Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
Dated as of June 3, 1999,
Among
▇▇▇▇▇▇ INDUSTRIES, INC.,
ATL ACQUISITION CORPORATION
And
AVONDALE INDUSTRIES, INC.
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TABLE OF CONTENTS
PAGE
ARTICLE I
The Merger
SECTION 1.1. The Merger.................................................. 1
SECTION 1.2. Closing..................................................... 1
SECTION 1.3. Effective Time.............................................. 2
SECTION 1.4. Effects..................................................... 2
SECTION 1.5. Articles of Incorporation and By-laws....................... 2
SECTION 1.6. Directors of Surviving Corporation.......................... 2
SECTION 1.7. Officers of Surviving Corporation........................... 2
ARTICLE II
Effect on the Capital Stock of the Constituent Corporations;
Exchange of Certificates
SECTION 2.1. Effect on Capital Stock..................................... 3
SECTION 2.2. Exchange of Certificates.................................... 4
ARTICLE III
Representations and Warranties of the Company
SECTION 3.1. Organization, Standing and Power............................ 5
SECTION 3.2. Company Subsidiaries; Equity Interests...................... 6
SECTION 3.3. Capital Structure........................................... 6
SECTION 3.4. Authority; Execution and Delivery; Enforceability........... 7
SECTION 3.5. No Conflicts; Consents...................................... 8
SECTION 3.6. SEC Documents; Undisclosed Liabilities...................... 9
SECTION 3.7. Proxy Statement............................................. 10
SECTION 3.8. Absence of Certain Changes or Events........................ 10
SECTION 3.9. Taxes....................................................... 11
SECTION 3.10. Absence of Changes in Benefit Plans......................... 12
SECTION 3.11. ERISA Compliance; Excess Parachute Payments................. 13
SECTION 3.12. Litigation.................................................. 15
SECTION 3.13. Compliance with Applicable Laws............................. 15
SECTION 3.14. Brokers; Schedule of Fees and Expenses...................... 16
SECTION 3.15. Opinion of Financial Advisor................................ 16
SECTION 3.16. Year 2000................................................... 16
SECTION 3.17. Environmental Matters....................................... 16
SECTION 3.18. Labor Matters............................................... 18
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SECTION 3.19. Government Contracts; Material Contracts.................... 18
SECTION 3.20. Newport News Agreement...................................... 19
ARTICLE IV
Representations and Warranties of Parent and Sub
SECTION 4.1. Organization, Standing and Power............................ 20
SECTION 4.2. Authority; Execution and Delivery; Enforceability........... 20
SECTION 4.3. No Conflicts; Consents...................................... 21
SECTION 4.4. Information Supplied........................................ 21
SECTION 4.5. Brokers..................................................... 21
SECTION 4.6 Opinion of Financial Advisor................................ 22
SECTION 4.7 Financing................................................... 22
SECTION 4.8 Ownership of Company Common Stock........................... 22
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.1. Conduct of Business......................................... 22
SECTION 5.2. No Solicitation by the Company.............................. 25
ARTICLE VI
Additional Agreements
SECTION 6.1. Preparation of the Proxy Statement; Stockholders Meeting.... 27
SECTION 6.2. Access to Information; Confidentiality...................... 27
SECTION 6.3. Reasonable Efforts; Notification............................ 28
SECTION 6.4. Company Stock Options....................................... 29
SECTION 6.5. Benefit Plans............................................... 30
SECTION 6.6. Indemnification............................................ 30
SECTION 6.7. Fees and Expenses........................................... 31
SECTION 6.8. Public Announcements........................................ 32
SECTION 6.9. Rights Agreements; Consequences if Rights Triggered......... 32
SECTION 6.10. Newport News Lock-up Option................................. 32
ARTICLE VII
Conditions Precedent
SECTION 7.1. Conditions to Each Party's Obligation To Effect The Merger.. 33
SECTION 7.2. Conditions to Obligations of Parent and Sub................. 33
SECTION 7.3. Conditions to Obligations of the Company.................... 34
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ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.1. Termination................................................. 35
SECTION 8.2. Effect of Termination....................................... 36
SECTION 8.3. Amendment................................................... 37
SECTION 8.4. Extension; Waiver........................................... 37
SECTION 8.5. Procedure for Termination, Amendment, Extension or Waiver... 37
ARTICLE IX
General Provisions
SECTION 9.1. Nonsurvival of Representations and Warranties............... 37
SECTION 9.2. Notices..................................................... 37
SECTION 9.3. Definitions................................................. 38
SECTION 9.4. Interpretation.............................................. 38
SECTION 9.5. Severability................................................ 39
SECTION 9.6. Counterparts................................................ 39
SECTION 9.7. Entire Agreement; No Third-Party Beneficiaries.............. 39
SECTION 9.8. Assignment.................................................. 39
SECTION 9.9. Enforcement................................................. 39
SECTION 9.10. Governing Law............................................... 40
Exhibit A Form of Amendment to Company Rights Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of June 3, 1999, among ▇▇▇▇▇▇
INDUSTRIES, INC., a Delaware corporation ("Parent"), ATL ACQUISITION
CORPORATION, a Louisiana corporation and a wholly owned subsidiary of Parent
("Sub"), and AVONDALE INDUSTRIES, INC., a Louisiana corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the merger (the "Merger") of Sub into the Company on the
terms and subject to the conditions set forth in this Agreement, whereby each
issued share of common stock, par value $1.00 per share, of the Company (the
"Company Common Stock") not owned directly or indirectly by Parent or the
Company shall be converted into the right to receive $39.50 per share in cash,
without interest.
WHEREAS simultaneously with the execution and delivery of this
Agreement the Company and Parent are entering into a stock option agreement (the
"Company Stock Option Agreement" and, together with this Agreement, the
"Transaction Agreements"), pursuant to which the Company is granting Parent the
option to purchase shares of Company Common Stock on the terms and subject to
the conditions set forth therein;
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. On the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Louisiana Business
Corporation Law (the "BCL"), Sub shall be merged with and into the Company at
the Effective Time (as defined in Section 1.3). At the Effective Time, the
separate corporate existence of Sub shall cease and the Company shall continue
as the surviving corporation (in such capacity, the Company is sometimes
referred to herein as the "Surviving Corporation"). The Merger and the other
transactions contemplated by the Transaction Agreements (including any exercise
of the option granted pursuant to the Company Stock Option Agreement) are
referred to in this Agreement collectively as the "Transactions".
SECTION 1.2. Closing. The closing (the "Closing") of the Merger shall
take place at the offices of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on the second business day
following the satisfaction (or, to the extent permitted by law, waiver by all
parties) of the conditions set forth in Section 7.1, or, if on such day any
condition set forth in Section 7.2 or 7.3 has not been satisfied (or, to the
extent permitted by law, waived by the party or parties entitled to the benefits
thereof), as soon as practicable after
all the conditions set forth in Article VII have been satisfied (or, to the
extent permitted by law, waived by the parties entitled to the benefits
thereof), or at such other place, time and date as shall be agreed in writing
between Parent and the Company. The date on which the Closing occurs is referred
to in this Agreement as the "Closing Date".
SECTION 1.3 Effective Time. Prior to the Closing, Parent shall
prepare, and on the Closing Date Parent shall file with the Secretary of State
of the State of Louisiana, a certificate of merger (the "Certificate of Merger")
executed in accordance with the relevant provisions of the BCL and shall make
all other filings or recordings required under the BCL. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with such
Secretary of State, or at such other time as Parent and the Company shall agree
and specify in the Certificate of Merger (the time the Merger becomes effective
being the "Effective Time"). After receipt of the Company Shareholder Approval
(as defined in Section 3.4(c)), prior to the Closing, the respective secretaries
or assistant secretaries of Sub and the Company shall certify on this Agreement
the fact that such approvals have been obtained, and this Agreement shall be
signed and acknowledged by a president or vice-president of Sub and the Company,
in each case in compliance with Section 112 of the BCL.
SECTION 1.4 Effects. The Merger shall have the effects set forth in
Section 115 of the BCL.
SECTION 1.5. Articles of Incorporation and By-laws. (a) The Articles
of Incorporation of Sub as in effect as of the Effective Time shall, by virtue
of the Merger, be the Articles of Incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law,
except that Article I thereof shall be amended such that from and after the
Effective Time the name of the Surviving Corporation shall be "Avondale
Industries, Inc." Without limitation, as of the Effective Time the Articles of
Incorporation of Sub shall contain provisions substantially identical to those
set forth in Article IX of the Articles of Incorporation of the Company as in
effect on the date of this Agreement.
(b) By-laws of Sub as in effect as of the Effective Time shall,
by virtue of the Merger, be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law. Without
limitation, as of the Effective Time the By-laws of Sub shall contain provisions
substantially identical to those set forth in Section 12 of the By-laws of the
Company as in effect on the date of this Agreement.
SECTION 1.6. Directors of Surviving Corporation. The directors of Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation from and after the Effective Time until the earlier of their
resignation or removal or until their respective successors are duly elected or
appointed and qualified, as the case may be.
SECTION 1.7. Officers of Surviving Corporation. The officers of the
Company immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected or appointed and qualified,
as the case may be.
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ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1. Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of capital
stock of Sub shall be converted into and become one fully paid and nonassessable
share of common stock, par value $0.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share
of Company Common Stock that is owned by the Company, Parent or Sub shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and no cash or other consideration shall be delivered in
exchange therefor.
(c) Conversion of Company Common Stock. (1) Subject to Sections
2.1(b), 2.1(d) and 2.2(e), each issued share of Company Common Stock shall be
converted into the right to receive $39.50 in cash, without interest (the
"Merger Consideration").
(2) At the Effective Time, all shares of Company Common Stock so
converted shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate representing
any such shares of Company Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration upon
surrender of such certificate in accordance with Section 2.2, without interest.
(d) Dissent Rights. Notwithstanding anything in this Agreement to the
contrary, shares ("Dissent Shares") of Company Common Stock that are outstanding
immediately prior to the Effective Time and that are held by any person who is
entitled to demand and properly demands payment from the Company of the fair
cash value of such Dissent Shares pursuant to, and who complies in all respects
with, Section 131 of the BCL ("Section 131") shall not be converted into Merger
Consideration as provided in Section 2.1(c), but rather the holders of Dissent
Shares shall be entitled to payment from the Company of the fair cash value of
such Dissent Shares in accordance with Section 131; provided, however, that if
any such holder shall fail to perfect or otherwise shall waive, withdraw or lose
the right to receive payment of fair cash value under Section 131, then the
right of such holder to be paid the fair cash value of such holder's Dissent
Shares shall cease and such Dissent Shares shall be treated as if they had been
converted as of the Effective Time into the Merger Consideration as provided in
Section 2.1(c). The Company shall promptly notify Parent of any demands received
by the Company for payment of the fair cash value of any shares of Company
Common Stock, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any
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payment with respect to, or settle or offer to settle, any such demands, or
agree to do any of the foregoing.
SECTION 2.2. Exchange of Certificates. (a) Exchange Agent. Prior to
the Effective Time, Parent shall designate a bank or trust company reasonably
acceptable to the Company to act as paying agent in the Merger (the "Exchange
Agent"), and, from time to time on, prior to or after the Effective Time, Parent
shall make available, or cause the Surviving Corporation to make available, to
the Exchange Agent funds in amounts and at the times necessary for the payment
of the Merger Consideration upon surrender of certificates representing shares
of Company Common Stock converted pursuant to Section 2.1(c).
