Exhibit 2.1
Execution Copy
AGREEMENT AND PLAN OF MERGER
AMONG
NORTHROP GRUMMAN CORPORATION,
PURCHASER CORP. I
AND
NEWPORT NEWS SHIPBUILDING INC.
TABLE OF CONTENTS
Description Page
ARTICLE 1
THE OFFER
Section 1.1 The Offer...................................................... 1
Section 1.2 Company Action................................................. 4
Section 1.3 Directors...................................................... 5
Section 1.4 Merger Without Meeting of Stockholders......................... 6
ARTICLE 2
THE MERGER
Section 2.1 The Merger................................................... 6
Section 2.2 The Closing.................................................. 6
Section 2.3 Effective Time............................................... 7
Section 2.4 Effects of the Merger........................................ 7
Section 2.5 Certificate of Incorporation and Bylaws...................... 7
Section 2.6 Directors.................................................... 7
Section 2.7 Officers..................................................... 7
Section 2.8 Conversion of Company Common Stock........................... 7
Section 2.9 Stock Options; Equity-Based Awards........................... 8
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.................................... 11
Section 3.2 Exchange Agent; Certificate Surrender Procedures............. 11
Section 3.3 Transfer Books............................................... 12
Section 3.4 Termination of Exchange Fund................................. 12
Section 3.5 Appraisal Rights............................................. 12
Section 3.6 Lost Certificates............................................ 12
Section 3.7 No Rights as Stockholder..................................... 13
Section 3.8 Withholding.................................................. 13
Section 3.9 Escheat...................................................... 13
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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Section 4.1 Organization................................................. 14
Section 4.2 Authorization of Transaction; Enforceability................. 14
Section 4.3 Noncontravention; Consents................................... 14
Section 4.4 Capitalization............................................... 15
Section 4.5 Company Reports; Proxy Statement............................. 16
Section 4.6 No Undisclosed Liabilities................................... 17
Section 4.7 Absence of Material Adverse Effect and Certain Events........ 17
Section 4.8 Litigation and Legal Compliance.............................. 17
Section 4.9 Contract Matters............................................. 18
Section 4.10 Tax Matters.................................................. 20
Section 4.11 Employee Benefit Matters..................................... 21
Section 4.12 Environmental Matters........................................ 23
Section 4.13 Title........................................................ 25
Section 4.14 Intellectual Property Matters................................ 25
Section 4.15 Labor Matters................................................ 25
Section 4.16 Rights Agreement............................................. 26
Section 4.17 State Takeover Laws.......................................... 26
Section 4.18 Brokers' Fees................................................ 26
Section 4.19 Termination of General Dynamics Merger Agreement............. 26
Section 4.20 Nuclear Related Activities................................... 26
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PARENT
AND THE PURCHASER
Section 5.1 Organization................................................. 27
Section 5.2 Authorization of Transaction; Enforceability................. 27
Section 5.3 Noncontravention; Consents................................... 27
Section 5.4 Capitalization............................................... 28
Section 5.5 Parent Reports............................................... 29
Section 5.6 No Undisclosed Liabilities................................... 30
Section 5.7 Absence of Material Adverse Effect and Certain Events........ 30
Section 5.8 Litigation and Legal Compliance.............................. 30
Section 5.9 Contract Matters............................................. 30
Section 5.10 Tax Matters.................................................. 32
Section 5.11 Employee Benefit Matters..................................... 33
Section 5.12 Environmental Matters........................................ 35
Section 5.13 Title........................................................ 35
Section 5.14 Intellectual Property Matters................................ 36
Section 5.15 Labor Matters................................................ 36
Section 5.16 Brokers' Fees................................................ 36
Section 5.17 Adequate Cash Resources...................................... 36
Section 5.18 No Capital Ownership in the Company.......................... 36
Section 5.19 Information for the Schedules TO and 14D-9, the Form S-4
and Proxy Statement.......................................... 36
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ARTICLE 6
COVENANTS
Section 6.1 General...................................................... 37
Section 6.2 Notices and Consents......................................... 37
Section 6.3 Interim Conduct of the Company............................... 37
Section 6.4 Preservation of Organization................................. 39
Section 6.5 Access....................................................... 39
Section 6.6 Notice of Developments....................................... 40
Section 6.7 Other Potential Acquirers.................................... 40
Section 6.8 Company Stockholder Meeting, Preparation of Proxy
Statement.................................................... 42
Section 6.9 Indemnification.............................................. 42
Section 6.10 Public Announcements......................................... 43
Section 6.11 Actions Regarding Antitakeover Statutes...................... 43
Section 6.12 Defense of Orders and Injunctions............................ 43
Section 6.13 Employee Benefit Matters..................................... 43
Section 6.14 Adjustment to Offer Consideration............................ 46
Section 6.15 Interim Conduct of the Parent................................ 46
Section 6.16 Tax Treatment; Tax Opinions.................................. 46
Section 6.17 No Company Rights Agreement Amendment........................ 47
Section 6.18 Affiliate Letter............................................. 47
Section 6.19 Consents of Accountants...................................... 47
ARTICLE 7
CONDITIONS TO THE CONSUMMATION OF THE MERGER
Section 7.1 Conditions to the Obligations of Each Party.................. 47
Section 7.2 Frustration of Closing Conditions............................ 47
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination.................................................. 48
Section 8.2 Effect of Termination........................................ 49
Section 8.3 Termination Fee.............................................. 50
ARTICLE 9
MISCELLANEOUS
Section 9.1 Nonsurvival of Representations............................... 51
Section 9.2 Remedies..................................................... 51
Section 9.3 Successors and Assigns....................................... 51
Section 9.4 Amendment.................................................... 51
Section 9.5 Extension and Waiver......................................... 51
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Section 9.6 Severability................................................. 51
Section 9.7 Counterparts................................................. 52
Section 9.8 Descriptive Headings......................................... 52
Section 9.9 Notices...................................................... 52
Section 9.10 No Third Party Beneficiaries................................. 53
Section 9.11 Entire Agreement............................................. 53
Section 9.12 Construction................................................. 53
Section 9.13 Submission to Jurisdiction................................... 53
Section 9.14 Governing Law................................................ 53
ANNEX I CERTAIN CONDITIONS OF THE OFFER........................... A I-1
ANNEX II OFFER CONSIDERATION....................................... A II-1
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....................................... AV-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
GAAP Section 4.5(b)
Governmental Entities Section 6.1
Hazardous Materials Section 4.12(c)
Indemnified Losses Section 6.9(a)
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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)
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)
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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 "Existing 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 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
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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
"subsequent 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 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
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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.
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
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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 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
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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 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.
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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, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, 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:
(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
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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 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).
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(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 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.
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(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, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
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.
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
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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 ▇▇▇▇▇'▇ 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 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
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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.
