SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)*
Delaware Otsego Corporation
(Name of Issuer)
Common Stock
(Title of Class of Securities)
246244 10 7
(Cusip Number)
Alan A. Rudnick
Vice President-General Counsel
and Corporate Secretary
CSX Corporation
901 East Cary Street
Richmond, Virginia 23219
(804) 782-1400
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 17, 1997
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a
statement on Schedule 13G to report the acqui-
sition which is the subject of this Schedule
13D, and is filing this schedule because of
Rule 13d-1(b)(3) or (4), check the following
box [].
Check the following box if a fee is being paid
with this statement. []. (A fee is not re-
quired only if the reporting person: (1) has a
previous statement on file reporting beneficial
ownership of more than five percent of the
class of securities described in Item 1; and
(2) has filed no amendment subsequent thereto<PAGE>
reporting beneficial ownership of five percent
or less of such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including
all exhibits, should be filed with the Commis-
sion. See Rule 13d-1(a) for other parties to
whom copies are to be sent.
The remainder of this cover page shall
be filled out for a reporting person's
initial filing on this form with re-
spect to the subject class of securi-
ties, and for any subsequent amendment
containing information which would al-
ter disclosures provided in a prior
cover page.
(continued on following page(s))
The information required on the remainder of
this cover page shall be deemed to be "filed"
for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise sub-
ject to the liabilities of that section of the
Act but shall be subject to all other provi-
sions of the Act (however, see the Notes).
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1 NAME OF REPORTING PERSONS CSX CORPORATION
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
62-1051971
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) []
(b) []
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS []
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E):
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES OF AMERICA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH PERSON WITH
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
110,250
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
110,250
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
110,250
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) []
EXCLUDES CERTAIN SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.0%
14 TYPE OF REPORTING PERSON
CO
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1 NAME OF REPORTING PERSONS CSX TRANSPORTATION, INC.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
54-6000720
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) []
(b) []
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS []
IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E):
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES OF AMERICA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH PERSON WITH
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
110,250
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
110,250
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
110,250
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) []
EXCLUDES CERTAIN SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6. 0%
14 TYPE OF REPORTING PERSON
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CO
-5-<PAGE>
This Amendment No. 3 to Schedule 13D, originally filed
February 12, 1996 and subsequently amended (as amended, the
"Schedule 13D"), by (i) CSX Corporation, a Virginia corporation
("CSX"), which has its principal executive offices at 901 East
Cary Street, Richmond, Virginia 23219, and (ii) CSX Transporta-
tion, Inc., a Virginia corporation ("CSTX"), which has its
principal executive offices at 500 Water Street, Jacksonville,
Florida 32203, relates to the common stock of Delaware Otsego
Corporation (the "Company"), whose principal executive offices
are at 1 Railroad Avenue, Cooperstown, New York 13326. Unless
otherwise indicated all capitalized terms used herein shall
have the same meanings as set forth in the Schedule 13D.
ITEM 3. SOURCE AND AMOUNT OF FUNDS AND OTHER CONSIDERATION.
Item 3 of the Schedule 13D is hereby amended by the addi-
tion of the following:
Funds to be provided by CSX to consummate the transactions
contemplated by the Merger Agreement (as defined below) will be
provided from working capital.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 of the Schedule 13D is hereby amended by the addi-
tion of the following:
On August 17, 1997, the Company, Mr. Walter G. Rich
("Rich"), CSX and NSC entered into a merger agreement (the
"Merger Agreement") providing for an acquisition of all shares
of capital stock of the Company by an entity to be formed by
CSX, NSC and Rich. In connection with the Merger Agreement,
CSX, NSC and Rich entered into a side agreement (the "Side
Agreement"), dated as of August 17, 1997, with respect to cer-
tain matters among such parties. Reference is hereby made to
the Merger Agreement, filed as Exhibit 3 hereto, and to the
Side Agreement, filed as Exhibit 4 hereto, for the terms of
such agreements.
On August 14, 1997, a complaint (the "Complaint") was
filed with the Supreme Court of the State of New York by a
Company shareholder requesting, among other things, that the
proposed transaction be enjoined. Reference is hereby made to
the Complaint, filed as Exhibit 5 hereto, for the complete
terms of such Complaint.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
This filing excludes all shares and options with respect
to shares of Common Stock of the Company beneficially owned by
Rich, as to which Rich possesses sole voting and dispositive
power.
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH SECURITIES OF THE ISSUER.
Reference is hereby made to the information set forth un-
der Item 4 above.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 3 -- Merger Agreement, dated August 17, 1997.
Exhibit 4 -- Side Agreement, dated August 17, 1997.
Exhibit 5 -- Complaint, dated August 14, 1997.
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SIGNATURES
After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this
statement is true, complete and correct.
Dated: August 17, 1997
CSX CORPORATION
By: /s/ Mark G. Aron
Mark G. Aron
Executive Vice President -
Law and Public Affairs
CSX TRANSPORTATION, INC.
By: /s/ William M. Hart
William M. Hart
Vice President --
Corridor Development
-8-
EXHIBIT 3
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CSX CORPORATION,
A VIRGINIA CORPORATION,
NORFOLK SOUTHERN CORPORATION,
A VIRGINIA CORPORATION,
WALTER G. RICH
AND
DELAWARE OTSEGO CORPORATION,
A NEW YORK CORPORATION,
DATED AS OF AUGUST 17, 1997.<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I
THE OFFER AND THE MERGER
Section 1.1. The Offer............................... 1
Section 1.2. Company Action.......................... 3
Section 1.3. The Merger.............................. 3
Section 1.4. Action by Shareholders.................. 4
Section 1.5. Proxy Statement......................... 4
Section 1.6. Closing................................. 5
Section 1.7. Effective Time.......................... 5
Section 1.8. Effects of the Merger................... 5
Section 1.9. Certificate of Incorporation............ 5
Section 1.10. Bylaws.................................. 5
Section 1.11. Directors and Officers.................. 5
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.1. Conversion of Securities................ 5
Section 2.2. Exchange of Certificates and Cash....... 6
Section 2.3. Stock Transfer Books ................... 8
Section 2.4. Stock Options; Payment Rights........... 8
Section 2.5. Dissenting Shares....................... 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DOCP
Section 3.1. Organization and Qualifications;
Subsidiaries.......................... 9
Section 3.2. Certificate of Incorporation
and Bylaws............................ 9
Section 3.3. Capitalization.......................... 9
Section 3.4. Authority Relative to This Agreement.... 10
Section 3.5. No Conflict; Required Filings and
Consents.............................. 11
Section 3.6. Compliance.............................. 11
Section 3.7. Litigation.............................. 12
Section 3.8. SEC Filings; Financial Statements....... 12
Section 3.9. Absence of Certain Changes and Events... 13
Section 3.10. Employee Benefit Plans.................. 14
Section 3.11. Environmental Matters................... 14
Section 3.12. [Intentionally omitted.]................ 15
Section 3.13. Transactions with Affiliates............ 16
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Section 3.14. Contracts............................... 16
Section 3.15. Tax Matters............................. 16
Section 3.16. Opinion of Financial Advisor............ 17
Section 3.17. Brokers................................. 17
Section 3.18. Information Supplied.................... 17
Section 3.19. State Takeover Statutes................. 17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER,
CSX, NSC AND THE MANAGEMENT INVESTOR
Section 4.1. Organization and Qualification.......... 18
Section 4.2. Authority Relative to This Agreement.... 18
Section 4.3. No Conflict; Required Filings
and Consents.......................... 18
Section 4.4. Information Supplied.................... 19
Section 4.5. Brokers................................. 19
ARTICLE V
COVENANTS RELATING TO THE CONDUCT OF BUSINESS
Section 5.1. Conduct of Business by DOCP Pending
the Merger............................ 20
Section 5.2. Other Actions........................... 22
ARTICLE VI
ADDITIONAL COVENANTS
Section 6.1. Access to Information; Confidentiality.. 22
Section 6.2. No Solicitation......................... 23
Section 6.3. Indemnification, Exculpation and
Insurance............................. 24
Section 6.4. Notification of Certain Matters......... 24
Section 6.5. Further Action; Best Efforts............ 25
Section 6.6. Public Announcements.................... 25
Section 6.7. Conveyance Taxes........................ 25
ARTICLE VII
CLOSING CONDITIONS
Section 7.1. Conditions to Obligations of Each
Party to Effect the Merger............ 26
Section 7.2. Conditions to Obligations of DOCP
to Effect the Merger.................. 26
Section 7.3. Conditions to Obligations of Buyer
to Effect the Merger.................. 27
Section 7.4. Frustration of Closing Conditions....... 27
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1. Termination............................. 27
Section 8.2. Effect of Termination................... 28
Section 8.3. Amendment............................... 28
Section 8.4. Waiver.................................. 29
Section 8.5. Fees, Expenses and Other Payments....... 29
ARTICLE IX
GENERAL PROVISIONS
Section 9.1. Effectiveness of Representations,
Warranties and Agreements............. 29
Section 9.2. Notices................................. 30
Section 9.3. Certain Definitions..................... 32
Section 9.4. Interpretation.......................... 32
Section 9.5. Severability............................ 33
Section 9.6. Entire Agreement........................ 33
Section 9.7. Assignment.............................. 33
Section 9.8. Parties in Interest..................... 33
Section 9.9. Governing Law........................... 33
Section 9.10. Enforcement............................. 34
Section 9.11. Counterparts............................ 34
Section 9.12. Guarantee............................... 34
Annex I - Conditions of the Offer
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INDEX OF DEFINED TERMS
----------------------
TERM PAGE TERM PAGE
---- ---- ---- ----
affiliate........................ 32 Offer Price............... 1
Agreement........................ 1 Options................... 10
Alternative Transaction.......... 23 Permits................... 12
business day..................... 32 person.................... 32
Buyer............................ 1 Property.................. 14
Buyer Material Adverse Effect.... 18 Proxy Statement........... 4
Certificates..................... 6 Release................... 15
Cleanup.......................... 15 Respective Representatives 22
Code............................. 7 Schedule 13E-3............ 2
Confidential Information......... 22 Schedule 14D-1............ 2
control, controlled, controlled Schedule 14D-9............ 3
by, under common control with.. 32 SEC....................... 2
Convertible Debt................. 10 Securities Act............ 12
CSX.............................. 1 subsidiary, subsidiaries.. 32
Dissenting Shares................ 8 Superior Proposal......... 24
DOCP............................. 1 Surviving Corporation..... 1
DOCP Board....................... 1 taken as a whole.......... 32
DOCP Disclosure Schedule......... 9 Transmittal Documents..... 7
DOCP Material Adverse Effect..... 9 Warrants.................. 10
DOCP Plans....................... 14
DOCP SEC Reports................. 12
DOCP Shares...................... 1
DOCP Stock Options............... 9
DOCP Subsidiary.................. 9
Effective Time................... 5
Environmental Laws............... 15
ERISA............................ 14
Exchange Act..................... 11
Exchange Agent................... 6
Exchange Fund.................... 6
Expenses......................... 29
Fair Market Value................ 24
Governmental Entity.............. 11
Hazardous Substances............. 15
HSR Act.......................... 11
Indemnified Parties.............. 24
IRS.............................. 14
knowledge........................ 32
LLC.............................. 1
Management Investor.............. 1
material, materially............. 32
Merger........................... 1
Merger Meeting................... 4
Minimum Condition................ A-1
New York Law..................... 1
NSC.............................. 1
Offer............................ 1
Offer Documents.................. 2
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AGREEMENT AND PLAN OF MERGER, dated as of August 17,
1997 (this "Agreement"), by and among CSX CORPORATION, a
Virginia corporation ("CSX"), NORFOLK SOUTHERN CORPORATION, a
Virginia corporation ("NSC"), WALTER G. RICH (the "Management
Investor") and DELAWARE OTSEGO CORPORATION, a New York
corporation ("DOCP").
W I T N E S S E T H:
WHEREAS, the parties to this Agreement desire to
effect the acquisition of DOCP by a corporate subsidiary
("Buyer") of a limited liability company ("LLC") to be formed
by CSX, NSC and the Management Investor;
WHEREAS, no later than the Effective Time, the
Management Investor, together with CSX and NSC, will
collectively own all of the outstanding membership interests of
LLC;
WHEREAS, in furtherance of the foregoing, upon the
terms and subject to the conditions of this Agreement and in
accordance with the Business Corporation Law of the State of
New York (collectively, the "New York Law"), Buyer will make
the cash tender offer described in Section 1.1 hereof (the
"Offer") and thereafter will merge with and into DOCP (the
"Merger"), with DOCP as the surviving corporation (the
"Surviving Corporation");
WHEREAS, the Board of Directors of DOCP (the "DOCP
Board") has determined that the Offer and the Merger are fair
to, and in the best interests of, DOCP and the holders of DOCP
Shares (other than CSX and the Management Investor) and has
approved and adopted this Agreement, including the Offer, the
Merger and the other transactions contemplated hereby; and
NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants and
agreements set forth in this Agreement, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
THE OFFER AND THE MERGER
Section 1.1. The Offer. (a) Provided that nothing
shall have occurred that would result in a failure to satisfy
any of the conditions set forth in paragraphs (i) through (iv)
of Annex I hereto, as promptly as practicable after the date
hereof, but in no event later than five business days following
the public announcement of the terms of this Agreement, Buyer
(or its subsidiary) shall commence an offer to purchase all of
the outstanding shares of common stock, par value $.125 per
share, of DOCP (the "DOCP Shares") at a price of $22 per DOCP
Share, net to the seller in cash (the "Offer Price").
-1-<PAGE>
(b) The Offer shall be subject to the conditions set
forth in Annex I hereto. Buyer shall not, without the prior
written consent of DOCP, make any change in the terms or
conditions of the Offer that is adverse to the holders of DOCP
Shares, decrease the Offer Price or the number of DOCP Shares
sought in the Offer or impose conditions to the Offer other
than those set forth in Annex I hereto (it being agreed that a
waiver by Buyer of any condition, in its discretion, shall not
be deemed to be adverse to the holders of DOCP Shares);
provided that, if on any scheduled expiration date of the Offer
all conditions to the Offer shall not have been satisfied or
waived, the Offer may, but need not, be extended from time to
time without the consent of DOCP for such period of time as is
reasonably expected by Buyer to be necessary to satisfy the
unsatisfied conditions; provided further that the Offer may be
extended by Buyer without the consent of DOCP for any period
required by any rule, regulation, interpretation or position of
the United States Securities and Exchange Commission (the
"SEC") or the staff thereof applicable to the Offer; and
provided further that, if at any scheduled expiration date of
the Offer all conditions to the Offer shall have been satisfied
but less than a number of DOCP Shares that, together with the
number of DOCP shares to be contributed by CSX and the
Management Investor to Buyer, represent less than 90% of the
outstanding DOCP Shares, on a fully-diluted basis, shall have
been tendered into the Offer, Buyer shall be entitled to extend
the Offer from time to time without the consent of DOCP (for
not more than 10 business days) in order to permit Buyer to
solicit additional DOCP Shares to be tendered into the Offer.
It is agreed that the conditions to the Offer are solely for
the benefit of Buyer and may be asserted by Buyer regardless of
the circumstances giving rise to any such condition (including
any action or inaction by Buyer) or may, but need not, be
waived by Buyer, in whole or in part at any time and from time
to time, in its sole discretion.
(c) As soon as practicable on the date of
commencement of the Offer, Buyer (and, to the extent required
by law, CSX, NSC and the Management Investor, as co-bidders)
shall file with the SEC a Tender Offer Statement on Schedule
14D-1 (together with all supplements and amendments thereto,
the "Schedule 14D-1") and, together with DOCP, a Rule 13E-3
Transaction Statement on Schedule 13E-3 (together with all
supplements and amendments thereto, the "Schedule 13E-3") with
respect to the Offer, which shall contain the offer to purchase
and form of the related letter of transmittal (together with
any supplements or amendments thereto, collectively, the "Offer
Documents"). DOCP shall provide Buyer (and, if applicable,
CSX, NSC and the Management Investor) with such information
concerning DOCP as may reasonably be requested in connection
with the preparation of the Schedule 13E-3. Each party hereto
shall promptly supplement, update and correct any information
provided by it for use in the Offer Documents if and to the
extent that it is or shall have become incomplete, false or
misleading. In any such event, Buyer shall take all steps
necessary to cause the Offer Documents as so supplemented,
updated or corrected to be filed with the SEC and to be
disseminated to the holders of DOCP Shares, in each case, as
and to the extent required by applicable federal securities
laws. DOCP and its counsel, with respect to the Schedule 14D-
1, and each party hereto and its respective counsel, with
respect to the Schedule 13E-3, shall be given an opportunity to
review and comment on such filing and each supplement,
amendment or response to comments with respect thereto prior to
its being filed with or delivered to the SEC.
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Section 1.2. Company Action. (a) DOCP hereby
consents to the Offer and represents that the DOCP Board, at a
meeting duly called and held, has, by the vote of all directors
present with one abstention, (i) determined that this Agreement
and the transactions contemplated hereby, including the Offer
and the Merger, are fair to and in the best interest of DOCP
and the holders of DOCP Shares (other than CSX and the
Management Investor), (ii) approved and adopted this Agreement
and the transactions contemplated hereby, including the Offer
and the Merger, which approval satisfies in full the
requirements of the New York Law (including all approvals
required under Section 912 of the New York Law in connection
with the consummation of the transactions contemplated hereby)
and (iii) resolved to recommend acceptance of the Offer, and,
if applicable, approval and adoption of this Agreement and the
Merger, by the holders of DOCP Shares. DOCP further represents
that Smith Barney, Inc. has delivered to the DOCP Board its
opinion, dated the date of this Agreement (which will be
confirmed in writing as promptly as practicable after the date
of this Agreement), that, as of such date, the cash
consideration to be received in the Offer and the Merger by the
holders of DOCP Shares (other than CSX, NSC and the Management
Investor and their respective affiliates) is fair to such
holders from a financial point of view. DOCP shall promptly
furnish Buyer with a list of its shareholders, mailing labels,
and any available listing or computer file containing the names
and addresses of all record holders of DOCP Shares and lists of
securities positions of DOCP Shares held in stock depositories,
in each case, true and correct as of the most recent
practicable date, and will provide to Buyer such additional
information (including updated lists of shareholders, mailing
labels and lists of securities positions) and such other
assistance as Buyer may reasonably request in connection with
the Offer.
(b) As soon as practicable on the day that the Offer
is commenced, DOCP shall file with the SEC a Solicitation/
Recommendation Statement on Schedule 14D-9 (together with all
supplements and amendments thereto, the "Schedule 14D-9")
which, unless otherwise required due to the applicable
fiduciary duties of the DOCP Board as determined by the members
thereof in good faith based on the advice of outside counsel,
shall reflect the recommendations of the DOCP Board referred to
above. Each party shall promptly supplement, update and
correct any information provided by it for use in the Schedule
14D-9 if and to the extent that it is or shall have become
incomplete, false or misleading. In any such event, DOCP shall
take all steps necessary to cause the Schedule 14D-9 as so
supplemented, updated or corrected to be filed with the SEC and
to be disseminated to the holders of DOCP Shares, in each case,
as and to the extent required by applicable United States
federal securities laws. Each other party hereto and its
respective counsel shall be given an opportunity to review and
comment on the Schedule 14D-9 and each supplement, amendment or
response to comments with respect thereto prior to its being
filed or delivered with the SEC.
Section 1.3. The Merger. Upon the terms and subject
to the conditions set forth in this Agreement, and in
accordance with the New York Law, at the Effective Time Buyer
shall be merged with and into DOCP. As a result of the Merger,
the separate existence of Buyer shall cease and DOCP shall
continue as the Surviving Corporation. At the election of
Buyer, any direct or indirect wholly owned subsidiary of Buyer
may be substituted for Buyer as a constituent party of the
Merger. In such event, the parties hereto shall execute an
appropriate amendment to this agreement to reflect such
substitution.
-3-<PAGE>
Section 1.4. Action by Shareholders. If required by
applicable law to consummate the Merger, DOCP, acting through
the DOCP Board, shall, in accordance with applicable law, its
certificate of incorporation and bylaws: (a) as soon as
practicable after consummation of the Offer, duly call, give
notice of, convene and hold a special meeting of shareholders
(the "Merger Meeting") for the purpose of adopting this
Agreement and approving the Merger; (b) include in the Proxy
Statement (as defined below) the determination and
recommendation of the DOCP Board to the effect that the DOCP
Board, having determined that this Agreement and the
transactions contemplated hereby, including the Offer and the
Merger, are fair to and in the best interests of DOCP and the
holders of DOCP Shares (other than CSX and the Management
Investor), has approved and adopted this Agreement and the
transactions contemplated hereby and, unless otherwise required
due to the applicable fiduciary duties of the DOCP Board as
determined by the members thereof in good faith based on the
advice of outside counsel, recommends that such holders vote in
favor of the approval and adoption of this Agreement and the
Merger; and (c) use its best efforts to obtain the necessary
approval of this Agreement and the Merger by such holders. In
the event of the Merger Meeting, each of CSX, NSC, Buyer and
the Management Investor shall vote all DOCP Shares owned by
such person in favor of the adoption of this Agreement and the
transactions contemplated hereby.
Section 1.5. Proxy Statement. (a) If required by
applicable law in connection with the Merger, as promptly as
practicable after consummation of the Offer, DOCP shall prepare
and file with the SEC a proxy or information statement relating
to the Merger Meeting (together with any supplements or
amendments thereto, the "Proxy Statement"), and shall use its
reasonable best efforts to have such filing cleared by the SEC.
CSX, NSC, Buyer and the Management Investor shall furnish to
DOCP all information concerning such party as DOCP may
reasonably request in connection with the preparation of the
Proxy Statement. As promptly as practicable after the Proxy
Statement has been cleared by the SEC, DOCP shall mail the
Proxy Statement to the holders of DOCP Shares. The Proxy
Statement shall include the recommendation of the DOCP Board in
favor of the Merger as described in Section 1.4.
(b) The information supplied by each of CSX, NSC,
LLC, Buyer and the Management Investor for inclusion in the
Proxy Statement shall not, at the time the Proxy Statement (or
any supplement or amendment thereto) is first mailed to the
holders of DOCP Shares or, unless promptly corrected, during
the pendency of the Merger Meeting, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading. If at any time prior to the
Effective Time any event or circumstance relating to any party
hereto, or their respective officers or directors, should be
discovered by such party which should be set forth in a
supplement or an amendment to the Proxy Statement, such party
shall promptly inform the other parties hereto thereof and
shall take appropriate action in respect thereof.
(c) Notwithstanding anything in the foregoing to the
contrary, in the event that at any time Buyer and/or any other
direct or indirect subsidiary of Buyer shall acquire at least
90% of the outstanding DOCP Shares, Buyer and DOCP shall take
all necessary and appropriate action to cause the Merger to
become effective as promptly as practicable after the
expiration of
-4-<PAGE>
the Offer and the satisfaction or waiver of the conditions set
forth in Article VII without the Merger Meeting in accordance
with Section 905 of the New York Law.
Section 1.6. Closing. Unless this Agreement shall
have been terminated and the transactions contemplated hereby
shall have been abandoned pursuant to Section 8.1, and subject
to the satisfaction or waiver of the conditions set forth in
Article VII, the closing of the Merger shall take place as
promptly as practicable (and, in any event, within 10 business
days) after the satisfaction or waiver of the conditions set
forth in Article VII at the offices of Kelley, Drye & Warren
LLP, New York, New York, unless another date, time or place is
agreed to in writing by the parties hereto.
Section 1.7. Effective Time. As promptly as
practicable after the satisfaction or waiver of the conditions
set forth in Article VII, the parties hereto shall cause the
Merger to be consummated by filing a certificate of merger with
the Secretary of State of the State of New York and by making
any related filings required under the New York Law in
connection with the Merger. The Merger shall become effective
at such time as the certificate of merger is duly filed with
the Secretary of State of the State of New York or at such
later time, not to exceed 30 days from the date of such filing,
as is specified in the certificate of merger (the "Effective
Time").
Section 1.8. Effects of the Merger. From and after
the Effective Time, the Surviving Corporation shall possess all
the rights, privileges, powers and franchises and be subject to
all of the restrictions, disabilities and duties of DOCP and
Buyer, and the Merger shall otherwise have the effects as
provided by New York law.
Section 1.9. Certificate of Incorporation. The
certificate of incorporation of Buyer in effect at the
Effective Time shall be the certificate of incorporation of the
Surviving Corporation until amended in accordance with
applicable law.
Section 1.10. Bylaws. The bylaws of Buyer in effect
at the Effective Time shall be the bylaws of the Surviving
Corporation until amended in accordance with applicable law.
Section 1.11. Directors and Officers. From and
after the Effective Time, until successors are duly elected or
appointed and qualified (or earlier resignation or removal) in
accordance with applicable law, (a) the directors of Buyer at
the Effective Time shall be the directors of the Surviving
Corporation and (b) the officers of DOCP at the Effective Time
shall be the officers of the Surviving Corporation.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.1. Conversion of Securities. At the
Effective Time, by virtue of the Merger and without any action
on the part of Buyer, DOCP or the holders of any of DOCP
securities:
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(a) Each DOCP Share issued and outstanding
immediately prior to the Effective Time (other than any
DOCP Shares to be canceled pursuant to Section 2.1(b) and
any Dissenting Shares) shall be converted into the right
to receive an amount in cash equal to the Offer Price,
without interest.
(b) Each DOCP Share or DOCP Stock Option held in the
treasury of DOCP (or any DOCP Subsidiary) and each DOCP
Share or DOCP Stock Option owned by Buyer (or its
subsidiary) immediately prior to the Effective Time shall
automatically be canceled and extinguished without any
conversion thereof, and no payment shall be made with
respect thereto.
(c) Each share of capital stock (and any option to
purchase any share of capital stock) of Buyer outstanding
immediately prior to the Effective Time shall be converted
into and become one share of a class of capital stock (or
an option to purchase one share of a class of capital
stock) of the Surviving Corporation with the same rights,
powers and privileges as the share of capital stock (or
option to purchase a share of capital stock) so converted
and shall constitute the only outstanding shares (or
options to purchase shares) of capital stock of the
Surviving Corporation.
(d) On and after the Effective Time, holders of
certificates which immediately prior to the Effective Time
represented issued and outstanding DOCP Shares
("Certificates") shall cease to have any rights as
shareholders of DOCP, except the right to receive the
consideration set forth in this Article II with respect to
each DOCP Share held by them.
Section 2.2. Exchange of Certificates and Cash. (a)
Exchange Agent. From time to time as may be necessary to make
payments of cash pursuant to Section 2.1(a), Buyer shall
deposit, or shall cause to be deposited, with or for the
account of a bank or trust company designated by Buyer, which
shall be reasonably satisfactory to DOCP (the "Exchange
Agent"), for exchange in accordance with this Article II
through the Exchange Agent, amounts in cash to be paid in
respect of outstanding DOCP Shares (all such cash funds, the
"Exchange Fund"). The Exchange Agent shall, pursuant to
Buyer's instructions, deliver such cash from the Exchange Fund
to holders of DOCP Shares pursuant to the exchange procedures
set forth below. Any interest, dividends or other income
earned on the investment of the Exchange Fund shall be for the
account of Buyer.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, Buyer shall instruct the
Exchange Agent to mail to each holder of record of a
Certificate or Certificates, (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss
and title to a Certificate shall pass, only upon proper
delivery of such Certificate to the Exchange Agent and shall be
in such form and have such other provisions as Buyer may
reasonably specify) and (ii) instructions to effect the
surrender of Certificates in exchange for cash. Upon surrender
of a Certificate for cancellation to the Exchange Agent or to
such other agent or agents as may be appointed by Buyer
together with such letter of transmittal, duly executed, and
such other customary documents as may be required pursuant to
such instructions
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(collectively, the "Transmittal Documents"), the holder of such
Certificate shall be entitled to receive in exchange therefor
the amount in cash which such holder has the right to receive
pursuant to Section 2.1(a) and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of
ownership of DOCP Shares which is not registered in the
transfer records of DOCP, the applicable Exchange Fund cash may
be paid in accordance with this Article II to a transferee only
if the Certificate evidencing such transferred DOCP Shares is
presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence
that any applicable stock transfer taxes have been paid.
Exchange Fund cash shall be delivered by the Exchange Agent as
promptly as practicable following surrender of a Certificate
and the related Transmittal Documents, and Exchange Fund cash
payments may be made by check (unless otherwise required by a
depositary institution in connection with the book-entry
delivery of securities). No interest shall be payable on any
Exchange Fund cash to be delivered in respect of DOCP Shares
regardless of any delay in making payments. Until surrendered
as contemplated by this Section 2.2(b), each Certificate shall
be deemed, at any time after the Effective Time, to evidence
only the right to receive, upon such surrender, the applicable
Exchange Fund cash.
(c) Termination of Exchange Fund. Any portion of
the Exchange Fund which is not distributed to the holders of
DOCP Shares by the six-month anniversary of the Effective Time
shall be delivered to Buyer, upon demand, and any holders of
DOCP Shares who have not theretofore complied with this Article
II and received Exchange Fund cash may thereafter look only to
Buyer for the applicable cash to which they are entitled
pursuant to this Article II.
(d) No Liability. Neither Buyer, CSX, NSC, the
Management Investor, the Surviving Corporation nor DOCP shall
be liable to any holder of DOCP Shares for any Exchange Fund
cash delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(e) Withholding Rights. Buyer or the Exchange Agent
shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of
DOCP Shares such amounts as Buyer or the Exchange Agent is
required to deduct and withhold with respect to the making of
such payment under the United States Internal Revenue Code of
1986, as amended, and the rules and regulations thereunder (the
"Code"), or any provision of United States state or local or
foreign tax law. To the extent that amounts are so deducted or
withheld, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of
the DOCP Shares in respect of which such deduction and
withholding was made.
(f) Lost Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate
to be lost, stolen or destroyed and, if required by Buyer or
the Surviving Corporation, the posting by such person of a bond
in such reasonable amount as Buyer or the Surviving Corporation
may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed
Certificate the cash deliverable in respect thereof pursuant to
this Article.
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(g) No Further Ownership Rights. All cash paid
pursuant to this Article upon the surrender or exchange of
Certificates shall be deemed to have been paid in full
satisfaction of all rights pertaining to the DOCP Shares
theretofore represented by such Certificates.
Section 2.3. Stock Transfer Books. At the Effective
Time, the stock transfer books of DOCP shall be closed and
there shall be no further registration of transfers of DOCP
Shares on the records of DOCP. On or after the Effective Time,
any Certificate presented to the Exchange Agent or the
Surviving Corporation for any reason shall be exchanged for the
consideration into which the DOCP Shares represented by such
Certificate have been converted pursuant to this Article.
Section 2.4. Stock Options; Payment Rights. At the
Effective Time, each outstanding DOCP Stock Option to purchase
DOCP Shares, whether or not then exercisable, other than any
DOCP Stock Option held in the treasury of DOCP (or any DOCP
Subsidiary) or owned by Buyer (or its subsidiary) which shall
be treated as provided in Section 2.1(b), shall be canceled,
and the holder thereof shall be entitled to receive in full
consideration therefor cash in an amount equal to the
difference between the Offer Price and the per share exercise
price thereof, multiplied by the number of DOCP Shares subject
to such DOCP Stock Option; and DOCP shall obtain consents from
the holders of any DOCP Stock Options to the extent necessary
or appropriate to effect the foregoing.
Section 2.5. Dissenting Shares. (a)
Notwithstanding any other provision of this Agreement to the
contrary, DOCP Shares outstanding immediately prior to the
Effective Time and held by shareholders who shall have not
voted in favor of the Merger or consented thereto in writing
and who shall be entitled to and shall have demanded properly
in writing payment for such DOCP Shares in accordance with
Sections 910 and 623 of the New York Law and who shall not have
withdrawn such demand or otherwise have forfeited appraisal
rights (collectively, "Dissenting Shares") shall not be
converted into or represent the right to receive cash pursuant
to Section 2.1. Such shareholders shall be entitled to receive
payment of the appraised value of such DOCP Shares held by them
in accordance with the provisions of the New York Law, except
that all Dissenting Shares held by shareholders who shall have
failed to perfect or who effectively shall have withdrawn,
forfeited or lost their rights to appraisal of such DOCP Shares
under the New York Law shall thereupon be deemed to have been
converted into and to have become exchangeable, as of the
Effective Time, for the right to receive, without any interest
thereon, the applicable consideration provided in Section 2.1,
upon surrender, in the manner provided in Section 2.2, of the
Certificate or Certificates that formerly evidenced such DOCP
Shares.
(b) DOCP shall give Buyer prompt notice of any
demands for appraisal received by it, withdrawals of such
demands, and any other instruments served pursuant to the New
York Law received by DOCP and relating thereto. DOCP and Buyer
shall jointly direct all negotiations and proceedings with
respect to demands for appraisal under the New York Law.
Neither DOCP nor Buyer shall, except with the prior written
consent of the other, make any payment with respect to any
demands for appraisal, or offer to settle, or settle, any such
demands.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DOCP
DOCP hereby represents and warrants to each of the
other parties hereto that:
Section 3.1. Organization and Qualifications;
Subsidiaries. Each of DOCP, each DOCP subsidiary and each
other person in which DOCP has an investment of greater than
$1,000,000 (each, a "DOCP Subsidiary") is a corporation,
partnership or other legal entity duly incorporated or
organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization and
has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted,
except where the failure to be so organized, existing or in
good standing or to have such power, authority and governmental
approvals would not, individually or in the aggregate, have a
material adverse effect on the business, results of operations,
financial condition, assets, properties or prospects of DOCP
and the DOCP Subsidiaries, taken as a whole, or otherwise delay
in any material respect or prevent consummation of the Offer or
the Merger or otherwise prevent DOCP from performing its
obligations under this Agreement in any material respect (any
such event, a "DOCP Material Adverse Effect"). DOCP and each
DOCP Subsidiary is duly qualified or licensed as a foreign
corporation to transact business, and is in good standing, in
each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes
such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing
that could not reasonably be expected to, individually or in
the aggregate, have a DOCP Material Adverse Effect. Section
3.1 of the written disclosure schedule previously delivered by
DOCP to Buyer (the "DOCP Disclosure Schedule") sets forth a
complete and correct list of all DOCP Subsidiaries. Except for
the capital stock of the DOCP Subsidiaries, DOCP does not
beneficially or of record own, directly or indirectly, any
capital stock or other ownership interest in any corporation,
partnership, joint venture or other entity.
Section 3.2. Certificate of Incorporation and
Bylaws. DOCP has heretofore made available to Buyer a complete
and correct copy of the certificate of incorporation and bylaws
or equivalent organizational documents, each as amended to the
date hereof, of DOCP and each DOCP Subsidiary. Such
certificates of incorporation, bylaws and equivalent
organizational documents are in full force and effect. Neither
DOCP nor any DOCP Subsidiary is in violation of any provision
of its certificate of incorporation, bylaws or equivalent
organizational documents.
Section 3.3. Capitalization. The authorized capital
stock of DOCP consists of 10,000,000 DOCP Shares and 1,000,000
shares of preferred stock of DOCP, par value $1.25 per share.
As of August 7, 1997, (a) 1,893,219 DOCP Shares were issued and
outstanding, all of which were validly issued, fully paid and
nonassessable, (b) 168,251 DOCP Shares were reserved for
issuance upon the exercise of outstanding stock options granted
pursuant to DOCP employee stock plans ("DOCP Stock Options"),
(c) 421,309 DOCP Shares were reserved for issuance upon
conversion of all outstanding Convertible Debt and Warrants of
DOCP, (d) 110
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DOCP Shares were held in the treasury of DOCP, (e) no DOCP
Shares were held by DOCP Subsidiaries and (f) no shares of
preferred stock of DOCP were issued and outstanding. Except as
set forth in this Section 3.3, as of August 7, 1997, no shares
of capital stock or other voting securities of DOCP were
issued, reserved for issuance or outstanding. Except as set
forth in this Section 3.3 or in Section 3.3, other than
warrants to purchase 66,150 DOCP Shares, pursuant to the
Warrant Agreement, dated as of January 31, 1996, by and between
DOCP and Creditanstalt Corporate Finance, Inc. (the "Warrants")
and other than DOCP's 6.5% Convertible Subordinated Notes due
September 1, 2003 (the "Convertible Debt"), there are no
options, stock appreciation rights, warrants or other rights,
agreements, arrangements or commitments of any character
(collectively, "Options") relating to the issued or unissued
capital stock of DOCP or any DOCP Subsidiary or obligating DOCP
or any DOCP Subsidiary to issue, grant or sell any shares of
capital stock of, or other equity interests in, or convertible
into equity interests in, DOCP or any DOCP Subsidiary. Upon
consummation of the Merger, the Warrants and the Convertible
Debt shall cease to represent any right to purchase or
otherwise obtain any capital stock of DOCP or the Surviving
Corporation, and all rights of the holders of such Warrants and
Convertible Debt to purchase or otherwise obtain any capital
stock of DOCP shall, pursuant to the terms of such instruments,
solely represent the right, upon proper exercise or conversion
of such instruments, to obtain an amount in cash equal to the
product of the Offer Price and the number of DOCP Shares for or
into which such Warrants or Convertible Debt were exercisable
or convertible immediately prior to the Effective Time.
Section 3.3 of the DOCP Disclosure Schedule sets forth a
complete and correct list as of August 16, 1997 of the number
of DOCP Shares subject to DOCP Stock Options, the exercise
prices and holders thereof and the terms of all stock option
plans and agreements relating thereto. Since August 7, 1997,
DOCP has not issued any shares of its capital stock or Options
in respect thereof, except upon the conversion of the
Convertible Debt or the exercise of the Warrants or DOCP Stock
Options referred to above. All outstanding DOCP Shares have
been, and all DOCP Shares subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be, duly
authorized, validly issued, fully paid and nonassessable.
Except as set forth in Section 3.3 of the DOCP Disclosure
Schedule, there are no outstanding contractual obligations of
DOCP or any DOCP Subsidiary to repurchase, redeem or otherwise
acquire any shares of DOCP Shares or any capital stock of any
DOCP Subsidiary, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any DOCP Subsidiary or
any other person. Except as set forth in Section 3.3 of the
DOCP Disclosure Schedule, each outstanding share of capital
stock of each DOCP Subsidiary is duly authorized, validly
issued, fully paid and nonassessable and is owned by DOCP or
wholly owned another DOCP Subsidiary free and clear of all
security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on DOCP's or such other
DOCP Subsidiary's voting rights, charges and other encumbrances
of any nature whatsoever. Except as set forth in this Section
3.3, there are no outstanding bonds, debentures, notes or other
indebtedness having the right to vote or convertible into or
exchangeable for securities having the right to vote on any
matters upon which holders of DOCP Shares may vote.
Section 3.4. Authority Relative to This Agreement.
DOCP has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by DOCP and
the consummation by DOCP of the transactions contemplated
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hereby have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part
of DOCP or holders of its securities or indebtedness are necessary
to authorize this Agreement or to consummate the transactions
contemplated hereby (other than, with respect to consummation of
the Merger, except as contemplated by Section 1.5(c) hereof, the
approval and adoption of this Agreement by the holders of
two-thirds of the then-outstanding DOCP Shares and the filing and
recordation of appropriate merger and similar documents as required
by the New York Law). This Agreement has been duly and validly
executed and delivered by DOCP, and, assuming the due authorization,
execution and delivery by the other parties hereto, constitutes
the legal, valid and binding obligation of DOCP, enforceable
against DOCP in accordance with its terms.
Section 3.5. No Conflict; Required Filings and
Consents. (a) Except as set forth in Section 3.5 of the DOCP
Disclosure Schedule, the execution and delivery of this
Agreement by DOCP do not, and the performance of this Agreement
and the consummation of the transactions contemplated hereby by
DOCP will not, (i) conflict with or violate the certificate of
incorporation or bylaws or equivalent organizational documents
of DOCP or any DOCP Subsidiary, (ii) conflict with or violate
any law, rule, regulation, order, judgment or decree applicable
to DOCP or any DOCP Subsidiary or by which any property or
asset of DOCP or any DOCP Subsidiary is bound or affected or
(iii) result in any breach of or constitute a default (or an
event which, with notice or lapse of time or both, would become
a default) under, result in the loss of a material benefit
under, or give to others any right of termination, amendment,
acceleration, increased payments or cancellation of, or result
in the creation of a lien or other encumbrance on any property
or asset of DOCP or any DOCP Subsidiary pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which
DOCP or any DOCP Subsidiary is a party or by which DOCP or any
DOCP Subsidiary or any property or asset of DOCP or any DOCP
Subsidiary is bound or affected, except, in the case of clauses
(ii) and (iii), for any such conflicts, violations, breaches,
defaults or other occurrences as could not reasonably be
expected to, individually or in the aggregate, have a DOCP
Material Adverse Effect.
(b) The execution and delivery of this Agreement by
DOCP do not, and the performance of this Agreement and the
consummation of the transactions contemplated hereby by DOCP
will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign (each a
"Governmental Entity"), except (i) for (A) applicable filings
under the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder (the "Exchange
Act"), (B) the requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR Act"), if applicable, and (C)
the filing and recordation of appropriate merger and similar
documents as required by the New York Law and (ii) where
failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, could not
reasonably be expected to, individually or in the aggregate,
have a DOCP Material Adverse Effect.
Section 3.6. Compliance. Except as set forth in
Section 3.6 of the DOCP Disclosure Schedule, neither DOCP nor
any DOCP Subsidiary is in conflict with, or in default or
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or violation of, (a) any law, rule, regulation, order, judgment or
decree applicable to DOCP or any DOCP Subsidiary or by which
any property or asset of DOCP or any DOCP Subsidiary is bound
or affected, or (b) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which DOCP or any DOCP Subsidiary
is a party or by which DOCP or any DOCP Subsidiary or any
property or asset of DOCP or any DOCP Subsidiary is bound or
affected, except for such conflicts, defaults or violations as
could not reasonably be expected to, individually or in the
aggregate, have a DOCP Material Adverse Effect. The business
of DOCP is not being conducted in violation of any law,
ordinance or regulation of any Governmental Entity, including
environmental laws, and DOCP and each DOCP Subsidiary possess
all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities required therefor
("Permits"), including as required under Environmental Laws,
and there has occurred no default under any such Permits,
except for the lack of Permits and for defaults under Permits
as could not reasonably be expected to, individually or in the
aggregate, have a DOCP Material Adverse Effect.
Section 3.7. Litigation. Except as set forth in
Section 3.7 of the DOCP Disclosure Schedule, (a) there is no
single or series of related suits, actions, notices, demands,
claims, investigations or proceedings pending or, to the
knowledge of DOCP, threatened against DOCP or any DOCP
Subsidiary, or any unsatisfied judgment against DOCP or any
DOCP Subsidiary, relating to or involving an amount greater
than $100,000 and (b) there is no judgment, decree, injunction
or similar order of any Governmental Entity or arbitrator
outstanding against DOCP or any DOCP Subsidiary or other single
or series of related suits, actions or proceedings pending or,
to the knowledge of DOCP, threatened that, individually or in
the aggregate, could reasonably be expected to have a DOCP
Material Adverse Effect.
Section 3.8 SEC Filings; Financial Statements. (a)
DOCP has filed all forms, reports and documents required to be
filed by it with the SEC since January 1, 1995 and has
heretofore made available to Buyer, in the form filed with the
SEC all such forms, reports and documents (all such forms,
reports and documents, collectively, with exhibits, schedules
or information incorporated therein by reference, the "DOCP SEC
Reports"). The DOCP SEC Reports and any forms, reports and
other documents filed by DOCP with the SEC after the date of
this Agreement (i) were or will be prepared in accordance with
the requirements of the Securities Act of 1933, as amended, and
the rules and regulations thereunder (the "Securities Act"),
and the Exchange Act, as the case may be, and (ii) did not at
the time they were filed and, except as amended prior the date
hereof, at any time since filing or will not at the time they
are filed 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 made therein, in the
light of the circumstances under which they were made, not
misleading. No DOCP Subsidiary is required to file any form,
report or other document with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the
DOCP SEC Reports (i) was prepared in accordance with generally
accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as may be indicated in the
notes thereto), (ii) fairly presents the consolidated financial
position, results of operations and cash flows of DOCP and the
consolidated DOCP Subsidiaries
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as at the respective dates thereof and for the
respective periods indicated therein (subject, in the case of
unaudited statements, to normal and recurring year-end
adjustments which were not and are not expected, individually
or in the aggregate, to be material in amount) and (iii)
complies as to form, as of its respective date of filing with
the SEC, with all applicable accounting requirements and SEC
rules and regulations. Since December 31, 1994, there has been
no change in any of the significant accounting (including tax
accounting) policies, practices or procedures of DOCP or any
DOCP Subsidiary except insofar as required by a change in
generally accepted accounting principles.
(c) Except as set forth in Section 3.8 of the DOCP
Disclosure Schedule or as and to the extent set forth on the
audited DOCP balance sheets contained in DOCP SEC Reports filed
with the SEC prior to the date of this Agreement, DOCP and the
DOCP Subsidiaries do not have any liability or obligation of
any nature (whether accrued, absolute, contingent or otherwise)
other than liabilities and obligations incurred in the ordinary
course of business and which could not reasonably be expected
to, individually or in the aggregate, have a DOCP Material
Adverse Effect.
Section 3.9. Absence of Certain Changes and Events.
Except as set forth in Section 3.9 of the DOCP Disclosure
Schedule, since December 31, 1996: (a) DOCP and the DOCP
Subsidiaries have conducted their businesses only in the
ordinary course consistent with past practice, (b) there have
not been any events or changes in circumstances which has
resulted in or could, individually or in the aggregate,
reasonably be expected to result in, a DOCP Material Adverse
Effect, (c) there has not been (i) except as disclosed in DOCP
SEC Reports filed prior to the date hereof, any declaration,
setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any DOCP
capital stock, (ii) except as disclosed in DOCP SEC Reports
filed prior to the date hereof, any split, combination or
reclassification of any DOCP capital stock or any issuance or
the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for DOCP capital
stock, except for issuances of DOCP Shares upon the exercise of
DOCP Stock Options or the Warrants or the conversion of the
Convertible Debt, in each case in accordance with the terms
thereof, (iii) (A) any granting by DOCP or any DOCP Subsidiary
to any current or former employee, officer, director or
consultant of DOCP of any options to purchase DOCP Shares or
any increase in compensation (including bonuses or
commissions), except for normal increases in the ordinary
course of business consistent with past practice or as required
under employment or consulting agreements in effect as of the
date of the most recent audited financial statements included
in the DOCP SEC Reports filed prior to the date hereof, (B) any
granting by DOCP or any DOCP Subsidiary to any current or
former employee, officer, director or consultant of any
increase in severance or termination pay, except as required
under any employment, consulting, severance or termination
agreements in effect as of the date of the most recent audited
financial statements included in the DOCP SEC Reports filed
prior to the date hereof or (C) any entry by DOCP or any DOCP
Subsidiary into any employment, consulting, severance,
termination or indemnification agreements, arrangements, or
understandings with any such current or former employee,
officer, director or consultant, (iv) except as disclosed in
DOCP SEC Reports filed prior to the date hereof, any change
in accounting methods, principles or practices by DOCP
materially affecting its assets, liabilities or business, except
insofar as may have been required by a change
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in generally accepted accounting principles, or (v) any
action which would have been prohibited without Buyer's
approval under Section 5.1 if taken between the date of this
Agreement and the Effective Time.
Section 3.10. Employee Benefit Plans. With respect
to all the employee benefit plans, programs and arrangements
maintained for the benefit of any current or former employee,
officer or director of DOCP or any DOCP Subsidiary (the "DOCP
Plans"), except as set forth in Section 3.10 of the DOCP
Disclosure Schedule: (a) none of the DOCP Plans is a multi-
employer plan within the meaning of the Employee Retirement
Income Security Act of 1974, as amended, and the rules and
regulations thereunder ("ERISA"); (b) none of the DOCP Plans
promises or provides retiree medical or life insurance benefits
to any person; (c) each DOCP Plan intended to be qualified
under Section 401(a) of the Code has received a favorable
determination letter from the United States Internal Revenue
Service (the "IRS") that it is so qualified and nothing has
occurred since the date of such letter that could reasonably be
expected to affect the qualified status of such DOCP Plan other
than occurrences that could not reasonably be expected to,
individually or in the aggregate, have a DOCP Material Adverse
Effect; (d) each DOCP Plan has been operated in all material
respects in accordance with its terms and the requirements of
applicable law; (e) neither DOCP nor any DOCP Subsidiary has
incurred any direct or indirect liability under, arising out of
or by operation of Title IV of ERISA in connection with the
termination of, or withdrawal from, any DOCP Plan or other
retirement plan or arrangement, and no fact or event exists
that could reasonably be expected to give rise to any such
liability, other than any liability that could not reasonably
be expected to, individually or in the aggregate, have a DOCP
Material Adverse Effect; and (f) DOCP and the DOCP Subsidiaries
have not incurred any liability under, and have complied in all
material respects with, the federal Worker Adjustment
Retraining Notification Act, and no fact or event exists that
could give rise to liability under such act, other than any
liability that could not reasonably be expected to,
individually or in the aggregate, have a DOCP Material Adverse
Effect. Except as set forth in Section 3.9 of the DOCP
Disclosure Schedule, the aggregate accumulated benefit
obligations of each DOCP Plan subject to Title IV of ERISA (as
of the date of the most recent actuarial valuation prepared for
such DOCP Plan) do not exceed the fair market value of the
assets of such DOCP Plan (as of the date of such valuation).
Section 3.11. Environmental Matters. Except as set
forth in Section 3.11 of the DOCP Disclosure Schedule:
(a) DOCP and the DOCP Subsidiaries have not, and, to
DOCP's knowledge, no other person has, Released, placed,
stored, buried or dumped any material quantities of Hazardous
Substances on, beneath or adjacent to each property owned,
operated or leased by DOCP and the DOCP Subsidiaries (the
"Property"), or, to the knowledge of DOCP, any property
formerly owned, operated or leased by DOCP or the DOCP
Subsidiaries, except for the presence of such Hazardous
Substances as would not have a DOCP Material Adverse Effect.
(b) Neither DOCP nor any DOCP Subsidiary has entered
into any agreement that requires them to pay to, reimburse,
guarantee, pledge, defend, indemnify or hold harmless any
person for or against any liabilities or costs in connection
with any pending or threatened suit,
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action, notice, proceeding or investigation relating to alleged
noncompliance with, or liability under, Environmental Laws.
(c) Neither DOCP nor any DOCP Subsidiary has
received any written notice or written order from any
Governmental Entity or private entity advising them that they
are responsible for or potentially responsible for Cleanup, or
paying for the cost of Cleanup, of any Hazardous Substances on
or adjacent to the Property or at any location containing
Hazardous Substances generated, treated, transported or stored
by DOCP or the DOCP Subsidiaries or on behalf of DOCP or the
DOCP Subsidiaries, and neither DOCP nor any DOCP Subsidiary has
entered into any agreements concerning such Cleanup, nor is
DOCP aware of any material facts which DOCP has reasonable
grounds to believe will give rise to such notice, order or
agreement.
(d) As used in this Agreement: "Cleanup" shall mean
all actions required to (i) cleanup, remove, treat or remediate
Hazardous Substances in the indoor or outdoor environment, (ii)
prevent the Release of Hazardous Substances so that they do not
migrate, endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment, (iii) perform
pre-remedial studies and investigations and post-remedial
monitoring and care, (iv) respond to any government requests
for information or documents in any way relating to cleanup,
removal, treatment or remediation or potential cleanup,
removal, treatment or remediation of Hazardous Substances in
the indoor or outdoor environment or (v) any administrative,
judicial, or other proceedings related to the above;
"Environmental Laws" shall mean all applicable United States
federal, state and local, and foreign laws, regulations, rules
and ordinances relating to pollution or protection of the
environment or human health and safety, including laws relating
to Releases or threatened Releases of Hazardous Substances into
the indoor or outdoor environment (including ambient air,
surface water, groundwater, land, surface and subsurface
strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, transport or
handling of Hazardous Substances, and all laws and regulations
with regard to recordkeeping, notification, disclosure and
reporting requirements respecting Hazardous Substances, and all
laws relating to endangered or threatened species of fish,
wildlife and plants and the management or use of natural
resources; "Hazardous Substance" shall mean: (i) any
petrochemical or petroleum products, radioactive materials,
asbestos in any form that is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment
that contain dielectric fluid containing levels of
polychlorinated biphenyls and radon gas, (ii) any chemicals,
materials or substances defined as or included in the
definition of: "hazardous substances," "hazardous wastes,"
"hazardous materials," "restricted hazardous materials,"
"extremely hazardous substances," "toxic substances,"
"contaminants" or "pollutants" or words of similar meaning and
regulatory effect or (iii) any other chemical, material or
substance exposure to which is prohibited, limited or regulated
by any Environmental Law; and "Release" shall mean any release,
spill, emission, discharge, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration
into the indoor or outdoor environment (including ambient air,
surface water, groundwater and surface or subsurface strata) or
into or out of any property, including the movement of Hazardous
Substances through or in the air, soil, surface water, groundwater
or property.
Section 3.12. [Intentionally omitted.]
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Section 3.13 Transactions with Affiliates. As of
the date hereof, except as set forth in Section 3.13 of the
DOCP Disclosure Schedule, (a) there are no outstanding amounts
payable to or receivable from, or advances by DOCP or any DOCP
Subsidiary to, and neither DOCP nor any DOCP Subsidiary is
otherwise a creditor of or debtor to, any officer, director,
consultant or employee of DOCP or any DOCP Subsidiary and (b)
neither DOCP nor any DOCP Subsidiary is a party to any
transaction, agreement, arrangement or understanding with any
officer, director, consultant or employee of DOCP or any DOCP
Subsidiary, other than, with respect to both clauses (a) and
(b), items arising out of the ordinary course of employment
with DOCP or any DOCP Subsidiary.
Section 3.14. Contracts. Except as set forth in the
DOCP SEC Reports filed prior to the date hereof, neither DOCP
nor any DOCP Subsidiary is a party to or bound by (a) any
"material contract" (as such term is defined in Item 601(b)(10)
of Regulation S-K of the SEC), (b) any non-competition
agreement or any other agreement or obligation which purports
to limit in any material respect the manner in which, or the
localities in which, all or any material portion of the
business of DOCP and the DOCP Subsidiaries, taken as a whole,
is or would be conducted or (c) any contract or other agreement
which would prohibit or materially delay the consummation of
the Merger or any of the transactions contemplated by this
Agreement.
Section 3.15. Tax Matters. (a) Each of DOCP and
each DOCP Subsidiary has filed all tax returns that it was
required to file or has obtained extension with respect to any
unfiled tax returns. All such tax returns were correct and
complete in all material respects. All taxes owed by any of
DOCP or a DOCP Subsidiary (whether or not shown on any tax
return) have been paid. Neither DOCP nor any DOCP Subsidiary
currently is the beneficiary of any extension of time within
which to file any tax return.
(b) There is no dispute or claim concerning any
material tax liability of any of DOCP or the DOCP Subsidiaries
either (i) claimed or raised by any authority in writing or
(ii) as to which any of the directors and officers of DOCP or
the DOCP Subsidiaries has knowledge based upon personal contact
with any agent of such authority.
(c) None of DOCP nor the DOCP Subsidiaries (i) is a
party to any tax allocation or sharing agreement, (ii) has been
a member of an affiliated group (within the meaning of Section
1504(a) of the Code) filing a consolidated income tax return
(other than a group the common parent of which was DOCP) or
(iii) has any liability for the taxes of any person (other than
DOCP or a DOCP Subsidiary) under Treasury Regulation Section
1.1502-6 promulgated under the Code (or any similar provision
of United States state or local, or foreign law), as a
transferee or successor, by contract, or otherwise.
(d) The unpaid taxes of DOCP and the DOCP
Subsidiaries as of the Closing Date do not exceed the reserve
for tax liability (rather than any reserve for deferred taxes
established to reflect timing differences between book and
taxable income) set forth in the most recent audited balance
sheets contained in DOCP SEC Reports filed with the SEC prior
to the date of this Agreement.
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(e) The United States federal income tax returns of
DOCP and the DOCP Subsidiaries have not been audited by the IRS
through the fiscal year since at least 1987.
(f) Neither DOCP nor any DOCP Subsidiary has filed
an election under Section 341(f) of the Code to be treated as a
consenting corporation.
Section 3.16. Opinion of Financial Advisor. The
DOCP Board has received the opinion of Smith Barney, Inc.,
dated the date of this Agreement (which will be confirmed in
writing as promptly as practicable after the date of this
Agreement), to the effect that, as of such date, the cash
consideration to be received by the holders of DOCP Shares
(other than CSX, NSC and the Management Investor and their
respective affiliates) pursuant to the Offer and the Merger is
fair to such holders from a financial point of view, a copy of
which opinion will be delivered to Buyer after receipt thereof
by DOCP.
Section 3.17. Brokers. Except as described in
Section 3.17 of the DOCP Disclosure Schedule, no broker, finder
or investment banker (other than Smith Barney, Inc.) is
entitled to any brokerage, finder's or other fee or commission
in connection with the transactions contemplated hereby based
upon arrangements made by or on behalf of DOCP. DOCP has
heretofore furnished to Buyer a complete and correct copy of
all agreements between DOCP and Smith Barney, Inc. pursuant to
which such firm would be entitled to any payment, reimbursement
or indemnification from DOCP or otherwise relating to the
transactions contemplated hereby.
Section 3.18. Information Supplied. None of the
information supplied or to be supplied by DOCP for inclusion or
incorporation by reference in the Schedule 14D-1 or the
Schedule 13E-3 will, at the date such documents are first
published, sent or delivered to shareholders or, unless
promptly corrected, at any time during the pendency of the
Offer, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
Neither the Schedule 14D-9 at the date such document is first
published, sent or delivered to shareholders or, unless
promptly corrected, at any time during the pendency of the
Offer, nor the Proxy Statement (if applicable) at the date such
document is first published, sent or delivered to shareholders
or, unless promptly corrected, at any time during the pendency
of the Merger Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are
made, not misleading. The Schedule 14D-9 and the Proxy
Statement (if applicable) will comply as to form in all
material respects with the requirements of the Exchange Act.
Notwithstanding the foregoing, no representation or warranty is
made by DOCP with respect to statements made or incorporated by
reference therein based on information supplied by LLC, Buyer,
CSX, NSC or the Management Investor (acting in such capacity)
for inclusion or incorporation by reference in any of the
foregoing documents.
Section 3.19. State Takeover Statutes. DOCP and the
DOCP Board have taken all action necessary or advisable so as
to render inoperative with respect to the transactions
contemplated hereby (including the Offer and the Merger) all
applicable state anti-takeover
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statutes and all anti-takeover provisions of the organizational
documents of DOCP and each DOCP Subsidiary. Without limiting the
generality of the foregoing, DOCP and the DOCP Board have taken
all actions necessary to exempt all future transactions contemplated
by this Agreement (including the Offer and the Merger), on the one
hand, and each of the other parties and their respective
"affiliates" and "associates" (each as defined in Section 912
of the New York Law), on the other hand, from the provisions of
such Section 912 of the New York Law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER, CSX, NSC
AND THE MANAGEMENT INVESTOR
Each of LLC, Buyer, CSX, NSC and the Management
Investor (except, as regards the Management Investor, with
respect to Section 4.1) hereby represents and warrants (or, in
the cases of LLC and Buyer, will be deemed to represent and
warrant upon their respective formations) to each of the other
parties hereto that:
Section 4.1. Organization and Qualification. Such
person is a corporation, duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation or organization and has the requisite power and
authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power,
authority and governmental approvals could not reasonably be
expected to, individually or in the aggregate, have a material
adverse effect on the ability of such party to consummate the
transactions contemplated hereby (a "Buyer Material Adverse
Effect"). Such person is not in violation of any provision of
its certificate of incorporation, bylaws or equivalent
organizational documents.
Section 4.2. Authority Relative to This Agreement.
Such person has all necessary power and authority to execute
and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by such
person and the consummation by such person of the transactions
contemplated hereby have been duly and validly authorized by
all necessary corporate action (and in the case of the
Management Investor, all necessary action) and no other
corporate proceedings on the part of such person (and, in the
case of the Management Investor, no other proceedings) are
necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than the filing and
recordation of appropriate merger documents as required by the
New York Law). This Agreement has been duly and validly
executed and delivered by such person, and, assuming the due
authorization, execution and delivery by the other parties
hereto, constitutes the legal, valid and binding obligation of
such person, enforce able against such person in accordance
with its terms.
Section 4.3. No Conflict; Required Filings and
Consents. (a) The execution and delivery of this Agreement by
such person do not, and the performance of this Agreement and
the transactions contemplated hereby by such person, will not
(i) other than with respect to the
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Management Investor, conflict with or violate the certificate
of incorporation or bylaws or equivalent organizational
documents of such person, (ii) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to
such person or by which any property or asset of such person is
bound or affected or (iii) result in any breach of or
constitute a default (or an event which, with notice or lapse
of time or both, would become a default) under, result in the
loss of a material benefit under or give to others any right of
termination, amendment, acceleration, increased payments or
cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of such person pursuant
to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or any other instrument or
obligation to which such person is a party or by which such
person or any property or asset of such person is bound or
affected, except in the case of clauses (ii) and (iii), for any
such conflicts, violations, breaches, defaults or other
occurrences as could not reasonably be expected to,
individually or in the aggregate, have a Buyer Material Adverse
Effect.
(b) The execution and delivery of this Agreement by
such person do not, and the performance of this Agreement and
the consummation of the transactions contemplated hereby by
such person will not, require any consent, approval,
authorization or permit of, or filing with or notification to,
any Governmental Entity, except (i) for (A) applicable
disclosures, if any, under the Exchange Act, (B) the
requirements of the HSR Act, if applicable, and (C) filing and
recordation of appropriate merger and similar documents as
required by the New York Law and (ii) where failure to obtain
such consents, approvals, authorizations or permits, or to make
such filings or notifications, could not reasonably be expected
to, individually or in the aggregate, have a Buyer Material
Adverse Effect.
Section 4.4. Information Supplied. None of the
information supplied or to be supplied by such person for
inclusion or incorporation by reference in the Schedule 14D-9
or the Proxy Statement (if applicable) will, at the date such
documents are first published, sent or delivered to
shareholders or, unless promptly corrected, at any time during
the pendency of the Offer, contain any untrue statement of a
material fact required to be stated therein or necessary to
make the statements therein not misleading. None of the
Schedule 14D-1 nor the Schedule 13E-3 will, at the date such
document is first published, sent or delivered to shareholders
or, unless promptly corrected, at any time during the pendency
of the Offer, contain any untrue statement of a material fact
or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not
misleading. The Schedule 14D-1 and the Schedule 13E-3 will
comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, no representation
or warranty is made by such person with respect to statements
made or incorporated by reference therein based on information
supplied by DOCP for inclusion or incorporation by reference in
any of the foregoing documents.
Section 4.5. Brokers. No broker, finder or
investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on
behalf of such person.
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ARTICLE V
COVENANTS RELATING TO THE CONDUCT OF BUSINESS
Section 5.1. Conduct of Business by DOCP Pending the
Merger. Except as set forth in this Agreement or in Section
5.1 of the DOCP Disclosure Schedule, during the period from the
date of this Agreement to the Effective Time, other than with
LLC's prior written consent, DOCP and each DOCP Subsidiary
shall not, voluntarily or involuntarily, (a) take any action,
regulatory or otherwise, inconsistent with facilitating
consummation of the transactions contemplated hereby or (b)
take any of the following actions:
(i) conduct its business in any manner other than in
the ordinary course of business consistent with past
practice and in compliance in all material respects with
all applicable laws and regulations, and, to the extent
consistent therewith, shall not fail to use all reasonable
efforts to preserve intact their current business
organizations, use reasonable efforts to keep available
the services of their current officers and other key
employees as a group and preserve their relationships with
those persons having business dealings with them to the
end that their goodwill and ongoing businesses shall be
unimpaired at the Effective Time;
(ii) adopt, propose or agree to any amendment to its
articles of incorporation, laws or other comparable
organizational documents;
(iii) issue, deliver, sell, pledge, or otherwise
encumber (A) any shares of DOCP's or any DOCP Subsidiary's
capital stock or any rights, warrants or options to
acquire any such shares (other than the issuance of DOCP
Shares in connection with the exercise of DOCP Stock
Options or Warrants outstanding as of the date of this
Agreement and in accordance with the terms of such DOCP
Stock Options or the Warrants, as the case may be, or upon
conversion of the Convertible Debt in accordance with its
terms, in each case, in effect on the date of this
Agreement) or (B) any material assets or properties;
(iv) other than dividends and distributions
(including liquidating distributions) by a direct or
indirect wholly owned subsidiary of DOCP to its parent,
(A) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or
otherwise, in respect of any capital stock or (B)
subdivide, reclassify, recapitalize, split, combine or
exchange any shares of capital stock of DOCP or any DOCP
Subsidiary; (C) issue or authorize the issuance of any
other securities in respect of, in lieu of or in
substitution for shares of capital stock of DOCP or any
DOCP Subsidiary; (D) purchase, redeem or otherwise acquire
any capital stock of DOCP or any DOCP Subsidiary or any
other securities thereof, or any rights, warrants or
options to acquire any such shares or other securities;
(v) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue
or sell any debt securities or warrants or other rights
-20-<PAGE>
to acquire any debt securities of DOCP or any DOCP
Subsidiary, guarantee any debt securities of another
person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another
person, or enter into any arrangement having the economic
effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business
consistent with past practice and pursuant to existing
agreements, or (B) make any loans, advances or capital
contributions to, or investments in, any other person,
other than to DOCP or any DOCP Subsidiary;
(vi) except for expenditures made under the DOCP
capital budget described in DOCP SEC Reports filed prior
to the date hereof, make or agree to make any new capital
expenditure or new capital expenditures which individually
is in excess of $50,000 or in the aggregate is in excess
of $100,000;
(vii) increase the compensation payable or to become
payable to its executive officers, employees or
consultants, or grant any bonus, incentive, severance or
termination pay to, or enter into any commission, bonus,
incentive, employment or severance agreement with, any
director, executive officer or consultant of it or any of
its subsidiaries, or establish, adopt, enter into or amend
in any material respect or take action to accelerate any
rights or benefits under any collective bargaining
agreement or any DOCP Plan, agreement or policy;
(viii) make any change to its accounting methods,
principles or practices, except as may be required by
general accounting principles or take any other action,
other than reasonable and usual actions in the ordinary
course of business and consistent with past practice, with
respect to accounting policies or procedures (including
tax accounting policies and procedures);
(ix) make any material tax election or settle or
compromise any material income tax liability;
(x) enter into, modify, amend or terminate any
material contract, agreement, right or privilege involving
the assets or properties of DOCP or to which DOCP or any
DOCP Subsidiary is a party, or waive, release or assign
any material rights or claims thereunder;
(xi) acquire by merger or consolidation, or by
purchase of assets, or by any other manner, any business;
(xii) mortgage or otherwise encumber or subject to any
lien any of its properties or assets;
(xiii) pay, discharge, settle or satisfy any material
claims, liabilities or obligations (whether absolute,
accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge, settlement or
satisfaction of such claims, liabilities or obligations in
the ordinary course of business consistent with past
practice or in accordance with their terms;
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(xiv) (A) enter into any agreement containing any
provision or covenant limiting in any material respect the
ability to compete with any person which would bind any
party hereto (or its operations) after the Effective Time
or (B) except to the extent required by any existing
contract or agreement disclosed in Section 5.1 of the DOCP
Disclosure Schedule, acquire any interest in any railroad
line or terminal facility or dispose of any interest in
any railroad line or terminal facility owned, used or
operated by DOCP or any DOCP Subsidiary (including through
a grant of concessions or trackage rights); or
(xv) authorize or commit or agree to take any of the
foregoing actions.
Section 5.2. Other Actions. DOCP shall not, and
shall not permit any of the DOCP Subsidiaries to, take any
action that would, or that could reasonably be expected to,
result in (a) any of the representations and warranties of DOCP
set forth in this Agreement that are qualified as to
materiality becoming untrue, (b) any of such representations
and warranties that are not so qualified becoming untrue in any
material respect or (c) except as otherwise permitted by
Section 6.2, any of the conditions to the Offer set forth in
Annex I or any of the conditions to the Merger set forth in
Article VII not being satisfied.
ARTICLE VI
ADDITIONAL COVENANTS
Section 6.1. Access to Information; Confidentiality.
(a) From the date hereof through the Effective Time (subject
to applicable law), DOCP shall (and shall cause its
subsidiaries and officers, directors, employees, auditors and
agents to) afford the officers, employees and agents of each of
the other parties hereto and its respective subsidiaries (the
"Respective Representatives") reasonable access at all
reasonable times to its officers, employees, agents,
properties, offices, plants and other facilities, books and
records, and shall furnish such Respective Representatives with
all financial, operating and other data and information as may
be reasonably requested. All such information obtained will be
subject to the following confidentiality arrangements between
DOCP and each of the other parties hereto:
(i) None of the parties hereto nor any of their
Respective Representatives shall disclose any Confidential
Information to any person without the consent of the other
parties, other than (A) to the other parties hereto or
their Respective Representatives and their officers,
directors, partners, employees, agents and advisors, and
then only on a confidential basis, or (B) as required by
any law, rule or regulation or judicial process, provided
that such party shall, unless prohibited by applicable law
or regulation or court order, give notice to the party of
such requirement to disclose Confidential Information,
and, if practicable, such notice shall be given prior to
such disclosure, provided, however, that the failure to
give such notice shall not prohibit such disclosure.
(ii) Confidential Information" means information
furnished by the parties hereto to one another designated
as confidential, but does not include any such information
that is or becomes generally available to the public other
than as a result of a breach by any of
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the parties hereto of their obligations hereunder or that
is or becomes available to a party hereunder from a source
other than any of the other parties hereunder that is not,
to the best of such party's knowledge, acting in violation
of a confidentiality agreement with any of the parties
hereto.
(b) No investigation pursuant to this Section shall
affect any representation or warranty in this Agreement of any
party hereto or any condition to the obligations of the parties
hereto.
Section 6.2. No Solicitation. DOCP shall not, nor
shall it permit any DOCP Subsidiary, or its or any DOCP
Subsidiary officers, directors, employees, agents or
representatives (including, without limitation, any investment
banker, attorney or accountant) to, initiate, solicit or
encourage, directly or indirectly, any inquiries or the making
of any proposal with respect to an Alternative Transaction,
engage in any discussions or negotiations concerning, or
provide to any other person any information or data relating to
it or any DOCP Subsidiary for the purposes of, or otherwise
cooperate in any way with or assist or participate in,
facilitate or encourage, any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to
lead to, a proposal to seek or effect an Alternative
Transaction, or agree to or endorse any Alternative
Transaction; provided, however, that nothing contained in this
Section shall prohibit DOCP or the DOCP Board from taking and
disclosing to its shareholders a position as required by
Exchange Act Rule 14e-2; and provided further that, prior to
acceptance for payment of any DOCP Shares pursuant to the
Offer, the DOCP Board, on behalf of DOCP, may, in response to
an unsolicited, bona fide Superior Proposal, furnish
information or data (including confidential information or
data) relating to DOCP and participate in negotiations with a
person making such unsolicited Superior Proposal, but only
after such person enters into arrangements regarding
confidentiality on terms at least as favorable to DOCP as the
confidentiality arrangements contained herein and only in the
event that (a) the DOCP Board determines in good faith, on the
basis of advice of independent counsel furnished prior thereto
to Buyer, that such action is legally required by the fiduciary
obligations of the DOCP Board and (b) DOCP advises Buyer of its
intention to make such determination to do so prior thereto.
DOCP shall promptly advise Buyer of, and communicate the terms
of, any proposal respecting an Alternative Transaction it may
receive, or any inquiries it receives which may reasonably be
expected to lead to a proposal respecting an Alternative
Transaction, and the identity of the person making such
proposal. Prior to taking any such action, if DOCP intends to
participate in any such discussion or negotiation or provide
any such information or data to any such third party, it shall
give reasonable notice to Buyer and shall consult, and
thereafter shall continue to consult, with Buyer.
Notwithstanding the foregoing, nothing in this Section 6.2
shall (a) permit DOCP to enter into any agreement with respect
to or to facilitate an Alternative Transaction during the term
of this Agreement (it being understood that DOCP shall not
enter into any agreement with any person that provides for, or
in any way facilitates, the development of a proposal for an
Alternative Transaction, other than a confidentiality agreement
in customary form in respect of a Superior Proposal as
described above) or (b) affect any other obligation of DOCP
under this Agreement. "Alternative Transaction" means a
transaction or series of related transactions resulting in (a)
any change of control of DOCP, (b) any merger or consolidation
of DOCP in which another person acquires 25% or more of the
aggregate voting power of all voting securities of it or the
surviving corporation, as the
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case may be, (c) any tender offer or exchange offer for, or any
acquisitions of, any securities of DOCP which, if consummated,
would result in another person owning 25% or more of the
aggregate voting power of all voting securities of it or (d)
any sale or other disposition of assets of DOCP or any of its
subsidiaries if the Fair Market Value of such assets exceeds
25% of the aggregate Fair Market Value of the assets of DOCP
and all DOCP Subsidiaries taken as a whole before giving effect
to such sale or other disposition. The "Fair Market Value" of
any assets or securities means the fair market value of such
assets or securities, as determined by the DOCP Board in good
faith. "Superior Proposal" means a bona fide proposal made by
a third party for an Alternative Transaction on terms which the
DOCP Board determines in its good faith judgment to be more
favorable to DOCP's shareholders than the Offer and the Merger
and for which financing, to the extent required, is then
committed or which, in the good faith judgment of the DOCP
Board, is reasonably capable of being obtained by such third
party.
Section 6.3. Indemnification, Exculpation and
Insurance. (a) Buyer, CSX, NSC and the Management Investor
agree that 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 DOCP and the DOCP Subsidiaries
(collectively, the "Indemnified Parties"), as provided in their
respective certificates of incorporation or bylaws (or
comparable organizational documents) and any indemnification
agreements of DOCP, the existence of which does not constitute
a breach of this Agreement, shall be assumed by the Surviving
Corporation in the Merger without further action as of the
Effective Time, and shall survive the Merger and shall continue
in full force and effect in accordance with their respective
terms.
(b) For a period of one year after the Effective
Time, the Surviving Corporation shall cause to be maintained in
effect the current policies of directors' and officers'
liability insurance maintained by DOCP (provided that the
Surviving Corporation may substitute therefor policies of at
least the same coverage and amounts containing terms and
conditions which are, in the aggregate, not less advantageous
to such officers and directors) with respect to claims arising
from facts or events which occurred before the Effective Time;
provided, however, that in no event shall the Surviving
Corporation be required to expend pursuant to this Section 6.3
more than an amount equal to 150% of the current annualized
premiums paid by DOCP for such insurance (which premiums DOCP
represents and warrants to be approximately $100,000 for 1997,
in the aggregate on an annualized basis).
Section 6.4. Notification of Certain Matters. DOCP
shall give prompt notice to Buyer, and Buyer shall give prompt
notice to DOCP, of (a) the occurrence, or non-occurrence, of
any event the occurrence, or non-occurrence, of which would be
likely to cause (i) any representation or warranty contained in
this Agreement to be untrue or inaccurate or (ii) any covenant,
condition or agreement contained in this Agreement not to be
complied with or satisfied and (b) any failure of DOCP or
Buyer, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 6.4 shall not limit or
otherwise affect the remedies available hereunder to the party
receiving such notice.
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Section 6.5. Further Action; Best Efforts. (a)
Upon the terms and subject to the conditions hereof, each of
the parties hereto shall (i) make promptly its respective
filings, and thereafter make any other required submissions,
under any applicable laws with respect to the transactions
contemplated hereby and shall not make any filing or
submission, or take any position, in connection with regulatory
authorities (in respect of the transactions contemplated hereby
or otherwise) without the consent of the Management Investor,
CSX and NSC and (ii) use its best efforts to take, or cause to
be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under
applicable laws and regulations or otherwise to consummate and
make effective the transactions contemplated hereby.
(b) In connection with, and without limiting the
foregoing, each of the parties hereto shall (i) take all
actions necessary to ensure that no state anti-takeover statute
or similar statute or regulation is or becomes operative with
respect to this Agreement, the Offer, the Merger or any other
transaction contemplated by this Agreement and (ii) if any
state anti-takeover statute or similar statute or regulation is
or becomes operative with respect to this Agreement, the Offer,
the Merger or any other transaction contemplated by this
Agreement, take all actions necessary to ensure that this
Agreement, the Offer, the Merger and any other transactions
contemplated by this Agreement may be consummated as promptly
as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation
on the Merger, the Offer and the other transactions
contemplated by this Agreement.
Section 6.6. Public Announcements. The parties
hereto shall consult with each other before issuing any press
release or otherwise making any public statements with respect
to this Agreement or the transactions contemplated hereby, and
shall not issue any such press release or make any such public
statement without the prior consent of the other parties, which
consent shall not be unreasonably withheld; provided, however,
that a party may, without the prior consent of the other
parties, issue such press release or make such public statement
as may be required by law or any listing agreement or
arrangement to which such party is bound with a national
securities exchange or The Nasdaq Stock Market if it has used
reasonable efforts to consult with the other parties and to
obtain such parties' consent but has been unable to do so in a
timely manner.
Section 6.7. Conveyance Taxes. Buyer and DOCP 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, and any
similar taxes which become payable in connection with the
transactions contemplated hereby that are required or permitted
to be filed on or before the Effective Time.
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ARTICLE VII
CLOSING CONDITIONS
Section 7.1. Conditions to Obligations of Each Party
to Effect the Merger. The respective obligations of each of
DOCP and Buyer to effect the Merger shall be subject to the
satisfaction or waiver of the following conditions prior to the
Effective Time:
(a) Shareholder Approval. If required by the New
York Law, this Agreement and the Merger shall have been
approved and adopted by the requisite vote of DOCP
shareholders.
(b) No Order. No Governmental Entity or United
States federal or state court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which
materially restricts, prevents or prohibits consummation
of the transactions contemplated hereby; provided,
however, that the parties shall use their reasonable
efforts to cause any such decree, judgment, injunction or
other order to be vacated or lifted.
(c) Other Approvals. Other than the filing of
Merger documents in accordance with the New York Law, all
authorizations, consents, waivers, orders or approvals
required to be obtained, and all filings, notices or
declarations required to be made, by any of the parties
hereto prior to the consummation of the Merger, shall have
been obtained from, and made with, all required
Governmental Entities, except for such authorizations,
consents, waivers, orders, approvals, filings, notices or
declarations the failure to obtain or make which would not
have a DOCP Material Adverse Effect or a Buyer Material
Adverse Effect.
Section 7.2. Conditions to Obligations of DOCP to
Effect the Merger. Prior to consummation of the Offer, the
obligations of DOCP to effect the Merger shall be subject to
the satisfaction or waiver of the following conditions prior to
the Effective Time:
(a) Compliance. None of LLC, Buyer, CSX, NSC or the
Management Investor shall have breached or failed to
observe or perform in any material respect any of its
covenants or agreements in favor of DOCP hereunder to be
performed by it at or prior to the Effective Time, and the
representations and warranties of LLC, Buyer, CSX, NSC and
the Management Investor set forth herein shall be true and
accurate 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 breach or failure to
observe or perform such covenants and agreements, or 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" or
similar language set forth therein), does not, and is not
likely to, individually or in the aggregate, prevent
consummation of the Merger.
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Section 7.3. Conditions to Obligations of Buyer to
Effect the Merger. The obligations of Buyer to effect the
Merger shall be subject to the satisfaction or waiver of the
following conditions prior to the Effective Time:
(a) Compliance. DOCP shall not have breached or
failed to observe or perform in any material respect any
of its covenants or agreements hereunder to be performed
by it at or prior to the Effective Time, and the
representations and warranties of DOCP set forth herein
shall be true and accurate 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
breach or failure to observe or perform such covenants and
agreements, or 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" or similar language set forth therein),
does not have, and is not likely to have, individually or
in the aggregate, a DOCP Material Adverse Effect or a
Buyer Material Adverse Effect.
(b) No Material Adverse Change. At any time after
the date of this Agreement, there shall not have occurred
any DOCP Material Adverse Effect.
Section 7.4. Frustration of Closing Conditions. No
party hereto may rely on the failure of any condition set forth
in this Article to be satisfied if such failure was caused by
such party's failure to use reasonable efforts to consummate
the transactions contemplated by this Agreement.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1. Termination. This Agreement may be
terminated at any time prior to the Effective Time, in the case
of Buyer, or prior to the purchase of DOCP Shares under the
Offer, in the case of DOCP, whether before or after approval of
this Agreement and the Merger by the shareholders of DOCP:
(a) by mutual consent of DOCP and Buyer;
(b) (i) by Buyer upon a breach of any covenant or
agreement on the part of DOCP set forth in this Agreement
which has not been cured, or if any representation or
warranty of DOCP shall have become untrue, in either case,
such that such breach or untruth is incapable of being
cured within 30 days after the giving of written notice to
DOCP of such breach or untruth, provided that such breach
or untruth is material and that Buyer is not then in
material breach of this Agreement or (ii) by DOCP in the
event of a breach of any representation, warranty,
agreement or covenant of Buyer set forth in this
Agreement, in any case, such that such breach has not been
cured within 30 days after the giving of written notice to
Buyer of such breach or untruth and will prevent
consummation of the Merger, provided that DOCP is not then
in material breach of this Agreement;
-27-<PAGE>
(c) by either Buyer or DOCP, if any permanent
injunction or action by any Governmental Entity preventing
the consummation of the Merger shall have become final and
nonappealable, provided that the party seeking to
terminate this Agreement pursuant to this clause (c) shall
have used all reasonable efforts to prevent the entry of
and to remove such permanent injunction or action;
(d) by either Buyer or DOCP, if the Merger shall not
have been consummated before June 30, 1998, provided that
the right to terminate this Agreement pursuant to this
clause (d) shall not be available to any party whose
failure to perform any of its obligations hereunder
results in the failure of the Merger to be consummated by
such date;
(e) by Buyer (i) if the DOCP Board or any committee
thereof shall withdraw, modify or change its
recommendation so that it is not in favor of this
Agreement, the Offer or the Merger (or make any
recommendation in favor of an Alternative Transaction) or
shall have resolved to do any of the foregoing or (ii) if
DOCP shall take any action that would be proscribed by
Section 6.2 of this Agreement but for the exceptions
contained in the provisions thereof; or
(f) by Buyer if the DOCP Board or any committee
thereof shall have approved or entered into an agreement
respecting a Superior Proposal or recommended or resolved
to recommend to its shareholders a Superior Proposal, or
by DOCP in connection with the DOCP Board or any committee
thereof approving or entering into an agreement respecting
a Superior Proposal, provided that, in the case of any
such termination by DOCP, simultaneously with such
termination, DOCP complies with Section 8.5(b) of this
Agreement and prior thereto has complied with Section 6.2
of this Agreement and provided, further, that the party
seeking to terminate under this clause (f) is not then in
material breach of this Agreement.
The right of any party hereto to terminate this Agreement
pursuant to this Section shall remain operative and in full
force and effect regardless of any investigation made by or on
behalf of any party hereto, any person controlling any such
party, or any of their respective officers or directors,
whether prior to or after the execution of this Agreement.
Section 8.2. Effect of Termination. Except as
provided in Section 8.5 or Section 9.1, in the event of the
termination of this Agreement pursuant to Section 8.1, this
Agreement shall forthwith become void, there shall be no
liability on the part of any party hereto, or any of their
respective officers or directors, to the other and all rights
and obligations of any party hereto shall cease; provided,
however, that nothing herein shall relieve any party from
liability for the willful breach of any of its representations,
warranties, covenants or agreements set forth in this
Agreement.
Section 8.3. Amendment. This Agreement may be
amended by the parties hereto at any time prior to the
Effective Time; provided, however, that, after approval of this
Agreement and the Merger by the shareholders of DOCP, no
amendment, which under applicable law may not be made without
the approval of the shareholders of DOCP, may be made without
such
-28-<PAGE>
approval. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
Section 8.4. Waiver. At any time prior to the
Effective Time, any party hereto may (a) extend the time for
the performance of any of the obligations or other acts of the
other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained
herein or in any document delivered pursuant hereto or (c)
waive compliance by the other party with any of the agreements
or conditions contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
Section 8.5. Fees, Expenses and Other Payments. (a)
Except as otherwise provided in this Agreement, all costs and
expenses, including, without limitation, fees and disbursements
of counsel, financial advisors and accountants, incurred by the
parties hereto shall be borne solely and entirely by the party
which has incurred such costs and expenses (with respect to
such party, its "Expenses"); provided that, except in the event
that the payment provided in Section 8.5(b) becomes payable, if
DOCP breaches any material term of this Agreement or if the
Merger is not consummated, and this Agreement is thereafter
terminated, and within one year of the date of such termination
DOCP enters into an agreement respecting an Alternative
Transaction, DOCP shall pay the reasonable fees and expenses of
one firm of legal counsel advising the Management Investor, up
to $50,000, plus 50% of any such fees in excess of $50,000, for
the benefit of the Management Investor in connection with the
transactions contemplated hereby.
(b) If (i) this Agreement shall be terminated by
Buyer pursuant to Section 8.1(e) or by Buyer or DOCP pursuant
to Section 8.1(f), or (ii) (A) after the date of this Agreement
any person or "group" (within the meaning of Section 13(d)(3)
of the Exchange Act) shall have publicly made a proposal with
respect to an Alternative Transaction, (B) the Offer shall have
remained open until at least the scheduled expiration date
immediately following the date such proposal is made, (C) the
Minimum Condition shall not have been satisfied at the
expiration of the Offer and (D) this Agreement shall thereafter
be terminated pursuant to Section 8.1(d), then DOCP shall pay
to Buyer $3,000,000 plus all Expenses of Buyer, CSX, NSC and
the Management Investor as promptly as practicable but not
later than two business days after termination of this
Agreement (unless required simultaneously with termination
under Section 8.1(f)) by wire transfer of immediately available
funds to an account designated by Buyer.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1. Effectiveness of Representations,
Warranties and Agreements. (a) Except as set forth in Section
9.1(b), the representations, warranties and agreements of each
party hereto shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such party
or any of their respective officers or directors, whether prior
to or after the execution of this Agreement.
-29-<PAGE>
(b) The representations, warranties and agreements
in this Agreement shall terminate at the Effective Time or upon
the termination of this Agreement pursuant to Article VIII,
except that the agreements set forth in Articles I, II and IX,
and Section 6.3 shall survive the Effective Time and those set
forth in Sections 6.1(a), 8.2 and 8.5, and Article IX shall
survive termination.
Section 9.2. Notices. All notices and other
communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made as
of the date delivered or transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to
the parties at the following addresses (or at such other
address for a party as shall be specified by like changes of
address) or sent by electronic transmission to the telecopier
number specified below:
(a) If to Buyer:
then c/o CSX, NSC and the Management Investor
at the respective addresses set forth below;
(b) If to CSX:
c/o CSX Corporation
One James Center
901 East Cary Street
Richmond, VA 23219
Attention: Peter J. Shudtz
Telecopier No.: (804) 783-1355
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Pamela S. Seymon
Telecopier No.: (212) 403-2000
(c) If to NSC:
Norfolk Southern Corporation
Three Commercial Place
Norfolk, VA 23510
Attention: William C. Wooldridge
Telecopier No.: (757) 629-2345
-30-<PAGE>
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attention: Eric J. Friedman
Telecopier No.: (212) 735-2000
(d) If to the Management Investor:
Walter G. Rich
c/o Delaware Otsego Corporation
One Railroad Avenue
Cooperstown, NY 13326
Telecopier No.: (607) 547-9834
with a copy to:
Kelley Drye & Warren, LLP
101 Park Avenue
New York, NY 10178
Attention: Ronald B. Risdon
Telecopier No.: (212) 808-7897
(e) If to DOCP:
Delaware Otsego Corporation
One Railroad Avenue
Cooperstown, NY 13326
Attention: General Counsel
Telecopier No.: (607) 547-9834
with a copy to:
Carter Ledyard & Milburn
2 Wall Street
New York, NY 10005
Attention: Steven J. Glusband
Telecopier No: (212) 732-3232
-31-<PAGE>
Section 9.3. Certain Definitions. For purposes of
this Agreement, the term:
(a) "affiliate" means a person that, directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first
mentioned person;
(b) "business day" means any day other than a day on
which (i) banks in the State of New York are authorized or
obligated to be closed or (ii) the SEC is closed;
(c) "control" (including the terms "controlled,"
"controlled by" and "under common control with") means the
possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the management
or polices of a person, whether through the ownership of stock
or as trustee or executor, by contract or credit arrangement or
otherwise;
(d) "material" means, with respect to a person,
material to the business, financial condition, results of
operations, properties, assets or prospects of such person and
its subsidiaries taken as a whole or materially impairing the
ability of such person to consummate the transactions
contemplated hereby (including the Offer and the Merger), and
the term "materially" has a correlative meaning;
(e) "person" means an individual, corporation,
partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other
entity;
(f) "subsidiary" or "subsidiaries" of any person
means any corporation, partnership, joint venture or other
legal entity of which such person (either alone or through or
together with any other subsidiary) owns, directly or
indirectly, 50% or more of the stock or other equity interests,
the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of
such corporation or other legal entity;
(g) "knowledge" of any person which is not an
individual means the knowledge of such person's executive
officers after reasonable inquiry; and
(h) "taken as a whole," with respect to any person
and its subsidiaries, means taken as a whole to the extent of
such person's interest in each of such subsidiaries.
Section 9.4. Interpretation. When a reference is
made in this Agreement to an Article, Section or Annex, such
reference shall be to an Article or Section of, or an Annex to,
this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the
words "include", "includes" or "including" are used in this
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
Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. All terms defined
in this Agreement shall have the defined meanings when used in
-32-<PAGE>
any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein. The definitions
contained in this 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 9.5. Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of
being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon
such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this 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 9.6. Entire Agreement. This Agreement,
together with the Annex, the DOCP Disclosure Schedule and the
other documents delivered as of the date hereof in connection
herewith, constitute the entire agreement of the parties and
supersede all prior agreements and understandings, both written
and oral, between the parties, or any of them, with respect to
the subject matter hereof.
Section 9.7. Assignment. Neither this Agreement nor
any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by operation
of law or otherwise by any of the parties hereto without the
prior consent of the other party (other than an assignment by
CSX, NSC or Buyer to a controlled subsidiary). Any assignment
in violation of the preceding sentence shall be void. Subject
to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
Section 9.8. Parties in Interest. This Agreement
shall be binding upon and inure solely to the benefit of each
party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any person any
right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, except that the provisions of Section
6.3 should inure to the benefit of the indemnified parties.
Section 9.9. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE
GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF LAWS THEREOF;
PROVIDED, HOWEVER, THAT THE LAWS OF THE RESPECTIVE STATES OF
INCORPORATION OF
-33-<PAGE>
EACH OF THE PARTIES HERETO SHALL GOVERN THE RELATIVE RIGHTS,
OBLIGATIONS, POWERS, DUTIES AND OTHER INTERNAL AFFAIRS OF SUCH
PARTY AND ITS BOARD OF DIRECTORS.
Section 9.10. ENFORCEMENT. THE PARTIES AGREE THAT
IRREPARABLE DAMAGE WOULD OCCUR AND THAT THE PARTIES WOULD NOT
HAVE ANY ADEQUATE REMEDY AT LAW IN THE EVENT THAT ANY OF THE
PROVISIONS OF THIS AGREEMENT WERE NOT PERFORMED IN ACCORDANCE
WITH THEIR SPECIFIC TERMS OR WERE OTHERWISE BREACHED. IT IS
ACCORDINGLY AGREED THAT THE PARTIES SHALL BE ENTITLED TO AN
INJUNCTION OR INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT
AND TO ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS OF THIS
AGREEMENT IN ANY UNITED STATES FEDERAL COURT LOCATED IN THE
STATE OF NEW YORK OR IN NEW YORK STATE COURT, THIS BEING IN
ADDITION TO ANY OTHER REMEDY TO WHICH THEY ARE ENTITLED AT LAW
OR IN EQUITY. IN ADDITION, EACH OF THE PARTIES HERETO (A)
CONSENTS TO SUBMIT ITSELF TO THE PERSONAL JURISDICTION OF ANY
UNITED STATES FEDERAL COURT LOCATED IN THE STATE OF NEW YORK OR
ANY NEW YORK STATE COURT IN THE EVENT ANY DISPUTE ARISES OUT OF
THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY,
(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 AND (C) AGREES THAT IT WILL NOT BRING ANY ACTION
RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY IN ANY COURT OTHER THAN A FEDERAL COURT
SITTING IN THE STATE OF NEW YORK OR A NEW YORK STATE COURT.
Section 9.11. Counterparts. This Agreement may be
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
Section 9.12. Guarantee. The obligations hereunder
with respect to the transactions contemplated hereby shall be
solely obligations of LLC and Buyer and shall be guaranteed by
each of CSX and NSC on a 50% basis. The parties hereto agree
and understand that, prior to the consummation of the Offer,
all rights of LLC and Buyer hereunder shall be exercised solely
by CSX and NSC acting collectively.
-34-<PAGE>
IN WITNESS WHEREOF, CSX, NSC, the Management Investor
and DOCP have caused this Agreement to be executed as of the
date first written above by their respective officers thereunto
duly authorized.
CSX CORPORATION
By /s/ Mark G. Aron
Name:
Title:
NORFOLK SOUTHERN CORPORATION
By /s/ William J. Romig
Name:
Title:
/s/ Walter G. Rich
WALTER G. RICH
DELAWARE OTSEGO CORPORATION
By /s/ Everett Gilmour
Name:
Title:
-35-<PAGE>
ANNEX I
CONDITIONS OF THE OFFER
-----------------------
Notwithstanding any other provision of the Offer, and
in addition to and not in limitation of Buyer's rights to
extend or amend the Offer at any time, in its sole discretion
(subject to the Merger Agreement), Buyer shall not be required
to accept for payment or, subject to any applicable rules or
regulations of the SEC, pay for any DOCP Shares, and may delay
the acceptance of payment of or, subject to any restriction
referred to above, the payment for, and may terminate the
Offer, if (a) the DOCP Shares tendered pursuant to the Offer by
the expiration of the Offer and not withdrawn, together with
the DOCP Shares owned by Buyer or any subsidiary of Buyer or to
be contributed to Buyer pursuant to binding agreements (which
Buyer, in its sole discretion, believes will be performed)
represent, on a fully diluted basis less than 66 2/3% of the
outstanding DOCP Shares (the "Minimum Condition"), (b) the
waiting periods under the HSR Act applicable to the
transactions contemplated by the Merger Agreement shall not
have expired or been terminated, if such Act is applicable, or
any other regulatory approvals required under applicable law
for the consummation of the Offer shall not have been obtained;
or (c) at any time prior to the acceptance for payment of DOCP
Shares, any of the following conditions exist:
(i) there shall be instituted, pending or threatened
any action, investigation or proceeding by any domestic or
foreign government or Governmental Entity, or there shall
be instituted, pending or threatened any action or
proceeding by any other person, domestic or foreign,
before any domestic or foreign court or Governmental
Entity (other than shareholder litigation by DOCP
Shareholders acting in their capacity as DOCP shareholders
and other than actions or proceedings by any person before
a Government Entity to the extent such person seeks the
imposition of conditions in proceedings pending as of the
date hereof), (A) challenging or seeking to make illegal,
to delay materially or otherwise, directly or indirectly,
to restrain or prohibit the making of the Offer, the
acceptance for payment of or payment for some of or all
the DOCP Shares by Buyer or the consummation of the
Merger, seeking to obtain material damages or imposing any
material adverse conditions in connection therewith or
otherwise, directly or indirectly, relating to the
transactions contemplated by the Offer or the Merger, (B)
seeking to restrain, prohibit or delay the exercise of
full rights of ownership or operation by Buyer or its
affiliates of all or any portion of the business or assets
of DOCP and the DOCP Subsidiaries, taken as a whole, or of
Buyer or any of its affiliates, or to compel Buyer or any
of its affiliates to dispose of or hold separate all or
any material portion of the business or assets of DOCP and
the DOCP subsidiaries, taken as a whole, or of Buyer or
any of its affiliates, (C) seeking to impose or confirm
limitations on the ability of Buyer or any of its
affiliates effectively to exercise full rights of
ownership of the DOCP Shares, including, without
limitation, the right to vote any DOCP Shares acquired or
owned by Buyer or any of its affiliates on all matters
properly presented to DOCP's shareholders or (D) seeking
to require divestiture by Buyer or any of its affiliates
of any DOCP Shares; or
(ii) there shall be any action taken, or any statute,
rule, regulation, injunction, order or decree proposed,
enacted, enforced, promulgated, issued or deemed applicable to,
A-1<PAGE>
or any consent or approval withheld with respect to the Offer,
the acceptance for payment of or payment for any DOCP Shares
or the Merger, by any domestic or foreign court or government
or Governmental Entity that, in the reasonable
judgment of Buyer, might, directly or indirectly, result
in any of the consequences referred to in clauses (A)
through (D) of paragraph (i) above; or
(iii) DOCP shall have breached or failed to perform in
any material respect any of its covenants or agreements
under the Merger Agreement which breach or failure to
perform shall not have been cured, or any of the
representations and warranties of DOCP set forth in the
Merger Agreement shall not be true in any material respect
when made or at any time prior to consummation of the
Offer as if made at and as of such time and shall continue
to be untrue;
(iv) the Merger Agreement shall have been terminated
in accordance with its terms or all conditions (other than
the condition pertaining to DOCP shareholder approval) to
the consummation of the Merger shall not have been
satisfied; or
which, in the reasonable judgment of Buyer in any such case,
and regardless of the circumstances giving rise to any such
condition, makes it inadvisable to proceed with such acceptance
for payment or payment.
The foregoing conditions are for the sole benefit of
Buyer and may be asserted by Buyer regardless of the
circumstances giving rise to any such condition (including any
action or omission by Buyer) or may be waived by Buyer in whole
or in part at any time and from time to time in its reasonable
discretion. The failure by Buyer at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any
such right; the waiver of any such right with respect to
particular facts and other circumstances shall not be deemed a
waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
A-2
EXHIBIT 4
EXECUTION COPY
August 17, 1997
This agreement is entered into to set forth our
understanding with respect to the acquisition (the
"Acquisition") of Delaware Otsego Corporation (the "Company")
pursuant to the Merger Agreement, dated as of the date hereof
(the "Merger Agreement"), by and among the Company, Walter Rich
("Rich"), CSX Corporation ("CSX") and Norfolk Southern
Corporation ("NSC"). We have agreed as follows:
1. In the event of a termination of the Merger
Agreement, Rich shall not participate in any
termination fee (as contemplated by Section 8.5(b) of
the Merger Agreement), other than with respect to any
arrangements which may exist respecting Expenses (as
defined in the Merger Agreement).
2. The terms of the Acquisition shall be as set forth in
the Merger Agreement, and CSX, NSC and Rich shall
establish LLC and Buyer (as contemplated by the
Merger Agreement) as promptly as practicable.
3. CSX, NSC and Rich shall hereafter negotiate in good
faith toward definitive documentation respecting
final arrangements on terms along the lines laid out
in the term sheet attached to their proposal letter
to the Company, dated as of August 8, 1997, as
modified by the Merger Agreement.<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this
Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
CSX CORPORATION
By: /s/ Mark G. Aron
NORFOLK SOUTHERN CORPORATION
By: /s/ William J. Romig
/s/ Walter Rich
WALTER RICH
2
EXHIBIT 5
SUPREME COURT OF THE STATE OF
NEW YORK COUNTY OF NEW YORK Index No. 97 114690
- - - - - - - - - - - - - - - - - x Date purchased 8/14/97
RICHARD BERNABE,
Plaintiff, : Plaintiff(s)
designate(s) N.Y.
- against - :
County as the place
WALTER G. RICH, C. DAVID SOULE, : of trial.
NILES F. CURTIS, MALCOLM C.
HUGHES, GORDON R. FULLER, RICHARD : The basis of the venue
A. WHITE, DAVID B. COMMON, DR. is place where cause of
GERALD A. GROFF, ROBERT L. : action arose
MARCALUS, EVERETT A. GILMOUR,
ALBERT B. AFTOORA, CHARLES S. : SUMMONS
BRENNER, HARVEY POLLY, CSX CORP.,
NORFOLK SOUTHERN CORP., and : Plaintiff(s) reside(s)
Delaware OTSEGO CORP., at
:
County of
Defendant(s) :
- - - - - - - - - - - - - - - - x
To the above named Defendant(s) (see attached)
You are hereby summoned to answer the complaint in
this action and to serve a copy of your answer, or, if the
complaint is not served with this summons, to serve a notice of
appearance, on the Plaintiff's Attorney(s) within 20 days
after the service of this summons, exclusive of the day of
service (or within 30 days after the service is complete if
this summons is not personally delivered to you within the
State of New York); and in case of your failure to appear or
answer, judgment will be taken against you by default for the
relief demanded in the complaint.
WOLF POPPER LLP
Dated: August 14, 1997 Attorney(s) for Plaintiff
Office and Post Office Address
Defendant's address:
845 Third Avenue
New York, New York 10022<PAGE>
Defendant's List
----------------
1. Walter G. Rich
c/o Delaware Otsego Corp.
1 Railroad Avenue
Cooperstown, NY 13326
2. C. David Soule
c/o Delaware Otsego Corp.
1 Railroad Avenue
Cooperstown, NY 13326
3. Niles F. Curtis
c/o Delaware Otsego Corp.
1 Railroad Avenue
Cooperstown, NY 13326
4. Malcolm C. Hughes
c/o Delaware Otsego Corp.
1 Railroad Avenue
Cooperstown, NY 13326
5. Gordon R. Fuller
c/o Delaware Otsego Corp.
1 Railroad Avenue
Cooperstown, NY 13326
6. Richard A. White
c/o Delaware Otsego Corp.
1 Railroad Avenue
Cooperstown, NY 13326
7. David B. Common
c/o Delaware Otsego Corp.
1 Railroad Avenue
Cooperstown, NY 13326
8. Dr. Gerald D. Groff
c/o Delaware Otsego Corp.
