub shall be merged with and into Chrysler (the "Chrysler
Merger"), and Chrysler shall be the surviving corporation in the Chrysler Merger
(the "U.S. Surviving Corporation"). The corporate existence of Chrysler, with
all its purposes, rights, privileges, franchises, powers and objects, shall
continue unaffected and unimpaired by the Chrysler Merger and, as the U.S.
Surviving Corporation, it shall be governed by the laws of the State of Delaware
and succeed to all rights, assets, liabilities and obligations of Chrysler
Merger Sub in accordance with Section 259(a) of the DGCL. The separate existence
and corporate organization of Chrysler Merger Sub shall cease at the Effective
Time.
Section 2.3. THE U.S. SHARE EXCHANGE. Upon the terms and subject to the
conditions of this Restated Agreement, as soon as possible after the Effective
Time, DaimlerChrysler AG will issue the U.S. Merger Consideration to the U.S.
Exchange Agent for the account of the former stockholders of Chrysler, and the
U.S. Exchange Agent will contribute, for the account of the former stockholders
of Chrysler, all of the issued and outstanding shares of Surviving Corporation
Common Stock to DaimlerChrysler AG as a transfer in kind (the "U.S. Share
Exchange"). Subject to Section 9.16, such exchange shall be effected in
accordance with SectionSection 52 and 183 ET SEQ. (including in particular
Section 187) of the German Stock Corporation Law (AKTIENGESETZ) by registering
the contribution in kind agreement (EINBRINGUNGSVERTRAG) and the increase of the
DaimlerChrysler AG stated share capital with the commercial register
(HANDELSREGISTER) for DaimlerChrysler AG. At the Effective Time, the obligation
of the parties to effect the U.S. Share Exchange shall be unconditional.
Section 2.4. CONVERSION OF CHRYSLER COMMON STOCK IN THE CHRYSLER MERGER. At
the Effective Time, by virtue of the Chrysler Merger and without any action on
the part of the holder of any share of common stock, par value $1.00 per share,
of Chrysler (including the associated preferred share purchase rights, the
"Chrysler Common Stock"):
(a) The Chrysler Common Stock which is held by Chrysler as treasury stock
(or held by any wholly owned Subsidiary of Chrysler) shall be cancelled and
retired and shall cease to exist, without any conversion thereof, and no payment
shall be made with respect thereto.
(b) Each share of Chrysler Common Stock issued and outstanding immediately
prior to the Effective Time (other than any shares canceled pursuant to Section
2.4(a)) shall be converted into the right to receive, upon surrender of the
certificate formerly representing such share of Chrysler Common Stock pursuant
to Section 2.5, that fraction of a DaimlerChrysler Ordinary Share expressed as a
decimal carried to 4 digits which results from the computation in the Exchange
Ratio Formula. Such decimal fraction of a DaimlerChrysler Ordinary Share is
referred to herein as the "U.S. Exchange Ratio" and the DaimlerChrysler Ordinary
Shares to be issued in the Chrysler Merger are referred to herein as the "U.S.
Merger Consideration." Notwithstanding the foregoing, prior to the delivery of
the DaimlerChrysler Ordinary Shares to the U.S. Exchange Agent pursuant to
Section 2.5 for the account of the former stockholders of Chrysler in the U.S.
Share Exchange, each such stockholder shall, in addition to his, her or its
right to receive such DaimlerChrysler Ordinary Shares, have a continuing
ownership interest in the U.S. Surviving Corporation identical in all respects
to his, her or its ownership interest in Chrysler immediately prior to the
Effective Time, such ownership interest to be extinguished automatically upon
such delivery of DaimlerChrysler Ordinary Shares to the U.S. Exchange Agent.
(c) The Exchange Ratio Formula shall be the following:
<TABLE>
<S> <C> <C>
Exchange Ratio = 103.4929 X (DP X DAP) + SOP
---------------------------
(DAP X DP) X (DAP + SOP)
</TABLE>
A-5
<PAGE>
As used in the Exchange Ratio Formula, the following terms have the
following meaning:
"DAP" refers to Daimler-Benz's adjusted price per Daimler-Benz Ordinary
Share and is herein defined to mean (i) that number of Deutsche Marks equal to
190.8 minus the sum of (A) the per Daimler-Benz Ordinary Share regular annual
dividend in respect of the year 1997 payable on or about May 28, 1998, plus (B)
the per Daimler-Benz Ordinary Share amount of the Special Distribution payable
on or about June 15, 1998, or (ii) in the event that Daimler-Benz fails to pay
its previously announced Special Distribution payable on or about June 15, 1998,
that number of Deutsche Marks equal to 185.09 minus the per Daimler-Benz
Ordinary Share regular annual dividend in respect to the year 1997 payable on or
about May 28, 1998.
"SOP" refers to Daimler-Benz's SCHUTT AUS/HOL ZURUCK share offering proceeds
and is herein defined to mean (i) the aggregate amount of net proceeds,
expressed in Deutsche Marks, received by Daimler-Benz in respect of its global
offering of rights to acquire Daimler-Benz Ordinary Shares and Daimler-Benz
ADSs, which is currently scheduled to become effective on or about June 8, 1998,
and which is described generally in the Registration Statement (File No.
333-8662) filed with the SEC on April 22, 1998 (the "Rights Offering"), divided
by (ii) 516,748,337 if the Rights are not distributed to the holders of the
Notes or 523,299,381 if the Rights are distributed to such holders; PROVIDED
that SOP shall equal 0 if the Rights Offering is canceled or otherwise is not
consummated.
"DP" refers to the Rights Offering discounted price expressed as a
percentage of the then current market price and is herein defined to mean that
decimal fraction carried to four digits determined by dividing (1) the offering
price per new Daimler-Benz Ordinary Share (expressed in Deutsche Marks) in the
Rights Offering by (2) the reported last sale price per Daimler-Benz Ordinary
Share on the FSE, as reported by the FSE, on the last full trading day which
immediately precedes the public announcement of the price at which a holder of a
Right will be entitled to purchase a Daimler-Benz Ordinary Share pursuant to the
Rights Offering; PROVIDED that DP shall equal 1 if the Rights Offering is
canceled or otherwise is not consummated.
(d) Each share of Chrysler Merger Sub Common Stock issued and outstanding
immediately prior to the Effective Time shall continue to be an issued and
outstanding share of common stock, par value $.01 per share, of the U.S.
Surviving Corporation ("Surviving Corporation Common Stock").
No holder of Chrysler Common Stock will be entitled to receive fractional
DaimlerChrysler Ordinary Shares pursuant to this Section 2.4, and if any such
holder would otherwise be so entitled then he, she or it will receive cash in
lieu of such fractional share, the amount of which shall be determined in
accordance with Section 3.10
Section 2.5. EXCHANGE OF SHARES OF CHRYSLER COMMON STOCK.
(a) U.S. EXCHANGE FUND. The aggregate U.S. Merger Consideration transferred
by DaimlerChrysler AG to the U.S. Exchange Agent pursuant to Section 2.3,
together with any dividends or other distributions with respect to
DaimlerChrysler Ordinary Shares to be made pursuant to Section 2.5(c), is
referred to herein as the "U.S. Exchange Fund."
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time, the U.S.
Exchange Agent will mail to each former record holder of shares of Chrysler
Common Stock entitled to receive U.S. Merger Consideration pursuant to Section
2.4(b) a form of letter of transmittal which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of a certificate or certificates formerly representing shares of
Chrysler Common Stock ("Old Chrysler Certificates") to the U.S. Exchange Agent
and instructions for use in effecting the surrender to the U.S. Exchange Agent
of Old Chrysler Certificates in exchange for DaimlerChrysler Ordinary Shares.
The letter of transmittal shall contain such other terms and conditions as
Daimler-Benz and Chrysler reasonably specify. Upon surrender of an Old Chrysler
Certificate to the U.S. Exchange Agent, together with a letter of transmittal
duly executed and completed in accordance with the instructions thereto, and any
other documents reasonably required by the U.S. Exchange Agent or Daimler-Benz
and Chrysler, (i) the holder of such Old Chrysler Certificate shall be entitled
to receive in exchange therefor (x) a certificate registered in the name of such
holder representing the number of whole DaimlerChrysler Ordinary Shares and cash
in lieu of any fractional DaimlerChrysler Ordinary Share into which the
A-6
<PAGE>
shares previously represented by such Old Chrysler Certificate shall have been
converted at the Effective Time and (y) if applicable, a check payable to such
holder representing the payment of any dividends and distributions pursuant to
Section 2.5(c), and (ii) such Old Chrysler Certificate shall forthwith be
cancelled. If any cash is to be paid to, or any certificate representing
DaimlerChrysler Ordinary Shares is to be issued in the name of, a person other
than the person in whose name the Old Chrysler Certificate so surrendered in
exchange therefor is registered, it shall be a condition of the payment or
issuance that the Old Chrysler Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person requesting
such exchange shall pay any transfer or other taxes required by reason of the
payment of cash to, or the issuance of a certificate representing
DaimlerChrysler Ordinary Shares in the name of, a person other than the
registered holder of the Old Chrysler Certificate so surrendered or shall
establish to the satisfaction of the U.S. Exchange Agent and DaimlerChrysler AG
that such tax has been paid or is not applicable. Until surrendered in
accordance with the provisions of this Section 2.5 and subject to the third
sentence of Section 2.4(b), each Old Chrysler Certificate shall, at and after
the Effective Time, represent for all purposes only the right to receive
DaimlerChrysler Ordinary Shares, cash in lieu of any fractional DaimlerChrysler
Ordinary Share and any dividends and distributions as provided in Section
2.5(c), if any.
(c) DIVIDENDS; DISTRIBUTIONS. No dividends or other distributions declared
after the Effective Time on DaimlerChrysler Ordinary Shares and payable to the
holders of record thereof after the Effective Time shall be paid to the holder
of any unsurrendered Old Chrysler Certificates with respect to which the
DaimlerChrysler Ordinary Shares shall have been issued in the Chrysler Merger.
All such dividends or other distributions shall be paid by DaimlerChrysler AG to
the U.S. Exchange Agent (on behalf of holders of unsurrendered Old Chrysler
Certificates) and shall be included in the U.S. Exchange Fund, in each case
until such Old Chrysler Certificates shall be surrendered as provided herein,
but (i) upon such surrender there shall be paid to the person in whose name the
certificates representing such DaimlerChrysler Ordinary Shares shall be issued
and registered the amount of dividends theretofore paid with respect to such
DaimlerChrysler Ordinary Shares as of any date subsequent to the Effective Time,
and (ii) at the appropriate payment date or as soon as practicable thereafter,
there shall be paid to such person the amount of dividends with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such DaimlerChrysler Ordinary Shares, subject
in any case to any applicable abandoned property, escheat and similar laws. No
interest shall be payable with respect to the payment of such dividends on
surrender of outstanding Old Chrysler Certificates.
(d) FINAL SETTLEMENT. From and after the Effective Time, the holders of Old
Chrysler Certificates shall cease to have any rights with respect to such shares
except as otherwise provided herein or by applicable law. All rights to receive
cash, if any, and DaimlerChrysler Ordinary Shares into which shares of Chrysler
Common Stock shall have been converted pursuant to this Article II shall be
deemed to have been paid or issued, as the case may be, in full satisfaction of
all rights pertaining to such shares of Chrysler Common Stock.
(e) TRANSFER BOOKS. After the Effective Time, there shall be no further
registration of transfers on the stock transfer books of the U.S. Surviving
Corporation of shares of Chrysler Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time, Old
Chrysler Certificates are presented to the U.S. Surviving Corporation, they
shall be cancelled and exchanged for cash or certificates representing
DaimlerChrysler Ordinary Shares, or both, in accordance with the procedures set
forth in this Article II.
(f) AFFILIATES LETTER. Notwithstanding anything to the contrary contained
herein, for purposes of qualifying the transactions contemplated hereby for
"pooling-of-interests" accounting treatment under Opinion No. 16 "Business
Combinations" of the Accounting Principles Board of the American Institute of
Certified Public Accountants ("APB No. 16") and applicable SEC rules and
regulations, no DaimlerChrysler Ordinary Shares or cash shall be delivered to a
person who is an affiliate of Chrysler unless such person has executed and
delivered an agreement in the form of Exhibit B-1 or unless Chrysler and
Daimler-Benz shall have determined that the transactions contemplated by this
Restated Agreement will not be accounted for as a "pooling-of-interests" under
US GAAP because of other circumstances.
A-7
<PAGE>
(g) TERMINATION OF U.S. EXCHANGE FUND. Any portion of the U.S. Exchange Fund
that remains undistributed to the holders of the Old Chrysler Certificates one
year after the Effective Time shall be delivered by the U.S. Exchange Agent to a
depositary bank designated by DaimlerChrysler AG, upon demand, whereupon such
depositary bank shall hold the U.S. Exchange Fund on behalf of holders of
unsurrendered Old Chrysler Certificates, and any holders of the Old Chrysler
Certificates who have not theretofore complied with this Section 2.5 shall
thereafter look only to DaimlerChrysler AG or such depositary bank for payment
of their claim for U.S. Merger Consideration and any dividends or distributions
with respect to DaimlerChrysler Ordinary Shares and DaimlerChrysler AG shall
cause the depositary bank to satisfy such claim. Such depositary bank shall
maintain an office in the City of New York where holders of Old Chrysler
Certificates may comply with this Article II.
(h) WITHHOLDING TAXES. Each of the U.S. Exchange Agent and DaimlerChrysler
AG shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Restated Agreement to any holder of Old Chrysler
Certificates such amounts as it is required to deduct and withhold with respect
to the making of such payment under the Code, or any provision of state, local
or non-U.S. tax law. To the extent that amounts are so withheld by the U.S.
Exchange Agent or DaimlerChrysler AG, as the case may be, such withholdings
shall be treated for all purposes of this Restated Agreement as having been paid
to the holder of the Old Chrysler Certificate in respect of which such deduction
and withholding was made by the U.S. Exchange Agent or DaimlerChrysler AG, as
the case may be.
(i) NO LIABILITY. None of Daimler-Benz, Chrysler, the U.S. Surviving
Corporation, DaimlerChrysler AG or the U.S. Exchange Agent shall be liable to
any person in respect of any DaimlerChrysler Ordinary Shares, any dividends or
distributions with respect to DaimlerChrysler Ordinary Shares or any cash from
the U.S. Exchange Fund, in each case delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(j) LOST, STOLEN OR DESTROYED CERTIFICATES. If any Old Chrysler Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Old Chrysler Certificate to be lost,
stolen or destroyed and, if required by the U.S. Surviving Corporation,
DaimlerChrysler AG or the U.S. Exchange Agent, the posting by such person of a
bond in such reasonable amount as such entity may direct as indemnity against
any claim that may be made against it with respect to such Old Chrysler
Certificate, the U.S. Exchange Agent shall issue in exchange for such lost,
stolen or destroyed Old Chrysler Certificate the U.S. Merger Consideration and,
if applicable, any unpaid dividends and distributions on shares of
DaimlerChrysler Ordinary Shares deliverable in respect thereof, in each case
pursuant to this Restated Agreement.
Section 2.6. TREATMENT OF CHRYSLER STOCK PLANS. (a) Subject to the
consummation of the Chrysler Merger, immediately prior to the Effective Time
each outstanding Chrysler Employee Stock Option will become exercisable, and
shall be deemed to be exercised and will then be converted (and such Chrysler
Employee Stock Option will be extinguished) into a right to receive that number
of whole DaimlerChrysler Ordinary Shares and any fractional DaimlerChrysler
Ordinary Share determined in accordance with the following formula:
<TABLE>
<S> <C> <C>
Option Shares X (Closing Value - Exercise Price) X 1.02
--------------------------------------------------------- X .6235
Closing Value
</TABLE>
where "Option Shares" is the number of shares of Chrysler Common Stock subject
to the Chrysler Employee Stock Option; "Closing Value" is the closing per share
price of Chrysler Common Stock as reported in THE WALL STREET JOURNAL for the
next to last trading day prior to the Effective Time; and "Exercise Price" is
the per share exercise price for shares subject to the Chrysler Employee Stock
Option. Each Chrysler Employee Optionholder shall surrender directly to Chrysler
for cancellation and not for conversion pursuant to this Section 2.6 that number
of Chrysler Employee Stock Options necessary to satisfy Chrysler's obligation
under the Code, or any provision of state, local or non-U.S. tax law, to deduct
and withhold in respect of payments made hereunder to such Chrysler Employee
Optionholder. The value of any such Chrysler Employee Stock Option surrendered
for this purpose shall equal Option Shares x (Closing Value -- Exercise Price) x
1.02. As soon as practicable following the Effective Time and immediately prior
to the U.S. Share Exchange, Chrysler shall deliver to the U.S.
A-8
<PAGE>
Exchange Agent the aggregate number of shares of Chrysler Common Stock issuable
pursuant to the deemed exercise of Chrysler Employee Stock Options provided in
this Section 2.6(a) (exclusive of Chrysler Employee Stock Options which have
been cancelled), subject to Section 9.16, for contribution in kind to
DaimlerChrysler AG by the U.S. Exchange Agent on behalf of the Chrysler Employee
Optionholders.
(b) Subject to the consummation of the Chrysler Merger, immediately prior to
the Effective Time each outstanding Chrysler performance share award shall be
deemed vested in accordance with the terms of Chrysler's 1991 Stock Compensation
Plan and shall be settled with that number of whole DaimlerChrysler Ordinary
Shares and any fractional DaimlerChrysler Ordinary Share determined in
accordance with the following formula:
<TABLE>
<S> <C> <C>
Performance Shares X Closing Value X 1.02
------------------------------------------- X .6235
Closing Value
</TABLE>
where "Performance Shares" is the number of shares of Chrysler Common Stock
subject to the performance share award. Each holder of an outstanding Chrysler
performance share award shall surrender directly to Chrysler for cancellation
and not for settlement pursuant to this Section 2.6 that number of Chrysler
performance share awards necessary to satisfy Chrysler's obligation under the
Code, or any provision of state, local or non-U.S. tax law, to deduct and
withhold in respect of payments made hereunder to such Chrysler performance
share award holder. The value of any such Chrysler performance share award
surrendered for this purpose shall equal Performance Shares x Closing Value x
1.02. As soon as practicable following the Effective Time and immediately prior
to the U.S. Share Exchange, Chrysler shall transmit to the U.S. Exchange Agent
the aggregate number of shares of Chrysler Common Stock subject to outstanding
performance share awards (exclusive of performance share awards which have been
cancelled), subject to Section 9.16, for contribution in kind into
DaimlerChrysler AG by the U.S. Exchange Agent on behalf of the holders of
performance share awards.
(c) Subject to the consummation of the Chrysler Merger, immediately prior to
the Effective Time, each outstanding Chrysler stock unit shall be deemed vested
in accordance with the terms of Chrysler's 1996 Non-employee Director Stock Unit
Plan and shall be settled with that number of whole DaimlerChrysler Ordinary
Shares and any fractional DaimlerChrysler Ordinary Share determined in
accordance with the following formula:
<TABLE>
<S> <C> <C>
Closing Value X 1.02
---------------------- X .6235
Closing Value
</TABLE>
As soon as practicable following the Effective Time and immediately prior to the
U.S. Share Exchange, Chrysler shall transmit to the U.S. Exchange Agent the
aggregate number of shares of Chrysler Common Stock subject to outstanding stock
units, subject to Section 9.16, for contribution in kind into DaimlerChrysler AG
by the U.S. Exchange Agent on behalf of the holders of stock units.
(d) Subject to the consummation of the Chrysler Merger, immediately prior to
the Effective Time, each outstanding Chrysler restricted stock unit award shall
be deemed vested in accordance with the terms of Chrysler's 1991 Stock
Compensation Plan and shall be settled with that number of whole DaimlerChrysler
Ordinary Shares and any fractional DaimlerChrysler Ordinary Share determined in
accordance with the following formula:
<TABLE>
<S> <C> <C>
Restricted Stock Units X Closing Value X 1.02
----------------------------------------------- X .6235
Closing Value
</TABLE>
where "Restricted Stock Units" is the number of shares of Chrysler Common Stock
subject to the restricted stock unit award. As soon as practicable following the
Effective Time and immediately prior to the U.S. Share Exchange, Chrysler shall
transmit to the U.S. Exchange Agent the aggregate number of shares of Chrysler
Common Stock subject to outstanding restricted stock unit awards, subject to
Section 9.16, for contribution in
A-9
<PAGE>
kind into DaimlerChrysler AG by the U.S. Exchange Agent on behalf of the holders
of restricted stock unit awards.
(e) To the extent that any person would otherwise be entitled to receive a
fraction of a DaimlerChrysler Ordinary Share pursuant to this Section 2.6, such
fraction shall be treated in accordance with Section 3.10.
(f) As soon as practicable following the Effective Time, DaimlerChrysler AG
shall cause the U.S. Exchange Agent to deliver to the former holders of Chrysler
Employee Stock Options Chrysler performance share awards, Chrysler stock units
and Chrysler restricted stock unit awards, the DaimlerChrysler Ordinary Shares
payable pursuant to this Section 2.6.
(g) DaimlerChrysler AG and Chrysler shall establish a mechanism whereby each
person who is permitted to sell DaimlerChrysler Ordinary Shares received
pursuant to this Section 2.6 without registration under the Securities Act can
sell all or a portion of such DaimlerChrysler Ordinary Shares through open
market sales of such DaimlerChrysler Ordinary Shares to be effected by a broker
selected by Chrysler and reasonably satisfactory to Daimler-Benz. Chrysler
shall, at least ten days prior to the Effective Time, identify the broker to
whom such holders may direct sales orders. DaimlerChrysler AG shall deliver (or
cause the U.S. Exchange Agent to deliver) the aggregate number of
DaimlerChrysler Ordinary Shares subject to all such sales orders received prior
to the Effective Time to the broker as soon as practicable thereafter, but no
later than five business days after the Effective Time and any holder directing
such a sales order shall bear the cost of all expenses, including all
commissions, related thereto.
(h) Chrysler agrees to use its reasonable best efforts, if the transactions
contemplated by this Restated Agreement shall be accounted for as a
"pooling-of-interests" under APB No. 16, to take such actions (including, but
not limited to, adopting all required amendments) with respect to (i) all
compensation and benefit plans and arrangements and (ii) all awards outstanding
under such plans or arrangements, in each case that are required to enable the
transactions contemplated by this Restated Agreement to be accounted for as a
"pooling-of-interests" under APB No. 16.
Section 2.7. REDEMPTION OF CHRYSLER PREFERRED STOCK. Prior to the Effective
Time, Chrysler shall have redeemed all outstanding shares of Series A
Convertible Preferred Stock, par value $1.00 per share, of Chrysler (the
"Chrysler Preferred Stock") in the manner contemplated by and pursuant to the
terms and procedures set forth in the Certificate of Designation, Preferences
and Rights with respect to the Chrysler Preferred Stock.
Section 2.8. ANTIDILUTION PROTECTION FOR U.S. EXCHANGE RATIO. If, between
the date of this Restated Agreement and the Effective Time, the outstanding
DaimlerChrysler Ordinary Shares, Daimler-Benz Ordinary Shares or shares of
Chrysler Common Stock shall have been changed into a different number of shares
or a different class by reason of any reclassification, recapitalization, stock
split, combination or exchange of shares or a stock dividend or dividend payable
in any other securities shall be declared with a record date within such period,
or any similar event shall have occurred, the U.S. Exchange Ratio shall be
appropriately adjusted to provide to the holders of Chrysler Common Stock the
same economic effect as contemplated by this Restated Agreement prior to such
event.
Section 2.9. CHRYSLER MERGER CLOSING. Immediately following consummation
of the Daimler-Benz Exchange Offer, the closing of the Chrysler Merger (the
"Chrysler Merger Closing") shall be held at 10:00 a.m. at the offices of
Debevoise & Plimpton, 875 Third Avenue, New York, New York, or at such other
place and time as the parties shall agree. At the Chrysler Merger Closing, a
certificate of merger shall be executed and acknowledged by Chrysler Merger Sub
and Chrysler and delivered to the Secretary of State of the State of Delaware
for filing as provided by the DGCL and, upon completion of such filing, the
Chrysler Merger shall become effective as set forth herein and in such
certificate. The time the Chrysler Merger becomes effective is referred to
herein as the "Effective Time."
A-10
<PAGE>
Section 2.10. CERTIFICATE OF INCORPORATION. Upon the formation of Chrysler
Merger Sub, its Certificate of Incorporation shall be substantially in the form
of Exhibit C hereto (the "Chrysler Merger Sub Charter"), and such Chrysler
Merger Sub Charter will continue to be in effect immediately prior to the
Effective Time. The Chrysler Merger Sub Charter shall be the Certificate of
Incorporation of the U.S. Surviving Corporation, until the same shall thereafter
be altered, amended or repealed in accordance with the DGCL and such Certificate
of Incorporation.
Section 2.11. BY-LAWS. DaimlerChrysler AG, Daimler-Benz and Chrysler will
take all action necessary to ensure that the By-laws of Chrysler Merger Sub,
substantially in the form of Exhibit D hereto (the "Chrysler Merger Sub
By-laws"), will be in effect immediately prior to the Effective Time. The
Chrysler Merger Sub By-laws shall be the By-laws of the U.S. Surviving
Corporation, until the same shall thereafter be altered, amended or repealed in
accordance with the DGCL, the Amended and Restated Chrysler Merger Sub Charter
and such By-laws.
Section 2.12. OFFICERS. The officers of Chrysler Merger Sub immediately
prior to the Effective Time, who shall be reasonably acceptable to Chrysler and
Daimler-Benz, shall be the officers of the U.S. Surviving Corporation, and such
individuals shall serve until their successors shall have been elected and shall
qualify.
Section 2.13. BOARD OF DIRECTORS. The directors of Chrysler Merger Sub
immediately prior to the Effective Time, who shall be reasonably acceptable to
Chrysler and Daimler-Benz, shall be the directors of the U.S. Surviving
Corporation, and such individuals shall serve until their successors shall have
been elected and shall qualify.
Section 2.14. OPTION TO ISSUE DAIMLERCHRYSLER AMERICAN DEPOSITARY
SHARES. If for any reason relating to the listing of DaimlerChrysler Ordinary
Shares on the NYSE or to the implementation of procedures for transfer,
registration, voting or payment of dividends with respect to DaimlerChrysler
Ordinary Shares in the United States, Daimler-Benz and Chrysler jointly
determine that it is more practical and desirable from a market point of view
for DaimlerChrysler AG to cause DaimlerChrysler ADSs to be issued to the U.S.
holders of Chrysler Common Stock, then DaimlerChrysler AG shall cause
DaimlerChrysler ADSs to be issued to U.S. holders of Chrysler Common Stock in
complete satisfaction of its obligations under this Article II. If Daimler-Benz
and Chrysler make the requisite determination under this Section then all
references in this Article II to DaimlerChrysler Ordinary Shares issuable to
U.S. Persons shall mean DaimlerChrysler ADSs.
ARTICLE III
DAIMLER-BENZ MERGER
Section 3.1. DAIMLER-BENZ MERGER. As soon as practicable following the
date hereof, DaimlerChrysler AG and Daimler-Benz shall enter into a merger
agreement pursuant to Section 5 of the German Transformation Act
(UMWANDLUNGSGESETZ) which shall be in form and substance reasonably satisfactory
to Daimler-Benz and Chrysler (the "German Merger Agreement"). In accordance with
the German Merger Agreement, the German Stock Corporation Law (AKTIENGESETZ) and
the German Transformation Act (UMWANDLUNGSGESETZ) (the "German Stock Corporation
Law (AKTIENGESETZ)" and, together with the German Transformation Act
(UMWANDLUNGSGESETZ), the "GSCL"), Daimler-Benz shall be merged with and into
DaimlerChrysler AG (the "Daimler-Benz Merger"), and DaimlerChrysler AG shall be
the surviving corporation in the Daimler-Benz Merger (the "German Surviving
Corporation"). As a consequence of the Daimler-Benz Merger, the corporate
existence of Daimler-Benz will cease and DaimlerChrysler AG will succeed to all
rights, assets, liabilities and obligations of Daimler-Benz in accordance with
the GSCL.
Section 3.2. DAIMLER-BENZ MERGER CLOSING. As soon as possible following
the U.S. Share Exchange, the Daimler-Benz Merger shall be effected in accordance
with applicable law by registering the merger with the commercial registers
(HANDELSREGISTER) for Daimler-Benz and DaimlerChrysler AG, and the parties shall
make
A-11
<PAGE>
all other filings and recordings required under the GSCL. The time the
Daimler-Benz Merger becomes effective is hereinafter referred to as the "German
Effective Time."
Section 3.3. CONVERSION OF DAIMLER-BENZ ORDINARY SHARES AND DAIMLER-BENZ
ADSS IN THE DAIMLER-BENZ MERGER. At the German Effective Time, by virtue of the
Daimler-Benz Merger and without any action on the part of the holder of any
Daimler-Benz Ordinary Shares, the stockholders of Daimler-Benz (other than
Daimler-Benz or DaimlerChrysler AG) shall automatically become stockholders of
DaimlerChrysler AG. Each Daimler-Benz Ordinary Share shall embody solely the
right to receive that number of DaimlerChrysler Ordinary Shares equal to the
Daimler-Benz Exchange Offer Ratio in exchange for such Daimler-Benz Ordinary
Share, and each Daimler-Benz ADS shall embody solely the right to receive that
number of DaimlerChrysler Ordinary Shares equal to the Daimler-Benz Exchange
Offer Ratio in exchange for such Daimler-Benz ADS (such exchange ratio being
referred to herein as the "Daimler-Benz Merger Exchange Ratio" and the
DaimlerChrysler Ordinary Shares to be issued in the Daimler-Benz Merger are
referred to herein as the "Daimler-Benz Merger Consideration"). No holder of
Daimler-Benz Ordinary Shares or Daimler-Benz ADSs will be entitled to receive
fractional DaimlerChrysler Ordinary Shares pursuant to this Section 3.3, and if
any such holder would otherwise be so entitled then he, she or it will receive
cash in lieu of such fractional share, the amount of which shall be determined
in accordance with Section 3.10.
Section 3.4. EXCHANGE OF DAIMLER-BENZ ADSS.
(a) EXCHANGE PROCEDURES. DaimlerChrysler AG shall instruct the designated
exchange agent for accepting Daimler-Benz ADSs and exchanging therefor the
DaimlerChrysler Ordinary Shares (the "German Exchange Agent") to mail to each
former holder of record of Daimler-Benz ADSs entitled to receive the
Daimler-Benz Merger Consideration pursuant to Section 3.3 a form of letter of
transmittal which shall specify that the delivery shall be effected, and risk of
loss and title shall pass, only upon proper delivery of a certificate or
certificates formerly representing Daimler-Benz ADSs ("Old Daimler-Benz ADRs")
to the German Exchange Agent and instructions for use in effecting the surrender
to the German Exchange Agent of Old Daimler-Benz ADRs in exchange for
DaimlerChrysler Ordinary Shares. The letter of transmittal shall contain such
other terms and conditions as DaimlerChrysler AG specifies. Upon surrender of an
Old Daimler-Benz ADR to the German Exchange Agent, together with a letter of
transmittal duly executed and completed in accordance with the instructions
thereto, and any other documents reasonably required by the German Exchange
Agent or DaimlerChrysler AG, (i) the holder of such Old Daimler-Benz ADR shall
be entitled to receive in exchange therefor (x) a share certificate registered
in the name of such holder representing the number of whole DaimlerChrysler
Ordinary Shares and cash in lieu of any fractional DaimlerChrysler Ordinary
Share into which the shares previously represented by such Old Daimler-Benz ADR
shall have been converted at the German Effective Time and (y) if applicable, a
check payable to such holder representing the payment of any dividends and
distributions pursuant to Section 3.4(b), and (ii) such Old Daimler-Benz ADR
shall forthwith be cancelled. If any cash is to be paid to, or any certificate
representing DaimlerChrysler Ordinary Shares is to be issued in the name of, a
person other than the person in whose name the Old Daimler-Benz ADR so
surrendered in exchange therefor is registered, it shall be a condition of the
payment or issuance that the Old Daimler-Benz ADR so surrendered shall be
properly endorsed or otherwise in proper form for transfer and that the person
requesting such exchange shall pay any transfer or other taxes required by
reason of the payment of cash to, or the issuance of a certificate representing
DaimlerChrysler Ordinary Shares in the name of, a person other than the
registered holder of the Old Daimler-Benz ADR so surrendered or shall establish
to the satisfaction of DaimlerChrysler AG that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this Section
3.4, each Old Daimler-Benz ADR shall, at and after the German Effective Time,
represent for all purposes only the right to receive DaimlerChrysler Ordinary
Shares, cash in lieu of any fractional DaimlerChrysler Ordinary Share and any
dividends and distributions as provided in Section 3.4(b), if any.
(b) DIVIDENDS; DISTRIBUTIONS. No dividends or other distributions declared
after the German Effective Time on DaimlerChrysler Ordinary Shares and payable
to the holders of record thereof after the German Effective Time shall be paid
to the holder of any unsurrendered Old Daimler-Benz ADR with respect to which
the
A-12
<PAGE>
DaimlerChrysler Ordinary Shares shall have been issued in the Daimler-Benz
Merger until such Old Daimler-Benz ADRs shall be surrendered as provided herein,
but (i) upon such surrender there shall be paid to the person in whose name the
certificate representing such DaimlerChrysler Ordinary Shares shall be issued
and registered the amount of dividends theretofore paid with respect to such
whole DaimlerChrysler Ordinary Shares as of any date subsequent to the German
Effective Time, and (ii) at the appropriate payment date or as soon as
practicable thereafter, there shall be paid to such person the amount of
dividends with a record date after the German Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole DaimlerChrysler Ordinary Shares, subject to any applicable abandoned
property, escheat and similar laws. No interest shall be payable with respect to
the payment of such dividends on surrender of outstanding Old Daimler-Benz ADRs.
(c) FINAL SETTLEMENT. From and after the German Effective Time, the holders
of Old Daimler-Benz ADRs shall cease to have any rights with respect to the
Daimler-Benz ADSs evidenced thereby except as otherwise provided herein or by
applicable law. All rights to receive cash, if any, and DaimlerChrysler Ordinary
Shares into which Daimler-Benz ADSs shall have been converted pursuant to this
Article III shall be deemed to have been paid or issued, as the case may be, in
full satisfaction of all rights pertaining to such Daimler-Benz ADSs.
(d) TRANSFER BOOKS. After the German Effective Time, there shall be no
further registration of transfers on the transfer books of the relevant
depositary banks of Daimler-Benz ADSs which were outstanding immediately prior
to the German Effective Time. If, after the German Effective Time, Old
Daimler-Benz ADRs are presented to the relevant depositary, they shall be
cancelled and exchanged for cash or certificates representing DaimlerChrysler
Ordinary Shares, or both, in accordance with the procedures set forth in this
Article III.
(e) TERMINATION OF MERGER EXCHANGE FUND. Any portion of DaimlerChrysler
Ordinary Shares or distributions payable pursuant to Section 3.4(b) that remains
undistributed to the holders of the Old Daimler-Benz ADRs one year after the
German Effective Time shall be delivered to a depositary bank designated by
DaimlerChrysler AG, upon demand by DaimlerChrysler AG, whereupon such depositary
bank shall hold such remaining portion on behalf of holders of unsurrendered Old
Daimler-Benz ADRs, and any holders of the Old Daimler-Benz ADRs who have not
theretofore complied with this Section 3.4 shall thereafter look only to
DaimlerChrysler AG for payment of their claim for the Daimler-Benz Merger
Consideration and any dividends or distributions with respect to DaimlerChrysler
Ordinary Shares. Such depositary bank shall maintain an office in the City of
New York where holders of Old Daimler-Benz ADRs may comply with this Article
III.
Section 3.5. AFFILIATES LETTER. Notwithstanding anything to the contrary
contained herein, for "pooling-of-interests" accounting treatment under APB No.
16 and applicable SEC rules and regulations, no DaimlerChrysler Ordinary Shares
shall be delivered to a person who is an affiliate of Daimler-Benz for purposes
of qualifying the transactions contemplated hereby unless such person has
executed and delivered an agreement in the form of Exhibit B-2 or unless
Chrysler and Daimler-Benz shall have determined that the transactions
contemplated by this Restated Agreement will not be accounted for as a
"pooling-of-interests" under US GAAP because of other circumstances.
Section 3.6. TREATMENT OF DAIMLER-BENZ STOCK PLANS. (a) Upon effectiveness
of the Daimler-Benz Merger, all outstanding Daimler-Benz Employee Stock Options
will become stock options of DaimlerChrysler AG in accordance with Section 23 of
the German Transformation Act (UMWANDLUNGSGESETZ) (or such other instruments as
shall meet the requirements of such Section 23 and shall be agreed to by
Chrysler and Daimler-Benz), and from and after the date of the effectiveness of
the Daimler-Benz Merger shall be convertible into DaimlerChrysler Ordinary
Shares (rather than Daimler-Benz Ordinary Shares) in accordance with their
terms; PROVIDED that the number of whole DaimlerChrysler Ordinary Shares subject
to each such Daimler-Benz Employee Stock Option shall equal the number of
Daimler-Benz Ordinary Shares subject thereto multiplied by the Daimler-Benz
Merger Exchange Ratio and the per share exercise price thereof shall be divided
by the Daimler-Benz Merger Exchange Ratio.
(b) Daimler-Benz agrees to take all actions (including, but not limited to,
adopting all required amendments) with respect to (i) all compensation and
benefit plans and arrangements and (ii) all awards outstanding
A-13
<PAGE>
under such plans or arrangements, in each case that are required to enable the
transactions contemplated by this Restated Agreement to be accounted for as a
"pooling-of-interests" under APB No. 16.
Section 3.7. TREATMENT OF DAIMLER-BENZ NEWS. Upon effectiveness of the
Daimler-Benz Merger, all Warrants which are convertible into newly issued
Daimler-Benz Ordinary Shares will become Warrants of DaimlerChrysler AG in
accordance with Section 23 of the German Transformation Act (UMWANDLUNGSGESETZ)
and, from and after the date of effectiveness of the Daimler-Benz Merger, will
entitle the holder thereof to purchase DaimlerChrysler Ordinary Shares (rather
than Daimler-Benz Ordinary Shares) in accordance with their terms. With respect
to the Warrants which are convertible into outstanding Daimler-Benz Ordinary
Shares, DaimlerChrysler AG and Daimler-Benz will take all actions necessary to
ensure that such Warrants will be convertible, as of the effectiveness of the
Daimler-Benz Merger, into DaimlerChrysler Ordinary Shares (rather than Daimler-
Benz Ordinary Shares) in accordance with the terms of the Warrants and Section
23 of the German Transformation Act (UMWANDLUNGSGESETZ).
Section 3.8. TREATMENT OF DAIMLER-BENZ SUBORDINATED MANDATORY CONVERTIBLE
NOTES. Upon the effectiveness of the Daimler-Benz Merger, the 5 3/4%
Subordinated Mandatory Convertible Notes due June 14, 2002 (the "Notes"),
including Notes represented by American Depositary Notes ("ADNs") and DM Book
Entry Securities ("DM BESs"), issued by Daimler-Benz will become Notes of
DaimlerChrysler AG in accordance with Section 23 of the German Transformation
Act (UMWANDLUNGSGESETZ) and, from and after the date of effectiveness of the
Daimler-Benz Merger, will be convertible into DaimlerChrysler Ordinary Shares
(rather than Daimler-Benz Ordinary Shares) in accordance with their terms.
DaimlerChrysler AG and Daimler-Benz will take all actions necessary to ensure
that the ADNs and DM BESs will be convertible, as of the effectiveness of the
Daimler-Benz Merger, into DaimlerChrysler Ordinary Shares (rather than
Daimler-Benz ADSs) in accordance with their terms and Section 23 of the German
Transformation Act (UMWANDLUNGSGESETZ).
Section 3.9. ANTIDILUTION PROTECTION FOR DAIMLER-BENZ MERGER EXCHANGE
RATIO. If, between the date of this Restated Agreement and the German Effective
Time, the outstanding DaimlerChrysler Ordinary Shares, Daimler-Benz Ordinary
Shares or shares of Chrysler Common Stock shall have been changed into a
different number of shares or a different class by reason of any
reclassification, recapitalization, stock split, combination, or exchange of
shares or a stock dividend or dividend payable in any other securities shall be
declared with a record date within such period, or any similar event shall have
occurred, the Daimler-Benz Merger Exchange Ratio shall be appropriately adjusted
to provide to the holders of Daimler-Benz Ordinary Shares the same economic
effect as contemplated by this Restated Agreement prior to such event.
Section 3.10. TREATMENT OF FRACTIONAL SHARES.
(a) (i) As promptly as practicable following the Effective Time, the U.S.
Exchange Agent will determine the excess of (x) the aggregate number of
DaimlerChrysler Ordinary Shares delivered to the U.S. Exchange Agent over (y)
the aggregate number of whole DaimlerChrysler Ordinary Shares to be distributed
in connection with the Chrysler Merger (such excess being referred to herein as
the "Chrysler Merger Excess Shares"). Following the Effective Time the U.S.
Exchange Agent will, on behalf of the former stockholders of Chrysler, sell the
Chrysler Merger Excess Shares at then-prevailing prices on the New York Stock
Exchange (the "NYSE") in the manner provided in Section 3.10(b);
(ii) As promptly as practicable following the Daimler-Benz Exchange Offer
Expiration Date, the Daimler-Benz Exchange Agent will determine the excess of
(x) the aggregate number of DaimlerChrysler Ordinary Shares delivered to the
Daimler-Benz Exchange Agent over (y) the aggregate number of whole
DaimlerChrysler Ordinary Shares to be distributed in connection with the
Daimler-Benz Exchange Offer (such excess being referred to herein as the
"Daimler-Benz Exchange Offer Excess Shares"). Following the Daimler-Benz
Exchange Offer Expiration Date the Daimler-Benz Exchange Agent will, on behalf
of the former stockholders of Daimler-Benz who tendered their Daimler-Benz
Ordinary Shares or Daimler-Benz ADSs in the Daimler-Benz Exchange Offer, sell
the Daimler-Benz Exchange Offer Excess Shares at then-prevailing prices on the
NYSE or the Frankfurt Stock Exchange (the "FSE") in the manner provided in
3.10(b); and
A-14
<PAGE>
(iii) As promptly as practicable following the German Effective Time, the
German Exchange Agent will determine the excess of (x) the aggregate number of
DaimlerChrysler Ordinary Shares delivered to the German Exchange Agent over (y)
the aggregate number of whole DaimlerChrysler Ordinary Shares to be distributed
in connection with the Daimler-Benz Merger (such excess being referred to herein
as the "Daimler-Benz Merger Excess Shares"). Following the German Effective Time
the German Exchange Agent will, on behalf of the former stockholders of
Daimler-Benz remaining after the Daimler-Benz Exchange Offer, sell the
Daimler-Benz Merger Excess Shares at then-prevailing prices on the NYSE or the
FSE in the manner provided in Section 3.10(b). As used in this Section 3.10,
"Exchange Agent" means the U.S. Exchange Agent, the Daimler-Benz Exchange Agent
or the German Exchange Agent as the context requires. As used in this Section
3.10, "Excess Shares" means the Chrysler Merger Excess Shares, the Daimler-Benz
Exchange Offer Excess Shares or the Daimler-Benz Merger Excess Shares as the
context requires.
(b) The sale of the Excess Shares by the Exchange Agent will be executed on
the NYSE or the FSE, as the case may be, through one or more member firms and
will be executed in round lots to the extent practicable. The Exchange Agent
will use reasonable efforts to complete the sale of the Excess Shares as
promptly following the Effective Time, the Daimler-Benz Exchange Offer
Expiration Date or the German Effective Time, as the case may be, as, in its
sole judgment, is practicable consistent with obtaining the best execution of
such sales in light of prevailing market conditions. Until the net proceeds of
such sale or sales have been distributed to the holders of Chrysler Common
Stock, Daimler-Benz Ordinary Shares or Daimler-Benz ADSs, as the case may be,
the Exchange Agent will hold such proceeds in trust for such holders (the
"Common Shares Trust"). All commissions, transfer taxes and other out-of-pocket
transaction costs incurred in connection with such sale of Excess Shares shall
be paid by Chrysler with respect to the Chrysler Merger Excess Shares and by
DamilerChrysler AG with respect to the Daimler-Benz Exchange Offer Excess Shares
and the Daimler-Benz Merger Excess Shares (and none of these parties shall
directly or indirectly be reimbursed by any other party for such payments). The
Exchange Agent will determine the portion of the Common Shares Trust to which
each holder of Chrysler Common Stock, Daimler-Benz Ordinary Shares or
Daimler-Benz ADSs, as the case may be, is entitled, if any, by multiplying the
amount of the aggregate proceeds comprising the Common Shares Trust by a
fraction, the numerator of which is the amount of the fractional share interest
to which such holder of Chrysler Common Stock, Daimler-Benz Ordinary Shares or
Daimler-Benz ADSs, as the case may be, is entitled (after taking into account
all such shares held at the Effective Time, the Daimler-Benz Exchange Offer
Expiration Date or the German Effective Time, as the case may be, by such
holder) and the denominator of which is the aggregate amount of fractional share
interests to which all holders of Chrysler Common Stock, Daimler-Benz Ordinary
Shares or Daimler-Benz ADSs, as the case may be, are entitled pursuant to the
Chrysler Merger, the Daimler-Benz Exchange Offer or the Daimler-Benz Merger, as
the case may be.
(c) As soon as practicable after the determination of the amount of cash, if
any, to be paid to holders of Chrysler Common Stock, Daimler-Benz Ordinary
Shares or Daimler-Benz ADSs, as the case may be, with respect to fractional
share interests, the Exchange Agent will make available such amounts to such
holders.
Section 3.11. WITHHOLDING TAXES. DaimlerChrysler AG shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Restated Agreement to any holder of Daimler-Benz Ordinary Shares or the Old
Daimler-Benz ADRs such amounts as it is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local or non-U.S. tax law. To the extent that amounts are so withheld by
DaimlerChrysler AG, such withheld amounts shall be treated for all purposes of
this Restated Agreement as having been paid to the holder of Daimler-Benz
Ordinary Shares or the Old Daimler-Benz ADRs in respect of which such deduction
and withholding was made by DaimlerChrysler AG.
Section 3.12. SINGAPORE DEPOSITARY SHARES. Singapore Depositary Shares
representing Daimler-Benz Ordinary Shares shall for all purposes under this
Restated Agreement be treated in the same manner as Daimler-Benz ADSs.
DaimlerChrysler AG and Daimler-Benz shall make appropriate arrangements with the
depositary bank for the Singapore Depositary Shares to fully effect this result.
A-15
<PAGE>
Section 3.13. OPTION TO ISSUE DAIMLERCHRYSLER AMERICAN DEPOSITARY
SHARES. If for any reason relating to the listing of DaimlerChrysler Ordinary
Shares on the NYSE or to the implementation of procedures for transfer,
registration, voting or payments of dividends with respect to DaimlerChrysler
Ordinary Shares in the United States, Daimler-Benz and Chrysler jointly
determine that it is more practical and desirable from a market point of view
for DaimlerChrysler AG to cause DaimlerChrysler ADSs to be issued to the U.S.
holders of Daimler-Benz ADSs and Daimler-Benz Ordinary Shares then
DaimlerChrysler AG shall cause DaimlerChrysler ADSs to be issued to U.S. Persons
holding Daimler-Benz ADSs and Daimler-Benz Ordinary Shares in complete
satisfaction of its obligations under this Article III. If Daimler-Benz and
Chrysler make the requisite determination under this Section then all references
in this Article III to DaimlerChrysler Ordinary Shares issuable to U.S. Persons
shall mean DaimlerChrysler ADSs.
ARTICLE IV
DAIMLERCHRYSLER AG GOVERNANCE AFTER THE EFFECTIVE TIME
Section 4.1. DAIMLERCHRYSLER AG GOVERNANCE AFTER EFFECTIVE
TIME. Daimler-Benz, Chrysler and DaimlerChrysler AG agree that after the
Effective Time, DaimlerChrysler AG shall have a corporate governance structure
reflecting that the transactions contemplated herein are a merger of equals.
Without the intention to interfere with the rights and powers of
DaimlerChrysler's Shareholders meeting, Supervisory Board and the Management
Board (VORSTAND) and subject to Section Section 95 ET SEQ., Section 84 of the
German Stock Corporation Law and Section Section 6 ET SEQ. of the
Co-determination Law of 1976, they will recommend to their respective
shareholders and organizational bodies the following:
(a) DAIMLERCHRYSLER AG ARTICLES OF ASSOCIATION (SATZUNG) AND MANAGEMENT
BOARD (VORSTAND) RULES OF PROCEDURE (GESCHAFTSORDNUNG). The Articles of
Association (SATZUNG) of DaimlerChrysler AG and the Management Board (VORSTAND)
Rules of Procedure (GESCHAFTSORDNUNG) of DaimlerChrysler AG, in each case,
following the Effective Time, shall be in form and substance reasonably
acceptable to Daimler-Benz and Chrysler.
(b) DAIMLERCHRYSLER AG SUPERVISORY BOARD. Until the DaimlerChrysler AG
Supervisory Board has to be composed in accordance with the Co-determination Law
of 1976, the DaimlerChrysler AG Supervisory Board shall be composed of twelve
members representing the shareholders, six of whom shall have been recommended,
immediately prior to the Effective Time, by Daimler-Benz from the then-current
non-employee representative members (ANTEILSEIGNERVERTRETER) of the Supervisory
Board of Daimler-Benz and six of whom shall have been recommended, immediately
prior to the Effective Time, by Chrysler from the then-current outside members
of the Board of Directors of Chrysler. For the period thereafter, the
DaimlerChrysler AG Supervisory Board shall consist of twenty members (Section 7
of the Co-determination Law of 1976); five of the members of the restructured
DaimlerChrysler AG Supervisory Board shall have been recommended by Daimler-Benz
from non-employee representative members (ANTEILSEIGNERVERTRETER) of the
Supervisory Board of Daimler-Benz and five of the members shall have been
recommended by Chrysler from the outside members of the Board of Directors of
Chrysler.
(c) CHAIRMAN OF THE SUPERVISORY BOARD (AUFSICHTSRAT). For a period of not
less than two years following the Effective Time, the current Chairman of
Daimler-Benz's Supervisory Board (AUFSICHTSRAT) shall continue to be Chairman of
the DaimlerChrysler AG Supervisory Board.
(d) COMPOSITION OF DAIMLERCHRYSLER AG MANAGEMENT BOARD (VORSTAND). The
Management Board (VORSTAND) of DaimlerChrysler AG shall consist of 18 members.
In general, 50% of such members shall be those designated by Chrysler, and 50%
of such members shall be those designated by Daimler-Benz, and there will be two
additional members with responsibility for Daimler-Benz's non-automotive
businesses. For three years following the Effective Time, Jurgen E. Schrempp and
Robert J. Eaton shall be the Co-CEOs and Co-Chairmen (VORSTANDSVORSITZENDE) of
the Management Board (VORSTAND) of DaimlerChrysler AG and members of the Office
of the Chairmen of DaimlerChrysler AG. If any person designated as a member of
the Office of the Chairman or the Management Board of DaimlerChrysler AG ceases
to be a full-time employee of either Chrysler or Daimler-Benz at or before the
Effective Time, Daimler-Benz, in the case of any such employee of Daimler-Benz
on the date hereof or any such employee to be designated by Daimler-Benz, or
Chrysler, in the case of any such
A-16
<PAGE>
employee of Chrysler on the date hereof or any such employee to be designated by
Chrysler, shall designate another person to serve in such person's stead.
Section 4.2. INTEGRATION COMMITTEE. The DaimlerChrysler AG Management
Board (VORSTAND) shall establish an Integration Committee with consultative
function which shall consist of the Co-Chairmen of the Management Board of
DaimlerChrysler AG, who shall also serve as Co-Chairmen of the Integration
Committee, and 12 or more members (including such Co-Chairmen), 50% of which
shall be designated by Chrysler and 50% of which shall be designated by
Daimler-Benz.
Section 4.3. OPERATIONAL HEADQUARTERS. Following the Effective Time,
DaimlerChrysler AG shall maintain two operational headquarters: one located at
the current headquarters of Daimler-Benz, and one located at the current
headquarters of Chrysler.
Section 4.4. LANGUAGE. Following the Effective Time, English shall be the
official language for the management of DaimlerChrysler AG.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Except as set forth in the Daimler-Benz Disclosure Schedule or as disclosed
in the Daimler-Benz Pre-Agreement Filings or as otherwise contemplated by this
Restated Agreement, Daimler-Benz hereby represents and warrants to Chrysler and
except as set forth in the Chrysler Disclosure Schedule or as disclosed in the
Chrysler Pre-Agreement Filings or as otherwise contemplated by this Restated
Agreement, Chrysler hereby represents and warrants to Daimler-Benz, in each case
as set forth in this Article V, with the party making such representations and
warranties being referred to as the "Representing Party." Notwithstanding the
foregoing, any representation or warranty which expressly refers to Daimler-Benz
or Chrysler is being made solely by Daimler-Benz or Chrysler, as the case may
be.
Section 5.1. CORPORATE ORGANIZATION. The Representing Party is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the corporate power and
authority to own, operate and lease all of its properties and assets and to
carry on its business as it is now being conducted or presently proposed to be
conducted, except where the failure to be in good standing would not reasonably
be expected to have a Material Adverse Effect. The Representing Party is duly
qualified to do business and is in good standing (to the extent the concepts of
"qualification to do business" and "good standing" exist) in all jurisdictions
where its ownership, operation or leasing of property or assets or the conduct
of its business requires it to be so qualified, except in such jurisdictions, if
any, where the failure to be so qualified or in good standing would not,
individually or in the aggregate, have a Material Adverse Effect. The
Representing Party, its Subsidiaries and their respective employees hold all
permits, licenses, variances, exemptions, orders, registrations and approvals of
all Government Entities which are required for the operation of the businesses
of the Representing Party and its Subsidiaries as currently conducted (the
"Company Permits"), except where the failure to have any such Company Permits
individually or in the aggregate would not have a Material Adverse Effect.
Chrysler has made available to Daimler-Benz true and complete copies of its
Certificate of Incorporation and By-Laws and Daimler-Benz has made available to
Chrysler a true and complete copy of its Memorandum and Articles of Association
(SATZUNG), Management Board (VORSTAND) Rules of Procedure (GESCHAFTSORDNUNG) and
English translations thereof.
Section 5.2. SUBSIDIARIES. (a) Each Subsidiary of the Representing Party
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, has the corporate power and authority
to own, operate or lease all of its properties and assets and to carry on its
business as it is now being conducted or presently proposed to be conducted and
is duly qualified to do business and is in good standing (to the extent the
concepts of "qualification to do business" and "good standing" exist) in each
jurisdiction where its ownership, operation, or leasing of property or the
conduct of its business requires such qualification, except in such
jurisdictions, if any, where the failure to be so organized, existing, in good
standing or qualified would not have a Material Adverse Effect. Each
Representing Party has made available to
A-17
<PAGE>
the other Representing Party a copy of the certificate of incorporation,
by-laws, Memorandum and Articles of Association (SATZUNG), Management Board
(VORSTAND) Rules of Procedure (GESCHAFTSORDNUNG) or other similar documents for
each of its Significant Subsidiaries.
(b) Each Representing Party is, directly or indirectly, the record and
beneficial owner of approximately that percentage of the outstanding shares of
capital stock of each of its Significant Subsidiaries which is set forth
opposite the name of each such Significant Subsidiary in Section 5.2(b) of the
Representing Party's Disclosure Schedule. There are no outstanding (i)
securities of the Representing Party or any of its Significant Subsidiaries
convertible into or exchangeable or exercisable for shares of capital stock or
other voting securities or ownership interests in any of the Representing
Party's Significant Subsidiaries, (ii) warrants, calls, options or other rights
to acquire from the Representing Party or any of its Significant Subsidiaries,
or any obligations of the Representing Party or any of its Significant
Subsidiaries to issue, any capital stock, voting securities or other ownership
interests in, or any securities convertible into or exchangeable or exercisable
for, any capital stock, voting securities or ownership interests in any of the
Representing Party's Significant Subsidiaries, or (iii) obligations of the
Representing Party or any of its Significant Subsidiaries to repurchase, redeem
or otherwise acquire any such outstanding securities of the Representing Party's
Significant Subsidiaries or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities. All of the outstanding shares of capital
stock of each of the Representing Party's Significant Subsidiaries have been
validly issued and are fully paid, non-assessable and free of preemptive rights,
and the shares owned, directly or indirectly, by such Representing Party are
owned free and clear of all Encumbrances, except for such Encumbrances which
would not, individually or in the aggregate, have a Material Adverse Effect.
Section 5.3. CAPITAL STOCK. Section 5.3(a) of the Representing Party's
Disclosure Schedule sets forth as of April 30, 1998:
(i) the number of authorized shares of each class or series of capital
stock of the Representing Party;
(ii) the number of shares of each class or series of capital stock of the
Representing Party which are issued and outstanding;
(iii) the number of shares of each class or series of capital stock which
are held in the treasury of such Representing Party;
(iv) the number of shares of each class or series of capital stock of the
Representing Party which are reserved for issuance, indicating each
particular reservation; and
(v) the aggregate number of shares of each class or series of capital stock
subject to employee stock options or other rights to purchase or receive
capital stock granted under such Representing Party's stock option or
other stock based employee or non-employee director benefit plans.
(b) Promptly following the date hereof, the Representing Party shall furnish
a supplement to its Disclosure Schedule setting forth as of a date within 30
days preceding the date of this Restated Agreement the number of shares of each
class or series of capital stock of such Representing Party which are subject to
employee stock options or other rights to purchase or receive capital stock
granted under such Representing Party's stock option or other stock based
employee benefit plans, indicating the name of the plan, identifying the
employee or director by number (not by name), the date of grant and the exercise
price thereof.
(c) There are no authorized, issued, reserved for issuance or outstanding
(i) shares of capital stock or voting securities of the Representing Party, (ii)
securities of the Representing Party convertible into or exchangeable for shares
of capital stock or voting securities of the Representing Party, (iii) warrants,
calls, options or other rights to acquire from the Representing Party or any of
its Subsidiaries, or any obligation of the Representing Party or any of its
Subsidiaries to issue, any shares of capital stock or voting securities or
securities convertible into or exchangeable or exercisable for capital stock or
voting securities of the Representing Party, and (iv) there are no outstanding
obligations of the Representing Party to repurchase, redeem or otherwise acquire
any such securities or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities.
A-18
<PAGE>
Section 5.4. AUTHORITY. The Representing Party has the corporate power and
authority to enter into this Restated Agreement and to carry out its obligations
hereunder. The execution, delivery and performance of this Restated Agreement by
Chrysler and the consummation by Chrysler of the transactions contemplated
hereby have been duly authorized by the Board of Directors of Chrysler, and,
except for the Chrysler Stockholder Approval, no other corporate action on the
part of Chrysler is necessary to authorize this Restated Agreement or the
transactions contemplated hereby. The execution, delivery and performance of
this Restated Agreement by Daimler-Benz, including the consummation by
Daimler-Benz of the transactions contemplated hereby, have been duly authorized
by the Management Board (VORSTAND) of Daimler-Benz, and, except for the approval
of the Supervisory Board (AUFSICHTSRAT) of Daimler-Benz and the Daimler-Benz
Stockholder Approval, no other corporate action on the part of Daimler-Benz is
necessary to authorize this Restated Agreement or the transactions contemplated
hereby. This Restated Agreement has been duly and validly executed and delivered
by the Representing Party and (assuming this Restated Agreement constitutes a
valid and binding obligation of the other Representing Party and of
DaimlerChrysler AG and assuming the Supervisory Board (AUFSICHTSRAT) approval
referred to in the preceding sentence) is a valid and binding agreement of the
Representing Party, enforceable against such Representing Party in accordance
with its terms.
Section 5.5. CONSENTS AND APPROVALS; NO VIOLATION. (a) Except where the
failure to make any filing with, or to obtain any permit, authorization, consent
or approval of, any Governmental Entity would not prevent or materially delay
the consummation of the transactions contemplated hereby or otherwise prevent
the Representing Party from performing in all material respects its obligations
under this Restated Agreement, or would not individually or in the aggregate
have a Material Adverse Effect, no filing with, and no permit, authorization,
consent or approval of, any Governmental Entity is necessary for the execution,
delivery and performance of this Restated Agreement by the Representing Party
and the consummation by such Representing Party of the transactions contemplated
hereby.
(b) Neither the execution, delivery or performance of this Restated
Agreement by the Representing Party nor the consummation by such Representing
Party of the transactions contemplated hereby, will (i) violate or conflict with
any provision of the certificate of incorporation, Memorandum and Articles of
Association (SATZUNG), the Management Board (VORSTAND) Rules of Procedure
(GESCHAFTSORDNUNG) or by-laws or other similar governing documents of the
Representing Party or any of its Subsidiaries, (ii) 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, cancellation, vesting,
payment, exercise, acceleration, suspension or revocation) under any of the
provisions of any note, bond, mortgage, deed of trust, security interest,
indenture, license, contract, agreement, plan or other instrument or obligation
to which the Representing Party or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound, (iii)
violate any order, writ, injunction, decree, judgment, statute, rule or
regulation applicable to the Representing Party or its Subsidiaries or any of
their respective properties or assets, (iv) result in the creation or imposition
of any Encumbrance on any asset of the Representing Party or any of its
Subsidiaries, or (v) cause the suspension or revocation of any permit, license,
governmental authorization, consent or approval necessary for the Representing
Party or any of its Subsidiaries to conduct its business as currently conducted,
except in the case of clauses (ii), (iii), (iv) and (v) for violations,
breaches, defaults, terminations, cancellations, accelerations, creations,
impositions, suspensions or revocations which would not or would not be
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect or prevent the consummation of the transactions contemplated hereby.
Section 5.6. FINANCIAL STATEMENTS; SEC FILINGS. (a) The consolidated
balance sheets of the Representing Party and its consolidated Subsidiaries as of
December 31, 1996 and December 31, 1997, and the related consolidated statements
of earnings cash flows for each of the two fiscal years ended December 31, 1997
and 1996, incorporated by reference in the Annual Reports on Form 10-K in the
case of Chrysler and the Annual Reports on Form 20-F in the case of Daimler-Benz
for the fiscal years ended December 31, 1997 and 1996, respectively, as filed
with the SEC, and the unaudited consolidated balance sheet of Chrysler as of
March 30, 1997, and the related unaudited consolidated statements of income and
cash flows for the three-month period then ended included in the Quarterly
Report on Form 10-Q of Chrysler for the quarterly period ended March 30, 1997,
as filed with the SEC, copies of all of which have been made available by each
Representing Party to the
A-19
<PAGE>
other (collectively, the "Representing Party's Financial Statements"), complied
as to form, as of their respective dates of filing with the SEC, in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with US GAAP applied on a consistent basis, except as reflected in the
Representing Party Financial Statements, and present fairly the consolidated
financial position of the Representing Party and its consolidated Subsidiaries
at the dates and the consolidated results of operations of the Representing
Party and its Subsidiaries for the periods stated therein subject, in the case
of unaudited interim statements, to normal year-end adjustments. The
Representing Party Financial Statements referred to in this Restated Agreement
shall be deemed to include any notes to such financial statements.
(b) Since January 1, 1996, each Representing Party and its Subsidiaries that
is required to make filings under the Securities Act of 1933, as amended (the
"Securities Act"), or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), has filed with the SEC all forms, reports and documents
required to be filed by it pursuant to the Securities Act and the Exchange Act,
all of which, as of their respective filing dates, complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act. Each Representing Party has heretofore made available to the other a true
and complete copy of each final prospectus and definitive proxy statement filed
by it or any of its Subsidiaries with the SEC since January 1, 1996, and each
report filed by it or any of its Subsidiaries with the SEC since January 1, 1996
(the documents referred to in clauses (i) and (ii) being hereinafter referred to
as the "Representing Party's Filings" and such of the Representing Party's
Filings as have been filed on or before the date hereof being referred to as the
"Representing Party's Pre-Agreement Filings."). None of the Representing Party's
Pre-Agreement Filings as of the respective dates on which they were filed with
the SEC contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
Section 5.7. ABSENCE OF CHANGES. Except as disclosed in the Representing
Party's Pre-Agreement Filings and except as contemplated by this Restated
Agreement, since the date of the Representing Party's latest financial
statements included in such Representing Party's Pre-Agreement Filings, the
Representing Party and its Subsidiaries have conducted their respective
businesses in the ordinary course consistent with past practice and there has
not been:
(a) any Material Adverse Effect;
(b) any material change in the method of accounting or accounting practice
of the Representing Party and its Subsidiaries, other than changes required by
US GAAP;
(c) any direct or indirect redemption, purchase or other acquisition of any
shares of capital stock of the Representing Party or any declaration, setting
aside or payment of any dividend or other distribution (whether in cash, stock
or property) in respect of such capital stock, other than regular quarterly cash
dividends in the case of Chrysler and regular annual cash dividends in the case
of Daimler-Benz;
(d) (i) any increase in the compensation payable or to become payable by the
Representing Party or any of its Subsidiaries to any of their respective
officers or employees, other than increases in the ordinary course of business
and substantially consistent with past practice, increases required by union
contracts and increases specifically approved in writing by the other
Representing Party or (ii) any increase or modification in any bonus, pension,
insurance or other employee benefit, plan, payment or arrangement made to, for
or with respect to employees not in the ordinary course of business and
consistent with past practice or (iii) entry into or amendment of any employment
agreement or other employment arrangement with any employee of the Representing
Party or any of its Subsidiaries which employment agreement or amendment
provides or may provide compensation and benefits in excess of $1,000,000 to any
individual in any 12-month period; or
(e) any issuance of shares of capital stock other than pursuant to currently
outstanding stock options or other similar stock based employee benefit awards.
A-20
<PAGE>
Section 5.8. ABSENCE OF UNDISCLOSED LIABILITIES. There are no liabilities
of the Representing Party or any of its Subsidiaries of any kind whatsoever,
whether or not accrued and whether or not contingent or absolute, determined or
determinable, that are material to such Representing Party and its Subsidiaries
taken as a whole, other than (a) liabilities disclosed or provided for in such
Representing Party's Financial Statements, (b) liabilities disclosed in the
Representing Party's Filings or disclosed as liabilities on the Representing
Party's Disclosure Schedule, (c) liabilities incurred on behalf of the
Representing Party in connection with this Restated Agreement and the
transactions contemplated hereby, (d) liabilities not required to be disclosed
under US GAAP, and (e) liabilities incurred in the ordinary course of business
consistent with past practice since the date of the Representing Party's latest
financial statements included in such Representing Party's Pre-Agreement
Filings, none of which, either individually or in the aggregate, are reasonably
likely to have a Material Adverse Effect.
Section 5.9. LITIGATION. There are no claims, actions, suits, proceedings
or investigations pending or, to the knowledge of the Representing Party,
threatened against such Representing Party or any of its Subsidiaries or any of
their respective assets before any Governmental Entity which, individually or in
the aggregate, have a reasonable likelihood of resulting in a Material Adverse
Effect. Neither the Representing Party nor any of its Subsidiaries is subject to
any outstanding order, writ, injunction or decree which reasonably has had or
could be expected to have a Material Adverse Effect.
Section 5.10. TAXES. (a) The Representing Party and each of its Subsidiaries
have timely filed or caused to be filed (or there has been timely filed on their
behalf) or will timely file or cause to be filed all income Tax Returns and all
other material Tax Returns required by applicable law to be filed on or prior to
the date hereof, or requests for extensions to file such Tax Returns have been
filed, granted and have not expired, except to the extent that such failures to
file or to have extensions granted that remain in effect individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect.
All such Tax Returns are complete and accurate in all material respects, except
to the extent that such failures to be complete or accurate individually or in
the aggregate would not reasonably be expected to have a Material Adverse
Effect. The Representing Party and each of its Subsidiaries have paid (or there
has been paid on their behalf) all Taxes shown as due on such Tax Returns, and
the most recent Representing Party's Financial Statements contained in the
Representing Party's Filings reflect an adequate reserve in accordance with US
GAAP for all Taxes payable by the Representing Party and its Subsidiaries for
all taxable periods and portions thereof accrued through the date of such
financial statements, except for inadequately reserved Taxes that individually
or in the aggregate would not reasonably be expected to have a Material Adverse
Effect. No deficiencies for any Tax have been proposed in writing, asserted or
assessed, in each case by any taxing authority, against the Representing Party
or any of its Subsidiaries for which there are not adequate reserves, except for
deficiencies that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect.
(b) Except as contemplated by Sections 2.6, 3.6 and 8.2 of this Restated
Agreement, any amount or other entitlement that could be received (whether in
cash or property or the vesting of property) as a result of any of the
transactions contemplated by this Restated Agreement by any employee, officer or
director of Chrysler or any of its affiliates who is a "disqualified individual"
(as such term is defined in proposed Treasury Regulation Section 1.280G-1) under
any employee benefit plan or other compensation arrangement currently in effect
would not be characterized as an "excess parachute payment" or a "parachute
payment" (as such terms are defined in Section 280G(b)(1) of the Code).
Section 5.11. EMPLOYEE BENEFIT PLANS. (a) As soon as practicable (but in any
event within 30 business days) following the date hereof, each Representing
Party shall provide the other with a true and complete list of each material
deferred compensation, incentive compensation, stock purchase, stock option and
other equity compensation plan, program, agreement or arrangement; each material
severance or termination pay, medical, surgical, hospitalization, life insurance
and other "welfare" plan, fund or program (within the meaning of Section 3(1) of
ERISA); each material profit-sharing, stock bonus or other "pension" plan, fund
or program (within the meaning of Section 3(2) of ERISA); each material
employment, termination or severance agreement; and each other material employee
benefit plan, fund, program, agreement or arrangement, in each case that is
A-21
<PAGE>
sponsored, maintained or contributed to or required to be contributed to by the
Representing Party or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), that together with the Representing Party would be deemed a
"single employer" within the meaning of Section 4001(b) of ERISA, or to which
the Representing Party or an ERISA Affiliate is a party, whether written or
oral, for the benefit of any employee or former employee of the Representing
Party or any of the Representing Party's Subsidiaries and whether or not subject
to ERISA (with respect to a Representing Party, the "Plans").
(b) Each Plan has been administered and operated in compliance with its
terms and applicable law in all material respects, including, without
limitation, in accordance with the Code and ERISA and the comparable provisions
of any foreign law.
(c) There are no liabilities of the Representing Party or any ERISA
Affiliate with respect to any Plan, other than (i) liabilities disclosed or
provided for in such Representing Party's Financial Statements and (ii)
liabilities none of which, either individually or in the aggregate, are
reasonably likely to have a Material Adverse Effect.
Section 5.12. LABOR AND EMPLOYMENT MATTERS. (a) Except as contemplated by
Sections 2.6, 3.6 and 8.2 of this Restated Agreement and except for employment
agreements and other arrangements which do not require the payment of more than
$200,000 per person, as soon as practicable (but in any event within 30 business
days) following the date hereof, each Representing Party shall provide the other
with a true and complete list of each employment agreement or any other
arrangement or understanding with any employee that provides for the payment of
any consideration (including severance pay) by such Representing Party or any of
its Subsidiaries to such person as a result of the consummation of any of the
transactions contemplated by this Restated Agreement, either alone or in
conjunction with the termination of such person's employment.
(b) (i) Except as disclosed by a Representing Party in writing as soon as
practicable (but in any event within 30 business days) following the date
hereof, neither the Representing Party nor any of its Subsidiaries is a party
to, or bound by, any material collective bargaining agreement or other material
contract, agreement, arrangement or understanding with a labor union or labor
organization; (ii) except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, there is no (1) unfair
labor practice, labor dispute (other than routine individual grievances) or
labor arbitration proceeding pending or, to the knowledge of the Representing
Party, threatened against the Representing Party or its Subsidiaries; (2)
activity or proceeding by a labor union or representative thereof to organize
any employees of the Representing Party or any of its Subsidiaries; or (3)
lockout, strike, slowdown, work stoppage or threat thereof by or with respect to
such employees; and (iii) since December 31, 1997, there has not been any
adoption or amendment in any material respect by the Representing Party or any
of its Subsidiaries of any material collective bargaining agreement or other
contract, agreement, arrangement or understanding with a labor union or labor
organization. Each of the Representing Party and its Subsidiaries is in
compliance with all laws regarding employment, employment practices, terms and
conditions of employment and wages, except for such noncompliance that
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect.
Section 5.13. INFORMATION PROVIDED BY REPRESENTING PARTY. None of the
information provided or to be provided by the Representing Party specifically
for inclusion or incorporation by reference in (a) the F-4 Registration
Statement will at the date the F-4 Registration Statement is declared effective
by the SEC contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, (b) the Proxy Statement/Prospectus will, at the date the Proxy
Statement/Prospectus is first mailed to the Representing Party's stockholders,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, (c) the Exchange Offer Documents will, at the time of commencement
of the Daimler-Benz Exchange Offer or at the time of the expiration date of the
Daimler-Benz Exchange Offer, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading, or (d) the merger report to be prepared pursuant
to Section 8 of the German
A-22
<PAGE>
Transformation Act (UMWANDLUNGSGESETZ) in connection with the Daimler-Benz
Merger will, at the time the merger report is made available to the stockholders
of Daimler-Benz in connection with the Daimler-Benz Stockholders Meeting,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, no representation or warranty is made
by a Representing Party with respect to any statements made in the F-4
Registration Statement, the Proxy Statement/Prospectus or the Exchange Offer
Documents based on information provided by or on behalf of the other
Representing Party for inclusion or incorporation by reference in such documents
or with respect to information incorporated by reference in such documents from
any of the other Representing Party's Filings. Daimler-Benz represents and
warrants to Chrysler that the F-4 Registration Statement and the Exchange Offer
Documents will comply as to form with all applicable provisions of law. Chrysler
represents and warrants to Daimler-Benz that the Proxy Statement/Prospectus will
comply as to form with all applicable provisions of law.
Section 5.14. OWNERSHIP OF CAPITAL STOCK. To the knowledge of the
Representing Party, neither the Representing Party nor any of its affiliates
beneficially owns, directly or indirectly, any capital stock of the other
Representing Party or is a party to any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any capital stock
of the other Representing Party.
Section 5.15. VOTING REQUIREMENTS. (a) Chrysler represents and warrants to
Daimler-Benz that the affirmative vote at the Chrysler Stockholders Meeting,
which shall become effective upon consummation of the Daimler-Benz Exchange
Offer (the "Chrysler Stockholder Approval"), of the holders of a majority of all
outstanding shares of Chrysler Common Stock is the only vote of holders of any
class or series of Chrysler capital stock necessary to approve and adopt this
Restated Agreement and the transactions contemplated hereby, including the
Chrysler Merger.
(b) Daimler-Benz represents and warrants to Chrysler that the affirmative
votes at the Daimler-Benz Stockholders Meeting (the "Daimler-Benz Stockholder
Approval") of the holders of 75% of the Daimler-Benz Ordinary Shares represented
at the Daimler-Benz Stockholders Meeting to approve and adopt (i) this Restated
Agreement and the transactions contemplated hereby, including the Daimler-Benz
Exchange Offer, and (ii) the Daimler-Benz Merger are the only votes of the
holders of any class or series of Daimler-Benz capital stock necessary for the
consummation of the transactions contemplated by this Restated Agreement.
Section 5.16. ACCOUNTING MATTERS. To its knowledge neither the Representing
Party nor any of its affiliates (as such term is used in Section 9.10) has taken
or agreed to take any action that would prevent the transactions contemplated by
this Restated Agreement from being accounted for as a "pooling-of-interests"
under APB No. 16 and the Representing Party has no reason to believe that such
transactions will not qualify for "pooling-of-interests" accounting treatment
under APB No. 16.
Section 5.17. OPINION OF FINANCIAL ADVISORS. Chrysler represents and
warrants to Daimler-Benz that Chrysler has received the opinion of CSFB, to the
effect that, as of May 7, 1998, the U.S. Exchange Ratio is fair from a financial
point of view to the holders of shares of Chrysler Common Stock (other than
Daimler-Benz and its affiliates). Daimler-Benz represents and warrants to
Chrysler that Daimler-Benz has received the opinion of Goldman Sachs, to the
effect that, as of May 7, 1998, the Daimler-Benz Exchange Ratio pursuant to this
Restated Agreement is fair from a financial point of view to the holders of
Daimler-Benz Ordinary Shares. For purposes of the opinion as expressed in this
Restated Agreement, the term "Daimler-Benz Exchange Ratio" means the
Daimler-Benz Exchange Offer Ratio and the Daimler-Benz Merger Exchange Ratio,
collectively, after taking into account the Chrysler Merger.
Section 5.18. FINDERS AND ADVISORS. Except for Goldman Sachs and Deutsche
Bank AG, whose fees shall be the sole responsibility of Daimler-Benz, and CSFB,
whose fees shall be the sole responsibility of Chrysler, no financial advisor,
broker, agent or finder has been retained by either Representing Party in
connection with this Restated Agreement or any transaction contemplated hereby,
and no such financial advisor, broker, agent or finder is entitled to any fee or
other compensation on account of this Restated Agreement or any transaction
contemplated hereby.
A-23
<PAGE>
Section 5.19. STATE TAKEOVER STATUTES; STOCKHOLDER RIGHTS PLAN. (a) Chrysler
represents and warrants to Daimler-Benz that its Board of Directors has taken
all action necessary to ensure that Section 203 of the DGCL does not apply to
this Restated Agreement and the transactions contemplated hereby.
(b) Chrysler represents and warrants to Daimler-Benz that its Board of
Directors has amended the Rights Agreement, dated as of February 5, 1998,
between Chrysler and First Chicago Trust Company of New York (the "Chrysler
Rights Agreement") to render it inapplicable to the transactions contemplated by
this Restated Agreement.
ARTICLE VI
DAIMLERCHRYSLER AG REPRESENTATIONS AND WARRANTIES
DaimlerChrysler AG represents and warrants to Chrysler as follows:
Section 6.1. CORPORATE ORGANIZATION. DaimlerChrysler AG is an
AKTIENGESELLSCHAFT duly incorporated and validly existing under the laws of the
Federal Republic of Germany and has the corporate power and authority to own,
operate and lease all of its properties and assets and to carry on its business
as it is now being conducted or presently proposed to be conducted.
Section 6.2. CAPITAL STOCK. As of the date hereof, (a) 20,000
DaimlerChrysler Ordinary Shares were issued and outstanding and owned by Sal.
Oppenheim jr. & Cie.; and (b) no other shares of capital stock were issued or
outstanding. Except as set forth in this Section 6.2, (1) there are not issued,
reserved for issuance or outstanding (i) any shares of capital stock or other
voting securities of DaimlerChrysler AG, (ii) any securities of DaimlerChrysler
AG convertible into or exchangeable or exercisable for shares of capital stock
or voting securities of DaimlerChrysler AG, or (iii) any warrants, calls,
options or other rights to acquire from DaimlerChrysler AG, or any obligation of
DaimlerChrysler AG to issue, any capital stock, voting securities or securities
convertible into or exchangeable for or exercisable for capital stock or voting
securities of DaimlerChrysler AG, and (2) there are no outstanding obligations
of DaimlerChrysler AG to repurchase, redeem or otherwise acquire any such
securities or to issue, deliver or sell, or cause to be issued, delivered or
sold, any such securities.
Section 6.3. AUTHORITY. DaimlerChrysler AG has the corporate power and
authority to enter into this Restated Agreement and to carry out its obligations
hereunder. The execution and delivery and, subject to completion of the actions
to be performed pursuant to Section 9.16, the performance of this Restated
Agreement by DaimlerChrysler AG and the consummation by DaimlerChrysler AG of
the transactions contemplated hereby have been duly authorized by the general
meeting of stockholders (HAUPTVERSAMMLUNG) of DaimlerChrysler AG, by the
Supervisory Board (AUFSICHTSRAT) of DaimlerChrysler AG and by the Management
Board (VORSTAND) of DaimlerChrysler AG, and no other corporate action on the
part of DaimlerChrysler AG is necessary to authorize this Restated Agreement or
the transactions contemplated hereby. This Restated Agreement has been duly and
validly executed and delivered by DaimlerChrysler AG and (assuming this Restated
Agreement constitutes a valid and binding obligation of Daimler-Benz and
Chrysler and, upon the actions required by Section 9.16 being taken) is a valid
and binding agreement of DaimlerChrysler AG, enforceable against DaimlerChrysler
AG in accordance with its terms. DaimlerChrysler AG has made available to
Daimler-Benz and Chrysler true and complete copies of its Memorandum and
Articles of Association (SATZUNG) and an English translation thereof.
Section 6.4. CONSENTS AND APPROVALS; NO VIOLATION. (a) Except where the
failure to make any filing with, or to obtain any permit, authorization, consent
or approval of, any Governmental Entity would not prevent or delay the
consummation of the transactions contemplated hereby or otherwise prevent
DaimlerChrysler AG from performing its obligations under this Restated
Agreement, no filing with, and no permit, authorization, consent or approval of,
any Governmental Entity is necessary for the execution, delivery and performance
of this Restated Agreement by DaimlerChrysler AG and the consummation by
DaimlerChrysler AG of the transactions contemplated hereby.
A-24
<PAGE>
(b) Neither the execution, delivery or performance of this Restated
Agreement by DaimlerChrysler AG nor the consummation by DaimlerChrysler AG of
the transactions contemplated hereby, will (i) violate or conflict with any
provision of the Memorandum and Articles of Association (SATZUNG) of
DaimlerChrysler AG, (ii) 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, cancellation, vesting, payment, exercise, acceleration,
suspension or revocation) under any of the provisions of any note, bond,
mortgage, deed of trust, security interest, indenture, license, contract,
agreement, plan or other instrument or obligation to which DaimlerChrysler AG is
a party or by which it or any of its properties or assets may be bound, (iii)
violate any order, writ, injunction, decree, judgment, statute, rule or
regulation applicable to DaimlerChrysler AG or any of its respective properties
or assets, (iv) result in the creation or imposition of any Encumbrance on any
asset of DaimlerChrysler AG, or (v) cause the suspension or revocation of any
permit, license, governmental authorization, consent or approval necessary for
DaimlerChrysler AG to conduct its business as currently conducted.
Section 6.5. INFORMATION PROVIDED BY DAIMLERCHRYSLER AG. None of the
information provided or to be provided by DaimlerChrysler AG specifically for
inclusion or incorporation by reference in (a) the F-4 Registration Statement
will, at the date the F-4 Registration Statement is declared effective by the
SEC, contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, (b) the Proxy Statement/Prospectus will, at the date the Proxy
Statement/Prospectus is first mailed to the Chrysler stockholders, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading, (c) the report
to be prepared pursuant to Section 183(3) of the German Stock Corporation Law
(AKTIENGESETZ) in connection with the U.S. Share Exchange will, at the time of
delivery of the report to the commercial register, and the report to be prepared
pursuant to Section 52(3) of the German Stock Corporation Law (AKTIENGESETZ) in
connection with the U.S. Share Exchange will, at the time of its presentation to
the general meeting of stockholders of DaimlerChrysler AG, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, or (d) the
Exchange Offer Documents will, at the time of commencement of the Daimler-Benz
Exchange Offer or on the Daimler-Benz Exchange Offer Expiration Date, the report
to be prepared pursuant to Section 183(3) of the German Stock Corporation Law
(AKTIENGESETZ) in connection with the German Share Exchange will, at the time of
delivery of the report to the commercial register, and the report to be prepared
pursuant to Section 52(3) of the German Stock Corporation Law (AKTIENGESETZ) in
connection with the German Share Exchange will, at the time of its presentation
to the general meeting of stockholders (HAUPTVERSAMMLUNG) of DaimlerChrysler AG
and at the time of its filing with the commercial register (HANDELSREGISTER),
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. Notwithstanding the foregoing, no representation or warranty is made
by DaimlerChrysler AG with respect to any statements made in the F-4
Registration Statement, the Proxy Statement/Prospectus or the Exchange Offer
Documents based on information provided by or on behalf of Chrysler for
inclusion or incorporation by reference in such documents or with respect to
information incorporated by reference in such documents from any of the
Representing Party's Filings. The F-4 Registration Statement and the Exchange
Offer Documents will comply as to form with all applicable provisions of law.
Section 6.6. OWNERSHIP OF CAPITAL STOCK. To the knowledge of DaimlerChrysler
AG, neither DaimlerChrysler AG nor any of its Subsidiaries beneficially owns,
directly or indirectly, any capital stock of Daimler-Benz or Chrysler or is a
party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any capital stock of Daimler-Benz or
Chrysler, other than as contemplated by this Restated Agreement.
Section 6.7. ACCOUNTING MATTERS. To its knowledge neither DaimlerChrysler AG
nor any of its affiliates (as such term is used in Section 9.10) has taken or
agreed to take any action that would prevent the transactions
A-25
<PAGE>
contemplated by this Restated Agreement from being accounted for as a
"pooling-of-interests" under APB No. 16, and DaimlerChrysler AG has no reason to
believe that such transactions will not qualify for "pooling-of-interests"
accounting treatment under APB No. 16.
Section 6.8. NO PRIOR ACTIVITIES. DaimlerChrysler AG was formed solely for
the purpose of engaging in the transactions contemplated by this Restated
Agreement, has no Subsidiaries and has undertaken no business or activities
other than in connection with entering into this Restated Agreement and engaging
in the transactions contemplated hereby.
ARTICLE VII
CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME
From the date of this Restated Agreement until the Effective Time, unless
the other parties shall agree in writing or except as otherwise contemplated by
this Restated Agreement or Section 7 of the Representing Party's Disclosure
Schedule, each of the parties hereto shall, and shall cause their respective
Subsidiaries to, conduct their respective businesses in the ordinary course
substantially consistent with past practices and shall use all reasonable
efforts to preserve intact their business organizations and relationships with
third parties (including but not limited to their respective relationships with
customers, suppliers, employees and business partners) and to keep available the
services of their present officers and key employees. Without limiting the
generality of the foregoing, except as otherwise contemplated by this Restated
Agreement or except as contemplated by the agenda published for the annual
general meeting of Daimler-Benz, a copy of which has been previously provided by
Daimler-Benz, from the date of this Restated Agreement until the Effective Time,
without the prior written consent of Chrysler, in the case of any action
proposed to be taken by Daimler-Benz or any Subsidiary of Daimler-Benz, or by
Daimler-Benz, in the case of any action proposed to be taken by Chrysler or any
Subsidiary of Chrysler, or by Chrysler and Daimler-Benz, in the case of any
action proposed to be taken by DaimlerChrysler AG (which consent will not be
unreasonably withheld or delayed by any party from whom it is requested):
(a) none of the parties shall, and each shall cause its respective
Significant Subsidiaries not to, adopt or propose any amendment to its
certificate of incorporation, bylaws, Memorandum and Articles of Association
(SATZUNG) or other similar governing documents;
(b) none of the parties shall, and each shall cause its respective
Subsidiaries not to (i) declare, set aside or pay any dividend or other
distribution with respect to any shares of its capital stock, except in the case
of Chrysler for regular quarterly cash dividends on the outstanding shares of
Chrysler Common Stock and in the case of Daimler-Benz for the regular annual
cash dividend on the outstanding Daimler-Benz Ordinary Shares of DM 1.60 per
Ordinary Share, the Special Distribution and the Rights Offering and except for
cash dividends or distributions by a Subsidiary to its parent, (ii) split,
combine or reclassify any of its shares of capital stock, or (iii) issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of such party's or such party's Subsidiary's capital
stock, except for (1) the issuance of shares of Chrysler Common Stock by
Chrysler and Daimler-Benz Ordinary Shares by Daimler-Benz upon conversion of
such party's convertible securities or upon the exercise of stock options or
other rights to acquire such party's capital stock, in each case which
securities, options and rights are outstanding as of the date hereof and such
issuance is made in accordance with the terms of such securities, options and
rights in effect on the date of this Restated Agreement; (2) the grant of not
more than 100,000 options to purchase shares of Chrysler Common Stock in the
ordinary course of business; (3) the issuance of Daimler-Benz Ordinary Shares
and Daimler-Benz ADSs in connection with the Rights Offering; (4) the issuance
of not more than 2 million Daimler-Benz Ordinary Shares pursuant to
Daimler-Benz's Employee Share Purchase Program and (5) the issuance by
Daimler-Benz of up to a maximum of 10,000,000 Daimler-Benz Ordinary Shares
pursuant to The Stock Option Plan of the Daimler-Benz Group (1998);
(c) none of the parties shall, and each shall cause its respective
Subsidiaries not to, repurchase, redeem or otherwise acquire any shares of
capital stock or other equity or equity equivalent securities of, or other
A-26
<PAGE>
ownership interests in, such party or such Subsidiary, except that Chrysler may
redeem the Chrysler Preferred Stock in accordance with Section 2.7;
(d) none of the parties shall, and none of the parties shall permit any of
its Subsidiaries to, issue, deliver, sell, pledge or otherwise encumber or
subject to any Encumbrance any shares of its capital stock, any of its other
voting securities or any of its securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities, except as expressly provided in clause (iii) of
paragraph (b) above and except for the issuance by Chrysler of Chrysler Common
Stock in connection with the Chrysler Stock Issuance as provided in Section 9.3;
(e) none of the parties shall, and none of the parties shall permit any of
its Subsidiaries to, merge or consolidate with any other person or acquire a
material amount of assets of or make a material investment in or otherwise
engage in any similar extraordinary business transaction with any other person,
except for transactions in the automotive or automotive finance businesses in
which the party or its Subsidiaries are currently engaged;
(f) none of the parties shall, and none of the parties shall permit any of
its Subsidiaries to, sell, lease, license or otherwise surrender, relinquish or
dispose of (i) any facility owned or leased by such party or its Subsidiary and
material to such party and its Subsidiaries taken as a whole or (ii) any assets
or property which are material to such party and its Subsidiaries taken as a
whole, except pursuant to existing contracts or commitments (the terms of which
have been disclosed to the other party hereto prior to the date hereof);
(g) none of the parties shall, and none of the parties shall permit any
Subsidiary to, incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for the obligations of any person for borrowed money, except
for indebtedness which will not cause an adverse change in the ratings of the
party's or its Subsidiaries' rated debt securities by Standard & Poor's Ratings
Services and by Moody's Investor Service, Inc. from those in effect as of the
date hereof;
(h) none of the parties shall, and none of the parties shall permit any of
its Subsidiaries to, take any action that would reasonably be expected to cause
(1) the Chrysler Exchange to (a) fail to qualify as a reorganization within the
meaning of Section 368(a) of the Code or (b) when integrated with the
Daimler-Benz Exchange Offer and taking into account the Daimler-Benz Merger,
fail to be treated as a transaction described in Section 351(a) of the Code; (2)
the Daimler-Benz Exchange Offer to (a) when integrated with the Chrysler
Exchange, fail to be treated as a transaction described in Section 351(a) of the
Code or (b) if integrated with the Daimler-Benz Merger, fail to qualify as a
reorganization within the meaning of Section 368(a) of the Code; or (3) the
Daimler-Benz Exchange Offer or the Daimler-Benz Merger to result in the
recognition of any gain or loss by DaimlerChrysler AG, Daimler-Benz or
stockholders of Daimler-Benz under German law;
(i) none of the parties shall, and none of the parties shall permit any of
its Significant Subsidiaries to, take any actions which would, or would be
reasonably likely to, prevent accounting for the transactions contemplated by
this Restated Agreement in accordance with the "pooling of interests" method of
accounting under the requirements of APB No. 16;
(j) none of the parties shall, and none of the parties shall permit any of
its Significant Subsidiaries to, take any action that would cause any of the
representations and warranties set forth in Article V to be untrue or incorrect
in any material respect; and
(k) none of the parties shall, and none of the parties shall permit any of
its Significant Subsidiaries to, authorize, agree or commit to do any of the
foregoing.