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time (but in any event not later than the fifth business day after the
Closing Date), the Exchange Agent shall mail to each holder of record of a
certificate or certificates (the "Certificates") that immediately prior to the
Effective Time represented outstanding shares of Company Common Stock whose
shares were converted into the right to receive the Merger Consideration
pursuant to Section 2.1, (i) a letter of transmittal (which (A) shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent, (B)
shall have such other provisions as Parent may reasonably specify and (C) shall
be in a form to be reasonably agreed upon by Parent and the Company) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate for cancellation
to the Exchange Agent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Exchange Agent,
the holder of such Certificate shall be entitled to receive in exchange therefor
the amount of cash into which the shares of Company Common Stock theretofore
represented by such Certificate shall have been converted pursuant to Section
2.1(c), and the Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of Company Common Stock that is not registered
in the transfer records of the Company, a check for the Merger Consideration may
be issued to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such payment
shall pay any transfer or other taxes required by reason of the payment of the
Merger Consideration to a person other than the registered holder of such
Certificate or establish to the satisfaction of Parent that such tax has been
paid or is not applicable. Until surrendered as contemplated by this Section
2.2, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender Merger Consideration as
contemplated by this Section 2.2. No interest shall be paid or accrue on any
cash payable upon surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. The Merger
Consideration issued (and paid) in accordance with the terms of this Article II
upon conversion of any shares of Company Common Stock shall be deemed to have
been issued (and paid) in full satisfaction of all rights pertaining to such
shares, and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of shares of Company Common Stock
that were outstanding immediately prior to the Effective Time. If, after the
Effective Time, any certificates formerly representing shares of Company Common
Stock are
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presented to the Surviving Corporation or the Exchange Agent for any reason,
they shall be canceled and exchanged as provided in this Article II.
(d) Termination of Exchange Fund. Any portion of the funds deposited
with the Exchange Agent that remains undistributed to the holders of Company
Common Stock for six months after the Effective Time shall be delivered to
Parent, upon demand, and any holder of Company Common Stock who has not
theretofore complied with this Article II shall thereafter look only to Parent
for payment of its claim for Merger Consideration, without interest.
(e) No Liability. None of Parent, Sub, the Company or the Exchange
Agent shall be liable to any person in respect of funds deposited with the
Exchange Agent that are subsequently delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any Certificate
has not been surrendered prior to five years after the Effective Time (or
immediately prior to such earlier date on which Merger Consideration in respect
of such Certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 3.5)), any such cash in respect of
such Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(f) Investment of Exchange Fund. The Exchange Agent shall invest any
cash deposited with it pursuant to Section 2.2(a) as directed by Parent, on a
daily basis. Any interest and other income resulting from such investments shall
be paid to Parent.
(g) Withholding Rights. Parent shall be entitled to deduct and
withhold from the consideration otherwise payable to any holder of Company
Common Stock pursuant to this Agreement such amounts as it determines in good
faith to be required to be deducted and withheld with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended (the "Code"),
or under any provision of state, local or foreign tax law. Any amounts so
deducted and withheld shall be treated as having been paid to the applicable
stockholder for purposes of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
SECTION 3.1. Organization, Standing and Power. Each of the
Company and each of its subsidiaries (the "Company Subsidiaries") is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has full corporate power and authority
and possesses all governmental franchises, licenses, permits, authorizations and
approvals necessary to enable it to own, lease or otherwise hold its properties
and assets and to conduct its businesses as presently conducted, other than such
franchises, licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect (as defined below). The
Company and each Company Subsidiary is duly qualified to do business in each
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jurisdiction where the nature of its business or the ownership or leasing of its
properties make such qualification necessary, except where the failure to so
qualify has not had and would not reasonably be expected to have a Company
Material Adverse Effect. The Company has filed with the Securities and Exchange
Commission (the "SEC") true and complete copies of the articles of incorporation
of the Company, as amended to the date of this Agreement (as so amended, the
"Company Charter"), and the By-laws of the Company, as amended to the date of
this Agreement (as so amended, the "Company By-laws"), and has delivered to
Parent copies of the charter of each Company Subsidiary listed on Exhibit 21 to
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998, as amended prior to the date hereof (the "Company 1998 10-K"), in each
case as amended through the date of this Agreement. The term "Company Material
Adverse Effect" means any effect, event, state of fact or occurrence that
individually, or together with any other such effects, events, states of fact or
occurrences, (i) materially and adversely affects the ability of the Company to
perform its obligations under the Transaction Agreements or the ability of the
Company to consummate the Merger and the other Transactions, or (ii) has a
material adverse effect on the business, assets, condition (financial or
otherwise), prospects or results of operations of the Company and its
subsidiaries, taken as a whole.
SECTION 3.2. Company Subsidiaries; Equity Interests. (a) Exhibit 21 to
the Company 1998 10-K lists each Company Subsidiary. All the outstanding shares
of capital stock of each Company Subsidiary have been validly issued and are
fully paid and nonassessable and are owned by the Company, by another Company
Subsidiary or by the Company and another Company Subsidiary, free and clear of
all claims, pledges, liens, charges, mortgages, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens").
(b) Except for its interests in the Company Subsidiaries and except
for interests in partnerships 100% of the equity interests of which are owned by
the Company and the Company Subsidiaries, the Company does not own, directly or
indirectly, any capital stock, membership interest, partnership interest, joint
venture interest or other equity interest in any person.
SECTION 3.3. Capital Structure. The authorized capital stock of the
Company consists of 30,000,000 shares of Company Common Stock and 5,000,000
shares of preferred stock, par value $1.00 per share ("Company Preferred Stock"
and, together with the Company Common Stock, the "Company Capital Stock"). The
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999
accurately discloses the number of shares of Company Common Stock and Company
Preferred Stock issued and outstanding, and the number of such shares held by
the Company in its treasury, as of March 31, 1999, and, from such date to the
date of this Agreement, no additional shares of Company Common Stock or Company
Preferred Stock have been issued, except upon exercise of options outstanding as
of December 31, 1998. The Company 1998 10-K accurately discloses the number of
outstanding Company Employee Stock Options and, from December 31, 1998 to the
date of this Agreement, the Company has not granted any additional Company
Employee Stock Options. As of the date of this Agreement, no shares of capital
stock or other voting securities of the Company were issued, reserved for
issuance or outstanding, except (i) as set forth above, (ii) for shares of
Company Common Stock
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reserved for issuance pursuant to the Company Stock Plans (as defined in Section
6.4), (iii) for shares of Company Preferred Stock reserved for issuance in
connection with the rights (the "Company Rights") issued pursuant to the
Stockholder Protection Rights Agreement dated as of September 26, 1994 (as
amended from time to time, the "Company Rights Agreement"), between the Company
and ChaseMellon Shareholder Services, LLC, as Rights Agent, (iv) for shares of
Company Common Stock reserved for issuance in connection with the Newport News
Lock-Up Option (defined in Section 3.20), and (v) for shares of Company Common
Stock reserved for issuance upon the exercise of the option granted to Parent
pursuant to the Company Stock Option Agreement. There are no outstanding Company
SARs (as defined in Section 6.4) that were not granted in tandem with a related
Company Employee Stock Option. All outstanding shares of Company Capital Stock
are, and all such shares that may be issued prior to the Effective Time will be
when issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to or issued in violation of any purchase option, call option, right
of first refusal, preemptive right, subscription right or any similar right
under any provision of the BCL, the Company Charter, the Company By-laws or any
Contract (as defined in Section 3.5) to which the Company is a party or
otherwise bound. There are not any bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
holders of Company Common Stock may vote ("Voting Company Debt"). Except as set
forth above, and, except for 1,598 outstanding Company SARs in respect of 1,598
shares of Company Common Stock, there are not any options, warrants, rights,
convertible or exchangeable securities, "phantom" stock rights, stock
appreciation rights, stock-based performance units, commitments, Contracts,
arrangements or undertakings of any kind to which the Company or any Company
Subsidiary is a party or by which any of them is bound (i) obligating the
Company or any Company Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other equity
interests in, or any security convertible or exercisable for or exchangeable
into any capital stock of or other equity interest in, the Company or of any
Company Subsidiary or any Voting Company Debt, (ii) obligating the Company or
any Company Subsidiary to issue, grant, extend or enter into any such option,
warrant, call, right, security, commitment, Contract, arrangement or undertaking
or (iii) that give any person the right to receive any economic benefit or right
similar to or derived from the economic benefits and rights accruing to holders
of Company Capital Stock. There are not any outstanding contractual obligations
of the Company or any Company Subsidiary to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any Company Subsidiary.
The Company has filed with the SEC a complete and correct copy of the Company
Rights Agreement, as amended to the date of this Agreement, except that as of
the date of this Agreement, the Company and the Rights Agent have executed an
amendment thereto, in the form of Exhibit A to this Agreement.
SECTION 3.4. Authority; Execution and Delivery; Enforceability. (a)
The Company has all requisite corporate power and authority to execute the
Transaction Agreements and to consummate the Transactions. The execution and
delivery by the Company of each Transaction Agreement and the consummation by
the Company of the Transactions have been duly authorized by all necessary
corporate action on the part of the Company, subject, in the case of the Merger,
to receipt of the Company Shareholder Approval. The Company has duly executed
and delivered each Transaction Agreement, and each Transaction Agreement
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constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms.
(b) The Board of Directors of the Company (the "Company Board"), at a
meeting duly called and held duly adopted resolutions by the necessary vote (i)
approving this Agreement and the other Transaction Agreement, the Merger and the
other Transactions, (ii) determining that the terms of the Merger and the other
Transactions are fair to and in the best interests of the Company and its
shareholders and (iii) recommending that the Company's shareholders approve this
Agreement. Such resolutions are sufficient to render inapplicable to Parent and
Sub (when acting in accordance with and pursuant to this Agreement and the other
Transaction Agreement) and this Agreement and the other Transaction Agreement,
the Merger and the other Transactions the provisions of Sections 132-134 of the
BCL and paragraph B of Article V of the Company Charter. To the Company's
knowledge, no other state takeover statute or similar statute or regulation
applies or purports to apply to the Company with respect to this Agreement and
the other Transaction Agreement, the Merger or any other Transaction.
(c) The only vote of holders of any class or series of Company Capital
Stock necessary to approve and adopt this Agreement and the Merger is the
approval of this Agreement by the holders of a majority of the outstanding
shares of Company Common Stock (the "Company Shareholder Approval"). The
affirmative vote of the holders of Company Capital Stock, or any of them, is not
necessary to approve any Transaction Agreement other than this Agreement or to
consummate any Transaction other than the Merger.
(d) In making the representations and warranties in this Section 3.4,
the Company has assumed the accuracy of Parent's representation contained in
Section 4.8.
SECTION 3.5. No Conflicts; Consents. (a) Except as set forth in the
disclosure letter dated as of and delivered by the Company to Parent on March
31, 1999, the execution and delivery by the Company of each Transaction
Agreement to which it is a party do not, and the consummation of the Merger and
the other Transactions and compliance with the terms hereof and thereof will
not, conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the properties or
assets of the Company or any Company Subsidiary under, any provision of (i) the
Company Charter, the Company By-laws or the comparable charter or organizational
documents of any Company Subsidiary, (ii) any contract, lease, license,
indenture, note, bond, agreement, permit, concession, franchise or other
instrument (a "Contract") to which the Company or any Company Subsidiary is a
party or by which any of their respective properties or assets is bound or (iii)
subject to the filings and other matters referred to in Section 3.5(b), any
judgment, order or decree ("Judgment") or statute, law (including common law),
ordinance, rule or regulation ("Applicable Law") applicable to the Company or
any Company Subsidiary or their respective properties or assets, except, in the
case of clauses (ii) and (iii) above, for any such items that, individually or
in the aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect.
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(b) No material consent, approval, license, permit, order or
authorization ("Consent") of, or registration, declaration or filing with, any
Federal, state, local or foreign government or any court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental Entity") is
required to be obtained or made by or with respect to the Company or any Company
Subsidiary in connection with the execution, delivery and performance of any
Transaction Agreement to which it is a party or the consummation of the
Transactions, other than (i) compliance with and filings under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), (▇▇) the
filing with the Securities and Exchange Commission (the "SEC") of (A) a proxy or
information statement relating to the approval of this Agreement by the
Company's shareholders (the "Proxy Statement") and (B) such reports under
Sections 13 and 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as may be required in connection with this Agreement and the
other Transaction Agreement, the Merger and the other Transactions, (iii) the
filing of the Certificate of Merger with the Secretary of State of the State of
Louisiana and appropriate documents with the relevant authorities of the other
jurisdictions in which the Company is qualified to do business, (iv) such
filings as may be required in connection with transfers of property under
applicable Environmental Laws (as defined in Section 3.17), and (v) such other
items required solely by reason of the participation of Parent (as opposed to
any third party) in the Transactions.
(c) The Company and the Company Board have taken all action necessary
to (i) render the Company Rights inapplicable to this Agreement and the other
Transaction Agreement, the Merger and the other Transactions and (ii) ensure
that (A) neither Parent nor any of its affiliates or associates is or will
become an "Acquiring Person" (as defined in the Company Rights Agreement) by
reason of any Transaction Agreement, the Merger or any other Transaction, (B) no
"Separation Time", "Flip-in Date" or "Flip-over Event" (as such terms are
defined in the Company Rights Agreement) shall occur by reason of any
Transaction Agreement, the Merger or any other Transaction and (C) the Company
Rights shall expire immediately prior to the Effective Time.
SECTION 3.6. SEC Documents; Undisclosed Liabilities. The Company has
filed all reports, schedules, forms, statements and other documents required to
be filed by the Company with the SEC since January 1, 1997 (the "Company SEC
Documents"). As of its respective date, each Company SEC Document complied in
all material respects with the requirements of the Exchange Act or the
Securities Act of 1933, as amended (the "Securities Act"), as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
such Company SEC Document, and did not contain any untrue statement of a
material fact or omit 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. Except to the extent that
information contained in any Company SEC Document filed after January 1, 1998
(the "Company 1998 SEC Documents") has been revised or superseded by a later
filed Company 1998 SEC Document, the Company 1998 SEC Documents do not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The consolidated financial
9
statements of the Company included in the Company SEC Documents comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP")(except, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal recurring year-end audit adjustments), except that Parent
has been informed by the Company and acknowledges that up to $4,000,000 of a
previously recorded receivable relating to a single commercial contract that
shall be identified by the Company to Parent promptly following the execution of
this Agreement may not be collected. Except as set forth in the Filed Company
SEC Documents (as defined in Section 3.8), neither the Company nor any Company
Subsidiary has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise) that, individually or in the aggregate, has
had or would reasonably be expected to have a Company Material Adverse Effect.
SECTION 3.7. Proxy Statement. The Proxy Statement will not, at the
date it is first mailed to the Company's shareholders or at the time of the
Company Shareholders Meeting (as defined in Section 6.1), contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representation is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied by Parent or Sub
for inclusion or incorporation by reference in the Proxy Statement.
SECTION 3.8. Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Documents filed and publicly available on or after December
31, 1997 and prior to May 28, 1999 (the "Filed Company SEC Documents"), from
December 31, 1998 to the date of this Agreement, the Company has conducted its
business only in the ordinary course, and during such period there has not been:
(i) any event, change, effect or development that, individually or in
the aggregate, has had or would reasonably be expected 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
Company Capital Stock or any purchase, redemption or other acquisition for
value by the Company of any Company Capital Stock;
(iii) any split, combination or reclassification of any Company
Capital Stock 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
Company Capital Stock;
10
(iv) (A) any granting by the Company or any Company Subsidiary to any
director or executive officer of the Company or any Company Subsidiary 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 December 31, 1998, (B) any granting by the
Company or any Company Subsidiary 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
December 31, 1998, or (C) any entry by the Company or any Company
Subsidiary 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 Company Subsidiary 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
(vi) any elections with respect to Taxes (as defined in Section 3.9)
by the Company or any Company Subsidiary that could have the effect of
materially increasing any liability or materially decreasing any refund of
Taxes, or any settlement or compromise by the Company or any Company
Subsidiary of any material Tax liability or refund.
SECTION 3.9. Taxes. (a) Each of the Company and each Company
Subsidiary has timely filed, or has caused to be timely filed on its behalf, all
Tax Returns required to be filed by it, and all such Tax Returns are true,
complete and accurate, except to the extent any failure to file or any
inaccuracies in any filed Tax Returns, individually or in the aggregate, has not
had and would not reasonably be expected to have a Company Material Adverse
Effect. All Taxes shown to be due on such Tax Returns, or otherwise owed, have
been timely paid, except to the extent that any failure to pay, individually or
in the aggregate, has not had and would not reasonably be expected to have a
Company Material Adverse Effect.
(b) The most recent financial statements contained in the Filed
Company SEC Documents reflect an adequate reserve for all Taxes payable by the
Company and the Company Subsidiaries for all Taxable periods and portions
thereof through the date of such financial statements. No deficiency with
respect to any Taxes has been proposed, asserted or assessed against the Company
or any Company Subsidiary, and no requests for waivers of the time to assess any
such Taxes are pending, except to the extent any such deficiency or request for
waiver, individually or in the aggregate, has not had and would not reasonably
be expected to have a Company Material Adverse Effect.
(c) The Federal income Tax Returns of the Company and each Company
Subsidiary consolidated in such Returns have been examined by and settled with
the United States Internal Revenue Service for all years through 1987. All
material assessments for Taxes due with respect to such completed and settled
examinations or any concluded litigation have been fully paid.
11
(d) There are no material Liens for Taxes (other than for current
Taxes not yet due and payable or which are being contested in good faith) on the
assets of the Company or any Company Subsidiary. Neither the Company nor any
Company Subsidiary is bound by any agreement with respect to Taxes. There are no
material Tax Liens which are being contested in good faith as of the date of
this Agreement.
(e) Except for liability arising from direct claims by the United
States Internal Revenue Service relating to open years, if any, with respect to
▇▇▇▇▇ Corporation's consolidated tax returns for tax years during which the
Company was included in ▇▇▇▇▇ Corporation's consolidated returns ("▇▇▇▇▇-Related
Liability"), neither the Company nor any Company Subsidiary has any liability
for any Taxes of any person other than the Company and the Company Subsidiaries
(i) under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local or foreign law), (ii) as a transferee or successor, (iii) by
contract or (iv) otherwise. The Company has not received notice from any person
that the Company or any Company Subsidiary is liable for any ▇▇▇▇▇-Related
Liability, and the company is not aware of any dispute or any basis for any
dispute that could reasonably be expected to give rise to any material
▇▇▇▇▇-Related Liability. Neither the Company nor any Company Subsidiary is party
to any contract or agreement with ▇▇▇▇▇ Corporation or any of its affiliates
relating to the payment of Taxes or the reimbursement or indemnification
thereof. The Company is not a "United States real property holding corporation"
within the meaning of Code Section 897. Neither the Company nor any Company
Subsidiary has constituted a "distributing corporation" or a "controlled
corporation" (within the meaning of Section 355(a)(1)(A) of the Code) in a
distribution of stock intended to qualify for tax-free treatment under Section
355 of the Code (x) in the past 24 month period or (y) 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
Merger.
(f) For purposes of this Agreement:
"Taxes" includes all forms of taxation, whenever created or imposed,
and whether of the United States or elsewhere, and whether imposed by a local,
municipal, governmental, state, foreign, Federal or other Governmental Entity,
or in connection with any agreement with respect to Taxes, including all
interest, penalties and additions imposed with respect to such amounts.
"Tax Return" means all Federal, state, local, provincial and foreign
Tax Returns, declarations, statements, reports, schedules, forms and information
Returns and any amended Tax Return relating to Taxes.
SECTION 3.10. Absence of Changes in Benefit Plans. Except as disclosed
in the Filed Company SEC Documents, from December 31, 1998 to the date of this
Agreement, there has not been any adoption or amendment in any material respect
by the Company or any Company Subsidiary of any collective bargaining agreement
or any bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit, hospitalization,
12
medical or other plan, arrangement or understanding (whether or not legally
binding) providing benefits to any current or former employee, officer or
director of the Company or any Company Subsidiary (collectively, the "Company
Benefit Plans"). Except as disclosed in the Filed Company SEC Documents and
except as set forth in the last sentence of Section 6.6(a), there are not any
employment, consulting, indemnification, severance or termination agreements or
arrangements between the Company or any Company Subsidiary and any current or
former executive officer or director of the Company or any Company Subsidiary.
SECTION 3.11. ERISA Compliance; Excess Parachute Payments. (a) The
Filed Company SEC Documents accurately disclose all of the Company's and the
Company Subsidiaries' "employee pension benefit plans" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (sometimes referred to herein as "Company Pension Plans"). The
Company maintains "employee welfare benefit plans" (as defined in Section 3(1)
of ERISA) (the "Company EWBPs") and (i) with respect to those Company EWBPs
which are generally available to the Company's employees, the benefits available
under such plans are not materially greater than as would be customary in the
shipbuilding industry, (ii) with respect to those Company EWBPs which provide
additional benefits to executive officers of the Company, the Filed Company SEC
Documents accurately disclose all of such plans, and (iii) none of such Company
EWBPs has been amended since May 5, 1999.
(b) All Company Pension Plans have been the subject of determination
letters from the Internal Revenue Service to the effect that such Company
Pension Plans are qualified and exempt from Federal income taxes under Sections
401(a) and 501(a), respectively, of the Code, and no such determination letter
has been revoked nor, to the knowledge of the Company, has revocation been
threatened, nor has any such Company Pension Plan been amended since the date of
its most recent determination letter or application therefor in any respect that
would adversely affect its qualification or materially increase its costs.
(c) No Company Pension Plan that is subject to the funding
requirements set forth in Section 302 of ERISA or Section 412 or 4971 of the
Code, had, as of the respective last annual valuation date for each such Company
Pension Plan, an "unfunded benefit liability" (as such term is defined in
Section 4001(a)(18) of ERISA), based on reasonable actuarial assumptions. To the
knowledge of the Company, none of the Company Pension Plans has an "accumulated
funding deficiency" (as such term is defined in Section 302 of ERISA or Section
412 of the Code), whether or not waived. To the knowledge of the Company, none
of the Company, any Company Subsidiary, any officer of the Company or any
Company Subsidiary or any of the Company Benefit Plans which are subject to
ERISA, including the Company Pension Plans, any trusts created thereunder or any
trustee or administrator thereof, has engaged in a "prohibited transaction" (as
such term is defined in Section 406 of ERISA or Section 4975 of the Code) or any
other breach of fiduciary responsibility that could subject the Company, any
Company Subsidiary or any officer of the Company or any Company Subsidiary to
the tax or penalty on prohibited transactions imposed by such Section 4975 or to
any liability under Section 502(i) or 502(1) of ERISA. During the previous five
years, (i) none of the Company Pension Plans and trusts has been terminated,
(ii) to the knowledge of the Company, no "reportable
13
event" (as that term is defined in Section 4043 of ERISA) has occurred with
respect to any Company Benefit Plan, and (iii) neither the Company nor any
Company Subsidiary has contributed to or maintained, or been required to
contribute to or maintain, a multiemployer pension plan within the meaning of
Section 4001(a)(3) of ERISA.
(d) With respect to any Company Benefit Plan that is an employee
welfare benefit plan, (i) no such Company Benefit Plan is funded through a
"welfare benefits fund" (as such term is defined in Section 419(e) of the Code)
and (ii) each such Company Benefit Plan (including any such Plan covering
retirees or other former employees) may be amended or terminated without
material liability to the Company and the Company Subsidiary on or at any time
after the Effective Time except with respect to benefits of not more than 50
individuals who have already retired as of the date of this Agreement.
(e) Other than payments that may be made to the seven persons
described in the Company 1998 SEC Documents as having entered into change of
control severance agreements (or agreements having similar effect) with the
Company (the "Primary Company Executives") pursuant to such agreements, no
amount that could be received (whether in cash or property or the vesting of
property) as a result of the Merger or any other Transaction by any employee,
officer or director of the Company or any of its affiliates who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Company Benefit Plan currently in
effect would be characterized as an "excess parachute payment" (as defined in
Section 280G(b)(1) of the Code). The aggregate amount of payments and other
benefits to the Primary Company Executives (other than any "gross-up" for any
tax on "excess parachute payments") as a result of the Merger or any other
Transaction, either alone or in conjunction with any other event (such as
termination of employment), that could be deemed to be "excess parachute
payments" will not exceed $10,000,000. A complete and accurate copy of each
employment, severance, termination or change of control agreement with any of
the Primary Company Executives, as in effect as of the date of this Agreement,
is filed as an exhibit to the Company 1998 10-K. Other than as are filed as
exhibits to the Company 1998 10-K, there are no Company Benefit Plans, nor any
contracts or agreements to which the Company or any Company Subsidiary is party,
under which any severance, termination or other payment could become payable, or
any benefits could become vested or accelerated, or the funding of which could
be accelerated, to any officer, director, employee or affiliate of the Company
or the Company Subsidiaries as a result of the execution of either of the
Transaction Agreements or consummation of any of the Transactions contemplated
by the Transaction Agreements, either alone or in conjunction with any other
event such as a termination of employment. The aggregate amount of severance,
termination or similar payments (including any "gross-up" for taxes but
excluding any lump-sum payments of pension benefits that were vested prior to
the execution of this Agreement) that could become payable to officers,
directors, and affiliates of the Company upon a termination of employment in
connection with or following the Merger or any other Transaction does not exceed
$20,000,000.
14
(e) No Company Benefit Plan that is an employee stock ownership plan
as defined in Section 4975(e)(7) of the Code has any currently outstanding loans
described in Section 4975(d)(3) of the Code.
(f) With respect to each Company Benefit Plan, the Company and its
subsidiaries have complied, and are now in compliance, in all respects with all
provisions of ERISA, the Code and all other laws and regulations applicable to
such Company Benefit Plans and each Company Benefit Plan has been administered
in all respects in accordance with its terms, in each case except for any
non-compliance or failure to so administer as could not reasonably be expected
to result, individually or in the aggregate, in a material liability to the
Company or any Company Subsidiary.
(g) There are no pending or threatened claims (other than claims for
benefits in the ordinary course), lawsuits or arbitrations which have been
asserted or instituted against any of the Company Benefit Plans, any fiduciary
thereof with respect to its duties to any Company Benefit Plan or the assets of
any of the trusts under any of the Company Benefit Plans, which would reasonably
be expected to result in any material liability of the Company or any of its
subsidiaries to the Pension Benefit Guaranty Corporation, the Department of
Treasury, the Department of Labor, any other governmental agency or authority,
or any Company Benefit Plan or any participant in a Company Benefit Plan.
SECTION 3.12. Litigation. Except as disclosed in the Filed Company SEC
Documents, there is no suit, action or proceeding pending or, to the knowledge
of the Company, threatened against or affecting the Company or any Company
Subsidiary (and the Company is not aware of any basis for any such suit, action
or proceeding) that, individually or in the aggregate, has had or would
reasonably be expected to have a Company Material Adverse Effect, nor is there
any Judgment outstanding against the Company or any Company Subsidiary that has
had or would reasonably be expected to have a Company Material Adverse Effect.
SECTION 3.13. Compliance with Applicable Laws. Except as disclosed in
the Filed Company SEC Documents and except with respect to the Company Benefit
Plans (which are the subject of Sections 3.10 and 3.11), the Company and the
Company Subsidiaries are in compliance with all Applicable Laws, including those
relating to occupational health and safety, except for instances of
noncompliance that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Company Material Adverse Effect. Except as set
forth in the Filed Company SEC Documents, neither the Company nor any Company
Subsidiary has received any written communication during the past two years from
a Governmental Entity that alleges that the Company or a Company Subsidiary is
not in compliance in any material respect with any Applicable Law which is
material to the conduct of the business of the Company and the Company
Subsidiaries. For purposes of the immediately foregoing sentence only, notices,
items or events shall be deemed material if, individually or in the aggregate,
they have, have had or would reasonably be expected to have an adverse financial
effect of $2,000,000 or a materially adverse effect on the manner in which the
Company and the Company Subsidiaries conduct their business. This Section 3.13
does not relate to matters with respect to
15
Taxes, which are the subject of Section 3.9, or with respect to the environment,
which are the subject of Section 3.17.
SECTION 3.14. Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Inc., the fees and expenses of which will be paid by the Company, is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Merger and the other Transactions based upon
arrangements made by or on behalf of the Company. The financial terms of ▇▇▇▇▇▇▇
▇▇▇▇▇ Barney Inc.'s engagement (i) were not amended after May 5, 1999, and (ii)
are customary in light of the work performed by ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. in
connection with the transactions contemplated by the Newport/Avondale Agreement
and this Agreement and in light of the size and nature of such transactions.
SECTION 3.15. Opinion of Financial Advisor. The Company has received
the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., dated the date of this Agreement, to
the effect that, as of such date, based upon and subject to the conditions set
forth therein, the Merger Consideration is fair, from a financial point of view,
to the holders of Company Common Stock, a signed copy of which opinion has been
delivered to Parent.
SECTION 3.16. Year 2000. Except as disclosed in the Filed Company SEC
Documents, all computer systems and computer software used by the Company or any
of the Company Subsidiaries (a) recognize or are being adapted so that, prior to
December 31, 1999, they shall recognize the advent of the year A.D. 2000 without
any adverse change in operation associated with such recognition, (b) can
correctly recognize or are being adapted so that they can correctly recognize
and manipulate date information relating to dates before, on or after January 1,
2000, including accepting date input, performing calculations on dates or
portion of dates and providing date output, and the operation and functionality
of such computer systems and such computer software will not be adversely
affected by the advent of the year A.D. 2000 or any manipulation of data
featuring information relating to dates before, on or after January 1, 2000 and
(c) can suitably interact with other computer systems and computer software in a
way that does not compromise (i) its ability to correctly recognize the advent
of the year A.D. 2000 or (ii) its ability to correctly recognize and manipulate
date information relating to dates before, on or after January 1, 2000 (the
operations of clauses (a), (b) and (c) together, "Company Millennium
Functionality"), except in each case for such computer systems and computer
software, the failure of which to achieve Company Millennium Functionality,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect. To the knowledge of the Company, the costs of
the adaptations necessary to achieve Company Millennium Functionality are not
reasonably likely to have a Company Material Adverse Effect.
SECTION 3.17. Environmental Matters. (a) Except as disclosed in the
Filed Company SEC Documents, neither the Company nor any Company Subsidiary has
(i) placed, held, located, released, transported, discharged or disposed of any
Hazardous Substances (as defined below) on, under, from or at any of the
Company's or any of the Company Subsidiaries' properties or any other
properties, other than in a manner that, in all such cases taken individually or
in the aggregate, has not had, and would not reasonably be expected to have, a
Company
16
Material Adverse Effect, (ii) any knowledge or reason to know of the presence of
any Hazardous Substances on, under or at any of the Company's or any of the
Company Subsidiaries' properties or any other property but arising from the
Company's or any of the Company Subsidiaries' properties or activities, other
than in a manner that, in all such cases taken individually or in the aggregate,
has not had, and would not reasonably be expected to have, a Company Material
Adverse Effect, or (iii) during the preceding five years, received any written
notice (A) of any violation of any Applicable Law or Judgment relating to any
matter of pollution, protection of the environment, environmental regulation or
control or regarding Hazardous Substances (collectively, "Environmental Laws")
at, on or under any of the Company's or any of the Company Subsidiaries'
properties, (B) of the institution or pendency of any suit, action, proceeding
or investigation by any Governmental Entity or any third party in connection
with any such actual or alleged violation, (C) requiring the response to or
remediation of Hazardous Substances at or arising from any of the Company's or
any of the Company Subsidiaries' currently or formerly owned, leased or operated
properties, or (D) demanding payment for response to or remediation of Hazardous
Substances at or arising from any of the Company's or any of the Company
Subsidiaries' currently or formerly owned, leased or operated properties, other
than notices relating to matters which, individually or in the aggregate, do
not, and could not reasonably be expected to have, an adverse financial impact
on the Company and the Company Subsidiaries, taken as a whole, of more than
$3,000,000. For purposes of this Agreement, the term "Hazardous Substance" shall
mean any pollutants, toxic or hazardous materials, substances or wastes,
including asbestos, flammable explosives, radioactive materials and wastes,
petroleum and petroleum products and any substances defined as, or included in
the definition of, "pollutant", "hazardous substances", "hazardous wastes",
"hazardous materials" or "toxic substances" under any Environmental Law.
(b) The Company and the Company Subsidiaries have, and are in
compliance with, all permits and authorizations required under Environmental
Laws to conduct their respective businesses as conducted at the Closing Date,
except where the failure to have, or to be in compliance with, such permits and
authorizations has not had and would not reasonably be expected to have a
Company Material Adverse Effect.
(c) Except as would not reasonably be expected to have a Company
Material Adverse Effect, (i) no Environmental Law imposes any obligation upon
the Company or any Company Subsidiary arising out of or as a condition to any
Transaction, including any requirement to modify or to transfer any permit or
license, any requirement to file any notice or other submission with any
Governmental Entity, the placement of any notice, acknowledgment or covenant in
any land records, or the modification of or provision of notice under any
agreement, consent order or consent decree, and (ii) no Lien has been placed
upon any of the Company's or the Company Subsidiaries' properties under any
Environmental Law.
(d) Except as disclosed in the Filed Company SEC Documents, neither
the Company nor any Company Subsidiary is subject to any liability for
investigation, response, removal, or remediation costs or expenses under
Environmental Laws that would reasonably be expected to have a Company Material
Adverse Effect.
