EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
Dated as of January 19, 1999,
Among
NEWPORT NEWS SHIPBUILDING INC.,
ARES ACQUISITION CORPORATION
And
AVONDALE INDUSTRIES, INC.
TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger..................................................2
SECTION 1.02. Closing.....................................................2
SECTION 1.03. Effective Time..............................................3
SECTION 1.04. Effects.....................................................3
SECTION 1.05. Articles of Incorporation and
By-laws....................................................3
SECTION 1.06. Directors of Surviving Corporation..........................3
SECTION 1.07. Officers of Surviving Corporation...........................4
SECTION 1.08. Board of Directors, Committees and
Officers of Parent........................................4
ARTICLE II
Effect on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock.....................................5
SECTION 2.02. Exchange of Certificates....................................6
ARTICLE III
Representations and Warranties of the Company
SECTION 3.01. Organization, Standing and Power...........................11
SECTION 3.02. Company Subsidiaries; Equity
Interests................................................12
SECTION 3.03. Capital Structure..........................................12
SECTION 3.04. Authority; Execution and Delivery;
Enforceability...........................................14
SECTION 3.05. No Conflicts; Consents.....................................14
SECTION 3.06. SEC Documents; Undisclosed
Liabilities..............................................16
SECTION 3.07. Information Supplied.......................................17
SECTION 3.08. Absence of Certain Changes or
Events...................................................17
SECTION 3.09. Taxes......................................................19
SECTION 3.10. Absence of Changes in Benefit Plans........................20
SECTION 3.11. ERISA Compliance; Excess Parachute
Payments.................................................20
SECTION 3.12. Litigation..................................................22
SECTION 3.13. Compliance with Applicable Laws.............................22
SECTION 3.14. Brokers; Schedule of Fees and
Expenses..................................................23
SECTION 3.15. Opinion of Financial Advisor................................23
SECTION 3.16. Accounting Matters..........................................23
SECTION 3.17. Year 2000...................................................23
SECTION 3.18. Environmental Matters.......................................24
SECTION 3.19. Labor Matters...............................................25
SECTION 3.20. Government Contracts........................................26
ARTICLE IV
Representations and Warranties of Parent and Sub
SECTION 4.01. Organization, Standing and Power............................26
SECTION 4.02. Parent Subsidiaries; Equity
Interests.................................................27
SECTION 4.03. Capital Structure...........................................27
SECTION 4.04. Authority; Execution and Delivery;
Enforceability............................................29
SECTION 4.05. No Conflicts; Consents......................................30
SECTION 4.06. SEC Documents; Undisclosed
Liabilities ..............................................31
SECTION 4.07. Information Supplied........................................32
SECTION 4.08. Absence of Certain Changes or
Events....................................................33
SECTION 4.09. Taxes.......................................................34
SECTION 4.10. Absence of Changes in Benefit Plans.........................35
SECTION 4.11. ERISA Compliance; Excess Parachute
Payments..................................................35
SECTION 4.12. Litigation..................................................37
SECTION 4.13. Compliance with Applicable Laws.............................37
SECTION 4.14. Brokers; Schedule of Fees and
Expenses..................................................37
SECTION 4.15. Opinion of Financial Advisor................................37
SECTION 4.16. Accounting Matters..........................................38
SECTION 4.17. Year 2000...................................................38
SECTION 4.18. Environmental Matters.......................................38
SECTION 4.19. Labor Matters...............................................40
SECTION 4.20. Government Contracts........................................40
SECTION 4.21. Tenneco.....................................................40
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01. Conduct of Business.........................................41
SECTION 5.02. No Solicitation by the Company..............................47
SECTION 5.03. No Solicitation by Parent...................................50
ARTICLE VI
Additional Agreements
SECTION 6.01. Preparation of the Form S-4 and
the Proxy Statement; Stockholders
Meetings..................................................52
SECTION 6.02. Access to Information;
Confidentiality...........................................54
SECTION 6.03. Reasonable Efforts; Notification............................55
SECTION 6.04. Company Stock Options.......................................56
SECTION 6.05. Benefit Plans...............................................58
SECTION 6.06. Indemnification.............................................59
SECTION 6.07. Fees and Expenses...........................................60
SECTION 6.08. Public Announcements........................................62
SECTION 6.09. Transfer Taxes..............................................62
SECTION 6.10. Affiliates..................................................62
SECTION 6.11. Stock Exchange Listing......................................62
SECTION 6.12. Rights Agreements; Consequences if
Rights Triggered..........................................62
SECTION 6.13. Tax Treatment...............................................63
SECTION 6.14. Issuance of Parent Common Stock and
Company Stock.............................................64
ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's
Obligation To Effect The Merger...........................64
SECTION 7.02. Conditions to Obligations of
Parent and Sub............................................65
SECTION 7.03. Conditions to Obligations of the
Company...................................................67
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination.................................................69
SECTION 8.02. Effect of Termination.......................................71
SECTION 8.03. Amendment...................................................71
SECTION 8.04. Extension; Waiver...........................................72
SECTION 8.05. Procedure for Termination,
Amendment, Extension or Waiver............................72
ARTICLE IX
General Provisions
SECTION 9.01. Nonsurvival of Representations and
Warranties................................................72
SECTION 9.02. Notices.....................................................72
SECTION 9.03. Definitions.................................................73
SECTION 9.04. Interpretation; Disclosure Letters..........................74
SECTION 9.05. Severability................................................74
SECTION 9.06. Counterparts................................................74
SECTION 9.07. Entire Agreement; No Third-Party
Beneficiaries.............................................75
SECTION 9.08. Assignment..................................................75
SECTION 9.09. Enforcement.................................................75
SECTION 9.10. Governing Law...............................................76
Exhibits
Exhibit A Articles of Incorporation of the Surviving
Corporation
Exhibit B-1 Corporate Governance of Parent Following
the Effective Time
Exhibit B-2 Corporate Governance of the Surviving
Corporation Following the Effective Time
Exhibit C-1 Form of Company Affiliate Letter
Exhibit C-2 Form of Parent Affiliate Letter
Exhibit D-1 Form of Parent Tax Representation Letter
Exhibit D-2 Form of Company Tax Representation Letter
AGREEMENT AND PLAN OF MERGER dated as of January 19,
1999, among NEWPORT NEWS SHIPBUILDING INC., a Delaware
corporation ("Parent"), ARES ACQUISITION CORPORATION, a
Louisiana corporation ("Sub") and a wholly owned subsidiary
of Parent, 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
common stock, par value $0.01 per share, of Parent (the "Parent Common
Stock");
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"), 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 simultaneously with the execution and delivery of this
Agreement the Company and Parent are entering into a stock option agreement
(the "Parent Stock Option Agreement" and, together with this Agreement and
the Company Stock Option Agreement, the "Transaction Agreements"), pursuant
to which Parent is granting the Company the option to purchase shares of
Parent Common Stock on the terms and subject to the conditions set forth
therein;
WHEREAS for Federal income tax purposes it is intended that the
Merger qualify as a "reorganization" within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code") and that this
Agreement constitutes a plan of reorganization;
WHEREAS for accounting purposes, it is intended that the Merger
be accounted for as a pooling of interests under United States generally
accepted accounting principles ("GAAP"); and
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 1.01. 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 1.03). At
the Effective Time, the separate corporate existence of Sub shall cease and
the Company shall continue as the surviving corporation (the "Surviving
Corporation"). If Parent and the Company agree, the structure of the Merger
(as set forth in this Section 1.01) will be changed in order to qualify the
transaction as another form of tax-free reorganization under Section 368 of
the Code or as a tax-free incorporation transaction under Section 351 of
the Code (and in the latter case the Company Common Stock will be converted
into the right to receive common stock of a newly-formed corporation that
will become the sole stockholder of Parent and the Company), and otherwise
on substantially the same terms as set forth in this Agreement. In such
case, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect such change in structure. The Merger and the
other transactions contemplated by the Transaction Agreements (including
any exercise of the options granted pursuant to the Company Stock Option
Agreement or the Parent Stock Option Agreement) are referred to in this
Agreement collectively as the "Transactions".
SECTION 1.02. Closing. The closing (the "Closing") of the Merger
shall take place at the offices of Cravath, Swaine & Xxxxx, 000 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 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 7.01, or, if on such
day any condition set forth in Section 7.02 or 7.03 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 1.03. 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
3.04(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 1.04. Effects. The Merger shall have the effects set
forth in Section 115 of the BCL.
SECTION 1.05. Articles of Incorporation and Bylaws. (a) The
Articles of Incorporation of the Company shall be amended and restated at
the Effective Time to read in the form of Exhibit A, and, as so amended,
such Articles of Incorporation shall be the Articles of Incorporation of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) Subject to Section 1.06 and Exhibit B-2, the By-laws of Sub
as in effect immediately prior to the Effective Time shall be the By-laws
of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
SECTION 1.06. Directors of Surviving Corporation. Immediately
following the Effective Time, (i) the Board of Directors of the Surviving
Corporation the ("Surviving Board") shall be comprised of the individuals
set forth on Exhibit B-2 (consisting of two designees of Parent and two
designees of the Company), it being agreed that if at any time prior to the
Effective Time any person set forth on Exhibit B-2 shall be unable to serve
as a director, at such time the party whose designee is unable to serve
shall designate another individual reasonably acceptable to the
other party to serve in such individual's place (and Exhibit B-2 shall be
deemed amended accordingly) and (ii) the By-laws of the Surviving
Corporation shall be amended to include the provisions set forth on Exhibit
B-2. During the period from the Effective Time through the one year
anniversary of the Effective Time, (i) the number of directors on the
Surviving Board shall not be changed without the approval of the majority
of the members of the Surviving Board and (ii) neither of the two designees
of the Company set forth on Exhibit B-2 or other designees of the Company
as provided above will be removed or replaced as a member of the Surviving
Board unless the Board of Directors of Parent (the "Parent Board"), acting
by majority vote of all of the directors then serving on the Parent Board,
determines in good faith that such removal or replacement is required in
order for the Parent Board to discharge its fiduciary duties.
SECTION 1.07. 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.
SECTION 1.08. Board of Directors, Committees and Officers of
Parent. Immediately following the Effective Time, the Parent Board,
committees of the Parent Board and officers of Parent shall be as set forth
on or designated in accordance with Exhibit B-1 hereto until the earlier of
the resignation or removal of any individual set forth on or designated in
accordance with Exhibit B-1 or until their respective successors are duly
elected and qualified, as the case may be, it being agreed that if any of
Xxxxxx X. Xxxxxxx, Xx., Xxxxxxx X. Xxxxxxx or Xxxx X. Xxxxxxxx shall be
unable to serve as a director at the Effective Time the Company shall
designate another member of the Company Board (as defined below) as of the
date hereof reasonably acceptable to Parent to serve in such individual's
place. If any officer set forth on or designated in accordance with Exhibit
B-1 ceases to be a full-time employee of either Parent or the Company at or
before the Effective Time, the parties will agree upon another person to
serve in such person's stead.
ARTICLE II
Effect on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. 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) Cancelation 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 Parent Common Stock or other
consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. (1) Subject to Sections
2.01(b), 2.01(d) and 2.02(e), each issued share of Company Common Stock
shall be converted into the right to receive the number (the "Conversion
Number") of fully paid and nonassessable shares of Parent Common Stock that
is equal to the quotient obtained by dividing (i) $35.50 by (ii) the
Average Parent Stock Price (as defined below) (rounded to the nearest
one-ten-thousandth); provided, however, that in no event shall the
Conversion Number be greater than 1.2500 or less than 1.1500. For purposes
hereof, the "Average Parent Stock Price" means the average closing price,
for the 15 trading days ending immediately on the fourth trading day prior
to the Company Shareholders Meeting (as defined in Section 6.01) (not
counting the day of the Company Shareholders Meeting), per share of Parent
Common Stock as reported on the New York Stock Exchange (the "NYSE"), as
reported in The Wall Street Journal (Northeast Edition), or, if not
reported thereby, any other authoritative source.
(2) The shares of Parent Common Stock to be issued upon the
conversion of shares of Company Common Stock pursuant to this Section
2.01(c) and cash in lieu of fractional shares as contemplated by Section
2.02(e) are referred to collectively as "Merger Consideration". At the
Effective Time, all such shares of Company Common Stock 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 Merger Consideration upon surrender of such certificate in
accordance with Section 2.02, 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 2.01(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 Merger Consideration as provided in Section
2.01(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
payment with respect to, or settle or offer to settle, any such demands, or
agree to do any of the foregoing.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent.
Promptly following the Effective Time, Parent shall deposit with
ChaseMellon Shareholder Services, LLC, or such other bank or trust company
as may be designated by Parent and the Company (the "Exchange Agent"), for
the benefit of the holders of shares of Company Common Stock, for exchange
in accordance with this Article II, through the Exchange Agent,
certificates representing the shares of Parent Common Stock issuable
pursuant to Section 2.01 in exchange for outstanding shares of Company
Common Stock (such shares of Parent Common Stock, together with any
dividends or distributions with respect thereto, being hereinafter referred
to as the "Exchange Fund"). For the purposes of such deposit, Parent shall
assume that there will not be any fractional shares of Parent Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, 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 Merger
Consideration pursuant to Section 2.01, (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 Merger
Consideration. Upon surrender of a Certificate for cancelation 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 a certificate representing that number of whole shares of
Parent Common Stock (together with cash in lieu of fractional shares) that
such holder has the right to receive pursuant to the provisions of this
Article II, and the Certificate so surrendered shall forthwith be canceled.
Until such time as a certificate representing Parent Common Stock is issued
to or at the direction of the holder of a surrendered Certificate, such
Parent Common Stock shall not be entitled to vote on any matter. In the
event of a transfer of ownership of Company Common Stock that is not
registered in the transfer records of the Company, a certificate
representing the appropriate number of shares of Parent Common Stock 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
issuance of shares of Parent Common Stock 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 2.02, 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
2.02. No interest shall be paid or accrue on any cash payable upon
surrender of any Certificate.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Parent Common Stock with a
record date after the Effective
Time shall be paid to the holder of any Certificate with respect to the
shares of Parent Common Stock issuable upon surrender thereof, and no cash
payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.02(e) until the surrender of such Certificate in
accordance with this Article II. Subject to applicable law, following
surrender of any such Certificate, there shall be paid to the holder of the
certificate representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of Parent Common
Stock to which such holder is entitled pursuant to Section 2.02(e) and the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective
Time but prior to such surrender and a payment date subsequent to such
surrender payable with respect to such whole shares of Parent Common Stock.
(d) 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, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a
record date prior to the Effective Time that may have been declared or made
by the Company on such shares in accordance with the terms of this
Agreement or prior to the date of this Agreement and which remain unpaid at
the Effective Time, 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 presented to the Surviving
Corporation or the Exchange Agent for any reason, they shall be canceled
and exchanged as provided in this Article II.
(e) No Fractional Shares. (1) No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon
the conversion of Company Common Stock pursuant to Section 2.01, and such
fractional share interests shall not entitle the owner thereof to vote or
to any rights of a holder of Parent Common Stock.
(2) As promptly as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (A) the number of shares of
Parent Common Stock delivered to the Exchange Agent by Parent pursuant to
Section 2.02(a) over (B) the aggregate number of whole shares of Parent
Common Stock to be issued to holders of Company Common Stock pursuant to
Section 2.02(b) (such excess being herein called the "Excess Shares"). As
soon after the Effective Time as practicable, the Exchange Agent, as agent
for the holders of Company Common Stock, shall sell the Excess Shares at
then prevailing prices on the NYSE, all in the manner provided in Section
2.02(e)(3).
(3) The sale of the Excess Shares by the Exchange Agent shall be
executed on the NYSE through one or more member firms of the NYSE and shall
be executed in round lots to the extent practicable. The proceeds from such
sale or sales available for distribution to the holders of Company Common
Stock shall be reduced by the compensation payable to the Exchange Agent
and the expenses incurred by the Exchange Agent, in each case, in
connection with such sale or sales of the Excess Shares, including all
related commissions, transfer taxes and other out-of-pocket transaction
costs. Until the net proceeds of such sale or sales have been distributed
to the holders of Company Common Stock entitled thereto, the Exchange Agent
shall hold such proceeds in trust for such holders of Company Common Stock
(the "Common Shares Trust"). The Exchange Agent shall determine the portion
of the Common Shares Trust to which each holder of a Certificate shall be
entitled, if any, by multiplying the amount of the aggregate net proceeds
comprising the Common Shares Trust by a fraction, the numerator of which is
the amount of the fractional share interest in a share of Parent Common
Stock to which such holder is entitled under Section 2.01(c) (or would be
entitled but for this Section 2.02(e)) and the denominator of which is the
aggre gate amount of fractional interests in a share of Parent Common Stock
to which all holders of Company Common Stock are entitled.
(4) Notwithstanding the provisions of Sections 2.02(e)(2) and
2.02(e)(3), the Surviving Corporation may elect at its option, exercised
prior to the Effective Time, in lieu of the issuance and sale of Excess
Shares and the making of the payments contemplated above, to pay each
former holder of Company Common Stock an amount in cash, without interest,
rounded to the nearest cent, equal to the product of (A) the amount of the
fractional share interest in a share of Parent Common Stock to which such
holder is entitled under Section 2.01(c) (or would be entitled but for this
Section 2.02(e)) and (B) the average
of the closing sale prices for Parent Common Stock on the NYSE, as reported
in The Wall Street Journal, Northeastern edition, for each of the ten
consecutive trading days ending with the second complete trading day prior
the Closing Date (not counting the Closing Date). Any such payments shall
be made at the time certificates for shares of Parent Common Stock are
delivered to each former holder of Company Common Stock pursuant to Section
2.02(b).
(5) As soon as practicable after the determina tion of the amount
of cash, if any, to be paid to holders of Company Common Stock in lieu of
any fractional share interests in Parent Common Stock, the Exchange Agent
shall make available such amounts, without interest, to the holders of
Company Common Stock entitled to receive such cash.
(f) Termination of Exchange Fund and Common Shares Trust. Any
portion of the Exchange Fund and Common Shares Trust 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 and any dividends or distributions with respect to
Parent Common Stock as contemplated by Section 2.02(c)(i).
(g) No Liability. None of Parent, Sub, the Company or the
Exchange Agent shall be liable to any person in respect of any shares of
Parent Common Stock (or dividends or distributions with respect thereto) or
cash from the Exchange Fund or the Common Shares Trust 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 or any dividends or distributions with
respect to Parent Common Stock as contemplated by Section 2.02(c)(i) in
respect of such Certificate would otherwise escheat to or become the
property of any Governmental Entity (as defined in Section 3.05)), any such
shares, cash, dividends or distributions 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.
(h) Investment of Exchange Fund and Common Shares Trust. The
Exchange Agent shall invest any cash included in the Exchange Fund and
Common Shares Trust, as directed by
Parent, on a daily basis. Any interest and other income resulting from such
investments shall be paid to Parent.
(i) 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 Code, or under any provision of state,
local or foreign tax law. To the extent that amounts are so withheld and
paid over to the appropriate taxing authority, Parent or the Surviving
Corporation, as the case may be, shall be treated as though it withheld an
appropriate amount of the type of consideration otherwise payable pursuant
to this Agreement to any holder of Company Common Stock, sold such
consideration for an amount of cash equal to the fair market value of such
consideration at the time of such deemed sale and paid such cash proceeds
to the appropriate taxing authority.
ARTICLE III
Representations and Warranties of the Company
The Company represents and warrants to Parent and Sub that,
except as disclosed in the letter dated as of the date of this Agreement,
from the Company to Parent and Sub (the "Company Disclosure Letter"):
SECTION 3.01. 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
material adverse effect on the Company, on the ability of the Company to
perform its obligations under the Transaction Agreements or on the ability
of the Company to consummate the Merger and the other Transactions (a
"Company Material Adverse Effect"). The Company and each Company 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 Company Material Adverse
Effect. The Company has made available to Parent 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 Bylaws"), and the comparable charter and organizational documents
of each Company Subsidiary, in each case as amended through the date of
this Agreement.
SECTION 3.02. Company Subsidiaries; Equity Interests. (a) The
Company Disclosure Letter 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, 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 3.03. 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"). At the close of business on December 31, 1998, (i)
13,254,066 shares of Company Common Stock and no shares of Company
Preferred Stock were issued and outstanding, (ii) 2,713,016 shares of
Company Common Stock were held by the Company in its treasury, (iii)
476,332 shares of Company Common Stock were subject to outstanding Company
Employee Stock Options (as defined in Section 6.04) and 942,823 additional
shares of Company Common Stock were reserved for issuance pursuant to the
Company Stock Plans (as defined in Section 6.04) and (iv) 1,000,000 shares
of Company Preferred Stock were 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. Except as set forth
above and except for the shares of
Company Common Stock reserved for issuance upon the exercise of the option
granted to Parent pursuant to the Company Stock Option Agreement, at the
close of business on December 31, 1998, no shares of capital stock or other
voting securities of the Company were issued, reserved for issuance or
outstanding. There are no outstanding Company SARs (as defined in Section
6.04) 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 3.05) 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, as of the date of this
Agreement, 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 occurring to holders of Company Capital
Stock. As of the date of this Agreement, 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 delivered to Parent a
complete and correct copy of the Company Rights Agreement, as amended to
the date of this Agreement.
SECTION 3.04. Authority; Execution and Delivery; Enforceability.
(a) The Company has all requisite corporate power and authority to execute
the Transaction Agreements to which it is a party and to consummate the
Transactions. The execution and delivery by the Company of each Transaction
Agreement to which it is a party 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 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 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 Agreements, 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 Agreements) and this
Agreement and the other Transaction Agreements, the Merger and the other
Transactions the provisions of Sections 132-134 of the BCL. 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 Agreements, 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.
SECTION 3.05. No Conflicts; Consents. (a) 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, cancelation 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 3.05(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.
(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 Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx
"XXX Xxx"), (xx) 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 Agreements, 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 3.18), (v) such filings as may be required in connection with the
taxes described in Section 6.09 and (vi) 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 Agreements, 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) a "Separation Time" (as defined in the
Company Rights Agreement) shall not 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 3.06. 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 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 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 as set forth in the Filed Company SEC Documents
(as defined in Section 3.08), 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 3.07. Information Supplied. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with
the SEC by Parent in connection with the issuance of Parent Common Stock in
connection with the Merger (the "Form S-4") will, at the time the Form S-4
becomes effective under the Securities Act and at the time of any
post-effective amendments, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or (ii) the Proxy
Statement will, at the date it is first mailed to the Company's
shareholders or Parent's stockholders or at the time of the Company
Shareholders Meeting (as defined in Section 6.01) or the Parent
Stockholders Meeting (as defined in Section 6.01), 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 3.08. Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Documents filed and publicly available prior
to the date of this Agreement (the "Filed Company SEC Documents"), from the
date of the most recent audited financial statements included in the Filed
Company SEC Documents 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;
(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 the date of the most
recent audited financial statements included in the Filed Company SEC
Documents, (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 the date of the
most recent audited financial statements included in the Filed Company
SEC Documents, 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 material elections with respect to Taxes (as defined in
Section 3.09) by the Company or any Company Subsidiary (other than
those elections reflected on Tax Returns filed as of the date hereof)
or settlement or compromise by the Company or any Company Subsidiary
of any material Tax liability or refund.
SECTION 3.09. 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.
(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.
Material Tax Liens which are being contested in good faith as of the date
hereof are set forth in the Company Disclosure Letter.
(e) The Company has no reason to believe that any conditions
exist that would reasonably be expected to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
(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 the date of the most
recent audited financial statements included in the Filed Company SEC
Documents 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, 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, as
of the date of this Agreement 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 Company Disclosure Letter contains a list of all "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"), "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA) and all other Company Benefit Plans
maintained, or contributed to, by the Company or any Company Subsidiary for
the benefit of any current or former employees, officers or directors of
the Company or any Company Subsidiary.
(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, 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 actuarial assumptions that have been furnished to Parent.
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 of its 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 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 or maintained, or been required to contribute 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.
(e) Other than payments that may be made to the persons listed in
the Company Disclosure Letter (the "Primary Company Executives"), any
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 not be characterized as an "excess parachute
payment" (as defined in Section 280G(b)(1) of the Code). Set forth in the
Company Disclosure Letter is (i) the estimated maximum amount that could be
paid to each Primary Company Executive as a result of the Merger and the
other Transactions under all employment, severance and termination
agreements, other compensation arrangements and Company Benefit Plans
currently in effect and (ii) the estimated "base amount" (as defined in
Section 280G(b)(3) of the Code) for each Primary Company Executive
calculated as of the date of this Agree ment, assuming that the
Transactions occur after December 31, 1998.
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, 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. This Section 3.13 does not relate to matters with respect to
Taxes, which are the subject of Section 3.09, or with respect to the
environment, which are the subject of Section 3.18.
SECTION 3.14. Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than Xxxxxxx
Xxxxx Xxxxxx 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 Company has furnished to Parent a true and complete copy of all
agreements between the Company and Xxxxxxx Xxxxx Barney Inc. relating to
the Merger and the other Transactions.
SECTION 3.15. Opinion of Financial Advisor. The Company has
received the opinion of Xxxxxxx Xxxxx Xxxxxx 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 Conversion Number 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. Accounting Matters. Neither the Company nor any
Company Subsidiary nor, to the Company's best knowledge, any other
affiliate of the Company, has taken or agreed to take any action that
(without giving effect to any action taken or agreed to be taken by Parent
or any of its affiliates) would prevent Parent from accounting for the
business combination to be effected by the Merger as a pooling of
interests.
SECTION 3.17. 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 adaptions necessary to achieve Company Millennium
Functionality are not reasonably likely to have a Company Material Adverse
Effect.
SECTION 3.18. Environmental Matters. (a) 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 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. 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 (which, for purposes
of Section 4.18 only, shall include high level, mixed, transuranic, spent
nuclear fuel, and low level nuclear wastes and nuclear materials, but only
to the extent that any and all risks related to such nuclear wastes and
materials are not covered in a U.S. Government nuclear indemnity or
insurance clause pursuant to 50 U.S.C. ss. 1431 or 42 U.S.C. ss. 2011 et
seq., as amended, and regulations promulgated thereunder, and Executive
Order No. 10789), 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 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) 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.
SECTION 3.19. 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 3.20. Government Contracts. The Company's most recent
Estimate at Completion, which has been provided to Parent prior to the date
of this Agreement, (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 and
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.
ARTICLE IV
Representations and Warranties of Parent and Sub
Parent and Sub, jointly and severally, represent and warrant to
the Company that, except as disclosed in the letter dated as of the date of
this Agreement, from Parent to the Company (the "Parent Disclosure
Letter"):
SECTION 4.01. 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
material adverse effect on Parent, on the ability of Parent or Sub to
perform its obligations under the Transaction Agreements or on the ability
of Parent or Sub to consummate the Merger and the other Transactions (a
"Parent Material Adverse Effect"). 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 restated 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 Bylaws"), and the comparable charter and organizational
documents of Sub and each other Parent Subsidiary, in each case as amended
through the date of this Agreement.
SECTION 4.02. Parent Subsidiaries; Equity Interests. (a) The
Parent Disclosure Letter lists each Parent Subsidiary. All the outstanding
shares of capital stock of each Parent Subsidiary have been validly issued
and are fully paid and nonassessable and are owned by Parent, by another
Parent Subsidiary or by Parent and another Parent Subsidiary, free and
clear of all Liens.
(b) Except for its interests in the Parent Subsidiaries, Parent
does not own, directly or indirectly, any capital stock, membership
interest, partnership interest, joint venture interest or other equity
interest in any person.
(c) Since the date of its incorporation, Sub has not carried on
any business or conducted any operations other than the execution of the
Transaction Agreements to which it is a party, the performance of its
obligations hereunder and thereunder and matters ancillary thereto.
SECTION 4.03. Capital Structure. (a) The authorized capital stock
of Parent consists of 70,000,000 shares of Parent Common Stock and
10,000,000 shares of preferred stock, par value $0.01 per share ("Parent
Preferred Stock" and, together with the Parent Common Stock, the "Parent
Capital Stock"). At the close of business on December 31, 1998, (i)
34,264,209 shares of Parent Common Stock were issued and outstanding, (ii)
no
shares of Series A Participating Cumulative Preferred Stock of Parent were
issued and outstanding, and no other shares of Parent Preferred Stock have
been designated or issued, (iii) 1,022,177 shares of Parent Common Stock
were held by Parent in its treasury, (iv) 3,661,813 shares of Parent Common
Stock were subject to outstanding Parent Employee Stock Options (as defined
in Section 6.04) and 5,386,445 additional shares of Parent Common Stock
were reserved for issuance pursuant to Parent Stock Plans (as defined in
Section 6.04) and (v) 400,000 shares of Parent Preferred Stock were
reserved for issuance in connection with the rights (the "Parent Rights")
issued pursuant to the Rights Agreement dated as of June 10, 1998 (as
amended from time to time, the "Parent Rights Agreement"), between Parent
and First Chicago Trust Company of New York, as Rights Agent. Except as set
forth above and except for the shares of Parent Common Stock reserved for
issuance upon the exercise of the option granted to Parent pursuant to the
Parent Stock Option Agreement, at the close of business on December 31,
1998, no shares of capital stock or other voting securities of Parent were
issued, reserved for issuance or outstanding. There are no outstanding
Parent SARs (as defined in Section 6.04 (a)(ii)). All outstanding shares of
Parent 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 Delaware
General Corporation Law (the "DGCL"), the Parent Charter, the Parent
By-laws or any Contract to which Parent is a party or otherwise bound.
There are not any bonds, debentures, notes or other indebtedness of Parent
having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which holders of
Parent Common Stock may vote ("Voting Parent Debt"). Except as set forth
above, as of the date of this Agreement, 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
Parent or any Parent Subsidiary is a party or by which any of them is bound
(i) obligating Parent or any Parent 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, Parent or of any Parent Subsidiary or any Voting Parent Debt,
(ii) obligating Parent or any Parent 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 occurring to holders of Parent Capital Stock.
As of the date of this Agreement, there are not any outstanding contractual
obligations of Parent or any Parent Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock of Parent or any Parent
Subsidiary. Parent has delivered to the Company a complete and correct copy
of the Parent Rights Agreement as amended to the date of this Agreement.
(b) The authorized capital stock of Sub consists of 1,000 shares
of common stock, par value $0.01 per share, all of which have been validly
issued, are fully paid and nonassessable and are owned by Parent free and
clear of any Lien.
SECTION 4.04. 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 as the part of Parent and Sub, subject (i) in
the case of the issuance of shares of Parent Common Stock in accordance
with the terms of this Agreement (the "Share Issuance"), to receipt of
Parent Stockholder Approval and (ii) to receipt of the Parent Stockholder
Approval and filing with the Secretary of State of the State of Delaware of
an amendment to the Parent Charter (the "Charter Amendment") to change the
corporate name of Parent, as contemplated by Section 7.03(g). 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 (i) approving the Share Issuance, the
Charter Amendment, this Agreement and the other Transaction Agreements, 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 Parent and its stockholders, (iii)
recommending that Parent's stockholders approve the Share Issuance and the
Charter Amendment and (iv) approving and declaring advisable the Charter
Amendment. To Parent's knowledge, and assuming no material change in
current ownership of Company Capital Stock prior to the Effective Time, 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
Agreements, the Merger or any other Transaction.
(c) The only vote of holders of any class or series of Parent
Capital Stock necessary in connection with this Agreement and the Merger is
(i) the approval of the Share Issuance by the holders of outstanding Parent
Common Stock, in accordance with the requirements of the NYSE and the
Parent By-laws, and (ii) the approval of the Charter Amendment by a
majority of the outstanding Parent Common Stock (collectively, the "Parent
Stockholder Approval"). The affirmative vote of the holders of Parent
Capital Stock, or any of them, is not otherwise necessary to consummate the
Merger, approve the Charter Amendment or consummate any Transaction.
SECTION 4.05. 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, cancelation 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 (subject to
the approval, filing and effectiveness of the Charter Amendment), (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 4.05(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 (A) the Form S-4 and the Proxy Statement and (B) such
reports under Sections 13 and 16 of the Exchange Act, as may be required in
connection with this Agreement and the other Transaction Agreements, 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 the filing
of the Charter Amendment with the Secretary of State of the State of
Delaware, (iv) such filings as may be required in connection with transfers
of property under applicable Environmental Laws, (v) such filings as may be
required in connection with the taxes described in Section 6.09 and (vi)
such other items required solely by reason of the participation of the
Company (as opposed to any third party) in the Transactions.
(c) Parent and the Parent Board have taken all action necessary
to (i) render the Parent Rights inapplicable to this Agreement and the
other Transaction Agreements, the Merger and the other Transactions and
(ii) ensure that (A) neither the Company nor any of its affiliates or
associates is or will become an "Acquiring Person" (as defined in the
Parent Rights Agreement) by reason of any Transaction Agreement, the Merger
or any other Transaction, and (B) assuming no material change in the
current ownership of Company Capital Stock prior to the Effective Time, a
"Distribution Date" (as defined in the Parent Rights Agreement) shall not
occur by reason of any Transaction Agreement, the Merger or any other
Transaction.
SECTION 4.06. SEC Documents; Undisclosed Liabilities. Parent has
filed all reports, schedules, forms, statements and other documents
required to be filed by Parent with the SEC since January 1, 1997 (the
"Parent SEC Documents"). As of its respective date, each Parent SEC
Document complied in all material respects with the requirements of the
Exchange Act or the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Parent 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 Parent SEC Document filed after January
1, 1998 (the "Parent 1998 SEC Documents") has been revised or superseded by
a later filed Parent 1998 SEC Document, the Parent 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 statements of Parent
included in the Parent 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 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 Parent 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 as set forth in the Filed Parent SEC Documents
(as defined in Section 4.08), neither Parent nor any Parent 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 Parent Material Adverse Effect.
SECTION 4.07. Information Supplied. None of the information
supplied or to be supplied by Parent or Sub for inclusion or incorporation
by reference in (i) the Form S-4 will, at the time the Form S-4 becomes
effective under the Securities Act and at the time of any post-effective
amendments, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, or (ii) the Proxy Statement will, at
the date it is first mailed to the Company's shareholders or Parent's
stockholders or at the time of the Company Shareholders Meeting or the
Parent Stockholders 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. The Form S-4 will
comply as to form in all material respects with the requirements of the
Securities Act and the rules and regulations thereunder, except that no
representation is made by Parent or Sub with respect to statements made or
incorporated by reference therein based on information
supplied by the Company for inclusion or incorporation by
reference therein.
SECTION 4.08. Absence of Certain Changes or Events. (a) Except as
disclosed in the Parent SEC Documents filed and publicly available prior to
the date of this Agreement (the "Filed Parent SEC Documents"), from the
date of the most recent audited financial statements included in the Filed
Parent SEC Documents to the date of this Agreement, Parent 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
Parent Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect
to any Parent Capital Stock or any purchase, redemption or other
acquisition for value by Parent of any Parent Capital Stock;
(iii) any split, combination or reclassification of any Parent
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 Parent Capital Stock;
(iv) (A) any granting by Parent or any Parent Subsidiary to any
director or executive officer of Parent or any Parent 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 the date of the most recent
audited financial statements included in the Filed Parent SEC
Documents, (B) any granting by Parent or any Parent 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 the date of the
most recent audited financial statements included in the Filed Parent
SEC Documents, or (C) any entry by Parent or any Parent Subsidiary
into any employment, severance or termina tion agreement with any such
director or executive officer;
(v) any change in accounting methods, principles or practices by
Parent or any Parent Subsidiary materi-
ally affecting the consolidated assets, liabilities or results of
operations of Parent, except insofar as may have been required by
a change in GAAP; or
(vi) any material elections with respect to Taxes by Parent or
any Parent Subsidiary or settlement or compromise by Parent or any
Parent Subsidiary of any material Tax liability or refund.
(b) Since the date of its incorporation, Sub has not carried on
any business or conducted any operations other than the execution of the
Transaction Agreements to which it is a party, the performance of its
obligations hereunder and thereunder and matters ancillary thereto.
SECTION 4.09. Taxes. (a) Each of Parent and each Parent
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
Parent Material Adverse Effect. All Taxes shown to be due on such Tax
Returns, or otherwise owed, has 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 Parent Material Adverse Effect.
(b) The most recent financial statements contained in the Filed
Parent SEC Documents reflect an adequate reserve for all Taxes payable by
Parent and the Parent 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 Parent
or any Parent 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 Parent Material Adverse Effect.
(c) The Federal income Tax Returns of Parent and each Parent
Subsidiary consolidated in such Returns have been examined by and settled
with the United States Internal Revenue Service for all years through 1992.
All material assessments for Taxes due with respect to such completed and
settled examinations or any concluded litigation have been fully paid.
(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 Parent or any Parent Subsidiary. Neither Parent nor any
Parent Subsidiary is bound by any agreement with respect to Taxes. Material
Tax Liens which are being contested in good faith as of the date hereof are
set forth in the Parent Disclosure Letter.
(e) Parent has no reason to believe that any conditions exist
that would reasonably be expected to prevent the Merger from qualifying as
a reorganization within the meaning of Section 368(a) of the Code.
(f) Parent has furnished to the Company a copy of the Internal
Revenue Service's ruling that the distribution of Parent Common Stock by
Tenneco Inc. in 1996 qualified as a distribution under Section 355 of the
Code. No action has been taken by Parent and, to Parent's knowledge, no
event has occurred that would nullify the Internal Revenue Service's ruling
or cause the distribution of Parent Common Stock by Tenneco Inc. in 1996 to
fail to qualify as a distribution under Section 355 of the Code or result
in liability by Parent under the Tax Sharing Agreement dated December 11,
1996 executed in connection with such distribution.
SECTION 4.10. Absence of Changes in Benefit Plans. Except as
disclosed in the Filed Parent SEC Documents, from the date of the most
recent audited financial statements included in the Filed Parent SEC
Documents to the date of this Agreement, there has not been any adoption or
amendment in any material respect by Parent or any Parent 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, medical or other plan,
arrangement or understanding (whether or not legally binding) providing
benefits to any current or former employee, officer or director of Parent
or any Parent Subsidiary (collectively, "Parent Benefit Plans").
SECTION 4.11. ERISA Compliance; Excess Parachute Payments. (a)
The Parent Disclosure Letter contains a list of all "employee pension
benefit plans" (as defined in Section 3(2) of ERISA) (sometimes referred to
herein as "Parent Pension Plans") maintained, or contributed to, by Parent
or any Parent Subsidiary for the benefit of any current or former
employees, officers or directors of Parent or any Parent Subsidiary.
(b) All Parent Pension Plans have been the subject of
determination letters from the Internal Revenue Service to the effect that
such Parent 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 Parent,
has revocation been threatened, nor has any such Parent 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 Parent Pension Plan, other than any Parent Pension Plan
that is a "multiemployer plan" within the meaning of Section 4001(a)(3) of
ERISA (a "Parent Multiemployer Pension Plan"), had, as of the respective
last annual valuation date for each such Parent Pension Plan, an "unfunded
benefit liability" (as such term is defined in Section 4001(a)(18) of
ERISA), based on actuarial assumptions that have been furnished to Parent.
None of Parent 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 Parent's knowledge, none of Parent, any Parent
Subsidiary, any officer of Parent or any of its Parent Subsidiary or any of
Parent Benefit Plans which are subject to ERISA, including the Parent
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 Parent, any
Parent Subsidiary or any officer of Parent or any Parent 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 such Parent Pension Plans and trusts has
been terminated, (ii) to Parent's knowledge, "reportable event" (as that
term is defined in Section 4043 of ERISA) with respect to any Parent
Benefit Plan has occurred, and (iii) neither Parent nor any Parent
Subsidiary has incurred a "complete withdrawal" or a "partial withdrawal"
(as such terms are defined in Sections 4203 and 4205, respectively, of
ERISA) with respect to any Multiemployer Pension Plan.
(d) With respect to any Parent Benefit Plan that is an employee
welfare benefit plan, no such Parent Benefit Plan is funded through a
"welfare benefits fund" (as such term is defined in Section 419(e) of the
Code).
SECTION 4.12. Litigation. Except as disclosed in the Filed Parent
SEC Documents, there is no suit, action or proceeding pending or, to the
knowledge of Parent, threatened against or affecting Parent or any Parent
Subsidiary (and Parent 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 Parent Material Adverse Effect, nor is
there any Judgment outstanding against Parent or any Parent Subsidiary that
has had or would reasonably be expected to have a Parent Material Adverse
Effect.
SECTION 4.13. Compliance with Applicable Laws. Except as
disclosed in the Filed Parent SEC Documents, Parent and the Parent
Subsidiaries are in compliance with all material 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 Parent Material Adverse Effect.
Except as set forth in the Filed Parent SEC Documents, neither Parent nor
any Parent Subsidiary has received any written communication during the
past two years from a Governmental Entity that alleges that Parent or a
Parent Subsidiary is not in compliance in any material respect with any
Applicable Law which is material to the conduct of the business of Parent
and the Parent Subsidiaries. This Section 4.13 does not relate to matters
with respect to Taxes, which are the subject of Section 4.09 or with
respect to the environment, which are the subject of Section 4.18.
SECTION 4.14. Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than Lazard
Freres & Co. LLC and CS First Boston, the fees and expenses of which will
be paid by Parent, 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
Parent or Sub. Parent has furnished to the Company a true and complete copy
of all agreements between Parent and Lazard Freres & Co. LLC relating to
the Merger and the other Transactions and the Parent Disclosure Letter sets
forth the amount of the fee to be paid to CS First Boston in connection
with the Merger and the other Transactions.
SECTION 4.15. Opinion of Financial Advisor. Parent has received
the opinion of Lazard Freres & Co. LLC, dated the date of this Agreement,
to the effect that, as of such date, the Conversion Number is fair, from a
financial
point of view, to Parent, a signed copy of which opinion has been delivered
to the Company.
SECTION 4.16. Accounting Matters. Neither Parent nor any Parent
Subsidiary nor, to Parent's best knowledge, any other affiliate of Parent,
has taken or agreed to take any action that (without giving effect to any
action taken or agreed to be taken by Parent or any of its affiliates)
would prevent Parent from accounting for the business combination to be
effected by the Merger as a pooling of interests.
SECTION 4.17. Year 2000. Except as disclosed in the Parent SEC
Documents, all computer systems and computer software used by Parent or any
of the Parent 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, "Parent Millennium
Functionality"), except in each case for such computer systems and computer
software, the failure of which to achieve Parent Millennium Functionality,
individually or in the aggregate, would not reasonably be expected to have
a Parent Material Adverse Effect. To the knowledge of Parent, the costs of
the adaptions necessary to achieve Parent Millennium Functionality are not
reasonably likely to have a Parent Material Adverse Effect.
SECTION 4.18. Environmental Matters. (a) Neither the Parent nor
any Parent Subsidiary has (i) placed, held, located, released, transported,
discharged or disposed of any Hazardous Substances on, under, from or at
any of the Parent's or any of the Parent 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
Parent Material Adverse Effect, (ii) any knowledge or reason to know of the
presence of any Hazardous Substances on, under or at any of the Parent's or
any of the Parent Subsidiaries' properties or any other property but
arising from the Parent's or any of the Parent 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 Parent Material Adverse Effect, or (iii) during the
preceding five years, received any written notice (A) of any violation of
any Environmental Law at, on or under any of the Parent's or any of the
Parent 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 Parent's or any of the Parent 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 Parent's or any of the Parent Subsidiaries'
currently or formerly owned, leased or operated properties.
(b) The Parent and the Parent 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 be
reasonably expected to have a Parent Material Adverse Effect.
(c) Except as would not be reasonably expected to have a Parent
Material Adverse Effect, (i) no Environmental Law imposes any obligation
upon the Parent or any Parent 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 Parent's or the Parent Subsidiaries'
properties under any Environmental Law.
(d) Neither the Parent nor any Parent 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 Parent
Material Adverse Effect.
SECTION 4.19. Labor Matters. Except as set forth in the Filed
Parent SEC Documents, neither Parent nor any of the Parent Subsidiaries is
the subject of any suit, action or proceeding which is pending or, to the
knowledge of Parent, threatened, asserting that Parent or any of the Parent
Subsidiaries has committed an unfair labor practice (within the meaning of
the National Labor Relations Act or applicable state statutes) or seeking
to compel Parent or any of the Parent Subsidiaries to bargain with any
labor organization as to wages and conditions of employment, in any such
case, that would reasonably be expected to have a Parent Material Adverse
Effect. Except as set forth in the Filed Parent SEC Documents, no strike or
other labor dispute involving Parent or any of the Parent Subsidiaries is
pending or, to the knowledge of Parent, threatened, and, to the knowledge
of Parent, there is no activity involving any employees of Parent or any of
the Parent Subsidiaries seeking to certify a collective bargaining unit or
engaging in any other organizational activity, except for any such dispute
or activity that would not reasonably be expected to have a Parent Material
Adverse Effect.
SECTION 4.20. Government Contracts. Parent's most recent Estimate
at Completion, which has been provided to the Company prior to the date of
this Agreement, (i) was prepared in the ordinary course and consistent with
past practice and (ii) accurately reflects Parent's best estimate of the
total cost to complete each of Parent's material contracts and each such
best estimate is based on all material facts known, or that reasonably
should have been known, to Parent at the time such Estimate at Completion
was prepared.
SECTION 4.21. Tenneco. Except as disclosed in the Filed Parent
SEC Documents: (i) Parent and the Parent Subsidiaries have no material
obligations to Tenneco or its subsidiaries or its affiliates arising from
or in connection with the spin-off of Parent from Tenneco; (ii) no material
claims are pending, or to Parent's knowledge, threatened against Parent or
any Parent Subsidiary by any person, including any Governmental Entity,
with respect to the spin-off; and (iii) to Parent's knowledge, no such
claims have been asserted against Tenneco or its subsidiaries or affiliates
for which Parent or any Parent Subsidiary would reasonably be expected to
provide indemnification or reimbursement.
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01. Conduct of Business. (a) Conduct of Business by the
Company. Except for matters set forth in the Company Disclosure Letter or
otherwise 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 for matters
set forth in the Company Disclosure Letter or otherwise 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 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 upon the exercise of Company Rights, (3)
the issuance of Company Common Stock (and associated Company Rights)
pursuant to the Company Stock Option Agreement and (4) 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 the date of the most recent audited financial statements
included in the Filed Company SEC Documents, (C) enter into any
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;
(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 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 in the Company Disclosure Letter 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;
(xii) take any action that (without giving effect to any action
taken or agreed to be taken by Parent or any of its affiliates) would
prevent Parent from accounting for the business combination to be
effected by the Merger as a pooling of interests; or
(xiii) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Conduct of Business by Parent. Except for matters set forth
in the Parent Disclosure Letter or otherwise expressly contemplated by the
Transaction Agreements, from the date of this Agreement to the Effective
Time Parent shall, and shall cause each Parent 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 for matters set forth in the Parent Disclosure Letter or
otherwise expressly contemplated by the Transaction Agreements, from the
date of this Agreement to the Effective Time, Parent shall not, and shall
not permit any Parent Subsidiary to, do any of the following without the
prior written consent of the Company:
(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 (1) dividends and distributions
by a direct or indirect wholly owned subsidiary of Parent to its
parent and (2) regular quarterly cash dividends with respect to the
Parent Common Stock, not in excess of $0.04 per share, with usual
declaration, record and payment dates and in accordance with Parent's
past dividend policy, (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 Parent or any Parent 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 Parent 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) other than in the
ordinary course of business consistent with past practice, any stock
options, performance shares, incentive shares, restricted stock,
"phantom" stock, "phantom" stock rights, stock appreciation rights or
stock-based performance units, other than (1) the issuance of Parent
Common Stock (and associated Parent Rights) upon the exercise of
Parent Employee Stock Options outstanding on the date of this
Agreement and in accordance with their present terms, (2) the issuance
of Parent Preferred Stock upon the exercise of Parent Rights, (3) the
issuance of Parent Common Stock (and associated Parent Rights)
pursuant to the Parent Stock Option Agreement and (4) the sale or
purchase of Parent Common Stock (or its equivalent) under Parent
Pension Plans;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents in a manner adverse to
the holders of Company Common Stock;
(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 Parent and the Parent Subsidiaries, taken as a whole;
(v) make any change in accounting methods, principles or
practices materially affecting the reported consolidated assets,
liabilities or results of operations of Parent, except insofar as may
have been required by a change in GAAP;
(vi) 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 Parent and the Parent Subsidiaries, taken as a
whole, except sales of obsolete assets in the ordinary course of
business consistent with past practice;
(vii) (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 Parent or any Parent 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 Parent or any
direct or indirect wholly owned subsidiary of Parent;
(viii) make or agree to make any new capital expenditure or
expenditures that, individually, is in excess of $5,000,000 or, in the
aggregate, are in excess of $35,000,000;
(ix) (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 Parent included in the Filed
Parent SEC Documents or in the Parent Disclosure Letter or incurred in
the ordinary course of business consistent with past practice, (B)
cancel any material indebtedness (individually or in the aggregate),
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 Parent or any Parent
Subsidiary is a party;
(x) take any action that (without giving effect to any action
taken or agreed to be taken by the Company or any of its affiliates)
would prevent Parent from accounting for the business combination to
be effected by the Merger as a pooling of interests;
(xi) take any action that (without giving effect to any action
taken or agreed to be taken by the Company or any of its affiliates)
would render the provisions of Sections 132-134 of the BCL applicable
to this Agreement or the Merger; or
(xii) authorize any of, or commit or agree to take any of, the
foregoing actions.
(c) Other Actions. The Company and Parent shall not, and shall
not permit any of their respective subsidi aries to, take any action that
would, or that could reason ably be expected to, result in (i) any of the
representa tions 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.
(d) 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 material
adverse effect on such party.
SECTION 5.02. 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 5.02(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 5.02(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 5.02(b)), and subject to
compliance with Section 5.02(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 Section 6.02) 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 5.02(a) by the Company.
(b) Except as expressly permitted by this Section 5.02, 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
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 5.02 shall prohibit the Company from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or from making any required disclosure to the Company's
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, (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 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.
SECTION 5.03. No Solicitation by Parent. (a) Parent shall not,
nor shall it permit any Parent 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, Parent or any
Parent Subsidiary to, (i) directly or indirectly solicit, initiate or
encourage the submission of, any Parent Takeover Proposal (as defined in
Section 5.03(f)), (ii) enter into any agreement with respect to any Parent
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 Parent Takeover Proposal; provided, however,
that prior to receipt of the Parent Stockholder Approval (the "Parent
Applicable Period"), if Parent receives a proposal or offer that was not
solicited by Parent and that did not otherwise result from a breach or
deemed breach of this Section 5.03(a) and that the Parent Board believes in
good faith could result in a third party making a Parent Superior Proposal
(as defined in Section 5.03(b)), and subject to compliance with Section
5.03(c), Parent may (x) furnish information with respect to the Parent 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 Parent than the terms of the Confidentiality Agreement and (y)
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
affiliate, director or executive officer of Parent or any Parent Subsidiary
or any investment banker, attorney or other advisor or representative of
Parent or any Parent Subsidiary, shall be deemed to be a breach of this
Section 5.03(a) by Parent.
(b) Except as expressly permitted by this Section 5.03, neither
the Parent Board nor any committee thereof shall (i) approve any letter of
intent, agreement in principle, acquisition agreement or similar agreement
relating to any Parent Takeover Proposal or (ii) approve or recommend, or
propose publicly to approve or recommend, any Parent Takeover Proposal.
Notwithstanding the foregoing, if the Parent has received a Parent Superior
Proposal, the Parent Board may terminate this Agreement, but only at a time
that is during the Parent Applicable Period and is more than 48 hours
following the Company's receipt of written notice advising the Company that
the Parent Board is prepared to accept such Parent Superior Proposal,
specifying
the material terms and conditions of such Parent Superior Proposal and
identifying the person making such Parent Superior Proposal. For purposes
of this Agreement, a "Parent 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 of the Parent Capital Stock then
outstanding or all or substantially all the assets of the Parent and
otherwise on terms which the Parent 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 Parent and Parent'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) Parent promptly shall advise the Company orally and in
writing of any Parent Takeover Proposal or any inquiry with respect to or
that could reasonably be expected to lead to any Parent Takeover Proposal,
the identity of the person making any such Parent Takeover Proposal or
inquiry and the material terms of any such Parent Takeover Proposal or
inquiry. Parent shall (i) keep the Company fully informed of the status of
any such Parent Takeover Proposal or inquiry (including any change to the
material terms thereof) and (ii) provide to the Company as soon as
practicable after receipt or delivery thereof with copies of all
correspondence and other written material sent or provided to Parent from
any third party in connection with any Parent Takeover Proposal.
(d) Neither Parent nor the Parent Board nor any committee thereof
shall withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to the Company, the recommendation of the Parent Board of
the Share Issuance or the Charter Amendment, or approve or recommend, or
propose publicly to approve or recommend, a Parent Takeover Proposal unless
a withdrawal or modification of such recommendation is, in the good faith
judgment of the Parent Board after consultation with its outside counsel,
required by its fiduciary duties. Nothing contained in this Section 5.03
shall prohibit Parent from taking and disclosing to its stockholders a
position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act or from making any
required disclosure to Parent's stockholders if, in the good faith judgment
of the Parent Board, based on the opinion of outside counsel, failure so to
disclose would be inconsistent with its obligations under applicable law.
(e) Parent represents and warrants to the Company that, within
the 12 month period prior to the date of this Agreement, (i) Parent has not
received any Parent Takeover Proposal and (ii) the Parent has not provided
written non-public information (whether or not pursuant to a
confidentiality agreement) to any person in consideration of a potential
Parent Takeover Proposal or to otherwise facilitate the making of a Parent
Takeover Proposal.
(f) For purposes of this Agreement:
"Parent Takeover Proposal" means any proposal for a merger,
consolidation, dissolution, liquidation, recapitalization or other
business combination involving Parent or any Parent 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 Parent of a material amount of its equity securities as
consideration for the assets or securities of any person or any
proposal or offer to acquire in any manner, directly or indirectly, a
material equity interest in any voting securities of, or a substantial
portion of the assets of Parent or any Parent Subsidiary, other than
the Transactions.
ARTICLE VI
Additional Agreements
SECTION 6.01. Preparation of the Form S-4 and the Proxy
Statement; Stockholders Meetings. (a) As soon as practicable following the
date of this Agreement, the Company and Parent shall prepare and file with
the SEC the Proxy Statement in preliminary form and Parent shall prepare
and file with the SEC the Form S-4, in which the Proxy Statement will be
included as a prospectus, and each of the Company and Parent shall use best
efforts to respond as promptly as practicable to any comments of the SEC
with respect thereto. Each of the Company and Parent shall use best efforts
to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing. The Company shall use best
efforts to cause the Proxy Statement to be mailed to the Company's
shareholders,
and Parent shall use best efforts to cause the Proxy Statement to be mailed
to Parent's stockholders, in each case as promptly as practicable after the
Form S-4 is declared effective under the Securities Act. Parent shall also
take any action (other than qualifying to do business in any jurisdiction
in which it is not now so qualified) required to be taken under any
applicable state securities laws in connection with the issuance of Parent
Common Stock in connection with the Merger and under the Company Stock
Plans and the Company shall furnish all information concerning the Company
and the holders of the Company Common Stock and rights to acquire Company
Common Stock pursuant to the Company Stock Plans as may be reasonably
requested in connection with any such action. The parties shall notify each
other 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 the Form S-4 or for additional information and shall
supply each other with copies of all correspondence between such party 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, the Form S-4 or the
Merger. If at any time prior to receipt of the Company Shareholder Approval
or the Parent Stockholder Approval, there shall occur any event that should
be set forth in an amendment or supplement to the Proxy Statement, the
Company and Parent shall promptly prepare and mail to their respective
stockholders 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. 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 6.01(b) shall not be affected by the commencement, public proposal,
public disclosure or communication to the Company of any Company Takeover
Proposal.
(c) Parent shall, as soon as practicable following the date of
this Agreement, duly call, give notice of, convene and hold a meeting of
its stockholders (the "Parent Stockholders Meeting") for the purpose of
seeking the Parent Stockholder Approval. Parent shall, through the Parent
Board, recommend to its stockholders that they give the Parent Stockholder
Approval. Without limiting the generality of the foregoing, Parent agrees
that its obligations pursuant to the first sentence of this
Section 6.01(c) shall not be affected by the commencement, public proposal,
public disclosure or communication to Parent of any Parent Takeover
Proposal.
(d) The Company shall use its best efforts to cause to be
delivered to Parent a letter of Deloitte & Touche LLP ("D&T"), the
Company's independent public accountants, dated a date within two business
days before the date on which the Form S-4 shall become effective and
addressed to Parent, in form and substance reasonably satisfactory to
Parent and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4.
(e) Parent shall use its best efforts to cause to be delivered to
the Company a letter of Xxxxxx Xxxxxxxx LLP ("AA"), Parent's independent
public accountants, dated a date within two business days before the date
on which the Form S-4 shall become effective and addressed to the Company,
in form and substance reasonably satisfactory to the Company and customary
in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the Form
S-4.
SECTION 6.02. Access to Information; Confidenti ality. Each of
the Company and Parent shall, and shall cause each of its respective
subsidiaries to, afford to the other party and to the officers, employees,
accountants, counsel, financial advisors and other representatives of such
other party, 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, each of the Company and Parent shall, and shall cause each of its
respective subsidiaries to, furnish promptly to the other party (a) 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 (b) all other information concerning its business,
properties and personnel as such other party 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 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). Without limiting the generality of the foregoing, Parent
shall, within two business days of request therefor, provide to the Company
the information described in Rule 14a-7(a)(2)(ii)
under the Exchange Act and any information to which a holder of Parent
Common Stock would be entitled under Section 220 of the DGCL (assuming such
holder met the requirements of such section). All information exchanged
pursuant to this Section 6.02 shall be subject to the Mutual Nondisclosure
Agreement dated November 23, 1998 between the Company and Parent (the
"Confidentiality Agreement").
SECTION 6.03. 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, making any
reasonable accommodation, such as the granting of additional security or
the issuance of a Parent guarantee, as may be reasonably requested by the
Administrator of the Maritime Administration of the Department of
Transportation in connection with obtaining the consent referred to in
Section 7.02(g)), (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. 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 7.02(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 obliga tions of the parties under the Transaction
Agreements.
SECTION 6.04. 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
adopt such resolutions or take such other actions as may be required to
effect the following:
(i) adjust the terms of all outstanding Company Employee Stock
Options to provide that, at the Effective Time, each Company Employee
Stock Option out standing immediately prior to the Effective Time
shall be deemed to constitute an option to acquire, on the same terms
and conditions as were applicable under such Company Employee Stock
Option, the same number of shares of Parent Common Stock as the holder
of such Company Employee Stock Option would have been entitled to
receive pursuant to the Merger had such holder exercised such Company
Employee Stock Option in full immediately prior to the Effective Time,
at a price per share equal to (A) the aggregate exercise price for the
shares of Company Common Stock otherwise purchasable pursuant to such
Company Employee Stock Option divided by (B) the number of shares of
Parent Common Stock deemed purchasable pursuant to such Company
Employee Stock Option; provided, however, that in the case of any
option to which Section 421 of the Code applies by reason of its
qualification under either Section 422 or 424 of the Code ("qualified
stock options"), the option price, the number of shares purchasable
pursuant to such option and the terms and conditions of exercise of
such option shall be determined in order to comply with Section 424(a)
of the Code;
(ii) adjust the terms of all outstanding Company SARs to provide
that, at the Effective Time, (A) each holder of a Company SAR shall be
entitled to that number of stock appreciation rights with respect to
Parent Common Stock ("Parent SARs") equal to the number of Company
SARs held by such holder immediately prior to the Effective Time
multiplied by the Conversion Number, and (B) the appreciation base
with respect to each Parent SAR shall be equal to the appreciation
base in effect with respect to the corresponding Company SAR
immediately prior to the Effective Time, divided by the Conversion
Number;
(iii) make such other changes to the Company Stock Plans as it
deems appropriate to give effect to the Merger (subject to the
approval of Parent, which shall not be unreasonably withheld); and
(iv) ensure that, after the Effective Time, no Company Employee
Stock Options or Company SARs may be granted under any Company Stock
Plan.
(b) At the Effective Time, and subject to compliance by the
Company with Section 6.04(a), Parent shall assume all the obligations of
the Company under the Company Stock Plans, each outstanding Company
Employee Stock Option and Company SAR and the agreements evidencing the
grants thereof. As soon as practicable after the Effective Time, Parent
shall deliver to the holders of Company Employee Stock Options and Company
SARs appropriate notices setting forth such holders' rights pursuant to the
respective Company Stock Plans, and the agreements evidencing the grants of
such Company Employee Stock Options and Company SARs shall continue in
effect on the same terms and conditions, including any terms which provide
for full and immediate vesting (subject to the adjustments required by this
Section 6.04 after giving effect to the Merger). Parent shall comply with
the terms of the Company Employee Stock Plans and ensure, to the extent
required by, and subject to the provisions of, such Company Stock Plans,
that the Company Employee Stock Options that qualified as qualified stock
options prior to the Effective Time continue to qualify as qualified stock
options after the Effective Time.
(c) Parent shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Parent Common Stock for
delivery upon exercise of
the Company Employee Stock Options assumed in accordance with this Section
6.04. As of the Effective Time, Parent shall file a registration statement
on Form S-8 (or any successor or other appropriate form) with respect to
the shares of Parent Common Stock subject to such Company Employee Stock
Options and shall use its best efforts to maintain the effectiveness of
such registration statement or registration statements (and maintain the
current status of the prospectus or prospectuses contained therein) for so
long as such Company Employee Stock Options remain outstanding. With
respect to those individuals who subsequent to the Merger will be subject
to the reporting requirements under Section 16(a) of the Exchange Act,
where applicable, Parent shall administer the Company Stock Plans assumed
pursuant to this Section 6.04 in a manner that complies with Rule 16b-3
promulgated under the Exchange Act to the extent the applicable Company
Stock Plan complied with such rule prior to the Merger.
(d) 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.
"Parent Employee Stock Option" means any option to purchase
Parent Common Stock granted under any Parent Stock Plan.
"Parent Stock Plans" means Newport News Shipbuilding Inc.
Employee Stock Purchase and Accumulation Plan, Newport News
Shipbuilding Inc. Stock Ownership Plan, Newport News Shipbuilding Inc.
Stock Incentive Plan, 1997 Stock Plan for Directors of Newport News
Shipbuilding Inc., Newport News Shipbuilding Inc. 401(K) Investment
Plan for Salaried Employees and Newport News Shipbuilding and Dry Dock
Company Savings (401(K)) Plan for Union Eligible Employees.
SECTION 6.05. 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 (other than plans providing for the issuance of Company
Capital Stock or based on the value of Company Capital Stock) 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
materially less favorable in the aggregate to such category of employees
than those provided under such Company Benefit Plans.
SECTION 6.06. 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 (as well
as the additional indemnity obligations described in the Company Disclosure
Letter), and such 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.
(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 6.06.
SECTION 6.07. 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, except that (i) expenses incurred
in connection with filing, printing and mailing the Proxy Statement and the
Form S-4 and (ii) the fees and expenses of Xxxxxx, Xxxx shall be shared
equally by Parent and the Company.
(b) The Company shall pay to Parent a fee of $15,000,000 if: (i)
Parent terminates this Agreement pursuant to Section 8.01(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 8.01(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 8.01(b)), the Company Shareholder Approval is not obtained prior to
termination of this Agreement pursuant to Section 8.01(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 Section 8.01(c) due to a breach by the Company in
any material respect of Section 5.01(c) 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 8.01(g); 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 8.01(b)(iv).
Any fee due under this Section 6.07(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 clauses (ii), (iii) or (iv) above) or (C) as
specified in Section 8.01(g) (in the case of clause (v) above).
(c) Parent shall pay to the Company a fee of $15,000,000 if: (i)
the Company terminates this Agreement pursuant to Section 8.01(f); (ii) any
person makes a Parent Takeover Proposal that was publicly disclosed prior
to the Parent Stockholders Meeting, thereafter this Agreement is terminated
pursuant to Section 8.01(b)(v) and within 12 months of such termination
Parent enters into a definitive agreement with such person or any affiliate
of such person to consummate, or consummates, the transactions contemplated
by a Parent Takeover Proposal; (iii) any person makes a Parent Takeover
Proposal prior to the Outside Date, the Parent Stockholder Approval is not
obtained prior to termination of this Agreement pursuant to Section
8.01(b)(i) and within 12 months of such termination Parent enters into a
definitive agreement to consummate, or consummates, the transactions
contemplated by a Parent Takeover Proposal; (iv) any person makes a Parent
Takeover Proposal that was publicly disclosed prior to termination of this
Agreement, this Agreement is terminated pursuant to Section 8.01(e) due to
a breach by Parent in any material respect of Section 5.01(c) and within 12
months of such termination Parent enters into a definitive agreement with
such person or any affiliate of such person to consummate, or consummates,
the transactions contemplated by a Parent Takeover Proposal; (v) this
Agreement is terminated pursuant to Section 8.01(h); or (vi) (A) the Parent
Board or any committee thereof withdraws or modifies in a manner adverse to
the Company its recommendation of the Share Issuance and the Charter
Amendment or fails to recommend to Parent's stockholders that they give the
Parent Stockholder Approval and (B) thereafter this Agreement is terminated
pursuant to Section 8.01(b)(v). Any fee due under this Section 6.07(c)
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 termination
pursuant to clauses (ii), (iii) or (iv) above) or (C) as specified in
Section 8.01(h) (in the case of clause (v) above).
SECTION 6.08. 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 6.09. Transfer Taxes. All stock transfer, real estate
transfer, documentary, stamp, recording and other similar Taxes (including
interest, penalties and additions to any such Taxes) ("Transfer Taxes")
incurred in connection with the transactions contemplated by this Agreement
shall be paid by the Company, and the Company or Parent, as required, shall
prepare, execute and file any returns with respect to such Transfer Taxes.
SECTION 6.10. Affiliates. (a) Promptly following the date of
execution of this Agreement, the Company shall deliver to Parent a letter
identifying all persons who are expected by the Company to be, at the date
of the Company Shareholders Meeting, "affiliates" of the Company for
purposes of Rule 145 under the Securities Act. The Company shall use its
best efforts to cause each such person to deliver to Parent on or prior to
the date of mailing of the Proxy Statement a written agreement
substantially in the form attached as Exhibit C-1.
(b) Promptly following the date of execution of this Agreement,
Parent shall deliver to the Company a letter identifying all persons who
are expected by Parent to be, on the Closing Date, "affiliates" of Parent
for purposes of Rule 145 under the Securities Act. Parent shall use its
best efforts to cause each such person to deliver to Parent on or prior to
the date of mailing of the Proxy Statement a written agreement
substantially in the form of Exhibit C-2.
SECTION 6.11. Stock Exchange Listing. Parent shall use all
reasonable efforts to cause the shares of Parent Common Stock to be issued
in the Merger and under the Company Stock Plans to be approved for listing
on the NYSE, subject to official notice of issuance, prior to the Closing
Date.
SECTION 6.12. Rights Agreements; Consequences if Rights
Triggered. (a) 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 Conversion Number 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.
(b) The Parent Board shall take all action requested in writing
by the Company in order to render the Parent Rights inapplicable to the
Merger and the other Transactions. Except as approved in writing by the
Company, the Parent Board shall not (i) amend the Parent Rights Agreement,
(ii) redeem the Parent Rights or (iii) take any action with respect to, or
make any determination under, the Parent Rights Agreement. If any
Distribution Date occurs under the Parent Rights Agreement or any person
becomes an Acquiring Person thereunder 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 Conversion Number 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 (e.g., if any Distribution Date occurs under the Parent
Rights Agreement at any time during the period from the date of this
Agreement to the Effective Time, the Parent Board could take such actions
as are necessary and permitted under the Parent Rights Agreement to provide
that Rights Certificates representing an appropriate number of Parent
Rights are issued to the Company's shareholders who receive Parent Common
Stock pursuant to the Merger).
SECTION 6.13. Tax Treatment. The parties intend the Merger to
qualify as a reorganization under Section 368(a) of the Code. Each party
and its affiliates shall use reasonable efforts to cause the Merger to so
qualify and to obtain the opinions of Jones, Walker, Waechter, Poitevent,
Carrere & Xxxxxxx LLP ("Xxxxx Xxxxxx") and Cravath, Swaine & Xxxxx to the
effect that the Merger will be treated
for U.S. Federal income tax purposes as a "reorganization" within the
meaning of Section 368(a) of the Code and that Parent, Sub and the Company
will each be a party to that reorganization within the meaning of Section
368(b) of the Code. For purposes of the tax opinions described in Sections
7.02(f) and 7.03(e), each of Parent and the Company shall provide
representation letters substantially in the form of Exhibits D-1 and D-2,
each dated on or about the date that is two business days prior to the date
the Proxy Statement is mailed to the stockholders of Parent and the Company
and reissued as of the Closing Date. Each of Parent, Sub and the Company
and each of their respective affiliates shall not take any action and shall
not fail to take any action or suffer to exist any condition which action
or failure to act or condition would prevent, or would be reasonably likely
to prevent, the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
SECTION 6.14. Issuance of Parent Common Stock and Company Common
Stock. (a) Notwithstanding any prohibition to the contrary set forth in
this Agreement, to the extent necessary, based upon the advice of D&T and
AA, to account for the Merger as a pooling of interests under GAAP, Parent
shall, prior to or after satisfaction or waiver of all conditions set forth
in Article VII, at its sole election, issue up to 840,000 shares of Parent
Common Stock prior to the Effective Time and may issue additional shares of
Parent Common Stock prior to the Effective Time.
(b) Notwithstanding any prohibition to the contrary set forth in
this Agreement, to the extent necessary, based upon the advice of D&T and
AA, to account for the Merger as a pooling of interests under GAAP and only
to the extent that Parent is not able to issue additional shares of Parent
Common Stock in order to account for the Merger as a pooling of interests
under GAAP, the Company shall, after satisfaction or waiver of all
conditions set forth in Article VII, issue up to 200,000 shares of Company
Common Stock held in its treasury prior to the Effective Time and may issue
additional shares of Company Common Stock prior to the Effective Time.
ARTICLE VII
Conditions Precedent
SECTION 7.01. 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, and Parent shall have obtained the Parent
Stockholder Approval.
(b) Listing. The shares of Parent Company Stock issuable to the
Company's shareholders pursuant to this Agreement and under the Company
Stock Plans shall have been approved for listing on the NYSE, subject to
official notice of issuance.
(c) 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.
(d) 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 6.03, each of the parties shall have used its best
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.
(e) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order, and Parent shall have received all state
securities or "blue sky" authorizations necessary to issue Parent Common
Stock pursuant to the Merger.
SECTION 7.02. 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 repre sentations and
warranties of the Company 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 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).
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.
(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 or in the Company Disclosure
Letter, since the date of the most recent audited financial statements
included in the Filed Company SEC Documents 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.
(e) Letters from Company Affiliates. Prior to the mailing of the
Proxy Statement, Parent shall have received from each person named in the
letter referred to in Section 6.10 an executed copy of an agreement
substantially in the form of Exhibit C-1.
(f) Tax Opinion. Parent shall have received a written opinion,
dated as of the Closing Date, from Cravath, Swaine & Xxxxx, counsel to
Parent, to the effect that the Merger will be treated for Federal income
tax purposes as a reorganization within the meaning of Section 368(a) of
the Code, and that Parent, Sub and the Company will each be a party to that
reorganization within the meaning of Section 368(b) of the Code; it being
understood that in rendering such opinion, such tax counsel shall be
entitled to rely upon representations provided by the parties hereto
substantially in the form of Exhibits D-1 and D-2.
(g) Consents. The Administrator of the Maritime Administration of
the Department of Transportation shall have approved the consummation of
the Merger.
SECTION 7.03. 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 repre sentations 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 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 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 Parent Material Adverse Effect. Except as
disclosed in the Filed Parent SEC Documents or in the Parent Disclosure
Letter, since the date of the most recent audited financial statements
included in the Filed Parent SEC Documents 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 Parent Material
Adverse Effect.
(e) Tax Opinion. The Company shall have received a written
opinion, dated as of the Closing Date, from Xxxxx Xxxxxx, counsel to the
Company, to the effect that the Merger will be treated for Federal income
tax purposes as a reorganization within the meaning of Section 368(a) of
the Code, and that Parent, Sub and the Company will each be a party to that
reorganization within the meaning of Section 368(b) of the Code; it being
understood that in rendering such opinion, such tax counsel shall be
entitled to rely upon representations provided by the parties hereto
substantially in the form of Exhibits D-1 and D-2.
(f) Letters from Parent Affiliates. Prior to the mailing of the
Proxy Statement, Parent shall have received from each person named in the
letter referred to in
Section 6.10 an executed copy of an agreement substantially in the form of
Exhibit C-2.
(g) Name Change. Effective as of the Effective Time, Parent shall
amend the Parent Charter such that its name shall be Newport News Avondale
Industries Inc.
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after receipt of
the Company Shareholder Approval or the Parent Stockholder 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 November
30, 1999 (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; or
(iii) if any condition to the obligation of such party to
consummate the Merger set forth in Section 7.02 (in the case of
Parent) or 7.03 (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;
(iv) if, upon a vote at a duly held meeting to obtain the
Company Shareholder Approval, the Company Shareholder Approval is
not obtained; or
(v) if, upon a vote at a duly held meeting of Parent to
obtain the Parent Stockholder Approval, the Parent Stockholder
Approval is not obtained;
(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 7.02(a) or 7.02(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 5.02 or
(B) any other representative or agent of the Company takes any of
the actions proscribed by Section 5.02 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 7.03(a) or 7.03(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);
(f) by the Company:
(i) if the Parent Board or any committee thereof withdraws
or modifies in a manner adverse to the Company its recommendation
of the Share Issuance or Charter Amendment or fails to recommend
to Parent's stockholders that they give the Parent Stockholder
Approval; or
(ii) if (A) Parent or any of its officers, directors or
employees takes any of the actions proscribed by Section 5.03 or
(B) any other representative or agent of Parent takes any of the
actions proscribed by Section 5.03 and prior to such actions the
Parent had received, or following such actions Parent receives,
any inquiry or proposal that constitutes, or may reasonably be
expected to lead to, any Parent Takeover Proposal;
(g) by the Company prior to receipt of the Company Shareholders
Approval in accordance with Section 5.02(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 6.07; or
(h) by Parent prior to receipt of the Parent Stockholders
Approval in accordance with Section 5.03(b); provided, however, that
Parent shall have complied with all provisions thereof, including the
notice provisions therein and shall have immediately prior to such
termination paid to the Company the then fees due to the Company from
Parent pursuant to Section 6.07.
SECTION 8.02. Effect of Termination. In the event of termination
of this Agreement by either the Company or Parent as provided in Section
8.01, 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 4.14, the last sentence of
Section 6.02, Section 6.07, Section 6.08, this Section 8.02 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.
SECTION 8.03. Amendment. This Agreement may be amended by the
parties at any time before or after receipt of the Company Shareholder
Approval or the Parent
Stockholder Approval; provided, however, that after receipt of the Company
Shareholder Approval or the Parent Stockholder Approval, there shall be
made no amendment that by law requires further approval by the shareholders
of the Company or the stockholders of Parent without the further approval
of such shareholders or stockholders, as the case may be. This Agreement
may not be amended except by an instrument in writing signed on behalf of
each of the parties.
SECTION 8.04. 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 8.03, 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 8.05. Procedure for Termination, Amend ment, Extension or
Waiver. A termination of this Agreement pursuant to Section 8.01, an
amendment of this Agreement pursuant to Section 8.03 or an extension or
waiver pursuant to Section 8.04 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 9.01. 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 9.01 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective
Time.
SECTION 9.02. Notices. All notices, requests, claims, demands and
other communications under this Agree ment 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
Attention: Vice President and General
Counsel
with a copy to:
Cravath, Swaine & Xxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxx
(b) if to the Company, to
Attention:
with a copy to:
Jones, Walker, Waechter, Poitevent, Carrere &
Xxxxxxx LLP
Place St. Xxxxxxx
000 Xx. Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
SECTION 9.03. 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 "material adverse effect" on a party means a material adverse
effect on the business, assets, condition (financial or otherwise),
prospects or results of operations of such party and its subsidiaries,
taken as a whole.
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 9.04. Interpretation; Disclosure Letters. 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 "include", "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the
words "without limitation". Any matter disclosed in any section of either
the Company Disclosure Letter or the Parent Disclosure Letter shall be
deemed disclosed only for the purposes of the specific Sections of this
Agreement to which such section relates.
SECTION 9.05. 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 9.06. 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 9.07. Entire Agreement; No Third-Party Beneficiaries. The
Transaction Agreements, taken together with the Company Disclosure Letter,
the Parent Disclosure Letter, the Confidentiality Agreement 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 6.04 and Section 6.06, are not
intended to confer upon any person other than the parties any rights or
remedies.
SECTION 9.08. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by opera tion 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 9.09. 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 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 New York,
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.
IN WITNESS WHEREOF, Parent, Sub and the Company have duly
executed this Agreement, all as of the date first written above.
NEWPORT NEWS SHIPBUILDING INC.,
by /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
ARES ACQUISITION CORPORATION,
by /s/ Xxxxx X.X. Xxxxxx
--------------------------
Name: Xxxxx X.X. Xxxxxx
Title: Vice President
AVONDALE INDUSTRIES, INC.,
by /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Chairman of the Board,
President and Chief
Executive Officer
EXHIBIT A
ARTICLES OF INCORPORATION OF THE SURVIVING CORPORATION
The Articles of Incorporation of Avondale Industries, Inc. shall
be amended and restated in their entirety to read as follows:
ARTICLE I
NAME
The name of this corporation is Avondale Industries, Inc.
ARTICLE II
OBJECT AND PURPOSE
The object and purpose for which this corporation is organized is
to engage, either for its own account or the account of others, as either
agent or principal, in any lawful activity for which corporations may be
formed under the provisions of the Louisiana Business Corporation Law
(Title 12, Chapter 1, Louisiana Revised Statutes of 1950 as may be codified
and amended); and to the extent not prohibited thereby to enter upon and
engage in any kind of business of any nature whatsoever in any other state
of the United States of America, any foreign nation, and any territory of
any country to the extent permitted by the laws of such other state, nation
or territory. It shall have all such power as is not repugnant to law.
ARTICLE III
AUTHORIZED CAPITAL
A. The total authorized capital stock of this corporation is
1,000 shares of common stock, par value $.01 per share.
B. Without the necessity of action by the shareholder, shares of
stock may be issued by the corporation from time to time by the Board of
Directors. Any and all shares so issued, if the consideration fixed for
such shares is paid, shall be deemed fully paid stock, and not liable to
any further call or assessment, and the holder of such shares shall not be
liable for any further payment thereon. All or any part of the authorized
capital stock
may be issued or sold from time to time for not less than the par value.
Stock may be given in exchange for cash or services rendered to the
corporation. The capital stock of this corporation shall be fully paid and
nonassessable and when issued shall be represented by certificates signed
by the President or by a Vice-President together with the signature of a
Secretary or a Secretary-Treasurer.
C. Shareholders shall have pre-emptive rights.
ARTICLE IV
DIRECTORS
A. The Board of Directors shall be charged with the management of
all of the affairs of the corporation and shall have authority to exercise,
in addition to the powers and authority expressly conferred upon it, all
such powers of the corporation and all such other lawful acts or things
which the corporation or its shareholders might do, unless such acts or
things are prohibited or directed or required to be exercised or done by
the shareholders or officers of the corporation by applicable statute, or
by the articles of incorporation, or by the bylaws, or by shareholders'
agreement.
B. Any director absent from a meeting of the Board or any
committee thereof, may be represented by any other director or shareholder,
who may cast the absent director's vote according to his written
instructions, general or special.
ARTICLE V
CAPITAL, SURPLUS AND DIVIDENDS
The Board of Directors shall have such power and authority with
respect to capital, surplus and dividends, including allocation, increases,
reduction, utilization, distribution and payment as is permitted and
provided in Section 61, 62 and 63 of the Louisiana Business Corporation Law
or other applicable law.
ARTICLE VI
PURCHASE AND REDEMPTION OF SHARES
The corporation may purchase or redeem its own shares in the
manner and on the conditions permitted and provided in Section 55 of the
Louisiana Business Corporation Law or other applicable law, and as may be
authorized by the Board of Directors; and shares so purchased may be
reissued and disposed of as authorized by law, or may be cancelled and the
capital stock reduced, as the Board of Directors may, from time to time,
determine, in accordance with law.
ARTICLE VII
REVERSION OF UNCLAIMED DIVIDENDS,
RECLASSIFIED STOCK OR REDEMPTION PRICE
Cash, property or share dividends, shares issuable to
shareholders in connection with a reclassification of stock, and the
redemption price of redeemed shares, which are not claimed by the
shareholders entitled thereto within one year after the dividend or
redemption price became payable or the shares became issuable, despite
reasonable efforts by the corporation to pay the dividend or redemption
price or deliver the certificates for the shares to such shareholders
within such time, shall, at the expiration of such time, revert in full
ownership to the corporation, and the corporation's obligation to pay such
dividend or redemption price or issue such shares, as the case may be,
shall thereupon cease; provided that the Board of Directors may, at any
time, for any reason satisfactory to it, but need not, authorize (a)
payment of the amount of any cash or property dividend or redemption price
or (b) issuance of any shares, ownership of which as reverted to the
corporation, to the entity who or which would be entitled thereto had such
reversion not occurred.
ARTICLE VIII
FAIR PRICE PROTECTION
The provisions of Louisiana Revised Statutes 12:132 through 134,
inclusive, or any similar provisions enacted with respect thereto, shall
not apply to this corporation.
ARTICLE IX
CONTROL SHARE ACQUISITION ACT
The provisions of Louisiana Revised Statutes 12:135 through 140.2
inclusive, or any similar provisions enacted with respect thereto, shall
not apply to this corporation.
ARTICLE X
CONVERTIBLE SECURITIES AND STOCK PURCHASE RIGHTS
The corporation may issue convertible securities and rights to
convert shares and obligations of the corporation into shares of any
authorized class of stock, and the right or option to purchase shares of
any authorized class of stock, in the manner or on the conditions permitted
and provided in Section 56 of the Louisiana Business Corporation Law or
other applicable law, and as may be authorized by the Board of Directors.
ARTICLE XI
AMENDMENTS TO ARTICLES OF INCORPORATION
Any amendment for which a larger vote is not specifically made
mandatory by the Louisiana Business Corporation Law may be made by a
majority of the voting power present of the shareholders entitled to vote
under these articles, including an increase or reduction of capital stock.
In addition, if an amendment adversely affects the rights of any class or
classes of shareholders, a majority of the voting power present of that
class or classes, whether or not that class is entitled to vote, is
required.
ARTICLE XII
VOTING OF SHAREHOLDERS AND BONDHOLDERS
Any corporate action requiring the vote of shareholders, or of
bondholders if bonds are issued having any voting rights, including
specifically, but not by way of limitation, adoption and approval of
authorization of voluntary disposition of all or substantially all of the
corporate assets, and removal of a member of the Board of Directors, may be
authorized by consent in writing signed by
the shareholders having that proportion of the total voting power which
would be required to authorize and constitute such action at a meeting of
such shareholders or bondholders.
ARTICLE XIII
OFFICERS' AND DIRECTORS' LIABILITY
No officer or director of the corporation shall be personally
liable to the corporation or its shareholders for monetary damages for
breach of fiduciary duty as a director or officer, whether or not he
continues to be such officer or director at the time when any such
liability is asserted; provided, however, that the liability of a director
of officer of the corporation shall not be eliminated or limited (a) for
any breach of the director's or officer's duty of loyalty to the
corporation or its shareholders, (b) for acts or omissions not in good
faith or which involve intentional misconduct or a known violation of law,
(c) for liability under Louisiana Revised Statutes 12:92(D), or (d) for any
transaction from which the director or officer derived an improper personal
benefit.
ARTICLE XIV
MISCELLANEOUS
Until the first anniversary of [the date of consummation of the
Merger], (a) the corporation shall not be liquidated, dissolved or merged
out of existence without the prior approval of the Board of Directors, (b)
the number of members on the Board of Directors shall not be changed and
(c) neither of [the two directors designated by Ares] shall be removed or
replaced as a director unless the board of directors of Newport News
Avondale Industries Inc. ("Newport"), acting by majority vote of all of the
directors then serving on such board of directors of Newport, determines in
good faith that such removal or replacement is required in order for the
board of directors of Newport to discharge its fiduciary duties.
EXHIBIT B-1
Corporate Governance of
Parent Following the Effective Time
Board and Board Committees
Following the Effective Time, the Parent Board will consist of 10
members, comprised of Xxxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxx, Xx., Xxxxxxx X.
Xxxxxxx, Xxxx X. Xxxxxxxx and six outside directors of Parent. Xx. Xxxxxx
will serve as Chairman of the Parent Board and Xx. Xxxxxxx will serve as
Vice Chairman of the Parent Board. Xx. Xxxxxx and Xx. Xxxxxxx will serve in
Class III of the Parent Board and each will be nominated or renominated, as
the case may be, at Parent's 1999 Annual Meeting of Stockholders (the
"Annual Meeting"). Xx. Xxxxxxxx and Xx. Xxxxxxx will serve in Class I and
Class II, respectively, and will be renominated at Parent's 2000 Annual
Meeting and 2001 Annual Meeting, respectively.
Xx. Xxxxxxx will serve on the Executive Committee of Parent, Xx.
Xxxxxxxx will serve on the Audit Committee of Parent and Xx. Xxxxxxx will
serve on the Compensation and Benefits Committee of Parent.
Parent Executive Management Committee
An executive "Management Committee" shall be created at the
Effective Time and be comprised of Xx. Xxxxxx, Xx. Xxxxxxx, Xxxxx X.
Xxxxxxxx, Xxxxxx X. Kitchen and Xxxxxx X. Xxxxxxxxxxxx, for the purpose of
reviewing the combined operations of Parent and the Company. Such committee
shall meet monthly.
Officers
Following the Effective Time, Xx. Xxxxxx will serve as Chairman
and Chief Executive Officer of Parent and Xx. Xxxxxxx will serve as Vice
Chairman of Parent and President and Chief Executive Officer of the
Surviving Corporation. Mr. Kitchen will serve as Executive Vice President
of Parent and will be Chief Operating Officer of the Surviving Corporation.
EXHIBIT B-2
Corporate Governance of the
Surviving Corporation Following the
Effective time
Directors of the Surviving Corporation
Xxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxx, Xx.
Xxxxxx X. Xxxxxxxxxxxx
Xxxxxx X. Kitchen
By-laws of the Surviving Corporation
The bylaws of the Surviving Corporation shall provide that,
without the prior approval of the Parent Board, no action shall be taken by
the Board of Directors of the Surviving Corporation, or otherwise by the
Surviving Corporation or any of its subsidiaries to:
(a) enter into any merger or combination of the Surviving
Corporation or any of its subsidiaries;
(b) incur or issue any additional indebtedness (including for
this purpose any indebtedness evidenced by notes, debentures, bonds or
other similar instruments, or secured by any lien on any property,
conditional sale obligations, obligations under any title retention
agreement and obligations under letters of credit or similar credit
transactions) in a single transaction or group of related
transactions, enter into a guaranty, engage in any other financing
arrangement or issue nonvoting preferred stock other than as provided
for in the then current annual budget of the Surviving Corporation
which has been approved by the Parent Board and other than for leases;
(c) acquire or dispose of, in a single transaction or group of
related transactions, whether by merger, consolidation, purchase of
stock or assets or other business combination, (i) any line of
business of the Surviving Corporation or any of its subsidiaries or
(ii) assets, businesses, operations or securities of the Surviving
Corporation or any of its subsidiaries;
(d) adopt a plan relating to the liquidation or dissolution of
the Surviving Corporation or any of its subsidiaries; or
(e) make any material changes in the compensation, incentive or
employee benefit plans of the Surviving Corporation or any of its
subsidiaries.
The bylaws also shall provide that the foregoing provisions
cannot be amended without the prior approval of the Parent Board.
EXHIBIT C-1
Form of Company Affiliate Letter
Dear Sirs:
The undersigned refers to the Agreement and Plan of Merger (the
"Merger Agreement") dated as of January 19, 1999 among Newport News
Shipbuilding Inc., a Delaware corporation, Ares Acquisition Corporation, a
Louisiana corporation, and Avondale Industries, Inc., a Louisiana
corporation. Capitalized terms used but not defined in this letter have the
meanings give such terms in the Merger Agreement.
The undersigned, a holder of shares of Company Common Stock, is
entitled to receive in connection with the Merger shares of Parent Common
Stock. The undersigned acknowledges that the undersigned may be deemed an
"affiliate" of the Company within the meaning of Rule 145 ("Rule 145")
promulgated under the Securities Act or Accounting Series Releases 130 and
135, as amended, of the SEC (the "Releases"), although nothing contained
herein should be construed as an admission of such fact.
If in fact the undersigned were an affiliate under the Act, the
undersigned's ability to sell, assign or transfer the Parent Common Stock
received by the undersigned in exchange for any shares of Company Common
Stock pursuant to the Merger may be restricted unless such transaction is
registered under the Act or an exemption from such registration is
available. The undersigned (i) understands that such exemptions are limited
and that Parent is not under any obligation to effect any such registration
and (ii) has obtained advice of counsel as to the nature and conditions of
such exemptions, including information with respect to the applicability to
the sale of such securities of Rules 144 and 145(d) promulgated under the
Securities Act.
The undersigned hereby represents to and covenants with Parent
that the undersigned will not sell, assign or transfer any of the Parent
Common Stock received by the undersigned in exchange for shares of Company
Common Stock pursuant to the Merger except (i) pursuant to an effective
registration statement under the Securities Act or (ii) in a transaction
that, in the opinion of counsel reasonably satisfactory to Parent or as
described in a "no-action" or interpretive letter from the Staff of the
SEC, is not required to be registered under the Securities Act.
The undersigned further represents to and covenants with Parent
that (i) the undersigned will not, between the date hereof and the Closing
Date, reduce its risk (within the meaning of the Releases) with respect to,
any shares of Company Common Stock held by it and (ii) the undersigned will
not reduce its risk (within the meaning of the Releases) with respect to
any Parent Common Stock received by it in the Merger until after such time
as a report including results covering at least 30 days of combined
operations of the Company and Parent have been published by Parent. Parent
shall promptly notify the undersigned when such report has been published
by Parent.
In the event of a sale or other disposition by the undersigned
pursuant to Rule 145, of Parent Common Stock received by the undersigned in
the Merger, the undersigned will supply Parent with evidence of compliance
with such Rule, in the form of a letter in the form of Annex I hereto and
the opinion of counsel or no-action letter referred to above. The
undersigned understands that Parent may instruct its transfer agent to
withhold the transfer of any Parent Securities disposed of by the
undersigned, but that upon receipt of such evidence of compliance the
transfer agent shall effectuate the transfer of the Parent Common Stock
sold as indicated in the letter.
The undersigned acknowledges and agrees that (i) the Parent
Common Stock issued to the undersigned will all be in certificated form and
(ii) appropriate legends will be placed on certificates representing Parent
Common Stock received by the undersigned in the Merger or held by a
transferee thereof, which legends will be removed by delivery of substitute
certificates upon receipt of an opinion in form and substance reasonably
satisfactory to Parent from counsel reasonably satisfactory to Parent to
the effect that such legends are no longer required for purposes of the
Securities Act.
The undersigned acknowledges that (i) the undersigned has
carefully read this letter and understands the requirements hereof and the
limitations imposed upon the distribution, sale, transfer or other
disposition of Parent Common Stock and (ii) the receipt by Parent of this
letter is an inducement and a condition to Parent's obligations to
consummate the Merger.
Very truly yours,
Dated:
ANNEX I
TO EXHIBIT C-1
Newport News Shipbuilding Inc.
On , the undersigned sold the securities of Newport News
Shipbuilding Inc. ("Parent") described below in the space provided for that
purpose (the "Securities"). The Securities were received by the undersigned
in connection with the merger of Ares Acquisition Corporation, a subsidiary
of Parent, with and into Avondale Industries, Inc..
Based upon the most recent report or statement filed by Parent
with the Securities and Exchange Commission, the Securities sold by the
undersigned were within the prescribed limitations set forth in Rule 144(e)
promulgated under the Securities Act of 1933, as amended (the "Securities
Act").
The undersigned hereby represents that the Securities were sold
in "brokers' transactions" within the meaning of Section 4(4) of the
Securities Act or in transactions directly with a "market maker" as that
term is defined in Section 3(a)(38) of the Securities Exchange Act of 1934,
as amended. The undersigned further represents that the undersigned has not
solicited or arranged for the solicitation of orders to buy the Securities,
and that the undersigned has not made any payment in connection with the
offer or sale of the Securities to any person other than to the broker who
executed the order in respect of such sale.
Very truly yours,
Dated:
EXHIBIT C-2
Form of Parent Affiliate Letter
Dear Sirs:
The undersigned refers to the Agreement and Plan of Merger (the
"Merger Agreement") dated as of January 19, 1999, among Newport News
Shipbuilding Inc., a Delaware corporation, Ares Acquisition Corporation, a
Louisiana corporation, and Avondale Industries, Inc., a Louisiana
corporation. Capitalized terms used but not defined in this letter have the
meanings give such terms in the Merger Agreement.
The undersigned is a holder of shares of Parent Common Stock. The
undersigned acknowledges that the undersigned may be deemed an "affiliate"
of the Company within the meaning of Accounting Series Releases 130 and
135, as amended, of the SEC (the "Releases"), although nothing contained
herein should be construed as an admission of such fact.
The undersigned represents to and covenants with Parent and the
Company that the undersigned will not, between the date hereof and the
Closing Date, reduce its risk (within the meaning of the Releases) with
respect to, any shares of Parent Common Stock held by it and that it will
not reduce its risk (within the meaning of the Releases) with respect to
any Parent Common Stock until after such time as a report including results
covering at least 30 days of combined operations of the Company and Parent
have been published by Parent.
The undersigned acknowledges that (i) the undersigned has
carefully read this letter and understands the requirements hereof and the
limitations imposed upon the distribution, sale, transfer or other
disposition of Parent Common Stock and (ii) the receipt by Parent of this
letter is an inducement and a condition to the Company's obligations to
consummate the Merger.
Very truly yours,
Dated:
EXHIBIT D-1
[Letterhead of Parent]
[ ], 1999
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Jones, Walker, Waechter, Poitevent,
Carrere & Xxxxxxx, L.L.P.
Xxxxx Xx. Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000-0000
Ladies and Gentlemen:
In connection with the opinions to be delivered pursuant to
Sections 7.02(f) and 7.03(e) of the Agreement and Plan of Merger (the
"Merger Agreement") dated as of January 19, 1999, by and among Newport News
Shipbuilding Inc., a Delaware corporation ("Parent"), Ares Acquisition
Corporation, a Louisiana corporation and a wholly owned subsidiary of
Parent ("Sub"), and Avondale Industries, Inc., a Louisiana corporation (the
"Company"), and in connection with the filing with the Securities Exchange
Commission (the "SEC") of the registration statement on Form S-4 (the
"Registration Statement") relating to the Merger Agreement, which includes
the proxy statement/prospectus of Parent and the Company, the undersigned
certifies and represents on behalf of Parent and Sub, after due inquiry and
investigation, as follows (any capitalized term used but not defined herein
having the meaning given to such term in the Merger Agreement):
1. The facts relating to the contemplated merger (the "Merger")
of Sub with and into the Company as described in the Registration Statement
and the documents described in the Registration Statement are, insofar as
such facts pertain to Parent and Sub, true, correct and complete in all
material respects. The Merger will be consummated in accordance with the
Merger Agreement.
2. The formula set forth in the Merger Agreement pursuant to
which each issued and outstanding share of common stock of the Company, par
value $1.00 per share ("Company Common Stock") will be converted into the
right to receive common stock, par value $0.01 per share, of Parent
("Parent Common Stock") is the result of arm's length bargaining.
3. Cash payments to be made to stockholders of the Company in
lieu of fractional shares of Parent Common Stock that would otherwise be
issued to such stockholders in the Merger will be made for the purpose of
saving Parent the expense and inconvenience of issuing and transferring
fractional shares of Parent Common Stock, and do not represent separately
bargained for consideration. The total cash consideration that will be paid
in the Merger to stockholders of the Company in lieu of fractional shares
of Parent Common Stock is not expected to exceed one percent of the total
consideration that will be issued in the Merger to stockholders of the
Company in exchange for their shares of Company Common Stock.
4. (i) Parent has no present plan or intention, following the
Merger, to reacquire, or to cause any corporation that is related to Parent
to acquire, any Parent Common Stock, except for repurchases of Parent
Common Stock by Parent in connection with a repurchase program meeting the
requirements of Section 4.05(1)(b) of Revenue Procedure 96-30. To the best
knowledge of the management of Parent, no corporation that is related to
Parent has a present plan or intention to purchase any Parent Common Stock.
(ii) For purposes of this representation letter, two corporations
shall be treated as related to one another if immediately prior to or
immediately after the Merger, (a) the corporations are members of the same
affiliated group (within the meaning of Section 1504 of the Internal
Revenue Code of 1986, as amended (the "Code"), but determined without
regard to Section 1504(b) of the Code) or (b) one corporation owns 50% or
more of the total combined voting power of all classes of stock of the
other corporation that are entitled to vote or 50% or more of the total
value of shares of all classes of stock of the other corporation (applying
the attribution rules of Section 318 of the Code, as modified pursuant to
Section 304(c)(3)(B) of the Code).
5. Parent has no present plan or intention to make any
distributions after the Merger to holders of Parent Common Stock (other
than dividends made in the ordinary course of business).
6. Neither Parent nor Sub (nor any other subsidiary of Parent)
has acquired, or, except as a result of the Merger, will acquire, or has
owned in the past five years, any Company Common Stock.
7. Prior to the Merger, Parent will own all the capital stock of
Sub. Parent has no present plan or intention to cause the Company to issue
additional shares of its stock that would result in Parent owning less than
all the capital stock of the Company after the Merger.
8. Parent has no present plan or intention, following the Merger,
to liquidate the Company, to merge the Company with and into another
corporation, to sell or otherwise dispose of any of the stock of the
Company, to cause the Company to distribute to Parent or any of its
subsidiaries any assets of the Company or the proceeds of any borrowings
incurred by the Company, or to cause the Company to sell or otherwise
dispose of any of the assets held by the Company at the time of the Merger,
except for dispositions of such assets in the ordinary course of business
and transfers described in Section 368(a)(2)(C) of the Code or Treasury
Regulations Section 1.368-1(d).
9. Immediately following the Merger, the Company will hold (i) at
least 90% of the fair market value of the net assets and at least 70% of
the fair market value of the gross assets that were held by the Company
immediately prior to the Merger and (ii) at least 90% of the fair market
value of the net assets and at least 70% of the fair market value of the
gross assets that were held by Sub immediately prior to the Merger. For
purposes of this representation, amounts paid to stockholders who receive
cash or other property (including cash in lieu of fractional shares of
Parent Common Stock) in connection with the Merger, assets of the Company
used to pay its reorganization expenses and all redemptions and
distributions made by the Company (other than dividends made in the
ordinary course of business) immediately preceding, or in contemplation of,
the Merger will be included as assets held by the Company immediately prior
to the Merger.
10. Except for Transfer Taxes, Parent, Sub, the Company and
holders of Company Common Stock will each pay their respective expenses, if
any, incurred in connection
with the Merger. Except to the extent specifically contemplated under the
Merger Agreement neither Parent nor Sub has paid (directly or indirectly)
or has agreed to assume any expenses or other liabilities, whether fixed or
contingent, incurred or to be incurred by the Company or any holder of
Company Common Stock in connection with or as part of the Merger or any
related transactions.
11. Following the Merger, Parent intends to cause the Company to
continue its "historic business" or to use a significant portion of its
"historic business assets" in a business (as such terms are defined in
Treasury Regulations Section 1.368-1(d)).
12. Neither Parent nor Sub is an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
13. Neither Parent nor Sub will take any position on any Federal,
state or local income or franchise tax return, or take any other tax
reporting position, that is inconsistent with the treatment of the Merger
as a reorganization within the meaning of Section 368(a) of the Code,
unless otherwise required by a "determination" (as defined in Section
1313(a)(1) of the Code) or by applicable state or local tax law (and then
only to the extent required by such applicable state or local tax law).
14. None of the compensation received by any stockholder-employee
of the Company in respect of periods after the Effective Time represents
separate consideration for, or is allocable to, any of their Company Common
Stock. None of the Parent Common Stock that will be received by any
stockholder-employee of the Company in the Merger represents separately
bargained for consideration which is allocable to any employment agreement
or arrangement. The compensation paid to any stockholder-employees will be
for services actually rendered and will be determined by bargaining at
arm's-length.
15. There is no intercorporate indebtedness existing between
Parent (or any of its subsidiaries, including Sub) and the Company (or any
of its subsidiaries) that was issued or acquired, or will be settled, at a
discount.
16. Neither Parent nor Sub is under the jurisdiction of a court
in a Title 11 or similar case within the meaning of Section 368(a)(3)(A) of
the Code.
17. Neither Parent nor Sub (nor any other subsidiary of Parent)
has constituted either a "distributing corporation" or a "controlled
corporation" (within the meaning of Section 355(a)(1)(A) of the Code) in a
distribution of stock qualifying for tax-free treatment under Section 355
of the Code and subject to Section 355(e) of the Code (i) in the two years
prior to the date of the Merger Agreement or (ii) in a distribution which
could otherwise constitute part of a "plan" or "series of related
transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Merger.
18. In connection with the Merger, Company Common Stock will be
converted solely into Parent Common Stock (except for cash paid in lieu of
fractional shares of Parent Common Stock and payments made in respect of
dissenting shares). For purposes of this representation, Company Common
Stock redeemed for cash or other property furnished directly or indirectly
by Parent will be considered as acquired by Parent for other than Parent
Common Stock. Further, no liabilities of the Company or any holders of
Company Common Stock will be assumed by Parent, nor will any of the Company
Common Stock acquired by Parent in connection with the Merger be subject to
any liabilities.
19. The Merger Agreement, the Registration Statement and the
other documents described in the Registration Statement represent the
entire understanding of Parent and Sub with respect to the Merger.
20. Sub is a corporation newly formed for the purpose of
participating in the Merger and at no time prior to the Merger has had
assets (other than nominal assets contributed upon the formation of Sub,
which assets will be held by Company as the surviving corporation following
the Merger) or business operations.
21. The Merger is being undertaken for purposes of enhancing the
business of Parent and for other good and valid business purposes of
Parent.
22. The undersigned is authorized to make all the representations
set forth herein on behalf of Parent and Sub.
The undersigned acknowledges that (i) the opinions to be
delivered pursuant to Sections 7.02(f) and 7.03(e) of the Merger Agreement
will be based on the accuracy of the representations set forth herein and
on the accuracy of the representations and warranties and the satisfaction
of the
covenants and obligations contained in the Merger Agreement and the various
other documents related thereto, and (ii) such opinions will be subject to
certain limitations and qualifications including that it may not be relied
upon if any such representations or warranties are not accurate or if any
such covenants or obligations are not satisfied in all material respects.
The undersigned acknowledges that such opinions will not address
any tax consequences of the Merger or any action taken in connection
therewith except as expressly set forth in such opinions.
Very truly yours,
NEWPORT NEWS SHIPBUILDING
INC.,
by
---------------------------
Name:
Title:
EXHIBIT D-2
[Letterhead of the Company]
[ ], 1999
Jones, Walker, Waechter, Poitevent,
Carrere & Xxxxxxx, L.L.P.
Xxxxx Xx. Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000-0000
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
In connection with the opinions to be delivered pursuant to
Sections 7.02(f) and 7.03(e) of the Agreement and Plan of Merger (the
"Merger Agreement") dated as of January 19, 1999, by and among Newport News
Shipbuilding Inc., a Delaware corporation ("Parent"), Ares Acquisition
Corporation, a Louisiana corporation and a wholly owned subsidiary of
parent ("Sub"), and Avondale Industries, Inc., a Louisiana corporation (the
"Company"), and in connection with the filing with the Securities Exchange
Commission (the "SEC") of the registration statement on Form S-4 (the
"Registration Statement") relating to the Merger Agreement, which includes
the proxy statement/prospectus of Parent and the Company, the undersigned
certifies and represents on behalf of the Company, after due inquiry and
investigation, as follows (any capitalized term used but not defined herein
having the meaning given to such term in the Merger Agreement):
1. The facts relating to the contemplated merger (the "Merger")
of Sub with and into the Company as described in the Registration Statement
and the documents described in the Registration Statement are, insofar as
such facts pertain to the Company, true, correct and complete in all
material respects. The Merger will be consummated in accordance with
the Merger Agreement.
2. The formula set forth in the Merger Agreement pursuant to
which each issued and outstanding share of common stock of the Company, par
value $1.00 per share, of the Company ("Company Common Stock") will be
converted into the right to receive common stock, par value $0.01 per
share, of Parent ("Parent Common Stock") is the result of arm's length
bargaining.
3. Cash payments to be made to stockholders of the Company in
lieu of fractional shares of Parent Common Stock that would otherwise be
issued to such stockholders in the Merger will be made for the purpose of
saving Parent the expense and inconvenience of issuing and transferring
fractional shares of Parent Common Stock, and do not represent separately
bargained for consideration.
4. (i) Neither the Company nor any corporation related to the
Company has acquired or has any present plan or intention to acquire any
Company Common Stock in contemplation of the Merger, after the Merger, or
otherwise as part of a plan of which the Merger is a part. To the best
knowledge of the management of the Company, neither Parent nor any
corporation that is related to Parent has a present plan or intention to
purchase Company Common Stock or any Parent Common Stock.
(ii) For purposes of this representation letter, two corporations
shall be treated as related to one another if immediately prior to or
immediately after the Merger, (a) the corporations are members of the same
affiliated group (within the meaning of Section 1504 of the Internal
Revenue Code of 1986, as amended (the "Code"), but determined without
regard to Section 1504(b) of the Code) or (b) one corporation owns 50% or
more of the total combined voting power of all classes of stock of the
other corporation that are entitled to vote or 50% or more of the total
value of shares of all classes of stock of the other corporation (applying
the attribution rules of Section 318 of the Code, as modified pursuant to
Section 304(c)(3)(B) of the Code).
5. The Company has not made, and does not have any present plan
or intention to make, any distributions (other than dividends made in the
ordinary course of business or payments made in respect of dissenting
shares) prior to, in contemplation of or otherwise in connection with, the
Merger.
6. Except for Transfer Taxes and filing fees with respect to the
Proxy Statement and the Form S-4 and the HSR Act, Parent, Sub, the Company
and holders of Company Common Stock will each pay their respective
expenses, if any, incurred in connection with the Merger. Except with
respect to Transfer Taxes, the Company has not agreed to assume, nor will
it directly or indirectly assume, any expense or other liability, whether
fixed or contingent, of any holder of Company Common Stock.
7. Immediately following the Merger, the Company will hold (i) at
least 90% of the fair market value of the net assets and at least 70% of
the fair market value of the gross assets that were held by the Company
immediately prior to the Merger and (ii) at least 90% of the fair market
value of the net assets and at least 70% of the fair market value of the
gross assets that were held by Sub immediately prior to the Merger. For
purposes of this representation, amounts paid to stockholders who receive
cash or other property (including cash in lieu of fractional shares of
Parent Common Stock) in connection with the Merger, assets of the Company
used to pay its reorganization expenses and all redemptions and
distributions made by the Company (other than dividends made in the
ordinary course of business) immediately preceding, or in contemplation of,
the Merger will be included as assets held by the Company immediately prior
to the Merger.
8. Except as provided in the Merger Agreement, immediately prior
to the time of the Merger, the Company will not have outstanding any
warrants, options, convertible securities or any other type of right
pursuant to which any person could acquire Company Common Stock.
9. In connection with the Merger, Company Common Stock will be
converted solely into Parent Common Stock (except for cash paid in lieu of
fractional shares of Parent Common Stock and payments made in respect of
dissenting shares). For purposes of this representation, Company Common
Stock redeemed for cash or other property furnished, directly or
indirectly, by Parent will be considered as exchanged for other than Parent
Common Stock. Further, no liabilities of the Company or any holders of
Company Common Stock will be assumed by Parent, nor will any of the Company
Common Stock acquired by Parent pursuant to Section 2.01(a) of the Merger
Agreement be subject to any liabilities.
10. The Company is not an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
11. The Company will not take any position on any Federal, state
or local income or franchise tax return, or take any other tax reporting
position, that is inconsistent with the treatment of the Merger as a
reorganization within the meaning of Section 368(a) of the Code, unless
otherwise required by a "determination" (as defined in Section 1313(a)(1)
of the Code) or by applicable state or local tax law (and then only to the
extent required by such applicable state or local tax law).
12. None of the compensation received by any stockholder-employee
of the Company in respect of periods at or prior to the Effective Time
represents separate consideration for, or is allocable to, any of its
Company Common Stock. None of the Parent Common Stock that will be received
by stockholder-employees of the Company in the Merger represents separately
bargained for consideration which is allocable to any employment agreement
or arrangement. The compensation paid to any stockholder- employees will be
for services actually rendered and will be determined by bargaining at
arm's-length.
13. There is no intercorporate indebtedness existing between
Parent (or any of its subsidiaries, including Sub) and the Company (or any
of its subsidiaries) that was issued or acquired, or will be settled, at a
discount.
14. The Company is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the
Code.
15. It is the Company's present intention to pay all Transfer
Taxes attributable to the Merger, and all payments made in respect of
dissenting shares, out of the Company's own funds (and not out of funds
provided, directly or indirectly, by Parent).
16. The Merger Agreement, the Registration Statement and the
other documents described in the Registration Statement represent the
entire understanding of the Company with respect to the Merger.
17. No assets of the Company have been sold, transferred or
otherwise disposed of which would prevent Parent from continuing the
"historic business" of the Company or from using a significant portion of
the "historic business assets" of the Company in a business following the
Merger (as such terms are defined in Treasury Regulations Section
1.368-1(d)).
18. Neither the Company nor any of its subsidiaries has
constituted either a "distributing corporation" or a "controlled
corporation" (within the meaning of Section 355(a)(1)(A) of the Code) in a
distribution of stock qualifying for tax-free treatment under Section 355
of the Code and subject to 355(e) of the Code (i) in the two years prior to
the date of the Merger Agreement or (ii) in a distribution which could
otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
Merger.
19. As of the time of the Merger, the fair market value of the
assets of the Company will equal or exceed the sum of its liabilities, plus
the amount of liabilities, if any, to which such assets are subject.
20. The undersigned is authorized to make all the representations
set forth herein.
The undersigned acknowledges that (i) the opinions to be
delivered pursuant to Sections 7.02(f) and 7.03(e) of the Merger Agreement
will be based on the accuracy of the representations set forth herein and
on the accuracy of the representations and warranties and the satisfaction
of the covenants and obligations contained in the Merger Agreement and the
various other documents related thereto, and (ii) such opinions will be
subject to certain limitations and qualifications including that it may not
be relied upon if any such representations or warranties are not accurate
or if any such covenants or obligations are not satisfied in all material
respects.
The undersigned acknowledges that such opinions will not address
any tax consequences of the Merger or any action taken in connection
therewith except as expressly set forth in such opinions.
Very truly yours,
AVONDALE INDUSTRIES, INC.
by _____________________
Name:
Title:
