SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 10, 1999
NEWPORT NEWS SHIPBUILDING INC.
(Exact name of registrant as specified in its charter)
Delaware 1-12385 74-1541566
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
4101 Washington Avenue, Newport News, VA 23607
------------------------------------------------------
(Address of principal executive offices) (zip code)
(757) 380-2000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events
Newport News Shipbuilding Inc. ("Newport News") reported today
that it has received an unsolicited offer from General Dynamics Corporation
("General Dynamics") proposing to pay $38.50 per share in cash for all of
Newport News' outstanding shares, subject to various conditions including
due diligence and antitrust clearance from the appropriate regulatory
authorities in the U.S. Departments of Justice and Defense.
On January 19, 1999, Newport News announced a proposed merger
with Avondale Industries, Inc. ("Avondale") that is currently under
regulatory review. Under the merger agreement with respect to the Avondale
transaction, Newport News is not permitted to negotiate or enter into a
transaction with a party that has made a proposal to acquire Newport News
unless, among other things, the Newport News board of directors (the
"Newport News Board") has determined that the proposal is superior to the
merger with Avondale. In order for a proposal to be a superior proposal,
the Newport News Board must determine that the proposed transaction is both
reasonably capable of being completed, taking into account legal,
regulatory and other factors, and that its financial and other terms are
more favorable to Newport News and its shareholders.
The Newport News Board met on February 18, 1999, to consider
General Dynamics' proposal. In light of recent antitrust scrutiny in the
defense sector, the Newport News Board believes that the transaction
offered by General Dynamics requires a careful assessment of the antitrust
risk and reliable assurance that it is unlikely to be a problem. Under the
present circumstances, the Newport News Board determined that in order to
further evaluate General Dynamics' proposal, it would require a finding by
the U.S. Department of Defense that there is a reasonable likelihood that a
combination of Newport News and General Dynamics would be approved. General
Dynamics has not satisfied the Newport News Board's concerns as to the
reasonable likelihood of approval. Should the Newport News Board become
satisfied, it would then be prepared to evaluate the terms of the General
Dynamics proposal, including the proposed price. The Newport News Board
meanwhile continues to remain fully committed to the Avondale transaction.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit 99.1 Press Release
Exhibit 99.2 Letter from General Dynamics Corporation dated
February 10, 1999 (with enclosure)
Exhibit 99.3 Mutual Nondisclosure Agreement of Newport News and
Avondale dated November 20, 1998
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
NEWPORT NEWS SHIPBUILDING INC.
Date: February 18, 1999 By: /s/ Stephen B. Clarkson
-------------------------------
Name: Stephen B. Clarkson
Title: Vice President, General Counsel and
Secretary
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Exhibit Index
Sequential Page
Exhibit No. Description of Exhibit Number
Exhibit 99.1 Press Release 5
Exhibit 99.2 Letter from General Dynamics Corporation
dated February 10, 1999 (with enclosure) 6
Exhibit 99.3 Mutual Nondisclosure Agreement of Newport
News and Avondale dated November 20, 1998 12
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EX-99.1
PRESS RELEASE
NEWPORT NEWS
SHIPBUILDING
NEWS RELEASE
NEWPORT NEWS HAS RECEIVED PROPOSAL
FROM GENERAL DYNAMICS
NEWPORT NEWS, VA, - February 18, 1999 - Newport News Shipbuilding
(NYSE:NNS) said today that it has received an unsolicited offer from
General Dynamics (NYSE:GD) proposing to pay $38.50 per share in cash for
all of its outstanding shares, subject to various conditions including due
diligence and antitrust clearance from the appropriate regulatory
authorities in the Department of Justice and Defense.
On January 19, 1999, Newport News announced a proposed merger
with Avondale Industries (NASDAQ:AVDL) that is currently under regulatory
review. Under the merger agreement, Newport News is not permitted to enter
into a transaction with a party that has made a proposal to acquire Newport
News unless, among other things, the Newport News board of directors has
determined that the proposal is superior to the merger with Avondale. In
order for a proposal to be a superior proposal, the board of directors must
determine that it is both reasonably capable of being completed, taking
into account legal, regulatory and other factors, and its financial and
other terms are more favorable to Newport News and its shareholders.
"Our board is fully committed to acting in the best interest of
its shareholders," said William P. Fricks, chairman and chief executive
officer of Newport News. "Because of recent antitrust scrutiny in the
defense sector we believe that the General Dynamics proposal requires a
careful assessment of the antitrust risk and reliable assurance that it is
unlikely to be a problem. Under present circumstances, we view this as
requiring a finding by the Department of Defense that there is a reasonable
likelihood of approval. At this time, General Dynamics has not satisfied
the board's concerns as to the reasonable certainty of closing. Should the
board become satisfied, it would then be prepared to evaluate the terms of
the General Dynamics proposal, including the proposed price. Meanwhile, we
remain fully committed to the Avondale transaction."
Newport News Shipbuilding designs and constructs nuclear powered
aircraft carriers and submarines for the U.S. Navy and provides life cycle
maintenance services for ships in the Navy fleet. The company employs
18,000 people and has annual revenues of approximately $1.8 billion.
CONTACT: Dave Anderson - Investors (757) 380-7600 or
George Sard or Paul Verbinnen - Media (212) 687-8080.
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EX-99.2
GENERAL DYNAMICS LETTER
GENERAL DYNAMICS
Nicholas D. Chabraja
Chairman & Chief Executive Officer
February 10, 1999
PERSONAL AND CONFIDENTIAL
Mr. William P. Fricks
Chairman of the Board and Chief Executive Officer
Newport News Shipbuilding Inc.
4101 Washington Avenue
Newport News, Virginia 23607-2770
Dear Bill:
Over the past year you and I have discussed on several occasions the
possibility of a business combination between General Dynamics Corporation
and Newport News Shipbuilding Inc. You have repeatedly stated your
preference that Newport News remain an independent public company. As you
know, I have been inclined to respect your wishes in that regard. However,
a thorough analysis of the merits of a combination of General Dynamics and
Newport News has reinforced my belief that the joining of our two
organizations would be in the best interests of our collective
stakeholders--shareholders, employees and customers.
I believe that the combined company would be very well positioned for
long-term leadership in the shipbuilding industry. The combined company
with critical mass, breadth of programs and depth of technology will be
ideally postured to offer maximum value to its customers, and thereby
provide enhanced job stability and career opportunities for Newport News
employees within the expanded enterprise.
Additionally, my discussions with you have led me to appreciate the
importance of maintaining the proud and rich heritage of Newport News. I
believe that a combination with General Dynamics would provide the best
avenue through which the Newport News legacy can continue to prosper.
In the event of our combination, we would look forward to continuing the
"best-of-the-best" philosophy that has been so successful in all of our
prior business combinations. Further, the success of Newport News has been
due in large measure to the efforts of your outstanding management team. We
would envision Newport News' key executives and employees taking leadership
roles where appropriate in the expanded enterprise.
Strategic Rationale
I want to assure you that after a thorough analysis of the business and
cultural fit between our organizations, we believe that Newport News' and
General Dynamics' businesses are extremely complementary. We strongly
believe that the combined company offers significant economic,
technological and cost benefits for our collective customers, most
importantly the United States Navy. We are confident that we will be able
to achieve significant future costs savings for many of the major Navy
programs currently being performed by our companies.
General Dynamics attributes significant strategic value to Newport News'
personnel and production capabilities. Furthermore, national security and
other considerations clearly dictate that our combined companies would
continue to operate the current nuclear-capable facilities in Connecticut
and Virginia. This would ensure that both yards remain strong and vibrant
for the foreseeable future.