17
SECTION 3.18. Labor Matters. Except as set forth in the Filed Company
SEC Documents, neither the Company nor any of the Company Subsidiaries is the
subject of any suit, action or proceeding which is pending or, to the knowledge
of the Company, threatened, asserting that the Company or any of the Company
Subsidiaries has committed an unfair labor practice (within the meaning of the
National Labor Relations Act or applicable state statutes) or seeking to compel
the Company or any of the Company Subsidiaries to bargain with any labor
organization as to wages and conditions of employment, in any such case, that
has had or would reasonably be expected to have a Company Material Adverse
Effect. Except as set forth in the Filed Company SEC Documents, no strike or
other labor dispute involving the Company or any of the Company Subsidiaries is
pending or, to the knowledge of the Company, threatened, and, to the knowledge
of the Company, there is no activity involving any employees of the Company or
any of the Company Subsidiaries seeking to certify a collective bargaining unit
or engaging in any other organizational activity, except for any such dispute or
activity that, individually or in the aggregate, has not had and would not
reasonably be expected to have a Company Material Adverse Effect.
SECTION 3.19. Government Contracts; Material Contracts. (a) Each of
the Company's most recent estimates at completion for each contract to which the
Company or any Company Subsidiary is a party for which an estimate of completion
has been prepared (collectively, the "Current EACs"), each of which Current EAC
shall be delivered to Parent pursuant to Section 6.2(b), (i) was prepared in the
ordinary course and consistent with past practice and (ii) accurately reflects
the Company's best estimate of the total cost to complete each of the Company's
material contracts. Each such best estimate is based on all material facts
known, or that reasonably should have been known, to the Company at the time
such estimate at completion was prepared. The Company's estimate at completion
for each contract to which the Company or any Company Subsidiary is or was a
party for which an estimate at completion had been prepared as of the date of
the audited financial statements included in the Company 1998 10-K (the "10-K
EACs") are accurately reflected in such audited financial statements included in
the Company 1998 10-K. In the aggregate, the Current EACs do not reflect any
material change from the 10-K EACs.
(b) Except for contracts filed as exhibits to the Company 1998 10-K
(the "Filed Contracts"), contracts with ARCO Marine, Inc. for the construction
of three crude oil carriers and purchase orders and supply contracts entered
into in the ordinary course of business:
(i) there are no material contracts, agreements, commitments, written
understandings or other arrangements with any Governmental Entity, to which
the Company or any of the Company Subsidiaries is a party; and
(ii) there are no other contracts or agreements to which the Company
or any Company Subsidiary is a party, whether or not made in the ordinary
course of business, which are material to the Company and the Company
Subsidiaries, taken as a whole, or the conduct of the business of the
Company and its Subsidiaries, taken as a whole, or the absence or
termination of which would, in the aggregate, have a Company Material
Adverse Effect.
18
(c) Each Filed Contract and each other contract and agreement
(including oral agreements) that is material to the Company and the Company
Subsidiaries, taken as a whole (such contracts and agreements, together with the
Filed Contracts, the "Material Contracts") is legal, valid and binding on the
Company or the respective Company Subsidiary party thereto and, to the knowledge
of the Company, the other parties thereto, and is in full force and effect.
Neither the Company nor any of the Company Subsidiaries is in material breach
of, or material default under, any Material Contract. As of the date of this
Agreement, neither the Company nor any Company Subsidiary has received any oral
or written notice of a material default (which has not been cured), offset or
counterclaim under any Material Contract, or any other communication calling
upon it to comply with any provision of any Material Contract or asserting
noncompliance therewith or asserting the Company or Company Subsidiary has
waived or altered its rights thereunder, nor has the Company or any Company
Subsidiary received any oral or written notice that any party to any Material
Contract intends or is threatening to terminate or fail to exercise any renewal
or extension of any Material Contract. Neither the Company nor any Company
Subsidiary is party to any contract or agreement the performance of which, or
the cost of performance of which, could reasonably be expected to have a Company
Material Adverse Effect.
(d) No other party to any Material Contract is, to the knowledge of
the Company, in material breach thereof or default thereunder.
(e) There are no contracts or agreements to which the Company or any
of the Company Subsidiaries is a party containing any provision or covenant that
would have the effect after the Effective Time of limiting or purporting to
limit the ability of Parent or any Parent Subsidiary (other than the Company or
any Company Subsidiary) to (i) sell any products or services of or to any other
Person, (ii) engage in any line of business or (iii) compete with or to obtain
products or services from any Person or limiting the ability of any Person to
provide products or services to Parent or any Parent Subsidiary (other than the
Company or any Company Subsidiary), in each of cases (i), (ii) and (iii) above,
in any geographic area or during any period of time.
SECTION 3.20. Newport News Agreement. The Company has terminated that
certain Agreement and Plan of Merger, dated as of January 19, 1999, among
Newport News Shipbuilding Inc. ("Newport News"), Ares Acquisition Corporation
and the Company (the "Newport News/Avondale Agreement") and neither the Company
nor any Company Subsidiary has any further obligation or liability of any nature
to Newport News or any other person pursuant thereto or in connection with or as
a result of such termination, other than pursuant to that certain Company Stock
Option Agreement, dated as of January 19, 1999, by and between the Company and
Newport News (the "Newport News Lock-up Option")). The Newport News Lock-up
Option has not been amended or otherwise modified from the form filed as an
exhibit to the Company's Current Report on Form 8-K filed on January 22, 1999,
nor has the Company waived any right thereunder.
19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub, jointly and severally, represent and warrant to the
Company as follows:
SECTION 4.1. Organization, Standing and Power. (a) Each of Parent and
each of its subsidiaries, including Sub (the "Parent Subsidiaries"), is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has full corporate power and authority
and possesses all governmental franchises, licenses, permits, authorizations and
approvals necessary to enable it to own, lease or otherwise hold its properties
and assets and to conduct its businesses as presently conducted, other than such
franchises, licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, has not had and could not reasonably be
expected to have a Parent Material Adverse Effect (as defined below). Parent and
each Parent Subsidiary is duly qualified to do business in each jurisdiction
where the nature of its business or their ownership or leasing of its properties
make such qualification necessary, except where the failure to so qualify has
not had and would not reasonably be expected to have a Parent Material Adverse
Effect. Parent has made available to the Company true and complete copies of the
certificate of incorporation of Parent, as amended to the date of this Agreement
(as so amended, the "Parent Charter"), and the By-laws of Parent, as amended to
the date of this Agreement (as so amended, the "Parent By-laws"), and the
comparable charter and organizational documents of Sub, in each case as amended
through the date of this Agreement. The term "Parent Material Adverse Effect"
means any effect, event, fact or occurrence that individually, or together with
any other such effects, events, facts or occurrences, materially and adversely
affects the ability of the Parent or Sub to perform its obligations under this
Agreement or the other Transaction Agreement or the ability of Parent or Sub to
consummate the Merger and the other Transactions.
SECTION 4.2. Authority; Execution and Delivery; Enforceability. (a)
Each of Parent and Sub has all requisite corporate power and authority to
execute each Transaction Agreement to which it is a party and to consummate the
Transactions. The execution and delivery by each of Parent and Sub of each
Transaction Agreement to which it is a party and the consummation by it of the
Transactions have been duly authorized by all necessary corporate action on the
part of Parent and Sub. The Board of Directors of Sub has adopted by unanimous
written consent a resolution approving this Agreement. Parent, as sole
stockholder of Sub, has approved this Agreement. Each of Parent and Sub has duly
executed and delivered each Transaction Agreement to which it is a party, and
each Transaction Agreement to which it is a party constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
(b) The Parent Board, at a meeting duly called and held duly and
unanimously adopted resolutions approving the Transactions contemplated by this
Agreement. To Parent's knowledge, assuming no material change in current
ownership of Company Capital Stock prior to the Effective Time and assuming the
accuracy of the Company's representations contained in
20
the first two sentences of Section 3.4(b), no state takeover statute or similar
statute or regulation applies or purports to apply to Parent with respect to
this Agreement and the other Transaction Agreement, the Merger or any other
Transaction.
(c) The affirmative vote of the holders of any class or series of
capital stock of Parent, or any of them, is not necessary to consummate the
Merger or any other Transaction.
SECTION 4.3. No Conflicts; Consents. (a) The execution and delivery by
each of Parent and Sub of each Transaction Agreement to which it is a party, do
not, and the consummation of the Merger and the other Transactions and
compliance with the terms hereof and thereof will not, conflict with, or result
in any violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of Parent or
any Parent Subsidiary under, any provision of (i) the Parent Charter, Parent
By-laws or the comparable charter or organizational documents of any Parent
Subsidiary, (ii) any Contract to which Parent or any Parent Subsidiary is a
party or by which any of their respective properties or assets is bound or (iii)
subject to the filings and other matters referred to in Section 4.3(b), any
Judgment or Applicable Law applicable to Parent or any Parent Subsidiary or
their respective properties or assets except, in the case of clauses (ii) and
(iii) above, for any such items that, individually or in the aggregate, has not
had and would not reasonably be expected to have a Parent Material Adverse
Effect.
(b) No material Consent of, or registration, declaration or filing
with, any Governmental Entity is required to be obtained or made by or with
respect to Parent or any Parent Subsidiary in connection with the execution,
delivery and performance of any Transaction Agreement to which Parent or Sub is
a party or the consummation of the Transactions, other than (i) compliance with
and filings under the HSR Act, (ii) the filing with the SEC of such reports
under Sections 13 and 16 of the Exchange Act, as may be required in connection
with this Agreement and the other Transaction Agreement, the Merger and the
other Transactions, (iii) the filing of the Certificate of Merger with the
Secretary of State of the State of Louisiana, (iv) such filings as may be
required in connection with transfers of property under applicable Environmental
Laws, and (v) such other items required solely by reason of the participation of
the Company (as opposed to any third party) in the Transactions.
SECTION 4.4. Information Supplied. None of the information supplied or
to be supplied by Parent or Sub for inclusion or incorporation by reference in
the Proxy Statement will, at the date it is first mailed to the Company's
shareholders or at the time of the Company Shareholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
SECTION 4.5. Brokers. No broker, investment banker, financial advisor
or other person, other ▇▇▇▇ ▇▇▇▇▇▇▇, Lynch, Pierce, ▇▇▇▇▇▇ and ▇▇▇▇▇,
Incorporated, the fees and expenses of which will be paid by Parent, is entitled
to any broker's, finder's, financial advisor's or other
21
similar fee or commission in connection with the Merger and the other
Transactions based upon arrangements made by or on behalf of Parent or Sub.
SECTION 4.6. Opinion of Financial Advisor. Parent has received the
opinion of Merrill, Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇ Incorporated, dated the date
of this Agreement, to the effect that, as of such date, the Merger Consideration
is fair, from a financial point of view, to Parent, a signed copy of which
opinion has been delivered to the Company.
SECTION 4.7. Financing. Parent and Sub collectively will have at the
Effective Time, and Parent will make available to Sub, as necessary, sufficient
funds to enable each of Parent and Sub to comply with its respective obligations
pursuant to this Agreement.
SECTION 4.8 Ownership of Company Common Stock. As of the date of this
Agreement, and without giving effect to the Company Stock Option Agreement,
neither Parent nor any Parent Subsidiary beneficially owns (within the meaning
ascribed to such term by Rule 13d-3 of the Exchange Act) any shares of Company
Common Stock.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.1. Conduct of Business. (a) Conduct of Business by the
Company. Except as expressly contemplated by the Transaction Agreements, from
the date of this Agreement to the Effective Time the Company shall, and shall
cause each Company Subsidiary to, conduct its business in the ordinary course in
substantially the same manner as previously conducted and use all reasonable
efforts to preserve intact its current business organization, keep available the
services of its current officers and employees and keep its relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with them. In addition, and without limiting the generality of
the foregoing, except as expressly contemplated by the Transaction Agreements,
from the date of this Agreement to the Effective Time, the Company shall not,
and shall not permit any Company Subsidiary to, do any of the following without
the prior written consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, whether in cash,
stock or property, other than dividends and distributions by a direct or
indirect wholly owned subsidiary of the Company to its parent, (B) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (C) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any Company
Subsidiary or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) issue, deliver, sell or grant (A) any shares of its capital
stock, (B) any Voting Company Debt or other voting securities, (C) any
securities convertible into or exchangeable for, or any options, warrants
or rights to acquire, any such shares, voting securities or convertible or
exchangeable securities or (D) any stock options, performance
22
shares, incentive shares, restricted stock, "phantom" stock, "phantom"
stock rights, stock appreciation rights or stock-based performance units,
other than (1) the issuance of Company Common Stock (and associated Company
Rights) upon the exercise of Company Employee Stock Options outstanding on
the date of this Agreement and in accordance with their present terms, (2)
the issuance of Company Preferred Stock (or other Company Securities as
permitted pursuant to the Company Rights Agreement) upon the exercise of
Company Rights, (3) the issuance of Company Common Stock (and associated
Company Rights) pursuant to the Company Stock Option Agreement, (4) the
issuance of Company Common Stock (and associated Company Rights) in the
event of exercise of the Newport News Lock-up Option, and (5) the sale or
purchase of Company Common Stock (or its equivalent) under Company Pension
Plans;
(iii) amend its articles of incorporation, by-laws or other comparable
charter or organizational documents;
(iv) acquire or agree to acquire (A) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof or (B) any
assets that are material, individually or in the aggregate, to the Company
and the Company Subsidiaries, taken as a whole;
(v) (A) grant to any officer or director of the Company or any Company
Subsidiary any increase in compensation, except in the ordinary course of
business consistent with prior practice or to the extent required under
employment agreements in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC Documents, (B) grant
to any officer or director of the Company or any Company Subsidiary any
increase in severance or termination pay, except to the extent required
under any agreement in effect as of December 31, 1998, (C) enter into any
employment, severance or termination agreement with any such officer or
director, (D) establish, adopt, enter into or amend in any material respect
any collective bargaining agreement or Company Benefit Plan or (E) take any
action to accelerate any rights or benefits, or make any material
determinations not in the ordinary course of business consistent with prior
practice, under any collective bargaining agreement or Company Benefit
Plan; provided, that the Company (x) reserves the right to amend any
Company Benefit Plan solely to the extent required to comply with
Applicable Law, and (y) may obtain the consents described in Section 6.4
(provided that in no case shall the Company make any payment to any holder
of any Company Employee Stock Option or otherwise incur significant
additional cost in connection with obtaining any such consent);
(vi) make any change in accounting methods, principles or practices
materially affecting the reported consolidated assets, liabilities or
results of operations of the Company, except insofar as may have been
required by a change in GAAP;
(vii) sell, lease, license or otherwise dispose of or subject to any
Lien any properties or assets that are material, individually or in the
aggregate, to the Company and
23
the Company Subsidiaries, taken as a whole, except sales of obsolete assets
in the ordinary course of business consistent with past practice;
(viii) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any Company Subsidiary, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
the economic effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business consistent with past
practice, or (B) make any loans, advances or capital contributions to, or
investments in, any other person, other than to or in the Company or any
direct or indirect wholly owned subsidiary of the Company;
(ix) make or agree to make any new capital expenditure or expenditures
that, individually, is in excess of $3,000,000 or, in the aggregate, are in
excess of $25,000,000;
(x) make any material Tax election or settle or compromise any
material Tax liability or refund;
(xi) (A) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the
notes thereto) of the Company included in the Filed Company SEC Documents
or incurred in the ordinary course of business consistent with past
practice, (B) cancel any material indebtedness (individually or in the
aggregate) or materially amend the delivery schedules for any vessels under
the Arco agreements, waive any claims or rights of substantial value or (C)
waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or
any Company Subsidiary is a party; or
(xii) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Other Actions. The Company and Parent shall not, and shall not
permit any of their respective subsidiaries to, take any action that would, or
that could reasonably be expected to, result in (i) any of the representations
and warranties of such party set forth in any Transaction Agreement to which it
is a party that is qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that is not so qualified becoming untrue in any
material respect or (iii) any condition to the Merger set forth in Article VII
not being satisfied; provided, however, that nothing in this Agreement shall
prevent or prohibit Parent from taking any action in furtherance of the
negotiation of, the entering into or the consummation of any business
combination transaction with or involving Newport News Shipbuilding Inc.
24
(c) Advice of Changes. The Company and Parent shall promptly advise
the other orally and in writing of any change or event having, or which, insofar
as can reasonably be foreseen, would have, a Company Material Adverse Effect or
Parent Material Adverse Effect.
SECTION 5.2. No Solicitation by the Company. (a) 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 5.2(f)),
(ii) enter into any agreement with respect to any Company Takeover Proposal 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 receipt of the Company Shareholder
Approval (the "Company Applicable Period"), if the Company receives a proposal
or offer that was not solicited by the Company and that did not otherwise result
from a breach or deemed breach of this Section 5.2(a) and that the Company Board
believes in good faith could result in a third party making a Company Superior
Proposal (as defined in Section 5.2(b)), and subject to compliance with Section
5.2(c), the Company may (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 (as defined in the
Newport/Avondale Agreement hereto and (B) participate in discussions or
negotiations with such person regarding such proposal or offer. 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 5.2(a) by the Company. For purposes of
this Agreement, assuming the continued accuracy of the Company's representations
contained in Section 3.20 of this Agreement, the Newport News/Avondale Agreement
shall not be deemed to be a "Company Takeover Proposal".
(b) Except as expressly permitted by this Section 5.2, neither the
Company Board nor any committee thereof shall (i) approve any letter of intent,
agreement in principle, acquisition agreement or similar agreement relating to
any Company Takeover Proposal or (ii) approve or recommend, or propose to
approve or recommend, any Company Takeover Proposal. Notwithstanding the
foregoing, if the Company has received a Company Superior Proposal, the Company
Board may terminate this Agreement, but only at a time that is during the
Company Applicable Period and is more than 48 hours following Parent's receipt
of written notice advising Parent that the Company Board is prepared to accept
such Company Superior Proposal, specifying the material terms and conditions of
such Company Superior Proposal and identifying the person making such Company
Superior Proposal. For purposes of this Agreement, a "Company Superior Proposal"
means any proposal made by a third party to acquire, directly or indirectly,
including pursuant to a tender offer, exchange offer, merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction, for consideration consisting of cash and/or securities, more than
50% of the combined voting power of the shares
25
of the Company Capital Stock then outstanding or all or substantially all the
assets of the Company and otherwise on terms which the Company Board determines
in its good faith judgment (after consulting with a financial advisor of
nationally recognized reputation) (A) is reasonably capable of being completed,
taking into account all legal, financial, regulatory and other aspects of the
proposal and the third party making such proposal, and (B) presents, in its
entirety, more favorable terms, financial and otherwise, taken as a whole, to
the Company and the Company's shareholders, than the terms of the Merger and the
other Transactions, as the Merger and the Transaction Agreements may be amended
from time to time.
(c) The Company promptly shall advise 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 (i)
keep Parent fully informed of the status of any such Company Takeover Proposal
or inquiry (including any change to the material terms thereof) and (ii) provide
to Parent as soon as practicable after receipt or delivery thereof with copies
of all correspondence and other written material sent or provided to the Company
from any third party in connection with any Company Takeover Proposal.
(d) 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 Parent or Sub, 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, unless 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. Nothing contained in this Section 5.2 shall prohibit the
Company from taking and disclosing to its shareholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any required
disclosure to the Company's shareholders if, in the good faith judgment of the
Company Board, based on the opinion of outside counsel, failure so to disclose
would be inconsistent with its obligations under applicable law.
(e) The Company represents and warrants to Parent that, within the
previous 12 months, other than in connection with the Newport News/Avondale
Agreement, (i) the Company has not received any Company Takeover Proposal and
(ii) the Company has not provided written non-public information (whether or not
pursuant to a confidentiality agreement) to any person in consideration of a
potential Company Takeover Proposal or to otherwise facilitate the making of a
Company Takeover Proposal.
(f) 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 Company Subsidiary that
constitutes a significant subsidiary within the meaning of Rule 1-02 of
Regulation S-X of the SEC, any proposal or offer for the issuance by the
Company of a material amount
26
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, other than the Transactions.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1. Preparation of the Proxy Statement; Stockholders Meeting.
(a) As soon as practicable following the date of this Agreement, the Company
shall prepare and file with the SEC the Proxy Statement in preliminary form, and
the Company shall use its best efforts to respond as promptly as practicable to
any comments of the SEC with respect thereto. The Company shall use best efforts
to cause the Proxy Statement to be mailed to the Company's shareholders as
promptly as practicable. The Company shall notify Parent promptly of the receipt
of any comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the Proxy Statement or for additional
information and shall supply Parent with copies of all correspondence between
the Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement or the Merger. If
at any time prior to receipt of the Company Shareholder Approval, there shall
occur any event that should be set forth in an amendment or supplement to the
Proxy Statement, the Company shall promptly prepare and mail to its shareholders
such an amendment or supplement.
(b) The Company shall, as soon as practicable following the date of
this Agreement, duly call, give notice of, convene and hold a meeting of its
shareholders (the "Company Shareholders Meeting") for the purpose of seeking the
Company Shareholder Approval. Subject to Section 5.2(d), the Company shall,
through the Company Board, recommend to its shareholders that they give the
Company Shareholder Approval. Without limiting the generality of the foregoing,
the Company agrees that its obligations pursuant to the first sentence of this
Section 6.1(b) shall not be affected by the commencement, public proposal,
public disclosure or communication to the Company of any Company Takeover
Proposal.
SECTION 6.2. Access to Information; Confidentiality. (a) The Company
shall, and shall cause each of its subsidiaries to, afford to Parent and to the
officers, employees, accountants, counsel, financial advisors and other
representatives of Parent, reasonable access during normal business hours during
the period prior to the Effective Time to all their respective properties,
books, contracts, commitments, personnel and records and, during such period,
the Company shall, and shall cause each of its subsidiaries to, furnish promptly
to Parent (i) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of Federal
or state securities laws and (ii) all other information concerning its business,
properties and personnel as Parent may reasonably request. Without limiting the
generality of the foregoing, the Company shall, within two business days of
request therefor, provide to Parent the information described in Rule
14a-7(a)(2)(ii) under the Exchange
27
Act and any information to which a holder of Company Common Stock would be
entitled under Section 103 of the BCL (assuming such holder met the requirements
of such section).
(b) Not later than the fifth business day after the date of this
Agreement, the Company shall deliver to Parent a schedule indicating the
Company's most recent estimate at completion for each contract to which the
Company or any Company Subsidiary is a party for which an estimate of completion
has been prepared, each such estimate at completion to be prepared in the manner
set forth in Section 3.19(a).
(c) Except as otherwise agreed to by the Company, until the earlier of
the second anniversary of the date hereof, and notwithstanding termination of
this Agreement, Parent will keep, and will cause its officers, employees,
independent accountants, counsel, financial advisers and other representatives
and affiliates to keep, all Confidential Information (as defined below)
confidential and not to disclose any Confidential Information to any person
other than Parent's or Sub's directors, officers, employees, affiliates or
agents, and then only on a confidential basis; provided, however, that Parent or
Sub may disclose Confidential Information (i) as required by law, rule,
regulation or judicial process, including as required to be disclosed in
connection with the Merger, (ii) to its attorneys, accountants and financial
advisors who have agreed to keep the Confidential Information confidential in
accordance with the terms hereof or (iii) as requested or required by any
Governmental Entity. For purposes of this Agreement, "Confidential Information"
shall include all information about the Company which has been furnished by the
Company to Parent or Sub pursuant to or in connection with this Agreement;
provided, however, that Confidential Information does not include information
which (x) is or becomes generally available to the public other than as a result
of a disclosure by Parent or Sub not permitted by this Agreement, (y) was
available to Parent or Sub on a non-confidential basis prior to its disclosure
to Parent or Sub by the Company or (z) becomes available to Parent or Sub on a
non-confidential basis from a person other than the Company who, to the
knowledge of Parent or Sub, as the case may be, is not otherwise bound by a
confidentiality agreement with the Company or is not otherwise prohibited from
transmitting the relevant information to Parent or Sub.
SECTION 6.3. Reasonable Efforts; Notification. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties shall
use all reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the other
Transactions, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from 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, (including, in the case of Parent,
agreeing to take or to refrain from taking any action as may be required by a
Governmental Entity in connection with obtaining expiration of the applicable
waiting period under the HSR Act, provided that neither Parent nor any Parent
Subsidiary shall be required to take or to refrain from taking any action if to
so take or refrain from taking such action is, or would reasonably be expected
to be adverse and material in
28
relation to the business, assets, liabilities, condition (financial or
otherwise), prospects or results of operations of the Company, the Company
Subsidiaries, and ▇▇▇▇▇▇▇ Shipbuilding, Inc., taken as a whole), (ii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iii) the defending of any lawsuits or other legal proceedings, whether judicial
or administrative, challenging this Agreement or any other Transaction Agreement
or the consummation of the Transactions, 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 Transactions and to fully carry out the
purposes of the Transaction Agreements. In connection with and without limiting
the foregoing, the Company and the Company Board shall (i) take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Transactions or this Agreement or any
other Transaction Agreement and (ii) if any state takeover statute or similar
statute or regulation becomes applicable to the Transactions or this Agreement
or any other Transaction Agreement, take all action necessary to ensure that the
Merger and the other Transactions may be consummated as promptly as practicable
on the terms contemplated by the Transaction Agreements. Except to the extent
provided in clause (i) of the first sentence of this paragraph (a),
notwithstanding anything to the contrary contained in any Transaction Agreement,
the "reasonable efforts" of Parent shall not require Parent to agree to any
prohibition, limitation or other requirement of the type set forth in Section
7.2(c).
(b) The Company shall give prompt notice to Parent, and Parent or Sub
shall give prompt notice to the Company, of (i) any representation or warranty
made by it contained in any Transaction Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under any Transaction Agreement; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under the Transaction Agreements.
SECTION 6.4. Company Stock Options. (a) As soon as practicable
following the date of this Agreement, the Company Board (or, if appropriate, any
committee administering the Company Stock Plans) shall (i) use all reasonable
efforts to obtain written consents from holders of Company Employee Stock
Options as may be required to effect the following:
(A) to permit the adjustment of the terms of all outstanding Company
Employee Stock Options to provide that, at the Effective Time, each Company
Employee Stock Option outstanding immediately prior to the Effective Time
shall be canceled. In consideration of such cancellation, the holder shall
receive in full satisfaction of such Company Employee Stock Option, subject
to any applicable withholding tax, an amount in cash equal to the product
of (x) the excess, if any, of the Merger Consideration over the per share
exercise price of such Company Employee Stock Option and (y) the number of
shares subject to such Company Employee Stock Option; and
29
(ii) adopt such resolutions or take such other actions as may be
required or desirable to effect the following:
(A) after the Effective Time, no Company Employee Stock Options or
Company SARs shall be granted under any Company Stock Plan;
(B) the provisions in each of the Company Stock Plans and any other
plan, program or arrangement providing for the issuance or grant of any
other interest in respect of the capital stock of the Company or any
Company Subsidiary (other than with respect to the Newport News Lock-up
Option) shall be amended to provide that no new issuances or grants of
capital stock of the Company may be made thereunder; and
(C) to the extent permissible under Applicable Law and the relevant
Company Stock Plan, to provide that after the Effective Time, no holder of
Company Employee Stock Options will have any right to receive any shares of
capital stock of the Company or, if applicable, the Surviving Corporation,
upon exercise of any Company Employee Stock Option that is outstanding at
the Effective Time.
(b) In this Agreement:
"Company Employee Stock Option" means any option to purchase Company
Common Stock granted under any Company Stock Plan.
"Company SAR" means any stock appreciation right linked to the price
of Company Common Stock and granted under any Company Stock Plan.
"Company Stock Plans" means the Avondale Industries, Inc. 1997 Stock
Incentive Plan, the Avondale Industries, Inc. Performance Share Plan and
the Avondale Industries, Inc. Stock Appreciation Plan.
SECTION 6.5. Benefit Plans. For a period of one year after the
Effective Time Parent shall cause the Surviving Corporation either (a) to
maintain the Company Benefit Plans in effect on the date of this Agreement or
(b) to provide benefits to each category of employees of the Company and the
Company Subsidiaries that are not, in the reasonable judgment of Parent,
materially less favorable in the aggregate to such category of employees than
those provided under such Company Benefit Plans; provided, that neither clause
(a) nor clause (b) shall apply to any plans (including the Company Benefit
Plans) that provide for the issuance of Company Capital Stock or based on the
value of Company Capital Stock.
SECTION 6.6. Indemnification. (a) Parent shall, to the fullest extent
permitted by law, cause the Surviving Corporation to honor all Company
obligations to indemnify (including any obligations to advance funds for
expenses) the current or former directors or officers of the Company for acts or
omissions by such directors and officers occurring, or alleged to have occurred,
prior to the Effective Time to the extent that such obligations of the Company
exist on the date of this Agreement, whether pursuant to the Company Charter,
the Company By-laws, individual indemnity agreements or otherwise as of the date
of this Agreement, and such
30
obligations shall survive the Merger and shall continue in full force and effect
in accordance with the terms of the Company Charter, the Company By-laws and
such individual indemnity agreements from the Effective Time until the
expiration of the applicable statute of limitations with respect to any claims
against such directors or officers arising out of such acts or omissions. The
Company is party to indemnification agreements with not more than 50 current and
former employees providing for indemnification in respect of ongoing asbestosis
litigation.
(b) For a period of six years after the Effective Time, Parent shall
cause to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by the Company (provided that Parent
may substitute therefor policies with reputable and financially sound carriers
of at least the same coverage and amounts containing terms and conditions which
are no less advantageous) with respect to claims arising from or related to
facts, events, actions or omissions, which occurred at or before the Effective
Time; provided, however, that Parent shall not be obligated to make annual
premium payments for such insurance to the extent such premiums exceed 300% of
the annual premiums paid as of the date hereof by the Company for such insurance
(such 300% amount, the "Maximum Premium") (it being understood that the
Company's practice is to purchase director and officers' liability insurance
policies having terms of longer than one year and the premium paid with respect
to any multi-year policy shall be annualized for purposes of determining whether
it exceeds the Maximum Premium). If such insurance coverage cannot be obtained
at all, or can only be obtained at an annual premium in excess of the Maximum
Premium, Parent shall maintain the most advantageous policies of directors' and
officers' insurance obtainable for an annual premium equal to the Maximum
Premium. The Company represents to Parent that the Maximum Premium is
$3,000,000.
(c) Parent agrees to unconditionally guarantee the obligations of the
Surviving Corporation under this Section 6.6.
SECTION 6.7. Fees and Expenses. (a) Except as provided below, all fees
and expenses incurred in connection with the Merger and the other Transactions
shall be paid by the party incurring such fees or expenses, whether or not the
Merger is consummated.
(b) The Company shall pay to Parent a fee of $15,000,000 if: (i)
Parent terminates this Agreement pursuant to Section 8.1(d); (ii) any person
makes a Company Takeover Proposal that was publicly disclosed prior to the
Company Shareholders Meeting, thereafter this Agreement is terminated pursuant
to Section 8.1(b)(iv) and within 12 months of such termination the Company
enters into a definitive agreement with such person or any affiliate of such
person to consummate, or consummates, the transactions contemplated by a Company
Takeover Proposal; (iii) any person makes a Company Takeover Proposal prior to
the Outside Date (as defined in Section 8.1(b)), the Company Shareholder
Approval is not obtained prior to termination of this Agreement pursuant to
Section 8.1(b)(i) and within 12 months of such termination the Company enters
into a definitive agreement with such person or any affiliate of such person to
consummate, or consummates, the transactions contemplated by a Company Takeover
Proposal; (iv) any person makes a Company Takeover Proposal that was publicly
disclosed prior to termination of this Agreement, this Agreement is terminated
pursuant to
31
Section 8.1(c) due to a breach by the Company in any material respect of Section
5.1(b) and within 12 months of such termination the Company enters into a
definitive agreement with such person or any affiliate of such person to
consummate, or consummates, the transactions contemplated by a Company Takeover
Proposal; (v) this Agreement is terminated pursuant to Section 8.1(f); or (vi)
(A) the Company Board or any committee thereof withdraws or modifies in a manner
adverse to the Parent or Sub its approval or recommendation of this Agreement or
fails to recommend to the Company's shareholders that they give the Company
Shareholder Approval and (B) thereafter this Agreement is terminated pursuant to
Section 8.1(b)(iv). Any fee due under this Section 6.7(b) shall be paid by
certified check or wire transfer of same-day funds (A) on the date of
termination of this Agreement (in the case of clause (i) or (vi) above), (B) on
the date of execution of such definitive agreement or, if earlier, consummation
of such transactions (in the case of clause (ii), (iii) or (iv) above) or (C) as
specified in Section 8.1(f) (in the case of clause (v) above).
SECTION 6.8. Public Announcements. Parent and Sub, on the one hand,
and the Company, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the Merger and the
other Transactions and shall not issue any such press release or make any such
public statement prior to such consultation, except, in each of the foregoing
cases, after making a reasonable effort to notify and consult with the other
party, as may be required by applicable law, court process or by obligations
pursuant to any listing agreement with any national securities exchange.
SECTION 6.9. Rights Agreements; Consequences if Rights Triggered. The
Company Board shall take all action requested in writing by Parent in order to
render the Company Rights inapplicable to the Merger and the other Transactions.
Except as approved in writing by Parent, the Company Board shall not (i) amend
the Company Rights Agreement, (ii) redeem the Company Rights or (iii) take any
action with respect to, or make any determination under, the Company Rights
Agreement. If any Separation Time, Stock Acquisition Date, Flip-over Transaction
or Event or Flip-in Date occurs under the Company Rights Agreement at any time
during the period from the date of this Agreement to the Effective Time, the
Company and Parent shall make such adjustment to the Merger Consideration as the
Company and Parent shall mutually agree so as to preserve the economic benefits
that the Company and Parent each reasonably expected on the date of this
Agreement to receive as a result of the consummation of the Merger and the other
Transactions.
SECTION 6.10. Newport News Lock-up Option. (a) Following the time that
all parties to this Agreement shall have duly executed this Agreement (on the
same day, if commercially practicable, and otherwise as promptly as possible on
the next business day), Parent shall pay to the Company, by wire transfer of
same-day funds, the amount paid by the Company to Newport News pursuant to
Section 6.7(b) of the Newport News/Avondale Agreement, not to exceed
$15,000,000.
(b) Provided that the Newport News Lock-up Option shall not have been
amended or otherwise modified from the form filed as an exhibit to the Company's
Current
32
Report on Form 8-K filed on January 22, 1999 in any manner adverse to the
Company or Parent, Parent agrees to pay to Newport News, on behalf of the
Company, on any Option Closing Date (as defined in the Newport News Lock-up
Option) any Newport News Option Cash-out Amounts (as defined below), not to
exceed $14,000,000 in the aggregate; provided, that the Company shall have
provided Parent with a copy of the Exercise Notice (as defined in the Newport
News Lock-up Option) promptly after receipt thereof.
(c) As used herein, the term "Newport News Option Cash-out Amount"
means any amount required to be paid by the Company to Newport News upon
exercise by Newport News of a Cash-Out Right (as defined in the Newport News
Lock-up Option).
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1. Conditions to Each Party's Obligation To Effect The
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Company shall have obtained the Company
Shareholder Approval.
(b) Antitrust. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired. Any consents, approvals and filings under any foreign antitrust
law, the absence of which would prohibit the consummation of the Merger, shall
have been obtained or made.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that, subject
to Section 6.3, each of the parties shall have used all reasonable efforts to
prevent the entry of any such injunction or other order and to appeal as
promptly as possible any such injunction or other order that may be entered.
SECTION 7.2. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
following conditions:
(a) Representations and Warranties. The Specified Representations (as
defined below) that are qualified as to materiality shall be true and correct
and those not so qualified shall be true and correct in all material respects,
in each case as of the date of this Agreement and as of the Closing Date as
though made on the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties qualified as to materiality shall be true and
correct, and those not so qualified shall be true and correct in all material
respects, on and as of such earlier date). The representations and warranties of
the Company in this Agreement (other than the Specified Representations) that
are qualified as to materiality shall be true and correct and those not so
33
qualified shall be true and correct in all material respects, in each case as of
the date of this Agreement and as of the Bringdown Date as though made on the
Bringdown Date, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations and
warranties qualified as to materiality shall be true and correct, and those not
so qualified shall be true and correct in all material respects, on and as of
such earlier date). Parent shall have received a certificate signed on behalf of
the Company by the chief executive officer and the chief financial officer of
the Company to the foregoing effects. The term "Bringdown Date" means the
earlier of (i) the Closing Date and (ii) August 31, 1999. The term "Specified
Representations" means the representations and warranties of the Company
contained in Sections 3.1, 3.2, 3.3, 3.4, 3.14, 3.15 and 3.20 of this Agreement.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Parent shall have
received a certificate signed on behalf of the Company by the chief executive
officer and the chief financial officer of the Company to such effect.
(c) No Litigation. There shall not be pending any suit, action or
proceeding by any Governmental Entity or any other person that has a reasonable
likelihood of success, (i) seeking to restrain or prohibit the consummation of
the Merger or any other Transaction or seeking to obtain from the Company,
Parent or Sub any monetary damages that are material in relation to the Company
and its subsidiaries taken as a whole, (ii) seeking to prohibit or limit the
ownership or operation by the Company, Parent or any of their respective
subsidiaries of any material portion of the business or assets of the Company,
Parent or any of their respective subsidiaries, or to compel the Company, Parent
or any of their respective subsidiaries to dispose of or hold separate any
material portion of the business or assets of the Company, Parent or any of
their respective subsidiaries, as a result of the Merger or any other
Transaction, (iii) seeking to impose limitations on the ability of Parent to
acquire or hold, or exercise full rights of ownership of, any shares of Company
Common Stock, including the right to vote the Company Common Stock purchased by
it on all matters properly presented to the shareholders of the Company or (iv)
seeking to prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect the business or operations of the Company
and the Company Subsidiaries.
(d) Absence of Company Material Adverse Effect. Except as disclosed in
the Filed Company SEC Documents, since the date of the most recent audited
financial statements included in the Filed Company SEC Documents through the
Bringdown Date there shall not have been any event, change, effect or
development that, individually or in the aggregate, has had or would reasonably
be likely to have a Company Material Adverse Effect.
SECTION 7.3. Conditions to Obligations of the Company. The obligation
of the Company to effect the Merger is further subject to the following
conditions:
(a) Representations and Warranties. The representations and warranties
of Parent and Sub in this Agreement that are qualified as to materiality shall
be true and correct and those not so qualified shall be true and correct in all
material respects, as of the date of this
34
Agreement and on the Closing Date as though made on the Closing Date, except to
the extent such representations and warranties expressly relate to an earlier
date (in which case such representations and warranties qualified as to
materiality shall be true and correct, and those not so qualified shall be true
and correct in all material respects, on and as of such earlier date). The
Company shall have received a certificate signed on behalf of Parent by the
chief executive officer and the chief financial officer of Parent to such
effect.
(b) Performance of Obligations of Parent and Sub. Parent and Sub shall
have performed in all material respects all obligations required to be performed
by them under this Agreement at or prior to the Closing Date, and the Company
shall have received a certificate signed on behalf of Parent by the chief
executive officer and the chief financial officer of Parent to such effect.
(c) No Litigation. There shall not be pending any suit, action or
proceeding by any Governmental Entity that has a reasonable likelihood of
success seeking to restrain or prohibit the consummation of the Merger.
ARTICLE VIII
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
Shareholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger is not consummated on or before March 31, 2000
(the "Outside Date"), unless the failure to consummate the Merger is
the result of a material breach of any Transaction Agreement by the
party seeking to terminate this Agreement;
(ii) if any Governmental Entity issues an order, decree or ruling
or takes any other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have become final and nonappealable;
(iii) if any condition to the obligation of such party to
consummate the Merger set forth in Section 7.2 (in the case of Parent)
or 7.3 (in the case of the Company) becomes incapable of satisfaction
prior to the Outside Date; provided, however, that the terminating
party is not then in material breach of any representation, warranty
or covenant contained in any Transaction Agreement;
35
(iv) if, upon a vote at a duly held meeting to obtain the Company
Shareholder Approval, the Company Shareholder Approval is not
obtained; or
(c) by Parent, if the Company breaches or fails to perform in any
material respect any of its representations, warranties or covenants contained
in any Transaction Agreement, which breach or failure to perform (i) would give
rise to the failure of a condition set forth in Section 7.2(a) or 7.2(b), and
(ii) cannot be or has not been cured within 30 days after the giving of written
notice to the Company of such breach (provided that Parent is not then in
material breach of any representation, warranty or covenant contained in any
Transaction Agreement);
(d) by Parent:
(i) if the Company Board or any committee thereof withdraws or
modifies in a manner adverse to Parent its approval or recommendation
of this Agreement or fails to recommend to the Company's shareholders
that they give the Company Shareholder Approval; or
(ii) if (A) the Company or any of its officers, directors or
employees takes any of the actions proscribed by Section 5.2 or (B)
any other representative or agent of the Company takes any of the
actions proscribed by Section 5.2 and prior to such actions the
Company had received, or following such actions the Company receives,
any inquiry or proposal that constitutes, or may reasonably be
expected to lead to, any Company Takeover Proposal;
(e) by the Company, if Parent breaches or fails to perform in any
material respect any of its representations, warranties or covenants contained
in any Transaction Agreement, which breach or failure to perform (i) would give
rise to the failure of a condition set forth in Section 7.3(a) or 7.3(b), and
(ii) cannot be or has not been cured within 30 days after the giving of written
notice to Parent of such breach (provided that the Company is not then in
material breach of any representation, warranty or covenant in any Transaction
Agreement); or
(f) by the Company prior to receipt of the Company Shareholder
Approval in accordance with Section 5.2(b); provided, however, that the Company
shall have complied with all provisions thereof, including the notice provisions
therein and shall have immediately prior to such termination paid to Parent the
fees then due to Parent from the Company pursuant to Section 6.7.
SECTION 8.2. Effect of Termination. In the event of termination of
this Agreement by either the Company or 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 Parent, Sub or the Company, other than Section
3.14, Section 4.6, Section 6.2(c), Section 6.7, this Section 8.2 and Article IX,
which provisions shall survive such termination, and except to the extent that
such termination results from the knowing and intentional and material breach by
a party of any representation, warranty or covenant set forth in any Transaction
Agreement.
36
SECTION 8.3. Amendment. This Agreement may be amended by the parties
at any time before or after receipt of the Company Shareholder Approval;
provided, however, that after receipt of the Company Shareholder Approval, there
shall be made no amendment that by law requires further approval by the
shareholders of the Company without the further approval of such shareholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties.
SECTION 8.4. Extension; Waiver. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 8.3, waive compliance with any of the agreements or conditions contained
in this Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver of
such rights.
SECTION 8.5. Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 8.1, an amendment of
this Agreement pursuant to Section 8.3 or an extension or waiver pursuant to
Section 8.4 shall, in order to be effective, require in the case of Parent, Sub
or the Company, action by its Board of Directors or the duly authorized designee
of its Board of Directors.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 9.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 9.2. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given upon receipt by the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
▇▇▇▇▇▇ Industries, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Senior Vice President and General Counsel
with a copy to:
37
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: 212-403-2000
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
(b) if to the Company, to
Avondale Industries, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
Attention: General Counsel
with a copy to:
Jones, Walker, Waechter, Poitevent, Carrere & ▇▇▇▇▇▇▇ LLP
Place St. ▇▇▇▇▇▇▇
▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile:
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
SECTION 9.3. Definitions. For purposes of this Agreement:
An "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
"knowledge" of any person means the knowledge of the directors and
executive officers of such person or any supervisory employee or employees of
such person directly in charge of the area for which knowledge is called;
"known" shall have a correlative meaning.
A "person" means any individual, firm, corporation, partnership,
company, limited liability company, trust, joint venture, association,
Governmental Entity or other entity.
A "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned by such first person or by another
subsidiary of such person.
SECTION 9.4. Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words
38
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
SECTION 9.5. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 9.6. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 9.7. Entire Agreement; No Third-Party Beneficiaries. The
Transaction Agreements and any other document executed by Parent and the Company
and dated the date hereof that specifically refers to this Agreement, (a)
constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
Transactions and (b) except for the provisions of Article II, Section 6.4 and
Section 6.6, are not intended to confer upon any person other than the parties
any rights or remedies.
SECTION 9.8. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties. Any purported assignment without such
consent shall be void. Subject to the preceding sentences, this Agreement will
be binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
SECTION 9.9. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of any Transaction Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of any Transaction Agreement and
to enforce specifically the terms and provisions of each Transaction Agreement
in any New York State court or any Federal court located in the state of New
York, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any New York State court or any Federal
court located in the state of New York in the event any dispute arises out of
any Transaction Agreement or any Transaction, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court, (c) agrees that it will not bring any action
relating to any Transaction Agreement or any Transaction in any court other than
any New York State court or any Federal court sitting in the state of New
39
York and (d) waives any right to trial by jury with respect to any action
related to or arising out of any Transaction Agreement or any Transaction.
SECTION 9.10. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the state of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof, except to the extent the laws of Louisiana are mandatorily
applicable to the Merger.
40
IN WITNESS WHEREOF, Parent, Sub and the Company have duly executed
this Agreement, all as of the date first written above.
▇▇▇▇▇▇ INDUSTRIES, INC.,
by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President and
General Counsel
ATL ACQUISITION CORPORATION,
by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
AVONDALE INDUSTRIES, INC.,
by ▇▇▇▇▇▇ ▇. Kitchen
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Name: ▇▇▇▇▇▇ ▇. Kitchen
Title: Corporate Vice President &
Chief Financial Officer
[SIGNATURE PAGE TO MERGER AGREEMENT]