(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.
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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 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
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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 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.
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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.
(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
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accounting principles ("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.
(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,
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
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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 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
-17-
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 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
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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.
(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
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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.
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
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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 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.
(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,
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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.
(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
-22-
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 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.
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(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").
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
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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.
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
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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
▇▇▇▇▇-▇▇▇▇▇▇▇▇ 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
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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
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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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
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together with a right to purchase preferred stock of the Parent (the
"Parent Rights") issued pursuant to the Rights Agreement between the
Parent and ▇▇▇▇▇ ▇▇▇▇▇▇ 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, (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
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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 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 ▇▇▇▇▇▇ 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 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
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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 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,
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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 (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
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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 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
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Opinion") from Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, 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;
(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;
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(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 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
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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, (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.
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Section 5.16 Brokers' Fees. Except for the fees and expenses payable by
the Parent to ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 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.
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.
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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.
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
operating assets no longer required in its operations made in the
ordinary course of business, consistent with past practice;
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(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;
(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
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$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 satify 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 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
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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
(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.
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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
(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.
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(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
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.
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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.
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.
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(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 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 reasonably practicable, and in any event prior to
the Consummation of the Offer. If the Form S-3 has been declared
effective by the SEC prior to the Consummation of the Offer,
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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;
(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
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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, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
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 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
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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 efforts to cause to be
delivered to the Parent a consent letter best 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
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 efforts to cause to be
delivered to the Company a consent letter of the best 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
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(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;
(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
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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 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
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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
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.
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.
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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.
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:
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If to the Parent
Corporation Northrop Grumman Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Corporate Vice President and
Secretary
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which will
not constitute notice) to: Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company: Newport News Shipbuilding Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Vice President, General
Counsel & Secretary
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which will
not constitute notice ) to: Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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 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
-52-
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.
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* * * * *
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first written above.
NORTHROP GRUMMAN CORPORATION
By /s/ ▇▇ ▇▇▇▇▇
-------------------------------------
PURCHASER CORP. I
By /s/ W. ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
NEWPORT NEWS SHIPBUILDING INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
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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;
(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;
A-1
(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;
(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.
A-2
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-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) $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
A-1
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 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
A-2
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-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 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.
A-1
(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-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, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ 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
--------
1 Include bracketed text if the Merger is restructured in accordance
with Section 2.11 and the Company is the Surviving Corporation.
2
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.
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
3
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.
EIGHTH2: 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,
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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
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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
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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").
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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.
6
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.
7
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
8
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
9
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
10
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
11
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.
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
2
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: