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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
OUTBOARD MARINE CORPORATION
------------------------
(NAME OF SUBJECT COMPANY)
OMC ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
DETROIT DIESEL CORPORATION
------------------------
(BIDDERS)
COMMON STOCK, $.15 PAR VALUE
------------------------
(TITLE OF CLASS OF SECURITIES)
690020102
------------------------
(CUSIP NUMBER OF COMMON STOCK)
TIMOTHY D. LEULIETTE
VICE CHAIRMAN
DETROIT DIESEL CORPORATION
13400 OUTER DRIVE, WEST
DETROIT, MICHIGAN 48239-4001
(313) 592-7231
------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
Copy to:
JOHN F. FARMER, ESQ.
VICE PRESIDENT
AND GENERAL COUNSEL
DETROIT DIESEL CORPORATION
13400 OUTER DRIVE, WEST
DETROIT, MICHIGAN 48239-4001
(313) 592-7111
------------------------
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
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$221,481,904 $44,296.38
</TABLE>
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* For the purpose of calculating the fee only, this amount assumes the
purchase of 13,842,619 shares of Common Stock of Outboard Marine
Corporation, at $16.00 per share.
** 1/50 of 1% of Transaction Valuation.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C>
AMOUNT PREVIOUSLY PAID: FILING PARTY:
FORM OR REGISTRATION NO.: DATE FILED:
</TABLE>
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This Statement relates to a tender offer by OMC Acquisition Corp., a
Delaware corporation (the "Offeror") and a wholly-owned subsidiary of Detroit
Diesel Corporation, a Delaware corporation ("DDC"), to purchase 13,842,619
shares of the Common Stock, par value $0.15 per share (the "Shares"), of
Outboard Marine Corporation, a Delaware corporation (the "Company"), at a
purchase price of $16.00 per Share, net to the seller in cash, without interest,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated July 15, 1997 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which together constitute the "Offer"), copies of which are filed
as Exhibits (a)(1) and (a)(2) hereto, respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Outboard Marine Corporation. The
address of the principal executive offices of the Company is set forth in
Section 8 ("Certain Information Concerning the Company") of the Offer to
Purchase and is incorporated herein by reference.
(b) The exact title of the class of equity securities being sought in the
Offer is the Common Stock, par value $0.15 per share, of the Company. The
information set forth in the Introduction to the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) through (d), and (g): The information set forth in the Introduction and
Section 9 ("Certain Information Concerning the Offeror") of the Offer to
Purchase, and in Annex I thereto, is incorporated herein by reference.
(e) and (f): None of the Offeror or DDC, nor, to the best of their
knowledge, any of the persons listed in Annex I of the Offer to Purchase, has
during the last five years (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) None.
(b) The information set forth in the Introduction and Section 11
("Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company") and Section 8 ("Certain Information Concerning the Company") of the
Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b): The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a) through (e): The information set forth in the Introduction, Section 11
("Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company") and Section 12 ("Purpose of the Offer; The Merger; Plans for the
Company") of the Offer to Purchase is incorporated herein by reference. Except
as set forth in Sections 11 and 12 of the Offer to Purchase, neither the Offeror
nor DDC has any present plans or proposals that would result in an extraordinary
corporate transaction, such as a merger, reorganization, liquidation or sale or
transfer of a material amount of assets involving the Company, or any other
material
2
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changes in the Company's capitalization, dividend policy, corporate structure or
business or composition of its management or personnel.
(f) and (g): The information set forth in Section 7 ("Effect of the Offer
on NYSE Listing, Market for Shares and SEC Registration") of the Offer to
Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) None.
(b) None.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction and Section 11 ("Background
of the Offer; Past Contacts, Transactions or Negotiations with the Company") of
the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and in Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information Concerning the
Offeror") of the Offer to Purchase is incorporated herein by reference.
The incorporation by reference herein of the above-mentioned financial
information does not constitute an admission that such information is material
to a decision by a security holder of the Company as whether to sell, tender or
hold securities being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 11 ("Background of the Offer; Past
Contacts, Transactions or Negotiations with the Company") and Section 12
("Purpose of the Offer; the Merger; Plans for the Company") of the Offer to
Purchase is incorporated herein by reference.
(b) and (c): The information set forth in Section 16 ("Certain Regulatory
and Legal Matters") of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth in Section 7 ("Effect of the Offer on NYSE
Listing, Market for Shares and SEC Registration") and Section 16 ("Certain
Regulatory and Legal Matters") of the Offer to Purchase is incorporated herein
by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference in its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
99.(a)(1) Offer to Purchase, dated July 15, 1997.
99.(a)(2) Letter of Transmittal.
99.(a)(3) Letter from Chase Securities Inc., as Dealer Manager, to Brokers,
Dealers, Commercial Banks, Trust Companies and Other Nominees.
3
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99.(a)(4) Letter from Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees to Clients.
99.(a)(5) Notice of Guaranteed Delivery.
99.(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
99.(a)(7) Summary Announcement, dated July 15, 1997.
99.(a)(8) Press Release issued by DDC on July 9, 1997.
99.(a)(9) Press Release issued by DDC on July 10, 1997.
99.(b)(1) Financing Commitment Letter, dated June 25, 1997, among DDC, The
Chase Manhattan Bank and Chase Securities Inc.
99.(c)(1) Agreement and Plan of Merger, dated as of July 8, 1997, among
DDC, the Offeror and the Company.
(d) None.
(e) Not applicable.
4
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SIGNATURE
After due inquiry and to the best of its knowledge and belief, each of the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: July 15, 1997 OMC ACQUISITION CORP.
By: /s/ TIMOTHY D. LEULIETTE
-----------------------------------
Name: Timothy D. Leuliette
Title: Vice Chairman
DETROIT DIESEL CORPORATION
By: /s/ TIMOTHY D. LEULIETTE
-----------------------------------
Name: Timothy D. Leuliette
Title: Vice Chairman
5
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE
EXHIBIT DESCRIPTION NO.
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<S> <C> <C>
99.(a)(1) -- Offer to Purchase, dated July 15, 1997.
99.(a)(2) -- Letter of Transmittal.
99.(a)(3) -- Letter from Chase Securities Inc., as Dealer Manager, to
Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
99.(a)(4) -- Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees to Clients.
99.(a)(5) -- Notice of Guaranteed Delivery.
99.(a)(6) -- Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
99.(a)(7) -- Summary Announcement, dated July 15, 1997.
99.(a)(8) -- Press Release issued by DDC on July 9, 1997.
99.(a)(9) -- Press Release issued by DDC on July 10, 1997.
99.(b)(1) -- Financing Commitment Letter, dated June 25, 1997, among DDC,
The Chase Manhattan Bank and Chase Securities Inc.
99.(c)(1) -- Agreement and Plan of Merger, dated July 8, 1997, among DDC,
the Offeror and the Company.
99.(d) -- None.
99.(e) -- Not applicable.
</TABLE>
<PAGE> 1
EXHIBIT 99.(A)(1)
Offer to Purchase for Cash
13,842,619 Shares of Common Stock
of
OUTBOARD MARINE CORPORATION
at
$16.00 Net Per Share
by
OMC ACQUISITION CORP.
a wholly-owned subsidiary of
DETROIT DIESEL CORPORATION
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON MONDAY, AUGUST 11, 1997, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED BY THE EXPIRATION DATE AND NOT WITHDRAWN 13,842,619 SHARES OF COMMON
STOCK OF OUTBOARD MARINE CORPORATION (THE "MINIMUM CONDITION"), AND (ii)
SATISFACTION OF CERTAIN OTHER TERMS AND CONDITIONS. SEE SECTION 15.
THE OFFER IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 8, 1997, AMONG DETROIT DIESEL CORPORATION, OMC ACQUISITION
CORP. AND OUTBOARD MARINE CORPORATION. ALL OF THE MEMBERS OF THE BOARD OF
DIRECTORS OF OUTBOARD MARINE CORPORATION (WITH ONE ABSTENTION) APPROVED THE
OFFER, THE MERGER AND THE MERGER AGREEMENT, HAVE DETERMINED THAT THE TERMS OF
EACH OF THE OFFER, THE MERGER AND THE MERGER AGREEMENT ARE FAIR TO AND IN THE
BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS AND RECOMMEND THAT THE COMPANY'S
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES IN THE OFFER.
---------------------------
IMPORTANT
Any stockholder desiring to tender Shares should either (i) complete and
sign the Letter of Transmittal or a facsimile thereof in accordance with the
instructions in the Letter of Transmittal and deliver the Letter of Transmittal
with the Shares and all other required documents to the Depositary or follow the
procedure for book-entry transfer set forth in Section 3 or (ii) request his
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for him. A stockholder having Shares registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must contact
such person if he desires to tender his Shares.
Any stockholder who desires to tender Shares and cannot deliver such Shares
and all other required documents to the Depositary by the expiration of the
Offer must tender such Shares pursuant to the guaranteed delivery procedure set
forth in Section 3.
Questions and requests for assistance or additional copies of this Offer to
Purchase and the Letter of Transmittal may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase.
---------------------------
The Dealer Manager for the Offer is:
CHASE SECURITIES INC.
July 15, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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PAGE
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<C> <S> <C>
INTRODUCTION....................................................... 1
1. Terms of the Offer.......................................... 2
2. Acceptance for Payment and Payment for Shares............... 4
3. Procedure for Tendering Shares.............................. 5
4. Withdrawal Rights........................................... 7
5. Certain Federal Income Tax Consequences..................... 7
6. Price Range of Shares; Dividends............................ 9
7. Effect of the Offer on NYSE Listing, Market for Shares and 9
SEC Registration............................................
8. Certain Information Concerning the Company.................. 10
9. Certain Information Concerning the Offeror.................. 12
10. Source and Amount of Funds.................................. 14
11. Background of the Offer; Past Contacts, Transactions or 15
Negotiations with the Company...............................
12. Purpose of the Offer; The Merger; Plans for the Company..... 16
13. The Merger Agreement........................................ 17
14. Dividends and Distributions................................. 24
15. Certain Conditions to Offeror's Obligations................. 24
16. Certain Regulatory and Legal Matters........................ 26
17. Fees and Expenses........................................... 27
18. Miscellaneous............................................... 28
Annex I CERTAIN INFORMATION CONCERNING DDC, THE OFFEROR AND
RELATED PARTIES........................................... A-1
</TABLE>
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TO HOLDERS OF COMMON STOCK OF
OUTBOARD MARINE CORPORATION:
INTRODUCTION
OMC Acquisition Corp., a Delaware corporation (the "Offeror") and a
wholly-owned subsidiary of Detroit Diesel Corporation, a Delaware corporation
("DDC"), hereby offers to purchase 13,842,619 shares of Common Stock, par value
$0.15 per share (the "Shares"), of Outboard Marine Corporation, a Delaware
corporation (the "Company"), at a purchase price of $16.00 per Share, net to the
seller in cash (the "Offer Price"), without interest, upon the terms and subject
to the conditions set forth in this Offer to Purchase and in the related Letter
of Transmittal (which, as amended from time to time, together constitute the
"Offer"). Tendering holders of Shares will not be obligated to pay brokerage
fees or commissions or, except as set forth in the Letter of Transmittal,
transfer taxes on the purchase of Shares by Offeror pursuant to the Offer. The
Offeror will pay all charges and expenses of Chase Securities Inc. (the "Dealer
Manager"), ChaseMellon Shareholder Services, L.L.C. (the "Depositary") and D.F.
King & Co., Inc. (the "Information Agent") in connection with the Offer.
ALL OF THE MEMBERS OF THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD OF
DIRECTORS") (WITH ONE ABSTENTION) APPROVED THE OFFER, THE MERGER (AS HEREINAFTER
DEFINED) AND THE MERGER AGREEMENT (AS HEREINAFTER DEFINED), HAVE DETERMINED THAT
THE TERMS OF EACH OF THE OFFER, THE MERGER AND THE MERGER AGREEMENT ARE FAIR TO
AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS AND RECOMMEND THAT THE
COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES IN THE OFFER.
Mr. William C. France abstained from the decision of the Board of Directors
due to an existing relationship with an affiliate of DDC.
Salomon Brothers Inc, the Company's financial advisor ("the Financial
Advisor"), has delivered to the Company's Board of Directors its written opinion
that the consideration to be received by the stockholders of the Company
pursuant to the Offer and the Merger is fair to such stockholders from a
financial point of view. Copies of such opinions will be contained in the
Company's Statement on Schedule 14D-9 to be distributed to the Company's
stockholders.
This Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of July 8, 1997 (the "Merger Agreement"), among DDC, the Offeror and the
Company. The Merger Agreement provides that, subject to the satisfaction of or
waiver of certain conditions set forth in the Merger Agreement (including,
without limitation, the approval of the Merger and the Merger Agreement by the
affirmative vote of the holders of two-thirds of the issued and outstanding
Shares on the record date for the stockholders meeting to consider such
matters), the Offeror will merge with and into the Company, with the Company
continuing as the surviving corporation. Following the Merger the Company will
continue as a wholly-owned subsidiary of DDC. (The merger of the Offeror into
the Company being herein referred to as the "Merger" and the Company as the
survivor of the Merger being herein referred to as the "Surviving Corporation.")
Pursuant to the Merger, each outstanding Share, other than Shares owned by
DDC or the Offeror or held by the Company, all of which shall be cancelled, and
other than Shares with respect to which appraisal rights are properly exercised
under Delaware law ("Dissenting Shares") ("the Exchanged Common Shares"), will
be converted into and represent the right to receive (1) a fractional share of
fully paid and nonassessable common stock, $0.01 par value, of DDC ("DDC Common
Shares") equal to 4,000,000 divided by the number of Exchanged Common Shares
(the "Exchange Ratio") plus (2) a cash payment equal to (a) $16.00 minus (b) the
product of the Exchange Ratio times $25, plus (3) in the event the average
closing price on the New York Stock Exchange for DDC Common Shares for the 20
consecutive trading days ending on the fifth trading day prior to the Closing
Date (the "Closing Date Market Price") is less than $25.00, then an additional
cash payment equal to the product of the Exchange Ratio multiplied by the lesser
of (a) $25.00 minus the Closing Date Market Price or (b) $6.00 (the "Merger
Consideration"). See Section 5 for a description of certain tax consequences of
the Offer and the Merger.
1
<PAGE> 4
THE OFFER DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY DDC COMMON SHARES. SUCH AN OFFER MAY BE MADE ONLY PURSUANT TO A
PROSPECTUS.
The Company has advised the Offeror that as of June 30, 1997, there were
20,205,515 Shares issued and outstanding. Approval of the Merger will require
the affirmative vote of two-thirds of the issued and outstanding Shares. If the
Offeror acquires the 13,842,619 Shares subject to the Offer, it will control
over two-thirds of the Shares issued and outstanding as of the date of the
Merger Agreement and will have sufficient voting power to approve the Merger
without the affirmative vote of any other stockholder. However, the Company
currently has options outstanding to purchase approximately 1,430,000 Shares of
which approximately 250,000 are exercisable at $16.00 or less per Share. In
addition, there are existing convertible debt instruments of the Company
convertible into approximately 3,360,000 Shares, at a conversion price of $22.25
per Share. If at the record date relating to the stockholder meeting on the
Merger, more than 20,763,928 Shares are outstanding, the Offeror will not have
sufficient voting power to approve the Merger without the affirmative vote of
other holders of Shares in an amount, which together with the Shares held by the
Offeror, will constitute at least two-thirds of the then issued and outstanding
Shares. The Merger Agreement provides that, upon the purchase of Shares pursuant
to the consummation of the Offer, DDC shall be entitled to designate such number
of directors, rounded up to the next whole number, as will give DDC
representation on the Board of Directors equal to the product of (1) the number
of directors on the Board of Directors and (2) the percentage that the number of
Shares purchased by the Offeror or DDC or any affiliate thereof bears to the
aggregate number of Shares outstanding, and the Company shall, upon request by
DDC, promptly increase the size of the Board of Directors or exercise its
reasonable efforts to secure the resignations of such number of directors as is
necessary to enable DDC's designees to be elected to the Board of Directors and
shall cause DDC's designees to be so elected. Notwithstanding the foregoing, the
Company, DDC and the Offeror shall use their respective reasonable efforts to
ensure that at least three members of the Company's Board of Directors shall at
all times prior to the Effective Time be current members of its Board of
Directors.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Offeror will accept for payment and pay for 13,842,619 Shares to
the extent such Shares are validly tendered prior to the Expiration Date and not
theretofore withdrawn in accordance with Section 4. The term "Expiration Date"
means 12:00 Midnight, New York City time, on August 11, 1997, unless the Offeror
shall have extended the period of time for which the Offer is open, in which
event the term "Expiration Date" shall mean the latest time and date at which
the Offer, as so extended by the Offeror, shall expire.
If the Offeror shall decide, in its sole discretion, to increase the
consideration offered in the Offer to holders of Shares and if, at the time that
notice of such increase is first published, sent or given to holders of Shares
in the manner specified below, the Offer is scheduled to expire at any time
earlier than the expiration of a period ending on the tenth business day from,
and including, the date that such notice is first so published, sent or given,
then the Offer will be extended until the expiration of such period of ten
business days. For purposes of the Offer, a "business day" means any day other
than a Saturday, Sunday or a federal holiday, and consists of the time period
from 12:01 a.m. through 12:00 Midnight, New York City time.
THE OFFER IS CONDITIONED UPON SATISFACTION OF THE MINIMUM CONDITION. THE
OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE SECTION 15. The Offeror
reserves the right (but shall not be obligated), in accordance with applicable
rules and regulations of the Securities and Exchange Commission (the
"Commission"), subject to the limitations set forth in the Merger Agreement and
described below, to waive or reduce the Minimum Condition or to waive any other
condition to the Offer. If the Minimum Condition, or any of the other conditions
set forth in Section 15, have not been satisfied by 12:00 Midnight, New York
City time, on
2
<PAGE> 5
August 11, 1997 (or any other time then set as the Expiration Date), the Offeror
may, subject to the terms of the Merger Agreement as described below, elect to
(1) extend the Offer and, subject to applicable withdrawal rights, retain all
tendered Shares until the expiration of the Offer, as extended, (2) subject to
complying with applicable rules and regulations of the Commission, accept for
payment all Shares so tendered and not extend the Offer, or (3) terminate the
Offer and not accept for payment any Shares and return all tendered Shares to
tendering stockholders. Under the terms of the Merger Agreement, the Offeror may
not, without the prior written consent of the Company, (1) waive the Minimum
Condition, (2) reduce the number of Shares subject to the Offer, (3) reduce the
price per Share to be paid pursuant to the Offer, (4) change the form of
consideration payable in the Offer, (5) amend or modify any term or condition of
the Offer in any manner adverse to the holders of Shares or (6) impose
additional conditions to the Offer other than such conditions required by
applicable law. So long as the Merger Agreement is in effect and all the
conditions to the Offer have not been satisfied or waived, at the request of the
Company, the Offeror shall extend the Offer for an aggregate period of not more
than 10 business days (for all extensions by the Company) beyond the originally
scheduled expiration date of the Offer. Notwithstanding the foregoing, so long
as the Merger Agreement is in effect, the Offeror may, without the consent of
the Company, extend the Offer (1) if at the then scheduled Expiration Date of
the Offer any of the conditions to the Offeror's obligation to accept for
payment and pay for Shares shall not be satisfied or waived, until such time as
such conditions are satisfied or waived, (2) for any period required by any
rule, regulation, interpretation or position of the Commission or the staff
applicable to the Offer, and (3) up to 10 days following the satisfaction of all
of the conditions to the Offer; provided, however, that in no event shall DDC
extend the Offer for more than 20 days in the aggregate without the consent of
the Company.
Subject to the applicable rules and regulations of the Commission, the
Offeror also expressly reserves the right, in its sole discretion at any time
and from time to time, (1) to delay payment for any Shares regardless of whether
such Shares were theretofore accepted for payment, or, subject to the
limitations set forth in the Merger Agreement, to terminate the Offer and not to
accept for payment or pay for any Shares not theretofore accepted for payment or
paid for, upon the occurrence of any of the conditions set forth in Section 15
by giving oral or written notice of such delay or termination to the Depositary,
and (2) subject to the limitations set forth in the Merger Agreement and
described below, at any time or from time to time, to amend the Offer in any
respect. The Offeror's right to delay payment for any Shares or not to pay for
any Shares theretofore accepted for payment is subject to the applicable rules
and regulations of the Commission, including Rule 14e-1(c) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), relating to the Offeror's
obligation to pay for or return tendered Shares promptly after the termination
or withdrawal of the Offer.
Any extension of the period during which the Offer is open, delay in
acceptance for payment, or payment, termination or amendment of the Offer will
be followed, as promptly as practicable, by public announcement thereof, such
announcement in the case of an extension to be issued not later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date in accordance with the public announcement requirements of Rule
14d-4(c) and 14e-1(d) under the Exchange Act. Without limiting the obligation of
the Offeror under such rule or the manner in which the Offeror may choose to
make any public announcement, the Offeror currently intends to make
announcements by issuing a press release to the Dow Jones News Service and
making any appropriate filing with the Commission.
If the Offeror makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer (including a waiver of the Minimum Condition), the Offeror will
disseminate additional tender offer materials and extend the Offer if and to the
extent required by Rules 14d-4(c), 14d-6(d) and 14(e)-1 under the Exchange Act
or otherwise. The minimum period during which an Offer must remain open
following material changes in the terms of the Offer or the information
concerning the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
relative materiality of the terms or information changes. In the Commission's
viewpoint, an offer should generally remain open for a minimum of five business
days from the date a material change is first published, or sent or given to
stockholders. With respect to a change in price or a change in percentage of
securities sought (other than an increase in the number of Shares sought), a
3
<PAGE> 6
minimum ten business day period is generally required to allow for adequate
dissemination to stockholders and investor response.
In the event that proration of tendered Shares is required, the Company
will determine the proration factor as soon as practicable following the
Expiration Date. Proration for each stockholder tendering Shares, shall be based
on the ratio of the number of Shares tendered by such stockholder to the total
number of Shares tendered by all stockholders. Because of the difficulty in
determining the number of Shares properly tendered (including Shares tendered by
guaranteed delivery procedures, and not withdrawn) the Company does not expect
that it will be able to announce the final proration factor or to commence
payment for any Shares purchased pursuant to the Offer until approximately five
New York Stock Exchange ("NYSE") trading days after the Expiration Date. The
preliminary results of any proration will be announced by press release as
promptly as practicable after the Expiration Date. Stockholders may obtain such
preliminary information from the Information Agent or the Dealer Manager and may
be able to obtain such information from their brokers.
The Company has provided the Offeror with the Company's list of
stockholders and security position listings for the purpose of disseminating the
Offer to holders of Shares. This Offer to Purchase and the Letter of Transmittal
will be mailed to record holders of the Shares and will be furnished to brokers,
dealers, commercial banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the list of stockholders or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Offeror will accept for payment and will pay for, 13,842,619
Shares to the extent such Shares are validly tendered prior to the Expiration
Date and not theretofore withdrawn in accordance with Section 4, promptly after
the later to occur of (1) the Expiration Date and (2) subject to compliance with
Rule 14e-1(c) under the Exchange Act, the satisfaction or waiver of the
conditions set forth in Section 15. Subject to compliance with Rule 14e-1(c)
under the Exchange Act, the Offeror expressly reserves the right to delay
payment for Shares in order to comply in whole or in part with any applicable
law. See Sections 1 and 15. In all cases, payment for Shares accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (1) certificates for such Shares or timely confirmation (a
"Book-Entry Confirmation") of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company or the Philadelphia
Depository Trust Company (collectively, the "Book-Entry Transfer Facilities"),
pursuant to the procedures set forth in Section 3, (2) a properly completed and
duly executed Letter of Transmittal (or a manually signed facsimile thereof)
with any required signature guarantees, or an Agent's Message (as defined below)
in connection with a book-entry transfer, and (3) any other documents required
by the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to and received by the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased, 13,842,619 Shares to the extent such Shares are
validly tendered and not withdrawn as, if and when the Offeror gives oral or
written notice to the Depositary of the Offeror's acceptance of such Shares for
payment. In all cases, payment for Shares purchased pursuant to the Offer will
be made by deposit of the purchase price with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payment from the
Offeror and transmitting such payment to tendering stockholders. If, for any
reason whatsoever, acceptance for payment of any Shares tendered pursuant to the
Offer is delayed, or the Offeror is unable to accept for payment Shares tendered
pursuant to the Offer, then, without prejudice to the Offeror's rights under
Section 15, the Depositary may, nevertheless, on behalf of the Offeror, retain
tendered Shares, and such Shares may not be withdrawn, except to the extent that
the tendering stockholders are
4
<PAGE> 7
entitled to withdrawal rights as described in Section 4 below and as otherwise
required by Rule 14e-1(c) under the Exchange Act. Under no circumstances will
interest be paid on the Offer Price by the Offeror because of any delay in
making such payment.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted for
more Shares than are tendered, certificates for such unpurchased or untendered
Shares will be returned, without expense to the tendering stockholder (or, in
the case of Shares delivered by book-entry transfer to a Book-Entry Transfer
Facility, such Shares will be credited to an account maintained within such
Book-Entry Transfer Facility), as promptly as practicable after the expiration,
termination or withdrawal of the Offer.
If, prior to the Expiration Date, the Offeror increases the Offer Price,
such increased consideration will be paid to all stockholders whose Shares are
purchased pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES.
Valid Tenders. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof), with any required signature guarantees and any other
required documents, or an Agent's Message in connection with a book-entry
delivery of Shares, must be received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase prior to the Expiration
Date, or the tendering stockholder must comply with the guaranteed delivery
procedure set forth below. In addition, either (1) certificates representing
such Shares must be received by the Depositary or such Shares must be tendered
pursuant to the procedure for book-entry transfer set forth below, and a
Book-Entry Confirmation must be received by the Depositary, in each case prior
to the Expiration Date, or (2) the guaranteed delivery procedure set forth below
must be complied with. No alternative, conditional or contingent tenders will be
accepted. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Book-Entry Transfer. The Depositary will make a request to establish an
account with respect to the Shares at each Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in a Book-Entry
Transfer Facility's system may make book-entry delivery of Shares by causing a
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at a Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. Although delivery of Shares may be
effected through book-entry at a Book-Entry Transfer Facility prior to the
Expiration Date, (1) the Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer, and
any other required documents, must, in any case, be transmitted to and received
by the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase or (2) the guaranteed delivery procedures described below must
be complied with.
Signature Guarantee. Signatures on the Letter of Transmittal must be
guaranteed by a firm that is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agent's Medallion Program (collectively, "Eligible Institutions"),
unless the Shares tendered thereby are tendered (1) by a registered holder of
Shares who has not completed either the box labeled "Special Delivery
Instructions" or the box labeled "Special Payment Instructions" on the Letter of
Transmittal or (2) for the account of any Eligible Institution. If the
certificates evidencing Shares are registered in the name of a person or persons
other than the signer of the Letter of Transmittal, or if payment is to be made,
or delivered to, or certificates for unpurchased Shares are to be issued or
returned to, a person other than the registered owner or owners, then the
tendered certificates must be endorsed or accompanied by duly executed stock
powers, in either case signed exactly as the name or names of the registered
owner or owners appear on the certificates, with the signatures on the
certificates or stock powers guaranteed by an Eligible Institution as provided
in the Letter of Transmittal. See Instructions 1 and 5 to the Letter of
Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or time will not permit all required
5
<PAGE> 8
documents to reach the Depositary prior to the Expiration Date or the procedure
for book-entry transfer cannot be completed on a timely basis, such Shares may
nevertheless be tendered if all of the following guaranteed delivery procedures
are duly complied with:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Offeror herewith, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation), together with a properly completed
and duly executed Letter of Transmittal (or a manually signed facsimile
thereof), and any required signature guarantees (or in the case of a
book-entry transfer, an Agent's Message) and any other documents required
by the Letter of Transmittal are received by the Depositary within three
NYSE trading days after the date of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the
Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after (1) timely
receipt by the Depositary of certificates for such Shares or a Book-Entry
Confirmation, (2) a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof), with all required signature
guarantees, or an Agent's Message, in the case of a book-entry transfer, and (3)
any other documents required by the Letter of Transmittal.
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING WITH RESPECT TO PAYMENT OF THE PURCHASE PRICE OF SHARES PURCHASED
PURSUANT TO THE OFFER, EACH STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH HIS
CORRECT TAXPAYER IDENTIFICATION NUMBER ("TIN") AND CERTIFY THAT HE IS NOT
SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE
FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. SEE INSTRUCTION 8 SET FORTH IN
THE LETTER OF TRANSMITTAL.
Determination of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by the Offeror, in its sole
discretion, and its determination will be final and binding on all parties. The
Offeror reserves the absolute right to reject any or all tenders of any Shares
that are determined by it not to be in proper form or the acceptance of or
payment for which may, in the opinion of the Offeror, be unlawful. The Offeror
also reserves the absolute right to waive any of the conditions of the Offer,
subject to the limitations set forth in the Merger Agreement, or any defect or
irregularity in the tender of any Shares. The Offeror's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
Instructions to the Letter of Transmittal) will be final and binding on all
parties. No tender of Shares will be deemed to have been validly made until all
defects and irregularities have been cured or waived. None of the Offeror, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
Other Requirements. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of the Offeror as
such stockholder's proxies, each with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment by the Offeror (and any and all other Shares or other securities or
rights issued or issuable in respect of such Shares). All such proxies shall be
considered coupled with an interest in the tendered Shares. This appointment is
effective when, and only to the extent that, the Offeror accepts for payment the
Shares deposited with the Depositary. Upon
6
<PAGE> 9
acceptance for payment, all prior proxies given by the stockholder with respect
to such Shares or other securities or rights will, without further action, be
revoked and no subsequent proxies may be given or written consent executed (and,
if given or executed, will not be deemed effective). The designees of the
Offeror will, with respect to the Shares and other securities or rights, be
empowered to exercise all voting and other rights of such stockholder as they in
their sole judgment deem proper in respect of any annual or special meeting of
the Company's stockholders, or any adjournment or postponement thereof. The
Offeror reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Offeror's payment for such Shares, the
Offeror must be able to exercise full voting and other rights with respect to
such Shares and the other securities or rights issued or issuable in respect of
such Shares, including voting at any meeting of stockholders (whether annual or
special or whether or not adjourned) in respect of such Shares.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment pursuant to the Offer, may also be withdrawn at any time
after September 12, 1997. If purchase of or payment for Shares is delayed for
any reason or if the Offeror is unable to purchase or pay for Shares for any
reason, then, without prejudice to the Offeror's rights under the Offer,
tendered Shares may be retained by the Depositary on behalf of the Offeror and
may not be withdrawn except to the extent that tendering stockholders are
entitled to withdrawal rights as set forth in this Section 4, subject to Rule
14e-1(c) under the Exchange Act which provides that no person who makes a tender
offer shall fail to pay the consideration offered or return the securities
deposited by or on behalf of security holders promptly after the termination or
withdrawal of a tender offer.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name in which the certificates representing such Shares are registered, if
different from that of the person who tendered the Shares. If certificates for
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and,
unless such Shares have been tendered by an Eligible Institution, the signatures
on the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been tendered pursuant to the procedures for book-entry transfer set
forth in Section 3, any notice of withdrawal must also specify the name and
number of the account at the applicable Book-Entry Transfer Facility to be
credited with the withdrawn Shares. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be determined by the
Offeror, in its sole discretion, and its determination will be final and binding
on all parties. None of the Offeror, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be retendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of the principal federal income tax consequences
of the Offer and the Merger to holders whose Shares are purchased pursuant to
the Offer or whose Shares are converted to cash and DDC Common Shares in the
Merger (including pursuant to the exercise of appraisal rights). The discussion
applies only to holders of Shares in whose hands Shares are capital assets, and
may not apply to Shares received pursuant to the exercise of employee stock
options or otherwise as compensation, or to holders of Shares who are in special
tax situations (such as insurance companies, tax-exempt organizations or
non-U.S. persons).
7
<PAGE> 10
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR
GENERAL INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON CURRENT LAW. BECAUSE
INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT HIS
OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED BELOW TO
HIM AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE MERGER, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER INCOME TAX LAWS.
The receipt of cash for Shares pursuant to the Offer and receipt of cash
and DDC Common Shares for Shares pursuant to the Merger (including pursuant to
the exercise of appraisal rights) will be taxable for federal income tax
purposes (and also may be a taxable transaction under applicable state, local
and other income tax laws). In general, for federal income tax purposes, a
holder of Shares will recognize gain or loss equal to the difference between his
adjusted tax basis in the Shares sold pursuant to the Offer and the amount of
cash received therefor. Holders of Shares who receive cash and DDC Common Shares
in the Merger will recognize gain or loss equal to the difference between the
sum of (1) the fair market value of the DDC Common Shares and (2) the cash
received and the holder's adjusted tax basis in the Shares exchanged.
Gain or loss, and adjusted tax basis, must be determined separately for
each block of Shares (i.e., Shares acquired at the same cost in a single
transaction) sold pursuant to the Offer or converted in the Merger. Such gain or
loss will be capital gain or loss (other than, with respect to the exercise of
appraisal rights, amounts, if any, which are or are deemed to be interest for
federal income tax purposes, which amounts will be taxed as ordinary income) and
will be long-term gain or loss if, on the date of sale (or, if applicable, the
date of the Merger), the Shares were held for more than one year.
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" at a rate of 31%. Backup withholding generally applies if
the stockholder (1) fails to furnish his social security number or TIN, (2)
furnishes an incorrect TIN, (3) fails properly to report interest or dividends,
or (4) under certain circumstances, fails to provide a certified statement,
signed under penalties of perjury, that the TIN provided is his correct number
and that he is not subject to backup withholding. Backup withholding is not an
additional tax but merely an advance payment, which may be refunded to the
extent it results in an overpayment of tax. Certain persons generally are
entitled to exemption from backup withholding, including corporations and
financial institutions. Certain penalties apply for failure to furnish correct
information and for failure to include reportable payments in income. Each
stockholder should consult with his own tax advisor as to his qualification for
exemption from backup withholding and the procedure for obtaining such
exemption. Tendering stockholders may be able to prevent backup withholding by
completing the Substitute Form W-9 included in the Letter of Transmittal. See
Section 3.
8
<PAGE> 11
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are principally traded on the NYSE under the symbol "OM." The
following table sets forth for the periods indicated the high and low closing
prices per Share on the NYSE based on published financial sources, together with
the dividends paid per Share.
<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW PAID
---- --- ---------
<S> <C> <C> <C>
FISCAL 1995:
First Quarter..................................... $24.88 $17.50 $.10
Second Quarter.................................... 22.00 19.50 .10
Third Quarter..................................... 22.88 18.88 .10
Fourth Quarter.................................... 22.63 18.00 .10
FISCAL 1996:
First Quarter..................................... $22.38 $19.75 $.10
Second Quarter.................................... 21.88 18.88 .10
Third Quarter..................................... 20.25 18.13 .10
Fourth Quarter.................................... 18.50 14.38 .10
FISCAL 1997:
First Quarter..................................... $16.88 $15.25 $.10
Second Quarter.................................... 17.50 12.13 .10
Third Quarter..................................... 17.75 10.88 --
Fourth Quarter (through July 14, 1997)............ 19.50 15.88 --
</TABLE>
On July 8, 1997, the last full day of trading prior to the public
announcement of the execution of the Merger Agreement, the closing price per
Share as reported on the NYSE was $19.50. On July 14, 1997, the last full day of
trading prior to the commencement of the Offer, the closing price per Share as
reported on the NYSE was $15.94.
Stockholders are urged to obtain current market quotations for the Shares.
7. EFFECT OF THE OFFER ON NYSE LISTING, MARKET FOR SHARES AND SEC REGISTRATION.
The purchase of the Shares by the Offeror pursuant to the Offer will reduce
the number of Shares that might otherwise trade publicly and may reduce the
number of holders of Shares, which could adversely affect the liquidity and
market value of the remaining Shares held by stockholders other than the
Offeror. The Company has advised the Offeror that, as of July 8, 1997, there
were approximately 3,950 stockholders of record and approximately 15,400
beneficial owners of the Shares.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NYSE for continued listing and
may, therefore, be delisted from such exchange. According to the NYSE's
published guidelines, the NYSE could consider delisting the Shares if, among
other things, the number of publicly held Shares (excluding Shares held by
officers, directors, their immediate families and other concentrated holdings of
10% or more) were less than 600,000, there were less than 1,200 holders of at
least 100 Shares or the aggregate market value of the publicly held Shares was
less than $5 million. If, as a result of the purchase of Shares pursuant to the
Offer, the Shares no longer meet the requirements of the NYSE for continued
listing and the listing of Shares on such exchanges is discontinued, the market
for the Shares could be adversely affected.
If the NYSE were to delist the Shares, it is possible that the Shares would
trade on another securities exchange or in the over-the-counter market and that
price quotations for the Shares would be reported by such exchange or through
Nasdaq or other sources. The extent of the public market for the Shares and the
availability of such quotations would, however, depend upon such factors as the
number of holders and/or the aggregate market value of the publicly held Shares
at such time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act and other factors.
9
<PAGE> 12
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, it is possible that,
following the Offer, the Shares would no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application by the Company to the Commission
if the Shares are not listed on a national securities exchange and there are
fewer than 300 record holders of the Shares. The termination of registration of
the Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to holders of Shares and to the
Commission and would make certain provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b), the requirement of
furnishing a proxy statement in connection with shareholders' meetings pursuant
to Section 14(a), and the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions, no longer applicable to the Shares. In
addition, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as
amended (the "Securities Act").
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is a Delaware corporation with its principal executive offices
located at 100 Sea Horse Drive, Waukegan, Illinois 60085.
According to the Company's Annual Report on Form 10-K for the year ended
September 30, 1996 (the "Company 10-K"), the Company is engaged principally in
the manufacturing and marketing of marine engines, boats and marine parts and
accessories principally for recreational use. Most of the Company's principal
products are sold throughout the world.
The following selected consolidated financial data of the Company and its
subsidiaries for the three fiscal years ended September 30, 1996 have been taken
or derived from the audited financial statements contained in the Company 10-K
and the consolidated financial data for the six months ended March 31, 1997 have
been taken or derived from the unaudited financial statements contained in the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997
(the "Company 10-Q"). See Section 18. More comprehensive financial information
for such period is included in the Company 10-K and the Company 10-Q, and the
financial data set forth below is qualified in its entirety by reference to such
reports, including the financial statements contained therein. Such reports may
be examined and copies may be obtained from the offices of the Commission in the
manner set forth below.
10
<PAGE> 13
OUTBOARD MARINE CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED FISCAL YEAR ENDED
MARCH 31, SEPTEMBER 30,
-------------------- --------------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales.................................. $ 434.1 $ 517.6 $1,121.5 $1,229.2 $1,078.4
Net earnings (Loss)........................ (21.6) (11.3) (7.3) 51.4 48.5
Primary net earnings (loss) per Share...... (1.07) (0.56) (.36) 2.56 2.42
Fully diluted earnings (loss) per Share.... (1.07) (0.56) (.36) 2.33 2.22
Dividends declared per Share............... .20 .20 .40 .40 .40
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 31, AT SEPTEMBER 30,
------------ -------------------
1997 1996 1995
---- ---- ----
(UNAUDITED)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Total assets............................................. $835.4 $873.7 $907.0
Total current assets..................................... 442.8 467.5 502.2
Total current liabilities................................ 245.6 253.3 248.8
Long-term debt........................................... 172.6 177.6 177.4
Total shareholders' investment........................... 210.2 237.6 255.8
</TABLE>
Prior to entering into the Merger Agreement, the Offeror conducted a due
diligence review of the Company and in connection with such review received
certain non-public information from the Company pursuant to the terms of a
Confidentiality Agreement dated April 14, 1997. The non-public information
included, among other things, the Company's 1997 financial model (the "Financial
Model") for the fiscal years ending September 30, 1997, 1998, 1999, 2000 and
2001. The Financial Model was prepared by the Company's management based on
numerous assumptions, including among others, the current business base and
prospects of the Company's operations, operating costs, wage and benefit
increases and the general business climate for the Company's operations. Set
forth below is a summary of certain income statement data derived from the
Financial Model. None of the assumptions set forth in the Financial Model give
effect to the Offer, the Merger or the financing thereof or the potential
combined operations of DDC and the Company after consummation of such
transactions.
THE COMPANY HAS ADVISED THE OFFEROR THAT IT DOES NOT AS A MATTER OF COURSE
DISCLOSE PROJECTIONS AS TO FUTURE REVENUES OR EARNINGS, AND THAT THE PROJECTIONS
DISCUSSED IN THE FINANCIAL MODEL WERE NOT INTENDED TO FORECAST LIKELY OR
ANTICIPATED OPERATING RESULTS, BUT INSTEAD WERE MERELY ONE SCENARIO INTENDED TO
REPRESENT INTERNAL GOALS AND ILLUSTRATE CAPITAL NEEDS AND OTHER ELEMENTS
NECESSARY BASED ON A FINANCIAL MODEL TO ACHIEVE SUCH GOALS. THE PROJECTIONS
DISCUSSED IN THE FINANCIAL MODEL WERE NOT PREPARED WITH A VIEW TO PUBLIC
DISCLOSURE OR COMPLIANCE WITH PUBLISHED GUIDELINES OF THE COMMISSION OR THE
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FOR PROJECTIONS. THE
FORECASTED INFORMATION IS INCLUDED HEREIN SOLELY BECAUSE SUCH INFORMATION WAS
FURNISHED TO THE OFFEROR OR ITS FINANCIAL ADVISORS. ACCORDINGLY, THE INCLUSION
OF THE PROJECTIONS IN THIS OFFER SHOULD NOT BE REGARDED AS AN INDICATION THAT
THE OFFEROR, THE COMPANY OR THEIR RESPECTIVE FINANCIAL ADVISORS OR THEIR
RESPECTIVE OFFICERS AND DIRECTORS CONSIDER SUCH INFORMATION TO BE ACCURATE OR
RELIABLE, AND NONE OF SUCH PERSONS ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY
THEREFOR. THE FINANCIAL MODEL WAS PREPARED FOR INTERNAL USE AND IS SUBJECTIVE IN
MANY RESPECTS AND THUS SUSCEPTIBLE TO VARIOUS INTERPRETATIONS AND PERIODIC
REVISION BASED UPON ACTUAL EXPERIENCE AND BUSINESS DEVELOPMENT. IN ADDITION,
BECAUSE THE ESTIMATES AND ASSUMPTIONS UNDERLYING THE FINANCIAL MODEL ARE
INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES AND
CONTINGENCIES, WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND ARE
BEYOND THE CONTROL OF THE COMPANY AND/OR THE OFFEROR, THERE CAN BE NO ASSURANCE
THAT THE FINANCIAL MODEL WILL BE REALIZED. ACCORDINGLY, IT IS EXPECTED THAT
THERE WILL BE DIFFERENCES BETWEEN ACTUAL AND PROJECTED RESULTS, AND ACTUAL
RESULTS MAY BE MATERIALLY HIGHER OR LOWER THAN THOSE SET FORTH BELOW.
11
<PAGE> 14
OUTBOARD MARINE CORPORATION
SUMMARY 1997 BUSINESS PLAN INCOME STATEMENT
COMBINED OPERATIONS
(IN MILLIONS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total sales.................................. $1,001.6 $1,105.9 $1,157.6 $1,212.0 $1,269.2
Earnings (loss) before taxes................. (16.7) 17.6 28.6 38.6 51.2
Net earnings (loss).......................... (19.7) 14.7 25.6 34.6 45.1
</TABLE>
Except as otherwise indicated herein, the information concerning the
Company contained herein has been taken from or is based upon reports and other
documents on file with the Commission or otherwise publicly available. Although
the Offeror does not have any knowledge that would indicate that any statements
contained herein based upon such reports and documents are untrue, the Offeror
does not take any responsibility for the accuracy or completeness of the
information contained in such reports and other documents or for any failure by
the Company to disclose events that may have occurred and may affect the
significance or accuracy of any such information but that are unknown to the
Offeror.
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files periodic reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. The Company is required to disclose in such proxy
statements certain information, as of particular dates, concerning the Company's
directors and officers, their remuneration, stock options granted to them, the
principal holders of the Company's securities and any material interests of such
persons in transactions with the Company. Such reports, proxy statements and
other information may be inspected at the public reference facilities maintained
by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549 and are also available for inspection and copying at the regional offices
of the Commission in New York (Seven World Trade Center, Suite 1300, New York,
New York 10048) and Chicago (Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511). Copies of such material can also be
obtained from the Public Reference Section of the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such
material may also be accessed electronically by means of the Commission's home
page on the World Wide Web (www.sec.gov). In addition, information about the
Company can be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York, 10005.
9. CERTAIN INFORMATION CONCERNING THE OFFEROR
DDC owns 100% of the issued and outstanding capital stock of the Offeror.
Approximately 46% of the outstanding capital stock of DDC is held by DDC
Holdings, Inc., a Delaware corporation ("DDC Holdings"), which is a wholly-owned
subsidiary of Penske Corporation, a Delaware corporation. Penske Corporation is
controlled by Roger S. Penske.
The principal executive offices of DDC and the Offeror are located at 13400
Outer Drive, West, Detroit, Michigan 48239-4001. The principal executive offices
of DDC Holdings are located at 1105 N. Market Street, Suite 1300, Wilmington,
Delaware 19801. The business address of Roger S. Penske is 13400 Outer Drive
West, Detroit, Michigan 48239-4001. The name, business address, principal
occupation or employment, five year employment history and citizenship of each
director and executive officer of DDC and the Offeror are set forth in Annex I
hereto.
DDC designs, manufactures, markets, services and provides aftermarket and
remanufactured products for a full range of high performance diesel and
alternative fuel engines from ten to 10,000 horsepower and provides financing
through Detroit Diesel Capital Corporation. DDC serves the on-highway truck,
coach and bus, automotive, construction, mining and industrial, power
generation, marine and military markets through a worldwide network of more than
2,500 authorized distributors and dealers. Additionally, DDC sells its engines
directly to original equipment manufacturers ("OEMs") as well as to governmental
entities. A portion of
12
<PAGE> 15
DDC's products are exported in equipment sold by its OEM customers to end-users.
In 1996, approximately 66% of DDC's net revenues were derived from sales made
directly to U.S.-based customers, with the balance sold to international
accounts. A portion of U.S. sales were exported as part of equipment built by
U.S. customers.
DDC's world headquarters is located in Detroit, Michigan. DDC operates
diesel engine manufacturing plants in Redford, Michigan and in Cento, Italy, as
well as an engine assembly facility in Emporia, Kansas. Additionally, DDC
operates a worldwide Parts Distribution Center in Canton, Ohio, complemented by
service parts warehouses located in the Netherlands and in Singapore.
The following selected consolidated financial data of DDC and its
subsidiaries has been taken or derived from the audited financial statements
contained in DDC's Annual Report on Form 10-K for the fiscal year ended December
31, 1996 or Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1997. DDC is subject to the informational requirements of the Exchange Act and
in accordance therewith files periodic reports and other information with the
Commission relating to its business, financial condition and other matters. DDC
is subject to the informational requirements of the Exchange Act and in
accordance therewith files periodic reports and other information with the
Commission relating to its business, financial condition and other matters. More
comprehensive financial information is included in such forms and the other
documents filed by DDC with the Commission, and the financial data set forth
below is qualified in its entirety by reference to such reports and other
documents including the financial statements contained therein. Such reports and
other documents may be examined and copies may be obtained from the offices of
the Commission in the same manner as set forth with respect to the Company in
Section 8.
DETROIT DIESEL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------- ------------------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net revenues............................... $519.7 $478.8 $1,962.9 $2,087.1 $1,662.5
Gross profit............................... 122.2 112.2 449.1 486.3 388.8
Income before income taxes and minority
interests............................... 10.2 13.2 1.4 60.8 59.6
Net income................................. 6.4 8.3 3.8(1) 40.1(2) 36.1
Primary net income per share............... $ .26 $ .34 $ .16(1) $ 1.62(2) $ 1.52
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
AT MARCH 31, -------------------
1997 1996 1995
------------ ---- ----
(UNAUDITED)
<S> <C> <C> <C>
BALANCE SHEET DATA
Total assets.............................................. $1,155.3 $1,112.6 $1,045.1
Long-term debt and capital leases......................... 128.7 92.6 58.5
Total debt................................................ 148.5 119.0 90.1
Total liabilities......................................... 830.6 791.4 734.7
Total stockholders' equity................................ 324.7 321.2 310.4
</TABLE>
- -------------------------
(1) Includes a $24.9 million, net of tax, special charge for product coverage
and to reduce the value of an investment in Mexico. Excluding this charge
net income would have been $28.7 million, or $1.17 per share.
(2) Includes a $6.7 million, net of tax, restructuring charge to cover costs of
a reduction in salaried personnel. Excluding this charge, net income would
have been $46.8 million, or $1.90 per share.
DDC Common Shares are traded on the NYSE under the symbol "DDC." On July
14, 1997, the last full day of trading prior to the commencement of the Offer,
the closing price per share of DDC Common Shares
13
<PAGE> 16
as reported on the NYSE was $25.25. Stockholders are urged to obtain current
market quotations for DDC Common Shares.
10. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by the Offeror to consummate the Offer
and the Merger is expected to be approximately $225 million, which amount
excludes related fees and expenses. The Offeror plans to obtain the necessary
funds under the Credit Facilities (as defined below).
DDC has received a written financing commitment (the "Commitment Letter")
from Chase Securities Inc. ("CSI") and The Chase Manhattan Bank ("Chase Bank")
to provide a senior revolving credit facility in the aggregate amount of up to
$300 million and a senior term loan facility in the aggregate amount of up to
$500 million (the "Credit Facilities"). The purposes of the Credit Facilities is
to finance the Offer and the Merger, and to pay related fees and expenses, and,
with respect to the senior revolving credit facility, for general corporate
purposes of DDC and its subsidiaries in the ordinary course of business.
Although Chase Bank has committed to provide the entire Credit Facilities, CSI
intends to syndicate the Credit Facilities to a group of financial institutions
(the "Lenders") prior to the initial funding under the Credit Facilities.
The terms of the definitive agreement providing for the Credit Facilities
(the "Loan Agreement") have not been finalized. The following is a summary of
the anticipated principal terms of the Credit Facilities based upon the
Commitment Letter. This summary is subject to finalizing the Loan Agreement and
is qualified in its entirety by reference to the Commitment Letter, which is
filed as an exhibit to the Schedule 14D-1 of which this Offer to Purchase is an
exhibit.
The Credit Facilities are anticipated to mature in six years. The senior
term loan facility will be repayable in consecutive semi-annual installments,
commencing on the first anniversary of the closing date with respect to the
Credit Facilities. The senior revolving credit loan will have no scheduled
amortization. The Credit Facilities will be unsecured unless senior subordinated
notes in an aggregate amount of at least $125 million have not been issued on or
prior to the closing date with respect to the Credit Facilities, in which case
the Credit Facilities will be secured by a perfected first priority security
interest in all of the capital stock of the Company. This security interest will
be released if DDC achieves certain financial ratios on the last day of any
quarter ending on or after December 31, 1997.
Borrowings under the Credit Facilities will bear interest at a floating
rate based upon, at DDC's option, (1) the higher of Chase Bank's prime rate, the
secondary market rate for three-month certificates of deposit plus 1%, or the
Federal funds rate plus 0.5% per annum, in each case, plus up to 0.25%,
depending upon certain financial ratios applicable to DDC, or (2) the Eurodollar
Rate, plus between 0.625% and 1.500%, depending upon certain financial ratios
applicable to DDC. In addition, DDC will have a competitive advance option under
the Credit Facilities that will allow it to request uncommitted advances from
the Lenders at competitive rates on an auction basis. A facility fee will accrue
on the total Credit Facilities regardless of usage at a rate of from 0.175% to
0.375% per annum, depending upon certain financial ratios applicable to DDC. DDC
will also pay Chase Bank underwriting and administration fees, reimburse certain
expenses and provide certain indemnities, all of which DDC believes to be
customary for commitments of this type.
The Loan Agreement will contain conditions precedent, representations and
warranties, covenants (including financial covenants), events of default and
other provisions customary for such financings.
Chase Bank's commitment to provide the Credit Facilities is conditioned on,
among other things: (1) there not occurring or becoming known to CSI and Chase
Bank any material adverse condition or material adverse change in or affecting
the business, operations, property, condition (business or otherwise) or
prospects (a) of DDC and its subsidiaries, taken as a whole, or (b) the Company
and its subsidiaries, taken as a whole, that would permit DDC to terminate the
Merger Agreement; (2) CSI and Chase Bank not becoming aware after the date of
the Commitment Letter of any information or other matter affecting DDC or the
Company or the transactions contemplated by the Commitment Letter which is
inconsistent in a material and adverse manner with any such information or other
matter disclosed to CSI and Chase Bank before the date of the Commitment Letter;
(3) there not having occurred a material disruption of or material adverse
change in
14
<PAGE> 17
financial, banking or capital market conditions that, in the judgment of CSI and
Chase Securities, could materially impair the syndication of the Credit
Facilities, and (4) the negotiation, execution and delivery on or before October
31, 1997 of definitive documentation with respect to the Credit Facilities.
It is anticipated that the indebtedness incurred through borrowing under
the Credit Facilities will be repaid from funds generated internally by DDC and
its subsidiaries, including the Company and its subsidiaries, and from other
sources that may include the proceeds of the private or public sale of debt or
equity securities. No final decisions have been made concerning the method DDC
will employ to repay such indebtedness. Such decisions when made will be based
upon DDC's review from time to time of the advisability of particular actions,
as well as on prevailing interest rates and financial and other economic
conditions.
The purchase of Shares pursuant to the Offer may, without the requisite
consents, result in an event of default under certain loan agreements to which
affiliates of the Offeror are parties. While the Offeror expects to obtain the
requisite consents prior to the Offer being consummated, the Offeror's
obligation to accept Shares tendered pursuant to the Offer is not conditioned on
the obtaining of these consents. In addition, the purchase of Shares under the
Offer may result in a default under certain credit facilities of the Company. It
is the Offeror's present intention, upon obtaining control of the Company, to
cause the Company to replace these facilities.
11. BACKGROUND OF THE OFFER; PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH
THE COMPANY.
In April 1997, Mr. John C. Jinishian of Salomon Brothers Inc ("Salomon
Brothers") sent Mr. Timothy D. Leuliette, Vice Chairman and Chief Operating
Officer of Penske Corporation and Vice Chairman of DDC, a letter to advise
Penske Corporation that the Company was exploring strategic alternatives,
including a sale of the Company, and to invite Penske Corporation to make an
offer. DDC believes that Penske Corporation was one of several companies
contacted by Salomon Brothers about this opportunity. On April 14, 1997, Penske
Corporation and the Company entered into a Confidentiality Agreement that
related to due diligence review by Penske Corporation and its affiliates of the
Company, and, over the course of the following eight weeks, representatives of
Penske Corporation and DDC conducted such due diligence review.
On June 10, 1997, Mr. Jinishian sent to Mr. Leuliette an invitation to
submit a written offer for the acquisition of the Company. Messrs. Leuliette,
Penske and other DDC executive officers presented the OMC acquisition
opportunity to the DDC Board of Directors on June 23, 1997. The DDC Board of
Directors unanimously approved the offer and merger on the terms and conditions
presented to the DDC Board.
On June 25, 1997, Mr. Leuliette submitted to Mr. Jinishian DDC's offer,
which provided that an affiliate of DDC would acquire by tender offer 13,842,619
Shares for $16.00 per Share in cash, followed by a merger in which the remaining
stockholders would receive a combination of DDC Common Shares and cash.
The next day, Mr. Jinishian contacted Mr. Leuliette to clarify and
negotiate the terms of the offer relating to the merger consideration payable in
the Merger. Mr. Leuliette responded with a letter, together with, on June 27,
1997, amended terms. On June 27, 1997, Mr. Jinishian again contacted Mr.
Leuliette to discuss the consideration payable in connection with the
transactions, together with the fees payable in the event of a termination of
the proposed DDC transaction coupled with the completion of a transaction
including OMC and a third party. Mr. Leuliette responded the following day to
further negotiate the terms of the merger consideration and the amount of the
termination fee, and on June 30, 1997, Mr. Leuliette and Mr. Jinishian continued
such negotiations. On July 1, 1997, the Company entered into a Confidentially
Agreement that related to the Company's due diligence review of DDC and
representatives of the Company conducted such due diligence review. Thereafter,
the parties negotiated the final terms of the Merger Agreement and the other
definitive documents for the transaction.
On July 8, 1997, the Company's Board of Directors approved the Merger
Agreement and the parties executed the definitive documentation related thereto
after the close of business that day.
15
<PAGE> 18
12. PURPOSE OF THE OFFER; THE MERGER; PLANS FOR THE COMPANY.
The purpose of the Offer is for DDC, through the Offeror, to acquire
control of the Company through the Offeror's purchase of 13,842,619 Shares, as a
first step in consummating a business combination between DDC and the Company.
The purpose of the Merger is for the Offeror to acquire all Shares not purchased
pursuant to the Offer and thereby accomplish the business combination
transaction.
Under the Delaware General Corporate Law (the "DGCL") and the Company's
Certificate of Incorporation, the approval of the Board of Directors of the
Company, and the affirmative vote of the holders of two-thirds of the
outstanding Shares are required to approve and adopt the Merger Agreement and
the transactions contemplated thereby, including the Merger. All of the members
of the Board of Directors of the Company (with one abstention) approved the
Offer, the Merger and the Merger Agreement and the transactions contemplated
thereby, and the only remaining required corporate action of the Company is the
approval and adoption of the Merger Agreement and the transactions contemplated
thereby by the affirmative vote of the holders of two-thirds of the Shares. If
the Offeror acquires the 13,842,619 Shares subject to the Offer, it will control
over two-thirds of the Shares issued and outstanding as of the date of the
Merger Agreement and will have sufficient voting power to approve the Merger
without the affirmative vote of any other stockholder. However, the Company
currently has options outstanding to purchase approximately 1,430,000 Shares of
which approximately 250,000 are exercisable at $16.00 or less per Share. In
addition, there are existing convertible debt instruments of the Company
convertible into approximately 3,360,000 Shares, at a conversion price of $22.25
per Share. If at the record date relating to the stockholder meeting on the
Merger, more than 20,763,928 Shares are outstanding, the Offeror will not have
sufficient voting power to approve the Merger without the affirmative vote of
other holders of Shares in an amount, which together with the Shares held by the
Offeror, will constitute at least two-thirds of the then issued and outstanding
Shares.
In the Merger Agreement, the Company has agreed to take all action
necessary to convene a meeting of its stockholders as promptly as practicable
after the consummation of the Offer for the purpose of considering and taking
action on the Merger Agreement and the transactions contemplated thereby, if
such action is required by the DGCL. The Offeror has agreed that all Shares
owned by it and its subsidiaries will be voted in favor of the Merger Agreement
and the transactions contemplated thereby.
Board Representation. Upon purchase of Shares pursuant to consummation of
the Offer, the Merger Agreement provides that the Offeror will be entitled to
designate representatives to serve on the Board in proportion to the Offeror's
ownership of Shares following such purchase. See Section 13. The Offeror
currently intends to designate two-thirds of the directors of the Company
following consummation of the Offer. It is currently anticipated that the
Offeror will designate the persons it would be entitled to appoint as directors
of the Company from the executive officers and directors of the Offeror listed
in Annex I. The Offeror expects that such representation may permit the Offeror
to exert substantial influence over the Company's conduct of its business and
operations. Notwithstanding the foregoing, the Company, DDC and the Offeror
shall use their respective reasonable efforts to ensure that at least three
members of the Company's Board of Directors shall at all times prior to the
Effective Time be current members of its Board of Directors.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company will
have certain rights under the DGCL to dissent and demand appraisal of, and to
receive payment in cash of the fair value of, their Shares. Such rights to
dissent, if the statutory procedures are complied with, could lead to a judicial
determination of the fair value of the Shares, as of the day prior to the date
on which the stockholders' vote was taken approving the merger or similar
business combination (excluding any element of value arising from the
accomplishment or expectation of the Merger), required to be paid in cash to
such dissenting stockholders for their Shares. In addition, such dissenting
stockholders would be entitled to receive payment of a fair rate of interest
from the date of consummation of the Merger on the amount determined to be the
fair value of their Shares. In determining the fair value of the Shares, a
Delaware court would be required to take into account all relevant factors.
Accordingly, such determination could be based upon considerations other than,
or in addition to, the market value of the Shares, including, among other
things, asset values and earning capacity. In Weinberger v. UOP, Inc., the
Delaware Supreme Court stated, among other things, that "proof of value by any
techniques or
16
<PAGE> 19
methods which are generally considered acceptable in the financial community and
otherwise admissible in court" should be considered in an appraisal proceeding.
Therefore, the value so determined in any appraisal proceeding could be
different from the Offer Price or the Merger Consideration.
In addition, several decisions by Delaware courts have held that, in
certain circumstances, a controlling stockholder of a company involved in a
merger has a fiduciary duty to other stockholders which requires that the merger
be fair to such other stockholders. In determining whether a merger is fair to
minority stockholders, Delaware courts have considered, among other things, the
type and amount of consideration to be received by the stockholders and whether
there was fair dealing among the parties. The Delaware Supreme Court stated in
Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that although the remedy
ordinarily available to minority stockholders in a cash-out merger is the right
to appraisal described above, a damages remedy or injunctive relief may be
available if a merger is found to be the product of procedural unfairness,
including fraud, misrepresentation or other misconduct.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger or another business
combination following the purchase of Shares pursuant to the Offer or otherwise
in which the Offeror seeks to acquire the remaining Shares not held by it. The
Offeror believes, however, that if the Merger is consummated within one year of
its purchase of Shares pursuant to the Offer, Rule 13e-3 will not be applicable
to the Merger. Rule 13e-3 requires, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such transaction, be filed with the Commission and disclosed to
stockholders prior to consummation of the transaction.
Plans for the Company. Except as otherwise set forth in this Offer to
Purchase, it is expected that, initially following the Merger, the business and
operations of the Company will be continued by the Surviving Corporation
substantially as they are currently being conducted. The Company or the
Surviving Corporation may be required to repurchase certain of the Company's
7.00% convertible subordinated debentures pursuant to the related Indenture in
connection with the purchase of shares by the Offeror pursuant to the Offer, and
the Surviving Corporation may redeem any remaining debentures, although it would
not be required to do so. Also, the Merger Agreement provides that prior to the
Effective Time (as defined below), the Company will not (i) declare, set aside
or pay any dividend (whether in cash, stock or property) or make any other
distribution or payment with respect to any shares of its capital stock or (ii)
directly or indirectly redeem, purchase or otherwise acquire any shares of its
capital stock or make any commitment for any such action.
DDC will continue to evaluate the business and operations of the Company
during the pendency of the Offer and after the consummation of the Offer and the
Merger, and will take such actions as it deems appropriate under the
circumstances then existing. DDC intends to seek additional information about
the Company during this period. Thereafter, DDC intends to review such
information as part of a comprehensive review of the Company's business,
operations, capitalization and management with a view to optimizing exploitation
of the Company's potential in conjunction with DDC's business. It is expected
that the business and operations of the Company would form an important part of
DDC's future business plans.
Except as indicated in this Offer to Purchase, neither the Offeror nor DDC
has any present plans or proposals which relate to or would result in an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries, a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries or any material change in the Company's capitalization or dividend
policy or any other material changes in the Company's corporate structure or
business, or the composition of the Company's Board of Directors or management.
13. THE MERGER AGREEMENT.
The following is a summary of certain provisions of the Merger Agreement, a
copy of which has been filed as an exhibit to the Schedule 14D-1 filed by the
Offeror and the Partnership with the Commission and which is available in the
manner set forth in Section 18. Such summary is qualified in its entirety by
reference to the text of the Merger Agreement.
17
<PAGE> 20
The Merger Agreement provides for the commencement of the Offer not later
than five business days after the first public announcement of the execution of
the Merger Agreement, provided that certain of the conditions to the Offer have
not occurred. Pursuant to the terms and conditions of the Merger Agreement, DDC,
the Offeror and the Company are required to use all reasonable efforts to take
all action as may be necessary or appropriate in order to effectuate the Offer
and the Merger as promptly as possible and to carry out the transactions
provided for or contemplated by the Merger Agreement.
The Merger Agreement provides that, if all of the conditions to the Merger
shall have been fulfilled or waived and the Merger Agreement shall not have been
terminated, the Offeror will be merged with and into the Company, with the
Company continuing as the Surviving Corporation in the Merger under the
corporate name it possesses immediately prior to the effective time of the
Merger (the "Effective Time").
In the Merger Agreement, the Company, through its Board of Directors, will
call a meeting of the stockholders for the purpose of voting upon the Merger,
hold such meeting as soon as practicable following the purchase of Shares
pursuant to the Offer and the effectiveness of the registration statement for
the DDC Common Shares to be issued in connection with the Merger, and, subject
to the fiduciary duties of the Board of Directors under applicable law as
advised by outside counsel of the Company, recommend to its stockholders the
approval of the Merger. Such recommendation shall not be withdrawn or adversely
modified except by resolution of the Board of Directors adopted in the exercise
of applicable fiduciary duties. The Company shall use reasonable efforts to
solicit from stockholders of the Company proxies in favor of the Merger and take
all other actions reasonably requested by DDC to secure the vote of stockholders
requested by the DGCL to effect the Merger. At any such meeting, all of the
Shares then owned by the Offeror and by any of its subsidiaries will be voted in
favor of the Merger and the Merger Agreement.
At the Effective Time, each Share issued and outstanding immediately prior
thereto (other than Shares owned by DDC or the Offeror or held by the Company,
all of which shall be cancelled, and Dissenting Shares) shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into the right to receive the Merger Consideration. Each share of common stock
of the Offeror issued and outstanding immediately prior to the Effective Time
shall, at the Effective Time, by virtue of the Merger and without any action on
the part of the Offeror, the Company or the holders of Shares, be converted into
and shall thereafter evidence one validly issued and outstanding share of common
stock of the Surviving Corporation. In the Merger Agreement, the Company has
agreed to use reasonable efforts to ensure that all outstanding stock options
(individually, an "Option" and, collectively, the "Options"), performance share
awards (individually, a "Performance Share" and, collectively, the "Performance
Shares") and phantom restricted stock awards (individually, a "Phantom
Restricted Stock Award" and, collectively, the "Phantom Restricted Stock
Awards") heretofore granted under any plan, program or arrangement of the
Company (collectively, the "Incentive Equity Plans") that are outstanding
immediately prior to the Effective Time shall be acquired by the Company at the
Effective Time for cash payments by the Company as follows:
(i) With respect to Options, an amount equal to (A) the excess, if any, of
(1) (I) for all option holders who are not officers or directors of
the Company for purposes of Section 16 of the Exchange Act, the cash
value of 33% of the per share Merger Consideration payable with
respect to the Common Stock plus $10.72, and (II) for all option
holders who are officers or directors of the Company for purposes of
Section 16 of the Exchange Act, the greater of (x) the cash value of
33% of the per share Merger Consideration payable with respect to the
Common Stock plus $10.72 or (y) the highest closing price of the
Shares on the NYSE during the 180-day period preceding the date on
which the purchases of Shares pursuant to the Offer is consummated
over (2) the exercise price per Share subject to the Option,
multiplied by (B) the number of Shares for which the Option shall not
have theretofore been exercised;
(ii) With respect to Performance Shares, an amount equal to the product of
(A) (1) the number of Performance Shares covered by the award
multiplied by (2) a fraction, the numerator of which is the number of
days that shall have then elapsed in the applicable three-year
performance cycle and the denominator of which is 1,095, and (B) the
"Payment Value" (as defined in the Company's
18
<PAGE> 21
1994 Long-Term Incentive Plan or Executive Equity Incentive Plan, as
the case may be) specified in the agreement evidencing the subject
Performance Share award; and
(iii) With respect to Phantom Restricted Stock Awards, an amount equal to
(A) (I) the number of phantom shares of restricted stock covered by
the award multiplied by (II) the cash value of 33% of the per share
Merger Consideration payable with respect to the Shares plus $10.72
plus (B) the cash value of dividend equivalents credited to the
phantom shares of restricted stock covered by the award.
Either prior to or as soon as practicable following the consummation of the
Offer, the Board of Directors (or, if appropriate, the Compensation Committee of
the Board of Directors) shall adopt such resolutions or take other such actions
as are required to cause any Options that are not exercisable as of the date
hereof to become exercisable, to cause any Performance Share awards (prorated in
accordance with clause (ii)(A) above that are not payable as of the date of the
Merger Agreement to become payable, and to cause any Phantom Restricted Stock
Awards (and dividend equivalents credited to the shares of phantom restricted
stock covered thereby) that are not payable as of the date of the Merger
Agreement to become payable, at the Effective Time.
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction or waiver, where permissible, prior to the Effective
Time, of the following conditions:
(i) If approval of the Merger Agreement and the Merger by the Company's
stockholders is required by applicable law, the Merger Agreement and
the Merger shall have been approved by the requisite vote of such
holders.
(ii) There shall not have been issued any injunction or issued or enacted
any law which prohibits or has the effect of prohibiting the
consummation of the Merger or makes such consummation illegal;
provided, however, that each of the parties shall have used its best
efforts to prevent the entry of any injunction or other order and to
appeal as promptly as possible any injunction or other order that may
be entered.
In the Merger Agreement, the Company has agreed that on the date the
Offeror's offer documents are filed with the Commission, it will file with the
Commission and mail to its stockholders, a Solicitation/Recommendation Statement
on Schedule 14D-9 (the "Schedule 14D-9") containing the recommendation of the
Board of Directors that the Company's stockholders accept the Offer and approve
the Merger and the Merger Agreement; provided, that such recommendation may be
withdrawn, amended or modified to the extent the Board of Directors determines
to do so in the exercise of its fiduciary duties, based upon the written advice
of counsel.
The Merger Agreement provides that upon the purchase of Shares pursuant to
the consummation of the Offer, DDC shall be entitled to designate such number of
directors, rounded up to the next whole number, as will give DDC representation
on the Board of Directors equal to the product of (1) the number of directors on
the Board of Directors and (2) the percentage that the number of Shares
purchased by the Offeror or DDC, or any affiliate thereof bears to the aggregate
number of Shares outstanding. The Company has agreed, upon the request of DDC,
promptly to increase the size of the Board of Directors or exercise its
reasonable efforts to secure the resignations of such number of directors as is
necessary to enable DDC's designees to be elected to the Board of Directors and
to cause DDC's designees to be so elected. The Company has agreed to take all
reasonably appropriate action necessary to effect any such election and shall
include in the Schedule 14D-9 the information required by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. Notwithstanding the
foregoing, the parties shall use their respective reasonable efforts to ensure
that at least three of the members of the Board of Directors not designated by
DDC shall at all times prior to the Effective Time continue in office.
In the Merger Agreement, the Company has made customary representations and
warranties to the Offeror, including, but not limited to, representations and
warranties relating to the Company's organization and qualification,
capitalization, its authority to enter into the Merger Agreement and carry out
the related transactions, Commission filings (including financial statements),
the documents supplied by the Company
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relating to the Offer, required consents and approvals, compliance with
applicable laws, employee benefit plans, litigation, material liabilities of the
Company and its subsidiaries, environmental matters relating to the Company and
its subsidiaries, labor matters, insurance, taxes, intellectual property and the
absence of certain material adverse changes or events since September 30, 1996.
DDC and the Offeror have also made customary representations and warranties
to the Company, including, but not limited to, representations and warranties
relating to the Offeror's organization and qualification, its authority to enter
into the Merger Agreement, required consents and approvals, documents related to
the Offer, terms of the Offer, the availability of sufficient funds to
consummate the Offer, compliance with applicable laws, capitalization,
Commission filings (including financial statements), the absence of certain
material adverse changes or events since December 31, 1996, taxes, litigation,
employee benefit plans, material liabilities of DDC and its subsidiaries, and
environmental matters relating to DDC and its subsidiaries.
Pursuant to the Merger Agreement, unless DDC has consented in writing
thereto, the Company shall, and shall cause each of its Subsidiaries to, (1)
conduct its operations according to its usual, regular and ordinary course of
business consistent with past practice; (2) use its reasonable efforts to
preserve intact its business organizations and goodwill, maintain in effect
existing qualifications, licenses, permits, approvals and other authorizations
(other than those the lapse of which would not have, individually or in the
aggregate, a material adverse effect), keep available the services of its
officers and employees and maintain satisfactory relationships with those
persons having business relationships with them; (3) promptly upon the discovery
thereof notify DDC of the existence of any breach of any representation or
warranty of the Company contained in the Merger Agreement or the occurrence of
any event that would cause any representation or warranty of the Company
contained in the Merger Agreement no longer to be true and correct; and (4)
promptly deliver to the DDC true and correct copies of any report, statement or
schedule filed with the Commission subsequent to the date of the Merger
Agreement. In addition, from the date of the Merger Agreement to the Effective
Time, unless DDC has consented in writing thereto, the Company shall not, and
shall not permit any of its Subsidiaries to, (1) amend its Certificate of
Incorporation or Bylaws or comparable governing instruments or the Rights
Agreement dated as of April 24, 1996, as amended by Amendment No. 1 dated July
8, 1997, between the Company and First Chicago Trust Company of New York; (2)
authorize for issuance, issue, sell, pledge or register for issuance or sale any
shares of its capital stock or other ownership interest in the Company (other
than issuances of Shares in respect of any exercise of Options outstanding on
the date of the Merger Agreement) or any of the Subsidiaries, or any securities
convertible into or exchangeable for any such shares or ownership interest, or
any rights (other than rights related to Shares issued upon the exercise of
Options, which entitle the holders of Shares to purchase shares of Series A
Junior Participating Preferred Stock upon the occurrence of certain events),
warrants or options to acquire or with respect to any such shares of capital
stock, ownership interest, or convertible or exchangeable securities; or
accelerate any right to convert or exchange or acquire any securities of the
Company (other than Options, Performance Shares and Phantom Restricted Stock
Awards pursuant to the Merger Agreement) or any of its Subsidiaries for any such
shares or ownership interest; (3) effect any stock split or conversion of any of
its capital stock or otherwise change its capitalization as it exists on the
date hereof, other than as set forth in the Merger Agreement; (4) except as
contemplated by the Merger Agreement, directly or indirectly redeem, purchase or
otherwise acquire any shares of its capital stock or capital stock of any of its
subsidiaries, or declare, pay or set aside any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, other than dividends or distributions to the Company or a
subsidiary wholly-owned by the Company; (5) sell, lease, mortgage, pledge or
otherwise dispose of or encumber any of its assets (including capital stock of
subsidiaries), except in the ordinary course of business consistent with past
practice; (6) acquire by merger, purchase or any other manner, any material
business or entity or otherwise acquire any assets that are material to the
Company and its subsidiaries taken as a whole, except for purchases of
inventory, supplies or capital equipment in the ordinary course of business
consistent with past practice; (7) incur or assume any long-term or short-term
debt in excess of $10 million, except for working capital purposes in the
ordinary course of business under the Company's existing credit facilities; (8)
assume, guarantee or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except wholly
owned subsidiaries of the Company; (9) make or forgive
20
<PAGE> 23
any loans, advances or capital contributions to, or investments in, any other
person; (10) waive or amend any term or condition of any confidentiality or
"standstill" agreement to which the Company is a party; (11) enter into any new
employment, severance, consulting or salary continuation agreements with any
newly hired employees other than in the ordinary course of business consistent
with past practice or enter into any of the foregoing with any existing
officers, directors or employees or grant any increases in compensation or
benefits to employees, other than increases in the ordinary course of business
consistent with past practice, (12) enter into, adopt, amend in any material
respect or terminate any employee benefit plan or arrangement (other than the
termination of the Company's non-employee director equity compensation plan and
the termination of the Company's employee stock purchase plan); (13) enter into,
amend in any material respect or terminate any employment agreement or severance
agreement entered into between the Company and its executive officers or waive
any material right of the Company thereunder; (14) make any material changes in
the type or amount of their insurance coverage or permit any material insurance
policy naming the Company or any subsidiary as a beneficiary or a loss payee to
be cancelled or terminated other than in the ordinary course of business
consistent with past practice; (15) make any tax election or, except as may be
required by law or generally acceptable accounting principles, change any
material accounting principles or practices used by the Company or its
subsidiaries; (16) take, or fail to take, any action to cause the Shares to be
delisted from the NYSE prior to the completion of the Offer or the Merger; (17)
settle or compromise any claims or litigation involving payments by the Company
or any of its subsidiaries of more than $250,000 in any single instance or
related instances, or that otherwise are material; (18) enter into any
intellectual property license pursuant to which the Company licenses any of its
intellectual property or sublicenses any of its intellectual property; (19)
enter into any lease or amend any lease of real property involving the payment
by the Company of $250,000 or more; or (20) agree in writing or otherwise to
take any of the foregoing actions.
Pursuant to the Merger Agreement, from the date of the Merger Agreement,
unless the Company has consented in writing thereto, each of DDC and the Offeror
shall, and shall cause each of its subsidiaries to, (1) conduct its operations
according to its usual, regular and ordinary course of business consistent with
past practice; (2) use its reasonable efforts to preserve intact its business
organizations, maintain in effect existing material qualifications, licenses,
permits, approvals and other authorizations (other than those the lapse of which
would not have, individually or in the aggregate, a material adverse effect),
keep available the services of their officers and employees and maintain
satisfactory relationships with those persons having business relationships with
them; (3) promptly upon the discovery thereof notify the Company of the
existence of any breach of any representation or warranty of DDC or the Offeror
contained in the Merger Agreement or the occurrence of any event that would
cause any representation or warranty of DDC or the Offeror contained in the
Merger Agreement no longer to be true and correct; and (4) promptly deliver to
the Company true and correct copies of any report, statement or schedule filed
with the Commission subsequent to the date of the Merger Agreement. In addition,
from and after the date of the Merger Agreement to the Effective Time, unless
the Company has consented in writing thereto, neither DDC nor the Offeror shall,
and neither shall permit any of its significant subsidiaries to, (1) amend its
Certificate of Incorporation or Bylaws or comparable governing instruments; (2)
authorize for issuance, issue, sell, pledge or register for issuance or sale any
shares of its capital stock or other ownership interest in DDC (other than
issuances of DDC Common Shares in respect of any exercise of options outstanding
on the date of the Merger Agreement, issuances necessary to complete the
transactions contemplated by the Merger Agreement), the Offeror or any of their
respective significant subsidiaries, or any securities convertible into or
exchangeable for any such shares or ownership interest, or any rights, warrants
or options to acquire or with respect to any such shares of capital stock,
ownership interest, or convertible or exchangeable securities; or accelerate any
right to convert or exchange or acquire any securities of DDC, the Offeror or
any of their respective significant subsidiaries for any such shares or
ownership interest, except for the issuance of any financial instruments in
connection with the Offer and the Merger and the financing thereof; (3) effect
any stock split or conversion of any of its capital stock or otherwise change
its capitalization as it exists on the date hereof, other than as set forth in
the Merger Agreement; (4) directly or indirectly redeem, purchase or otherwise
acquire any shares of its capital stock or capital stock of any of its
significant subsidiaries other than as set forth in the Merger Agreement, or
declare, pay or set aside any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
other than dividends or distributions to DDC or any significant
21
<PAGE> 24
subsidiary wholly-owned by DDC; (5) sell, lease or otherwise dispose of any of
its assets (including capital stock of its significant subsidiaries), except in
the ordinary course of business; (6) acquire by merger, purchase or any other
manner, any material business or entity or otherwise acquire any assets that are
material to DDC, the Offeror and their significant subsidiaries taken as a
whole, except for purchases of inventory, supplies or capital equipment in the
ordinary course of business consistent with past practice; (7) incur or assume
any long-term or short-term debt in excess of $50 million, except for working
capital purposes in any amount in the ordinary course of business under DDC's
existing credit facilities and except as may be required to consummate the Offer
and the Merger; (8) assume, guarantee or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
person except subsidiaries of DDC, except in the ordinary course of business
consistent with past practice; (9) make or forgive any loans, advances or
capital contributions to, or investments in, any other person, other than
consistent with past practices, to or in any subsidiary, and other than by
Detroit Diesel Capital Corporation or Detroit Diesel Credit Corporation in the
ordinary course of their respective business consistent with past practices;
(10) waive or amend any term or condition of any confidentiality or "standstill"
agreement to which DDC or the Offeror is a party; (11) adopt or amend in any
material respect or terminate any employee benefit plan or arrangement; (12)
amend in any material respect or terminate any employment agreement or severance
agreement entered into between DDC and its executive officers or waive any
material right of DDC thereunder, except in the ordinary course of business
consistent with past practice; (13) make any material changes in the type or
amount of their insurance coverage or permit any material insurance policy
naming DDC or any of its subsidiaries as a beneficiary or a loss payee to be
cancelled or terminated other than in the ordinary course of business; (14)
except as may be required by law or generally acceptable accounting principles,
change any material accounting principles or practices used by DDC or its
significant subsidiaries; (15) take any action to cause the DDC Common Shares to
be delisted from the NYSE; or (16) agree in writing or otherwise to take any of
the foregoing actions.
The Company has agreed in the Merger Agreement that, from the date of the
Merger Agreement and prior to the Effective Time, neither the Company nor its
subsidiaries shall, and the Company shall direct and use its best efforts to
cause its officers, directors, employees, agents and representatives (including,
without limitation, any investment banker, attorney, or accountant retained by
it or any of its subsidiaries) not to, initiate, solicit or encourage, directly
or indirectly, any inquiries or the making or implementation of any proposal or
offer (including without limitation, any proposal or offer to its stockholders)
with respect to a merger, acquisition, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities of, the Company or any of its subsidiaries (any such
proposal or offer being referred to as an "Alternative Proposal") or engage in
any negotiations concerning, or provide any confidential information or data to,
or have any discussions with, any person relating to an Alternative Proposal, or
otherwise facilitate any effort or attempt to make or implement an Alternative
Proposal. However, the foregoing shall not prohibit the Board of Directors of
the Company from furnishing information to or entering into discussions or
negotiations with, any person or entity that makes an unsolicited bona fide
proposal in writing, to acquire the Company pursuant to a merger, consolidation,
share exchange, purchase of a substantial portion of the assets, business
combination or other similar transaction, if, and only to the extent that, (1)
the Board of Directors determines in good faith, and after consultation with
outside counsel and the Financial Advisor that such action is required for the
Board of Directors to comply with its fiduciary duties to shareholders imposed
by law, (2) prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity, the Company provides
written notice to DDC to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such person or entity, and (3)
the Company keeps DDC informed of the status (not the terms) of any such
discussions or negotiations.
From and after the Effective Time, DDC has agreed in the Merger Agreement
to indemnify and hold harmless, to the fullest extent permitted under the DGCL,
each person who is, or has been at any time prior to the date of the Merger
Agreement or who becomes prior to the Effective Time, an officer, director or
similar person of the Company or any subsidiary against all losses, claims,
damages, liabilities, costs or expenses (including attorneys' fees), judgments,
fines, penalties and amounts paid in settlement in connection with any claims,
actions, suits, proceedings, arbitrations, investigations or audits arising
before or after the Effective Time out of or pertaining to acts or omissions, or
alleged acts or omissions, by them in their capacities as such,
22
<PAGE> 25
which acts or omissions occurred prior to the Effective Time. DDC has also
agreed in the Merger Agreement to purchase a six-year pre-paid noncancellable
directors and officers insurance policy covering the current and all former
directors, officers and similar persons of the Company and its subsidiaries with
respect to acts or failures to act prior to the Effective Time, in a single
aggregate amount over the six-year period immediately following the Closing Date
equal to the policy limit for the Company's current directors and officers
insurance policy (the "Current Policy"). If such insurance is not obtainable at
an annual cost per covered year not in excess of three times the annual premium
paid by the Company for the Current Policy (the "Cap"), then DDC will cause the
Surviving Corporation to purchase policies providing at least the same coverage
as the Current Policy and containing terms and conditions no less advantageous
to the current and former directors, officers and similar persons of the Company
and its subsidiaries than the current policy with respect to acts or failures to
act prior to the Effective Time; provided, however, that DDC and the surviving
corporation shall not be required to obtain policies providing such coverage
except to the extent that such coverage can be provided at an annual cost of no
greater than the Cap; and, if equivalent coverage cannot be obtained, or can be
obtained only by paying an annual premium in excess of the Cap, DDC or the
Surviving Corporation shall only be required to obtain as much coverage as can
be obtained by paying an annual premium equal to the Cap.
The Merger Agreement provides that it may be terminated and the merger
abandoned at any time prior to the Effective Time, notwithstanding approval by
the stockholders of the Company, (1) by mutual written consent of the Company
and DDC duly authorized by their respective Boards of Directors; (2) by the
Company, if the Offeror shall have failed to commence the Offer within five
business days after the date of the Merger Agreement, (3) by the Company, if DDC
or the Offeror materially breaches any of their respective representations or
warranties or covenants contained in the Merger Agreement and, with respect to
any such breach that can be remedied, the breach is not remedied within five
business days after the Company has furnished DDC or the Offeror with written
notice of such failure; (4) by DDC or the Company (a) if the Effective Time
shall not have occurred on or before December 31, 1997 (provided that the right
to terminate the Merger Agreement pursuant to this provision is not available to
any party whose failure to fulfill any obligation under the Merger Agreement has
been the cause of or resulted in the failure of the Effective Time to occur on
or before such date); (b) if there shall be any statute, law, rule or regulation
that makes consummation of the Offer or the Merger illegal or prohibited or if
any court of competent jurisdiction or other governmental entity shall have
issued an order, judgment, decree or ruling, or taken any other action
restraining, enjoining or otherwise prohibiting the Offer or the Merger and such
order, judgment, decree, ruling or other action shall have become final and
non-appealable; or (c) if the Offer terminates or expires on account of the
failure of any condition specified in Merger Agreement without the Offeror
having purchased any Shares thereunder (provided that the right to terminate the
Merger Agreement pursuant to this provision is not available to any party whose
failure to fulfill any obligation under the Merger Agreement has been the cause
of or resulted in the failure of any such condition); (5) by the Company, at any
time prior to the acceptance for payment of Shares by the Offeror pursuant to
the Offer, if there is an Alternative Proposal which the Board of Directors in
good faith determines represents a superior transaction for the stockholders of
the Company as compared to the Offer and the Merger, and the Board of Directors
determines, after consultation with outside counsel and the Financial Advisor,
that it is required by its fiduciary duties to the Company's stockholders
imposed by law to terminate the Merger Agreement and the Company pays to DDC the
Termination Fee (as defined below); provided, however, that the right to
terminate the Merger Agreement pursuant to this provision shall not be available
(a) if such Alternative Proposal shall result from a breach in any material
respect of the Company's obligations under the Merger Agreement with respect to
solicitations or (b) if the Company has not provided DDC and the Offeror with at
least two business days' prior written notice of its intent to so terminate the
Merger Agreement together with a summary of the material terms and conditions of
the Alternative Proposal; and (6) by DDC, if the Board of Directors of the
Company shall have failed to recommend, or shall have withdrawn, modified or
amended in any manner adverse to DDC or Offeror, its approval or recommendation
of the Offer or the Merger, or shall have recommended acceptance of any
Alternative Proposal.
The Company has agreed in the Merger Agreement that, in the event that, (1)
the Board of Directors of the Company shall publicly modify or amend its
recommendation of the Offer or the Merger in a manner
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<PAGE> 26
adverse to DDC or shall withdraw its recommendation of the Offer or shall
recommend any Alternative Proposal, or shall resolve to do any of the foregoing,
or (2) at any time prior to the termination of the Merger Agreement any person
(other than DDC or any of its affiliates) shall publicly announce any
Alternative Proposal and, at any time on or prior to one year after the date of
the Merger Agreement, shall become the beneficial owner of 33% or more of the
outstanding Shares or shall consummate an Alternative Proposal, then in any such
event the Company shall promptly, but in no event later than two business days
after the first of such events to occur, pay DDC an amount equal to $15,750,000
(the "Termination Fee"), which shall be in lieu of any and all damages, costs,
and expenses, for breach of the Merger Agreement by the Company.
14. DIVIDENDS AND DISTRIBUTIONS
The Merger Agreement provides that neither the Company nor any of its
subsidiaries will, among other things, prior to the Effective Time (1) declare,
set aside or pay any dividend (whether in cash, stock or property) or make any
other distribution or payment with respect to any shares of its capital stock or
(2) directly or indirectly redeem, purchase or otherwise acquire any shares of
its capital stock or make any commitment for any such action.
15. CERTAIN CONDITIONS TO OFFEROR'S OBLIGATIONS
Notwithstanding any other term of the Offer or the Merger Agreement, the
Offeror shall not be required to accept for payment or pay for, subject to any
applicable rules and regulations of the Commission, any Shares not theretofore
accepted for payment or paid for and may terminate or amend the Offer as to such
Shares unless (1) the Minimum Condition is satisfied, (2) any waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act")
applicable to the purchase of Shares pursuant to the Offer shall have expired or
been terminated and (3) approvals required by law to be obtained prior to the
consummation of the Offer under any foreign antitrust or competition laws
("Foreign Antitrust Laws") to the purchase of Shares pursuant to the Offer shall
have been obtained. Furthermore, notwithstanding any other term of the Offer or
the Merger Agreement, the Offeror shall not be required to accept for payment or
to pay for any Shares not theretofore accepted for payment or paid for, and may
terminate or amend the Offer if at any time on or after the date of the Merger
Agreement and prior to the expiration of the Offer, any of the following
conditions exist or shall occur and remain in effect:
(i) (a) A court of competent jurisdiction or other governmental entity
shall have issued an order, judgment, decree or ruling on the merits in
connection with an action, suit or proceeding brought by any governmental
entity or person which (1) restrains or prohibits the acquisition by DDC of
Shares pursuant to the Offer, or the making or consummation of the Offer or
the Merger, (2) makes the purchase of or payment for some or all of the
Shares pursuant to the Offer or the Merger illegal, (3) imposes material
limitations on the ability of DDC (or any of its affiliates) to acquire or
hold, or to require DDC or any of its affiliates or subsidiaries to dispose
of or hold separate, any material portion of the assets or the business of
DDC and its affiliates taken as a whole or the Company and its subsidiaries
taken as a whole, or (4) imposes material limitations on the ability of DDC
(or its affiliates) to exercise full rights of ownership of the Shares
purchased by it, including, without limitation, the right to vote the
Shares purchased by it on all matters properly presented to the
stockholders of the Company, or (b) there shall have been instituted and
pending any action or proceeding by any governmental entity which, in the
opinion of DDC's counsel (assuming, for purposes of such opinion only, the
validity of the allegations) has a reasonable likelihood of success on the
merits, and which (1) seeks to challenge the acquisition by DDC of the
Shares pursuant to the Offer, restrain, prohibit or delay the making or
consummation of the Offer or the Merger, or obtain any material damages in
connection therewith, (2) seeks to make the purchase of or payment for some
or all of Shares pursuant to the Offer or the Merger illegal, (3) seeks to
impose material limitations on the ability of DDC (or any of its
affiliates) effectively to acquire or hold, or to require DDC or the
Company or any of their respective affiliates or subsidiaries to dispose of
or hold separate, any material portion of the assets or the business of DDC
and its affiliates taken as a whole or the Company and its subsidiaries
taken as a whole, or (4) seeks to impose material limitations on the
ability of DDC (or its affiliates) to exercise full rights of ownership of
the Shares purchased by it,
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<PAGE> 27
including, without limitation, the right to vote the Shares purchased by it
on all matters properly presented to the stockholders of the Company; or
(ii) There shall have occurred (a) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States, (b) the
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (c) the commencement of a war, armed
hostilities or other international or national calamity directly or
indirectly involving the United States, or (d) any limitation (whether or
not mandatory) by any governmental or regulatory authority on, or any other
event which has a material adverse effect on the extension of credit by
banks or other lending institutions in the United States; or
(iii) there shall have been promulgated, enacted, entered, enforced or
deemed applicable to the Offer or the Merger, by any governmental entity,
any law or there shall have been issued any injunction resulting in any of
the consequences referred to in subsection (i) above; or
(iv) the Merger Agreement shall have been terminated in accordance
with its terms; or
(v) (a) the representations and warranties made by the Company in the
Merger Agreement shall not be true and correct as of the date of
consummation of the Offer as though made on and as of that date (other than
representations and warranties made as of a specified date) except for any
breach or breaches which, in the aggregate, would not have a material
adverse effect or (b) the Company shall have breached or failed to comply
in any material respect with any of its obligations under the Merger
Agreement and, with respect to any such failure that can be remedied, the
failure is not remedied within 20 business days after DDC has furnished the
Company with written notice of such failure; or
(vi) during the period from the date of the Merger Agreement through
the expiration of the Offer, the Company and its Subsidiaries have not
conducted their business in the ordinary course of such business consistent
with past practices, or there has been any event or state of facts which
would have a material adverse effect; or
(vii) the Board of Directors shall have modified or amended its
recommendation of the Offer or the Merger in any manner adverse to DDC or
the Offeror or shall have withdrawn its recommendation of the Offer or the
Merger or shall have recommended acceptance of any Alternative Proposal or
shall have resolved to do any of the foregoing; or
(viii) (a) a tender or exchange offer for 33% or more of the then
outstanding Shares shall have been publicly proposed to be made and not
withdrawn within five business days, or shall have been made, by any
person, corporation, entity or group (other than DDC and any of its
affiliates and other than any person who is the beneficial owner of 33% or
more of the Shares as of the date of the Merger Agreement) at a price in
excess of the value of the Merger Consideration (calculated as if the
Closing Date were the date such tender offer is commenced); (b) any person
(other than DDC and any of its affiliates) shall have acquired beneficial
ownership of 33% or more of the outstanding Shares, or shall have been
granted any options or rights, conditional or otherwise, to acquire a total
of 33% or more of the outstanding Shares; (c) any new group shall have been
formed which beneficially owns more than 33% of the outstanding Shares; or
(d) any person (other than DDC and any of its affiliates) shall have
entered into an agreement in principle or definitive agreement with the
Company with respect to a tender or exchange offer for any Shares or a
merger, consolidation or other business combination with or involving the
Company.
Subject to the Company's right to extend the Offer, the foregoing
conditions (i) through (viii) are for the sole benefit of DDC and the Offeror
and may be asserted by DDC regardless of the circumstances giving rise to any
such condition and may be waived by DDC, in whole or in part, at any time and
from time to time, in the sole discretion of DDC. The failure by DDC at any time
to exercise any of the foregoing rights will not be deemed a waiver of any
right, the waiver of such right with respect to any particular facts or
circumstances shall not be deemed a waiver with respect to any other facts or
circumstances, and each right will be deemed an ongoing right which may be
asserted at any time and from time to time.
25
<PAGE> 28
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered Shares not theretofore accepted for payment shall forthwith be returned
by the depositary to the tendering stockholders.
16. CERTAIN REGULATORY AND LEGAL MATTERS
Except as set forth in this Section, the Offeror is not aware of any
approval or other action by any governmental or administrative agency which
would be required for the acquisition or ownership of Shares by the Offeror as
contemplated herein. Should any such approval or other action be required, it
will be sought, but the Offeror has no current intention to delay the purchase
of Shares tendered pursuant to the Offer pending the outcome of any such matter,
subject, however, to the Offeror's right to decline to purchase Shares if any of
the conditions specified in Section 15 shall have occurred. There can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without substantial conditions, or that adverse
consequences might not result to the Company's business or that certain parts of
the Company's business might not have to be disposed of if any such approvals
were not obtained or other action taken.
Antitrust. The federal government has adopted antitrust laws, regulations
and rules applicable to attempts to acquire securities of corporations
incorporated or operating in the United States. Such laws, regulations and
rules, could prohibit the consummation of the Offer and the Merger. The HSR Act
provides that the acquisition of the Shares by the Offeror in the Offer and the
Merger may not be consummated unless certain information has been furnished to
the Department of Justice, Antitrust Division (the "Division") and the Federal
Trade Commission ("FTC") and certain waiting period requirements have been
satisfied. The rules promulgated by the FTC under the HSR Act require the filing
of a Notification and Report Form (the "Form") with the Division and the FTC and
that the acquisition of the Shares by the Offeror in the Offer may not be
consummated until 15 days after receipt of the Form by the Division or the FTC.
Within such period, the Division or the FTC may request additional information
or documentary material. In the event of such request, the acquisition of the
Shares by the Offeror in the Offer may not be consummated until ten days after
receipt of such additional information or documentary material by the Division
or the FTC. Compliance with a request for additional information or documentary
material can take a significant amount of time. The Offeror has been advised
that Roger S. Penske, as ultimate parent of DDC, and that the Company intend to
file their respective forms as soon as practicable, and in any event no later
than July 25, 1997.
If any applicable waiting period under the HSR Act in respect of the
acquisition of the Shares by the Offeror in the Offer and the Merger has not
expired or been terminated prior to the Expiration Date, the Offeror will not be
obligated to proceed with the Offer or the purchase of any Shares not
theretofore purchased pursuant to the Offer. See Section 15.
State Takeover Laws. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of the DGCL ("Section 203") prevents
an "interested stockholder" (including a person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock) from engaging
in a "business combination" (defined to include mergers and certain other
transactions) with a Delaware corporation for a period of three years following
the date such person became an interested stockholder unless, among other
things, the business combination (i) is with a person who either was not an
interested stockholder during the previous three years or became an interested
stockholder with the approval of the corporation's board of directors and (ii)
is approved or not opposed by a majority of the corporation's directors then in
office. The Merger Agreement, the Offer and the Merger were unanimously approved
by the Board of Directors of the Company on July 8, 1997; therefore, since
neither the Offeror nor any of its affiliates is (or has during the previous
three years been) an interested stockholder, Section 203 is inapplicable to the
Offer and the Merger.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However in 1987, in
CTS Corp. v. Dynamics Corp.
26
<PAGE> 29
of America, the Supreme Court held that the State of Indiana may, as a matter of
corporate law and, in particular, with respect to those aspects of corporate law
concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without the prior
approval of the remaining presenting stockholders. The state law before the
Supreme Court was by its terms applicable only to corporations that had a
substantial number of stockholders in the state and were incorporated there.
Subsequently, in TLX Acquisition Corp., v Telex Corp., a Federal district court
in Oklahoma ruled that the Oklahoma statutes were unconstitutional insofar as
they apply to corporations incorporated outside Oklahoma in that they would
subject such corporations to inconsistent regulations. Similarly, in Tyson
Foods, Inc., v McReynolds, a Federal district court in Tennessee ruled that four
Tennessee takeover statutes were unconstitutional as applied to corporations
incorporated outside Tennessee. This decision was affirmed by the United States
Court of Appeals for the Sixth Circuit. In December 1988, a Federal district
court in Florida held in Grand Metropolitan PLC v Butterworth that the
provisions of the Florida Affiliated Transactions Act and Florida Control Share
Acquisition Act were unconstitutional as applied to corporations incorporated
outside of Florida.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. The Offeror does not know whether any of these laws will, by
their terms, apply to the Offer or the Merger and has not complied with any such
laws. Should any person seek to apply any state takeover law, the Offeror will
take such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
In the event it is asserted that one or more state takeover laws is applicable
to the Offer or the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer, the Offeror might be
required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, the Offeror might be
unable to accept for payment any Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer and the Merger. In such case,
the Offeror may not be obligated to accept for payment any Shares tendered. See
Section 15.
Other Foreign Laws. The Company and certain of its subsidiaries conduct
business in several foreign countries where regulatory filings or approvals may
be required or desirable in connection with the consummation of the Offer.
Certain of such filings or approvals, if required or desirable, may not be made
or obtained prior to the expiration of the Offer. The Purchaser is seeking
further information regarding the applicability of any such laws and currently
intends to take such action as may be required or desirable. If any approvals
required by law to be obtained prior to consummation of the Offer under any
Foreign Antitrust Laws to the purchase of Shares pursuant to the Offer shall not
have been obtained prior to the Expiration Date, the Offeror will not be
obligated to proceed with the Offer or the purchase of any Shares not
theretofore purchased pursuant to the Offer. In addition, if any foreign
governmental entity takes any action prior to the completion of the Offer that
might have certain adverse effects, the Purchaser will not be obligated to
accept for payment or pay for any Shares tendered pursuant to the Offer. See
Section 15.
17. FEES AND EXPENSES
Neither the Offeror, nor any officer, director, stockholder, agent or other
representative of the Offeror, will pay any fees or commissions to any broker,
dealer or other person (other than the Dealer Manager, the Depositary and the
Information Agent) for soliciting tenders of Shares pursuant to the Offer.
Brokers, dealers, commercial banks and trust companies and other nominees will,
upon request, be reimbursed by the Offeror for customary mailing and handling
expenses incurred by them in forwarding materials to their customers.
Chase Securities Inc. ("Chase") is acting as Dealer Manager in connection
with the Offer and has provided certain financial advisory services (including
delivery of a fairness opinion to DDC's board of directors) to the Offeror in
connection with the proposed acquisition of the Shares. The Offeror has agreed
to pay Chase (1) a fee of $250,000 payable upon consummation of the Offer for
its services as Dealer Manager, (2) a fee of $200,000 payable upon delivery of
its fairness opinion to DDC's board of directors, and (3) an additional fee of
$425,000 payable upon the execution of the Merger Agreement. In addition, the
Offeror has agreed to reimburse Chase for certain reasonable out-of-pocket
expenses incurred by Chase in connection
27
<PAGE> 30
with the Offer, including the reasonable fees of its counsel, and to indemnify
Chase against certain liabilities and expenses, including certain liabilities
under the federal securities laws.
The Offeror has retained D.F. King & Co., Inc., as Information Agent, and
ChaseMellon Shareholder Services, L.L.C. as Depositary, in connection with the
Offer. The Information Agent and the Depositary will receive reasonable and
customary compensation for their services hereunder and reimbursement for their
reasonable out-of-pocket expenses. The Information Agent and the Depositary will
also be indemnified by the Offeror against certain liabilities in connection
with the Offer.
18. MISCELLANEOUS
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares residing in any jurisdiction in which the making or
acceptance thereof would not be in compliance with the securities, blue sky or
other laws of such jurisdiction. In any jurisdiction where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of the Offeror by Chase or one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of the Offeror other than as contained in this Offer to
Purchase or in the Letter of Transmittal, and, if any such information or
representation is given or made, it should not be relied upon as having been
authorized by the Offeror.
The Offeror has filed with the Commission a Statement on Schedule 14D-1,
pursuant to Section 14(d)(1) of the Exchange Act and Rule 14d-1 promulgated
thereunder, furnishing certain information with respect to the Offer. Such
Schedule 14D-1 and any amendments thereto, including exhibits, may be examined
and copies may be obtained at the same places and in the same manner as set
forth with respect to the Company in Section 8 (except that they will not be
available at the regional offices of the Commission).
OMC ACQUISITION CORP.
July 15, 1997
28
<PAGE> 31
ANNEX I
CERTAIN INFORMATION CONCERNING THE DDC,
THE OFFEROR AND RELATED PARTIES
The table below presents certain information concerning the executive
officers and directors of DDC and the Offeror (with additional information being
set forth below). The address of each director and officer is Detroit Diesel
Corporation, 13400 Outer Drive, West, Detroit, Michigan 48239-4001. All
directors and executive officers listed below are citizens of the United States,
except for Dr. Eckhard Cordes and Dr. Kurt J. Lauk, who are both citizens of
Germany.
<TABLE>
<CAPTION>
NAME CURRENT POSITIONS WITH DDC AND THE OFFEROR
---- ------------------------------------------
<S> <C>
Roger S. Penske........................ Chief Executive Officer and Chairman of the Board of
Directors of DDC and the Offeror
Timothy D. Leuliette................... Vice Chairman and Director of DDC and the Offeror
Ludvik F. Koci......................... President and Director of DDC and the Offeror
Dr. Eckhard Cordes..................... Director of DDC
John E. Doddridge...................... Director of DDC
William E. Hoglund..................... Director of DDC
Gary G. Jacobs......................... Director of DDC
Dr. Kurt J. Lauk....................... Director of DDC
Joseph F. Welch........................ Director of DDC
R. Jamison Williams, Jr................ Director of DDC
Robert R. Allran....................... Senior Vice President - Operations of DDC
A. Gordon Clark........................ Senior Vice President - Sales of DDC
John F. Farmer......................... Vice President and General Counsel of DDC, Vice President
and Secretary of the Offeror
J. Randall Lawrence.................... Senior Vice President - Finance of DDC, Senior Vice
President of the Offeror
David F. Merrion....................... Senior Vice President - Engineering of DDC
Calvin C. Sharp........................ Senior Vice President - Administration of DDC
Robert A. Sisk......................... Senior Vice President - Strategic Planning and Business
Development of DDC
Paul F. Walters........................ Senior Vice President of DDC
Walter F. Ware......................... Senior Vice President of DDC
</TABLE>
Roger S. Penske is 60 years old. He has been Chairman and a director of DDC
since its organization in 1987. Mr. Penske is also Chairman of the Board and
Chief Executive Officer of Penske Corporation. Penske Corporation is a
privately-owned diversified transportation services company which (among other
things) holds, through its subsidiaries, interests in a number of businesses,
including Penske Truck Leasing Co., L.P., Penske Motorsports, Inc., and Diesel
Technology Company. Mr. Penske is also a member of the Boards of Directors of
Philip Morris Companies Inc., General Electric Company, Penske Motorsports, Inc.
and Gulfstream Aerospace Corporation.
Timothy D. Leuliette is 47 years old. He has been a director and Vice
Chairman of DDC since 1996. Before that, Mr. Leuliette had been President and
Chief Executive Officer of ITT Automotive, Inc., and Senior Vice President of
ITT Industries, Inc., since 1991, and was President and Chief Executive Officer
of Siemens Automotive, L.P. from 1988 to 1991. Mr. Leuliette is also a director
and the President and Chief Operating Officer of Penske Corporation. Mr.
Leuliette is a director of Libbey-Owens-Ford and the Detroit Branch of The
Federal Reserve Bank of Chicago. His other affiliations have been with the
Leukemia Society of America, Children's Center, Vision 2000, Arthritis
Foundation and Junior Achievement.
Ludvik F. Koci is 61 years old. He has been a director of DDC since its
organization in 1987. Mr. Koci has been President and Chief Operating Officer
since December 1989. Before that, Mr. Koci had been
A-1
<PAGE> 32
Executive Vice President of the Company since DDC's organization in 1987. Prior
to the company's commencement of operations in January 1988, Mr. Koci had been
employed by General Motors since 1954. Mr. Koci is also a Director of Wabash
National Corporation.
Dr. Eckhard Cordes is 46 years old. He has been a director of DDC since
March 1997. Dr. Cordes is a Deputy Member of the Daimler-Benz AG Board of
Management, Corporate Development and Rail Systems, Microelectronics. Before
that, he was a Senior Vice President, Corporate Development of Daimler-Benz from
1995 to 1996; Senior Vice President, Corporate Planning and Controlling of
Daimler-Benz from 1994 to 1995; and Senior Vice President, Controlling,
Corporate Planning and M&A of AEG AG, a Daimler-Benz affiliate, from 1991 to
1994.
John E. Doddridge is 56 years old. He has been a director of DDC since
January 1994. Mr. Doddridge is the Chairman and Chief Executive Officer of
Intermet Corp., a publicly-traded metal casting company. He was, from November
1992 to October 1994, the Vice Chairman of the Board of Directors and Chief
Executive Officer of Magna International, Inc., a publicly-traded manufacturer
of technologically-advanced automotive components, assemblies and systems. Mr.
Doddridge was President, North American Operations of Dana Corporation from
April 1989 to November 1992. Mr. Doddridge is also a member of the Board of
Directors of Standard Products Co.
William E. Hoglund is 62 years old. He has been a director of DDC since
1990. Mr. Hoglund retired as Executive Vice President of General Motors
Corporate Affairs and Staff Support Group in December 1994, a position he had
held since the group was established in November 1992. Before that, Mr. Hoglund
was Executive Vice President and Chief Financial Officer of General Motors from
April 1992 to November 1992. He had served as Executive Vice President of
General Motors since August 1988. Mr. Hoglund is also a member of the Boards of
Directors of Standard Federal Bank, N.A. and Mead Corporation, as well as the
Sloan Foundation.
Gary G. Jacobs is 56 years old. He has been a director of DDC since January
1994. He is the President and Chief Executive Officer of Laredo National
Bancshares, Inc. (a bank holding company) and Chairman of The Laredo National
Bank.
Dr. Kurt J. Lauk is 50 years old. He has been a director of DDC since 1996.
Dr. Lauk is the Head of the Commercial Vehicle Division, Daimler-Benz and a
member of its Board of Management. Before that, he was a member of the Board of
Management of VEBA, AG, Dusseldorf, responsible for finance and controlling,
from 1992 to 1996, and Deputy President of AUDI AG, Ingolstadt, responsible for
finance, business management and marketing, from 1989 to 1992.
Joseph F. Welch is 62 years old. He has been a director of DDC since
January 1994. He is the Chairman and Chief Executive Officer of The Bachman
Company, a producer of snack foods.
R. Jamison Williams, Jr. is 55 years old. He has been a director of DDC
since 1988. He is a shareholder in the law firm of Williams, Williams, Ruby &
Plunkett, P.C., in Birmingham, Michigan. He is also a director of Price
Manufacturing, Inc., a Canadian bedding manufacturer.
Robert R. Allran is 54 years old and has been Senior Vice President -
Operations of DDC since DDC's organization in 1987.
A. Gordon Clark is 75 years old and has been Senior Vice President - Sales
of DDC since October 1993. Before that, Mr. Clark had been active in the DDC's
business in his capacity as Executive Vice President - Sales of Penske
Transportation, Inc. since 1989. Mr. Clark has an employment agreement with DDC
that provides an annual salary of $350,000 through January 31, 1998 when the
agreement terminates.
John F. Farmer is 43 years old and has been General Counsel of DDC since
1988 and a Vice President of DDC since April 1993. From 1988 to January 1994,
Mr. Farmer was also Secretary of DDC.
J. Randall Lawrence is 47 years old and was appointed Senior Vice President
- -Finance of DDC in January 1995. Prior to this appointment, Mr. Lawrence was
Chief Financial Officer of Penske Automotive Group, Inc. since 1986.
A-2
<PAGE> 33
David F. Merrion is 60 years old and has been Senior Vice President -
Engineering of DDC since DDC's organization in 1987.
Calvin C. Sharp is 46 years old and has been Senior Vice President -
Administration of DDC since July 1997. Before that, he was Director of
Industrial Relations and Administration of DDC since 1988.
Robert A. Sisk is 43 years old and has been Senior Vice President -
Strategic Planning and Business Development of DDC since January 1997. Before
that, he was Vice President, Business Development of DDC from 1992 to 1997, and
Vice President, Power Systems of DDC from 1989 to 1992.
Paul F. Walters is 53 years old and has been the Executive Vice President -
Administration of Penske Corporation and the Senior Vice President of DDC since
July 1997. Before that, Mr. Walters was the Senior Vice President -
Administration of DDC since DDC's organization in 1987.
Walter F. Ware is 54 years old and was appointed Senior Vice President of
DDC in November 1995. Prior to his appointment, Mr. Ware was actively involved
in seeking entrepreneurial opportunities in the automotive sector from August
1994 to November 1995. Before that, Mr. Ware had been Vice-President - Group
Executive of IDEX Corporation since 1993, where he was responsible for three
wholly-owned subsidiaries involved in the industrial machinery business, and
Group Vice - President of the Industrial Products Group of Goulds Pumps Inc.
from 1989 to 1993.
A-3
<PAGE> 34
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for Shares and any other required documents
should be sent or delivered by each stockholder of the Company or his broker,
dealer, commercial bank, trust company or other nominee to the Depositary at one
of the addresses set forth below:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<C> <C> <C>
By Mail: By Overnight Courier: By Hand Delivery:
P.O. Box 3305 85 Challenger Rd. 120 Broadway, 13th Floor
South Hackensack, NJ 07606 Mail Drop - Reorg New York, NY 10271
Attn: Reorganization Department Ridgefield Park, NJ 07660 Attn: Reorganization Department
Attn: Reorganization Department
By Facsimile Transmission:
(201) 329-8936
To Confirm:
(201) 296-4860
</TABLE>
------------------
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal and Notice of Guaranteed Delivery may
be directed to the Information Agent or the Dealer Manager at their respective
telephone numbers and locations listed below. Stockholders may also contact
their broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 WATER STREET
NEW YORK, NEW YORK 10005
BANKS AND BROKERS CALL COLLECT: (212) 269-5550
ALL OTHERS CALL TOLL-FREE: (800) 207-2014
The Dealer Manager for the Offer is:
CHASE SECURITIES INC.
270 PARK AVENUE
NEW YORK, NY 10017
(212) 270-3416
(CALL COLLECT)
<PAGE> 1
EXHIBIT 99.(A)(2)
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
of
OUTBOARD MARINE CORPORATION
Pursuant to the Offer to Purchase
Dated July 15, 1997
by
OMC ACQUISITION CORP.
a wholly-owned subsidiary of
DETROIT DIESEL CORPORATION
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, AUGUST 11, 1997, UNLESS THE OFFER
IS EXTENDED.
THE DEPOSITARY:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<C> <C> <C>
By Mail: By Overnight Courier: By Hand Delivery:
P.O. Box 3305 85 Challenger Rd. 120 Broadway, 13th Floor
South Hackensack, NJ 07606 Mail Drop - Reorg New York, NY 10271
Attn: Reorganization Ridgefield Park, NJ 07660 Attn: Reorganization Department
Department Attn: Reorganization Department
By Facsimile Transmission:
(201) 329-8936
Confirm by Telephone to:
(201) 296-4860
</TABLE>
------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE
SPACE THEREFOR PROVIDED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH
BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders of Outboard
Marine Corporation if certificates are to be forwarded herewith or, unless an
Agent's Message (as defined in the Offer to Purchase) is utilized, if delivery
of Shares (as defined below) is to be made by book-entry transfer to the
Depositary's account at The Depository Trust Company or the Philadelphia
Depository Trust Company (hereinafter collectively referred to as the
"Book-Entry Transfer Facilities") pursuant to the procedures set forth in
Section 3 of the Offer to Purchase (as defined below).
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their Shares and all other documents required hereby to the
Depositary by the Expiration Date (as defined in the Offer to Purchase), or who
cannot comply with the book-entry transfer procedures on a timely basis, may
nevertheless tender their Shares pursuant to the guaranteed delivery procedure
set forth in Section 3 of the Offer to Purchase. See Instruction 2.
<PAGE> 2
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ---------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE TOTAL NUMBER NUMBER OF
(PLEASE FILL IN, IF BLANK) NUMBER(S)* OF SHARES SHARES
REPRESENTED BY TENDERED**
CERTIFICATE(S)*
- ---------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
TOTAL SHARES
- ---------------------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to the
Depositary are being tendered. See Instruction 4.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
-------------------------------------------------
Account No. at
------------------------------------------------------------------
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Transaction Code Number:
-------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Tendering Stockholder(s):
-------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
----------------------------
Name of Institution which Guaranteed Delivery:
---------------------------------
If delivered is by book-entry transfer:
----------------------------------------
Name of Tendering Institution:
-------------------------------------------------
Account No. at
------------------------------------------------------------------
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Transaction Code Number:
-------------------------------------------------------
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to OMC Acquisition Corp., a Delaware
corporation (the "Offeror"), and a wholly-owned subsidiary of Detroit Diesel
Corporation, a Delaware corporation ("DDC"), the above-described shares of
Common Stock, $0.15 par value per share (the "Shares"), of Outboard Marine
Corporation, a Delaware corporation (the "Company"), pursuant to the Offeror's
offer to purchase 13,842,619 Shares at a purchase price of $16.00 per Share, net
to the seller in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated July 15, 1997 (the "Offer
to Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which together with the Offer to Purchase constitute the "Offer").
The Offer is being made in connection with the Agreement and Plan of Merger,
dated as of July 8, 1997, among DDC, the Offeror and the Company.
Subject to and effective upon acceptance for payment of and payment for the
Shares tendered herewith, the undersigned hereby sells, assigns and transfers to
or upon the order of the Offeror all right, title and interest in and to all the
Shares that are being tendered hereby (and any and all other Shares, securities
or rights issued or issuable in respect thereof) and appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares (and all such other Shares, securities or rights issued or issuable
in respect thereof), with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest), to (a)
deliver certificates for such Shares (and all such other Shares, securities or
rights issued or issuable in respect thereof), or transfer ownership of such
Shares (and all such other Shares, securities or rights issued or issuable in
respect thereof) on the account books maintained by any of the Book-Entry
Transfer Facilities, together, in any such case, with all accompanying evidences
of transfer and authenticity, to or upon the order of the Offeror, (b) present
such Shares (and all such other Shares, securities or rights issued or issuable
in respect thereof) for transfer on the books of the Company and (c) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and all such other Shares, securities or rights issued or issuable in
respect thereof), all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Timothy D. Leuliette and John
F. Farmer, and each of them, the attorneys and proxies of the undersigned, each
with full power of substitution, to exercise all voting and other rights of the
undersigned in such manner as each such attorney and proxy or his substitute
shall in his sole judgment deem proper, with respect to all of the Shares
tendered hereby which have been accepted for payment by the Offeror prior to the
time of any vote or other action (and any and all other Shares, other securities
or rights issued or issuable in respect thereof), at any meeting of stockholders
of the Company (whether annual or special and whether or not an adjourned
meeting) or otherwise. This proxy is irrevocable and is granted in consideration
of, and is effective upon, the acceptance for payment of such Shares by the
Offeror in accordance with the terms of the Offer. Such acceptance for payment
shall revoke any other proxy or written consent granted by the undersigned at
any time with respect to such Shares (and all such other Shares, securities or
rights issued or issuable in respect thereof), and no subsequent proxies will be
given or written consents will be executed by the undersigned (and if given or
executed, will not be deemed effective).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any and all other Shares, securities or rights issued or
issuable in respect thereof) and that when the same are accepted for payment by
the Offeror, the Offeror will acquire good and unencumbered title thereto, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claims. The undersigned will, upon request, execute and deliver
any additional documents deemed by the Depositary or the Offeror to be necessary
or desirable to complete the sale, assignment and transfer of the Shares
tendered hereby (and all such other Shares, securities or rights issued or
issuable in respect thereof).
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in the Offer, this tender is
irrevocable.
<PAGE> 4
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute an agreement between the undersigned and the
Offeror upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of any Shares purchased, and return any
Shares not tendered or not purchased, in the name(s) of the undersigned (and, in
the case of Shares tendered by book-entry transfer, by credit to the account at
the Book-Entry Transfer Facility designated above). Similarly, unless otherwise
indicated under "Special Delivery Instructions," please mail the check for the
purchase price of any Shares purchased and return any certificates for Shares
not tendered or not purchased (and accompanying documents, as appropriate) to
the undersigned at the address shown below the undersigned's signature(s). In
the event that both "Special Payment Instructions" and "Special Delivery
Instructions" are completed, please issue the check for the purchase price of
any Shares purchased and return any Shares not tendered or not purchased in the
name(s) of, and mail said check and any certificates to, the person(s) so
indicated. The undersigned recognizes that the Offeror has no obligation,
pursuant to the "Special Payment Instructions," to transfer any Shares from the
name of the registered holder(s) thereof if the Offeror does not accept for
payment any of the Shares so tendered.
<PAGE> 5
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased or
certificates for Shares not tendered or not purchased are to be issued in the
name of someone other than the undersigned, or if Shares tendered by book-entry
transfer that are not purchased are to be returned by credit to an account at
one of the Book-Entry Transfer Facilities other than that designated above.
Issue check and/or certificates to:
Name:
--------------------------------------------------------------------------
(PLEASE PRINT)
Address:
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
(ZIP CODE)
- -------------------------------------------------------------------------------
(TAXPAYER IDENTIFICATION NO.)
(SEE SUBSTITUTE FORM W-9)
[ ] Credit unpurchased Shares tendered by book-entry transfer to the account set
forth below:
Name of Account Party
----------------------------------------------------------
Account No. at
-----------------------------------------------------------------
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased or
certificates for Shares not tendered or not purchased are to be mailed to
someone other than the undersigned or to the undersigned at an address other
than that shown below the undersigned's signature(s).
Mail check and/or certificates to:
Name:
--------------------------------------------------------------------------
(PLEASE PRINT)
Address:
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
(ZIP CODE)
- -------------------------------------------------------------------------------
(TAX IDENTIFICATION NO.)
<PAGE> 6
- --------------------------------------------------------------------------------
SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 BELOW)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Signature(s) of Owner(s)
------------------------------------------------------------------------------
Name(s):
----------------------------------------------------------------------
(Please Print)
------------------------------------------------------------------------------
Capacity (full title):
--------------------------------------------------------
Address:
----------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Include Zip Code)
Area Codes and Telephone Number
-----------------------------------------------
(Home)
Taxpayer Identification Number:
-----------------------------------------------
Dated: , 1997
------------------------------------------------------------------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by the person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, please set forth full title
and see Instruction 5.)
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW
- --------------------------------------------------------------------------------
<PAGE> 7
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
- -------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I--PLEASE PROVIDE YOUR TIN PART III--Social Security
FORM W-9 IN THE BOX AT RIGHT AND CERTIFY Number OR
DEPARTMENT OF THE TREASURY BY SIGNING AND DATING BELOW. Employer Identification Number
INTERNAL REVENUE SERVICE
(If awaiting TIN write "Applied For")
--------------------------------------------------------------------------
PART II--For Payees exempt from backup withholding, see the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Payer's Request for Taxpayer Substitute Form W-9 and complete as instructed therein.
Identification Number (TIN)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATION--Under penalties of perjury, I certify that:
(1) The Number shown on this form is my correct TIN (or I am waiting for a
number to be issued to me); and
(2) I am not subject to backup withholding either because I have not been
notified by the IRS that I am subject to backup withholding as a result of
a failure to report all interest or dividends, or the IRS has notified me
that I am no longer subject to backup withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding, you
received another notification from the IRS that you were no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the
enclosed Guidelines.)
- --------------------------------------------------------------------------------
NAME
---------------------------------------------------------------------------
(Please Print)
SIGNATURE DATE
------------------------------------------------ ------------------
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING YOUR TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a TIN has not been issued to me, and
either (1) I have mailed or delivered an application to receive a TIN to the
appropriate IRS Center or Social Security Administration Office or (2) I intend
to mail or deliver an application in the near future. I understand that if I do
not provide a TIN by the time of payment, 31% of all payments pursuant to the
Offer made to me thereafter will be withheld until I provide a number.
SIGNATURE DATE
------------------------------------------------- ------------------
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, signatures
on all Letters of Transmittal must be guaranteed by a firm that is a bank,
broker, dealer, credit union, savings association or other entity which is a
member in good standing of the Securities Transfer Agent's Medallion Program
(each of the foregoing constituting an "Eligible Institution"), unless the
Shares tendered thereby are tendered (i) by a registered holder of Shares who
has not completed either the box labeled "Special Payment Instructions" or the
box labeled "Special Delivery Instructions" on the Letter of Transmittal or (ii)
for the account of an Eligible Institution. See Instruction 5. If the
certificates are registered in the name of a person or persons other than the
signer of this Letter of Transmittal, or if payment is to be made or delivered
to, or certificates evidencing unpurchased Shares are to be issued or returned
to, a person other than the registered owner or owners, then the tendered
certificates must be endorsed or accompanied by duly executed stock powers, in
either case signed exactly as the name or names of the registered owner or
owners appear on the certificates or stock powers, with the signatures on the
certificates or stock powers guaranteed by an Eligible Institution as provided
herein. See Instruction 5.
2. Delivery of Letter of Transmittal and Shares. This Letter of Transmittal
is to be used either if certificates are to be forwarded herewith or, unless an
Agent's Message is utilized, if the delivery of Shares is to be made by
book-entry transfer pursuant to the procedures set forth in Section 3 of the
Offer to Purchase. Certificates for all physically delivered Shares, or a
confirmation of a book-entry transfer into the Depositary's account at one of
the Book-Entry Transfer Facilities of all Shares delivered electronically, as
well as a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof) and any other documents required by this
Letter of Transmittal, or an Agent's Message, in the case of a book-entry
transfer, must be received by the Depositary at one of its addresses set forth
on the front page of this Letter of Transmittal by the Expiration Date.
Stockholders who cannot deliver their Shares and all other required documents to
the Depositary by the Expiration Date must tender their Shares pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
Pursuant to such procedure: (a) such tender must be made by or through an
Eligible Institution; (b) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by the Offeror must be
received by the Depositary prior to the Expiration Date; and (c) the
certificates for all tendered Shares, in proper form for tender, or a
confirmation of a book-entry transfer into the Depositary's account at one of
the Book-Entry Transfer Facilities of all Shares delivered electronically, as
well as a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), and any other documents required by this
Letter of Transmittal or an Agent's Message, in the case of a book-entry
transfer, must be received by the Depositary within three NYSE trading days
after the date of execution of such Notice of Guaranteed Delivery, all as
provided in Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH A BOOK-ENTRY TRANSFER FACILITY,
IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. By executing this Letter of Transmittal (or
a manually signed facsimile thereof), the tendering stockholder waives any right
to receive any notice of the acceptance for payment of the Shares.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. Partial Tenders (not applicable to stockholders who tender by book-entry
transfer); Proration. If fewer than all the Shares represented by any
certificate delivered to the Depositary are to be tendered, fill in the number
of Shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such case, a new certificate for the remainder of the Shares
represented by the old certificate will be sent to the person(s) signing this
Letter of Transmittal, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as promptly as practicable following the expiration or
termination of the Offer. The Shares are
<PAGE> 9
subject to proration as provided in Section 1 of the Offer to Purchase. If
proration is required, then a new certificate for the Shares not accepted as a
result of proration will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the appropriate box on this Letter of
Transmittal, as promptly as practicable following the consummation of the Offer.
All Shares represented by certificates delivered to the Depositary will be
deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock powers
are required unless payment of the purchase price is to be made, or Shares not
tendered or not purchased are to be returned, in the name of any person other
than the registered holder(s). Signatures on any such certificates or stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the certificate must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the certificates
for such Shares. Signature(s) on any such certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
the Offeror of the authority of such person so to act must be submitted.
6. Stock Transfer Taxes. The Offeror will pay any stock transfer taxes with
respect to the sale and transfer of any Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or
Shares not tendered or not purchased are to be returned in the name of, any
person other than the registered holder(s), then the amount of any stock
transfer taxes (whether imposed on the registered holder(s), such other person
or otherwise) payable on account of the transfer to such person will be deducted
from the purchase price unless satisfactory evidence of the payment of such
taxes, or exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. Special Payment and Delivery Instruction. If the check for the purchase
price of any Shares purchased is to be issued, or any Shares not tendered or not
purchased are to be returned, in the name of a person other than the person(s)
signing this Letter of Transmittal or if the check or any certificates for
Shares not tendered or not purchased are to be mailed to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal at an address other than that shown above, the appropriate
boxes on this Letter of Transmittal should be completed. Stockholders tendering
Shares by book-entry transfer may request that Shares not purchased be credited
to such account at any of the Book-Entry Transfer Facilities as such stockholder
may designate under "Special Payment Instructions." If no such instructions are
given, any such Shares not purchased will be returned by crediting the account
at the Book-Entry Transfer Facilities designated above.
8. Substitute Form W-9. The tendering stockholder is required to provide
the Depositary with such stockholder's correct TIN on Substitute Form W-9, which
is provided above, unless an exemption applies. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
a $50
<PAGE> 10
penalty and to 31% federal income tax backup withholding on the payment of the
purchase price for the Shares.
9. Requests for Assistance or Additional Copies. Requests for assistance or
additional copies of the Offer to Purchase and this Letter of Transmittal may be
obtained from the Information Agent or the Dealer Manager at their respective
addresses or telephone numbers set forth below.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE COPY
HEREOF (TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND
ALL OTHER REQUIRED DOCUMENTS) OR NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED
BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO
PURCHASE).
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
stockholder's correct TIN on the Substitute Form W-9. If such stockholder is an
individual, the TIN is such stockholder's social security number. If the
Depositary is not provided with the correct TIN, the stockholder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such stockholder with respect to Shares purchased pursuant to
the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements may be
obtained from the Depositary. All exempt recipients (including foreign persons
wishing to qualify as exempt recipients) should see the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If backup withholding results in an
overpayment of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding on payments that are made
to a stockholder with respect to Shares purchased pursuant to the Offer, the
stockholder is required to notify the Depositary of his or her correct TIN by
completing the form certifying that the TIN provided on the Substitute Form W-9
is correct.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidelines on which number to
report.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 WATER STREET
NEW YORK, NEW YORK 10005
BANKS AND BROKERS CALL COLLECT: (212) 269-5550
ALL OTHERS CALL TOLL-FREE: (800) 207-2014
<PAGE> 11
The Dealer Manager for the Offer is:
CHASE SECURITIES INC.
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(212) 270-3416
(CALL COLLECT)
JULY 15, 1997
<PAGE> 1
EXHIBIT 99.(A)(3)
Offer to Purchase for Cash
13,842,619 Shares of Common Stock
of
OUTBOARD MARINE CORPORATION
at
$16.00 Net Per Share
by
OMC ACQUISITION CORP.
a wholly-owned subsidiary of
DETROIT DIESEL CORPORATION
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, AUGUST 11, 1997, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
July 15, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by OMC Acquisition Corp., a Delaware corporation
(the "Offeror"), and a wholly-owned subsidiary of Detroit Diesel Corporation, a
Delaware corporation ("DDC"), to act as Dealer Manager in connection with the
Offeror's offer to purchase 13,842,619 shares of Common Stock, $0.15 par value
per share (the "Shares"), of Outboard Marine Corporation, a Delaware corporation
(the "Company"), at a purchase price of $16.00 per Share, net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated July 15, 1997 (the "Offer to Purchase"), and in
the related Letter of Transmittal (which together constitute the "Offer")
enclosed herewith. The Offer is being made in connection with the Agreement and
Plan of Merger, dated as of July 8, 1997, among DDC, the Offeror and the Company
(the "Merger Agreement"). Holders of Shares whose certificates for such Shares
(the "Share Certificates") are not immediately available or who cannot deliver
their Certificates and all other required documents to the Depositary or
complete the procedures for book-entry transfer prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase) must tender their Shares
according to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares in your name or in the name of your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated July 15, 1997.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal may
be used to tender Shares.
3. A letter to stockholders of the Company from Harry W. Bowman, the
Chairman of the Board, President and Chief Executive Officer of the Company,
together with a Solicitation/Recommendation Statement on Schedule 14D-9 filed
with the Securities and Exchange Commission by the Company and mailed to the
stockholders of the Company.
4. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if Share Certificates are not immediately available or if such
certificates and all other required documents cannot be delivered to ChaseMellon
Shareholder Services, L.L.C. (the "Depositary") by the Expiration Date or if the
procedure for book-entry transfer cannot be completed by the Expiration Date.
5. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name, with space provided for
obtaining such clients' instructions with regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9.
7. A return envelope addressed to the Depositary.
<PAGE> 2
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER, PRORATION PERIOD AND
WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY,
AUGUST 11, 1997, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal and any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase) in connection with a book-
entry delivery of Shares, and any other required documents should be sent to the
Depositary, and (ii) either Share Certificates representing the tendered Shares
should be delivered to the Depositary, or such Shares should be tendered by
book-entry transfer into the Depositary's account maintained at one of the
Book-Entry Transfer Facilities (as described in the Offer to Purchase), all in
accordance with the instructions set forth in the Letter of Transmittal and the
Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates, or other required documents on or prior to the
Expiration Date or to comply with the book-entry transfer procedures on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase.
The Offeror will not pay any fees or commissions to any broker, dealer or
any other person (other than the Dealer Manager (as described in the Offer to
Purchase)) for soliciting tenders of Shares pursuant to the Offer. The Offeror
will, however, upon request, reimburse you for customary mailing and handling
expenses incurred by you in forwarding any of the enclosed materials to your
customers. The Offeror will pay or cause to be paid any stock transfer taxes
payable on the transfer of Shares to it, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
the Dealer Manager or D.F. King & Co., Inc., as the Information Agent, at their
respective addresses and telephone numbers set forth on the back cover page of
the Offer to Purchase. Additional copies of the enclosed materials may be
obtained from the Information Agent.
Very truly yours,
CHASE SECURITIES INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE OFFEROR, DDC, THE DEPOSITARY, THE
INFORMATION AGENT, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE> 1
EXHIBIT 99.(A)(4)
Offer to Purchase for Cash
13,842,619 Shares of Common Stock
of
OUTBOARD MARINE CORPORATION
at
$16.00 Net Per Share
by
OMC ACQUISITION CORP.
a wholly-owned subsidiary of
DETROIT DIESEL CORPORATION
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, AUGUST 11, 1997, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated July 15,
1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") relating to an offer by OMC Acquisition Corp.,
a Delaware corporation (the "Offeror") and a wholly-owned subsidiary of Detroit
Diesel Corporation, a Delaware corporation ("DDC"), to purchase 13,842,619
shares of Common Stock, par value $0.15 per share (the "Shares") of Outboard
Marine Corporation, a Delaware corporation (the "Company"), at a purchase price
of $16.00 per Share, net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer. The Offer is being made in
connection with the Agreement and Plan of Merger, dated as of July 8, 1997,
among DDC, the Offeror and the Company (the "Merger Agreement"). This material
is being forwarded to you as the beneficial owner of Shares carried by us in
your account but not registered in your name.
A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND
PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR
YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR
YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to tender any
or all of the Shares held by us for your account, upon the terms and conditions
set forth in the Offer.
Please note the following:
1. The tender price is $16.00 per Share, net to you in cash.
2. The Offer is being made for 13,842,619 Shares.
3. The Offer, proration period and withdrawal rights will expire at
12:00 Midnight, New York City time, on Monday, August 11, 1997, unless the
Offer is extended.
4. The Offer is conditioned upon, among other things, there being
validly tendered prior to the expiration of the Offer and not withdrawn
13,842,619 Shares. The Offer is also subject to the other terms and
conditions contained in the Offer to Purchase.
5. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to the
Offer.
<PAGE> 2
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction form
contained in this letter. An envelope to return your instruction to us is
enclosed. If you authorize tender of your Shares, all such Shares will be
tendered unless otherwise indicated in such instruction form. PLEASE FORWARD
YOUR INSTRUCTIONS TO US AS SOON AS POSSIBLE TO ALLOW US AMPLE TIME TO TENDER
YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements or amendments thereto. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares
residing in any jurisdiction in which the making of the Offer or acceptance
thereof would not be in compliance with the securities laws of such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of the Offeror by Chase Securities Inc. or one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
13,842,619 SHARES OF COMMON STOCK
OF
OUTBOARD MARINE CORPORATION
AT
$16.00 NET PER SHARE
BY
OMC ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
DETROIT DIESEL CORPORATION
The undersigned acknowledge(s) receipt of your letter enclosing the Offer
to Purchase, dated July 15, 1997, and the related Letter of Transmittal (which
together constitute the "Offer") relating to the Offer by OMC Acquisition Corp.,
a Delaware corporation, and a wholly-owned subsidiary of Detroit Diesel
Corporation, a Delaware corporation, to purchase 13,842,619 shares of Common
Stock, par value $0.15 per share (the "Shares"), of Outboard Marine Corporation,
a Delaware corporation.
You are instructed to tender the number of Shares indicated below (or, if
no number is indicated below, all Shares) that are held by you for the account
of the undersigned, upon the terms and subject to the conditions set forth in
the Offer.
SIGN HERE
- ----------------------------------------------------
______________ Shares*
- ----------------------------------------------------
<TABLE>
<S> <C>
------------------------------------------------
------------------------------------------------
Signature(s)
------------------------------------------------
------------------------------------------------
Please Print Name(s) and
Address(es) Here
------------------------------------------------
Area Code and Telephone No.
------------------------------------------------
Taxpayer Identification or
Social Security No.(s)
</TABLE>
Dated: , 1997
- ------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
<PAGE> 1
EXHIBIT 99.(A)(5)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
OUTBOARD MARINE CORPORATION
This form, or one substantially equivalent hereto, must be used to accept
the Offer (as defined below) if certificates for shares of Common Stock, $0.15
par value per share (the "Shares"), of Outboard Marine Corporation, a Delaware
corporation (the "Company"), are not immediately available or if the procedure
for book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary on or prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase). Such form
may be delivered by hand, facsimile transmission, or mail to the Depositary. See
Section 3 of the Offer to Purchase, dated July 15, 1997 (the "Offer to
Purchase").
The Depositary:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<C> <C> <C>
By Mail: By Overnight Courier: By Hand Delivery:
P.O. Box 3305 85 Challenger Rd. 120 Broadway, 13(th) Floor
South Hackensack, NJ 07606 Mail Drop -- Reorg New York, NY 10271
Attn: Reorganization Ridgefield Park, NJ 07660 Attn: Reorganization
Department Attn: Reorganization Department
Department
By Facsimile Transmission:
(201) 329-8936
To Confirm:
(201) 296-4860
</TABLE>
------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE, OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID
DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to OMC Acquisition Corp., upon the terms and
subject to the conditions set forth in the Offer to Purchase, and the related
Letter of Transmittal (which together constitute the "Offer"), receipt of which
is hereby acknowledged, Shares of the Company, pursuant to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: SIGN HERE
Certificate No(s). (if available): Name(s):
- ----------------------------------------------------- -----------------------------------------------------
- -----------------------------------------------------
-----------------------------------------------------
(PLEASE PRINT)
If Securities will be tendered by
book-entry transfer:
Address:
Name of Tendering Institution:
(ZIP CODE)
Area Code and Telephone No.:
Account Number: at
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Signature(s):
</TABLE>
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity which is a member in good standing of the Securities Transfer
Agent's Medallion Program guarantees the delivery to the Depositary of the
Shares tendered hereby, together with a properly completed and duly executed
Letter of Transmittal (or manually signed facsimile(s) thereof), or an Agent's
Message (as defined in the Offer to Purchase) in the case of a book-entry
delivery, and any other required documents, all within three New York Stock
Exchange trading days of the date hereof.
<TABLE>
<S> <C>
Name of Firm: Title:
------------------------ ----------------------------------
Name:
- ------------------------------------- -----------------------------------
(AUTHORIZED SIGNATURE) (PLEASE PRINT OR TYPE)
Address: Area Code and Telephone No.:
----------------------------- ------------
- ------------------------------------- ----------------------------------------
</TABLE>
DO NOT SEND CERTIFICATES FOR SHARES WITH THIS FORM -- CERTIFICATES SHOULD BE
SENT WITH THE LETTER OF TRANSMITTAL.
Dated: , 1997
3
<PAGE> 1
EXHIBIT 99.(A)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- ---------------------------------------------------------- ---------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE FOR THIS TYPE OF ACCOUNT: GIVE THE EMPLOYER
SOCIAL SECURITY IDENTIFICATION
NUMBER OF-- NUMBER OF--
- ---------------------------------------------------------- ---------------------------------------------------------------
<S> <C> <C> <C>
1. An individual's The individual 9. A valid trust, estate, The legal entity (Do not
account or pension trust furnish the identification
number of the personal
2. Two or more The actual owner of the representative or trustee
individuals account or, if combined unless the legal entity
(joint account) funds, any one of the itself is not designated
individuals(1) in the account title.)(5)
3. Husband and wife The actual owner of the 10. Corporate account The corporation
(joint account) account or, if joint
funds, either person(1)
4. Custodian account of a The minor(2) 11. Religious, charitable, The organization
minor (Uniform Gift to or educational
Minors Act) organization account
5. Adult and minor The adult or, if the minor 12. Partnership account The partnership
(joint account) is the only contributor,
the minor(1) 13. Association, club or The organization
other tax-exempt
6. Account in the name of The ward, minor, or organization
guardian or committee incompetent person(3)
for a designated ward, 14. A broker or registered The broker or nominee
minor or incompetent nominee
person
7. a. The usual revocable The grantor-trustee(1) 15. Account with the The public entity
savings trust Department of
account (grantor is Agriculture in the name
also trustee) of a public entity
b. So-called trust The actual owner(1) (such as a State or
account that is nt local government,
a legal or valid school district, or
trust under state prison) that receives
law agricultural program
payments
8. Sole proprietorship The owner(4)
account
- ---------------------------------------------------------- ---------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a) of the Code.
- - An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1) of the Code.
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
- - Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
- - Payments described in section 6049(b)(5) of the Code to non-resident aliens.
- - Payments on tax-free covenant bonds under section 1451 of the Code.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9
ENCLOSED HEREWITH TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE
SUBSTITUTE FORM W-9 WITH THE PAYER, REMEMBERING TO CERTIFY YOUR TAXPAYER
IDENTIFICATION NUMBER ON PART III OF THE FORM, WRITE "EXEMPT" ON THE FACE OF THE
FORM AND SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N of the Code and their regulations.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. Payers must be
given the numbers whether or not recipients are required to file a tax return.
Payers must generally withhold 31% of taxable interest, dividends, and certain
other payments to a payee who does not furnish a taxpayer identification number
to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE> 1
EXHIBIT 99.(A)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated July 15,
1997 and the related Letter of Transmittal and is being made to all holders of
Shares. The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. In those jurisdictions whose securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of OMC Acquisition Corp. by Chase Securities Inc. or
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
13,842,619 SHARES OF COMMON STOCK
OF
OUTBOARD MARINE CORPORATION
AT
$16 NET PER SHARE
BY
OMC ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
DETROIT DIESEL CORPORATION
OMC Acquisition Corp., a Delaware corporation (the "Offeror") and a
wholly-owned subsidiary of Detroit Diesel Corporation, a Delaware corporation
("DDC"), is offering to purchase 13,842,619 shares of Common Stock, par value
$0.15 per share (the "Shares"), of Outboard Marine Corporation, a Delaware
corporation (the "Company"), at $16 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated July 15, 1997 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer").
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of July 8, 1997 (the "Merger Agreement"), among DDC, the Offeror and the
Company. The Merger Agreement provides, among other things, that subject to the
satisfaction or waiver of certain conditions set forth in the Merger Agreement,
the Offeror will merge (the "Merger") with and into the Company, with the
Company continuing as the surviving corporation. Pursuant to the Merger, each
outstanding Share (other than Shares owned by the Company as treasury stock,
Shares owned by Offeror or DDC or Shares held by stockholders who perfect their
appraisal rights under Delaware law) (the "Exchanged Common Shares") will be
converted into and represent the right to receive (1) a fractional share of DDC
common stock equal to 4,000,000 divided by the number of Exchanged Common Shares
(the "Exchange Ratio") plus (2) a cash payment equal to (i) $16.00 minus (ii)
the product of the Exchange Ratio times $25.00, plus (3) in the event the
average closing price on the New York Stock Exchange for DDC common stock for
the 20 consecutive trading days ending on the fifth trading day prior to the
closing date of the merger (the "DDC Closing Date Price") is less than $25.00,
then an additional cash payment equal to the product of the Exchange Ratio
multiplied by the lesser of (i) $25.00 minus the DDC Closing Date Price or (ii)
$6.00.
Approval of the Merger will require the affirmative vote of two-thirds of the
issued and outstanding Shares. If the Offeror acquires the 13,842,619 Shares
subject to the Offer it will control over two-thirds of the Shares issued and
outstanding as of the date of the Merger Agreement and will have sufficient
voting power to approve the Merger without the affirmative vote of any other
stockholder. However, the Company currently has options outstanding to purchase
approximately 1,430,000 Shares, of which approximately 250,000 are exercisable
at exercise prices of $16.00 or less per Share. In addition, there are existing
convertible debt instruments of the Company convertible into approximately
3,360,000 Shares, at a conversion price of $22.25 per Share. If at the record
date relating to the stockholder meeting on the Merger more than 20,763,928
Shares are outstanding, the Offeror will not have sufficient voting power to
approve the Merger without the affirmative vote of other holders of Shares in an
amount, which together with the Shares held by the Offeror, will constitute at
least two-thirds of the then issued and outstanding Shares.
ALL OF THE MEMBERS OF THE BOARD OF DIRECTORS OF THE COMPANY (WITH ONE
ABSTENTION) APPROVED THE OFFER, THE MERGER, AND THE MERGER AGREEMENT, HAVE
DETERMINED THAT THE TERMS OF EACH OF THE OFFER, THE MERGER AND THE MERGER
AGREEMENT ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS
AND RECOMMEND THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES IN THE OFFER.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, AUGUST 11, 1997, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (i) there being validly
tendered by the Expiration Date (as defined below) and not withdrawn at least
13,842,619 Shares, and (ii) satisfaction of certain other terms and conditions.
If any of the conditions set forth in the Offer to Purchase that relate to the
Offeror's obligations to purchase the Shares are not satisfied by 12:00
Midnight, New York City time, on Monday, August 11, 1997 (or any other time then
set as the Expiration Date), the Offeror may, subject to the terms of the Merger
Agreement, (i) extend the Offer and, subject to applicable withdrawal rights,
retain all tendered Shares until the expiration of the Offer as so extended,
(ii) subject to complying with applicable rules and regulations of the
Securities and Exchange Commission accept for payment all Shares so tendered and
not extend the Offer, or (iii) terminate the Offer and not accept for payment
any Shares and return all tendered Shares to tendering stockholders.
If, for any reason whatsoever, acceptance for payment of any Shares tendered
pursuant to the Offer is delayed, or if Purchaser is unable to accept for
payment or pay for Shares tendered pursuant to the Offer, then, without
prejudice to Purchaser's rights set forth in the Offer to Purchase, the
Depositary may, nevertheless, on behalf of the Offeror, retain tendered Shares
and such Shares may not be withdrawn except to the extent that the tendering
stockholder is entitled to and duly exercises withdrawal rights as described in
Section 4 of the Offer to Purchase. Any such delay will be followed by an
extension of the Offer to the extent required by law.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer (including proration due to tenders of
more than 13,842,619 Shares), or if Share certificates are submitted evidencing
more Shares than are tendered, Share certificates evidencing unpurchased Shares
will be returned without expense to the tendering stockholder (or, in the case
of Shares tendered by book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility pursuant to the procedure set forth in Section 3 of
the Offer to Purchase, such Shares will be credited to an account maintained at
such Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
<PAGE> 2
Except as otherwise provided in Section 4 of the Offer to Purchase, tenders
of Shares made pursuant to the Offer are irrevocable. Shares tendered pursuant
to the Offer may be withdrawn at any time prior to the Expiration Date. The term
"Expiration Date" for certain purposes and subject to certain limitations, shall
mean 12:00 Midnight, New York City time, on Thursday, August 11, 1997, unless
the Offeror shall have extended the period of time for which the Offer is open,
in which event the term "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended by the Offeror, shall expire. Unless theretofore
accepted for payment as provided in the Offer, Shares tendered pursuant to the
Offer may also be withdrawn at any time after September 12, 1997. For a
withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder if different from the name of the person who tendered the
Shares. If certificates for Shares to be withdrawn have been delivered or
otherwise identified to the Depositary, then prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and, unless such Shares have been tendered for the
account of an Eligible Institution (as defined in the Offer to Purchase), the
signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been tendered pursuant to the procedures for
book-entry transfer set forth in Section 3 of the Offer to Purchase, the notice
of withdrawal must also specify the name and number of the account at the
applicable Book-Entry Transfer Facility to be credited with the withdrawn
Shares. All questions as to the form and validity (including time of receipt) of
notice of withdrawal will be determined by the Offeror, in its sole discretion,
and its determination will be final and binding on all parties.
The Offeror will, upon the terms and subject to the conditions of the Offer,
purchase an aggregate of 13,842,619 Shares on a pro rata basis (with adjustments
to avoid purchase of fractional Shares) based upon the number of Shares properly
tendered on or prior to the Expiration Date and not withdrawn. Due to the
difficulty of determining the precise number of Shares properly tendered and not
withdrawn, if proration is required, Offeror does not expect to announce the
final results of proration or pay for Shares until at least five New York Stock
Exchange trading days after the Expiration Date. Preliminary results of
proration will be announced by press release as promptly as practicable after
the Expiration Date. Holders of Shares may obtain such preliminary information
when it becomes available from the Information Agent and may be able to obtain
such information from their brokers.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when the Offeror gives oral or written notice to the Depositary of the
Offeror's acceptance of such Shares for payment. In all cases, payment for
Shares purchased pursuant to the Offer will be made by deposit of the purchase
price with the Depositary, which will act as agent for tendering stockholders
for the purpose of receiving payment from the Offeror and transmitting payment
to tendering stockholders. Payment for Shares accepted for payment pursuant to
the Offer will be made only after timely receipt by the Depositary of
certificates for such Shares or timely confirmation of a book-entry transfer of
such Shares into the Depositary's account at the Book-Entry Transfer Facilities
pursuant to the procedures set forth in the Offer to Purchase and timely receipt
by the Depositary of a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees and
any other documents required by the Letter of Transmittal or an Agent's Message
(as defined in the Offer to Purchase), in the case of a book-entry transfer.
The Offeror expressly reserves the right, in its sole discretion, at any time
or from time to time, subject to applicable law and to the Merger Agreement, to
extend the period during which the Offer is open by giving oral or written
notice of such extension to the Depositary followed by, as promptly as
practicable, a public announcement thereof no later than 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date.
The information required to be disclosed by Paragraph (e)(1)(vii) of Rule
14d-6 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, is contained in the Offer to Purchase and is incorporated
herein by reference.
The Company has provided to the Offeror its lists of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and other
related materials are being mailed to record holders of Shares and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
lists or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE
OFFER.
Questions and requests for assistance or for copies of the Offer to Purchase
and the related Letter of Transmittal and other tender offer materials may be
directed to the Information Agent or the Dealer Manager as set forth below, and
copies will be furnished promptly at the Offeror's expense. No fees or
commissions will be payable to brokers, dealers or other persons other than the
Dealer Manager for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D. F. KING & CO., INC.
77 Water Street
New York, New York 10005
BANKS AND BROKERS CALL COLLECT: (212) 269-5550
ALL OTHERS CALL TOLL FREE: (800) 207-2014
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail:
P.O. Box 3305
South Hackensack, NJ 07606
Attn: Reorganization Department
By Overnight Courier:
85 Challenger Rd.
Mail Drop - Reorg
Ridgefield Park, NJ 07660
Attn: Reorganization Department
By Hand Delivery:
120 Broadway, 13th Floor
New York, NY 10271
Attn: Reorganization Department
By Facsimile Transmission: (201) 329-8936
(For Eligible Institutions Only)
Confirm by Telephone to: (201) 296-4860
The Dealer Manager for the Offer is:
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
(212) 270-3939
<PAGE> 1
EXHIBIT 99.(a)(8)
R-1234
Contact: Suzanne Truskowski
Manager, Public Affairs
Detroit Diesel Corporation
Phone: 313.592.7642
Fax: 313.592.5058
FOR IMMEDIATE RELEASE
DETROIT DIESEL CORPORATION ANNOUNCES TENDER OFFER
TO ACQUIRE OUTBOARD MARINE CORPORATION
DETROIT, MI and WAUKEGAN, IL, July 9, 1997 -- Detroit Diesel Corporation
(NYSE: DDC) and Outboard Marine Corporation (NYSE: OM), today jointly
announced the signing of a definitive agreement and plan of merger under
which DDC will acquire Outboard Marine Corporation (OMC). Detroit
Diesel will shortly commence a two-step transaction to acquire the
outstanding common shares of OMC for $16 per share. The transaction's
two steps are first: a tender offer for approximately 67% on a fully
diluted basis of the outstanding OMC shares in cash; then, in step two,
to purchase the remaining shares for a combination of cash and 4 million
shares of DDC common stock. The aggregate value of the transaction is
approximately $500 million, including the assumption of OMC's existing
debt of approximately $180 million. In addition to the equity offering,
DDC's acquisition will be financed through a newly established credit
facility.
The agreement, which is subject to customary conditions, provides
for the merger of a newly-formed subsidiary of Detroit Diesel with OMC
following the completion of the tender offer. The board of directors of
Outboard Marine has approved the offer and the merger.
Roger S. Penske, Chairman of Detroit Diesel said, "Our objective
is to further expand our worldwide marine capabilities beyond diesel
engines with the OMC enterprises. OMC, as a leading boat and marine
gasoline engine manufacturer, affords us the opportunity to enhance
skills and resources in new product development, manufacturing
processes, marketing, sales and distribution, and customer service. In
addition, we look forward to the prospect of further developing OMC's
proprietary FICHT(TM) fuel injection technology to optimize the
performance, fuel economy and emissions capability for the next
generation of marine and other engines. The DDC/OMC combination
represents an additional example of our commitment to generate long-term
earnings growth and maintain technology leadership for our
shareholders."
Referring to OMC's previously announced decision to explore
strategic alternatives in order to maximize shareholder value, Harry W.
1
<PAGE> 2
Bowman, Chairman of Outboard Marine Corporation, said, "We are very
pleased that our process has resulted in an agreement to team OMC with
Detroit Diesel, a company which has achieved great growth and excellent
performance in engineering, manufacturing and marketing its products.
With OMC's shareholders being offered the opportunity to participate in
DDC's future, along with the cash consideration being offered, we
believe this offer maximizes value for our current owners. The merger
also provides the opportunity for an optimistic future for our dealers,
their customers, and our employees. This is a very positive development
for OMC worldwide and the marine industry as well."
Timothy D. Leuliette, Vice Chairman of Detroit Diesel said, "With
OMC's leading market positions, and its recognized and respected brands
such as Johnson (R) and Evinrude (R), there are many opportunities to expand
our marine business and capitalize on synergies between DDC and OMC
operations. We will proceed with our tender offer shortly, subject to
normal regulatory approvals, and plan to close the subsequent merger
transaction within the next 90 days."
Combined net revenues for Detroit Diesel and Outboard Marine
Corporation in 1996 would have been $3.2 billion.
Outboard Marine Corporation is a leading global manufacturer and
marketer of marine engines and boats and related parts and accessories.
It is the second largest manufacturer of outboard engines in the world
and the second largest boat builder in the United States. Some of OMC's
products, including Johnson(R) and Evinrude(R) outboards, and Chris-Craft(R),
Grumman(R), Four Winns(R) and Stratos(R) boats, are among the most widely
recognized brands in the world. OMC manufactures products for world
markets in facilities located around the globe. Approximately 80% of
OMC sales are in North America, the world's largest market for marine
products.
Detroit Diesel Corporation is engaged in the design, manufacture,
sale and service of heavy-duty diesel and alternative fuel engines,
automotive diesel engines, and engine-related products, and provides
financing through Detroit Diesel Capital Corporation. The Company
offers a complete line of diesel engines from ten to 10,000 horsepower
for the on-highway truck; construction, mining and industrial;
automotive; coach and bus; marine; power generation; and military
markets. Detroit Diesel services these markets directly and through a
worldwide network of more than 2,500 authorized distributors and
dealers.
Detroit Diesel's major shareholder is a wholly-owned subsidiary
of Penske Corporation, a closely-held, diversified transportation
services company which conducts its business through a number of wholly-
or partially-owned companies, including Penske Truck Leasing Company,
Diesel Technology Company, AG Kuhnle, Kopp and Kausch, Penske
Automotive Group, Inc., Penske Auto Centers, Inc., Penske Motorsports,
Inc., and Penske Capital Partners. The Penske group of businesses has
annual revenues exceeding $6 billion and employs more than 25,000 around
the world.
###
Detroit Diesel Corporation's World Wide Web address is
http://www.detroitdiesel.com.
Outboard Marine Corporation World Wide Web address is
http://www.OMC-online.com
2
<PAGE> 1
EXHIBIT 99.(a)(9)
R-1235 Contact: Dan McEnroe
Treasurer
313/592-7344
E-Mail Address: [email protected]
DETROIT DIESEL CORPORATION ANNOUNCES ADDITIONAL DETAILS TO OUTBOARD MARINE
CORPORATION TENDER OFFER
FOR IMMEDIATE RELEASE
DETROIT, MI, July 10, 1997 -- Yesterday, Detroit Diesel Corporation
(NYSE: DDC) and Outboard Marine Corporation (NYSE: OM) jointly announced the
signing of a definitive merger agreement under which DDC will acquire Outboard
Marine Corporation (OMC). Further details of the transaction are as follows:
OMC has 20,205,515 shares of common stock outstanding, which excludes
shares issuable upon exercise of options issued to employees and conversion of
outstanding convertible debt instruments.
OMC Acquisition Corp., a wholly-owned subsidiary of DDC, will initiate a
cash tender offer to purchase 13,842,619 shares of common stock of OMC at a
price of $16.00 per share.
In the event the tender offer is consummated, the second part of the
transaction will be the merger of the DDC subsidiary into OMC pursuant to which
the outstanding shares of common stock of OMC will be exchanged for an
aggregate of 4,000,000 shares of common stock of DDC plus a variable amount of
cash based on the closing price of the DDC common stock. In the merger, each
share of then issued and outstanding OMC common stock (the "Exchanged Common
Shares"), shall be converted into the right to receive (1) a fractional share
of DDC common stock equal to 4,000,000 divided by the number of Exchanged
Common Shares (the "Exchange Ratio") plus (2) a cash payment equal to (i)
$16.00 minus (ii) the product of the Exchange Ratio times $25.00, plus (3) in
the event the average closing price on the New York Stock Exchange for DDC
common stock for the 20 consecutive trading days ending on the fifth trading
day prior to the closing date of the merger (the "DDC Closing Date Price") is
less than $25.00, then an additional cash payment equal to the product of the
Exchange Ratio multiplied by the lesser of (i) $25.00 minus the DDC Closing
Date Price or (ii) $6.00.
Assuming the issuance of no additional shares of common stock by OMC prior
to the merger, at the effective time of the merger, the holders of the
6,362,896 Exchanged Common Shares of OMC common stock would receive a
combination of 4,000,000 shares of DDC common stock and cash. Assuming a
$25.00 DDC Closing Date Price, OMC shareholders in the merger would thus
receive $16.00 of value per OMC share, which value is comprised of 0.6286
shares of DDC common stock for each share of OMC common stock and $0.28 in
cash.
The above conversion formula provides that should the DDC Closing Date
Price be less than $25.00, additional cash consideration will be paid to the
holders of the Exchanged Common Shares to maintain the total $16.00 per share
value subject to a minimum value of $19.00 per share of DDC common stock. If
the DDC Closing Date Price exceeds $25.00 per share of DDC common stock, the
Exchange Ratio would remain the same.
Additional details will be available in the tender offer documents to be
filed with the Securities and Exchange Commission in connection with this
transaction.
1
<PAGE> 2
Outboard Marine Corporation is a leading global manufacturer and marketer
of marine engines and boats and related parts and accessories. It is the
second largest manufacturer of outboard engines in the world and the second
largest boat builder in the United States. Some of OMC's products, including
Johnson(R) and Evinrude(R) outboards, and Chris*Craft(R), Grumman(R), Four
Winns(R), and Stratos(R) boats, are among the most widely recognized brands in
the world. OMC manufactures products for world markets in facilities located
around the globe. Approximately 80% of OMC sales are in North America, the
world's largest market for marine products.
Detroit Diesel Corporation is engaged in the design, manufacture, sale and
service of heavy-duty diesel and alternative fuel engines, automotive diesel
engines, and engine-related products and provides financing through Detroit
Diesel Capital Corporation. The Company offers a complete line of diesel
engines from ten to 10,000 horsepower for the on-highway truck; construction,
mining and industrial; automotive; coach and bus; marine; power generation; and
military markets. Detroit Diesel services these markets directly and through a
worldwide network of more than 2,500 authorized distributors and dealers.
Detroit Diesel's major shareholder is a wholly-owned subsidiary of Penske
Corporation, a closely-held, diversified transportation services company which
conducts its business through a number of wholly- or partially-owned companies,
including Penske Truck Leasing Company, Diesel Technology Company, AG Kuhnle,
Kopp and Kausch, Penske Automotive Group, Inc., Penske Auto Centers, Inc.,
Penske Motorsports, Inc., and Penske Capital Partners. The Penske group of
businesses has annual revenues exceeding $6 billion and employs more than
25,000 around the world.
This news release may include projections, forecasts and other
forward-looking statements about the Company, the industry in which it competes
and the markets it serves. The achievement of such projections is subject to
certain risks and uncertainties, fully detailed in the Company's Annual Report
on Form 10-K for the year ended December 31, 1996.
###
For Media Only: For a complimentary facsimile copy of Detroit Diesel
Corporation's recent press releases call "Company News on Call" at
1-800-758-5804 ext. 239425.
Detroit Diesel Corporation's World Wide Web address is
http://www.detroitdiesel.com
Outboard Marine Corporation's World Wide Web address is
http://WWW.OMC-online.com
2
<PAGE> 1
EXHIBIT 99.(b)(1)
[CHASE LOGO]
June 25, 1997
Detroit Diesel Corporation
Acquisition Credit Facilities
Commitment Letter
Detroit Diesel Corporation
13400 Outer Drive West
Detroit, Michigan 48239-4001
Attention: Mr. Daniel J. McEnroe
Treasurer
Ladies and Gentlemen:
You have advised The Chase Manhattan Bank ("Chase") and Chase Securities
Inc. ("CSI") that Detroit Diesel Corporation (the "Borrower") will form a
wholly-owned subsidiary ("AcquisitionCo") which will seek to acquire all of the
issued and outstanding common stock (the "Shares") of a corporation previously
identified to us ("Target") pursuant to a merger agreement (the "Merger
Agreement") providing for approximately 67% of the Shares to be purchased by
AcquisitionCo pursuant to a cash tender offer (the "Tender Offer"), followed by
a merger in which all the remaining Shares will be converted to the right to
receive cash and common stock of the Borrower (the "Merger"; the Tender Offer
and the Merger being collectively called the "Acquisition"). References herein
to (a) the "Acquisition" shall include the financings and all transactions
related to the Acquisition and (b) "AcquisitionCo" shall refer, prior to the
Merger, to AcquisitionCo, and, following the Merger, to Target (as the surviving
corporation in the Merger).
You have also advised us that to finance the Acquisition (including the
refinancing of existing indebtedness of the Borrower and Target) and the related
premiums, fees and expenses you will require senior credit facilities in the
aggregate amount of up to $800,000,000. You have requested that CSI agree to
structure, arrange and syndicate a senior revolving credit facility in an
aggregate amount of up to $300,000,000 and a senior term loan facility in the
aggregate amount of up to $500,000,000 (the "Facilities"), and that Chase commit
to provide the entire amount of the Facilities and to serve as administrative
agent for the Facilities. You have further advised us that you intend, promptly
upon the execution of the Merger Agreement, to commence the steps leading to an
offering of senior subordinated notes of the Borrower (the "Subordinated
Notes"), expected to be in the amount of at least $125,000,000, which you expect
to close concurrently with the closing of the Tender Offer. The net proceeds of
the Subordinated Notes will be used to finance the Tender Offer and will reduce
the amount of the senior term loan facility by the amount thereof.
CSI is pleased to advise you that it is willing to act as exclusive advisor
and arranger for the Facilities.
Furthermore, Chase is pleased to advise you of its commitment to provide
the entire amount of the Facilities upon the terms and subject to the conditions
set forth or referred to in this commitment letter (the "Commitment Letter") and
in the Summary of Terms and Conditions attached hereto as Exhibit A (the "Term
Sheet").
It is agreed that Chase will act as the sole and exclusive Administrative
Agent, and that CSI will act as the sole and exclusive advisor and arranger (in
such capacity, the "Arranger"), for the Facilities, and each will, in such
capacities, perform the duties and exercise the authority customarily performed
and exercised by it in such roles. You agree that no other agents, co-agents or
arrangers will be appointed, no other titles will be
1
<PAGE> 2
awarded and no compensation (other than that expressly contemplated by the Term
Sheet and the Fee Letter referred to below) will be paid in connection with the
Facilities unless you and we shall so agree.
We intend to syndicate the Facilities to a group of financial institutions
(together with Chase, the "Lenders") identified by us in consultation with you.
CSI intends to commence syndication efforts promptly upon the execution of this
Commitment Letter, and you agree to assist CSI in completing a syndication
satisfactory to it. Such assistance shall include (a) your using commercially
reasonable efforts to ensure that the syndication efforts benefit materially
from your existing lending relationships, (b) direct contact between senior
management and advisors of the Borrower and Target and the proposed Lenders, (c)
assistance in the preparation of a Confidential Information Memorandum and other
marketing materials to be used in connection with the syndication and (d) the
hosting, with CSI, of one or more meetings of prospective Lenders.
As the Arranger, CSI will manage all aspects of the syndication in
consultation with you, including decisions as to the selection of institutions
to be approached and when they will be approached, when their commitments will
be accepted, which institutions will participate, the allocations of the
commitments among the Lenders and the amount and distribution of fees among the
Lenders. In acting as the Arranger, CSI will have no responsibility other than
to arrange the syndication. To assist CSI in its syndication efforts, you agree
promptly to prepare and provide to CSI and Chase all information with respect to
the Borrower, Target and the transactions contemplated hereby, including all
financial information and projections (the "Projections"), as we may reasonably
request in connection with the arrangement and syndication of the Facilities.
You hereby represent and covenant that (a) all information other than the
Projections (the "Information") that has been or will be made available to Chase
or CSI by you or any of your representatives is or will be, when furnished,
complete and correct in all material respects and does not or will not, when
furnished, contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein not
materially misleading in light of the circumstances under which such statements
are made, and (b) the Projections that have been or will be made available to
Chase or CSI by you or any of your representatives have been or will be prepared
in good faith based upon reasonable assumptions. You understand that in
arranging and syndicating the Facilities we may use and rely on the Information
and Projections without independent verification thereof.
As consideration for Chase's commitment hereunder and CSI's agreement to
perform the services described herein, you agree to pay to Chase the
nonrefundable fees set forth in the Fee Letter dated the date hereof and
delivered herewith (the "Fee Letter").
Chase's commitment hereunder and CSI's agreement to perform the services
described herein are subject to (a) there not occurring or becoming known to us
any material adverse condition or material adverse change in or affecting the
business, operations, property, condition (financial or otherwise) or prospects
(i) of the Borrower and its subsidiaries, taken as a whole, or (ii) of Target
and its subsidiaries, taken as a whole, that would permit the Borrower to
terminate the Merger Agreement, (b) our not becoming aware after the date hereof
of any information or other matter affecting the Borrower or Target or the
transactions contemplated hereby which is inconsistent in a material and adverse
manner with any such information or other matter disclosed to us prior to the
date hereof, (c) there not having occurred a material disruption of or material
adverse change in financial, banking or capital market conditions that, in our
judgment, could materially impair the syndication of the Facilities, (d) our
satisfaction that prior to and during the syndication of the Facilities there
shall be no competing offering, placement or arrangement of any debt securities
or bank financing by or on behalf of the Borrower or any affiliate thereof
(other than the offering of Subordinated Notes), (e) the negotiation, execution
and delivery on or before October 31, 1997 of definitive documentation with
respect to the Facilities satisfactory to Chase and its counsel and (f) the
other conditions set forth or referred to in the Term Sheet. The terms and
conditions of Chase's commitment hereunder and of the Facilities are not limited
to those set forth herein and in the Term Sheet. Those matters that are not
covered by the provisions hereof and of the Term Sheet are subject to the
approval and agreement of Chase, CSI and the Borrower.
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<PAGE> 3
You agree (a) to indemnify and hold harmless Chase, CSI, their affiliates
and their respective officers, directors, employees, advisors, and agents (each,
an "indemnified person") from and against any and all losses, claims, damages
and liabilities to which any such indemnified person may become subject arising
out of or in connection with this Commitment Letter, the Facilities, the use of
the proceeds thereof, the Acquisition, or any related transaction or any claim,
litigation, investigation or proceeding relating to any of the foregoing,
regardless of whether any indemnified person is a party thereto, and to
reimburse each indemnified person upon demand for any reasonable legal or other
expenses incurred in connection with investigating or defending any of the
foregoing, provided that the foregoing indemnity will not, as to any indemnified
person, apply to losses, claims, damages, liabilities or related expenses to the
extent they are found by a final, non-appealable judgment of a court to arise
from the willful misconduct or gross negligence of such indemnified person, and
(b) to reimburse Chase, CSI and their affiliates on demand for all reasonable
out-of-pocket expenses (including due diligence expenses, syndication expenses,
consultant's fees and expenses, travel expenses, and reasonable fees, charges
and disbursements of counsel) incurred in connection with the Facilities and any
related documentation (including this Commitment Letter, the Term Sheet, the Fee
Letter and the definitive financing documentation) or the administration,
amendment, modification or waiver thereof. No indemnified person shall be liable
for any indirect or consequential damages in connection with its activities
related to the Facilities.
You acknowledge that Chase and its affiliates (the term "Chase" being
understood to refer hereinafter in this paragraph to include such affiliates)
may be providing debt financing, equity capital or other services (including
financial advisory services) to other companies in respect of which you may have
conflicting interests regarding the transactions described herein and otherwise.
Chase will not use confidential information obtained from you by virtue of the
transactions contemplated by this Commitment Letter or their other relationships
with you in connection with the performance by Chase of services for other
companies, and Chase will not furnish any such information to other companies.
You also acknowledge that Chase has no obligation to use in connection with the
transactions contemplated by this Commitment Letter, or to furnish to you,
confidential information obtained from other companies.
This Commitment Letter shall not be assignable by you without the prior
written consent of Chase and CSI (and any purported assignment without such
consent shall be null and void), is intended to be solely for the benefit of the
parties hereto and is not intended to confer any benefits upon, or create any
rights in favor of, any person other than the parties hereto. This Commitment
Letter may not be amended or waived except by an instrument in writing signed by
you, Chase and CSI. This Commitment Letter may be executed in any number of
counterparts, each of which shall be an original, and all of which, when taken
together, shall constitute one agreement. Delivery of an executed signature page
of this Commitment Letter by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof. This Commitment Letter and
the Fee Letter are the only agreements that have been entered into among us with
respect to the Facilities and set forth the entire understanding of the parties
with respect thereto. This Commitment Letter shall be governed by, and construed
in accordance with, the laws of the State of New York.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Term Sheet or the Fee Letter nor any of
their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) to your officers, agents and advisors who are directly
involved in the consideration of this matter or (b) as may be compelled in a
judicial or administrative proceeding or as otherwise required by law (in which
case you agree to inform us promptly thereof), provided, that the foregoing
restrictions shall cease to apply (except in respect of the Fee Letter and its
terms and substance) after this Commitment Letter has been accepted by you.
The compensation, reimbursement, indemnification and confidentiality
provisions contained herein and in the Fee Letter shall remain in full force and
effect regardless of whether definitive financing documentation shall be
executed and delivered and notwithstanding the termination of this Commitment
Letter or Chase's commitment hereunder.
If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms hereof and of the Term Sheet and the Fee Letter by
returning to us executed counterparts hereof and of the Fee
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<PAGE> 4
Letter not later than 5:00 p.m., New York City time, on June 25, 1997. Chase's
commitment and CSI's agreements herein will expire at such time in the event
Chase has not received such executed counterparts in accordance with the
immediately preceding sentence.
Chase and CSI are pleased to have been given the opportunity to assist you
in connection with this important financing.
Very truly yours,
THE CHASE MANHATTAN BANK
By:
------------------------------------
Name:
Title:
CHASE SECURITIES INC.
By:
------------------------------------
Name:
Title:
Accepted and agreed to
as of the date first
written above by:
DETROIT DIESEL CORPORATION
By:
----------------------------------
Name:
Title:
4
<PAGE> 5
EXHIBIT A
DETROIT DIESEL CORPORATION ACQUISITION CREDIT FACILITIES
SUMMARY OF TERMS AND CONDITIONS
JUNE 25, 1997
------------------------------
Detroit Diesel Corporation (the "Borrower") will form a wholly-owned
subsidiary ("AcquisitionCo") which will seek to acquire all of the outstanding
issued and outstanding common stock (the "Shares") of a corporation previously
identified to Chase and CSI ("Target") pursuant to a merger agreement (the
"Merger Agreement") providing for approximately 67% of the Shares to be
purchased by AcquisitionCo pursuant to a cash tender offer (the "Tender Offer"),
followed by a merger in which all the remaining Shares will be converted to the
right to receive cash and common stock of the Borrower (the "Merger"; the Tender
Offer and the Merger being collectively called the "Acquisition"). References
herein to (a) the "Acquisition" shall include the financings and all
transactions related to the Acquisition and (b) "AcquisitionCo" shall refer,
prior to the Merger, to AcquisitionCo, and, following the Merger, to Target (as
the surviving corporation in the Merger). The Borrower intends, promptly upon
the execution of the Merger Agreement, to commence the steps leading to an
offering of senior subordinated notes of the Borrower (the "Subordinated
Notes"), expected to be in the amount of at least $125,000,000, which is
expected to close concurrently with the closing of the Tender Offer. The net
proceeds of the Subordinated Notes will be used to finance the Tender Offer and
will reduce the amount of the Term Loan Facility by the amount thereof.
I. PARTIES
Borrower: Detroit Diesel Corporation (the "Borrower").
Guarantor: AcquisitionCo and each of the other direct and
indirect significant domestic subsidiaries of
the Borrower (the "Guarantors"; the Borrower
and the Guarantors, collectively, the "Credit
Parties").
Advisor and Arranger: Chase Securities Inc. (in such capacity, the
"Arranger").
Administrative Agent: The Chase Manhattan Bank ("Chase" and, in such
capacity, the "Administrative Agent").
Lenders: A syndicate of banks, financial institutions
and other entities, including Chase, arranged
by the Arranger (collectively, the "Lenders").
II. TYPES AND AMOUNTS OF CREDIT FACILITIES
1. Term Loan Facility
Type and Amount of Facility: Six-year term loan facility (the "Term Loan
Facility") in the amount of $500,000,000 (the
loans thereunder, the "Term Loans").
Availability: The Term Loans shall be made in up to 4
drawings, in minimum amounts to be determined,
during the period commencing on the Closing
Date (as defined below) and ending six months
following the Closing Date. At all times there
shall be sufficient availability under the
Term Loan Facility to repay the outstanding
public debt
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<PAGE> 6
of Target and to pay the cash purchase price
for Shares not owned by AcquisitionCo.
Amortization: The Term Loans shall be repayable in
consecutive semi-annual installments,
commencing on the first anniversary of the
Closing Date, in amounts to be determined.
Purpose: The proceeds of the Term Loans shall be used
to finance the Transaction and to pay related
fees and expenses.
2. Revolving Credit Facility
Type and Amount of Facility: Six-year revolving credit facility (the
"Revolving Credit Facility"; together with the
Term Loan Facility, the "Facilities") in the
amount of $300,000,000 (the loans thereunder,
the "Revolving Credit Loans").
Availability: The Revolving Credit Facility shall be
available on a revolving basis during the
period commencing on the Closing Date and
ending on the sixth anniversary thereof (the
"Revolving Credit Termination Date").
Letters of Credit: A portion of the Revolving Credit Facility not
in excess of $50,000,000 (plus the face amount
of the existing letter of credit in favor of
The Chase Manhattan Bank, Milan Branch (the
"Italian Letter of Credit")) shall be
available for the issuance of letters of
credit (the "Letters of Credit") by Chase (in
such capacity, the "Issuing Lender"). No
Letter of Credit (other than the Italian
Letter of Credit) shall have an expiration
date after the earlier of (a) one year after
the date of issuance and (b) two business days
prior to the Revolving Credit Termination
Date, provided that any Letter of Credit with
a one-year tenor may provide for the renewal
thereof for additional one-year periods (which
shall in no event extend beyond the date
referred to in clause (b) above). Outstanding
letters of credit under the Borrower's
existing credit agreement (the "Existing
Credit Agreement") will be rolled into the
Revolving Credit Facility on the Closing Date.
Drawings under any Letter of Credit shall be
reimbursed by the Borrower (whether with its
own funds or with the proceeds of Revolving
Credit Loans) on the same business day on
which the Borrower is notified of such
drawing. To the extent that the Borrower does
not so reimburse the Issuing Lender, the
Lenders under the Revolving Credit Facility
shall be irrevocably and unconditionally
obligated to reimburse the Issuing Lender on a
pro rata basis.
Maturity: The Revolving Credit Termination Date.
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Purpose: The proceeds of the Revolving Credit Loans
shall be used to finance the Transaction and
for general corporate purposes of the Borrower
and its subsidiaries in the ordinary course of
business.
III. CERTAIN PAYMENT PROVISIONS
Fees and Interest Rates: As set forth on Annex I.
Optional Prepayments and
Commitment Reductions: Loans may be prepaid (subject, in the case of
Eurodollar Loans, to payment of any "breakage
costs") and commitments may be reduced by the
Borrower in minimum amounts to be agreed upon.
Optional prepayments of the Term Loans shall
be applied to the installments thereof ratably
in accordance with the then outstanding
amounts thereof and may not be reborrowed.
Mandatory Prepayments and
Commitment Reductions: The following amounts shall be applied to
prepay the Term Loans:
(a) 50% of the net cash proceeds of any sale
or issuance of equity (other than equity
issued under any employee benefit plan and the
rights granted thereunder) and 100% of the net
proceeds of incurrence of certain indebtedness
after the Closing Date by the Borrower or any
of its subsidiaries (excluding, for example,
permitted indebtedness incurred in the
ordinary course of business and refinancing of
permitted subsidiary indebtedness);
(b) 100% of the net cash proceeds of any sale
or other disposition (including as a result of
casualty or condemnation) by the Borrower or
any of its subsidiaries of any assets (except
for the sale of inventory in the ordinary
course of business and certain other
dispositions to be agreed on); and
(c) until the Borrower achieves compliance
with a financial test to be agreed upon, 50%
of excess cash flow (to be defined in a
mutually satisfactory manner) for each fiscal
year of the Borrower (commencing with the
fiscal year following the fiscal year in which
the Closing Date occurs).
All such amounts shall be applied to the
prepayment of the Term Loans. Each such
prepayment of the Term Loans shall be applied
to the installments thereof ratably in
accordance with the then outstanding amounts
thereof and may not be reborrowed.
IV. COLLATERAL
If Subordinated Notes in an aggregate
principal amount of at least $125,000,000 have
not been issued on or prior to the Closing
Date, the obligations of the Borrower in
respect of the Facilities shall be secured by
a perfected first priority security interest
in all of the capital stock of Target.
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Collateral Release If the Senior Leverage Ratio (to be defined as
total senior debt to EBITDA) as of the last
day of any quarter ending on or after 12/31/97
is less than 3.0x, and if no default or event
of default has occurred and is continuing, any
Collateral shall be released automatically.
V. CERTAIN CONDITIONS
Initial Conditions: The availability of the Facilities shall be
conditioned upon satisfaction of, among other
things, the following conditions precedent
(the date upon which all such conditions
precedent shall be satisfied, the "Closing
Date") on or before October 31, 1997 (with
references to the Borrower and its
subsidiaries in this paragraph being deemed to
refer to and include the Target and its
subsidiaries after giving effect to the Tender
Offer):
(a) Each Credit Party shall have executed and
delivered satisfactory definitive financing
documentation with respect to the Facilities
(the "Credit Documentation").
(b) The Borrower, AcquisitionCo and Target
shall have entered into a definitive Merger
Agreement, in form and substance reasonably
satisfactory to the Administrative Agent,
providing for the Tender Offer and the Merger.
The Merger Agreement shall have been approved
by the Boards of Directors of the Borrower,
AcquisitionCo and Target and the Tender Offer
and the Merger provided for thereby shall have
been recommended by the Board of Directors of
Target to the shareholders of Target. The
Merger Agreement shall be in full force and
effect and no provision thereof shall have
been waived, amended, supplemented or
otherwise modified.
(c) The Lenders, the Administrative Agent and
the Arranger shall have received all fees
required to be paid, and all expenses for
which invoices have been presented, on or
before the Closing Date.
(d) All amounts outstanding under the Existing
Credit Agreement (other than letters of credit
to the extent rolled into the Revolving Credit
Facility) shall have been repaid, and the
commitments thereunder shall have been
cancelled. All amounts outstanding under the
existing bank credit facility of Target shall
have been repaid, and the commitments
thereunder shall have been cancelled.
(e) All governmental and third party approvals
necessary in connection with the Transaction,
the financing contemplated hereby and the
continuing operations of the Borrower and its
subsidiaries shall have been obtained and be
in full force and effect, and all applicable
waiting periods shall have expired without any
action being taken or threatened by any
competent authority which would restrain,
prevent or otherwise impose adverse conditions
on the Transaction or the financing thereof.
(f) The Lenders shall have received a
satisfactory pro forma consolidated balance
sheet of the Borrower as at the date of its
8
<PAGE> 9
most recent available consolidated balance
sheet, adjusted to give effect to the
consummation of the Transaction and the
financings contemplated hereby as if such
transactions had occurred on such date.
(g) The Lenders shall have received the
results of a recent lien search in each
relevant jurisdiction with respect to the
Borrower and its significant domestic
subsidiaries, and such search shall reveal no
liens on any of the assets of the Borrower or
such subsidiaries except for liens permitted
by the Credit Documentation or liens to be
discharged on or prior to the Closing Date
pursuant to documentation satisfactory to the
Administrative Agent.
(h) If Collateral is required pursuant to the
terms hereof, all perfection actions necessary
or advisable in the opinion of the
Administrative Agent shall have been taken in
respect of the Collateral.
(i) AcquisitionCo shall have acquired
concurrently with the making of the initial
Loans on the Closing Date not less than such
number of shares of the issued and outstanding
common stock of Target as to be able to effect
the Merger without the consent of any other
shareholder of Target.
(j) The Lenders shall be satisfied that the
Facilities, the use of proceeds thereof and
the collateral security therefor comply in all
respects with Regulations G and U of the Board
of Governors of the Federal Reserve System.
(k) The Lenders shall have received such legal
opinions from counsel to the Borrower and its
significant domestic subsidiaries, documents
and other instruments as are customary for
transactions of this type or as they may
reasonably request.
On-Going Conditions: The making of each extension of credit shall
be conditioned upon (a) the accuracy of all
representations and warranties in the Credit
Documentation (including, without limitation,
the material adverse change and litigation
representations) and (b) there being no
default or event of default in existence at
the time of, or after giving effect to the
making of, such extension of credit. As used
herein and in the Credit Documentation a
"material adverse change" shall mean any
event, development or circumstance that has
had or could reasonably be expected to have a
material adverse effect on (a) the business,
assets, property, condition (financial or
otherwise) or prospects of the Borrower and
its subsidiaries taken as a whole, or (b) the
validity or enforceability of any of the
Credit Documentation or the rights and
remedies of the Administrative Agent and the
Lenders thereunder.
VI. CERTAIN DOCUMENTATION MATTERS
The Credit Documentation shall contain
representations, warranties, covenants and
events of default customary for financings of
this type and other terms deemed appropriate
by the Lenders, including, without limitation:
9
<PAGE> 10
Representations and
Warranties: Financial statements (including pro forma
financial statements); absence of undisclosed
liabilities; no material adverse change;
corporate existence; compliance with law;
corporate power and authority; enforceability
of Credit Documentation; no conflict with law
or contractual obligations; no material
litigation; no default; ownership of property;
liens; intellectual property; taxes; Federal
Reserve regulations; ERISA; Investment Company
Act; subsidiaries; environmental matters;
solvency; accuracy of disclosure; and creation
and perfection of security interests, if
applicable.
Affirmative Covenants: Delivery of financial statements, reports,
accountants' letters, projections, officers'
certificates and other information requested
by the Lenders; payment of other obligations;
continuation of business and maintenance of
existence and material rights and privileges;
compliance with laws and material contractual
obligations; maintenance of property and
insurance; maintenance of books and records;
right of the Lenders to inspect property and
books and records; notices of defaults,
litigation and other material events;
compliance with environmental laws; best
efforts to effect the offering of Subordinated
Notes; and prepayment of all outstanding
public debt of Target as soon as practicable
following the Closing Date.
Financial Covenants: (a) Ratio of senior debt to EBITDA (rolling 4
quarters) not to exceed:
<TABLE>
<CAPTION>
QUARTERS ENDING RATIO
<S> <C>
on or prior to 09/30/98 3.75x
thereafter and on or prior to 9/30/99 3.25x
thereafter 2.75x;
</TABLE>
provided that, if Subordinated Notes in an
amount at least equal to $125 million have not
been issued, the ratio for quarters ending on
or prior to 09/30/98 shall not exceed 4.75x.
(b) Ratio of total debt to EBITDA (rolling 4
quarters) not to exceed 5.25x.
(c) Ratio of EBITDA to interest expense
(rolling 4 quarters) not less than 2.50x.
(d) Tangible Net Worth not less than an amount
to be agreed plus 50% of positive consolidated
net income for each fiscal year ending after
the Closing Date.
Negative Covenants: Limitations on: indebtedness (including
preferred stock of subsidiaries); liens;
guarantee obligations; mergers,
consolidations, liquidations and dissolutions;
sales of assets; leases; dividends and other
payments in respect of capital stock; capital
expenditures; investments, loans and advances;
optional payments and modifications of
subordinated and other debt instruments;
transactions with affiliates; sale and
leasebacks; changes in fiscal year; negative
pledge clauses; and changes in lines of
business. The foregoing items are subject to
the mutual agreement of the parties hereto.
Events of Default: Nonpayment of principal when due; nonpayment
of interest, fees or other amounts after a
grace period to be agreed upon; material
inaccuracy of representations and warranties;
violation of
10
<PAGE> 11
covenants (subject, in the case of certain
affirmative covenants, to a grace period to be
agreed upon); cross-default; bankruptcy
events; certain ERISA events; material
judgments; actual or asserted invalidity of
any guarantee or security document or security
interest; and a change of control (the
definition of which is to be agreed); failure
of the Merger to occur within six months
following the Closing Date.
Voting: Amendments and waivers with respect to the
Credit Documentation shall require the
approval of Lenders holding not less than a
majority of the aggregate amount of the Term
Loans, Revolving Credit Loans and
participations in Letters of Credit and unused
commitments under the Facilities, except that
(a) the consent of each Lender directly
affected thereby shall be required with
respect to (i) reductions in the amount or
extensions of the scheduled date of
amortization or final maturity of any Loan,
(ii) reductions in the rate of interest or any
fee or extensions of any due date thereof and
(iii) increases in the amount or extensions of
the expiry date of any Lender's commitment and
(b) the consent of 100% of the Lenders shall
be required with respect to (i) modifications
to any of the voting percentages and (ii)
releases of all or substantially all of the
Guarantors or all or substantially all of the
collateral. In addition, the consent of
Lenders holding a majority of the aggregate
amount of the Term Loans shall be required
with respect to certain modifications
affecting the Term Loan Facility.
Assignments and
Participations: The Lenders shall be permitted to assign and
sell participations in their Loans and
commitments, subject, in the case of
assignments (other than to another Lender or
to an affiliate of a Lender), to the consent
of the Administrative Agent and the Borrower
(which consent in each case shall not be
unreasonably withheld). Non-pro rata
assignments shall be permitted. In the case of
partial assignments (other than to another
Lender or to an affiliate of a Lender), the
minimum assignment amount shall be $5,000,000,
and, after giving effect thereto, the
assigning Lender shall have commitments and
Loans aggregating at least $5,000,000, in each
case unless otherwise agreed by the Borrower
and the Administrative Agent. Participants
shall have the same benefits as the Lenders
with respect to yield protection and increased
cost provisions. Voting rights of participants
shall be limited to those matters with respect
to which the affirmative vote of the Lender
from which it purchased its participation
would be required as described under "Voting"
above. Pledges of Loans in accordance with
applicable law shall be permitted without
restriction. Promissory notes shall be issued
under the Credit Facilities only upon request.
Yield Protection: The Credit Documentation shall contain
customary provisions (a) protecting the
Lenders against increased costs or loss of
yield resulting from changes in reserve, tax,
capital adequacy and other requirements of law
and from the imposition of or changes in
withholding or other taxes and (b)
indemnifying the Lenders for "breakage costs"
incurred in connection with, among other
things, any prepayment of a Eurodollar Loan
(as defined in Annex I) on a
11
<PAGE> 12
day other than the last day of an interest
period with respect thereto.
Expenses and
Indemnification: The Borrower shall pay (a) all reasonable
out-of-pocket expenses of the Administrative
Agent and the Arranger associated with the
syndication of the Credit Facilities and the
preparation, execution, delivery and
administration of the Credit Documentation and
any amendment or waiver with respect thereto
(including the reasonable fees, disbursements
and other charges of counsel) and (b) all
reasonable out-of-pocket expenses of the
Administrative Agent and the Lenders
(including the fees, disbursements and other
charges of counsel) in connection with the
enforcement of the Credit Documentation.
The Administrative Agent, the Arranger and the
Lenders (and their affiliates and their
respective officers, directors, employees,
advisors and agents) will have no liability
for, and will be indemnified and held harmless
against, any loss, liability, cost or expense
incurred in respect of the financing
contemplated hereby or the use or the proposed
use of proceeds thereof (except to the extent
resulting from the gross negligence or willful
misconduct of the indemnified party).
Governing Law and Forum: State of New York.
Counsel to the
Administrative Agent
and the Arranger: Simpson Thacher & Bartlett.
12
<PAGE> 13
ANNEX I
INTEREST AND CERTAIN FEES
Interest Rate Options: The Borrower may elect that the Loans
comprising each borrowing bear interest at a
rate per annum equal to:
the ABR plus the Applicable Margin; or
the Eurodollar Rate plus the Applicable
Margin.
As used herein:
"ABR" means the highest of (i) the rate of
interest publicly announced by Chase as its
prime rate in effect at its principal office
in New York City (the "Prime Rate"), (ii) the
secondary market rate for three-month
certificates of deposit (adjusted for
statutory reserve requirements) plus 1% and
(iii) the federal funds effective rate from
time to time plus 0.5%.
"Applicable Margin" means a percentage
determined in accordance with the pricing grid
attached hereto as Annex I-A.
"Eurodollar Rate" means the rate (adjusted for
statutory reserve requirements for
eurocurrency liabilities) appearing on Page
3750 of the Dow Jones Telerate Service at
approximately 11:00 a.m. London time, two
business days prior to the commencement of an
interest period, for dollar deposits for a
period of one, two, three or six months (as
selected by the Borrower).
Interest Payment Dates: In the case of Loans bearing interest based
upon the ABR ("ABR Loans"), quarterly in
arrears.
In the case of Loans bearing interest based
upon the Eurodollar Rate ("Eurodollar Loans"),
on the last day of each relevant interest
period and, in the case of any interest period
longer than three months, on each successive
date three months after the first day of such
interest period.
Commitment Fees: The Borrower shall pay a commitment fee
calculated at the rate determined in
accordance with the pricing grid attached
hereto on the average daily unused portion of
the Revolving Credit Facility, payable
quarterly in arrears.
Letter of Credit Fees: The Borrower shall pay a commission on all
outstanding Letters of Credit at a per annum
rate equal to the Applicable Margin then in
effect with respect to Eurodollar Loans on the
face amount of each such Letter of Credit.
Such commission shall be shared ratably among
the Lenders participating in the Revolving
Credit Facility and shall be payable quarterly
in arrears.
A fronting fee in an amount set forth in the
Fee Letter on the face amount of each Letter
of Credit shall be payable to the Issuing
Lender for its own account. In addition,
customary administrative, issuance, amendment,
payment and negotiation charges shall be
payable to the Issuing Lender for its own
account.
13
<PAGE> 14
Default Rate: At any time when the Borrower is in default
(which has not been cured) in the payment of
any amount of principal due under the Credit
Facilities, such amount shall bear interest at
2% above the rate otherwise applicable
thereto. Overdue interest, fees and other
amounts shall bear interest at 2% above the
rate applicable to ABR Loans.
Rate and Fee Basis: All per annum rates shall be calculated on the
basis of a year of 360 days (or 365/366 days,
in the case of ABR Loans the interest rate
payable on which is then based on the Prime
Rate) for actual days elapsed.
14
<PAGE> 15
ANNEX I-A
FEE AND APPLICABLE MARGIN TABLE
<TABLE>
<CAPTION>
COMMITMENT EURODOLLAR
TOTAL DEBT TO FEE MARGIN ABR MARGIN
EBITDA(1) (BP) (BP) (BP)
------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Category 1............................... Greater than 4.50 37.50 150.00 0.25
Category 2............................... Less than or equal 30.00 125.00 0.00
to 4.50 but greater
than 4.00
Category 3............................... Less than or equal 25.00 100.00 0.00
to 4.00 but greater
than 3.75
Category 4............................... Less than or equal 25.00 87.50 0.00
to 3.75 but greater
than 3.00
Category 5............................... Less than or equal 20.00 75.00 0.00
to 3.00 but greater
than 2.50
Category 6............................... Less than or equal 17.50 62.50 0.00
to 2.50
</TABLE>
- -------------------------
(1) Total Debt and EBITDA (to be defined) of the last day of each quarter on a
rolling 4 quarter basis. On the Closing Date, the applicable category shall
be Category 2. Thereafter the appropriate category will be determined upon
receipt of the relevant quarterly or annual financial statements in respect
of each quarter ending on or after 12/31/97.
15
<PAGE> 1
EXHIBIT 99.(c)(1)
================================================================================
AGREEMENT AND PLAN OF MERGER
AMONG
DETROIT DIESEL CORPORATION,
OMC ACQUISITION CORP.
AND
OUTBOARD MARINE CORPORATION
DATED AS OF JULY 8, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1 The Offer................................................... 1
1.1. The Offer................................................... 1
1.2. Actions By Purchaser and Merger Sub......................... 2
1.3. Actions by the Company...................................... 2
1.4. Directors................................................... 4
ARTICLE 2 The Merger.................................................. 4
2.1. The Merger.................................................. 4
2.2. The Closing................................................. 4
2.3. Effective Time.............................................. 4
ARTICLE 3 Certificate of Incorporation and Bylaws of the Surviving 5
Corporation.................................................
3.1. Certificate of Incorporation................................ 5
3.2. Bylaws...................................................... 5
ARTICLE 4 Directors and Officers of the Surviving Corporation......... 5
4.1. Directors................................................... 5
4.2. Officers.................................................... 5
ARTICLE 5 Effect of the Merger on Securities of Merger Sub and the 5
Company.....................................................
5.1. Merger Sub Stock............................................ 5
5.2. Company Securities.......................................... 5
5.3. Exchange of Certificates Representing Common Stock.......... 6
5.4. Adjustment of Merger Consideration.......................... 8
5.5. Dissenting Company Shareholders............................. 8
ARTICLE 6 Representations and Warranties of the Company............... 8
6.1. Existence; Good Standing; Corporate Authority............... 8
6.2. Authorization, Validity and Effect of Agreements............ 8
6.3. Compliance with Laws........................................ 9
6.4. Capitalization.............................................. 9
6.5. Subsidiaries................................................ 9
6.6. No Violation................................................ 10
6.7. Company Reports; Offer Documents............................ 10
6.8. Absence of Certain Changes.................................. 11
6.9. Taxes....................................................... 12
6.10. Litigation.................................................. 12
6.11. Employee Benefit Plans...................................... 12
6.12. Employment Relations and Agreements......................... 13
6.13. Contracts................................................... 13
6.14. Environmental Laws and Regulations.......................... 13
6.15. Brokers..................................................... 14
6.16. Opinion of Financial Advisor................................ 14
6.17. No Restrictions on the Offer or the Merger.................. 14
6.18. Intellectual Property....................................... 14
ARTICLE 7 Representations and Warranties of Purchaser and Merger 15
Sub.........................................................
7.1. Existence; Good Standing; Corporate Authority............... 15
7.2. Authorization, Validity and Effect of Agreements............ 15
7.3. Offer Documents............................................. 15
7.4. No Violation................................................ 16
7.5. Financing................................................... 16
7.6. Merger Sub.................................................. 16
7.7. Compliance with Laws........................................ 16
7.8. Capitalization.............................................. 17
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
7.9. Purchaser Reports........................................... 17
7.10. Absence of Certain Changes.................................. 18
7.11. Taxes....................................................... 18
7.12. Litigation.................................................. 18
7.13. Employee Benefit Plans...................................... 18
7.14. Contracts................................................... 19
7.15. Environmental Laws and Regulations.......................... 19
ARTICLE 8 Covenants................................................... 19
8.1. No Solicitation............................................. 19
8.2. Interim Operations of the Company........................... 20
8.2A. Interim Operations of Purchaser and Merger Sub.............. 21
8.3. Company Shareholder Approval; Proxy Statement............... 23
8.4. Filings; Other Action....................................... 24
8.5. Publicity................................................... 24
8.6. Further Action.............................................. 24
8.7. Insurance; Indemnity........................................ 24
8.8. Restructuring of Merger..................................... 26
8.9. Employee Benefit Plans...................................... 26
8.10. Acceleration of Outstanding Indebtedness.................... 26
8.11. Real Property Transfer Taxes................................ 26
ARTICLE 9 Conditions.................................................. 26
9.1. Conditions to Each Party's Obligation to Effect the 26
Merger......................................................
ARTICLE 10 Termination; Amendment; Waiver.............................. 27
10.1. Termination................................................. 27
10.2. Effect of Termination....................................... 27
10.3. Amendment................................................... 28
10.4. Extension; Waiver........................................... 28
ARTICLE 11 General Provisions.......................................... 28
11.1. Nonsurvival of Representations and Warranties............... 28
11.2. Notices..................................................... 28
11.3. Assignment; Binding Effect.................................. 29
11.4. Entire Agreement............................................ 29
11.5. Fees and Expenses........................................... 29
11.6. Governing Law............................................... 29
11.7. Headings.................................................... 29
11.8. Interpretation.............................................. 29
11.9. Severability................................................ 30
11.10. Enforcement of Agreement.................................... 30
11.11. Counterparts................................................ 30
11.12. Obligation of Purchaser..................................... 30
11.13. Certain Definitions......................................... 30
</TABLE>
EXHIBIT
EXHIBIT A Conditions of the Offer
ii
<PAGE> 4
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of July 8, 1997,
among Detroit Diesel Corporation, a Delaware corporation ("Purchaser"), OMC
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Purchaser ("Merger Sub"), and Outboard Marine Corporation, a Delaware
corporation (the "Company").
RECITALS
WHEREAS, the Boards of Directors of Purchaser and the Company each have
determined that it is in the best interests of their respective companies and
shareholders for Purchaser to acquire the Company upon the terms and subject to
the conditions set forth herein; and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection herewith;
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE OFFER
1.1. THE OFFER.
(a) Subject to the provisions of this Agreement and this Agreement not
having been terminated in accordance with Article 10 hereof, as promptly as
practicable but in any event within five business days after the first public
announcement of this Agreement, Merger Sub shall commence, within the meaning of
Rule 14d-2 under the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder (the "Exchange Act"), an offer to
purchase 13,842,619 shares of common stock, par value $.15 per share (the
"Common Stock") of the Company at a price of $16.00 per share of Common Stock,
net to the seller in cash (the "Offer"). The obligation of Merger Sub to
commence the Offer and accept for payment, and pay for, any shares of Common
Stock tendered pursuant to the Offer shall be subject to the conditions set
forth in Exhibit A hereto and to the terms and conditions of this Agreement and
no such payment shall be made until after calculation of proration. If proration
of tendered shares is required, the shares purchased from each shareholder
tendering shares will be determined by multiplying 13,842,619 by a fraction, the
numerator of which is the number of shares tendered by such shareholder and the
denominator of which is the number of shares tendered by all tendering
shareholders. Subject to the provisions of this Agreement, the Offer shall
expire 20 business days after the date of its commencement, unless this
Agreement is terminated in accordance with Article 10, in which case the Offer
(whether or not previously extended in accordance with the terms hereof) shall
expire on such date of termination.
(b) Merger Sub expressly reserves the right to modify the terms of the
Offer and to waive any condition of the Offer, except that, without the prior
written consent of the Company, Merger Sub shall not (i) waive the Minimum
Condition (as defined in Exhibit A), (ii) reduce the number of shares of Common
Stock subject to the Offer, (iii) reduce the price per share of Common Stock to
be paid pursuant to the Offer, (iv) change the form of consideration payable in
the Offer, (v) amend or modify any term or condition of the Offer (including the
conditions set forth on Exhibit A) in any manner adverse to the holders of
Common Stock or (vi) impose additional conditions to the Offer other than such
conditions required by applicable Law (as hereinafter defined). So long as this
Agreement is in effect and all the conditions to the Offer have not been
satisfied or waived, at the request of the Company, Merger Sub shall extend the
Offer for an aggregate period of not more than 10 business days (for all
extensions requested by the Company) beyond the originally scheduled expiration
date of the Offer. Notwithstanding the foregoing, so long as this Agreement is
in effect, Merger Sub may, without the consent of the Company, extend the Offer
(i) if at the then scheduled expiration date of the Offer any of the conditions
to Merger Sub's obligation to accept for payment and pay for shares of Common
Stock shall not be satisfied or waived, until such time as such conditions are
satisfied or
1
<PAGE> 5
waived; (ii) for any period required by any rule, regulation, interpretation or
position of the SEC or the staff applicable to the Offer; and (iii) up to 10
days following the satisfaction of all the conditions in Exhibit A; provided,
however, that in no event shall Purchaser extend the Offer for more than 20 days
in the aggregate without the consent of the Company. Subject to the terms and
conditions of the Offer and this Agreement, Merger Sub shall accept for payment
and pay for, in accordance with the terms of the Offer, 13,842,619 shares of
Common Stock, on a fully diluted basis, to the extent validly tendered and not
withdrawn pursuant to the Offer as soon as practicable after the expiration of
the Offer.
1.2. ACTIONS BY PURCHASER AND MERGER SUB.
(a) As soon as reasonably practicable following execution of this
Agreement, but in no event later than five business days from the date hereof,
Purchaser and Merger Sub shall file with the Securities and Exchange Commission
(the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer, which shall contain an offer to purchase and a related letter of
transmittal and any other ancillary documents pursuant to which the Offer shall
be made (such Schedule 14D-1 and the documents therein pursuant to which the
Offer will be made, together with any supplements or amendments thereto, the
"Offer Documents"). The Company and its counsel shall be given a reasonable
opportunity to review and comment upon the Offer Documents prior to the filing
thereof with the SEC. The Offer Documents shall comply as to form in all
material respects with the requirements of the Exchange Act, and, on the date
filed with the SEC and on the date first published, sent or given to the
Company's shareholders, the Offer Documents shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, except
that no representation is made by Purchaser or Merger Sub with respect to
information supplied in writing by the Company specifically for inclusion in the
Offer Documents. Each of Purchaser, Merger Sub and the Company agrees promptly
to correct any information provided by it for use in the Offer Documents if and
to the extent such information shall have become false or misleading in any
material respect, and each of Purchaser, Merger Sub and the Company further
agrees to take all steps necessary to cause the Offer Documents as so corrected
to be filed with the SEC and to be disseminated to holders of shares of Common
Stock, in each case as and to the extent required by applicable federal
securities laws. Purchaser and Merger Sub agree to provide the Company and its
counsel in writing with any comments Purchaser, Merger Sub or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after receipt of such comments.
(b) Purchaser shall provide or cause to be provided to Merger Sub all the
funds necessary to purchase any shares of Common Stock that Merger Sub becomes
obligated to purchase pursuant to the Offer.
1.3. ACTIONS BY THE COMPANY.
(a) The Company hereby approves of and consents to the Offer and represents
and warrants that the Board of Directors of the Company (the "Board of
Directors" or the "Board") at a meeting duly called and held has duly adopted
resolutions (i) approving this Agreement, the Offer and the Merger (as
hereinafter defined), determining that the Merger is advisable and that the
terms of the Offer and Merger are fair to, and in the best interests of, the
Company's shareholders and recommending that the Company's shareholders accept
the Offer and approve the Merger and this Agreement, and (ii) taking all action
necessary to render Section 203 of the Delaware General Corporation Law (the
"DGCL"), Article Eighteenth of the Company's Restated Certificate of
Incorporation and the provisions of the Rights Agreement, dated as of April 24,
1996, between the Company and First Chicago Trust Company of New York
inapplicable to the Offer, the Merger, this Agreement and any of the
transactions contemplated hereby. The Company further represents and warrants
that the Board of Directors has received the written opinion of Salomon Brothers
Inc (the "Financial Advisor") that the proposed consideration to be received by
the holders of shares of Common Stock pursuant to the Offer and the Merger is
fair to such holders from a financial point of view (the "Fairness Opinion").
The Company hereby consents to the inclusion in the Offer Documents, subject to
prior review and consent by the Company, of the recommendation of the Board of
Directors described in the first sentence of this Section 1.3(a). The Company
hereby represents and warrants that it has been authorized by the Financial
Advisor to permit the inclusion of the Fairness Opinion, and, subject to the
reasonable approval of the
2
<PAGE> 6
Financial Advisor, the inclusion of references to such Fairness Opinion, in the
Offer Documents, the Schedule 14D-9 (as hereinafter defined) and the Proxy
Statement (as hereinafter defined). The Company has been advised by each of its
directors and executive officers that each such person intends to tender all
shares of Common Stock owned by such person pursuant to the Offer, except to the
extent of any restrictions created by Section 16(b) of the Exchange Act. If the
Board of Directors determines based on the advice of counsel that its fiduciary
duties require it to withdraw, modify or amend its recommendations described
above, such withdrawal, amendment or modification shall not constitute a breach
of this Agreement but shall have the effects specified herein.
(b) On the date the Offer Documents are filed with the SEC, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 with respect to the Offer (such Schedule 14D-9, as amended from time to
time, the "Schedule 14D-9") containing the recommendations described in the
first sentence of Section 1.3(a) (subject to the last sentence of Section
1.3(a)) and shall mail the Schedule 14D-9 to the shareholders of the Company. To
the extent practicable, the Company shall cooperate with Purchaser in mailing or
otherwise disseminating the Schedule 14D-9 with the appropriate Offer Documents
to the Company's shareholders. Purchaser and its counsel shall be given a
reasonable opportunity to review and comment upon the Schedule 14D-9 prior to
the filing thereof with the SEC. The Schedule 14D-9 shall comply as to form in
all material respects with the requirements of the Exchange Act and, on the date
filed with the SEC and on the date first published, sent or given to the
Company's shareholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied by
Purchaser or Merger Sub for inclusion in the Schedule 14D-9. Each of the
Company, Purchaser and Merger Sub agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent such
information shall have become false or misleading in any material respect, and
the Company further agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and to be disseminated to the
holders of shares of Common Stock, in each case as and to the extent required by
applicable federal securities laws. The Company agrees to provide Purchaser and
Merger Sub and their counsel in writing with any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its transfer
agent to assist Merger Sub in compiling mailing labels containing the names and
addresses of the record holders of Common Stock as of a recent date and of those
persons becoming record holders subsequent to such date, and to furnish copies
of other information in the Company's possession or control regarding the
beneficial owners of Common Stock, and shall furnish to Merger Sub such
information and assistance (including updated lists of shareholders, security
position listings and computer files) as Merger Sub may reasonably request in
communicating the Offer to the Company's shareholders. Subject to the
requirements of law, and except for such steps as are necessary to disseminate
the Offer Documents and any other documents necessary to consummate the Offer
and the Merger, Purchaser and Merger Sub and each of their affiliates and
associates shall hold in confidence the information contained in any of such
labels, lists and files, shall use such information only in connection with the
Offer and the Merger, and, if this Agreement is terminated, shall promptly
deliver to the Company all copies of such information then in their possession
or under their control.
(d) Subject to the terms and conditions of this Agreement, if there shall
occur a change in law or in a binding judicial interpretation of existing law
which would, in the absence of action by the Company or the Board, prevent the
Merger Sub, were it to acquire a specified percentage of the shares of Common
Stock then outstanding, from approving and adopting this Agreement by its
affirmative vote as the holder of 67% of the issued and outstanding shares of
Common Stock and without the affirmative vote of any other shareholder, the
Company will use its best efforts to promptly take or cause such action to be
taken, or, at the election of the Purchaser prior to consummation of the Offer,
this Agreement shall terminate.
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1.4. DIRECTORS.
(a) Upon the purchase of shares of Common Stock pursuant to the
consummation of the Offer, Purchaser shall be entitled to designate such number
of directors, rounded up to the next whole number, as will give Purchaser
representation on the Board of Directors equal to the product of (i) the number
of directors on the Board of Directors and (ii) the percentage that the number
of shares of Common Stock purchased by Merger Sub or Purchaser or any affiliate
thereof bears to the aggregate number of shares of Common Stock outstanding (the
"Percentage"), and the Company shall, upon request by Purchaser, promptly
increase the size of the Board of Directors or exercise its reasonable efforts
to secure the resignations of such number of directors as is necessary to enable
Purchaser's designees to be elected to the Board of Directors and shall cause
Purchaser's designees to be so elected. At the request of Purchaser, the Company
will use its reasonable efforts to cause such individuals designated by
Purchaser to constitute the same Percentage of (i) each committee of the Board,
(ii) the board of directors of each Subsidiary (as hereinafter defined) and
(iii) the committees of each such board of directors. The Company's obligations
to seek to appoint designees to the Board of Directors shall be subject to
Section 14(f) of the Exchange Act. The Company shall take all reasonably
appropriate action necessary to effect any such election and shall, subject to
the next succeeding sentence, include in the Schedule 14D-9 the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. Purchaser will supply to the Company in writing and be solely
responsible for any information with respect to itself and its nominees,
directors and affiliates required by Section 14(f) and Rule 14f-1.
Notwithstanding the foregoing, the parties hereto shall use their respective
reasonable efforts to ensure that at least three of the members of the Board of
Directors shall at all times prior to the Effective Time (as hereinafter
defined) be Continuing Directors (as hereinafter defined).
(b) Following the election or appointment of Purchaser's designees pursuant
to this Section 1.4 and prior to the Effective Time, the approval of a majority
of the directors of the Company then in office who are not designated by
Purchaser (the "Continuing Directors") shall be required to authorize (and such
authorization shall constitute the authorization of the Board of Directors and
no other action on the part of the Company, including any action by any other
director of the Company, shall be required to authorize) any termination of this
Agreement by the Company, any amendment of this Agreement requiring action by
the Board of Directors, any extension of time for the performance of any of the
obligations or other acts of Purchaser or Merger Sub, and any waiver of
compliance with any of the agreements or conditions contained herein for the
benefit of the Company.
ARTICLE 2
THE MERGER
2.1. THE MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time, Merger Sub shall be merged with and into the Company in
accordance with this Agreement and the applicable provisions of the DGCL, and
the separate corporate existence of Merger Sub shall thereupon cease (the
"Merger"). The Company shall be the surviving corporation in the Merger
(sometimes hereinafter referred to as the "Surviving Corporation"). The Merger
shall have the effects specified in the DGCL.
2.2. THE CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") shall take place at the offices of
Detroit Diesel Corporation, 13400 Outer Drive, West, Detroit, Michigan
48239-4001, as soon as practicable following the satisfaction (or waiver if
permissible) of the conditions set forth in Article 9. The date on which the
Closing occurs is hereinafter referred to as the "Closing Date."
2.3. EFFECTIVE TIME. If all the conditions to the Merger set forth in
Article 9 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 10, the parties
hereto shall cause a Certificate of Merger meeting the requirements of Section
251 of the DGCL to be properly executed and filed in accordance with such
Section on the Closing Date. The Merger shall become effective at the time of
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware
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in accordance with the DGCL or at such later time which the parties hereto shall
have agreed upon and designated in such filing as the effective time of the
Merger (the "Effective Time").
ARTICLE 3
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
3.1. CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
Merger Sub in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation, until duly amended in
accordance with applicable law and the terms thereof.
3.2. BYLAWS. The Bylaws of Merger Sub in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law, the terms thereof and the Surviving
Corporation's Certificate of Incorporation.
ARTICLE 4
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
4.1. DIRECTORS. The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation as of the
Effective Time and until their successors are duly appointed or elected in
accordance with applicable law and the Surviving Corporation's Certificate of
Incorporation and Bylaws.
4.2. OFFICERS. The officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation as of the
Effective Time and until their successors are duly appointed or elected in
accordance with applicable law and the Surviving Corporation's Certificate of
Incorporation and Bylaws.
ARTICLE 5
EFFECT OF THE MERGER ON SECURITIES
OF MERGER SUB AND THE COMPANY
5.1. MERGER SUB STOCK. At the Effective Time, each share of common stock,
$0.01 par value per share, of Merger Sub outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and non-assessable share of common stock, $0.01 par value per share,
of the Surviving Corporation.
5.2. COMPANY SECURITIES.
(a) At the Effective Time, each share of Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares of Common
Stock owned by Purchaser or Merger Sub or held by the Company, all of which
shall be cancelled, and other than shares of Dissenting Common Stock (as
hereinafter defined)) (the "Exchanged Common Shares") shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into the right to receive (1) 4,000,000 divided by the number of Exchanged
Common Shares (the "Exchange Ratio") shares of fully paid and nonassessable
common shares of Purchaser ("Purchaser Common Shares") plus (2) a cash payment
equal to (i) $16.00 minus (ii) the product of the Exchange Ratio times $25, plus
(3) in the event the average closing price on the New York Stock Exchange for
Purchaser Common Shares for the 20 consecutive trading days ending on the fifth
trading day prior to the Closing Date (the "Closing Date Market Price") is less
than $25.00, then an additional cash payment equal to the product of the
Exchange Ratio multiplied by the lesser of (i) $25.00 minus the Closing Date
Market Price or (ii) $6.00 (the "Merger Consideration").
(b) As a result of the Merger and without any action on the part of the
holder thereof, at the Effective Time, all shares of Common Stock shall cease to
be outstanding and shall be cancelled and retired and shall cease to exist, and
each holder of shares of Common Stock (other than Merger Sub, Purchaser and the
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Company) shall thereafter cease to have any rights with respect to such shares
of Common Stock, except the right to receive, without interest, the Merger
Consideration in accordance with Section 5.3 upon the surrender of a certificate
or certificates (a "Certificate") representing such shares of Common Stock.
(c) Each share of Common Stock issued and held in the Company's treasury at
the Effective Time shall, by virtue of the Merger, cease to be outstanding and
shall be cancelled and retired without payment of any consideration therefor.
(d) The Company shall use reasonable efforts to ensure that all outstanding
stock options (individually, an "Option" and, collectively, the "Options"),
performance share awards (individually, a "Performance Share" and, collectively,
the "Performance Shares") and phantom restricted stock awards (individually, a
"Phantom Restricted Stock Award" and, collectively, the "Phantom Restricted
Stock Awards") heretofore granted under any plan, program or arrangement of the
Company (collectively, the "Incentive Equity Plans") that are outstanding
immediately prior to the Effective Time shall be acquired by the Company at the
Effective Time for cash payments by the Company as follows:
(i) With respect to Options, an amount equal to (A) the excess, if
any, of (1) (I) for all option holders who are not officers or directors of
the Company for purposes of Section 16 of the Exchange Act, the cash value
of 33% of the per share Merger Consideration payable with respect to the
Common Stock plus $10.72, and (II) for all option holders who are officers
or directors of the Company for purposes of Section 16 of the Exchange Act,
the greater of (x) the cash value of 33% of the per share Merger
Consideration payable with respect to the Common Stock plus $10.72 or (y)
the highest closing price of the Common Stock on the New York Stock
Exchange during the 180-day period preceding the date on which the
purchases of shares of Common Stock pursuant to the Offer is consummated
over (2) the exercise price per share of Common Stock subject to the
Option, multiplied by (B) the number of shares of Common Stock for which
the Option shall not have theretofore been exercised;
(ii) With respect to Performance Shares, an amount equal to the
product of (A) (1) the number of Performance Shares covered by the award
multiplied by (2) a fraction, the numerator of which is the number of days
that shall have then elapsed in the applicable three-year performance cycle
and the denominator of which is 1,095, and (B) the "Payment Value" (as
defined in the Company's 1994 LongTerm Incentive Plan or Executive Equity
Incentive Plan, as the case may be) specified in the agreement evidencing
the subject Performance Share award; and
(iii) With respect to Phantom Restricted Stock Awards, an amount equal
to (A) (I) the number of Phantom Restricted Stock Awards covered by the
award multiplied by (II) the cash value of 33% of the per share Merger
Consideration payable with respect to the Common Stock plus $10.72 plus (B)
the cash value of dividend equivalents credited to the Phantom Restricted
Stock Awards covered by the award.
Either prior to or as soon as practicable following the consummation of the
Offer, the Board of Directors (or, if appropriate, the Compensation Committee of
the Board of Directors) shall adopt such resolutions or take other such actions
as are required to cause any Options that are not exercisable as of the date
hereof to become exercisable, to cause any Performance Share awards (prorated in
accordance with clause (ii)(A) of this Section 5.2(d)) that are not payable as
of the date hereof to become payable, and to cause any Phantom Restricted Stock
Awards (and dividend equivalents credited to the shares of phantom restricted
stock covered thereby) that are not payable, as of the date hereof to become
payable at the Effective Time. All amounts payable pursuant to this Section
5.2(d) shall be subject to any required withholding of taxes and shall be paid
without interest.
5.3. EXCHANGE OF CERTIFICATES REPRESENTING COMMON STOCK.
(a) Prior to the Effective Time, Purchaser shall appoint a commercial bank
or trust company having net capital of not less than $200 million, or such other
party reasonably satisfactory to the Company, to act as paying agent hereunder
for payment or exchange of the Merger Consideration upon surrender of
Certificates (the "Paying Agent"). Purchaser shall cause the Surviving
Corporation to provide the Paying Agent with cash in amounts necessary to pay
for and certificates necessary for the exchange of Purchaser Common Shares for
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all the shares of Common Stock pursuant to Section 5.2(a) and, in connection
with the Options, Performance Shares and Phantom Restricted Stock Awards
pursuant to Section 5.2(d), as and when such amounts are needed by the Paying
Agent. Such amounts and certificates shall hereinafter be referred to as the
"Exchange Fund."
(b) Promptly after the Effective Time, Purchaser shall cause the Paying
Agent to mail to each holder of record of shares of Common Stock (i) a letter of
transmittal which shall specify that delivery shall be effected, and risk of
loss and title to such Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and which letter shall be in such form and have
such other provisions as Purchaser may reasonably specify and (ii) instructions
for effecting the surrender of such Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate to the Paying Agent together with
such letter of transmittal, duly executed and completed in accordance with the
instructions thereto, and such other documents as may reasonably be required by
the Paying Agent, the holder of such Certificate shall promptly receive in
exchange therefor the Merger Consideration payable with respect to the shares of
Common Stock represented by such Certificate pursuant to this Agreement plus any
cash payment owed with respect to fractional shares of Purchaser Common Shares
and the shares represented by the Certificate so surrendered shall forthwith be
cancelled. Notwithstanding the foregoing, no certificates or scrip representing
fractional Purchaser Common Shares will be issued upon the surrender for
exchange of Certificates, and each holder of a fractional Purchaser Common Share
shall be paid, upon surrender of such Certificate, an amount in cash equal to
the product obtained by multiplying (i) such fractional interest to which such
holder (after taking into account all fractional Purchaser Common Shares then
held by such holder) would otherwise be entitled by (ii) the Closing Date Market
Price. As promptly as practicable after the determination of the amount of cash,
if any, to be paid to holders of fractional Purchaser Common Shares, the Paying
Agent shall so notify the Surviving Corporation, and the Surviving Corporation
shall cause the Paying Agent to forward payment to such holders of fractional
Purchaser Common Shares. No interest will be paid or will accrue on the cash
payable upon surrender of any Certificate. In the event of a transfer of
ownership of Common Stock which is not registered in the transfer records of the
Company, payment may be made with respect to such Common Stock to such a
transferee if the Certificate representing such shares of Common Stock is
presented to the Paying Agent, accompanied by all documents reasonably required
to evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
(c) At or after the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the shares of Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall be
cancelled and exchanged as provided in this Article 5.
(d) Any portion of the Exchange Fund (including the proceeds of any
interest and other income received by the Paying Agent in respect of all such
funds) that remains unclaimed by the former shareholders of the Company one year
after the Effective Time shall be delivered to the Surviving Corporation. Any
former shareholders of the Company who have not theretofore complied with this
Article 5 shall thereafter look only to the Surviving Corporation for payment of
any Merger Consideration that may be payable in respect of each share of Common
Stock such shareholder holds as determined pursuant to this Agreement, without
any interest thereon.
(e) None of Purchaser, the Company, the Surviving Corporation, the Paying
Agent or any other person shall be liable to any former holder of shares of
Common Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(f) 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 the Surviving Corporation, the
posting by such person of a bond in such reasonable amount as the Surviving
Corporation may direct as indemnity against any claim that may be made against
it with respect to such Certificate, the Paying Agent will issue in exchange for
such lost, stolen or destroyed Certificate the Merger Consideration payable in
respect thereof pursuant to this Agreement.
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(g) Except as otherwise provided herein, Purchaser shall pay all charges
and expenses, including those of the Paying Agent, in connection with the
exchange of the Merger Consideration for Certificates.
5.4. ADJUSTMENT OF MERGER CONSIDERATION. If, subsequent to the date of this
Agreement but prior to the Effective Time, the outstanding shares of Common
Stock or Purchaser Common Shares shall have been changed into a different number
of shares or a different class as a result of a stock split, reverse stock
split, stock dividend, distribution (other than normal cash dividends as
provided in this Agreement), subdivision, reclassification, split, combination,
exchange, recapitalization or other similar transaction, the Merger
Consideration shall be appropriately adjusted.
5.5. DISSENTING COMPANY SHAREHOLDERS. Notwithstanding any provision of this
Agreement to the contrary, if required by the DGCL but only to the extent
required thereby, shares of Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by holders of such
shares of Common Stock who have properly exercised appraisal rights with respect
thereto in accordance with Section 262 of the DGCL (the "Dissenting Common
Stock") will not be exchangeable for the right to receive the Merger
Consideration, and holders of such shares of Dissenting Common Stock will be
entitled to receive payment of the appraised value of such shares of Common
Stock in accordance with the provisions of such Section 262 unless and until
such holders fail to perfect or effectively withdraw or lose their rights to
appraisal and payment under the DGCL. If, after the Effective Time, any such
holder fails to perfect or effectively withdraws or loses such right, such
shares of Common Stock will thereupon be treated as if they had been converted
into and to have become exchangeable for, at the Effective Time, the right to
receive the Merger Consideration, without any interest thereon. The Company will
give Purchaser notice of any demands received by the Company for appraisals of
shares of Common Stock. The Company shall not, except with the prior written
consent of Purchaser, make any payment with respect to any demands for appraisal
or settle any such demands.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the corresponding sections of the disclosure letter,
dated the date hereof, delivered by the Company to Purchaser (the "Disclosure
Letter"), the Company hereby represents and warrants to Purchaser and Merger Sub
as follows:
6.1. EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each of the Company and
its Subsidiaries is (i) a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation and (ii) is
duly licensed or qualified to do business as a foreign corporation and is in
good standing under the laws of any other state of the United States or the laws
of any foreign jurisdiction, if applicable, in which the character of the
properties owned or leased by it or in which the transaction of its business
makes such qualification necessary, except where the failure to be so qualified
or to be in good standing would not have a material adverse effect on the
business, results of operations or financial condition of the Company and its
Subsidiaries, taken as a whole or on the ability of the Company to consummate
the transactions contemplated by this Agreement (a "Material Adverse Effect").
Each of the Company and its Subsidiaries has all requisite corporate power and
authority to own, operate and lease its properties and carry on its business as
now conducted except where the failure to have such power and authority would
not have a Material Adverse Effect. The Company has heretofore made available to
Purchaser true and correct copies of the Certificate of Incorporation and Bylaws
of the Company and each of its Subsidiaries as currently in effect.
6.2. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and all agreements and documents contemplated hereby or executed in connection
herewith (the "Ancillary Documents") and subject, if required with respect to
the consummation of the Merger, to the approval of holders of the Common Stock,
to consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the Ancillary Documents by the Company and
the consummation by the Company of the transactions contemplated hereby and
thereby have been duly and validly authorized by the Board of Directors, and no
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other corporate proceedings on the part of the Company are necessary to
authorize this Agreement and the Ancillary Documents or to consummate the
transactions contemplated hereby and thereby (other than the approval of this
Agreement and the Merger by the holders of the Common Stock). This Agreement has
been, and any Ancillary Document at the time of execution will have been, duly
and validly executed and delivered by the Company, and (assuming this Agreement
and such Ancillary Documents each constitutes a valid and binding obligation of
Purchaser and Merger Sub) constitutes and will constitute the valid and binding
obligations of the Company, and the Agreement is enforceable in accordance with
its terms (subject to the approval of this Agreement and the Merger by the
holders of the Common Stock).
6.3. COMPLIANCE WITH LAWS. Except as set forth in the Disclosure Letter,
neither the Company nor any of its Subsidiaries is in violation of, and the
consummation of the transactions contemplated by this Agreement will not result
in any violation of, any foreign, federal, state or local law, statute,
ordinance, rule, regulation, order, judgment, ruling or decree ("Laws") of any
foreign, federal, state or local judicial, legislative, executive,
administrative or regulatory body or authority or any court, arbitration, board
or tribunal ("Governmental Entity") applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, except for
violations which would not have a Material Adverse Effect, which compliance
includes, but is not limited to, the possession by the Company and its
Subsidiaries of all licenses, permits and other governmental authorizations
required under applicable Laws and compliance with the terms and conditions
thereof (collectively, "Permits"), except where the failure of the Company or
its Subsidiaries to possess such licenses, permits and authorizations, or comply
with the terms and conditions thereof, would not, individually or in the
aggregate, have a Material Adverse Effect. The completion of the transactions
contemplated by this Agreement will not result in the lapse or termination of
any Permits, other than such lapse or termination which would not have a
Material Adverse Effect.
6.4. CAPITALIZATION. The authorized capital stock of the Company consists
of 90,000,000 shares of Common Stock and 3,000,000 shares of preferred stock,
$10.00 par value ("Preferred Stock"). As of June 30, 1997, (a) 20,205,515 shares
of Common Stock were issued and outstanding, (b) Options to purchase an
aggregate of 1,426,725 shares of Common Stock were outstanding, (c) 129,716
shares of Common Stock were held by the Company in its treasury, and (d) no
shares of capital stock of the Company were held by the Company's Subsidiaries.
The Company has no outstanding bonds, debentures, notes or other obligations
entitling the holders thereof to vote (or which are convertible into or
exercisable for securities having the right to vote) with the shareholders of
the Company on any matter. Since June 30, 1997, the Company (i) has not issued
any shares of Common Stock, other than upon the exercise of Options, or
Preferred Stock, (ii) has granted no Options to purchase shares of Common Stock
under the Incentive Equity Plans and (iii) has not split, combined, converted or
reclassified any of its shares of capital stock. All issued and outstanding
shares of Common Stock are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. Except as set forth in this Section
6.4 or in the Disclosure Letter, there are no other shares of capital stock or
voting securities of the Company, and no existing options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments which obligate the Company or any of its Subsidiaries to issue,
transfer or sell any shares of capital stock of, or equity interests in, the
Company or any of its Subsidiaries. Except as provided under the Incentive
Equity Plans, there are no equity equivalents, interests in the ownership or
earnings of the Company or its Subsidiaries, or similar rights authorized,
issued or outstanding similar to those under Incentive Equity Plans. Except as
set forth in the Disclosure Letter, there are no outstanding obligations of the
Company or any Subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company and there are no performance awards
outstanding under the Incentive Equity Plan or any other outstanding
stock-related awards. There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries or, to the
knowledge of the Company, any of the Company's directors or executive officers
is a party with respect to the voting of capital stock of the Company or any of
its Subsidiaries.
6.5. SUBSIDIARIES. Except as set forth in the Disclosure Letter, (i) the
Company owns, directly or indirectly through a Subsidiary, all the outstanding
shares of capital stock (or other ownership interests having by their terms
ordinary voting power to elect directors or others performing similar functions
with respect to such Subsidiary) of each of the Company's Subsidiaries (except
for director qualifying and similar shares),
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and (ii) each of the outstanding shares of capital stock (or other ownership
interests having by their terms ordinary voting power to elect directors or
others performing similar functions with respect to such Subsidiary) of each of
the Company's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and (except for director qualifying and similar shares) is owned,
directly or indirectly, by the Company free and clear of all liens, pledges,
security interests, claims or other encumbrances ("Encumbrances").
6.6. NO VIOLATION. Except as set forth in the Disclosure Letter, neither
the execution and delivery by the Company of this Agreement or any of the
Ancillary Documents nor the consummation by the Company of the transactions
contemplated hereby or thereby will: (i) violate, conflict with or result in a
breach of any provisions of the Certificate of Incorporation or Bylaws of the
Company or comparable governing instruments of any of its Subsidiaries; (ii)
violate, conflict with, result in a breach of any provision of, constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, result in the termination or in a right of
termination of, accelerate the performance required by or benefit obtainable
under, result in the triggering of any payment, penalty or other obligations
pursuant to, result in the creation of any Encumbrance upon any of the
properties of the Company or its Subsidiaries under, or result in there being
declared void, voidable, or without further binding effect, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture or other
obligation for borrowed money to which the Company or any of its Subsidiaries is
a party, or by which the Company or any of its Subsidiaries or any of their
respective properties is bound (each, a "Contract" and, collectively,
"Contracts"), except for any such breach, default or right with respect to which
requisite waivers or consents have been, or prior to the Effective Time will be,
obtained or any of the foregoing matters which would not have a Material Adverse
Effect; (iii) require any consent, approval or authorization of, license, permit
or waiver by, or declaration, filing or registration (collectively, "Consents")
with, any Governmental Entity, including any such Consent under the Laws of any
foreign jurisdiction, other than (x) the filings provided for in Section 2.3 and
the filings required under the Exchange Act and the Securities Act of 1933, as
amended (the "Securities Act"), and (y) the filing required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), the filing
required under the Exon-Florio Amendment to the Defense Production Act of 1950
("Exon-Florio Amendment"), and any Consents required or permitted to be obtained
pursuant to the Laws of any foreign jurisdiction relating to antitrust matters
or competition ("Foreign Antitrust Laws") (collectively, "Other Antitrust
Filings and Consents," and, together with the other filings described in clauses
(x) and (y) above, "Regulatory Filings"), except for those Consents the failure
of which to obtain or make would not, individually or in the aggregate, have a
Material Adverse Effect; or (iv) violate any Laws applicable to the Company or
any of its Subsidiaries, except for violations which would not, individually or
in the aggregate, have a Material Adverse Effect.
