NEWPORT NEWS SHIPBUILDING INC.
$200,000,000
8 5/8% SENIOR NOTES DUE 2006
AND
$200,000,000
9 1/4% SENIOR SUBORDINATED NOTES DUE 2006
PURCHASE AGREEMENT
November 21, 1996
X.X. Xxxxxx Securities Inc.
CS First Boston Corporation
Xxxxxx Xxxxxxx & Co. Incorporated
BA Securities, Inc.
NationsBanc Capital Markets, Inc.
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Newport News Shipbuilding Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to X.X. Xxxxxx Securities Inc., CS First Boston
Corporation, Xxxxxx Xxxxxxx & Co. Incorporated, BA Securities, Inc. and
NationsBanc Capital Markets, Inc. (the "Initial Purchasers") $200,000,000
aggregate principal amount of its 8 5/8% Senior Notes due 2006 (the "Senior
Notes") and $200,000,000 aggregate principal amount of its 9 1/4% Senior
Subordinated Notes due 2006 (the "Senior Subordinated Notes," and, together
with the Senior Notes, the "Notes"). The Senior Notes will be issued pursuant
to the provisions of an Indenture to be dated as of November 26, 1996 (the
"Senior Note Indenture") among the Company, the Guarantor (as defined below)
and The Bank of New York, as trustee (the "Senior Note Trustee"). The Senior
Subordinated Notes will be issued pursuant to the provisions of an Indenture
to be dated as of November 26, 1996 (the "Senior Subordinated Note Indenture,"
and, together with the Senior Note Indenture, the "Indentures") among the
Company, the Guarantor and The Bank of New York, as trustee (the "Senior
Subordinated Note Trustee," and, together with the Senior Note Trustee, the
"Trustee"). The Notes will be initially guaranteed (the "Guarantees," and,
collectively with the Notes, the "Securities") by Newport News Shipbuilding
and Dry Dock Company, a Virginia corporation (the "Guarantor").
Holders of the Senior Notes will have the benefits of a Registration Rights
Agreement to be dated as of November 26, 1996 (the "Senior Notes Registration
Rights Agreement") among the Initial Purchasers, the Company and the
Guarantor. Holders of the Senior Subordinated Notes will have the benefits of
a Registration Rights Agreement to be dated as of November 26, 1996 (the
"Senior Subordinated Notes Registration Rights Agreement," and, together with
the Senior Notes Registration Rights Agreement, the "Registration Rights
Agreements") among the Initial Purchasers, the Company and the Guarantor.
The sale of the Securities to the Initial Purchasers will be made without
registration of the Securities under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance upon the exemption therefrom provided by
Section 4(2) of the Securities Act.
In connection with the sale of the Securities, the Company and the Guarantor
have prepared a preliminary offering memorandum, dated November 8, 1996 (the
"Preliminary Offering Memorandum"), and an offering memorandum, dated November
21, 1996 (the "Offering Memorandum"). Any reference to the Preliminary
Offering Memorandum or the Offering Memorandum, as the case may be, as amended
or supplemented as of any specified date, shall be deemed to include any Rule
144A(d)(4) Information (as defined in Section 5(m)) furnished by the Company
prior to completion of the distribution of the Securities. Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed
to them in the Offering Memorandum.
The Company and the Guarantor hereby agree with the Initial Purchasers as
follows:
1. Upon the basis of the representations, warranties and agreements
contained herein, the Company and the Guarantor agree to issue and sell the
Securities to the Initial Purchasers as hereinafter provided, and each Initial
Purchaser, upon the basis of the representations, warranties and agreements
herein contained, but subject to the conditions hereinafter stated, agrees to
purchase, severally and not jointly, from the Company (i) the respective
principal amount of Senior Notes set forth opposite such Initial Purchaser's
name in Schedule I hereto at a purchase price (the "Senior Note Purchase
Price") equal to 97.75% of their principal amount and (ii) the respective
principal amount of Senior Subordinated Notes set forth opposite such Initial
Purchaser's name in Schedule I hereto at a purchase price (the "Senior
Subordinated Note Purchase Price," and, together with the Senior Note Purchase
Price, the "Total Purchase Price") equal to 97.50% of their principal amount.
No additional consideration shall be paid by the Initial Purchasers for the
Guarantees.
2. The Company and the Guarantor understand that the Initial Purchasers
intend (i) to offer privately their respective portions of the Securities as
soon after this Agreement has become effective as in the judgment of the
Initial Purchasers is advisable and (ii) initially to offer the Securities
upon the terms set forth in the Preliminary Offering Memorandum and the
Offering Memorandum.
The Company and the Guarantor confirm that they have authorized the Initial
Purchasers, subject to the restrictions set forth below, to distribute copies
of the Preliminary Offering Memorandum and the Offering Memorandum in
connection with the offering of the Securities. Each Initial Purchaser hereby
makes to the Company and the Guarantor the following representations,
warranties and agreements:
(i) it is a qualified institutional buyer within the meaning of Rule 144A
under the Securities Act;
(ii) (A) neither it nor any person acting on its behalf will solicit
offers for, or offer to sell, the Securities by any form of general
solicitation or general advertising (as those terms are used in Regulation
D under the Securities Act) or in a manner involving a public offering
within the meaning of Section 4(2) of the Securities Act and (B) it and
persons acting on its behalf will solicit offers for the Securities only
from, and will offer and sell the Securities only to, (1) in the case of
offers and sales in the United States, (x) persons whom it reasonably
believes to be "qualified institutional buyers" within the meaning of and
in accordance with Rule 144A under the Securities Act or (y) a limited
number of institutions which it reasonably believes are "accredited
investors," as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act, who, in the case of purchasers described in this
clause (B)(1)(y), provide it with a letter in the form of Exhibit A to the
Offering Memorandum and (2) in the case of offers and sales outside the
United States, persons whom it reasonably believes to be persons other than
U.S. persons, in reliance upon and in accordance with Regulation S under
the Securities Act;
(iii) except for offers and sales described in (ii)(B)(1) above, it will
not offer, sell or deliver the Securities to, or for the account or benefit
of, U.S. persons (a) as part of its distribution at any time or
(b) otherwise until 40 days after the later of the commencement of the
offering and the Closing Date (defined below), and it will send to each
dealer to whom it sells such Securities during such period a confirmation
or other notice setting forth the restrictions on offers and sales of the
Securities within the United States or to, or for the account or benefit
of, U.S. persons; and
(iv) neither it nor any person acting on its behalf will offer, sell or
deliver any of the Securities in any jurisdiction outside the United States
except under circumstances that will result in compliance with the
applicable laws thereof.
3. Payment for the Securities shall be made by wire transfer in immediately
available funds to an escrow account specified by the Trustee to the Initial
Purchasers no later than noon on the Business Day (as defined below) prior to
the Closing Date (as defined below), on November 26, 1996, or at such other
time on the same or such other date, not later than the fifth Business Day
thereafter, as the Initial Purchasers and the Company may agree upon in
writing. The time and date of such payment are referred to herein as the
"Closing Date." As used herein, the term "Business Day" means any day other
than a day on which banks are permitted or required to be closed in New York
City.
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Payment for the Securities shall be made against delivery (i) to the nominee
of The Depository Trust Company for the respective accounts of the Initial
Purchasers of one or more global Senior Notes and global Senior Subordinated
Notes (collectively, the "Global Notes") and/or (ii) to the Initial Purchasers
of one or more physical Senior Notes and physical Senior Subordinated Notes
(collectively, the "Physical Notes"), together representing the Securities,
with any transfer taxes payable in connection with the transfer to the Initial
Purchasers of the Securities duly paid by the Company. The Global Notes and
the Physical Notes will be made available for inspection by the Initial
Purchasers at the office of X.X. Xxxxxx Securities Inc. at the address set
forth above not later than 1:00 P.M., New York City time, on the Business Day
prior to the Closing Date.
4. Each of the Company and the Guarantor represents and warrants to each
Initial Purchaser that:
(a) the Preliminary Offering Memorandum and the Offering Memorandum and
any amendments or supplements thereto did not and will not, as of their
respective dates, and, in the case of the Offering Memorandum, at all times
subsequent thereto up to the Closing Date, contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties
set forth in this subclause (a) do not apply to statements or omissions
made in reliance upon and conformity with information specifically
furnished in writing to the Company by the Initial Purchasers through X.X.
Xxxxxx Securities Inc. expressly for use in the Preliminary Offering
Memorandum, the Offering Memorandum or any amendment or supplement thereto;
(b) the financial statements, and the related notes thereto, included in
the Offering Memorandum present fairly in all material respects the
combined financial position, results of operations and changes in combined
cash flows of the shipbuilding business of Tenneco Inc. ("Tenneco") and its
subsidiaries as of the dates and for the periods indicated; and said
financial statements have been prepared in conformity with United States
generally accepted accounting principles and practices applied on a
consistent basis; and the pro forma financial information, and the related
notes thereto, included in the Offering Memorandum is based upon good faith
estimates and assumptions believed by the Company and the Guarantor to be
reasonable;
(c) since the respective dates as of which information is given in the
Offering Memorandum, there has not been (i) any change in the capital stock
or long-term debt of the Company and the Subsidiaries (as defined in the
Offering Memorandum) or (ii) any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the business, prospects, management, financial position,
stockholders' equity or results of operations of the Company and the
Subsidiaries, taken as a whole, otherwise than as set forth or contemplated
in the Offering Memorandum; and except as set forth or contemplated in the
Offering Memorandum, none of the Company, the Subsidiaries or Tenneco or
Tenneco's subsidiaries (with respect to the shipbuilding business of
Tenneco and its subsidiaries to be operated by the Company and the
Subsidiaries after the Shipbuilding Distribution (as defined in the
Offering Memorandum) as contemplated by the Offering Memorandum (the
"Shipbuilding Business")) has entered into any transaction (whether or not
in the ordinary course of business) material to the Company and the
Subsidiaries, taken as a whole;
(d) the Company has been duly incorporated and is validly existing as a
corporation under the laws of its jurisdiction of incorporation, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Offering Memorandum, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing (if applicable) under the laws of each other jurisdiction
in which it owns or leases properties, or conducts any business, so as to
require such qualification, other than where the failure to be so qualified
or in good standing would not have a material adverse effect on the
business, prospects, management, financial position, stockholders' equity
or results of operations of the Company and the Subsidiaries, taken as a
whole (a "Material Adverse Effect");
(e) the Company has the capitalization set forth in the Offering
Memorandum; and the shares of capital stock of the Company to be
distributed in the Shipbuilding Distribution, when distributed by Tenneco
pursuant to the Distribution Agreement (as defined in the Offering
Memorandum), will be duly authorized
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and validly issued, and fully paid and non-assessable, owned free and clear
of all liens, encumbrances, security interests and claims;
(f) each corporation which after giving effect to the Shipbuilding
Distribution (as defined in the Offering Memorandum), will be a
"significant subsidiary" (as defined in Regulation S-X under the Securities
Act) of the Company (each, a "Subsidiary" and, collectively, "the
Subsidiaries") has been duly incorporated and is validly existing as a
corporation under the laws of its jurisdiction of incorporation, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Offering Memorandum, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing (if applicable) under the laws of each jurisdiction in
which it owns or leases properties or conducts any business, so as to
require such qualification, other than where the failure to be so qualified
or in good standing would not have a Material Adverse Effect; and all the
outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued, are fully paid and non-assessable, and
(except for any directors' qualifying shares and except as described in the
Offering Memorandum) are or will be immediately following the Shipbuilding
Distribution owned by the Company, directly or indirectly, free and clear
of all liens, encumbrances, security interests and claims, other than liens
securing the Senior Credit Facility (as defined in the Offering Memorandum)
and any other liens permitted under the Indentures;
(g) this Agreement has been duly authorized, executed and delivered by
each of the Company and the Guarantor;
(h) the Notes have been duly authorized and, when issued and delivered
pursuant to the Indentures and this Agreement, will have been duly
executed, authenticated, issued and delivered and will constitute valid and
binding obligations of the Company entitled to the benefits provided by the
Indentures, enforceable against the Company in accordance with their terms,
except as enforceability thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) equitable
principles of general applicability whether applied by a court of law or
equity; each of the Indentures has been duly authorized by the Company and,
when executed and delivered by each of the Company, the Guarantor and the
relevant Trustee, each of the Indentures will constitute a valid and
binding instrument of the Company, enforceable against the Company in
accordance with its terms, except as enforceability thereof may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect relating to creditors' rights generally and (ii)
equitable principles of general applicability whether applied by a court of
law or equity; and the Notes and the Indentures will conform to the
descriptions thereof in the Offering Memorandum;
(i) each of the Guarantees has been duly authorized and, when the Notes
are issued and delivered pursuant to the Indentures and this Agreement,
will have been duly executed, authenticated and delivered and will
constitute a valid and binding obligation of the Guarantor, enforceable
against the Guarantor in accordance with its terms, except as
enforceability thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) equitable principles of
general applicability whether applied by a court of law or equity; each of
the Indentures has been duly authorized by the Guarantor and, when executed
and delivered by the Guarantor and the relevant Trustee, each of the
Indentures will constitute a valid and binding instrument of the Guarantor,
enforceable against the Guarantor in accordance with its terms, except as
enforceability thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) equitable principles of
general applicability whether applied by a court of law or equity; and the
Guarantees will conform to the description thereof in the Offering
Memorandum;
(j) each of the Registration Rights Agreements has been duly authorized
by each of the Company and the Guarantor and, when executed and delivered
by each of the Company and the Guarantor, each of the Registration Rights
Agreements will constitute a valid and binding instrument of each of the
Company and the Guarantor, enforceable against each of the Company and the
Guarantor in accordance with its terms, except as (A) the enforceability
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
4
moratorium or similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) equitable principles of general
applicability whether applied by a court of law or equity and (B) any
rights to indemnity or contribution thereunder may be limited by federal
and state securities laws and public policy considerations; and the
Registration Rights Agreements will conform to the description thereof in
the Offering Memorandum;
(k) the Senior Credit Facility has been duly authorized by each of the
Company and the Guarantor and the Senior Credit Facility constitutes a
valid and binding instrument of each of the Company and the Guarantor,
enforceable against each of the Company and the Guarantor in accordance
with its terms, except as enforceability thereof may be limited by (i)
bankruptcy insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
equitable principles of general applicability whether applied by a court of
law or equity; and the Senior Credit Facility conforms to the description
thereof in the Offering Memorandum;
(l) the use of the proceeds from the sale of the Securities by the
Company will not violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
regulation promulgated thereunder, including, without limitation,
Regulations G, T, U, and X of the Board of Governors of the Federal Reserve
System;
(m) none of the Company, the Subsidiaries or Tenneco or its subsidiaries
(with respect to the Shipbuilding Business) is, or with the giving of
notice or lapse of time or both would be, in violation of or in default
under its Certificate of Incorporation or By-Laws or any indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which the Company, any of the Subsidiaries or Tenneco or any
of its subsidiaries (with respect to the Shipbuilding Business) is a party
or by which it or any of them or any of their respective properties is
bound, except for violations and defaults which individually and in the
aggregate would not have a Material Adverse Effect; the issue and sale of
the Securities and the performance by the Company and the Guarantor of all
of the provisions of their obligations under the Securities, the
Indentures, the Registration Rights Agreements, the Senior Credit Facility
and this Agreement (collectively, the "Transaction Documents") and the
consummation of the transactions herein and therein contemplated will not
conflict with or result in a breach of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which the Company or
the Guarantor is or, following the Shipbuilding Distribution, will be a
party or by which any of them is or, following the Shipbuilding
Distribution, will be bound or to which any of the property or assets of
the Company or the Guarantor is or, following the Shipbuilding
Distribution, will be subject, nor will any such action result in any
violation of the provisions of the Certificate of Incorporation or By-Laws
of the Company or the Guarantor or any applicable law or statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company, the Guarantor or any of their
respective properties; and no consent, approval, authorization, order,
license, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Securities or the consummation by the Company and the Guarantor of the
transactions contemplated by the Transaction Documents, except such
consents, approvals, authorizations, registrations or qualifications as
have been obtained or may be required under state securities, Blue Sky Laws
or laws of other countries in connection with the purchase and distribution
of the Securities by the Initial Purchasers;
(n) other than as set forth or contemplated in the Offering Memorandum,
there are no legal or governmental investigations, actions, suits or
proceedings pending or, to the knowledge of the Company and the Guarantor,
threatened against or affecting the Company, any of the Subsidiaries or
Tenneco or any of its subsidiaries (with respect to the Shipbuilding
Business) or any of their respective properties or to which the Company or
any of the Subsidiaries is or may be a party or to which any property of
the Company or any of the Subsidiaries is or may be the subject which will,
individually or in the aggregate, have a Material Adverse Effect and, to
the best of the Company's and the Guarantor's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
5
(o) none of the Company, the Guarantor or their respective affiliates (as
defined in Rule 501(b) of Regulation D under the Securities Act
("Regulation D")) has directly, or through any agent, sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which is or will be integrated
with the sale of the Securities in a manner that would require the
registration under the Securities Act of the offering contemplated by the
Offering Memorandum;
(p) none of the Company, the Guarantor, their respective affiliates or
any person acting on their behalf has offered or sold the Securities by
means of any general solicitation or general advertising within the meaning
of Rule 502(c) under the Securities Act or, with respect to Securities sold
outside the United States to non-U.S. persons (as defined in Rule 902 under
the Securities Act), by means of any directed selling efforts within the
meaning of Rule 902 under the Securities Act, and each of the Company, the
Guarantor, their respective affiliates and any person acting on their
behalf has complied with the "offering restriction" within the meaning of
such Rule 902;
(q) neither the Company nor the Guarantor is, nor, after giving effect to
the offering and sale of the Securities and the Shipbuilding Distribution,
will be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended;
(r) it is not necessary in connection with the offer, sale and delivery
of the Securities in the manner contemplated by this Agreement to register
the Securities under the Securities Act or to qualify the Indentures under
the Trust Indenture Act of 1939, as amended;
(s) the Securities satisfy the requirements set forth in Rule 144A(d)(3)
under the Securities Act;
(t) Xxxxxx Xxxxxxxx LLP, who have certified certain financial statements
of the Company and the Subsidiaries, are independent public accountants as
required by the Securities Act;
(u) except as described in the Offering Memorandum, after giving effect
to the Shipbuilding Distribution, the Company and the Subsidiaries will
have good and marketable title in fee simple to all material items of real
property and good and marketable title to all material personal property
owned by the Company and the Subsidiaries or by Tenneco and its
subsidiaries and used in the Shipbuilding Business, in each case free and
clear of all liens, encumbrances and defects except such as do not
materially affect the value of such property and do not materially
interfere with the use proposed to be made of such property by the Company
and the Subsidiaries; and after giving effect to the Shipbuilding
Distribution, any material real property and buildings to be held under
lease by the Company or the Subsidiaries will be held by them under valid,
existing and enforceable leases with such exceptions as are not material
and do not interfere with the use proposed to be made of such property and
buildings by the Company or the Subsidiaries;
(v) the Company and the Subsidiaries have complied with all provisions of
Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida)
relating to doing business with the Government of Cuba or with any person
or affiliate located in Cuba;
(w) each of the Company, the Subsidiaries and Tenneco and its
subsidiaries (with respect to the Shipbuilding Business) has filed all
federal, state, local and foreign tax returns which have been required to
be filed and have paid all taxes shown thereon and all assessments received
by them or any of them to the extent that such taxes have become due and
are not being contested in good faith; and, except as disclosed in the
Offering Memorandum, there is no tax deficiency which has been or might
reasonably be expected to be asserted or threatened against the Company or
any of the Subsidiaries;
(x) the Company, immediately following the Shipbuilding Distribution,
will be subject to Section 13 or 15(d) of the Exchange Act;
(y) after giving effect to the Shipbuilding Distribution, each of the
Company and the Subsidiaries will own, possess or have obtained all
material licenses, permits, certificates, consents, orders, approvals and
other authorizations from, and Tenneco and its subsidiaries have made and,
after giving effect to the Shipbuilding Distribution, the Company and the
Subsidiaries will have made all declarations and filings
6
with, all federal, state, local and other governmental authorities
(including foreign regulatory agencies), all self-regulatory organizations
and all courts and other tribunals, domestic or foreign, necessary to own
or lease, as the case may be, and to operate its properties and to carry on
the Shipbuilding Business as conducted as of the date hereof, except where
the failure to so obtain, individually and in the aggregate, would not have
a Material Adverse Effect; and neither the Company nor the Guarantor has
received any actual notice, or is aware of, any proceeding relating to
revocation or modification of any such license, permit, certificate,
consent, order, approval or other authorization, except as described in the
Offering Memorandum; and Tenneco and its subsidiaries (with respect to the
Shipbuilding Business) are, and after giving effect to the Shipbuilding
Distribution, each of the Company and the Subsidiaries will be in
compliance in all material respects with all laws and regulations necessary
to conduct the Shipbuilding Business;
(z) there are no existing or, to the best knowledge of the Company and
the Guarantor, threatened labor disputes with the employees of the Company
or the Subsidiaries which will have, singly or in the aggregate, a Material
Adverse Effect;
(aa) except as set forth in the Offering Memorandum, the Company and the
Subsidiaries are and, immediately after giving effect to the Shipbuilding
Distribution, will be (i) in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) in possession of all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct the
Shipbuilding Business and (iii) in compliance with all terms and conditions
of any such permit, license or approval, except where such noncompliance
with Environmental Laws, failure to possess required permits, licenses or
other approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals will not, singly or in the aggregate, have a
Material Adverse Effect; and after giving effect to the Shipbuilding
Distribution and the Transaction Documents (as defined in the Offering
Memorandum), associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities and
any potential liabilities to third parties) would not, singly or in the
aggregate, have a Material Adverse Effect;
(ab) each employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
that is or, after the Shipbuilding Distribution, will be maintained,
administered or contributed to by the Company or any affiliates of the
Company for employees or former employees of the Company and its affiliates
has been maintained in compliance with its terms and the requirements of
any applicable statutes, orders, rules and regulations, including but not
limited to ERISA and the Internal Revenue Code of 1986, as amended
("Code"), except where the failure to so comply, individually and in the
aggregate, would not have a Material Adverse Effect. No prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of
the Code has occurred or, after giving effect to the Shipbuilding
Distribution, will occur with respect to any such plan excluding
transactions effected pursuant to a statutory or administrative exemption
and except for the occurrence of prohibited transactions which individually
and in the aggregate would not have a Material Adverse Effect. Except as
described in the Offering Memorandum, for each such plan which is subject
to the funding rules of Section 412 of the Code or Section 302 of ERISA (A)
no "accumulated funding deficiency" as defined in Section 412 of the Code
has been incurred, whether or not waived, and (B) the fair market value of
the assets of each such plan (excluding for these purposes accrued but
unpaid contributions) exceeds the present value of all benefits accrued
under such plan determined using reasonable actuarial assumptions other
than where the failure to so exceed would not have a Material Adverse
Effect; and
(ac) after giving effect to the Shipbuilding Distribution, each of the
Company and the Subsidiaries will own or possess adequate patents, patent
licenses, trademarks, service marks and trade names necessary to carry on
the Shipbuilding Business as conducted as of the date hereof; and none of
the Company nor the
7
Guarantor has received any written notice of infringement of or conflict
with (or knows of any such infringement of or conflict with) asserted
rights of others with respect to any patents, patent licenses, trademarks,
service marks or trade names which will, singly or in the aggregate, have a
Material Adverse Effect.
5. Each of the Company and the Guarantor covenants and agrees with each of
the Initial Purchasers as follows:
(a) before distributing any amendment or supplement to the Offering
Memorandum, to furnish to the Initial Purchasers a copy of the proposed
amendment or supplement for review and not to distribute any such proposed
amendment or supplement to which the Initial Purchasers reasonably object;
(b) if, at any time prior to the completion of the initial placement of
the Securities, any event shall occur as a result of which it is necessary
to amend or supplement the Offering Memorandum in order that the Offering
Memorandum does not contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein,
in the light of the circumstances when the Offering Memorandum is delivered
to a purchaser, not misleading, or if it is necessary to amend or
supplement the Offering Memorandum to comply with law, forthwith to prepare
and furnish, at the expense of the Company, to the Initial Purchasers and
to the dealers (whose names and addresses the Initial Purchasers will
furnish to the Company) to which Securities may have been sold by the
Initial Purchasers on behalf of the Initial Purchasers and to any other
dealers upon request, such amendments or supplements to the Offering
Memorandum as may be necessary so that the statements in the Offering
Memorandum as so amended or supplemented will not contain an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
when the Offering Memorandum is delivered to a purchaser, not misleading or
so that the Offering Memorandum will comply with law;
(c) to endeavor to qualify the Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Initial Purchasers
shall reasonably request and to continue such qualification in effect so
long as reasonably required for distribution of the Securities; provided
that the Company shall not be required to qualify as a foreign corporation
or to file a general consent to service of process in any jurisdiction;
(d) so long as the Securities are outstanding, to furnish to the Initial
Purchasers copies of all reports or other communications (financial or
other) furnished to holders of Securities, and copies of any reports and
financial statements furnished to or filed with the Commission or any
national securities exchange;
(e) during the period beginning on the date hereof and continuing to and
including the Business Day following the Closing Date, not to offer, sell,
contract to sell, or otherwise dispose of any debt securities of or
guaranteed by the Company or the Guarantor which are substantially similar
to the Securities;
(f) to use the net proceeds received by the Company from the sale of the
Securities pursuant to this Agreement in the manner specified in the
Offering Memorandum under the caption "Use of Proceeds";
(g) to use its best efforts to cause such Securities to be eligible for
the PORTAL trading system of the National Association of Securities Dealer,
Inc.;
(h) to furnish to the holders of the Securities as soon as reasonably
practicable after the end of each fiscal year an annual report (including a
balance sheet and statements of income, stockholders' equity and cash flows
of the Company and its consolidated subsidiaries certified by independent
public accountants) and, as soon as reasonably practicable after the end of
each of the first three quarters of each fiscal year (beginning with the
fiscal quarter ending after the date of the Offering Memorandum),
consolidated summary financial information of the Company and its
consolidated subsidiaries of such quarter in reasonable detail;
(i) during the period from the Closing Date to the earlier of (A) the
date the Exchange Offer (as defined in the Registration Rights Agreements)
is consummated and (B) the third anniversary of the Closing Date, the
Company will not, and will not permit any of its "affiliates" (as defined
in Rule 144 under the Securities
8
Act) to, resell any of the Securities which constitute "restricted
securities" under Rule 144 that have been reacquired by any of them;
(j) whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
costs and expenses incident to the performance of its obligations
hereunder, including without limiting the generality of the foregoing, all
costs and expenses (i) incident to the preparation, issuance, execution,
authentication and delivery of the Securities, including any expenses of
the Trustee, (ii) incident to the preparation, printing and distribution of
the Offering Memorandum and any preliminary offering memorandum (including
in each case all exhibits, amendments and supplements thereto), (iii)
incurred in connection with the registration or qualification and
determination of eligibility for investment of the Securities under the
laws of such jurisdictions as the Initial Purchasers may designate
(including reasonable fees of counsel for the Initial Purchasers and their
reasonable disbursements), (iv) in connection with the printing (including
word processing and duplication costs) and delivery of this Agreement, the
Indentures, the Registration Rights Agreements, the Blue Sky Survey and any
Legal Investment Survey and the furnishing to Initial Purchasers and
dealers of copies of the Offering Memorandum and the Preliminary Offering
Memorandum, including mailing and shipping, as herein provided, (v) payable
to rating agencies in connection with the rating of the Securities, and
(vi) any expenses incurred by the Company in connection with a "road show"
presentation to potential investors.
(k) the Company will take all action that is appropriate or necessary to
assure that its offerings of other securities will not be integrated for
purposes of the Securities Act with the offerings contemplated hereby;
(l) the Company will not solicit any offer to buy or offer to sell
Securities by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) of Regulation D under the
Securities Act;
(m) while the Securities remain outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act,
the Company will, during any period in which it is not subject to Section
13 or 15(d) under the Exchange Act, make available to the Initial
Purchasers and any holder of Securities in connection with any sale thereof
and any prospective purchaser of Securities, in each case upon request, the
information specified in, and meeting the requirements of, Rule 144A(d)(4)
("Rule 144A(d)(4) Information") under the Securities Act (or any successor
thereto); and
(n) the Company will not take any action prohibited by Rule 10b-6 under
the Exchange Act in connection with the distribution of the Securities
contemplated hereby.
6. The several obligations of the Initial Purchasers hereunder to purchase
the Securities on the Closing Date are subject to the performance by each of
the Company and the Guarantor of its obligations hereunder and to the
following additional conditions:
(a) the representations and warranties of each of the Company and the
Guarantor contained herein are true and correct in all material respects on
and as of the Closing Date as if made on and as of the Closing Date and
each of the Company and the Guarantor shall have complied in all material
respects with all agreements and all conditions on its part to be performed
or satisfied hereunder at or prior to the Closing Date;
(b) subsequent to the execution and delivery of this Agreement and prior
to the Closing Date, there shall not have occurred any downgrading, nor
shall any notice have been given of (i) any downgrading, (ii) any intended
or potential downgrading or (iii) any review or possible change that does
not indicate an improvement, in the rating accorded any securities of or
guaranteed by the Company by any "nationally recognized statistical rating
organization", as such term is defined for purposes of Rule 436(g)(2) under
the Securities Act;
(c) otherwise than as set forth or contemplated in the Offering
Memorandum, since the respective dates as of which information is given in
the Offering Memorandum, there shall not have been (i) any change in
9
the capital stock or long-term debt of the Company and the Subsidiaries or
(ii) any material adverse change or any development involving a prospective
material adverse change, in or affecting the business, prospects,
management, financial position, stockholders' equity or results of
operations of the Company and the Subsidiaries, taken as a whole, the
effect of which in the judgment of the Initial Purchasers makes it
impracticable or inadvisable to proceed with the offering or the delivery
of the Securities on the Closing Date on the terms and in the manner
contemplated in the Offering Memorandum; and none of the Company or the
Subsidiaries has sustained since the date of the latest audited financial
statements of the Company and the Subsidiaries included in the Offering
Memorandum any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Offering Memorandum;
(d) the Initial Purchasers shall have received on and as of the Closing
Date a certificate of an executive officer of each of the Company and the
Guarantor, with specific knowledge about the Company's or the Guarantor's
financial matters, as the case may be, satisfactory to the Initial
Purchasers to the effect set forth in subsections (a) and (b) of this
Section and to the further effect that, since the date of this Agreement,
there has not occurred any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
business, prospects, management, financial position, stockholders' equity
or results of operations of the Company and the Subsidiaries, taken as a
whole, except as set forth or contemplated in the Offering Memorandum;
(e) Xxxxxxx X. Xxxxxxxx, Vice President, General Counsel and Secretary of
the Company and the Guarantor, shall have furnished to the Initial
Purchasers his written opinion, dated the Closing Date, in form and
substance satisfactory to the Initial Purchasers, to the effect that:
(i) each of the Company and the Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with power and
authority (corporate and other) to own its properties and conduct its
business as described in the Offering Memorandum;
(ii) each of the Company and the Subsidiaries has been duly qualified
as a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or in
good standing would not have a Material Adverse Effect;
(iii) the shares of capital stock of the Company to be distributed in
the Shipbuilding Distribution, when distributed by Tenneco pursuant to
the Distribution Agreement, will be duly authorized and validly issued,
and fully paid and non-assessable;
(iv) all of the outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued, are fully
paid and non-assessable;
(v) to such counsel's knowledge, other than as set forth or
contemplated in the Offering Memorandum, there are no legal or
governmental investigations, actions, suits or proceedings pending or
threatened in writing against or affecting the Company or any of the
Subsidiaries or any of their respective properties or to which the
Company or any of the Subsidiaries is or may be a party or to which any
property of the Company or any of the Subsidiaries is or may be the
subject which would individually or in the aggregate have a Material
Adverse Effect;
(vi) this Agreement has been duly authorized, executed and delivered
by the each of the Company and the Guarantor;
(vii) the Notes have been duly authorized, executed and delivered by
the Company and, when duly authenticated in accordance with the terms
of the relevant Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, will
constitute valid and binding obligations of the Company entitled to the
benefits provided by the relevant Indenture, enforceable against the
Company in accordance with their terms, except as enforceability
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter
10
in effect relating to creditors' rights generally and (ii) equitable
principles of general applicability, whether applied by a court of law
or equity; the Notes conform to the descriptions thereof in the
Offering Memorandum;
(viii) each of the Indentures has been duly authorized, executed and
delivered by each of the Company and the Guarantor and constitutes a
valid and binding instrument of each of the Company and the Guarantor,
enforceable against each of the Company and the Guarantor in accordance
with its terms, except as enforceability thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar laws now
or hereafter in effect relating to creditors' rights generally and (ii)
equitable principles of general applicability, whether applied by a
court of law or equity; the Indentures conform to the description
thereof in the Offering Memorandum;
(ix) each of the Guarantees has been duly authorized, executed and
delivered by the Guarantor and, when the Notes are executed by the
Company and authenticated in accordance with the relevant Indenture and
delivered to and paid for by the Initial Purchasers in accordance with
the terms of this Agreement, will constitute a valid and binding
obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms, except as the enforceability thereof may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) equitable principles of general applicability,
whether applied by a court of law or equity; and, insofar as the
Guarantees are summarized in the Offering Memorandum, the Guarantees
conform to the descriptions thereof in the Offering Memorandum;
(x) each of the Registration Rights Agreements has been duly
authorized, executed and delivered by each of the Company and the
Guarantor and constitutes a valid and binding instrument of each of the
Company and the Guarantor; and, insofar as the Registration Rights
Agreements are summarized in the Offering Memorandum, the Registration
Rights Agreements conform to the descriptions thereof in the Offering
Memorandum;
(xi) the Senior Credit Facility has been duly authorized, executed
and delivered by each of the Company and the Guarantor and constitutes
a valid and binding obligation of each of the Company and the
Guarantor, enforceable against each of the Company and the Guarantor in
accordance with its terms, except as enforceability thereof may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) equitable principles of general applicability
whether applied by a court of law or equity; and, insofar as the Senior
Credit Facility is summarized in the Offering Memorandum, the Senior
Credit Facility conforms to the description thereof in the Offering
Memorandum;
(xii) to such counsel's knowledge, none of the Company, any of the
Subsidiaries or Tenneco or any of Tenneco's subsidiaries (with respect
to the Shipbuilding Business) is, or with the giving of notice or lapse
of time or both would be, in violation of or in default under its
Certificate of Incorporation or By-Laws or any indenture, mortgage,
deed of trust, loan agreement or other material agreement or instrument
known to such counsel to which the Company, any of the Subsidiaries or
Tenneco or any of Tenneco's subsidiaries (with respect to the
Shipbuilding Business) is a party or by which it or any of them or any
of their respective properties is bound, except for violations and
defaults which individually and in the aggregate will not have a
Material Adverse Effect; to such counsel's knowledge, the issue and
sale of the Securities and the performance by the Company and the
Guarantor of their respective obligations under the Transaction
Documents and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach of any of the
terms of provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument known to such counsel to which the Company or the Guarantor
is or, following the Shipbuilding Distribution, will be a party or by
which the Company or the Guarantor is or, following the Shipbuilding
Distribution, will be bound or to which any of the property or assets
of the Company or the Guarantor is or, following the Shipbuilding
Distribution, will be subject, nor will any such action result in any
violation of the provisions of the Certificate of Incorporation or By-
Laws of the Company or the Guarantor or any applicable law or statute
or any
11
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company, the Guarantor or any of their
respective properties;
(xiii) no consent, approval, authorization, order, license,
registration or qualification of or with any court or governmental
agency or body is required for the issue and sale of the Securities or
the consummation of the other transactions contemplated by this
Agreement or the Indentures, except such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws or the laws of other countries
in connection with the purchase and distribution of the Securities by
the Initial Purchasers or which have been previously obtained;
(xiv) it is not necessary in connection with the offer, sale and
delivery of the Securities in the manner contemplated by this Agreement
to register the Securities under the Securities Act or to qualify an
indenture under the Trust Indenture Act of 1939, as amended;
(xv) the Securities satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act;
(xvi) the statements in the Offering Memorandum under "Business--
Investigations and Legal Proceedings", "Description of the Notes",
"Description of the Senior Credit Facility" and "ERISA Considerations",
insofar as such statements constitute a summary of the legal matters,
documents or proceedings referred to therein, fairly present such legal
matters, documents or proceedings;
(xvii) such counsel believes that (except for the financial
statements, supporting schedules, statistical data and other financial
information included therein as to which such counsel need express no
belief) the Offering Memorandum did not, as of its date of issuance,
and does not, as amended or supplemented, if applicable, as of the
Closing Date, contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; and
(xviii) neither the Company nor the Guarantor is or, after giving
effect to the offering and sale of the Securities and the Shipbuilding
Distribution, will be an "investment company" or entity "controlled" by
an "investment company", as such terms are defined in the Investment
Company Act.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States
and the States of Delaware and Virginia, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an
opinion or opinions (reasonably satisfactory to the Initial Purchasers'
counsel) of other counsel, reasonably acceptable to the Initial Purchasers'
counsel, familiar with the applicable laws; (B) as to the opinions in
subparagraphs (xiv), (xv), (xvi) and (xviii) above, upon the opinion of
counsel referenced in paragraph (f) below; and (C) as to matters of fact,
to the extent such counsel deems proper, on certificates of responsible
officers of the Company and the Guarantor. The opinion of such counsel
shall state that the opinion of any such other counsel upon which they
relied is in form satisfactory to such counsel and, in such counsel's
opinion, the Initial Purchasers and they are justified in relying thereon.
With respect to the matters to be covered in subparagraph (xvii) above
counsel may state their opinion and belief is based upon their
participation in the preparation of the Offering Memorandum and any
amendment or supplement thereto but is without independent check or
verification except as specified.