Price and Structure
We, in combination with our outside financial advisors, have placed a value
on Newport News which is based on publicly available information. We have
analyzed the business utilizing a wide variety of valuation methodologies
including, comparable merger and acquisition transactions, market values of
comparable publicly traded companies and discounted cash flow analyses. In
addition, we have reviewed premiums to market value
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paid in other relevant merger and acquisition transactions. The value we
are offering to the Newport News shareholders is at the high end of the
valuation range for the company based on these analyses.
Accordingly, I have been authorized by the Board of Directors of General
Dynamics to formally propose a business combination between our companies
in which the shareholders of Newport News would receive $38.50 per share in
cash on a fully diluted basis, subject to brief due diligence. Our proposal
represents approximately a 40% premium over your average share price since
your proposed Avondale transaction was announced. We believe that this
offer is more attractive than the short-term and long-term value that
Newport News could deliver to its shareholders on its own, and, therefore
represents an outstanding opportunity for Newport News to deliver maximum
value to its public shareholders.
Our offer is an all cash offer that we would accomplish through a tender
offer followed by a merger. We believe, however, that the most effective
strategic combination of General Dynamics with Newport News would be
accomplished through a stock-for-stock merger which would be treated as a
pooling. In view of your current circumstances this may not be achievable.
If, however, there is a means of accomplishing a pooling, we think that
would best serve the interests of all of our shareholders. Moreover, the
ability to achieve a pooling would enable us to increase the value of our
offer.
Timing
Time is of the essence. It is our belief that it is in the best interests
of Newport News that we initiate and complete our due diligence and
finalize a definitive agreement as soon as possible. It is our expectation
that this process can be successfully completed within one week. In order
to expedite the process, we have included a signed confidentiality
agreement. We are also prepared to send you a draft merger agreement which
General Dynamics is prepared to sign.
Sources of Financing
General Dynamics would plan to finance a cash purchase of Newport News
through a combination of General Dynamics' current cash reserves and
borrowed funds. We regularly hold discussions with our financial advisors
and commercial banks to review General Dynamics' debt capacity, including
financing major acquisitions. Based on these conversations, more than
adequate funds are available on terms satisfactory to General Dynamics to
provide the cash required to close the transaction. Thus, our proposal is
not subject to receipt of financing.
Conditions to the Consummation of a Transaction
General Dynamics does not anticipate that it would require any unusual
conditions to the consummation of a transaction. As you know, our companies
currently work closely under teaming arrangements relating to the New
Attack Submarine and CVX carrier programs. Moreover, the Navy's procurement
plans do not envision any major ship building programs in the foreseeable
future on which our companies might compete. Nonetheless, we anticipate
that the Department of Defense and the relevant federal antitrust
authorities will review a merger of our companies. We are confident based
on our outside antitrust counsel's analysis and, more importantly, our
recent conversations with a number of the most senior members of the Navy
and the Department of Defense that a combination of our companies will not
adversely affect competition in the industry and should receive the
required regulatory approvals. We, of course, are available to discuss with
you the basis of our confidence on this point.
Finally, your proposed acquisition of Avondale Industries creates possible
antitrust concerns which could delay or frustrate a business combination
between our companies. In view of this possibility, we would like to
discuss with you appropriate arrangements to ensure that this transaction
does not impede the joining of our companies which we believe is of far
greater and more immediate importance to Newport News' public shareholders.
We are prepared to move forward on an accelerated time schedule with a
minimum amount of disruption to Newport News. In consideration of your
employees and shareholders, we hope you will allow us the opportunity to
share our views with you. We would like to meet with you as soon as
possible to discuss the proposed combination with the objective of
expeditiously working toward a mutually beneficial transaction. Our entire
Board of Directors has reviewed and approved this offer. As a courtesy, we
are sending a copy of this letter to each of Newport News' Board members.
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We have the highest regard for Newport News and its people and believe that
a business combination between Newport News and General Dynamics would
truly be "win-win" for all parties. I am available to discuss these
extremely important matters with you at any time. This transaction has the
highest priority for all of us at General Dynamics and we look forward to
hearing from you within the week.