A-27
<PAGE>
ARTICLE VIII
EMPLOYEE BENEFIT MATTERS
Section 8.1. DAIMLERCHRYSLER AG RETENTION/PERSONNEL POLICY. In general, and
subject to the specific provisions of this Article VIII, Daimler-Benz, Chrysler
and DaimlerChrysler AG have agreed that, consistent with the practices of
Daimler-Benz and Chrysler, DaimlerChrysler AG will seek to attract and retain
superior quality executive, managerial, technical and administrative personnel
in every market in which it conducts activities and will generally implement
compensation and benefit plans and policies necessary to achieve this objective.
It is the specific intention that DaimlerChrysler AG's compensation and benefit
programs (including stock options) will be competitive with those provided
generally in the U.S. domestic automotive and automotive finance industry and
the German automotive and automotive finance industry, respectively, both with
respect to the type and variety of programs as well as the level of benefits
afforded.
Section 8.2. BENEFITS. (a) For at least two years following the Effective
Time (such period, the "Initial Period"), DaimlerChrysler AG shall provide or
cause to be provided to current and former employees and directors of Chrysler
and its Subsidiaries and Daimler-Benz and its Subsidiaries compensation and
benefits that are at least as favorable in the aggregate as the compensation and
benefits they were entitled to receive immediately prior to the Effective Time
(including, without limitation, benefits pursuant to pension plans, savings
plans, medical plans and programs, lay-off policies, deferred compensation
arrangements and retiree benefit plans, policies and arrangements); PROVIDED
that, with respect to employees who are subject to collective bargaining, all
benefits shall be provided in accordance with the applicable collective
bargaining or other labor agreements. DaimlerChrysler AG shall honor, and shall
cause its Subsidiaries to honor, pursuant to their terms all employee benefit
obligations to current and former employees and directors of Chrysler and
Daimler-Benz.
(b) From and after the Effective Time, DaimlerChrysler AG shall, and shall
cause its Subsidiaries to, recognize service with Chrysler and Chrysler's
Subsidiaries and Daimler-Benz and Daimler-Benz's Subsidiaries prior to the
Effective Time for all purposes (including, without limitation, eligibility to
participate, vesting, benefit accrual, eligibility to commence benefits
(including, without limitation, subsidized early retirement benefits) and
severance) under any benefit plans of DaimlerChrysler AG or its Subsidiaries in
which the particular employee or former employee of Chrysler or Daimler-Benz (or
their respective Subsidiaries) participates; PROVIDED, HOWEVER, that the
foregoing shall not result in any duplication of benefits. From and after the
Effective Time, DaimlerChrysler AG shall, and shall cause its Subsidiaries to,
recognize any and all out-of-pocket expenses of each employee or former employee
of Chrysler and Chrysler's Subsidiaries and Daimler-Benz and Daimler-Benz's
Subsidiaries for purposes of determining such employee's, former employee's,
beneficiary's and dependent's deductible and copayment expenses.
(c) Without limiting the generality of the foregoing, for at least two years
following the Effective Time, DaimlerChrysler AG shall provide or cause to be
provided to retirees and employees of Chrysler and its Subsidiaries and
Daimler-Benz and its Subsidiaries who, as of the Effective Time, have satisfied
the age and service requirements, or are within five years of satisfying the age
and service requirements, for eligibility to receive retiree medical and life
insurance benefits under the benefit plans, policies and arrangements of
Chrysler and its Subsidiaries or Daimler-Benz and its Subsidiaries, as the case
may be (the "Eligible Retirees"), retiree medical and life insurance benefits
that are at least as favorable as the retiree medical and life insurance
benefits provided under such plans, policies and arrangements immediately prior
to the Effective Time. DaimlerChrysler AG shall not, and shall cause its
Subsidiaries not to, amend, modify or terminate any retiree medical and life
insurance benefits provided to Eligible Retirees during any two-year period
after the initial two-year period in a manner that would increase the cost of
such benefits to retirees, their dependents and beneficiaries by more than 20%
during any such two-year period.
Section 8.3. EMPLOYMENT AGREEMENTS. (a) Except as otherwise expressly
provided in this Restated Agreement, from and after the Effective Time,
DaimlerChrysler AG shall honor, and shall cause its Subsidiaries to honor, in
accordance with its terms, each existing employment, severance and termination
agreement between Daimler-Benz or Chrysler or any of their respective
Subsidiaries, and any officer, director or employee of any
A-28
<PAGE>
such company, so long as such agreement shall have been identified to the other
party in accordance with Section 5.11(a) or 5.12 of this Restated Agreement, if
required to be so identified, and to the extent such terms are in effect on the
date hereof. To the extent that any such employment, severance or termination
agreement can be unilaterally amended by the Representing Party, DaimlerChrysler
AG agrees not to amend, and to cause its Subsidiaries not to amend, any such
plan or agreement prior to the second anniversary of the Effective Time in a
manner that will reduce or otherwise impair the benefits that would be payable
to any employee pursuant to such plan or agreement who is covered thereby.
(b) At or prior to the Effective Time, DaimlerChrysler AG shall recommend to
its Supervisory Board (AUFSICHTSRAT) that DaimlerChrysler AG, represented by its
Supervisory Board, enter into employment agreements (DIENSTVERTRAG)
substantially in the form previously provided by Daimler-Benz to Chrysler with
the Daimler-Benz and Chrysler officers identified on Exhibit E.
ARTICLE IX
ADDITIONAL AGREEMENTS
Section 9.1. NO SOLICITATION. (a) Neither party shall, nor shall it permit
any of its Subsidiaries to, nor shall it authorize or permit any of its
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
Subsidiaries to, directly or indirectly through another person, (i) solicit,
initiate or encourage (including by way of furnishing information), or take any
other action designed to facilitate, any inquiries or the making of any proposal
which constitutes a Takeover Proposal or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect to
a Takeover Proposal; PROVIDED, that if the party's Board of Directors (or the
Management Board (VORSTAND) in the case of Daimler-Benz) determines in good
faith, after receiving the advice of outside counsel, that its failure to do so
may result in a breach of its fiduciary duties to its stockholders under
applicable law, such party may, in response to a Takeover Proposal which was not
solicited by it, which did not otherwise result from a breach of this Section
9.1(a) and which is made or received prior to the effectiveness of the Chrysler
Stockholder Approval (in the case of a Takeover Proposal relating to Chrysler)
or the Daimler-Benz Stockholder Approval (in the case of a Takeover Proposal
relating to Daimler-Benz), and subject to providing to the other party prior
written notice of its decision to take such action and of such party's
compliance with Section 9.1(c), (x) furnish information with respect to such
party and its Subsidiaries to any person making a Takeover Proposal pursuant to
a customary confidentiality agreement (as determined by such party after
receiving the advice of its outside counsel) and (y) participate in discussions
or negotiations regarding such Takeover Proposal. Each party shall promptly
notify the other party of any Takeover Proposal (including, without limitation,
the material terms and conditions thereof and the identity of the person making
it) as promptly as practicable after its receipt thereof and shall thereafter
inform the other party of any material change in the status of any discussions
or negotiations with such third party, and any material changes to the terms and
conditions of such Takeover Proposal and shall promptly give the other party a
copy of any business or financial information related to Chrysler or
Daimler-Benz, as the case may be, delivered to such person which has not
previously been reviewed by such other party. For purposes of this Restated
Agreement, "Takeover Proposal" means any BONA FIDE inquiry, proposal or offer
from any person relating to any (1) tender or exchange offer involving 25% or
more of the capital stock of such party, (2) merger, consolidation or other
business combination involving such party or any of its Significant
Subsidiaries, (3) direct or indirect acquisition or purchase of a business that
constitutes 25% or more of the assets of such party and its Subsidiaries, taken
as a whole, or 25% or more of the equity securities of the party, (4)
recapitalization or restructuring of such party or any of its Significant
Subsidiaries, or (5) other transaction similar to any of the foregoing with
respect to such party or any of its Significant Subsidiaries, other than the
transactions contemplated by this Restated Agreement. Effective as of the date
of this Restated Agreement, each party shall immediately terminate any
discussions or negotiations with any other third parties, if any, that may be
currently in progress with respect to any Takeover Proposal and shall request
that all confidential information furnished on behalf of such party to any such
third parties be returned.
A-29
<PAGE>
(b) Except as expressly permitted by this Section 9.1, neither the Board of
Directors of Chrysler or any committee thereof nor Daimler-Benz by its
Management Board (VORSTAND) or any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to the
other party, the approval or recommendation by such Board of Directors or
Management Board (VORSTAND) or any such committee of the transactions
contemplated by this Restated Agreement, (ii) approve or recommend, or propose
publicly to approve or recommend, any Takeover Proposal, or (iii) cause its
company to enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement (each, an "Acquisition Agreement") related
to any Takeover Proposal. Notwithstanding the foregoing, at any time prior to
the effectiveness of the Chrysler Stockholder Approval (in the case of Chrysler)
or the Daimler-Benz Stockholder Approval (in the case of Daimler-Benz), (x) the
Board of Directors of Chrysler, to the extent that it determines in good faith,
after receiving the advice of outside counsel, that its failure to do so may
result in a breach of its fiduciary duties to Chrysler's stockholders under
applicable law, may (subject to this and the following sentences) terminate this
Restated Agreement solely in order to concurrently enter into an Acquisition
Agreement with respect to any Superior Proposal, but only at a time that is
after the third business day following Daimler-Benz's receipt of written notice
advising Daimler-Benz that the Board of Directors of Chrysler is prepared to
accept a Superior Proposal, specifying the material terms and conditions of such
Superior Proposal and identifying the person making such Superior Proposal, and
(y) the Management Board (VORSTAND) of Daimler-Benz, to the extent that it
determines in good faith, after receiving the advice of outside counsel, that
its failure to do so may result in a breach of its fiduciary duties to
Daimler-Benz's stockholders under applicable law, may (subject to this and the
following sentence) terminate this Restated Agreement solely in order to
concurrently enter into an Acquisition Agreement with respect to a Superior
Proposal, but only at a time that is after the third business day following
Chrysler's receipt of written notice advising Chrysler that such Board is
prepared to accept a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal. For purposes of this Restated Agreement, "Superior Proposal"
means any Takeover Proposal on terms that the Board of Directors of Chrysler or
the Management Board (VORSTAND) of Daimler-Benz, as the case may be, determines
in its good faith judgment (after receiving the advice of its financial advisor)
to be a superior financial alternative to that party's stockholders when
compared as a whole with the transactions contemplated by this Restated
Agreement and for which financing, to the extent required, is then committed or
which, in the good faith judgment of such Board after receiving the advice of
its financial advisor, is reasonably likely to be obtained by such third party.
(c) Nothing contained in this Section 9.1 shall prohibit either party from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to its
stockholders if, in the good faith judgment of the Board of Directors of
Chrysler, in the case of Chrysler, or the Management Board (VORSTAND) or the
Supervisory Board (AUFSICHTSRAT) of Daimler-Benz, in the case of Daimler-Benz,
after consultation with outside counsel, failure so to disclose may be
inconsistent with its obligations under applicable law.
Section 9.2. PREPARATION OF THE F-4 REGISTRATION STATEMENT, THE PROXY
STATEMENT/PROSPECTUS AND THE U.S. EXCHANGE OFFER DOCUMENTS; STOCKHOLDERS
MEETINGS. (a) As soon as practicable following the date of this Restated
Agreement, (i) Chrysler, Daimler-Benz and DaimlerChrysler AG shall prepare and
file with the SEC the preliminary Proxy Statement/Prospectus, (ii) Daimler-Benz
and DaimlerChrysler AG shall prepare and file with the SEC the F-4 Registration
Statement, and (iii) Daimler-Benz and DaimlerChrysler AG shall prepare and file
with the SEC the U.S. Exchange Offer Documents. Each of Chrysler, Daimler-Benz
and DaimlerChrysler AG shall use reasonable best efforts to have the F-4
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing. Chrysler shall use reasonable best efforts to
cause the Proxy Statement/Prospectus to be delivered to Chrysler's stockholders,
Daimler-Benz shall use reasonable best efforts to cause the Proxy
Statement/Prospectus to be delivered to Daimler-Benz's stockholders, and
Daimler-Benz and DaimlerChrysler AG shall use reasonable best efforts to cause
the Exchange Offer Documents to be delivered to Daimler-Benz's stockholders
(including the holders of the Daimler-Benz ADRs), in each case as promptly as
practicable after the F-4 Registration Statement is declared effective under the
Securities Act. Daimler-Benz and DaimlerChrysler AG shall also take any action
reasonably required to be taken under any applicable state
A-30
<PAGE>
securities laws in connection with the issuance of DaimlerChrysler Ordinary
Shares in the Daimler-Benz Exchange Offer, the U.S. Share Exchange, the Chrysler
Merger and the Daimler-Benz Merger, and Chrysler shall furnish all information
concerning Chrysler and the holders of Chrysler Common Stock as may be
reasonably requested in connection with any such action. No filing of, or
amendment or supplement to, the F-4 Registration Statement, the Proxy
Statement/Prospectus or the Exchange Offer Documents shall be made by
Daimler-Benz or DaimlerChrysler AG without providing Chrysler the opportunity to
review and comment thereon. Each of Daimler-Benz and DaimlerChrysler AG shall
advise Chrysler, promptly after it receives notice thereof, of the time when the
F-4 Registration Statement has become effective or any supplement or amendment
has been filed, the issuance of any stop order, the suspension of the
qualification of the DaimlerChrysler Ordinary Shares issuable in connection with
the Daimler-Benz Exchange Offer, the U.S. Share Exchange, the Chrysler Merger or
the Daimler-Benz Merger for offering or sale in any jurisdiction, or any request
by the SEC for amendment of the Proxy Statement/Prospectus or the F-4
Registration Statement or comments thereon and responses thereto or requests by
the SEC for additional information. If at any time prior to the Effective Time
any information relating to Chrysler, Daimler-Benz or DaimlerChrysler AG, or any
of their respective affiliates, officers or directors, is discovered by
Chrysler, Daimler-Benz or DaimlerChrysler AG, which should be set forth in an
amendment or supplement to any of the F-4 Registration Statement, the Proxy
Statement/Prospectus or the Exchange Offer Documents, so that any of such
documents would not include any misstatement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party that
discovers such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of Chrysler and Daimler-Benz.
(b) Chrysler shall, as promptly as practicable after the F-4 Registration
Statement is declared effective under the Securities Act, give notice of,
convene and hold a meeting of its stockholders (the "Chrysler Stockholders
Meeting") in accordance with the DGCL for the purpose of obtaining the Chrysler
Stockholder Approval and, subject to its rights to terminate this Restated
Agreement pursuant to Section 11.1(f), shall, through its Board of Directors,
recommend to its stockholders the approval and adoption of this Restated
Agreement, the Chrysler Merger and the other transactions contemplated hereby.
The Chrysler Stockholders Meeting shall be scheduled and, if necessary,
adjourned as appropriate so that the vote necessary to obtain the Chrysler
Stockholder Approval occurs simultaneously with the Daimler-Benz Stockholder
Approval.
(c) Daimler-Benz shall, as promptly as practicable after the F-4
Registration Statement is declared effective under the Securities Act, give
notice of, convene and hold a meeting of its stockholders (the "Daimler-Benz
Stockholders Meeting") in accordance with the GSCL for the purpose of obtaining
the Daimler-Benz Stockholder Approval and, subject to its rights to terminate
this Restated Agreement pursuant to Section 11.1(d), shall, through its
Management Board (VORSTAND) and Supervisory Board (AUFSICHTSRAT), recommend to
its stockholders the approval and adoption of this Restated Agreement, the
Daimler-Benz Exchange Offer, the Daimler-Benz Merger and the other transactions
contemplated hereby. The Daimler-Benz Stockholders Meeting shall be scheduled
and, if necessary, adjourned as appropriate so that the Daimler-Benz Stockholder
Approval occurs simultaneously with the Chrysler Stockholder Approval.
Section 9.3. CHRYSLER STOCK ISSUANCE. Prior to the Effective Time and unless
the Minimum Condition has been changed to the 80% Minimum, Chrysler shall issue
and sell, in such manner as Chrysler reasonably determines and is reasonably
acceptable to Daimler-Benz, approximately 30 million shares of Chrysler Common
Stock (or such greater or lesser number as will allow the Mergers to be
accounted for as a "pooling-of-interests" under APB No. 16 and applicable SEC
rules and regulations) (the "Chrysler Stock Issuance"). The Chrysler Stock
Issuance shall be accomplished on such terms and conditions as Chrysler
reasonably believes are appropriate and are reasonably acceptable to
Daimler-Benz. Daimler-Benz and Chrysler shall cooperate with each other with
respect to the Chrysler Stock Issuance. Shares of Chrysler Common Stock sold and
issued pursuant to the Chrysler Stock Issuance shall be treated for all purposes
as issued and outstanding shares of Chrysler Common Stock at the Effective Time.
A-31
<PAGE>
Section 9.4. ACCOUNTANTS' COMFORT LETTERS. Each of Daimler-Benz and Chrysler
shall use their reasonable best efforts to cause to be delivered to the other
two letters from their respective independent accountants, one dated a date
within two business days before the date on which the F-4 Registration Statement
shall become effective and one dated a date within two business days before the
Effective Time, in form and substance reasonably satisfactory to the recipient
and customary in scope and substance for comfort letters delivered by
independent accountants in connection with registration statements similar to
the F-4 Registration Statement.
Section 9.5. ACCOUNTANTS' POOLING LETTERS. Each of Daimler-Benz and Chrysler
shall use their reasonable best efforts to cause to be delivered to each other
and their respective accountants a letter from the other's independent
accountants addressed to Daimler-Benz and Chrysler, dated as of the date the F-4
Registration Statement is declared effective and as of the Closing Date, stating
that accounting for the Mergers as a "pooling-of-interests" under APB No. 16 and
applicable SEC rules and regulations is appropriate if the Mergers are
consummated as contemplated by this Restated Agreement.
Section 9.6. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) Each of Chrysler
and Daimler-Benz shall, and shall cause each of their respective Subsidiaries
to, afford to the other party and to the officers, employees, accountants,
counsel, financial advisors and other representatives of such other party,
reasonable access during normal business hours during the period prior to the
Effective Time to all their respective properties, books, contracts,
commitments, personnel and records and, during such period, each of Chrysler and
Daimler-Benz shall, and shall cause each of its respective Subsidiaries to,
furnish promptly to the other party (i) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of U.S. federal or state securities laws or German
securities laws and (ii) all other information concerning its business,
properties and personnel as such other party may reasonably request. No review
pursuant to this Section 9.6 shall affect any representation or warranty given
by the other party hereto.
(b) Each of Daimler-Benz, Chrysler and DaimlerChrysler AG will hold and will
cause each of their respective officers, directors, employees, attorneys,
investment bankers and other advisors ("representatives") to hold in strict
confidence (unless compelled to disclose by judicial or administrative process)
all non-public information obtained, whether prior to or after the date of this
Restated Agreement, from or provided on behalf of the other party, except to the
extent that such information can be shown to have been (i) previously known or
independently developed by the party receiving such information, (ii) in the
public domain through no fault of the receiving party, or (iii) later lawfully
acquired by the receiving party from other sources not known by the receiving
party to be bound by confidentiality obligations (the "Confidential
Information"). Each of Daimler-Benz, Chrysler and DaimlerChrysler AG will, and
will cause each of their respective representatives to, use the Confidential
Information received by it solely in connection with its evaluation of the
transactions contemplated by this Restated Agreement and in furtherance of the
consummation of such transactions in accordance with the terms of this Restated
Agreement. In the event of the termination of this Restated Agreement, each of
Daimler-Benz, Chrysler and DaimlerChrysler AG will, and will cause each of their
respective representatives to, (x) maintain the confidentiality of the
Confidential Information, and (y) return all written Confidential Information
promptly upon the written request of the other party. In addition, each of
Daimler-Benz, Chrysler and DaimlerChrysler AG, as a result of their receipt of
Confidential Information will, and will cause each of their respective
representatives not to, solicit any employee of the other for employment,
PROVIDED that each of Daimler-Benz, Chrysler and DaimlerChrysler AG may engage
in general solicitations of employment not specifically directed to employees of
Chrysler, Daimler-Benz and DaimlerChrysler AG, as the case may be.
Section 9.7. TAKEOVER STATUTE. Chrysler and Daimler-Benz shall (i) take all
action necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Chrysler Merger, this Restated
Agreement, or any of the other transactions contemplated by this Restated
Agreement and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Chrysler Merger, this Restated Agreement,
or any other transaction contemplated by this Restated Agreement, take all
action necessary to ensure that the Chrysler Merger and the other transactions
contemplated by this Restated Agreement may be consummated as promptly as
practicable on the terms contemplated by this Restated Agreement and otherwise
A-32
<PAGE>
to minimize the effect of such statute or regulation on the Chrysler Merger and
the other transactions contemplated by this Restated Agreement.
Section 9.8. INDEMNIFICATION, EXCULPATION AND INSURANCE. (a) Daimler-Benz
and DaimlerChrysler AG shall maintain in effect in accordance with their terms
all rights to indemnification and exculpation from liabilities for acts or
omissions occurring at or prior to the Effective Time now existing in favor of
the current or former directors or officers of Chrysler or Daimler-Benz or any
of their respective Subsidiaries as provided in their respective certificates of
incorporation or by-laws (or comparable organizational documents) and any
indemnification agreements of Chrysler or Daimler-Benz. In addition, from and
after the Effective Time, directors and officers of Chrysler who become
directors or officers of DaimlerChrysler AG or Daimler-Benz shall be entitled to
the same indemnity rights and protections as are afforded to other directors and
officers of DaimlerChrysler AG or Daimler-Benz, as the case may be, and
Management Board members (MITGLIEDER DES VORSTANDS) and officers of Daimler-Benz
who become directors or officers of DaimlerChrysler AG or Chrysler shall be
entitled to the same indemnity rights and protections as are afforded to other
directors and officers of DaimlerChrysler AG or Chrysler, as the case may be.
(b) If DaimlerChrysler AG, Daimler-Benz or any of their respective
successors or assigns (i) consolidates with or merges into any other person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision will be made so that the successors and assigns of DaimlerChrysler AG
or Daimler-Benz, as the case may be, assume the obligations set forth in this
Section 9.8.
(c) From and after the Effective Time, Chrysler and DaimlerChrysler AG will
indemnify and hold harmless each present and former director and officer of
Chrysler and its Subsidiaries (the "Indemnified Parties"), against any costs or
expenses (including attorneys' fees), judgments, fines, losses, claims, damages
or liabilities (collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time, to the fullest extent
that Chrysler or such Subsidiary would have been permitted under applicable law
and the Certificate of Incorporation or Bylaws of Chrysler or such Subsidiary in
effect on the date hereof to indemnify or to obtain insurance for such person
(and DaimlerChrysler AG or Chrysler shall also advance expenses as incurred to
the fullest extent permitted under applicable law provided the person to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to indemnification).
(d) The provisions of this Section 9.8 are intended to be for the benefit
of, and may be enforced by, each indemnified party, his or her heirs and his or
her representatives and are in addition to, and not in substitution for, any
other rights to indemnification or contribution that any such person may have by
contract or otherwise.
Section 9.9. PUBLIC ANNOUNCEMENTS. Daimler-Benz and Chrysler shall consult
with each other before issuing, and provide each other the opportunity to
review, comment upon and concur with and use reasonable best efforts to agree
on, any press release or other public statements with respect to the
transactions contemplated by this Restated Agreement, including the Mergers, and
shall not issue any such press release or make any such public statement prior
to such consultation, except as either party may determine is required by
applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange. The parties agree that the
initial press release to be issued with respect to the transactions contemplated
by this Restated Agreement shall be in the form heretofore agreed to by the
parties.
Section 9.10. AFFILIATES. Unless Chrysler and Daimler-Benz shall have
determined that, because of circumstances not related to the matters set forth
in this Section 9.10, the transactions contemplated by this Restated Agreement
will not be accounted for as a "pooling of interests" under US GAAP: (a) As soon
as practicable after the date hereof, Chrysler shall deliver to Daimler-Benz a
letter identifying all persons who are, at the time this Restated Agreement is
submitted for adoption by the stockholders of Chrysler, "affiliates" of Chrysler
for purposes of Rule 145 under the Securities Act or for purposes of qualifying
the Mergers for "pooling-of-interests" accounting treatment under APB No. 16 and
applicable SEC rules and regulations, and
A-33
<PAGE>
such list shall be updated as necessary to reflect changes from the date hereof.
Chrysler shall use reasonable best efforts to cause each person identified on
such list to deliver to Daimler-Benz not less than 30 days prior to the
Effective Time, a written agreement substantially in the form attached as
Exhibit B-1. As soon as practicable after the date hereof, Daimler-Benz shall
deliver to Chrysler a letter identifying all persons who are, at the time this
Restated Agreement is submitted for adoption by the stockholders of
Daimler-Benz, "affiliates" of Daimler-Benz for purposes of Rule 145 under the
Securities Act or for purposes of qualifying the Mergers for
"pooling-of-interests" accounting treatment under APB No. 16 and applicable SEC
rules and regulations, and such list shall be updated as necessary to reflect
changes from the date hereof. Daimler-Benz shall use reasonable best efforts to
cause all persons who are "affiliates" of Daimler-Benz for purposes of
qualifying the Mergers for "pooling-of-interests" accounting treatment under APB
No. 16 and applicable SEC rules and regulations to deliver to Chrysler not less
than 30 days prior to the Effective Time, a written agreement substantially in
the form of Exhibit B-2.
(b) DaimlerChrysler AG shall publish no later than 45 days after the end of
the first month after the Effective Time in which there are at least 30 days of
post-Effective Time combined operations (which month may be the month in which
the Effective Time occurs), combined sales and net income figures as
contemplated by and in accordance with the terms of SEC Accounting Series
Release No. 135.
Section 9.11. STOCK EXCHANGE LISTINGS. (a) As soon as practicable following
the date of this Restated Agreement and in any event prior to the Daimler-Benz
Exchange Offer Expiration Date, Daimler-Benz and DaimlerChrysler AG shall
prepare and file all documents with the Frankfurt Stock Exchange Admission Board
(the "Stock Exchange Admission Board") and all other stock exchange admission
boards on which the Daimler-Benz Ordinary Shares are listed and use their
reasonable best efforts to cause the DaimlerChrysler Ordinary Shares to be
issued by DaimlerChrysler AG in connection with the transactions contemplated by
this Restated Agreement to be approved for listing on the FSE and such other
stock exchanges, subject to official notice of issuance. DaimlerChrysler AG
shall prepare and file with the Stock Exchange Admission Board the draft German
Prospectus, and DaimlerChrysler AG and Daimler-Benz shall promptly provide the
Executive Office of the Takeover Commission with all information required under
the German Takeover Code. Each of Chrysler, Daimler-Benz and DaimlerChrysler AG
shall use its reasonable best efforts to have the German Prospectus consented to
by the Stock Exchange Admission Board as promptly as practicable after such
filings and the listing of DaimlerChrysler Ordinary Shares obtained on all stock
exchanges on which the Daimler-Benz Ordinary Shares are listed. If at any time
prior to the Effective Time, any of the parties discover that an amendment or
supplement to the documents or other information filed with the Stock Exchange
Admission Board, the other stock exchange admission boards or the Executive
Office of the Takeover Commission should be filed so that any such documents or
information would not include any misstatement of a material fact or any
omission of any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, the party that
makes such discovery shall promptly notify the other parties hereto and an
appropriate amendment or supplement shall be promptly filed with the Stock
Exchange Admission Board, the stock exchange admission boards of all other stock
exchanges on which the Daimler-Benz Ordinary Shares are listed and the Executive
Office of the Takeover Commission and, to the extent required by law, such
information shall be made public.
(b) Daimler-Benz and DaimlerChrysler AG shall use reasonable best efforts to
cause the DaimlerChrysler Ordinary Shares to be approved for listing on the
NYSE, subject to official notice of issuance, as promptly as practicable after
the date hereof, and in any event prior to the Daimler-Benz Exchange Offer
Expiration Date.
Section 9.12. STOCKHOLDER LITIGATION. Each of Chrysler and Daimler-Benz
shall give the other the reasonable opportunity to participate in the defense of
any stockholder litigation against Chrysler, Daimler-Benz or DaimlerChrysler AG,
as applicable, and its directors relating to the transactions contemplated by
this Restated Agreement.
Section 9.13. TAX TREATMENT. Each of Daimler-Benz and Chrysler shall use its
reasonable best efforts (i) to cause the Chrysler Exchange either (a) to qualify
as a reorganization within the meaning of Section 368(a) of
A-34
<PAGE>
the Code or (b) when integrated with the Daimler-Benz Exchange Offer and taking
into account the Daimler-Benz Merger, to be treated as a transaction described
in Section 351(a) of the Code, (ii) to cause the Daimler-Benz Exchange Offer
either (a) when integrated with the Chrysler Exchange, to be treated as a
transaction described in Section 351(a) of the Code or (b) if integrated with
the Daimler-Benz Merger, to qualify as a reorganization within the meaning of
Section 368(a) of the Code, (iii) to cause the Daimler-Benz Exchange Offer and
the Daimler-Benz Merger not to result in the recognition of any gain or loss by
DaimlerChrysler AG, Daimler-Benz or stockholders of Daimler-Benz under German
law, and (iv) to enable Chrysler to obtain from the Internal Revenue Service the
private letter ruling described in Section 10.3(d) and to meet the conditions
thereof. Chrysler agrees to consult with Daimler-Benz with respect to Chrysler's
request for the IRS private letter ruling described in Section 10.3(d). Prior to
submitting any written submissions or representations to the IRS in connection
with such request, Chrysler further agrees to provide such written submissions
and representations to Daimler-Benz for Daimler-Benz's review and approval,
which shall not be unreasonably withheld or delayed.
Section 9.14. STANDSTILL AGREEMENTS; CONFIDENTIALITY AGREEMENTS. During
the period from the date of this Restated Agreement through the Effective Time,
neither Chrysler nor Daimler-Benz shall terminate, amend, modify or waive any
provision of any standstill agreement or waive any provision of any
confidentiality agreement to which it or any of its respective Subsidiaries is a
party, except as provided in the Chrysler Stockholders Agreement. During such
period, Chrysler or Daimler-Benz, as the case may be, shall enforce, to the
fullest extent permitted under applicable law, the provisions of any such
agreement, including by obtaining injunctions to prevent any breaches of such
agreements and to enforce specifically the terms and provisions thereof in any
court of the United States of America or of any state thereof or any court in
Germany or any political subdivision thereof, in each such case which has
jurisdiction of the parties and the subject matter.
Section 9.15. CONVEYANCE TAXES. Daimler-Benz and Chrysler shall cooperate
in the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees or any similar taxes that become payable
in connection with the transactions contemplated by this Restated Agreement that
are required or permitted to be filed on or before the Effective Time. Chrysler
shall pay, without deduction or withholding from any amount payable to the
holders of Chrysler Common Stock (and shall not directly or indirectly be
reimbursed by Daimler-Benz or DaimlerChrysler AG for), any such taxes or fees
imposed by any taxing authority (and any penalties and interest with respect to
such taxes and fees) on Chrysler or any holder of Chrysler Common Stock that
become payable in connection with the transactions contemplated by this Restated
Agreement. Daimler-Benz shall pay, without deduction or withholding from any
amount payable to the holders of Daimler-Benz Ordinary Shares or Daimler-Benz
ADSs (and shall not directly or indirectly be reimbursed by Chrysler or
DaimlerChrysler AG for), any such taxes or fees imposed by any taxing authority
(and any penalties and interest with respect to such taxes and fees) on
Daimler-Benz or any holder of Daimler-Benz Ordinary Shares or Daimler-Benz ADSs
that become payable in connection with the transactions contemplated by this
Restated Agreement.
Section 9.16. CERTAIN OBLIGATIONS OF DAIMLERCHRYSLER AG. Certain
obligations of DaimlerChrysler AG set forth in this Restated Agreement,
including those obligations designed to survive the consummation of the U.S.
Share Exchange, the German Share Exchange or the Daimler-Benz Merger, require
certain additional corporate actions by or with respect to DaimlerChrysler AG
specified in the German Stock Corporation Law (AKTIENGESETZ) including
Section 52 and SectionSection 183 ET SEQ. (in particular Section187) of the
German Stock Corporation Law (AKTIENGESETZ) and in the German Transformation Act
(UMWANDLUNGSGESETZ) be taken. DaimlerChrysler AG shall recommend to its
Supervisory Board (AUFSICHTSRAT) and to its shareholders meeting that such
actions be taken. As required by law, certain of such obligations of
DaimlerChrysler AG shall be incorporated in agreements in connection with the
contributions in kind to DaimlerChrysler AG, which agreements shall be entered
into by DaimlerChrysler AG and the U.S. Exchange Agent as well as the
Daimler-Benz Exchange Agent and Chrysler, respectively, in the context of the
U.S. Share Exchange and the German Share Exchange pursuant to SectionSection 52
and 183 et seq. of the German Stock Corporation Law (AKTIENGESETZ).
A-35
<PAGE>
Section 9.17. REASONABLE BEST EFFORTS. Upon the terms and subject to the
conditions set forth in this Restated Agreement, each of the parties agrees to
use reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Restated Agreement, including (i) the obtaining of all
necessary actions or non-actions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
and the taking of all steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Entity, (ii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iii) the defending of any lawsuits or other legal proceedings, whether judicial
or administrative, challenging this Restated Agreement or the consummation of
the transactions contemplated by this Restated Agreement, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, and (iv) the execution and delivery of
any additional instruments necessary to consummate the transactions contemplated
by, and to fully carry out the purposes of, this Restated Agreement. Nothing set
forth in this Section 9.17 will limit or affect actions permitted to be taken
pursuant to Section 9.1.
ARTICLE X
CLOSING CONDITIONS
Section 10.1. CONDITIONS TO ALL PARTIES' OBLIGATION TO CLOSE. The
obligation of all parties to consummate the Daimler-Benz Exchange Offer and the
German Share Exchange, the Daimler-Benz Merger and the Chrysler Merger and the
U.S. Share Exchange is subject to the satisfaction on or prior to the
consummation of the Daimler-Benz Exchange Offer of the following conditions:
(a) (i) Any applicable waiting period under the HSR Act relating to the
transactions contemplated by this Restated Agreement shall have expired or
been terminated; and (ii) the Commission of the European Union shall have
approved the transactions contemplated by this Restated Agreement under
Regulation (EEC) No. 4064/89 of the Council of the European Union, or such
approval shall have been deemed to have been granted.
(b) The F-4 Registration Statement shall have become effective and no
stop order suspending the effectiveness of the F-4 Registration Statement
shall have been issued and no proceeding for that purpose shall have been
initiated by the SEC.
(c) The DaimlerChrysler Ordinary Shares issuable pursuant to this
Restated Agreement shall have been approved for listing on the NYSE, subject
to official notice of issuance, and on the FSE.
(d) Each of the Chrysler Stockholder Approval and the Daimler-Benz
Stockholder Approval shall have been obtained.
(e) Other than the filing provided for under Section 2.9 and filings
pursuant to the HSR Act, and with the Commission of the European Union under
Regulation (EEC) No. 4064/89 of the Council of the European Union, all
consents, approvals and actions of, filings with and notices to any
Governmental Entity required of Chrysler, Daimler-Benz or any of their
respective Subsidiaries to consummate the transactions contemplated hereby,
the failure of which to be obtained or taken is reasonably likely to have a
Material Adverse Effect on DaimlerChrysler AG, shall have been obtained or
made, all in form and substance reasonably satisfactory to Chrysler and
Daimler-Benz.
(f) No judgment, order, decree, statute, law, ordinance, rule or
regulation, entered, enacted, promulgated, enforced or issued by any
Governmental Entity of competent jurisdiction or other legal restraint or
prohibition (collectively, "Restraints") shall be in effect (i) preventing
the consummation of the Daimler-Benz Exchange Offer, the Chrysler Merger,
the U.S. Share Exchange or the Daimler-Benz Merger, or (ii) which otherwise
is reasonably likely to have a Material Adverse Effect on Chrysler or
Daimler-Benz;
A-36
<PAGE>
PROVIDED that each of the parties shall have used its reasonable best
efforts to prevent the entry of any such Restraints and to appeal as
promptly as possible any such Restraints that may be entered.
(g) Each of Daimler-Benz and Chrysler shall have received the
accountants' letters contemplated by Sections 9.4 and (unless the Minimum
Condition has been changed to the 80% Minimum) 9.5.
(h) The Chrysler Stock Issuance shall have been completed in accordance
with Section 9.3 (unless the Minimum Condition has been changed to the 80%
Minimum).
(i) All conditions to the Daimler-Benz Exchange Offer shall have been
satisfied.
Section 10.2. CONDITIONS TO DAIMLER-BENZ'S AND DAIMLERCHRYSLER AG'S
OBLIGATION TO CLOSE. The obligation of Daimler-Benz and DaimlerChrysler AG to
consummate the U.S. Share Exchange and the Daimler-Benz Merger is further
subject to the satisfaction on or prior to the Effective Time of the following
additional conditions:
(a) The representations and warranties of Chrysler set forth herein
shall be true and correct both when made and at and as of the Effective
Time, as if made at and as of such time (except to the extent expressly made
as of an earlier date, in which case as of such date), except where the
failure of such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or "Material
Adverse Effect" set forth therein) would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Chrysler, and
Daimler-Benz shall have received a Certificate of an Executive Vice
President of Chrysler as to the satisfaction of this condition.
(b) Chrysler shall, in all material respects, have performed and
complied with all obligations required to be performed or complied with by
it under this Restated Agreement at or prior to the Effective Time, and
Daimler-Benz shall have received a Certificate of an Executive Vice
President of Chrysler as to the satisfaction of this condition.
(c) Daimler-Benz and DaimlerChrysler AG shall have received from German
tax counsel to Daimler-Benz, based on reasonably requested representation
letters and customary assumptions, an opinion, dated as of the Chrysler
Merger Closing Date, substantially to the effect that neither the
Daimler-Benz Exchange Offer nor the Daimler-Benz Merger will result in the
recognition of any gain or loss by stockholders of Daimler-Benz or by
Daimler-Benz or DaimlerChrysler AG under German law.
(d) Daimler-Benz and DaimlerChrysler AG shall have received from
Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to Daimler-Benz
and DaimlerChrysler AG, an opinion, based on reasonably requested
representation letters and customary assumptions, dated as of the
Daimler-Benz Exchange Offer Expiration Date, substantially to the effect
that for U.S. federal income tax purposes the Daimler-Benz Exchange Offer,
taking into account the Chrysler Exchange and the Daimler-Benz Merger,
should be treated as a non-recognition transfer of Daimler-Benz Ordinary
Shares and Daimler-Benz ADSs by the holders thereof in exchange for
DaimlerChrysler Ordinary Shares.
(e) At any time after the date of this Restated Agreement there shall
not have occurred and be continuing as of the Effective Time any Material
Adverse Effect on Chrysler.
Section 10.3. CONDITIONS TO CHRYSLER'S OBLIGATION TO CLOSE. The obligation
of Chrysler to consummate the Chrysler Merger is further subject to the
satisfaction on or prior to the Effective Time of the following additional
conditions:
(a) The respective representations and warranties of Daimler-Benz and
DaimlerChrysler AG set forth herein shall be true and correct both when made
and at and as of the Effective Time, as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case as
of such date), except, in the case of representations and warranties of
Daimler-Benz, where the failure of such representations and warranties to be
so true and correct (without giving effect to any limitation as to
"materiality" or "Material Adverse Effect" set forth therein) would not
reasonably be expected to have, individually or in
A-37
<PAGE>
the aggregate, a Material Adverse Effect on Daimler-Benz, and Chrysler shall
have received a certificate of a member of the Board of Management
(VORSTAND) of Daimler-Benz as to the satisfaction of this condition by
Daimler-Benz and a certificate of a member of the Board of Management
(VORSTAND) of DaimlerChrysler AG as to the satisfaction of this condition by
DaimlerChrysler AG.
(b) Daimler-Benz and DaimlerChrysler AG shall, in all material respects,
have performed or complied with all obligations required to be performed or
complied with by it under this Restated Agreement at or prior to the
Effective Time, and Chrysler shall have received a certificate of a member
of the Board of Management (VORSTAND) of Daimler-Benz as to the satisfaction
of this condition by Daimler-Benz and a certificate of a member of the Board
of Management (VORSTAND) of DaimlerChrysler AG as to the satisfaction of
this condition by DaimlerChrysler AG.
(c) Chrysler shall have received from Debevoise & Plimpton, special
counsel to Chrysler, an opinion, based on a private letter ruling from the
IRS addressing certain issues under Section 367(a)(1) of the Code,
reasonably requested representation letters and customary assumptions, dated
as of the Chrysler Merger Closing Date, substantially to the effect that for
U.S. federal income tax purposes the Chrysler Exchange, taking into account
the Daimler-Benz Exchange Offer and the Daimler-Benz Merger, should be
treated as a non-recognition transfer of Chrysler Common Stock by the
holders thereof in exchange for DaimlerChrysler Ordinary Shares.
(d) Chrysler shall have received from the IRS a private letter ruling
addressing certain issues under Section 367(a)(1) of the Code, reasonably
satisfactory to Chrysler and sufficient to enable Debevoise & Plimpton to
render the opinion described in Section 10.3(c).
(e) The Rights Offering shall have been consummated and shall have been
fully subscribed.
(f) The Daimler-Benz Exchange Offer shall have been consummated.
(g) At any time after the date of this Restated Agreement there shall
not have occurred and be continuing as of the Effective Time any Material
Adverse Effect on Daimler-Benz.
Section 10.4. FURTHER CONDITION TO OBLIGATIONS OF DAIMLER-BENZ AND
DAIMLERCHRYSLER AG. After the Effective Time and the consummation of the U.S.
Share Exchange, the obligations of Daimler-Benz and DaimlerChrysler AG to
complete the Daimler-Benz Merger shall only be subject to the satisfaction on or
prior to the date of the Daimler-Benz Merger Closing of the condition set forth
in Section 10.1(f)(i).
Section 10.5. FRUSTRATION OF CLOSING CONDITIONS. Neither Daimler-Benz nor
Chrysler may rely on the failure of any condition set forth in Section 10.1,
10.2, 10.3 or 10.4, as the case may be, to be satisfied if such failure was
caused by such party's failure to use reasonable best efforts to consummate the
Daimler-Benz Exchange Offer, the Mergers and the other transactions contemplated
by this Restated Agreement, as required by and subject to Section 9.17.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
Section 11.1. TERMINATION. This Restated Agreement may be terminated at
any time prior to the Effective Time, and (except in the case of Section 11.1(d)
or Section 11.1(f)) whether before or after the Chrysler Stockholder Approval or
the Daimler-Benz Stockholder Approval:
(a) by mutual written consent of Daimler-Benz and Chrysler;
(b) by either Daimler-Benz or Chrysler:
(i) if the Chrysler Merger and the Daimler-Benz Exchange Offer shall
not have been consummated by January 31, 1999, PROVIDED that the right to
terminate this Restated Agreement pursuant to this Section 11.1(b)(i)
shall not be available to any party whose failure to perform any of its
A-38
<PAGE>
obligations under this Restated Agreement results in the failure of the
Chrysler Merger, the U.S. Share Exchange and the Daimler-Benz Exchange
Offer to be consummated on or prior to such date; and PROVIDED, FURTHER,
that this Restated Agreement may be extended for up to 30 days by either
Daimler-Benz or Chrysler by written notice to the other party if the
Daimler-Benz Exchange Offer or the Chrysler Merger shall not have been
consummated as a direct result of Daimler-Benz or Chrysler having failed
to receive all regulatory approvals required to be obtained with respect
thereto;
(ii) if the Chrysler Stockholder Approval or the Daimler-Benz
Stockholder Approval shall not have been obtained at the respective
Chrysler Stockholders Meeting or Daimler-Benz Stockholders Meeting or at
any adjournment or postponement thereof;
(iii) if any Restraint having either of the effects set forth in
Section 10.1(f) shall be in effect and shall have become final and
nonappealable, PROVIDED, that the party seeking to terminate this
Restated Agreement pursuant to this Section 11.1(b)(iii) shall have used
reasonable best efforts to prevent the entry of and to remove such
Restraint;
(iv) if this Restated Agreement shall not have been finally approved
by the Supervisory Board (AUFSICHTSRAT) of Daimler-Benz on or prior to
May 21, 1998.
(c) by Daimler-Benz if Chrysler shall have breached or failed to perform
in any material respect any of its representations, warranties, covenants or
other agreements contained in this Restated Agreement, which breach or
failure to perform (1) would give rise to the failure of a condition set
forth in Section 10.2(a) or (b), and (2) is incapable of being cured by
Chrysler or is not cured within 45 days after receipt of written notice
thereof;
(d) prior to receipt of the Daimler-Benz Stockholder Approval, by
Daimler-Benz in accordance with Section 9.1(b);
(e) by Chrysler, if Daimler-Benz or DaimlerChrysler AG shall have
breached or failed to perform in any material respect any of their
representations, warranties, covenants or other agreements contained in this
Restated Agreement, which breach or failure to perform (1) would give rise
to the failure of a condition set forth in Section 10.3(a) or (b), and (2)
is incapable of being cured by Daimler-Benz or DaimlerChrysler AG or is not
cured within 45 days of written notice thereof; or
(f) prior to receipt of the Chrysler Stockholder Approval, by Chrysler
in accordance with Section 9.1(b).
Section 11.2. EFFECT OF TERMINATION. In the event of termination of this
Restated Agreement by either Chrysler or Daimler-Benz as provided in Section
11.1, written notice thereof shall be given as promptly as possible to the other
parties hereto and this Restated Agreement shall forthwith become void and have
no effect, without any liability or obligation on the part of Daimler-Benz,
Chrysler or DaimlerChrysler AG, except to the extent that such termination
results from the willful and material breach by a party of any of its
representations, warranties, covenants or agreements set forth in this Restated
Agreement. Notwithstanding the foregoing, the provisions of Section 5.18,
paragraph (b) of Section 9.6, this Section 11.2 and Article XII shall survive
termination of this Restated Agreement in accordance with Article XI.
ARTICLE XII
MISCELLANEOUS
Section 12.1. NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Restated Agreement or in any instrument
or document delivered pursuant to this Restated Agreement shall survive the
Effective Time. This Section 12.1 shall not limit any covenant or agreement of
the parties which by its terms contemplate performance after the Effective Time.
A-39
<PAGE>
Section 12.2. FEES AND EXPENSES. Except as otherwise provided in Section
9.15, all fees and expenses incurred in connection with the Mergers, this
Restated Agreement and the other transactions contemplated by this Restated
Agreement shall be borne by the party incurring such fees or expenses, whether
or not the Mergers are consummated, and accordingly each of Daimler-Benz and
Chrysler shall bear and pay one-half of the costs and expenses incurred in
connection with the filing, printing and mailing of the F-4 Registration
Statement and the Proxy Statement/Prospectus (including SEC registration and
filing fees).
Section 12.3. COUNTERPARTS; EFFECTIVENESS. This Restated 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 Restated Agreement shall become effective when each party hereto shall have
received counterparts hereof signed by each of the other parties hereto.
Section 12.4. GOVERNING LAW. The Daimler-Benz Merger, the Daimler-Benz
Exchange Offer (to the extent it is conducted in Germany) and the capital
contribution in kind included in the U.S. Share Exchange shall be governed by
and effected in accordance with German law. In all other respects, this Restated
Agreement shall be governed by and effected in accordance with Delaware law
without regard to the principles of conflicts of laws thereof.
Section 12.5. NOTICES. All notices, requests, claims, demands and other
communications under this Restated Agreement 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 12.5 and the appropriate telecopy confirmation is received or (b) if
given by any other means, when delivered at the address specified in this
Section 12.5 (or at such other address for a party as shall be specified by like
notice):
(a) if to Chrysler, to
Chrysler Corporation
1000 Chrysler Drive
Auburn Hills, Michigan 48326
Telecopy No.: (248) 512-5420
Attention: William J. O'Brien
Vice President, General
Counsel and Secretary
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy No.: (212) 909-6836
Attention: Meredith M. Brown
Paul H. Wilson, Jr.
and a further copy to:
Bruckhaus Westrick Heller Lober
Taunusanlage 11
D-60329 Frankfurt am Main
Germany
Telecopy No.: 011-49-69-23 26 64
Attention: Dr. Harald Voss
A-40
<PAGE>
(b) if to Daimler-Benz, to
Daimler-Benz Aktiengesellschaft
Epplestrasse 225
70567 Stuttgart
Germany
Telecopy No.: 011-49-711-17-94452
Attention: Dr. Siegfried Schwung
Associate General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Telecopy No.: (212) 735-2000
Attention: J. Michael Schell
Margaret L. Wolff
with a further copy to:
Shearman & Sterling
Couvenstr. 8
D-40211 Dusseldorf
Germany
Telecopy No.: 011-49-211-17888-81
Attention: Georg F. Thoma
(c) if to DaimlerChrysler AG, to
DaimlerChrysler AG
c/o Sal. Oppenheim jr. & Cie.
Unter Sachsenhausen 4
50667 Koln
Telecopy No.: 011-49-221-145-1034
Attention: Johannes Maret
Section 12.6. ASSIGNMENT; BINDING EFFECT. Neither this Restated 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. Subject to the preceding sentence,
this Restated 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 12.6 shall be null and void.
Section 12.7. SEVERABILITY. Any term or provision of this Restated
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 Restated Agreement in any other jurisdiction. If any
provision of this Restated Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable. Upon such
determination that any term or other provision is invalid or unenforceable, the
parties hereto shall negotiate in good faith to modify this Restated Agreement
so as to effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
Section 12.8. 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 any default under, this
A-41
<PAGE>
Restated 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 12.9. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Restated Agreement, the Exhibits hereto and the other agreements contemplated
hereby and instruments delivered pursuant hereto and thereto 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 as otherwise expressly provided
herein, is not intended to and shall not confer upon any person other than the
parties hereto any rights or remedies hereunder.
Section 12.10. RESERVATION OF RIGHT TO REVISE TRANSACTION. If the
implementation and mechanics prove not to be operable, the parties will use
their reasonable best efforts to change the method of effecting the business
combination between Chrysler and Daimler-Benz contemplated hereby, and each
party will cooperate in such efforts, including to provide for a different form
of transaction to effect the business combination of Chrysler and Daimler-Benz,
PROVIDED, that no such change shall (a) alter or change the amount or kind of
consideration to be received by holders of Chrysler Common Stock, Daimler-Benz
Ordinary Shares or Daimler-Benz ADRs, (b) adversely affect the tax treatment to
Chrysler, Daimler-Benz, DaimlerChrysler AG or their respective stockholders as a
result of the transactions contemplated hereby, or (c) materially delay receipt
of any material approval referred to in this Restated Agreement or the
consummation of the transactions contemplated hereby. DaimlerChrysler AG shall
be bound by any changes to the transactions contemplated hereby that are agreed
to by Chrysler and Daimler-Benz in accordance with this Section 12.10.
Section 12.11. EXTENSION OF TIME, WAIVER, ETC. At any time prior to the
Effective Time, either Daimler-Benz or Chrysler may (a) extend the time for the
performance of any of the obligations or acts of any other party hereto
(PROVIDED that Daimler-Benz may not extend the time for the performance of any
of the obligations of DaimlerChrysler AG without the written consent of
Chrysler); (b) waive any inaccuracies in the representations and warranties of
any other party hereto contained herein or in any document delivered pursuant
hereto (PROVIDED that Daimler-Benz may not waive any inaccuracies in the
representations or warranties made by DaimlerChrysler AG without the written
consent of Chrysler); or (c) subject to the proviso of Section 12.12 waive
compliance with any of the agreements or conditions of any other party hereto
contained herein (PROVIDED that Daimler-Benz may not waive compliance with any
of the agreements or conditions of DaimlerChrysler AG without the written
consent of Chrysler). Notwithstanding the foregoing, no failure or delay by
Daimler-Benz or Chrysler or DaimlerChrysler AG 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 Daimler-Benz or Chrysler
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.
Section 12.12. AMENDMENT. This Restated Agreement may be amended by the
parties at any time before or after the Chrysler Stockholder Approval or the
Daimler-Benz Stockholder Approval PROVIDED, that after any such approval, there
shall not be made any amendment that by law requires further approval by the
stockholders of Chrysler or Daimler-Benz without the further approval of such
stockholders. This Restated Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties.
Section 12.13. INTERPRETATION. When a reference is made in this Restated
Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or an Exhibit to, this Restated Agreement unless
otherwise indicated. The table of contents and headings contained in this
Restated Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Restated Agreement. Whenever the words
"include," "includes" or "including" are used in this Restated Agreement, they
shall be deemed to be followed by the words "without limitation." The words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Restated Agreement shall refer to this Restated
A-42
<PAGE>
Agreement as a whole and not to any particular provision of this Restated
Agreement. All terms defined in this Restated Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein. The definitions contained in
this Restated Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such term. Any agreement, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein. References to a person are also to its permitted successors and
assigns.
Section 12.14. RESPONSIBILITY FOR OBLIGATIONS OF DAIMLERCHRYSLER AG. After
consummation of the Daimler-Benz Exchange Offer and until the German Effective
Time, DaimlerChrysler AG as majority shareholder of Daimler-Benz will cause
Daimler-Benz to comply with all of Daimler-Benz's obligations hereunder.
Section 12.15. CONSENT TO JURISDICTION. Each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of or relates to this Restated Agreement or any of the
transactions contemplated by this Restated Agreement, (b) agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, including, without limitation, a motion
to dismiss on the grounds of forum non conveniens, (c) agrees that it will not
bring any action arising out of or relating to this Restated Agreement or any of
the transactions contemplated by this Restated Agreement in any court other than
a federal court sitting in the State of Delaware or a Delaware state court, and
(d) waives any right to a trial by jury with respect to any claim, counterclaim
or action arising out of or in connection with this Restated Agreement or the
transactions contemplated hereby.
A-43
<PAGE>
IN WITNESS HEREOF, Daimler-Benz, Chrysler and DaimlerChrysler AG have caused
this Restated Agreement to be duly executed as of the day and year first above
written.
<TABLE>
<S> <C> <C>
DAIMLER-BENZ AKTIENGESELLSCHAFT
By: /s/ JURGEN E. SCHREMPP
------------------------------------------
Name: Jurgen E. Schrempp
Title: Chairman of the Management Board
By: /s/ E. CORDES
------------------------------------------
Name: Eckhard Cordes
Title: Member of the Management Board
CHRYSLER CORPORATION
By: /s/ R J EATON
------------------------------------------
Name: Robert J. Eaton
Title: Chairman and Chief Executive
Officer
By: /s/ G.C. VALADE
------------------------------------------
Name: G.C. Valade
Title: EVP and Chief Financial Officer
DAIMLERCHRYSLER AG
By: /s/ J MARET
------------------------------------------
Name: Johannes Maret
Title: Member of the Management Board
</TABLE>
A-44
<PAGE>
Exhibit A to Annex A
ANNEX OF DEFINED TERMS
1.1 "Acquisition Agreement" shall have the meaning set forth in Section
9.1(b).
1.2 "affiliate" of any person shall mean (except as otherwise specifically
defined), as to any person, any other person which, directly or indirectly,
controls, is controlled by, or is under common control with, such person, where
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a person, whether
through the ownership of securities or partnership or other ownership interests,
by contract or otherwise.
1.3 "ADNs" shall have the meaning set forth in Section 3.8.
1.4 "Agreement" shall have the meaning set forth in the first paragraph.
1.5 "APB No. 16" shall have the meaning set forth in Section 2.5(f).
1.6 "Chrysler" shall mean the corporate party to the Agreement identified in
the first paragraph.
1.7 "Chrysler Common Stock" shall have the meaning set forth in Section 2.4.
1.8 "Chrysler Employee Optionholder" shall mean any person who holds a
Chrysler Employee Stock Option.
1.9 "Chrysler Employee Stock Option" shall mean an option to purchase shares
of Chrysler Common Stock granted pursuant to a Chrysler stock option plan and
listed on Section 5.3(b) of Chrysler's Disclosure Schedule or subsequently
granted as permitted by Article VII(b)(2).
1.10 "Chrysler Exchange" shall mean the Chrysler Merger together with the
U.S. Share Exchange.
1.11 "Chrysler Merger" shall mean the transaction contemplated by Section
2.2.
1.12 "Chrysler Merger Closing" shall have the meaning set forth in Section
2.9.
1.13 "Chrysler Merger Closing Date" shall mean the date on which the
Chrysler Merger Closing occurs.
1.14 "Chrysler Merger Excess Shares" shall have the meaning set forth in
Section 3.10(a)(i).
1.15 "Chrysler Merger Sub" shall have the meaning set forth in Section 2.1.
1.16 "Chrysler Merger Sub By-laws" shall have the meaning set forth in
Section 2.11.
1.17 "Chrysler Merger Sub Charter" shall have the meaning set forth in
Section 2.10.
1.18 "Chrysler Merger Sub Common Stock" shall have the meaning set forth in
Section 2.1.
1.19 "Chrysler Preferred Stock" shall have the meaning set forth in Section
2.7.
1.20 "Chrysler Rights Agreement" shall have the meaning set forth in Section
5.19(b).
1.21 "Chrysler Stockholder Approval" shall have the meaning set forth in
Section 5.15(a).
1.22 "Chrysler Stockholders Meeting" shall have the meaning set forth in
Section 9.2(c).
1.23 "Chrysler Stock Issuance" shall have the meaning set forth in Section
9.3.
1.24 "Closing Value" shall have the meaning set forth in Section 2.6(a).
1.25 "Code" shall have the meaning set forth in the sixth WHEREAS clause.
1.26 "Common Shares Trust" shall have the meaning set forth in Section
3.10(c).
1.27 "Company Permits" shall have the meaning set forth in Section 5.1.
A-45
<PAGE>
1.28 "Confidential Information" shall have the meaning set forth in Section
9.6(b).
1.29 "Costs" shall have the meaning set forth in Section 9.8(c).
1.30 "CSFB" shall mean Credit Suisse First Boston Corporation, financial
advisor to Chrysler.
1.31 "Daimler-Benz" shall mean the corporate party to the Agreement
identified in the first paragraph.
1.32 "Daimler-Benz ADSs" shall have the meaning set forth in Section 1.1.
1.33 "Daimler-Benz Employee Optionholder" shall mean any person who holds a
Daimler-Benz Employee Stock Option.
1.34 "Daimler-Benz Employee Stock Option" shall mean a convertible bond,
nominal value DM 1,000, issued pursuant to the Daimler-Benz stock option plans
and listed on Section 5.3(b) of Daimler-Benz's Disclosure Schedule.
1.35 "Daimler-Benz Exchange Agent" shall have the meaning set forth in
Section 1.2.
1.36 "Daimler-Benz Exchange Offer" shall mean the offer contemplated by
Section 1.1.
1.37 "Daimler-Benz Exchange Offer Conditions" shall have the meaning set
forth in Section 1.1.
1.38 "Daimler-Benz Exchange Offer Excess Shares" shall have the meaning set
forth in Section 3.10(a)(ii).
1.39 "Daimler-Benz Exchange Offer Expiration Date" shall have the meaning
set forth in Section 1.1.
1.40 "Daimler-Benz Exchange Offer Ratio" shall have the meaning set forth in
Section 1.1.
1.41 "Daimler-Benz Merger" shall mean the transaction contemplated by
Section 3.1.
1.42 "Daimler-Benz Merger Consideration" shall have the meaning set forth in
Section 3.3.
1.43 "Daimler-Benz Merger Excess Shares" shall have the meaning set forth in
Section 3.10(a)(iii).
1.44 "Daimler-Benz Merger Exchange Ratio" shall have the meaning set forth
in Section 3.3.
1.45 "Daimler-Benz Ordinary Shares" shall have the meaning set forth in
Section 1.1.
1.46 "Daimler-Benz Stockholder Approval" shall have the meaning set forth in
Section 5.15(b).
1.47 "Daimler-Benz Stockholders Meeting" shall have the meaning set forth in
Section 9.2(c).
1.48 "DaimlerChrysler ADSs" shall have the meaning set forth in Section 1.8.
1.49 "DaimlerChrysler AG" shall mean the corporate party to the Agreement
identified in the first paragraph.
1.50 "DaimlerChrysler Ordinary Shares" shall have the meaning set forth in
Section 1.1.
1.51 "DaimlerChrysler SATZUNG" shall have the meaning set forth in Section
4.1.
1.52 "DGCL" shall mean the General Corporation Law of the State of Delaware.
1.53 "Disclosure Schedule" shall mean the disclosure schedule delivered by
each Representing Party to the other setting forth (organized by the number and
letter of the corresponding section and paragraph in the Business Combination
Agreement PROVIDED, that matters disclosed in any section of the Disclosure
Schedule shall be deemed to be disclosed for all purposes of such disclosure
schedule) the Representing Party's exceptions to the representations and
warranties of such Representing Party contained in Article V and to the
covenants set forth in Article VII, and PROVIDED FURTHER that inclusion of an
item in a disclosure schedule shall not be construed to mean that the item is
required to be disclosed or is material.
1.54 "DM BES" shall have the meaning set forth in Section 3.8.
A-46
<PAGE>
1.55 "Effective Time" shall have the meaning set forth in Section 2.9.
1.56 "80% Minimum" shall have the meaning set forth in Section 1.1.
1.57 "Eligible Retiree" shall have the meaning set forth in Section 8.3(c).
1.58 "Encumbrance" shall mean any mortgage, pledge, lien, charge,
encumbrance, defect, security interest, claim, option or restriction of any
kind.
1.59 "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
1.60 "ERISA Affiliate" shall have the meaning set forth in Section 5.11(a).
1.61 "Excess Shares" shall have the meaning set forth in Section 3.10(b).
1.62 "Exchange Agent" shall have the meaning set forth in Section 3.10.
1.63 "Exchange Act" shall have the meaning set forth in Section 5.6(b).
1.64 "Exchange Offer Documents" shall have the meaning set forth in Section
1.4(b).
1.65 "Executive Office of the Takeover Commission" shall have the meaning
set forth in Section 1.1.
1.66 "Exercise Price" shall have the meaning set forth in Section 2.6(a).
1.67 "F-4 Registration Statement" shall mean the Registration Statement on
Form F-4 of DaimlerChrysler AG registering DaimlerChrysler Ordinary Shares to be
issued in the Chrysler Merger and the Daimler-Benz Exchange Offer.
1.68 "FSE" shall have the meaning set forth in Section 3.10.
1.69 "Fully Diluted Basis" shall mean a basis that takes into account all
outstanding Daimler-Benz Ordinary Shares (including all outstanding Daimler-Benz
ADSs) and the maximum aggregate number of Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs that may be issued in respect of any warrants, options,
convertible instruments or other rights pursuant to which the holder thereof may
acquire Daimler-Benz Ordinary Shares or Daimler-Benz ADSs, regardless of whether
currently exercisable or convertible. For this purpose, the number of
Daimler-Benz Ordinary Shares or ADSs into which the Notes (including Notes
represented by ADNs and DM BESs) may be converted shall be deemed to be the
higher of (i) the maximum aggregate number of Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs into which the Notes can be converted and (ii) a number of
Daimler-Benz Ordinary Shares equal to 120% of the market value of the Notes on
the Daimler-Benz Exchange Offer Expiration Date divided by the per share closing
price of a Daimler-Benz Ordinary Share or Daimler-Benz ADS, as applicable, as
reported by the FSE or THE WALL STREET JOURNAL, as applicable, on such date.
1.70 "German Effective Time" shall have the meaning set forth in Section
3.2.
1.71 "German Exchange Agent" shall have the meaning set forth in Section
3.4.
1.72 "German Exchange Offer Documents" shall have the meaning set forth in
Section 1.3.
1.73 "German Merger Agreement" shall have the meaning set forth in Section
3.1.
1.74 "German Prospectus" shall have the meaning set forth in Section 1.3.
1.75 "German Share Exchange" shall have the meaning set forth in Section
1.1.
1.76 "German Stock Corporation Law (AKTIENGESETZ)" shall have the meaning
set forth in Section 3.1.
1.77 "German Surviving Corporation" shall have the meaning set forth in
Section 3.1.
1.78 "German Takeover Code" shall have the meaning set forth in Section 1.1.
1.79 "Goldman Sachs" shall mean Goldman, Sachs & Co., financial advisor to
Daimler-Benz.
A-47
<PAGE>
1.80 "Governmental Entity" shall mean any court, tribunal or administrative,
governmental or regulatory body, agency, commission, division, department,
public body or other authority, whether federal, state, local or foreign.
1.81 "GSCL" shall have the meaning set forth in Section 3.1.
1.82 "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
1.83 "Indemnified Party" shall have the meaning set forth in Section 9.8(c).
1.84 "Initial Period" shall have the meaning set forth in Section 8.3(a).
1.85 "IRS" shall mean the United States Internal Revenue Service.
1.86 "Material Adverse Effect" with respect to Daimler-Benz, Chrysler or
DaimlerChrysler AG shall mean any event or state of facts that is or would
reasonably be expected to be materially adverse to the business, assets, results
of operations or financial condition of such Party and its Subsidiaries, taken
as a whole, except for any events or states of facts relating to (i) the
automotive and automotive finance industry in general, and not relating
specifically to the business of Chrysler or Daimler-Benz, as the case may be, or
(ii) the economy of the United States of America, the Federal Republic of
Germany or the world, in general, and not relating specifically to the business
of Chrysler or Daimler-Benz, as the case may be or in the case of
DaimlerChrysler AG, DaimlerChrysler AG and its Subsidiaries immediately after
the Effective Time, taken as a whole.
1.87 "Mergers" shall mean the Daimler-Benz Merger and the Chrysler Merger,
collectively.
1.88 "Minimum Condition" shall have the meaning set forth in Section 1.1.
1.89 "Notes" shall have the meaning set forth in Section 3.8.
1.90 "NYSE" shall have the meaning set forth in Section 3.10(b).
1.91 "Old Chrysler Certificates" shall have the meaning set forth in Section
2.5(b).
1.92 "Old Daimler-Benz ADRs" shall have the meaning set forth in Section
3.4(a).
1.93 "Option Shares" shall have the meaning set forth in Section 2.6(a).
1.94 "PBGC" shall mean the Pension Benefit Guaranty Corporation.
1.95 "Performance Shares" shall have the meaning set forth in Section
2.6(b).
1.96 "person" shall mean an individual, corporation, partnership,
association, trust, or any other entity or organization, including, without
limitation, a Governmental Entity.
1.97 "Plans" shall have the meaning set forth in Section 5.11(a).
1.98 "Proxy Statement/Prospectus" shall mean the proxy statement of Chrysler
to be used in connection with the solicitation of proxies by Chrysler for the
Chrysler Stockholders Meeting and the prospectus of DaimlerChrysler AG for the
DaimlerChrysler Ordinary Shares being issued in connection with the transactions
contemplated by the Agreement, which Proxy Statement/Prospectus forms a part of
the F-4 Registration Statement.
1.99 "Representing Party" shall have the meaning set forth in the first
paragraph of Article V.
1.100 "Representing Party's Filings" shall have the meaning set forth in
Section 5.6(b).
1.101 "Representing Party's Financial Statements" shall have the meaning set
forth in Section 5.6(a).
1.102 "Representing Party's Pre-Agreement Filings" shall have the meaning
set forth in Section 5.6(b).
1.103 "Restraints" shall have the meaning set forth in Section 10.1(f).
A-48
<PAGE>
1.104 "Restricted Stock Units" shall have the meaning set forth in Section
2.6(d).
1.105 "Rights" shall mean the rights to purchase new Daimler-Benz Ordinary
Shares distributed to holders of the Daimler-Benz Ordinary Shares pursuant to
the Rights Offering.
1.106 "Rights Offering" shall have the meaning set forth in Section 2.4(c).
1.107 "Schedule 14D-1" shall have the meaning set forth in Section 1.4(a).
1.108 "Schedule 14D-9" shall have the meaning set forth in Section 1.4(b).
1.109 "SEC" shall have the meaning set forth in Section 1.4(a).
1.110 "Securities Act" shall have the meaning set forth in Section 5.6(b).
1.111 "Significant Subsidiary" shall have the meaning set forth in Rule
1.02(w) of Regulation S-X promulgated by the SEC under the Exchange Act.
1.112 "Special Distribution" shall mean the special distribution by
Daimler-Benz of DM 20 per Daimler-Benz Ordinary Share/Daimler-Benz ADS as
proposed to the Annual General Meeting of Daimler-Benz stockholders to be held
on May 27, 1998.
1.113 "Stock Exchange Admission Board" shall have the meaning set forth in
Section 9.11(a).
1.114 "Subsidiary" shall mean with respect to Daimler-Benz, Chrysler or
DaimlerChrysler AG, as the case may be, any person (i) of which fifty percent or
more of either the equity interests in, or the voting control of, such person is
directly or indirectly beneficially owned by Daimler-Benz, Chrysler or
DaimlerChrysler AG, or (ii) Daimler-Benz, Chrysler or DaimlerChrysler AG has the
ability to elect fifty percent or more of the directors or members of the
governing board of such person, and in either such case, such person is a
consolidated entity in the consolidated financial statements of Daimler-Benz,
Chrysler or DaimlerChrysler AG, as the case may be.
1.115 "Superior Proposal" shall have the meaning set forth in Section
9.1(b).
1.116 "Surviving Corporation Common Stock" shall have the meaning set forth
in Section 2.4(c).
1.117 "Takeover Proposal" shall have the meaning set forth in Section
9.1(a).
1.118 "Taxes" shall mean any and all taxes, duties, levies, imposts or other
governmental charges 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, net assets, 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.
1.119 "Tax Returns" shall mean any return, report or similar statement
required to be filed with respect to any Taxes, including, without limitation,
any information return, claim for refund, amended return or declaration of
estimated Taxes.
1.120 "U.S. Exchange Agent" shall have the meaning set forth in Section 2.1.
1.121 "U.S. Exchange Fund" shall have the meaning set forth in Section
2.5(a).
1.122 "U.S. Exchange Offer Documents" shall have the meaning set forth in
Section 1.4(b).
1.123 "U.S. Exchange Ratio" shall have the meaning set forth in Section
2.4(b).
1.124 "US GAAP" shall have the meaning set forth in the eighth WHEREAS
clause.
1.125 "U.S. Merger Consideration" shall have the meaning set forth in
Section 2.4(b).
A-49
<PAGE>
1.126 "U.S. Person" shall mean (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized in
or under the laws of the United States or any political subdivision thereof,
(iii) an estate whose income is subject to United States Federal Income taxation
regardless of its source or (iv) a trust if (a) a court within the United States
is able to exercise primary supervision over the administration of the trust and
(b) one or more U.S. Persons have the authority to control all substantial
decisions of the trust.
1.127 "U.S. Share Exchange" shall have the meaning set forth in Section 2.3.
1.128 "U.S. Surviving Corporation" shall have the meaning set forth in
Section 2.2.
1.129 "Warrants" shall mean the warrants issued by Daimler-Benz in
connection with the 4 1/8% Deutsche Mark Bearer Notes of 1996/2003 issued by
Daimler-Benz Capital (Luxembourg) AG.
A-50
<PAGE>
Exhibit B-1 to Annex A
FORM OF AFFILIATE LETTER FOR AFFILIATES OF
CHRYSLER CORPORATION
Chrysler Corporation
1000 Chrysler Drive
Auburn Hills, Michigan 48326
Daimler-Benz Aktiengesellschaft
225 Epplestrasse
70567 Stuttgart
Germany
Oppenheim Aktiengesellschaft
Unter Sachsenhausen 4
50667 Koln
Germany
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed to be
an "affiliate" of Chrysler Corporation, a Delaware corporation ("Chrysler"), as
the term "affiliate" is (i) defined for purposes of paragraphs (c) and (d) of
Rule 145 of the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"), and/ or (ii) used in and for purposes of
Accounting Series Releases No. 130 and No. 135, as amended, of the Commission.
Pursuant to the terms of the Business Combination Agreement, dated as of May 7,
1998 (the "Business Combination Agreement"), among Daimler-Benz
Aktiengesellschaft, an AKTIENGESELLSCHAFT organized and existing under the laws
of the Federal Republic of Germany ("Daimler-Benz"), Chrysler, and Oppenheim
Aktiengesellschaft, an AKTIENGESELLSCHAFT organized and existing under the laws
of the Federal Republic of Germany ("Newco AG"), pursuant to which (i) Newco AG
will exchange one ordinary share of no par value of Newco AG (the "Newco
Ordinary Shares") or one Newco American Depositary Share representing one Newco
Ordinary Share (the "Newco ADSs") for each outstanding ordinary share of DM 5
nominal value of Daimler-Benz or the corresponding no par value share, as the
case may be (the "Daimler-Benz Ordinary Shares") or Daimler-Benz American
Depositary Share representing one Daimler-Benz Ordinary Share (the "Daimler-Benz
ADSs") tendered pursuant to an exchange offer being made by Newco to all holders
of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs (the "Exchange Offer"),
(ii) simultaneously with the closing of the Exchange Offer, Chrysler Merger Sub,
a Delaware corporation, will merge with and into Chrysler (the "Chrysler
Merger") whereby the Chrysler stockholders will have the right to receive Newco
ADSs in exchange for their shares of common stock, par value $1.00 per share, of
Chrysler (the "Chrysler Common Stock"), and (iii) following the Exchange Offer,
Daimler-Benz will merge with and into Newco and all remaining outstanding
Daimler-Benz Ordinary Shares and Daimler-Benz ADSs will be converted into Newco
Ordinary Shares or Newco ADSs, as the case may be, and (iv) stockholders of each
of Chrysler and Daimler-Benz will become stockholders of Newco. Capitalized
terms used in this letter without definition shall have the meanings assigned to
them in the Business Combination Agreement.
A-51
<PAGE>
As a result of the Chrysler Merger, I may receive Newco ADSs. I would
receive such Newco ADSs in exchange for shares (or upon exercise of options for
shares) owned by me of Chrysler Common Stock.
1. I hereby represent, warrant and covenant to Newco, Chrysler and
Daimler-Benz that in the event I receive any Newco ADSs as a result of the
Chrysler Merger:
A. I shall not make any offer, sale, pledge, transfer or other
disposition of the Newco ADSs in violation of the Act or the Rules and
Regulations.
B. I have carefully read this letter and the Business Combination
Agreement and discussed the requirements of such documents and other
applicable limitations upon my ability to sell, transfer or otherwise
dispose of the Newco ADSs, to the extent I felt necessary, with my counsel
or counsel for Chrysler.
C. I have been advised that the issuance of the Newco ADSs to me
pursuant to the Chrysler Merger has been registered with the Commission
under the Act on a Registration Statement on Form F-4. However, I have also
been advised that, because at the time the Chrysler Merger is submitted for
a vote of the stockholders of Chrysler, (a) I may be deemed to be an
affiliate of Chrysler and (b) the distribution by me of the Newco ADSs has
not been registered under the Act, I may not sell, transfer or otherwise
dispose of the Newco ADSs issued to me in the Chrysler Merger unless (i)
such sale, transfer or other disposition is made in conformity with the
volume and other limitations of Rule 145 promulgated by the Commission under
the Act, (ii) such sale, transfer or other disposition has been registered
under the Act, or (iii) in the opinion of counsel reasonably acceptable to
Newco, or a "no action" letter obtained by the undersigned from the staff of
the Commission such sale, transfer or other disposition is otherwise exempt
from registration under the Act.
D. I understand that except as provided for in the Business Combination
Agreement, Newco is under no obligation to register the sale, transfer or
other disposition of the Newco ADSs by me or on my behalf under the Act or,
except as provided in paragraph 2 below, to take any other action necessary
in order to make compliance with an exemption from such registration
available.
E. I further represent to, and covenant with, Newco, Daimler-Benz and
Chrysler that I will not, during the 30 days prior to the Effective Time,
sell, transfer or otherwise dispose of or reduce my risk (as contemplated by
the SEC Accounting Series Release No. 135) with respect to shares of
Chrysler Common Stock that I may hold and, furthermore, that I will not
sell, transfer or otherwise dispose of or reduce my risk (as contemplated by
SEC Accounting Series Release No. 135) with respect to the Newco ADSs
received by me in the Chrysler Merger or any other shares of the capital
stock of Newco until after such time as results covering at least 30 days of
operations of Newco have been published by Newco, in the form of a quarterly
earnings report, an effective registration statement filed with the
Commission, a report to the Commission on Form 20-F or 6-K, or any other
public filing or announcement which includes the combined results of
operations of Chrysler and Daimler-Benz (the period commencing 30 days prior
to the Effective Time and ending on the date of the publication of the
post-Chrysler Merger financial results is referred to herein as the "Pooling
Period"). Newco shall notify the "affiliates" of the publication of such
results. Notwithstanding the foregoing, I understand that during the
aforementioned period, subject to providing written notice to Newco, I will
not be prohibited from selling up to 10% of the Newco ADSs (the "10%
Shares") received by me or the shares of Chrysler Common Stock owned by me
or making charitable contributions or bona fide gifts of the Newco ADSs
received by me or the shares of Chrysler Common Stock owned by me, subject
to the same restrictions. The 10% Shares shall be calculated in accordance
with SEC Accounting Series Release No. 135 as amended by Staff Accounting
Bulletin No. 76. I covenant with Newco that I will not sell, transfer or
otherwise dispose of any 10% Shares during the period commencing on the
Effective Time and ending on the last day of the Pooling Period except in
compliance with Rule 145(d)(i) under the Act or pursuant to charitable
contributions or bona fide gifts.
A-52
<PAGE>
F. Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of Chrysler as described in the first
paragraph of this letter, or as a waiver of any rights I may have to object
to any claim that I am such an affiliate on or after the date of this
letter.
2. By Newco AG's acceptance of this letter, Newco AG hereby agrees with me
that for so long as and to the extent necessary to permit me to sell the Newco
ADSs pursuant to Rule 145 and, to the extent applicable, Rule 144 under the Act,
Newco AG shall (a) use its reasonable best efforts (i) to file, on a timely
basis, all reports and data required to be filed with the Commission by it
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, and
(ii) to furnish me upon request a written statement as to whether Newco AG has
complied with such reporting requirements during the 12 months preceding any
proposed sale of the Newco ADSs by me under Rule 145, and (b) otherwise use its
reasonable efforts to permit such sales pursuant to Rule 145 and Rule 144.
Very truly yours,
--------------------------------------
Name:
Agreed and accepted this day of , 1998, by
<TABLE>
<S> <C> <C>
DAIMLER-BENZ AKTIENGESELLSCHAFT
By: ----------------------------------------
Name:
Title:
By: ----------------------------------------
Name:
Title:
CHRYSLER CORPORATION
By: ----------------------------------------
Name:
Title:
OPPENHEIM AKTIENGESELLSCHAFT
By: ----------------------------------------
Name:
Title:
By: ----------------------------------------
Name:
Title:
</TABLE>
A-53
<PAGE>
Exhibit B-2 to Annex A
FORM OF AFFILIATE LETTER FOR AFFILIATES OF
DAIMLER-BENZ AKTIENGESELLSCHAFT
Chrysler Corporation
1000 Chrysler Drive
Auburn Hills, Michigan 48326
Daimler-Benz Aktiengesellschaft
225 Epplestrasse
70567 Stuttgart
Germany
Oppenheim Aktiengesellschaft
Unter Sachsenhausen
50667 Koln
Germany
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed to be
an "affiliate" of Daimler-Benz Aktiengesellschaft, an AKTIENGESELLSCHAFT
organized and existing under the laws of the Federal Republic of Germany
("Daimler-Benz"), as the term "affiliate" is (i) defined for purposes of
paragraphs (c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"), and/or (ii) used in and for
purposes of Accounting Series Releases No. 130 and No. 135, as amended, of the
Commission. Pursuant to the terms of the Business Combination Agreement, dated
as of May 7, 1998 (the "Business Combination Agreement"), among Daimler-Benz,
Chrysler Corporation, a Delaware corporation ("Chrysler"), and Oppenheim
Aktiengesellschaft, an AKTIENGESELLSCHAFT organized and existing under the laws
of the Federal Republic of Germany ("Newco AG"), pursuant to which (i) Newco AG
will exchange one ordinary share of no par value of Newco AG (the "Newco
Ordinary Shares") or one Newco American Depositary Share representing one Newco
Ordinary Share (the "Newco ADSs"), for each outstanding ordinary share of DM 5
nominal value of Daimler-Benz or the corresponding no par value share, as the
case may be (the "Daimler-Benz Ordinary Shares") or Daimler-Benz American
Depositary Share representing one Daimler-Benz Ordinary Share (the "Daimler-Benz
ADSs") tendered pursuant to an exchange offer being made by Newco AG to all
holders of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs (the "Exchange
Offer"), (ii) simultaneously with the closing of the Exchange Offer, Chrysler
Merger Sub, a Delaware corporation, will merge, with and into Chrysler whereby
the Chrysler stockholders will have the right to receive Newco ADSs in exchange
for their shares of common stock, par value $1.00 per share, of Chrysler, and
(iii) following the Exchange Offer, Daimler-Benz will merge with and into Newco
AG (the "Daimler-Benz Merger") and all remaining outstanding Daimler-Benz
Ordinary Shares and Daimler-Benz ADSs will be converted into Newco Ordinary
Shares or Newco ADSs, as the case may be, and (iv) stockholders of each of
Chrysler and Daimler-Benz will become stockholders of Newco AG. Capitalized
terms used in this letter without definition shall have the meanings assigned to
them in the Business Combination Agreement.
As a result of the Exchange Offer and/or the Daimler-Benz Merger, I may
receive Newco Ordinary Shares. I would receive such Newco Ordinary Shares in
exchange for Daimler-Benz Ordinary Shares owned by me.
1. I hereby represent, warrant and covenant to Newco AG, Chrysler and
Daimler-Benz that in the event I receive any Newco Ordinary Shares as a result
of the Exchange Offer and/or the Daimler-Benz Merger:
A-54
<PAGE>
A. I shall not make any offer, sale, pledge, transfer or other
disposition of Newco Ordinary Shares in violation of the Act or the Rules
and Regulations.
B. I have carefully read this letter and the Business Combination
Agreement and discussed the requirements of such documents and other
applicable limitations upon my ability to sell, transfer or otherwise
dispose of Newco Ordinary Shares, to the extent I felt necessary, with my
counsel or counsel for Daimler-Benz.
C. I have been advised that the issuance of the Newco Ordinary Shares
to me pursuant to the Exchange Offer or the Daimler-Benz Merger has been
registered with the Commission under the Act on a Registration Statement on
Form F-4. However, I have also been advised that, because at the time the
Exchange Offer and Daimler-Benz Merger are submitted for a vote of the
stockholders of Daimler-Benz, (a) I may be deemed to be an affiliate of
Daimler-Benz and (b) the distribution by me of the Newco Ordinary Shares has
not been registered under the Act, I may not sell, transfer or otherwise
dispose of the Newco Ordinary Shares issued to me in the Exchange Offer or
the Daimler-Benz Merger unless (i) such sale, transfer or other disposition
is made in conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the Act, (ii) such sale, transfer or
other disposition has been registered under the Act, or (iii) in the opinion
of counsel reasonably acceptable to Newco AG, or a "no action" letter
obtained by the undersigned from the staff of the Commission such sale,
transfer or other disposition is otherwise exempt from registration under
the Act.
D. I understand that except as provided for in the Business Combination
Agreement, Newco AG is under no obligation to register the sale, transfer or
other disposition of the Newco Ordinary Shares by me or on my behalf under
the Act or, except as provided in paragraph 2 below, to take any other
action necessary in order to make compliance with an exemption from such
registration available.
E. I further represent to, and covenant with, Newco AG, Daimler-Benz
and Chrysler that I will not, during the 30 days prior to the Effective
Time, sell, transfer or otherwise dispose of or reduce my risk (as
contemplated by the SEC Accounting Series Release No. 135) with respect to
Daimler-Benz Ordinary Shares and Daimler-Benz ADSs that I may hold and,
furthermore, that I will not sell, transfer or otherwise dispose of or
reduce my risk (as contemplated by SEC Accounting Series Release No. 135)
with respect to the Newco Ordinary Shares received by me in the Exchange
Offer and/or the Daimler-Benz Merger or any other shares of capital stock of
Newco AG until after such time as results covering at least 30 days of
operations of Newco AG have been published by Newco AG, in the form of a
quarterly earnings report, an effective registration statement filed with
the Commission, a report to the Commission on Form 20-F or 6-K, or any other
public filing or announcement which includes the combined results of
operations of Chrysler and Daimler-Benz (the period commencing 30 days prior
to the Effective Time and ending on the date of the publication of the
post-Chrysler Merger financial results is referred to herein as the "Pooling
Period"). Newco AG shall notify the "affiliates" of the publication of such
results. Notwithstanding the foregoing, I understand that during the
aforementioned period, subject to providing written notice to Newco AG, I
will not be prohibited from selling up to 10% of the Newco Ordinary Shares
(the "10% Shares") received by me or the Daimler-Benz Ordinary Shares owned
by me or making charitable contributions or bona fide gifts of the Newco
Ordinary Shares received by me or the Daimler-Benz Ordinary Shares owned by
me, subject to the same restrictions. The 10% Shares shall be calculated in
accordance with SEC Accounting Series Release No. 135 as amended by Staff
Accounting Bulletin No. 76. I covenant with Newco AG that I will not sell,
transfer or otherwise dispose of any 10% Shares during the period commencing
on the Effective Time and ending on the last day of the Pooling Period
except in compliance with Rule 145(d)(i) under the Act or pursuant to
charitable contributions or bona fide gifts.
F. Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of Daimler-Benz as described in the first
paragraph of this letter, or as a waiver of any rights I may have to object
to any claim that I am such an affiliate on or after the date of this
letter.
2. By Newco AG's acceptance of this letter, Newco AG hereby agrees with me
that for so long as and to the extent necessary to permit me to sell the Newco
Ordinary Shares pursuant to Rule 145 and, to the extent
A-55
<PAGE>
applicable, Rule 144 under the Act, Newco AG shall (a) use its reasonable best
efforts (i) to file, on a timely basis, all reports and data required to be
filed with the Commission by it pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended, and (ii) to furnish me upon request a written
statement as to whether Newco has complied with such reporting requirements
during the 12 months preceding any proposed sale of the Newco Ordinary Shares by
me under Rule 145, and (b) otherwise use its reasonable efforts to permit such
sales pursuant to Rule 145 and Rule 144.
Very truly yours,
______________________________________
Name:
Agreed and accepted this day
of , 1998, by
<TABLE>
<S> <C> <C>
DAIMLER-BENZ AKTIENGESELLSCHAFT
By: ------------------------------------
Name:
Title:
By: ------------------------------------
Name:
Title:
CHRYSLER CORPORATION
By: ------------------------------------
Name:
Title:
OPPENHEIM AKTIENGESELLSCHAFT
By: ------------------------------------
Name:
Title:
By: ------------------------------------
Name:
Title:
<CAPTION>
By:
By:
CHRYSLER
By:
OPPENHEIM
By:
By:
</TABLE>
A-56
<PAGE>
Exhibit C to Annex A
FORM OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CHRYSLER MERGER SUB
The undersigned, [Officer], certifies that he is the [Title] of Chrysler
Merger Sub, a corporation organized and existing under the laws of the State of
Delaware (the "Corporation"), and does hereby further certify as follows:
(a) The name of the Corporation is Chrysler Merger Sub.
(b) The name under which the Corporation was originally incorporated was
Chrysler Merger Sub and the original Certificate of Incorporation of the
Corporation was filed with the Secretary of State of the State of Delaware
on May , 1998.
(c) This Amended and Restated Certificate of Incorporation was duly
adopted in accordance with the provisions of Sections 242 and 245 of the
General Corporation Law of the State of Delaware.
(d) The text of the Certificate of Incorporation of the Corporation as
amended hereby is restated to read in its entirety, as follows:
FIRST: The name of the Corporation is Chrysler Corporation (hereinafter, the
"Corporation").
SECOND: The address of the registered office of the Corporation in the State
of Delaware is 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of its registered agent at that address is The Corporation
Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the
"GCL").
FOURTH: The total number of shares of stock which the Corporation shall have
authority to issue is 1,000 shares of Common Stock, each having a par value of
one penny ($.01).
FIFTH: The name and mailing address of the Sole Incorporator is as follows:
<TABLE>
<CAPTION>
Name Address
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
[ ] [ ]
[ ]
</TABLE>
SIXTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(1) The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors.
(2) The directors shall have concurrent power with the stockholders to
make, alter, amend, change, add to or repeal the By-Laws of the Corporation.
(3) The number of directors of the Corporation shall be as from time to
time fixed by, or in the manner provided in, the By-Laws of the Corporation.
Election of directors need not be by written ballot unless the By-Laws so
provide.
A-57
<PAGE>
(4) No director shall be personally liable to the Corporation or any of
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) pursuant to Section 174 of the GCL, or (iv) for any
transaction from which the director derived an improper personal benefit.
Any repeal or modification of this Article SIXTH by the stockholders of the
Corporation shall not adversely affect any right or protection of a director
of the Corporation existing at the time of such repeal or modification with
respect to acts or omissions occurring prior to such repeal or modification.
(5) In addition to the powers and authority hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised
or done by the Corporation, subject, nevertheless, to the provisions of the
GCL, this Certificate of Incorporation, and any By-Laws adopted by the
stockholders; PROVIDED, HOWEVER, that no By-Laws hereafter adopted by the
stockholders shall invalidate any prior act of the directors which would
have been valid if such By-Laws had not been adopted.
SEVENTH: The Corporation shall indemnify its directors and officers to the
fullest extent authorized or permitted by law, as now or hereafter in effect,
and such right to indemnification shall continue as to a person who has ceased
to be a director or officer of the Corporation and shall inure to the benefit of
his or her heirs, executors and personal and legal representatives; PROVIDED,
HOWEVER, that, except for proceedings to enforce rights to indemnification, the
Corporation shall not be obligated to indemnify any director or officer (or his
or her heirs, executors or personal or legal representatives) in connection with
a proceeding (or part thereof) initiated by such person unless such proceeding
(or part thereof) was authorized or consented to by the Board of Directors. The
right to indemnification conferred by this Article SEVENTH shall include the
right to be paid by the Corporation the expenses incurred in defending or
otherwise participating in any proceeding in advance of its final disposition.
The Corporation may, to the extent authorized from time to time by the Board
of Directors, provide rights to indemnification and to the advancement of
expenses to employees and agents of the Corporation similar to those conferred
in this Article SEVENTH to directors and officers of the Corporation.
The rights to indemnification and to the advance of expenses conferred in
this Article SEVENTH shall not be exclusive of any other right which any person
may have or hereafter acquire under the Certificate of Incorporation or the
By-Laws of the Corporation, any statute, agreement, vote of stockholders or
disinterested directors or otherwise.
Any repeal or modification of this Article SEVENTH by the stockholders of
the Corporation shall not adversely affect any rights to indemnification and to
the advancement of expenses of a director or officer of the Corporation existing
at the time of such repeal or modification with respect to any acts or omissions
occurring prior to such repeal or modification.
EIGHTH: Meetings of stockholders may be held within or without the State of
Delaware, as the By-Laws may provide. The books of the Corporation may be kept
(subject to any provision contained in the GCL) outside the State of Delaware at
such place or places as may be designated from time to time by the Board of
Directors or in the By-Laws of the Corporation.
NINTH: The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
IN WITNESS WHEREOF, Chrysler Merger Sub has caused this Certificate to be
duly executed in its corporate name this day of , 1998.
CHRYSLER MERGER SUB
By:_______________________________
Name:
Title:
A-58
<PAGE>
Exhibit D to Annex A
FORM OF
BY-LAWS
OF
CHRYSLER MERGER SUB
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors.
SECTION 2. ANNUAL MEETINGS. The Annual Meetings of Stockholders for the
election of directors shall be held on such date and at such time as shall be
designated from time to time by the Board of Directors. Any other proper
business may be transacted at the Annual Meeting of Stockholders.
SECTION 3. SPECIAL MEETINGS. Unless otherwise required by law or by the
certificate of incorporation of the Corporation, as amended and restated from
time to time (the "Certificate of Incorporation"), Special Meetings of
Stockholders, for any purpose or purposes, may be called by either (i) the
Chairman, if there be one, or (ii) the President, (iii) any Vice President, if
there be one, (iv) the Secretary or (v) any Assistant Secretary, if there be
one, and shall be called by any such officer at the request in writing of (i)
the Board of Directors, (ii) a committee of the Board of Directors that has been
duly designated by the Board of Directors and whose powers and authority include
the power to call such meetings or (iii) stockholders owning a majority of the
capital stock of the Corporation issued and outstanding and entitled to vote.
Such request shall state the purpose or purposes of the proposed meeting. At a
Special Meeting of Stockholders, only such business shall be conducted as shall
be specified in the notice of meeting (or any supplement thereto).
SECTION 4. NOTICE. Whenever stockholders are required or permitted to
take any action at a meeting, a written notice of the meeting shall be given
which shall state the place, date and hour of the meeting, and, in the case of a
special meeting, the purpose or purposes for which the meeting is called. Unless
otherwise required by law, the written notice of any meeting shall be given not
less than ten nor more than sixty days before the date of the meeting to each
stockholder entitled to vote at such meeting.
A-59
<PAGE>
SECTION 5. ADJOURNMENTS. Any meeting of the stockholders may be adjourned
from time to time to reconvene at the same or some other place, and notice need
not be given of any such adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting, the Corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
SECTION 6. QUORUM. Unless otherwise required by law or the Certificate of
Incorporation, the holders of a majority of the capital stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business. A quorum, once established, shall not be broken by the
withdrawal of enough votes to leave less than a quorum. If, however, such quorum
shall not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, in the manner
provided in Section 5, until a quorum shall be present or represented.
SECTION 7. VOTING. Unless otherwise required by law, the Certificate of
Incorporation or these By-laws, any question brought before any meeting of
stockholders, other than the election of directors, shall be decided by the vote
of the holders of a majority of the total number of votes of the capital stock
represented and entitled to vote thereat, voting as a single class. Unless
otherwise provided in the Certificate of Incorporation, and subject to Section 5
of Article V hereof, each stockholder represented at a meeting of stockholders
shall be entitled to cast one vote for each share of the capital stock entitled
to vote thereat held by such stockholder. Such votes may be cast in person or by
proxy but no proxy shall be voted on or after three years from its date, unless
such proxy provides for a longer period. The Board of Directors, in its
discretion, or the officer of the Corporation presiding at a meeting of
stockholders, in such officer's discretion, may require that any votes cast at
such meeting shall be cast by written ballot.
SECTION 8. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Unless otherwise
provided in the Certificate of Incorporation, any action required or permitted
to be taken at any Annual or Special Meeting of Stockholders of the Corporation
may be taken without a meeting, without prior notice and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the Corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the Corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty days of the
earliest dated consent delivered in the manner required by this Section 8 to the
Corporation, written consents signed by a sufficient number of holders to take
action are delivered to the Corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the Corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing and who, if the action
had been taken at a meeting, would have been entitled to notice of the meeting
if the record date for such meeting had been the date that written consents
signed by a sufficient number of holders to take the action were delivered to
the Corporation as provided above in this section.
SECTION 9. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary
A-60
<PAGE>
business hours, for a period of at least ten days prior to the meeting either at
a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder of the Corporation who is present.
SECTION 10. STOCK LEDGER. The stock ledger of the Corporation shall be
the only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 9 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
SECTION 11. CONDUCT OF MEETINGS. The Board of Directors of the
Corporation may adopt by resolution such rules and regulations for the conduct
of the meeting of the stockholders as it shall deem appropriate. Except to the
extent inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of the stockholders shall have the right
and authority to prescribe such rules, regulations and procedures and to do all
such acts as, in the judgment of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of Directors or prescribed by the chairman of the meeting, may
include, without limitation, the following: (i) the establishment of an agenda
or order of business for the meeting; (ii) the determination of when the polls
shall open and close for any given matter to be voted on at the meeting; (iii)
rules and procedures for maintaining order at the meeting and the safety of
those present; (iv) limitations on attendance at or participation in the meeting
to stockholders of record of the corporation, their duly authorized and
constituted proxies or such other persons as the chairman of the meeting shall
determine; (v) restrictions on entry to the meeting after the time fixed for the
commencement thereof; and (vi) limitations on the time allotted to questions or
comments by participants.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND ELECTION OF DIRECTORS. The Board of Directors shall
consist of not less than one nor more than fifteen members, the exact number of
which shall initially be fixed by the Incorporator and thereafter from time to
time by the Board of Directors. Except as provided in Section 2 of this Article
III, directors shall be elected by a plurality of the votes cast at the Annual
Meetings of Stockholders and each director so elected shall hold office until
the next Annual Meeting of Stockholders and until such director's successor is
duly elected and qualified, or until such director's earlier death, resignation
or removal. Any director may resign at any time upon written notice to the
Corporation. Directors need not be stockholders.
SECTION 2. VACANCIES. Unless otherwise required by law or the Certificate
of Incorporation, vacancies arising through death, resignation, removal, an
increase in the number of directors or otherwise may be filled only by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until the
next Annual Meeting of Stockholders and until their successors are duly elected
and qualified, or until their earlier death, resignation or removal.
SECTION 3. DUTIES AND POWERS. The business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by these
By-Laws required to be exercised or done by the stockholders.
SECTION 4. MEETINGS. The Board of Directors may hold meetings, both
regular and special, either within or without the State of Delaware. Regular
meetings of the Board of Directors may be held without notice at such time and
at such place as may from time to time be determined by the Board of Directors.
Special meetings of the Board of Directors may be called by the Chairman, if
there be one, the President, or by any director. Notice thereof stating the
place, date and hour of the meeting shall be given to each director either by
mail not less than forty-eight (48) hours before the date of the meeting, by
telephone or telegram on twenty-four (24) hours'
A-61
<PAGE>
notice, or on such shorter notice as the person or persons calling such meeting
may deem necessary or appropriate in the circumstances.
SECTION 5. QUORUM. Except as otherwise required by law or the Certificate
of Incorporation, at all meetings of the Board of Directors, a majority of the
entire Board of Directors shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors. If a quorum
shall not be present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting of the time and place of the adjourned meeting,
until a quorum shall be present.
SECTION 6. ACTIONS BY WRITTEN CONSENT. Unless otherwise provided in the
Certificate of Incorporation, or these By-Laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
SECTION 7. MEETINGS BY MEANS OF CONFERENCE TELEPHONE. Unless otherwise
provided in the Certificate of Incorporation, members of the Board of Directors
of the Corporation, or any committee thereof, may participate in a meeting of
the Board of Directors or such committee by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this
Section 7 shall constitute presence in person at such meeting.
SECTION 8. COMMITTEES. The Board of Directors may designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of any such committee. In the absence or disqualification
of a member of a committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member. Any committee, to the
extent permitted by law and provided in the resolution establishing such
committee, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers which
may require it. Each committee shall keep regular minutes and report to the
Board of Directors when required.
SECTION 9. COMPENSATION. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be paid a
fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director, payable in cash or securities. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
SECTION 10. INTERESTED DIRECTORS. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers or have a financial interest, shall be void or voidable solely for this
reason, or solely because the director or officer is present at or participates
in the meeting of the Board of Directors or committee thereof which authorizes
the contract or transaction, or solely because the director or officer's vote is
counted for such purpose if (i) the material facts as to the director or
officer's relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee, and the Board
of Directors or committee in good faith authorizes the contract or transaction
by the affirmative votes of a majority of the disinterested directors, even
though the disinterested directors be less than a quorum; or (ii) the material
facts as to the director or officer's relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or (iii) the contract or transaction is
fair as to the Corporation as of the time it is authorized,
A-62
<PAGE>
approved or ratified by the Board of Directors, a committee thereof or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
ARTICLE IV
OFFICERS
SECTION 1. GENERAL. The officers of the Corporation shall be chosen by
the Board of Directors and shall include a President, a Secretary and a
Treasurer. The Board of Directors, in its discretion, also may choose a Chairman
of the Board of Directors (who must be a director) and one or more Vice
Presidents, Assistant Secretaries, Assistant Treasurers and other officers. Any
number of offices may be held by the same person, unless otherwise prohibited by
law or the Certificate of Incorporation. The officers of the Corporation need
not be stockholders of the Corporation nor, except in the case of the Chairman
of the Board of Directors, need such officers be directors of the Corporation.
SECTION 2. ELECTION. The Board of Directors, at its first meeting held
after each Annual Meeting of Stockholders (or action by written consent of
stockholders in lieu of the Annual Meeting of Stockholders), shall elect the
officers of the Corporation who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors; and all officers of the Corporation
shall hold office until their successors are chosen and qualified, or until
their earlier death, resignation or removal. Any officer elected by the Board of
Directors may be removed at any time by the affirmative vote of the Board of
Directors. Any vacancy occurring in any office of the Corporation shall be
filled by the Board of Directors. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors.
SECTION 3. VOTING SECURITIES OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the President or any Vice President or any
other officer authorized to do so by the Board of Directors and any such officer
may, in the name of and on behalf of the Corporation, take all such action as
any such officer may deem advisable to vote in person or by proxy at any meeting
of security holders of any corporation in which the Corporation may own
securities and at any such meeting shall possess and may exercise any and all
rights and power incident to the ownership of such securities and which, as the
owner thereof, the Corporation might have exercised and possessed if present.
The Board of Directors may, by resolution, from time to time confer like powers
upon any other person or persons.
SECTION 4. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board
of Directors, if there be one, shall preside at all meetings of the stockholders
and of the Board of Directors. The Chairman of the Board of Directors shall be
the Chief Executive Officer of the Corporation, unless the Board of Directors
designates the President as the Chief Executive Officer, and, except where by
law the signature of the President is required, the Chairman of the Board of
Directors shall possess the same power as the President to sign all contracts,
certificates and other instruments of the Corporation which may be authorized by
the Board of Directors. During the absence or disability of the President, the
Chairman of the Board of Directors shall exercise all the powers and discharge
all the duties of the President. The Chairman of the Board of Directors shall
also perform such other duties and may exercise such other powers as may from
time to time be assigned by these By-Laws or by the Board of Directors.
SECTION 5. PRESIDENT. The President shall, subject to the control of the
Board of Directors and, if there be one, the Chairman of the Board of Directors,
have general supervision of the business of the Corporation and shall see that
all orders and resolutions of the Board of Directors are carried into effect.
The President shall execute all bonds, mortgages, contracts and other
instruments of the Corporation requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except that the other officers of the Corporation may sign and
execute documents when so authorized by these By-Laws, the Board of Directors or
the President. In the absence or disability of the Chairman of the Board of
Directors, or if there be none, the President shall preside at all meetings of
the stockholders and the Board of
A-63
<PAGE>
Directors. If there be no Chairman of the Board of Directors, or if the Board of
Directors shall otherwise designate, the President shall be the Chief Executive
Officer of the Corporation. The President shall also perform such other duties
and may exercise such other powers as may from time to time be assigned to such
officer by these By-Laws or by the Board of Directors.
SECTION 6. VICE PRESIDENTS. At the request of the President or in the
President's absence or in the event
of the President's inability or refusal to act (and if there be no Chairman of
the Board of Directors), the Vice President, or the Vice Presidents if there is
more than one (in the order designated by the Board of Directors), shall perform
the duties of the President, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President. Each Vice President
shall perform such other duties and have such other powers as the Board of
Directors from time to time may prescribe. If there be no Chairman of the Board
of Directors and no Vice President, the Board of Directors shall designate the
officer of the Corporation who, in the absence of the President or in the event
of the inability or refusal of the President to act, shall perform the duties of
the President, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the President.
SECTION 7. SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for committees of the Board of
Directors when required. The Secretary shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors, the Chairman of the Board of Directors or the President, under
whose supervision the Secretary shall be. If the Secretary shall be unable or
shall refuse to cause to be given notice of all meetings of the stockholders and
special meetings of the Board of Directors, and if there be no Assistant
Secretary, then either the Board of Directors or the President may choose
another officer to cause such notice to be given. The Secretary shall have
custody of the seal of the Corporation and the Secretary or any Assistant
Secretary, if there be one, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by the signature
of the Secretary or by the signature of any such Assistant Secretary. The Board
of Directors may give general authority to any other officer to affix the seal
of the Corporation and to attest to the affixing by such officer's signature.
The Secretary shall see that all books, reports, statements, certificates and
other documents and records required by law to be kept or filed are properly
kept or filed, as the case may be.
SECTION 8. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all transactions as Treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, the Treasurer shall give the Corporation
a bond in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of the office
of the Treasurer and for the restoration to the Corporation, in case of the
Treasurer's death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in the Treasurer's
possession or under the Treasurer's control belonging to the Corporation.
SECTION 9. ASSISTANT SECRETARIES. Assistant Secretaries, if there be any,
shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Secretary, and in the absence of the Secretary or in the
event of the Secretary's disability or refusal to act, shall perform the duties
of the Secretary, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Secretary.
SECTION 10. ASSISTANT TREASURERS. Assistant Treasurers, if there be any,
shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any
A-64
<PAGE>
Vice President, if there be one, or the Treasurer, and in the absence of the
Treasurer or in the event of the Treasurer's disability or refusal to act, shall
perform the duties of the Treasurer, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the Treasurer. If required
by the Board of Directors, an Assistant Treasurer shall give the Corporation a
bond in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of the office
of Assistant Treasurer and for the restoration to the Corporation, in case of
the Assistant Treasurer's death, resignation, retirement or removal from office,
of all books, papers, vouchers, money and other property of whatever kind in the
Assistant Treasurer's possession or under the Assistant Treasurer's control
belonging to the Corporation.
SECTION 11. OTHER OFFICERS. Such other officers as the Board of Directors
may choose shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Directors. The Board of Directors may
delegate to any other officer of the Corporation the power to choose such other
officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the Corporation
shall be entitled to have a certificate signed, in the name of the Corporation
(i) by the Chairman of the Board of Directors, the President or a Vice President
and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Corporation, certifying the number of shares owned by
such stockholder in the Corporation.
SECTION 2. SIGNATURES. Any or all of the signatures on a certificate may
be a facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the Corporation with the same effect as if such
person were such officer, transfer agent or registrar at the date of issue.
SECTION 3. LOST CERTIFICATES. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or the owner's legal representative, to advertise the same in such
manner as the Board of Directors shall require and/or to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost, stolen or destroyed or the issuance of such new certificate.
SECTION 4. TRANSFERS. Stock of the Corporation shall be transferable in
the manner prescribed by law and in these By-Laws. Transfers of stock shall be
made on the books of the Corporation only by the person named in the certificate
or by such person's attorney lawfully constituted in writing and upon the
surrender of the certificate therefor, which shall be cancelled before a new
certificate shall be issued. No transfer of stock shall be valid as against the
Corporation for any purpose until it shall have been entered in the stock
records of the Corporation by an entry showing from and to whom transferred.
SECTION 5. RECORD DATE.
(a) In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
the board of directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors, and which record date shall not be more than sixty nor
less than ten days before the date of such meeting. If no record date is fixed
by the Board of Directors, the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next
A-65
<PAGE>
preceding the day on which the meeting is held. A determination of stockholders
of record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; providing, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the Board of Directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the Board of Directors, and
which record date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
law, shall be the first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the Corporation by delivery
to its registered office in this State, its principal place of business, or an
officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is required by law, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolutions taking such prior action.
(c) In order that the Corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any rights
or the stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
SECTION 6. RECORD OWNERS. The Corporation shall be entitled to recognize
the exclusive right of a person registered on its books as the owner of shares
to receive dividends, and to vote as such owner, and to hold liable for calls
and assessments a person registered on its books as the owner of shares, and
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise required by law.
ARTICLE VI
NOTICES
SECTION 1. NOTICES. Whenever written notice is required by law, the
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at such
person's address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Written notice may also
be given personally or by telegram, telex or cable.
SECTION 2. WAIVERS OF NOTICE. Whenever any notice is required by law, the
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, a waiver thereof in writing, signed, by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Attendance of a person at a
meeting, present in person or represented by proxy, shall constitute a waiver of
notice of such meeting, except where the person attends the meeting for the
express purpose of objecting at the beginning of the meeting to the transaction
of any business because the meeting is not lawfully called or convened.
A-66
<PAGE>
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the requirements of the DGCL and the provisions of the
Certificate of Incorporation, if any, may be declared by the Board of Directors
at any regular or special meeting of the Board of Directors (or any action by
written consent in lieu thereof in accordance with Section 6 of Article III
hereof), and may be paid in cash, in property, or in shares of the Corporation's
capital stock. Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
of Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.
SECTION 2. DISBURSEMENTS. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
SECTION 4. CORPORATE SEAL. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
SECTION 1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN
THOSE BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of this
Article VIII, the Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director or officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe such person's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which such person reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.
SECTION 2. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN
THE RIGHT OF THE CORPORATION. Subject to Section 3 of this Article VIII, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that such person is or was a director or officer of the Corporation, or is
or was a director or officer of the Corporation serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit
if such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of
A-67
<PAGE>
the Corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
SECTION 3. AUTHORIZATION OF INDEMNIFICATION. Any indemnification under
this Article VIII (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because such person has met the applicable standard of conduct set forth in
Section 1 or Section 2 of this Article VIII, as the case may be. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (i) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (ii) by a committee of such directors designated by a
majority vote of such directors, even though less than a quorum, or (iii) if
there are no such directors, or if such directors so direct, by independent
legal counsel in a written opinion or (iv) by the stockholders. Such
determination shall be made, with respect to former directors and officers, by
any person or persons having the authority to act on the matter on behalf of the
Corporation. To the extent, however, that a present or former director or
officer of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding described above, or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith, without the necessity of authorization in the
specific case.
SECTION 4. GOOD FAITH DEFINED. For purposes of any determination under
Section 3 of this Article VIII, a person shall be deemed to have acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the Corporation, or, with respect to any criminal action
or proceeding, to have had no reasonable cause to believe such person's conduct
was unlawful, if such person's action is based on the records or books of
account of the Corporation or another enterprise, or on information supplied to
such person by the officers of the Corporation or another enterprise in the
course of their duties, or on the advice of legal counsel for the Corporation or
another enterprise or on information or records given or reports made to the
Corporation or another enterprise by an independent certified public accountant
or by an appraiser or other expert selected with reasonable care by the
Corporation or another enterprise. The term "another enterprise" as used in this
Section 4 shall mean any other corporation or any partnership, joint venture,
trust, employee benefit plan or other enterprise of which such person is or was
serving at the request of the Corporation as a director, officer, employee or
agent. The provisions of this Section 4 shall not be deemed to be exclusive or
to limit in any way the circumstances in which a person may be deemed to have
met the applicable standard of conduct set forth in Section 1 or 2 of this
Article VIII, as the case may be.
SECTION 5. INDEMNIFICATION BY A COURT. Notwithstanding any contrary
determination in the specific case under Section 3 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director or
officer may apply to the Court of Chancery in the State of Delaware for
indemnification to the extent otherwise permissible under Sections 1 and 2 of
this Article VIII. The basis of such indemnification by a court shall be a
determination by such court that indemnification of the director or officer is
proper in the circumstances because such person has met the applicable standards
of conduct set forth in Section 1 or 2 of this Article VIII, as the case may be.
Neither a contrary determination in the specific case under Section 3 of this
Article VIII nor the absence of any determination thereunder shall be a defense
to such application or create a presumption that the director or officer seeking
indemnification has not met any applicable standard of conduct. Notice of any
application for indemnification pursuant to this Section 5 shall be given to the
Corporation promptly upon the filing of such application. If successful, in
whole or in part, the director or officer seeking indemnification shall also be
entitled to be paid the expense of prosecuting such application.
SECTION 6. EXPENSES PAYABLE IN ADVANCE. Expenses incurred by a director
or officer in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the Corporation in
A-68
<PAGE>
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not entitled to
be indemnified by the Corporation as authorized in this Article VIII.
SECTION 7. NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES. The indemnification and advancement of expenses provided by or
granted pursuant to this Article VIII shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under the Certificate of Incorporation, any By-Law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, it being the policy of the Corporation that indemnification of the
persons specified in Sections 1 and 2 of this Article VIII shall be made to the
fullest extent permitted by law. The provisions of this Article VIII shall not
be deemed to preclude the indemnification of any person who is not specified in
Section 1 or 2 of this Article VIII but whom the Corporation has the power or
obligation to indemnify under the provisions of the General Corporation Law of
the State of Delaware, or otherwise.
SECTION 8. INSURANCE. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director or officer of the Corporation,
or is or was a director or officer of the Corporation serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise against any liability asserted against such person and incurred by
such person in any such capacity, or arising out of such person's status as
such, whether or not the Corporation would have the power or the obligation to
indemnify such person against such liability under the provisions of this
Article VIII.
SECTION 9. CERTAIN DEFINITIONS. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer of
such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, shall stand in
the same position under the provisions of this Article VIII with respect to the
resulting or surviving corporation as such person would have with respect to
such constituent corporation if its separate existence had continued. For
purposes of this Article VIII, references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director or officer with
respect to an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner such person reasonably believed
to be in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in this Article VIII.
SECTION 10. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Article VIII shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
SECTION 11. LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained in this Article VIII to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 5 hereof),
the Corporation shall not be obligated to indemnify any director or officer in
connection with a proceeding (or part thereof) initiated by such person unless
such proceeding (or part thereof) was authorized or consented to by the Board of
Directors of the Corporation.
SECTION 12. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation may,
to the extent authorized from time to time by the Board of Directors, provide
rights to indemnification and to the advancement of
A-69
<PAGE>
expenses to employees and agents of the Corporation similar to those conferred
in this Article VIII to directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
SECTION 1. AMENDMENTS. These By-Laws may be altered, amended or repealed,
in whole or in part, or new By-Laws may be adopted by the stockholders or by the
Board of Directors, provided, however, that notice of such alteration,
amendment, repeal or adoption of new By-Laws be contained in the notice of such
meeting of stockholders or Board of Directors as the case may be. All such
amendments must be approved by either the holders of a majority of the
outstanding capital stock entitled to vote thereon or by a majority of the
entire Board of Directors then in office.
SECTION 2. ENTIRE BOARD OF DIRECTORS. As used in this Article IX and in
these By-Laws generally, the term "entire Board of Directors" means the total
number of directors which the Corporation would have if there were no vacancies.
* * *
<TABLE>
<S> <C>
Adopted as of:
Last Amended as of:
</TABLE>
A-70
<PAGE>
Exhibit E to Annex A
DESIGNATED OFFICERS
OF
DAIMLER-BENZ AG AND CHRYSLER CORPORATION
<TABLE>
<S> <C>
Jurgen E. Schrempp Robert J. Eaton
Manfred Gentz Thomas T. Stallkamp
Eckhard Cordes Gary C. Valade
Jurgen Hubbert Theodor R. Cunningham
Manfred Bischoff Thomas C. Gale
Kurt Lauk James P. Holden
Klaus Mangold Dennis K. Pawley
Heiner Tropitzsch Thomas W. Sidlik
Klaus-Dieter
Vohringer
Dieter Zetsche
</TABLE>
A-71
<PAGE>
Annex B
<TABLE>
<S> <C>
[Letterhead of Credit Suisse First Boston Corporation]
</TABLE>
May 6, 1998
The Board of Directors
Chrysler Corporation
1000 Chrysler Drive
Auburn Hills, MI 48325-2766
Ladies and Gentlemen:
You have asked us to advise you with respect to the fairness to the holders
of the common stock of Chrysler Corporation ("Chrysler")from a financial point
of view of the consideration to be received by such holders pursuant to the
terms of the Business Combination Agreement, dated as of May 7, 1998 (the
"Business Combination Agreement"), among Chrysler, Daimler-Benz
Aktiengesellschaft ("Daimler") and Oppenheim Aktiengesellschaft (which is to be
renamed DaimlerChrysler Aktiengesellschaft ("DaimlerChrysler")). The Business
Combination Agreement provides for, among other things, the merger (the
"Chrysler Merger") of Chrysler Merger Sub ("Chrysler Merger Sub") with and into
Chrysler, with Chrysler as the surviving corporation in the Chrysler Merger (the
"U.S. Surviving Corporation"), pursuant to which each outstanding share of
common stock, par value $1.00 per share, of Chrysler ("Chrysler Common Stock")
(other than shares held by Chrysler or any of its wholly-owned subsidiaries)
will be converted into the right to receive 0.547 (subject to adjustment as set
forth in the Business Combination Agreement) of a DaimlerChrysler American
Depositary Share (the "U.S. Exchange Ratio"). Each DaimlerChrysler American
Depositary Share (a "DaimlerChrysler ADS") represents one DaimlerChrysler
Ordinary Share of DM 5 nominal value (a "DaimlerChrysler Ordinary Share").
The Business Combination Agreement further provides that (1) Daimler will
commence an offer (the "Daimler Exchange Offer") to (i) the holders of Ordinary
Shares of DM 5 nominal value each or the corresponding no-par value shares of
Daimler ("Daimler Ordinary Shares") to exchange one DaimlerChrysler Ordinary
Share for each Daimler Ordinary Share held by such holder and (ii) the holders
of Daimler American Depositary Shares representing Daimler Ordinary Shares
("Daimler ADS") to exchange one DaimlerChrysler ADS for each Daimler ADS held by
such holder (the consummation of the Daimler Exchange Offer by Daimler on the
terms set forth in the Business Combination Agreement is referred to herein as
the "German Share Exchange"); (2) prior to the effectiveness of the Chrysler
Merger, it is contemplated that Chrysler shall issue and sell approximately 30
million shares of Chrysler Common Stock; (3) in the Chrysler Merger, each
outstanding share of Chrysler Merger Sub Common Stock will continue to be an
issued and outstanding share of common stock, par value $0.01 per share, of the
U.S. Surviving Corporation (the "Surviving Corporation Common Stock"); and
DaimlerChrysler will deliver, for the account of all of the former holders of
Chrysler Common Stock, all of the DaimlerChrysler ADSs to be issued in the
Chrysler Merger to the U.S. Exchange Agent selected by Chrysler (the "U.S.
Exchange Agent"), and the U.S. Exchange Agent will deliver all of the issued and
outstanding shares of Surviving Corporation Common Stock to DaimlerChrysler, as
a transfer in kind (the "U.S. Share Exchange"); and (4) pursuant to the Business
Combination Agreement and a German Merger Agreement (as defined in the Business
Combination Agreement) to be entered into by Daimler and DaimlerChrysler,
Daimler will merge with and into DaimlerChrysler (the "Daimler Merger") and as a
result of the Daimler Merger each Daimler Ordinary Share shall embody solely the
right to receive one DaimlerChrysler Ordinary Share and each Daimler ADS shall
embody solely the right to receive one DaimlerChrysler ADS. The Daimler Exchange
Offer (and the German Share Exchange), the Chrysler Merger, the U.S. Share
Exchange and the Daimler Merger are collectively referred to herein as the
"Transactions".
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to Chrysler and Daimler as well as a
draft of the Business Combination Agreement. We have also reviewed certain other
information, including financial forecasts provided to us by Chrysler and
Daimler, and have met with Chrysler's and Daimler's managements to discuss the
business and prospects of Chrysler and Daimler.
<PAGE>
<TABLE>
<S> <C>
[LOGO] Page 2
</TABLE>
We have also considered certain financial and stock market data of Chrysler
and Daimler, and we have compared those data with similar data for other
publicly held companies in businesses similar to Chrysler and Daimler and we
have considered the financial terms of certain other business combinations and
other transactions which have recently been affected. We also considered such
other information, financial studies, analyses and investigations and financial,
economic and market criteria which we deemed relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
it being complete and accurate in all material respects. With respect to the
financial forecasts, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of
Chrysler's and Daimler's managements as to the future financial performance of
Chrysler and Daimler. We have also assumed, with your consent, that the
Transactions will be consummated in the manner and on the terms set forth in the
Business Combination Agreement and that in the course of obtaining the necessary
legal, regulatory and third party consents and approvals no restriction will be
imposed that will have a material adverse effect on the contemplated benefits of
the Transactions. In addition, we have not been requested to make, and have not
made, an independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) or Chrysler or Daimler, nor have we been furnished
with any such evaluations or appraisals. We were not requested to, and did not,
solicit third party indications of interest in acquiring all or any part of
Chrysler. Our opinion is necessarily based upon financial, economic, market and
other conditions as they exist and can be evaluated on the date hereof. We are
not expressing any opinion as to the actual value of the DaimlerChrysler ADSs
when issued to Chrysler's stockholders pursuant to the Chrysler Merger and the
U.S. Share Exchange or the prices at which such DaimlerChrysler ADSs will trade
subsequent to any of the Transactions.
We have acted as financial advisor to Chrysler in connection with the
Transactions and will receive a fee for our services, a significant portion of
which is contingent upon the consummation of the Transactions. In the past, we
have performed certain investment banking services for Chrysler and have
received customary fees for such services. To the extent that Chrysler issues
Chrysler Common Stock in connection with the Transactions, we will perform
certain investment banking services for Chrysler related thereto and receive
customary fees for such services. In the ordinary course of our business, we and
our affiliates may actively trade the debt and equity securities of both
Chrysler and Daimler for our and such affiliates' own accounts and for the
accounts of customers and, accordingly may at any time hold a long or short
position in such securities.
It is understood that this letter is for the information of the Board of
Directors of Chrysler in connection with its consideration of the Transactions
and does not constitute a recommendation to any stockholder as to how such
stockholder should vote on the proposed Chrysler Merger and the transactions
contemplated thereby.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the U.S. Exchange Ratio is fair to the holders of Chrysler Common
Stock from a financial point of view.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
B-2
<PAGE>
Annex C
[Letterhead of Goldman, Sachs & Co. oHG]
PERSONAL AND CONFIDENTIAL
May 8, 1998
Management Board and Supervisory Board
Daimler-Benz AG
Epplestrasse 225
70546 Stuttgart
Germany
Gentlemen and Madame:
You have requested our opinion as to the fairness from a financial point of
view to the holders (other than Chrysler Corporation ("Chrysler") and its
affiliates) of the outstanding ordinary shares of DM 5 nominal value or the
corresponding no par value share, as the case may be (the "Daimler-Benz Ordinary
Shares") of Daimler-Benz AG, an Aktiengesellschaft organized and existing under
the laws of the Federal Republic of Germany ("Daimler-Benz"), including those
Daimler-Benz Ordinary Shares represented by Daimler-Benz ADSs (as defined
below), of the Daimler-Benz Exchange Ratio (as defined below) to be received by
the holders of Daimler-Benz Ordinary Shares in the Daimler-Benz Exchange Offer
and the Daimler-Benz Merger (each as defined below) pursuant to the Business
Combination Agreement, dated as of May 7, 1998, among Daimler-Benz, Chrysler and
DaimlerChrysler AG, an Aktiengesellschaft organized and existing under the laws
of the Federal Republic of Germany ("DaimlerChrysler") (the "Agreement").
The Agreement provides that DaimlerChrysler will commence an exchange offer,
which may consist of one offer made in the United States and one made elsewhere
(the "Daimler-Benz Exchange Offer") to: (i) the holders of Daimler-Benz Ordinary
Shares to exchange, subject to certain conditions, one no par value ordinary
share of DaimlerChrysler (the "DaimlerChrysler Ordinary Shares") for each
Daimler-Benz Ordinary Share held by such holder; and (ii) the holders of
Daimler-Benz American Depositary Shares representing Daimler-Benz Ordinary
Shares (the "Daimler-Benz ADSs") to exchange, subject to certain conditions, one
DaimlerChrysler American Depositary Share representing one DaimlerChrysler
Ordinary Share (the "DaimlerChrysler ADSs") for each Daimler-Benz ADS held by
such holder (such one-for-one exchange offered in the foregoing clauses (i) and
(ii) being referred to herein as the "Daimler-Benz Exchange Offer Ratio"). The
Daimler-Benz Exchange Offer is subject to, among other things, the satisfaction
or waiver of the condition that such number of Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs which in the aggregate represent at least that number of
outstanding Daimler-Benz Ordinary Shares required for the transactions
contemplated by the Agreement to be accounted for as a pooling of interests
under United States generally accepted accounting principles shall have been
validly tendered, not withdrawn and available for purchase immediately prior to
the Daimler-Benz Exchange Offer Expiration Date (as defined in the Agreement).
The Agreement further provides that immediately following the consummation of
the Daimler-Benz Exchange Offer, Chrysler Incorporated, a Delaware corporation,
will merge with and into Chrysler with Chrysler being the surviving corporation
(the "Chrysler Merger") whereby the Chrysler stockholders will have the right to
receive a fraction of a DaimlerChrysler ADS equal to the U.S. Exchange Ratio (as
defined in the Agreement) in exchange for each share of common stock, par value
$1.00 per share, of Chrysler (the "Chrysler Common Stock"). Based on assumptions
provided by senior management of Daimler-Benz, as of the date hereof, the U.S.
Exchange Ratio pursuant to the Agreement would be 0.6235. As soon as possible
following the Chrysler Merger, it is intended that Daimler-Benz will merge with
and into DaimlerChrysler with DaimlerChrysler being the surviving corporation
(the "Daimler-Benz Merger") whereby: (i) each outstanding Daimler-Benz Ordinary
Share will have the right to receive one DaimlerChrysler Ordinary Share; and
(ii) each outstanding Daimler-Benz ADS will have the right to receive one
DaimerChrysler ADS (such one-for-one exchange ratio in the foregoing clauses (i)
and (ii) being referred to herein as the
<PAGE>
"Daimler-Benz Merger Exchange Ratio"). Stockholders of each of Chrysler and
Daimler-Benz will become stockholders of DaimlerChrysler. For purposes of this
opinion, the term "Daimler-Benz Exchange Ratio" means the Daimler-Benz Exchange
Offer Ratio and the Daimler-Benz Merger Exchange Ratio, collectively, after
taking into account the Chrysler Merger.
Goldman, Sachs & Co. oHG and its affiliates ("Goldman Sachs"), as part of
its investment banking business, is continually engaged in the valuation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes. We are familiar with Daimler-Benz having acted as
its financial advisor in connection with, and having participated in certain of
the negotiations leading to, the Agreement. In addition, we are familiar with
Daimler-Benz having acted as its financial advisor in connection with the sale
of TEMIC Semiconductor GmbH in 1998; the acquisition of a defense electronics
business from Siemens AG in 1998; the merger of Mercedes Benz AG with
Daimler-Benz in 1997; the sale of 80% of Dornier Luftfahrt GmbH of Daimler-Benz
Aerospace AG in 1996; the merger of AEG AG into Daimler-Benz in 1996; the sale
of 80% of Dornier Medizintechnik GmbH in 1996; a series of capital markets
transactions including a number of equity and equity-linked offerings from 1994
to 1997; and sponsorship and advisory services pertaining to Daimler-Benz's NYSE
listing in 1993. We also have provided certain investment banking services to
Chrysler from time to time including serving as a co-manager in the issuance of
$600 million 7.45% Debentures due 2027 and $500 million 7.4% Debentures due 2097
in February 1997 and July 1997, respectively. Goldman Sachs provides a full
range of financial advisory and securities services and, in the course of its
normal trading activities, may from time to time effect transactions and hold
securities, including derivative securities, of Daimler-Benz or Chrysler for its
own account and for the accounts of customers. As of May 7, 1998, Goldman Sachs
accumulated net short position of 23,548 shares of Daimler-Benz and net long
position of 160,154 shares of Chrysler.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders of Daimler-Benz and Chrysler for the
five years ended December 31, 1997; Annual Reports on Form 10-K of Chrysler for
the five years ended December 31, 1997; Annual Reports on Form 20-F of Daimler-
Benz for the four years ended December 31, 1997; certain interim reports to
stockholders of Daimler-Benz and Chrysler and Quarterly Reports on Form 10-Q of
Chrysler; certain other communications from Daimler-Benz and Chrysler to their
respective stockholders; and certain internal financial analyses and forecasts
for Daimler-Benz and Chrysler prepared by their respective managements including
the cost savings projected by the Daimler-Benz and Chrysler managements to
result from the transactions contemplated by the Agreement. We also have held
discussions with the members of the senior management of Daimler-Benz and
Chrysler regarding the strategic rationale for, and the potential benefits of,
the transaction contemplated by the Agreement and the past and current business
operations, financial condition and future prospects of their respective
companies. In addition, we have reviewed the reported price and trading activity
for the Daimler-Benz Ordinary Shares and Daimler-Benz ADSs and Chrysler Common
Stock, compared certain financial and stock market information for Daimler-Benz
and Chrysler with similar information for certain other companies the securities
of which are publicly traded, reviewed the financial terms of certain recent
business combinations in the automotive manufacturing industry specifically and
in other industries generally and performed such other studies and analyses as
we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial
and other information reviewed by us and have assumed such accuracy and
completeness for purposes of rendering this opinion. In addition, we have not
made an independent evaluation or appraisal of the assets and liabilities of
Daimler-Benz or Chrysler or any of their subsidiaries and we have not been
furnished with any such evaluation or appraisal. We have assumed, with your
consent, that the financial forecasts, including, without limitation, the cost
savings projected by Daimler-Benz and Chrysler managements to result from the
transactions contemplated by the Agreement, have been reasonably prepared on a
basis reflecting the best currently available judgements and estimates of
Daimler-Benz and Chrysler managements and that such forecasts will be realized
in the amount and at the times contemplated thereby. We are not expressing any
opinion herein as to the prices at which
C-2
<PAGE>
DaimlerChrysler Ordinary Shares may trade if and when they are issued. Our
advisory services and the opinion expressed herein are provided for the
information and assistance of the Management Board and the Supervisory Board of
Daimler-Benz in connection with its consideration of the transactions
contemplated by the Agreement and such opinion does not constitute a
recommendation as to how any holder of Daimler-Benz Ordinary Shares or
Daimler-Benz ADSs should vote with respect to such transaction or whether or not
any holder of Daimler-Benz Ordinary Shares or Daimler-Benz ADSs should tender
such securities in connection with such transaction. In addition, the opinion
and any such advice provided by Goldman Sachs oHG is not and should not be
considered a value opinion (Bewertung z.B. im Rahmen einer Verschmelzung) as
usually rendered by qualified auditors based on the requirements of German
corporate law; depending on the nature of the transaction, such a value opinion
may be required independent of our opinion.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that as of the date hereof the
Daimler-Benz Exchange Ratio pursuant to the Agreement is fair from a financial
point of view to the holders of Daimer-Benz Ordinary Shares (including those
Daimler-Benz Ordinary Shares represented by Daimler-Benz ADSs).
Very truly yours,
GOLDMAN, SACHS & CO. oHG
C-3
<PAGE>
Annex D
DAIMLERCHRYSLER AG
Memorandum and Articles of Association
<PAGE>
I. General Provisions
Section 1 Name, Registered Office
The name of the stock corporation is DaimlerChrysler AG. Its registered
office is situated in Stuttgart.
Section 2 Object
(1) The object of the company is to pursue, directly or indirectly, business in
the fields of development, production and sale of products and rendering of
services, in particular in the following lines of business:
- vehicles for use on land,
- vehicles for use on water, in the air and in space and other products in
the fields of transport, aerospace, space, and marine technology,
- engines and other technological propulsion systems,
- plants, machinery and equipment for power generation, distribution and
utilisation,
- electrical and electronic equipment, plants and systems,
- communication and information technology, business consultancy,
- financial services of all kinds, insurance brokerage, and activities in
the fields of media and expositions, and
- management and development of real property.
(2) The company is empowered to take all actions and measures which serve the
attainment of its objects.
(3) The company may set up domestic as well as foreign subsidiaries and acquire
interests in other companies. The company may purchase, dispose of, bring
under joint management and conclude inter-company agreements with other
companies, or limit itself to the management of its interest. The company is
authorized to, wholly, or partly, drop-down its business in subsidiaries.
(4) The company itself is not permitted to carry out banking and real property
transactions directly, which are subject to licence-requirements.
II. Capital Stock and Shares
Section 3 Capital Stock
(1) The capital stock of the company amounts to DM(1) [ ](2) and is divided up
into [ ] no par value registered shares.
(2) The Board of Management is authorized upon the approval of the Supervisory
Board to increase the capital stock in the period up to April 30, 2003 by a
total of up to DM 500,000,000 (authorized capital I) in a lump
- ------------------------
(1) Board of Management and Supervisory Board shall be granted authorization
to convert to EURO as of January 1, 1999.
(2) The present capital stock of the company amounts to DM 100,000, divided up
into 20,000 no par value registered shares. However, the capital will be
increased as follows: (i) in exchange for contribution in kind of the
Daimler-Benz- shares made available following the acceptance of the exchange
offer, (ii) in exchange for contribution in kind of the Chrysler-shares and
(iii) in order to consummate the merger of Daimler-Benz Aktiengesellschaft
into DaimlerChrysler AG. Moreover, authorized capitals will be created
(compare subsection (2), (3) and (7)). Finally, conditional capital will be
created which will be needed to satisfy exercises of holders of convertible
notes and warrants (compare subsections (5), (6), (8) and (9)).
D-2
<PAGE>
sum or in partial amounts by issuing new no par value registered shares in
exchange for cash contributions. At the same time, the shareholders shall be
granted stock subscription rights. The stock subscription rights of the
shareholders may be excluded to the extent that residual amounts are to be
offset. Furthermore, the stock subscription rights of the shareholders may
be excluded to the extent that it is necessary to extend to holders of
warrants or of convertible bonds or notes issued by Daimler-Benz
Aktiengesellschaft or its subsidiaries, or to be issued by DaimlerChrysler
AG or its subsidiaries in the future, subscription rights for new shares in
the volume to which they would be entitled after exercising the warrants or
conversion rights or after fulfilling conversion obligations. Finally, the
stock subscription rights may be excluded to the extent that the share in
capital stock allocated to the new shares exceeds neither a total of ten
percent of the capital stock existing at the time when this authorized
capital is registered nor a total of ten percent of the capital stock
existing at the time when the new shares are issued, and providing the issue
price of the new shares is not significantly lower within the meaning of
SectionSection 203.1, 203.2 and 186.3 Sent. 4 of the German Stock
Corporation Act than the market price.
(3) The Board of Management is authorized upon the approval of the Supervisory
Board to increase the capital stock in the period up to April 30, 2003 by a
total of up to DM 50,000,000 (authorized capital II) in a lump sum or in
partial amounts by issuing new no par value registered shares in exchange
for cash contributions for the purpose of issuing employee shares. At the
same time, subscription rights of the shareholders shall be excluded. The
Board of Management shall determine the additional conditions of issuance of
the shares upon the approval of the Supervisory Board.
(4)(3) The capital stock shall be conditionally increased by an additional DM
85,500,000 divided up into up to 17,100,000 no par value registered shares
with a proportionate amount of the capital stock of DM 5 allotted to each
share (conditional capital I). This conditional increase of capital shall be
accomplished only to the extent that the holders of warrants and conversion
rights attached to the 4 1/8%--DM--notes with warrants of 1996/2003 of
Daimler-Benz Capital (Luxembourg) AG ("DM--notes with warrants 1996/2003")
and to the 5 3/4 %--DM--subordinated mandatory convertible bearer notes of
1997/2002 of Daimler-Benz Aktiengesellschaft ("DM--mandatory convertible
notes 1997/2002") exercise their option or conversion rights after the time
when the merger with Daimler-Benz Aktiengesellschaft has become effective,
or to the extent that holders obligated to convert convertible notes
attached to the DM-- mandatory convertible notes 1997/2002 fulfill their
obligation to convert such notes after the time when the merger with
Daimler-Benz Aktiengesellschaft has become effective. The new shares created
through the DM--notes with warrants 1996/2003 shall participate in profits
as of the beginning of the financial year to which the "day of exercise"
(with the meaning determined in the warrants conditions) belongs, the new
shares created through the DM--mandatory convertible notes 1997/2002 as of
the beginning of the financial year in which they are issued.
(5)(4) The capital stock shall be conditionally increased by DM 78,300,000
divided up into up to 15,660,000 no par value registered shares with a
proportionate amount of the capital stock of DM 5 allotted to each share
(conditional capital II). This conditional increase of capital shall be
accomplished only to the extent that the holders of the convertible bonds
attached to the 5,9%--DM--convertible bonds of 1996/2006, to the
5,3%--DM--convertible bonds of 1997/2007, and to the 4,4%--DM--convertible
bonds of 1998/2008, issued by Daimler-Benz Aktiengesellschaft upon the
authorization of the annual general meeting of May 22, 1996, in conjunction
with the supplementary authorization of the annual general meeting on May
28, 1997, have conversion rights and exercise their conversion rights after
the time when the merger with DaimlerBenz Aktiengesellschaft has become
effective. The new shares shall participate in profits as of the beginning
of the financial year in which the conversion becomes effective.
(6)(5) The capital stock shall be conditionally increased by up to DM
200,000,000, divided up into up to 40,000,000 no par value registered shares
with a proportionate amount of the capital stock of DM 5 allotted to each
share (conditional capital III). The conditional capital increase shall be
accomplished only
- ------------------------
(3) This Section 3.4 will only be in force after the time when the merger has
become effective.
(4) This Section 3.5 will only be in force after the time when the merger has
become effective.
(5) This Section 3.6 will only be in force after the time when the
"Chrysler-capital increase" has become effective.
D-3
<PAGE>
to the extent that the holders of option or conversion rights attached to,
bonds or notes with warrants or convertible bonds or notes to be issued or
guaranteed by DaimlerChrysler AG or its wholly owned direct or indirect
subsidiaries by April 30, 2003 exercise their option or conversion rights,
or to the extent that the holders obligated to convert convertible bonds or
notes to be issued or guaranteed by DaimlerChrysler AG or its wholly owned
direct or indirect subsidiaries by April 30, 2003 fulfill their conversion
obligations. The new shares shall be entitled to participate in profits as
of the beginning of the financial year in which such shares come into
existence through the exercise of option or conversion rights or through the
fulfillment of conversion obligations.
(7)(6) The Board of Management is authorized upon the approval of the
Supervisory Board to increase the capital stock in the period up to December
31, 1999 by a total of up to DM 150,000,000 in a lump sum or in partial
amounts by issuing new no par value registered shares in exchange for
contributions in kind (authorized capital III). The shares shall each be
issued for the proportionate amount of the capital stock allotted to the
individual no par value share, i.e. for DM 5 each. The new shares shall
participate in profits as of the beginning of the financial year ending on
December 31, 1998, however, if the shares are issued after the company's
ordinary general meeting in 1999, they shall only participate in profits as
of the beginning of the financial year 1999.
The new shares are exclusively for the subscription of shareholders of
Daimler-Benz Aktiengesellschaft. At the same time, subscription rights of
the shareholders shall be excluded.
As consideration for shares subscribed by them, the shareholders of
Daimler-Benz Aktiengesellschaft have to transfer no par value bearer shares
of Daimler-Benz Aktiengesellschaft to the company. The shareholder of
Daimler-Benz Aktiengesellschaft shall receive one no par value share of the
company for each no par value share of Daimler-Benz Aktiengesellschaft with
a proportionate amount of the capital stock of DM 5 allotted to such a
share.(7)
The Board of Management shall determine the additional conditions of issuance
of the shares upon the approval of the Supervisory Board.
(8)(8) In addition, the capital stock shall be conditionally increased by up to
DM 85,500,000, divided up into up to 17,100,000 no par value registered
shares with a proportionate amount of the capital stock of DM 5 allotted to
each share (conditional capital IV). This conditional capital increase is
carried out for the consummation of the merger with Daimler-Benz
Aktiengesellschaft. It shall be accomplished only to the extent that as a
consequence of the exercise of option rights to subscription of shares of
Daimler-Benz Aktiengesellschaft attached to the 4-1/8% DM--notes with
warrants of 1996/2003 of Daimler-Benz Capital (Luxembourg) AG ("DM--notes
with warrants 1996/2003") and of the exercise of rights to conversion or of
obligations to convert into shares of Daimler-Benz Aktiengesellschaft
attached to the 5-3/4%--DM-- subordinated mandatory convertible bearer notes
of 1997/2002 of Daimler-Benz Aktiengesellschaft ("DM--mandatory convertible
notes 1997/2002") no par value shares of Daimler-Benz Aktiengesellschaft are
issued in the period from July 1, 1998 up to the time when the merger
becomes effective, if those are not exchanged into shares of the company
before the time when the merger becomes effective, and that, therefore,
there is a need for additional no par value shares of the company, exceeding
the no par value shares created through the unconditional capital increase
for the consummation of the merger with Daimler-Benz Aktiengesellschaft, in
order to exchange all shares of outside shareholders of Daimler-Benz
Aktiengesellschaft existing at the time when the merger becomes effective
into no par value shares of the
- ------------------------
(6) This Section 3.7 will only be of relevance for the implementation of the
merger, at the latest up to December 31, 1999. It may be deleted from the
Memorandum and Articles of Association after December 31, 1999.
(7) In the case of DaimlerChrysler receiving 90% or more of the shares of
Daimler-Benz AG pursuant to the preceding exchange, the last sentence of
Section 3.7 will be phrased as follows: The shareholder of Daimler-Benz
Aktiengesellschaft shall receive 1,005 no par value shares of the company
for each no par value share of Daimler-Benz Aktiengesellschaft with a
proportionate amount of the capital stock of DM 5 allotted to such a share.
(8) This Section 3.8 will only be of relevance up to the time of consummation
of the merger. Following this, it may be deleted from the Memorandum and
Articles of Association.
D-4
<PAGE>
company. The new shares created through the DM--notes with warrants
1996/2003 shall participate in profits as of the beginning of the financial
year to which the "day of exercise" (with the meaning determined in the
option conditions) belongs, the new shares created through the DM--mandatory
convertible notes 1997/2002 as of the beginning of the financial year in
which they are issued.
(9)(9) In addition, the capital stock shall be conditionally increased by up to
DM 78,300,000, divided up into up to 15,660,000 no par value registered
shares with a proportionate amount of the capital stock of DM 5 allotted to
each share (conditional capital V). This conditional capital increase is
carried out for the purpose of the consummation of the merger with
Daimler-Benz Aktiengesellschaft. It shall be accomplished only to the extent
that the holders of the convertible bonds attached to the
5,9%--DM--convertible bonds of 1996/2006 of Daimler-Benz Aktiengesellschaft,
to the 5,3%--DM--convertible bonds of 1997/2007 of Daimler-Benz
Aktiengesellschaft, and to the 4,4%--DM--convertible bonds of 1998/2008 of
Daimler-Benz Aktiengesellschaft, have rights of conversion into shares of
Daimler-Benz Aktiengesellschaft, and that as a consequence of the exercise
of such conversion rights in the period from July 1, 1998, up to the time,
when the merger becomes effective, new no par value shares of Daimler-Benz
Aktiengesellschaft are issued, which have not been exchanged for shares of
the company before the time when the merger becomes effective, and that,
therefore, there is a need for additional no par value shares of the
company, exceeding the no par value shares created through the unconditional
capital increase for the consummation of the merger with Daimler-Benz
Aktiengesellschaft, in order to exchange all shares of outside shareholders
of Daimler-Benz Aktiengesellschaft existing at the time when the merger
becomes effective into no par value shares of the company. The new shares
shall participate in profits as of the beginning of the financial year in
which the conversion becomes effective.
Section 4 Share Certificates
(1) The form and contents of share certificates, dividend coupons and renewal
coupons, if any, shall be determined by the Board of Management with the
agreement of the Supervisory Board. The same shall apply to debentures and
interest coupons.
(2) To the extent legally permissible and unless required under the rules of a
stock exchange where the shares are listed, shareholders' rights to stock
certificates and dividend coupons are disallowed. The company is granted the
right to issue share certificates, representing single shares (Einzelaktien)
or several shares (Sammelaktien).
III. The Board of Management
Section 5 Composition
The Board of Management shall consist of not less than two members. The
Supervisory Board shall appoint the members of the Board of Management in
accordance with the provisions of the Stock Corporation Act and the
Co-determination Act and shall determine their number.
Section 6 Representation of the Company
Two members of the Board of Management or one member of the Board of Management
and one holder of a special power of attorney (procura) shall be entitled to
represent the company.
- ------------------------
(9) This Section 3.9 will only be of relevance up to the time of consummation
of the merger. Following this it may be deleted from the Memorandum and
Articles of Association.
D-5
<PAGE>
IV. The Supervisory Board(10)
Section 7 Composition, Term of Office, Retirement
(1) The Supervisory Board shall consist of twenty members, of whom ten shall be
elected by the shareholders and ten by the employees. The appointment is for
a period ending no later than the close of the General Meeting which
ratifies the members' actions during the fourth financial year following the
commencement of their term of office, exclusive of the financial year in
which that term begins. The General Meeting may, when electing, determine a
shorter period of office for the shareholders' members.
(2) Any member of the Supervisory Board may, by four weeks' notice in writing to
the Chairman of the Supervisory Board, retire even without showing good
cause. The Chairman of the Supervisory Board, or in the case of a
resignation from his office by the Chairman his deputy, may grant the
consent to a reduction of the period.
(3) The term of office of the first Supervisory Board shall expire at the end of
(11).
Section 8 Chairman and Deputy Chairmen of the Supervisory Board
(1) Following the General Meeting at which the ten shareholders' representatives
on the Supervisory Board are elected, a meeting of the Supervisory Board
shall take place, to which an invitation need not be issued. At this
meeting, the Supervisory Board shall, in accordance with the
Co-determination Act, appoint two of its number to be Chairman and Deputy
Chairman for the duration of its term of office.
(2) If the Chairman or the Deputy Chairman retire before the expiration of their
term of office, a successor shall be elected without delay for the remainder
of the term.
Section 9 Committees of the Supervisory Board
(1) Following the election of the Chairman and Deputy Chairman of the
Supervisory Board, the Supervisory Board shall elect a committee for the
duration of its term of office pursuant to its obligations under section 31,
sub-section 3 of the Co-determination Act, which shall include the Chairman
and the Deputy Chairman of the Supervisory Board and two further members,
one to be elected by the employees' representatives on the Supervisory Board
from their midst and one by the shareholders' representatives from their
midst, by a majority of the votes cast.
(2) If one of the further members of the committee mentioned in sub-clause 1
retires prematurely, a successor shall be elected without delay for the
remainder of that member's term of office.
(3) Elections under sub-clause 2 shall be subject to the same regulations as
elections under sub-clause 1.
(4) The Supervisory Board may form from among its members committees entrusted
with special tasks or powers. To the extent permitted by law, the powers of
the Supervisory Board to pass resolutions may also be exercised by the
committees of the Supervisory Board. For resolutions in the committees,
clause 10,
- ------------------------
(10) The provisions of the Memorandum and Articles of Association which concern
the composition of the Supervisory Board according to the Co-determination
Act, and the other provisions of the Memorandum and Articles of Association
concerning co-determination (section 5 sentence 2, section 7 sub-section 1
sentence 1, section 8 sub-section 1, section 9 sub-section 1, 2 and 3,
section 9 sub-section 4 sentence 3, 2(nd) half-sentence, section 10
sub-section 3, section 10 sub- section 5, section 10 sub-section 6 sentence
3 to 5, section 10 sub-section 7 sentence 2, section 17 sub-section 1
sentence 1) will enter into force as soon as the capital increase for the
consummation of the exchange of Daimler-Benz- shares for
DaimlerChrysler-shares has been carried out, henceforth when the company has
gained a majority share in Daimler-Benz Aktiengesellschaft, and when the
status procedure ("Statusverfahren") pursuant to Section 97 Stock
Corporation Act has been completed. During the interim time span between
registration of the capital increase by contribution in kind and completion
of the status procedure, the Supervisory Board will consist of twelve
members to be elected by the shareholders.
(11) The date when the capital increase by contribution in kind of the
Daimler-Benz-shares following the exchanges is registered in the commercial
register.
D-6
<PAGE>
sub-clauses 6 to 8 shall apply, save as otherwise required by binding
statutory provisions; clause 10, sub-clause 5 shall not apply.
Section 10 Meetings, Resolutions and Statements of Intent of the Supervisory
Board
(1) Meetings of the Supervisory Board shall be convened by the Chairman of the
Supervisory Board or his Deputy if the Chairman is prevented from doing so.
Meetings shall be called in writing (including by telefax), by telex or by
telegram, with two weeks notice. The individual items on the agenda shall be
stated with such clarity as to allow members of the Supervisory Board not
present at the meeting to make use of their right to a written vote. In
urgent cases, the required notice of meeting may be shortened to three days.
(2) If due notice has not been given of any item on the agenda, a resolution may
be passed only if no member of the Supervisory Board objects.
Absent members of the Supervisory Board shall in such case be given the
opportunity to object to the resolution within a reasonable period to be
decided by the Chairman; the resolution shall only become effective if the
absent members of the Supervisory Board have not objected within the
specified period.
(3) A quorum of the Supervisory Board shall be constituted when invitations have
been issued to all its members at their last known address and at least ten
members of the Supervisory Board participate in passing the resolution.
(4) The Chairman of the Supervisory Board, or his Deputy if the Chairman is
prevented from doing so, shall preside as Chairman at meetings of the
Supervisory Board and shall decide the order of items on the agenda and the
manner of voting.
(5) If, when a resolution is to be passed, the members of the Supervisory Board
are not present in their entirety, and if those members not present do not
submit a written vote, the resolution shall be postponed if at least two of
the members present so request. In case of postponement and if a special
meeting of the Supervisory Board is not convened, the resolution shall be
deferred to the next regular meeting. On the second occasion, a minority
request for postponement shall not be permissible.
If the Chairman of the Supervisory Board is present at the meeting or if one
of the members present is in possession of his written vote, the above
sub-clause shall not apply when the number of shareholders' representatives
on the Supervisory Board present in person or submitting a written vote
equals the number of employees' representatives or when an inequality is
offset by the abstention of certain Supervisory Board members from the
voting.
(6) Resolutions shall be passed by a simple majority of votes cast unless other
forms of majority are required by law. In determining the result of the
vote, abstentions shall not be counted.
In the case of an equality of votes, any member of the Supervisory Board may
request that a second vote take place. The Chairman, or the Deputy Chairman
should the Chairman be prevented from doing so, shall decide when the vote
is to be repeated. If the second vote, too, results in an equality of votes,
the Chairman of the Supervisory Board shall have a second or casting vote.
(7) Members of the Supervisory Board who are not present may participate in a
resolution of the Supervisory Board and its committees by submitting a
written vote via other members. This shall apply also to the second vote of
the Chairman of the Supervisory Board.
(8) The Chairman of the Supervisory Board, or the Deputy Chairman should the
Chairman be prevented from doing so, may also arrange for the voting on a
resolution of the Supervisory Board to take place in writing (including by
telefax), by telex or by telegram if no member of the Supervisory Board
objects to this procedure within an appropriate period to be decided by the
Chairman.
(9) The Chairman of the Supervisory Board, or the Deputy Chairman if the
Chairman is prevented from doing so, shall issue the statements of intent of
the Supervisory Board and its committees and conduct their correspondence.
D-7
<PAGE>
(10) Minutes of the Supervisory Board's discussions and resolutions shall be
prepared and they shall be signed by the Chairman. The minutes shall be
forwarded to all members.
Section 11 Duty of Secrecy of Members of the Supervisory Board
The members of the Supervisory Board shall be bound to secrecy in respect of
confidential information and company secrets, in particular business or trade
secrets which become known to members of the Supervisory Board through their
activities on the Supervisory Board. If a member of the Supervisory Board
intends to pass on to third parties information, particularly about the
proceedings of a meeting of the Supervisory Board or the contents of documents
and resolutions of the Supervisory Board, he shall give prior notice to the
Chairman of the Supervisory Board in order to exclude any possible differences
of opinion in construing the duty of secrecy.
Section 12 Remuneration of the Supervisory Board
The members of the Supervisory Board shall receive, in addition to reimbursement
of their expenses (including the costs of any value added tax incurred by them
as a consequence of their office), a fixed remuneration to be paid after the
close of the financial year. The remuneration shall amount to DM 100,000 for the
individual member, twice this amount for the Chairman, 1.5 times this amount for
the deputy Chairman and 1.3 times this amount for members elected to committees
of the Supervisory Board. Furthermore, the members of the Supervisory Board
shall receive a flat fee of DM 2,000 for each meeting of the Supervisory Board.
V. The General Meeting
Section 13 Convening of General Meetings
(1) General Meetings shall be convened by the Board of Management or the
Supervisory Board. General Meetings shall take place at the registered
office of the company or at any other location not excluded by law.
(2) Notice of the meeting shall be given at least one month prior to the last
day on which the shareholders have to register for the General Meeting. The
term of notice shall be calculated exclusive of the day on which notice is
given and the last day of the period of registration.
Section 14 The Annual General Meeting
The General Meeting which ratifies the actions of the Board of Management and
the Supervisory Board, and approves the disposition of unappropriated profit,
the appointment of the auditor and, if applicable, the audited financial
statements (Annual General Meeting), shall take place within the first eight
months of each financial year.
Section 15 Requirements for Participation and the Exercise of Voting Rights
Those shareholders who are registered in the share register on the day of the
General Meeting and who have notified the company no later than on the third day
before the General Meeting shall be entitled to participate in General Meetings
and to exercise voting rights.
Section 16 Voting Rights
Each share represents one vote.
Section 17 Chairmanship of General Meetings
(1) The Chairman of the Supervisory Board shall preside as chairman at General
Meetings. If he is prevented from doing so, the Meeting shall be chaired by
a member of the Supervisory Board appointed by the Chairman or, failing such
appointment, the member elected by the shareholders' representatives on the
Supervisory Board in accordance with Section 27 Sub-section 3 of the
Co-determination Act. If none of the above-mentioned is present or none
agrees to chair the meeting, the Chairman of the Meeting shall be elected by
the Supervisory Board.
D-8
<PAGE>
(2) The Chairman shall preside over the proceedings and decide the order of
business and the manner of voting.
Section 18 Resolutions
(1) Resolutions shall be passed at General Meetings by a simple majority of
votes cast, save as otherwise required by binding provisions of the Stock
Corporation Act. If the Stock Corporation Act also requires that a
resolution be passed by a majority of the capital stock represented at the
Meeting, a simple majority of the capital represented shall suffice,
provided this is permitted by law.
(2) Changes to the Memorandum and Articles of Association which affect merely
the form of words may be passed by resolution of the Supervisory Board.
VI. Financial Statements and Disposition of the Unappropriated Profit
Section 19 Financial Year, Accounting
(1) The financial year is the calendar year.
(2) The Board of Management shall prepare the financial statements and the
business review for the previous financial year during the first three
months of the financial year and submit them to the auditor. Upon
preparation, the Board of Management shall immediately submit to the
Supervisory Board the financial statements and the business review together
with the proposal for disposition of the unappropriated profit which the
Board of Management intends to put before the General Meeting.
Section 20 Interim Distribution of the Unappropriated Profit
Following the end of the financial year, the Board of Management is--with the
approval of the Supervisory Board--permitted to make an interim payment to the
shareholders with respect to the foreseeable Unappropriated Profit, if a
preliminary closing of the Financial Statements of the past financial year shows
a profit for the year. The maximum to be paid is half of the amount which
remains of the Unappropriated Profit for the year after deducting the amounts
which, pursuant to law or to the Memorandum and Articles of Association, must be
transferred to the disclosed reserves. Furthermore, the interim payment shall
not exceed one half of the previous year's Unappropriated Profit.
Section 21 Criteria for the Shareholders' Participation in Profits
(1) The dividends paid to shareholders shall be proportional to their shares in
the stock capital.
(2) When new shares are issued, a different entitlement to profits may be
specified.
VII. Announcements
Section 22
Announcements of the company shall be published in the Federal Gazette.
VIII. Expenses of Formation
Section 23
Expenses and taxes incurred in connection with the formation of the company and
its registration in the commercial register (in particular notary- and court
fees, expenses for announcements, taxes, legal- and tax consultants' fees,
expenses for experts, bank fees) shall be borne by the company up to an amount
of DM 10,000 in total.
D-9
<PAGE>
Subject to Completion, dated September 16, 1998
OFFERING CIRCULAR-PROSPECTUS
Offer to Exchange
Each Outstanding Ordinary Share, No Par Value
and
Each Outstanding American Depositary Share
Representing One Ordinary Share, No Par Value
of
DAIMLER-BENZ AKTIENGESELLSCHAFT
for
One Ordinary Share, No Par Value
of
DAIMLERCHRYSLER AG
THE DAIMLER-BENZ EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
NOON, NEW YORK CITY TIME, ON FRIDAY, OCTOBER 23, 1998, UNLESS THE DAIMLER-BENZ
EXCHANGE OFFER IS EXTENDED. DAIMLER-BENZ ORDINARY SHARES OR DAIMLER-BENZ
AMERICAN DEPOSITARY SHARES TENDERED PURSUANT TO THE DAIMLER-BENZ EXCHANGE
OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION OF THE DAIMLER-BENZ
EXCHANGE OFFER.
DaimlerChrysler AG, a stock corporation (AKTIENGESELLSCHAFT) organized under
the laws of the Federal Republic of Germany ("DaimlerChrysler AG"), hereby
offers, upon the terms and subject to the conditions set forth herein and in the
related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "Daimler-Benz
Exchange Offer"), (i) to exchange one Ordinary Share, no par value (a
"DaimlerChrysler Ordinary Share"), of DaimlerChrysler AG for each outstanding
Ordinary Share, no par value (a "Daimler-Benz Ordinary Share"), of Daimler-Benz
Aktiengesellschaft, a stock corporation (AKTIENGESELLSCHAFT) organized under the
laws of the Federal Republic of Germany ("Daimler-Benz"), and (ii) to exchange
one DaimlerChrysler Ordinary Share for each outstanding American Depositary
Share of Daimler-Benz, representing one Daimler-Benz Ordinary Share (a "Daimler-
Benz ADS"); PROVIDED that, if the Minimum Condition (as hereinafter defined) is
satisfied so that the Transactions (as hereinafter defined) can be accounted for
as a pooling-of-interests, then each exchanging holder will receive 1.005
DaimlerChrysler Ordinary Shares for each share exchanged (such ratio referred to
in the foregoing clauses (i) and (ii), as it may be so adjusted, being referred
to herein as the "Daimler-Benz Exchange Offer Ratio") and in accordance with
Rule 14e-1(b) promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Daimler-Benz Exchange Offer will be extended so that
it will remain open for at least 10 business days from the date notice of such
increase is first published, sent or given to the Daimler-Benz security holders.
The Daimler-Benz Exchange Offer is conditioned upon, among other things,
there being validly tendered and not properly withdrawn prior to the expiration
of the Daimler-Benz Exchange Offer such number of Daimler-Benz Ordinary Shares
and Daimler-Benz ADSs which constitutes at least 90% of the then issued and
outstanding Daimler-Benz Ordinary Shares, including Daimler-Benz Ordinary Shares
represented by Daimler-Benz ADSs (the "Minimum Condition"); PROVIDED, HOWEVER,
that if the number of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs
tendered does not satisfy the Minimum Condition but equals at least 75% of the
issued and outstanding Daimler-Benz Ordinary Shares on a primary basis,
including Daimler-Benz Ordinary Shares represented by Daimler-Benz ADSs, at the
time of registration with the commercial register (HANDELSREGISTER) of the
capital increase relating to the DaimlerChrysler Ordinary Shares being issued in
exchange therefor (the "75% Minimum"), the Minimum Condition shall mean the 75%
Minimum, see "The Daimler-Benz Exchange Offer--Certain Conditions of the
Daimler-Benz Exchange Offer." Consistent with the Private Letter Ruling (as
hereinafter defined) received from the Internal Revenue Service on September 4,
1998, and in accordance with the provisions of the Combination Agreement (as
hereinafter defined), Daimler-Benz and Chrysler have agreed to the 75% Minimum
which represents a reduction from the requirement set forth in the Combination
Agreement that shares representing at least 80% of the capital stock of
Daimler-Benz on a fully diluted basis (the "80% Minimum") be tendered in order
to satisfy the 80% Minimum and permit the Minimum Condition to be redefined as
the 80% Minimum.
See "Risk Factors" beginning on page 26 of this Offering Circular-Prospectus
for certain information which should be considered by stockholders in connection
with a decision to exchange Daimler-Benz Ordinary Shares or Daimler-Benz ADSs in
the Daimler-Benz Exchange Offer.
------------------------
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS OFFERING CIRCULAR-PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Dealer Managers for the Daimler-Benz Exchange Offer are:
GOLDMAN, SACHS & CO. CREDIT SUISSE FIRST BOSTON DEUTSCHE BANK SECURITIES
The date of this Offering Circular-Prospectus is September 24, 1998.
<PAGE>
(COVER PAGE CONTINUED)
The Daimler-Benz Board of Management (VORSTAND) has unanimously determined
that the Daimler-Benz Exchange Offer and the Daimler-Benz Merger (as hereinafter
defined) are fair to and in the best interests of Daimler-Benz and its
stockholders and recommends that holders of Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs accept the Daimler-Benz Exchange Offer and tender their shares
pursuant to the Daimler-Benz Exchange Offer. In addition, the Daimler-Benz
Exchange Offer and the Daimler-Benz Merger have been unanimously approved by the
Supervisory Board of Daimler-Benz and [have been approved by the holders of
Daimler-Benz Ordinary Shares, including those shares represented by Daimler-Benz
ADSs.]
The Daimler-Benz Exchange Offer is being made pursuant to the Business
Combination Agreement, dated as of May 7, 1998 (as amended and restated, unless
the context otherwise requires, the "Combination Agreement"), among
Daimler-Benz, Chrysler Corporation, a Delaware corporation ("Chrysler"), and
DaimlerChrysler AG. The Daimler-Benz Exchange Offer is one in a series of
transactions described in this Offering Circular-Prospectus which together will
have the effect of combining the respective businesses, stockholder groups,
managements and other constituencies of Chrysler and Daimler-Benz in a
"merger-of-equals" transaction. The Combination Agreement is attached as Annex A
to this Offering Circular-Prospectus and is incorporated herein by reference.
Immediately following consummation of the Daimler-Benz Exchange Offer, a
newly formed Delaware corporation ("Chrysler Merger Sub") will be merged with
and into Chrysler (the "Chrysler Merger"). In the Chrysler Merger, each share of
common stock, par value $1.00 per share, of Chrysler (the "Chrysler Common
Stock"), other than Chrysler Common Stock held in treasury or by a wholly owned
subsidiary of Chrysler, will be converted into the right to receive .6235 (the
"U.S. Exchange Ratio") of a DaimlerChrysler Ordinary Share.
As soon as possible following the consummation of the Chrysler Merger, the
merger of Daimler-Benz with and into DaimlerChrysler AG (the "Daimler-Benz
Merger" and, together with the Chrysler Merger, the "Mergers") will be
consummated. As a result of the Daimler-Benz Merger, each outstanding
Daimler-Benz Ordinary Share will be converted into the right to receive that
number of DaimlerChrysler Ordinary Shares equal to the Daimler-Benz Exchange
Offer Ratio (such exchange ratio being referred to herein as the "Daimler-Benz
Merger Exchange Ratio"). The Daimler-Benz Exchange Offer and the Mergers
(including the U.S. Share Exchange (as hereinafter defined)) are collectively
referred to herein as the "Transactions." Immediately after the consummation of
the Transactions, based upon the number of shares of Chrysler Common Stock and
Daimler-Benz Ordinary Shares issued and outstanding on July 20, 1998, the former
stockholders of Chrysler will own approximately 42% and the former stockholders
of Daimler-Benz will own approximately 58% of the outstanding DaimlerChrysler
Ordinary Shares. If the Daimler-Benz Exchange Offer Ratio is changed to 1.005
DaimlerChrysler Ordinary Shares for each share exchanged, the respective
percentages would remain approximately the same, exclusive of the issuance of 30
million shares of Chrysler Common Stock in the Chrysler Stock Issuance (as
hereinafter defined). As a result of the Chrysler Merger and after consummation
of the Transactions, former Chrysler stockholders as well as former Daimler-Benz
stockholders will be stockholders of a company incorporated in Germany.
The two largest stockholders of Daimler-Benz, Deutsche Bank AG and the
Emirate of Kuwait, have notified Daimler-Benz that they intend to tender the
Daimler-Benz Ordinary Shares held by them for investment purposes in the
Daimler-Benz Exchange Offer.
It is a condition to the consummation of the Chrysler Merger that the
Daimler-Benz Exchange Offer be consummated. One of the conditions to the
Daimler-Benz Exchange Offer is that the Minimum Condition (or the 75% Minimum)
be satisfied. Although the exchange ratio in the Daimler-Benz Merger is the
same as the exchange ratio in the Daimler-Benz Exchange Offer, the
Daimler-Benz Merger will not occur unless the Daimler-Benz Exchange Offer is
successful. Accordingly, stockholders are urged to tender their Daimler-Benz
Ordinary Shares and Daimler-Benz ADSs in the Daimler-Benz Exchange Offer. In
addition, if the Minimum Condition is not achieved, it will not be possible to
account for the Transactions as a pooling-of-interests. Accounting for the
Transactions as a purchase will reduce reported earnings. See "The
Transactions--Anticipated Accounting Treatment." Moreover, it is imperative
that holders of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs desiring to
tender into the Daimler-Benz Exchange Offer do so on or prior to the
Daimler-Benz Exchange Offer Initial Expiration Date (as hereinafter defined)
in order for such shares to be included in determining whether the Minimum
Condition (or the 75% Minimum) has been satisfied. For a discussion of the tax
consequences of tendering in the Daimler-Benz Exchange Offer or participating
in the Daimler-Benz Merger, see "The Transactions--Certain Tax Consequences."
There is currently no trading market for the DaimlerChrysler Ordinary
Shares. However, because holders of Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs will have the right to exchange one Daimler-Benz Ordinary
Share or one Daimler-Benz ADS for one DaimlerChrysler Ordinary Share (or 1.005
DaimlerChrysler Ordinary Shares, as the case may be) pursuant to the
Daimler-Benz Exchange Offer, Daimler-Benz expects that the market price of a
DaimlerChrysler Ordinary Share received in the Chrysler Exchange (as hereinafter
defined) or the Daimler-Benz Exchange Offer should be substantially equivalent
to the market price of a Daimler-Benz Ordinary Share immediately prior to the
consummation of the Daimler-Benz Exchange Offer. The DaimlerChrysler Ordinary
Shares are expected to be approved for listing on the Frankfurt Stock Exchange
("FSE"). The DaimlerChrysler Ordinary Shares have been
ALT-2
<PAGE>
(COVER PAGE CONTINUED)
approved for listing on the New York Stock Exchange, Inc. (the "NYSE"), subject
to official notice of issuance, and will be traded thereon under the symbol
"DCX."
------------------------
IMPORTANT
Any holder desiring to tender such holder's Daimler-Benz ADSs should either
(1) complete and sign the Letter of Transmittal (or a facsimile thereof) in
accordance with the Instructions in the Letter of Transmittal, mail or deliver
it together with the certificate(s) evidencing the tendered Daimler-Benz ADSs
(the "ADS Certificates") and any other required documents to The Bank of New
York, the Exchange Agent, or tender Daimler-Benz ADSs pursuant to the procedure
for book-entry transfer described in "The Daimler-Benz Exchange
Offer--Procedures for Tendering Daimler-Benz ADSs or Daimler-Benz Ordinary
Shares," or (2) request such holder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for such holder. Holders
having Daimler-Benz ADSs registered in the name of a broker, dealer, commercial
bank, trust company or other nominee must contact such broker, dealer,
commercial bank, trust company or other nominee if they desire to tender
Daimler-Benz ADSs so registered.
The Deposit Agreement with respect to the Daimler-Benz ADSs will be amended
to provide that each holder of a Daimler-Benz ADS outstanding on the
Daimler-Benz Exchange Offer Expiration Date who has not tendered such holder's
Daimler-Benz ADSs pursuant to the Daimler-Benz Exchange Offer will be deemed to
have instructed the Depositary to tender all Daimler-Benz Ordinary Shares
represented thereby into the Daimler-Benz Exchange Offer, and the Depositary
will do so unless instructed otherwise by Daimler-Benz. Accordingly, holders of
Daimler-Benz ADSs who do not intend to tender their securities in the
Daimler-Benz Exchange Offer and who do not wish to have the Daimler-Benz
Ordinary Shares underlying their Daimler-Benz ADSs exchanged for DaimlerChrysler
Ordinary Shares must withdraw the Daimler-Benz Ordinary Shares underlying their
Daimler-Benz ADSs in accordance with the procedures described in "The
Daimler-Benz Exchange Offer--Amendment and Termination of the Deposit Agreement"
not later than the Daimler-Benz Exchange Offer Expiration Date.
Any holder of Daimler-Benz Ordinary Shares desiring to tender such holder's
Daimler-Benz Ordinary Shares should (1) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the Instructions in the
Letter of Transmittal and (2) mail or deliver it together with the
certificate(s) evidencing the tendered Daimler-Benz Ordinary Shares and dividend
coupons numbered 68 through 70 and the renewal coupon (not invalidated) (the
"Coupons") and any other required documents to The Bank of New York, or instruct
the depositary bank holding your Daimler-Benz Ordinary Shares and Coupons to
transfer such shares and coupons to the Custody Account of The Bank of New York,
Account Number 9583899-01 at Deutsche Bank AG, Frankfurt am Main, Germany
(Contact: Helga Feyer) (the "Depositary Bank Transfer Procedure") on or prior to
the Daimler-Benz Exchange Offer Expiration Date. Alternatively, holders of
Daimler-Benz Ordinary Shares may tender such shares in accordance with the
procedures, terms and conditions set forth in the Daimler-Benz Exchange Offer
materials (the "German Exchange Offer Materials") as published or provided to
you by the depositary bank in Germany holding your Daimler-Benz Ordinary Shares
and Coupons (the "Depositary Bank").
A holder who desires to tender Daimler-Benz ADSs and whose ADS Certificates
are not immediately available, or who cannot comply with the procedures for
book-entry transfer on a timely basis and any holder who desires to tender
Daimler-Benz Ordinary Shares and whose certificate(s) evidencing such
Daimler-Benz Ordinary Shares ("Ordinary Share Certificates") are not immediately
available or who cannot comply with the Depositary Bank Transfer Procedure on a
timely basis, may tender such Daimler-Benz ADSs or Daimler-Benz Ordinary Shares
by following the procedures for guaranteed delivery described herein. See "The
Daimler-Benz Exchange Offer-- Guaranteed Delivery."
Questions and requests for assistance may be directed to Goldman, Sachs &
Co., Credit Suisse First Boston Corporation or Deutsche Bank Securities (the
"Dealer Managers"), to D.F. King & Co., Inc. (the "Information Agent") or to the
Exchange Agent, at their respective addresses and telephone numbers set forth on
the back cover of this Offering Circular-Prospectus. In addition, holders of
Daimler-Benz Ordinary Shares who hold such shares though a depositary bank may
also direct questions and requests for assistance to such holders' depositary
banks. Additional copies of this Offering Circular-Prospectus, the Letter of
Transmittal and the Notice of Guaranteed Delivery may also be obtained from the
Dealer Managers, the Information Agent or from brokers, dealers, commercial
banks or trust companies.
------------------------
ALT-3
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE DAIMLER-BENZ EXCHANGE OFFER
THE FOLLOWING QUESTIONS AND ANSWERS ARE INTENDED TO PROVIDE BRIEF ANSWERS TO
CERTAIN COMMONLY ASKED QUESTIONS. THESE QUESTIONS AND ANSWERS DO NOT, AND ARE
NOT INTENDED TO, ADDRESS ALL QUESTIONS THAT MAY BE PERTINENT TO DAIMLER-BENZ
STOCKHOLDERS AND OTHER PROSPECTIVE INVESTORS, AND ARE QUALIFIED IN THEIR
ENTIRETY BY REFERENCE TO THE MORE DETAILED INFORMATION CONTAINED ELSEWHERE IN
THIS OFFERING CIRCULAR-PROSPECTUS, THE ANNEXES ATTACHED HERETO AND THE DOCUMENTS
REFERRED TO OR INCORPORATED HEREIN BY REFERENCE.
<TABLE>
<S> <C>
Q: Why is DaimlerChrysler AG making the
Daimler-Benz Exchange Offer?
A: The Daimler-Benz Exchange Offer is the
first step in a series of transactions
being entered into in order to effect the
proposed combination of Daimler-Benz and
Chrysler and to enable the Transactions to
qualify for the pooling-of-interests
method of accounting.
Q: What will I receive in exchange for my
Daimler-Benz securities?
A: You will receive shares of DaimlerChrysler
AG, an AKTIENGESELLSCHAFT organized and
existing under the laws of the Federal
Republic of Germany.
Q: How can I get 1.005 DaimlerChrysler
Ordinary Shares rather than only 1.000
DaimlerChrysler Ordinary Share?
A: You will only be entitled to receive the
extra .005 of a DaimlerChrysler Ordinary
Share if 90% or more of the Daimler-Benz
Ordinary Shares and ADSs are tendered in
the offer. Accordingly, you are strongly
encouraged to tender all of your shares on
or prior to the Daimler-Benz Exchange
Offer Initial Expiration Date in order for
such shares to be included in determining
whether this condition has been satisfied.
Q: I hold certificates for Daimler-Benz ADSs.
How do I participate in the Daimler-Benz
Exchange Offer?
A: If you hold certificates for Daimler-Benz
ADSs, complete and sign the Letter of
Transmittal and send it, together with
your certificates representing
Daimler-Benz ADSs and any other documents
required by the Letter of Transmittal, to
the Exchange Agent at one of the addresses
set forth on the back cover of this
Offering Circular-Prospectus before the
expiration of the Daimler-Benz Exchange
Offer. Do not send your certificates to
Daimler-Benz, DaimlerChrysler AG, the
Dealer Managers (Goldman, Sachs & Co.,
Credit Suisse First Boston Corporation and
Deutsche Bank Securities) or the
Information Agent (D.F. King & Co., Inc.).
Q: My ADSs are held by my broker. What should
I do if I want to participate in the
Daimler-Benz Exchange Offer?
A: If your ADSs are held by your broker and
are not certificated in your name (I.E.,
your ADSs are held in "street name"), you
should receive instructions from your
broker on how to participate in the offer.
In this situation, you do not need to
complete the Letter of Transmittal. If you
have not yet received instructions from
your broker, please contact your broker
directly.
Q: I hold Daimler-Benz Ordinary Shares. How
do I participate in the Daimler-Benz
Exchange Offer?
A: - If you hold your stock certificates and
dividend coupons numbered 68 through 70
and the renewal coupon (not
invalidated), you should complete and
sign the Letter of Transmittal (or a
facsimile thereof) in accordance with
the Instructions in the Letter of
Transmittal and mail or deliver it
together with such certificates and the
coupons and any other documents required
by the Letter of Transmittal to the
Exchange Agent at one of the addresses
set forth on the back cover of this
Offering Circular-Prospectus before the
expiration of the Daimler-Benz Exchange
Offer. Do not send your certificates and
coupons to Daimler-Benz, DaimlerChrysler
AG, the Dealer Managers (Goldman, Sachs
& Co., Credit Suisse First Boston
Corporation and Deutsche Bank
Securities) or the Information Agent
(D.F. King & Co., Inc.)
- If a German depositary bank holds your
Daimler-Benz Ordinary Shares, you should
(1) complete and sign the Letter of
Transmittal (or a facsimile thereof) in
accordance with the Instructions in the
Letter of Transmittal and mail or
deliver it to the Exchange Agent at one
of the addresses set forth on the back
cover of this Offering
Circular-Prospectus, and (2) instruct
the bank to transfer your Daimler-Benz
Ordinary Shares and dividend coupons
numbered 68 through 70 and the renewal
coupon (not invalidated) to the Custody
</TABLE>
ALT-4
<PAGE>
<TABLE>
<S> <C>
Account of The Bank of New York, Account
Number 9583899-01 at Deutsche Bank AG,
Frankfurt am Main, Germany (Contact:
Helga Feyer) before the expiration of
the Daimler-Benz Exchange Offer.
- Instead of either of the procedures
described above, you may follow the
instructions set forth in the
Daimler-Benz Exchange Offer materials as
published or provided to you by the
depositary bank in Germany holding your
Daimler-Benz Ordinary Shares and coupons
and tender your Daimler-Benz Ordinary
Shares in accordance with the
procedures, terms and conditions set
forth in such materials.
Q: Can I change my mind after I tender my
Daimler-Benz securities?
A: Yes. You may withdraw a tender of your
securities any time before the expiration
of the Daimler-Benz Exchange Offer. If you
change your mind and decide to tender, you
can retender your Daimler-Benz securities
by following the tender procedures again,
as long as you do so prior to the
expiration of the Daimler-Benz Exchange
Offer.
Q: Are there any conditions to Daimler-Benz'
obligation to complete the Daimler-Benz
Exchange Offer?
A: Yes, Daimler-Benz' obligation to complete
the Daimler-Benz Exchange Offer is subject
to the conditions set forth on page 41.
Q: Will you complete the Exchange Offer if
less than 90% of the Daimler-Benz shares
are tendered?
A: If all of the other conditions to the
offer are satisfied and at least 75% but
less than 90% of the issued and
outstanding Daimler-Benz shares are
tendered, we will complete the
Daimler-Benz Exchange Offer but the
Transactions will be treated as a purchase
rather than a pooling-of-interests for
accounting purposes. Accounting for the
Transactions as a purchase will reduce
reported earnings. For further information
see "The Transactions--Anticipated
Accounting Treatment" in this Offering
Circular-Prospectus.
Q: When does the Daimler-Benz Exchange Offer
expire?
A: The Daimler-Benz Exchange Offer and
withdrawal rights will initially expire at
12:00 Noon, New York City time, on Friday,
October 23, 1998. However, if 90% or more
of the Daimler-Benz Ordinary Shares are
tendered in the offer as of such date, the
U.S. federal securities laws require that
the offer remain open for a period of 10
business days from the date Daimler-Benz
publicizes the increase in the
Daimler-Benz Exchange Offer Ratio. The
U.S. federal securities laws also require
that the offer remain open for a period of
five business days if the Minimum
Condition is revised to the 75% Minimum
Condition.
Q: When will tendering stockholders know the
outcome of the Daimler-Benz Exchange
Offer?
A: Results of the Daimler-Benz Exchange Offer
will be announced by press release
promptly after the expiration of the
Daimler-Benz Exchange Offer.
Q: How will I be taxed on the DaimlerChrysler
AG shares that I receive in the
Daimler-Benz Exchange Offer?
A: Stockholders should not recognize taxable
gain or loss for United States federal
income tax purposes upon the exchange of
Daimler-Benz Ordinary Shares or
Daimler-Benz ADSs for DaimlerChrysler
Ordinary Shares, except with respect to
any cash received with respect to a
fractional DaimlerChrysler Ordinary Share.
The holding period for the DaimlerChrysler
Ordinary Shares received, which determines
how any gain or loss should be treated for
United States federal income tax purposes
upon future sales of DaimlerChrysler
Ordinary Shares, generally will include
the holding period for the Daimler-Benz
Ordinary Shares and Daimler-Benz ADSs
exchanged in the business combination. For
a fuller description of United States
federal income tax considerations, see
"The Transactions-- Certain Tax
Consequences."
Q: Whom should I call if I have questions or
want copies of additional documents?
A: If you need additional documents or have
any questions you may contact:
</TABLE>
The Information Agent:
D.F. King & Co., Inc.1-800-848-3094 (toll free)
The Dealer Managers:
Goldman, Sachs & Co. 1-800-323-5678 (toll free)
Credit Suisse First Boston
Corporation 1-800-881-8320 (toll free)
Deutsche Bank Securities
1-800-334-1898 (toll free)
ALT-5
<PAGE>
The Daimler-Benz Exchange Offer
<TABLE>
<S> <C>
Daimler-Benz Exchange
Offer Ratio............ 1.000 DaimlerChrysler Ordinary Share for each Daimler-Benz Ordinary
Share or Daimler-Benz ADS if less than 90% but at least 75% of the
issued and outstanding Daimler-Benz Ordinary Shares on a primary
basis, including Daimler-Benz Ordinary Shares represented by
Daimler-Benz ADSs, at the time of registration with the commercial
register (HANDELSREGISTER) of the capital increase relating to the
DaimlerChrysler Ordinary Shares being issued in exchange therefor
are tendered.
1.005 DaimlerChrysler Ordinary Shares for each Daimler-Benz
Ordinary Share or Daimler-Benz ADS if 90% or more of the
outstanding Daimler-Benz Ordinary Shares and Daimler-Benz ADSs are
tendered.
Daimler-Benz Merger
Exchange Ratio......... Same as the Daimler-Benz Exchange Offer Ratio described above.
Terms of the
Daimler-Benz
Exchange Offer......... DaimlerChrysler AG is offering, upon the terms and subject to the
conditions of the Daimler-Benz Exchange Offer, to exchange (i) that
number of DaimlerChrysler Ordinary Shares equal to the Daimler-Benz
Exchange Offer Ratio for each issued and outstanding Daimler-Benz
Ordinary Share, and (ii) that number of DaimlerChrysler Ordinary
Shares equal to the Daimler-Benz Exchange Offer Ratio for each
issued and outstanding Daimler-Benz ADS. To be eligible to receive
DaimlerChrysler Ordinary Shares pursuant to the Daimler-Benz
Exchange Offer, a holder of Daimler-Benz Ordinary Shares or
Daimler-Benz ADSs must validly tender and not properly withdraw
such shares on or prior to the Daimler-Benz Exchange Offer
Expiration Date (as hereinafter defined). See "The Daimler-Benz
Exchange Offer--Terms of the Daimler-Benz Exchange Offer;
Daimler-Benz Exchange Offer Expiration Date." The Daimler-Benz
Exchange Offer is being conducted simultaneously in jurisdictions
outside of the United States in accordance with the applicable laws
of such jurisdictions.
Daimler-Benz
Exchange Offer
Expiration Date........ The Daimler-Benz Exchange Offer expires at 12:00 Noon, New York
City time, on Friday, October 23, 1998 (the "Daimler-Benz Exchange
Offer Initial Expiration Date"), unless extended. The Combination
Agreement provides that if any of the conditions to the
consummation of the Daimler-Benz Exchange Offer are unsatisfied at
the Daimler-Benz Exchange Offer Initial Expiration Date and if
requested by either Chrysler or Daimler-Benz, or if requested by
either Chrysler or Daimler-Benz pursuant to clause (ii) below, the
Daimler-Benz Exchange Offer Initial Expiration Date will be
extended by DaimlerChrysler AG from time to time thereafter until
the earliest of (i) the maximum period permitted under the German
Takeover Code (UBERNAHMEKODEX DER BORSENSACHVERSTANDIGENKOMMISSION
BEIM BUNDESMINISTERIUM DER FINANZEN) (the "German Takeover Code")
or as otherwise approved by the Executive Office of the Takeover
Commission (UBERNAHMEKOMMISSION) pursuant to the German Takeover
Code (the "Executive Office of the Takeover Commission"), (ii) the
close of business (Central European Time) on the day on which
Daimler-Benz and DaimlerChrysler AG have publicly announced that
all of the conditions to the consummation of the Daimler-Benz
Exchange Offer shall have been satisfied or that they have been
duly waived (or, if later, a date that is five business days
following the Daimler-Benz Exchange Offer
</TABLE>
ALT-6
<PAGE>
<TABLE>
<S> <C>
Initial Expiration Date, if either Chrysler or Daimler-Benz shall
have requested DaimlerChrysler AG to extend the Daimler-Benz
Exchange Offer to such date), and (iii) such time as the
Combination Agreement is terminated as provided under "The
Combination Agreement--Termination." As used in this Offering
Circular-Prospectus, the "Daimler-Benz Exchange Offer Expiration
Date" means the latest date and time to which the Daimler-Benz
Exchange Offer is extended. See "The Daimler-Benz Exchange
Offer--Terms of the Daimler-Benz Exchange Offer; Daimler-Benz
Exchange Offer Expiration Date," "--Extension, Termination and
Amendment" and "--Certain Conditions of the Daimler-Benz Exchange
Offer."
Anticipated Extension
of the Daimler-Benz
Exchange Offer
Expiration Date........ In the event that the Minimum Condition is satisfied by virtue of
there being validly tendered and not properly withdrawn on or prior
to the Daimler-Benz Exchange Offer Expiration Date at least 90% of
the issued and outstanding Daimler-Benz Ordinary Shares (including
Daimler-Benz Ordinary Shares represented by Daimler-Benz ADSs), the
Daimler-Benz Exchange Offer Ratio will be 1.005 DaimlerChrysler
Ordinary Shares for each Daimler-Benz Ordinary Share or
Daimler-Benz ADS exchanged. Accordingly, if the Minimum Condition
has been satisfied, the Daimler-Benz Exchange Offer will be
extended in accordance with Rule 14e-1(b) under the Exchange Act so
that it will remain open for at least 10 business days from the
date notice of the increase in the Daimler-Benz Exchange Offer
Ratio as a result of the Minimum Condition having been satisfied is
first published, sent or given to Daimler-Benz security holders. In
the event that the Minimum Condition is not satisfied and is
reduced to the 75% Minimum, the Daimler-Benz Exchange Offer will
remain open for at least five business days from the date the
Daimler-Benz security holders are notified of such change. IT IS
IMPERATIVE THAT HOLDERS OF DAIMLER-BENZ ORDINARY SHARES AND
DAIMLER-BENZ ADSs DESIRING TO TENDER SHARES IN THE DAIMLER-BENZ
EXCHANGE OFFER DO SO ON OR PRIOR TO THE DAIMLER-BENZ EXCHANGE OFFER
INITIAL EXPIRATION DATE IN ORDER FOR SUCH SHARES TO BE INCLUDED IN
DETERMINING WHETHER THE MINIMUM CONDITION HAS BEEN SATISFIED. See
"The Daimler-Benz Exchange Offer--Extension, Termination and
Amendment."
Conditions of the
Daimler-Benz
Exchange Offer......... The Daimler-Benz Exchange Offer is subject to certain conditions,
including, among other things, there being validly tendered and not
properly withdrawn prior to the Daimler-Benz Exchange Offer
Expiration Date such number of Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs which constitutes at least 90% of the then issued
and outstanding Daimler-Benz Ordinary Shares, including
Daimler-Benz Ordinary Shares represented by Daimler-Benz ADSs (the
"Minimum Condition"); PROVIDED, HOWEVER, that if the number of
Daimler-Benz Ordinary Shares and Daimler-Benz ADSs tendered does
not satisfy the Minimum Condition but equals at least 75% of the
issued and outstanding Daimler-Benz Ordinary Shares on a primary
basis, including Daimler-Benz Ordinary Shares represented by
Daimler-Benz ADSs, at the time of registration with the commercial
register (HANDELSREGISTER) of the capital increase relating to the
DaimlerChrysler Ordinary Shares being issued in exchange therefor
(the "75%
</TABLE>
ALT-7
<PAGE>
<TABLE>
<S> <C>
Minimum"), the Minimum Condition shall mean the 75% Minimum.
Consistent with the Private Letter Ruling and in accordance with
the provisions of the Combination Agreement, Daimler-Benz and
Chrysler have agreed to the 75% Minimum which represents a
reduction from the requirement set forth in the Combination
Agreement that shares representing at least 80% of the capital
stock of Daimler-Benz on a fully diluted basis (the "80% Minimum")
be tendered in order to satisfy the 80% Minimum and permit the
Minimum Condition to be redefined as the 80% Minimum. For a
discussion of the other conditions to the Daimler-Benz Exchange
Offer, see "The Daimler-Benz Exchange Offer--Certain Conditions of
the Daimler-Benz Exchange Offer." In addition, for a discussion of
the conditions to the Transactions, see "The Combination
Agreement--Conditions to Closing."
Procedures for
Tendering
Daimler-Benz ADSs...... To be properly tendered, either (i) ADS Certificates, together with
a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) or an Agent's Message (as hereinafter defined)
in the case of a book-entry transfer of Daimler-Benz ADSs and any
other documents required by the Letter of Transmittal must be
received by the Exchange Agent at one of the addresses set forth on
the back cover of this Offering Circular-Prospectus, in each case,
on or prior to the Daimler-Benz Exchange Offer Expiration Date, or
(ii) stockholders must comply with the specific procedures for
guaranteed delivery described herein. Holders of Daimler-Benz ADSs
having Daimler-Benz ADSs registered in the name of a broker,
dealer, commercial bank, trust company or other nominee are urged
to contact such person promptly if they wish to tender any Daimler-
Benz ADSs pursuant to the Daimler-Benz Exchange Offer. See "The
Daimler-Benz Exchange Offer--Procedures for Tendering Daimler-Benz
ADSs or Daimler-Benz Ordinary Shares" and "--Guaranteed Delivery."
The method for delivering ADS Certificates and all other required
documents, including delivery through the book-entry transfer
facility, is at the option and risk of the tendering holder, and
the delivery will be deemed made only when actually received by the
Exchange Agent. If delivery is by mail, registered mail with return
receipt requested, properly insured, is recommended. In all cases,
sufficient time should be allowed to ensure timely delivery.
Procedures for
Tendering Daimler-Benz
Ordinary Shares........ To be properly tendered (i) Ordinary Share Certificates together
with the Coupons and a properly completed and duly executed Letter
of Transmittal (or a facsimile thereof) and any other documents
required by the Letter of Transmittal must be received by the
Exchange Agent at one of the addresses set forth on the back cover
of this Offering Circular-Prospectus on or prior to the
Daimler-Benz Exchange Offer Expiration Date, or (ii) stockholders
must instruct the depositary bank holding such holders'
Daimler-Benz Ordinary Shares and Coupons to transfer such shares
and Coupons to the Custody Account of The Bank of New York, Account
Number 9583899-01 at Deutsche Bank AG, Frankfurt am Main, Germany
(Contact: Helga Feyer) and must deliver to the Exchange Agent a
properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) and any other documents required by the Letter
of Transmittal, in each case on or prior to the Daimler-Benz
Exchange Offer Expiration Date, or (iii) stockholders must comply
with the specific procedures for guaranteed delivery described
herein, or (iv) stockholders must follow the instructions for
</TABLE>
ALT-8
<PAGE>
<TABLE>
<S> <C>
tendering Daimler-Benz Ordinary Shares and Coupons set forth in the
German Exchange Offer Materials and tender such shares in
accordance with the procedures, terms and conditions set forth in
such materials. In all cases for Daimler-Benz Ordinary Shares to be
properly tendered they must be accompanied by the Coupons. See "The
Daimler-Benz Exchange Offer-- Procedures for Tendering Daimler-Benz
ADSs or Daimler-Benz Ordinary Shares." The method for delivering
Ordinary Share Certificates and Coupons and all other required
documents is at the option and risk of the tendering holder, and
the delivery will be deemed made only when actually received by the
Exchange Agent. If delivery is by mail, registered mail with return
receipt requested, properly insured, is recommended. In all cases,
sufficient time should be allowed to ensure timely delivery.
Chrysler Merger
Dependent on
Success of Daimler-Benz
Exchange Offer......... It is a condition to the consummation of the Chrysler Merger that
the Daimler-Benz Exchange Offer be consummated. One of the
conditions to the Daimler-Benz Exchange Offer is that the Minimum
Condition (or the 75% Minimum) be satisfied. Accordingly, the
Chrysler Merger will not occur unless the Minimum Condition (or the
75% Minimum) is satisfied.
Accounting
Considerations......... If the Minimum Condition is not achieved, it will not be possible
to account for the Transactions as a pooling-of-interests.
Accounting for the Transactions as a purchase will reduce reported
earnings. See "The Transactions--Anticipated Accounting Treatment."
Withdrawal Rights...... Tenders of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs made
pursuant to the Daimler-Benz Exchange Offer are irrevocable, except
that Daimler-Benz Ordinary Shares and Daimler-Benz ADSs tendered
pursuant to the Daimler-Benz Exchange Offer may be withdrawn at any
time prior to the Daimler-Benz Exchange Offer Expiration Date, and,
unless theretofore accepted for exchange by DaimlerChrysler AG for
DaimlerChrysler Ordinary Shares pursuant to the Daimler-Benz
Exchange Offer, may also be withdrawn at any time after November
22, 1998. See "The Daimler-Benz Exchange Offer--Withdrawal Rights."
Delivery of
DaimlerChrysler
Ordinary Shares........ In the event the Minimum Condition and all other conditions to the
Daimler-Benz Exchange Offer are satisfied and DaimlerChrysler AG
accepts Daimler-Benz Ordinary Shares and Daimler-Benz ADSs for
exchange, exchanging securityholders will receive one
DaimlerChrysler Ordinary Share for each Daimler-Benz Ordinary Share
and Daimler-Benz ADS exchanged promptly following the Daimler-Benz
Exchange Offer Expiration Date. The additional whole
DaimlerChrysler Ordinary Shares which the exchanging Daimler-Benz
securityholders will be entitled to receive as a result of the
increase in the Daimler-Benz Exchange Offer Ratio from 1:1 to
1:1.005 together with a cash payment in lieu of any fractional
shares will be delivered within fourteen business days following
the Daimler-Benz Exchange Offer Expiration Date. Under no
circumstances will interest be paid on the exchange of
DaimlerChrysler Ordinary Shares for Daimler-Benz ADSs and
Daimler-Benz Ordinary Shares,
</TABLE>
ALT-9
<PAGE>
<TABLE>
<S> <C>
regardless of any delay in making such exchange. See "The
Daimler-Benz Exchange Offer--Exchange of Daimler-Benz ADSs and
Daimler-Benz Ordinary Shares."
Termination of
Daimler-Benz ADS
Program................ The Deposit Agreement with respect to the Daimler-Benz ADSs will be
amended to provide that each holder of a Daimler-Benz ADS
outstanding on the Daimler-Benz Exchange Offer Expiration Date who
has not tendered such holder's Daimler-Benz ADSs pursuant to the
Daimler-Benz Exchange Offer will be deemed to have instructed the
Depositary to tender all Daimler-Benz Ordinary Shares represented
thereby into the Daimler-Benz Exchange Offer, and the Depositary
will do so unless instructed otherwise by Daimler-Benz.
Accordingly, holders of Daimler-Benz ADSs who do not intend to
tender their securities in the Daimler-Benz Exchange Offer and who
do not wish to have the Daimler-Benz Ordinary Shares underlying
their Daimler-Benz ADSs exchanged for DaimlerChrysler Ordinary
Shares must withdraw the Daimler-Benz Ordinary Shares underlying
their Daimler-Benz ADSs in accordance with the procedures described
in "The Daimler-Benz Exchange Offer--Amendment and Termination of
the Deposit Agreement" not later than the Daimler-Benz Exchange
Offer Expiration Date.
Dealer Managers........ The Dealer Managers in connection with the Daimler-Benz Exchange
Offer are: Goldman, Sachs & Co., toll free telephone number (800)
323-5678; Credit Suisse First Boston Corporation, toll free
telephone number (800) 881-8320; and Deutsche Bank Securities, toll
free telephone number (800) 334-1898.
Exchange Agent......... The Bank of New York is serving as the Exchange Agent in connection
with the Daimler-Benz Exchange Offer. Its toll free telephone
number is (800) 470-7418.
Information Agent...... D.F. King & Co., Inc. is serving as the Information Agent in
connection with the Daimler-Benz Exchange Offer. Its toll free
telephone number is (800) 848-3094.
</TABLE>
ALT-10
<PAGE>
THE DAIMLER-BENZ EXCHANGE OFFER
General
DaimlerChrysler AG hereby offers, upon the terms and subject to the
conditions set forth in the Daimler-Benz Exchange Offer, (i) to exchange that
number of DaimlerChrysler Ordinary Shares equal to the Daimler-Benz Exchange
Offer Ratio for each outstanding Daimler-Benz Ordinary Share, and (ii) to
exchange that number of DaimlerChrysler Ordinary Shares equal to the
Daimler-Benz Exchange Offer Ratio for each outstanding Daimler-Benz ADS. To be
eligible to receive DaimlerChrysler Ordinary Shares pursuant to the Daimler-Benz
Exchange Offer, a holder of Daimler-Benz Ordinary Shares or Daimler-Benz ADSs
must validly tender and not properly withdraw such shares on or prior to the
Daimler-Benz Exchange Offer Expiration Date. See "--Withdrawal Rights." The
Daimler-Benz Exchange Offer Initial Expiration Date is 12:00 Noon, New York City
time, on Friday, October 23, 1998; however, if the Minimum Condition has been
satisfied, the Daimler-Benz Exchange Offer will be extended in accordance with
Rule 14e-1(b) under the Exchange Act so that it will remain open for at least 10
business days from the date notice of the increase in the Daimler-Benz Exchange
Offer Ratio as a result of the Minimum Condition having been satisfied is first
published, sent or given to Daimler-Benz securityholders. In the event the
Minimum Condition is not satisfied and is reduced to the 75% Minimum, the
Daimler-Benz Exchange Offer will remain open for at least five business days
from the date the Daimler-Benz securityholders are notified of such change.
Tendering holders of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs will
not be obligated to pay any charges or expenses of the Exchange Agent or any
brokerage commissions in connection with the tender of Daimler-Benz Ordinary
Shares and Daimler-Benz ADSs in the Daimler-Benz Exchange Offer. In addition,
the Depository will not charge Daimler-Benz ADS holders any fees in connection
with the withdrawal of Daimler-Benz Ordinary Shares pursuant to the Deposit
Agreement. See "--Amendment and Termination of the Deposit Agreement." Except as
set forth in the Instructions to the Letter of Transmittal, transfer taxes on
the exchange of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs pursuant to
the Daimler-Benz Exchange Offer will be paid by or on behalf of DaimlerChrysler
AG. DaimlerChrysler AG will pay all charges and expenses of the Dealer Managers,
the Exchange Agent and the Information Agent incurred in connection with the
Daimler-Benz Exchange Offer. See "--Fees and Expenses."
The Daimler-Benz Exchange Offer is being made pursuant to the Combination
Agreement and is one in a series of transactions described in this Offering
Circular-Prospectus which together will have the effect of combining the
respective businesses, stockholder groups, managements and other constituencies
of Chrysler and Daimler-Benz in a "merger-of-equals" transaction. The purpose of
the Daimler-Benz Exchange Offer is for DaimlerChrysler AG to obtain the entire
equity interest in Daimler-Benz and to enable the Transactions to qualify for
the pooling-of-interests method of accounting. Immediately following
consummation of the Daimler-Benz Exchange Offer, the Chrysler Merger will be
consummated. As soon as possible following the consummation of the Chrysler
Merger, the Daimler-Benz Merger will be consummated. See "Risk Factors" and "The
Transactions--German Valuation Proceeding (SPRUCHVERFAHREN)."
The Daimler-Benz Exchange Offer has been unanimously approved by the
Daimler-Benz Supervisory Board (AUFSICHTSRAT) and the Daimler-Benz Management
Board (VORSTAND) [and has also been approved by the stockholders of
Daimler-Benz]. The Daimler-Benz Management Board (VORSTAND) has determined that
the Daimler-Benz Exchange Offer is fair to and in the best interests of
Daimler-Benz and its stockholders and recommends that stockholders tender their
Daimler-Benz Ordinary Shares and Daimler-Benz ADSs.
For a discussion of the Daimler-Benz Management Board's recommendation, see
"The Transactions-- Recommendations of the Daimler-Benz Management Board and
Reasons for those Recommendations."
On May 6, 1998, Goldman, Sachs & Co. oHG delivered its oral opinion to the
Daimler-Benz Management Board and the Daimler-Benz Supervisory Board that, as of
the date of such opinion, the Daimler-Benz Exchange Ratio (as defined in the
opinion of Goldman, Sachs & Co. oHG attached hereto as Annex C) pursuant to the
ALT-11
<PAGE>
Combination Agreement is fair from a financial point of view to the holders of
Daimler-Benz Ordinary Shares (including those Daimler-Benz Ordinary Shares
represented by Daimler-Benz ADSs). Goldman, Sachs & Co. oHG subsequently
confirmed its earlier opinion by delivery of its written opinion, dated as of
May 8, 1998. Thereafter, Goldman Sachs orally advised the Daimler-Benz
Management Board and Daimler-Benz Supervisory Board that (i) the change to 1.005
in the Daimler-Benz Exchange Offer Ratio and the Daimler-Benz Merger Exchange
Ratio if the Minimum Condition is satisfied and (ii) the change of the 80%
Minimum to the 75% Minimum did not affect the Goldman Sachs opinion. Neither the
Daimler-Benz Management Board nor the Daimler-Benz Supervisory Board requested
an updated opinion from Goldman Sachs.
The full text of the written opinion of Goldman, Sachs & Co. oHG, which sets
forth the assumptions made, matters considered and limitations on the review
undertaken in connection with the opinion, is attached hereto as Annex C and is
incorporated herein by reference. The opinion of Goldman, Sachs & Co. oHG
referred to herein does not constitute a recommendation whether or not any
holder of Daimler-Benz Ordinary Shares or Daimler-Benz ADSs should tender such
securities in the Daimler-Benz Exchange Offer. Holders of Daimler-Benz Ordinary
Shares or Daimler-Benz ADSs are urged to, and should, read such opinion in its
entirety. The opinion and advice provided by Goldman, Sachs and Co. oHG is not
and should not be considered a value opinion (BEWERTUNG Z.B. IM RAHMEN EINER
VERSCHMELZUNG). See "The Transactions--Opinion of Financial Advisor of
Daimler-Benz."
The Daimler-Benz Exchange Offer is conditioned upon, among other things, the
satisfaction of the Minimum Condition or the 75% Minimum, as the case may be.
The Daimler-Benz Exchange Offer is also subject to certain other conditions set
forth in this Offering Circular-Prospectus. See "--Certain Conditions of the
Daimler-Benz Exchange Offer."
As of August 15, 1998, Daimler-Benz had issued and outstanding 571,933,266
Daimler-Benz Ordinary Shares (including Daimler-Benz Ordinary Shares represented
by Daimler-Benz ADSs), 15,531,800 Daimler-Benz Ordinary Shares were issuable
upon the exercise of Daimler-Benz Employee Stock Options (as hereinafter
defined), 4,920,395 Daimler-Benz Ordinary Shares were issuable upon the exercise
of the Warrants (as hereinafter defined), and up to 9,495,488 Daimler-Benz
Ordinary Shares were issuable upon the exercise of the Notes, including Notes
represented by ADNs and DM BESs (as such terms are hereinafter defined). The two
largest stockholders of Daimler-Benz, Deutsche Bank AG and the Emirate of
Kuwait, have notified Daimler-Benz that they intend to tender the Daimler-Benz
Ordinary Shares held by them for investment purposes in the Daimler-Benz
Exchange Offer. Accordingly, in order for the Minimum Condition to be satisfied
(assuming that no additional Daimler-Benz Ordinary Shares or Daimler-Benz ADSs
are issued and outstanding on the Daimler-Benz Exchange Offer Expiration Date),
the holders of at least an additional 57.4% of the Daimler-Benz Ordinary Shares
and Daimler-Benz ADSs (or approximately 328,562,655 Daimler-Benz Ordinary
Shares, including Ordinary Shares represented by Daimler-Benz ADSs), must tender
their shares in the Daimler-Benz Exchange Offer. In order for the 75% Minimum to
be satisfied (assuming that no additional Daimler-Benz Ordinary Shares or
Daimler-Benz ADS are issued and outstanding on the Daimler-Benz Exchange Offer
Expiration Date), the holders of at least an additional 42.4% of the
Daimler-Benz Ordinary Shares and Daimler-Benz ADSs (or approximately 242,772,666
Daimler-Benz Ordinary Shares, including Daimler-Benz Ordinary Shares represented
by Daimler-Benz ADSs), must tender their shares in the Daimler-Benz Exchange
Offer.
ALT-12
<PAGE>
It is a condition to the consummation of the Chrysler Merger that the
Daimler-Benz Exchange Offer be consummated. One of the conditions to the
Daimler-Benz Exchange Offer is that the Minimum Condition (or the 75% Minimum)
be satisfied. Although the Daimler-Benz Exchange Offer Ratio is the same as the
Daimler-Benz Merger Exchange Ratio, the Daimler-Benz Merger will not occur
unless the Daimler-Benz Exchange Offer is successful. Accordingly, stockholders
are urged to tender their Daimler-Benz Ordinary Shares and Daimler-Benz ADSs in
the Daimler-Benz Exchange Offer. In addition, if the Minimum Condition is not
achieved, it will not be possible to account for the Transactions as a
pooling-of-interests. Accounting for the Transactions as a purchase will reduce
reported earnings. See "The Transactions-- Anticipated Accounting Treatment."
Moreover, it is imperative that holders of Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs desiring to tender shares in the Daimler-Benz Exchange Offer
do so on or prior to the Daimler-Benz Exchange Offer Initial Expiration Date in
order for such shares to be included in determining whether the Minimum
Condition (or the 75% Minimum) has been satisfied. For a discussion of the tax
consequences of tendering in the Daimler-Benz Exchange Offer or participating in
the Daimler-Benz Merger, see "The Transactions--Certain Tax Consequences."
This Offering Circular-Prospectus and the related Letter of Transmittal and
other relevant materials (the "Daimler-Benz Exchange Offer Materials") are being
mailed to all record holders of Daimler-Benz ADSs and to all "U.S. persons" (as
defined in Rule 902(a) of Regulations S promulgated under the Securities Act)
who own Daimler-Benz Ordinary Shares. Notice of the Daimler-Benz Exchange Offer
will also be published in THE WALL STREET JOURNAL and in the Federal Gazette
(BUNDESANZEIGER), the FRANKFURTER ALLGEMEINE ZEITUNG and BORSEN-ZEITUNG
newspapers in Germany.
THIS OFFERING CIRCULAR-PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL
CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE DAIMLER-BENZ EXCHANGE OFFER.
Terms of the Daimler-Benz Exchange Offer; Daimler-Benz Exchange Offer Expiration
Date
DaimlerChrysler AG hereby offers, upon the terms and subject to the
conditions set forth in the Daimler-Benz Exchange Offer, (i) to exchange that
number of DaimlerChrysler Ordinary Shares equal to the Daimler-Benz Exchange
Offer Ratio for each outstanding Daimler-Benz Ordinary Share, and (ii) to
exchange that number of DaimlerChrysler Ordinary Shares equal to the
Daimler-Benz Exchange Offer Ratio for each outstanding Daimler-Benz ADS. To be
eligible to receive DaimlerChrysler Ordinary Shares pursuant to the Daimler-Benz
Exchange Offer, a holder of Daimler-Benz Ordinary Shares or Daimler-Benz ADSs
must validly tender and not properly withdraw such shares on or prior to the
Daimler-Benz Exchange Offer Expiration Date.
Upon the terms and subject to the conditions set forth in the Daimler-Benz
Exchange Offer (including, if the Daimler-Benz Exchange Offer is extended or
amended, the terms and conditions of such extension or amendment),
DaimlerChrysler AG will accept and exchange all Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs validly tendered prior to the Daimler-Benz Exchange Offer
Expiration Date and not withdrawn as permitted under "--Withdrawal Rights." The
term "Daimler-Benz Exchange Offer Expiration Date" means the latest date and
time to which the Daimler-Benz Exchange Offer is extended.
In the event that the Minimum Condition is satisfied by virtue of there
being validly tendered and not properly withdrawn on or prior to the
Daimler-Benz Exchange Offer Expiration Date at least 90% of the issued and
outstanding Daimler-Benz Ordinary Shares, including Daimler-Benz Ordinary Shares
represented by Daimler-Benz ADSs, the Daimler-Benz Exchange Offer Ratio will be
1.005 DaimlerChrysler Ordinary Shares for each Daimler-Benz Ordinary Share or
Daimler-Benz ADS exchanged. Accordingly, if the Minimum Condition has been
satisfied, the Daimler-Benz Exchange Offer will be extended in accordance with
Rule 14e-1(b) under the Exchange Act so that it will remain open for at least 10
business days from the date notice of the increase in the Daimler-Benz Exchange
Offer Ratio as a result of the Minimum Condition having been satisfied is first
ALT-13
<PAGE>
published, sent or given to Daimler-Benz securityholders. In the event the
Minimum Condition is not satisfied and is reduced to the 75% Minimum, the
Daimler-Benz Exchange Offer will remain open for at least five business days
from the date the Daimler-Benz securityholders are notified of such change. IT
IS IMPERATIVE THAT HOLDERS OF DAIMLER-BENZ ORDINARY SHARES AND DAIMLER-BENZ ADSs
DESIRING TO TENDER SHARES IN THE DAIMLER-BENZ EXCHANGE OFFER DO SO ON OR PRIOR
TO THE DAIMLER-BENZ EXCHANGE OFFER INITIAL EXPIRATION DATE IN ORDER FOR SUCH
SHARES TO BE INCLUDED IN DETERMINING WHETHER THE MINIMUM CONDITION (OR THE 75%
MINIMUM) HAS BEEN SATISFIED.
Exchange of Daimler-Benz ADSs and Daimler-Benz Ordinary Shares
Upon the terms and subject to the conditions of the Daimler-Benz Exchange
Offer (including, if the Daimler-Benz Exchange Offer is extended or amended, the
terms and conditions of any such extension or amendment), DaimlerChrysler AG
will accept for exchange, and will exchange, Daimler-Benz ADSs and Daimler-Benz
Ordinary Shares validly tendered and not properly withdrawn as promptly as
practicable after the Daimler-Benz Exchange Offer Expiration Date. In addition,
subject to applicable rules of the Commission, DaimlerChrysler AG expressly
reserves the right to delay acceptance for exchange or delay exchange of
Daimler-Benz ADSs or Daimler-Benz Ordinary Shares in order to comply in whole or
in part with any applicable law.
In all cases, (1) exchange of Daimler-Benz ADSs tendered and accepted for
exchange pursuant to the Daimler-Benz Exchange Offer will be made only after
timely receipt by the Exchange Agent of (i) ADS Certificates or a timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Daimler-Benz ADSs into the Exchange Agent's account at The Depository Trust
Company ("DTC") pursuant to the procedures set forth in "--Procedures for
Tendering Daimler-Benz ADSs or Daimler-Benz Ordinary Shares," (ii) a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof), with
any required signature guarantees, or an Agent's Message in connection with a
book-entry transfer, and (iii) any other documents required by the Letter of
Transmittal, and (2) exchange of Daimler-Benz Ordinary Shares tendered and
accepted pursuant to the Daimler-Benz Exchange Offer will be made only after (i)
timely receipt by the Exchange Agent at one of its addresses set forth on the
back cover of this Offering Circular--Prospectus of Ordinary Share Certificates
together with the Coupons and a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) and any other documents required by the
Letter of Transmittal, (ii) timely receipt by the Exchange Agent in the Custody
Account of The Bank of New York, Account Number 9583899-01 at Deutsche Bank AG,
Frankfurt am Main, Germany (Contact: Helga Feyer) of the tendered Daimler-Benz
Ordinary Shares together with the Coupons and a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and any other documents
required by the Letter of Transmittal, or (iii) timely compliance with the
instructions for tendering Daimler-Benz Ordinary Shares and Coupons set forth in
the German Exchange Offer Materials.
For purposes of the Daimler-Benz Exchange Offer, DaimlerChrysler AG will be
deemed to have accepted for exchange (and thereby purchased) Daimler-Benz ADSs
and Daimler-Benz Ordinary Shares validly tendered and not properly withdrawn as,
if and when DaimlerChrysler AG gives oral or written notice to the Exchange
Agent of its acceptance of the tenders of such Daimler-Benz securities pursuant
to the Daimler-Benz Exchange Offer. Upon the terms and subject to the conditions
of the Daimler-Benz Exchange Offer, exchange of DaimlerChrysler Ordinary Shares
for Daimler-Benz ADSs and Daimler-Benz Ordinary Shares accepted for exchange
pursuant to the Daimler-Benz Exchange Offer will be made by deposit of
DaimlerChrysler Ordinary Shares in exchange therefor with the Exchange Agent,
which will act as agent for tendering stockholders whose Daimler-Benz ADSs and
Daimler-Benz Ordinary Shares have been accepted for exchange. In the event the
Minimum Condition and all other conditions to the Daimler-Benz Exchange Offer
are satisfied and DaimlerChrysler AG accepts Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs for exchange, exchanging securityholders will receive one
DaimlerChrysler Ordinary Share for each Daimler-Benz Ordinary Share and
Daimler-Benz ADS exchanged promptly following the Daimler-Benz Exchange Offer
Expiration Date. The additional whole DaimlerChrysler
ALT-14
<PAGE>
Ordinary Shares which the exchanging Daimler-Benz securityholders will be
entitled to receive as a result of the increase in the Daimler-Benz Exchange
Offer Ratio from 1:1 to 1:1.005 together with a cash payment in lieu of any
fractional shares will be delivered within fourteen business days following the
Daimler-Benz Exchange Offer Expiration Date. Any whole DaimlerChrysler Ordinary
Shares which an exchanging Daimler-Benz securityholder is entitled to receive
will be delivered through the U.S. Transfer Agent's (The Bank of New York,
DaimlerChrysler AG's transfer agent and registrar in New York, New York) direct
registration system by registering such DaimlerChrysler Ordinary Shares in the
name of such securityholder on the books of the U.S. Transfer Agent. Each
securityholder will receive a statement confirming such holder's ownership of
DaimlerChrysler Ordinary Shares. Under no circumstances will interest be paid on
the exchange of DaimlerChrysler Ordinary Shares for Daimler-Benz ADSs and
Daimler-Benz Ordinary Shares, regardless of any delay in making such exchange.
If any tendered Daimler-Benz ADSs or Daimler-Benz Ordinary Shares are not
accepted for exchange pursuant to the terms and conditions of the Daimler-Benz
Exchange Offer for any reason, or if ADS Certificates or Ordinary Share
Certificates are submitted for more Daimler-Benz securities than are tendered,
certificates for such unexchanged Daimler-Benz securities will be returned
without expense to the tendering holder or, in the case of Daimler-Benz ADSs
tendered by book-entry transfer of such Daimler-Benz ADSs into the Exchange
Agent's account at DTC pursuant to the procedures set forth below under
"--Procedures for Tendering Daimler-Benz ADSs or Daimler-Benz Ordinary Shares,"
such Daimler-Benz ADSs will be credited to an account maintained at DTC, in each
case as promptly as practicable following expiration or termination of the
Daimler-Benz Exchange Offer. In the case of Daimler-Benz Ordinary Shares (and
associated Coupons) which are not accepted for exchange pursuant to the terms
and conditions of the Daimler-Benz Exchange Offer and which were (x) tendered
into the Custody Account of The Bank of New York, Account Number 9583899-01 at
Deutsche Bank AG, Frankfurt am Main, Germany (Contact: Helga Feyer), such shares
and the associated Coupons will be returned to the tendering stockholder's
account at the depositary bank that transferred such shares and Coupons, or (y)
tendered in accordance with the instructions set forth in the German Exchange
Offer Materials, such shares will be returned in accordance with the procedures
outlined in such materials.
MISCELLANEOUS
If, prior to the Daimler-Benz Exchange Offer Expiration Date,
DaimlerChrysler AG shall increase the consideration offered to any holder of
Daimler-Benz Ordinary Shares or Daimler-Benz ADSs (as is contemplated if the
Minimum Condition is satisfied), such increased consideration shall be paid to
all holders of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs that are
exchanged in the Daimler-Benz Exchange Offer, whether or not such Daimler-Benz
Ordinary Shares or Daimler-Benz ADSs were tendered prior to such increase in
consideration. Such increased consideration will also be paid to all Remaining
Stockholders in the Daimler-Benz Merger.
Procedures for Tendering Daimler-Benz ADSs or Daimler-Benz Ordinary Shares
PROCEDURES FOR TENDERING DAIMLER-BENZ ADSS
In order for a holder validly to tender Daimler-Benz ADSs pursuant to the
Daimler-Benz Exchange Offer, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), together with any required signature
guarantees, or an Agent's Message in the case of a book-entry transfer of
Daimler-Benz ADSs, and any other documents required by the Letter of
Transmittal, must be received by the Exchange Agent at one of its addresses set
forth on the back cover of this Offering Circular-Prospectus and either (i) the
ADS Certificates for tendered Daimler-Benz ADSs must be received by the Exchange
Agent at such address or such Daimler-Benz ADSs must be tendered pursuant to the
procedure for book-entry transfer described below and a Book-Entry Confirmation
must be received by the Exchange Agent (including an Agent's Message if the
tendering holder of Daimler-Benz ADSs has not delivered a Letter of
Transmittal), in each case prior to the Daimler-Benz Exchange Offer Expiration
Date, or (ii) such holder must comply with the guaranteed delivery procedure set
forth below.
ALT-15
<PAGE>
The term "Agent's Message" means a message, transmitted by DTC to, and
received by, the Exchange Agent and forming a part of a Book-Entry Confirmation,
which states that DTC has received an express acknowledgment from the DTC
participant tendering the Daimler-Benz ADSs that are the subject of such Book-
Entry Confirmation, that such participant has received and agrees to be bound by
the terms of the Letter of Transmittal and that DaimlerChrysler AG may enforce
such agreement against such participant.
BOOK-ENTRY. The Exchange Agent will establish an account with respect to
the Daimler-Benz ADSs at DTC for purposes of the Daimler-Benz Exchange Offer
within two business days after the date of this Offering Circular-Prospectus.
Any financial institution that is a participant in DTC's systems may make
book-entry delivery of Daimler-Benz ADSs by causing DTC to transfer such
Daimler-Benz ADSs into the Exchange Agent's account in accordance with DTC's
procedure for such transfer. However, although delivery of Daimler-Benz ADSs may
be effected through book-entry at DTC, the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, together with any required
signature guarantees, or an Agent's Message in lieu of a Letter of Transmittal,
and any other required documents, must, in any case, be received by the Exchange
Agent at one of its addresses set forth on the back cover of this Offering
Circular-Prospectus prior to the Daimler-Benz Exchange Offer Expiration Date, or
the tendering holder of Daimler-Benz ADSs must comply with the guaranteed
delivery procedure described below. Delivery of documents to DTC in accordance
with its procedures does not constitute delivery to the Exchange Agent.
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal with respect
to the tender of Daimler-Benz ADSs must be guaranteed by a firm that is a member
of the Medallion Signature Guarantee Program, or by any other "eligible
guarantor institution," as such term is defined in Rule 17Ad-15 under the
Exchange Act (each of the foregoing is referred to as an "Eligible
Institution"), except in cases in which Daimler-Benz ADSs are tendered (i) by a
registered holder of such securities who has not completed either the box
entitled "Special Registration Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. If an ADS Certificate is registered in the name of a
person other than the signer of the Letter of Transmittal, or if certificates
for unexchanged Daimler-Benz ADSs are to be issued to a person other than the
registered holder(s), the certificates representing such securities must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the ADS
Certificate, with the signature(s) on the certificates or stock powers
guaranteed as aforesaid.
PROCEDURES FOR TENDERING DAIMLER-BENZ ORDINARY SHARES
In order for a holder validly to tender Daimler-Benz Ordinary Shares
pursuant to the Daimler-Benz Exchange Offer, (i) a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and any other documents
required by the Letter of Transmittal and Ordinary Share Certificates together
with the Coupons must be received by the Exchange Agent at one of its addresses
set forth on the back cover of this Offering Circular-Prospectus on or prior to
the Daimler-Benz Exchange Offer Expiration Date, or stockholders must instruct
the depositary bank holding such holders' Daimler-Benz Ordinary Shares and
Coupons to transfer such shares and Coupons to the Custody Account of The Bank
of New York, Account Number 9583899-01 at Deutsche Bank AG, Frankfurt am Main,
Germany (Contact: Helga Feyer) and must deliver to the Exchange Agent a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) and
any other documents required by the Letter of Transmittal, in each case on or
prior to the Daimler-Benz Exchange Offer Expiration Date, or (ii) stockholders
must comply with the guaranteed delivery procedures set forth below, or (iii)
stockholders must follow the instructions for tendering Daimler-Benz Ordinary
Shares and Coupons set forth in the German Exchange Offer Materials and tender
such shares in accordance with the procedures, terms and conditions set forth in
such materials. Signatures on a Letter of Transmittal with respect to the tender
of Daimler-Benz Ordinary Shares do not need to be guaranteed by an Eligible
Institution.
* * * * *
ALT-16
<PAGE>
THE METHOD OF DELIVERY OF CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS,
INCLUDING DELIVERY THROUGH DTC OR A DEPOSITARY BANK, IS AT THE OPTION AND RISK
OF THE TENDERING HOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
* * * * *
OTHER REQUIREMENTS.
By executing a Letter of Transmittal as set forth above, the tendering
holder irrevocably appoints designees of DaimlerChrysler AG as such holder's
attorneys-in-fact and proxies, each with full power of substitution, to the full
extent of such holder's rights with respect to the Daimler-Benz ADSs or the
Daimler-Benz Ordinary Shares tendered by such holder and accepted for exchange
by DaimlerChrysler AG and with respect to any and all other Daimler-Benz ADSs or
Daimler-Benz Ordinary Shares and other securities issued or issuable in respect
of such Daimler-Benz securities on or after September 24, 1998. Such appointment
is effective, and voting rights will be affected, when and only to the extent
that DaimlerChrysler AG accepts for exchange Daimler-Benz ADSs and Daimler-Benz
Ordinary Shares in accordance with the terms of the Daimler-Benz Exchange Offer.
All such proxies shall be considered coupled with an interest in the tendered
Daimler-Benz securities and therefore shall not be revocable. Upon the
effectiveness of such appointment, all prior proxies given by such holder will
be revoked without further action, and no subsequent powers of attorney and
proxies may be given nor any subsequent written consents executed (and, if given
or executed, will not be deemed effective). DaimlerChrysler AG's designees will,
with respect to the Daimler-Benz ADSs and the Daimler-Benz Ordinary Shares for
which the appointment is effective, be empowered, among other things, to
exercise all voting and other rights of such holders as they, in their sole
discretion, deem proper at any annual, extraordinary or adjourned meeting of
Daimler-Benz' stockholders, by written consent in lieu of any such meeting or
otherwise. DaimlerChrysler AG reserves the right to require that, in order for
Daimler-Benz ADSs or Daimler-Benz Ordinary Shares to be deemed validly tendered,
immediately upon DaimlerChrysler AG's acceptance of such Daimler-Benz ADSs and
Daimler-Benz Ordinary Shares for exchange, DaimlerChrysler AG must be able to
exercise all rights of ownership, including full voting and disposition rights,
with respect to such Daimler-Benz ADSs and Daimler-Benz Ordinary Shares.