The opinion of Xxxxxxx X. Xxxxxxxx described above shall be rendered to
the Initial Purchasers at the request of the Company and shall so state
therein;
(f) Jenner & Block, special Counsel for the Company, shall have furnished
to the Initial Purchasers their written opinion, dated the Closing Date, in
form and substance satisfactory to the Initial Purchasers, (i) to the
effect that such counsel believes that (except for financial statements,
supporting schedules, statistical data and other financial information
included therein as to which such counsel need express no belief) the
Offering Memorandum did not, as of its date of issuance, and does not, as
amended or supplemented, if applicable, as of the Closing Date, contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (such opinion of
such counsel may state their opinion and belief is based upon their
participation in the preparation of the Offering Memorandum and any
amendment or supplement
12
thereto but it is without independent check or verification except as
specified) and (ii) as to Federal and Illinois law only, with respect to
subparagraphs (xiv), (xv), (xvi) and (xviii) of paragraph (e) above.
The opinion of Xxxxxx & Block described above shall be rendered to the
Initial Purchasers at the request of the Company and shall so state
therein;
(g) on the date of the issuance of the Offering Memorandum and also on
the Closing Date, Xxxxxx Xxxxxxxx LLP shall have furnished to the Initial
Purchasers letters, dated the respective dates of delivery thereof, in form
and substance satisfactory to the Initial Purchasers, containing statements
and information of the type customarily included in accountants "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Offering Memorandum;
(h) the Initial Purchasers shall have received on and as of the Closing
Date an opinion of Xxxxxx Xxxxxx & Xxxxxxx, counsel to the Initial
Purchasers, with respect to the validity of the Indentures, the Securities
and the Registration Rights Agreements, and such other related matters as
the Initial Purchasers may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters; and
(i) on or prior to the Closing Date, the Company and the Guarantor shall
have furnished to the Initial Purchasers such further certificates and
documents as the Initial Purchasers shall reasonably request.
7. Each of the Company and the Guarantor, jointly and severally, agrees to
indemnify and hold harmless each Initial Purchaser and each person, if any,
who controls any Initial Purchaser within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act, from and against any and
all losses, claims, damages and liabilities (including without limitation the
reasonable legal fees and other expenses incurred in connection with any suit,
action or proceeding or any claim asserted) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Offering
Memorandum (and any amendment or supplement thereto, if the Company shall have
furnished any amendments or supplements thereto) or any preliminary offering
memorandum, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information relating to any Initial Purchaser specifically furnished to
the Company in writing by such Initial Purchaser through X.X. Xxxxxx
Securities Inc. expressly for use therein; provided, however, that the Company
and the Guarantor shall not be liable in any such case to the extent that any
such losses, claims, damages, liabilities or expenses are caused by an untrue
statement or omission or alleged untrue statement or alleged omission made in
any preliminary offering memorandum if (a) such Initial Purchaser failed to
deliver a copy of the Offering Memorandum with or prior to the delivery of
written confirmation of the sale of a Note or Notes to the person asserting
such loss, claim, damage, liability or expense who purchased such Note or
Notes which are the subject thereof and (b) the Offering Memorandum would have
corrected such untrue statement or omission or alleged untrue statement or
alleged omission; and provided further, that the Company and the Guarantor
shall not be liable in any such case to the extent that any such losses,
claims, damages, liabilities or expenses are caused by an untrue statement or
omission or alleged untrue statement or alleged omission in the Offering
Memorandum if such untrue statement or omission or alleged untrue statement or
alleged omission is corrected in an amendment or supplement to the Offering
Memorandum and if, having previously been furnished by or on behalf of the
Company and the Guarantor with copies of the Offering Memorandum as so amended
or supplemented, such Initial Purchaser thereafter fails to deliver such
Offering Memorandum as so amended or supplemented, prior to or concurrently
with the sale of a Note or Notes to the person asserting such loss, claim,
damage, liability or expense who purchased such Note or Notes which are the
subject thereof.
Each Initial Purchaser agrees, severally and not jointly, to indemnify and
hold harmless each of the Company, the Guarantor, their respective directors
and officers and each person who controls the Company within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act, to the
same extent as the foregoing indemnity from each of the Company and the
Guarantor to each Initial Purchaser, but only with reference to information
relating to such Initial Purchaser furnished to the Company in writing by such
Initial
13
Purchaser expressly for use in the Offering Memorandum, any amendment or
supplement thereto, or any preliminary offering memorandum.
If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any
person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall
promptly notify the person against whom such indemnity may be sought (the
"Indemnifying Person") in writing, and the Indemnifying Person, upon request
of the Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the
reasonable fees and expenses of such counsel related to such proceeding. In
any such proceeding, any Indemnified Person shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Person unless (i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed to the contrary, (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties
in any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to a conflict of
interest or the defendants in any such action including both the Indemnified
Person and the Indemnifying Person and the Indemnified Person shall have been
advised by counsel that there may be one or more legal defenses available to
it and/or the other Indemnified Persons that are different from or additional
to those of the Indemnifying Person. It is understood that the Indemnifying
Person shall not, in connection with any proceeding or related proceeding in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all Indemnified Persons,
and that all such fees and expenses shall be reimbursed as they are incurred.
Any such separate firm for the Initial Purchasers and such control persons of
Initial Purchasers shall be designated in writing by X.X. Xxxxxx Securities
Inc. and any such separate firm for any of the Company, the Guarantor, their
respective directors and officers and such control persons of the Company
shall be designated in writing by the Company. The Indemnifying Person shall
not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees to indemnify any
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an Indemnified Person shall have requested an Indemnifying Person to reimburse
the Indemnified Person for fees and expenses of counsel as contemplated by the
third sentence of this paragraph, the Indemnifying Person agrees that it shall
be liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 30 days after receipt
by such Indemnifying Person of the aforesaid request and (ii) such
Indemnifying Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement; provided,
however, that the Indemnifying Person shall not be liable for any settlement
effected without its consent pursuant to this sentence if the Indemnifying
Person is contesting, in good faith, the request for reimbursement. No
Indemnifying Person shall, without the prior written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified
Person, unless such settlement includes an unconditional release of such
Indemnified Person from all liability on claims that are the subject matter of
such proceeding.
