Exhibit (a)(5)(CC)
AGREEMENT AND PLAN OF MERGER
AMONG
NORTHROP GRUMMAN CORPORATION,
PURCHASER CORP. I
AND
NEWPORT NEWS SHIPBUILDING INC.
TABLE OF CONTENTS
Description Page
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ARTICLE 1 THE OFFER
Section 1.1 The Offer...................................................2
Section 1.2 Company Action..............................................5
Section 1.3 Directors...................................................6
Section 1.4 Merger Without Meeting of Stockholders......................7
ARTICLE 2 THE MERGER
Section 2.1 The Merger..................................................7
Section 2.2 The Closing.................................................7
Section 2.3 Effective Time..............................................8
Section 2.4 Effects of the Merger.......................................8
Section 2.5 Certificate of Incorporation and Bylaws.....................8
Section 2.6 Directors...................................................8
Section 2.7 Officers....................................................8
Section 2.8 Conversion of Company Common Stock..........................8
Section 2.9 Stock Options; Equity-Based Awards..........................9
Section 2.10 Conversion of the Purchaser Common Stock...................11
Section 2.11 Restructuring of the Merger................................11
ARTICLE 3 PAYMENT
Section 3.1 Surrender of Certificates..................................12
Section 3.2 Exchange Agent; Certificate Surrender Procedures...........12
Section 3.3 Transfer Books.............................................12
Section 3.4 Termination of Exchange Fund...............................13
Section 3.5 Appraisal Rights...........................................13
Section 3.6 Lost Certificates..........................................13
Section 3.7 No Rights as Stockholder...................................13
Section 3.8 Withholding................................................14
Section 3.9 Escheat....................................................14
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization...............................................14
Section 4.2 Authorization of Transaction; Enforceability...............15
Section 4.3 Noncontravention; Consents.................................15
Section 4.4 Capitalization.............................................16
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Section 4.5 Company Reports; Proxy Statement...........................17
Section 4.6 No Undisclosed Liabilities.................................18
Section 4.7 Absence of Material Adverse Effect and Certain Events......18
Section 4.8 Litigation and Legal Compliance............................19
Section 4.9 Contract Matters...........................................19
Section 4.10 Tax Matters................................................21
Section 4.11 Employee Benefit Matters...................................23
Section 4.12 Environmental Matters......................................26
Section 4.13 Title......................................................27
Section 4.14 Intellectual Property Matters..............................28
Section 4.15 Labor Matters..............................................28
Section 4.16 Rights Agreement...........................................29
Section 4.17 State Takeover Laws........................................29
Section 4.18 Brokers' Fees..............................................29
Section 4.19 Termination of General Dynamics Merger Agreement...........29
Section 4.20 Nuclear Risks..............................................29
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE PARENT AND
THE PURCHASER
Section 5.1 Organization...............................................30
Section 5.2 Authorization of Transaction; Enforceability...............30
Section 5.3 Noncontravention; Consents.................................31
Section 5.4 Capitalization.............................................31
Section 5.5 Parent Reports.............................................33
Section 5.6 No Undisclosed Liabilities.................................33
Section 5.7 Absence of Material Adverse Effect and Certain Events......33
Section 5.8 Litigation and Legal Compliance............................34
Section 5.9 Contract Matters...........................................34
Section 5.10 Tax Matters................................................36
Section 5.11 Employee Benefit Matters...................................37
Section 5.12 Environmental Matters......................................39
Section 5.13 Title......................................................39
Section 5.14 Intellectual Property Matters..............................40
Section 5.15 Labor Matters..............................................40
Section 5.16 Brokers' Fees..............................................40
Section 5.17 Adequate Cash Resources....................................40
Section 5.18 No Capital Ownership in the Company........................41
Section 5.19 Information for the Schedules TO and 14D-9, the Form S-4
and Proxy Statement........................................41
ARTICLE 6 COVENANTS
Section 6.1 General....................................................41
Section 6.2 Notices and Consents.......................................42
Section 6.3 Interim Conduct of the Company.............................42
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Section 6.4 Preservation of Organization...............................44
Section 6.5 Access.....................................................44
Section 6.6 Notice of Developments.....................................44
Section 6.7 Other Potential Acquirers..................................45
Section 6.8 Company Stockholder Meeting, Preparation of Proxy
Statement..................................................46
Section 6.9 Indemnification............................................47
Section 6.10 Public Announcements.......................................49
Section 6.11 Actions Regarding Antitakeover Statutes....................49
Section 6.12 Defense of Orders and Injunctions..........................49
Section 6.13 Employee Benefit Matters...................................49
Section 6.14 Adjustment to Offer Consideration..........................50
Section 6.15 Interim Conduct of the Parent..............................50
Section 6.16 Tax Treatment; Tax Opinion.................................52
Section 6.17 No Company Rights Agreement Amendment......................53
Section 6.18 Affiliate Letter...........................................53
Section 6.19 Letters of Accountants.....................................53
ARTICLE 7 CONDITIONS TO THE CONSUMMATION OF THE MERGER
Section 7.1 Conditions to the Obligations of Each Party................54
Section 7.2 Frustration of Closing Conditions..........................54
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination................................................54
Section 8.2 Effect of Termination......................................56
Section 8.3 Termination Fee............................................56
ARTICLE 9 MISCELLANEOUS
Section 9.1 Nonsurvival of Representations.............................58
Section 9.2 Remedies...................................................58
Section 9.3 Successors and Assigns.....................................58
Section 9.4 Amendment..................................................58
Section 9.5 Extension and Waiver.......................................58
Section 9.6 Severability...............................................58
Section 9.7 Counterparts...............................................58
Section 9.8 Descriptive Headings.......................................58
Section 9.9 Notices....................................................59
Section 9.10 No Third Party Beneficiaries...............................59
Section 9.11 Entire Agreement...........................................60
Section 9.12 Construction...............................................60
Section 9.13 Submission to Jurisdiction.................................60
Section 9.14 Governing Law..............................................60
ANNEX I CERTAIN CONDITIONS OF THE OFFER.....................A I-1
ANNEX II OFFER CONSIDERATION................................A II-1
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ANNEX III MERGER CONSIDERATION..............................A III-1
ANNEX IV CERTIFICATE OF INCORPORATION AND
BYLAWS OF THE SURVIVING CORPORATION................A IV-1
ANNEX V AFFILIATE AGREEMENT.................................A V-1
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TABLE OF DEFINED TERMS
Affiliate Agreement Section 6.18
Certificate Section 3.1
Certificate of Merger Section 2.3
Closing Section 2.2
Closing Date Section 2.2
Code Section 4.11(a)(i)
Company Preamble
Company Applicable Period Section 6.7(a)
Company Board Recitals
Company Common Stock Recitals
Company Disclosure Letter Article 4
Company Government Contract Section 4.9(b)
Company Government Sub-Contract Section 4.9(b)
Company Material Adverse Effect Section 4.1
Company Plans Section 4.11(a)
Company Rights Section 4.4(a)
Company Rights Agreement Section 4.4(a)
Company SEC Documents Section 4.5(a)
Company Stock-Based Award Section 2.9(a)(iii)
Company Stockholder Approval Section 6.8(d)
Company Stockholder Meeting Section 6.8(a)
Company Takeover Proposal Section 6.7(d)
Confidentiality Agreement Section 6.5
Consummation of the Offer Section 1.4
CSFB Opinion Section 4.2
Deemed Per Share Offer Consideration Section 2.9(b)
Delaware Act Section 1.4
Dissenting Stockholders Section 2.8(b)
Effective Time Section 2.3
Employees Section 6.13(a)
Employee Pension Benefit Plan Section 4.11(a)
Employee Welfare Benefit Plan Section 4.11(a)
Environmental Law Section 4.12(b)
ERISA Section 4.11(a)
ESPAP Section 6.13(e)
Exchange Act Section 1.1(b)
Exchange Agent Section 3.1
Exchange Fund Section 3.2(a)
Existing Offer Recitals
Existing Schedule 14D-9 Section 1.2(c)
Form S-4 Section 1.1(e)
Form S-3 Section 6.13(f)
General Dynamics Section 4.16(b)
General Dynamics Merger Agreement Section 4.19
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GAAP Section 4.5(b)
Governmental Entities Section 6.1
Hazardous Materials Section 4.12(c)
Indemnified Losses Section 6.9(a)
Indemnified Parties Section 6.9(a)
Independent Directors Section 1.3(a)
Initial Expiration Date Section 1.1(a)
Initial Tax Opinion Section 5.10(g)
Intellectual Property Section 4.14(b)
Joint Press Release Section 1.1(d)
Laws Section 1.2(a)
Lien Section 4.3
Merger Section 2.1
Merger Consideration Section 2.8(b)
Minimum Condition Section 1.1(a)
Multiemployer Plan Section 4.11(a)(vi)
OFCCP Section 4.15
Offer Recitals
Offer Documents Section 1.1(e)
Offer Consideration Section 1.1(a)
Offer to Exchange Recitals
Outside Date Section 8.1(b)(i)
Parent Preamble
Parent Board Section 5.2
Parent Common Stock Recitals
Parent Disclosure Letter Article 5
Parent Form S-3 Section 6.14(c)
Parent Government Contract Section 5.9(b)
Parent Government Sub-Contract Section 5.9(b)
Parent Material Adverse Effect Section 5.1
Parent Plans Section 5.11(a)
Parent Rights Section 5.4(a)
Parent Rights Agreement Section 5.4(a)
Parent Securities Section 5.4(a)
Parent SEC Documents Section 5.5(a)
Permitted Liens Section 4.13
Proxy Statement Section 6.8(b)
Purchaser Preamble
Qualified Person Section 1.3(a)
Schedule 14D-9 Section 1.2(c)
Schedule 14D-9 Amendment Section 1.2(c)
Schedule TO Section 1.1(e)
SEC Section 1.1(b)
SECT Section 2.8(a)
SECT Shares Section 6.13(f)
SECT Share Value Section 6.13(f)
Securities Act Section 4.5(a)
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Share Issuance Section 5.2
Significant Company Subsidiary Section 4.1
Significant Parent Subsidiaries Section 5.1
Stock Plans Section 2.9(a)(i)
Stock Option Section 2.9(a)(i)
Subsidiary Section 2.8(c)
Surviving Corporation Section 2.1
Synthetic Stock-Based Award Section 2.9(a)(ii)
Taxes Section 4.10(a)
Tax Returns Section 4.10(a)
Termination Fee Section 8.3(a)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of November 7, 2001 among Northrop
Grumman Corporation, a Delaware corporation (the "Parent"), Purchaser Corp. I, a
Delaware corporation and a wholly-owned subsidiary of the Parent (the
"Purchaser"), and Newport News Shipbuilding Inc., a Delaware corporation (the
"Company").
WHEREAS the Parent has outstanding an offer (the AExisting Offer", and, as
amended from time to time in accordance with this Agreement, the "Offer") to
purchase all the outstanding shares of common stock, par value $0.01 per share,
of the Company (the "Company Common Stock"), including the associated Company
Rights (as defined in Section 4.4(a)), on the terms and subject to the
conditions set forth in the offer to exchange dated May 23, 2001 (the "Offer to
Exchange"), and in the related letter of transmittal;
WHEREAS the board of directors of the Company (the "Company Board") has
approved the acquisition of the Company by the Parent and resolved and agreed to
recommend that holders of Company Common Stock tender their shares of Company
Common Stock pursuant to the Offer;
WHEREAS, in furtherance of such transaction, the respective Boards of
Directors of the Parent, the Purchaser and the Company have approved the merger
of the Purchaser with the Company on the terms and subject to the conditions set
forth in this Agreement, whereby each issued share of Company Common Stock not
owned directly by the Parent, the Purchaser or the Company (other than shares of
Company Common Stock held by Dissenting Stockholders (as defined in Section
2.8(b)) shall be converted into the right to receive shares of common stock, par
value $1.00 per share, of the Parent (the "Parent Common Stock") or cash or a
combination thereof in accordance with this Agreement; and
WHEREAS the Parent, the Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the mutual agreements contained herein
and for other good and valuable consideration, the value, receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
THE OFFER
Section 1.1 The Offer.
(a) As promptly as practicable following execution of this Agreement,
the Parent shall amend the Existing Offer: (i) to provide that the
consideration to be paid per share of Company Common Stock pursuant to the
Offer will be as calculated in accordance with Annex II hereto (the "Offer
Consideration"); (ii) to designate the Purchaser as the offeror and to set
November 29, 2001 (the "Initial Expiration Date"), as the expiration date
for the Offer; and (iii) otherwise to reflect the terms and conditions of
this Agreement. For purposes of this Agreement, the term "business day"
shall mean any day, other than Saturday, Sunday or a federal holiday, and
shall consist of the time period from 12:01 a.m. through 12:00 midnight
Eastern time. The obligation of the Purchaser to accept for payment and pay
for shares of Company Common Stock (including the related Company Rights)
tendered pursuant to the Offer shall be subject only to the condition that
there shall be validly tendered (other than by guaranteed delivery where
actual delivery has not occurred) in accordance with the terms of the
Offer, prior to the expiration date of the Offer and not withdrawn, a
number of shares of Company Common Stock that, together with the shares of
Company Common Stock then owned by the Parent and/or the Purchaser,
represents at least a majority of the shares of Company Common Stock
outstanding on a fully diluted basis (after giving effect to the conversion
or exercise of all outstanding options, warrants and other rights to
acquire, and securities exercisable or convertible into, Company Common
Stock, whether or not exercised or converted at the time of determination,
other than potential dilution attributable to the Company Rights) (the
"Minimum Condition") and to the satisfaction or waiver by the Purchaser as
permitted hereunder of the other conditions set forth in Annex I hereto.
Without limiting the foregoing, effective upon Consummation of the Offer
(as defined in Section 1.4), the holder of such Company Common Stock
(including the related Company Rights) will sell and assign to the
Purchaser all right, title and interest in and to all of the shares of
Company Common Stock tendered (including, but not limited to, such holder's
right to any and all dividends and distributions with a record date before,
and a payment date after, the scheduled or extended expiration date).
(b) The Purchaser expressly reserves the right, subject to compliance
with the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
to waive any of the conditions to the Offer and to make any change in the
terms of or conditions to the Offer; provided that (i) neither the Minimum
Condition nor any condition set forth in clause (c) of Annex I may be
waived or changed without the prior written consent of the Company, (ii) no
change may be made that reduces any of the Adjusted Cash Amount, the Base
Cash Amount or the Parent Available Shares or amends the Exchange Ratio,
each as defined in Annex II hereto, and (iii) and no change may be made
that decreases the number of shares of Company Common Stock sought in the
Offer, adds additional conditions to the Offer, modifies any of the
conditions to the Offer in a manner adverse to holders of Company Common
Stock, makes any other change in the terms of the Offer that is in any
manner adverse to the holders of the Company Common Stock or (except as
provided in the next sentence and in Section 1.1(c)) changes the expiration
date of the Offer, without the prior written consent of the Company.
Without the consent of the Company, the Purchaser shall have the right to
extend the expiration date of the Offer from time to time for one or more
additional periods of not more than 10 business days (5 business days if
only one or more of the Minimum Condition, the condition set forth in
clause (c)(i) of Annex I hereto or the condition set forth in clause
(c)(ii) of Annex I hereto
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remain to be satisfied) (or such longer period as may be approved by the
Company), (i) if, immediately before the scheduled or extended expiration
date of the Offer, any of the conditions to the Offer shall not have been
satisfied or, to the extent permitted, waived, until such conditions are
satisfied or waived or (ii) for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange
Commission or the staff thereof (the "SEC") applicable to the Offer or any
period required by applicable law. If the Purchaser elects to extend the
expiration date pursuant to the immediately preceding sentence when the
only Offer Condition that is not satisfied (or waived by the Purchaser) is
the Minimum Condition, to the extent requested in writing by the Company
(which request must be delivered on or before the expiration date), the
Purchaser and the Parent shall be deemed to have irrevocably waived all of
the Offer Conditions other than the Minimum Condition and the conditions
set forth in clause (c) of Annex I. In addition, if, at the scheduled or
extended expiration date of the Offer, conditions to the Offer have been
satisfied or waived and the Minimum Condition has been satisfied but
Company Common Stock tendered and not withdrawn pursuant to the Offer
constitutes less than 90 percent of the outstanding Company Common Stock,
without the consent of the Company, the Purchaser shall (subject to
applicable law) have the right to provide for a Asubsequent offering
period" (as contemplated by Rule 14d-11 under the Exchange Act) for up to
20 business days after the Purchaser's acceptance for payment of the shares
of Company Common Stock then tendered and not withdrawn pursuant to the
Offer.
(c) If any of the conditions to the Offer are not satisfied or waived
on any scheduled or extended expiration date of the Offer, the Purchaser
shall, and the Parent shall cause the Purchaser to, extend the Offer, if
such condition or conditions could reasonably be expected to be satisfied,
from time to time until such conditions are satisfied or waived; provided,
that the Purchaser shall not be required to extend the Offer beyond the
Outside Date. Subject to the foregoing and upon the terms and subject to
the conditions of the Offer, the Purchaser shall, and the Parent shall
cause it to, accept for payment and pay for, as promptly as practicable
after the expiration of the Offer and in accordance with Rule 14e-1(c) of
the SEC (or as required by Rule 14d-11 under the Exchange Act), all shares
of Company Common Stock validly tendered and not withdrawn pursuant to the
Offer.
(d) No later than the first business day following execution of this
Agreement and subject to the conditions of this Agreement, the Parent shall
issue a joint press release with the Company (the "Joint Press Release")
regarding this Agreement and shall file with the SEC the Joint Press
Release.
(e) As promptly as practicable after the date of this Agreement, the
Parent and the Purchaser shall amend the Tender Offer Statement on Schedule
TO, as previously amended prior to the date hereof, and the registration
statement on Form S-4 (No. 333-61056), as previously amended prior to the
date hereof, with respect to the Existing Offer that were originally filed
on May 23, 2001, and file such amendments with the SEC. Such amendments
shall contain an amendment of the Offer to Exchange and a revised form of
the letter of transmittal (which letter of transmittal will be in a form
reasonably satisfactory to the Company) to set forth the terms of the
Offer. The Tender Offer Statement on Schedule TO and the Registration
Statement on Form S-4, as so amended
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and as otherwise amended and supplemented from time to time after the date
hereof are referred to as the "Schedule TO" and the "Form S-4",
respectively. The Parent and the Purchaser shall use their reasonable best
efforts to cause the Form S-4 to be declared effective by the SEC as
promptly as practicable. The Schedule TO, the Form S-4 and the documents
included therein pursuant to which the Offer is being made, together with
any supplements or amendments thereto, are referred to as the "Offer
Documents". The Parent and the Purchaser will take all steps necessary to
cause the Offer Documents to be disseminated to holders of shares of
Company Common Stock to the extent required by applicable federal
securities law. The Parent, the Purchaser and the Company will promptly
correct any information provided by it for use in the Offer Documents if
and to the extent that such information shall have become false or
misleading in any material respect. The Parent and the Purchaser will take
all steps necessary to cause the Schedule TO and the Form S-4 as so
corrected to be filed with the SEC and the Offer Documents as so corrected
to be disseminated to holders of shares of Company Common Stock, in each
case as and to the extent required by applicable federal securities law,
including applicable SEC rules and regulations thereunder. The Company and
its counsel shall be given a reasonable opportunity to review and comment
on all amendments or supplements to the Schedule TO, the Form S-4 and the
Offer Documents prior to their being filed with the SEC or disseminated to
the holders of shares of Company Common Stock. The Purchaser and the Parent
also agree to provide the Company and its counsel in writing with any
comments the Purchaser, the Parent or their counsel may receive from the
SEC or its staff with respect to the Schedule TO, the Form S-4 or the Offer
Documents promptly after the receipt of such comments and shall consult
with and provide the Company and its counsel a reasonable opportunity to
review and comment on the response of the Purchaser to such comments prior
to responding.
(f) For purposes of all dividends or other distributions declared on
Parent Common Stock with a record date following the Consummation of the
Offer (as defined in Section 1.4), each holder of shares of Company Common
Stock validly tendered pursuant to the Offer shall be deemed to be the
holder of all shares of Parent Common Stock issuable to such holder as
Offer Consideration effective at the Consummation of the Offer.
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Section 1.2 Company Action.
(a) The Company hereby approves of and consents to the Offer. The
Company has been advised that all of its directors and executive officers
who own shares of Company Common Stock intend to tender their shares of
Company Common Stock pursuant to the Offer so long as such action would not
result in liability under Section 16(b) of the Exchange Act. In connection
with the Offer, the Company will, or will cause its transfer agent to,
promptly furnish the Parent with a list of its stockholders, mailing labels
and any available listing or computer file containing the names and
addresses of all record holders of shares of Company Common Stock and lists
in the Company's possession or control of securities positions of shares of
Company Common Stock held in stock depositories, in each case as of a
recent date, and will provide to the Parent such additional information
(including updated lists of stockholders, mailing labels and lists of
securities positions) and such other assistance as the Parent may
reasonably request in connection with the Offer. Subject to the
requirements of applicable statutes, laws (including common law),
ordinances, rules or regulations (collectively, "Laws"), and, except for
such steps as are necessary to disseminate the Schedule TO and the Offer
Documents and any other documents necessary to consummate the Offer and the
transactions contemplated by this Agreement, the Parent and the Purchaser
shall hold in confidence the information contained in any such labels,
listings and files, shall use such information only in connection with the
Offer and the Merger, and, if this Agreement shall be terminated, shall,
upon request, deliver to the Company all copies of such information then in
their possession.
(b) No later than the first business day following execution of this
Agreement, and subject to the conditions of this Agreement, the Company
will issue the Joint Press Release with the Parent and shall file with the
SEC the Joint Press Release.
(c) On the date the amendment to the Schedule TO is filed with the SEC
pursuant to Section 1.1(e), the Company will file with the SEC an amendment
(the "Schedule 14D-9 Amendment") to its Solicitation/Recommendation
Statement on Schedule 14D-9 originally filed on June 6, 2001 with respect
to the Offer (such Schedule 14D-9, as amended from time to time on or prior
to the date hereof, the "Existing Schedule 14D-9"), and will mail the
Schedule 14D-9 Amendment to the holders of Company Common Stock. The
Existing Schedule 14D-9, as amended by the Schedule 14D-9 Amendment and as
amended and supplemented from time to time after the date hereof is
referred to as the "Schedule 14D-9". Each of the Company, the Parent and
the Purchaser will promptly correct any information provided by it for use
in the Schedule 14D-9 if and to the extent that such information shall have
become false or misleading in any material respect, and the Company will
take all steps necessary to amend or supplement the Schedule 14D-9 and to
cause the Schedule 14D-9 as so amended or supplemented to be filed with the
SEC and to be disseminated to holders of shares of Company Common Stock, in
each case as and to the extent required by applicable federal securities
law. The Parent and its counsel shall be given a reasonable opportunity to
review and comment on all amendments and supplements to the Schedule 14D-9
prior to its being filed with the SEC or disseminated to holders of Company
Common Stock. The Company also agrees to provide the Parent and its
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counsel in writing with any comments the Company or its counsel may receive
from the SEC with respect to the Schedule 14D-9 promptly after the receipt
of such comments and shall consult with and provide the Parent and its
counsel a reasonable opportunity to review and comment on the response of
the Company to such comments prior to responding.
Section 1.3 Directors.
(a) Promptly upon the Consummation of the Offer, and as long as the
Parent directly or indirectly owns, not less than a majority of the issued
and outstanding shares of Company Common Stock on a fully diluted basis by
the Parent or any of its direct or indirect Subsidiaries pursuant to the
Offer, the Parent shall be entitled to designate for appointment or
election to the then existing Company Board, upon written notice to the
Company, such number of directors, rounded up to the next whole number, on
the Company Board such that the percentage of its designees on the Company
Board shall equal the percentage of the outstanding shares of Company
Common Stock owned of record by the Parent and its direct or indirect
Subsidiaries. In furtherance thereof, the Company shall, upon request of
the Purchaser, use its reasonable efforts promptly to cause the Parent's
designees (and any replacement designees in the event that any designee
shall no longer be on the Company Board) to be so elected to the Company
Board, and in furtherance thereof, to the extent necessary, increase the
size of the Company Board or use its reasonable efforts to obtain the
resignation of such number of its current directors as is necessary to give
effect to the foregoing provision. At such time, the Company shall also,
upon the request of the Purchaser, use its reasonable efforts to cause the
Persons designated by the Parent to constitute at least the same percentage
(rounded up to the next whole number) as is on the Company Board of (i)
each committee of the Company Board, (ii) each board of directors (or
similar body) of each Subsidiary of the Company and (iii) each committee
(or similar body) of each such board. Notwithstanding the foregoing, until
the Effective Time, the Company Board shall have at least two directors who
are directors of the Company on the date of this Agreement and who are not
officers of the Company or any of its Subsidiaries (the "Independent
Directors"); provided, however, that (x) notwithstanding the foregoing, in
no event shall the requirement to have at least two Independent Directors
result in the Parent's designees constituting less than a majority of the
Company Board unless the Parent shall have failed to designate a sufficient
number of Persons to constitute at least a majority and (y) if the number
of Independent Directors shall be reduced below two for any reason
whatsoever (or if immediately following Consummation of the Offer there are
not at least two then-existing directors of the Company who (1) are
Qualified Persons (as defined below) and (2) are willing to serve as
Independent Directors), then the number of Independent Directors required
hereunder shall be one, unless the remaining Independent Director is able
to identify a person, who is not an officer or Affiliate of the Company,
the Parent or any of their respective Subsidiaries (any such person being
referred to herein as a "Qualified Person"), willing to serve as an
Independent Director, in which case such remaining Independent Director
shall be entitled to designate any such Qualified Person or Persons to fill
such vacancy, and such designated Qualified Person shall be deemed to be an
Independent Director for purposes of this Agreement, or if no Independent
Directors then remain, the other Directors shall be required to designate
two Qualified Persons to fill such vacancies, and such persons shall be
deemed to be Independent Directors for purposes of this Agreement.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in
order to fulfill its obligations under Section 1.3(a), including mailing to
stockholders the information required by such Section 14(f) and Rule 14f-1
(which the Company shall mail together with the Schedule 14D-9 if it
receives from the Parent and the Purchaser the
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information below on a basis timely to permit such mailing) as is necessary
to fulfill the Company's obligations under Section 1.3(a). The Company's
obligations to appoint the Parent's designees to the Company Board shall be
subject to compliance with Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. The Parent or the Purchaser shall supply the
Company in writing any information with respect to either of them and their
nominees, officers, directors and Affiliates required by such Section 14(f)
and Rule 14f-1 as is necessary in connection with the appointment of any of
the Parent's designees under Section 1.3(a). The provisions of Section
1.3(a) are in addition to and shall not limit any rights that the
Purchaser, the Parent or any of their Affiliates may have as a holder or
beneficial owner of shares of Company Common Stock as a matter of law with
respect to the election of directors or otherwise.