6.7. COMPANY REPORTS; OFFER DOCUMENTS.
(a) The Company has delivered or otherwise made available to Purchaser each
registration statement, report, proxy statement or information statement (as
defined under the Exchange Act) filed by it since September 30, 1994, each in
the form (including exhibits and any amendments thereto) filed with the SEC
(collectively, the "Company Reports"). As of their respective dates, the Company
Reports (i) complied as to form in all material respects with the applicable
requirements of the Securities Act, the Exchange Act, and the rules and
regulations thereunder and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, taken as a whole and in the light
of the circumstances under which they were made, not misleading. Each of the
consolidated balance sheets of the Company included in or incorporated by
reference into the Company Reports (including the related notes and schedules)
is true and complete in all material respects and fairly presents the
consolidated financial position of the Company and its Subsidiaries as of its
respective date, and each of the consolidated statements of income, retained
earnings and cash flows of the Company included in or incorporated by reference
into the Company Reports (including any related notes and schedules) is true and
complete in all material respects and fairly presents the results of operations,
retained earnings or cash flows, as the case may be, of the Company and its
Subsidiaries for the periods set forth therein in accordance with United States
generally accepted accounting principles, consistently applied during the
periods involved, except as may be noted therein. Except as disclosed in the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, or
the Company's audited financial statements included in the Company's
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Annual Report on Form 10-K for the year ended September 30, 1996 neither the
Company nor its Subsidiaries has any material liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on, or reserved against in, a balance sheet of the
Company or in the notes thereto, prepared in accordance with generally accepted
accounting principles consistently applied, except liabilities and obligations
arising in the ordinary course of business since March 31, 1997 and except for
liabilities or obligations that would not constitute a Material Adverse Effect.
The Company has heretofore made available or promptly will make available to
Purchaser a complete and correct copy of any amendments or modifications, which
have not yet been filed with the SEC, to agreements, documents or other
instruments which previously have been filed by the Company with the SEC as
exhibits to the Company Reports.
(b) None of the Schedule 14D-9, any information statement filed by the
Company in connection with the Offer (the "Information Statement"), any schedule
required to be filed by the Company with the SEC and any amendment or supplement
thereto, at the respective times such documents are filed with the SEC or first
published, sent or given to the Company's shareholders, will contain any untrue
statement of a material fact or will omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading except that
no representation is made by the Company with respect to information supplied by
Purchaser or Merger Sub for inclusion in the Schedule 14D-9 or Information
Statement or any amendment or supplement. None of the information supplied or to
be supplied by the Company expressly for inclusion or incorporation by reference
in the Offer Documents will, at the date of filing with the SEC or first
publication, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading. If, at any time prior to the Effective Time, the Company
shall obtain knowledge of any facts with respect to itself, any of its officers
and directors or any of its Subsidiaries that would require the supplement or
amendment to any of the foregoing documents in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or to comply with applicable Laws, such amendment or supplement
shall be promptly filed with the SEC and, as required by Law, disseminated to
the shareholders of the Company, and in the event Purchaser shall advise the
Company as to its obtaining knowledge of any facts that would make it necessary
to supplement or amend any of the foregoing documents, the Company shall
promptly amend or supplement such document as required and distribute the same
to its shareholders.
(c) None of the information supplied or to be supplied by the Company for
inclusion or incorporation by reference in (i) the registration statement on
Form S-4 to be filed with the SEC by Purchaser in connection with the issuance
of Purchaser Common Shares in the Merger (such S-4, and all amendments and
supplements thereto, the "S-4") will, at the time the S-4 is filed with the SEC
and at the time it becomes effective under the Securities Act, 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,
and (ii) the joint proxy statement/prospectus included in the S-4 (such proxy
statement, and all amendments and supplements thereto, the "Proxy Statement")
will, at the date of mailing to shareholders and at the times of the meetings of
shareholders to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The Proxy
Statement (except for such portions thereof that relate only to Purchaser) will
comply as to form in all material respects with the requirements of the Exchange
Act and the rules and regulations of the SEC thereunder.
6.8. ABSENCE OF CERTAIN CHANGES. Except as set forth in the Company Reports
or the Disclosure Letter, during the period from September 30, 1996 through the
date of this Agreement, the Company and its Subsidiaries have conducted their
business in the ordinary course of such business consistent with past practices,
and there have not been (i) any events or states of fact which individually, or
in the aggregate, would have a Material Adverse Effect; (ii) any declaration,
setting aside or payment of any dividend or other distribution with respect to
its capital stock other than the regular quarterly dividend declared and paid in
the first three quarters of fiscal 1997; (iii) any repurchase, redemption or any
other acquisition by the Company or its Subsidiaries of any outstanding shares
of capital stock or other securities of, or other ownership interests in,
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<PAGE> 15
the Company or its Subsidiaries; (iv) any material change in accounting
principles, practices or methods; (v) any entry into any employment agreement
with, or any material increase in the rate or terms (including, without
limitation, any acceleration of the right to receive payment) of compensation
payable or to become payable by the Company or any of its Subsidiaries to, their
respective directors, officers or employees, except for increases occurring in
the ordinary course of business in accordance with their customary practices and
employment agreements entered into in the ordinary course of business; (vi) any
material increase in the rate or terms (including, without limitation, any
acceleration of the right to receive payment) of any bonus, insurance, pension
or other employee benefit plan or arrangement covering any such directors,
officers or employees, except increases occurring in the ordinary course of
business in accordance with its customary practices; (vii) any revaluation by
the Company or any of its Subsidiaries of any material amount of their assets,
taken as a whole, including, without limitation, write-downs of inventory or
write-offs of accounts receivable other than in the ordinary course of business
consistent with past practices and (viii) any amendment or change to the
Certificate of Incorporation or Bylaws or comparable governing instruments of
the Company or any of its Subsidiaries.
6.9. TAXES. Except as set forth in the Disclosure Letter, the Company and
each of its Subsidiaries have timely filed all material Tax Returns required to
be filed by any of them. All such Tax Returns are true, correct and complete,
except for such instances, if any, which would not, individually or in the
aggregate, have a Material Adverse Effect. All Taxes of the Company and its
Subsidiaries which are (i) shown as due on such Returns, (ii) otherwise due and
payable or (iii) claimed or asserted by any taxing authority to be due, have
been paid, except for those Taxes being contested in good faith and for which
adequate reserves have been established in the financial statements included in
the Company Reports in accordance with generally accepted accounting principles,
consistently applied. There are no proposed or, to the knowledge of the Company,
threatened Tax claims or assessments which, if upheld, would, individually or in
the aggregate, have a Material Adverse Effect. Except as set forth in the
Disclosure Letter, the Company and each Subsidiary have withheld and paid over
to the relevant taxing authority all Taxes required to have been withheld and
paid in connection with payments to employees, independent contractors,
creditors, shareholders or other third parties, except where the failure to
withhold and pay would not, individually or in the aggregate, have a Material
Adverse Effect. For purposes of this Agreement, (a) "Tax" (and, with correlative
meaning, "Taxes") means any federal, state, local or foreign income, gross
receipts, property, sales, use, license, excise, franchise, employment, payroll,
premium, withholding, alternative or added minimum, ad valorem, transfer or
excise tax, or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty, imposed by any Governmental Entity, and (b) "Tax Return" means any
return, report or similar statement required to be filed with respect to any Tax
(including any attached schedules), including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Tax.
6.10. LITIGATION. As of the date of this Agreement, except as disclosed in
the Disclosure Letter, there are no actions, suits, or proceedings pending
against the Company or its Subsidiaries or, to the knowledge of the Company,
threatened against the Company or its Subsidiaries at law or in equity, or
before or by any federal or state commission, board, bureau, agency,
instrumentality or any arbitrator or arbitration, tribunal, that, if decided
adversely, individually or in the aggregate would have a Material Adverse
Effect.
6.11. EMPLOYEE BENEFIT PLANS.
(a) Except as disclosed in the Disclosure Letter, the Company has complied
with and performed all contractual obligations and all obligations under
applicable federal, state, and local laws, rules and regulations (domestic and
foreign) required to be performed by it under or with respect to any of the
Company Benefit Plans (as hereinafter defined) or any related trust agreement or
insurance contract, other than where the failure to so comply or perform will
not have a Material Adverse Effect. All contributions and other payments
required to be made by the Company to any Company Benefit Plan or Multi-Employer
Plan (as hereinafter defined), prior to the date hereof have been made, other
than where the failure to so contribute or make payments will not have a
Material Adverse Effect. Except as disclosed in the Disclosure Letter, there is
no claim, dispute, grievance, charge, complaint, restraining or injunctive
order, litigation, or proceeding pending, or, to the Company's knowledge,
threatened (other than routine claims for benefits) against or relating to any
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Company Benefit Plan or against the assets of any Company Benefit Plan, which
will have, individually or in the aggregate, a Material Adverse Effect.
(b) Neither the Company nor its Subsidiaries has incurred, nor has any
event occurred which has imposed or is reasonably likely to impose, upon the
Company any withdrawal liability (partial or complete) in respect of any
multi-employer plan (within the meaning of Section 3(37) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") ("Multi-Employer
Plan"), which withdrawal liability has not been satisfied or discharged in full
or which, either individually or in the aggregate, will cause a Material Adverse
Effect.
(c) (i) "Plan" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock purchase, stock option,
stock ownership, stock appreciation rights, phantom stock, leave of absence,
layoff, vacation, day or dependent care, legal services, cafeteria, life
insurance, severance, separation or other employee benefit plan, practice,
policy or arrangement of any kind, including, but not limited to, any "employee
benefit plan" within the meaning of Section 3(3) of ERISA and (ii) "Company
Benefit Plan" means any employee pension benefit plan and any Plan, other than a
Multi-Employer Plan, established by the Company or to which the Company
contributes or has contributed (including any such Plans not now maintained by
the Company or to which the Company does not now contribute, but with respect to
which the Company has or may have any liability).
6.12. EMPLOYMENT RELATIONS AND AGREEMENTS. (a) Except as disclosed in the
Disclosure Letter or as would not constitute a Material Adverse Effect, as of
the date of this Agreement, (i) no unfair labor practice complaint against the
Company or any of its Subsidiaries is pending before the National Labor
Relations Board; (ii) there is no, and has not been during the last three years,
any labor strike, slowdown or stoppage actually pending which may interfere with
the business activities of the Company or its Subsidiaries; (iii) no arbitration
proceeding arising out of or under any collective bargaining agreement is
pending and no claim therefore has been asserted; and (iv) no collective
bargaining agreement is currently being negotiated by the Company or any of its
Subsidiaries.
(b) Except as disclosed in the Disclosure Letter, to the knowledge of the
Company, neither the Company nor its Subsidiaries has any employment agreement
with any other person that could have a Material Adverse Effect.
(c) There are no work stoppages or any actual or, to the Company's
knowledge, threatened termination or modification of the business relationships
of the Company or any of its Subsidiaries with any of their customers or
suppliers, that would have a Material Adverse Effect, except to the extent
commencing after the public announcement of, and arising out of or relating to,
the transactions contemplated hereby.
6.13. CONTRACTS. Except as set forth in the Company Reports or disclosed in
the Disclosure Letter, neither the Company nor its Subsidiaries is a party to or
bound by (i) any "material contract" (as such term is defined in Item 601(b)(10)
of Regulation S-K of the SEC), or (ii) any non-competition agreement or other
agreement which purports to limit in any material respect the manner in which,
or the location in which, all or any material portion of the business of the
Company and its Subsidiaries is conducted (all contracts of the type described
in clauses (i) and (ii) being referred to herein as "Material Contracts"). Each
Material Contract is valid and binding on the Company (or, to the extent a
Subsidiary of the Company is a party, such Subsidiary) and is in full force and
effect, and the Company and each of its Subsidiaries have in all material
respects performed all obligations required to be performed by them to date
under each Material Contract, except where noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect. The Company does not know
of, and has not received notice of, any violation or default under (nor, to the
knowledge of the Company, does there exist any condition which with the passage
of time or the giving of notice or both would result in such a violation or
default under) any Material Contract, which default would have a Material
Adverse Effect.
6.14. ENVIRONMENTAL LAWS AND REGULATIONS. (a) As of the date of this
Agreement, except as disclosed in the Company Reports or the Disclosure Letter,
(i) neither the Company nor any of its Subsidiaries has received written notice
of, or, to the knowledge of the Company, is the subject of, any action, cause of
action,
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claim, investigation, demand or notice by any person or entity alleging
liability under or non-compliance with any Law relating to pollution or
protection of human health or the environment (including without limitation
ambient air, surface water, ground water, land surface or surface strata) (an
"Environmental Claim") that individually or in the aggregate would have a
Material Adverse Effect; and (ii) to the knowledge of the Company, there are no
circumstances that are reasonably likely to prevent or interfere with such
material compliance in the future.
(b) As of the date of this Agreement, except as disclosed in the Company
Reports or the Disclosure Letter, there are no Environmental Claims which
individually or in the aggregate would have a Material Adverse Effect that are
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries or, to the knowledge of the Company, against any person
or entity whose liability for any Environmental Claim the Company or any of its
Subsidiaries has or may have retained or assumed either contractually or by
operation of law.
(c) As of the date of this Agreement, except as disclosed in the Company
Reports or the Disclosure Letter, there has been no spill, discharge, leak,
emission, injection, disposal, escape, dumping or release of any kind by the
Company or its Subsidiaries on, beneath or above the real property owned by the
Company or any of its Subsidiaries, or the real property leased, used, or in
which any other interest is maintained by the Company and its Subsidiaries at
the Effective Time or, to the knowledge of the Company, previously owned by,
used by or leased to the Company or any Subsidiary (collectively, the
"Property") or into the environment surrounding the Property of any pollutants,
contaminants, hazardous substances, hazardous chemicals, toxic substances,
hazardous wastes, infectious wastes, radioactive materials, petroleum (including
crude oil or any fraction thereof), asbestos fibers or solid wastes
(collectively, "Hazardous Materials"), including but not limited to those
defined in any Law and all regulations promulgated under each and all amendments
thereof, or any other federal, state or local environmental law, ordinance,
regulations, rule or order, except such of the foregoing occurrences as do not
have a Material Adverse Effect.
6.15. BROKERS. The Company has not entered into any contract, arrangement
or understanding with any person or firm which may result in the obligation of
Purchaser or the Company to pay any finder's fees, brokerage or agent's
commissions or other like payments in connection with the negotiations leading
to this Agreement or the consummation of the transactions contemplated hereby,
except that the Company has retained the Financial Advisor and Merrill Lynch
Pierce Fenner & Smith Incorporated, the arrangements with which have been
disclosed in writing to Purchaser prior to the date hereof.
6.16. OPINION OF FINANCIAL ADVISOR. The Company has received the opinion of
the Financial Advisor, to the effect that, as of the date hereof, the Merger
Consideration to be received by the holders of Common Stock pursuant to the
Offer and the Merger is fair to such shareholders from a financial point of
view.
6.17. NO RESTRICTIONS ON THE OFFER OR THE MERGER. No provision of the
Certificate of Incorporation, Bylaws or other governing instruments of the
Company or any of its Subsidiaries (i) imposes restrictions materially adversely
affecting (or materially delaying) the consummation of the Offer or the Merger
or (ii) would, as a result of the Offer, the Merger, the transactions
contemplated hereby or the acquisitions of securities of the Company or the
Surviving Corporation by Purchaser or Merger Sub (A) restrict or impair the
ability of Purchaser to vote, or otherwise to exercise the rights of a
shareholder with respect to, securities of the Company or the Surviving
Corporation and their Subsidiaries that may be acquired or controlled by
Purchaser or (B) entitle any person, entity, or group to acquire securities of
the Company or the Surviving Corporation on a basis not available to Purchaser.
Except as set forth in the Disclosure Letter, the Company is not a party to any
plan or agreement pursuant to which payments are required or acceleration of
benefits are required to be paid to any employee or former employee of the
Company upon a "change in control" of the Company as a result of the
consummation of the transactions contemplated hereby. The approval and adoption
of the Merger requires the affirmative vote of two-thirds of the outstanding
shares of Common Stock.
6.18. INTELLECTUAL PROPERTY. Each of the Company and its Subsidiaries is
the owner of, or a licensee under a valid license for, all items of intellectual
property that are material to its business. Except as disclosed in the
Disclosure Letter or as would not result in a Material Adverse Effect, there are
no claims pending or, to the knowledge of the Company or any of its
Subsidiaries, threatened challenging that the Company or any of
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its Subsidiaries is in violation of the intellectual property rights of any
third party nor, to the Company's knowledge, are there any infringements by
others of any of the rights owned by or licensed to the Company or any of its
Subsidiaries.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB
Except as set forth in the corresponding sections of the disclosure letter,
dated the date hereof, delivered by Purchaser to the Company (the "Purchaser
Disclosure Letter"), Purchaser and Merger Sub hereby represent and warrant to
the Company as follows:
7.1. EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each of Purchaser and
Merger Sub is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own, operate and lease its properties
and carry on its business as now conducted, except where the failure to have
such power and authority would not have a materially adverse effect on the
business, results of operations or financial condition of Purchaser or on the
ability of Purchaser or Merger Sub to consummate the transactions contemplated
by this Agreement (a "Purchaser Material Adverse Effect").
7.2. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Each of Purchaser
and Merger Sub has the requisite corporate power and authority to execute and
deliver this Agreement and the Ancillary Documents and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Ancillary Documents and the consummation by Purchaser and
Merger Sub of the transactions contemplated hereby and thereby have been duly
and validly authorized by the respective Boards of Directors of Purchaser and
Merger Sub and by Purchaser as the sole shareholder of Merger Sub and no other
corporate proceedings on the part of Purchaser or Merger Sub are necessary to
authorize this Agreement and the Ancillary Documents or to consummate the
transactions contemplated hereby and thereby. This Agreement has been, and any
Ancillary Documents at the time of execution will have been, duly and validly
executed and delivered by Purchaser and Merger Sub, and (assuming this Agreement
and such Ancillary Documents each constitutes a valid and binding obligation of
the Company) constitutes and will constitute the valid and binding obligations
of each of Purchaser and Merger Sub, and the Agreement is enforceable in
accordance with its terms.
7.3. OFFER DOCUMENTS.
(a) None of the Offer Documents, any schedule required to be filed by
Purchaser or Merger Sub with the SEC or any amendment or supplement thereto will
contain, at the respective times such documents are filed with the SEC or first
published, sent or given to the Company's shareholders, any untrue statement of
a material fact or will omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading, except that no
representation is made by Purchaser or Merger Sub with respect to information
supplied by the Company specifically for inclusion in the Offer Documents or the
Information Statement, any schedule required to be filed with the SEC or any
amendment or supplement. None of the information supplied or to be supplied by
Purchaser or Merger Sub for inclusion or incorporation by reference in the
Schedule 14D-9 will, at the date of filing with the SEC or first publication,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If at any time prior to the Effective Time either Purchaser or
Merger Sub shall obtain knowledge of any facts with respect to itself, any of
its officers and directors or any of its Subsidiaries that would require the
supplement or amendment to any of the foregoing documents in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or to comply with applicable Laws, such amendment or
supplement shall be promptly filed with the SEC and, as required by Law,
disseminated to the shareholders of the Company, and in the event the Company
shall advise Purchaser or Merger Sub as to its obtaining knowledge of any facts
that would make it necessary to supplement or amend any of the foregoing
documents, Purchaser
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or Merger Sub shall promptly amend or supplement such document as required and
distribute the same to the shareholders of the Company.
(b) None of the information supplied or to be supplied by Purchaser for
inclusion or incorporation by reference in (i) the S-4 will, at the time the S-4
is filed with the SEC and becomes effective under the Securities Act, 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 and (ii) the Proxy Statement will, at the date of mailing to
shareholders and at the times of the meetings of shareholders to be held in
connection with the Merger, 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 were made, not misleading. The Proxy Statement (except for such portions
thereof that relate only to the Company) will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the SEC thereunder, and the S-4 (except for such portions thereof that relate
only to the Company) will comply as to form in all material respects with the
requirements of the Securities Act and the rules and regulations of the SEC
thereunder.
7.4. NO VIOLATION. Neither the execution and delivery of this Agreement or
any of the Ancillary Documents by Purchaser and Merger Sub nor the consummation
by them of the transactions contemplated hereby or thereby will (i) violate,
conflict with or result in any breach of any provision of the respective
Certificates of Incorporation or Bylaws of Purchaser or any of its Subsidiaries;
(ii) violate, conflict with, result in a breach of any provision of, constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, result in the termination or in a right of
termination of, accelerate the performance required by or benefit obtainable
under, result in the triggering of any payment or other obligations pursuant to,
result in the creation of any Encumbrance upon any of the properties of
Purchaser or Merger Sub under, or result in there being declared void, voidable,
or without further binding effect, any Contract to which Purchaser or Merger Sub
is a party, or by which Purchaser or Merger Sub or any of their respective
properties is bound, except for any such breach, default or right with respect
to which requisite waivers or consents have been, or prior to the Effective Time
will be, obtained or any of the foregoing matters which would not have a
Purchaser Material Adverse Effect; (iii) other than the Regulatory Filings,
require any Consent of any Governmental Entity, the lack of which would have a
Purchaser Material Adverse Effect; or (iv) violate any Laws applicable to
Purchaser or the Merger Sub or any of their respective assets, except for
violations which would not, individually or in the aggregate, have a Purchaser
Material Adverse Effect.
7.5. FINANCING. On the date hereof, Purchaser has access to funds
sufficient to consummate the Offer and the Merger on the terms contemplated
hereby. The source and any commitments related thereto are set forth in the
Purchaser Disclosure Letter. At the consummation of the Offer and at the
Effective Time, Purchaser will have, and will cause Merger Sub to have, funds
available to it sufficient to consummate the Offer and the Merger on the terms
contemplated hereby.
7.6. MERGER SUB. Merger Sub was formed solely for the purpose of engaging
in the transactions contemplated hereby. Except for obligations or liabilities
incurred in connection with its incorporation or organization and the
transactions contemplated hereby, Merger Sub has not incurred any obligations or
liabilities or engaged in any business or activities of any type or kind
whatsoever or entered into any agreements or arrangements with any Person.
7.7. COMPLIANCE WITH LAWS. Except as set forth in the Purchaser Disclosure
Letter, Purchaser is not in violation of, and the consummation of the
transactions contemplated by this Agreement will not result in any violation of,
any Laws of any Governmental Entity applicable to Purchaser or any of its
Subsidiaries or any of their respective properties or assets, except for
violations which would not have a Purchaser Material Adverse Effect, which
compliance includes, but is not limited to, the possession by the Purchaser and
its Subsidiaries of all Permits and compliance with the terms and conditions
thereof, except where the failure of Purchaser or its Subsidiaries to possess
such licenses, permits and authorizations, or comply with the terms and
conditions thereof, would not, individually or in the aggregate, have a
Purchaser Material Adverse Effect. The completion of the transactions
contemplated by this Agreement will not result in the lapse or termination of
any Permits, other than such lapse or termination which would not have a
Purchaser Material Adverse Effect.
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7.8. CAPITALIZATION. The authorized capital stock of Purchaser consists of
40,000,000 shares of Purchaser Common Stock and 10,000,000 shares of preferred
stock, $0.01 par value ("Purchaser Preferred Stock"). As of May 1, 1997, (a)
24,698,816 shares of Purchaser Common Stock were issued and outstanding, (b)
options to purchase an aggregate of 907,500 shares of Purchaser Common Stock
were outstanding, (c) no shares of Purchaser Common Stock were held by Purchaser
in its treasury, (d) no shares of capital stock of Purchaser were held by
Purchaser's Subsidiaries and (e) no shares of Purchaser Preferred Stock are
outstanding. Purchaser has no outstanding bonds, debentures, notes or other
obligations entitling the holders thereof to vote (or which are convertible into
or exercisable for securities having the right to vote) with the shareholders of
Purchaser on any matter. Since May 1, 1997, Purchaser (i) has not issued any
shares of Purchaser Common Stock, other than upon the exercise of options, or
Purchaser Preferred Stock, and (ii) has not split, combined, converted or
reclassified any of its shares of capital stock. All issued and outstanding
shares of Purchaser Common Stock are duly authorized, validly issued, fully
paid, nonassessable and free of preemptive rights. Except as set forth in this
Section 7.8 or in the Purchaser Disclosure Letter, there are no other shares of
capital stock or voting securities of Purchaser, and no existing options,
warrants, calls, subscriptions, convertible securities, or other rights,
agreements or commitments which obligate Purchaser or any of its Subsidiaries to
issue, transfer or sell any shares of capital stock of, or equity interests in,
Purchaser or any of its Subsidiaries. Except for the options to acquire
Purchaser Common Stock described in this Section 7.8, there are no equity
equivalents, interests in the ownership or earnings of the Purchaser or its
Subsidiaries, or similar rights authorized, issued or outstanding similar to
those granted by the Company under Incentive Equity Plans. Except as set forth
in the Disclosure Letter, there are no outstanding obligations of Purchaser or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of Purchaser and there are no outstanding stock-related awards.
Except as set forth in the Purchaser Disclosure Letter, there are no voting
trusts or other agreements or understandings to which Purchaser or any of its
Subsidiaries or, to the knowledge of Purchaser, any of Purchaser's directors or
executive officers is a party with respect to the voting of capital stock of
Purchaser or any of its Subsidiaries.
7.9. PURCHASER REPORTS. Purchaser has delivered or otherwise made available
to the Company each registration statement, report, proxy statement or
information statement (as defined under the Exchange Act) filed by it since
January 1, 1994, each in the form (including exhibits and any amendments
thereto) filed with the SEC (collectively, the "Purchaser Reports"). As of their
respective dates, the Purchaser Reports (i) complied as to form in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act, and the rules and regulations thereunder and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, taken as a
whole and in the light of the circumstances under which they were made, not
misleading. Each of the consolidated balance sheets of Purchaser included in or
incorporated by reference into the Purchaser Reports (including the related
notes and schedules) is true and complete in all material respects and fairly
presents the consolidated financial position of Purchaser and its Subsidiaries
as of its respective date, and each of the consolidated statements of income,
retained earnings and cash flows of Purchaser included in or incorporated by
reference into the Purchaser Reports (including any related notes and schedules)
is true and complete in all material respects and fairly presents the results of
operations, retained earnings or cash flows, as the case may be, of Purchaser
and its Subsidiaries for the periods set forth therein in accordance with United
States generally accepted accounting principles, consistently applied during the
periods involved, except as may be noted therein. Except as disclosed in the
Purchaser's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997
and Purchaser's audited financial statements included in its Annual Report on
Form 10-K for the year ended December 31, 1996, neither Purchaser nor its
Subsidiaries has any material liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on, or reserved against in, a balance sheet of Purchaser or in the
notes thereto, prepared in accordance with generally accepted accounting
principles consistently applied, except liabilities and obligations arising in
the ordinary course of business since March 31, 1997 and except for liabilities
or obligations that would not constitute a Material Adverse Effect. Purchaser
has heretofore made available or promptly will make available to the Company a
complete and correct copy of any amendments or modifications, which have not yet
been filed with the SEC, to agreements, documents or other instruments which
previously have been filed by Purchaser with the SEC as exhibits to the
Purchaser Reports.
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7.10. ABSENCE OF CERTAIN CHANGES. Except as set forth in the Purchaser
Reports or the Purchaser Disclosure Letter, during the period from December 31,
1996 through the date of this Agreement, Purchaser and its Subsidiaries have
conducted their business in the ordinary course of such business consistent with
past practices, and there have not been (i) any events or states of fact which
individually, or in the aggregate, would have a Purchaser Material Adverse
Effect; (ii) any declaration, setting aside or payment of any dividend or other
distribution with respect to its capital stock; (iii) any repurchase, redemption
or any other acquisition by Purchaser or its Subsidiaries of any outstanding
shares of capital stock or other securities of, or other ownership interests in,
Purchaser or its Subsidiaries; (iv) any material change in accounting
principles, practices or methods; (v) any entry into any employment agreement
with, or any material increase in the rate or terms (including, without
limitation, any acceleration of the right to receive payment) of compensation
payable or to become payable by Purchaser or any of its Subsidiaries to, their
respective directors, officers or employees, except for increases occurring in
the ordinary course of business in accordance with their customary practices and
employment agreements entered into in the ordinary course of business; (vi) any
material increase in the rate or terms (including, without limitation, any
acceleration of the right to receive payment) of any bonus, insurance, pension
or other employee benefit plan or arrangement covering any such directors,
officers or employees, except increases occurring in the ordinary course of
business in accordance with its customary practices; (vii) any revaluation by
Purchaser or any of its Subsidiaries of any material amount of their assets,
taken as a whole, including, without limitation, write-downs of inventory or
write-offs of accounts receivable other than in the ordinary course of business
consistent with past practices and (viii) any amendment or change to the
Certificate of Incorporation or Bylaws or comparable governing instruments of
Purchaser or any of its Subsidiaries.
7.11. TAXES. Except as set forth in the Purchaser Disclosure Letter,
Purchaser and each of its Subsidiaries have timely filed all material Tax
Returns required to be filed by any of them. All such Tax Returns are true,
correct and complete, except for such instances, if any, which would not,
individually or in the aggregate, have a Purchaser Material Adverse Effect. All
Taxes of Purchaser and its Subsidiaries which are (i) shown as due on such
Returns, (ii) otherwise due and payable or (iii) claimed or asserted by any
taxing authority to be due, have been paid, except for those Taxes being
contested in good faith and for which adequate reserves have been established in
the financial statements included in the Purchaser Reports in accordance with
generally accepted accounting principles, consistently applied. There are no
proposed or to the knowledge, of Purchaser, threatened Tax claims or assessments
which, if upheld, would, individually or in the aggregate, have a Purchaser
Material Adverse Effect. Except as set forth in the Purchaser Disclosure Letter,
Purchaser and each Subsidiary have withheld and paid over to the relevant taxing
authority all Taxes required to have been withheld and paid in connection with
payments to employees, independent contractors, creditors, shareholders or other
third parties, except where the failure to withhold and pay would not,
individually or in the aggregate, have a Purchaser Material Adverse Effect.
7.12. LITIGATION. Except as disclosed in the Purchaser Disclosure Letter,
there are no actions, suits, or proceedings pending against Purchaser or its
Subsidiaries or, to the knowledge of the Purchaser, threatened against the
Purchaser or its Subsidiaries at law or in equity, or before or by any federal
or state commission, board, bureau, agency, instrumentality or any arbitrator or
arbitration, tribunal, that, if decided adversely, individually or in the
aggregate, would have a Purchaser Material Adverse Effect, or is reasonably
expected to prevent or materially delay the consummation of the transactions
contemplated hereby.
7.13. EMPLOYEE BENEFIT PLANS.
(a) Except as disclosed in the Purchaser Disclosure Letter, Purchaser has
complied with and performed all contractual obligations and all obligations
under applicable federal, state, and local laws, rules and regulations (domestic
and foreign) required to be performed by it under or with respect to any of the
Purchaser Benefit Plans (as defined below) or any related trust agreement or
insurance contract, other than where the failure to so comply or perform will
not have a Purchaser Material Adverse Effect. All contributions and other
payments required to be made by Purchaser to any Purchaser Benefit Plan or
Multi-Employer Plan, prior to the date hereof have been made, other than where
the failure to so contribute or make payments will not have a Purchaser Material
Adverse Effect. Except as disclosed in the Purchaser Disclosure Letter, there is
no claim, dispute, grievance, charge, complaint, restraining or injunctive
order, litigation, or proceeding
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pending, or, to Purchaser's knowledge, threatened (other than routine claims for
benefits) against or relating to any Purchaser Benefit Plan or against the
assets of any Purchaser Benefit Plan, which will have, individually or in the
aggregate, a Purchaser Material Adverse Effect.
(b) Neither Purchaser nor its Subsidiaries has incurred, nor has any event
occurred which has imposed or is reasonably likely to impose upon Purchaser, any
withdrawal liability (partial or complete) in respect of any Multi-Employer
Plan, which withdrawal liability has not been satisfied or discharged in full or
which, either individually or in the aggregate, will cause a Purchaser Material
Adverse Effect.
(c) "Purchaser Benefit Plan" means any employee pension benefit plan and
any Plan, other than a Multi-Employer Plan, established by Purchaser or to which
Purchaser contributes or has contributed (including any such Plans not now
maintained by Purchaser or to which the Purchaser does not now contribute, but
with respect to which Purchaser has or may have any liability).
7.14. CONTRACTS. Except as set forth in the Purchaser Reports or disclosed
in the Purchaser Disclosure Letter, neither Purchaser nor its Subsidiaries is a
party to or bound by any Material Contract. Each Material Contract is valid and
binding on Purchaser (or, to the extent a Purchaser Subsidiary is a party, such
Subsidiary) and is in full force and effect, and Purchaser and each of its
Subsidiaries have in all material respects performed all obligations required to
be performed by them to date under each Material Contract, except where
noncompliance, individually or in the aggregate, would not have a Purchaser
Material Adverse Effect. Purchaser does not know of, and has not received notice
of, any violation or default under (nor, to the knowledge of Purchaser, does
there exist any condition which with the passage of time or the giving of notice
or both would result in such a violation or default under) any Material
Contract, which default would have a Purchaser Material Adverse Effect.
7.15. ENVIRONMENTAL LAWS AND REGULATIONS. (a) Except as disclosed in the
Purchaser Reports or the Disclosure Letter, (i) neither Purchaser nor any of its
Subsidiaries has received written notice of, or, to the knowledge of Purchaser,
is the subject of, any Environmental Claim that individually or in the aggregate
would have a Purchaser Material Adverse Effect; and (ii) to the knowledge of
Purchaser, there are no circumstances that are reasonably likely to prevent or
interfere with such material compliance in the future.
(b) Except as disclosed in the Purchaser Reports or the Purchaser
Disclosure Letter, there are no Environmental Claims which individually or in
the aggregate would have a Purchaser Material Adverse Effect that are pending
or, or the knowledge of Purchaser, threatened against Purchaser or any of its
Subsidiaries or, to the knowledge of Purchaser, against any person or entity
whose liability for any Environmental Claim Purchaser or any of its Subsidiaries
has or may have retained or assumed either contractually or by operation of law.
(c) Except as disclosed in the Purchaser Reports or the Purchaser
Disclosure Letter, there has been no spill, discharge, leak, emission,
injection, disposal, escape, dumping or release of any kind by Purchaser or its
Subsidiaries on, beneath or above the real property owned by Purchaser or any of
its Subsidiaries, or the real property leased, used, or in which any other
interest is maintained by Purchaser and its Subsidiaries at the Effective Time
or, to the knowledge of Purchaser, previously owned by, used by or leased to
Purchaser or any Subsidiary (collectively, the "Purchaser Property") or into the
environment surrounding the Purchaser Property of any Hazardous Materials,
including but not limited to those defined in any Law and all regulations
promulgated under each and all amendments thereof, or any other federal, state
or local environmental law, ordinance, regulations, rule or order, except such
of the foregoing occurrences as do not have a Purchaser Material Adverse Effect.
ARTICLE 8
COVENANTS
8.1. NO SOLICITATION. From and after the date of this Agreement and prior
to the Effective Time, except as provided below, the Company agrees (a) that
neither the Company nor its Subsidiaries shall, and the Company shall direct and
use its best efforts to cause its officers, directors, employees, agents and
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representatives (including, without limitation, any investment banker, attorney,
or accountant retained by it or any of its Subsidiaries) not to, initiate,
solicit or encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer (including without limitation, any
proposal or offer to its shareholders) with respect to a merger, acquisition,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, the Company or
any of its Subsidiaries (any such proposal or offer being hereinafter referred
to as an "Alternative Proposal") or engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions with,
any person relating to an Alternative Proposal, or otherwise facilitate any
effort or attempt to make or implement an Alternative Proposal; (b) that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing and will take the necessary steps to inform the
individuals or entities referred to above of the obligations undertaken in this
Section 8.1; and (c) that it will notify Purchaser promptly if any such
inquiries or proposals are received by, any such information is requested from,
or any such negotiations or discussions are sought to be initiated or continued
with it, including the identity of the other party and the terms of its
proposal; provided however, that nothing contained in this Section 8.1 shall
prohibit the Board of Directors of the Company from (i) furnishing information
to or entering into discussions or negotiations with, any person or entity that
makes an unsolicited bona fide proposal in writing, to acquire the Company
pursuant to a merger, consolidation, share exchange, purchase of a substantial
portion of the assets, business combination or other similar transaction, if,
and only to the extent that, (A) the Board of Directors determines in good
faith, and after consultation with outside counsel and the Financial Advisor,
that such action is required for the Board of Directors to comply with its
fiduciary duties to shareholders imposed by law, (B) prior to furnishing such
information to, or entering into discussions or negotiations with, such person
or entity, the Company provides written notice to Purchaser to the effect that
it is furnishing information to, or entering into discussions or negotiations
with, such person or entity, and (C) the Company keeps Purchaser informed of the
status (not the terms) of any such discussions or negotiations; and (ii) to the
extent applicable, complying with Rule 14e-2 promulgated under the Exchange Act
with regard to an Alternative Proposal. Subject to Article 10, nothing in this
Section 8.1 shall (x) permit the Company to terminate this Agreement, (y) permit
the Company to enter into any agreement with respect to an Alternative Proposal
during the term of this Agreement, or (z) affect any other obligation of any
party under this Agreement. The Company shall enter into a confidentiality
agreement with any third party permitted by this Section 8.1, on terms which
shall not be more favorable to, or less restrictive on, such third party as the
terms applicable to Purchaser set forth in the letter agreement dated as of
April 14, 1997, between the Company and Purchaser (the "Confidentiality
Agreement") relating to the confidential treatment of Confidential Information
(as defined therein).
8.2. INTERIM OPERATIONS OF THE COMPANY.
(a) From the date of this Agreement to the Effective Time, unless Purchaser
has consented in writing thereto, the Company shall, and shall cause each of its
Subsidiaries to, (i) conduct its operations according to its usual, regular and
ordinary course of business consistent with past practice; (ii) use its
reasonable efforts to preserve intact its business organizations and goodwill,
maintain in effect all existing qualifications, licenses, permits, approvals and
other authorizations referred to in Section 6.3 (other than those the lapse of
which would not have, individually or in the aggregate, a Material Adverse
Effect), keep available the services of its officers and employees and maintain
satisfactory relationships with those persons having business relationships with
them; (iii) promptly upon the discovery thereof notify Purchaser of the
existence of any breach of any representation or warranty of the Company
contained herein (or, in the case of any representation or warranty that makes
no reference to Material Adverse Effect, any breach of such representation or
warranty in any material respect) or the occurrence of any event that would
cause any representation or warranty of the Company contained herein no longer
to be true and correct (or, in the case of any representation or warranty that
makes no reference to Material Adverse Effect, to be no longer be true and
correct in any material respect); and (iv) promptly deliver to Purchaser true
and correct copies of any report, statement or schedule filed with the SEC
subsequent to the date of this Agreement.
(b) From and after the date of this Agreement to the Effective Time, unless
Purchaser has consented in writing thereto, the Company shall not, and shall not
permit any of its Subsidiaries to, (i) amend its
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Certificate of Incorporation or Bylaws or comparable governing instruments or
the Rights Agreement dated as of April 24, 1996, as amended by Amendment No. 1
dated July 8, 1997, between the Company and First Chicago Trust Company of New
York; (ii) authorize for issuance, issue, sell, pledge or register for issuance
or sale any shares of its capital stock or other ownership interest in the
Company (other than issuances of Common Stock in respect of any exercise of
Options outstanding on the date hereof) or any of the Subsidiaries, or any
securities convertible into or exchangeable for any such shares or ownership
interest, or any rights (other than rights related to shares of Common Stock
issued upon the exercise of Options, which entitle the holders of shares of
Common Stock to purchase shares of Series A Junior Participating Preferred Stock
upon the occurrence of certain events), warrants or options to acquire or with
respect to any such shares of capital stock, ownership interest, or convertible
or exchangeable securities; or accelerate any right to convert or exchange or
acquire any securities of the Company (other than Options pursuant to Section
5.2(d)) or any of its Subsidiaries for any such shares or ownership interest;
(iii) effect any stock split or conversion of any of its capital stock or
otherwise change its capitalization as it exists on the date hereof, other than
as set forth in this Agreement; (iv) except as contemplated by this Agreement,
directly or indirectly redeem, purchase or otherwise acquire any shares of its
capital stock or capital stock of any of its Subsidiaries, or declare, pay or
set aside any dividend or other distribution (whether in cash, stock or property
or any combination thereof) in respect of its capital stock, other than
dividends or distributions to the Company or a Subsidiary wholly-owned by the
Company; (v) sell, lease, mortgage, pledge or otherwise dispose of or encumber
any of its assets (including capital stock of Subsidiaries), except in the
ordinary course of business consistent with past practice; (vi) acquire by
merger, purchase or any other manner, any material business or entity or
otherwise acquire any assets that are material to the Company and its
Subsidiaries taken as a whole, except for purchases of inventory, supplies or
capital equipment in the ordinary course of business consistent with past
practice; (vii) incur or assume any long-term or short-term debt in excess of
$10 million, except for working capital purposes in the ordinary course of
business under the Company's existing credit facilities; (viii) assume,
guarantee or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except wholly
owned Subsidiaries of the Company; (ix) make or forgive any loans, advances or
capital contributions to, or investments in, any other Person; (x) waive or
amend any term or condition of any confidentiality or "standstill" agreement to
which the Company is a party; (xi) enter into any new employment, severance,
consulting or salary continuation agreements with any newly hired employees
other than in the ordinary course of business consistent with past practice or
enter into any of the foregoing with any existing officers, directors or
employees or grant any increases in compensation or benefits to employees, other
than increases in the ordinary course of business consistent with past practice;
(xii) enter into, adopt, amend in any material respect or terminate any employee
benefit plan or arrangement (other than the termination of the Company's
non-employee director equity compensation plan and the termination of the
Company's employee stock purchase plan); (xiii) enter into, amend in any
material respect or terminate any employment agreement or severance agreement
entered into between the Company and its executive officers or waive any
material right of the Company thereunder; (xiv) make any material changes in the
type or amount of their insurance coverage or permit any material insurance
policy naming the Company or any Subsidiary as a beneficiary or a loss payee to
be cancelled or terminated other than in the ordinary course of business
consistent with past practice; (xv) make any tax election or, except as may be
required by law or generally acceptable accounting principles, change any
material accounting principles or practices used by the Company or its
Subsidiaries; (xvi) take, or fail to take, any action to cause the Common Stock
to be delisted from the New York Stock Exchange prior to the completion of the
Offer or the Merger; (xvii) settle or compromise any claims or litigation
involving payments by the Company or any of its Subsidiaries of more than
$250,000 in any single instance or related instances, or that otherwise are
material; (xviii) enter into any intellectual property license pursuant to which
the Company licenses any of its intellectual property or sublicenses any of its
intellectual property; (xvix) enter into any lease or amend any lease of real
property involving the payment by the Company of $250,000 or more; or (xx) agree
in writing or otherwise to take any of the foregoing actions.
8.2A. INTERIM OPERATIONS OF PURCHASER AND MERGER SUB.
(a) From the date of this Agreement to the Effective Time, unless the
Company has consented in writing thereto, each of Purchaser and Merger Sub
shall, and shall cause each of its Subsidiaries to,
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(i) conduct its operations according to its usual, regular and ordinary course
of business consistent with past practice; (ii) use its reasonable efforts to
preserve intact its business organizations, maintain in effect all existing
material qualifications, licenses, permits, approvals and other authorizations
(other then those the lapse of which would not have, individually or in the
aggregate, a Purchaser Material Adverse Effect), keep available the services of
their officers and employees and maintain satisfactory relationships with those
persons having business relationships with them; (iii) promptly upon the
discovery thereof notify the Company of the existence of any breach of any
representation or warranty of Purchaser or Merger Sub contained herein (or, in
the case of any representation or warranty that makes no reference to Purchaser
Material Adverse Effect, any breach of such representation or warranty in any
material respect) or the occurrence of any event that would cause any
representation or warranty of Purchaser or Merger Sub contained herein no longer
to be true and correct (or, in the case of any representation or warranty that
makes no reference to Purchaser Material Adverse Effect, to no longer be true
and correct in any material respect); and (iv) promptly deliver to the Company
true and correct copies of any report, statement or schedule filed with the SEC
subsequent to the date of this Agreement.
(b) From and after the date of this Agreement to the Effective Time, unless
the Company has consented in writing thereto, neither Purchaser nor Merger Sub
shall, and neither shall permit any of their Significant Subsidiaries to, (i)
amend its Certificate of Incorporation or Bylaws or comparable governing
instruments; (ii) authorize for issuance, issue, sell, pledge or register for
issuance or sale any shares of its capital stock or other ownership interest in
the Purchaser (other than issuances of Purchaser Common Stock in respect of any
exercise of options outstanding on the date hereof, issuances necessary to
complete the transactions contemplated by this Agreement and issuances disclosed
in the Company Reports), the Merger Sub or any of their respective Significant
Subsidiaries, or any securities convertible into or exchangeable for any such
shares or ownership interest, or any rights, warrants or options to acquire or
with respect to any such shares of capital stock, ownership interest, or
convertible or exchangeable securities; or accelerate any right to convert or
exchange or acquire any securities of Purchaser, Merger Sub or any of their
respective Significant Subsidiaries for any such shares or ownership interest,
except for the issuance of any financial instruments in connection with the
Offer and the Merger and the financing thereof; (iii) effect any stock split or
conversion of any of its capital stock or otherwise change its capitalization as
it exists on the date hereof, other than as set forth in this Agreement; (iv)
directly or indirectly redeem, purchase or otherwise acquire any shares of its
capital stock or capital stock of any of its Significant Subsidiaries other than
as set forth in this Agreement, or declare, pay or set aside any dividend or
other distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock, other than dividends or distributions
to the Purchaser or any Significant Subsidiary wholly-owned by the Purchaser;
(v) sell, lease or otherwise dispose of any of its assets (including capital
stock of its Significant Subsidiaries), except in the ordinary course of
business; (vi) acquire by merger, purchase or any other manner, any material
business or entity or otherwise acquire any assets that are material to
Purchaser, Merger Sub and their Significant Subsidiaries taken as a whole,
except for purchases of inventory, supplies or capital equipment in the ordinary
course of business consistent with past practice; (vii) incur or assume any
long-term or short-term debt in excess of $50 million, except for working
capital purposes in any amount in the ordinary course of business under
Purchaser's existing credit facilities and except as may be required to
consummate the Offer and the Merger; (viii) assume, guarantee or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person except Subsidiaries of Purchaser, except in
the ordinary course of business consistent with past practice; (ix) make or
forgive any loans, advances or capital contributions to, or investments in, any
other person, other than consistent with past practices, to or in any
Subsidiary, and other than by Detroit Diesel Capital Corporation or Detroit
Diesel Credit Corporation in the ordinary course of their respective businesses
consistent with past practices; (x) waive or amend any term or condition of any
confidentiality or "standstill" agreement to which Purchaser or Merger Sub is a
party; (xi) adopt or amend in any material respect or terminate any employee
benefit plan or arrangement; (xii) amend in any material respect or terminate
any employment agreement or severance agreement entered into between Purchaser
and its executive officers or waive any material right of Purchaser thereunder,
except in the ordinary course of business consistent with past practice; (xiii)
make any material changes in the type or amount of their insurance coverage or
permit any material insurance policy naming Purchaser or any of its Subsidiaries
as a beneficiary or a loss payee to be cancelled or terminated other
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than in the ordinary course of business; (xiv) except as may be required by law
or generally acceptable accounting principles, change any material accounting
principles or practices used by Purchaser or its Significant Subsidiaries; (xv)
take any action to cause the Purchaser Common Shares to be delisted from the New
York Stock Exchange; or (xvi) agree in writing or otherwise to take any of the
foregoing actions.
8.3. COMPANY SHAREHOLDER APPROVAL; PROXY STATEMENT.
(a) The Company, through its Board of Directors, shall (i) call a meeting
of its shareholders (the "Shareholders Meeting") for the purpose of voting upon
the Merger, (ii) hold the Shareholders Meeting as soon as practicable following
the purchase of shares of Common Stock pursuant to the Offer and the
effectiveness of the S-4, and (iii) subject to the fiduciary duties of the Board
of Directors under applicable law as advised by outside counsel of the Company,
recommend to its shareholders the approval of the Merger. The Company shall use
reasonable efforts to solicit from shareholders of the Company proxies in favor
of the Merger and shall take all other actions reasonably requested by Purchaser
to secure the vote of shareholders required by the DGCL to effect the Merger.
The record date for the Shareholders Meeting shall be a date subsequent to the
date Purchaser or Merger Sub becomes a record holder of Common Stock purchased
pursuant to the Offer.
(b) As soon as practicable following the date of this Agreement, Purchaser,
Merger Sub and the Company shall prepare and file the Proxy Statement with the
SEC, and Purchaser shall, in cooperation with the Company, prepare and file with
the SEC the S-4. Each of Purchaser, Merger Sub and the Company shall use all
reasonable efforts to have the S-4 declared effective under the Securities Act
as promptly as practicable after such filing and to keep the S-4 effective as
long as is necessary to consummate the Merger. The Company shall mail the Proxy
Statement to its shareholders as promptly as practicable after the S-4 is
declared effective under the Securities Act. Purchaser shall also take any
action (other than qualifying to do business in any jurisdiction in which
Purchaser is not now so qualified) required to be taken under any applicable
U.S. state securities laws in connection with the issuance of Purchaser Common
Shares in connection with the Merger.
(c) The Company represents and warrants that the Proxy Statement will
comply as to form in all material respects with the Exchange Act and, at the
respective times filed with the SEC and distributed to shareholders of the
Company, will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes no
representation or warranty as to any information included in the Proxy Statement
which was provided by Purchaser or Merger Sub. Purchaser represents and warrants
that none of the information supplied by Purchaser or Merger Sub for inclusion
in the Proxy Statement will, at the respective times filed with the SEC and
distributed to shareholders of the Company, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) Purchaser represents and warrants that the S-4 will comply as to form
in all material respects with the Securities Act and, at the respective times
filed with the SEC, when the same becomes effective and when the prospectus
therein is distributed to shareholders of the Company, will not 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; provided, however, that Purchaser makes no representation or
warranty as to any information included in the Proxy Statement which was
provided by the Company. The Company represents and warrants that none of the
information supplied by the Company for inclusion in the S-4 will, at the
respective times filed with the SEC, when the same becomes effective and when
distributed to shareholders of the Company, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading.
(e) Purchaser shall use its best efforts to obtain the approval of the New
York Stock Exchange to the listing of the Purchaser Common Shares to be issued
in the Merger prior to the Effective Date and shall file all listing
applications and other documents requested by the New York Stock Exchange in
connection with such listing.
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(f) Subject to clause (iii) of Section 8.3(a), the Company shall use its
reasonable efforts to obtain the necessary approvals by its shareholders of the
Merger, this Agreement and the transactions contemplated hereby.
(g) Purchaser agrees to cause all shares of Common Stock purchased by
Merger Sub pursuant to the Offer and all other shares of Common Stock owned by
Purchaser, Merger Sub or any other Subsidiary or affiliate of Purchaser to be
voted in favor of the approval of the Merger.
(h) Except as required by law, no amendment or supplement to the Proxy
Statement or the S-4 shall be made by the Company or Purchaser without the
approval of the other party (which shall not be unreasonably withheld). Each
party shall advise the other party, promptly after it receives notice thereof,
of the time when the S-4 has become effective or any supplement or amendment has
been filed, of the issuance of any stop order, of the suspension of the
qualification of Purchaser Common Shares issuable in connection with the Merger
for offering or sale in any jurisdiction, or of any request by the SEC for
amendment of the Proxy Statement or the S-4 or comments thereon and responses
thereto or requests by the SEC for additional information.
8.4. FILINGS; OTHER ACTION.
Subject to the terms and conditions herein provided, the Company, Purchaser
and Merger Sub shall: (a) promptly make their respective filings and thereafter
make any other required submissions under the HSR Act and the Exon-Florio
Amendment with respect to the Offer and, if applicable, the Merger; (b)
cooperate and consult with one another in (i) determining which Regulatory
Filings are required or, in the case of Other Antitrust Filings and Consents,
permitted to be made prior to the Effective Time with, and which Consents are
required or, in the case of Other Antitrust Filings and Consents, permitted to
be obtained prior to the Effective Time from Governmental Entities or other
third parties in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, and all Consents
required to transfer to the Company any Permits or registrations held on behalf
of the Company or any of its Subsidiaries by or in the name of distributors,
brokers or sales agents; (ii) preparing all Regulatory Filings and all other
filings, submissions and presentations required or prudent to obtain all
Consents, including by providing to the other parties drafts of such material
reasonably in advance of the anticipated filing or submission dates; and (iii)
timely making all such Regulatory Filings and timely seeking all such Consents
and (c) use their reasonable efforts to take, or cause to be taken, all other
action and do, or cause to be done, all other things necessary, proper or
appropriate to consummate and make effective the transactions contemplated by
this Agreement. Each of Purchaser and the Company shall use its best efforts to
contest any proceeding seeking a preliminary injunction or other legal
impediment to, and to resolve any objections as may be asserted by any
Governmental Entity with respect to, the Offer or the Merger under the HSR Act
or Foreign Antitrust Laws. If, at any time after the Effective Time, any further
action is necessary or desirable to carry out the purpose of this Agreement, the
proper officers and directors of Purchaser and the Surviving Corporation shall
take all such necessary action.
8.5. PUBLICITY. The initial press release relating to this Agreement shall
be a joint press release and thereafter the Company and Purchaser shall, subject
to their respective legal obligations (including the requirements of the New
York Stock Exchange and other similar regulating bodies), use reasonable efforts
to agree upon the text of any press release before issuing such press release or
otherwise making public statements with respect to the transactions contemplated
hereby and in making any filings with any Governmental Entity or with any
securities exchange with respect thereto.
8.6. FURTHER ACTION. Each party hereto shall, subject to the fulfillment at
or before the Effective Time of each of the conditions of performance set forth
herein or the waiver thereof, perform such further acts and execute such
documents as may be reasonably required to complete the transactions
contemplated hereby.
8.7. INSURANCE; INDEMNITY.
(a) Purchaser will cause the Surviving Corporation to purchase a six-year
pre-paid noncancellable directors and officers insurance policy covering the
current and all former directors, officers and similar persons of the Company
and its Subsidiaries with respect to acts or failures to act prior to the
Effective Time,
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<PAGE> 28
in a single aggregate amount over the six-year period immediately following the
Closing Date equal to the policy limit for the Company's current directors and
officers insurance policy (the "Current Policy"). If such insurance is not
obtainable at an annual cost per covered year not in excess of three times the
annual premium paid by the Company for the Current Policy (the "Cap"), then
Purchaser will cause the Surviving Corporation to purchase policies providing at
least the same coverage as the Current Policy and containing terms and
conditions no less advantageous to the current and former directors, officers
and similar persons of the Company and its Subsidiaries than the Current Policy
with respect to acts or failures to act prior to the Effective Time; provided,
however, that Purchaser and the Surviving Corporation shall not be required to
obtain policies providing such coverage except to the extent that such coverage
can be provided at an annual cost of no greater than the Cap; and, if equivalent
coverage cannot be obtained, or can be obtained only by paying an annual premium
in excess of the Cap, Purchaser or the Surviving Corporation shall only be
required to obtain as much coverage as can be obtained by paying an annual
premium equal to the Cap.
(b) Purchaser shall cause the Surviving Corporation to keep in effect in
its Bylaws provisions for a period of not less than six years after the
Effective Time (or, in the case of matters occurring prior to the Effective Time
which have not been resolved prior to the sixth anniversary of the Effective
Time, until such matters are finally resolved) which provide for exculpation of
director and officer liability and indemnification (and advancement of expenses
related thereto) of the past and present officers and directors of the Company
and its Subsidiaries to the fullest extent permitted by the DGCL which
provisions shall not be amended except as required by applicable law or except
to make changes permitted by law that would enhance the rights of past or
present officers and directors to indemnification or advancement of expenses.
(c) From and after the Effective Time, Purchaser shall indemnify and hold
harmless, to the fullest extent permitted under the DGCL, each person who is, or
has been at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer, director or similar person of the Company or any
Subsidiary against all losses, claims, damages, liabilities, costs or expenses
(including attorneys' fees), judgments, fines, penalties and amounts paid in
settlement (collectively, "Losses") in connection with any claims, actions,
suits, proceedings, arbitrations, investigations or audits (collectively
"Litigation") arising before or after the Effective Time out of or pertaining to
acts or omissions, or alleged acts or omissions, by them in their capacities as
such, which acts or omissions occurred prior to the Effective Time. Without
limiting the foregoing, Purchaser shall periodically advance expenses as
incurred with respect to the foregoing to the fullest extent permitted under
applicable law provided that the person to whom the expenses are advanced
provides an undertaking to repay such advance if it is ultimately determined
that such person is not entitled to indemnification.
(d) If the Merger shall have been consummated, the Surviving Corporation
shall, to the fullest extent permitted under applicable law, indemnify and hold
harmless Purchaser and any person or entity who was a shareholder, officer,
director or affiliate of Purchaser prior to the Effective Time against any
Losses in connection with any Litigation arising out of or pertaining to any of
the transactions contemplated by this Agreement or the Ancillary Documents.
(e) If, after the Effective Time, Purchaser or Surviving Corporation or any
of their respective successors or assigns (i) consolidates with or merges into
any other person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers all or substantially
all its properties and assets to any person, then, in each such case, proper
provisions shall be made so that successors and assigns of Purchaser or
Surviving Corporation, as the case may be, shall assume all the obligations set
forth in this Section 8.7. The provisions of this Section 8.7 are intended for
the benefit of and shall be enforceable by each person who is now or has been at
any time prior to the date of this Agreement, or who becomes prior to the
Effective Time, an officer, director or similar person of the Company or any of
its Subsidiaries.
(f) Any Indemnified Party will promptly notify Purchaser and the Surviving
Corporation of any claim, action, suit, proceeding or investigation for which
such party may seek indemnification under this Section. If any Litigation
described in paragraph (c) or (d) of this Section 8.7 (each, an "Action") arises
or occurs, the Surviving Corporation shall control the defense of such Action
with counsel selected by the Surviving Corporation, which counsel shall be
reasonably acceptable to the party seeking indemnification pursuant to
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<PAGE> 29
paragraph (c) or (d) of this Section 8.7 (each, an "Indemnified Party"),
provided that the Indemnified Party shall be permitted to participate in the
defense of such Action through counsel selected by the Indemnified Party, at the
Indemnified Party's expense. Notwithstanding the foregoing, if there is any
actual or potential conflict between the Surviving Corporation and any
Indemnified Party or there are additional defenses available to any Indemnified
Party, such Indemnified Party shall be permitted to participate in the defense
of such Action with counsel selected by the Indemnified Party, at the Surviving
Corporation's expense; provided, however, that the Surviving Corporation shall
not be obligated to pay the reasonable fees and expenses of more than one
counsel for all Indemnified Parties in any single Action except to the extent
that two or more of such Indemnified Parties have conflicting interests in the
outcome of such Action. The Surviving Corporation shall not be liable for any
settlement effected without its written consent, which consent shall not
unreasonably be withheld.
8.8. RESTRUCTURING OF MERGER. Upon the mutual agreement of Purchaser and
the Company, the Merger shall be restructured in the form of a forward
subsidiary merger of the Company into Merger Sub, with Merger Sub being the
surviving corporation, or as a merger of the Company into Purchaser, with
Purchaser being the surviving corporation. In such event, this Agreement shall
be deemed appropriately modified to reflect such form of merger.
8.9. EMPLOYEE BENEFIT PLANS. From and after the Effective Time, the
Surviving Corporation and its respective Subsidiaries will honor, in accordance
with their terms, all existing employment and severance agreements between the
Company or any of its Subsidiaries and any current or former officer, director,
consultant or employee of the Company or any of its Subsidiaries to the extent
in effect on the date hereof and all benefits or other amounts earned or accrued
to the extent vested or which become vested pursuant to the terms of such
agreements or in accordance with the terms of this Agreement through the
Effective Time under all employee benefit plans of the Company and any of its
Subsidiaries, in each case to the extent in effect on the date hereof.
8.10. ACCELERATION OF OUTSTANDING INDEBTEDNESS. If, after the Offer is
consummated, the Company's or any Subsidiary's obligation for borrowed money
outstanding is accelerated or the Company or such Subsidiary is otherwise
required to repurchase, repay or prepay any such obligation, Purchaser agrees,
within five business days after notice thereof, to loan to the Company an amount
equal to the amount which the Company or any such Subsidiary is required to so
repurchase, repay or prepay (including any related prepayment premiums or
penalties) at an interest rate not to exceed the rate under Purchaser's bank
credit facility. The term of such loan shall be equal to the term of such
accelerated obligation (prior to its acceleration) and the Company and Purchaser
shall enter into any agreements reasonably necessary to evidence such agreement.
8.11. REAL PROPERTY TRANSFER TAXES. Any liability for real property
transfer taxes, real property gains taxes or similar taxes imposed with respect
to the property of the Company by any state, local or foreign taxing authority
with respect to the Offer and the Merger shall be paid or caused to be paid by
Surviving Corporation.
ARTICLE 9
CONDITIONS
9.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction or waiver, where permissible, prior to the Effective Time, of the
following conditions:
(a) If approval of this Agreement and the Merger by the holders of Common
Stock is required by applicable law, this Agreement and the Merger shall have
been approved by the requisite vote of such holders.
(b) There shall not have been issued any injunction or issued or enacted
any Law which prohibits or has the effect of prohibiting the consummation of the
Merger or makes such consummation illegal; provided, however, that each of the
parties shall have used its best efforts to prevent the entry of any injunction
or other order and to appeal as promptly as possible any injunction or other
order that may be entered.
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ARTICLE 10
TERMINATION; AMENDMENT; WAIVER
10.1. TERMINATION. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time
notwithstanding approval thereof by the shareholders of the Company:
(a) by mutual written consent of the Company and Purchaser duly authorized
by their respective Boards of Directors;
(b) by the Company, if Merger Sub shall have failed to commence the Offer
within five business days after the date of this Agreement;
(c) by the Company, if Purchaser or Merger Sub materially breaches any of
their respective representations or warranties or covenants contained in this
Agreement and, with respect to any such breach that can be remedied, the breach
is not remedied within five business days after the Company has furnished
Purchaser or Merger Sub with written notice of such failure;
(d) by Purchaser or the Company:
(i) if the Effective Time shall not have occurred on or before
December 31, 1997 (provided that the right to terminate this Agreement
pursuant to this clause (i) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause
of or resulted in the failure of the Effective Time to occur on or before
such date);
(ii) if there shall be any statute, law, rule or regulation that makes
consummation of the Offer or the Merger illegal or prohibited or if any
court of competent jurisdiction or other Governmental Entity shall have
issued an order, judgment, decree or ruling, or taken any other action
restraining, enjoining or otherwise prohibiting the Offer or the Merger and
such order, judgment, decree, ruling or other action shall have become
final and non-appealable; or
(iii) if the Offer terminates or expires on account of the failure of
any condition specified in Exhibit A without Merger Sub having purchased
any shares of Common Stock thereunder (provided that the right to terminate
this Agreement pursuant to this clause (iii) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of any such condition); or
(e) by the Company, at any time prior to the acceptance for payment of
shares of Common Stock by Merger Sub pursuant to the Offer, if there is an
Alternative Proposal which the Board of Directors in good faith determines
represents a superior transaction for the shareholders of the Company as
compared to the Offer and the Merger, and the Board of Directors determines,
after consultation with outside counsel and the Financial Advisor, that it is
required by its fiduciary duties to the Company's shareholders imposed by law to
terminate this Agreement and the Company pays to Purchaser any amounts owed
under Section 10.2 below; provided, however, that the right to terminate this
Agreement pursuant to this Section 10.1(e) shall not be available (i) if such
Alternative Proposal shall result from a breach in any material respect of the
Company's obligations under Section 8.1 or (ii) if the Company has not provided
Purchaser and Merger Sub with at least two business days' prior written notice
of its intent to so terminate this Agreement together with a summary of the
material terms and conditions of the Alternative Proposal; and
(f) by Purchaser, if the Board of Directors of the Company shall have
failed to recommend, or shall have withdrawn, modified or amended in any manner
adverse to Purchaser or Merger Sub, its approval or recommendation of the Offer
or the Merger, or shall have recommended acceptance of any Alternative Proposal.
10.2. EFFECT OF TERMINATION. (a) Subject to this Section 10.2, if this
Agreement is terminated and the Merger is abandoned pursuant to Section 10.1,
this Agreement, except for the provisions of Sections 1.3(c) (with respect to
confidentiality), 8.5 and Article 11, shall terminate, without any liability on
the part of any party or their respective directors, officers or shareholders.
Nothing herein shall relieve any party to this
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Agreement of liability for breach of this Agreement or prejudice the ability of
the non-breaching party to seek damages from any other party for any breach of
this Agreement including, without limitation, attorneys' fees and the right to
pursue any remedy at law or in equity.
(b) In the event (i) the Board of Directors of the Company shall publicly
modify or amend its recommendation of the Offer or the Merger in a manner
adverse to Purchaser or shall withdraw its recommendation of the Offer or shall
recommend any Alternative Proposal, or shall resolve to do any of the foregoing,
or (ii) at any time prior to the termination of this Agreement any person (other
than Purchaser or any of its affiliates) shall publicly announce any Alternative
Proposal and, at any time on or prior to one year after the date of this
Agreement, shall become the beneficial owner of 33% or more of the outstanding
shares of Common Stock or shall consummate an Alternative Proposal, then in any
such event the Company shall promptly, but in no event later than two business
days after the first of such events to occur, pay Purchaser an amount equal to
$15,750,000 which shall be in lieu of any and all damages, costs and expenses
for breach of this Agreement by the Company.
10.3. AMENDMENT. To the extent permitted by applicable law, this Agreement
may be amended by action taken by or on behalf of the Boards of Directors of the
Company and Purchaser at any time before or after adoption of this Agreement by
the shareholders of the Company but, after any such shareholder approval, no
amendment shall be made which decreases the Merger Consideration or which
adversely affects the rights of the Company's shareholders hereunder without the
approval of such shareholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of all of the parties.
10.4. EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken by or on behalf of the Board of Directors of the
Company (subject to Section 1.4) and Purchaser, may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate or writing
delivered pursuant hereto by any other applicable party or (iii) waive
compliance with any of the agreements or conditions contained herein, except
after any adoption of this Agreement by the shareholders of the Company, for any
waiver which has the effect of decreasing the Merger Consideration or which
adversely affects the rights of the Company's shareholders hereunder without
approval of such shareholders. Any agreement on the part of any party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE 11
GENERAL PROVISIONS
11.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time.
11.2. NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission (with a
confirmatory copy sent by overnight courier), by courier service (with proof of
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<PAGE> 32
service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
<TABLE>
<S> <C>
If to Purchaser or Merger Sub: If to the Company:
Outboard Marine Corporation
Detroit Diesel Corporation 100 Sea Horse Drive
13400 Outer Drive, West Waukegan, Illinois 60085
Detroit, Michigan 48239-4001 Facsimile: (847) 689-6006
Facsimile: (313) 592-3725 Attention: Harry W. Bowman
Attention: Timothy D. Leuliette With a copy to:
With a copy to: Jones, Day, Reavis & Pogue
Detroit Diesel Corporation 77 West Wacker Drive
13400 Outer Drive, West Chicago, Illinois 60601-1692
Detroit, Michigan 48239-4001 Facsimile: (312) 782-8585
Facsimile: (313) 592-5014 Attention: William P. Ritchie
Attention: John F. Farmer
</TABLE>
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
11.3. ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties; provided, however, that either Purchaser
or Merger Sub (or both) may assign its rights hereunder (including, without
limitation, the right to make the Offer or to purchase shares of Common Stock in
the Offer) to a wholly owned subsidiary but nothing shall relieve the assignor
from its obligations hereunder. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, except for the provisions of
Sections 8.7 and 8.9, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
11.4. ENTIRE AGREEMENT. This Agreement, the Confidentiality Agreement, the
Disclosure Letter, the Purchaser Disclosure Letter, the Exhibits, the Ancillary
Documents and any other documents delivered by the parties in connection
herewith constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto.
11.5. FEES AND EXPENSES. Except as provided in Section 10.2, whether or not
the Offer or Merger is consummated, all costs and expenses incurred in
connection with the transactions contemplated by this Agreement shall be paid by
the party incurring such expenses.
11.6. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its rules of
conflict of laws. Each of the Company, Purchaser and Merger Sub hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts located in Lake County, Illinois and of the United States of
America located in the Northern District of Illinois (the "Northern Illinois
Courts") for any litigation arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any litigation
relating thereto except in such courts), waives any objection to the laying of
venue of any such litigation in the Northern Illinois Courts and agrees not to
plead or claim in any Northern Illinois Court that such litigation brought
therein has been brought in an inconvenient forum.
11.7. HEADINGS. Headings of the Articles and Sections of this Agreement are
for the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
11.8. INTERPRETATION. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all
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genders and words denoting natural persons shall include corporations and
partnerships and vice versa. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." As used in this Agreement, the words
"Subsidiary," "affiliate" and "associate" shall have the meanings ascribed
thereto in Rule 12b-2 under the Exchange Act. The phrase "Significant
Subsidiary" means any Subsidiary which is material to Purchaser's results of
operations, financial condition or business and a "Significant Subsidiary" as
such term is defined in Rule 12b-2 under the Exchange Act.
11.9. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
11.10. ENFORCEMENT OF AGREEMENT. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with its specific terms or was 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 hereof in any Northern Illinois Court,
this being in addition to any other remedy to which they are entitled at law or
in equity. The prevailing party in any judicial action shall be entitled to
receive from the other party reimbursement for the prevailing party's reasonable
attorney's fees and disbursements, and court costs.
11.11. COUNTERPARTS. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all, of the parties hereto.
11.12. OBLIGATION OF PURCHASER. Whenever this Agreement requires Merger Sub
to take any action, such requirement shall be deemed to include an undertaking
on the part of Purchaser to cause Merger Sub to take such action.
11.13. CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms shall have the meanings ascribed to them below:
(a) "BENEFICIAL OWNER" with respect to any securities means a person
that would be a beneficial owner pursuant to Rule 13d-3 promulgated under
the Exchange Act.
(b) "BUSINESS DAY" means any day other than a Saturday, Sunday, or
Federal holiday, and consists of the time period from 12:01 a.m. through
12:00 midnight, New York City time.
(c) "PERSON" means a natural person, company, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity.
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<PAGE> 34
IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf on the day and year first written
above.
OUTBOARD MARINE CORPORATION
By: /s/ HARRY W. BOWMAN
--------------------------------------
Name: Harry W. Bowman
Title: Chairman of the Board,
President and Chief
Executive Officer
DETROIT DIESEL CORPORATION
By: /s/ TIMOTHY D. LEULIETTE
--------------------------------------
Name: Timothy D. Leuliette
Title: Vice Chairman
OMC ACQUISITION CORP.
By: /s/ TIMOTHY D. LEULIETTE
--------------------------------------
Name: Timothy D. Leuliette
Title: Vice Chairman
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<PAGE> 35
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Agreement and Plan of
Merger (the "Merger Agreement"), Merger Sub shall not be required to accept for
payment or pay for, subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) of the Exchange Act, any shares of Common Stock not
theretofore accepted for payment or paid for and may terminate or amend the
Offer as to such shares of Common Stock unless (i) there shall have been validly
tendered and not withdrawn prior to the expiration of the Offer that number of
shares of Common Stock which would represent at least 13,842,619 shares of the
outstanding shares of Common Stock on a fully diluted basis (collectively, the
"Minimum Condition"), (ii) any waiting period under the HSR Act applicable to
the purchase of shares of Common Stock pursuant to the Offer shall have expired
or been terminated and (iii) approvals required by law to be obtained prior to
the consummation of the Offer under any Foreign Antitrust Laws to the purchase
of shares of Common Stock pursuant to the Offer shall have been obtained.
Furthermore, notwithstanding any other term of the Offer or the Merger
Agreement, Merger Sub shall not be required to accept for payment or, subject as
aforesaid, to pay for any shares of Common Stock not theretofore accepted for
payment or paid for, and may terminate or amend the Offer if at any time on or
after the date of the Merger Agreement and prior to the expiration of the Offer,
any of the following conditions exist or shall occur and remain in effect:
(a) (i) A court of competent jurisdiction or other Governmental Entity
shall have issued an order, judgment, decree or ruling on the merits in
connection with an action, suit or proceeding brought by any Governmental
Entity or person which (1) restrains or prohibits the acquisition by
Purchaser of shares of Common Stock pursuant to the Offer, or the making or
consummation of the Offer or the Merger, (2) makes the purchase of or
payment for some or all of the shares of Common Stock pursuant to the Offer
or the Merger illegal, (3) imposes material limitations on the ability of
Purchaser (or any of its affiliates) to acquire or hold, or to require
Purchaser or any of its affiliates or Subsidiaries to dispose of or hold
separate, any material portion of the assets or the business of Purchaser
and its affiliates taken as a whole or the Company and its Subsidiaries
taken as a whole, or (4) imposes material limitations on the ability of
Purchaser (or its affiliates) to exercise full rights of ownership of the
shares of Common Stock purchased by it, including, without limitation, the
right to vote the shares purchased by it on all matters properly presented
to the shareholders of the Company, or (ii) there shall have been
instituted and pending any action or proceeding by any Governmental Entity
which, in the opinion of Purchaser's counsel (assuming, for purposes of
such opinion only, the validity of the allegations) has a reasonable
likelihood of success on the merits, and which (1) seeks to challenge the
acquisition by Purchaser of shares of Common Stock pursuant to the Offer,
restrain, prohibit or delay the making or consummation of the Offer or the
Merger, or obtain any material damages in connection therewith, (2) seeks
to make the purchase of or payment for some or all of the shares of Common
Stock pursuant to the Offer or the Merger illegal, (3) seeks to impose
material limitations on the ability of Purchaser (or any of its affiliates)
effectively to acquire or hold, or to require Purchaser or the Company or
any of their respective affiliates or subsidiaries to dispose of or hold
separate, any material portion of the assets or the business of Purchaser
and its affiliates taken as a whole or the Company and its subsidiaries
taken as a whole, or (4) seeks to impose material limitations on the
ability of Purchaser (or its affiliates) to exercise full rights of
ownership of the shares of Common Stock purchased by it, including, without
limitation, the right to vote the shares purchased by it on all matters
properly presented to the shareholders of the Company; or
(b) There shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States, (ii) the
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) the commencement of a war,
armed hostilities or other international or national calamity directly or
indirectly involving the United States, or (iv) any limitation (whether or
not mandatory) by any governmental or regulatory authority on, or any other
event which has a material adverse effect on the extension of credit by
banks or other lending institutions in the United States; or
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(c) there shall have been promulgated, enacted, entered, enforced or
deemed applicable to the Offer or the Merger, by any Governmental Entity,
any Law or there shall have been issued any injunction resulting in any of
the consequences referred to in subsection (a) above; or
(d) the Merger Agreement shall have been terminated in accordance with
its terms; or
(e) (i) the representations and warranties made by the Company in the
Merger Agreement shall not be true and correct as of the date of
consummation of the Offer as though made on and as of that date (other than
representations and warranties made as of a specified date) except for any
breach or breaches which, in the aggregate, would not have a Material
Adverse Effect or (ii) the Company shall have breached or failed to comply
in any material respect with any of its obligations under this Agreement
and, with respect to any such failure that can be remedied, the failure is
not remedied within 20 business days after Purchaser has furnished the
Company with written notice of such failure; or
(f) during the period from the date of this Agreement through the
expiration of the Offer, the Company and its Subsidiaries have not
conducted their business in the ordinary course of such business consistent
with past practices, or there has been any event or state of fact which
would have a Material Adverse Effect; or
(g) the Board of Directors shall have modified or amended its
recommendation of the Offer or the Merger in any manner adverse to
Purchaser or Merger Sub or shall have withdrawn its recommendation of the
Offer or the Merger or shall have recommended acceptance of any Alternative
Proposal or shall have resolved to do any of the foregoing; or
(h) (i) a tender or exchange offer for 33% or more of the then
outstanding shares of Common Stock shall have been publicly proposed to be
made and not withdrawn within five business days, or shall have been made,
by any person, corporation, entity or "group" (as defined in Section
13(d)(3) of the Exchange Act) (other than Purchaser and any of its
affiliates and other than any person who is the beneficial owner of 33% or
more of the shares of Common Stock as of the date of the Merger Agreement)
at a price in excess of the value of the Merger Consideration (calculated
as if the Closing Date were the date such tender offer is commenced); (ii)
any person (other than Purchaser and any of its affiliates) shall have
acquired beneficial ownership of 33% or more of the outstanding shares of
Common Stock, or shall have been granted any options or rights, conditional
or otherwise, to acquire a total of 33% or more of the outstanding shares
of Common Stock; (iii) any new group shall have been formed which
beneficially owns more than 33% of the outstanding shares of Common Stock;
or (iv) any person (other than Purchaser and any of its affiliates) shall
have entered into an agreement in principle or definitive agreement with
the Company with respect to a tender or exchange offer for any shares of
Common Stock or a merger, consolidation or other business combination with
or involving the Company.
Subject to Section 1.1(b) of the Merger Agreement, the foregoing conditions
(a) through (h) are for the sole benefit of Purchaser and Merger Sub and may be
asserted by Purchaser regardless of the circumstances giving rise to any such
condition and may be waived by Purchaser, in whole or in part, at any time and
from time to time, in the sole discretion of Purchaser. The failure by Purchaser
at any time to exercise any of the foregoing rights will not be deemed a waiver
of any right, the waiver of such right with respect to any particular facts or
circumstances shall not be deemed a waiver with respect to any other facts or
circumstances, and each right will be deemed an ongoing right which may be
asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered shares of Common Stock not theretofore accepted for payment shall
forthwith be returned by the depositary to the tendering shareholders.
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