MERGER AGREEMENT
DATED AS OF
AUGUST 17, 1995
AMONG
GENERAL DYNAMICS CORPORATION
BIW ACQUISITION CORP.
BATH IRON WORKS CORPORATION
AND
BATH HOLDING CORP.
TABLE OF CONTENTS
Section 1 Definitions 1
Section 2. The Merger Transaction 11
2.1 The Merger Generally 11
2.2 Governing Documents 12
2.3 Prepayment of Required Debt 12
2.4 Conversion of Shares in the Merger 12
2.5 Initial Merger Consideration 13
2.6 Adjustment of Initial Merger Consideration 13
2A The Stock Sale 17
2A.1 Election to Purchase Stock 17
2A.2 The Stock Sale Generally 17
2A.3 Deliveries at Closing 17
2A.4 Stock Representation 17
Section 3 Closing and Closing Date 17
3.1 Closing 17
3.2 Closing Date; Effective Time 18
3.3 Deliveries at the Closing 18
Section 4. Representations and Warranties of BHC 18
4.1 Organization 18
4.2 Authorization of Transaction 18
4.3 No Conflicts; Consents 18
4.4 Capitalization 18
4.5 Subsidiaries 18
4.6 Financial Statements 18
4.7 Undisclosed Liabilities 20
4.8 Events Subsequent to July 2, 1995 21
4.9 Accounts Receivable 23
4.10 Inventories; Shipbuilding Contracts
in Progress 23
4.11 Tax Matters 24
4.12 Contracts 25
4.13 Government Contracts 26
4.14 Real Property 29
4.15 Title and Related Matters 31
4.16 Intellectual Property 31
4.17 Litigation 33
4.18 Employee Benefits 33
4.19 Labor Relations; Workers' Compensation 38
4.20 Environmental Matters 38
4.21 Legal Compliance 39
4.22 Permits 39
4.23 Insurance 39
4.24 Brokers' Fees 40
4.25 Full Disclosure. 40
Section 5. Representations and Warranties of GDC 40
5.1 Organization of GDC and BIWA 40
5.2 Authorization of Transaction 40
5.3 No Conflicts; Consents 41
5.4 Litigation 41
5.5 Brokers' Fees 41
Section 6. Pre-Closing Covenants 41
6.1 General 41
6.2 Xxxx-Xxxxx-Xxxxxx Filing 42
6.3 Carry on Business in Regular Course 42
6.4 No General Increases in Compensation 42
6.5 Contracts and Commitments 42
6.6 Structural Changes 42
6.7 Preservation of Organization 43
6.8 No Default 43
6.9 Full Access 43
6.10 Notice of Developments 43
6.11 Exclusivity 44
6.12 Tax Matters 44
6.13 REA Claims 45
Section 7. Post-Closing Covenants 45
7.1 General 45
7.2 Litigation Support 45
7.3 Confidentiality 45
7.4 Transfer Taxes 46
7.5 Tax Refunds 46
7.6 Marine Insurance Fund 46
Section 8. Employee Benefits 46
8.1 Allocation of Pension Responsibilities 46
8.2 Allocation of Welfare Benefit
Responsibilities. 47
8.3 Allocation of Investment Plan
Responsibilities 48
8.4 Limitations on Liability 48
8.5 Cooperation Between Parties 48
Section 9. Closing Conditions 49
9.1 Conditions to Obligation of GDC
and BIWA 49
9.2 Conditions to Obligation of BHC
and the Company 50
Section 10. Remedies for Breaches of
Representations and Warranties 51
10.1 Survival 51
10.2 Indemnification Provisions for Benefit
of GDC 51
10.3 Indemnification Provisions for
Benefit of BHC. 52
10.4 Matters Involving Third Parties 53
10.5 Indemnification Procedures 53
10.6 Recourse Limited 54
Section 11. Termination 54
11.1 Termination of Agreement 54
11.2 Effect of Xxxxxxxxxxx 00
Xxxxxxx 00. Dispute Resolution 55
12.1 Dispute Resolution 55
12.2 Choice of Forum 56
12.3 Waiver of Jury Trial and Certain
Damages 56
12.4 Specific Performance. 56
12.5 Attorneys' Fees 57
Section 13. Miscellaneous 57
13.1 Press Releases and Announcements 57
13.2 Expenses 57
13.3 Remedies 57
13.4 Consent to Amendments 57
13.5 Liquidation of BHC. 58
13.6 Successors and Assigns 58
13.7 BHC Representative 58
13.8 Severability 58
13.9 Counterparts 59
13.10 Descriptive Headings 59
13.11 Notices 59
13.12 No Third-Party Beneficiaries 60
13.13 Entire Agreement 60
13.14 Construction 60
13.15 Incorporation of Exhibits and
Schedules 60
13.16 Governing Law 60
EXECUTION COPY
MERGER AGREEMENT
MERGER AGREEMENT dated as of August 17, 1995 among
GENERAL DYNAMICS CORPORATION, a Delaware corporation ("GDC"),
BIW ACQUISITION CORP., a Maine corporation ("BIWA"), BATH
IRON WORKS CORPORATION, a Maine corporation (the "Company"),
and BATH HOLDING CORP., a Delaware corporation ("BHC").
WHEREAS, the respective boards of directors and the
respective shareholders of BIWA and the Company have approved
the merger of the Company with and into BIWA on the terms and
subject to the conditions set forth in this Agreement; and
WHEREAS, BHC owns of record and beneficially all of the
issued and outstanding shares of common stock of the Company,
and The Prudential Insurance Company of America ("Prudential")
owns of record and beneficially all of the issued and
outstanding shares of preferred stock of the Company;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions. For purposes of this Agreement,
the following terms have the meanings set forth below:
"Affiliate" has the meaning set forth in Rule 12b-2 of
the regulations promulgated under the Securities Exchange Act
of 1934, as amended.
"Agreement" means this Merger Agreement, as the same may
be amended from time to time in accordance with the terms
hereof.
"Ancillary Agreements" means, collectively, the REA
Assignment Agreement, the Support Agreement and the Tax
Matters Agreement.
"Anglo American Policy" means the aggregate stop loss
policies of workers' compensation insurance issued by the
Anglo American Insurance Company Ltd. for the policy year
1992.
"Arbiter" has the meaning set forth in Section 2.6(d).
"BHC" has the meaning set forth in the Preamble to this
Agreement.
"BHC Representative" means the Person designated by BHC
or a predecessor BHC Representative to act on behalf of BHC
pursuant to Section 13.7.
"BIWA" has the meaning set forth in the Preamble to this
Agreement.
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" has the meaning set forth in Section 3.2.
"Closing Date Balance Sheet" has the meaning set forth in
Section 2.6(a).
"Closing Date Transaction Expenses" has the meaning set
forth in Section 13.2.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Company" has the meaning set forth in the Preamble to
this Agreement.
"Company Common Stock" means the issued and outstanding
shares of common stock, $1.00 par value, of the Company.
"Company Hourly Investment Plans" means the Bath Iron
Works Corporation Tax-Deferred Savings Plan for Hourly
Employees.
"Company Hourly Participants" means those Persons who, as
of the Closing Date, are Eligible Individuals employed in a
classification of employees then eligible for coverage under
the Company Hourly Plan, including certain Company Salaried
Participants who have accrued benefits under the Company
Hourly Plan, plus former employees and/or beneficiaries as
identified in Section 8 who are entitled to benefits under the
Company Hourly Plan.
"Company Hourly Plan" means the hourly employee defined
benefit pension structures existing under the Bath Iron Works
Corporation Pension Plan for Hourly Employees as described in
collective bargaining agreements covering them and as those
structures otherwise exist immediately prior to the Effective
Time.
"Company Hourly Trust" means the existing funding
arrangements for the Company Hourly Plans.
"Company Investment Plans" means, collectively, the
Company Hourly Investment Plan and the Company Salaried
Investment Plan.
"Company Pension Participant" means a Company Hourly
Participant or a Company Salaried Participant, where no
distinction is required by the context in which the term is
used.
"Company Pension Plans" means, collectively, the Company
Hourly Plan and the Company Salaried Plan.
"Company Pension Trusts" means, collectively, the Company
Hourly Trust and the Company Salaried Trust.
"Company Preferred Stock" means the issued and
outstanding shares of Senior Redeemable Exchangeable Preferred
Stock of the Company.
"Company Salaried Investment Plan" means the Bath Iron
Works Corporation Tax-Deferred Savings Plan for Salaried
Employees.
"Company Salaried Participants" means those Persons who,
as of the Closing Date, are Eligible Individuals employed in a
classification of employees then eligible for coverage under
the Company Salaried Plan, including certain Company Hourly
Participants who have accrued benefits under the Company
Hourly Plans, plus former employees and/or beneficiaries as
identified in Section 8.1(b) who are entitled to benefits
under the Company Salaried Plan.
"Company Salaried Plan" means the Bath Iron Works
Corporation Pension Plan for Salaried Employees, as it exists
as a defined benefit pension structure immediately prior to
the Effective Time.
"Company Salaried Trust" means the existing funding
arrangements for the Company Salaried Plan.
"Company Shares" means the Company Common Stock and the
Company Preferred Stock.
"Company Welfare Plans" means the applicable welfare
plans of the Company as described on Schedule 4.18 of the
Disclosure Schedules, but excluding arrangements providing
workers' compensation benefits.
"Confidential Information" has the meaning set forth in
Section 7.3.
"Contracts" means all contracts, agreements, commitments,
instruments, guaranties, and, with respect to contracts with
the DOD, all bids and proposals, in each case to which the
Company is a party, including those listed on Schedule 4.12 of
the Disclosure Schedules.
"Covered Other Tax Refund" has the meaning set forth in
Section 7.5.
"Dauphin Real Estate" means the homes and homesites
adjacent to the Company's former solid waste disposal facility
in Bath, Maine.
"Disclosure Schedules" means, collectively, the various
Schedules referred to in this Agreement.
"DOD" means the United States Department of Defense or
any branch or agency thereof.
"EAC Income" means, for each contract, the projected
income (or loss) at completion that is earned (or recognized)
over time on a percentageofcompletion basis, which income
reflects assumptions that include, but are not limited to:
estimated labor hours to complete the ship as required under
the applicable contract; labor and overhead rates (including
pension assumptions) projected over the remainder of each ship
construction period; the material required, including
unallocated material, to complete each ship as required under
the applicable contract, and the projected change in the
contractually specified indices for labor and material.
"Earned Progress" means, for each ship under contract,
the progress measured by the Company's management control
systems, approved in accordance with Department of Defense
Instruction 5000.2, except that, in the case of material, such
progress shall incorporate modifications approved by the Navy
(but in the case of labor, no adjustment shall be made for
progress measured through statusing of work orders), which
progress, as described in the Physical Progressing System
Description required under each shipbuilding contract and as
adjusted, in the case of material, to incorporate approved
modifications by the Navy, is used as a basis for submitting
and receiving customer approval of biweekly progress payments
except as provided in the next sentence. Earned Progress for
any ship under a contract in which the first ship of that
contract has not passed the start fabrication date shall be
calculated by dividing total costs incurred (labor, overhead,
material, and facilities cost of capital) by the estimated
total costs at completion in effect as of the date of the
Interim Balance Sheet (such total costs incurred and estimated
total costs to be calculated in contract base-month dollars
which, in the case of estimated total costs use the same de-
escalation factors that the Company used in its EAC Income
calculations as of the date of the Interim Balance Sheet).
"Effective Time" has the meaning set forth in Section
3.2.
"Employee Benefit Plan" has the meaning set forth in
Section 4.18(a).
"Employee Pension Benefit Plan" has the meaning set forth
in Section 4.18(a).
"Employee Welfare Benefit Plan" has the meaning set forth
in Section 4.18(a).
"Environmental Claim" means any accusation, allegation,
notice of violation, claim, demand, abatement, order,
directive, judgment, lien, or other assessment by any Person
for personal injury, sickness or death, damage to property,
nuisance, pollution, contamination, natural resource damage,
remediation or corrective action or other damage or adverse
effects on the environment, or for fines, costs of
investigation, penalties or restrictions, in any case
resulting from or based upon: (a) the occurrence or threat of
occurrence on or before the Closing Date of any Release of any
Hazardous Materials; (b) the transportation, storage, or
disposal of any Hazardous Materials on or before the Closing
Date; or (c) the violation or alleged violation of any
Environmental Law or Permits relating to any Environmental
Law, Release or Hazardous Material on or before the Closing
Date.
"Environmental Law" means any Law with respect to any
Hazardous Materials, drinking water, surface water,
groundwater, wetlands, landfills, open dumps, storage tanks,
underground storage tanks, solid waste, waste water, storm
water run-off, waste emissions or xxxxx. Without limiting the
generality of the foregoing, the term will encompass each of
the following statutes and the regulations promulgated
thereunder: (a) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (codified in scattered
sections of 26 U.S.C., 33 U.S.C., 42 U.S.C. and 42 U.S.C.
9601 et seq.), (b) the Resource Conservation and Recovery Act
of 1976 (42 U.S.C. 6901 et seq.), (c) the Hazardous
Materials Transportation Act (49 U.S.C. 1801 et seq.), (d)
the Toxic Substances Control Act (15 U.S.C. 2061 et seq.),
(e) the Clean Water Act (33 U.S.C. 7401 et seq.), (f) the
Clean Air Act (42 U.S.C. 7401 et seq.), (g) the Safe
Drinking Water Act (21 U.S.C. 349); 42 U.S.C. 201 and
300f et seq.), (h) the National Environmental Policy Act of
1969 (42 U.S.C. 4321), (i) the Superfund Amendment and
Reauthorization Act of 1986 (codified in scattered sections of
10 X.X.X., 00 X.X.X., 00 X.X.X. xxx 00 X.X.X.), (x) the
Occupational Safety and Health Act (29 U.S.C. 651 et seq.) to
the extent that it relates to the use or control of Hazardous
Materials or the prevention of or response to a Release, and
(k) Title III of the Superfund Amendment and Reauthorization
Act (40 U.S.C. 1101 et seq.).
"Environmental Losses" has the meaning set forth in
Section 10.2(b).
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
"Facilities" means all real property at any time owned,
leased, or used by the Company in connection with the
Shipbuilding Business.
"Financial Statements" has the meaning set forth in
Section 4.6.
"Funded Debt" as of any date means the aggregate of (a)
all obligations of the Company at such time for borrowed money
evidenced by a note, bond, debenture or similar instrument
issued by the Company, (b) all capitalized lease obligations
of the Company, (c) all liabilities of the Company for any
interest, premium, or other charges (including prepayment
penalties) in respect of any obligation of the type described
in the preceding clauses (a) and (b) in order to obtain the
full release of the Company from such obligations as of such
date, and (d) all liabilities of the Company under any
guaranty of any obligation of the type described in the
preceding clauses (a), (b) or (c).
"GAAP" means United States generally accepted accounting
principles and practices, as in effect as of the date of this
Agreement, as promulgated by the Financial Accounting
Standards Board and its predecessors.
"GDC" has the meaning set forth in the Preamble to this
Agreement.
"Governmental Entity" means any government or any agency,
bureau, board, commission, court, department, official,
political subdivision, tribunal or other instrumentality of
any government, whether federal, state or local, domestic or
foreign.
"Government Contract" means a Contract between the
Company and the DOD or any other Governmental Entity,
including any facilities contract for the use of government-
owned facilities.
"Government Subcontract" means any Contract that is a
subcontract between the Company and any third party relating
to a prime contract with the DOD or any other Governmental
Entity.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended.
"Hazardous Materials" means each and every element,
compound, chemical mixture, contaminant, pollutant, material,
waste or other substance which is defined as, determined to be
or identified as hazardous or toxic under any Environmental
Law or the Release of which is prohibited under any
Environmental Law, including, without limiting the generality
of the foregoing, (a) "hazardous substances" as defined in the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Superfund Amendment and
Reauthorization Act of 1986, or Title III of the Superfund
Amendment and Reauthorization Act, each as amended, and
regulations promulgated thereunder, (b) "hazardous waste" as
defined in the Resource Conservation and Recovery Act of 1976,
as amended, and regulations promulgated thereunder, (c)
"hazardous materials" as defined in the Hazardous Materials
Transportation Act, as amended, and regulations promulgated
thereunder, and (d) "chemical substance or mixture" as defined
in the Toxic Substances Control Act, as amended, and
regulation promulgated thereunder.
"Income Tax" means any Tax measured or assessed on the
net income of the Company, including any such Tax denominated
as a franchise tax.
"Income Tax Return" means any return, declaration,
report, claim for refund or information return or statement
relating exclusively to Income Taxes, including any schedule
or attachment
thereto.
"Indemnified Losses" has the meaning set forth in Section
10.2(d).
"Indemnified Party" has the meaning set forth in Section
10.4.
"Indemnifying Party" has the meaning set forth in Section
10.4.
"Initial Merger Consideration" has the meaning set forth
in Section 2.5.
"Intellectual Property" means all (a) patents, patent
disclosures, trademarks, service marks, trade dress, logos,
trade names, copyrights and mask works, and all registrations,
applications and associated goodwill for each of the
foregoing, owned by the Company and used or held for use in
connection with the business of the Company, including those
listed on Schedule 4.16 of the Disclosure Schedules, and (b)
all computer software, computer programs, computer data bases
and related documentation and materials, data, documentation,
trade secrets, confidential business information (including
ideas, formulas, compositions, inventions, know-how,
manufacturing and production processes and techniques,
research and development information, drawings, designs,
plans, proposals and technical data, financial, marketing and
business data, pricing and cost information) and other
intellectual property rights (in whatever form or medium)
owned by the Company and used or held for use in connection
with the business of the Company.
"Interim Balance Sheet" has the meaning set forth in
Section 4.6.
"Inventory Account" means the line item captioned
"Inventories" on the balance sheet of BHC and the Company.
"IRS" means the Internal Revenue Service of the
Department of the Treasury.
"BHC's knowledge" and "knowledge of BHC" mean (i) the
actual knowledge of the directors and officers of BHC and (ii)
with respect to any representation or warranty, the actual
knowledge of the directors and officers of the Company listed
as having knowledge with respect to such representation or
warranty on Exhibit A hereto, in each case following
reasonable inquiry by or on behalf of BHC.