(c) Following the election or appointment of the Parent's designees
pursuant to Section 1.3(a), the approval by affirmative vote or written
consent of all of the Independent Directors then in office (or, if there
shall be only one Independent Director then in office, the Independent
Director) shall be required to authorize (and such authorization shall
constitute the authorization of the Company Board and no other action on
the part of the Company, including any action by any committee thereof or
any other director of the Company, shall, unless otherwise required by law,
be required or permitted to authorize) (i) any amendment or termination of
this Agreement by the Company, (ii) any extension of time for performance
of any obligation or action hereunder by the Parent or the Purchaser or
(iii) any waiver or exercise of any of the Company's rights under this
Agreement.
Section 1.4 Merger Without Meeting of Stockholders. If following
first acceptance for payment of shares of Company Common Stock by the Purchaser
pursuant to the Offer (the "Consummation of the Offer") (or any subsequent
offering period), the Purchaser owns at least 90 percent of the outstanding
shares of Company Common Stock, each of the parties hereto shall take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after such acquisition, without the Company Stockholder Meeting,
in accordance with Section 253 of the Delaware General Corporation Law (the
"Delaware Act").
ARTICLE 2
THE MERGER
Section 2.1 The Merger. Subject to Section 2.11, upon the terms and subject
to the conditions set forth in this Agreement, at the Effective Time (as defined
in Section 2.3) the Company will be merged (the "Merger") with and into the
Purchaser in accordance with the provisions of the Delaware Act. Following the
Merger, the Purchaser will continue as the surviving corporation (the "Surviving
Corporation") and the separate corporate existence of the Company will cease.
Section 2.2 The Closing. Upon the terms and subject to the conditions set
forth in this Agreement, the consummation of the Merger and the other
transactions contemplated by this Agreement (the "Closing") will take place at
the offices of Fried, Frank, Harris, Xxxxxxx &
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Xxxxxxxx, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., local
time, no later than the third business day following the satisfaction or waiver,
to the extent permitted by applicable Laws, of the conditions set forth in
Article 7 (other than those conditions that by their nature are to be satisfied
at the Closing, but subject to the satisfaction or, where permitted, waiver of
those conditions), or at such other date, time or place as the Parent and the
Company may agree. The date upon which the Closing occurs is referred to in this
Agreement as the "Closing Date."
Section 2.3 Effective Time. Upon the terms and subject to the conditions of
this Agreement, on the date of the Closing (or on such other date as the Parent
and the Company may agree), the Parent, the Purchaser and the Company shall file
with the Secretary of State of the State of Delaware a certificate of merger (or
certificate of ownership and merger, as the case may be) (the "Certificate of
Merger") executed and acknowledged in accordance with Section 251 (or Section
253, as the case may be) of the Delaware Act, and shall make all other filings
or recordings required under the Delaware Act. The Merger (whether effected
pursuant to Section 251 or Section 253 of the Delaware Act) shall become
effective on the later of the date on which the Certificate of Merger has been
duly filed with the Secretary of State of the State of Delaware or such time as
is agreed upon by the parties and specified in the Certificate of Merger, and
such time is hereinafter referred to as the "Effective Time."
Section 2.4 Effects of the Merger. From and after the Effective Time, the
Merger shall have the effects set forth in this Agreement and Section 259 of the
Delaware Act. Without limiting the generality of the foregoing, as of the
Effective Time, all properties, rights, privileges, powers and franchises of the
Company and the Purchaser will vest in the Surviving Corporation and all debts,
liabilities and duties of the Company and the Purchaser will become debts,
liabilities and duties of the Surviving Corporation.
Section 2.5 Certificate of Incorporation and Bylaws. At the Effective Time,
the certificate of incorporation and bylaws attached as Annex IV hereto will be
the certificate of incorporation and bylaws of the Surviving Corporation, until
amended by the Surviving Corporation pursuant to the Delaware Act and subject to
the provisions of Section 6.9(e).
Section 2.6 Directors. The directors of the Purchaser at the Effective Time
will be the initial directors of the Surviving Corporation and will hold office
from the Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the certificate of
incorporation and bylaws of the Surviving Corporation or as otherwise provided
by law.
Section 2.7 Officers. The officers of the Company at the Effective Time
will be the initial officers of the Surviving Corporation and will hold office
from the Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the certificate of
incorporation and bylaws of the Surviving Corporation or as otherwise provided
by law.
Section 2.8 Conversion of Company Common Stock. As of the Effective Time,
by virtue of the Merger and without any action on the part of the holders of any
shares of Company Common Stock or any shares of capital stock of the Purchaser:
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(a) All shares of Company Common Stock that are owned by the Company,
the Purchaser or the Parent immediately prior to the Effective Time shall
be cancelled and shall cease to exist and no consideration shall be
delivered in exchange therefor; provided that shares of Company Common
Stock held beneficially or of record by any Stock Plan (as defined in
Section 2.9(a)(i)) or Company Plan (as defined in Section 4.11(a)) or in
accordance with the provisions of the Company's Amended and Restated Stock
Employee Compensation Trust Agreement dated as of August 1, 2000 among the
Company and Wachovia Bank, N.A. (the "SECT") shall not be deemed to be held
by the Company regardless of whether the Company has, directly or
indirectly, the power to vote or control the disposition of such shares.
(b) Each share of Company Common Stock (other than shares to be
cancelled in accordance with Section 2.8(a) and any shares that are held by
stockholders exercising appraisal rights pursuant to Section 262 of the
Delaware Act ("Dissenting Stockholders")) issued and outstanding
immediately prior to the Effective Time, including any shares of Company
Common Stock held beneficially or of record by any Stock Plan or Company
Plan or in accordance with the provisions of the SECT, shall be converted
into the right to receive the consideration described in Annex III hereto,
payable to the holder thereof, without interest (the "Merger
Consideration"), upon surrender of the Certificate (as defined in Section
3.1) formerly representing such share in the manner provided in Section
3.2. All such shares, when so converted, shall no longer be outstanding and
shall automatically be cancelled and shall cease to exist, and each holder
of a Certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such Certificate in accordance
with Section 3.2, without interest.
(c) The term "Subsidiary" as used in this Agreement means any
corporation, partnership, limited liability company or other business
entity 50 percent or more of the outstanding voting equity securities of
which are owned, directly or indirectly, by the Company or the Parent, as
applicable.
Section 2.9 Stock Options; Equity-Based Awards.
(a) As soon as practicable following the date of this Agreement, the
Company Board (or, if appropriate, any committee administering the Stock
Plans) shall adopt such resolutions or take such other actions (if any) as
may be required to effect the following:
(i) Each option to purchase shares of Company Common Stock (a
"Stock Option") granted under any stock option plan, program,
agreement or arrangement of the Company or any of its Subsidiaries
(collectively, the "Stock Plans;" for the avoidance of doubt, the term
"Stock Plan" does not include the Company's Deferred Compensation Plan
or Deferred Compensation Plan for Nonemployee Directors (collectively,
the "Deferred Compensation Plans")) which is outstanding and
unexercised immediately prior to the acceptance for payment of shares
of Company Common Stock pursuant to the Offer, whether vested or
unvested, shall be adjusted to provide that each such Stock Option
shall be then cancelled, and, in consideration of such cancellation,
the holder of each such
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Stock Option shall become entitled to receive a payment in cash from
the Company in an amount equal to the product of (x) the excess, if
any, of the Deemed Per Share Offer Consideration over the exercise
price per share of Company Common Stock subject to such Stock Option
and (y) the number of shares of Company Common Stock subject to such
Stock Option. This Section 2.9(a)(i) will not apply to the ESPAP (as
defined in Section 6.13(e)) and the rights thereunder, which shall be
terminated in the manner set forth in Section 6.13(e).
(ii) Each right of any kind, whether vested or unvested,
contingent or accrued, to receive shares of Company Common Stock or
benefits measured by the value of a number of shares of Company Common
Stock (including performance share awards), except for Stock Options
(each, a "Synthetic Stock-Based Award"), which is outstanding
immediately prior to the acceptance for payment of shares of Company
Common Stock pursuant to the Offer, shall be adjusted to provide that
each such Synthetic Stock-Based Award shall be then cancelled, and, in
consideration of such cancellation, the holder of each such Synthetic
Stock-Based Award shall become entitled to receive a payment in cash
from the Company in an amount equal to the product of (x) the Deemed
Per Share Offer Consideration and (y) the number of shares of Company
Common Stock subject to such Synthetic Stock-Based Award (assuming the
maximum level of possible payout, if applicable); provided, however,
that no such payment shall be made to such holder with respect to any
Synthetic Stock-Based Award in respect of which the holder thereof has
elected to defer payment to a deferred compensation account under the
Deferred Compensation Plans, and, in lieu thereof, such account shall
be credited with a fully vested amount of cash equal to such payment.
(iii) Each award of any kind, whether vested or unvested,
consisting of shares of Company Common Stock issued under the Stock
Plans (including, without limitation, restricted stock) (each, a
"Company Stock-Based Award") outstanding immediately prior to the
acceptance for payment of shares of Company Common Stock pursuant to
the Offer which is not then vested shall be adjusted to provide that
each such Company Stock-Based Award shall then fully vest and each
holder thereof shall be permitted to tender such Company-Stock Based
Award pursuant to the Offer on a guaranteed delivery of shares basis
and to make all elections available to holders of Company Common Stock
tendered pursuant to the Offer and shall be subject to the same
proration limitations as are holders of Company Common Stock tendered
pursuant to the Offer._ Upon acceptance of the Offer, the holder of
each Company Stock-Based Award shall be entitled to receive, pursuant
to the Offer, in cash and/or Parent Common Stock, as applicable, the
product of the Offer Consideration and the number of shares of Company
Common Stock subject to such Company Stock-Based Award.
(iv) Any cash payments required to be made pursuant to Section
2.9(a)(i) or 2.9(a)(ii) are to be made (subject to applicable
withholding and payroll taxes) by the Company as promptly as
practicable following the Consummation of the Offer. The Purchaser and
the Company shall cooperate to determine the
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amount of any withholding and payroll taxes payable by the holders of
Company Stock-Based Awards in connection with the transactions
contemplated by Sections 2.9(a)(iii), and the Purchaser shall withhold
such amounts and shall remit such withholdings to the Company for the
payment of such taxes.
(b) For purposes of this Agreement, "Deemed Per Share Offer
Consideration" shall mean the amount, expressed in U.S. dollars, determined
by dividing (i) the sum of (A) the product of (x) the Parent Stock Value
(as defined in Annex II hereto) and (y) the total number of shares of
Parent Common Stock issued in the Offer and (B) the total cash amount paid
in the Offer, by (ii) the total number of shares of Company Common Stock
accepted for payment pursuant to the Offer.
(c) Except to the extent permitted by Section 6.3, no additional Stock
Options, Synthetic Stock-Based Awards, Company Stock-Based Awards or other
equity-based awards or other rights to acquire Company Common Stock shall
be granted pursuant to the Stock Plans or otherwise after the date of this
Agreement.
(d) The Company Board, or the applicable committee thereof, will grant
all approvals and take all other actions required pursuant to Rules 16b-3
under the Exchange Act to cause the disposition pursuant to this Agreement
of Company Common Stock, Synthetic Stock-Based Awards and Stock Options to
be exempt from the provisions of Section 16(b) of the Exchange Act, if any
such exemption is available.
Section 2.10 Conversion of the Purchaser Common Stock. Each share of the
common stock, par value $0.01 per share, of the Purchaser issued and outstanding
immediately prior to the Effective Time will, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into one
share of the Common Stock, par value $0.01 per share, of the Surviving
Corporation.
Section 2.11 Restructuring of the Merger. Notwithstanding Section 2.1, in
the event that the opinion of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx referred
to in Section 6.16(b) is not obtained as described therein, then upon the terms
and subject to the conditions set forth in this Agreement at the Effective Time
the Purchaser will be merged with and into the Company in accordance with the
provisions of the Delaware Act. Following such merger, the Company will continue
as the surviving corporation and the separate corporate existence of the
Purchaser will cease. In such event, the term the "Merger" shall be deemed to
refer to such merger and the term the "Surviving Corporation" shall be deemed to
refer to such surviving corporation, in each case for all purposes hereunder.
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ARTICLE 3
PAYMENT
Section 3.1 Surrender of Certificates. From and after the Effective Time,
each holder of a certificate that immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (a "Certificate") will be
entitled to receive in exchange therefor, upon surrender thereof to an exchange
agent (the "Exchange Agent") to be designated by the Parent prior to the
Effective Time with approval of the Company, which approval shall not be
unreasonably withheld, the Merger Consideration in accordance with the
provisions of Article 2 and this Article 3. No interest will be payable on the
Merger Consideration to be paid to any holder of a Certificate irrespective of
the time at which such Certificate is surrendered for exchange.
Section 3.2 Exchange Agent; Certificate Surrender Procedures.
(a) As soon as reasonably practicable following the Effective Time,
the Parent will deposit, or cause to be deposited, with the Exchange Agent,
(i) certificates representing shares of Parent Common Stock and (ii) an
amount in cash, sufficient to provide all shares of Parent Common Stock and
funds necessary for the Exchange Agent to make payment of the Merger
Consideration pursuant to Section 2.8 (the "Exchange Fund"). Pending
payment of such cash to the holders of Certificates for shares of Company
Common Stock, such cash will be held and may be invested by the Exchange
Agent as the Parent directs (so long as such directions do not impair the
rights of holders of Company Common Stock) in the direct obligations of the
United States, obligations for which the full faith and credit of the
United States is pledged to provide for the payment of principal and
interest or commercial paper rated of the highest quality by Xxxxx'x
Investors Services, Inc. or Standard & Poor's Corporation. Any net profit
resulting from, or interest or income produced by, such investments will be
payable to the Surviving Corporation or the Parent, as the Parent directs.
The Parent will promptly replace any monies lost through any investment
made pursuant to this Section 3.2(a).
(b) As soon as reasonably practicable after the Effective Time, the
Parent will instruct the Exchange Agent to mail to each record holder of a
Certificate (i) a letter of transmittal (which will specify that delivery
will be effected, and risk of loss and title to such Certificates will
pass, only upon delivery of the Certificate to the Exchange Agent, will
contain provisions to allow stockholders to exercise their election rights
if the last sentence of Section 5(g) of Annex III hereto is applicable,
will be in such form and have such other provisions as the Parent will
reasonably specify and will be in a form reasonably satisfactory to the
Company) and (ii) instructions for use in effecting the surrender of
Certificates for the Merger Consideration. Commencing immediately after the
Effective Time, upon the surrender to the Exchange Agent of such
Certificate or Certificates, together with a duly executed and completed
letter of transmittal and all other documents and other materials required
by the Exchange Agent to be delivered in connection therewith, the holder
will be entitled to receive the Merger Consideration in accordance with the
provisions of Section 2.8.
Section 3.3 Transfer Books. The stock transfer books of the Company will be
closed at the Effective Time and no transfer of any shares of Company Common
Stock outstanding immediately prior to the Effective Time will thereafter be
recorded on any of the stock transfer books. In the event of a transfer of
ownership of any Company Common Stock prior to the
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Effective Time that is not registered in the stock transfer records of the
Company at the Effective Time, the Merger Consideration will be paid to the
transferee in accordance with the provisions of Section 3.2(b) only if the
Certificate is surrendered as provided in Section 3.2 and accompanied by all
documents required to evidence and effect such transfer and by evidence of
payment of any applicable stock transfer taxes.
Section 3.4 Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed one hundred eighty (180) days after the Effective
Time will be delivered to the Parent upon demand, and each holder of Company
Common Stock who has not theretofore surrendered Certificates in accordance with
the provisions of this Article 3 will thereafter look only to the Parent for
satisfaction of such holder's claims for the Merger Consideration.
Section 3.5 Appraisal Rights. Notwithstanding anything in this Agreement to
the contrary, if any Dissenting Stockholder is entitled to appraisal rights
under Section 262 of the Delaware Act and shall demand to be paid the fair cash
value of such holder's shares of Company Common Stock, as provided in Section
262 of the Delaware Act, such shares shall not be converted into or be
exchangeable for the right to receive the Merger Consideration except as
provided in this Section 3.5, and the Company shall give the Parent notice of
any demand for appraisal rights under Section 262 of the Delaware Act received
by the Company, and the Parent shall have the right to participate in all
negotiations and proceedings with respect to any such demands. Neither the
Company nor the Surviving Corporation shall, except with the prior written
consent of the Parent, voluntarily make any payment with respect to, or settle
or offer to settle, any such demand for payment. If any Dissenting Stockholder
shall fail to perfect or shall have effectively withdrawn or lost the right to
an appraisal under Section 262 of the Delaware Act, the shares of Company Common
Stock held by such Dissenting Stockholder shall thereupon be treated as though
such shares had been converted into the right to receive the Merger
Consideration at the Effective Time pursuant to Section 2.8.
Section 3.6 Lost Certificates. If any Certificate has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the Parent,
the posting by such person of a bond in such reasonable amount as the Parent may
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will deliver in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration pursuant to Section
2.8.
Section 3.7 No Rights as Stockholder.
(a) From and after the Effective Time, the holders of Certificates
will cease to have any rights as a stockholder of the Surviving Corporation
except as otherwise provided in this Agreement or by applicable law, and
the Parent will be entitled to treat each Certificate that has not yet been
surrendered for exchange solely as evidence of the right to receive the
Merger Consideration in accordance with the provisions of Article 2 hereof
and this Article 3, provided, however, that each holder of a Certificate
that has become entitled to any declared and unpaid dividend will continue
to be entitled to such dividend following the Effective Time, and the
Surviving Corporation will pay such dividend to such holder in the amount
and on the date specified therefor by the Company Board at the time of
declaration thereof.
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(b) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions declared after the Effective Time on
Parent Common Stock shall be paid in respect of any Company Common Stock
formerly represented by a Certificate until such Certificate is surrendered
for exchange as provided herein. Following surrender of any such
Certificate, there shall be paid to the holder of the certificates
representing whole Parent Common Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore
payable with respect to such whole Parent Common Stock and not paid, less
the amount of any withholding taxes which may be required thereon, and (ii)
at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect
to such whole Parent Common Stock, less the amount of any withholding taxes
which may be required thereon.
Section 3.8 Withholding. The Parent will be entitled to deduct and withhold
from the Merger Consideration otherwise payable to any former holder of Company
Common Stock all amounts relating to federal and state income and payroll taxes
required by law to be deducted or withheld therefrom.
Section 3.9 Escheat. Neither the Parent, the Purchaser nor the Company will
be liable to any former holder of Company Common Stock for any portion of the
Merger Consideration delivered to any public official pursuant to any applicable
abandoned property, escheat or similar law. In the event any Certificate has not
been surrendered for the Merger Consideration prior to the sixth anniversary of
the Closing Date, or prior to such earlier date as of which such Certificate or
the Merger Consideration payable upon the surrender thereof would otherwise
escheat to or become the property of any governmental entity, then the Merger
Consideration otherwise payable upon the surrender of such Certificate will, to
the extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all rights, interests and adverse claims of any
person.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Parent and the Purchaser that
except as disclosed in the reports, schedules, forms, statements and other
documents filed by the Company with the SEC since December 31, 1999, and
publicly available prior to the date of this Agreement or as disclosed in the
letter dated as of the date of this Agreement from the Company to the Parent
(the "Company Disclosure Letter"):
Section 4.1 Organization. The Company and each of its Subsidiaries is (a) a
corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation, (b) has all requisite power and authority to
own, lease and operate its properties and to carry on its business as presently
being conducted, and (c) is in good standing under the laws of the jurisdiction
of its incorporation and is duly qualified to conduct business as a foreign
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corporation in each other jurisdiction where such qualification is required,
except, in the case of clauses (a) (as it relates to the Subsidiaries), (b) and
(c) above, where such failure, individually or in the aggregate, is not
reasonably likely to have a material adverse effect on the business, financial
condition, operations or results of operations of the Company and its
Subsidiaries taken as a whole (other than changes or effects relating to the
economy in general, the securities markets in general or the shipbuilding or
defense industries in general and not specifically relating to the Company) or
the ability of the Company to consummate the Merger and to perform its
obligations under this Agreement (a "Company Material Adverse Effect"). The
Company has delivered to the Parent correct and complete copies of its
certificate of incorporation and bylaws, as presently in effect, and, upon
request, will make available to the Parent after the date of this Agreement
correct and complete copies of the charters and bylaws, as presently in effect,
of each of its "significant subsidiaries", as such term is defined in Regulation
S-X of the Exchange Act (the "Significant Company Subsidiaries").
Section 4.2 Authorization of Transaction; Enforceability. The Company has
full corporate power and authority and has taken all requisite corporate action
to enable it to execute and deliver this Agreement, to consummate the Merger and
the other transactions contemplated hereby and to perform its obligations
hereunder, other than obtaining the Company Stockholder Approval (as defined in
Section 6.8(d)), if necessary, and the filing of the Certificate of Merger. The
Company Board, at a meeting thereof duly called and held, has (i) unanimously
determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, taken together, are advisable and fair to
and in the best interests of the Company and its stockholders; (ii) unanimously
approved this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, in all respects; and (iii) unanimously resolved to
recommend that the stockholders of the Company accept the Offer, tender their
shares of Company Common Stock thereunder to the Purchaser and adopt this
Agreement. In addition, the Company consents to the inclusion of such
recommendation and approval in the Offer Documents. In connection with its
adoption of the foregoing resolutions, the Company Board received the opinion
(the "CSFB Opinion") of Credit Suisse First Boston Corporation, financial
advisor to the Company Board, to the effect that, as of the date of such
opinion, the Offer Consideration and the Merger Consideration are fair to the
holders of shares of Company Common Stock (other than the Parent and its
affiliates), from a financial point of view. The Company will deliver to the
Parent a correct and complete copy of such CSFB Opinion, promptly following
receipt thereof. Assuming due execution and authorization by the Parent and the
Purchaser, this Agreement constitutes the valid and legally binding obligation
of the Company, enforceable against the Company in accordance with its terms and
conditions, except as enforceability may be limited by applicable bankruptcy,
insolvency or other similar Laws affecting the enforcement of creditors' rights
generally and by general principals of equity relating to enforceability.
Section 4.3 Noncontravention; Consents. Except for (a) filings and
approvals necessary to comply with the applicable requirements of the Exchange
Act and the "blue sky" laws and regulations of various states, (b) the filing of
the Certificate of Merger pursuant to the Delaware Act and any applicable
documents with the relevant authorities of other jurisdictions in which the
Company or any of its Subsidiaries is qualified to do business and (c) any
filings required under the rules and regulations of the New York Stock Exchange,
neither the execution and delivery of this Agreement by the Company, nor the
consummation by the Company of the
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transactions contemplated hereby, will constitute a violation of, be in conflict
with, constitute or create (with or without notice or lapse of time or both) a
default under, give rise to any right of termination, cancellation, amendment or
acceleration with respect to, or result in the creation or imposition of any
lien, encumbrance, security interest or other claim (a "Lien") upon any property
of the Company or any of its Subsidiaries pursuant to (i) the certificate of
incorporation or bylaws of the Company or any of its Subsidiaries, (ii) any law,
rule, regulation, permit, order, writ, injunction, judgment or decree to which
the Company or any of its Subsidiaries is subject or (iii) any agreement or
commitment to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is subject, except, in the case of
clauses (ii) and (iii) above, for such matters which, individually or in the
aggregate, are not reasonably likely to have a Company Material Adverse Effect
and for such matters arising as a result of the Company not being the Surviving
Corporation in the Merger.
Section 4.4 Capitalization.