If the indemnification provided for in the first and second paragraphs of
this Section 7 is unavailable to an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable
by such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantor on the one hand and the
Initial Purchasers on the other hand from the offering of the Securities or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company and the Guarantor on the one hand and the Initial Purchasers on
the other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant
14
equitable considerations. The relative benefits received by the Company and
the Guarantor on the one hand and the Initial Purchasers on the other shall be
deemed to be in the same respective proportions as the net proceeds from the
offering (before deducting expenses) received by the Company and the total
discounts and commissions received by the Initial Purchasers, in each case as
set forth in the table on the cover of the Offering Memorandum, bear to the
aggregate offering price of the Securities. The relative fault of the Company
and the Guarantor on the one hand and the Initial Purchasers on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or the Guarantor or by the Initial Purchasers and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission.
The Company, the Guarantor and the Initial Purchasers agree that it would
not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages and liabilities referred to
in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses incurred by such
Indemnified Person in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, in no event
shall an Initial Purchaser be required to contribute any amount in excess of
the amount by which the total price at which the Securities purchased by it
were offered exceeds the amount of any damages that such Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective principal amount of the Securities set forth opposite their names
in Schedule I hereto, and not joint.
The remedies provided for in this Section 7 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
The indemnity and contribution agreements contained in this Section 7 and
the representations and warranties of each of the Company and the Guarantor
set forth in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Initial Purchaser or any person
controlling any Initial Purchaser or by or on behalf of any of the Company,
the Guarantor, their respective officers or directors or any other person
controlling the Company and (iii) acceptance of and payment for any of the
Securities.
8. Notwithstanding anything herein contained, this Agreement may be
terminated in the absolute discretion of the Initial Purchasers, by notice
given to the Company, if after the execution and delivery of this Agreement
and prior to the Closing Date (i) trading generally shall have been suspended
or materially limited on or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (ii) trading of any securities of or
guaranteed by either the Company or Tenneco shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or
any calamity or crisis that, in the judgment of the Initial Purchasers, is
material and adverse and which, in the judgment of the Initial Purchasers,
makes it impracticable to market the Securities on the terms and in the manner
contemplated in the Offering Memorandum.
9. This Agreement shall become effective upon the execution and delivery
hereof by each of the parties hereto.
15
If, on the Closing Date any one or more of the Initial Purchasers shall fail
or refuse to purchase Securities which it or they have agreed to purchase
hereunder on such date, and the aggregate principal amount of Securities which
such defaulting Initial Purchaser or Initial Purchasers agreed but failed or
refused to purchase is not more than one-tenth of the aggregate principal
amount of the Securities to be purchased on such date, the other Initial
Purchasers shall be obligated severally in the proportions that the principal
amount of Securities set forth opposite their respective names in Schedule I
bears to the aggregate principal amount of Securities set forth opposite the
names of all such non-defaulting Initial Purchasers, or in such other
proportions as the Initial Purchasers may specify, to purchase the Securities
which such defaulting Initial Purchaser or Initial Purchasers agreed but
failed or refused to purchase on such date; provided that in no event shall
the principal amount of Securities that any Initial Purchaser has agreed to
purchase pursuant to Section 1 be increased pursuant to this Section 9 by an
amount in excess of one-ninth of such principal amount of Securities without
the written consent of such Initial Purchaser. If on the Closing Date any
Initial Purchaser or Initial Purchasers shall fail or refuse to purchase
Securities which it or they have agreed to purchase hereunder on such date,
and the aggregate principal amount of Securities with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of
Securities to be purchased on such date, and arrangements satisfactory to the
Initial Purchasers and the Company for the purchase of such Securities are not
made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Initial Purchaser or the
Company. In any such case either the Initial Purchasers or the Company shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Offering
Memorandum or in any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Initial
Purchaser from liability in respect of any default of such Initial Purchaser
under this Agreement.
10. If this Agreement shall be terminated by the Initial Purchasers, or any
of them, because of any failure or refusal on the part of either of the
Company or the Guarantor to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason either of the Company or
the Guarantor shall be unable to perform its obligations under this Agreement
or any condition of the Initial Purchasers' obligations cannot be fulfilled,
the Company agrees to reimburse the Initial Purchasers or such Initial
Purchasers as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and expenses of
their counsel) reasonably incurred by such Initial Purchasers in connection
with this Agreement or the offering contemplated hereunder.
11. This Agreement shall inure to the benefit of and be binding upon the
Company, the Guarantor, the Initial Purchasers, any controlling persons
referred to herein and their respective successors and assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person, firm or corporation any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. No purchaser of Securities from any Initial Purchaser shall be
deemed to be a successor by reason merely of such purchase.
12. Any action by the Initial Purchasers hereunder may be taken by X.X.
Xxxxxx Securities Inc. alone on behalf of the Initial Purchasers, and any such
action taken by X.X. Xxxxxx Securities Inc. alone shall be binding upon the
Initial Purchasers. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted
by any standard form of telecommunication. Notices to the Initial Purchasers
shall be given to the Initial Purchasers c/o X.X. Xxxxxx Securities Inc., 00
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0060; Attention: Syndicate Department.
Notices to the Company shall be given to it at Newport News Shipbuilding Inc.,
0000 Xxxxxxxxxx Xxxxxx, Xxxxxxx Xxxx, Xxxxxxxx 00000; Attention: Chief
Financial Officer.
13. This Agreement may be signed in counterparts, each of which shall be an
original and all of which together shall constitute one and the same
instrument.
14. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to the conflicts of laws
provisions thereof.
16
If the foregoing is in accordance with your understanding, please sign and
return four counterparts hereof.
Very truly yours,
Newport News Shipbuilding Inc.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President
Newport News Shipbuilding and Dry
Dock Company
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President
Accepted: November 21, 1996
X.X. Xxxxxx Securities Inc.
CS First Boston Corporation
Xxxxxx Xxxxxxx & Co. Incorporated
BA Securities, Inc.
Nationsbanc Capital Markets, Inc.
By: X.X. Xxxxxx Securities Inc.
By: /s/ Xxxxxx Xxxxx
---------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
17
SCHEDULE I
PRINCIPAL
PRINCIPAL AMOUNT AMOUNT OF SENIOR
OF SENIOR NOTES SUBORDINATED NOTES
INITIAL PURCHASER TO BE PURCHASED TO BE PURCHASED
----------------- ---------------- ------------------
X.X. Xxxxxx Securities Inc. ................ $100,000,000 $100,000,000
CS First Boston Corporation................. 40,000,000 40,000,000
Xxxxxx Xxxxxxx & Co. Incorporated........... 40,000,000 40,000,000
BA Securities, Inc. ........................ 10,000,000 10,000,000
NationsBanc Capital Markets, Inc. .......... 10,000,000 10,000,000
------------ ------------
Total:.................................... $200,000,000 $200,000,000
============ ============