Yours very truly,
/s/ Nicholas D. Chabraja
- ---------------------------
Nicholas D. Chabraja
Enclosures
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GENERAL DYNAMICS
Nicholas D. Chabraja
Chairman and Chief Executive Officer
February 10, 1999
PERSONAL AND CONFIDENTIAL
Newport News Shipbuilding Inc.
4101 Washington Avenue
Newport News, Virginia 23607-2770
Attention: Mr. William P. Fricks
Chairman of the Board
and Chief Executive Officer
Gentlemen:
General Dynamics Corporation ("General Dynamics") and Newport News
Shipbuilding Inc. ("Newport News") intend to enter into discussions
regarding a possible stock purchase, merger or other business combination
(a "Transaction") involving the acquisition of Newport News by General
Dynamics. In connection with their discussion of a possible Transaction,
the parties anticipate that Newport News will disclose to General Dynamics
certain confidential financial and other business information. In
consideration of, and as a condition to, Newport News furnishing General
Dynamics with such information, the parties hereby agree as follows:
1. The term "Evaluation Material" as used in this Agreement will be
construed broadly to include all information, in whatever form or
medium, disclosed or provided to General Dynamics by Newport News, any
of its affiliates or any of their respective stockholders, directors,
officers, employees, lenders, attorneys, accountants, financial
advisors or other representatives (such affiliates and other persons
being referred to herein collectively as the "Newport News
Representatives"). Notwithstanding the foregoing, the term "Evaluation
Material" will not be deemed to include any information which (a) at
the time of disclosure to General Dynamics is known by General
Dynamics, any of its affiliates or any of their respective
stockholders, directors, officers, employees, lenders, attorneys,
accountants, financial advisors or other representatives (such
affiliates and other persons being referred to herein collectively as
the "General Dynamics Representatives"), (b) at the time of disclosure
to General Dynamics is generally known by the public, (c) becomes
generally known by the public following the time of its disclosure to
General Dynamics (other than as a result of the breach of this
Agreement), (d) was or is made available to General Dynamics on a
nonconfidential basis from a person who is not bound by a
confidentiality agreement with Newport News or who is not otherwise
legally prohibited from transmitting such information to General
Dynamics or (e) was or is made available to General Dynamics or any of
its subsidiaries pursuant to any teaming, subcontract or other
agreement between General Dynamics, Newport News or any of their
respective subsidiaries.
2. The Evaluation Material will be used by General Dynamics solely for
the purpose of evaluating a possible Transaction. Unless and until a
Transaction has been consummated pursuant to a definitive agreement
between General Dynamics (or one or more of its affiliates) and
Newport News, the Evaluation Material will be kept strictly
confidential by General Dynamics and the General Dynamics
Representatives. The Evaluation Material or portions thereof may be
disclosed to those General Dynamics Representatives who need to know
such information for the purpose of evaluating a possible Transaction,
it being understood that prior to such disclosure the General Dynamics
Representatives will be informed of the confidential nature of the
Evaluation Material and will agree to be bound by this Agreement.
Information of the type described in paragraph 1(e) above will be held
and used by General Dynamics and its subsidiaries in accordance with
the terms and conditions of the teaming, subcontract or other
agreement pursuant to which such information was or is made available
by Newport News.
3. In the event that General Dynamics or any of the General Dynamics
Representatives receives a request to disclose all or any part of the
information contained in the Evaluation Material under the terms of
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a valid and effective subpoena or order issued by a court of competent
jurisdiction, General Dynamics agrees to (a) promptly notify Newport
News of the existence, terms and circumstances surrounding such
request, (b) cooperate with Newport News with respect to taking
legally available steps to resist or narrow such request and (c) if
disclosure of such information is legally required, exercise its
commercially reasonable efforts to obtain an order or other reliable
assurance that confidential treatment will be accorded to such
information.
4. General Dynamics acknowledges that it is aware that the securities
laws prohibit any person who has material, non-public information
concerning Newport News or the matters which are the subject of this
Agreement from purchasing or selling securities of Newport News (and
options, warrants and rights relating thereto) and from communicating
such information to any other person under circumstances in which it
is reasonably foreseeable that such person is likely to purchase or
sell such securities.
5. The parties agree that unless and until a definitive agreement with
respect to a Transaction has been executed and delivered, neither
General Dynamics nor Newport News will be under any legal obligation
of any kind whatsoever with respect to such a Transaction by virtue of
this Agreement or any written or oral expression with respect to such
a Transaction by any of their respective Representatives, except for
the matters specifically agreed to herein.
6. If General Dynamics determines that it does not wish to proceed with a
Transaction, it will promptly advise Newport News of that decision. In
that case, General Dynamics will promptly return to Newport News or
destroy all of the Evaluation Material disclosed or provided to
General Dynamics, together with all copies, reproductions, summaries,
analyses or extracts thereof or based thereon (in whatever form or
medium) in its possession or in the possession of any of its
Representatives. Upon request, General Dynamics will certify in
writing the return or destruction of all Evaluation Material in its
possession or in the possession of any of its Representatives.
7. Without prejudice to the rights and remedies otherwise available,
Newport News will each be entitled to seek equitable relief by way of
injunction in the case of the breach or threatened breach of the
provisions of this Agreement by General Dynamics or any of its
Representatives.
8. The benefits arising under this Agreement will inure to each of the
parties hereto and their respective successors and assigns. The
obligations arising under this Agreement will be enforceable against
each of the parties hereto, their Representatives and each of their
and their Representatives' respective successors and assigns.
9. If it is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) that any term or
provision of this Agreement is invalid or unenforceable (a) the
remaining terms and provisions of this Agreement will be unimpaired
and will remain in full force and effect and (b) the invalid or
unenforceable provision or term will be replaced by a term or
provision that is valid and enforceable and that comes closest to
expressing the intention of such invalid or unenforceable term or
provision.
10. This Agreement embodies the entire agreement and understanding of the
parties hereto and supersedes any prior agreements, arrangements and
understandings relating to the matters provided for herein. No
alteration, waiver, amendment, change or supplement to this Agreement
will be binding or effective unless the same is set forth in writing
signed by a duly authorized representative of each party.
11. For the convenience of the parties, any number of counterparts of this
Agreement may be executed by the parties hereto. Each such counterpart
will be deemed to be an original instrument, and all such counterparts
taken together will constitute one and the same Agreement.
12. The validity and interpretation of this Agreement will be governed by,
and construed and enforced in accordance with, the internal laws, and
not the law of conflicts, of the State of Delaware.
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This Agreement is being delivered to you in duplicate. Please execute and
return one copy of this Agreement, which will constitute our agreement and
understanding with respect to the subject matter hereof.
Very truly yours,
GENERAL DYNAMICS CORPORATION
By:
-----------------------------
Nicholas D. Chabraja
Chairman and Chief Executive Officer
Accepted and Agreed to
this day of February ___, 1999:
NEWPORT NEWS SHIPBUILDING INC.
By:
-----------------------------
Name:
Title:
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EX-99.3
NEWPORT NEWS
AVONDALE NONDISCLOSURE AGREEMENT
MUTUAL NONDISCLOSURE AGREEMENT
Between
NEWPORT NEWS SHIPBUILDING INC.
And
AVONDALE INDUSTRIES, INC.
THIS IS AN AGREEMENT made this 20th day of November, 1998, by and between
Newport News Shipbuilding Inc. ("NNS"), a Delaware corporation, 4101
Washington Avenue, Newport News, VA 23607, and Avondale Industries, Inc., a
Louisiana Corporation ("AVONDALE"), P.O. Box 50280, New Orleans, LA 70150,
relating to the disclosure by each of the parties to the other of certain
of its proprietary or confidential information concerning its business,
finances, operations and assets ("Evaluation Materials") solely for the
purpose of enabling each party to evaluate and consider a possible
strategic business combination with the other.
Evaluation Materials shall mean any information and data regarding the
disclosing party, its business, prospects, financial condition, operations,
assets and liabilities which is disclosed by the party or any of its
directors, officers, employees, counsel, accountants, investment bankers,
advisors, agents or representatives (such directors, officers, employees,
counsel, accountants, investment bankers, advisors, agents or
representatives of either party being referred to herein as
"Representatives") to the other party or its Representatives, including but
not limited to proprietary technical, financial, marketing, operating,
performance, cost, know-how, contracting, business and process information,
computer programming techniques, lists of customers and suppliers and all
record bearing media containing or disclosing such information. Evaluation
Material includes data and information which is disclosed by one party to
the other in writing or in non-written manner.
As used herein, "Evaluation Material" shall be deemed to include all notes,
analyses, compilations, studies, interpretations or other documents
prepared by a party or its Representatives which contain, reflect or are
based substantially on Evaluation Materials furnished by the other party or
its Representatives.
In consideration of the mutual promises set forth herein, the parties AGREE
AS FOLLOWS:
1. For a period of 30 days following the date of this Letter neither
party will enter into, discuss or otherwise negotiate, take any action
with the view to facilitating, or consummate any transaction,
arrangement or relationship with any person or entity, other than the
other party, having the purpose or effect of changing the ownership or
control of such party or of transferring ownership or possession of
all or substantially all of its business or assets. Each party will
promptly notify the other if it receives any inquiry or proposal with
respect to any such transaction, arrangement or relationship.
2. Each party agrees to provide Evaluation Materials to the other at a
mutually convenient location and time for the purposes set forth above
and to permit the receiving party to make such copies as are
reasonable. The nature and type of Evaluation Materials will be as
mutually agreed to between the parties; provided, however, neither
party has any obligation to accept or provide Evaluation Materials.
3. Each party agrees to hold in confidence and protect the Evaluation
Materials provided by the other party from disclosure to any third
party in a manner inconsistent with this Agreement.
4. Each party agrees to disclose Evaluation Materials received from the
other party only to its Representatives who have a need to know for
the above purpose. Each party agrees not to provide Evaluation
Materials to its Representatives unless those persons agree to keep
such information confidential and to be bound by the terms of this
Agreement to the same extent as if they were parties hereto.
5. Both parties agree that, without the prior written consent of the
other, neither will disclose to any person: (a) that Evaluation
Materials has been disclosed, (b) that discussions are taking place
concerning a possible strategic business combination involving the
parties, or (c) any of the terms, conditions or other facts with
respect thereto (including the status thereof), unless such disclosure
is required by law and then only with as much prior written notice to
the other party as is practical under the circumstances and only to
the extent required by law. For the purposes of this paragraph, the
term "person" shall be broadly construed to include the media and any
corporation, partnership, group, individual or other entity, but shall
not include the Representatives of a party who require and are given
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access to Evaluation Materials for the purposes and under the
conditions contemplated by this Agreement.
6. During the term of this Agreement each party agrees not to contact any
of the other party's employees regarding the Evaluation Materials or
any strategic business combination contemplated by this Agreement
without the other party's prior consent. For a period of one year
following the date of this Agreement each party agrees not to solicit
any of the other party's employees regarding possible employment,
other than a general solicitation, without the other party's prior
consent.
7. In the event either party or any of its Representatives is requested
or required (by oral questions, interrogatories, requests for
information or documents in legal proceedings or by subpoena, civil
investigative demand or other similar regulatory, administrative or
judicial process) to disclose any Evaluation Material provided by the
other party, such party shall provide the other party with prompt
written notice of any such request so that the other party may, at is
own expense, seek a protective order or other appropriate remedy. If,
in the absence of a protective order or other remedy, a party is
nonetheless legally required to disclose such Evaluation Material to
any tribunal, regulatory or administrative authority or agency, the
other party may, without liability hereunder, disclose to such
tribunal, regulatory or administrative authority or agency only that
portion of the Evaluation Material which is legally required to be
disclosed, provided that the disclosing party exercises reasonable
efforts to preserve the confidentiality of the Evaluation Materials.
8. Each party's obligation with respect to the disclosure of Evaluation
Materials, as set forth in this Agreement, is not applicable to
Evaluation Materials which:
a. Become available to it from a source, other than the other party,
without breach of this Agreement; or
b. Are developed independently by it; or
c. Are within, or later fall within, the public domain without
breach of this Agreement; or
d. Are already known by it on an unrestricted basis.
9. The standard of care for protection of Evaluation Materials which is
hereby imposed on each party is that degree of care that is reasonably
likely to keep the Evaluation Materials provided by the other party
from becoming known to third parties in a manner contrary to this
Agreement, but in no event less than that degree of care customarily
exercised by a party to protect the confidentiality of its own
Evaluation Materials.
10. If either party decides that it does not wish to consider further a
possible strategic business combination with the other party, it will
promptly inform the other party of that decision. At that time, or at
any time upon the request of a party for any reason, the other party
will and will cause its Representatives to deliver promptly all
documents (and all copies thereof) furnished to it by or on behalf of
such requesting party pursuant hereto. In the event of such a
decision, all other Evaluation Material prepared by a receiving party
or its Representatives containing or based on whole or in part on
Evaluation Materials provided by the other party shall be destroyed
and no copy thereof shall be retained and, upon request, the party
obligated to destroy such Evaluation Materials shall certify in
writing to the other party that such action has been taken.
11. Except as otherwise expressly provided in this Agreement,
notwithstanding the return or destruction of any Evaluation Materials,
the parties and their Representatives will continue to be bound by the
terms of this Agreement for a period of two years from the date of
this Agreement.
12. Each party agrees that unless and until a definitive agreement
regarding such strategic business combination between the parties has
been executed, neither party will be under any legal obligation of any
kind whatsoever with respect to such a possible combination or any
other transaction by virtue of this Agreement, except for the matters
specifically and expressly agreed to herein. The parties acknowledge
and agree that each reserves the right , in its sole discretion, to
reject any and all offers and proposals made by the other with regard
to a potential combination or other transaction, and to terminate
discussions and negotiations with the other party at any time, with or
without cause and without further obligation to the other party,
except as expressly set forth herein.
13. Nothing in this Agreement is intended, or shall be construed, to limit
either party's right to engage in any business or sell or otherwise
provide any product or service to any customer or other person
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in any geographic area or market; provided that no party may use
Evaluation Materials in violation of this Agreement.
14. Each of the parties agrees that, until the expiration of two years
from the date of this Agreement, without the prior written invitation
(on an unsolicited basis) of the Board of Directors of the other
party, it and its affiliates will not (a) in any manner acquire, agree
to acquire or make any proposal or offer or otherwise seek to acquire,
directly or indirectly, any securities (or rights in respect thereof),
assets or property of the other party or any of its subsidiaries or of
any successor thereto or person in control thereof, whether such
agreements or proposals or offers are made with or to the other party
or any of its subsidiaries (or a successor thereto or person in
control thereof) or a third party; (b) enter into or agree, offer,
seek or propose to enter into or otherwise be involved in or part of,
directly, or indirectly, any merger, acquisition transaction or other
business combination relating to the other party or any of its
subsidiaries or any of their respective assets; (c) make, or in any
way participate in, directly or indirectly, any "solicitation" of
"proxies" (as such terms are used in the proxy rules of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") ) to vote, or
seek to advise or influence any person with respect to the voting of,
any voting securities of the other party or any of its subsidiaries or
of any successor thereto or person in control thereof, (d) form, join
or in any way participate in a "group" (within the meaning of Section
13(d)(3) of the Exchange Act) with respect to any voting securities of
the other party or any of its subsidiaries or of any successor thereto
or person in control thereof, (e) seek or propose, alone or in concert
with others, to control or influence the management, Board of
Directors or policies of the other party; (f) directly or indirectly
enter into any discussions, negotiations, arrangements or
understandings with any other person (except internal discussions and
planning activities involving its Representatives) with respect to any
of the foregoing activities or propose any of such activities to any
other person (other than its Representatives); (g) directly or
indirectly advise, encourage, assist, act as a financing source for or
otherwise invest in any other person in connection with any of the
foregoing; (h) publicly disclose any intention, plan or arrangement
inconsistent with the foregoing. Each party also agrees that during
such two-year period, neither it nor any of its affiliates will: (i)
request the other party or its advisors, directly or indirectly, to
(l) amend or waive any provision of this paragraph (including this
sentence) or (2) otherwise consent to any action inconsistent with any
provision of this paragraph (including this sentence); or (ii) take
any initiative with respect to the other party or any of its
subsidiaries that could reasonably be expected to require the other
party to make a public announcement regarding (l) such initiative, (2)
any of the activities referred to in this paragraph, (3) the
possibility of a business combination or any similar transaction or
(4) the possibility of such party or any other person acquiring
control of the other party, whether by means of a business combination
or otherwise. Notwithstanding clauses (a), (b) and (e) above in this
paragraph 14, the parties may engage in the discussions contemplated
by this Agreement until such time as one party informs the other that
it does not wish to consider further a possible strategic business
combination with the other party.
Additionally, the Chief Executive Officer of a party may contact the Chief
Executive Officer of the other party for the purpose of expressing
continuing or renewed interest in a strategic business combination,
provided that, unless invited to do so by the Chief Executive Officer of
the other party, no offer or proposal shall be made that would require
public disclosure or formal consideration by such other party or its Board
of Directors.
A party shall be released from its obligations under this paragraph 14 if
an offer is made, or a public announcement is made of a proposal to make an
offer, to acquire equity securities of the other party sufficient to effect
a change in voting control of the other party or involving a merger,
consolidation or amalgamation, or involving a disposition of all or
substantially all the assets of, the other party.
15. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Delaware, exclusive of its conflicts of law
rules. The parties consent to the non-exclusive jurisdiction and venue
of the state and federal courts sitting in the State of Delaware.
16. This Agreement constitutes and expresses the entire agreement between
the parties as to all matters referred to herein, and all prior and
contemporaneous discussions, promises, representations and
understandings, whether written or oral, if any, are herein merged and
superseded an are of no further force or affect.
17. This Agreement may not be assigned or otherwise transferred by either
party in whole or in part without the express prior written consent of
the other party, which may be withheld within the sole discretion of
such other party. The foregoing shall not apply in the event either
party shall change its corporate name or merge with another
corporation.
18. This Agreement shall not be supplemented, amended or modified, nor
shall any waiver of any right hereunder be effective unless set forth
in a written document executed by duly authorized
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Representatives of both parties expressly referencing this Agreement
and the parties, intent that it be so supplemented, amended or
modified. The waiver of any breach of any term or covenant or failure
of any condition herein contained shall not be deemed to be a waiver
of any subsequent breach of the same or any other term or covenant or
failure of any condition herein.
19. In the event of a breach of this Agreement, the parties may pursue
their remedies at law or in equity; provided, however, the parties
acknowledge that money damages for a breach of this Agreement may be
difficult or impossible to ascertain and hereby consent to the award
of appropriate injunctive relief as well as any other appropriate
relief at law or in equity.
20. Neither party shall be deemed by virtue of this Agreement to have
represented or warranted the completeness or accuracy or any
Evaluation Material delivered to the other party, it being understood
that the only representations and warranties shall be those contained
in any definitive agreement.As evidence of the parties' mutual
agreement to the foregoing terms and conditions, an authorized officer
of each party has duly executed this Agreement, respectively.
NEWPORT NEWS SHIPBUILDING INC. AVONDALE INDUSTRIES, INC.
By: /s/ David J. Anderson By: /s/ Thomas M. Kitchen
--------------------------- --------------------------
Name: David J. Anderson Name: Thomas M. Kitchen
Title: Sr. Vice President & CFO Title: Vice President & CFO
Date: November 23, 1998 Date: November 23, 1998
15