1 Railroad Avenue
Cooperstown, NY 13326
9. Robert L. Marcalus
c/o Delaware Otsego Corp.
1 Railroad Avenue
Cooperstown, NY 13326
10. Everett A. Gilmour
c/o Delaware Otsego Corp.
1 Railroad Avenue
Cooperstown, NY 13326<PAGE>
11. Albert B. Aftoora
c/o CSX Corp.
901 East Cary Street
Richmond, VA 23219
12. Charles S. Brenner
c/o Delaware Otsego Corp.
1 Railroad Avenue
Cooperstown, NY 13326
13. Harvey Polly
c/o Delaware Otsego Corp.
1 Railroad Avenue
Cooperstown, NY 13326
14. CSX Corp.
901 East Cary Street
Richmond, VA 23219
15. Norfolk Southern Corp.
Three Commercial Place
Norwalk, VA 23510
16. Delaware Otsego Corp.
1 Railroad Avenue
Cooperstown, NY 13326<PAGE>
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
- - - - - - - - - - - - - - - - - - - x
RICHARD BERNABE, :
Plaintiff, : Civil Action No. 97 114690
- against - : CLASS ACTION COMPLAINT
WALTER G. RICH, C. DAVID SOULE, :
NILES F. CURTIS, MALCOLM C.
HUGHES, GORDON R. FULLER, RICHARD A. :
WHITE, DAVID B. COMMON, DR. GERALD
D. GROFF, ROBERT L. MARCALUS, :
EVERETT A. GILMOUR, ALBERT B.
AFTOORA, CHARLES S. BRENNER, :
HARVEY POLLY, CSX CORP., NORFOLK
SOUTHERN CORP., and Delaware :
OTSEGO CORP.,
:
Defendant(s) :
- - - - - - - - - - - - - - - - - - x
Plaintiff, Richard Bernabe, individually and on
behalf of all others similarly situated, alleges upon
information and belief (except for those allegations which
pertain to plaintiff, which allegations are based upon personal
knowledge), as follows:
1. This action arises out of an unlawful scheme and
plan by a group, led by the Company's Chief Executive Officer,
to acquire the remaining public shares of Delaware Otsego Corp.
("DOC" or the "Company") in a going-private transaction for
grossly inadequate consideration and in breach of defendants'
fiduciary and other duties. Plaintiff alleges that he and the
other public stockholders of DOC common stock are entitled to
enjoin the proposed transaction, or alternatively, to recover
damages in the event the transaction is consummated.<PAGE>
THE PARTIES
2. Plaintiff Richard Bernabe is and at all relevant
times was the owner of DOC common stock.
3. (a) Defendant DOC is a corporation organized and
existing under the laws of the State of New York with its
principal executive offices located at 1 Railroad Avenue,
Cooperstown, New York 13326. DOC is a holding company that
provides railroad transportation and shipping links for
customers throughout major northeastern railroads.
Specifically, DOC is the parent of the New York Susquehanna &
Western Railway ("NYS&W"), which owns 300 miles of track
including a direct route into the New York City area.
(b) DOC has approximately 1.8 million common
shares issued and outstanding. Its common stock trades on the
NASDAQ/National Market System.
4. Defendant Walter G. Rich ("Rich") is Chief
Executive Officer, President, and a director of the Company.
Rich owns approximately 15% of the Company's common stock.
5. Defendant Albert B. Aftoora is a director of the
Company. He is also Vice-President of CSX Transportation,
Inc., a wholly-owned subsidiary of CSX Corp.
6. Defendant C. David Soule is Executive Vice
President and a director of the Company.
7. Defendants Niles F. Curtis, Malcolm C. Hughes,
Gordon R. Fuller, Richard A. White, Dr. Gerald D. Groff, Robert
-2-<PAGE>
L. Marcalus, Everett A. Gilmour, Charles S. Brenner, and Harvey
Polly are directors of the Company.
8. Defendant CSX Corp. ("CSX") is a Virginia
corporation with its principal executive offices located at 901
East Cary Street, Richmond, Virginia 23219. CSX is an
international transportation company with interests in rail,
ocean container shipping, bargings, trucking, warehousing and
distribution. CSX owns approximately 6% of DOC's common stock.
9. Defendant Norfolk Southern Corp. ("Norfolk
Southern") is a Virginia corporation with its principal
executive offices located at Three Commercial Place, Norfolk,
Virginia 23510. Norfolk Southern is a holding company which
owns Norfolk Southern Railway Company.
10. Defendants CSX and Norfolk Southern recently
agreed with Consolidated Rail Corp. ("Conrail") to acquire
Conrail's routes, including access into the New York City area.
DOC is the only other rail carrier with a direct route into the
New York City area.
11. The above-named individual defendants
(collectively the "Individual Defendants") as officers and/or
directors of the Company, and/or significant shareholders of
the Company owe fiduciary duties of good faith, loyalty, fair
dealing, due care, and candor to plaintiff and the other
members of the Class (as defined below).
12. Defendants Rich and CSX, through their
stockholdings and executive/directorial positions, control
DOC's
-3-<PAGE>
Board of Directors, who have been nominated for the positions
and serve with the approval of Rich and CSX.
JURISDICTION AND VENUE
13. This Court has jurisdiction over this action and
the defendants. Defendants, through themselves or their
agents, inter alia, (a) transact business in the State of New
York; (b) committed a tortious act within the State of New
York; and/or (c) committed a tortious act without the State of
New York causing injury to Class members (as defined infra)
within the State of New York.
14. Pursuant to CPLR 503, venue is proper in this
judicial district since many of the Class members reside in New
York County and will suffer injury in this County if the
proposed transaction is consummated. Since the cause of action
arises, in substantial part, in New York County, under CPLR
503, DOC is deemed to be a resident of New York County.
CLASS ACTION ALLEGATIONS
15. Plaintiff brings this action pursuant to CPLR
901, on behalf of himself and all other stockholders of the
Company (the "Class"). Excluded from the Class are the
defendants herein, members of their immediate families, and any
subsidiary, firm, trust, corporation, or other entity related
to or affiliated with any of the defendants and their
successors in interest, who are or will be threatened with
injury arising from defendants' actions.
-4-<PAGE>
16. This action is properly maintainable as a class
action for the following reasons:
(a) the Class is so numerous that joinder of
all members is impracticable. While the exact number of class
members is unknown to plaintiff at this time and can only be
ascertained through appropriate discovery, there are
approximately 1.8 million shares of DOC common stock
outstanding held by hundreds of shareholders of record. The
holders of these shares are believed to be geographically
dispersed throughout the United States;
(b) there are questions of law and fact which
are common to members of the Class and which predominate over
any questions affecting only individual members. The common
questions include, inter alia, the following:
(i) whether defendants have engaged and
are continuing to engage in a plan and scheme to benefit
themselves at the expense of the members of the Class;
(ii) whether the defendants, as directors
and/or officers of the Company and/or as significant
shareholders of the Company, have breached their fiduciary
duties owed to plaintiff and the other members of the Class,
including their duties of entire fairness, loyalty, due care,
and candor;
(iii) whether defendants have disclosed
all material facts in connection with the challenged
transaction; and
-5-<PAGE>
(iv) whether plaintiff and the other
members of the Class would be irreparably damaged were
defendants not enjoined from the conduct described herein;
(c) the claims of plaintiff are typical of the
claims of the other members of the Class in that all members of
the Class will be damaged by defendants' actions;
(d) plaintiff will fairly and adequately
protect the interests of the members of the Class, and is
committed in prosecuting this action. Plaintiff has retained
counsel competent and experienced in litigation of this nature;
(e) the prosecution of separate actions by
individual members of the Class would create the risk of (i)
inconsistent or varying adjudications with respect to
individual members of the Class which would establish
incompatible standards of conduct for defendants; or (ii)
adjudications with respect to individual members of the Class
which would as a practical matter be dispositive of the
interests of the other members not parties to the adjudications
or substantially impair or impede their ability to protect
their interests; and
(f) defendants have acted, or refused to act,
on grounds generally applicable to, and causing injury to, the
Class and, therefore, preliminary and final injunctive relief
on behalf of the Class as a whole is appropriate.
-6-<PAGE>
SUBSTANTIVE ALLEGATIONS
17. The recent proposed acquisition of Conrail's
routes by CSX and Norfolk Southern has made the NYS&W an
attractive acquisition candidate. Both Norfolk Southern and
CSX were interested in obtaining the NYS&W since it would
secure the only remaining direct rail route to New York City.
Canadian carriers were also interested in the NYS&W since the
Conrail acquisition could sharply reduce their ability to use
Conrail's former routes.
18. DOC's stock price has sharply increased since
the announcement of the proposed Conrail acquisition by CSX and
Norfolk Southern, reflecting investor awareness of the
potential takeover value of DOC. As recently as August 1,
1997, the market price of DOC was $24 per share.
19. On August 11, 1997, DOC announced that a group,
comprised of CSX, Norfolk Southern, and Rich (the Company's
Chief Executive Officer and President), offered to acquire the
remaining 79% of the outstanding shares of DOC that it did not
already own. Pursuant to the proposed transaction, each of
DOC's common shares will be converted into the right to receive
$19.00 in cash (the "Buyout Transaction"), a price
substantially less than its market price.
20. As part of the Buyout Transaction, the group
will form a new company "Newco" to be organized and owned by
Rich, CSX, and Norfolk Southern, with Rich owning 80% and CSX
and Norfolk Southern each owning 10% of the voting equity,
-7-<PAGE>
respectively. Ninety five percent of the costs of the Buyout
Transaction will be paid by CSX and Norfolk Southern: CSX will
contribute $23.4 million in cash, plus $2.1 million in DOC
stock owned by CSX; Norfolk Southern will contribute $25.5
million in cash; and Rich will contribute $2.6 million in cash.
The Board of Directors of Newco will consist of Rich and his
designees (who will represent a majority) as well as
representatives of CSX and Norfolk Southern. Certain
designated matters to be agreed upon will require the approval
of a supermajority of Newco's Board of Directors.
21. The purpose of the Buyout Transaction is to
enable the group to acquire one hundred (100%) percent equity
ownership of DOC and its valuable assets for its own benefit at
the expense of DOC's public stockholders, who will be deprived
of their equity investment and the benefits thereof including,
among other things, the expected growth in the Company's
profitability.
22. The Buyout Transaction is the product of unfair
dealing, and the price of $19.00 cash per share to be paid to
class members is unconscionable and unfair and so grossly
inadequate as to constitute a gross breach of trust against the
public stockholders because, among other things:
(a) the announcement of the proposed Buyout
Transaction was made when the Company was poised for
significant future growth and earnings. Indeed, the Company
recently announced, on August 12, 1997, its operating results
for the second quarter ended June 30, 1997. The Company
reported an
-8-<PAGE>
increase in revenues, net earnings, and cash position over the
same period a year ago, and is poised for growth;
(b) because of Rich's senior management
positions with the Company, his and CSX's Board membership,
along with the group's combined 21% ownership of the Company's
stock, no third party will likely bid for DOC. Thus, the
group, led by Rich, will be able to proceed with the Buyout
Transaction without an auction or other type of market check to
maximize value for DOC's public shareholders; and
(c) the group timed the announcement of the
Buyout Transaction to place an artificial lid or cap on the
market price for DOC's stock to enable itself to acquire the
stock at the lowest possible price. The Buyout Price of $19.00
per share represents a substantial discount from the market
price on the day prior to the announcement of the Buyout
Transactions ($23.00). It is also well below the price that
the stock reached approximately two weeks ago ($24). Further,
the Buyout Price of $19.00 per share is only marginally higher
than the book value per share of the Company ($18.78). The
Buyout Price is also substantially below its fair value based
on a comparison of comparable railroads' trading multiples and
acquisition multiples.
23. By reason of defendants' positions with DOC,
along with their ownership of the Company, defendants are in
possession of non-public information concerning the financial
condition and prospects of DOC, and especially the true value
and expected
-9-<PAGE>
increased future value of DOC and its assets, which have not
been disclosed to DOC's public stockholders.
24. The group, led by Rich, is intent on paying the
lowest buyout price to Class members, whereas it and the other
defendants are duty-bound to maximize shareholder value. The
defendants have failed to insure that shareholder value would
be maximized and are acting to better the interests of the
group at the expense of the DOC public shareholders.
25. The proposed Buyout Transaction is wrongful,
unfair and harmful to DOC's public stockholders, and represents
an effort by the group to aggrandize their own financial
positions and interest at the expense of and to the detriment
of the Class. The Buyout Transaction is an attempt to deny
plaintiff and the other members of the Class their right to
share proportionately in the true value of DOC's valuable
assets, future growth in profits, and earnings, while usurping
the same for the benefit of the group on unfair and inadequate
terms.
26. The Individual Defendants, in failing to
disclose the material non-public information in their
possession as to the value of DOC's assets, the full extent of
the future earnings potential of DOC and its expected increase
in profitability, are not acting in good faith toward plaintiff
and the other members of the Class, and have breached and are
breaching their fiduciary duties to the members of the Class.
27. Defendant Rich has breached his fiduciary duties
of loyalty and due care by proposing and/or agreeing to the
-10-<PAGE>
Buyout Transaction for his own personal benefit and at the
expense, and to the detriment of, DOC's public shareholders.
Defendants CSX and Norfolk Southern have aided and abetted
defendant Rich, and conspired with Rich, to obtain 100%
ownership of DOC's public stock for the benefit of the group.
CSX and Norfolk Southern have, and will benefit from, the
Buyout Transaction since it will deprive any other rail carrier
from buying control of DOC, thereby obtaining direct access to
the New York City area.
28. As a result of defendants' unlawful actions,
plaintiff and the other members of the Class will not receive
their fair portion of the value of DOC's assets and business
and will be prevented from obtaining the real value of their
equity ownership of the Company. Unless the proposed Buyout
Transaction is enjoined by the Court, defendants will continue
to breach their fiduciary duties owed to the plaintiff and the
members of the Class, and the investor group, led by Rich, will
succeed in its plan described above, all to the irreparable
harm of the members of the Class.
29. Plaintiff and the other members of the Class
have no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) declaring this action to be a proper class
action and certifying plaintiff as the representative of the
Class;
-11-<PAGE>
(b) ordering defendants to carry out their fiduciary
duties to plaintiff and the other members of the Class,
including those duties of care, loyalty, and candor;
(c) granting preliminary and permanent injunctive
relief against the consummation of the Buyout Transaction as
described herein;
(d) in the event the Buyout Transaction is
consummated, rescinding the Buyout Transaction effected by
defendants and awarding rescissory damages to the Class;
(e) awarding plaintiff the costs and disbursements
of the action including allowances for plaintiff's reasonable
attorneys and experts' fees; and
(f) granting such other and further relief as the
Court may deem just and proper.
Dated: August 14, 1997
WOLF POPPER LLP
845 Third Avenue
New York, New York 10022
(212) 759-4600
Attorneys for Plaintiff
-12-