(a) As of the date of this Agreement, the authorized capital stock of
the Company consists of 70 million shares of Company Common Stock, par
value $0.01 per share, and 10 million shares of Preferred Stock, par value
$0.01 per share, of which 400,000 shares have been designated as Series A
Participating Cumulative Preferred Stock, par value $0.01 per share, none
of which shares of preferred stock have been issued. As of the close of
business on November 1, 2001, (i) 35,397,728 shares of Company Common Stock
were issued and outstanding, (ii) 31,176 shares of Company Common Stock
were subject to restricted stock grants, (iii) 2,239 shares were held by
the Company as treasury shares, (iv) 22,090,000 shares were reserved for
issuance pursuant to the Stock Plans, and (v) 400,000 shares of Company
Series A Participating Cumulative Preferred Stock were reserved for
issuance in connection with the rights (the "Company Rights") issued
pursuant to the Rights Agreement dated as of June 10, 1998 (as amended from
time to time) (the "Company Rights Agreement") between the Company and
First Chicago Trust Company of New York, as Rights Agent. All of the issued
and outstanding shares of capital stock of the Company have been duly
authorized and are validly issued, fully paid and nonassessable.
(b) Other than (i) Stock Options to acquire an aggregate of not more
than 2,359,496 shares of Company Common Stock granted by the Company to
current and former directors, officers, employees and advisors of the
Company and its Subsidiaries, and (ii) the Company Rights, as of the date
of this Agreement, there are no outstanding or authorized options,
warrants, subscription rights, conversion rights, exchange rights or other
contracts or commitments that could require the Company or any Significant
Company Subsidiary to issue, sell or otherwise cause to become outstanding
any of its capital stock. There are no outstanding stock appreciation,
phantom stock, profit participation, dividend equivalent rights or similar
rights with respect to the Company or any Significant Company Subsidiary.
The Company Disclosure Letter sets forth the aggregate number of
outstanding Stock Options and the aggregate number of Company Stock-Based
Awards and the average weighted exercise price of the Stock Options and the
average weighted base price of the Company Stock-Based Awards.
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(c) As of November 1, 2001, the trust under the SECT is the owner of
5,797,553 shares of Company Common Stock.
(d) Neither the Company nor any Significant Company Subsidiary is a
party to any voting trust, proxy or other agreement or understanding with
respect to the voting of any capital stock of the Company or any
Significant Company Subsidiary.
(e) Prior to the date of this Agreement, the Company Board has not
declared any dividend or distribution with respect to the Company Common
Stock the record or payment date for which is on or after the date of this
Agreement.
(f) All of the outstanding shares of the capital stock of each of the
Company's Subsidiaries have been validly issued, are fully paid and
nonassessable and as of the date of this Agreement are owned by the Company
or one of its Subsidiaries, free and clear of any Lien other than Permitted
Liens, except where the failure to be validly issued, fully paid or
nonassessable is not reasonably likely to have a Company Material Adverse
Effect. Except for its Subsidiaries, as of the date of this Agreement, the
Company does not control directly or indirectly or have any direct or
indirect equity participation in any corporation, partnership, limited
liability company, joint venture or other entity.
(g) The number of shares of Company Common Stock required to be
validly tendered to satisfy the Minimum Condition, calculated as of
November 1, 2001, is 18,878,613.
Section 4.5 Company Reports; Proxy Statement.
(a) The Company has since December 31, 1999 filed all reports, forms,
statements and other documents (collectively, together with all financial
statements included or incorporated by reference therein, the "Company SEC
Documents") required to be filed by the Company with the SEC pursuant to
the provisions of the Securities Act of 1933 (as amended, the "Securities
Act"), or Section 12(b), 12(g) or 15(d) of the Exchange Act. Each of the
Company SEC Documents, as of its filing date, complied in all material
respects with the applicable requirements of the Securities Act and the
Exchange Act. None of the Company SEC Documents, as of their respective
filing dates, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. No Subsidiary of the Company is
required to file any reports, forms, statements or other documents pursuant
to the Securities Act or Section 12(b), 12(g) or 15(d) of the Exchange Act.
(b) Each of the consolidated financial statements (including related
notes) included in the Company SEC Documents presented fairly in all
material respects the consolidated financial condition, cash flows and
results of operations of the Company and its Subsidiaries for the
respective periods or as of the respective dates set forth therein. Each of
the financial statements (including related notes) included in the Company
SEC Documents has been prepared in accordance with United States generally
accepted accounting principles ("GAAP"), consistently applied during the
periods involved, except
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(i) as noted therein, (ii) to the extent required by changes in GAAP or
(iii) in the case of unaudited interim financial statements, normal
recurring year-end audit adjustments and as permitted by Form 10-Q of the
SEC.
(c) The Schedule 14D-9 and the Proxy Statement to be filed by the
Company pursuant to this Agreement will comply in all material respects
with the applicable requirements of the Exchange Act and will not, at the
time the Schedule 14D-9 or the definitive Proxy Statement is filed with the
SEC, as the case may be, and mailed to the stockholders of the Company,
contain any untrue statement of material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. No representation or warranty is made herein by the
Company with respect to any information, if any, supplied by the Parent or
the Purchaser for inclusion in the Schedule 14D-9 or the Proxy Statement.
The information regarding the Company to be provided to the Parent and the
Purchaser for inclusion in the Form S-4 and the Schedule TO will not, at
the time such information is provided, contain any untrue statement of
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Section 4.6 No Undisclosed Liabilities. The Company and its Subsidiaries
have no liabilities or obligations (whether absolute or contingent, liquidated
or unliquidated, or due or to become due) except for (a) liabilities and
obligations referenced (whether by value or otherwise) or reflected in the
Company SEC Documents, (b) liabilities and obligations incurred in the ordinary
course of business, consistent with past practice, since June 30, 2001, and (c)
other liabilities and obligations which, individually or in the aggregate, are
not reasonably likely to have a Company Material Adverse Effect.
Section 4.7 Absence of Material Adverse Effect and Certain Events. Since
June 30, 2001 to the date of this Agreement, (i) there has not been a Company
Material Adverse Effect nor has there occurred any event, change, effect or
development which, individually or in the aggregate, is reasonably likely to
have a Company Material Adverse Effect; (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock, or
property) with respect to any capital stock of the Company or any purchase,
redemption or other acquisition for value by the Company of any capital stock
except in the ordinary course of business, consistent with past practice; (iii)
any split, combination or reclassification of any capital stock of the Company
or any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital stock of the
Company; (iv) (A) any granting by the Company or any Subsidiary of the Company
to any director or executive officer of the Company or any Subsidiary of the
Company of any increase in compensation, except in the ordinary course of
business consistent with prior practice or as was required under employment
agreements in effect as of June 30, 2001, (B) any granting by the Company or any
Subsidiary of the Company to any such director or executive officer of any
increase in severance or termination pay, except as was required under any
employment, severance or termination agreements in effect as of June 30, 2001,
or (C) any entry by the Company or any Subsidiary of the Company into any
employment, severance or termination agreement with any such director or
executive officer; (v) any change in accounting methods,
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principles or practices by the Company or any Subsidiary of the Company
materially affecting the consolidated assets, liabilities or results of
operations of the Company, except insofar as may have been required by a change
in GAAP or by Law; or (vi) any material elections with respect to Taxes by the
Company or any Subsidiary of the Company (other than those elections reflected
on Tax Returns filed as of the date hereof) or settlement or compromise by the
Company or any Subsidiary of the Company of any material Tax Liability or
refund.
Section 4.8 Litigation and Legal Compliance.
(a) As of the date of this Agreement, the Company Disclosure Letter
sets forth each instance in which the Company or any of its Subsidiaries is
(i) subject to any material unsatisfied judgment order, decree,
stipulation, injunction or charge or (ii) a party to or, to the Company's
knowledge, threatened to be made a party to any material charge, complaint,
action, suit, proceeding or hearing of or in any court or quasi-judicial or
administrative agency of any federal, state, local or foreign jurisdiction,
except for judgments, orders, decrees, stipulations, injunctions, charges,
complaints, actions, suits, proceedings and hearings which, individually or
in the aggregate, are not reasonably likely to have a Company Material
Adverse Effect. As of the date of this Agreement, there are no judicial or
administrative actions or proceedings pending or, to the Company's
knowledge, threatened that question the validity of this Agreement or any
action taken or to be taken by the Company in connection with this
Agreement, which, if adversely determined, are reasonably likely to have a
Company Material Adverse Effect.
(b) Except for instances of noncompliance which, individually or in
the aggregate, are not reasonably likely to have a Company Material Adverse
Effect, and except for Taxes and Environmental Laws, which are the subject
of Section 4.10 and Section 4.12, respectively, the Company and its
Subsidiaries are in compliance with each law, rule, regulation, permit,
order, writ, injunction, judgment or decree to which the Company or any of
its Subsidiaries is subject.
Section 4.9 Contract Matters.
(a) Neither the Company nor any of its Subsidiaries is in default or
violation of (and no event has occurred which with notice or the lapse of
time or both would constitute a default or violation of) any term,
condition or provision of any note, mortgage, indenture, loan agreement,
other evidence of indebtedness, guarantee, license, lease, agreement or
other contract, instrument or contractual obligation to which the Company
or any of its Subsidiaries is a party or by which any of their respective
assets is bound, except for any such default or violation which,
individually or in the aggregate, is not reasonably likely to have a
Company Material Adverse Effect.
(b) With respect to each contract, agreement, bid or proposal between
the Company or any of its Subsidiaries and any domestic or foreign
government or governmental agency, including any facilities contract for
the use of government-owned facilities (a "Company Government Contract"),
and each contract, agreement, bid or proposal that is a subcontract between
the Company or any of its Subsidiaries and a third party relating to a
contract between such third party and any domestic or foreign
-19-
government or governmental agency (a "Company Government Subcontract"), (i)
the Company and each of its Subsidiaries have complied with all terms and
conditions of such Company Government Contract or Company Government
Subcontract, including all clauses, provisions and requirements
incorporated expressly by reference therein, (ii) the Company and each of
its Subsidiaries have complied with all requirements of all laws, rules,
regulations or agreements pertaining to such Company Government Contract or
Company Government Subcontract, including where applicable the Cost
Accounting Standards disclosure statement of the Company or such
Subsidiary, (iii) as of the date of this Agreement, neither the United
States government nor any prime contractor, subcontractor or other person
or entity has notified the Company or any of its Subsidiaries, in writing
or orally, that the Company or any of its Subsidiaries has breached or
violated any law, rule, regulation, certification, representation, clause,
provision or requirement pertaining to such Company Government Contract or
Company Government Subcontract, (iv) neither the Company nor any of its
Subsidiaries has received any notice of termination for convenience, notice
of termination for default, cure notice or show cause notice pertaining to
such Company Government Contract or Company Government Subcontract, (v) as
of the date of this Agreement, other than in the ordinary course of
business, no cost incurred by the Company or any of its Subsidiaries
pertaining to such Company Government Contract or Company Government
Subcontract has been questioned or challenged, is the subject of any audit
or investigation or has been disallowed by any government or governmental
agency, and (vi) as of the date of this Agreement, no payments due to the
Company or any of its Subsidiaries pertaining to such Company Government
Contract or Company Government Subcontract has been withheld or set off,
nor has any claim been made to withhold or set off money, and the Company
and its Subsidiaries are entitled to all progress payments received to date
with respect thereto, except in each such case for any such failure,
noncompliance, breach, violation, termination, cost, investigation,
disallowance or payment which, individually or in the aggregate, is not
reasonably likely to have a Company Material Adverse Effect.
(c) To the Company's knowledge, neither the Company nor any of its
Subsidiaries, any of the respective directors, officers, employees,
consultants or agents of the Company or any of its Subsidiaries is or since
January 1, 2000 has been under administrative, civil or criminal
investigation, indictment or information by any government or governmental
agency or any audit or in investigation by the Company or any of its
Subsidiaries with respect to any alleged act or omission arising under or
relating to any Company Government Contract or Company Government
Subcontract except for any investigation, indictment, information or audit
relating to matters which, individually or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect.
(d) There exist (i) no material outstanding claims against the Company
or any of its Subsidiaries, either by any government or governmental agency
or by any prime contractor, subcontractor, vendor or other person or
entity, arising under or relating to any Company Government Contract or
Company Government Subcontract, and (ii) no disputes between the Company or
any of its Subsidiaries and the United States government under the Contract
Disputes Act or any other federal statute or between the Company or any of
its Subsidiaries and any prime contractor, subcontractor or vendor arising
under or relating to any Company Government Contract or Company Government
-20-
Subcontract, except for any such claim or dispute which, individually or in
the aggregate, is not reasonably likely to have a Company Material Adverse
Effect. Neither the Company nor any of its Subsidiaries has (i) any
interest in any pending or potential material claim against any government
or governmental agency or (ii) any interest in any pending claim against
any prime contractor, subcontractor or vendor arising under or relating to
any Company Government Contract or Company Government Subcontract, which,
if adversely determined against the Company, individually or in the
aggregate, is reasonably likely to have a Company Material Adverse Effect.
(e) Since January 1, 2000, neither the Company nor any of its
Subsidiaries has been debarred or suspended from participation in the award
of contracts with the United States government or any other government or
governmental agency (excluding for this purpose ineligibility to bid on
certain contracts due to generally applicable bidding requirements). To the
Company's knowledge, there exists no facts or circumstances that would
warrant the institution of suspension or debarment proceedings or the
finding of nonresponsibility or ineligibility on the part of the Company,
any of its Subsidiaries or any of their respective directors, officers or
employees. No payment has been made by or on behalf of the Company or any
of its Subsidiaries in connection with any Company Government Contract or
Company Government Subcontract in violation of applicable procurement laws,
rules and regulations or in violation of, or requiring disclosure pursuant
to, the Foreign Corrupt Practices Act, as amended, except for any such
violation or failure to disclose which, individually or in the aggregate,
is not reasonably likely to have a Company Material Adverse Effect.
Section 4.10 Tax Matters.
(a) For each taxable period beginning on or after January 1, 1997, the
Company and each of its Subsidiaries have timely filed all required
returns, declarations, reports, claims for refund or information returns
and statements, including any schedule or attachment thereto (collectively
"Tax Returns"), relating to 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 and
including any liability for the taxes of any other person or entity under
Treasury Regulation Section 1.1502-6 (or any similar state, local or
foreign law, rule or regulation), and any liability in respect of any tax
as a transferee or successor, by law, contract or otherwise (collectively
"Taxes"), and all such Tax Returns are accurate and complete in all
respects, except to the extent any such failure to file or any such
inaccuracy in any filed Tax Return, individually or in the aggregate, is
not reasonably likely to have a Company Material Adverse Effect. All Taxes
owed by the Company or any of its Subsidiaries (whether or not shown on any
Tax Return) have been paid or adequately reserved for in accordance with
generally accepted accounting principles in the financial statements of the
Company, except to the extent any such failure to pay or reserve,
individually or in the aggregate, is not reasonably likely to have a
Company Material Adverse Effect.
-21-
(b) No deficiency with respect to Taxes has been proposed, asserted or
assessed against the Company or any of its Subsidiaries and no requests for
waivers of the time to assess any such Taxes are pending, except (i)
requests for waivers for income Taxes for periods referred to in Section
4.10(c) (or subsequent periods) or (ii) to the extent any such deficiency
or request for waiver, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect.
(c) The Company Disclosure Letter sets forth the periods, as of the
date of this Agreement, of the federal income Tax Returns of the Company
and its Subsidiaries being examined by the Internal Revenue Service.
(d) Except for Liens for current Taxes not yet due and payable or
which are being contested in good faith, there is no Lien affecting any of
the assets or properties of the Company or any of its Subsidiaries that
arose in connection with any failure or alleged failure to pay any Tax,
except for Liens which, individually or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect.
(e) Neither the Company nor any of its Subsidiaries is a party to any
Tax allocation or Tax sharing agreement with any person other than the
Company or any of its Subsidiaries other than the agreement dated as of
December 11, 1996 between the Company, Tenneco Inc., New Tenneco Inc. and
El Paso Natural Gas Company.
(f) Neither the Company nor any of its Subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" in a
distribution of stock qualifying for tax-free treatment under Section 355
of the Code (i) in the two years prior to the date of this Agreement or
(ii) in a distribution which could otherwise constitute part of a "plan" or
series of related transactions" (within the meaning of Section 355(e) of
the Code) in conjunction with the Offer or the Merger.
(g) Neither the Company nor any of its Subsidiaries has taken or
agreed to take any action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Offer and the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of
the Code.
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Section 4.11 Employee Benefit Matters.
(a) The Company has made available to the Parent each plan, program,
agreement or arrangement constituting a material employee welfare benefit
plan (an "Employee Welfare Benefit Plan") as defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974 (as amended, "ERISA"), or a
material employee pension benefit plan (an "Employee Pension Benefit Plan")
as defined in Section 3(2) of ERISA, and each other material employee
benefit plan, agreement, program or arrangement or employment practice
maintained by the Company or any of its Subsidiaries with respect to any of
its current or former employees or to which the Company or any of the
Company Subsidiaries contributes or is required to contribute with respect
to any of its current or former employees (collectively, the "Company
Plans"). With respect to each Company Plan:
(i) such Company Plan (and each related trust, insurance contract
or fund) has been administered in a manner consistent in all respects
with its written terms and complies in form and operation with the
applicable requirements of ERISA and the Internal Revenue Code of
1986, as amended (the "Code"), and other applicable laws, except for
failures of administration or compliance which, individually or in the
aggregate, are not reasonably likely to have a Company Material
Adverse Effect;
(ii) all required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-1's and Summary Plan
Descriptions) have been filed or distributed appropriately with
respect to such Company Plan, except for failures of filing or
distribution which, individually or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect;
(iii) 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 Company Plan which is an Employee Welfare Benefit Plan, except
for failures which, individually or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect;
(iv) all material contributions, premiums or other payments
(including all employer contributions and employee salary reduction
contributions) that are required to be made under the terms of any
Company Plan have been timely made or have been reflected on the
financial statements contained in the Company's most recent Form 10-K
or Form 10-Q included in the Company SEC Documents except for failures
which, individually or in the aggregate, are not reasonably likely to
have a Company Material Adverse Effect;
(v) each such Company Plan which is an Employee Pension Benefit
Plan (other than a plan that is exempt from the requirements of Parts
2, 3 and 4 of Title I of ERISA) intended to be a "qualified plan"
under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service, and no event
has occurred which could reasonably be expected to cause the loss,
revocation or denial of any such favorable determination letter except
-23-
where the lack of a favorable determination letter is not reasonably
likely to have a Company Material Adverse Effect;
(vi) the Company has made available and will continue to make
available to the Parent, upon its request, correct and complete copies
of the plan documents and most recent summary plan descriptions, the
most recent determination letter received from the Internal Revenue
Service, the most recent Form 5500 Annual Report, the most recent
actuarial report, the most recent audited financial statements, and
all related trust agreements, insurance contracts and other funding
agreements that implement such Company Plan (but excluding the failure
to make available any such document which is not material). The
valuation summaries provided by the Company to the Parent reasonably
represent the assets and liabilities attributable to each Company Plan
which is an Employee Pension Benefit Plan (other than any
"multiemployer plan" as defined in Section 3(37) of ERISA
("Multiemployer Plan")) or an Employee Welfare Benefit Plan providing
retiree medical or life benefits calculated in accordance with the
Company's past practices, but excluding any failure which,
individually or in the aggregate, is not reasonably likely to have a
Company Material Adverse Effect;
(vii) no Company Plan which is an Employee Pension Benefit Plan
has been amended in any manner which would require the posting of
security under Section 401(a)(29) of the Code or Section 307 of ERISA,
except any such action which, individually or in the aggregate, is not
reasonably likely to have a Company Material Adverse Effect; and
(viii) neither the Company nor any of its Subsidiaries has
communicated to any employee (excluding internal memoranda to
management) any plan or commitment, whether or not legally binding, to
create any additional material employee benefit plan or to materially
modify or change any Company Plan affecting any employee or terminated
employee of the Company or any of its Subsidiaries, except any such
action which, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect.
-24-
(b) With respect to each Employee Welfare Benefit Plan or Employee
Pension Benefit Plan that the Company or any of its Subsidiaries 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 Pension Benefit Plan (other than any
Multiemployer Plan) has been completely or partially terminated (other
than any termination which, individually or in the aggregate, is not
reasonably likely to have a Company Material Adverse Effect), no
reportable event (as defined in Section 4043 of ERISA) for which the
30-day reporting requirement has not been waived, as to which notices
would be required to be filed with the Pension Benefit Guaranty
Corporation, has occurred but has not yet been so reported (but
excluding any failure to report which, individually or in the
aggregate, is not reasonably likely to have a Company Material Adverse
Effect), and no proceeding by the Pension Benefit Guaranty Corporation
to terminate such Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted;
(ii) there have been no non-exempt prohibited transactions (as
defined in Section 406 of ERISA and Section 4975 of the Code) with
respect to such 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 plan, and
no action, suit, proceeding, hearing or, to the Company's knowledge,
investigation with respect to the administration or the investment of
the assets of such plan (other than routine claims for benefits) is
pending or, to the Company's knowledge, threatened, but excluding,
from each of the foregoing, events or circumstances which,
individually or in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect; and
(iii) other than routine claims for benefits, none of the Company
or any of its Subsidiaries or related entities has incurred, and the
Company has no reason to expect that the Company or any of its
Subsidiaries or related entities will incur, any liability under
Subtitle C or D Title IV of ERISA or under the Code with respect to
any Company Plan that is an Employee Pension Benefit Plan, other than
liabilities which, individually or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect.
(c) Neither the Company nor any of its Subsidiaries presently
contributes to, nor, since January 1, 1997, have they been obligated to
contribute to, a Multiemployer Plan, other than obligations which,
individually or in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect.
(d) Other than pursuant to a Company Plan, neither the Company nor any
of its Subsidiaries has any obligation to provide 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), other than obligations which,
individually or in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect.
-25-
(e) Except as set forth in Section 4.11(e) of the Company Disclosure
Letter, no Company Plan contains any provision that would prohibit the
transactions contemplated by this Agreement, would give rise to any
severance, termination or other payments as a result of the transactions
contemplated by this Agreement (alone or together with the occurrence of
any other event), or would cause any payment, acceleration or increase in
benefits provided by any Company Plan as a result of the transactions
contemplated by this Agreement (alone or together with the occurrence of
any other event), but excluding any benefit acceleration or increase which
would not have a Company Material Adverse Effect.
(f) As of the date hereof, the amount of indebtedness that the SECT
owes the Company is not less than $195,000,000.
Section 4.12 Environmental Matters.
(a) Except for matters which, individually or in the aggregate, are
not reasonably likely to have a Company Material Adverse Effect: (i) the
Company and its Subsidiaries are, and, to the Company's knowledge, since
January 1, 1999 have been in compliance in all respects with all
Environmental Laws (as defined in Section 4.12(b)) in connection with the
ownership, use, maintenance and operation of their owned, operated or
leased real property or otherwise in connection with their operations, (ii)
neither the Company nor any of its Subsidiaries has any liability, whether
contingent or otherwise, under, or for any violations of, any Environmental
Law, (iii) no written notices of any violation or alleged violation of,
non-compliance or alleged noncompliance with or any liability under, any
Environmental Law have been received by the Company or any of its
Subsidiaries since January 1, 1999 that are currently outstanding and
unresolved as of the date of this Agreement, and, to the Company's
knowledge, there are no other outstanding notices that are unresolved for
which the Company or any of its Subsidiaries have responsibility, (iv)
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, to the Company's knowledge,
investigations pending or, to the Company's knowledge, threatened, relating
to compliance with or liability under any Environmental Law affecting the
Company or any of its Subsidiaries, (v) the Company and its Subsidiaries
possess valid environmental permits required by any Environmental Law in
connection with the ownership, use, maintenance and operation of their
respective owned, operated and leased real property, and (vi) to the
knowledge of the Company, no material changes to or alterations of the
practices or operations of the Company or any of its Subsidiaries as
presently conducted are anticipated to be required in the future in order
to permit the Company and its Subsidiaries to continue to comply in all
material respects with all applicable Environmental Laws. The Company
Disclosure Letter sets forth the amount reserved as of December 31, 2000 by
the Company for compliance with all Environmental Laws.
(b) The term "Environmental Law" as used in this Agreement means any
applicable and binding law, rule, regulation, permit, order, writ,
injunction, judgment or decree with respect to the protection or
preservation of the environment or the promotion
-26-
of worker health and safety, including any such law, rule, regulation,
permit, order, writ, injunction, judgment or decree relating to Hazardous
Materials (as defined in Section 4.12(c)). Without limiting the generality
of the foregoing, the term will encompass each of the following statutes
and the regulations promulgated thereunder, each as amended (i) the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, (ii) the Solid Waste Disposal Act, (iii) the Hazardous Materials
Transportation Act, (iv) the Toxic Substances Control Act, (v) the Clean
Water Act, (vi) the Clean Air Act, (vii) the Safe Drinking Water Act,
(viii) the National Environmental Policy Act of 1969, (ix) the Superfund
Amendments and Reauthorization Act of 1986, (x) Title III of the Superfund
Amendments and Reauthorization Act, (xi) the Federal Insecticide, Fungicide
and Rodenticide Act and (xii) the provisions of the Occupational Safety and
Health Act of 1970 relating to the handling of and exposure to Hazardous
Materials.
(c) The term "Hazardous Materials" as used in this Agreement means
each and every compound, chemical mixture, contaminant, pollutant,
material, waste or other substance (i) that is defined or has been
identified as hazardous or toxic under any Environmental Law or (ii) the
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, storing, escaping, leaching, dumping, discarding, burying,
abandoning or disposing into the environment of which is prohibited or
regulated under any Environmental Law. Without limiting the generality of
the foregoing, the term will include (i) "hazardous substances" as defined
in the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, and regulations promulgated thereunder, each as amended, (ii)
"extremely hazardous substance" as defined in the Superfund Amendments and
Reauthorization Act of 1986, or Title III of the Superfund Amendments and
Reauthorization Act and regulations promulgated thereunder, each as
amended, (iii) "hazardous waste" as defined in the Solid Waste Disposal Act
and regulations promulgated thereunder, each as amended, (iv) "hazardous
materials" as defined in the Hazardous Materials Transportation Act and the
regulations promulgated thereunder, each as amended, (v) "chemical
substance or mixture" as defined in the Toxic Substances Control Act and
regulations promulgated thereunder, each as amended, (vi) petroleum and
petroleum products and byproducts and (vii) asbestos.
Section 4.13 Title. The Company and its Subsidiaries have good and, in the
case of real property, marketable title to all the properties and assets
purported to be owned by them, free and clear of all Liens except (a) Liens for
current Taxes or assessments not delinquent, (b) builder, mechanic,
warehousemen, materialmen, contractor, workmen, repairmen, carrier or other
similar Liens arising and continuing in the ordinary course of business for
obligations that are not delinquent, (c) the rights, if any, of vendors having
possession of tooling of the Company and its Subsidiaries, (d) liens arising
from the receipt by the Company and its Subsidiaries of progress payments by the
United States government, (e) Liens securing rental payments under capital lease
arrangements and (f) other Liens which, individually or in the aggregate, are
not reasonably likely to have a Company Material Adverse Effect (collectively,
"Permitted Liens").
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Section 4.14 Intellectual Property Matters.
(a) The Company and its Subsidiaries own or have the right to use
pursuant to valid license, sublicense, agreement or permission all items of
Intellectual Property necessary for their operations as presently conducted
and as presently proposed to be conducted, except where the failure to have
such rights, individually or in the aggregate, is not reasonably likely to
have a Company Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has received any charge, complaint, claim, demand or notice
alleging any interference, infringement, misappropriation or violation of
the Intellectual Property rights of any third party, except for any
charges, complaints, claims, demands or notices relating to matters which,
individually or in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect. Since January 1, 2000, to the Company's
knowledge, no third party has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual
Property rights of the Company or any of its Subsidiaries, except for
misappropriations and violations which, individually or in the aggregate,
are not reasonably likely to have a Company Material Adverse Effect.
(b) The term "Intellectual Property" as used in this Agreement means,
collectively, patents, patent disclosures, trademarks, service marks,
logos, trade names, copyrights and mask works, and all registrations,
applications, reissuances, continuations, continuations-in-part, revisions,
extensions, reexaminations and associated good will with respect to each of
the foregoing, computer software (including source and object codes),
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 and pricing and cost
information) and all other intellectual property rights (in whatever form
or medium).
Section 4.15 Labor Matters. As of the date of this Agreement, there are no
controversies pending or, to the Company's knowledge, threatened between the
Company or any of its Subsidiaries and any of their current or former employees
or any labor or other collective bargaining unit representing any such employee
that are reasonably likely to have a Company Material Adverse Effect or are
reasonably likely to result in a material labor strike, dispute, slow-down or
work stoppage. As of the date of this Agreement, the Company is not aware of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company or any of its Subsidiaries.
As of the date of this Agreement, there are no current U.S. Department of Labor,
Office of Federal Contract Compliance Programs ("OFCCP") or Equal Employment
Opportunity Commission audits, except for any audits relating to matters which,
individually or in the aggregate, are not reasonably likely to have a Company
Material Adverse Effect. To the knowledge of the Company, as of the date of this
Agreement, there are no OFCCP conciliation agreements in effect.
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Section 4.16 Rights Agreement.
(a) The Company has taken all requisite action under the Company
Rights Agreement to cause the provisions of the Company Rights Agreement
not to be applicable to this Agreement, the Offer, the Merger or the other
transactions contemplated hereby and to provide for the expiration of the
Company Rights upon the Consummation of the Offer.
(b) The Company Rights Agreement applies to any acquisition by General
Dynamics Corporation ("General Dynamics") of Beneficial Ownership of more
than 15% of the Common Shares (each as defined in the Company Rights
Agreement).
Section 4.17 State Takeover Laws. The Company Board has approved the Offer,
the Merger and this Agreement and, assuming the accuracy of the Parent's and the
Purchaser's representations in Section 5.18, such approval is sufficient to
render inapplicable to the Offer, the Merger, this Agreement and the other
transactions contemplated hereby the restrictions on "business combinations" set
forth in Section 203 of the Delaware Act. To the Company's knowledge, no other
"fair price," "moratorium," "control share," "business combination," "affiliate
transaction," or other anti-takeover statute or similar statute or regulation of
any state is applicable to the Offer, the Merger, this Agreement and the other
transactions contemplated hereby.
Section 4.18 Brokers' Fees. Except for the fees and expenses payable by the
Company to Credit Suisse First Boston, neither the Company nor any of its
Subsidiaries has any liability or obligation to pay any fees or commissions to
any financial advisor, broker, finder or agent with respect to the transactions
contemplated by this Agreement. The Company has delivered to the Parent a
correct and complete copy of the engagement letter between the Company and
Credit Suisse First Boston relating to the transactions contemplated by this
Agreement, which letter describes the fees payable to Credit Suisse First Boston
in connection with this Agreement.
Section 4.19 Termination of General Dynamics Merger Agreement. The
Agreement and Plan of Merger dated as of April 24, 2001 (the "General Dynamics
Merger Agreement") among General Dynamics, Grail Acquisition Corporation and the
Company has been validly terminated pursuant to Section 8.1(a) of the General
Dynamics Merger Agreement and, except as provided in Section 8.3(b) thereof, is
of no further force and effect and the parties thereto have no rights, claims or
obligations thereunder. Neither such termination nor the execution, delivery or
performance of this Agreement has or will provide General Dynamics with any
right or claim that any Termination Fee (as defined in the General Dynamics
Merger Agreement) is payable to General Dynamics.
Section 4.20 Nuclear Risks. To the knowledge of the Company, all Company
Government Contracts and all Company Government Subcontracts that require or
have required the Company or any of its Subsidiaries (when each such Subsidiary
was directly or indirectly a Subsidiary of the Company and not before) to
perform work involving nuclear risks (i) have at all times been performed in
compliance with applicable statutes and regulations and no such performance has
been or is in violation of any applicable statute or regulation, except for such
failures to comply as would not reasonably be expected to result in a Company
Material Adverse Effect, and (ii)(A) have contained or contain contractual
indemnification by the U. S. Government under the authority of Public Law 85-804
or 10 U.S.C. Section 2354 or the Xxxxx-Xxxxxxxx
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Act, as implemented by Executive Order and regulation, and (B) such indemnities
are in full force and effect.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PARENT
AND THE PURCHASER
The Parent and the Purchaser represent and warrant, jointly and severally,
to the Company that except as disclosed in the reports, schedules, forms,
statements and other documents filed by the Parent with the SEC since December
31, 1999, and publicly available prior to the date of this Agreement or as
disclosed in the letter dated as of the date of this Agreement from the Parent
to the Company (the "Parent Disclosure Letter"):
Section 5.1 Organization. Each of the Purchaser, the Parent and each of the
Parent's Subsidiaries is (a) a corporation duly organized and validly existing
under the laws of the jurisdiction of its incorporation, (b) has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as presently being conducted, and (c) is in good standing under the
laws of the jurisdiction of its incorporation and is duly qualified to conduct
business as a foreign corporation in each other jurisdiction where such
qualification is required, except, in the case of clauses (a) (as it relates to
the Subsidiaries), (b) and (c) above, where such failure, individually or in the
aggregate, is not reasonably likely to have a material adverse effect on the
business, financial condition, operations or results of operations of the Parent
and its Subsidiaries taken as a whole (other than changes or effects relating to
the economy in general, the securities markets in general or the shipbuilding,
defense or other industries in which the Parent operates in general and not
specifically relating to the Parent) or the ability of the Parent to consummate
the Merger and to perform its obligations under this Agreement (a "Parent
Material Adverse Effect"). The Parent has delivered to the Company correct and
complete copies of the certificates of incorporation and bylaws, as presently in
effect, of the Parent and the Purchaser and, upon request, will make available
to the Company after the date of this Agreement correct and complete copies of
the charters and bylaws, as presently in effect, of each of the Parent's
"significant subsidiaries", as such term is defined in Regulation S-X of the
Exchange Act (the "Significant Parent Subsidiaries"). All of the outstanding
shares of the capital stock of the Purchaser have been validly issued, are fully
paid and nonassessable and are owned by the Parent free and clear of any Lien.
The Purchaser has been organized solely for the purpose of engaging in the
Merger and the other transactions contemplated by this Agreement and has not
engaged in any business other than contemplated by this Agreement.
Section 5.2 Authorization of Transaction; Enforceability. Each of the
Parent and the Purchaser has full corporate power and authority and has taken
all requisite corporate action to enable it to execute and deliver this
Agreement, to consummate the Offer, the Merger and the other transactions
contemplated hereby and to perform its obligations hereunder and, in the case of
the Parent, to issue shares of Parent Common Stock as part of the Offer
Consideration and the Merger Consideration (the "Share Issuance"). The Parent
has, simultaneously with the execution and delivery hereof, executed a written
consent in lieu of a special meeting of the sole stockholder of the Purchaser in
accordance with Section 228 of the Delaware Act adopting and approving this
Agreement. No vote of any class or series of the Parent's capital stock is
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necessary to approve and adopt this Agreement, the Offer, the Merger, the Share
Issuance or the other transactions contemplated hereby. Each of the Board of
Directors of the Parent (the "Parent Board") and the Board of Directors of the
Purchaser, has duly adopted resolutions by the requisite majority vote approving
and declaring advisable this Agreement, the Offer, the Merger, the Share
Issuance and the other transactions contemplated hereby and determining that the
Agreement, the Offer, the Merger, the Share Issuance and the other transactions
contemplated hereby are in the best interests of the Parent and its stockholders
and of the Purchaser and its sole stockholder, as the case may be. The foregoing
resolutions of each such Board of Directors have not been modified, supplemented
or rescinded and remain in full force and effect as of the date of this
Agreement. This Agreement constitutes the valid and legally binding obligation
of each of the Parent and the Purchaser, enforceable against the Parent and the
Purchaser in accordance with its terms and conditions.
Section 5.3 Noncontravention; Consents. Except for (a) filings and
approvals necessary to comply with the applicable requirements of the Exchange
Act and the "blue sky" laws and regulations of various states, (b) the filing of
the Certificate of Merger under the Delaware Act and (c) any filings required
under the rules and regulations of the New York Stock Exchange, neither the
execution and delivery of this Agreement by the Parent or the Purchaser, nor the
consummation by the Parent or the Purchaser of the transactions contemplated
hereby, will constitute a violation of, be in conflict with, constitute or
create (with or without notice or lapse of time or both) a default under, give
rise to any right of termination, cancellation, amendment or acceleration with
respect to, or result in the creation or imposition or any Lien upon any
property of the Parent or the Purchaser, or result in the breach of (i) the
certificate of incorporation or bylaws of the Parent or the Purchaser, (ii) any
law, rule, regulation, permit, order, writ, injunction, judgment or decree to
which the Parent, the Purchaser, any of the Parent's Subsidiaries or any of
their respective properties is bound or is subject or (iii) any agreement or
commitment to which the Parent, the Purchaser or any of the Parent's
Subsidiaries is a party or by which the Parent, the Purchaser or any of the
Parent's Subsidiaries is subject, except, in the case of clauses (ii) and (iii)
above, for such matters which, individually or in the aggregate, are not
reasonably likely to have a Parent Material Adverse Effect. The Parent has
received all requisite approvals from the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and all
requisite waiting periods thereunder have expired, in each case with respect to
the Offer, the Merger and the other transactions contemplated hereby.
Section 5.4 Capitalization.
(a) As of the date of this Agreement, the authorized capital stock of
the Parent consists of 400,000,000 shares of Parent Common Stock, of which,
as of September 30, 2001, 85,671,983 shares of Parent Common Stock were
issued and outstanding (each together with a right to purchase preferred
stock of the Parent (the "Parent Rights") issued pursuant to the Rights
Agreement between the Parent and Xxxxx Xxxxxx Shareholder Services, L.L.C.,
dated as of September 23, 1998 (the "Parent Rights Agreement")), and
10,000,000 shares of preferred stock, $1.00 par value per share, of which
3,500,000 shares of Series B preferred stock ("Series B Preferred Stock")
are outstanding. All of the outstanding shares of Parent Common Stock have
been validly issued and are fully paid, nonassessable and free of
preemptive rights. As of September 30, 2001,
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(i) 6,876,252 shares of Parent Common Stock were reserved for issuance and
issuable upon or otherwise deliverable in connection with the exercise of
outstanding options and (ii) there were 179,570 shares of Parent Common
Stock subject to Parent restricted stock rights and up to 2,171,394 shares
of Parent Common Stock issuable under Parent restricted performance stock
rights outstanding. Between September 30, 2001 and the date hereof, no
shares of the Parent's capital stock have been issued other than pursuant
to stock options already in existence on such date and except for grants of
stock options, restricted stock rights and restricted performance stock
rights to employees, officers and directors in the ordinary course of
business consistent with past practice. Between September 30, 2001 and the
date hereof, no stock options have been granted. Except as set forth above
and except for the Parent Rights, as of the date hereof, there are not
outstanding (i) any shares of capital stock or other voting securities of
the Parent, (ii) any securities of the Parent or its Subsidiaries
convertible into or exchangeable for shares of capital stock, or voting
securities of the Parent, (iii) any options or other rights to acquire from
the Parent or its Subsidiaries or any obligations of the Parent or its
Subsidiaries to issue any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
the Parent and (iv) except for Parent's Non-Employee Directors Equity
Participation Plan, any equity equivalent interests in the ownership or
earnings of the Parent of its Subsidiaries or other similar rights
(collectively "Parent Securities"). As of the date hereof, there are no
outstanding obligations of the Parent or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Parent Securities.
(b) The Parent Common Stock and the Parent Rights constitute the only
classes of equity securities of Parent or its Subsidiaries registered or
required to be registered under the Exchange Act.
(c) Other than (i) options to acquire an aggregate of not more than
6,871,257 shares of Parent Common Stock granted by the Parent to current
and former directors, officers, employees and advisors of the Parent and
its Subsidiaries, and (ii) the Parent Rights, as of the date of this
Agreement, there are no outstanding or authorized options, warrants,
subscription rights, conversion rights, exchange rights or other contracts
or commitments that could require the Parent or any of the Significant
Parent Subsidiaries to issue, sell or otherwise cause to become outstanding
any of its capital stock. There are no outstanding stock appreciation,
phantom stock, profit participation, dividend equivalent rights or similar
rights with respect to the Parent or any of the Significant Parent
Subsidiaries.
(d) Neither the Parent nor any of the Significant Parent Subsidiaries
is a party to any voting trust, proxy or other agreement or understanding
with respect to the voting of any capital stock of the Parent or any of the
Significant Parent Subsidiaries.
(e) All of the outstanding shares of the capital stock of each of the
Parent's Subsidiaries have been validly issued, are fully paid and
nonassessable and as of the date of this Agreement are owned by the Parent
or one of its Subsidiaries, free and clear of any Lien other than Permitted
Liens, except where the failure to be validly issued, fully paid or
nonassessable is not reasonably likely to have a Parent Material Adverse
Effect. Except for its Subsidiaries, as of the date of this Agreement, the
Parent does not control
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directly or indirectly or have any direct or indirect equity participation
in any corporation, partnership, limited liability company, joint venture
or other entity.
Section 5.5 Parent Reports.
(a) The Parent has since December 31, 1999 filed all reports, forms,
statements and other documents (collectively, together with all financial
statements included or incorporated by reference therein, the "Parent SEC
Documents") required to be filed by the Parent with the SEC pursuant to the
provisions of the Securities Act or Section 12(b), 12(g) or 15(d) of the
Exchange Act. Each of the Parent SEC Documents, as of its filing date,
complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act. None of the Parent SEC Documents, as
of their respective filing dates, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. No Subsidiary
of the Parent is required to file any reports, forms, statements or other
documents pursuant to the Securities Act or Section 12(b), 12(g) or 15(d)
of the Exchange Act other than for supplemental consolidating statements
contained in financial notes to the Parent SEC Documents with respect to
Xxxxxx Industries, Inc. for the year 2001 only.
(b) Each of the consolidated financial statements (including related
notes) included in the Parent SEC Documents presented fairly in all
material respects the consolidated financial condition, cash flows and
results of operations of the Parent and its Subsidiaries for the respective
periods or as of the respective dates set forth therein. Each of the
financial statements (including related notes) included in the Parent SEC
Documents has been prepared in accordance with GAAP, consistently applied
during the periods involved, except (i) as noted therein, (ii) to the
extent required by changes in GAAP or (iii) in the case of unaudited
interim financial statements, normal recurring year-end audit adjustments
and as permitted by Form 10-Q of the SEC.
Section 5.6 No Undisclosed Liabilities. The Parent and its Subsidiaries
have no liabilities or obligations (whether absolute or contingent, liquidated
or unliquidated, or due or to become due) except for (a) liabilities and
obligations referenced (whether by value or otherwise) or reflected in the
Parent SEC Documents, (b) liabilities and obligations incurred in the ordinary
course of business, consistent with past practice, since June 30, 2001, and (c)
other liabilities and obligations which, individually or in the aggregate, are
not reasonably likely to have a Parent Material Adverse Effect.
Section 5.7 Absence of Material Adverse Effect and Certain Events. Since
June 30, 2001 to the date of this Agreement, (i) there has not been a Parent
Material Adverse Effect nor has there occurred any event, change, effect or
development which, individually or in the aggregate, is reasonably likely to
have a Parent Material Adverse Effect; (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock, or
property) with respect to any capital stock of the Parent or any purchase,
redemption or other acquisition for value by the Parent of any of its capital
stock except in the ordinary course of business, consistent with past practice;
(iii) any split, combination or reclassification of any
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capital stock of the Parent or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for shares
of capital stock of the Parent; or (iv) any change in accounting methods,
principles or practices by the Parent or any Subsidiary of the Parent materially
affecting the consolidated assets, liabilities or results of operations of the
Parent, except insofar as may have been required by a change in GAAP or by Law.
Section 5.8 Litigation and Legal Compliance.
(a) As of the date of this Agreement, the Parent Disclosure Letter
sets forth each instance in which the Parent or any of its Subsidiaries is
(i) subject to any material unsatisfied judgment order, decree,
stipulation, injunction or charge or (ii) a party to or, to the Parent's
knowledge, threatened to be made a party to any material charge, complaint,
action, suit, proceeding or hearing of or in any court or quasi-judicial or
administrative agency of any federal, state, local or foreign jurisdiction,
except for judgments, orders, decrees, stipulations, injunctions, charges,
complaints, actions, suits, proceedings and hearings which, individually or
in the aggregate, are not reasonably likely to have a Parent Material
Adverse Effect. As of the date of this Agreement, there are no judicial or
administrative actions or proceedings pending or, to the Parent's
knowledge, threatened that question the validity of this Agreement or any
action taken or to be taken by the Parent in connection with this
Agreement, which, if adversely determined, are reasonably likely to have a
Parent Material Adverse Effect.
(b) Except for instances of noncompliance which, individually or in
the aggregate, are not reasonably likely to have a Parent Material Adverse
Effect, and except for Taxes and Environmental Laws, which are the subject
of Section 5.10 and Section 5.12, respectively, the Parent and its
Subsidiaries are in compliance with each law, rule, regulation, permit,
order, writ, injunction, judgment or decree to which the Parent or any of
its Subsidiaries is subject.
Section 5.9 Contract Matters.
(a) Neither the Parent nor any of its Subsidiaries is in default or
violation of (and no event has occurred which with notice or the lapse of
time or both would constitute a default or violation of) any term,
condition or provision of any note, mortgage, indenture, loan agreement,
other evidence of indebtedness, guarantee, license, lease, agreement or
other contract, instrument or contractual obligation to which the Parent or
any of its Subsidiaries is a party or by which any of their respective
assets is bound, except for any such default or violation which,
individually or in the aggregate, is not reasonably likely to have a Parent
Material Adverse Effect.
(b) With respect to each contract, agreement, bid or proposal between
the Parent or any of its Subsidiaries and any domestic or foreign
government or governmental agency, including any facilities contract for
the use of government-owned facilities (a "Parent Government Contract"),
and each contract, agreement, bid or proposal that is a subcontract between
the Parent or any of its Subsidiaries and a third party relating to a
contract between such third party and any domestic or foreign government or
governmental agency (a "Parent Government Subcontract"), (i) the Parent and
each of its
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Subsidiaries have complied with all terms and conditions of such Parent
Government Contract or Parent Government Subcontract, including all
clauses, provisions and requirements incorporated expressly by reference
therein, (ii) the Parent and each of its Subsidiaries have complied with
all requirements of all laws, rules, regulations or agreements pertaining
to such Parent Government Contract or Parent Government Subcontract,
including where applicable the Cost Accounting Standards disclosure
statement of the Parent or such Subsidiary, (iii) as of the date of this
Agreement, neither the United States government nor any prime contractor,
subcontractor or other person or entity has notified the Parent or any of
its Subsidiaries, in writing or orally, that the Parent or any of its
Subsidiaries has breached or violated any law, rule, regulation,
certification, representation, clause, provision or requirement pertaining
to such Parent Government Contract or Parent Government Subcontract, (iv)
neither the Parent nor any of its Subsidiaries has received any notice of
termination for convenience, notice of termination for default, cure notice
or show cause notice pertaining to such Parent Government Contract or
Parent Government Subcontract, (v) as of the date of this Agreement, other
than in the ordinary course of business, no cost incurred by the Parent or
any of its Subsidiaries pertaining to such Parent Government Contract or
Parent Government Subcontract has been questioned or challenged, is the
subject of any audit or investigation or has been disallowed by any
government or governmental agency, and (vi) as of the date of this
Agreement, no payments due to the Parent or any of its Subsidiaries
pertaining to such Parent Government Contract or Parent Government
Subcontract has been withheld or set off, nor has any claim been made to
withhold or set off money, and the Parent and its Subsidiaries are entitled
to all progress payments received to date with respect thereto, except in
each such case for any such failure, noncompliance, breach, violation,
termination, cost, investigation, disallowance or payment which,
individually or in the aggregate, is not reasonably likely to have a Parent
Material Adverse Effect.
(c) To the Parent's knowledge, neither the Parent nor any of its
Subsidiaries, any of the respective directors, officers, employees,
consultants or agents of the Parent or any of its Subsidiaries is or since
January 1, 2000 has been under administrative, civil or criminal
investigation, indictment or information by any government or governmental
agency or any audit or in investigation by the Parent or any of its
Subsidiaries with respect to any alleged act or omission arising under or
relating to any Parent Government Contract or Parent Government Subcontract
except for any investigation, indictment, information or audit relating to
matters which, individually or in the aggregate, are not reasonably likely
to have a Parent Material Adverse Effect.
(d) There exist (i) no material outstanding claims against the Parent
or any of its Subsidiaries, either by any government or governmental agency
or by any prime contractor, subcontractor, vendor or other person or
entity, arising under or relating to any Parent Government Contract or
Parent Government Subcontract, and (ii) no disputes between the Parent or
any of its Subsidiaries and the United States government under the Contract
Disputes Act or any other federal statute or between the Parent or any of
its Subsidiaries and any prime contractor, subcontractor or vendor arising
under or relating to any Parent Government Contract or Parent Government
Subcontract, except for any such claim or dispute which, individually or in
the aggregate, is not reasonably likely to have a Parent Material Adverse
Effect. Neither the Parent nor any of its Subsidiaries has
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(i) any interest in any pending or potential material claim against any
government or governmental agency or (ii) any interest in any pending claim
against any prime contractor, subcontractor or vendor arising under or
relating to any Parent Government Contract or Parent Government
Subcontract, which, if adversely determined against the Parent,
individually or in the aggregate, is reasonably likely to have a Parent
Material Adverse Effect.
(e) Since January 1, 2000, neither the Parent nor any of its
Subsidiaries has been debarred or suspended from participation in the award
of contracts with the United States government or any other government or
governmental agency (excluding for this purpose ineligibility to bid on
certain contracts due to generally applicable bidding requirements). To the
Parent's knowledge, there exists no facts or circumstances that would
warrant the institution of suspension or debarment proceedings or the
finding of nonresponsibility or ineligibility on the part of the Parent,
any of its Subsidiaries or any of their respective directors, officers or
employees. No payment has been made by or on behalf of the Parent or any of
its Subsidiaries in connection with any Parent Government Contract or
Parent Government Subcontract in violation of applicable procurement laws,
rules and regulations or in violation of, or requiring disclosure pursuant
to, the Foreign Corrupt Practices Act, as amended, except for any such
violation or failure to disclose which, individually or in the aggregate,
is not reasonably likely to have a Parent Material Adverse Effect.
Section 5.10 Tax Matters.
(a) For each taxable period beginning on or after January 1, 1997, the
Parent and each of its Subsidiaries have timely filed all Tax Returns
relating to any Taxes, and all such Tax Returns are accurate and complete
in all respects, except to the extent any such failure to file or any such
inaccuracy in any filed Tax Return, individually or in the aggregate, is
not reasonably likely to have a Parent Material Adverse Effect. All Taxes
owed by the Parent or any of its Subsidiaries (whether or not shown on any
Tax Return) have been paid or adequately reserved for in accordance with
generally accepted accounting principles in the financial statements of the
Parent, except to the extent any such failure to pay or reserve,
individually or in the aggregate, is not reasonably likely to have a Parent
Material Adverse Effect.
(b) No deficiency with respect to Taxes has been proposed, asserted or
assessed against the Parent or any of its Subsidiaries and no requests for
waivers of the time to assess any such Taxes are pending, except (i)
requests for waivers for income Taxes for periods referred to in Section
5.10(c) (or subsequent periods) or (ii) to the extent any such deficiency
or request for waiver, individually or in the aggregate, is not reasonably
likely to have a Parent Material Adverse Effect.
(c) The Parent Disclosure Letter sets forth the periods, as of the
date of this Agreement, of the federal income Tax Returns of the Parent and
its Subsidiaries being examined by the Internal Revenue Service.
(d) Except for Liens for current Taxes not yet due and payable or
which are being contested in good faith, there is no Lien affecting any of
the assets or properties of
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the Parent or any of its Subsidiaries that arose in connection with any
failure or alleged failure to pay any Tax, except for Liens which,
individually or in the aggregate, are not reasonably likely to have a
Parent Material Adverse Effect.
(e) Neither Parent nor any of its Subsidiaries has constituted either
a "distributing corporation" or a "controlled corporation" in a
distribution of stock qualifying for tax-free treatment under Section 355
of the Code (i) in the two years prior to the date of this Agreement or
(ii) in a distribution which could otherwise constitute part of a "plan" or
"series of related transactions" (within the meaning of Section 355(e) of
the Code) in conjunction with the Offer or the Merger.
(f) Neither the Parent nor any of its Subsidiaries has taken or agreed
to take any action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Offer and the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of
the Code.
(g) The Parent has delivered to the Company an opinion (the "Initial
Tax Opinion") from Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, counsel to
Parent, dated the date hereof and based on the assumptions set forth
therein and certain representations provided by the Parent and the Company,
to the effect that (i) the Offer and the Merger will qualify for U.S.
federal income tax purposes as a "reorganization" within the meaning of
Section 368(a) of the Code and (ii) the Parent, the Purchaser and the
Company will each be a "party to a reorganization" within the meaning of
Section 368(b) of the Code.
Section 5.11 Employee Benefit Matters. (a) The Parent has made available to
the Company each Employee Welfare Benefit Plan or Employee Pension Benefit Plan,
and each other material employee benefit plan, agreement, program or arrangement
or employment practice maintained by the Parent or any of its Subsidiaries with
respect to any of its current or former employees or to which the Parent or any
of its Subsidiaries contributes or is required to contribute with respect to any
of its current or former employees (collectively, the "Parent Plans"). With
respect to each Parent Plan:
(i) such Parent Plan (and each related trust, insurance contract
or fund) has been administered in a manner consistent in all respects
with its written terms and complies in form and operation with the
applicable requirements of ERISA and the Code and other applicable
laws, except for failures of administration or compliance which,
individually or in the aggregate, are not reasonably likely to have a
Parent Material Adverse Effect;
(ii) all material contributions, premiums or other payments
(including all employer contributions and employee salary reduction
contributions) that are required to be made under the terms of any
Parent Plan have been timely made or have been reflected on the
financial statements contained in the Parent's most recent Form 10-K
or Form 10-Q included in the Parent SEC Documents except for failures
which, individually or in the aggregate, are not reasonably likely to
have a Parent Material Adverse Effect;
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(iii) each such Parent Plan which is an Employee Pension Benefit
Plan (other than a plan that is exempt from the requirements of Parts
2, 3 and 4 of Title I of ERISA) intended to be a "qualified plan"
under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service (or has time
remaining to file for a timely determination letter under the remedial
amendment provisions of Section 401(b) of the Code), and no event has
occurred which could reasonably be expected to cause the loss,
revocation or denial of any such favorable determination letter except
where the lack of a favorable determination letter is not reasonably
likely to have a Parent Material Adverse Effect;
(iv) the Parent has made available and will, through the
Effective Time, continue to make available to the Company, upon its
request, correct and complete copies of the plan documents and most
recent summary plan descriptions, the most recent determination letter
received from the Internal Revenue Service, the most recent Form 5500
Annual Report, the most recent actuarial report, the most recent
audited financial statements, and all related trust agreements,
insurance contracts and other funding agreements that implement such
Parent Plan (but excluding the failure to make available any such
document which is not material). The valuation summaries provided by
the Parent to the Company reasonably represent the assets and
liabilities attributable to each Parent Plan which is an Employee
Pension Benefit Plan (other than any Multiemployer Plan) or an
Employee Welfare Benefit Plan providing retiree medical or life
benefits calculated in accordance with the Parent's past practices,
but excluding any failure which, individually or in the aggregate, is
not reasonably likely to have a Parent Material Adverse Effect;
(v) no Parent Plan which is an Employee Pension Benefit Plan has
been amended in any manner which would require the posting of security
under Section 401(a)(29) of the Code or Section 307 of ERISA, except
any such action which, individually or in the aggregate, is not
reasonably likely to have a Parent Material Adverse Effect; and
(vi) neither the Parent nor any of its Subsidiaries has
communicated to any employee (excluding internal memoranda to
management) any plan or commitment, whether or not legally binding, to
create any additional material employee benefit plan or to materially
modify or change any Parent Plan affecting any employee or terminated
employee of the Parent or any of its Subsidiaries, except any such
action which, individually or in the aggregate, is not reasonably
likely to have a Parent Material Adverse Effect.
(b) With respect to each Employee Welfare Benefit Plan or Employee
Pension Benefit Plan that the Parent or any of its Subsidiaries maintains
or ever has maintained, or to which any of them contributes, ever has
contributed or ever has been required to contribute:
(i) there have been no non-exempt prohibited transactions (as
defined in Section 406 of ERISA and Section 4975 of the Code) with
respect to such 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 plan, and
no action, suit, proceeding, hearing or, to the Parent's knowledge,
investigation with respect
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to the administration or the investment of the assets of such plan
(other than routine claims for benefits) is pending or, to the
Parent's knowledge, threatened, but excluding, from each of the
foregoing, events or circumstances which, individually or in the
aggregate, are not reasonably likely to have a Parent Material Adverse
Effect; and
(ii) other than routine claims for benefits, none of the Parent
or any of its Subsidiaries or related entities has incurred, and the
Parent has no reason to expect that the Parent or any of its
Subsidiaries or related entities will incur, any liability under Title
IV of ERISA or under the Code with respect to any Parent Plan that is
an Employee Pension Benefit Plan, other than liabilities which,
individually or in the aggregate, are not reasonably likely to have a
Parent Material Adverse Effect.
(c) Neither the Parent nor any of its Subsidiaries presently
contributes to, nor have they been obligated to contribute to, a
Multiemployer Plan, other than obligations which, individually or in the
aggregate, are not reasonably likely to have a Parent Material Adverse
Effect.
Section 5.12 Environmental Matters. Except for matters which, individually
or in the aggregate, are not reasonably likely to have a Parent Material Adverse
Effect: (i) the Parent and its Subsidiaries are, and, to the Parent's knowledge,
since January 1, 1999 have been in compliance in all respects with all
Environmental Laws in connection with the ownership, use, maintenance and
operation of their owned, operated or leased real property or otherwise in
connection with their operations, (ii) neither the Parent nor any of its
Subsidiaries has any liability, whether contingent or otherwise, under, or for
any violations of, any Environmental Law, (iii) no written notices of any
violation or alleged violation of, non-compliance or alleged noncompliance with
or any liability under, any Environmental Law have been received by the Parent
or any of its Subsidiaries since January 1, 1999 that are currently outstanding
and unresolved as of the date of this Agreement, and, to the Parent's knowledge,
there are no other outstanding notices that are unresolved for which the Parent
or any of its Subsidiaries have responsibility, (iv) 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, to the Parent's knowledge, investigations pending or, to
the Parent's knowledge, threatened, relating to compliance with or liability
under any Environmental Law affecting the Parent or any of its Subsidiaries, (v)
the Parent and its Subsidiaries possess valid environmental permits required by
any Environmental Law in connection with the ownership, use, maintenance and
operation of their respective owned, operated and leased real property, and (vi)
to the knowledge of the Parent, no material changes to or alterations of the
practices or operations of the Parent or any of its Subsidiaries as presently
conducted are anticipated to be required in the future in order to permit the
Parent and its Subsidiaries to continue to comply in all material respects with
all applicable Environmental Laws.
Section 5.13 Title. The Parent and its Subsidiaries have good and, in the
case of real property, marketable title to all the properties and assets
purported to be owned by them, free and clear of all Liens except (a) Liens for
current Taxes or assessments not delinquent,
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(b) builder, mechanic, warehousemen, materialmen, contractor, workmen,
repairmen, carrier or other similar Liens arising and continuing in the ordinary
course of business for obligations that are not delinquent, (c) the rights, if
any, of vendors having possession of tooling of the Parent and its Subsidiaries,
(d) liens arising from the receipt by the Parent and its Subsidiaries of
progress payments by the United States government, (e) Liens securing rental
payments under capital lease arrangements and (f) other Liens which,
individually or in the aggregate, are not reasonably likely to have a Parent
Material Adverse Effect.
Section 5.14 Intellectual Property Matters. The Parent and its Subsidiaries
own or have the right to use pursuant to valid license, sublicense, agreement or
permission all items of Intellectual Property necessary for their operations as
presently conducted and as presently proposed to be conducted, except where the
failure to have such rights, individually or in the aggregate, is not reasonably
likely to have a Parent Material Adverse Effect. Neither the Parent nor any of
its Subsidiaries has received any charge, complaint, claim, demand or notice
alleging any interference, infringement, misappropriation or violation of the
Intellectual Property rights of any third party, except for any charges,
complaints, claims, demands or notices relating to matters which, individually
or in the aggregate, are not reasonably likely to have a Parent Material Adverse
Effect. Since January 1, 2000, to the Parent's knowledge, no third party has
interfered with, infringed upon, misappropriated or otherwise come into conflict
with any Intellectual Property rights of the Parent or any of its Subsidiaries,
except for misappropriations and violations which, individually or in the
aggregate, are not reasonably likely to have a Parent Material Adverse Effect.
Section 5.15 Labor Matters. As of the date of this Agreement, there are no
controversies pending or, to the Parent's knowledge, threatened between the
Parent or any of its Subsidiaries and any of their current or former employees
or any labor or other collective bargaining unit representing any such employee
that are reasonably likely to have a Parent Material Adverse Effect or are
reasonably likely to result in a material labor strike, dispute, slow-down or
work stoppage. As of the date of this Agreement, the Parent is not aware of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Parent or any of its Subsidiaries,
except for efforts that, individually or in the aggregate, are not reasonably
likely to have a Parent Material Adverse Effect. As of the date of this
Agreement, there are no current U.S. Department of Labor, OFCCP or Equal
Employment Opportunity Commission audits, except for any audits relating to
matters which, individually or in the aggregate, are not reasonably likely to
have a Parent Material Adverse Effect. To the knowledge of the Parent, as of the
date of this Agreement, there are no material OFCCP conciliation agreements in
effect.
Section 5.16 Brokers' Fees. Except for the fees and expenses payable by the
Parent to Xxxxxxx Xxxxx Xxxxxx Inc., neither the Parent nor any of its
Subsidiaries has any liability or obligation to pay any fees or commissions to
any financial advisor, broker, finder or agent with respect to the transactions
contemplated by this Agreement.
Section 5.17 Adequate Cash Resources. The Parent has adequate resources for
obtaining and providing the aggregate Merger Consideration and the Offer
Consideration, to the extent required to be paid in cash, in the amount and at
the time required under this Agreement.
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Section 5.18 No Capital Ownership in the Company. Neither the Parent nor
any of its Subsidiaries owns any shares of Company Common Stock.
Section 5.19 Information for the Schedules TO and 14D-9, the Form S-4 and
Proxy Statement. The Form S-4 (i) complies and will comply in all material
respects with the applicable requirements of the Securities Act and (ii) does
not and will not contain any untrue statement of material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The Schedule TO complies and will comply in all material
respects with the applicable requirements of the Exchange Act and does not and
will not contain any untrue statement of material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No representation or warranty is made herein by the Parent with
respect to any information supplied by the Company for inclusion in the Form S-4
or the Schedule TO. The information regarding the Parent and the Purchaser to be
provided by the Parent to the Company for inclusion in the Schedule 14D-9 and
the Proxy Statement will not, at the time such information is so provided,
contain any untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary in order to the make the statements
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE 6
COVENANTS
Section 6.1 General. Subject to Sections 6.7 and 6.12, each of the parties
will use its respective best efforts to take all action and to do all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement,
including (i) the obtaining of all necessary actions or nonactions, waivers,
consents and approvals from any federal, state, local or foreign government or
any administrative agency or commission or other governmental authority
(collectively, "Governmental Entities") and the making of all necessary
registrations and filings (including filings with Governmental Entities, if any)
and the taking of all reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an action or proceeding by, any Governmental Entity,
(ii) the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) using best efforts in the defense of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the Offer, the Merger or the other transactions contemplated
by this Agreement, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed and
(iv) the execution and delivery of any additional instruments necessary to
consummate the Offer, the Merger or the other transactions contemplated by this
Agreement and to fully carry out the purposes of this Agreement. Each party will
consult with counsel for the other parties as to, and will permit such counsel
to participate in, any litigation referred to in clause (iii) above.
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Section 6.2 Notices and Consents. Without limiting the generality of
Section 6.1, each of the parties will give all notices to third parties and
governmental entities and will use its respective best efforts to obtain all
third party and governmental consents and approvals that are required in
connection with the transactions contemplated by this Agreement. The foregoing
sentence and Section 6.1 will not require the Parent to enter into any
agreement, consent decree or other commitment requiring the Parent or any of its
Subsidiaries (i) to dispose of or hold separate any material portion of its
shares of Company Common Stock or of the business or assets of the Company and
its Subsidiaries, or the Parent and its Subsidiaries, in each case taken as a
whole, or (ii) to take any other action which would materially impair the
benefits or advantages which the Parent reasonably expects to be realized from
the Offer, the Merger and the other transactions contemplated hereby.
Section 6.3 Interim Conduct of the Company. Except as expressly
contemplated by this Agreement, as set forth in the Company Disclosure Letter,
as required by law or by the terms of any contract in effect on the date of this
Agreement or as the Parent may approve, which approval will not be unreasonably
withheld or delayed, from and after the date of this Agreement through the
Closing Date, the Company will, and will cause each of its Subsidiaries to,
conduct its operations in accordance with its ordinary course of business,
consistent with past practice, and in accordance with such covenant will not,
and will not cause or permit any of its Subsidiaries to:
(a) amend its certificate of incorporation or bylaws or file any
certificate of designation or similar instrument with respect to any shares
of its authorized but unissued capital stock in any manner adverse to the
Parent, the Purchaser or the Company;
(b) authorize or effect any stock split or combination or
reclassification of shares of its capital stock;
(c) declare or pay any dividend or distribution with respect to its
capital stock (other than the regular quarterly dividend of $0.04 per share
of Company Common Stock and dividends payable by a Subsidiary of the
Company to the Company or another Subsidiary), issue or authorize the
issuance of any shares of its capital stock (other than in connection with
the exercise of currently outstanding Company Stock Options or Company
Stock-Based Awards or pursuant to the ESPAP or pursuant to the exercise of
Company Rights) or any other securities exercisable or exchangeable for or
convertible into shares of its capital stock, or repurchase, redeem or
otherwise acquire for value any shares of its capital stock or any other
securities exercisable or exchangeable for or convertible into shares of
its capital stock (other than the redemption of the Company Rights in
accordance with the provisions of this Agreement);
(d) in the case of the Company, merge or consolidate with any entity;
(e) sell, lease or otherwise dispose of any of its capital assets that
are material, individually or in the aggregate, to the Company and its
Subsidiaries taken as a whole, including any shares of the capital stock of
any Significant Company Subsidiary, other than sales, leases or other
dispositions of machinery, equipment, tools, vehicles and other
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operating assets no longer required in its operations made in the ordinary
course of business, consistent with past practice;
(f) in the case of the Company only, liquidate, dissolve or effect any
recapitalization or reorganization in any form;
(g) acquire any interest in any business (whether by purchase of
assets, purchase of stock, merger or otherwise) or enter into any joint
venture except for any interests in any business or joint venture which
does not involve an investment by the Company in excess of $5 million;
(h) create, incur, assume or suffer to exist any indebtedness for
borrowed money (including capital lease obligations), other than (i)
indebtedness existing as of the date of this Agreement, (ii) borrowings
under existing credit lines in the ordinary course of business, consistent
with past practice, (iii) indebtedness that can be prepaid at any time
without premium or penalty and (iv) intercompany indebtedness among the
Company and its Subsidiaries arising in the ordinary course of business,
consistent with past practice;
(i) create, incur, assume or suffer to exist any Lien (other than
Permitted Liens) affecting any of its material assets or properties;
(j) except as required by GAAP, change any of the accounting
principles or practices used by it or revalue in any material respect any
of its assets or properties, other than write-downs of inventory or
accounts receivable in the ordinary course of business, consistent with
past practice;
(k) except in the ordinary course of business consistent with past
practice and except as required under the terms of any collective
bargaining agreement in effect as of the date of this Agreement or as
required by applicable law, grant any general or uniform increase in the
rates of pay of its employees or grant any increase in the benefits under
any bonus or employee benefit plan or other arrangement, contract or
commitment;
(l) except in the ordinary course of business consistent with past
practice and except for any increase required under the terms of any
collective bargaining agreement or consulting, executive or employment
agreement in effect on the date of this Agreement or as required by
applicable law, increase the compensation payable or to become payable to
officers and salaried employees or increase any bonus, insurance, pension
or other benefit plan, payment or arrangement made to, for or with any such
officers or salaried employees;
(m) enter into any contract or commitment or engage in any transaction
with any affiliated person or entity (other than the Company or its
Subsidiaries) or enter into any contract or commitment or engage in any
transaction with any unaffiliated person or entity which, to the Company's
knowledge, is reasonably likely to have a Company Material Adverse Effect;
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(n) make any material Tax election or settle or compromise any
material Tax liability, except in the ordinary course of business;
(o) settle or compromise any material pending or threatened suit,
action or proceeding except to the extent any such settlement or compromise
is not reasonably likely to have a Company Material Adverse Effect;
(p) take any action, other than as expressly contemplated by Section
6.13(f), that would cause the indebtedness that the SECT owes the Company
to be less than $195,000,000, other than a reduction of indebtedness
required under the SECT to create Released Collateral (as defined in the
SECT) necessary for the SECT to deliver SECT Shares to satisfy option
exercises in the ordinary course of business consistent with past practice;
or
(q) commit to do any of the foregoing.
Section 6.4 Preservation of Organization. Subject to compliance with the
provisions of Section 6.3, the Company will, and will cause each its
Subsidiaries to, use its reasonable efforts to preserve its business
organization intact in all material respects, use its reasonable efforts to keep
available to the Company and its Subsidiaries, the present officers and
employees of the Company and its Subsidiaries as a group and use its reasonable
efforts to preserve the present relationships of the Company and its
Subsidiaries with suppliers and customers and others having business relations
with the Company and its Subsidiaries.
Section 6.5 Access. The Company will, and will cause each of its
Subsidiaries and representatives to, afford the Parent and its representatives
reasonable access, upon reasonable notice at reasonable times to all premises,
properties, books, records, contracts and documents of or pertaining to the
Company and its Subsidiaries. Parent will, and will cause each of its
Subsidiaries and representatives to, afford the Company and its representatives,
reasonable access, upon reasonable notice at reasonable times to all personnel
and information of the Parent reasonably requested by the Company.
Notwithstanding the foregoing, neither party will be required to provide access
or to disclose information (i) where such access or disclosure would contravene
any law or contract or would result in the waiver of any legal privilege or
work-product protection, or (ii) to the extent that counsel for such party
advises that such information should not be disclosed in order to ensure
compliance with any applicable antitrust laws. Any information disclosed
pursuant to Section 6.5 will be subject to the provisions of the Confidentiality
Agreement, dated October 5, 2001, between the Company and the Parent (the
"Confidentiality Agreement").
Section 6.6 Notice of Developments. Each party will give prompt written
notice to the other party of any event which has had or is reasonably likely to
have a Company Material Adverse Effect or a Parent Material Adverse Effect, as
the case may be. Each party will give prompt written notice to the other of any
material development which would give rise to a failure of a condition set forth
in Annex I. No such written notice of such a material development will be deemed
to have amended any of the disclosures set forth in the Company Disclosure
Letter or the Parent Disclosure Letter, to have qualified the representations
and warranties contained
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herein or to have cured any misrepresentation or breach of warranty that
otherwise might have existed hereunder by reason of such material development.
Section 6.7 Other Potential Acquirers.
(a) After the date hereof, the Company shall not, nor shall it permit
any Company Subsidiary to, nor shall it authorize or knowingly permit any
officer, director or employee of, or any investment banker, attorney or
other advisor or representative of, the Company or any Company Subsidiary
to, (i) directly or indirectly solicit, initiate or encourage the
submission of, any Company Takeover Proposal (as defined in Section
6.7(d)), (ii) enter into any agreement with respect to any Company Takeover
Proposal (except a confidentiality agreement in accordance with this
Section 6.7(a)) or (iii) directly or indirectly participate in any
discussions or negotiations regarding, or furnish to any person any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Company Takeover Proposal; provided, however,
that prior to Consummation of the Offer (the "Company Applicable Period"),
the Company and its Representatives may, in response to a proposal or offer
that was not solicited by the Company and that did not otherwise result
from a breach or deemed breach of this Section 6.7(a), and subject to
compliance with Section 6.7(b), (A) furnish information with respect to the
Company to the person making such a proposal or offer pursuant to a
customary confidentiality agreement the terms of which shall be no less
favorable to the Company than the terms of the Confidentiality Agreement
and (B) participate in discussions or negotiations with such person
regarding such proposal or offer, if the Company Board determines in good
faith after consultation with outside counsel that the fiduciary
obligations of the Company Board require such action; provided, further,
that, notwithstanding the provisions of this Section 6.7(a), the Company's
rights under this Section 6.7(a) shall not apply to offers or proposals by
General Dynamics or any of its affiliates. Without limiting the foregoing,
it is agreed that any violation of the restrictions set forth in the
preceding sentence by any executive officer of the Company or any Company
Subsidiary or any affiliate, director or investment banker, attorney or
other advisor or representative of the Company or any Company Subsidiary,
shall be deemed to be a breach of this Section 6.7(a) by the Company.
(b) The Company promptly shall advise the Parent orally and in writing
of any Company Takeover Proposal or any inquiry with respect to or that
could reasonably be expected to lead to any Company Takeover Proposal, the
identity of the person making any such Company Takeover Proposal or inquiry
and the material terms of any such Company Takeover Proposal or inquiry.
The Company shall keep the Parent informed of the status of any such
Company Takeover Proposal or inquiry (including any change to the material
terms thereof).
(c) Neither the Company nor the Company Board nor any committee
thereof shall withdraw or modify, or propose publicly to withdraw or
modify, in a manner adverse to the Parent or the Purchaser, the
recommendation of the Company Board of this Agreement or the Merger, or
approve or recommend, or propose publicly to approve or recommend, a
Company Takeover Proposal (other than the Offer and the Merger), unless
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(i) a withdrawal or modification of such recommendation is, in the good
faith judgment of the Company Board after consultation with its outside
counsel, required by its fiduciary duties, (ii) the Initial Tax Opinion is
withdrawn or the Parent notifies the Company that an event has occurred
that is inconsistent with any of the factual assumptions upon which the
Initial Tax Opinion is based and such event would result in the Initial Tax
Opinion having to be withdrawn or (iii) the Company requests that counsel
to the Parent reaffirm the Initial Tax Opinion and counsel to the Parent
fails to do so on the fifth day prior to the Consummation of the Offer.
Nothing contained in this Section 6.7 shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any required
disclosure to the Company's stockholders if, in the good faith judgment of
the Company Board, after consultation with outside counsel, failure so to
disclose would be inconsistent with its obligations under applicable law.
(d) For purposes of this Agreement, "Company Takeover Proposal" means
any proposal or offer for a merger, consolidation, dissolution,
liquidation, recapitalization or other business combination involving the
Company or any Significant Company Subsidiary, any proposal or offer for
the issuance by the Company of a material amount of its equity securities
as consideration for the assets or securities of any person or any proposal
or offer to acquire in any manner, directly or indirectly, a material
equity interest in any voting securities of, or a substantial portion of
the assets of, the Company or any Company Subsidiary.
Section 6.8 Company Stockholder Meeting, Preparation of Proxy Statement.
Subject to Section 1.4, as promptly as practicable following Consummation of the
Offer, if required by applicable law in order to consummate the Merger, the
Company, acting through the Company Board, shall, in accordance with applicable
law:
(a) duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Company Stockholder Meeting") for the purpose of
considering and taking action upon the adoption of this Agreement;
(b) prepare and file with the SEC a preliminary proxy or information
statement in accordance with the Exchange Act relating to the Merger and
this Agreement and use its reasonable efforts to obtain and furnish the
information required to be included by the Exchange Act and the SEC in the
Proxy Statement (as hereinafter defined) and, after consultation with the
Parent, to respond promptly to any comments made by the SEC with respect to
the preliminary proxy or information statement and cause a definitive proxy
or information statement, including any amendment or supplement thereto
(the "Proxy Statement"), to be mailed to its stockholders, provided that no
amendment or supplement to the Proxy Statement will be made by the Company
without consultation with the Parent and its counsel;
(c) subject to the Company Board's fiduciary duties under Delaware
law, the provisions of this Agreement and the requirement that the Initial
Tax Opinion not be withdrawn, include in the Proxy Statement the
recommendation of the Company Board that stockholders of the Company vote
in favor of adoption of this Agreement; and
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(d) use reasonable efforts to solicit from its stockholders proxies,
and to take all other action necessary and advisable, to secure the vote of
stockholders required by applicable law and the Company's certificate of
incorporation or bylaws to obtain the approval for this Agreement and the
Merger (the "Company Stockholder Approval"). In the event a Company
Stockholder Meeting is required under the Delaware Act in order to
consummate the Merger, the Parent will provide the Company with the
information concerning the Parent and the Purchaser required to be included
in the Proxy Statement and will vote or cause to be voted all shares of
Company Common Stock held by the Parent or its Subsidiaries in favor of the
adoption and approval of this Agreement and the transactions contemplated
hereby.
Section 6.9 Indemnification.
(a) From and after the Closing Date, the Parent will cause the
Surviving Corporation to indemnify, defend and hold harmless each person
who is now, or has been at any time prior to the Effective Time, an officer
or director of the Company or any of its present or former Subsidiaries or
corporate parents (collectively, the "Indemnified Parties") from and
against all losses, claims, damages and expenses (including reasonable
attorney's fees and expenses) ("Indemnified Losses") arising out of or
relating to actions or omissions, or alleged actions or omissions,
occurring at or prior to the Effective Time to the fullest extent permitted
from time to time by the Delaware Act or any other applicable laws as
presently or hereafter in effect. Furthermore, from and after the Closing
Date, the Parent shall indemnify, defend and hold harmless the directors
and officers of the Company from all Indemnified Losses arising out of, or
pertaining to, actions or omissions with respect to this Agreement and the
transactions contemplated hereby.
(b) Any determination required to be made with respect to whether any
Indemnified Party may be entitled to indemnification will, if requested by
such Indemnified Party, be made by independent legal counsel selected by
the Indemnified Party and reasonably satisfactory to the Surviving
Corporation.
(c) For a period of six years after the Closing Date, the Parent will
cause to be maintained in effect the policies of directors and officers
liability insurance and fiduciary liability insurance currently maintained
by the Company with respect to claims arising from or relating to actions
or omissions, or alleged actions or omissions, occurring on or prior to the
Closing Date. The Parent may at its discretion substitute for such policies
currently maintained by the Company directors and officers liability
insurance and fiduciary liability insurance policies with reputable and
financially sound carriers providing for no less favorable coverage.
Notwithstanding the provisions of this Section 6.9(c), the Parent will not
be obligated to make annual premium payments with respect to such policies
of insurance to the extent such premiums exceed 300 percent of the annual
premiums paid by the Company as of the date of this Agreement. If the
annual premium costs necessary to maintain such insurance coverage exceed
the foregoing amount, the Parent will maintain the most advantageous
policies of directors and officers
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liability insurance and fiduciary liability insurance obtainable for an
annual premium equal to the foregoing amount.
(d) To the fullest extent permitted from time to time under the law of
the State of Delaware, the Parent will cause the Surviving Corporation to
pay on an as-incurred basis the reasonable fees and expenses of each
Indemnified Party (including reasonable fees and expenses of counsel) in
advance of the final disposition of any action, suit, proceeding or
investigation that is the subject of the right to indemnification, subject
to reimbursement in the event such Indemnified Party is not entitled to
indemnification.
(e) The provisions set forth in Article Sixth of the Restated
Certificate of Incorporation of the Company and in Section 14 of Article IV
of the By-Laws of the Company, as in effect as of the date hereof, will
apply to each director or officer, as applicable, of the Company with
respect to matters occurring on or prior to the Effective Time. The
foregoing will not be deemed to restrict the right of the Surviving
Corporation to modify the provisions of its certificate of incorporation or
by-laws with respect to events or occurrences after the Closing Date but
such modifications shall not adversely affect the rights of the directors
hereunder. The Parent shall cause the Surviving Corporation to honor the
provisions of this Section 6.9(e).
(f) In the event of any action, suit, investigation or proceeding, the
Indemnified Party will be entitled to control the defense thereof with
counsel of its own choosing reasonably acceptable to the Parent, and the
Parent and the Surviving Corporation will cooperate in the defense thereof,
provided that neither the Parent nor the Surviving Corporation will be
liable for the fees of more than one counsel for all Indemnified Parties,
other than local counsel, unless the use of a single counsel would make it
impracticable or unethical for all Indemnified Parties to be represented by
a single counsel, and provided further that neither the Parent nor the
Surviving Corporation will be liable for any settlement effected without
its written consent (which consent will not be reasonably withheld or
delayed).
(g) The rights of each Indemnified Party hereunder will be in addition
to any other rights such Indemnified Party may have under the certificate
of incorporation or bylaws of the Surviving Corporation or any of its
Subsidiaries, under the Delaware Act or otherwise. Notwithstanding anything
to the contrary contained in this Agreement or otherwise, the provisions of
this Section 6.9 will survive the consummation of the Merger.
(h) Nothing in this Section 6.9 will diminish any right or
entitlements available to any director or officer of the Company under the
Company's certificate of incorporation and by-laws as in effect as of the
date of this Agreement.
(i) The provisions of this Section 6.9 are intended for the benefit of
and will be enforceable by each Indemnified Party and his or her heirs,
executors and legal representatives.
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Section 6.10 Public Announcements. The initial press release announcing the
transactions contemplated by this Agreement will be a Joint Press Release.
Thereafter, the Parent and the Company will consult with one another before
issuing any press releases or otherwise making any public announcements with
respect to the transactions contemplated by this Agreement and, except as may be
required by applicable law or by the rules and regulations of the New York Stock
Exchange, will not issue any such press release or make any such announcement
prior to such consultation.
Section 6.11 Actions Regarding Antitakeover Statutes. If any fair price,
moratorium, control share acquisition or other form of antitakeover statute,
rule or regulation is or becomes applicable to the transactions contemplated by
this Agreement, the Company Board and the Parent Board will grant such approvals
and take such other actions as may be required so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
and conditions set forth in this Agreement.
Section 6.12 Defense of Orders and Injunctions. In the event either party
becomes subject to any order or injunction of a court of competent jurisdiction
which prohibits the consummation of the transactions contemplated by this
Agreement, each party will use its best efforts to overturn or lift such order
or injunction. The foregoing will not be deemed to require the Parent to enter
into any agreement, consent decree or other commitment requiring the Parent or
any of its Subsidiaries (i) to dispose of or hold separate any material portion
of its shares of Company Common Stock or of the business or assets of the
Company and its Subsidiaries, or the Parent and its Subsidiaries, in each case
taken as a whole or (ii) to take any action which would materially impair the
benefits or advantages which the Parent reasonably expects to be realized from
the Offer, the Merger and the other transactions contemplated hereby.
Section 6.13 Employee Benefit Matters.
(a) For a period beginning immediately following the Consummation of
the Offer and ending not less than two years following the Effective Time,
Parent shall provide, or shall cause to be provided, to current and former
employees of the Company and its Subsidiaries (the "Employees")
compensation and employee benefits that are, in the aggregate, not less
favorable than the compensation and employee benefits provided to the
Employees immediately prior to the Consummation of the Offer, excluding,
however, stock-based plans and equity-based compensation arrangements. The
foregoing shall not be construed to prevent (i) the amendment or
termination of any particular Company Plans to the extent permitted by, and
in accordance with, its terms as in effect immediately prior to the
Consummation of the Offer, or (ii) the termination of employment or the
change in the compensation or employee benefits of any individual Employee.
(b) The Parent Corporation will honor and will cause the Purchaser to
honor, in accordance with their respective terms, the obligations, as of
the Consummation of the Offer, under the Company Plans, including any
rights or benefits arising as a result of the transactions contemplated by
this Agreement (either alone or in combination with any other event). The
Parent and the Company acknowledge and agree that the
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Consummation of the Offer and the transactions contemplated by this
Agreement constitute a "change in control" for all purposes under the
Company Plans.
(c) For all purposes under the employee benefit plans of the Parent
and its Subsidiaries (including the Surviving Corporation) providing
benefits to any Employees after the Effective Time, each Employee will be
credited with his or her years of service with the Company and its
Subsidiaries (and any predecessor entities thereof) before the Effective
Time, to the same extent as such Employee was entitled, before the
Effective Time, to credit for such service under any similar Company Plan;
provided, however, that Employees shall not be entitled to any credit for
benefit accrual purposes under any defined benefit pension plan in which
they commence participation after the Effective Time in the absence of a
transfer of assets and liabilities from any applicable prior defined
benefit pension plan or to the extent that it would result in a duplication
of benefits for the same period of service. Following the Effective Time,
the Parent will, or will cause its Subsidiaries to, (i) waive any
pre-existing condition limitation under any Employee Welfare Benefit Plan
maintained by the Parent or any of its Subsidiaries in which Employees and
their eligible dependents participate except to the extent that such
pre-existing condition limitation would have been applicable under the
comparable Company Employee Welfare Benefit plans immediately prior to the
Effective Time), and (ii) provide each Employee with credit for any
co-payments and deductibles incurred prior to the Effective Time (or such
earlier or later transition date to new Employee Welfare Benefits Plans)
for the calendar year in which the Effective Time (or such earlier or later
transition date) occurs, in satisfying any applicable deductible or
out-of-pocket requirements under any welfare plans that the Employees
participate in after the Effective Time.
(d) Nothing contained herein will create any rights in any third
party, including without limitation, any right to employment or right to
any particular benefit.
(e) As soon as practicable following the date of this Agreement, the
Company Board (or, if appropriate, any committee administering the Employee
Stock Purchase and Accumulation Plan (the "ESPAP")) shall adopt such
resolutions or take such other actions (if any) as may be required to
provide that (i) with respect to the offering period under the ESPAP under
way immediately prior to the Effective Time, the scheduled exercise date
shall be accelerated, and all unexercised rights granted in respect of such
offering period shall be exercised not later than immediately prior to the
Effective Time, (ii) all holding periods with respect to shares of Company
Common Stock under the ESPAP shall be waived immediately prior to the
Consummation of the Offer so as to permit the holders thereof to accept the
Offer, and (iii) the ESPAP shall terminate at the Effective Time.
(f) The Company will (i) file a registration statement on Form S-3
(the "Form S-3") with the SEC relating to the shares of Company Common
Stock held by the SECT (the "SECT Shares") not later than the business day
following the date that the amendment to the Form S-4 is filed with the SEC
in accordance with Section 1.1(e) and (ii) thereafter use its reasonable
best efforts to cause the Form S-3 to be declared effective by the SEC as
promptly as practicable, and in any event prior to the Consummation of the
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Offer. If the Form S-3 has been declared effective by the SEC prior to the
Consummation of the Offer, prior to the Consummation of the Offer the
Company will cause the SECT to (A) deliver shares of Company Common Stock
(valued at the SECT Share Value) to the Company to repay all the
indebtedness owed by the SECT to the Company (and retire all such shares of
Company Common Stock so delivered) and (B) sell the remaining SECT Shares
in a public offering, in the case of clause (B), as and to the extent
requested by the Parent. If the Form S-3 is not declared effective by the
SEC prior to the Consummation of the Offer, prior to the Consummation of
the Offer the Company will cause the SECT to deliver shares of Company
Common Stock (valued at the SECT Share Value) to the Company to repay the
indebtedness owed by the SECT to the Company (and retire all such shares of
Company Common Stock so delivered). Any SECT Shares remaining in the SECT
after such indebtedness has been satisfied and any such public offering has
been completed will be subject to (1) the provisions of this Agreement
applicable to all other outstanding shares of Company Common Stock and (2)
the provisions of the SECT. "SECT Share Value" shall mean the amount,
expressed in U.S. dollars, determined by dividing (i) the sum of (A) the
product of (x) the Parent Stock Value and (y) the number of Parent
Available Shares and (B) the Adjusted Cash Amount, without taking into
account clause (iv) of the definition thereof (each as defined in Annex II
hereto) by (ii) the aggregate number of shares of Company Common Stock
outstanding immediately prior to the time that the SECT Shares are
delivered to the Company. Following the Consummation of the Offer, the
Company and Purchaser agree to direct the Trustee to apply the cash in the
SECT as set forth in Section 6.13(f) of the Company Disclosure Letter.
Section 6.14 Adjustment to Offer Consideration. In the event there shall
occur a Distribution Date (as defined in the Company Rights Agreement or the
Parent Rights Agreement), at any time during the period from the date of this
Agreement to the Consummation of the Offer, the Company and the Parent shall
mutually agree to make such adjustment to the Offer Consideration so as to
preserve the economic benefits that the Company and the Parent reasonably
expected on the date of this Agreement to receive as a result of the
Consummation of the Offer and the Merger and the other transactions contemplated
by this Agreement.
Section 6.15 Interim Conduct of the Parent. Except as expressly
contemplated by this Agreement, as set forth in the Parent Disclosure Letter, as
required by law or by the terms of any contract in effect on the date of this
Agreement or as the Company may approve, which approval will not be unreasonably
withheld or delayed, from and after the date of this Agreement through the
Consummation of the Offer, the Parent will, and will cause each of its
Subsidiaries to, conduct its operations in accordance with its ordinary course
of business, consistent with past practice, and in accordance with such covenant
will not, and will not cause or permit any of its Subsidiaries to:
(a) amend its certificate of incorporation or bylaws or file any
certificate of designation or similar instrument with respect to any shares
of its authorized but unissued capital stock in any manner adverse to the
Parent, the Purchaser or the Company;
(b) authorize or effect any stock split or combination or
reclassification of shares of its capital stock;
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(c) declare or pay any dividend or distribution with respect to its
capital stock (other than the regular quarterly dividend of $0.40 per share
of Parent Common Stock, dividends payable pursuant to the terms of the
Series B Preferred Stock and dividends payable by a Subsidiary of the
Parent to the Parent or another Subsidiary), issue or authorize the
issuance of any shares of its capital stock (other than in connection with
the exercise of currently outstanding options to purchase Parent Common
Stock or pursuant to the exercise of Parent Rights) or any other securities
exercisable or exchangeable for or convertible into shares of its capital
stock, or repurchase, redeem or otherwise acquire for value any shares of
its capital stock or any other securities exercisable or exchangeable for
or convertible into shares of its capital stock; provided, however, that,
notwithstanding the provisions of this Section 6.15, the Parent may issue,
and take any and all actions in connection with such issuance or the
preparation therefor, shares of Parent Common Stock and debt convertible
into Parent Common Stock registered on the date of this Agreement pursuant
to the Parent's registration statement on Form S-3 (No. 333-71290) (the
"Parent Form S-3") pursuant to a fixed price, underwritten public offering
so long as such offering does not price, and no underwriting agreement or
other agreement (other than agreements that may be necessary to close such
previously priced offering) relating to the offer or sale of such shares is
entered into by the Parent, during the period beginning on the first
trading day of the Valuation Period (as defined in Annex II hereto) and
ending on the fourth trading day after the Consummation of the Offer;
(d) in the case of the Parent or the Purchaser, merge or consolidate
with any entity;
(e) in the case of the Parent and the Purchaser only, liquidate,
dissolve or effect any recapitalization or reorganization in any form; or
(f) commit to do any of the foregoing.
Section 6.16 Tax Treatment; Tax Opinion.
(a) Each of the Parent and the Company will use reasonable efforts to
cause the Offer and the Merger to qualify as a reorganization within the
meaning of Section 368(a) of the Code and will not take actions, cause
actions to be taken, or fail to take actions that could reasonably be
expected to prevent (i) the Offer and the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code or (ii) the
Parent and the Company from obtaining the opinion of counsel referred to in
Section 6.16(b).
(b) Each of the Parent and the Company will use reasonable efforts to
obtain from Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, counsel to the
Parent, on the Closing Date, an opinion dated as of the Closing Date and
based on the certain representations provided by the Parent and the Company
and to the effect that (i) the Offer and the Merger will qualify for U.S.
federal income tax purposes as a "reorganization" within the meaning of
Section 368(a) of the Code and (ii) the Parent, the Purchaser and the
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Company will each be a "party to a reorganization" within the meaning of
Section 368(b) of the Code.
(c) The Parent will promptly notify the Company in the event that the
Initial Tax Opinion is withdrawn for any reason. On the fifth day prior to
the Consummation of the Offer, Parent will notify the Company if any event
has occurred that is inconsistent with any of the factual assumptions upon
which the Initial Tax Opinion is based and such event would result in the
Initial Tax Opinion having to be withdrawn.
Section 6.17 No Company Rights Agreement Amendment. Prior to the earlier of
the termination of this Agreement or the Effective Time, the Company and the
Company Board will not amend or modify or take any other action with regard to
the Company Rights Agreement in any manner or take another action so as to (i)
render the Company Rights Agreement inapplicable to any transaction(s) other
than the Offer, the Merger and other transactions contemplated by this
Agreement, or (ii) permit any person or group (other than the Parent, the
Purchaser or any of their affiliates) who would otherwise be an Acquiring Person
(as such term is defined in the Company Rights Agreement) not to be an Acquiring
Person, or (iii) provide that a Distribution Date (as such term is defined in
the Company Rights Agreement) or similar event does not occur as promptly as
practicable by reason of the execution of any agreement or transaction other
than this Agreement and the Offer, the Merger and the agreements and
transactions contemplated hereby and thereby, or (iv) except as specifically
contemplated by this Agreement, otherwise affect the rights of holders of Rights
(as such term is defined in the Company Rights Agreement).
Section 6.18 Affiliate Letter. The Company will, as promptly as reasonably
practicable, deliver to the Parent a list setting forth the names and addresses
of all persons who may be, as of the date that the Company Stockholder Meeting
is held (if such Company Stockholder Meeting is required to be held),
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company will use its best efforts to cause each person who is identified as
an affiliate on such list to execute a written agreement (an "Affiliate
Agreement") attached hereto as Annex V prior to the Closing. Each Affiliate
Agreement will be in full force and effect as of the Effective Time. Parent will
be entitled to place appropriate legends on the certificates evidencing any
Parent Common Stock to be received as Merger Consideration by any such
affiliate, and to issue appropriate stock transfer instructions to the transfer
agent for the Parent Common Stock, consistent with the terms of the Affiliate
Agreement.
Section 6.19. Letters of Accountants. (a) The Company and the Parent shall
use their respective reasonable efforts to cause to be delivered to the Parent
comfort letters of the Company's and the Parent's independent accountants,
respectively, dated prior to the Consummation of the Offer (and reasonably
satisfactory in form and substance to the Parent), that is customary in scope
and substance for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
(b) The Company shall use its reasonable best efforts to cause to be
delivered to the Parent a consent letter of the Company's independent
accountants as soon as practicable following the date that the amendment to
the Form S-4 is filed with the SEC in accordance with
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Section 1.1(e) to allow the Parent to include the Company's financial
statements in the Parent Form S-3.
(c) The Parent shall use its reasonable best efforts to cause to be
delivered to the Company a consent letter of the Parent's independent
accountants as soon as practicable following the date that the amendment to
the Form S-4 is filed with the SEC in accordance with Section 1.1(e) to
allow the Company to include the Parent's financial statements in the Form
S-3.
ARTICLE 7
CONDITIONS TO THE CONSUMMATION OF THE MERGER
Section 7.1 Conditions to the Obligations of Each Party. The respective
obligation of each party to effect the Merger is subject to the satisfaction at
or prior to the Closing Date of each of the following conditions:
(a) this Agreement shall have been approved and adopted by the
requisite vote of the stockholders of the Company, if required by
applicable law, in order to consummate the Merger; and
(b) Consummation of the Offer shall have occurred; and
(c) no party will be subject to any order or injunction of a court of
competent jurisdiction or other legal restraint which prohibits the
consummation of the Merger.
Section 7.2 Frustration of Closing Conditions. None of the Company, the
Parent or the Purchaser may rely on the failure of any condition set forth in
Section 7.1, to be satisfied if such party's breach of this Agreement has been a
principal reason that such condition has not been satisfied.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after receipt of the Company
Stockholder Approval, if necessary:
(a) by mutual written consent of the Parent, the Purchaser and the
Company;
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(b) by either the Parent or the Company:
(i) if Consummation of the Offer does not occur on or before
January 31, 2002 (the "Outside Date"), unless such failure
is the result of a material breach of this Agreement by the
party seeking to terminate this Agreement; provided,
however, that unless the Merger Agreement is terminated in
accordance with its terms, the Company may extend such date
to April 30, 2002, if at the initial Outside Date any
condition to the Offer set forth in Annex I is not satisfied
(or waived by the Purchaser, if applicable) other than the
condition set forth in clause (b)(ii) or (b)(iii) of Annex
I;
(ii) if any court of competent jurisdiction in the United States
issues a final order, decree or ruling or takes any other
final action permanently enjoining, restraining or otherwise
prohibiting the Offer or the Merger and such order, decree,
ruling or other action shall have become final and
nonappealable, unless such order, decree, ruling or other
action is the result of a material breach of this Agreement
by the party seeking to terminate this Agreement; or
(iii) if, upon a vote at a duly held meeting to obtain the
Company Stockholder Approval, if necessary, the Company
Stockholder Approval is not obtained, unless such failure to
obtain the Company Stockholder Approval is the result of a
material breach of this Agreement by the party seeking to
terminate this Agreement;
(c) by the Parent prior to the Consummation of the Offer:
(i) if the Company breaches or fails to perform in any material
respect any of its representations, warranties or covenants
contained in this Agreement, which breach or failure to
perform (A) would give rise to the failure of a condition
set forth in Annex I, and (B) cannot be or has not been
cured within 30 days after the giving of written notice to
the Company of such breach; or
(ii) if (A) the Company, or the Company Board, as the case may
be, shall have (1) after the date hereof, entered into any
agreement, other than a confidentiality agreement permitted
under Section 6.7(a), with respect to any Company Takeover
Proposal other than the Offer or the Merger, (2) amended,
conditioned, qualified, withdrawn, modified or contradicted,
or resolved to do any of the foregoing, in a manner adverse
to the Parent or the Purchaser, its approval and
recommendation of the Offer, the Merger and this Agreement
for any reason other than as provided in Section 6.7(c)(ii)
or 6.7(c)(iii) (regardless of whether such action
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was permitted under the other provisions of this Agreement),
(3) solicited, approved or recommended any Company Takeover
Proposal other than the Offer or the Merger, or (4) violated
Section 6.7, or (B) the Company or the Company Board, or any
committee thereof, shall have resolved or agreed, in writing
or otherwise, to do any of the foregoing; provided, however,
that any disclosure by the Company to its stockholders of
information that in its good faith judgment, after
consultation with outside counsel, is required by Law shall
not be deemed to constitute any of the actions referred to
in the foregoing clauses (A)(2) and A(3) so long as such
disclosure does not change the Company Board's approval or
recommendation of the Offer, the Merger or the Agreement;
(d) by the Company prior to the Consummation of the Offer if the
Parent breaches or fails to perform in any material respect any of its
representations, warranties or covenants contained in this Agreement, which
breach or failure to perform (A) would give rise to the failure of a
condition set forth in Section 7.1(a) or 7.1(b), and (B) cannot be or has
not been cured within 30 days after the giving of written notice to the
Parent of such breach.
Section 8.2 Effect of Termination. In the event of termination of this
Agreement by either the Company or the Parent as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of the Parent, the Purchaser or the Company, (except
for any liability of any party then in willful material breach of any covenant
or agreement); provided that the provisions of this Section 8.2 and Section 8.3
of this Agreement will continue in full force and effect notwithstanding such
termination and abandonment.
Section 8.3 Termination Fee.
(a) The Company shall pay to the Parent a fee of $50,000,000 (the
"Termination Fee") if:
(i) the Parent terminates this Agreement pursuant to Section
8.1(c)(ii), which payment shall be payable on the date this
Agreement is terminated;
(ii) in the event (A) after the date of this Agreement, a Company
Takeover Proposal shall have been publicly announced or any
person has publicly announced an intention (whether or not
conditional and whether or not withdrawn) to make a Company
Takeover Proposal, (B) the Consummation of the Offer shall
not have occurred prior to the Outside Date, (C) on the
Outside Date, the only condition to the Offer that shall not
have been satisfied shall be the Minimum Condition, (D) the
Agreement is thereafter terminated by either the Parent or
the Company pursuant to
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Section 8.1(b)(i) and (E) within 12 months after such
termination, the Company or any Significant Company
Subsidiary enters into an agreement with respect to, or
consummates, such Company Takeover Proposal; or
(iii) in the event (A) there is a publicly announced Company
Takeover Proposal, (B) the Company thereafter breaches one
of its covenants in this Agreement, (C) the Parent
thereafter terminates this Agreement under Section 8.1(c)(i)
by reason of such breach, and (D) within 12 months after
such termination, the Company or any of its Significant
Subsidiaries enters into an agreement with respect to, or
consummates, such Company Takeover Proposal;
provided that with respect to clauses (ii) or (iii) no fee shall be payable
by the Company until and unless the agreement is entered into or the
Company Takeover Proposal is actually consummated within the 12 months
following such termination and shall be payable on the earlier of (y) the
date the agreement is entered into or (z) the Company Takeover Proposal is
consummated. Any fee due under this Section 8.3 shall be paid to the Parent
by certified check or wire transfer of same-day funds on the date payable
under this Section 8.3.
(b) Except as specifically provided in this Section 8.3, each party
will bear its own expenses incurred in connection with the transactions
contemplated by this Agreement, whether or not such transactions are
consummated.
(c) The Company acknowledges that the agreements regarding the payment
of fees contained in this Section 8.3 are an integral part of the
transactions contemplated by this Agreement and that, in the absence of
such agreements, the Parent and the Purchaser would not have entered into
this Agreement. The Company accordingly agrees that in the event the
Company fails to pay the Termination Fee promptly, the Company will in
addition to the payment of such amount also pay to the Parent all of the
reasonable costs and expenses (including reasonable attorneys' fees and
expenses) incurred by the Parent in the enforcement of its rights under
this Section 8.3, together with interest on such amount at a rate of 11
percent per annum from the date upon which such payment was due, to and
including the date of payment. Provided that the Company was not in breach
of any of the provisions of this Agreement, payment of the Termination Fee
will constitute full and complete satisfaction, and will constitute the
Parent's sole and exclusive remedy for any loss, liability, damage or claim
arising out of or in connection with any such termination of this Agreement
or the facts and circumstances resulting in or related to this Agreement.
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ARTICLE 9
MISCELLANEOUS
Section 9.1 Nonsurvival of Representations. The representations and
warranties contained in this Agreement will not survive the Merger or the
termination of this Agreement.
Section 9.2 Remedies. The parties agree that irreparable damage would occur
in the event that the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
will be entitled to specific performance of the terms of this Agreement, without
posting a bond or other security, this being in addition to any other remedy to
which they are entitled at law or in equity.
Section 9.3 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 parties hereto. Except as
otherwise expressly provided herein, all covenants and agreements contained in
this Agreement by or on behalf of any of the parties hereto or thereto 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.
Section 9.4 Amendment. This Agreement may be amended by the execution and
delivery of an written instrument by or on behalf of the Parent, the Purchaser
and the Company at any time before or after the Company Stockholder Approval,
provided that after the date of the Company Stockholder Approval, no amendment
to this Agreement will be made without the approval of stockholders of the
Company to the extent such approval is required under the Delaware Act.
Section 9.5 Extension and Waiver. At any time prior to the Effective Time,
the parties may extend the time for performance of or, subject to applicable
law, waive compliance with any of the covenants or agreements of the other
parties to this Agreement and may waive any breach of the representations or
warranties of such other parties. No agreement extending or waiving any
provision of this Agreement will be valid or binding unless it is in writing and
is executed and delivered by or on behalf of the party against which it is
sought to be enforced.
Section 9.6 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.
Section 9.7 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.
Section 9.8 Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
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Section 9.9 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 three 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 Parent and the Company at the addresses indicated below:
If to the Parent Corporation Northrop Grumman Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Corporate Vice President and
Secretary
Facsimile No: (000) 000-0000
With a copy (which will
not constitute notice) to: Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to the Company: Newport News Shipbuilding Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Vice President, General
Counsel & Secretary
Facsimile No.: (000) 000-0000
With a copy (which will
not constitute notice) to: Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx Xxxx
Facsimile No.: (000) 000-0000
or to such other address or to the attention of such other party as the
recipient party has specified by prior written notice to the sending party.
Section 9.10 No Third Party Beneficiaries. This Agreement will not confer
any rights or remedies upon any person or entity other than the Parent, the
Purchaser and the Company and their respective successors and permitted assigns,
except for the provisions of Article 2 and Article 3 and except that the
respective beneficiaries as of the Closing Date of the provisions of Section 6.9
will, for all purposes, be third party beneficiaries of the covenants and
agreements contained therein and, accordingly, will be treated as a party to
this Agreement for purposes of
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the rights and remedies relating to enforcement of such covenants and agreements
and will be entitled to enforce any such rights and exercise any such remedies
directly against the Parent and the Surviving Corporation.
Section 9.11 Entire Agreement. This Agreement (including the
Confidentiality Agreement, the Company Disclosure Letter, the Parent Disclosure
Letter and the other documents referred to herein) 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.
Section 9.12 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. As
used in this Agreement, the qualification "to the Company's knowledge" and
clauses of similar effect will mean the actual knowledge by any executive
officer of the Company or of its Subsidiaries of the existence or absence of
facts which would contradict a particular representation and warranty of the
Company.
Section 9.13 Submission to Jurisdiction. Each of the parties to this
Agreement submits to the jurisdiction of any state or federal court sitting in
the State of Delaware, in any action or proceeding arising out of or relating to
this Agreement, agrees that all claims in respect of the action or proceeding
may be heard and determined in any such court, and agrees not to bring any
action or proceeding arising out of or relating to this Agreement in any other
court. Each of the parties to this Agreement waives any defense of inconvenient
forum to the maintenance of any action or proceeding so brought and waives any
bond, surety or other security that might be required of any other party with
respect thereto.
Section 9.14 Governing Law. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE SCHEDULES HERETO WILL BE
GOVERNED BY THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF
DELAWARE.
-60-
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first written above.
NORTHROP GRUMMAN CORPORATION
By /s/ Xx Xxxxx
---------------------------------------
PURCHASER CORP. I
By /s/ W. Xxxxx Xxxxx
---------------------------------------
NEWPORT NEWS SHIPBUILDING INC.
By /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
ANNEX I
CERTAIN CONDITIONS OF THE OFFER
The capitalized terms used in this Annex I which are not defined herein
shall have the meanings set forth in the Agreement to which this Annex I is
attached, except that the term the "Merger Agreement" shall be deemed to refer
to the Agreement to which this Annex I is attached.
Notwithstanding any other provision of the Offer, the Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) promulgated under the Exchange
Act (relating to the Purchaser's obligations to pay for or return tendered
shares of Company Common Stock promptly after termination or withdrawal of the
Offer), pay for any shares of Company Common Stock tendered pursuant to the
Offer, and may (subject to Section 1.1 of the Merger Agreement) terminate or
amend the Offer in accordance with the Merger Agreement; if:
(a) immediately prior to any scheduled or extended expiration date of
the Offer the Minimum Condition shall not have been satisfied;
(b) any of the following conditions exists as of the expiration date
of the Offer:
(i) there shall have been any action taken, or suit or proceeding
threatened or commenced, or any statute, rule, regulation,
legislation, judgment, order or injunction promulgated, entered,
enforced, enacted, issued or deemed applicable to the Offer or the
Merger, in each case by any domestic or foreign federal or state
governmental regulatory or administrative agency or authority or court
or legislative body or commission which is reasonably likely to have
the effect of (1) prohibiting, or imposing any material limitations,
on Parent's or the Purchaser's ownership or operation (or that of any
of their respective Subsidiaries) of all or a material portion of the
Company's and its Subsidiaries' businesses or assets as a whole, or
compelling the Parent or the Purchaser or their respective
Subsidiaries to dispose of or hold separate any material portion of
its shares of Company Common Stock or of the business or assets of the
Company and its Subsidiaries or the Parent and its Subsidiaries, in
each case taken as a whole, other than limitations generally affecting
the industries in which the Company and the Parent and their
respective Subsidiaries conduct their business, (2) prohibiting, or
making illegal, Consummation of the Offer or consummation of the
Merger or the other transactions contemplated by the Merger Agreement,
or (3) imposing material limitations on the ability of the Purchaser
or the Parent or any of their Subsidiaries effectively to exercise
full rights of ownership of all or a substantial number of the shares
of the Company Common Stock including, without limitation, the right
to vote the shares of the Company Common Stock purchased by it on all
matters properly presented to the Company's shareholders on an equal
basis with all other holders of such shares and the right to hold,
transfer or dispose of such shares;
A I-1
(ii) since the date of the Merger Agreement, except as disclosed
in the Company Disclosure Letter and the Company SEC Documents filed
prior to the date of the Merger Agreement, there shall have occurred
any state of facts change, development, effect, event, condition or
occurrence that individually or in the aggregate has had or is
reasonably likely to have a Company Material Adverse Effect;
(iii) (1) the representations of the Company contained in the
Merger Agreement shall not be true and correct with the same effect as
if made at and as of the expiration date of the Offer or if such
representations speak as of an earlier date, as of such earlier date,
except, in either such case to the extent that the breach thereof
would not have a Company Material Adverse Effect (it being agreed that
the failure to be true and correct of any representation of the
Company that is qualified by "Company Material Adverse Effect" shall
constitute a failure of this condition), or (2) the Company shall have
failed to comply in material respects with its covenants and
agreements contained in the Merger Agreement;
(iv) the Merger Agreement shall have been terminated in
accordance with its terms; or
(v) there shall have occurred a Distribution Date (as defined in
the Company Rights Agreement) and any necessary adjustment to the
Offer Consideration under Section 6.14 of the Merger Agreement has not
been made as contemplated by the Merger Agreement;
which, in any such case, and regardless of the circumstances giving rise to
any such condition, make it inadvisable, in the sole and absolute
discretion of the Parent and the Purchaser, to proceed with such acceptance
for payment or payment; or
(c) any of the following conditions exists as of the expiration date
of the Offer:
(i) the Form S-4 has not been declared effective by the SEC or is
subject to any stop order;
(ii) the shares of Parent Common Stock to be issued pursuant to
the Share Issuance have not been approved for listing on the NYSE;
(iii) since the date of the Merger Agreement, except as disclosed
in the Parent Disclosure Letter and the Parent SEC Documents filed
prior to the date of the Merger Agreement, there shall have occurred
any state of facts change, development, effect, event, condition or
occurrence that individually or in the aggregate has had or is
reasonably likely to have a Parent Material Adverse Effect;
A I-2
(iv) (1) the representations of the Parent contained in the
Merger Agreement shall not be true and correct with the same effect as
if made at and as of the expiration date of the Offer or if such
representations speak as of an earlier date, as of such earlier date,
except, in either such case to the extent that the breach thereof
would not have a Parent Material Adverse Effect (it being agreed that
the failure to be true and correct of any representation of the Parent
that is qualified by "Parent Material Adverse Effect" shall constitute
a failure of this condition), or (2) the Parent shall have failed to
comply in material respects with its covenants and agreements
contained in the Merger Agreement; or
(v) there shall have occurred a Distribution Date (as defined in
the Parent Rights Agreement) and any necessary adjustment to the Offer
Consideration under Section 6.14 of the Merger Agreement has not been
made as contemplated by the Merger Agreement.
Subject to the provisions of the Merger Agreement (including, without
limitation, Section 1.1(b)(i)), the foregoing conditions are for the sole
benefit of the Parent and the Purchaser and may be asserted by the Purchaser or,
subject to the terms of the Merger Agreement, may be waived, by the Parent or
the Purchaser, in whole or in part at any time and from time to time in the sole
discretion of the Parent or the Purchaser. The failure by the Parent or the
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may, subject to Section 1.1 of the Merger Agreement, be asserted at
any time and from time to time.
A I-3
ANNEX II
OFFER CONSIDERATION
SECTION 1. Definitions. For purposes of this Annex II:
"Adjusted Cash Amount" means (i) the Base Cash Amount plus or minus (ii)
any adjustment provided for in Section 5 plus (iii) the product of (A) $67.50
and (B) the number of shares of Company Common Stock issued after November 1,
2001, and prior to the Consummation of the Offer upon the exercise of Stock
Options minus (iv) the amount of the SECT indebtedness repaid with SECT Shares
as contemplated by Section 6.13(f).
"Base Cash Amount" means $892,026,990.
"Exchange Ratio" means $67.50 divided by the Parent Stock Value; provided,
however, that in no event will the Exchange Ratio be greater than 0.84375
($67.50/$80.00) or less than 0.675 ($67.50/$100.00).
"Offer Cash Amount" means the product of (i) the Adjusted Cash Amount and
(ii) the Offer Ratio.
"Offer Ratio" means the ratio of (i) the number of shares of Company Common
Stock validly tendered pursuant to the Offer and not withdrawn to (ii) the total
number of outstanding shares of Company Common Stock on a fully diluted basis,
not taking into account Stock Options cancelled in accordance with Section
2.9(a)(i).
"Offer Shares" means the product of (i) the Parent Available Shares and
(ii) the Offer Ratio.
"Parent Available Shares" means 16,636,885 shares of Parent Common Stock.
"Parent Stock Value" means the average of the closing sale prices for a
share of Parent Common Stock on the New York Stock Exchange as reported in The
Wall Street Journal over the Valuation Period.
"Valuation Period" means the 5-day trading period ending on the trading day
immediately preceding the second full trading day before the expiration of the
Offer.
SECTION 2. Determination of Exchange Ratio. Parent shall calculate the
Exchange Ratio and the Parent Stock Value and such calculations shall be
conclusive absent manifest error. Parent will issue a press release before 9:00
A.M., New York City time, on the last full trading day before the date of the
expiration of the Offer, announcing the Exchange Ratio and the Parent Stock
Value.
SECTION 3. Election Right. Each holder of shares of Company Common Stock
may elect to receive, for those shares of Company Common Stock tendered in the
Offer, either (i)
A II-1
$67.50 in cash, without interest, per share of Company Common
Stock (a "Cash Election"), or (ii) a number of shares of newly-issued Parent
Common Stock equal to the product of (x) the number of shares of Company Common
Stock tendered by such holder for Parent Common Stock in the Offer and (y) the
Exchange Ratio (a "Share Election"), subject, in each case, to the election and
proration procedures and limitations described in Sections 5 and 6.
SECTION 4. Parent Available Shares. The Parent will issue not more than the
Offer Shares in the Offer.
SECTION 5. Limitation on Cash Consideration. (a) Subject to paragraphs (b),
(c), (d) and (e) of this Section 5, the Parent will not pay more in cash for the
shares of Company Common Stock acquired in the Offer than the Offer Cash Amount,
subject to increase for fractional shares.
(b) If the Parent Stock Value is less than $90.00 but equal to or
greater than $80.00, the Adjusted Cash Amount will increase by the product
of (a) the excess of $90.00 over the Parent Stock Value and (b) the number
of Parent Available Shares.
(c) If the Parent Stock Value is less than $80.00, the Adjusted Cash
Amount will increase by $166,368,850.
(d) If the Parent Stock Value is greater than $90.00 but less than or
equal to $100.00, the Adjusted Cash Amount will be reduced by the product
of (a) the excess of the Parent Stock Value over $90.00 and (b) the number
of Parent Available Shares.
(e) If the Parent Stock Value is greater than $100.00, the Adjusted
Cash Amount will be reduced by $166,368,850.
SECTION 6. Proration Procedures. (a) If the aggregate amount of cash that
the holders of Company Common Stock elect to receive in the Offer exceeds the
Offer Cash Amount, the amount of cash that holders of Company Common Stock will
receive for each share of Company Common Stock for which a Cash Election was
made will be reduced pro rata (a "Cash Reduction") so that the total amount of
cash that the Parent pays in the Offer does not exceed the Offer Cash Amount.
(b) If any shares of Company Common Stock are subject to a Cash
Reduction, the Parent will issue, in respect of each share of Company
Common Stock subject to a Cash Reduction, shares of Parent Common Stock in
lieu of the cash that the holders of Company Common Stock would have
otherwise received in the Offer. The number of shares of Parent Common
Stock that the Parent will issue for each share of Company Common Stock
subject to a Cash Reduction will be calculated by multiplying the Exchange
Ratio by the percentage reduction in the cash consideration paid in respect
of each share of Company Common Stock subject to a Cash Reduction in the
Offer.
(c) If holders of Company Common Stock elect to receive shares of
Parent Common Stock in excess of the number of Offer Shares, the number of
shares of Parent Common Stock that holders of Company Common Stock will
receive for each share of Company Common Stock
A II-2
for which a Share Election was made will be reduced pro rata (a "Share
Reduction") so that the total number of shares of Parent Common Stock
issued in the Offer will equal the number of Offer Shares.
(d) If any shares of Company Common Stock are subject to a Share
Reduction, the Parent will pay, in respect of each share of Company Common
Stock subject to a Share Reduction, cash in lieu of the shares of Parent
Common Stock that the holder of Company Common Stock would have otherwise
received in the Offer. The amount of cash to be paid for each share of
Company Common Stock subject to a Share Reduction will be calculated by
multiplying $67.50 by the percentage reduction in shares of Parent Common
Stock issued in respect of each share of Company Common Stock subject to a
Share Reduction in the Offer.
(e) In the case of an over-election for either cash or shares of
Parent Common Stock in the Offer, those holders of Company Common Stock who
tender their shares but fail to make a valid election with respect to their
shares of Company Common Stock will receive the under-elected form of
consideration for such shares of Company Common Stock.
(f) If all holders of tendered Company Common Stock together make
valid cash elections for less than the Offer Cash Amount and valid share
elections for fewer than the Offer Shares, all the remaining Offer Cash
Amount and Offer Shares that will be paid and issued in the Offer will be
allocated pro rata among the holders of non-electing tendered shares of
Company Common Stock.
SECTION 7. No Fractional Shares. (a) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the conversion of
Company Common Stock in the Offer, and such fractional share interests shall not
entitle the owner thereof to vote or to any rights of a holder of Parent Common
Stock. For purposes of this Annex II, all fractional shares to which a single
record holder would be entitled shall be aggregated.
(b) In lieu of any such fractional shares, each holder of Company
Common Stock who would otherwise be entitled to such fractional shares
shall be entitled to an amount in cash, without interest, rounded to the
nearest cent, equal to the product of (A) the amount of the fractional
share interest in a share of Parent Common Stock to which such holder is
entitled under this Annex II (or would be entitled but for this Section 7)
and (B) the Parent Stock Value.
A II-3
ANNEX III
MERGER CONSIDERATION
SECTION 1. Definitions. Capitalized terms used but not otherwise defined in
this Annex III have the meanings ascribed to such terms in Annex II. For
purposes of this Annex III:
"Remaining Cash Amount" means (i) the Adjusted Cash Amount minus (ii) the
amount of cash paid in respect of shares of Company Common Stock in the Offer.
"Remaining Parent Available Shares" means the Parent Available Shares less
the number of shares of Parent Common Stock issued in respect of Company Common
Stock in the Offer.
SECTION 2. Election Right. Each holder of shares of Company Common Stock
may make for each share of Company Common Stock exchanged pursuant to the
Merger, either (i) a Cash Election or (ii) a Share Election, subject, in each
case, to the election and proration procedures and limitations described in
Sections 4 and 5.
SECTION 3. Remaining Parent Available Shares. The Parent will issue not
more than the Remaining Parent Available Shares pursuant to the Merger in
respect of shares of Company Common Stock to be exchanged pursuant to the
Merger.
SECTION 4. Remaining Cash Amount. The Parent will distribute the Remaining
Cash Amount pursuant to the Merger in respect of shares of Company Common Stock
to be exchanged pursuant to the Merger. The Parent will not pay more in cash for
the shares of Company Common Stock to be exchanged pursuant to the Merger than
the Remaining Cash Amount, subject to increase for fractional shares.
SECTION 5. Proration Procedures. (a) If the aggregate amount of cash that
the holders of Company Common Stock elect to receive pursuant to the Merger
exceeds the Remaining Cash Amount, the amount of cash that holders of Company
Common Stock will receive for each share of Company Common Stock for which a
Cash Election was made will be reduced pro rata (a "Cash Reduction") so that the
total amount of cash that the Parent pays in respect of Company Common Stock
pursuant to the Merger does not exceed the Remaining Cash Amount.
(b) If any shares of Company Common Stock are subject to a Cash
Reduction, the Parent will issue, in respect of each share of Company
Common Stock subject to a Cash Reduction, shares of Parent Common Stock in
lieu of the cash that the holders of Company Common Stock would have
otherwise received pursuant to the Merger. The number of shares of Parent
Common Stock that the Parent will issue for each share of Company Common
Stock subject to a Cash Reduction will be calculated by multiplying the
Exchange Ratio by the percentage reduction in the cash consideration paid
in respect of each share of Company Common Stock subject to a Cash
Reduction pursuant to the Merger.
(c) If holders of Company Common Stock elect to receive shares of
Parent Common Stock in excess of the number of Remaining Parent Available
Shares, the number of shares of
A III-1
Parent Common Stock that holders of Company Common Stock will receive for
each share of Company Common Stock for which a Share Election was made will
be reduced pro rata (a "Share Reduction") so that the total number of
shares of Parent Common Stock issued pursuant to the Merger will equal the
number of Remaining Parent Available Shares.
(d) If any shares of Company Common Stock are subject to a Share
Reduction, the Parent will pay, in respect of each share of Company Common
Stock subject to a Share Reduction, cash in lieu of the shares of Parent
Common Stock that the holder of Company Common Stock would have otherwise
received pursuant to the Merger. The amount of cash to be paid for each
share of Company Common Stock subject to a Share Reduction will be
calculated by multiplying $67.50 by the percentage reduction in shares of
Parent Common Stock issued in respect of each share of Company Common Stock
subject to a Share Reduction pursuant to the Merger.
(e) In the case of an over-election for either cash or shares of
Parent Common Stock pursuant to the Merger, those holders of Company Common
Stock who fail to make a valid election with respect to their shares of
Company Common Stock will receive the under-elected form of consideration
for such shares of Company Common Stock.
(f) If all holders of Company Common Stock together make valid cash
elections for less than the Remaining Cash Amount and valid share elections
for fewer than the Remaining Parent Available Shares pursuant to the
Merger, all of the remaining cash and shares of Parent Common Stock that
will be paid and issued pursuant to the Merger will be allocated pro rata
among the holders of non-electing shares of Company Common Stock.
(g) If the Merger is consummated following a Company Stockholder
Meeting, each holder of Company Common Stock who fails to make an election
by the date of the Company Stockholder Meeting shall be deemed to have made
no election. If the Merger is consummated without a Company Stockholder
Meeting, each holder of Company Common Stock who fails to make an election
within 30 days of the mailing of the Letter of Transmittal shall be deemed
to have made no election.
SECTION 6. No Fractional Shares. (a) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the conversion of
Company Common Stock pursuant to the Merger, and such fractional share interests
shall not entitle the owner thereof to vote or to any rights of a holder of
Parent Common Stock. For purposes of this Annex III, all fractional shares to
which a single record holder would be entitled shall be aggregated.
(b) In lieu of any such fractional shares, each holder of Company
Common Stock who would otherwise be entitled to such fractional shares
shall be entitled to an amount in cash, without interest, rounded to the
nearest cent, equal to the product of (A) the amount of the fractional
share interest in a share of Parent Common Stock to which such holder is
entitled under this Annex III (or would be entitled but for this Section 6)
and (B) the Parent Stock Value.
A III-2
ANNEX IV
[RESTATED]/1/ CERTIFICATE OF INCORPORATION
OF
SURVIVING CORPORATION
FIRST: The name of the corporation is Newport News Shipbuilding
Inc.
SECOND: The address of its registered office in the State of
Delaware is Corporation Trust Center, 0000 Xxxxxx Xxxxxx, xx xxx Xxxx xx
Xxxxxxxxxx, Xxxxxx of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
THIRD: The purpose of the corporation is to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: A. The total number of shares of all classes of stock
which the corporation shall be authorized to issue is 2,000 shares, divided
into 1,000 shares of Common Stock, par value $.01 per share (herein called
"Common Stock"), and 1,000 shares of Preferred Stock, par value $.01 per
share (herein called "Preferred Stock").
B. The Board of Directors of the corporation (the "Board of
Directors") is hereby expressly authorized, by resolution or resolutions
thereof, to provide, out of the unissued shares of Preferred Stock, for
series of Preferred Stock and, with respect to each such series, to fix the
number of shares constituting such series and the designation of such
series, the voting powers (if any) of the shares of such series, and the
preferences and relative, participating, optional or other special rights,
if any, and any qualifications, limitations or restrictions thereof, of the
shares of such series. The powers, preferences and relative,
participating, optional and other special rights of each series of
Preferred Stock, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other series at any
time outstanding.
C. Except as may otherwise be provided in this Certificate of
Incorporation (including any certificate filed with the Secretary of State
of the State of Delaware establishing the terms of a series of Preferred
Stock in accordance with Section B of this Article FOURTH) or by applicable
law, each holder of Common Stock, as such, shall be entitled to one vote
for each share of Common Stock held of record by such holder on all matters
on which stockholders generally are entitled to vote, and no holder of any
series of Preferred Stock, as such, shall be entitled to any voting powers
in respect thereof.
D. Subject to applicable law and the rights, if any, of the
holders of any outstanding series of Preferred Stock, dividends may be
declared and paid on the Common Stock at such times and in such amounts as
the Board of Directors in its discretion shall determine.
----------------------
/1/ Include bracketed text if the Merger is restructured in accordance
with Section 2.11 and the Company is the Surviving Corporation.
E. Upon the dissolution, liquidation or winding up of the
corporation, subject to the rights, if any, of the holders of any
outstanding series of Preferred Stock, the holders of the Common Stock
shall be entitled to receive the assets of the corporation available for
distribution to its stockholders ratably in proportion to the number of
shares held by them.
F. The corporation shall be entitled to treat the person in
whose name any share of its stock is registered as the owner thereof for
all purposes and shall not be bound to recognize any equitable or other
claim to, or interest in, such share on the part of any other person,
whether or not the corporation shall have notice thereof, except as
expressly provided by applicable law.
FIFTH: A. The business and affairs of the corporation shall be
managed by or under the direction of the Board of Directors. A director
shall hold office until the next annual meeting of stockholders and until
his successor shall be elected and shall qualify, subject, however, to
prior death, resignation, retirement, disqualification or removal from
office. Any vacancy on the Board of Directors that results from an
increase in the number of directors may be filled by a majority of the
Board of Directors then in office, provided that a quorum is present, and
any other vacancy occurring in the Board of Directors may be filled by a
majority of the directors then in office, even if less than a quorum, or by
a sole remaining director.
Notwithstanding the foregoing, whenever the holders of any one or
more series of Preferred Stock shall have the right, voting separately as a
class or series, to elect directors, the election, removal, term of office,
filling of vacancies and other features of such directorships shall be
governed by the terms of this Certificate of Incorporation applicable
thereto, and such directors so elected shall not be divided into classes
pursuant to this Article FIFTH unless expressly provided by such terms.
B. The Board of Directors shall be authorized to adopt, make,
amend, alter, change, add to or repeal the By-Laws of the corporation,
subject to the power of the stockholders to amend, alter, change, add to or
repeal the By-Laws made by the Board of Directors.
C. Unless and except to the extent that the By-Laws of the
corporation shall so require, the election of directors of the corporation
need not be by written ballot.
SIXTH: A director of the corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except to the extent such exemption from
liability or limitation thereof is not permitted under the General
Corporation Law of the State of Delaware as the same exists or may
hereafter be amended. Any amendment, modification or repeal of the
foregoing sentence shall not adversely affect any right or protection of a
director of the corporation hereunder in respect of any act or omission
occurring prior to the time of such amendment, modification or repeal.
SEVENTH: Subject to the provisions of this Certificate of
Incorporation and applicable law, the corporation reserves the right at any
time and from time to time to amend, alter, change or repeal any provision
contained in this Certificate of Incorporation, and any other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted, in the manner now or hereafter prescribed herein or by
applicable law, and all rights, preferences and privileges of whatsoever
nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its
present form or as hereafter amended are granted subject to the right
reserved in this Article SEVENTH.
EIGHTH/2/: The incorporator of the Company is [ ], whose
mailing address is [ ].
---------------------
/2/ Article EIGHTH will be removed if the Merger is restructured in
accordance with Section 2.11 and the Company is the Surviving Corporation.
BY-LAWS
OF
SURVIVING CORPORATION
ARTICLE I
Stockholder Meetings
--------------------
SECTION 1. Place of Stockholder Meetings. All meetings of the
------------------------------
stockholders of the corporation shall be held at such place or places,
within or without the State of Delaware, as may from time to time be fixed
by the Board of Directors of the corporation (the "Board"), or as shall be
specified or fixed in the respective notices or waivers of notice thereof.
SECTION 2. Annual Meeting. The Annual Meeting of Stockholders
---------------
shall be held on such date and at such time as may be fixed by the Board
and stated in the notice thereof, for the purpose of electing directors and
for the transaction of only such other business as is properly brought
before the meeting in accordance with these By-Laws.
SECTION 3. Special Meetings. Subject to the rights of the
-----------------
holders of any series of preferred stock, par value $.01 per share, of the
corporation (the "Preferred Stock") to elect additional directors under
specified circumstances, special meetings of the stockholders shall be
called by the Board. Special meetings shall be held at such date and at
such time as the Board may designate.
SECTION 4. Notice of Meetings. Written notice of each meeting
-------------------
of stockholders, stating the place, date and hour of the meeting, and the
purpose or purposes thereof, shall be mailed not less than ten nor more
than sixty days before the date of such meeting to each stockholder
entitled to vote thereat.
SECTION 5. Quorum. Unless otherwise provided by statute, the
-------
holders of shares of stock entitled to cast a majority of votes at a
meeting, present either in person or by proxy, shall constitute a quorum at
such meeting. The Secretary of the corporation or in his absence an
Assistant Secretary or an appointee of the presiding officer of the
meeting, shall act as the Secretary of the meeting.
SECTION 6. Voting. Except as otherwise provided by law or the
-------
Certificate of Incorporation, each stockholder entitled to vote at any
meeting shall be entitled to one vote, in person, by written proxy or by
proxy transmitted or authorized for transmission by any electronic means,
including, but not limited to, telegram, cablegram, telephone and internet,
for each share held of record on the record date fixed by the Board for
determining the stockholders entitled to vote at such meeting. Except as
otherwise provided by law, the Certificate of Incorporation or these By-
Laws, the vote of a majority of any quorum shall be sufficient to elect
directors and to pass any resolution within the power of the holders of all
the outstanding shares. Elections of directors need not be by written
ballot; provided, however, that by resolution duly adopted, a vote by
written ballot may be required.
SECTION 7. Proxies. Each stockholder entitled to vote at a
--------
meeting of stockholders or to express consent or dissent to corporate
action in writing without a meeting may authorize another person or persons
to act for him by proxy, but no such proxy shall be voted or acted upon
after three years from its date, unless the proxy provides for a longer
period. A proxy shall be irrevocable if it states that it is irrevocable
and if, and only as long as, it is coupled with an interest sufficient in
law to support an irrevocable power. A stockholder may revoke any proxy
which is not irrevocable by attending the meeting and voting in person or
by filing an instrument revoking the proxy or by delivering a proxy in
accordance with applicable law bearing a later date to the Secretary of the
corporation. In order to be exercised at a meeting of stockholders, proxies
shall be delivered to the Secretary of the corporation or his
representative at or before the time of such meeting.
SECTION 8. Inspectors. At each meeting of the stockholders the
-----------
polls shall be opened and closed; the proxies and ballots shall be received
and be taken in charge, and all questions touching the qualification of
voters and the validity of proxies and the acceptance or rejection of votes
shall be decided by three Inspectors, two of whom shall have power to make
a decision. Such Inspectors shall be appointed by the Board before the
meeting, or in default thereof by the presiding officer at the meeting, and
shall be sworn to the faithful performance of their duties. If any of the
Inspectors previously appointed shall fail to attend or refuse or be unable
to serve, substitutes shall be appointed by the presiding officer.
SECTION 9. Conduct of Meetings. The date and time of the
--------------------
opening and the closing of the polls for each matter upon which the
stockholders will vote at a meeting shall be announced at the meeting by
the chairman of the meeting. The Board may adopt by resolution such rules
and regulations for the conduct of the meeting of stockholders as it shall
deem appropriate. Except to the extent inconsistent with such rules and
regulations as adopted by the Board, the chairman of any meeting of
stockholders shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment of
such chairman, are appropriate for the proper conduct of the meeting. Such
rules, regulations or procedures, whether adopted by the Board or
prescribed by the chairman of the meeting, may include, without limitation,
the following: (i) the establishment of an agenda or order of business for
the meeting; (ii) rules and procedures for maintaining order at the meeting
and the safety of those present; (iii) limitations on attendance at or
participation in the meeting to stockholders of record of the corporation,
their duly authorized and constituted proxies or such other persons as the
chairman of the meeting shall determine; (iv) restrictions on entry to the
meeting after the time fixed for the commencement thereof; and (v)
limitations on the time allotted to questions or comments by participants.
Unless and to the extent determined by the Board or the chairman of the
meeting, meetings of stockholders shall not be required to be held in
accordance with the rules of parliamentary procedure.
ARTICLE II
Board of Directors
------------------
SECTION 1. Number; Method of Election; Terms of Office and
-----------------------------------------------
Qualification. The business and affairs of the corporation shall be
--------------
managed under the direction of the Board. The number of directors which
shall constitute the entire Board shall be determined from time to time by
resolution adopted by a majority of the entire Board.
Any director may resign his office at any time by delivering his
resignation in writing to the corporation, and the acceptance of such
resignation unless required by the terms thereof shall not be necessary to
make such resignation effective.
SECTION 2. Meetings. The Board may hold its meetings and have
---------
an office in such place or places within or without the State of Delaware
as the Board by resolution from time to time may determine.
The Board may in its discretion provide for regular or stated
meetings of the Board. Notice of regular or stated meetings need not be
given. Special meetings of the Board shall be held whenever called by
direction of the Chief Executive Officer, the President or any two of the
directors.
Notice of any special meeting shall be given by the Secretary to
each director either by mail or by telegram, facsimile, telephone or other
electronic communication or transmission. If mailed, such notice shall be
deemed adequately delivered when deposited in the United States mails so
addressed, with postage thereon prepaid, at least three days before such
meeting. If by telegram, such notice shall be deemed adequately delivered
when the telegram is delivered to the telegraph corporation at least
twenty-four hours before such meeting. If by facsimile, telephone or other
electronic communication or transmission, such notice shall be transmitted
at least twenty-four hours before such meeting. Unless otherwise indicated
in the notice thereof, any and all business may be transacted at a special
meeting.
Except as otherwise provided by applicable law, at any meeting at
which every director shall be present, even though without notice, any
business may be transacted. No notice of any adjourned meeting need be
given.
The Board shall meet immediately after election, following the Annual
Meeting of Stockholders, for the purpose of organizing, for the election of
corporate officers as hereinafter specified, and for the transaction of any
other business which may come before it. No notice of such meeting shall be
necessary.
SECTION 3. Quorum. Except as otherwise expressly required by
-------
these By-Laws or by statute, a majority of the directors then in office
(but not less than one-third of the total number of directors constituting
the entire Board) shall be present at any meeting of the Board in order to
constitute a quorum for the transaction of business at such meeting, and
the vote of a majority of the directors present at any such meeting at
which quorum is present shall be necessary for the passage of any
resolution or for an act to be the act of the Board. In the absence of a
quorum, a majority of the directors present may adjourn such meeting from
time to time until a quorum shall be present. Notice of any adjourned
meeting need not be given.
ARTICLE III
Committees of the Board
-----------------------
SECTION 1. Committees. The Board may establish by resolution
-----------
any committee of the Board (a "Committee"). Any Committee shall be
comprised of such persons and shall possess such authority as shall be set
forth in such resolution.
SECTION 2. Procedures. (a) Each Committee shall fix its own
-----------
rules of procedure and shall meet where and as provided by such rules.
Unless otherwise stated in these By- Laws, a majority of a Committee shall
constitute a quorum.
(b) In the absence or disqualification of a member of any
Committee, the members of such Committee present at any meeting, and not
disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in
the place of any such absent or disqualified member.
ARTICLE IV
Officers
--------
SECTION 1. General Provisions. The corporate officers of the
-------------------
corporation shall consist of the following: a Chairman and/or a President,
one of whom shall be designated Chief Executive Officer and each of whom
shall be chosen from the Board; one or more Vice Chairman, Executive Vice
Presidents, Senior Vice Presidents, Vice Presidents and Assistant Vice
Presidents; a General Counsel, a Secretary, one or more Assistant
Secretaries, a Treasurer, one or more Assistant Treasurers, a Controller,
and such other officers as the Board may from time to time designate.
Insofar as permitted by statute, the same person may hold two or more
offices. All officers chosen by the Board shall each have such powers and
duties as generally pertain to their respective offices, subject to the
specific provisions of this Article IV.
The Chairman and/or President, each Vice Chairman, Executive Vice
President, Senior Vice President and Vice President, the Secretary and the
Treasurer shall be elected by the Board. Each such officer shall hold
office until his successor is elected or appointed and qualified or until
his earlier death, resignation or removal.
Any officer may be removed, with or without cause, at any time by
the Board.
A vacancy in any office may be filled for the unexpired portion
of the term in the same manner as provided in these By-Laws for election or
appointment to such office.
SECTION 2. Powers and Duties of the Chief Executive Officer.
-------------------------------------------------
The Chief Executive Officer shall have general charge and management of the
affairs, property and business of the corporation, subject to the Board and
the provisions of these By-Laws. The Chief Executive Officer or in his
absence such other individual as the Board may select, shall preside at all
meetings of the stockholders. He shall also preside at meetings of the
Board and in his absence the Board shall appoint one of their number to
preside.
The Chief Executive Officer shall perform all duties assigned to
him in these By-Laws and such other duties as may from time to time be
assigned to him by the Board. He shall have the power to appoint and
remove, with or without cause, such officers, other than those elected by
the Board as provided for in these By-Laws, as in his judgment may be
necessary or proper for the transaction of the business of the corporation,
and shall determine their duties, all subject to ratification by the Board.
SECTION 3. Powers and Duties of The Chairman. The Chairman
----------------------------------
shall perform such duties as may from time to time be assigned to him by
the Board or the Chief Executive Officer.
SECTION 4. Powers and Duties of the Vice Chairman. Each Vice
---------------------------------------
Chairman shall perform such duties as may from time to time be assigned to
him by the Board or the Chief Executive Officer.
SECTION 5. Powers and Duties of the President. The President
-----------------------------------
shall perform such duties as may from time to time be assigned to him by
the Board or the Chief Executive Officer.
SECTION 6. Powers and Duties of the Executive Vice President.
--------------------------------------------------
Each Executive Vice President shall perform such duties as may from time to
time be assigned to him by the Board or the Chief Executive Officer.
SECTION 7. Powers and Duties of the Senior Vice President. Each
-----------------------------------------------
Senior Vice President shall perform such duties as may from time to time be
assigned to him by the Board or the Chief Executive Officer.
SECTION 8. Powers and Duties of Each Vice President and
--------------------------------------------
Assistant Vice President. Each Vice President and Assistant Vice President
-------------------------
shall perform such duties as may from time to time be assigned to him by
the Board, the Chief Executive Officer or an Executive Vice President.
SECTION 9. Powers and Duties of the General Counsel. The
-----------------------------------------
General Counsel shall have general supervision and control of all of the
corporation's legal business. He shall perform such other duties as may be
assigned to him by the Board or the Chief Executive Officer.
SECTION 10. Powers and Duties of the Secretary and Assistant
------------------------------------------------
Secretary. The Secretary or an Assistant Secretary shall record the
----------
proceedings of all meetings of the Board and the stockholders, in books
kept for that purpose. The Secretary shall be the custodian of the
corporate seal, and he or an Assistant Secretary shall affix the same to
and countersign papers requiring such acts; and he and the Assistant
Secretaries shall perform such other duties as may be required by the Board
or the Chief Executive Officer.
SECTION 11. Powers and Duties of the Treasurer and Assistant
------------------------------------------------
Treasurer. The Treasurer and Assistant Treasurers shall have care and
----------
custody of all funds of the corporation and disburse and administer the
same under the direction of the Board or the Chief Executive Officer and
shall perform such other duties as the Board or the Chief Executive Officer
shall assign to them.
SECTION 12. Powers and Duties of the Controller. The Controller
------------------------------------
shall maintain adequate records of all assets, liabilities and transactions
of the corporation and see that audits thereof are currently and regularly
made; and he shall perform such other duties as may be required by the
Board or the Chief Executive Officer.
SECTION 13. Salaries and Appointments. The salaries of
--------------------------
corporate officers shall be fixed by the Board, except that the fixing of
salaries below certain levels, determinable from time to time by the Board,
may in the discretion of the Board be delegated to the Chief Executive
Officer, subject to the approval of the Board.
SECTION 14. Indemnification of Directors and Officers. (a) The
------------------------------------------
corporation shall indemnify and hold harmless, to the fullest extent
permitted by applicable law as it presently exists or may hereafter be
amended, any person (an "Indemnitee") who was or is made or is threatened
to be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative,
including appeals (a "proceeding"), by reason of the fact that he, or a
person for whom he is the legal representative, is or was a director or
officer of the corporation or, while a director or officer of the
corporation, is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or nonprofit entity,
including service with respect to employee benefit plans, against all
liability and loss suffered and expenses (including attorneys' fees)
reasonably incurred by such Indemnitee. Notwithstanding the preceding
sentence, except as otherwise provided in paragraph (3) of this Section 14,
the corporation shall be required to indemnify an Indemnitee in connection
with a proceeding (or part thereof) commenced by such Indemnitee only if
the commencement of such proceeding (or part thereof) by the Indemnitee was
authorized by the Board.
(b) The corporation shall pay the expenses (including attorneys'
fees) incurred by an Indemnitee in defending any proceeding in advance of
its final disposition, provided, however, that, to the extent required by
law, such payment of expenses in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the
Indemnitee to repay all amounts advanced if it should be ultimately
determined that the Indemnitee is not entitled to be indemnified under this
Section 14 or otherwise.
(c) If a claim for indemnification or payment of expenses under
this Section 14 is not paid in full within thirty days after a written
claim therefor by the Indemnitee has been received by the corporation, the
Indemnitee may file suit to recover the unpaid amount of such claim and, if
successful in whole or in part, shall be entitled to be paid the expense of
prosecuting such claim. In any such action the corporation shall have the
burden of proving that the Indemnitee is not entitled to the requested
indemnification or payment of expenses under applicable law.
(d) The rights conferred on any Indemnitee by this Section 14
shall not be exclusive of any other rights which such Indemnitee may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, these By-Laws, agreement, vote of stockholders or
disinterested directors or otherwise.
(e) The corporation's obligation, if any, to indemnify or to
advance expenses to any Indemnitee who was or is serving at its request as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, enterprise or nonprofit entity shall be reduced by
any amount such Indemnitee may collect as indemnification or advancement of
expenses from such other corporation, partnership, joint venture, trust,
enterprise or nonprofit enterprise.
(f) Any repeal or modification of the foregoing provisions of
this Section 14 shall not adversely affect any right or protection
hereunder of any Indemnitee in respect of any act or omission occurring
prior to the time of such repeal or modification.
(g) This Section 14 shall not limit the right of the
corporation, to the extent and in the manner permitted by law, to indemnify
and to advance expenses to persons other than Indemnitees when and as
authorized by appropriate corporate action.
ARTICLE V
Capital Stock
-------------
SECTION 1. Certificates of Stock. Certificates of stock
----------------------
certifying the number of shares owned shall be issued to each stockholder
in such form not inconsistent with the Certificate of Incorporation as
shall be approved by the Board. Such certificates of stock shall be
numbered and registered in the order in which they are issued and shall be
signed by the Chairman, the President or a Vice President, and by the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary. Any and all the signatures on the certificates may be a
facsimile.
SECTION 2. Transfers of Shares. Transfers of shares shall be
--------------------
made only upon the books of the corporation by the holder, in person, or by
power of attorney duly executed and filed with the Secretary of the
corporation, and on the surrender of the certificate or certificates of
such shares, properly assigned. The corporation may, if and whenever the
Board shall so determine, maintain one or more offices or agencies, each in
charge of an agent designated by the Board, where the shares of the capital
stock of the corporation shall be transferred and/or registered. The Board
may also make such additional rules and regulations as it may deem
expedient concerning the issue, transfer and registration of certificates
for shares of the capital stock of the corporation.
SECTION 3. Lost, Stolen or Destroyed Certificates. The
---------------------------------------
corporation may issue a new certificate of capital stock of the corporation
in place of any certificate theretofore issued by the corporation, alleged
to have been lost, stolen or destroyed, and the corporation may, but shall
not be obligated to, require the owner of the alleged lost, stolen or
destroyed certificate, or his legal representatives, to give the
corporation a bond sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or destruction of any
such certificate or the issuance of such new certificate, as the officers
of the corporation may, in their discretion, require.
ARTICLE VI
Miscellaneous
-------------
SECTION 1. Dividends and Reserves. Dividends upon the capital
-----------------------
stock of the corporation may be declared as permitted by law by the Board
at any regular or special meeting. Before payment of any dividend or making
any distribution of profits, there may be set aside out of the surplus or
net profits of the corporation such sum or sums as the Board, from time to
time, in its absolute discretion, think proper as a reserve fund to meet
contingencies, or for such other purposes as the Board shall think
conducive to the interests of the corporation, and any reserve so
established may be abolished and restored to the surplus account by like
action of the Board.
SECTION 2. Seal. The seal of the corporation shall bear the
-----
corporate name of the corporation, the year of its incorporation and the
words "Corporate Seal, Delaware".
SECTION 3. Waiver. Whenever any notice whatever is required to
-------
be given by statute or under the provisions of the Certificate of
Incorporation or these By-Laws, a waiver thereof in writing signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Neither the business to
be transacted at, nor the purpose of, any annual or special meeting of the
stockholders or the Board, as the case may be, need be specified in any
waiver of notice of such meeting.
SECTION 4. Fiscal Year. The fiscal year of the corporation shall
------------
begin with January first and end with December thirty-first.
SECTION 5. Contracts. Except as otherwise required by law, the
----------
Certificate of Incorporation or these By-Laws, any contracts or other
instruments may be executed and delivered in the name and on the behalf of
the corporation by such officer or officers of the corporation as the Board
may from time to time direct. Such authority may be general or confined to
specific instances as the Board may determine. The Chairman of the Board,
the President or any Vice President may execute bonds, contracts, deeds,
leases and other instruments to be made or executed for or on behalf of the
corporation. Subject to any restrictions imposed by the Board, the Chairman
of the Board, the President or any Vice President of the corporation may
delegate contractual powers to others under his jurisdiction, it being
understood, however, that any such delegation of power shall not relieve
such officer of responsibility with respect to the exercise of such
delegated power.
SECTION 6. Proxies. Unless otherwise provided by resolution
--------
adopted by the Board, the Chairman of the Board, the President or any Vice
President may from time to time appoint an attorney or attorneys or agent
or agents of the corporation, in the name and on behalf of the corporation,
to cast the votes which the corporation may be entitled to cast as the
holder of stock or other securities in any other corporation or other
entity, any of whose stock or other securities may be held by the
corporation, at meetings of the holders of the stock or other securities of
such other corporation or other entity, or to consent in writing, in the
name of the corporation as such holder, to any action by such other
corporation or other entity, and may instruct the person or persons so
appointed as to the manner of casting such votes or giving such consent,
and may execute or cause to be executed in the name and on behalf of the
corporation and under its corporate seal or otherwise, all such written
proxies or other instruments as he may deem necessary or proper in the
premises.
SECTION 7. Amendments. The Board from time to time shall have
-----------
the power to make, alter, amend or repeal any and all of these By-Laws, but
any By-Laws so made, altered or repealed by the Board may be amended,
altered or repealed by the stockholders.
A IV-1
ANNEX V
Form of Affiliate Agreement
---------------------------
Dear Sirs:
The undersigned refers to the Agreement and Plan of Merger (the
"Merger Agreement") dated as of November 7, 2001, among Northrop Grumman
-----------------
Corporation, a Delaware corporation (the "Parent"), Purchaser Corp. I, a
------
Delaware corporation and a wholly-owned subsidiary of the Parent (the
"Purchaser"), and Newport News Shipbuilding Inc., a Delaware corporation
----------
(the "Company"). Capitalized terms used but not defined in this letter
-------
have the meanings given to such terms in the Merger Agreement.
The undersigned, a holder of shares of Company Common Stock, is
entitled to receive in connection with the Merger shares of Parent Common
Stock. The undersigned acknowledges that the undersigned may be deemed, as
of the date of the Company Stockholder Meeting, an "affiliate" of the
Company within the meaning of Rule 145 ("Rule 145") promulgated under the
--------
Securities Act, although nothing contained herein should be construed as an
admission of such fact.
If in fact the undersigned were an affiliate under the Act as of
the date of the Company Stockholder Meeting, the undersigned's ability to
sell, assign or transfer the Parent Common Stock received by the
undersigned in exchange for any shares of Company Common Stock pursuant to
the Merger may be restricted unless such transaction is registered under
the Act or an exemption from such registration is available. The
undersigned (i) understands that such exemptions are limited and (ii) has
obtained advice of counsel as to the nature and conditions of such
exemptions, including information with respect to the applicability to the
sale of such securities of Rules 144 and 145(d) promulgated under the
Securities Act.
The undersigned hereby represents to and covenants with Parent
that the undersigned will not sell, assign or transfer any of the Parent
Common Stock received by the undersigned in exchange for shares of Company
Common Stock pursuant to the Merger except (i) pursuant to an effective
registration statement under the Securities Act, (ii) in a transaction that
meets the requirements of Rule 145 or (iii) in a transaction that, in the
opinion of independent counsel reasonably satisfactory to Parent (the
reasonable fees of which counsel will be paid by Parent) or as described in
a "no-action" or interpretive letter from the Staff of the SEC, is not
required to be registered under the Securities Act. The undersigned will
not be required to comply with the foregoing covenant if it is not an
affiliate of the Company as of the date of the Company Stockholder Meeting.
The undersigned acknowledges that (i) the undersigned has
carefully read this letter and understands the requirements hereof and the
limitations imposed upon the distribution, sale, transfer or other
disposition of Parent Common Stock and (ii) the receipt by Parent of this
letter is an inducement and a condition to Parent's obligations to
consummate the Merger.
Very truly yours,
Dated:
A V-1