DaimlerChrysler AG has appointed Deutsche Bank AG, Frankfurt am Main, to
handle the technical implementation of the Daimler-Benz Exchange Offer in
Germany and the implementation of the registration of the increase of the
DaimlerChrysler AG stated share capital with the commercial register
(HANDELSREGISTER) for DaimlerChrysler AG. Accordingly, it is intended that the
Daimler-Benz Ordinary Shares accepted for exchange in the Daimler-Benz Exchange
Offer (including Daimler-Benz Ordinary Shares represented by Daimler-Benz ADSs)
will first be transferred to Deutsche Bank AG, Frankfurt am Main, who will act
as trustee for the exchanging Daimler-Benz stockholders, among other things, for
the purpose of implementing the required DaimlerChrysler AG capital increase,
including approving the necessary increase in the conditional capital of
DaimlerChrysler AG creating identical equity capitalization to that of
Daimler-Benz. Moreover, Deutsche Bank AG, Frankfurt am Main, has authorized
DaimlerChrysler AG to act on its behalf to make all declarations necessary for
the transfer of title to the Daimler-Benz Ordinary Shares accepted in the
Daimler-Benz Exchange Offer. Therefore, (a) by making the Daimler-Benz Exchange
Offer, DaimlerChrysler AG declares on behalf of Deutsche Bank AG, Frankfurt am
Main, its agreement required for the transfer of title to the Daimler-Benz
Ordinary Shares accepted for exchange in the Daimler-Benz Exchange Offer, and
(b) by tendering Daimler-Benz Ordinary Shares or Daimler-Benz ADSs in the
Daimler-Benz Exchange Offer, securityholders agree with DaimlerChrysler AG that
title to such tendered securities upon acceptance thereof will be transferred to
Deutsche Bank AG, Frankfurt am Main, as trustee according to the terms and
conditions of the Daimler-Benz Exchange Offer and consent to Deutsche Bank AG
taking all necessary and expedient measures and rendering and receiving all
declarations in the context of the Daimler-Benz Exchange Offer and its
acceptance. The actions and approvals in this paragraph that are the subject of
the tendering stockholders' agreement, approval and
ALT-17
<PAGE>
consent constitute technical ratifications and the satisfaction of technical
requirements of German corporate law which clarify the significance of certain
implementational details and which do not change the terms of the Transactions
approved by the stockholders of Daimler-Benz and Chrysler at stockholder
meetings held September 18, 1998.
If the Letter of Transmittal or Notice of Guaranteed Delivery or any
certificates or stock powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, such persons should so indicate when
signing, and, unless waived by DaimlerChrysler AG, proper evidence satisfactory
to DaimlerChrysler AG of their authority so to act must be submitted.
If any ADS Certificate or Ordinary Share Certificate has been mutilated,
destroyed, lost or stolen, the stockholder must (i) furnish to the Exchange
Agent evidence, satisfactory to it in its discretion, of the ownership of and
the destruction, loss or theft of such certificate, (ii) furnish to the Exchange
Agent indemnity, satisfactory to it in its discretion, and (iii) comply with
such other reasonable requirements as the Exchange Agent may prescribe.
The tender of Daimler-Benz ADSs and Daimler-Benz Ordinary Shares pursuant to
any of the procedures described above will constitute a binding agreement
between the tendering holder and DaimlerChrysler AG upon the terms and subject
to the conditions of the Daimler-Benz Exchange Offer.
DETERMINATION OF VALIDITY
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Daimler-Benz ADSs or
Daimler-Benz Ordinary Shares will be determined by DaimlerChrysler AG, in its
sole discretion, which determination shall be final and binding on the holders
of the Daimler-Benz ADSs and Daimler-Benz Ordinary Shares. DaimlerChrysler AG
reserves the absolute right to reject any and all tenders determined by it not
to be in proper form or the acceptance of or exchange for which may, in the
opinion of DaimlerChrysler AG, be unlawful. Subject to the terms of the
Combination Agreement, DaimlerChrysler AG also reserves the absolute right to
waive any defect or irregularity in the tender of any shares of any particular
holder, whether or not similar defects or irregularities are waived in the case
of other stockholders. No tender of shares will be deemed to have been validly
made until all defects and irregularities have been cured or waived. None of
DaimlerChrysler AG, the Exchange Agent, the Information Agent, the Dealer
Managers nor any other person will be under any duty to give notification of any
defects or irregularities in the tender of any Daimler-Benz ADSs or Daimler-Benz
Ordinary Shares, or will incur any liability for failure to give any such
notification. DaimlerChrysler AG's interpretation of the terms and conditions of
the Daimler-Benz Exchange Offer (including the Letter of Transmittal and
instructions thereto) will be final and binding on the holders of Daimler-Benz
ADSs and Daimler-Benz Ordinary Shares.
Amendment and Termination of the Deposit Agreement
In accordance with Section 6.01 of the Deposit Agreement, on September 24,
1998, the Depositary notified holders of Daimler-Benz ADSs that the Deposit
Agreement with respect to the Daimler-Benz ADSs will be amended to provide that
each holder of a Daimler-Benz ADS outstanding on the Daimler-Benz Exchange Offer
Expiration Date who has not tendered such holder's Daimler-Benz ADSs pursuant to
the Daimler-Benz Exchange Offer will be deemed to have instructed the Depositary
to tender all Daimler-Benz Ordinary Shares represented thereby into the
Daimler-Benz Exchange Offer, and the Depositary will do so unless instructed
otherwise by Daimler-Benz. In addition, pursuant to the terms of the Deposit
Agreement, on September 24, 1998, the Depositary notified the holders of
Daimler-Benz ADSs that effective on the Daimler-Benz Exchange Offer Expiration
Date, the Deposit Agreement will be terminated. As a result of the termination
of the Deposit Agreement, among other things, registration of transfers of
Daimler-Benz ADSs will be discontinued, distributions of dividends will be
suspended, and the Depositary will not accept deposits of Daimler-Benz Ordinary
Shares for issuance of new Daimler-Benz ADSs.
ALT-18
<PAGE>
Following receipt by the Depositary of DaimlerChrysler Ordinary Shares
pursuant to the Daimler-Benz Exchange Offer, holders of Daimler-Benz ADSs who
did not tender their Daimler-Benz ADSs pursuant to the Daimler-Benz Exchange
Offer will be entitled to receive for each Daimler-Benz ADS the whole number of
DaimlerChrysler Ordinary Shares which equals the Daimler-Benz Exchange Offer
Ratio plus cash in lieu of any fractional shares upon surrender by them of their
Daimler-Benz ADSs to the Depositary and payment of all applicable taxes, duties
and other governmental charges specified in the Deposit Agreement.
Holders of Daimler-Benz ADSs who do not intend to tender their securities in
the Daimler-Benz Exchange Offer and who do not wish to have the Daimler-Benz
Ordinary Shares underlying their Daimler-Benz ADSs exchanged for DaimlerChrysler
Ordinary Shares must comply with the following procedures below no later than
the Daimler-Benz Exchange Offer Expiration Date:
Such holders must (i) deliver ADS Certificates to the
Depositary for the purpose of withdrawal of the whole number of
Daimler-Benz Ordinary Shares evidenced thereby; (ii) pay all
taxes, duties and other governmental charges payable in connection
with the delivery of Daimler-Benz Ordinary Shares against
surrender of ADS Certificates, and (iii) deliver written
instructions directing the Depositary to cause such whole number
of Daimler-Benz Ordinary Shares being withdrawn, to be delivered
to, or upon the written order of, the person or persons designated
in such instructions.
The Depositary will not charge the Daimler-Benz ADS holders any fees in
connection with the withdrawal of Daimler-Benz Ordinary Shares.
See "The Transactions--German Valuation Proceeding (SPRUCHVERFAHREN)" for a
discussion of the rights of holders of Daimler-Benz Ordinary Shares who do not
participate in the Daimler-Benz Exchange Offer and who continue to hold such
shares at the time of the Daimler-Benz Merger.
Guaranteed Delivery
If a holder desires to tender Daimler-Benz ADSs or Daimler-Benz Ordinary
Shares pursuant to the Daimler-Benz Exchange Offer and such holder's ADS
Certificates or Ordinary Share Certificates and Coupons, as the case may be, are
not immediately available or such holder cannot deliver such certificates (or in
the case of Daimler-Benz Ordinary Shares, cause such shares and Coupons to be
transferred to The Bank of New York's Custody Account at Deutsche Bank AG) and
all other required documents to the Exchange Agent prior to the Daimler-Benz
Exchange Offer Expiration Date, or in the case of a tender of Daimler-Benz ADSs
such stockholder cannot complete the procedure for book-entry transfer on a
timely basis, such Daimler-Benz ADSs and Daimler-Benz Ordinary Shares may
nevertheless be tendered; PROVIDED that all of the following conditions are
satisfied:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by
DaimlerChrysler AG, is received by the Exchange Agent as provided
below on or prior to the Daimler-Benz Exchange Offer Expiration
Date; and
(iii) (a) in the case of Daimler-Benz ADSs, the certificate(s) for
all tendered Daimler-Benz ADSs (or a confirmation of a book-entry
transfer of Daimler-Benz ADSs into the Exchange Agent's account at
DTC as described above), in proper form for transfer, together
with a properly completed and duly executed Letter of Transmittal
(or a manually executed facsimile thereof), with any required
signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message) and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within three New
York Stock Exchange trading days after the date of execution of
such Notice of Guaranteed Delivery or (b) in the case of
Daimler-Benz Ordinary Shares, the certificates for all tendered
Daimler-Benz Ordinary Shares in proper form for transfer or the
transfer of all such tendered shares to the Custody Account of The
Bank of New York, Account Number 9583899-01 at Deutsche Bank AG,
ALT-19
<PAGE>
Frankfurt am Main, Germany (Contact: Helga Feyer), together with a
properly completed and fully executed Letter of Transmittal (or a
manually executed facsimile thereof) and all other documents
required by the Letter of Transmittal are received by the Exchange
Agent within three trading days after the date of execution of
such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mail to the Exchange Agent and must in all cases
include a guarantee by an Eligible Institution in the form set forth in such
Notice of Guaranteed Delivery.
Withdrawal Rights
Tenders of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs made pursuant
to the Daimler-Benz Exchange Offer are irrevocable, except that Daimler-Benz
Ordinary Shares and Daimler-Benz ADSs tendered pursuant to the Daimler-Benz
Exchange Offer may be withdrawn at any time prior to the Daimler-Benz Exchange
Offer Expiration Date, and, unless theretofore accepted for exchange by
DaimlerChrysler AG for DaimlerChrysler Ordinary Shares pursuant to the
Daimler-Benz Exchange Offer, may also be withdrawn at any time after November
22, 1998.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Exchange Agent at one of its
addresses set forth on the back cover of this Offering Circular-Prospectus. Any
such notice must specify the name of the person having tendered the Daimler-Benz
Ordinary Shares or Daimler-Benz ADSs to be withdrawn, the number of Daimler-Benz
Ordinary Shares or Daimler-Benz ADSs to be withdrawn and, in the case of
Daimler-Benz ADSs, the name of the registered holder, if different from that of
the person who tendered such Daimler-Benz ADSs. If stock certificates evidencing
Daimler-Benz ADSs or Daimler-Benz Ordinary Shares to be withdrawn have been
delivered or otherwise identified to the Exchange Agent, then, prior to the
physical release of such stock certificates, the name of the registered holder
(in the case of Daimler-Benz ADSs) or the tendering Daimler-Benz Ordinary Share
holder and the serial numbers of the particular stock certificates evidencing
the Daimler-Benz ADSs or Daimler-Benz Ordinary Shares withdrawn must also be
furnished to the Exchange Agent and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution, unless such Daimler-Benz
securities have been tendered for the account of an Eligible Institution. If
Daimler-Benz ADSs have been tendered pursuant to the procedure for book-entry
transfer set forth under "--Procedures for Tendering Daimler-Benz ADSs or
Daimler-Benz Ordinary Shares," any notice of withdrawal must specify the name
and number of the account at DTC to be credited with the withdrawal of
Daimler-Benz ADSs. If Daimler-Benz Ordinary Shares have been tendered by
transfer of such shares to the Custody Account of The Bank of New York, Account
Number 9583899-01 at Deutsche Bank AG, Frankfurt am Main, Germany (Contact:
Helga Feyer), any notice of withdrawal must specify the depositary bank and the
name and number of the account at such bank to which the withdrawn Daimler-Benz
Ordinary Shares are to be transferred.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by DaimlerChrysler AG, in its sole
discretion, which determination shall be final and binding on the holders of the
Daimler-Benz Ordinary Shares and the Daimler-Benz ADSs. None of DaimlerChrysler
AG, the Exchange Agent, the Information Agent, the Dealer Managers nor any other
person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or will incur any liability for
failure to give any such notification. Any Daimler-Benz Ordinary Shares or
Daimler-Benz ADSs properly withdrawn will be deemed not to have been validly
tendered for purposes of the Daimler-Benz Exchange Offer. However, withdrawn
Daimler-Benz Ordinary Shares or Daimler-Benz ADSs may be re-tendered by
following one of the procedures described under "--Procedures for Tendering
Daimler-Benz ADSs or Daimler-Benz Ordinary Shares" at any time prior to the
Daimler-Benz Exchange Offer Expiration Date.
ALT-20
<PAGE>
Extension, Termination and Amendment
Subject to the applicable regulations of the Commission, DaimlerChrysler AG
also expressly reserves the right, in its sole discretion (but subject to the
terms of the Combination Agreement), at any time or from time to time, (i) to
extend the period of time during which the Daimler-Benz Exchange Offer is to
remain open for any reason, including the occurrence of any of the conditions
specified under "--Certain Conditions of the Daimler-Benz Exchange Offer," (ii)
to terminate the Daimler-Benz Exchange Offer and not accept for exchange
Daimler-Benz Ordinary Shares and Daimler-Benz ADSs upon the occurrence of any of
the conditions specified in
"--Certain Conditions of the Daimler-Benz Exchange Offer," and (iii) to waive
any condition other than the Minimum Condition, or otherwise amend the
Daimler-Benz Exchange Offer in any respect, by giving oral or written notice of
such extension, termination or waiver to the Exchange Agent, and by making a
public announcement thereof. The Combination Agreement provides that if any of
the conditions to the consummation of the Daimler-Benz Exchange Offer are
unsatisfied at the Daimler-Benz Exchange Offer Initial Expiration Date, and if
requested by either Chrysler or Daimler-Benz, or if requested by either Chrysler
or Daimler-Benz pursuant to clause (b) below, the Daimler-Benz Exchange Offer
Initial Expiration Date will be extended by DaimlerChrysler AG from time to time
thereafter until the earliest of (a) the maximum period permitted under the
German Takeover Code or as otherwise approved by the Executive Office of the
Takeover Commission, (b) the close of business (Central European time) on the
day on which Daimler-Benz and DaimlerChrysler AG have publicly announced that
all of the conditions to the consummation of the Daimler-Benz Exchange Offer
shall have been satisfied or that they have been duly waived (or, if later, a
date that is five business days following the Daimler-Benz Exchange Offer
Initial Expiration Date, if either Chrysler or Daimler-Benz shall have requested
DaimlerChrysler AG to extend the Daimler-Benz Exchange Offer to such date), and
(c) such time as the Combination Agreement is terminated as provided under "The
Combination Agreement--Termination." However, it is the current intention of
Daimler-Benz and Chrysler to extend the Daimler-Benz Exchange Offer until all
conditions have been satisfied or waived. During any such extension, all
Daimler-Benz Ordinary Shares and Daimler-Benz ADSs previously tendered and not
withdrawn will remain subject to the Daimler-Benz Exchange Offer, subject to the
right of a tendering holder to withdraw such Daimler-Benz Ordinary Shares or
Daimler-Benz ADSs, as the case may be. See "--Withdrawal Rights." Any such
extension, termination or amendment will be followed as promptly as practicable
by public announcement thereof, such announcement in the case of an extension to
be issued no later than 9:00 A.M., New York City time, on the next business day
after the previously scheduled Daimler-Benz Exchange Offer Expiration Date.
Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the
Exchange Act, which require that any material change in the information
published, sent or given to holders in connection with the Daimler-Benz Exchange
Offer be promptly disseminated to holders in a manner reasonably designed to
inform holders of such change) and without limiting the manner in which
DaimlerChrysler AG may choose to make any public announcement, DaimlerChrysler
AG shall have no obligation to publish, advertise or otherwise communicate any
such public announcement other than by making a release to the Dow Jones News
Service in the United States and in the Federal Gazette (BUNDESANZEIGER), the
FRANKFURTER ALLGEMEINE ZEITUNG and BORSEN-ZEITUNG newspapers in Germany.
If DaimlerChrysler AG makes a material change in the terms of the
Daimler-Benz Exchange Offer or the information concerning the Daimler-Benz
Exchange Offer, or if it waives a material condition of the Daimler-Benz
Exchange Offer, DaimlerChrysler AG will extend the Daimler-Benz Exchange Offer
to the extent required under the Exchange Act. Subject to the terms of the
Combination Agreement, if, prior to the Daimler-Benz Exchange Offer Expiration
Date, DaimlerChrysler AG should decide to decrease the number of Daimler-Benz
Ordinary Shares and Daimler-Benz ADSs being sought or to increase or decrease
the consideration offered to holders of Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs, such decrease in the number of Daimler-Benz Ordinary Shares
and Daimler-Benz ADSs being sought or such increase or decrease in the
consideration being offered will be applicable to all holders whose Daimler-Benz
Ordinary Shares or Daimler-Benz ADSs are accepted for exchange pursuant to the
Daimler-Benz Exchange Offer and, if at the time notice of any such decrease in
the number of Daimler-Benz Ordinary Shares and Daimler-Benz ADSs being sought or
such increase or decrease in the consideration being offered is first published,
sent or given to holders of Daimler-
ALT-21
<PAGE>
Benz Ordinary Shares and Daimler-Benz ADSs, the Daimler-Benz Exchange Offer is
scheduled to expire at any time earlier than the tenth business day from and
including the date that such notice is first so published, sent or given, the
Daimler-Benz Exchange Offer will be extended at least until the expiration of
such ten business-day period. Accordingly, if the Minimum Condition is satisfied
and the tendering Daimler-Benz securityholders will receive 1.005
DaimlerChrysler Ordinary Shares for each Daimler-Benz Ordinary Share or
Daimler-Benz ADS rather than 1.000 DaimlerChrysler Ordinary Share, Daimler-Benz
will issue the requisite press release and ensure that the Daimler-Benz Exchange
Offer remains open for 10 business days from and including the date of issuance
of such press release. Moreover, in the event the Minimum Condition is not
satisfied and is reduced to the 75% Minimum, the Daimler-Benz Exchange Offer
will remain open for at least five business days from the date the Daimler-Benz
securityholders are notified of such change. For purposes of the Daimler-Benz
Exchange Offer, a "business day" means any day other than a Saturday, Sunday or
federal holiday in the United States and consists of the time period from 12:01
A.M. though 12:00 Midnight, New York City time.
Certain Conditions of the Daimler-Benz Exchange Offer
DaimlerChrysler AG will not accept for exchange or exchange any Daimler-Benz
Ordinary Shares or Daimler-Benz ADSs tendered pursuant to the Daimler-Benz
Exchange Offer unless the Minimum Condition (or the 75% Minimum) shall have been
satisfied. Notwithstanding any other provision of the Daimler-Benz Exchange
Offer and subject to the terms of the Combination Agreement, DaimlerChrysler AG
shall not be required to accept for exchange or exchange, subject to the
applicable rules of the Commission, including Rules 13e-4(f)(5) and 14e-1(c),
any Daimler-Benz Ordinary Shares or Daimler-Benz ADSs, may postpone the
acceptance for exchange of, or exchange for, tendered Daimler-Benz Ordinary
Shares or Daimler-Benz ADSs, and may, in its reasonable discretion, terminate or
amend the Daimler-Benz Exchange Offer as to any Daimler-Benz Ordinary Shares or
Daimler-Benz ADSs not then exchanged for if, at the Daimler-Benz Exchange Offer
Expiration Date:
(i) a stop order suspending the effectiveness of the Registration
Statement shall have been issued or a proceeding for that purpose shall have
been initiated by the Commission;
(ii) the DaimlerChrysler Ordinary Shares shall not have been approved
for listing on the FSE;
(iii) all consents, approvals and actions of, filings with and notices
to any Governmental Entity (as defined in the Combination Agreement)
required of Chrysler and Daimler-Benz to consummate the transactions
contemplated by the Combination Agreement the failure of which to be
obtained or taken is reasonably likely to have a Material Adverse Effect (as
defined in the Combination Agreement) on DaimlerChrysler AG shall not have
been obtained or made;
(iv) a judgment, order, decree, statute, law, ordinance, rule or
regulation, entered, enacted, promulgated, enforced or issued by any
Governmental Entity shall be in effect (a) preventing the consummation of
the Daimler-Benz Exchange Offer, the Chrysler Merger, the U.S. Share
Exchange or the Daimler-Benz Merger, or (b) which otherwise is reasonably
likely to have a Material Adverse Effect on Chrysler or Daimler-Benz; or
(v) each of Chrysler and Daimler-Benz shall not have received the
accountants' letters contemplated by the Combination Agreement (unless the
Minimum Condition has been changed to the 75% Minimum).
The foregoing conditions are for the sole benefit of DaimlerChrysler AG and
may be asserted by DaimlerChrysler AG regardless of the circumstances giving
rise to any such conditions (including any action or inaction by DaimlerChrysler
AG) or may be waived by DaimlerChrysler AG in whole or in part (other than the
Minimum Condition). The determination as to whether any condition has been
satisfied shall be in the reasonable judgment of DaimlerChrysler AG and will be
final and binding on the holders of Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs. The failure by DaimlerChrysler AG 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 circumstances
shall not be deemed a waiver with respect to any other facts and
ALT-22
<PAGE>
circumstances and each such right shall be deemed a continuing right which may
be asserted at any time and from time to time.
Fees and Expenses
Except as set forth below, DaimlerChrysler AG will not pay any fees or
commissions to any broker or other person soliciting tenders of Daimler-Benz
Ordinary Shares and Daimler-Benz ADSs pursuant to the Daimler-Benz Exchange
Offer.
Goldman, Sachs & Co., Credit Suisse First Boston Corporation and Deutsche
Bank Securities are acting as Dealer Managers in the United States in connection
with the Daimler-Benz Exchange Offer and they (or certain of their affiliates)
have provided certain financial advisory services in connection with the
Transactions. See "The Transactions--Opinion of Financial Advisor of Chrysler"
and "--Opinion of Financial Advisor of Daimler-Benz." In addition, Goldman,
Sachs & Co. oHG, an affiliate of Goldman, Sachs & Co., which has also provided
certain financial advisory services in connection with the Transactions,
Deutsche Bank AG and Credit Suisse First Boston AG, an affiliate of Credit
Suisse First Boston Corporation, are acting as dealer managers outside the
United States in connection with the Daimler-Benz Exchange Offer.
DaimlerChrysler AG will pay certain fees and commissions in connection with
the Daimler-Benz Exchange Offer. DaimlerChrysler AG will pay Deutsche Bank AG a
fee of DM 14 million (approximately $8.3 million based on an exchange rate of DM
1.6895, the Noon Buying Rate on September 15, 1998) for its services as a dealer
manager in the Daimler-Benz Exchange Offer. In addition, DaimlerChrysler AG will
pay 28 German depositary banks up to an aggregate of DM 21 million
(approximately $12.4 million based on an exchange rate of DM 1.6895, the Noon
Buying Rate on September 15, 1998) to act as recipient and exchange agencies in
connection with exchanges of Daimler-Benz Ordinary Shares pursuant to the
Daimler-Benz Exchange Offer. DaimlerChrysler AG will also pay to each German
depositary bank as well as to certain institutions acting as recipient and
exchange agencies outside the United States and Germany a commission based on
the number of Daimler-Benz Ordinary Shares deposited for exchange through such
depositary bank equal to (i) 2% of the market price of such deposited shares
(based on the mid-day sale price (KASSAKURS) on the FSE of Daimler-Benz Ordinary
Shares on the last day of the Daimler-Benz Exchange Offer), subject to a
limitation of DM 1,500 per deposit, for shares deposited during the first 20
days of the Daimler-Benz Exchange Offer, and (ii) 1% of the market price of such
deposited shares (based on the mid-day sale price (KASSAKURS) on the FSE of
Daimler-Benz Ordinary Shares on the last day of the Daimler-Benz Exchange
Offer), subject to a limitation of DM 1,000 per deposit, for shares deposited
after the first 20 days of the Daimler-Benz Exchange Offer.
DaimlerChrysler AG has also retained D.F. King & Co., Inc. to act as
Information Agent in connection with the Daimler-Benz Exchange Offer. The
Information Agent may contact holders of Daimler-Benz Ordinary Shares or
Daimler-Benz ADSs by mail, telephone, telex and personal interviews and may
request brokers, dealers and other nominee stockholders to forward the
Daimler-Benz Exchange Offer Materials to owners of Daimler-Benz Ordinary Shares
or Daimler-Benz ADSs. The Information Agent will receive a fee estimated not to
exceed approximately $20,000 for such services, plus reimbursement of
out-of-pocket expenses. DaimlerChrysler AG will indemnify the Information Agent
against certain liabilities and expenses in connection with the Daimler-Benz
Exchange Offer, including liabilities under the federal securities laws.
DaimlerChrysler AG will pay the Exchange Agent reasonable and customary
compensation for its services in connection with the Daimler-Benz Exchange
Offer, plus reimbursement for out-of-pocket expenses, and will indemnify the
Exchange Agent against certain liabilities and expenses in connection therewith,
including liabilities under the federal securities laws. Brokers, dealers,
commercial banks and trust companies will be reimbursed by DaimlerChrysler AG
for customary mailing and handling expenses incurred by them in forwarding
material to their customers.
ALT-23
<PAGE>
Miscellaneous
The Daimler-Benz Exchange Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs in any jurisdiction in which the making of the Daimler-Benz
Exchange Offer or the acceptance thereof would not be in compliance with the
laws of such jurisdiction. DaimlerChrysler AG is not aware of any jurisdiction
where the making of the Daimler-Benz Exchange Offer or the acceptance thereof
would not be in compliance with applicable law. If DaimlerChrysler AG becomes
aware of any jurisdiction where the making of the Daimler-Benz Exchange Offer or
the acceptance thereof would not be in compliance with any valid applicable law,
DaimlerChrysler AG will make a good faith effort to comply with such law. If,
after such good faith effort, DaimlerChrysler AG cannot comply with such law,
the Daimler-Benz Exchange Offer will not be made to, nor will tenders be
accepted from or on behalf of, holders of Daimler-Benz Ordinary Shares and
Daimler-Benz ADSs in any such jurisdiction.
ALT-24
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for
Daimler-Benz ADSs and Daimler-Benz Ordinary Shares and any other required
documents should be sent or delivered by each holder of Daimler-Benz Ordinary
Shares and Daimler-Benz ADSs or such holder's broker, dealer, commercial bank,
trust company or other nominee to the Exchange Agent as follows:
THE EXCHANGE AGENT FOR THE DAIMLER-BENZ EXCHANGE OFFER IS:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
(FOR ELIGIBLE INSTITUTIONS ONLY)
Tender & Exchange Department (212) 815-6213 Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station FOR CONFIRMATION TELEPHONE: Receive and Deliver Window
New York, New York 10286-1248 (800) 507-9357 New York, New York 10286
</TABLE>
Any questions and requests for assistance may be directed to the Information
Agent or the Dealer Managers at their respective telephone numbers and addresses
listed below. Additional copies of this Offering Circular-Prospectus, the Letter
of Transmittal and the Notice of Guaranteed Delivery may also be obtained from
the Information Agent. You may also contact your broker, dealer, commercial bank
or trust company for assistance concerning the Daimler-Benz Exchange Offer.
THE INFORMATION AGENT FOR THE DAIMLER-BENZ EXCHANGE OFFER IS:
D.F. King & Co., Inc.
77 Water Street
20th Floor
New York, New York 10005
(212) 269-5550 (Call Collect)
(800) 848-3094 (Toll Free)
THE DEALER MANAGERS FOR THE DAIMLER-BENZ EXCHANGE OFFER ARE:
GOLDMAN, SACHS & CO. CREDIT SUISSE FIRST DEUTSCHE BANK SECURITIES
85 Broad Street BOSTON 31 West 52nd Street
New York, New York 10004 Eleven Madison Avenue New York, New York 10019
(212) 902-1000 (Call New York, New York 10005 (212) 469-5000 (Call
Collect) (800) 881-8320 (Toll Collect)
(800) 323-5678 (Toll Free) (800) 334-1898 (Toll
Free) Free)
ALT-25
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Members of the DaimlerChrysler Supervisory Board and the DaimlerChrysler
Management Board and officers of DaimlerChrysler AG will be covered by customary
liability insurance, including insurance against liabilities under the
Securities Act.
Item 21. Exhibits and Financial Statements Schedules.
<TABLE>
<CAPTION>
Exhibit Number Description of Documents
- ----------------- -------------------------------------------------------------------------------------------------
<C> <S>
2.1 Business Combination Agreement, dated as of May 7, 1998, among Chrysler, Daimler-Benz and
DaimlerChrysler AG (Included as Annex A to the Offering Circular--Prospectus).**
3.1 English Translation of Memorandum and Articles of Association (SATZUNG) of DaimlerChrysler AG
(Included as Annex D to the Offering Circular--Prospectus).
4.1 Specimen Certificate of DaimlerChrysler Ordinary Shares (Bilingual German and English).+
5.1 Opinion of the legal department of Daimler-Benz as to the validity of the DaimlerChrysler
Ordinary Shares.***
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to certain tax matters.***
8.2 Opinion of Debevoise & Plimpton as to certain tax matters.***
10.1 Stockholder Agreement, dated as of May 7, 1998, among Chrysler, Daimler-Benz, Tracinda and Kirk
Kerkorian (Incorporated by reference to Chrysler's Current Report on Form 8-K dated May 7, 1998).
11.1 Computation of Pro forma Combined Earnings (loss) Per Share.***
23.1 Consent of the legal department of Daimler-Benz (to be included in Exhibit 5.1).***
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (to be included in Exhibit 8.1).***
23.3 Consent of Debevoise & Plimpton (to be included in Exhibit 8.2).***
23.4 Consent of KPMG Deutsche Treuhand-Gesellschaft AG.*
23.5 Consent of Deloitte & Touche LLP.*
23.6 Letter from Deloitte & Touche LLP regarding unaudited interim financial information.*
23.7 Consent of Credit Suisse First Boston Corporation.*
23.8 Consent of Goldman, Sachs & Co. oHG*
24.1 Powers of Attorney (included on signature pages).***
99.1 Opinion of Credit Suisse First Boston Corporation (Included as Annex B to the Offering
Circular--Prospectus).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit Number Description of Documents
- ----------------- -------------------------------------------------------------------------------------------------
<C> <S>
99.2 Opinion of Goldman, Sachs & Co. oHG (Included as Annex C to the Offering Circular-- Prospectus).
99.3 Certificate of Incorporation of Chrysler, as amended and restated and in effect on May 21, 1987
(Incorporated by reference to Chrysler's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994).
99.4 Certificate of Amendment of Certificate of Incorporation of Chrysler, dated May 19, 1994, as in
effect on May 20, 1994 (Incorporated by reference to Chrysler's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994).
99.5 By-Laws of Chrysler, as amended as of February 8, 1996 (Incorporated by reference to Chrysler's
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1996).
99.6 Form of Proxy for the Chrysler Special Meeting.***
</TABLE>
- ------------------------
* Filed herewith.
** Schedules to the Combination Agreement have been omitted in accordance with
Item 601(b)(2) of Regulation S-K and a summary of such schedules is provided
in lieu thereof. The registrant undertakes to furnish supplementally to the
Commission copies of any omitted schedule on the request of the Commission.
*** Previously filed.
+ To be filed by amendment.
Item 22. Undertakings
The undersigned registrant hereby undertakes:
(a) (1) to file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) that, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering;
(4) to file a post-effective amendment to the registration statement to
include any financial statements required by Rule 3-19 of Regulation S-X under
the Securities Act of 1933 at the start of any delayed offering or throughout a
continuous offering;
(b) that, for purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to Section 13
(a) or 15 (d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section 15
(d) of the
II-2
<PAGE>
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be initial BONA FIDE offering thereof;
(c) (1) that prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form;
(2) every prospectus: (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of Section
10(a)(3) of the Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering as such securities
at that time shall be deemed to be the initial bona fide offering thereof;
(d) insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue;
(e) (1) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form
F-4, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means, and
(2) to arrange or provide for a facility in the United States for the purpose of
responding to such requests; and
(f) to supply by means of a post-effective amendment all information
concerning a transaction and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it became
effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Post-Effective Amendment No. 1 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Stuttgart, Germany on the 16th day of September, 1998.
<TABLE>
<S> <C> <C> <C>
DAIMLER-BENZ AKTIENGESELLSCHAFT DAIMLERCHRYSLER AG
By: /s/ JURGEN E. SCHREMPP By: /s/ JOHANNES MARET
---------------------------------------- ----------------------------------------
Jurgen E. Schrempp Member of the Board of Management
Chairman of the Board of Management
Chief Executive Officer
By: /s/ MANFRED GENTZ
----------------------------------------
Manfred Gentz
Member of the Board of Management
Chief Financial Officer
</TABLE>
II-4
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated, on the 16th day of September, 1998.
Signature Title
- ------------------------------ ---------------------------
/s/ JURGEN E. SCHREMPP Chairman of the Board of
- ------------------------------ Management
Jurgen E. Schrempp (Chief Executive Officer)
* Member of the Board of
- ------------------------------ Management
Dr. Manfred Bischoff
* Member of the Board of
- ------------------------------ Management
Dr. Eckhard Cordes
/s/ MANFRED GENTZ Member of the Board of
- ------------------------------ Management
Dr. Manfred Gentz (Chief Financial Officer)
* Member of the Board of
- ------------------------------ Management
Jurgen Hubbert
* Member of the Board of
- ------------------------------ Management
Dr. Kurt J. Lauk
* Member of the Board of
- ------------------------------ Management
Dr. Klaus Mangold
* Member of the Board of
- ------------------------------ Management
Heiner Tropitzsch
* Member of the Board of
- ------------------------------ Management
Klaus-Dieter Vohringer
* Member of the Board of
- ------------------------------ Management
Dr. Dieter Zetsche
* Principal Accounting
- ------------------------------ Officer
Dr. Hans-Georg Bruns
REPRESENTATIVE OF Authorized Representative
DAIMLERCHRYSLER AG AND in the United States
DAIMLER-BENZ
AKTIENGESELLSCHAFT
<TABLE>
<S> <C> <C>
*
--------------------------------------
Timotheus R. Pohl
By: Authorized Signatory
- ------------------------
/s/ JURGEN E. SCHREMPP
--------------------------------------
Jurgen E. Schrempp
Attorney-in-fact
*By:
/s/ MANFRED GENTZ
--------------------------------------
Dr. Manfred Gentz
Attorney-in-fact
By:
</TABLE>
II-5
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit Number Description of Documents
- ----------------- -------------------------------------------------------------------------------------------------
<C> <S>
2.1 Business Combination Agreement, dated as of May 7, 1998, among Chrysler, Daimler-Benz and
DaimlerChrysler AG (Included as Annex A to the Proxy Statement/Prospectus).**
3.1 English Translation of Memorandum and Articles of Association (SATZUNG) of DaimlerChrysler AG
(Included as Annex D to the Proxy Statement/Prospectus).
4.1 Specimen Certificate of DaimlerChrysler Ordinary Shares (Bilingual German and English).+
5.1 Opinion of the legal department of Daimler-Benz as to the validity of the DaimlerChrysler
Ordinary Shares.***
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to certain tax matters.***
8.2 Opinion of Debevoise & Plimpton as to certain tax matters.***
10.1 Stockholder Agreement, dated as of May 7, 1998, among Chrysler, Daimler-Benz, Tracinda and Kirk
Kerkorian (Incorporated by reference to Chrysler's Current Report on Form 8-K dated May 7, 1998).
11.1 Computation of Pro forma Combined Earnings (loss) Per Share.***
23.1 Consent of the legal department of Daimler-Benz (to be included in Exhibit 5.1).***
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (to be included in Exhibit 8.1).***
23.3 Consent of Debevoise & Plimpton (to be included in Exhibit 8.2).***
23.4 Consent of KPMG Deutsche Treuhand-Gesellschaft AG.*
23.5 Consent of Deloitte & Touche LLP.*
23.6 Letter from Deloitte & Touche LLP regarding unaudited interim financial information.*
23.7 Consent of Credit Suisse First Boston Corporation.*
23.8 Consent of Goldman, Sachs & Co. oHG*
24.1 Powers of Attorney (included on signature pages).***
99.1 Opinion of Credit Suisse First Boston Corporation (Included as Annex B to the Offering
Circular--Prospectus).
99.2 Opinion of Goldman, Sachs & Co. oHG (Included as Annex C to the Offering Circular-- Prospectus).
99.3 Certificate of Incorporation of Chrysler, as amended and restated and in effect on May 21, 1987
(Incorporated by reference to Chrysler's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994).
99.4 Certificate of Amendment of Certificate of Incorporation of Chrysler, dated May 19, 1994, as in
effect on May 20, 1994 (Incorporated by reference to Chrysler's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994).
99.5 By-Laws of Chrysler, as amended as of February 8, 1996 (Incorporated by reference to Chrysler's
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1996).
99.6 Form of Proxy for the Chrysler Special Meeting.***
</TABLE>
- ------------------------
* Filed herewith.
** Schedules to the Combination Agreement have been omitted in accordance with
Item 601(b)(2) of Regulation S-K and a summary of such schedules is provided
in lieu thereof. The registrant undertakes to furnish supplementally to the
Commission copies of any omitted schedule on the request of the Commission.
*** Previously filed.
+ To be filed by amendment.
<PAGE>
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
To the Board of Directors
DaimlerChrysler Aktiengesellschaft
We consent to the use of our reports dated March 17, 1998, relating to the
consolidated balance sheets of Daimler-Benz Aktiengesellschaft and
subsidiaries ("Daimler-Benz") as of December 31, 1997 and 1996, and the
related consolidated statements of income, changes in stockholders' equity
and cash flows for each of the years in the three-year period ended December
31, 1997, and the related financial statement schedule, appearing in the
Daimler-Benz 1997 Annual Report of Form 20-F, incorporated by reference
herein.
Our auditors' reports referred to above contain a qualification as a result of
a departure from United States generally accepted accounting principles for
Daimler-Benz' accounting for certain joint ventures in accordance with the
proportionate method of consolidation. In our opinion, United States
generally accepted accounting principles require that such joint ventures be
accounted for using the equity method of accounting. The United States
Securities and Exchange Commission has stated that it would not object to
Daimler-Benz' use of the proportionate method of consolidation as
supplemented by the disclosures in Note 2 to the consolidated financial
statements referred to above.
In addition, we consent to the reference to our firm under the heading
"Experts" in the Proxy Statement/Prospectus.
KPMG Deutsche Treuhand-Gesellschaft AG
Frankfurt am Main
September 15, 1998
<PAGE>
Exhibit 23.5
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective Amendment
No. 1 to Registration Statement No. 333-60767 of DaimlerChrysler AG, as
successor corporation to Daimler-Benz Aktiengesellschaft on Form F-4, of our
report dated January 22, 1998, relating to the financial statements of Chrysler
Corporation appearing in its Annual Report on Form 10-K for the year ended
December 31, 1997. We also consent to the reference to us under the heading
"Experts" in the Offering Circular-Prospectus and the Proxy
Statement/Prospectus, which are part of this Registration Statement.
Deloitte & Touche LLP
Detroit, Michigan
September 15, 1998
<PAGE>
Exhibit 23.6
DaimlerChrysler AG (as successor corporation to Daimler-Benz Aktiengesellschaft)
D-70546 Stuttgart
Federal Republic of Germany
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
financial information of Chrysler Corporation and consolidated subsidiaries
for the three-month periods ended March 31, 1998 and 1997 and the three-month
and six-month periods ended June 30, 1998 and 1997, as indicated in our
reports dated April 8, 1998 and July 10, 1998, respectively; because we did
not perform an audit, we expressed no opinion on that information.
We are aware that our reports referred to above, which were included in the
Chrysler Corporation Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998 and June 30, 1998, are incorporated by reference in this
Post-Effective Amendment No. 1 to Registration Statement No. 333-60767 on
Form F-4.
We also are aware that the aforementioned reports, pursuant to Rule 436(c)
under the Securities Act of 1933, are not considered a part of the
Registration Statement prepared or certified by an accountant or a report
prepared or certified by an accountant within the meaning of Sections 7 and
11 of that Act.
Deloitte & Touche LLP
Detroit, Michigan
September 15, 1998
<PAGE>
Exhibit 23.7
CONSENT OF CREDIT SUISSE FIRST BOSTON CORPORATION
We hereby consent to the use of our name and to the description of our
opinion letter dated May 6, 1998 under the captions "SUMMARY -- The Special
Meetings -- The Chrysler Special Meeting -- Opinion of Financial Advisor of
Chrysler", "THE TRANSACTIONS -- Background of the Transactions", "THE
TRANSACTIONS -- Recommendations of the Chrysler Board and Reasons for those
Recommendations" and "THE TRANSACTIONS -- Opinion of the Financial Advisor of
Chrysler" in, and to the inclusion of such opinion letter as Appendix B to, the
Proxy Statement/Prospectus of Chrysler Corporation and DaimlerChrysler AG and
Offering Circular-Prospectus of DaimlerChrysler AG included in Post-Effective
Amendment No. 1 to the Registration Statement on Form F-4 of DaimlerChrylser AG
(File No. 333-60767). In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under, or that we
are experts with respect to any part of such Registration Statement within the
meaning of the term "experts" as used in, the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
CREDIT SUISSE FIRST BOSTON CORPORATION
New York, New York
September 15, 1998
<PAGE>
EXHIBIT 23.8
[Letterhead of Goldman, Sachs & Co. oHG]
PERSONAL AND CONFIDENTIAL
September 15, 1998
Management Board and Supervisory Board
Daimler-Benz AG
EpplestraSSe 225
70646 Stuttgart
Germany
Re: Post-Effective Amendment No. 1 to the Registration Statement on Form F-4 of
DaimlerChrysler AG (File No. 333-60767) relating to the Ordinary Shares of
DaimlerChrysler AG being registered in connection with the combination of
Daimler-Benz AG and Chrysler Corporation.
Dear Gentlemen and Madame:
Reference is made to our opinion letter dated May 8, 1998 with respect to the
fairness from a financial point of view to the holders (other than Chrysler
Corporation ("Chrysler") and its affiliates) of the outstanding ordinary shares
of DM 5 nominal value or the corresponding no par value share, as the case may
be (the "Daimler-Benz Ordinary Shares") of Daimler-Benz AG, an Aktiengellschaft
organized and existing under the laws of the Federal Republic of Germany
("Daimler-Benz"), including those Daimler-Benz Ordinary Shares represented by
Daimler-Benz ADSs (as defined therein), of the Daimler-Benz Exchange Ratio (as
defined therein) to be received by the holders of the Daimler-Benz Ordinary
Shares in the Daimler-Benz Exchange Offer and the Daimler-Benz Merger (each as
defined therein) provided for in the Business Combination Agreement, dated as of
May 7, 1998, among Daimler-Benz, Chrysler and DaimlerChrysler AG, an
Aktiengesellschaft organized and existing under the laws of the Federal Republic
of Germany ("DaimlerChrysler") (the "Agreement").
The foregoing opinion letter is provided for the information and assistance of
the Management Board and Supervisory Board of Daimler-Benz in connection with
its consideration of the transaction contemplated therein and is not to be used,
circulated, quoted or otherwise referred to for any other purpose, nor is it to
be filed with, included in or referred to in whole or in part in any
registration statement, proxy statement or any other document, except in
accordance with our prior written consent. We understand that the Company has
determined to include our opinion in the above referenced Post-Effective
Amendment No. 1 to the Registration Statement.
In that regard, we hereby consent to the reference to the opinion of our Firm
under the captions "SUMMARY-- The Special Meetings--The Daimler-Benz Special
Meeting--Opinion of Financial Advisor of Daimler-Benz," "THE
TRANSACTIONS--Recommendations of the Daimler-Benz Management Board and Reasons
for those Recommendations," "THE TRANSACTIONS--Opinion of Financial Advisor of
Daimler-Benz" and "THE DAIMLER-BENZ EXCHANGE OFFER--General" and to the
inclusion of the foregoing opinion in the above mentioned Post-Effective
Amendment No. 1 to the Registration Statement. In giving such consent, we do not
thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the rules and
regulations of the Securities and Exchange Commission.
Very truly yours,
GOLDMAN, SACHS & CO. oHG