"Law" means any constitutional provision, statute, law,
rule, regulation, permit, decree, injunction, judgment, order,
ruling, determination, finding or writ of any Governmental
Entity.
"Lien" means any mortgage, pledge, security interest,
charge, claim or other encumbrance.
"Losses" mean any losses, damages, liabilities, costs or
expenses (including reasonable attorneys' and experts' fees
and expenses), in excess of any specific reserve or other
provision therefor included on the Interim Balance Sheet;
PROVIDED that no such reserves or other provisions shall be
deducted or otherwise considered in determining: (a) Losses
attributable to a breach of the representation and warranty of
BHC in Section 4.10(a); or (b) Losses including Income Taxes
for which BHC and Prudential are required to indemnify and
hold GDC and BIWA harmless pursuant to the Tax Matters
Agreement..
"Lloyd's Policy" means all aggregate stop loss policies
of workers' compensation insurance issued by Underwriters at
Lloyd's of London and Certain Member Companies of the
Institute of London Underwriters for the policy years
September 1, 1988 through December 31, 1989, 1990 and 1991.
"Material Adverse Effect" means, when used in connection
with a Person, any change or effect or circumstance that is
materially adverse to the business, properties, assets,
condition (financial or otherwise) or results of operations or
future prospects of such Person and its Subsidiaries taken as
a whole.
"Merger" has the meaning set forth in Section 2.1.
"Merger Consideration" has the meaning set forth in
Section 2.6(g).
"Multiemployer Plan" has the meaning set forth in Section
3(37) of ERISA.
"Net Working Capital" as of September 3, 1995 means:
(a) the sum of cash, cash equivalents and marketable
securities (whether carried on the balance sheet as a current
or a long term asset), net of outstanding checks and
overdrafts; restricted funds (whether carried on the balance
sheet as a current or long term asset); accounts receivable;
shipbuilding contracts in progress; inventories; other current
assets of the Company (other than current prepaid tax assets);
and property, plant and equipment, net of accumulated
depreciation, of the Company, minus
(b) the sum of amounts outstanding under the Revolver (as
reduced by any prepayment thereof on the Closing Date in
accordance with Section 2.3); accounts payable; accrued
current liabilities; accruals, payables and reserves for Other
Taxes and all other current liabilities (including, without
duplication, any such liability reflected as a contra-asset
account) of the Company (other than current portions of long
term debt and other Funded Debt and accruals, payables and
reserves for Income Taxes, in each case as such amounts are
included in current liabilities) and long term pension and
workers' compensation liabilities of the Company,
all as reflected on a balance sheet of the Company as of
September 3, 1995 prepared in accordance with GAAP applied on
a basis consistent with GAAP employed by the Company in the
preparation of the Interim Balance Sheet and using the same
accounting methods, policies, practices, assumptions and
procedures with consistent classifications, judgments and
valuation and estimation methodologies as used in the
preparation of the Interim Balance Sheet and including those
adjustments required by Section 2.6, minus
(c) $2,000,000;
PROVIDED, HOWEVER, that the amount included in Net Working
Capital resulting from operating income recognized on DDG 77,
79 and 81 during the Short Period shall be 2/3 of $1.6
million.
"Net Working Capital Statement" has the meaning set forth
in Section 2.6(a).
"Other Tax" means any Tax other than an Income Tax.
"Other Tax Return" means any return, declaration, report,
claim for refund or information return or statement relating
to Other Taxes, including any schedule or attachment thereto.
"Owned Real Property" means real property owned by the
Company, together with all buildings, structures,
improvements, fixtures and fittings located on or attached to
such real property, and all rights, privileges, easements and
other appurtenances belonging thereto, in each case as listed
on Schedule 4.14(a) of the Disclosure Schedules.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permit" means any license, permit, franchise,
certificate of authority or order, or any waiver of the
foregoing, issued by any Governmental Entity.
"Permitted Liens" means all (a) mechanics', materialmens'
or other similar Liens incurred in the ordinary course of
business in respect of liabilities incurred in the ordinary
course of business and accrued or otherwise reflected as a
liability on the books and records of the Company if and to
the extent required to be so accrued or otherwise reflected in
accordance with GAAP, (b) Liens arising under original
purchase price conditional sales contracts and equipment
leases with third parties entered into in the ordinary course
of business and accrued or otherwise reflected as a liability
on the books and records of the Company if and to the extent
required to be so accrued or otherwise reflected in accordance
with GAAP and (c) Liens for Taxes not yet due and payable.
"Person" means an individual, a partnership, a
corporation, a limited liability company, an association, a
joint stock company, a trust, a joint venture, an
unincorporated organization or a Governmental Entity.
"Predecessor Business" means any business, activity or
transaction of the Company or any current or former Affiliate
of the Company, or any entity merged with, or wholly or
partially liquidated into, any former Affiliate of the Company
other than the Shipbuilding Business.
"Predecessor Losses" has the meaning set forth in Section
10.2(c).
"Prohibited Transaction" has the meaning set forth in
Section 406 of ERISA and Section 4975 of the Code.
"Prudential" has the meaning set forth in the Preamble to
this Agreement.
"REA Assignment Agreement" means the Assignment Agreement
dated the date hereof between the Company and Prudential, and
all amendments thereto in accordance with the terms thereof.
"Real Estate Leases" means, collectively, the real estate
leases to which the Company is a party which are listed on
Schedule 4.14(b) of the Disclosure Schedules.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, storing, escaping,
leaching, dumping, discarding, burying, abandoning or
disposing of any Hazardous Substances into the environment.
"Reportable Event" has the meaning set forth in Section
4043 of ERISA.
"Required Debt" means (a) the Senior Notes and (b) the
Revolver.
"Residual Deficit Act" means 24 AMRSA Chapter 26, "An Act
to Create the Workers' Compensation Residual Deficit
Resolution and Recovery Act", enacted during the first regular
session of the 117th Maine Legislature.
"Revolver" means the Company's revolving credit facility
pursuant to the Revolving Credit Agreement dated as of January
22, 1994 between the Company, BHC and Fleet Bank of
Massachusetts, N.A., as amended from time to time, including
related liabilities of the Company for interest, premiums, if
any, or other charges (including prepayment penalties).
"Schedule" means, unless the context otherwise requires,
the referenced Schedule included in the Disclosure Schedules.
"Senior Notes" means the outstanding principal amount of
the Company's 11% Senior Notes, including related liabilities
of the Company for interest, premiums, if any, or other
charges (including prepayment penalties).
"Shipbuilding Business" means (a) the business conducted
in Bath, West Bath, Brunswick and Portland, Maine (including
Dauphin), involving the design, construction, maintenance and
servicing of surface ships, (b) the business conducted under
the trade name "Cleveland Punch and Shear" and (c) any other
business conducted by the Company since January 1, 1988.
"Short Period" means the period commencing on July 3,
1995 and ending on the September 3, 1995.
"Stock Sale" has the meaning set forth in Section 2A.1.
"Subsidiary" means any corporation with respect to which
another specified corporation has the power under ordinary
circumstances to vote or direct the voting of sufficient
securities to elect a majority of the directors.
"Support Agreement" means the Support Agreement among
GDC, BIWA, and Prudential, dated as of the date hereof, and
all amendments thereto in accordance with the terms thereof.
"Tax" or "Taxes" means any federal, state, local or
foreign net income, gross income, gross receipts, sales, use,
ad valorem, transfer, franchise, profits, license, lease,
service, service use, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property,
windfall profits, customs, duties or other tax, fee,
assessment or charge, including any interest, penalty or
addition thereto.
"Tax Matters Agreement" means the Tax Matters Agreement
among GDC, BIWA, BHC and Prudential, dated as of the date
hereof, and all amendments thereto in accordance with the
terms thereof.
"Tax Return" means any Income Tax Return or Other Tax
Return.
"Transferred Amounts" shall have the meaning assigned to
it in Section 2.01 of the REA Assignment Agreement.
"Warranty Losses" has the meaning set forth in Section
10.2(a).
Section 2. The Merger Transaction.
2.1 The Merger Generally. Upon the terms and subject to
the conditions set forth in this Agreement, at the Effective
Time the Company shall be merged with and into BIWA and the
separate corporate existence of the Company shall thereupon
cease (the "Merger"). BIWA shall be the surviving corporation
in the Merger and shall continue to be governed by the laws of
the State of Maine, the separate corporate existence of the
Company shall terminate, and all its rights, privileges,
powers, and franchises shall be vested in BIWA as the
surviving corporation.
2.2 Governing Documents. The certificate of
incorporation of BIWA in effect immediately prior to the
Effective Time shall be the certificate of incorporation of
the surviving corporation until duly amended in accordance
with the Maine Business Corporation Act, except that Article
First of the certificate of incorporation shall be amended at
the Effective Time to read in its entirety as follows:
"First. The name of the corporation shall be BATH IRON WORKS
CORPORATION."
2.3 Prepayment of Required Debt. At the Effective Time,
GDC shall cause BIWA or, if the Stock Sale shall occur, the
Company, to prepay the Required Debt as of the Closing Date,
subject to delivery to BIWA or, if the Stock Sale shall occur,
the Company, by each holder of Required Debt of a confirmation
of receipt of payment and a release substantially in the form
of Exhibit B attached hereto. At the Effective Time, GDC
shall also cause BIWA or, if the Stock Sale shall occur, the
Company, to pay all Closing Date Transaction Costs.
2.4 Conversion of Shares in the Merger. The manner of
converting shares of the Company and BIWA in the Merger shall
be as follows:
(a) Company Shares. At the Effective Time: (i) each
share of Company Common Stock issued and outstanding
immediately prior to the Effective Time and not owned directly
or indirectly by the Company shall, by virtue of the Merger
and without any action on the part of the holder thereof, be
converted into the right to receive in cash, at the Effective
Time, a pro rata portion of a $16,870,000 million portion of
the Merger Consideration; and (ii) each share of Company
Preferred Stock issued and outstanding immediately prior to
the Effective Time and not owned directly or indirectly by the
Company (and all associated rights including any dividends
declared but not paid and any accrued dividends not declared)
shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to
receive a pro rata portion of the Merger Consideration less
$16,870,000. All Company Shares owned by the Company
immediately prior to the Effective Time shall, by virtue of
the Merger and without any action on the part of the holder
thereof, be cancelled and retired, and no consideration shall
be payable therefor. The Merger Consideration shall be
payable when due, as provided in this Agreement, by bank wire
transfer of immediately available funds to the account or
accounts designated in writing by BHC in the case of payments
in respect of Company Common Stock, and by Prudential in the
case of payments in respect of Company Preferred Stock. All
Company Shares, by virtue of the Merger and without any action
on the part of the holders thereof, shall no longer be
outstanding and shall be cancelled and retired and shall cease
to exist, and each holder of a certificate representing any
such Company Shares shall thereafter cease to have any rights
with respect to such Company Shares, except for the right to
receive payment of a portion of the Merger Consideration as
herein provided for such Company Shares upon the surrender of
such certificates in accordance with this Agreement and the
right, if any, to receive payment from the surviving
corporation of the "fair value" of such Company Shares as
determined in accordance with Section 909 of the Maine
Business Corporation Act.
(b) BIWA Stock. At the Effective Time, each share of
capital stock of BIWA issued and outstanding immediately prior
to the Effective Time shall, by virtue of the Merger and
without any action on the part of BIWA or the holder of such
shares, be converted into one share of common stock of the
surviving corporation.
2.5 Initial Merger Consideration. The Initial Merger
Consideration shall be an amount equal to $300,000,000 plus
interest on such amount at 8% per annum (calculated on an
actual/360 basis) from and including September 3, 1995 to but
excluding the Closing Date, less the outstanding Required Debt
and Closing Date Transaction Expenses as of the Closing Date
(the "Initial Merger Consideration"). An adjustment to the
Initial Merger Consideration shall be payable as provided in
Section 2.6.
2.6 Adjustment of Initial Merger Consideration
(a) Within 60 days after the Closing Date, GDC will
deliver to BHC a balance sheet of the Company as of the close
of business on September 3, 1995 (the "Closing Date Balance
Sheet") prepared in accordance with GAAP applied on a basis
consistent with GAAP employed by the Company in the
preparation of the Interim Balance Sheet and using the same
accounting methods, policies, practices, assumptions and
procedures with consistent classifications, judgments and
valuation and estimation methodologies as used in the
preparation of the Interim Balance Sheet and including those
adjustments required by this Section 2.6. At the same time
GDC delivers the Closing Date Balance Sheet to BHC, GDC will
deliver to BHC (i) a statement setting forth in reasonable
detail the calculation of Net Working Capital in accordance
with this Section 2.6, as determined from the Closing Date
Balance Sheet (the "Net Working Capital Statement") and (ii) a
special purpose report from BIWA's or, if the Stock Sale shall
occur, the Company's independent auditors in the form of
Exhibit C attached hereto.
(b) The Closing Date Balance Sheet will not give effect
to any adjustments arising from the transactions provided for
in this Agreement (other than the billing or payment of
additional Closing Date Transaction Expenses in accordance
with Section 13.2(b) and other than the prepayment of the
Revolver in accordance with Section 2.3) or to any management
decision made or actions taken with respect to the
Shipbuilding Business after the Effective Time, including,
without limitation, any reduction in personnel or curtailment
or reduction of work or facilities after September 3, 1995.
(c) In addition, the following adjustments to the Closing
Date Balance Sheet will be made regardless of their amount:
(i) The Closing Date Balance Sheet will be adjusted to
remove the effects, if any, resulting from any change in the
assets or liabilities of the Company during the Short Period
caused by (A) any change resulting from a change in GAAP,
including those promulgated after the Interim Balance Sheet is
prepared, regardless of whether otherwise required to be made,
except as agreed to between BHC and GDC, (B) any change
resulting from a change of an accounting policy, practice,
procedure, allocation method, assumption or estimation
technique from that followed in preparing the Interim Balance
Sheet, (C) any extraordinary write- ups in the book value of
any of the assets of the Company during the Short Period, or
any transactions not in the ordinary course of business
consistent with past practices of the Company and not
otherwise required by this Section 2.6, (D) any write-up or
write-down of an accrual or asset valuation account which is
more properly either a correction of an error or an unusual
change in an estimation rather than a reflection of events
which occurred during the Short Period, provided that the
foregoing shall not permit any change prohibited by Section
2.6(b) or 2.6(c)(ii), and (E) any reclassification of assets
or liabilities from long term to short term or from short term
to long term.
(ii) GDC will use the same techniques and methodologies
used by the Company in determining its estimates and judgments
for evaluating the status of its Government Contracts and
Government Subcontracts and contract overhead rate reserves as
were used in preparing the Interim Balance Sheet, adjusted
solely for changes in facts and circumstances attributable to
events or conditions occurring during the Short Period.
Without limiting the foregoing, the line item shipbuilding
contracts in progress in the Closing Date Balance Sheet will
reflect, for each ship under construction, the same contract
close-out reserve, contract estimates at completion and EAC
Income used in preparing the Interim Balance Sheet adjusted
only for increases in Earned Progress and costs incurred and
reduced only by net xxxxxxxx during the Short Period. As to
all of the following matters, the same amount shall be set
forth in the Closing Date Balance Sheet as in the Interim
Balance Sheet: (A) any asset or liability of the Company
relating to compliance with any Environmental Law or
Environmental Claim or Release, other than actual expenditures
therefor during the Short Period; (B) any asset or liability
of the Company relating to the retrospective workers'
compensation premiums for policy years 1986/87 and 1987/88;
(C) any asset or liability relating to the Lloyd's Policy; (D)
any asset or liability relating to assessments by the United
States Department of Labor for assessments paid or payable
(other than assessments paid or payable with respect to the
Short Period) to the special fund under the United States
Xxxxxxxxx and Harbor Workers' Compensation Act; (E) any
liability relating to the prospective benefit obligation or
funded status of the Company Pension Plans, other than benefit
payments and accruals relating to the Short Period and not
attributable to any change in actuarial assumptions; (F) any
asset or liability attributable to any Predecessor Business
other than actual expenditures therefor during the Short
Period; (G) any asset or liability relating to the Anglo
American Policy or any settlement made by the Company with
respect thereto; (H) any asset or liability with respect to
the Dauphin Real Estate; (I) any liability of the Company or
BIWA under the Residual Deficit Act; (J) any asset or
liability relating to workers' compensation, other than
changes attributable to business during the Short Period and
not attributable to any change in actuarial assumptions; and
(K) any reserves or other provisions identified in Schedule
4.6 of the Disclosure Schedules, except that such reserves or
other provisions may be adjusted for any changes during the
Short Period that relate to any new items not reflected on the
Interim Balance Sheet, for which a new reserve may be
established.
(iii) The Closing Date Balance Sheet shall include the
same separate line items as are included in the Interim
Balance Sheet.
(iv) The Closing Date Balance Sheet shall reflect as
"other current liabilities" any Closing Date Transaction
Expenses not paid on the Closing Date and invoiced to BIWA
within 25 days after the Closing Date.
(d) Within 30 days after the receipt of the Closing Date
Balance Sheet and the Net Working Capital Statement (together
with the report of BIWA's (or, if the Stock Sale shall occur,
the Company's) independent auditors as provided in Section
2.6(a)), BHC will deliver written notice to GDC of any
objections thereto, and, if any such objections are made, BHC
must attempt in good faith to reach an agreement with GDC as
to any matters in dispute. In the absence of assertion of any
objection within such 30 day period, any basis for such
objection shall be deemed waived. If objections are timely
received and GDC and BHC, notwithstanding their good faith
effort, fail to resolve any matters in dispute within 20 days
after BHC advises GDC of its objections, then any remaining
disputed matters will be finally and conclusively determined
by an independent auditing firm of recognized national
standing (the "Arbiter") selected by GDC and BHC. Promptly,
but not later than 10 days after its acceptance of its
appointment, the Arbiter will determine (based solely on
presentations by BHC and GDC to the Arbiter and not by
independent review) only those issues in dispute and will
render a report as to the disputes. In resolving any disputed
item, the Arbiter shall apply the requirements of this
Agreement and may not assign a value to any particular item
greater than the greatest value for such item claimed by
either party or less than the lowest value for such item
claimed by either party, in each case as presented to the
Arbiter. The report of the Arbiter shall constitute an
arbitral award, shall be final and binding upon the parties
and be entitled to confirmation as an adjudication by
arbitration. The Arbiter shall be entitled to the full
privileges and immunities of an arbitrator. The report of the
Arbiter will be conclusive and binding upon the parties. For
purposes of the determination of Net Working Capital as of
September 3, 1995, the amounts to be included will be the
appropriate amounts from the Closing Date Balance Sheet as to
items that are not in dispute, and the amounts determined by
the Arbiter as to items that are submitted for resolution by
the Arbiter. The fees and expenses of the Arbiter shall be
borne 50% by GDC and 50% by BHC.
(e) For purposes of complying with the terms set forth
herein, each of GDC and BHC will cooperate with and make
available to the other and its auditors and representatives
all information, records, data and auditors' working papers,
and will permit access to its facilities and personnel, as may
be reasonably required in connection with the preparation and
analysis of the Closing Date Balance Sheet and the resolution
of any disputes thereunder. Without limiting the generality
of the foregoing, GDC will make available to BHC within three
business days after delivery of the Closing Date Balance Sheet
and Net Working Capital Statement pursuant to Section 2.6(a),
the audits, reports and accounts relating to the Closing Date
Balance Sheet and Net Working Capital Statement.
(f) As soon as the Closing Date Balance Sheet and the Net
Working Capital Statement have been prepared pursuant to the
provisions set forth in this Section 2.6 and all disagreements
with respect thereto have been resolved, then: (i) in the
event that the Net Working Capital as of September 3, 1995, as
adjusted by the Arbiter, is less than $218,145,000, the
Initial Merger Consideration shall be reduced (and shall be
reimbursed from Prudential to GDC) by an amount equal to the
amount by which $218,145,000 exceeds the Net Working Capital
as of September 3, 1995, as adjusted by the Arbiter; and (ii)
in the event that the Net Working Capital as of September 3,
1995, as adjusted by the Arbiter, is greater than
$218,145,000, the Initial Merger Consideration shall be
increased (and shall be paid by GDC to Prudential) by an
amount equal to the amount by which the Net Working Capital as
of September 3, 1995, as adjusted by the Arbiter, exceeds
$218,145,000.
(g) The increase or decrease in the Initial Merger
Consideration as provided in Section 2.6(f), shall be paid or
reimbursed, as the case may be, within 10 business days
following receipt by GDC and BHC of the Closing Date Balance
Sheet and resolution of any disputes with respect thereto.
The amount due to or from GDC shall be paid by bank wire
transfer of immediately available funds to an account
designated by GDC or Prudential, as the case may be, with
interest thereon from the Closing Date to the date of such
payment at a rate per annum equal to the bid quote for trading
on the Closing Date for United States Treasury Bills maturing
thirteen weeks after the Closing Date as reported by the Wall
Street Journal. The adjustments to the Initial Merger
Consideration and the payment pursuant to this Section 2.6
(other than the portion thereof that is attributable to the
payment of interest pursuant to this Section 2.6(g)) will be
treated by the parties as an adjustment to the Initial Merger
Consideration and the Initial Merger Consideration as so
adjusted will be referred to in this Agreement as the "Merger
Consideration."
Section 2A. The Stock Sale.
2A.1 Election to Purchase Stock. Notwithstanding the
foregoing, GDC shall have the right, exercisable upon written
notice to BHC no later than 3 business days prior to the
Closing Date, to elect to have the transaction take the form
of a sale and transfer (the "Stock Sale") of the Company
Shares. If GDC makes such election, the transaction shall
take the form of the Stock Sale, the provisions of this
Section 2A shall apply, the Merger shall not occur, the
provisions of Sections 2.1, 2.2 and 2.4 shall not apply.
2A.2 The Stock Sale Generally. If GDC makes the
election provided for in Section 2A.1, upon the terms and
subject to the conditions set forth in this Agreement, on the
Closing Date, BHC shall sell, transfer and deliver, or cause
to be sold, transferred and delivered, and GDC shall purchase,
the Company Shares for an aggregate purchase price equal to
the Merger Consideration. Of the Merger Consideration,
$16,870,000 shall be allocated to the Company Common Stock and
the balance shall be allocated to the Company Preferred Stock.
The Merger Consideration shall be payable when due, as
provided in this Agreement, by bank wire transfer of
immediately available funds to the account or accounts
designated in writing by BHC in the case of payments in
respect of Company Common Stock, and by Prudential in the case
of payments in respect of Company Preferred Stock.
2A.3. Deliveries at Closing. In addition to the
deliveries at Closing specified in Section 3.3, if GDC makes
the election provided for in Section 2A.1, BHC will deliver or
cause to be delivered to GDC certificates representing the
Company Shares duly endorsed in blank in proper form for
transfer, with appropriate transfer stamps, if any, affixed.
2A.4. Stock Representation. If GDC makes the election
provided for in Section 2A.1, BHC represents and warrants to
GDC and BIWA as follows: it has good and valid title to the
Company Common Stock, free and clear of any liens, claims,
encumbrances, security interests, options, charges or
restrictions of any kind; and assuming GDC has the requisite
power and authority to be the lawful owner of the Company
Common Stock, upon delivery to GDC at the Closing of the
documents referred to in Section 2A.2, and upon BHC's receipt
of the Merger Consideration allocable to the Company Common
Stock, good and valid title to the Company Common Stock will
pass to GDC, free and clear of any liens, claims,
encumbrances, security interests, options, charges and
restrictions of any kind, other than those arising from acts
of GDC or its Affiliates.
Section 3. Closing and Closing Date.
3.1 Closing. Subject to the provisions of Section 11,
the consummation of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of
Cravath, Swaine & Xxxxx, at 10:00 a.m., New York Time, on the
later of August 31, 1995 and the second business day after the
satisfaction or waiver of all of the closing conditions set
forth in Sections 9.1 and 9.2, or at such other place or on
such other date as GDC and the Company may agree, but in any
event not later than October 10, 1995.
3.2 Closing Date; Effective Time. The date on which the
Closing actually takes place is referred to in this Agreement
as the "Closing Date." The effective time of the Closing and
the Merger or the Stock Sale, as the case may be, will be the
close of business on the Closing Date (the "Effective Time").
3.3 Deliveries at the Closing. At the Closing (a) BHC
will deliver to GDC the various certificates, instruments and
documents referred to in Section 9.1, (b) GDC will deliver to
BHC the various certificates, instruments and documents
referred to in Section 9.2, and (c) if GDC does not make the
election provided for in Section 2A.1, the Company and BIWA
shall certify the adoption of, execute, acknowledge, file, and
record articles of merger in appropriate form in accordance
with the Maine Business Corporation Act, (d) GDC will cause
BIWA to prepay the Required Debt as contemplated by Section
2.3, and (e) GDC will deliver the Initial Merger Consideration
that is payable at the Effective Time as specified in Section
2.5.
Section 4. Representations and Warranties of BHC. BHC
represents and warrants to GDC and BIWA that:
4.1 Organization. BHC is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware. The Company is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Maine.
4.2 Authorization of Transaction. Each of BHC and the
Company has the requisite power and authority (including full
corporate power and authority) and has taken all requisite
corporate action (including any necessary approval of this
Agreement and the Merger by the board of directors and
shareholders of BHC and the Company) to enable it to execute
and deliver this Agreement and each of the Ancillary
Agreements to which it is a party and to perform its
obligations hereunder and thereunder. This Agreement
constitutes, and each of the Ancillary Agreements to which it
is a party when executed and delivered by BHC or the Company,
as the case may be, will constitute, the valid and binding
obligations of BHC or the Company, as the case may be,
enforceable in accordance with its terms and conditions.
4.3 No Conflicts; Consents. Neither the execution and
delivery of this Agreement or any of the Ancillary Agreements
by BHC or the Company, nor the consummation by BHC or the
Company of the transactions contemplated hereby or thereby,
will violate any Law to which BHC or the Company is subject or
any provision of the charter or bylaws of BHC or the Company.
Except (i) as would not prevent BHC or the Company from
performing any of its obligations under this Agreement, (ii)
as would not, individually or in the aggregate, have a
Material Adverse Effect on the Company or (iii) as set forth
on Schedule 4.3 of the Disclosure Schedules, neither the
execution and delivery of this Agreement or any of the
Ancillary Agreements by BHC or the Company, nor the
consummation by BHC or the Company of the transactions
contemplated hereby or thereby, will constitute a violation
of, be in conflict with, constitute or create a default under
or result in the creation or imposition of any Lien upon any
property of BHC or the Company pursuant to any agreement or
commitment to which BHC or the Company is a party or by which
BHC or the Company or any of its properties is bound or to
which BHC or the Company or any of its properties are subject.
Except as may be necessary solely as a result of any facts or
circumstances relating solely to GDC or BIWA or as set forth
on Schedule 4.3, the Company has given all required notices
and obtained all licenses, consents, approvals,
authorizations, qualifications and orders of Governmental
Entities and parties to Contracts listed on Schedule 4.12
other than Government Contracts and Government Subcontracts as
are required in order to enable the Company to perform its
obligations under this Agreement and each of the Ancillary
Agreements.
4.4 Capitalization. Schedule 4.4 of the Disclosure
Schedules sets forth for the Company (a) the number of
authorized shares of each class of its stock, (b) the number
of issued and outstanding shares of each class of its stock
(c) the holder of record of each issued and outstanding share
of each class of its stock and (d) the number of shares of its
stock held in treasury. All of the issued and outstanding
shares of stock of the Company have been duly authorized and
are validly issued, fully paid and non- assessable. There are
no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require
the Company to sell, transfer or otherwise dispose of any
stock of the Company or that could require the Company to
issue, sell or otherwise cause to become outstanding any of
its stock not issued and outstanding as of the date of this
Agreement. There are no outstanding stock appreciation,
phantom stock, profit participation or similar rights with
respect to the Company. There are no voting trusts, proxies
or other agreements or understandings with respect to the
voting of any stock of the Company. The Company has delivered
to GDC correct and complete copies of the articles of
incorporation and bylaws of the Company as amended to the date
of this Agreement. The Company is not in default under or in
violation of any provision of its articles of incorporation or
bylaws. The minute books, stock certificate books, and stock
record books of the Company are correct and complete in all
material respects.
4.5 Subsidiaries. Except as set forth on Schedule 4.5 of
the Disclosure Schedules, the Company does not control
directly or indirectly or have any direct or indirect equity
participation in any Person.
4.6 Financial Statements. Set forth as Schedule 4.6 of
the Disclosure Schedules are correct and complete copies of
the audited consolidated balance sheets of BHC as of January
3, 1993, January 2, 1994, and January 1, 1995 and the related
consolidated statements of income and cash flow for the years
then ended and the unaudited consolidated balance sheet of BHC
as of July 2, 1995 and the related consolidated statement of
income and cash flow for the twentysix week period then ended
(collectively, the "Financial Statements") and an unaudited
balance sheet of the Company as of July 2, 1995 (the "Interim
Balance Sheet"). The Financial Statements and the Interim
Balance Sheet were prepared using the contract method of
accounting in accordance with GAAP (except, in the case of any
of the annual Financial Statements, as described in the notes
thereto and except, in the case of interim Financial
Statements and the Interim Balance Sheet for which no notes
have been prepared, as described in Schedule 4.6), applied on
a basis consistent with the past practices of BHC (except that
as to consistency beginning July 4, 1994, there was adopted as
a uniform practice for amounts withheld from subcontractors
for contract costs withheld and cost limitations withheld of
including such withheld amounts in shipbuilding contracts in
progress and booking an offsetting liability in a
corresponding amount and except that, beginning January 2,
1995, certain modifications that are incorporated in the
definition of Earned Progress were made in the methodology for
calculating material progress in determining Earned Progress),
and the Financial Statements present fairly the consolidated
financial condition and the consolidated results of operations
of BHC as of the dates and for the periods indicated therein,
and the Interim Balance Sheet fairly presents the financial
condition of the Company as of the date indicated therein,
except for (consistent with the past practices of BHC) certain
accruals that would impact the balance sheet only and are
recorded by BHC only at year end and have not been recorded as
of July 2, 1995; provided that no representation or warranty
is made in this Section 4.6 concerning: (a) the environmental
asset reflected in shipbuilding contracts in progress; (b) the
adequacy of the close-out reserve reflected in shipbuilding
contracts in progress; (c) EAC Income reflected in
shipbuilding contracts in progress; (d) liabilities with
respect to compliance with Environmental Law or for any
Environmental Claim or Release; (e) any asset or liability of
the Company relating to the retrospective workers'
compensation premiums for policy years 1986/87 and 1987/88;
(f) any asset or liability of the Company relating to the
Lloyd's Policy; (g) the effect of assessments by the United
States Department of Labor for assessments payable to the
special fund under the United States Xxxxxxxxx and Harbor
Workers' Compensation Act; (h) any asset or liability relating
to the Anglo American Policy or any settlement made by the
Company with respect thereto; (i) the fair market value of the
Dauphin Real Estate; and (j) any liability of the Company or
BIWA under the Residual Deficit Act. Schedule 4.6 includes a
correct and complete list of all reserves and provisions for
loss reflected in the Interim Balance Sheet and a description
of the specific matter for which such reserve or provision had
been made. Notwithstanding anything in this Section 4.6, the
only representation and warranty made by BHC with respect to
the Inventory Account reflected on the Financial Statements or
on the Interim Balance Sheet is set forth in Section 4.10.
Other than the Company Common Stock held by BHC, there are no
assets included in the Financial Statements that are not also
assets of the Company.
4.7 Undisclosed Liabilities. The Company has no
liabilities or obligations (whether known or unknown, absolute
or contingent, liquidated or unliquidated, or due or to become
due) arising out of the Shipbuilding Business except for
liabilities and obligations; (a) that are reflected or
reserved for on the Interim Balance Sheet; (b) that have
arisen since the date of the Interim Balance Sheet in the
usual, regular and ordinary course of business of the Company
(none of which results from, arises out of, relates to, is in
the nature of or was caused by any breach of contract, breach
of warranty, tort, infringement or violation of Law) and which
will be reflected or reserved for on the Closing Date Balance
Sheet (or which would otherwise be reflected or reserved on
the Closing Date Balance Sheet if the third sentence of
Section 2.6(c)(ii) did not apply in the preparation of the
Closing Date Balance Sheet); (c) that will have arisen since
the date of the Closing Date Balance Sheet in the usual,
regular and ordinary course of business of the Company (none
of which results from, arises out of, relates to, is in the
nature of or was caused by any breach of contract, breach of
warranty, tort, infringement or violation of Law) and which
would be reflected or reserved for on a balance sheet of the
Company as of the Closing Date prepared on a consistent basis
with the Closing Date Balance Sheet (or which would otherwise
be reflected or reserved on such a balance sheet if the third
sentence of Section 2.6(c)(ii) did not apply in the
preparation of the Closing Date Balance Sheet); (d) that
relate to Taxes (as to which BHC's representations and
warranties are made in Section 4.11 and the Tax Matters
Agreement); (e) that relate to Contracts, including Government
Contracts and Government Subcontracts (as to which BHC's
representations and warranties are made in Sections 4.12 and
4.13); (f) that relate to any charge, complaint, action, suit,
proceeding, hearing, or investigation (as to which BHC's
representations and warranties are made in Section 4.17); (g)
that relate to compliance with Environmental Laws or arise out
of an Environmental Claim or Release (as to which BHC's
representations and warranties are made in Section 4.20); (h)
that relate to compliance with Laws (as to which BHC's
representations and warranties are made in Section 4.21); (i)
that relate to employee benefit plans (as to which BHC's
representations and warranties are made in Section 4.18) and
(j) that are set forth on Schedule 4.7(a) of the Disclosure
Schedules. To the knowledge of BHC, the Company has no
liabilities or obligations (whether known or unknown, absolute
or contingent, liquidated or unliquidated, or due or to become
due) arising out of any activity other than the Shipbuilding
Business, except as set forth on Schedule 4.7(b) of the
Disclosure Schedules. Except as disclosed in Schedule 4.7(b),
to the knowledge of BHC, since January 1, 1990, no claims have
been asserted or threatened against the Company arising out of
or relating to any Predecessor Business conducted, directly or
indirectly, by any former Affiliate of the Company that was
merged with or wholly or partially liquidated into the Company
on or before December 31, 1987 or by any entity that was
merged with or wholly or partially liquidated into any other
former Affiliate of the Company that was merged with or wholly
or partially liquidated into the Company on or before December
31, 1987.
4.8 Events Subsequent to July 2, 1995. (a) Since July 2,
1995, there has not been any material adverse change in the
business, financial condition, operations, results of
operations or future prospects of the Company.
(b) Without limiting the generality of the foregoing,
since July 2, 1995, except as set forth on Schedule 4.8 of the
Disclosure Schedules:
(i) the Company has not sold, leased, transferred or
assigned any of its assets, tangible or intangible, other than
in the ordinary course of business consistent with past
practices;
(ii) no party (including the Company) has accelerated,
terminated, modified or cancelled any agreement, contract,
lease or license (or series of related agreements, contracts,
leases and licenses) involving more than $1,000,000 to which
the Company is a party or by which it is bound;
(iii) the Company has not made any capital expenditure
(or series of related capital expenditures) involving more
than $200,000 for new capital projects initiated after July 2,
1995;
(iv) the Company has not made any capital investment in,
any loan to or any acquisition of the securities or assets of,
or any contribution of any kind to, any other Person (or
series of related capital investments, loans and acquisitions,
or contributions), either involving more than $100,000 outside
the ordinary course of business;
(v) the Company has not issued any note, bond or other
debt security or created, incurred, assumed or guaranteed any
indebtedness for borrowed money or capitalized lease
obligation either involving more than $100,000 singly or
$1,000,000 in the aggregate;
(vi) the Company has not cancelled, compromised, waived
or released any right or claim (or series of related rights
and claims) involving more than $100,000 outside the ordinary
course of business;
(vii) the Company has not experienced any material
damage, destruction or loss (whether or not covered by
insurance) to its material properties;
(viii) the Company has not made any loan to or entered
into any other transaction with any of the officers or
employees of the Company outside the ordinary course of
business;
(ix) the Company has not entered into any written
employment contract or collective bargaining agreement, any
oral employment contract requiring the payment by the Company
of more than $60,000 in any 12-month period, or modified the
terms of any existing such contract or agreement;
(x) the Company has not granted any increase in the base
compensation of any of the officers or employees of the
Company outside the ordinary course of business;
(xi) the Company has not adopted, amended, modified or
terminated any bonus, profit-sharing, incentive, severance or
other plan, contract or commitment for the benefit of any of
the officers or employees of the Company or taken any such
action with respect to any other Employee Benefit Plan;
(xii) the Company has not made any other change in
employment terms for any of the officers or employees of the
Company outside the ordinary course of business;
(xiii) the Company has not paid or prepaid any Funded
Debt;
(xiv) the Company has not declared, set aside, or paid
any dividend or distribution with respect to its capital stock
or redeemed, repurchased, or otherwise acquired for value of
any its capital stock;
(xv) the Company has not issued, sold, or otherwise
disposed or any of its capital stock or granted any option,
warrant, or the right to purchase or obtain any of its capital
stock whether upon conversion, exchange, exercise, or
otherwise; and
(xvi) the Company has not committed to do any of the
foregoing.
4.9 Accounts Receivable. The accounts receivable
reflected on the Interim Balance Sheet are, and all accounts
receivable of the Company arising after the date of the
Interim Balance Sheet and on or prior to the Closing Date will
be, bona fide receivables, accounted for in accordance with
GAAP applied on a basis consistent with GAAP used in the
preparation of the Interim Balance Sheet. Schedule 4.9 of the
Disclosure Schedules sets forth the total amount billed by the
Company under each open Government Contract and Government
Subcontract and the amount collected by the Company under each
Government Contract and Government Subcontract other than, in
each case, contracts that have value of less than $50,000 and
for which there are no receivables outstanding as of the date
of the Interim Balance Sheet.
4.10 Inventories; Shipbuilding Contracts in Progress.
(a) With respect to the Inventory Account reflected on
the Interim Balance Sheet, the amount thereof is based on
periodic cycle counts and not on physical inventory counts and
is represented and warranted to have a value of at least $5
million determined in accordance with GAAP.
(b) Assuming that the Company's contract close-out
reserve and contract estimates at completion and EAC Income on
the Interim Balance Sheet are correct:
(i) the Shipbuilding Contracts in Progress reflected on
the Interim Balance Sheet are stated at the Company's costs
incurred (labor, material and other direct costs and overhead)
plus estimated earnings, less progress payments (net of
withholdings), plus revenue not yet billed, all determined in
accordance with GAAP applied on a basis consistent with the
past practices of the Company (except that as to consistency
beginning July 4, 1994, there was adopted as a uniform
practice for amounts withheld from subcontractors for contract
costs withheld and cost limitations withheld of including such
withheld amounts in Shipbuilding Contracts in Progress and
booking an offsetting liability in a corresponding amount and
except that, beginning January 2, 1995, certain modifications
that are incorporated in the definition of Earned Progress
were made in the methodology for calculating material progress
in determining Earned Progress); and
(ii) to the knowledge of BHC, all unbilled accounts
receivable and unfunded items of cost reflected as
Shipbuilding Contracts in Progress under Government Contracts
and Government Subcontracts in the Interim Balance Sheet
relate to costs validly incurred thereunder and related
estimated earnings under such contracts are, and will be,
billable and collectible in the ordinary course of business of
the Company except to the extent of any applicable reserves
provided for in the Interim Balance Sheet, including any
reserves included in EAC Income,
in the case of each of clauses (i) and (ii), except for the
workers' compensation asset, the environmental asset and the
unbilled vacation asset reflected in Shipbuilding Contracts in
Progress on the Interim Balance Sheet and subject to the over
applied overhead included in the Inventory Account and the
over allocated costs included in Other Assets in each case
reflected on the Interim Balance Sheet.
4.11 Tax Matters.
(a) The Company (or an Affiliate on behalf of the
Company) has filed when due (after giving effect to
applicable extensions of the time for filing) all Other Tax
Returns that it was required to file. All such Other Tax
Returns were correct and complete in all respects. All Other
Taxes owed by the Company (whether or not shown on any Other
Tax Return) with respect to any taxable period (or portion
thereof) ending on or before July 2, 1995 (i) have been fully
and timely paid or (ii) are reflected through an adequate
accrual or reserve on the Interim Balance Sheet. Except as
set forth on Schedule 4.11 of the Disclosure Schedules, the
Company is not currently the beneficiary of any extension of
time within which to file any Other Tax Return. No claim has
ever been made by an authority in a jurisdiction where the
Company does not file Other Tax Returns that it is or may be
subject to taxation by that jurisdiction. There is no Lien
affecting any of the assets of the Company that arose in
connection with any failure or alleged failure to pay any
Other Tax.
(b) The Company has withheld and paid all Other Taxes
required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other party.
(c) The Company does not expect any authority to assess
any additional Other Tax against the Company for any period
for which Other Tax Returns have been filed. There is no
dispute or claim concerning any Other Tax liability of the
Company either claimed or raised by any authority in writing,
or to the knowledge of BHC, based upon personal contact of any
officer, employee, or agent of the Company with any agent of
such authority. Schedule 4.11 lists all federal, state, local
and foreign Other Tax Returns of the Company for taxable
periods ended on or after January 1, 1987, indicates those
Other Tax Returns that have been audited and indicates those
Other Tax Returns that currently are the subject of audit.
(d) Except as may be disclosed on Schedule 4.11 of the
Disclosure Schedules or in respect of any taxable period for
which the statute of limitations has run, neither BHC nor the
Company has waived any statute of limitations in respect of
Other Taxes or agreed to any extension of time with respect to
an Other Tax assessment or deficiency.
4.12 Contracts.
(a) Except for the Contracts listed on Schedule 4.12 of
the Disclosure Schedules, the Company is not a party to or
otherwise bound by any written or oral: (i) mortgage,
indenture, note, installment obligation or other instrument
relating to Funded Debt in excess of $100,000, (ii) guarantee
of any obligation in excess of $100,000, (iii) letter of
credit, bond or other indemnity (excluding endorsements of
instruments for collection in the ordinary course of business
of the Company), (iv) currency or interest rate swap, collar
or hedge agreement, (v) offset, countertrade or barter
agreement, (vi) agreement for the sale or lease by the Company
to any Person of any material amount of its existing assets
other than the retirement or other disposition of assets no
longer useful to the Company or the sale of finished products
and spare parts in the ordinary course of the Shipbuilding
Business, (vii) agreement requiring the payment by the Company
of more than $250,000 in any 12-month period for the purchase
or lease for its own use of any machinery, equipment or other
fixed assets, excluding those purchased or leased for
installation on ships, (viii) agreement providing for the
lease or sublease by the Company (as lessor, sublessor, lessee
or sublessee) of any real estate, machinery, equipment, or
other fixed assets each requiring the payment by the Company
of more than $1,000,000 in any 12month period or with a
remaining term of more than five years other than any such
lease or sublease that may be terminated prior to the
expiration of the stated term without liability, (ix)
distributor, representative, consultant, commissioned agent,
broker or advertising contract requiring the payment by the
Company of more than $100,000 in any 12month period that is
not terminable by the Company at will or by giving notice of
30 days or less, without penalty, (x) collective bargaining
agreement, employment or consulting agreement or agreement
providing for severance payments or other additional rights or
benefits in the event of the sale of the Company or its
business, (xi) joint venture agreement, (xii) teaming
agreement, (xiii) cooperative agreement involving the
submission of any proposal to a Governmental Entity or the
development or sale of any product or service, (xiv)
Government Contract or Government Subcontract with a value in
excess of $1 million, (xv) agreement requiring the payment by
the Company to any Person of more than $100,000 in any 12month
period for the purchase of services; or (xvi) agreement
requiring the payment by the Company to any Person of more
than $1,000,000 in any 12month period for the purchase of
goods.
(b) The Company has delivered or made available to GDC
correct and complete copies of each written agreement listed
on Schedule 4.12, as amended to date, and a written summary
setting forth the terms and conditions of each oral agreement
referred to on such Schedule. Each Contract listed on
Schedule 4.12 is a valid, binding and enforceable obligation
of the Company (subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar
Laws affecting creditors' rights and remedies generally and
subject as to enforceability to general principles of equity,
including principles of commercial reasonableness, good faith
and fair dealing) and is in full force and effect. Except as
set forth on Schedule 4.12: (i) the Company is not in breach
of, and has not repudiated any term of, any Contract listed on
Schedule 4.12, (ii) to the knowledge of BHC, no other party to
any Contract listed on Schedule 4.12 is in breach of or has
repudiated any term of, any such Contract that would,
individually or in the aggregate, have a Material Adverse
Effect on the Company, (iii) no event, occurrence or condition
exists which constitutes, or with the lapse of time or the
giving of notice would become, a default under any Contract
listed on Schedule 4.12 by the Company or, to the knowledge of
BHC, any other party thereto, (iv) the Company has not
released any of its rights under any Contract listed on
Schedule 4.12, and (v) no advance payments have been made
under any Contract listed on Schedule 4.12 except as expressly
provided in such Contract.
4.13 Government Contracts.
(a) Except as set forth on Schedule 4.13 of the
Disclosure Schedules, to BHC's knowledge, since January 1,
1990: (i) the Company has complied with all material terms
and conditions of each Government Contract or Government
Subcontract, including all clauses, provisions and
requirements incorporated expressly, by reference or by
operation of Law therein, (ii) the Company has complied in all
material respects with all requirements of all Laws or
agreements pertaining to each Government Contract or
Government Subcontract and (iii) all representations and
certifications executed, acknowledged or set forth in or
pertaining to each Government Contract or Government
Subcontract were complete and correct in all material respects
as of their effective date and the Company has complied in all
material respects with all such representations and
certifications. Except as set forth on Schedule 4.13 of the
Disclosure Schedules, since January 1, 1990: (i) the Company
has complied with all material terms and conditions of each
Government Contract or Government Subcontract, including all
clauses, provisions and requirements incorporated expressly,
by reference or by operation of Law therein, except for such
noncompliance that would not constitute or result from illegal
criminal activity or fraud, (ii) the Company has complied in
all material respects with all requirements of all Laws or
agreements pertaining to each Government Contract or
Government Subcontract, except where such noncompliance would
not constitute or result from illegal criminal activity or
fraud, (iii) all representations and certifications executed,
acknowledged or set forth in or pertaining to each Government
Contract or Government Subcontract were complete and correct
in all material respects as of their effective date and the
Company has complied in all material respects with all such
representations and certifications, except where such
incompleteness or incorrectness would not constitute or result
from illegal criminal activity or fraud. Except as set forth
on Schedule 4.13 of the Disclosure Schedules, since January 1,
1990: (i) neither the U.S. Government nor any prime
contractor, subcontractor or other Person has notified BHC or
the Company, either in writing or orally, that the Company has
breached or violated any Law, certification, representation,
clause, provision or requirement pertaining to any Government
Contract or Government Subcontract and (ii) no termination for
convenience, termination for default, cure notice or show
cause notice is currently in effect pertaining to any
Government Contract or Government Subcontract, (iii) no
material cost incurred by the Company pertaining to any
Government Contract or Government Subcontract has been
questioned or challenged by representatives of the
Administrative Contracting Officer or the Defense Contract
Audit Agency, is, to the knowledge of BHC, the subject of any
investigation, or has been disallowed by the U.S. Government,
and (iv) no amount of money due to the Company pertaining to
any Government Contract or Government Subcontract has been
withheld or set off nor has any claim been made to withhold or
set off money and the Company is entitled to all progress
payments received with respect thereto.
(b) Except as set forth on Schedule 4.13: (i) to BHC's
knowledge, neither the Company nor any of its directors,
officers, employees, consultants or agents is or during the
past three years has been under administrative, civil or
criminal investigation, indictment or information by any
Governmental Entity or any audit or investigation by BHC or
the Company or any other Person with respect to any alleged
irregularity, misstatement or omission arising under or
relating to any Government Contract or Government Subcontract,
and (ii) during the past three years, neither the Company nor
any Affiliate of the Company has conducted or initiated any
internal investigation or made a voluntary disclosure to any
Governmental Entity with respect to any alleged irregularity,
misstatement or omission arising under or relating to a
Government Contract or Government Subcontract. There exists
no irregularity, misstatement or omission arising under or
relating to any Government Contract or Government Subcontract
that has led during the last three years to any of the
consequences set forth in clause (i) or (ii) of the
immediately preceding sentence or any other damage, penalty
assessment, recoupment of payment or disallowance of cost.
(c) Except as set forth on Schedule 4.13, to BHC's
knowledge, there exist (i) no outstanding claims against the
Company, either by any Governmental Entity or by any prime
contractor, subcontractor, vendor or other Person, arising
under or relating to any Government Contract or Government
Subcontract and (ii) no material disputes between the Company
and any Governmental Entity under the Contract Disputes Act or
any other federal statute or regulation or between the Company
and any prime contractor, subcontractor or vendor arising
under or relating to any Government Contract or Government
Subcontract. To BHC's knowledge, except as set forth in
Schedule 4.13, the Company does not have any interest in any
pending or potential claim against any Governmental Entity or
any prime contractor, subcontractor or vendor arising under or
relating to any Government Contract or Government Subcontract.
Schedule 4.13 lists each Government Contract or Government
Subcontract which is currently under audit by any Governmental
Entity or any other Person that is a party to such Government
Contract or Government Subcontract. Except as set forth in
Schedule 4.13, the Company has not received any draft or final
post award audit report, any draft or final notice of cost
disallowance, or any draft or final notice of noncompliance
with any Cost Accounting Standard.
(d) Except as set forth on Schedule 4.13, since January
1, 1990, the Company has not been debarred or suspended from
participation in the award of contracts with the DOD or any
other Governmental Entity (excluding for this purpose
ineligibility to bid on certain contracts due to generally
applicable bidding requirements). To BHC's knowledge, there
exist no facts or circumstances that would warrant suspension
or debarment or the finding of nonresponsibility or
ineligibility on the part of the Company or any director or
officer of the Company. No payment has been made by the
Company or by any Person on behalf of the Company in
connection with any Government Contract or Government
Subcontract in violation of applicable procurement Laws or in
violation of, or requiring disclosure pursuant to, the Foreign
Corrupt Practices Act. Except as set forth on Schedule 4.13,
the Company's cost accounting and procurement systems and the
associated entries reflected in the Company's financial
statements with respect to the Government Contracts and
Government Subcontracts are in compliance in all material
respects with all Laws.
(e) Except as set forth in Schedule 4.13, to BHC's
knowledge, all material test and inspection results provided
by the Company to any Governmental Entity pursuant to any
Government Contract or Government Subcontract or to any other
Person pursuant to a Government Contract or Government
Subcontract or as a part of the delivery to any Governmental
Entity or to any other Person pursuant to a Government
Contract or Government Subcontract of any article designed,
engineered or manufactured by the Company were complete and
correct in all material respects as of the date so provided.
Except as set forth in Schedule 4.13, the Company has provided
all material test and inspection results to the DOD or to any
other Person pursuant to a Government Contract or Government
Subcontract as required by Law and the terms of the applicable
Government Contracts or Government Subcontracts.
4.14 Real Property.
(a) Schedule 4.14(a) of the Disclosure Schedules lists
all real property owned by the Company. With respect to each
such parcel of Owned Real Property, except as set forth on
Schedule 4.14(a):
(i) The Company has good and valid title to such parcel,
free and clear of all Liens, options, easements, covenants,
rights-of- way and other similar charges or restrictions of
any nature whatsoever except (A) Permitted Liens, (B)
easements, covenants, options, rights-of-way and other similar
charges and restrictions of record, (C) any conditions that
may be shown by a current, accurate survey or physical
inspection of any such parcel, (D) (i) zoning, building and
other similar restrictions, (ii) Liens that have been placed
by any developer, landlord or other third party on property
over which the Company has easement rights and subordination
or similar agreements relating thereto and (iii) unrecorded
easements, covenants, rights-of-way or other similar
restrictions, none of which items set forth in clauses (i),
(ii) and (iii), individually or in the aggregate, materially
impair the use and operation of the property to which they
relate in the Company's business as presently conducted, and
(E) other Liens, title imperfections and encumbrances which do
not, individually or in the aggregate, materially adversely
affect the continued use of the real or personal property to
which they relate in the conduct of business currently
conducted thereon;
(ii) there are no pending or, to the knowledge of BHC,
threatened condemnation proceedings, lawsuits or
administrative actions relating to such property or other
matters affecting adversely in any material respect the
current use or occupancy thereof, except to the extent such
proceedings, lawsuits or actions relate to compliance with
Environmental Laws, Environmental Claims or Releases;
(iii) all facilities have received all approvals of
Governmental Entities (except for any approvals relating to
Environmental Laws, Releases or Hazardous Materials) required
in connection with the ownership or operation thereof and are
operated and maintained in accordance with all applicable Laws
(except Environmental Laws) in all respects except for such
matters that would not, individually or in the aggregate,
materially and adversely affect the continued use or occupancy
of such property by the Company;
(iv) there are no leases, subleases, licenses,
concessions or other agreements, written or oral, granting to
any Person the right of use or occupancy of any portion of
such parcel, except as may be provided pursuant to any
Government Contract, and there are no parties (other than the
Company) in possession of such parcel, other than tenants
under any leases disclosed in Schedule 4.14(a) who are in
possession of the space to which they are entitled; and;
(v) there are no outstanding options or rights of first
refusal to purchase such parcel, or any portion thereof or
interest therein.
(b) Schedule 4.14(b) lists all real property leased or
subleased to the Company. The Company has delivered or made
available to GDC correct and complete copies of the leases and
subleases for the properties listed in Schedule 4.14(b), each
as amended to date. With respect to each lease and sublease
listed in Schedule 4.14(b), except as set forth on Schedule
4.14(b):
(i) the Company has good and valid title to the leasehold
estates, free and clear of all Liens, options, easements,
covenants, rights-of-way and other similar charges or
restrictions of any nature whatsoever except (A) Permitted
Liens, (B) easements, covenants, options, rights-of-way and
other similar charges and restrictions of record, (C) any
conditions that may be shown by a current, accurate survey or
physical inspection of any such parcel made prior to the date
of the this Agreement, (D) (i) zoning, building and other
similar restrictions, (ii) Liens that have been placed by any
developer, landlord or other third party on property over
which the Company has easement rights and subordination or
similar agreements relating thereto and (iii) unrecorded
easements, covenants, rights-of-way or other similar
restrictions, none of which items set forth in clauses (i),
(ii) and (iii), individually or in the aggregate, materially
impair the continued use and operation of the property to
which they relate in the Company's business as presently
conducted, and (E) other Liens, title imperfections and
encumbrances which do not individually or in the aggregate
materially adversely affect the continued use of the real or
personal property to which they relate in the conduct of
business currently conducted thereon;
(ii) the Company is not, and to BHC's knowledge, no other
party to the lease or sublease is in material breach or
default, and no event has occurred or condition exists which,
with notice or lapse of time or both, would constitute a
material breach or default or permit termination, modification
or acceleration thereunder;
(iii) the Company has not, and to BHC's knowledge, no
other party to the lease or sublease has, repudiated any
material provision thereof; and
(iv) all facilities leased or subleased thereunder have
received all approvals of Governmental Entities (including all
Permits) required in connection with the operation thereof and
are operated and maintained in accordance with all applicable
Laws in all respects except for such matters that would not,
individually or in the aggregate, materially adversely affect
the continued use or occupancy of such property by the
Company.
4.15 Title and Related Matters. Except as set forth on
Schedule 4.15 of the Disclosure Schedules, and except for
Intellectual Property (as to which BHC's representations and
warranties are made in Section 4.16), the Company has good and
valid title to all the personalty assets reflected on the
Interim Balance Sheet free and clear of all Liens other than
Permitted Liens. Except as set forth on Schedule 4.15 and
except for government-owned property, the Company owns or
leases and the Company's assets include sufficient tangible
personal property to conduct the business of the Company as
presently conducted. Schedule 4.15 contains a complete and
correct list of all material government-owned property,
including tooling and test equipment, provided under,
necessary to perform the obligations under or for which GDC or
BIWA could be held accountable under the Government Contracts
or Government Subcontracts to be transferred to BIWA pursuant
to this Agreement, and such government-owned equipment is
maintained by the Company in accordance in all material
respects with a government approved property management
system. Except as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company or as
set forth in Schedule 4.15, all machinery, equipment, and
other tangible personal property of whatsoever nature owned,
leased or used by the Company in the Shipbuilding Business,
including but not limited to government-owned property, is in
good operating condition and repair, ordinary wear and tear
excepted, and is suitable for the purposes for which it is
presently being used.
4.16 Intellectual Property.
(a) Except as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, the
Company owns or has the right to use pursuant to license,
sublicense, agreement or permission all Intellectual Property
necessary for the operation of its business as presently
conducted. The Company has taken all necessary action to
maintain and protect each item of Intellectual Property that
it owns or uses except where the failure to take such action
would not have a Material Adverse Effect on the Company.
(b) The Company has not interfered with, infringed upon,
misappropriated or otherwise come into conflict with any
intellectual property rights of third parties, except where
such interference, infringement or misappropriation is not
reasonably likely to have a Material Adverse Effect on the
Company, and the Company has not received any written charge,
complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation or violation
(including any claim that the Company must license or refrain
from using any intellectual property rights of any third
party). To the knowledge of BHC, no third party has
interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property rights of
the Company such that the interference, infringement,
misappropriation or violation has a Material Adverse Effect on
the Company.
(c) Schedule 4.16 of the Disclosure Schedules identifies
each material item of Intellectual Property of the type
described in clause (a) of the definition of Intellectual
Property owned by the Company, identifies each material
pending patent application or application for registration
which has been made with respect to any of the Intellectual
Property, and identifies each material license, agreement or
other permission which the Company has granted to any third
party with respect to any of the Intellectual Property. The
Company has delivered or made available to GDC correct and
complete copies of all such patents, registrations,
applications, licenses, agreements and permissions, each as
amended to date. With respect to each such item of
Intellectual Property required to be identified in Schedule
4.16, except as would not, individually or in the aggregate,
have a Material Adverse Effect on the Company:
(i) the Company possesses all right, title, and interest
in and to the item, free and clear of any Lien, license or
other restriction other than Permitted Liens;
(ii) to BHC's knowledge, the item is not subject to any
outstanding injunction, judgment, order, decree, ruling or
charge;
(iii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand is pending
or, to the knowledge of BHC, threatened which challenges the
legality, validity, enforceability, use or ownership of the
item; and
(iv) the Company has not agreed to indemnify any Person
for or against any interference, infringement,
misappropriation or other conflict with respect to the item.
(d) Schedule 4.16 identifies each material item of
Intellectual Property that any third party owns and that the
Company uses pursuant to license, sublicense, agreement or
permission. The Company has delivered or made available to
GDC correct and complete copies of all such licenses,
sublicenses, agreements and permissions, each as amended to
date. With respect to each such item of Intellectual Property
required to be identified in Schedule 4.16, except as would
not, individually or in the aggregate, have a Material Adverse
Effect on the Company:
(i) the license, sublicense, agreement or permission
covering the item is legal, valid, binding, enforceable and in
full force and effect;
(ii) to BHC's knowledge, no party to the license,
sublicense, agreement or permission is in material breach or
default, and no event has occurred or condition exists which,
with notice or lapse of time or both, would constitute a
material breach or default or permit termination, modification
or acceleration thereunder;
(iii) to BHC's knowledge, no party to the license,
sublicense, agreement or permission has repudiated any
material provision thereof; and
(iv) the Company has not granted any sublicense or
similar right with respect to the license, sublicense,
agreement or permission.
4.17 Litigation. Schedule 4.17 of the Disclosure
Schedules sets forth each instance in which the Company is (a)
subject to any unsatisfied judgment, order, decree,
stipulation, injunction or charge or (b) a party to or, to the
knowledge of BHC, is threatened to be made a party to any
charge, complaint, action, suit, proceeding, hearing or
investigation of or in any court or quasi-judicial or
administrative agency of any federal, state, local or foreign
jurisdiction where the amount in dispute is in excess of
$250,000 or which seeks injunctive or other equitable relief.
There are no judicial or administrative actions, proceedings
or investigations pending or, to the knowledge of BHC,
threatened that question the validity of this Agreement or any
of the Ancillary Agreements or any action taken or to be taken
by the Company in connection with this Agreement or any of the
Ancillary Agreements or the transactions contemplated hereby
or thereby or that, if adversely determined, would have a
material adverse effect upon the Company's ability to enter
into or perform its obligations under this Agreement or any of
the Ancillary Agreements to which it is a party. None of the
actions, suits, proceedings, hearings and investigations set
forth on Schedule 4.17 are reasonably likely to have a
Material Adverse Effect on the Company.
4.18 Employee Benefits.
(a) Schedule 4.18 of the Disclosure Schedules contains a
complete and correct list of all employee pension benefit
plans (within the meaning of Section 3(2) of ERISA), all
employee welfare benefit plans (within the meaning of Section
3(1) of ERISA), all supplemental benefit plans such as excess
benefit or top hat plans benefiting a select group of highly
compensated or management employees, and any other employee
benefit arrangements or payroll practices, including, without
limitation, employment agreements, severance agreements,
executive compensation arrangements, incentive programs or
arrangements, sick leave, vacation pay, severance pay policy,
plant closing benefits, salary continuation for disability,
consulting or other compensation arrangements, retirement,
deferred compensation, bonus, stock purchase, hospitalization,
medical insurance, life insurance, tuition reimbursement or
scholarship programs, any plans providing benefits or payments
in the event of a change of control, change in ownership,
merger, or sale of a substantial portion (including all or
substantially all) of the assets of the Company, maintained by
the Company or to which the Company has contributed or is or
was obligated to make payments, in each case with respect to
any employees (or, if the Company has any existing liability,
former employees) of the Company (the "Employee Benefit
Plans"). All employee pension benefit plans maintained by the
Company to which the Company has contributed or is obligated
to contribute, in each case with respect to any employees of
the Company (the "Employee Pension Benefit Plans") are
separately listed on Schedule 4.18(a). Schedule 4.18(a)
clearly identifies all Employee Benefit Plans which are (i)
Multiemployer Plans, (ii) multiple employer plans subject to
Sections 4063 and 4064 of ERISA, (iii) any other plans that
are subject to Section 412 of the Code, (iv) plans intended to
qualify under Section 401 of the Code, and (v) employee
welfare benefit plans (the "Employee Welfare Benefit Plans")
which provide for continuing benefits or coverage for any
participant or any beneficiary of a participant after such
participant's termination of employment except coverage or
benefits required by Section 4980B of the Code if paid 100% by
the participant. With respect to each such Employee Benefit
Plan or other employee benefit arrangement or payroll
practice, except as set forth on Schedule 4.18:
(i) Such Employee Benefit Plan (and each related trust,
insurance contract or fund) complies in form and in operation
in all material respects with the applicable requirements of
ERISA, the Code and other applicable Laws.
(ii) All required reports and descriptions (including
Form 5500 Annual Reports, Summary Annual Reports, PBGC-1 Forms
and Summary Plan Descriptions) have been filed or distributed
appropriately with respect to such Employee Benefit Plan and
the requirements of Part 6 of Subtitle B of Title I of ERISA
and Section 4980B of the Code have been met with respect to
each such Employee Benefit Plan which is an Employee Welfare
Benefit Plan.
(iii) All contributions (including all employer
contributions and employee salary reduction contributions)
which are due have been paid to each such Employee Benefit
Plan which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing
Date which are not yet due have been paid to each such
Employee Pension Benefit Plan or accrued in accordance with
the past custom and practice of the Company. None of the
ERISA plans or any trust established thereunder has incurred
any accumulated funding deficiency as defined in Section 302
of ERISA and Section 412 of the Code. All premiums or other
payments for all periods ending on or before the Closing Date
have been paid with respect to each such Employee Benefit Plan
which is an Employee Welfare Benefit Plan.
(iv) Each Employee Pension Benefit Plan which is intended
to qualify under Section 401(a) of the Code meets the
requirements of a "qualified plan" under Section 401(a) of the
Code and has received a favorable determination letter from
the IRS, and each trust related thereto has been determined to
be exempt from tax pursuant to Section 501(a) of the Code, and
no facts exist that could reasonably be expected to materially
adversely affect the qualified status of the Employee Pension
Benefit Plan other than the failure to make any required
amendments, the time for the adoption of which has not
expired.
(v) The estimated present values of all accrued benefits
(both vested and nonvested) as of January 1, 1995 under the
Company Pension Plans and the estimated fair market value of
the related trust assets, and the assumptions upon which such
estimates are based are set forth in Schedule 4.18(a).
(vi) The Company has delivered or made available to GDC
correct and complete copies of the plan documents and summary
plan descriptions together with copies of any and all
amendments thereof adopted through the date hereof, the most
recent determination letter received from the IRS, the most
recent Form 5500 Annual Report with all attachments and those
for the past two years, and all related trust agreements,
group annuity contracts, insurance contracts and other funding
agreements which implement such Employee Benefit Plans and the
most current actuarial reports and those for the past two
years, if required under ERISA. Each such actuarial report
fairly presents the financial condition and the results of
operations of each such plan as of such date and the results
of operations of each such plan as of such date in accordance
with the applicable standard.
(vii) Each such Employee Benefit Plan has been
administered consistently in all material respects with its
terms and applicable Laws.
(viii) No Employee Benefit Plans have been amended in any
manner which would require the posting of a security under
Section 401(a)(29) of the Code or Section 307 of ERISA.
(ix) There is no pending or, to the knowledge of BHC,
threatened legal action or proceeding or investigation against
any Employee Benefit Plan, the assets of any of the trusts
under such plans or the plan sponsor or the plan administrator
or against any fiduciary of the Employee Benefit Plans that
could give rise to any material liability, and there is no
basis for any such claim or lawsuit.
(x) The Company has not made any plan or commitment
whether legally binding or not to create any additional plan
or modify or change any existing plan that would affect any
employee or terminated employee or the Company or any of its
Affiliates.
(xi) The Company has not incurred any outstanding
liability under Section 4062 of ERISA to the PBGC, to a trust
established under Section 4041 or 4042 of ERISA or to a
trustee appointed under Section 4042 of ERISA.
(xii) None of the Employee Benefit Plans contains any
provisions which would prohibit the transactions contemplated
by this Agreement or would give rise to any severance,
termination or other payments as a result of the transactions
contemplated by this Agreement.
(xiii) The fair market value of the investments in each
Employee Benefit Plan have been fairly and accurately
represented in the Forms 5500 as of the date of such forms and
accompanying financial statements.
(xiv) Each such Employee Benefit Plan covers only current
and former employees of the Company and does not include any
former employees of any predecessor Person for which the
Company is considered a successor employer.
(b) Except as set forth on Schedule 4.18, with respect to
each Employee Benefit Plan that any of the Company, its
Affiliates and the controlled group of corporations (within
the meaning of Section 1563 of the Code) which includes the
Company maintains or ever has maintained, or to which any of
them contributes, ever has contributed or ever has been
required to contribute:
(i) No such Employee Benefit Plan which is an Employee
Pension Benefit Plan (other than any Multiemployer Plan) has
been completely or partially terminated or been the subject of
a Reportable Event as to which notices would be required to be
filed with the PBGC and no proceeding by the PBGC to terminate
such Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted or, to the knowledge
of BHC, threatened.
(ii) There have been no Prohibited Transactions with
respect to such Employee Benefit Plan, no fiduciary has any
liability for breach of fiduciary duty or any other failure to
act or comply in connection with the administration or
investment of the assets of such Employee Benefit Plan, and no
action, suit, proceeding, hearing or investigation with
respect to the administration or the investment of the assets
of such Employee Benefit Plan (other than routine claims for
benefits) is pending or, to the knowledge of BHC, threatened.
(iii) None of the Company or any of its Affiliates has
incurred and neither BHC nor the Company has reason to expect
that the Company or any of its Affiliates will incur any
liability to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal
liability) or under the Code with respect to any such Employee
Benefit Plan which is an Employee Pension Benefit Plan.
(c) Except as set forth on Schedule 4.18, none of the
Company, its Affiliates and the other members of the
controlled group of corporations that includes the Company
contributes to, ever has contributed to, or ever has been
required to contribute to any Multiemployer Plan or has any
liability (including withdrawal liability) under any
Multiemployer Plan. No event has occurred with respect to a
Multiemployer Plan to which the Company, its Affiliates and
the other members of the controlled group that includes the
Company contribute or have contributed (or to which the
Company, its Affiliates and the other members of the
controlled group that includes the Company have at any time
had an obligation to contribute) that reasonably can be
expected to constitute a "withdrawal" or "partial withdrawal"
with respect to such plan (as such terms are defined in Title
IV or ERISA) which could reasonably be expected to result in a
material liability.
(d) Except as set forth on Schedule 4.18, none of the
Company and its Affiliates maintains or ever has maintained
or contributes, ever has contributed, or ever has been
required to contribute to any Employee Welfare Benefit Plan
providing medical, health, life insurance or other welfare
benefits for current or future retired or terminated
employees, their spouses or their dependents (other than in
accordance with Section 4980B of the Code).
(e) Neither the Company, its Affiliates and other members
of the controlled group that includes the Company has incurred
(nor has any event occurred which reasonably can be
anticipated to result in the Company, its Affiliates and other
members of the controlled group that includes the Affiliates
and other members of the controlled group that includes the
Company) any material loss in connection with any existing or
previously existing Employee Benefit Plan that could become on
or after the Closing Date, an obligation or liability of GDC
or any of its Affiliates except for those matters expressly
assumed by GDC in Section 8.
(f) The Company is not in any way obligated to make any
payment or is a party to any agreement that under any
circumstances could obligate the Company to make any payment
that will not be deductible in whole or in part by reason of
Section 280G of the Code.
(g) Schedule 4.18 sets forth a complete and correct list
of all insurance policies of any kind or nature whatsoever
currently in force with respect to each Employee Benefit Plan
or benefit arrangement and each contract with any service
provider, third party administrator, vendor or other person
who provides or has provided material services in connection
with the operation or administration of such Employee Benefit
Plan or benefit arrangement. The Company has delivered or
made available to GDC a correct and complete copy of each such
policy or contract requested by GDC.
4.19 Labor Relations; Workers' Compensation.
(a) Except as set forth on Schedule 4.19 of the
Disclosure Schedules, there are no controversies pending or,
to the knowledge of BHC, threatened between the Company and
any current or former employee of the Company or any labor or
other collective bargaining unit representing any current or
former employee of the Company that could reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. Except as set forth on
Schedule 4.19, no claims asserting any unfair labor practice
in connection with the operations of the Company are pending
before the National Labor Relations Board. To the knowledge
of BHC, there is no organizational effort presently being made
or threatened by or on behalf of any labor union with respect
to employees of the Company.
(b) The Company has provided or otherwise made available
to GDC the most recent quarterly listing of workers'
compensation claims of the Company for the last three years.
The Company maintains a trust authorized by the State of Maine
which, combined with aggregate excess insurance and subject to
the matters disclosed on Schedule 4.7, covers the estimated
present value of future payments for workers' compensation
claims, determined as of January 1, 1995, of present and
former employees of the Company with respect to claims for
occurrences on or after September 1, 1988. All deposits
required to be made to such trust have been made as and when
due. The workers' compensation self-insurance program
maintained by the Company for policy years 1988 through 1995
was approved by the Superintendent of the Bureau of Insurance
of the State of Maine, and such plan was properly implemented
by the Company in accordance with such approval. The Company
has delivered or made available to GDC the materials described
in Schedule 4.19 that it used for estimating such claims and
determining the present value thereof and has described to GDC
the methodology for calculating such estimates and
determinations. The accrued liability of the Company for
retrospective premium adjustments for policies underwritten by
member companies of the American International Group and
covering the period from September 1, 1986 to September 1,
1988 is estimated by the Company to be $28.4 million at
January 1, 1995. The Company has delivered or made available
to GDC the materials described in Schedule 4.19 that it used
for determining such accrual and has described to GDC the
methodology for making such determinations.
4.20 Environmental Matters. Except as set forth on
Schedule 4.20 of the Disclosure Schedules, to the knowledge of
BHC: (a) the Company is in compliance in all material
respects with all Environmental Laws in connection with the
ownership, use, maintenance and operation of the Facilities,
(b) the Company has no material liability, whether contingent
or otherwise, under any Environmental Law with respect to the
Shipbuilding Business or the Facilities, (c) no notices of any
violation or alleged violation of, non-compliance or alleged
non-compliance with or any liability under, any Environmental
Law relating to the Shipbuilding Business or the Facilities
have been received by the Company since January 1, 1987, (d)
there are no administrative, civil or criminal writs,
injunctions, decrees, orders or judgments outstanding or any
administrative, civil or criminal actions, suits, claims,
proceedings or investigations pending or, to the knowledge of
BHC, threatened, relating to compliance with or liability
under any Environmental Law affecting the Company as a result
of the Shipbuilding Business or affecting the Facilities, (e)
no underground tank or other underground storage receptacle
for Hazardous Materials that is in violation of any
Environmental Law is located on the Owned Real Property or the
real property relating to any Real Estate Lease, and (f) no
Release has occurred or is occurring on or about the
Facilities in violation of any Environmental Law at the time
such Release occurred.
4.21 Legal Compliance. Except as set forth in Schedule
4.21 of the Disclosure Schedules, and except for Tax matters
(as to which BHC's representations and warranties are made in
Section 4.11 and the Tax Matters Agreement), matters
pertaining to compliance with federal Laws applicable to
Government Contracts and Government Subcontracts (as to which
BHC's representations and warranties are made in Section
4.13), matters pertaining to compliance with Laws applicable
to the Company Pension Plans and the Company Welfare Plans (as
to which BHC's representations and warranties are made in
Section 4.18) and environmental matters (as to which BHC's
representations and warranties are made in Section 4.20), the
Company has complied with all applicable Laws, including Laws
relating to worker health and safety, except for instances of
noncompliance that, individually or in the aggregate, would
not have a Material Adverse Effect on the Company. Except as
set forth on Schedule 4.21, no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand or
notice has been filed or commenced against or, to the
knowledge of BHC, has been threatened against the Company
alleging any failure to so comply that would, if adversely
determined, have a Material Adverse Effect on the Company.
4.22 Permits. The Company holds all Permits that are
required by any Governmental Entity to permit it to conduct
all business as presently conducted and to operate the
Company's assets as they are presently operated except for
failures to hold such Permits which would not, individually or
in the aggregate, have a Material Adverse Effect on the
Company or which do not relate to compliance with
Environmental Laws, Releases or Hazardous Materials. Each
such Permit is listed on Schedule 4.22 of the Disclosure
Schedules. No suspension, cancellation or termination of any
of such Permit is pending or, to the knowledge of BHC,
threatened that would, individually or in the aggregate, have
a Material Adverse Effect on the Company.
4.23 Insurance. To BHC's knowledge, Schedule 4.23 of
the Disclosure Schedules contains a correct and complete list
of all policies of insurance owned by the Company under which
the Company, or any of its material assets, is insured. All
such policies are in full force and effect and are sufficient
for compliance in all material respects by the Company with
all applicable requirements of material Law and all material
agreements to which the Company is a party or subject and
provide insurance coverage of the assets, operations and
employees of the Company generally equivalent in type and
amount to that which is customarily carried by other
corporations engaged in similar businesses.
4.24 Brokers' Fees. Neither BHC nor the Company has any
liability or obligation to pay any fees or commissions to any
broker, finder or agent, other than Xxxxxx Brothers, with
respect to the transactions contemplated by this Agreement for
which GDC, BIWA or the surviving Company could become liable
or obligated.
4.25 Full Disclosure. All documents and other papers
listed in the Disclosure Schedules and all other documents
that are required by Section 4.4, 4.14(b), 4.16(b), (c) and
(d), 4.18(a) and 4.19(b) of this Agreement or the Ancillary
Agreements to have been delivered or made available to GDC by
or on behalf of BHC or the Company are true, complete, correct
and authentic in all material respects. Subject to the last
sentence of this Section 4.25, no representation or warranty
of BHC contained in this Agreement or any of the Ancillary
Agreements and no certificate to be delivered to GDC by BHC
pursuant to Section 9 of this Agreement contains an untrue
statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein
not misleading, and there is no fact which BHC or the Company
has not disclosed to GDC or BIWA in writing which BHC or the
Company presently believes has or will have a Material Adverse
Effect on the Company or a material adverse effect on the
ability of BHC or the Company to perform this Agreement and
the Ancillary Agreements to which BHC or the Company is a
party. Notwithstanding any of the foregoing provisions of
this Section 4.25, neither the Company nor BHC makes any
representation or warranty or shall have any liability for any
disclosure or omission (a) with respect to the Xxxxxx
Brothers' offering memorandum dated March, 1995, (b) with
respect to any projections, forecasts or other data furnished
to GDC as to the future profitability or results of the
Company or (c) based on procurement policies of the DOD,
including the awarding of any bids or contracts to the Company
or its competitors or the pricing or other terms and
conditions of such bids or contracts. Notwithstanding any of
the foregoing provisions of this Section 4.25, neither the
Company nor BHC makes any representation or warranty in this
Section 4.25 or shall have any liability for any disclosure or
omission under this Section 4.25 with respect to the matters
set forth in clauses (a) through (j) of the proviso to the
second sentence of Section 4.6 hereof.
Section 5. Representations and Warranties of GDC. GDC
represents and warrants to BHC that:
5.1 Organization of GDC and BIWA. GDC is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Delaware. BIWA is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Maine.
5.2 Authorization of Transaction. Each of GDC and BIWA
has the requisite power and authority (including full
corporate power and authority) and has taken all requisite
corporation (including any necessary approval of this
Agreement and the Merger by the board of directors and
shareholders of GDC and BIWA) to enable it to execute and
deliver this Agreement and each of the Ancillary Agreements
and to perform its obligations hereunder and thereunder. This
Agreement constitutes, and each of the Ancillary Agreements
when executed and delivered by GDC or BIWA will constitute,
the valid and binding obligations of GDC or BIWA enforceable
in accordance with its terms and conditions.
5.3 No Conflicts; Consents. Neither the execution and
the delivery of this Agreement or any of the Ancillary
Agreements by GDC or BIWA, nor the consummation by GDC or BIWA
of the transactions contemplated hereby or thereby, will
violate any Law to which GDC or BIWA is subject or any
provision of the charter or bylaws of GDC or BIWA. Neither
the execution and delivery of this Agreement or any of the
Ancillary Agreements by GDC or BIWA nor the consummation by
GDC or BIWA, of the transactions contemplated hereby or
thereby, will constitute a violation of, be in conflict with,
constitute or create a default under or result in the creation
or imposition of any Lien upon any property of GDC or BIWA
pursuant to any agreement or commitment to which GDC or BIWA
is a party or by which GDC or BIWA or any of its properties is
bound or to which GDC or BIWA or any of such properties is
subject. Except for the filing of the Notification and Report
Form required under the HartScott Xxxxxx Act, and the
expiration or early termination of the waiting period
thereunder, GDC or BIWA has given all required notices and
obtained all licenses, consents, approvals, authorizations,
qualifications and orders of Governmental Entities as are
required in order to enable GDC and BIWA to perform their
obligations under this Agreement and each of the Ancillary
Agreements.
5.4 Litigation. There are no judicial or administrative
actions, proceedings or investigations pending or, to GDC's or
BIWA's knowledge, threatened that question the validity of
this Agreement or any of the Ancillary Agreements or any
action taken or to be taken by GDC or BIWA in connection with
this Agreement or any of the Ancillary Agreements or the
transactions contemplated thereby or hereby or that, if
adversely determined, would have a material adverse effect
upon GDC's or BIWA's ability to enter into or perform its
obligations under this Agreement or any of the Ancillary
Agreements to which it is a party.
5.5 Brokers' Fees. GDC and BIWA have no liability or
obligation to pay any fees or commissions to any broker,
finder or agent, with respect to the transactions contemplated
by this Agreement for which BHC or the Company could become
liable or obligated.
Section 6. Pre-Closing Covenants. The parties agree as
follows with respect to the period between the date of this
Agreement and the Closing Date.
6.1 General. Each of the parties will use its reasonable
best efforts to take all action and to do all things
necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement
(including satisfying the closing conditions set forth in
Section 9).
6.2 Xxxx-Xxxxx-Xxxxxx Filing. Within five business days
following the execution and delivery of this Agreement, each
of the appropriate parties will file a Notification and Report
Form and related material with the Federal Trade Commission
and the Antitrust Business of the United States Department of
Justice under the Xxxx-Xxxxx-Xxxxxx Act, will use its best
efforts to obtain early termination of the applicable waiting
period and will make all further filings pursuant thereto that
may be necessary, proper or advisable. BHC and GDC will
jointly use their best efforts from and after the date of this
Agreement until the Closing Date to obtain from the DOD or
other applicable Governmental Entities as promptly as
practicable an agreement of novation with respect to each
Government Contract and Government Subcontract.
6.3 Carry on Business in Regular Course. BHC will cause
the Company to maintain the owned and leased properties used
or held for use by the Company in good operating condition and
repair and make all necessary renewals, additions and
replacements thereto, will cause the Company to carry on its
business in all material respects in the same manner as
heretofore conducted, will not institute any unusual or novel
methods of manufacture, purchase, sale, lease, management,
accounting or operation.
6.4 No General Increases in Compensation. BHC will not
permit the Company to grant any general or uniform increase in
the rates of pay of employees of the Company, nor grant any
general or uniform increase in the benefits under any bonus or
pension plan or other contract or commitment. BHC will not
permit the Company to increase the compensation payable or to
become payable to officers or salaried employees of the
Company with a base salary in excess of $75,000 per year or
increase any existing, or establish any new, bonus, insurance,
pension or other benefit plan, payment or arrangement to, for
or with any such officers, salaried employees, other employees
or agents, except for any increase required under the terms of
any consulting or employment agreement or compensation plan in
effect on the date of this Agreement and which agreement or
plan is disclosed in the Disclosure Schedules.
6.5 Contracts and Commitments. BHC will not permit the
Company to enter into any contract or commitment or engage in
any transaction, including any contract, commitment or
engagement with any Affiliate of the Company, or effect any
change to any program, not in the usual and ordinary course of
business and consistent with the past operation of the
business of the Company.
6.6 Structural Changes. Other than pursuant to this
Agreement, BHC will not permit the Company to (a) sell or
otherwise dispose of any fixed or capital assets having a net
book value, individually or in the aggregate, exceeding
$200,000 or any other properties or assets that are material
to the conduct of the business of the Company, except in the
ordinary course of business consistent with past practice, (b)
purchase or lease any fixed or capital assets in connection
with any new capital project initiated after the date of this
Agreement at a cost, individually or in the aggregate,
exceeding $200,000, without the prior written consent of GDC,
(c) declare or pay any dividend or distribution with respect
to any class of its capital stock or redeem, repurchase or
otherwise acquire for value any capital stock of the Company,
(d) split, combine, or otherwise reclassify any Company
Shares, (e) amend its articles of incorporation or bylaws or
(f) make payments of principal or interest on the Senior Notes
except for scheduled payments in accordance with the terms of
the Senior Notes.
6.7 Preservation of Organization. BHC will use
commercially reasonable efforts to preserve the business of
the Company intact, to keep available the present key officers
and employees of the Company and to preserve the present
relationships of the Company with its suppliers and customers
and others having business relations with the Company.
6.8 No Default. BHC will not permit the Company to
commit or omit to take any act which will cause a termination
of or material breach or default under any Contract listed on
Schedule 4.12 of the Disclosure Schedules.
6.9 Full Access. BHC will permit, and will cause the
Company to permit, representatives of GDC to have reasonable
access at all reasonable times to all premises, properties,
books, records, contracts and documents of or pertaining to
the Company. BHC shall cause the Company to permit GDC to
make such inspection of the operations of the Company and the
Facilities as GDC deems appropriate in order to determine the
presence, or potential presence, of Hazardous Materials or the
occurrence, or the potential occurrence, of any Releases on or
about the Facilities and to determine compliance with
Environmental Laws. The investigation and inspection shall be
limited to a customary "Phase I" inspection. BHC will, and
will cause the Company to, cooperate in such inspections, to
the extent such cooperation is reasonably required, provided
that such inspections shall be performed at GDC's sole cost
and risk by an individual or firm identified by GDC and
reasonably acceptable to the Company. GDC will have no
obligation to provide the results of such assessments to the
Company or BHC. BHC will permit, and will cause the Company
to permit, representatives of GDC to have access to the Owned
Real Property and the real property subject to the Real Estate
Leases and the records of the Company relating thereto for the
purpose of enabling GDC to obtain a report concerning title to
such properties and matters affecting title thereto and for
the purpose of making surveys of such properties. BHC will,
and will cause the Company to, cooperate with such examination
and surveys to the extent such cooperation is reasonably
required.
6.10 Notice of Developments. BHC will give prompt
written notice to GDC of any development affecting the Company
or its business that would be likely to cause any of its
representations or warranties contained in this Agreement to
be untrue or inaccurate in any material respect at any time
from the date of this Agreement to the Closing Date. Each
party will give prompt written notice to the other of any
material development affecting the ability of the parties to
consummate the transactions contemplated by this Agreement or
any of the Ancillary Agreements. No such written notice of a
development will be deemed to have amended the Disclosure
Schedules, to have qualified the representations and
warranties contained herein and to have cured any
misrepresentation or breach of warranty that otherwise might
have existed hereunder by reason of such development.
6.11 Exclusivity. BHC will not, and will not permit the
Company or any Affiliate of BHC or the Company to, solicit,
initiate or encourage the submission of any proposal or offer
from any Person, or negotiate any unsolicited offer or
proposal, relating to any (a) liquidation, dissolution or
recapitalization, (b) merger or consolidation, (c) acquisition
or purchase of securities or assets, (d) refinancing,
restructuring, or refunding of Funded Debt, or (e) similar
transaction or business combination involving the Company.
BHC will, and will cause the Company and all Affiliates of BHC
or the Company to, notify GDC promptly if any Person makes any
proposal, offer, inquiry or contact with respect to any of the
foregoing.
6.12 Tax Matters. (a) No new elections with respect to
Other Taxes, or any changes in current elections with respect
to Other Taxes, affecting the Company or its assets shall be
made by BHC or the Company or any Affiliate of BHC or the
Company after the date of this Agreement without the prior
written consent of GDC.
(b) All Tax sharing agreements or similar arrangements of
the Company relating to Other Taxes shall be terminated prior
to the Closing Date, and the Company shall not be bound
thereby subsequent to the Effective Time.
(c) BHC, the Company and GDC agree that if the Merger
shall occur, as a result of the Merger, BIWA will have
purchased substantially all of the property used in the
business of the Company, and in connection therewith BIWA
shall employ individuals who immediately before the Closing
Date were employed in such trade or business by the Company.
Accordingly, pursuant to Rev. Proc. 84-77, 1984-2 C.B. 753,
PROVIDED that the Company provides BIWA with all necessary
payroll records for the calendar year which includes the
Closing Date, BIWA shall furnish a Form W2 to each employee
employed by BIWA who had been employed by the Company,
disclosing all wages and other compensation paid for such
calendar year, and taxes withheld therefrom.
(d) BHC and GDC (and, if the Stock Sale shall occur, the
Company) shall (i) each provide the other, and GDC shall cause
BIWA to provide Prudential, with such assistance as may
reasonably be requested by any of them in connection with the
preparation of any Other Tax Return, audit or other
examination by any taxing authority or judicial or
administrative proceedings relating to liability for Other
Taxes, (ii) each retain and provide the other, and GDC shall
cause BIWA and, if the Stock Sale shall occur, the Company to
retain and provide BHC, with any records or other information
which may be relevant to such Other Tax Return, audit or
examination, proceeding or determination, and (iii) each
provide the other with any final determination of any such
audit or examination, proceeding or determination that affects
any amount required to be shown on any Other Tax Return of the
other for any period. Without limiting the generality of the
foregoing, GDC shall retain, and shall cause BIWA and, if the
Stock Sale shall occur, the Company to retain, and BHC shall
retain, until the applicable statutes of limitations
(including any extensions) have expired, copies of all Other
Tax Returns, supporting work schedules and other records of
information which may be relevant to such returns for all Tax
periods or portions thereof ending before or including the
Effective Time and shall not destroy or otherwise dispose of
any such records without first providing the other party with
a reasonable opportunity to review and copy the same.
6.13 REA Claims. Prior to the Effective Time, the
Company shall declare a distribution of the Company's
beneficial interest in all Transferred Amounts.
Section 7. Post-Closing Covenants. The parties agree as
follows with respect to the period following the Closing Date.
7.1 General. In case at any time after the Closing Date
any further action is necessary or desirable to carry out the
purposes of this Agreement, each of the parties will take such
further action (including the execution and delivery of such
further instruments and documents) as the other party
reasonably may request, at the sole cost and expense of the
requesting party (unless the requesting party is entitled to
indemnification therefor under Section 10).
7.2 Litigation Support. In the event and for so long as
any party is actively contesting or defending against any
charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand in connection with (a) any
transaction contemplated under this Agreement or (b) any fact,
situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure
to act or transaction on or prior to the Closing Date, the
other party will cooperate with the contesting or defending
party and its counsel in the contest or defense, make
available its personnel and provide such testimony and access
to its books and records as may be necessary in connection
with the contest or defense, at the sole cost and expense of
the contesting or defending party (unless the contesting or
defending party is entitled to indemnification therefor under
Section 10).
7.3 Confidentiality. For a period of five years after
the Closing Date, BHC will, and BHC will cause its Affiliates
to, treat and hold as confidential in accordance with such
procedures as BHC or its Affiliates, as the case may be, apply
generally to their own information of this kind, and will not
use for the benefit of themselves or others, all information
relating to the Shipbuilding Business, except as required by
law or administrative process and except for information which
is available to the public on the Closing Date or thereafter
becomes available to the public other than as a result of a
breach of this Section 7.3 ("Confidential Information"). In
the event BHC or any of its Affiliates is requested or
required (by oral request or written request for information
or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand or similar process) to disclose any
Confidential Information, then BHC will, unless prohibited by
law, notify GDC promptly in writing of the request or
requirement so that GDC may seek an appropriate protective
order or waive compliance with this Section 7.3. If, in the
absence of a protective order or receipt of a waiver
hereunder, BHC or any of its Affiliates is compelled to
disclose any Confidential Information to any Person or else
stand liable for contempt, then BHC or its Affiliate may
disclose such Confidential Information to such Person.
7.4 Transfer Taxes. BHC and GDC will share equally any
sales, use, transfer and documentary taxes and any recordings
and filing fees attributable to the Merger.
7.5 Tax Refunds. Subject to the provisions of this
Section 7.5 regarding Covered Other Tax Refunds (as defined
below) and the final sentence of this Section 7.5, any Other
Tax refunds relating to the Company for taxable periods ending
on or prior to the Effective Time shall belong to Prudential,
and GDC shall and shall cause its Subsidiaries to pay to
Prudential any such refunds received. If Prudential or BHC or
BHC's other shareholders receive, directly or indirectly, any
Other Tax refund relating to the Company for such taxable
periods and the Other Tax liability to which such refund
relates was included as a cost in a cost-reimbursement or
fixed-price incentive (cost- redeterminable) Government
Contract or Government Subcontract (a "Covered Other Tax
Refund"), then Prudential will cooperate with GDC to determine
the appropriate portion of such Covered Other Tax Refund due
to any Governmental Entity as if GDC or BIWA had pursued and
obtained an identical Other Tax refund. Once the appropriate
portion due any Governmental Entity is determined, Prudential
will promptly remit to GDC or BIWA such amount to be paid to
such Governmental Entity in an appropriate manner to be
reasonably determined by GDC; PROVIDED, HOWEVER, that GDC
promptly remits such amount to the Governmental Entity, either
by payment or otherwise, including but not limited to indirect
payments such as reductions in moneys or other payments due to
GDC or BIWA by the Governmental Entity; and PROVIDED FURTHER,
that GDC shall return to Prudential any amounts not so
remitted. If GDC or BIWA is liable for any Other Taxes (net
of any Tax benefit to GDC in making payment to the
Governmental Entity) as a result of such reimbursement by
Prudential, Prudential will also pay to GDC such additional
amounts required to pay such Taxes. Notwithstanding the
above, if GDC or BIWA and, if the Stock Sale shall occur, the
Company pays, directly or indirectly, any Other Taxes with
respect to any taxable period ending on or before the
Effective Time, and such Other Taxes are later refunded, then
to the extent that GDC and BIWA have not been indemnified for
such Other Taxes, GDC and BIWA (and, if the Stock Sale shall
occur, the Company) will be entitled to such refund.
7.6 Maine Insurance Fund. Any initial registration fee
payable by BIWA, as successor in interest to the Company,
payable to register in the Maine Self Insured Employers
Guaranty Fund as a result of the transactions contemplated
hereby, other than any assessment under the Residual Deficit
Act, shall be paid one-half by BIWA and one-half by BHC.
Section 8. Employee Benefits.
8.1 Allocation of Pension Responsibilities.
(a) Subject to Section 8.4 of this Agreement and if the
Merger shall occur, BIWA will assume the obligations under the
Company Salaried Plan and the Company Hourly Plan and any
related trust agreements with respect to those employees and
former employees of the Company (and their beneficiaries) who
as of the Closing Date are participants in any of the Company
Pension Plans, and if the Merger shall occur BIWA shall accept
the assets and liabilities associated with the enumerated
Company Pension Plans. GDC and BHC shall take all necessary
actions to accomplish the assumption of responsibility for the
Company Pension Plans.
(b) As soon as practicable, BHC will cause the Company to
deliver to GDC such copies of the Company's applicable
personnel, pension and other records pertaining to the Company
Pension Participants and their individual participation in the
Company Pension Plans and such copies of any other applicable
records of either the Company or any agent or representative
thereof pertaining to the Company Pension Participants and/or
the Company Pension Plans and the Company Pension Trusts as
GDC may reasonably request.
8.2 Allocation of Welfare Benefit Responsibilities.
(a) Subject to Section 8.4 of this Agreement, as of the
Closing Date, if the Merger shall occur, GDC or BIWA will
assume the responsibility for welfare benefits under the
Company's welfare plans or provide plans with benefits
substantially equivalent in the aggregate to such benefits as
they existed immediately prior to the Closing Date in
accordance with the Company Welfare Plans and the summary plan
descriptions noted in Schedule 4.18 of the Disclosure
Schedules. Such welfare benefits after the Closing Date will
be determined without any waiting periods, without any
evidence of insurability and without the application of any
pre-existing physical or mental condition restrictions except
to the extent applicable under the Company Welfare Plans, but
counting claims incurred prior to the Closing Date for
purposes of applying deductible, out-of-pocket maximums and
other such matters.
(b) For purposes of providing welfare benefit
continuation coverage pursuant to the provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985,
welfare benefit plan coverage under GDC or BIWA welfare plans
will be considered to have commenced on the Closing Date and
all eligible individuals will not be considered to have lost
coverage under the Company Welfare Plans on the Closing Date.
(c) To the extent assets have been accumulated in
connection with any Employee Benefit Plan as of the Closing
Date, if the Merger shall occur, the Company shall transfer or
cause to be transferred to BIWA the balance existing as of the
Closing Date in any trust, voluntary employee beneficiary
association, reserve, premium stabilization account or other
similar account or arrangement established by the Company or
any other Person.
(d) BHC will cause to be transferred to BIWA or the
Company any experience adjustments, policy dividends, pretax
deposits for health care or dependent care reimbursement
accounts or any other similar funds related to the Company
Welfare Plans.
8.3 Allocation of Investment Plan Responsibilities.
(a) Subject to Section 8.4 of this Agreement, if the
Merger shall occur, BIWA will assume the obligations under the
Company Investment Plans with respect to those employees or
former employees of the Company (or their beneficiaries) who,
as of the Closing Date, are participants in any of the Company
Investment Plans, and if the Merger shall occur, BIWA shall
accept the assets and liabilities associated with the Company
Investment Plans. GDC and BHC shall take all necessary
actions to accomplish the assumption of responsibility for the
Company Investment Plans.
(b) As soon as practicable, BHC will cause the Company to
deliver to GDC such copies of the Company's applicable records
pertaining to the Company Investment Plans and such copies of
such other applicable records of either the Company or any
agent or representative thereof pertaining to the Company
Investment Plans as GDC may reasonably request.
8.4 Limitations on Liability. Notwithstanding the
provisions of Sections 8.1, 8.2 and 8.3, nothing in this
Agreement will limit or restrict in any way the Company's or
BIWA's right to modify, amend, terminate or establish employee
benefit plans or arrangements in whole or in part at any time
after the Closing Date, and this Agreement will not, in any
way or at any time, create any third party beneficiary rights
for or on behalf of any Person. BIWA and the Company shall be
obligated to provide hourly BIWA or Company employees with the
benefits described under Sections 8.1, 8.2 and 8.3 only until
the expiration of the collective bargaining agreement that
requires the benefit to be provided to such employees.
Nothing expressed or implied in this Agreement will obligate
BIWA or GDC to provide continued employment to any employee of
the Company for a specified period of time following the
Closing Date, and BIWA or the Company will be the sole judge
of the number, identity and qualifications of employees
necessary for the conduct of business.
8.5 Cooperation Between Parties.
(a) With respect to each Employee Benefit Plan or benefit
arrangement, BHC will cause the Company to use its best
efforts to cause to be assigned to GDC or BIWA, as the case
may be, all policies of insurance and contracts with any
service provider, third party administrator, vendor, or other
Person who has provided service in connection with the
operation or administration of such Employee Benefit Plan, as
GDC designates in writing and as pertain to the funding of
benefits in respect of employees under any such Employee
Benefit Plan or benefit arrangement, or in any case where such
assignment is commercially impracticable, the Company shall
cooperate in arranging for the issuance of new or modified
policies or contracts.
(b) BHC will cause the Company to provide to GDC, upon
GDC's request, copies of the Company's personnel, pension and
other records pertaining to Company employees.
Section 9. Closing Conditions.
9.1 Conditions to Obligation of GDC and BIWA. The
obligation of GDC and BIWA to consummate the Merger and the
other actions to be performed by them in connection with the
Merger is subject to satisfaction of the following conditions:
(a) the representations and warranties of BHC set forth
in Section 4 will be true and correct in all material respects
at and as of the date of this Agreement and at and as of the
Closing Date as if made on the Closing Date;
(b) BHC and the Company will have performed and complied
in all material respects with all of their covenants hereunder
through the Closing Date;
(c) BHC will have delivered to GDC a certificate to the
effect that each of the conditions specified above is
satisfied in all respects;
(d) BHC will have delivered to GDC a certificate
identifying the record and beneficial holder or holders of the
Company Common Stock as of the Closing Date;
(e) there shall have been, since the date of this
Agreement, no event, development, or condition that has or
will have a Material Adverse Effect on the Company including,
but not limited to, a material change initiated or caused by
the DOD in the DDG program that would make it reasonably
unlikely that the Company would receive fewer than five DDG
awards during the next five years as evidenced by publication
of a final report or recommendation indicating that the DOD
could reasonably be expected to cancel the DDG program or
single source future awards to another yard, but excluding any
event, development or condition generally affecting the
shipbuilding industry as a whole;
(f) there will not be any judgment, order, decree,
stipulation, injunction or charge in effect preventing
consummation of the transactions contemplated by this
Agreement;
(g) BHC will have delivered to GDC a certificate signed
by BHC setting forth the Funded Debt as of the Closing Date,
itemizing separately for each item of Funded Debt: (i) the
principal amount thereof; (ii) accrued and unpaid interest
thereon; (iii) any premium payable thereon (including any
prepayment penalties or other charges payable by reason of the
prepayment of such Funded Debt on the Closing Date); (iv) any
other charges payable in connection therewith; and (v) the
record holder of such Funded Debt;
(h) each holder of Required Debt as of the Closing Date
will have delivered to GDC a letter setting forth the unpaid
principal, accrued and unpaid interest, any premium (including
any prepayment penalties or other charges payable by reason of
the prepayment of such Required Debt on the Closing Date) and
other charges payable in connection therewith;
(i) all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act will have expired or
otherwise been terminated without the objection of any of the
relevant federal authorities; and
(j) the shareholders of BHC will have delivered to GDC
executed counterparts of each of the Ancillary Agreements to
which they are a party not already executed and delivered by
such shareholders and which are required by this Agreement to
be executed and delivered by such shareholders.
GDC may waive any condition specified in this Section 9.1 if
it executes a writing so stating at or prior to the Closing.
9.2 Conditions to Obligation of BHC and the Company. The
obligation of BHC and the Company to consummate the Merger and
the other actions to be performed by them in connection with
the Merger is subject to satisfaction of the following
conditions:
(a) the representations and warranties of GDC and BIWA
set forth in Section 5 will be true and correct in all
material respects at and as of the date of this Agreement;
(b) GDC and BIWA will have performed and complied in all
material respects with all of their covenants hereunder
through the Closing Date;
(c) GDC will have delivered to BHC a certificate to the
effect that each of the conditions specified above is
satisfied in all respects;
(d) there will not be any judgment order, decree,
stipulation, injunction or charge in effect preventing
consummation of the transactions contemplated by this
Agreement;
(e) all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act will have expired or
otherwise been terminated without the objection of any of the
relevant federal authorities; and
(f) GDC and BIWA will have delivered to BHC executed
counterparts of each of the Ancillary Agreements not already
executed and delivered by GDC and BIWA and which are required
by this Agreement to be executed and delivered by GDC and/or
BIWA.
The Company may waive any condition specified in this Section
9.2 if it executes a writing so stating at or prior to the
Closing.
Section 10. Remedies for Breaches of Representations and
Warranties.
10.1 Survival. All of the representations and warranties
of BHC contained in this Agreement or in any certificate
delivered by BHC pursuant to this Agreement will survive the
Closing and continue in full force and effect until (a) the
first anniversary of the Closing Date in the case of the
representations and warranties of BHC contained in Sections
4.6, 4.7, 4.8, 4.9, 4.10, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17,
4.19, 4.20, 4.21, 4.22, 4.23, 4.24, or 4.25 or contained in
any certification delivered by BHC pursuant to this Agreement
relating to the representations and warranties of BHC
contained in Sections 4.6, 4.7, 4.8, 4.9, 4.10, 4.12, 4.13,
4.14, 4.15, 4.16, 4.17, 4.19, 4.20, 4.21, 4.22, 4.23, 4.24 or
4.25 and (b) the third anniversary of the Closing Date in the
case of any other representation or warranty of BHC contained
in this Agreement or contained in any other certification
delivered by BHC pursuant to this Agreement. All of the
representations and warranties of GDC contained in this
Agreement or in any certificate delivered by GDC pursuant to
this Agreement will survive the Closing and continue in full
force and effect until the third anniversary of the Closing
Date. All of the covenants of GDC and BHC contained in this
Agreement will survive the Closing and continue in full force
and effect forever thereafter.
10.2 Indemnification Provisions for Benefit of GDC.
(a) In the event that GDC or BIWA shall suffer any Losses
attributable to any breach by BHC of any of its
representations and warranties contained in this Agreement
(other than the representations and warranties contained in
Section 4.20 of this Agreement) or in any certification
delivered by BHC pursuant to this Agreement (other than any
certification with respect to any representations and
warranties contained in Section 4.20 of this Agreement),
provided that GDC submits a written claim for indemnification
to BHC within the applicable survival period described in
Section 10.1, then BHC shall indemnify GDC from and against
any Losses, net of any applicable insurance recoveries,
amounts recovered from third parties applicable to such Losses
and amounts recovered under any Government Contract applicable
to such Losses (it being understood that GDC will seek to
recover all amounts recoverable under any Government
Contract), that GDC or BIWA may suffer resulting from, arising
out of, relating to or caused by such breach including any
Losses suffered by GDC or BIWA with respect to such breach
after the expiration of any applicable survival period with
regard to claims timely filed within the survival period (such
net Losses being referred to herein as the "Warranty Losses"),
all subject to the limitations of Section 10.2(d).
(b) In the event GDC or BIWA shall suffer any Losses
attributable to any breach by BHC of any of its
representations and warranties contained in Section 4.20 of
this Agreement or in any certification with respect to any
representations and warranties contained in Section 4.20 of
this Agreement delivered by BHC pursuant to this Agreement,
provided that GDC submits a written claim for indemnification
to BCH prior to the first anniversary of the Closing Date,
then BHC shall indemnify GDC from and against 662/3% of any
such Losses, net of 66-2/3% of any applicable insurance
recoveries, 66-2/3% of amounts recovered from third parties
applicable to such Losses and 66-2/3% of amounts recovered
under any Government Contract applicable to such Losses (it
being understood that GDC will seek to recover all amounts
recoverable under any Government Contract), that GDC or BIWA
may suffer resulting from, arising out of, relating to or
caused by such breach, including any Losses suffered by GDC or
BIWA with respect to such breach after the first anniversary
of the Closing Date with regard to claims timely filed prior
to the first anniversary of the Closing Date (such net Losses
being referred to herein as "Environmental Losses"), all
subject to the limitations of Section 10.2(d).
(c) In the event that at any time on or before the third
anniversary of the Closing Date, GDC or BIWA shall suffer any
Losses attributable to any claim, liability or obligation
arising out of any Predecessor Business, including without
limitation, any Environmental Claim, provided that GDC submits
a written claim for indemnification to BHC prior to the third
anniversary of the Closing Date, BHC shall indemnify GDC from
and against such Losses, net of any applicable insurance
recoveries, amounts recovered from third parties applicable to
such Losses and amounts recovered under any Government
Contract applicable to such Losses that GDC or BIWA may suffer
resulting from, arising out of, relating to or caused by such
claim, liability or obligation (such net Losses being referred
to herein as "Predecessor Losses"), all subject to the
limitations of Section 10.2(d).
(d) Notwithstanding Sections 10.2(a), 10.2(b) and
10.2(c), neither BHC nor the shareholders of BHC shall have
any liability to GDC or BIWA with respect to any Warranty
Losses, Environmental Losses or Predecessor Losses or any
guaranty obligation with respect to the indemnification of
such Warranty Losses, Environmental Losses or Predecessor
Losses (collectively, "Indemnified Losses") until and unless
GDC and BIWA have suffered aggregate Indemnified Losses in
excess of $1,500,000, and then only to the extent of such
excess. The aggregate liability of BHC and the shareholders
of BHC with respect to Indemnified Losses shall not exceed
$25,000,000 in the aggregate for any and all matters.
10.3 Indemnification Provisions for Benefit of BHC. In
the event that BHC shall suffer any Losses attributable to any
breach by GDC or BIWA of any of its representations or
warranties contained in this Agreement or in any certificate
delivered by GDC or BIWA pursuant to this Agreement, provided
that BHC submits a written claim for indemnification to GDC or
BIWA within the applicable survival period described in
Section 10.1, then GDC shall indemnify BHC from and against
any Losses, net of any applicable insurance recoveries.
10.4 Matters Involving Third Parties. If any third party
notifies any party hereto (the "Indemnified Party") with
respect to any matter which may give rise to a claim for
indemnification against any other party hereto (the
"Indemnifying Party") under this Section 10, then the
Indemnified Party will notify the Indemnifying Party thereof
promptly and in any event within 30 days after receiving any
written notice from a third party; provided that no delay on
the part of the Indemnified Party in notifying the
Indemnifying Party will relieve the Indemnifying Party from
any obligation hereunder unless, and then only to the extent
that, the Indemnifying Party is actually prejudiced as a
direct consequence thereof. Once the Indemnified Party has
given notice of the matter to the Indemnifying Party, the
Indemnified Party may defend against the matter in any manner
it reasonably may deem appropriate; provided, however, that
such Indemnified Party shall deliver to the Indemnifying
Party, within five business days after the receipt thereof,
copies of all notices and documents (including court papers)
received by the Indemnified Party relating to the third party
claim. In the event the Indemnifying Party notifies the
Indemnified Party within 30 days after the date the
Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense of such matter (a)
the Indemnifying Party will defend the Indemnified Party
against the matter with counsel of its choice reasonably
satisfactory to the Indemnified Party, (b) the Indemnified
Party may retain separate counsel at its sole cost and expense
(except that the Indemnifying Party will be responsible for
the fees and expenses of such separate co-counsel to the
extent the Indemnified Party concludes in good faith that the
counsel the Indemnifying Party has selected has a conflict of
interest or other ethical disqualification from representing
the interests of the Indemnified Party), it being understood
that the Indemnifying Party shall control such defense, (c)
the Indemnified Party will not consent to the entry of a
judgment or enter into any settlement with respect to the
matter without the written consent of the Indemnifying Party
(not to be withheld, conditioned or delayed unreasonably) and
(d) the Indemnifying Party will not consent to the entry of a
judgment with respect to the matter or enter into any
settlement which does not include a provision whereby the
plaintiff or claimant in the matter releases the Indemnified
Party from all liability with respect thereto, without the
written consent of the Indemnified Party (which shall not be
unreasonably withheld, conditioned or delayed). If the
Indemnifying Party elects to assume the defense of any third
party claim, the Indemnified Party shall cooperate with the
Indemnifying Party in the defense or prosecution thereof.
Such cooperation shall include the retention and (upon the
request of the Indemnifying Party) the provision to the
Indemnifying Party of records and information which are
reasonably relevant to such third party claim, and making
employees available on a mutually convenient basis to provide
additional information and explanation of any material
provided hereunder. In the event that the Indemnifying Party
does not timely notify the Indemnified Party that the
Indemnifying Party is assuming the defense of such matter, the
Indemnified Party shall be entitled to defend or settle such
matter as the Indemnified Party, in its discretion, deems
advisable.
10.5 Indemnification Procedures. In the event that any
Indemnified Party incurs any Losses other than in connection
with a third party claim for which such Indemnified Party is
or claims to be entitled to recovery under Section 10.2 or
10.3 hereof, such Indemnified Party shall give written notice
to the Indemnifying Party together with supporting details in
reasonable detail. No failure or delay by the Indemnified
Party in giving such notice, and no defect in such notice,
shall impair such Indemnified Party's right to indemnification
hereunder, except to the extent the Indemnifying Party is
actually prejudiced as a direct consequence thereof but any
such failure, delay or defect shall excuse the Indemnifying
Party from its duty to give notice of its objections to such
indemnification. Within 20 days after the Indemnifying Party
receives such notice from the Indemnified Party, the
Indemnifying Party shall give notice to the Indemnified Party
of any objections to providing the requested indemnification.
Failure of the Indemnifying Party to give timely notice of any
such objections shall be deemed a consent to its
indemnification obligation and a waiver of objections or
defenses that such Indemnifying Party may thereafter assert in
connection therewith. In the event the Indemnifying Party
objects to the requested indemnification, payment of only the
disputed portion shall be deferred from the date it is
otherwise due and payable until the dispute is settled by
mutual agreement between the parties or until the first
business day after a final order of a court of competent
jurisdiction determining the rights of the parties is entered
and all appeals thereof have been determined or the time for
the appeal has lapsed. No cause of action shall be asserted
with respect to any disputed claim for indemnification
hereunder after the fourth anniversary of the Closing Date.
If as of the third anniversary of the Closing Date, either
party has claims for Losses that have not been liquidated in
amount, such party may invoke the foregoing provisions of this
Section 10.5 with respect to such party's reasonably estimated
actual and expected Losses.
10.6 Recourse Limited. Recourse for the recovery of
GDC's and BIWA's Indemnified Losses shall be limited to the
amounts described in Section 10.2(d), and GDC and BIWA shall
have no recourse against assets of BHC or any Affiliate of BHC
or any successor or assign thereof for such Indemnified Losses
in excess of the amounts described in Section 10.2(d).
Notwithstanding the foregoing, recourse against BHC shall not
be limited if and to the extent that BHC or any director or
officer of BHC or any director or officer of the Company
listed in Exhibit A hereto is held to have engaged in conduct
constituting fraud under the common law of the State of
Delaware in connection with any breach of representation and
warranty contained in Sections 4.1 through 4.25 as a result of
which GDC or BIWA has suffered Losses. The fact that any
conduct is found to constitute fraud under any statute
pertaining to the procurement of Government Contracts,
including, but not limited to, the Truth in Negotiations Act,
18 U.S.C. 286 and 18 U.S.C. 371 (conspiracy to defraud),
18 U.S.C. 1001 (false statements), 18 U.S.C. 287 (false
claims), 18 U.S.C. 1341 (mail fraud), 18 U.S.C. 1343 (wire
fraud), 41 U.S.C. 423 (procurement integrity) shall not, of
itself, lead to the conclusion or create a presumption that
such conduct constitutes fraud under the common law of the
State of Delaware.
Section 11. Termination.
11.1 Termination of Agreement. The parties may terminate
this Agreement as provided below:
(a) GDC and BHC may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(b) GDC may terminate this Agreement by giving written
notice to the Company at any time prior to the Closing if the
Closing has not occurred on or before October 10, 1995, by
reason of the failure of any closing condition under Section
9.1 that has not been waived by GDC (unless the failure is the
result of a material breach of this Agreement by GDC);
(c) BHC may terminate this Agreement by giving written
notice to GDC at any time prior to the Closing if the Closing
has not occurred on or before October 10, 1995, by reason of
the failure of any closing condition under Section 9.2 that
has not been waived by BHC (unless the failure is the result
of a material breach of this Agreement by the Company or BHC);
(d) GDC may terminate this Agreement after the second
business day following the satisfaction of the conditions set
forth in Section 9.1(i) and 9.2(e), if, after such second
business day, GDC has delivered a notice setting a date for
the Closing (not earlier than 48 hours after such notice is
given) and the Company or BHC is unable to close on the date
specified in such notice; or
(e) BHC may terminate this Agreement after the second
business day following the satisfaction of the conditions set
forth in Section 9.1(i) and 9.2(e), if, after such second
business day BHC has delivered a notice setting a date for the
Closing (not earlier than 48 hours after such notice is given)
and GDC or BIWA is unable to close on the date specified in
such notice.
11.2 Effect of Termination. If any party terminates this
Agreement pursuant to Section 11.1, all obligations of the
parties hereunder will terminate without liability of any
party to the other party (except for any liability of any
party then in breach); provided that the provisions contained
in Sections 13.1 and 13.2 will survive termination and remain
in full force and effect thereafter.
Section 12. Dispute Resolution.
12.1 Dispute Resolution. In the event of any dispute or
disagreement relating to this Agreement or the transactions
contemplated by this Agreement, the parties shall endeavor to
settle such dispute or disagreement through good faith
negotiations. No party to this Agreement or any of its
successors or assigns or agents or representatives (including
any BHC Representative) shall file any suit or action or
otherwise commence any proceeding against any other party to
this Agreement or any of its successors or assigns or its
agents or representatives (including any BHC Representative)
unless such Person shall have first attempted to settle such
dispute or disagreement through good faith negotiations for a
period of not less than 30 days. Notwithstanding the
foregoing, any Person who has been made a party defendant in
any suit, action or proceeding relating to this Agreement
shall not be limited in its assertion of counterclaims,
crossclaims or affirmative defenses in connection therewith,
and any Person who has been made a party defendant in any
suit, action, or proceeding by any Person (other than the BHC
Representative) who is not a party to this Agreement shall not
be limited in its assertion of crossclaims against, or in
joining as a necessary party, in such suit, action or
proceeding, any Person who is a party to this Agreement or any
of its successors or assigns or agents or representatives
(including the BHC Representative).
12.2 Choice of Forum. IN CONNECTION WITH ANY SUIT,
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY, EACH PARTY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF DELAWARE AND THE COURTS OF
THE STATE OF DELAWARE, AND IRREVOCABLY WAIVES ANY OBJECTION IT
MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION, OR PROCEEDING BROUGHT IN ANY SUCH COURT OR THAT ANY
SUCH COURT IS AN INCONVENIENT FORUM. EACH PARTY FURTHER
AGREES THAT ANY SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS
IN ANY SUCH SUIT, ACTION, OR PROCEEDING MAY BE EFFECTIVELY
SERVED UPON IT BY THE DELIVERY THEREOF TO SUCH PARTY IN THE
SAME MANNER AS PROVIDED IN THIS AGREEMENT FOR THE GIVING OF
NOTICE TO SUCH PARTY, AND SUCH SUMMONS AND COMPLAINT OR OTHER
LEGAL PROCESS SHALL BE DEEMED EFFECTIVELY SERVED AT THE TIME
AT WHICH NOTICE THEREOF WOULD BE DEEMED GIVEN UNDER THIS
AGREEMENT.
12.3 Waiver of Jury Trial and Certain Damages. (a) Each
party hereto waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in
respect of any action, suit or proceeding arising out of or
relating to this Agreement or any of the transactions
contemplated hereby. Each party hereto certifies that no
representative, agent or attorney of any other party hereto
has represented, expressly or otherwise, that such other party
would not, in the event of litigation, seek to enforce the
foregoing waiver and acknowledges that it has been induced to
enter into this Agreement by, among other things, the mutual
waivers and certifications set forth above in this Section
12.3.
(b) Each party hereto waives, to the fullest extent
permitted by applicable law, and shall not be entitled to
recover, any punitive damages or consequential damages in
respect to this Agreement and the transactions contemplated
hereby.
12.4 Specific Performance. Each party hereto
acknowledges that money damages would be both incalculable and
an insufficient remedy for any breach of this Agreement by
such party and that any such breach would cause the other
parties hereto irreparable harm. Accordingly, each party
hereto also agrees that, in the event of any breach or
threatened breach of the provisions of this Agreement by such
party, the other parties hereto shall be entitled to equitable
relief without the requirement of posting a bond or other
security, including in the form of injunctions and orders for
specific performance, in addition to all other remedies
available to such other parties at law or in equity.
12.5 Attorneys' Fees. In any suit, action or proceeding
brought to seek enforcement of this Agreement or to establish
the disputed rights of any party to this Agreement or the BHC
Representative, in addition to such relief or award as shall
be ordered by the court, the prevailing party or parties shall
be entitled to recover the reasonable attorneys' fees incurred
in connection therewith from and after the date such suit or
action was filed or was otherwise commenced, as the court
shall order upon petition of the parties to the proceeding.
In the event that any party or parties shall prevail as to
some but not all claims or defenses asserted, the award of
reasonable attorneys' fees shall be determined by the court
according to equitable principles as may be applied by the
court upon petition of the parties to the proceeding.
Section 13. Miscellaneous.
13.1 Press Releases and Announcements. No party will
issue any press release or announcement relating to the
subject matter of this Agreement prior to the Closing Date
without the prior approval of the other party; provided that
any party may make any public disclosure it believes in good
faith upon advice of counsel is required by Law (in which case
the disclosing party will advise the other party prior to
making such disclosure).
13.2 Expenses. (a) Except as provided in Section 12.5,
the Company will bear all legal, accounting, investment
banking and other expenses incurred by BHC or the shareholders
of BHC or on the behalf of BHC or the shareholders of BHC in
connection with the transactions contemplated by this
Agreement, whether or not such transactions are consummated.
Except as provided in Section 12.5, GDC and BIWA will bear all
legal, accounting, investment banking and other expenses
incurred by them or on their behalf in connection with the
transactions contemplated by this Agreement, whether or not
such transactions are consummated.
(b) Without limiting the generality of the foregoing,
prior to the Closing Date, the Company shall have requested
final invoices from its, BHC's and BHC shareholder's
accountants, attorneys, investment bankers and other similar
professional advisors reflecting all fees and expenses known
as of one day prior to the Closing Date by such professionals
to be payable by the Company, BHC or BHC's shareholders with
respect to services rendered to the Company, BHC or BHC's
shareholders in connection with the transactions contemplated
hereby ("Closing Date Transaction Expenses"). All Closing
Date Transaction Expenses shall be paid on the Closing Date
and deducted from the Initial Merger Consideration. To the
extent that such final invoices do not reflect fully the
services and fees of such persons rendered on or prior to the
Closing Date, such persons may supplement, within 25 days
after the Closing Date, their respective final invoices, and
the amount thereof (net of all amounts paid on the Closing
Date) shall be payable in full by BIWA or, if the Stock Sale
shall occur, the Company, and shall, for the purposes of
Section 2.6, be included (to the extent not theretofore
included) in "other current liabilities" on the Closing Date
Balance Sheet.
13.3 Remedies. Any party having any rights under any
provision of this Agreement will have all rights and remedies
set forth in this Agreement and all rights and remedies which
such party may have been granted at any time under any other
agreement (including any Ancillary Agreement) or contract and
all of the rights which such party may have under any Law.
Any party having any rights or remedies under this Agreement
will be entitled to enforce such rights specifically, without
posting a bond or other security, to recover damages by reason
of any breach of any provision of this Agreement and to
exercise all other rights granted by Law.
13.4 Consent to Amendments. The provisions of this
Agreement may be amended or waived only by a written agreement
executed and delivered by the parties hereto.
13.5 Liquidation of BHC. GDC acknowledges that it is the
present intent of the shareholders of BHC to liquidate BHC
prior to, at or after the Effective Time.
13.6 Successors and Assigns. No party hereto may assign
or delegate any of such party's rights or obligations under or
in connection with this Agreement without the written consent
of the other party hereto; provided that BHC may assign its
rights under this Agreement to its shareholders in connection
with the liquidation of BHC. All covenants and agreements
contained in this Agreement by or on behalf of any of the
parties hereto will be binding upon and enforceable against
the respective successors and assigns of such party and will
be enforceable by and will inure to the benefit of the
respective successors and permitted assigns of such party.
13.7 BHC Representative. BHC hereby appoints Prudential
as the BHC Representative. The BHC Representative will from
time to time act on behalf of, and in substitution for, BHC
under this Agreement generally or in any instance in which BHC
is permitted or required to act under this Agreement. Unless
the authority of the BHC Representative shall be confined or
specifically limited in the document designating the BHC
Representative, the authority of the BHC Representative to act
on behalf of BHC shall be deemed unlimited. The designation
of Prudential as the BHC Representative shall be deemed to
constitute the appointment of Prudential as the true and
lawful agent and attorney in fact of BHC (with the full power
of Prudential to appoint its, his or her substitute for any
purposes by written notice to GDC). GDC shall be entitled to
rely exclusively upon the apparent authority of Prudential (or
any substitute as appointed in accordance herewith) until such
authority or the designation of such BHC Representative is
revoked by the Person who appointed such BHC Representative.
13.8 Severability. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be
effective and valid under applicable Law, but if any provision
of this Agreement is held to be prohibited by or invalid under
applicable Law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating
the remainder of this Agreement.
13.9 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which
need not contain the signatures of more than one party, but
all such counterparts taken together will constitute one and
the same Agreement.
13.10 Descriptive Headings. The descriptive headings of
this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
13.11 Notices. All notices, demands or other
communications to be given or delivered under or by reason of
the provisions of this Agreement will be in writing and will
be deemed to have been given when delivered personally to the
recipient or when sent to the recipient by telecopy (receipt
confirmed), one business day after the date when sent to the
recipient by reputable express courier service (charges
prepaid) or two business days after the date when mailed to
the recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and
other communications will be sent to the parties at their
addresses indicated below:
If to GDC or BIWA: c/o General Dynamics Corporation
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxxxxx,
Executive Vice President
Telecopy No. 703/876-3125
With a copy (which
will not constitute
notice) to: Jenner & Block
Xxx XXX Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopy No. 312/527-0484
If to BHC or the
Company: Bath Holding Corp.
c/o Prudential Capital Group
Four Xxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopy No. (000) 000-0000
With a copy (which
will not constitute
notice) to: Cravath, Swaine & Xxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx, Esq.
Telecopy No. (000) 000-0000
or to such other address or to the attention of such other
Person as the recipient party has specified by prior written
notice to the sending party.
13.12 No Third-Party Beneficiaries. This Agreement will
not confer any rights or remedies upon any Person other than
the parties hereto and their respective successors and
permitted assigns except as expressly provided in Section 10.
13.13 Entire Agreement. This Agreement (including the
Ancillary Agreements) constitutes the entire agreement among
the parties and supersedes any prior understandings,
agreements or representations by or among the parties, written
or oral, that may have related in any way to the subject
matter hereof.
13.14 Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to
express their mutual intent and no rule of strict construction
will be applied against any party. The use of the word
"including" in this Agreement means "including without
limitation" and is intended by the parties to be by way of
example rather than limitation.
13.15 Incorporation of Exhibits and Schedules. The
Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
13.16 Governing Law. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT
AND THE EXHIBITS AND SCHEDULES HERETO WILL BE GOVERNED BY THE
INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF
DELAWARE.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed and
deliver this Agreement on the date first written above.
GENERAL DYNAMICS CORPORATION
By /s/ Xxxxxxxx X. Xxxxxxxx
Xxxxxxxx X. Xxxxxxxx, Executive Vice President
BIW ACQUISITION CORP.
By /s/ Xxxxxxxx X. Xxxxxxxx
Xxxxxxxx X. Xxxxxxxx, President
BATH IRON WORKS CORPORATION
By /s/ Xxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxxxxxx, President and Chief
Executive Officer
BATH HOLDING CORP.
By /s/ Xxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxxxxxx, President and Chief
Executive Officer
