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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) November 10, 1998
GENERAL DYNAMICS CORPORATION
(Exact name of registrant as specified in charter)
Delaware 1-3671 13-1673581
-------- ------ ----------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3190 Fairview Park Drive, Falls Church, Virginia 22042-4523
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(Address of Principal Executive Offices) (Zip Code)
(703) 876-3000
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Registrant's telephone number, including area code
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Item 2. Acquisition or Disposition of Assets
On November 10, 1998, General Dynamics Corporation (the registrant)
acquired NASSCO Holdings Incorporated from NASSCO Holdings Incorporated
Employee Stock Ownership Plan and six individual stockholders. NASSCO
Holdings Incorporated owns 100 percent of the outstanding stock of
National Steel and Shipbuilding Company (NASSCO), which is in the
business of ship design, engineering, construction and repair for the
United States military and various commercial customers. NASSCO employs
approximately 3,700 people at its San Diego, California, headquarters
and shipyard. The registrant will account for this acquisition under
the purchase method of accounting.
The purchase consideration of $369 million in cash plus the obligation
to discharge $46 million in debt was established by negotiation. The
registrant paid $318 million of the total consideration and repaid the
$46 million obligation in cash during November 1998 from available
funds. The remaining $51 million purchase consideration will be paid in
cash during the second quarter of 1999 and is expected to be paid from
available funds.
The assets acquired include, among other things, machinery, equipment
and other physical property, the primary use of which relates to the
design, construction and repair of U.S. Navy auxiliary ships. It is the
present intent of the registrant to continue to devote the assets to
such purposes.
Item 7. Financial Statements and Exhibits
(1) Financial Statements of Businesses Acquired.
None required.
(2) Pro Forma Financial Information.
None required.
(3) Exhibits.
Exhibit 10-36 - Stock Purchase Agreement (without Exhibits and
Schedules) dated as of October 8, 1998, between the
registrant and NASSCO Holdings Incorporated
and the stockholders of NASSCO Holdings
Incorporated.
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SIGNATURES
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 and thereunto duly authorized.
GENERAL DYNAMICS CORPORATION
(Registrant)
By /s/ John W. Schwartz
-------------------------------
John W. Schwartz
Vice President and Controller
(Principal Accounting Officer)
Dated November 25, 1998
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EXECUTION COPY
------------------------
STOCK PURCHASE AGREEMENT
AMONG
GENERAL DYNAMICS CORPORATION,
NASSCO HOLDINGS INCORPORATED
AND
THE STOCKHOLDERS
OF
NASSCO HOLDINGS INCORPORATED
-----------------------
OCTOBER 8, 1998
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TABLE OF CONTENTS
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Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 2. Purchase and Sale of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.1 Purchase and Sale of Outstanding Shares . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.2 Purchase and Sale of Shares Issuable Pursuant to Stock Options . . . . . . . . . . . . . . .6
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Section 3. Closings; Delivery of Certificates; Payment . . . . . . . . . . . . . . . . . . . . . . . . . . .6
3.1 The Closings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
3.2 Closing Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.3 Transactions at the First Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.4 Transactions at the Second Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.5 Delivery of Tax Affidavits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Section 4. Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . . . .8
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
4.2 Authorization of Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
4.3 Noncontravention; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
4.4 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
4.5 Financial Statements and Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.6 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.7 Absence of Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.8 Litigation and Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.9 Contract Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.10 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.11 Employee Benefit Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.12 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.13 Title and Sufficiency of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.14 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.15 Intellectual Property Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.16 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.17 Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5. Representations and Warranties of the Sellers . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.2 Authorization of Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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5.3 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
5.4 Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Section 6. Representations and Warranties of General Dynamics . . . . . . . . . . . . . . . . . . . . . . .24
6.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
6.2 Authorization of Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
6.3 Noncontravention; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Section 7. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
7.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
7.2 Notices and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
7.3 Carry on in Regular Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
7.4 Preservation of Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
7.5 Full Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
7.6 Notice of Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
7.7 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
7.8 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
7.9 Actions Regarding Antitakeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . .29
7.10 Defense of Orders and Injunctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
7.11 Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
7.12 Execution of Option Exercise Agreements by Optionholders . . . . . . . . . . . . . . . . . .29
7.13 Payments with Respect to Repurchased Shares . . . . . . . . . . . . . . . . . . . . . . . .29
7.14 No Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
7.15 Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
7.16 Certain Corporate Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
7.17 Amendment or Termination of Company Plans . . . . . . . . . . . . . . . . . . . . . . . . .31
Section 8. Conditions to the Obligations of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . .31
8.1 Conditions to the Obligations of Each Party . . . . . . . . . . . . . . . . . . . . . . . .31
8.2 Conditions to the Obligation of the Company and the Sellers . . . . . . . . . . . . . . . .32
8.3 Conditions to the Obligation of General Dynamics . . . . . . . . . . . . . . . . . . . . .32
Section 9. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Section 10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
10.1 Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
10.2 Mutual Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
10.3 No Right of Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
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10.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
10.5 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
10.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
10.7 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
10.8 Extension and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
10.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
10.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
10.11 Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
10.12 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
10.13 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
10.14 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
10.15 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
10.16 Incorporation of Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
10.17 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
10.18 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of October 8, 1998 between
and among General Dynamics Corporation, a Delaware corporation ("General
Dynamics"), NASSCO Holdings Incorporated, a Delaware corporation (the
"Company"), Wells Fargo Bank, N.A. (the "Trustee"), as Trustee of the NASSCO
Holdings Incorporated Employee Stock Ownership Plan (the "ESOP"), and Richard
H. Vortmann, Donald A. Spanninga, Fred N. and Alicia H. Hallett, as Trustees
under the Trust Agreement dated as of June 15, 1979, and Alfred W., Jr. and
Ruth H. Lutter, as Trustees under the Trust Agreement dated as of January 19,
1988 (collectively, the "Management Stockholders"). The ESOP and the Management
Stockholders are referred to in this Agreement collectively as the "Sellers."
The Company, through its wholly-owned subsidiaries
International Manufacturing Technologies, Inc., a California corporation
("IMT"), National Steel and Shipbuilding Company, a Nevada corporation
("NASSCO"), NASSCO Funding Corporation, a California corporation ("NFC"), and
Tecnologias Internacionales de Manufactura, S.A de C.V, a Mexican corporation
("TIMSA"), designs, constructs and repairs ships for the United States military
and various commercial customers.
The ESOP and the Management Stockholders together own all of
the issued and outstanding shares of the Common Stock, par value $.01 per share
("Common Stock"), of the Company. This Agreement contemplates a transaction
pursuant to which General Dynamics will purchase for cash all of the issued and
outstanding shares of Common Stock and all of the shares of Common Stock
issuable upon the exercise of outstanding stock options held by certain current
and former employees of the Company and its subsidiaries.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and for other good and valuable consideration, the value,
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. Definitions. For purposes of this Agreement, the
following terms have the meanings set forth below:
"Acquisition Proposal" has the meaning set forth in Section
7.7.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of 1934, as amended.
"Affiliated Group" means any affiliated group within the
meaning of Section 1504(a) of the Code or any similar provision of state, local
or foreign Law.
"Agreement" means this Stock Purchase Agreement, as the same
may be amended from time to time in accordance with the terms hereof.
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"Closings" has the meaning set forth in Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" has the meaning set forth in the Preamble to this
Agreement.
"Company" has the meaning set forth in the Preamble to this
Agreement.
"Company Plans" has the meaning set forth in Section 4.11(a).
"Company Subsidiaries" means, collectively, IMT, NASSCO, NFC
and TIMSA.
"Confidentiality Agreement" means the Confidentiality Agreement
between the Company and General Dynamics dated August 13, 1998.
"Contract" means any oral or written contract, agreement,
commitment, lease, license, instrument, guaranty, bid or proposal to which the
Company or any of the Company Subsidiaries is a party or by which the Company
or any of the Company Subsidiaries is otherwise bound.
"Employee Benefit Plan" means an Employee Pension Benefit Plan
or an Employee Welfare Benefit Plan, where no distinction is required by the
context in which the term is used.
"Employee Pension Benefit Plan" has the meaning set forth in
Section 3(2) of ERISA.
"Employee Welfare Benefit Plan" has the meaning set forth in
Section 3(1) of ERISA.
"Environmental Law" means any Law with respect to the
protection of the environment or the promotion of worker health and safety,
including any Law relating to Hazardous Materials, drinking water, surface
water, groundwater, wetlands, landfills, open dumps, storage tanks, underground
storage tanks, solid waste, waste water, storm water run-off, noises, odors,
air emissions, waste emissions or wells. Without limiting the generality of
the foregoing, the term will encompass each of the following statutes and the
regulations promulgated thereunder, and any similar applicable state, local or
foreign Law, each as amended (a) the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, (b) the Solid Waste Disposal Act, (c)
the Hazardous Materials Transportation Act, (d) the Toxic Substances Control
Act, (e) the Clean Water Act, (f) the Clean Air Act, (g) the Safe Drinking
Water Act, (h) the National Environmental Policy Act of 1969, (i) the Superfund
Amendments and Reauthorization Act of 1986, (j) Title III of the Superfund
Amendments and Reauthorization Act, (k) the Federal Insecticide, Fungicide and
Rodenticide Act, (l) the provisions of the Occupational Safety and Health Act
of 1970 relating to the handling of and exposure to Hazardous Materials and
similar substances and (m) the Resource Conservation and Recovery Act.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
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"ESOP" has the meaning set forth in the Preamble to this
Agreement.
"Financial Statements" has the meaning set forth in Section
4.5(c).
"First Closing" has the meaning set forth in Section 3.1.
"First Closing Date" has the meaning set forth in Section 3.2.
"GAAP" means United States generally accepted accounting
principles, as in effect as of the date of this Agreement.
"General Dynamics" has the meaning set forth in the Preamble to
this Agreement.
"Governmental Entity" means any government or any agency,
bureau, board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether federal, state or
local, domestic or foreign.
"Government Contract" means a Contract between the Company or
any of the Company Subsidiaries and the Department of Defense or any other
Governmental Entity, including any facilities contract for the use of
government-owned facilities.
"Government Subcontract" means any Contract that is a
subcontract between the Company or any of the Company Subsidiaries and any
third party relating to a contract between such third party (or any higher-tier
contractor) and the Department of Defense any other Governmental Entity.
"Hazardous Materials" means each and every element, compound,
chemical mixture, contaminant, pollutant, material, waste or other substance
that is defined, determined or identified as hazardous or toxic under any
Environmental Law or the spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, storing, escaping, leaching, dumping,
discarding, burying, abandoning or disposing into the environment of which is
prohibited under any Environmental Law. Without limiting the generality of the
foregoing, the term will include (a) "hazardous substances" as defined in the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of 1986, or Title III of the
Superfund Amendments and Reauthorization Act and regulations promulgated
thereunder, each as amended, (b) "hazardous waste" as defined in the Solid
Waste Disposal Act and regulations promulgated thereunder, each as amended, (c)
"hazardous materials" as defined in the Hazardous Materials Transportation Act
and the regulations promulgated thereunder, each as amended, (d) "chemical
substance or mixture" as defined in the Toxic Substances Control Act and
regulation promulgated thereunder, each as amended, (e) petroleum and petroleum
products and byproducts and (f) asbestos.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
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"IMT" has the meaning set forth in the Preamble to this
Agreement.
"Intellectual Property" means, collectively, patents, patent
disclosures, trademarks, service marks, trade dress, logos, trade names,
copyrights and mask works, and all registrations, applications, reissuances,
continuations, continuations-in-part, revisions, extensions, reexaminations and
associated goodwill with respect to each of the foregoing, computer software
(including source and object codes), computer programs, computer databases and
related documentation and materials, data, documentation, trade secrets,
confidential business information (including ideas, formulas, compositions,
inventions, know-how, manufacturing and production processes and techniques,
research and development information, drawings, designs, plans, proposals and
technical data, financial, marketing and business data and pricing and cost
information) and other intellectual property rights (in whatever form or
medium).
"Interim Balance Sheet" has the meaning set forth in Section
4.5(b).
"Interim Financial Statements" has the meaning set forth in
Section 4.5(b).
"IRS" means the Internal Revenue Service of the Department of
the Treasury.
"knowledge" as applied to the Company means the actual
knowledge, after reasonable investigation, of (a) the Management Stockholders,
(b) the directors of the Company and the Company Subsidiaries and (c) the
employees of the Company and the Company Subsidiaries whose names are set forth
on Schedule 1.1.
"Law" means any constitutional provision, statute, law, rule,
regulation, Permit, decree, injunction, judgment, order, ruling, determination,
finding or writ of any Governmental Entity.
"Lien" means any mortgage, pledge, security interest, charge,
claim or other encumbrance.
"Management Stockholders" has the meaning set forth in the
Preamble to this Agreement.
"Multiemployer Plan" has the meaning set forth in Section 3(37)
of ERISA.
"NASSCO" has the meaning set forth in the Preamble to this
Agreement.
"NFC" has the meaning set forth in the Preamble to this
Agreement.
"Option Exercise Agreement" has the meaning set forth in
Section 2.2.
"Optionholders" means, collectively, the current and former
employees of the Company and the Company Subsidiaries holding outstanding Stock
Options.
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"Permit" means any license, permit, franchise, certificate of
authority or order, or any waiver of the foregoing, issued by any Governmental
Entity.
"Permitted Liens" means, collectively, (a) Liens for current
Taxes or assessments that are not delinquent, (b) builder, mechanic,
warehousemen, materialmen, contractor, workmen, repairmen, carrier or other
similar Liens arising and continuing in the ordinary course of business for
obligations that are not delinquent, (c) the rights, if any, of vendors having
possession of tooling of the Company and the Company Subsidiaries, (d) other
similar common law or statutory Liens that do not materially affect the value
of the property so subject or the usefulness thereof to the Company and the
Company Subsidiaries, (e) Liens securing rental payments under capital lease
arrangements, (f) easements, rights of way, restrictions, encumbrances,
covenants, conditions, encroachments or any other matters affecting title to
the real property owned or leased by the Company and the Company Subsidiaries
that do not individually or in the aggregate materially impair the current use
or value of any parcel of such real property and (g) liens and encumbrances set
forth on Schedule 4.13.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or a Governmental Entity.
"Prohibited Transaction" has the meaning set forth in Section
406 of ERISA and Section 4975 of the Code.
"Purchase Price" has the meaning set forth in Section 2.3.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, storing, escaping, leaching,
dumping, discarding, burying, abandoning or disposing of any Hazardous
Materials into the environment.
"Reportable Event" has the meaning set forth in Section 4043 of
ERISA.
"Restorative Payments" has the meaning set forth in Section
7.13.
"Second Closing" has the meaning set forth in Section 3.1.
"Second Closing Date" has the meaning set forth in Section 3.2.
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers" has the meaning set forth in the Preamble to this
Agreement.
"Stock Option" means any outstanding right to purchase or
otherwise acquire shares of Common Stock.
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"Tax" means any federal, state, local or foreign net income,
gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, license, lease, service, service use, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, windfall
profits, customs, duties or other tax, fee, assessment or charge, including any
interest, penalty or addition thereto, and including any transferee or
secondary liability in respect of any tax, whether by operation of Law,
contractual agreement or otherwise, and any liability in respect of any tax as
a result of being a member of any affiliated, consolidated, combined, unitary
or similar group.
"Tax Return" means, with respect to any Tax, any return,
declaration, report, claim for refund or information return or statement,
including any consolidated, combined, unitary, fiscal unity or similar return.
"TIMSA" has the meaning set forth in the Preamble to this
Agreement.
"Trustee" has the meaning set forth in the Preamble to this
Agreement.
"Year-End Financial Statements" has the meaning set forth in
Section 4.5(a).
Section 2. Purchase and Sale of Common Stock.
2.1 Purchase and Sale of Outstanding Shares. On the terms
and subject to the conditions set forth in this Agreement, General Dynamics
will purchase for cash all of the outstanding shares of Common Stock held by
the Sellers as of the date of this Agreement for a purchase price equal to
$225.82 per share and each Seller will sell, transfer, assign, convey and
deliver to General Dynamics all right, title and interest in and to the shares
of Common Stock held by such Seller.
2.2 Purchase and Sale of Shares Issuable Pursuant to Stock
Options. On the terms and subject to the conditions set forth in this
Agreement and in the separate Option Exercise and Release Agreements in
substantially the form attached as Exhibit A to this Agreement (each, an
"Option Exercise Agreement") to be entered into by the Company, General
Dynamics and each of the Optionholders, General Dynamics will purchase for cash
all of the shares of Common Stock issuable upon the exercise of the Stock
Options held by the Optionholders as of the date of this Agreement for a
purchase price equal to $225.82 per share and each Optionholder will sell,
transfer, assign, convey and deliver to General Dynamics all right, title and
interest in and to such shares of Common Stock.
2.3 Purchase Price. The aggregate purchase price to be
paid by General Dynamics pursuant to this Agreement and the Option Exercise
Agreements (the "Purchase Price") will be $368,880,867.64.
Section 3. Closings; Delivery of Certificates; Payment.
3.1 The Closings. Upon the terms and subject to the
conditions set forth in this Agreement, the consummation of the transactions
contemplated by this Agreement will take place
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in two separate closings (the "Closings") at the offices of Latham & Watkins,
701 "B" Street, Suite 2100, San Diego, California 92101. The first Closing
(the "First Closing") will take place at 10:00 a.m., local time, on the first
business day following the satisfaction or waiver of the conditions set forth
in Section 8. The second Closing (the "Second Closing") will take place at
10:00 a.m., local time, on May 3, 1999; provided that in no event will the
Second Closing take place prior to the First Closing. In the event the First
Closing has not occurred prior to May 3, 1999, the First Closing and the Second
Closing will be combined and will take place at the same date, time and place.
3.2 Closing Dates. The date upon which the First Closing
occurs is referred to in this Agreement as the "First Closing Date." The date
upon which the Second Closing occurs is referred to in this Agreement as the
"Second Closing Date." The dates on which the Closings occur are referred to
in this Agreement collectively as the "Closing Dates."
3.3 Transactions at the First Closing. At the First
Closing, (a) the Sellers will sell, transfer, assign, convey and deliver to
General Dynamics all right, title and interest in and to the shares of Common
Stock held by them and indicated on Schedule 3.3 and will deliver to General
Dynamics stock certificates representing such shares of Common Stock, each such
certificate endorsed in blank or accompanied by duly executed assignment
documents, (b) the Optionholders, pursuant to the provisions of the Option
Exercise Agreements, will exercise in full all Stock Options held by them, will
sell, transfer, assign, convey and deliver to General Dynamics all right, title
and interest in and to the shares of Common Stock acquired by them upon such
exercise, and will deliver to General Dynamics stock certificates representing
such shares of Common Stock, each such certificate endorsed in blank or
accompanied by duly executed assignment documents, and (c) General Dynamics
will deliver to each Seller and Optionholder, by cashier's or certified check
or by wire transfer of immediately available funds, the portion of the Purchase
Price payable to such Seller or Optionholder as determined in accordance with
the provisions of this Agreement and the Option Exercise Agreements.
3.4 Transactions at the Second Closing. At the Second
Closing, (a) the Management Stockholders identified on Schedule 3.4 will sell,
transfer, assign, convey and deliver to General Dynamics all right, title and
interest in and to the shares of Common Stock held by them and indicated on
Schedule 3.4 and will deliver to General Dynamics stock certificates
representing such shares of Common Stock, each such certificate endorsed in
blank or accompanied by duly executed assignment documents, and (b) General
Dynamics will deliver to each such Management Stockholder, by cashiers' or
certified check or by wire transfer of immediately available funds, the portion
of the Purchase Price payable to such Management Stockholder as determined in
accordance with the provisions of this Agreement.
3.5 Delivery of Tax Affidavits. At each of the Closings,
each Seller and Optionholder selling shares of Common Stock will deliver to
General Dynamics an affidavit pursuant to Section 1445(b)(2) of the Code
stating, under penalties of perjury, such Person's United States taxpayer
identification number and that such Person is not a foreign person.
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Section 4. Representations and Warranties of the Company. The
Company hereby represents and warrants to General Dynamics that the statements
contained in this Section 4 are correct and complete as of the date of this
Agreement:
4.1 Organization. The Company and each of the Company
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as presently being conducted. The Company and each of
the Company Subsidiaries is duly qualified to conduct business as a foreign
corporation and is in good standing under the laws of each jurisdiction where
such qualification is required, except where the failure to be so qualified
would not have a material adverse effect on the business, financial condition,
operations or results of operations of the Company and the Company Subsidiaries
taken as a whole. The Company has delivered to General Dynamics correct and
complete copies of the charters, bylaws and other organizational documents, as
presently in effect, of the Company and each of the Company Subsidiaries.
4.2 Authorization of Transaction. Except as set forth on
Schedule 4.2, the Company has full power and authority and has taken all
requisite action to enable it to execute and deliver this Agreement, to
consummate the transactions contemplated hereby and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Company, enforceable against the Company in accordance with its terms
and conditions.
4.3 Noncontravention; Consents. Except for the filing of
a Notification and Report Form and related material with the Federal Trade
Commission and the Antitrust Division of the United States Department of
Justice under the HSR Act and as set forth on Schedule 4.3, neither the
execution and delivery of this Agreement by the Company, nor the consummation
by the Company of the transactions contemplated hereby, will constitute a
violation of, be in conflict with, constitute or create (with or without notice
or lapse of time or both) a default under, give rise to any right of
termination, cancellation, amendment or acceleration with respect to, or result
in the creation or imposition of any Lien upon any property of the Company or
any of the Company Subsidiaries pursuant to (a) the charter, bylaws or other
organizational documents of the Company or any of the Company Subsidiaries, (b)
any Law to which the Company or any of the Company Subsidiaries is subject, or
(c) any agreement or commitment set forth on Schedule 4.9(a) to which the
Company or any of the Company Subsidiaries is a party or by which any of them
or any of their respective properties is bound or subject except, in each case,
for those circumstances which would not have a material adverse effect on the
business, financial condition, operations or results of operations of the
Company or Company Subsidiaries taken as a whole.
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<PAGE> 13
4.4 Capitalization.
(a) Schedule 4.4(a) sets forth for the Company and
each of the Company Subsidiaries (i) the number of authorized
shares of each class of its capital stock, (ii) the number of
issued and outstanding shares of each class of its capital
stock, (iii) the number of shares of its capital stock held in
treasury, (iv) the number of shares of Common Stock issuable
upon the exercise of all outstanding Stock Options and (v) the
names of its directors and elected officers.
(b) All of the issued and outstanding shares of
capital stock of the Company have been duly authorized and are
validly issued, fully paid and nonassessable. Except as set
forth on Schedule 4.4(b), there are no outstanding or
authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights or other contracts
or commitments that could require any of the Sellers to sell,
transfer or otherwise dispose of any capital stock of the
Company or that could require the Company to issue, sell or
otherwise cause to become outstanding any of its own capital
stock. Except as set forth on Schedule 4.4(b), there are no
outstanding stock appreciation, phantom stock, profit
participation or similar rights with respect to the Company.
There are no voting trusts, proxies or other agreements or
understandings with respect to the voting of any capital stock
of the Company. The minute books, stock certificate books and
stock record books of the Company are correct and complete in
all material respects.
(c) All of the issued and outstanding shares of
capital stock of each of the Company Subsidiaries have been
duly authorized and are validly issued, fully paid and
nonassessable. Except as set forth on Schedule 4.4(c), the
Company holds of record and owns beneficially all of the
outstanding shares of each of the Company Subsidiaries, free
and clear of any restrictions on transfer (other than
restrictions under the Securities Act and applicable state
securities Laws), Taxes, Liens, options, warrants, purchase
rights, contracts, commitments, equities, claims or demands.
Except as set forth on Schedule 4.4(c), there are no
outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights or
other contracts or commitments that could require the Company
to sell, transfer or otherwise dispose of any capital stock of
any of the Company Subsidiaries or that could require any of
the Company Subsidiaries to issue, sell or otherwise cause to
become outstanding any of its own capital stock. There are no
outstanding stock appreciation, phantom stock, profit
participation or similar rights with respect to any of the
Company Subsidiaries. There are no voting trusts, proxies or
other agreements or understandings with respect to the voting
of any capital stock of any of the Company Subsidiaries. The
minute books, stock certificate books and stock record books of
each of the Company Subsidiaries are correct and complete in
all material respects.
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<PAGE> 14
(d) Neither the Company nor any of the Company
Subsidiaries has any direct or indirect equity participation in
any Person other than the Company Subsidiaries.
(e) Except as set forth on Schedule 4.4(e), since
December 31, 1997 neither the Company nor any of the Company
Subsidiaries has repurchased, redeemed or otherwise acquired
for value any shares of its capital stock or any other
securities exercisable or exchangeable for or convertible into
shares of its capital stock.
4.5 Financial Statements and Reserves.
(a) The Company has previously delivered to
General Dynamics correct and complete copies of the audited
consolidated balance sheets of the Company and the Company
Subsidiaries as of December 31, 1995, December 31, 1996 and
December 31, 1997 and the related statements of income and cash
flow for the years then ended (the "Year-End Financial
Statements").
(b) Set forth as Schedule 4.5(b) are correct and
complete copies of the unaudited consolidated balance sheet of
the Company and the Company Subsidiaries as of June 28, 1998
(the "Interim Balance Sheet") and the related statements of
income and cash flow for the six-month period then ended (the
"Interim Financial Statements").
(c) The Year-End Financial Statements and the
Interim Financial Statements are referred to in this Agreement
collectively as the "Financial Statements." Except as set
forth on Schedule 4.5(c), the Financial Statements were
prepared in accordance with GAAP, consistently applied, and
present fairly on a consolidated basis the financial condition
and the results of operations of the Company and the Company
Subsidiaries as of the dates and for the periods indicated
therein, subject to the lack of footnote disclosures and to
normal year-end adjustments, consistent with past practice, in
the case of the Interim Financial Statements.
(d) Schedule 4.5(d) is a correct and complete list
of all material reserves for loss as of the date of this
Agreement and a description of the specific matters for which
such reserves have been made.
4.6 No Undisclosed Liabilities. The Company and the
Company Subsidiaries have no liabilities or obligations (whether absolute or
contingent, liquidated or unliquidated, or due or to become due) except for
liabilities and obligations (a) reflected on the Interim Balance Sheet, (b)
arising since the date of the Interim Balance Sheet in the usual and ordinary
course of business, (c) set forth in any of the Schedules to this Agreement,
(d) that relate to compliance with Laws and noncontravention of other
agreements or commitments (as to which the Company's representations and
warranties are made in Sections 4.3 and 4.8(b)), (e) that relate to any
charge, complaint, action, suit, proceeding, hearing or investigation (as to
which the Company's representations and warranties
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<PAGE> 15
are made in Section 4.8(a)), (f) that relate to Contracts, including Government
Contracts and Government Subcontracts (as to which the Company's
representations and warranties are made in Section 4.9), (g) that relate to
Taxes (as to which the Company's representations and warranties are made in
Section 4.10), (h) that relate to employee benefit matters (as to which the
Company's representations and warranties are made in Section 4.11), (i) that
relate to compliance with Environmental Laws (as to which the Company's
representations and warranties are made in Section 4.12) or (j) that would not
have, individually or in the aggregate, a material adverse effect on the
business, financial condition, operations or results of operations of the
Company and the Company Subsidiaries taken as a whole.
4.7 Absence of Material Adverse Change. Except as set
forth on Schedule 4.7, since June 28, 1998, there has not been any material
adverse change in the business, financial condition, operations or results of
operations of the Company and the Company Subsidiaries taken as a whole.
Without limiting the generality of the foregoing, since June 28, 1998, the
Company has not taken, and has not caused or permitted any of the Company
Subsidiaries to take, any action of the types described in Section 7.3.
4.8 Litigation and Legal Compliance.
(a) Schedule 4.8(a) sets forth each instance in
which the Company or any of the Company Subsidiaries is (i)
subject to any material unsatisfied judgment, order, decree,
stipulation, injunction or charge or (ii) a party to or, to the
Company's knowledge, is threatened to be made a party to any
material charge, complaint, action, suit, proceeding, hearing
or investigation of or in any court or quasi-judicial or
administrative agency of any federal, state, local or foreign
jurisdiction. There are no judicial or administrative actions,
proceedings or investigations pending or, to the Company's
knowledge, threatened that question the validity of this
Agreement or any action taken or to be taken by the Company or
any of the Sellers in connection with this Agreement which, if
adversely determined, would have a material adverse effect upon
the ability of the Company or any of the Sellers to enter into
or perform its obligations under this Agreement.
(b) Except as set forth on Schedule 4.8(b), to the
Company's knowledge, the Company and each of the Company
Subsidiaries have complied in all material respects with all
Laws to which the Company and the Company Subsidiaries are
subject and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand or notice has
been filed or commenced against or, to the Company's knowledge,
has been threatened against the Company or any of the Company
Subsidiaries alleging any failure to so comply.
4.9 Contract Matters.
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<PAGE> 16
(a) Except for the Contracts listed on Schedule
4.9(a), neither the Company nor any of the Company Subsidiaries
is a party to or otherwise bound by any written or oral (i)
mortgage, indenture, note, installment obligation or other
instrument relating to the borrowing of money in excess of
$100,000, (ii) guarantee of any material obligation (excluding
endorsements of instruments for collection in the ordinary
course of the operation of the Company and the Company
Subsidiaries), (iii) letter of credit, bond or other indemnity
(other than indemnities entered into in connection with
Contracts in the ordinary course of business) in excess of
$100,000, (iv) currency or interest rate swap, collar or hedge
agreement or contract for future delivery of raw materials,
commodities or financial instruments, (v) offset, countertrade
or barter agreement, (vi) Government Contract, Government
Subcontract or other customer contract having a total
unperformed contract value as of the date of this Agreement of
more than $1 million, (vii) agreement for the sale or lease by
the Company or any of the Company Subsidiaries to any Person of
any material amount of its assets, other than the retirement or
other disposition of assets no longer useful to the Company and
the Company Subsidiaries or the sale of finished products and
spare parts in the ordinary course of the operation of the
Company and the Company Subsidiaries, (viii) agreement
requiring the payment by the Company or any of the Company
Subsidiaries to any Person of more than $1 million in any
12-month period for the purchase of goods or services or the
lease of any machinery, equipment or other capital assets, (ix)
agreement providing for the lease or sublease by the Company
(as lessor, sublessor, lessee or sublessee) of any real estate,
(x) distributor, representative, broker or advertising
contract, (xi) collective bargaining agreement, employment
agreement, consulting agreement with any former employee or any
Person providing consulting services outside of the United
States, or agreement providing for severance payments or other
additional rights or benefits (whether or not optional) in the
event of the sale of the Company or any of the Company
Subsidiaries, (xii) joint venture or teaming agreement, (xiii)
license or sublicense agreement (whether as licensor, licensee,
sublicensor or sublicensee) with respect to any material item
of Intellectual Property owned or licensed by the Company or
any of the Company Subsidiaries, (xiv) material agreement
imposing non-competition, confidentiality or exclusive dealing
obligations on the Company or any of the Company Subsidiaries
or, to the Company's knowledge, any officer or employee of the
Company or any of the Company Subsidiaries, (xv) contract
relating to any sale, purchase, merger or consolidation
involving any business or (xvi) agreement presently expected to
result in a pre-Tax loss at completion in excess of $1 million.
(b) General Dynamics has been provided access to
correct and complete copies of each written Contract listed on
Schedule 4.9(a), as amended to date, and a written summary
setting forth the terms and conditions of each oral Contract
referred to on such Schedule. Each such Contract is a valid,
binding and enforceable obligation of the Company and the
Company Subsidiaries, as applicable, and the other party or
parties thereto (subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar
Laws affecting creditors' rights
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<PAGE> 17
and remedies generally and subject as to enforceability to
general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing) and is
in full force and effect. Except as set forth on Schedule
4.9(b), (i) neither the Company or any of the Company
Subsidiaries, as applicable, nor, to the Company's knowledge,
any other party thereto is in material breach of any term of
any Contract listed on Schedule 4.9(a) or has repudiated any
material term of any such Contract, (ii) no event, occurrence
or condition exists which, with the lapse of time or the giving
of notice or both, would become a default under any such
Contract by the Company or any of the Company Subsidiaries, as
applicable, or, to the Company's knowledge, any other party
thereto, (iii) neither the Company nor any of the Company
Subsidiaries has released or waived any material right under
any such Contract (other than settlements and waivers of claims
under Government Contracts and Government Subcontracts in the
usual and ordinary course of business which are consistent
with past practice with respect to aggregate amount).
(c) Except as set forth on Schedule 4.9(c), with
respect to each Government Contract and Government Subcontract
(i) the Company and each of the Company Subsidiaries have
complied in all material respects with all terms and conditions
of such Government Contract or Government Subcontract,
including all clauses, provisions and requirements incorporated
expressly, by reference or by operation of Law therein, (ii)
the Company and each of the Company Subsidiaries have complied
in all material respects with all requirements of all Laws
pertaining to such Government Contract or Government
Subcontract, including where applicable the Cost Accounting
Standards disclosure statement of the Company or such Company
Subsidiary, (iii) all representations and certifications
executed, acknowledged or set forth in or pertaining to such
Government Contract or Government Subcontract were complete and
correct in all material respects as of their effective dates
and the Company and the Company Subsidiaries have complied in
all material respects with all such representations and
certifications, (iv) neither the United States government nor
any prime contractor, subcontractor or other person or entity
has notified the Company or any of the Company Subsidiaries,
either in writing or orally, that the Company or any of the
Company Subsidiaries has breached or violated in any material
respect any Law, representation, clause, provision or
requirement pertaining to such Government Contract or
Government Subcontract, (v) neither the Company nor any of the
Company Subsidiaries has received any notice of termination for
convenience, notice of termination for default, cure notice or
show cause notice pertaining to such Government Contract or
Government Subcontract, (vi) no material cost incurred by the
Company or any of the Company Subsidiaries pertaining to such
Government Contract or Government Subcontract has been
questioned or challenged, is the subject of any audit or
investigation (other than routine audits in the ordinary course
of business) or has been disallowed by any government or
governmental agency and (vii) no material payments due to the
Company or any of the Company Subsidiaries pertaining to such
Government Contract or Government Subcontract has been withheld
or set off, nor has any claim been made to withhold or set off
money, and the Company and the Company
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<PAGE> 18
Subsidiaries are entitled to all progress payments received to
date with respect thereto. The foregoing representations
contained in this Section 4.9(c) will not apply to Government
Contracts or Government Subcontracts that have been fully
performed, closed out and settled and with respect to which the
Company and the Company Subsidiaries have no remaining warranty
or similar obligations.
(d) Except as set forth on Schedule 4.9(d), (i)
neither the Company or any of the Company Subsidiaries nor, to
the Company's knowledge, any of the respective directors,
officers, employees, consultants or agents of the Company or
any of the Company Subsidiaries is or since January 1, 1993 has
been under administrative, civil or criminal investigation,
indictment or information by any government or governmental
agency or any audit or investigation by the Company or any of
the Company Subsidiaries with respect to any alleged act or
omission arising under or relating to any Government Contract
or Government Subcontract and (ii) since January 1, 1993,
neither the Company nor any of the Company Subsidiaries has
conducted or initiated any internal investigation or made a
voluntary disclosure to any government or governmental agency
with respect to any alleged act or omission arising under or
relating to a Government Contract or Government Subcontract.
(e) Except as set forth on Schedule 4.9(e), there
exist (i) no material outstanding claims against the Company or
any of the Company Subsidiaries, either by any government or
governmental agency or by any prime contractor, subcontractor,
vendor or other person or entity, arising under or relating to
any Government Contract or Government Subcontract and (ii) no
material disputes between the Company or any of the Company
Subsidiaries and the United States government under the
Contract Disputes Act or any other federal statute or between
the Company or any of the Company Subsidiaries and any prime
contractor, subcontractor or vendor arising under or relating
to any Government Contract or Government Subcontract. Except
as set forth in Schedule 4.9(e), neither the Company nor any of
the Company Subsidiaries has any interest in any material
pending or potential claim against any government or
governmental agency or any prime contractor, subcontractor or
vendor arising under or relating to any Government Contract or
Government Subcontract.
(f) Except as set forth on Schedule 4.9(f), since
January 1, 1993, neither the Company nor any of the Company
Subsidiaries has been debarred or suspended from participation
in the award of contracts with the United States government or
any other government or governmental agency (excluding for this
purpose ineligibility to bid on certain contracts due to
generally applicable bidding requirements). To the Company's
knowledge, there exist no facts or circumstances that would
warrant the institution of suspension or debarment proceedings
or the finding of nonresponsibility or ineligibility on the
part of the Company, any of the Company Subsidiaries or any of
their respective directors, officers or employees. No payment
has been made by or on behalf of the Company or any of the
Company Subsidiaries in connection with any Government Contract
or Government Subcontract in material violation of
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<PAGE> 19
applicable procurement Laws or in material violation of, or
requiring disclosure pursuant to, the Foreign Corrupt Practices
Act, as amended.
4.10 Tax Matters.
Except as set forth on Schedule 4.10:
(a) The Company and each of the Company
Subsidiaries have timely filed all material Tax Returns that
they were required to file and all such Tax Returns relating to
the Company and the Company Subsidiaries were correct and
complete in all material respects. All material Taxes owed by
the Company or any of the Company Subsidiaries (whether or not
shown on any Tax Return) have been timely paid or reserved for
on the Interim Balance Sheet. Any unpaid Taxes of the Company
or the Company Subsidiaries do not exceed the reserve for Tax
liability (excluding any reserve for deferred Taxes established
to reflect timing differences between book and Tax income) set
forth or included in the Interim Balance Sheet, as adjusted for
the passage of time through the Closing Date in accordance with
past custom and practice of the Company, and the amounts shown
on the Interim Balance Sheet as the deferred income Tax asset
and deferred income Tax liability are not materially overstated
or understated, respectively.
(b) The Company and the Company Subsidiaries have
withheld and paid when due all material Taxes required to have
been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder
or other party.
(c) No material claim with respect to the Company
or any of the Company Subsidiaries has been made, and, to the
Company's knowledge, no such claim is threatened by an
authority in a jurisdiction where the Company or the Company
Subsidiaries does not file Tax Returns that the Company or any
of the Company Subsidiaries is or may be subject to taxation by
that jurisdiction.
(d) Neither the Company nor any of the Company
Subsidiaries is currently the beneficiary of any extension of
time within which to file any Tax Return. Neither the Company
nor any of the Company Subsidiaries has waived any statute of
limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.
(e) There is no material pending or, to the
Company's knowledge, threatened or proposed audit, assessment
or claim concerning any Tax liability of the Company or any of
the Company Subsidiaries (or any of their respective assets,
operations or activities) either claimed or raised by any Tax
authority. Schedule 4.10 lists all federal, state, local and
foreign jurisdictions in which the Company or any of the
Company Subsidiaries has filed income Tax Returns for taxable
periods ended on or after January 1, 1991 (and any other open
Tax years), indicates those Tax Returns that have been audited
and indicates those Tax Returns that currently are the subject
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<PAGE> 20
of audit. General Dynamics has been provided with access to
correct and complete copies of all income Tax Returns,
examination reports and statements of deficiencies assessed
against or agreed to by the Company or any of the Company
Subsidiaries for any taxable period ended on or after January
1, 1993 (and any other open Tax years).
(f) Neither the Company nor any of the Company
Subsidiaries has filed a consent under Section 341(f) of the
Code concerning collapsible corporations. There are no
outstanding rulings of, or requests for rulings with, any Tax
authority expressly addressing the Company or any of the
Company Subsidiaries that are, or if issued would be, binding
upon the Company or any of the Company Subsidiaries after the
First Closing Date. Neither the Company nor any of Company
Subsidiaries has, in a manner that would be binding on the
Company or the Company Subsidiaries after the First Closing
Date (i) executed, become subject to or entered into any
closing agreement pursuant to Section 7121 of the Code or any
similar or predecessor provision thereof under the Code or
other applicable Tax Law or (ii) received approval to make, or
agreed to, a change in accounting method or has any application
pending with any Tax authority requesting permission for any
such change.
(g) Schedule 4.10 sets forth a correct and
complete calculation of all federal, state and local Taxes
required to be withheld by the Company in connection with the
exercise of the Stock Options contemplated by Section 3.3(b).
(h) Each asset with respect to which either the
Company or any of the Company Subsidiaries claims depreciation,
amortization or similar expense for Tax purposes is owned for
Tax purposes by the Company or such Company Subsidiary under
applicable Tax Law. There is no Lien affecting any of the
assets or properties of the Company or any of the Company
Subsidiaries that arose in connection with any failure or
alleged failure to pay any Tax. None of the assets or
properties of the Company or any of the Company Subsidiaries is
required to be or is being depreciated under the alternative
depreciation system under Section 168(g)(2) of the Code or is
subject to Section 168(f) of the Code. No "industrial
development bonds" within the meaning of Section 103 of the
United States Internal Revenue Code of 1954, as amended and in
effect prior to the enactment of the Code, "private activity
bonds" within the meaning of Section 141 of the Code or, except
for benefits claimed by the Company under Section 7518 of the
Code, other Tax-exempt financing has been used directly or
indirectly to finance any assets, whether leased or owned, of
the Company or any of the Company Subsidiaries. Neither the
Company nor any of the Company Subsidiaries owns, directly or
indirectly, any interest in any entity classified as a
partnership for United States federal income Tax purposes.
(i) Neither the Company nor any of the Company
Subsidiaries is a party to any Tax allocation or Tax sharing
agreement. Neither the Company nor any of the Company
Subsidiaries has any liability for the Taxes of any other
person or entity under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign Law), as a
transferee or successor, by contract or otherwise.
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<PAGE> 21
(j) The are no material pending claims for refund
of any Tax of the Company or any of the Company Subsidiaries,
including refunds of Taxes allocable to the Company or any of
the Company Subsidiaries or with respect to consolidated,
combined, unitary, fiscal unity or similar Tax Returns.
(k) Neither the Company nor any of the Company
Subsidiaries has any taxable income or gain as a result of
prior intercompany transactions that has been deferred and that
will be taken into account as a result of the transactions
contemplated by this Agreement.
(l) Neither the Company nor any of the Company
Subsidiaries has an excess loss account (as defined in
Treasury Regulation Section 1.1502-19) with respect to the
stock of any Company Subsidiary.
(m) As to each year for which the statute of
limitations for assessments has not yet expired as to a given
Tax, neither the Company nor any of the Company Subsidiaries is
a member of an affiliated, consolidated, unitary, fiscal unity,
combined or similar Tax group.
(n) The Company is not, and has not been, a United
States real property holding corporation (as defined in Section
897(c)(2) of the Code) during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code.
4.11 Employee Benefit Matters.
(a) Schedule 4.11 lists each material employee
benefit plan constituting an Employee Welfare Benefit Plan,
each employee benefit plan constituting an Employee Pension
Benefit Plan and each other employee benefit plan, program or
arrangement or employment practice (including each employment
agreement, severance agreement, executive compensation
arrangement, incentive program or arrangement, sick leave,
vacation pay and severance pay policy, plant closing benefit,
salary continuation arrangement for disability, consulting or
other compensation arrangement, retirement plan, deferred
compensation plan, "Rabbi" trust, bonus program, stock purchase
arrangement, hospitalization, medical or heath plan, life
insurance plan, voluntary employee benefit association
(intended to qualify under Section 501(c)(9) of the Code),
tuition reimbursement or scholarship program, or plan providing
benefits or payments to employees in the event of a change in
control, change in ownership or sale of all or a substantial
portion of the assets of the Company or any of the Company
Subsidiaries) maintained by the Company or any of the Company
Subsidiaries with respect to any of its current or former
employees or to which the Company or any of the Company
Subsidiaries contributes or is required to contribute with
respect to any of its current or former employees
(collectively, the "Company Plans"). With respect to each
Company Plan and except as set forth on Schedule 4.11(a):
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(i) such Company Plan (and each related
trust, insurance contract or fund) has been
administered in a manner consistent in all material
respects with its written terms and complies in form
and operation in all material respects with the
applicable requirements of ERISA, the Code and other
applicable Laws;
(ii) all required reports and descriptions
(including Form 5500 Annual Reports, Summary Annual
Reports, PBGC-1's and Summary Plan Descriptions) have
been filed or distributed appropriately with respect
to such Company Plan;
(iii) the requirements of Part 6 of Subtitle
B of Title I of ERISA and Section 4980B of the Code
have been met in all material respects with respect to
each such Company Plan which is an Employee Welfare
Benefit Plan;
(iv) all contributions (including all
employer contributions and employee salary reduction
contributions) that are due have been paid to each
such Company Plan and all contributions for any period
ending on or before the Closing Date that are not yet
due have been paid to each such Company Plan or
accrued in accordance with the past custom and
practice of the Company. All premiums or other
payments for all periods ending on or before the
Closing Date have been paid with respect to each such
Company Plan;
(v) each such Company Plan has received a
favorable determination letter from the Internal
Revenue Service and no event has occurred which could
reasonably be expected to cause the loss or denial of
such qualification under Section 401(a) of the Code;
(vi) the market value of assets under each
such Company Plan which is a "defined benefit pension
plan" (other than any Multiemployer Plan or plan that
is exempt from the requirements of Parts 2, 3 and 4 of
Title I of ERISA) equals or exceeds the present value
of all vested and nonvested liabilities thereunder as
of January 1, 1998 determined in accordance with
Pension Benefit Guaranty Corporation methods, factors
and assumptions applicable to an employee pension
benefit plan terminating on the date for
determination;
(vii) General Dynamics has been provided
with correct and complete copies of the plan documents
and summary plan descriptions, the most recent
determination letter received from the Internal
Revenue Service, the most recent Form 5500 Annual
Report, and all related trust agreements, insurance
contracts and other funding agreements that implement
such Company Plan;
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(viii) no Company Plan which is an Employee
Pension Benefit Plan has been amended in any manner
which would require the posting of a security under
Section 401(a)(29) of the Code or Section 307 of
ERISA; and
(ix) neither the Company nor any Company
Subsidiary has communicated to any employee (excluding
internal memoranda to management) any plan or
commitment, whether or not legally binding, to create
any additional material employee benefit plan or
materially modify or change any Company Plan that
would affect any employee or terminated employee of
the Company or any of the Company Subsidiaries in a
material manner.
(b) With respect to each Employee Welfare Benefit
Plan or Employee Pension Benefit Plan that the Company or any
of the Company Subsidiaries maintains or ever has maintained,
or to which any of them contributes, ever has contributed or
ever has been required to contribute:
(i) no such Employee Pension Benefit Plan
(other than any Multiemployer Plan) has been partially
terminated or been the subject of an unreported
reportable event (as defined in Section 4043 of ERISA)
as to which notices would be required to be filed with
the Pension Benefit Guaranty Corporation, and no
proceeding by the Pension Benefit Guaranty Corporation
to terminate such Employee Pension Benefit Plan (other
than any Multiemployer Plan) has been instituted or,
to the Company's knowledge, threatened;
(ii) the Company has no material liability
for any prohibited transactions (as defined in Section
406 of ERISA and Section 4975 of the Code) or for
breach of fiduciary duty or any other failure to act
or comply in connection with the administration or
investment of the assets of such plan with respect to
such plan, and no action, suit, proceeding, hearing or
investigation with respect to the administration or
the investment of the assets of such plan (other than
routine claims for benefits) is pending or, to the
Company's knowledge, threatened; and
(iii) none of the Company or any of the
Company Subsidiaries has incurred, and the Company has
no reason to expect that the Company or any of the
Company Subsidiaries will incur, any material
liability to the Pension Benefit Guaranty Corporation
(other than premium payments) or otherwise under Title
IV of ERISA (including any withdrawal liability) or
under the Code with respect to any such Employee
Pension Benefit Plan.
(c) Neither the Company nor any of the Company
Subsidiaries contributes to or, since January 1, 1993, has
contributed to or been required to contribute to any
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<PAGE> 24
Multiemployer Plan or has any liability (including withdrawal
liability) under any Multiemployer Plan.
(d) Except as set forth on Schedule 4.11(d),
neither the Company nor any of the Company Subsidiaries
maintains or, since January 1, 1993, has maintained,
contributed to or been required to contribute to any Employee
Welfare Benefit Plan providing medical, health, life insurance
or other welfare benefits for current or future retired or
terminated employees, their spouses or their dependents (other
than in accordance with Section 4980B of the Code).
(e) Schedule 4.11(e) includes a workers'
compensation paid loss summary for the calender years 1995
through present on an accident year basis. Schedule 4.11(e)
additionally includes a recent listing of all open workers'
compensation claims showing claimant name, claim number,
description, paid loss, case reserve and incurred loss.
(f) Except as set forth on Schedule 4.11(f), no
Company Plan contains any provision that would prohibit the
transactions contemplated by this Agreement, would give rise to
any severance, termination or other payments as a result of the
transactions contemplated by this Agreement or would cause any
payment, acceleration or increase in benefits provided by any
Company Plan as a result of the transactions contemplated by
this Agreement.
(g) Except as set forth on Schedule 4.11(g), as of
the First Closing Date, the ESOP will have no outstanding loans
or unallocated assets. The ESOP has at all times been operated
in material compliance with the provisions of Sections 401, 409
and 4975 of the Code and Sections 406 and 407 of ERISA and the
regulations promulgated thereunder. The Trustee has been
engaged to act an independent fiduciary on behalf of the ESOP
and the ESOP Administrative Committee with respect to the
transactions contemplated by this Agreement.
(h) Except as set forth on Schedule 4.11(h), no
individual who is classified by the Company as a non-employee
(such as an independent contractor, leased employee or
consultant) is eligible to participate in any Company Plan.
(i) Neither the Company nor any of the Company
Subsidiaries is a party to or otherwise bound by any advance
agreement or similar arrangement with the Department of Defense
or any other Governmental Entity relating to the allowability,
allocation or reimbursement of benefit costs or other matters
in connection with any Company Plan.
4.12 Environmental Matters. Except as set forth on
Schedule 4.12, (a) the Company and the Company Subsidiaries have since
January 1, 1993 complied in all material respects with all Environmental Laws
in connection with the ownership, use, maintenance and operation of all real
property owned or leased by them and otherwise in connection with their current
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or former operations or properties, (b) neither the Company nor any of the
Company Subsidiaries has any material liability, whether contingent or
otherwise, under any Environmental Law with respect to its current or former
operations or properties, (c) no notices of any material violation or alleged
material violation of, material non-compliance or alleged material
non-compliance with or any material liability under, any Environmental Law
relating to the current or former operations or properties of the Company or
any of the Company Subsidiaries have been received by the Company or any of the
Company Subsidiaries since January 1, 1993, (d) there are no administrative,
civil or criminal writs, injunctions, decrees, orders or judgments outstanding
or any administrative, civil or criminal actions, suits, claims, proceedings or
investigations pending or, to the Company's knowledge, threatened, relating to
compliance with or liability under any Environmental Law affecting the Company
or any of the Company Subsidiaries and (e) to the knowledge of the Company, no
material changes or alterations in the practices or operations of the Company
or any of Company Subsidiaries as presently conducted are required in the
future in order to permit the Company and of the Company Subsidiaries to
continue to comply in all material respects with all applicable Environmental
Laws.
4.13 Title and Sufficiency of Assets. Except as set forth
on Schedule 4.13, the Company and the Company Subsidiaries now have and as of
the First Closing Date will have good and marketable title to all of the
material properties and assets purported to be owned by them, free and clear of
all Liens, except for Permitted Liens. All government-owned equipment in the
possession of the Company or any of the Company Subsidiaries is maintained in
all material respects in accordance with a government-approved property
management system. The properties and assets owned and leased by the Company
and the Company Subsidiaries include sufficient tangible personal property to
conduct the business and operations of the Company and the Company Subsidiaries
as presently conducted and as presently proposed to be conducted in all
material respects.
4.14 Real Property.
(a) Schedule 4.14(a) lists and describes in
reasonable detail all real property owned by the Company or any
of the Company Subsidiaries. With respect to each such parcel
of owned real property:
(i) the Company or the applicable Company
Subsidiary has good and marketable title to such
parcel, free and clear of any Lien, easement, covenant
or other restriction, except for installments of
special assessments not yet delinquent and recorded
easements, covenants and other restrictions which do
not individually or in the aggregate materially impair
the current use, occupancy or value, or the
marketability of title, of the property subject
thereto;
(ii) there are no pending or, to the
Company's knowledge, threatened condemnation
proceedings, lawsuits or administrative actions
relating to such property or other matters affecting
adversely the current use, occupancy or value thereof;
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(iii) the legal description for such parcel
contained in the deed thereof describes such parcel
fully and adequately in all material respects, the
buildings and improvements thereon are located within
the boundary lines of the described parcels of land,
are not in material violation of applicable setback
requirements, zoning laws and ordinances (and none of
the properties or buildings or improvements thereon
are subject to "permitted non-conforming use" or
"permitted non-conforming structure" classifications),
and do not materially encroach on any easement which
may burden the land, the land does not serve any
adjoining property for any purpose inconsistent with
the use of the land, and the property is not located
within any flood plain or subject to any similar
restriction for which any Permits necessary to the use
thereof have not been obtained;
(iv) all facilities have received all
material approvals of Governmental Entities (including
all material Permits) required in connection with the
ownership or operation thereof and have been operated
and maintained in all material respects accordance
with all applicable Laws;
(v) there are no material leases,
subleases, licenses, concessions or other agreements,
written or oral, granting to any Person the right of
use or occupancy of any portion of such parcel;
(vi) there are no outstanding options or
rights of first refusal to purchase such parcel, or
any portion thereof or interest therein; and
(vii) there are no parties (other than the
Company and the Company Subsidiaries) in possession of
such parcel, other than tenants under any leases
disclosed in Schedule 4.14 who are in possession of
space to which they are entitled.
(b) Schedule 4.14(b) lists and describes in
reasonable detail all real property leased or subleased to or
by the Company or any of the Company Subsidiaries, including
any real property leased or subleased from any Governmental
Entity. With respect to each lease and sublease listed in
Schedule 4.14(b):
(i) there are no material disputes, oral
agreements or forbearance programs in effect as to the
lease or sublease;
(ii) neither the Company nor any of the
Company Subsidiaries has assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any
interest in the leasehold or subleasehold, except for
Permitted Liens; and
(iii) all facilities leased or subleased
thereunder have received all material approvals of
Governmental Entities (including all material Permits)
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required in connection with the operation thereof and
have been operated and maintained in all material
respects in accordance with all applicable Laws.
4.15 Intellectual Property Matters. The Company and the
Company Subsidiaries own or have the right to use pursuant to valid license,
sublicense, agreement or permission all material items of Intellectual Property
necessary for their operations as presently conducted and as presently proposed
to be conducted. Since January 1, 1993, neither the Company nor any of the
Company Subsidiaries has received any charge, complaint, claim, demand or
notice alleging any material interference, infringement, misappropriation or
violation of the Intellectual Property rights of any third party. To the
Company's knowledge, no third party has materially interfered with, infringed
upon, misappropriated or otherwise come into conflict with any material
Intellectual Property rights of the Company or any of the Company Subsidiaries.
4.16 Labor Matters. Except as set forth on Schedule 4.16,
there are no controversies pending or, to the Company's knowledge, threatened
between the Company or any of the Company Subsidiaries and any of their current
or former employees or any labor or other collective bargaining unit
representing any such employee that could reasonably be expected to result in a
labor strike, dispute, slow-down or work stoppage or otherwise have a material
adverse effect on the business, financial condition, operations or results of
operations of the Company and its Subsidiaries taken as a whole. The Company
is not aware of any organizational effort presently being made or threatened by
or on behalf of any labor union with respect to employees of the Company or any
of the Company Subsidiaries. To the Company's knowledge, no executive, key
employee or group of employees of the Company and its Subsidiaries has any plan
to terminate employment with the Company and the Company Subsidiaries, other
than retirement of employees at normal retirement age.
4.17 Brokers' Fees. Except as set forth on Schedule 4.17,
neither the Company nor any of the Company Subsidiaries has any liability or
obligation to pay any fees or commissions to any financial advisor, broker,
finder or agent with respect to the transactions contemplated by this
Agreement. None of the Sellers has any liability or obligation to pay any fees
or commissions to any financial advisor, broker, finder or agent with respect
to the transactions contemplated by this Agreement for which the Company, any
Company Subsidiary or General Dynamics may have any obligation or
responsibility.
Section 5. Representations and Warranties of the Sellers.
Each Seller, severally and not jointly and severally with any other Seller or
the Company, hereby represents and warrants to General Dynamics that the
statements contained in this Section 5 are correct and complete as of the date
of this Agreement:
5.1 Organization. Such Seller (if not an individual) is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite power and authority to
own the Common Stock owned by it and to carry on its business as presently
being conducted.
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5.2 Authorization of Transaction. Such Seller has full
power and authority and has taken all requisite action to enable it to execute
and deliver this Agreement, to consummate the transactions contemplated hereby
and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement by such Seller will not constitute a violation of
or be in conflict with (a) the trust agreement or other organizational
documents of such Seller (if such Seller is not an individual) or (b) any
agreement or commitment to which such Seller is a party or by which such Seller
or any of its properties is bound or subject. This Agreement constitutes the
valid and legally binding obligation of such Seller, enforceable against such
Seller in accordance with its terms and conditions.
5.3 Ownership. Such Seller, with respect to all shares
of Common Stock indicated on Schedules 3.3 or 3.4 as being held by such Seller
as of the date of this Agreement, holds of record and owns beneficially all of
such shares, free and clear of any restrictions on transfer (other than
restrictions under the Securities Act and applicable state securities Laws),
Taxes, Liens, options, warrants, purchase rights, contracts, commitments,
equities, claims or demands.
5.4 Brokers' Fees. Except as set forth on Schedule 10.4,
such Seller has no liability or obligation to pay any fees or commissions to
any financial advisor, broker, finder or agent with respect to the transactions
contemplated by this Agreement for which the Company, any Company Subsidiary or
General Dynamics may have any obligation or responsibility.
Section 6. Representations and Warranties of General Dynamics.
General Dynamics hereby represents and warrants to the Sellers that the
statements contained in this Section 6 are correct and complete as of the date
of this Agreement:
6.1 Organization. General Dynamics is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite power and authority to
own, lease and operate its properties and to carry on its business as presently
being conducted. General Dynamics is duly qualified to conduct business as a
foreign corporation and is in good standing under the laws of each jurisdiction
where such qualification is required, except where the failure to be so
qualified would not have a material adverse effect on the business, financial
condition, operations or results of operations of General Dynamics and its
subsidiaries taken as a whole. General Dynamics has delivered to the Sellers
correct and complete copies of the charters and bylaws, as presently in effect,
of General Dynamics.
6.2 Authorization of Transaction. General Dynamics has
full corporate power and authority and has taken all requisite corporate action
to enable it to execute and deliver this Agreement, to consummate the
transactions contemplated hereby and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of General
Dynamics enforceable in accordance with its terms and conditions.
6.3 Noncontravention; Consents. Except for the filing of
a Notification and Report Form and related material with the Federal Trade
Commission and the Antitrust Division of the United States Department of
Justice under the HSR Act, neither the execution and delivery of this Agreement
by General Dynamics, nor the consummation by General Dynamics of the
transactions contemplated hereby, will constitute a violation of, be in
conflict with, constitute or
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<PAGE> 29
create (with or without notice or lapse of time or both) a default under, give
rise to any right of termination, cancellation, amendment or acceleration with
respect to, or result in the creation or imposition of any Lien upon any
property of General Dynamics pursuant to (a) the charter or bylaws of General
Dynamics, (b) any Law to which General Dynamics is subject or (c) any
agreement or commitment to which General Dynamics is a party or by which
General Dynamics or any of its properties is bound or subject.
Section 7. Covenants.
7.1 General. Each of the parties will use its reasonable
best efforts to take all action and to do all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by
this Agreement. The Company agrees to take all necessary actions and exercise
its reasonable best efforts to timely obtain for the ESOP the opinion of
Houlihan Lokey Howard & Zukin Financial Advisors, Inc. referred to in Section
8.1(d).
7.2 Notices and Consents. The parties hereto prior to the
First Closing Date will give all notices to third parties and will use their
reasonable best efforts to obtain all material third party consents that are
required in connection with the transactions contemplated by this Agreement.
Neither the Company nor any of the Company Subsidiaries will, without the prior
written consent of General Dynamics, make any material payment or provide any
material benefit, including by means of the amendment or modification of any
Contract, to any Person in order to obtain any such third party consent. Within
five business days following the execution and delivery of this Agreement, the
parties will file Notification and Report Forms and related material with the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice under the HSR Act, will use their reasonable best efforts
to obtain early termination of the applicable waiting period and will make all
further filings pursuant thereto that may be necessary, proper or advisable.
The foregoing will not be deemed to require General Dynamics to enter into any
agreement, consent decree or other commitment requiring General Dynamics or any
of its subsidiaries to divest or hold separate any assets or to take any other
action that would have a material adverse effect on the business, financial
condition, operations, results of operations or prospects of General Dynamics
and its subsidiaries taken as a whole.
7.3 Carry on in Regular Course. Except as expressly
contemplated by this Agreement or as set forth on Schedule 7.3, after the date
of this Agreement through the First Closing Date, the Company will, and will
cause each of the Company Subsidiaries to, conduct its operations in accordance
with its ordinary course of business, consistent with past practice. Without
limiting the generality of the foregoing, from and after the date of this
Agreement through the First Closing Date except as expressly contemplated by
this Agreement or as set forth on Schedule 7.3, without the prior written
consent of General Dynamics, the Company will not, and will not cause or permit
any of the Company Subsidiaries to:
(a) amend its charter or bylaws or file any
certificate of designation or similar instrument with respect
to any shares of its authorized but unissued capital stock;
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<PAGE> 30
(b) authorize or effect any stock split or
combination or reclassification of shares of its capital stock;
(c) declare or pay any dividend or distribution
with respect to its capital stock, issue or authorize the
issuance of any shares of its capital stock (other than in
connection with the exercise of currently outstanding Stock
Options) or any other securities exercisable or exchangeable
for or convertible into shares of its capital stock, or
repurchase, redeem or otherwise acquire for value any shares of
its capital stock or any other securities exercisable or
exchangeable for or convertible into shares of its capital
stock;
(d) merge or consolidate with any entity;
(e) sell, lease or otherwise dispose of any of its
capital assets in excess of $100,000, including any shares of
the capital stock of any of the Company Subsidiaries;
(f) liquidate, dissolve or effect any
recapitalization or reorganization in any form;
(g) acquire any interest in any business (whether
by purchase of assets, purchase of stock, merger or otherwise)
or enter into any joint venture;
(h) create, incur, assume or suffer to exist any
indebtedness for borrowed money (including capital lease
obligations), other than indebtedness existing as of the date
of this Agreement and borrowings under existing credit lines in
the ordinary course of business, consistent with past practice;
(i) create, incur, assume or suffer to exist any
Lien, other than Permitted Liens, affecting any of its material
assets or properties;
(j) except as required as the result of changes in
GAAP, change any of the accounting principles or practices used
by it or revalue in any material respect any of its assets or
properties, other than write-downs of inventory or accounts
receivable in the ordinary course of business, consistent with
past practice;
(k) institute any unusual or novel methods of
manufacture, purchase, sale, lease, management or operation;
(l) except as required under the terms of any
collective bargaining agreement in effect as of the date of
this Agreement, grant any general or uniform increase in the
rates of pay of its employees or grant any general or uniform
increase in the benefits under any bonus or pension plan or
other contract or commitment;
(m) except for any increase required under the
terms of any collective bargaining agreement or consulting or
employment agreement in effect on the date
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of this Agreement, increase the compensation payable or to
become payable to officers, salaried employees with a base
salary in excess of $75,000 per year or agents of the Company
or any of the Company Subsidiaries, increase any bonus,
insurance, pension or other benefit plan, payment or
arrangement made to, for or with any such officers, salaried
employees or agents or make any material loans or advances to
such officers, salaried employees or agents (other than travel
advances in the ordinary course of business);
(n) tender any bid, enter into any contract or
commitment or engage in any transaction, or effect any change
to any program, not in the ordinary course of business,
consistent with past practices;
(o) make, revoke or amend any Tax election,
execute any waiver of restrictions on assessment or collection
of any Tax, or enter into or amend any agreement or settlement
with any Tax authority;
(p) pay, discharge or satisfy any claims,
liabilities or obligations other than the payment, discharge
and satisfaction in the ordinary course of business of
liabilities reflected or reserved for in the consolidated
Financial Statements of the Company or otherwise incurred in
the ordinary course of business, consistent with past practice;
(q) settle or compromise any material pending or
threatened suit, action or proceeding or forgive any material
account receivable (other than settlements and waivers of
claims under Government Contracts and Government Subcontracts
in the usual and ordinary course of business which are
consistent with past practice with respect to aggregate
amount);
(r) commit or omit to take any act that will cause
a termination of or a material breach or default under any
material contract, commitment or obligation to which it is a
party or by which its assets are bound or subject;
(s) fail to comply in its operations in all
material respects with all applicable Laws or as may be
required for the valid and effective consummation of the
transactions contemplated by this Agreement;
(t) enter into any agreement or undertaking
requiring the Company or any of the Company Subsidiaries to
indemnify, defend or provide contribution to any Person in
connection with any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand or notice
relating to or arising out of the transactions contemplated by
this Agreement; or
(u) commit to do any of the foregoing.
7.4 Preservation of Organization. The Company will, and
will cause each of the Company Subsidiaries to, use its reasonable best efforts
to preserve its business organization intact,
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to keep available to the Company and the Company Subsidiaries after the First
and Second Closing Dates the present officers and employees of the Company and
the Company Subsidiaries and to preserve the present relationships with
suppliers and customers and others having business relations with the Company
and the Company Subsidiaries.
7.5 Full Access. Subject to the terms of the
Confidentiality Agreement, the Company will, and will cause each of the Company
Subsidiaries to, permit representatives of General Dynamics to have full access
at all reasonable times to all premises, properties, books, records, contracts,
documents, employees, consultants and advisors of or pertaining to the Company
and the Company Subsidiaries.
7.6 Notice of Developments. The Company will give prompt
written notice to General Dynamics of any material development prior to the
First Closing affecting the Company or any of the Company Subsidiaries. Each
party will give prompt written notice to the other of any material development
affecting the ability of such party to consummate the transactions contemplated
by this Agreement. No such written notice of a material development will be
deemed to have amended any of the Schedules to this Agreement, to have
qualified the representations and warranties contained herein and to have cured
any misrepresentation or breach of warranty that otherwise might have existed
hereunder by reason of such material development.
7.7 Exclusivity. The Sellers, the Company, the Company
Subsidiaries and each of their respective directors, officers, employees,
agents and representatives will immediately cease any discussions or
negotiations presently being conducted with respect to any proposal, whether or
not in writing, made by a party to acquire beneficial ownership (as defined
under Rule 13(d) promulgated under the Securities Exchange Act of 1934, as
amended) of all or a material portion of the assets of, or any material equity
interest in, the Company or any of the Company Subsidiaries pursuant to a
merger, consolidation or other business combination, sale of shares of capital
stock, sale of assets, tender or exchange offer or similar transaction
involving the Company or any of the Company Subsidiaries, including any single
or multi-step transaction or series of related transactions that is structured
to permit such party to acquire beneficial ownership of any material portion of
the assets of, or any material equity interest in, the Company or any of the
Company Subsidiaries (an "Acquisition Proposal"). The Sellers, the Company,
the Company Subsidiaries and each of their respective directors, officers,
employees, agents and representatives will not initiate or solicit, directly or
indirectly, any inquiries with respect to, or the making of, any Acquisition
Proposal or engage in any negotiations or discussions with or furnish any
information or data to any party relating to any Acquisition Proposal. The
Company will promptly provide General Dynamics with a copy of any written
Acquisition Proposal received after the date hereof and a written statement
setting forth in reasonable detail the identity of the party making the
Acquisition Proposal and the terms and conditions in connection with any
non-written Acquisition Proposal received by the Company.
7.8 Public Announcements. General Dynamics and the
Company will consult with one another before issuing any press releases or
otherwise making any public announcements with respect to the transactions
contemplated by this Agreement and, except as may be required by
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applicable Law or by the rules and regulations of the New York Stock Exchange,
will not issue any such press release or make any such announcement prior to
such consultation.
7.9 Actions Regarding Antitakeover Statutes. If any fair
price, moratorium, control share acquisition or other form of antitakeover
statute, rule or regulation is or becomes applicable to the transactions
contemplated by this Agreement, the Board of Directors of the Company will
grant such approvals and take such other actions as may be required so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms and conditions set forth in this Agreement.
7.10 Defense of Orders and Injunctions. In the event
either party becomes subject to any order or injunction of a court of competent
jurisdiction which prohibits the consummation of the transactions contemplated
by this Agreement, each party will use its reasonable best efforts to overturn
or lift such order or injunction.
7.11 Certain Tax Matters. The Company will, and will cause
each of the Company Subsidiaries to, prepare and file on or before the date
when due (taking into account all permitted extensions) all Tax Returns
required to be filed by the Company or any of the Company Subsidiaries on or
prior to the Closing Date and will pay, or will cause the Company Subsidiaries
to pay, all Taxes, including estimated Taxes, due on such Tax Returns or which
are otherwise required to be paid on or prior to the First Closing Date. Such
Tax Returns will be prepared in accordance with the Company's most recent Tax
practices as to Tax elections and methods of accounting. To the extent the
Company or any of the Company Subsidiaries becomes aware of the commencement or
scheduling of any Tax audit, the assessment of any material Tax, the issuance
of any notice of material Taxes due or any bill for collection of any material
payment due for Taxes, or the commencement or scheduling of any other
administrative or judicial proceeding with respect to the determination,
assessment or collection of any Tax of the Company or any of the Company
Subsidiaries, the Company will provide prompt notice to General Dynamics of
such matter setting forth, to the extent known, the nature and amount of the
asserted Tax liability and including copies of any notices or other
documentation received from the applicable Tax authority with respect to such
matter.
7.12 Execution of Option Exercise Agreements by
Optionholders. As promptly as practicable after the date hereof, the Company
and the Management Stockholders will use their reasonable best efforts to
obtain a duly executed Option Exercise Agreement from each of the
Optionholders. In the event any Optionholder for any reason fails to execute
an Option Exercise Agreement on or prior to the First Closing Date, then,
subject to the rights of General Dynamics under Section 8.3(e), the portion of
the Purchase Price payable to such Optionholder and any amounts payable to such
Optionholder pursuant to Section 7.13 will be retained by General Dynamics
pending the execution of an Option Exercise Agreement by such Optionholder and
the sale and assignment to General Dynamics of the shares of Common Stock
underlying the Stock Options held by such Optionholder.
7.13 Payments with Respect to Repurchased Shares. On or
prior to the First Closing Date, the Company will pay to the Sellers and
Optionholders set forth on Schedule 7.13 who
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<PAGE> 34
since December 31, 1997 have had shares of Common Stock or Stock Options
repurchased by the Company an amount equal to $154 per share, or an aggregate
amount equal to $46,118,302.43. The foregoing payments are referred to in
this Agreement collectively as the "Restorative Payments." The releases
provided in Section 10.2 of this Agreement and in Section 5 of the Option
Exercise Agreements executed by the Optionholders have been given as
consideration for the Restorative Payments. The Restorative Payment to be made
to the Trustee will be made to an escrow subject to any agreement that such
Restorative Payment (together with any after-Tax earnings thereon) will be
transferred to the Trustee upon a determination by the IRS that such transfer
and the subsequent allocation of the proceeds thereof pursuant to the
provisions of the ESOP does not adversely affect the qualified status of the
ESOP and that if the Company advises the escrow agent that such a determination
by the IRS cannot be obtained, such proceeds will be distributed outright to
the Persons whose accounts in the ESOP would have been credited if such
Restorative Payment had been made to the Trustee, in the same proportion as if
such Restorative Payment had been made to the Trustee. General Dynamics will
cooperate with the reasonable requests of the Company and its lenders in order
to facilitate the making of the Restorative Payments pursuant to this Section
7.13.
7.14 No Transfers. Except as otherwise expressly
contemplated by this Agreement, no Seller will sell, assign, pledge,
hypothecate, encumber or otherwise transfer any interest in any shares of
Common Stock or Stock Options owned by such Seller as of the date of this
Agreement.
7.15 Indemnification and Insurance.
(a) From and after the First Closing Date, General
Dynamics will cause the Company to indemnify, defend and hold
harmless the present and former directors, officers and
employees of the Company from and against all losses, claims,
damages and expenses (including reasonable attorney's fees and
expenses) arising out of or relating to actions or omissions,
or alleged actions or omissions, occurring prior to the First
Closing Date to the same extent and subject to the same terms
and conditions (including with respect to the advancement of
expenses) provided in the charter and bylaws of the Company and
the Company Subsidiaries as in effect as of the date of this
Agreement or in any existing written agreement between any of
such Persons and the Company or any of the Company
Subsidiaries. The foregoing will not restrict the right of the
Company or any of the Company Subsidiaries on or after the
First Closing Date to amend or modify their respective charters
or bylaws or to amend or terminate any such agreement to modify
or eliminate the indemnification and advancement provisions
contained therein as such provisions relate to actions or
omissions, or alleged actions or admissions, occurring from and
after the First Closing Date.
(b) For a period of five years after the First
Closing Date, General Dynamics will use its reasonable best
efforts to cause to be maintained in effect the policies of
directors and officers liability insurance currently maintained
by the Company with respect to claims arising from or relating
to actions or omissions, or alleged actions or omissions,
occurring prior to the First Closing Date. General
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Dynamics may at its discretion substitute for such policies
currently maintained by the Company directors and officers
liability insurance policies with reputable and financially
sound carriers providing for substantially similar coverage,
including the carriers presently providing directors and
officers liability insurance policies for General Dynamics and
its subsidiaries.
7.16 Certain Corporate Actions. On or prior to the First
Closing Date, (a) the existing Buy-Sell Agreement between the Management
Stockholders and the Company will be terminated and the Company and the Company
Subsidiaries will be released from all further liability thereunder in a manner
reasonably satisfactory to General Dynamics, (b) the term life insurance
policies set forth on Schedule 7.16 will be assigned by the Company to the
Management Stockholders listed as insured party thereunder and the Company will
cancel and terminate all other term life insurance policies insuring the lives
of the Management Stockholders with respect to which the Company is a
beneficiary and (c) the Bylaws of the Company will be amended to eliminate the
restrictions on ownership set forth in Article V, Sections 7(a) and (b)
thereof.
7.17 Amendment or Termination of Company Plans. The
Company will advise General Dynamics prior to amending or terminating any
Company Plan, including the ESOP, and will consult with and provide all
reasonably requested information to General Dynamics in connection with any
such amendment or termination.
Section 8. Conditions to the Obligations of the Parties.
8.1 Conditions to the Obligations of Each Party. The
respective obligations of General Dynamics, and the Company and the Sellers to
consummate the transactions contemplated to be performed by each of them herein
are subject to the satisfaction at or prior to the First Closing Date of each
of the following conditions:
(a) all applicable waiting periods under the HSR
Act will have terminated or expired;
(b) all consents, authorizations, orders and
approvals of or filings with any third party, governmental
commission, board or other regulatory authority required in
connection with the consummation of the transactions
contemplated by this Agreement, including any consent,
authorization, order or approval of or filing with the United
States Department of Transportation, Maritime Administration
relating to the Capital Construction Fund, will have been
obtained or made, except where the failure to obtain or make
such consent, authorization, order, approval or filing would
not, from and after the First Closing Date, have a material
adverse effect on the business, financial condition,
operations, results of operations of the Company and the
Company Subsidiaries taken as a whole;
(c) none of the parties to this Agreement will be
subject to any order or injunction of a court of competent
jurisdiction in the United States which prohibits the
consummation of the transactions contemplated by this
Agreement; and
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<PAGE> 36
(d) the ESOP shall have received the opinion of
Houlihan Lokey Howard & Zukin Financial Advisors, Inc. to the
effect that, as of the First Closing Date, the consideration to
be paid for the shares of Common Stock pursuant to this
Agreement is not less than fair market value and that the
transactions contemplated by this Agreement are fair from a
financial point of view to the ESOP and its participants.
8.2 Conditions to the Obligation of the Company and the
Sellers. The obligation of the Company and the Sellers to consummate the
transactions contemplated to be performed by it herein is subject to the
satisfaction at or prior to the First Closing Date of each of the following
conditions:
(a) the representations and warranties of General
Dynamics set forth in Section 6 will be true and correct in all
material respects at and as of the First Closing Date as though
then made; and
(b) General Dynamics will have in all material
respects performed and complied with all of its obligations
under this Agreement required to be performed by it at or prior
to the First Closing Date.
General Dynamics will furnish the Company with such
certificates and other documents to evidence the satisfaction of the conditions
set forth in this Section 8.2 as the Company may reasonably request.
8.3 Conditions to the Obligation of General Dynamics.
The obligation of General Dynamics to consummate the transactions contemplated
to be performed by it herein is subject to the satisfaction at or prior to the
First Closing Date of each of the following conditions:
(a) the representations and warranties of the
Company and the Sellers set forth in Sections 4 and 5 will be
true and correct in all material respects at and as of the
First Closing Date as though then made;
(b) the Company and each of the Sellers will have
in all material respects performed and complied with all of its
obligations under this Agreement required to be performed by it
at or prior to the First Closing Date;
(c) all of the outstanding shares of the capital
stock of TIMSA held by employees of the Company or the Company
Subsidiaries will have been transferred into the names of the
individuals whom General Dynamics has specified in writing at
least five business days prior to the First Closing Date;
(d) General Dynamics will have received the
resignations, effective as of the First Closing Date, of each
of the directors and officers of the Company and each of the
Company Subsidiaries, other than those whom General Dynamics
has specified in writing at least five business days prior to
the First Closing Date; and
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<PAGE> 37
(e) Optionholders holding not less than 90% of the
outstanding Stock Options will have executed and delivered
Option Exercise Agreements.
The Company will furnish General Dynamics with such
certificates and other documents to evidence the satisfaction of the conditions
set forth in this Section 8.3 as General Dynamics may reasonably request.
Section 9. Termination.
9.1 Termination. This Agreement may be terminated and the
consummation of the transactions contemplated by this Agreement may be
abandoned at any time prior to the First Closing Date:
(a) with the written consent of the General
Dynamics and the Company;
(b) by General Dynamics or the Company if any
court of competent jurisdiction or other governmental agency
has issued a final order, decree or ruling or taken any other
final action restraining, enjoining or otherwise prohibiting
the consummation of the transactions contemplated by this
Agreement, and such order, decree, ruling or other action is or
has become nonappealable;
(c) by General Dynamics if (i) the Company or any
of the Sellers has materially breached any of its
representations or warranties set forth in this Agreement prior
to the First Closing Date, (ii) the Company or any of the
Sellers has materially breached any of its covenants or
agreements contained in this Agreement prior to the First
Closing Date and such breach is not cured within 10 business
days after the date written notice of such breach is given by
General Dynamics or (iii) the First Closing has not occurred on
or before December 31, 1998 (unless the failure of the First
Closing to occur results primarily from General Dynamics
breaching any representation, warranty, covenant or agreement
contained in this Agreement); or
(d) by the Company if (i) General Dynamics has
materially breached any of its representations or warranties
set forth in this Agreement prior to the First Closing Date,
(ii) General Dynamics has materially breached any of its
covenants or agreements contained in this Agreement prior to
the First Closing Date and such breach is not cured within 10
business days after the date written notice of such breach is
given by the Company or (iii) the First Closing has not
occurred on or before December 31, 1998 (unless the failure of
the First Closing to occur results primarily from the Company
breaching any representation, warranty, covenant or agreement
contained in this Agreement).
9.2 Effect of Termination. In the event of the
termination and abandonment of this Agreement pursuant to Section 9.1, this
Agreement will forthwith become void and will be deemed to have terminated
without liability to any party (except for any liability of any party then
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<PAGE> 38
in breach); provided that the provisions of the Confidentiality Agreement and
Section 10.4 will continue in full force and effect notwithstanding such
termination and abandonment.
Section 10. Miscellaneous.
10.1 Survival of Representations. Subject to the
provisions of Section 9.2, the representations and warranties of the Sellers
contained in Section 5 will survive the Closings and will continue in full
force and effect until the third anniversary of the First Closing Date. All
other representations and warranties contained in this Agreement will not
survive the First Closing or the termination of this Agreement.
10.2 Mutual Release.
(a) Effective as of the First Closing Date, the
Sellers, and each of them, on behalf of themselves and all
Persons acting by, through, under or in concert with them, or
any of them, do hereby fully and without limitation release,
acquit and forever discharge the Company, the Company
Subsidiaries, each Company Plan, General Dynamics and each of
their Affiliates, and each of their present and former
officers, directors, shareholders, employees, agents,
fiduciaries, attorneys, representatives, successors and
assigns, of and from all debts, demands, actions, causes of
action, suits, accounts, covenants, contracts, promises,
compensation, agreements (oral or written), damages and any and
all claims (including claims for attorneys' fees and costs) and
liabilities whatsoever of every kind and nature which the
Sellers, individually or collectively, may have, or now claim
to have against, or in the future claim by reason of any
matter, cause or thing whatsoever, from the beginning of time
through and including the First Closing Date, including any
liability or obligation whatsoever relating to or arising out
of the Company's repurchase of shares of Common Stock and Stock
Options since December 31, 1997 or any of the transactions
contemplated by this Agreement; provided that (i) the Sellers
do not hereby release or discharge (A) the Company or the
Company Subsidiaries with respect to any current compensation
or benefits to which the Sellers may be entitled due to their
service as officers and employees of the Company and the
Company Subsidiaries through the First Closing Date or with
respect to any right to indemnification or advancement of
expenses to which the Sellers may be entitled under any
existing contract or pursuant to the charter or bylaws of the
Company or any of the Company Subsidiaries relating to any
action or omission, or alleged action or omission, occurring
prior to the First Closing Date or (B) General Dynamics from
the performance of any of its covenants or agreements contained
in this Agreement and (ii) the Trustee does not hereby release
or discharge the Company from any existing contractual rights
to indemnification from the Company with respect to its duties
as trustee of the ESOP.
(b) Effective as of the First Closing Date,
General Dynamics and the Company, and each of them, on behalf
of themselves, each of the Company Subsidiaries and all Persons
acting by, through, under or in concert with them, or any
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<PAGE> 39
of them, do hereby fully and without limitation release, acquit
and forever discharge the Sellers, and each of them, and each
of their present and former directors, officers, employees,
agents, attorneys, heirs, representatives, successors and
assigns, of and from all debts, demands, actions, causes of
action, suits, accounts, covenants, contracts, promises,
compensation, agreements (oral or written), damages and any and
all claims (including claims for attorneys' fees and costs) and
liabilities whatsoever of every kind and nature which General
Dynamics or the Company, individually or collectively, may
have, or now claim to have against, or in the future claim by
reason of any matter, cause or thing whatsoever, from the
beginning of time through and including the First Closing Date;
provided that General Dynamics does not hereby release or
discharge any of the Sellers from the performance of any of
their covenants or agreements contained in this Agreement.
(c) This Agreement and the releases contained
herein are not to be construed as an admission on the part of
any party of the validity of any contention made or position
taken by any of the parties of any unlawful or wrongful
conduct, or of any liability, or lack thereof, to any other
party, all of which is expressly denied. The parties intend
that this Agreement and the releases contained herein will be
effective as a full and final accord and satisfaction of each
and every released matter. In furtherance of this intention,
they acknowledge they are familiar with Section 1542 of the
Civil Code of the State of California, which provides as
follows:
"A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE
WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR."
The releasing parties respectively waive and
relinquish to the fullest extent possible every right or
benefit which they have or may have under Section 1542 and
under and similar or analogous law or any other applicable
jurisdiction. The parties acknowledge they are aware they may
hereafter discover facts in addition to or different from those
which they now know or believe to be true with respect to the
subject matter of this Agreement. The releasing parties intend
to, and hereby do, release the other parties as described above
from claims which they do not presently know or suspect to
exist at this time. Each party acknowledges and agrees that
each has read this mutual release carefully, understands all of
its terms and agrees to those terms voluntarily.
10.3 No Right of Offset. The Company and General Dynamics
do hereby expressly agree that under no circumstance may either of them
withhold or set off against the Sellers any amounts due at the Second Closing
or otherwise under this Agreement.
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<PAGE> 40
10.4 Expenses. The Company will pay at the First Closing
the legal, investment banking and other fees and expenses incurred by the
Company and the Sellers in connection with the transactions contemplated by
this Agreement to the extent such fees and expenses are set forth on Schedule
10.4. All other fees or expenses incurred by the Company and the Sellers in
connection with the transactions contemplated by this Agreement will be the
several responsibilities of the Management Stockholders. In the event the
transactions contemplated by this Agreement are not consummated, each of the
parties will bear all legal, investment banking and other fees and expenses
incurred by it or on its behalf.
10.5 Remedies. Any party having any rights under any
provision of this Agreement will have all rights and remedies set forth in this
Agreement and all rights and remedies that such party may have been granted at
any time under any other agreement or contract and all of the rights that such
party may have under any law. Any such party will be entitled to enforce such
rights specifically, without posting a bond or other security, to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law.
10.6 Successors and Assigns. No party hereto may assign or
delegate any of such party's rights or obligations under or in connection with
this Agreement without the written consent of each of the other parties hereto;
provided that General Dynamics may without the written consent of the other
parties hereto assign its rights under this Agreement to one or more of its
Affiliates. No assignment by General Dynamics pursuant to the proviso of the
preceding sentence will release General Dynamics from any of its obligations
under this Agreement or waive or release any right or remedy any party may have
against General Dynamics hereunder. All covenants and agreements contained in
this Agreement by or on behalf of any of the parties hereto or thereto will be
binding upon and enforceable against the respective successors and assigns of
such party and will be enforceable by and will inure to the benefit of the
respective successors and permitted assigns of such party.
10.7 Amendment. This Agreement may be amended by the
execution and delivery of a written instrument by or on behalf of General
Dynamics, the Company and the Sellers at any time.
10.8 Extension and Waiver. At any time prior to the First
Closing Date, the parties may extend the time for performance of or waive
compliance with any of the covenants or agreements of the other parties to this
Agreement and may waive any breach of the representations or warranties of such
other parties. No agreement extending or waiving any provision of this
Agreement will be valid or binding unless it is in writing and is executed and
delivered by or on behalf of the party against which it is sought to be
enforced.
10.9 Severability. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
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<PAGE> 41
10.10 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
will constitute one and the same Agreement.
10.11 Descriptive Headings. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.
10.12 Notices. All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when delivered
personally to the recipient or when sent to the recipient by telecopy (receipt
confirmed), one business day after the date when sent to the recipient by
reputable express courier service (charges prepaid) or three business days
after the date when mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications will be sent to General Dynamics, the Company, the ESOP and the
Management Stockholders at the addresses indicated below:
If to General Dynamics: General Dynamics Corporation
3190 Fairview Park Drive
Falls Church, Virginia 22042-4523
Attention: David A. Savner, Esq.
Senior Vice President - Law
Telecopy No: 703/876-3554
With a copy (which
will not constitute
notice) to: Jenner & Block
601 13th Street, N.W.
Washington, D.C. 20005
Attention: Craig A. Roeder, Esq.
Telecopy No: 202/639-6860
If to the Company or any
of the Management
Stockholders: NASSCO Holdings Incorporated
Harbor Drive and 28th Street
San Diego, California 92113
Attention: Richard H. Vortmann
Telecopy No: 619/544-3541
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<PAGE> 42
With a copy (which
will not constitute
notice) to: Latham & Watkins
701 "B" Street
Suite 2100
San Diego, California 92101
Attention: Thomas A. Edwards, Esq.
Telecopy No: 619/696-7419
If to the ESOP: Wells Fargo Bank, N.A.
707 Wilshire Boulevard
MAC 2818-101
Los Angeles, California 90017
Attention: Elyse Weise
Telecopy No: 213/614-2295
With a copy (which
will not constitute
notice) to: Ludwig, Goldberg & Krenzel
50 California Street
36th Floor
San Francisco, California 94111
Attention: Laurence A. Goldberg, Esq.
Telecopy No: 415/433-6496
or to such other address or to the attention of such other party as the
recipient party has specified by prior written notice to the sending party.
10.13 No Third Party Beneficiaries. This Agreement will not
confer any rights or remedies upon any person or entity other than the parties
hereto and their respective successors and permitted assigns.
10.14 Entire Agreement. This Agreement (including the
Confidentiality Agreement and the other documents referred to herein)
constitutes the entire agreement among the parties and supersedes any prior
understandings, agreements or representations by or among the parties, written
or oral, that may have related in any way to the subject matter hereof.
10.15 Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent and no rule of strict construction will be applied against any party.
The use of the word "including" in this Agreement means "including without
limitation" and is intended by the parties to be by way of example rather than
limitation.
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<PAGE> 43
10.16 Incorporation of Schedules. The Schedules identified
in this Agreement are incorporated herein by reference and made a part hereof.
10.17 Attorneys' Fees. In any suit, action or proceeding
brought to seek enforcement of this Agreement or to establish the disputed
rights of any party to this Agreement, in addition to such relief or award as
may be ordered by the court, the prevailing party or parties will be entitled
to recover the reasonable attorneys' fees incurred in connection therewith from
and after the date such suit or action was filed or was otherwise commenced, as
the court will order upon petition of the parties to the proceeding. In the
event that any party or parties prevails as to some but not all claims or
defenses asserted, the award of reasonable attorneys' fees will be determined
by the court according to equitable principles as may be applied by the court
upon petition of the parties to the proceeding.
10.18 GOVERNING LAW. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE SCHEDULES
HERETO WILL BE GOVERNED BY THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF
THE STATE OF DELAWARE.
* * * * *
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<PAGE> 44
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement on the date first written above.
GENERAL DYNAMICS CORPORATION
By /s/ NICHOLAS D. CHABRAJA
-----------------------------------------
Nicholas D. Chabraja
Chairman and Chief Executive Officer
NASSCO HOLDINGS INCORPORATED
By /s/ RICHARD H. VORTMANN
-----------------------------------------
Richard H. Vortmann
Chairman and Chief Executive Officer
WELLS FARGO BANK, N.A., as Trustee of
the NASSCO Holdings Incorporated Employee
Stock Ownership Plan
By /s/
-----------------------------------------
/s/ RICHARD H. VORTMANN
--------------------------------------------
Richard H. Vortmann
/s/ DONALD A. SPANNINGA
-------------------------------------------
Donald A. Spanninga
<PAGE> 45
/s/ FRED N. HALLETT
-------------------------------------------------
Fred N. Hallett, as Trustee under the Trust
Agreement dated as of June 15, 1979
/s/ ALICIA H. HALLETT
------------------------------------------------
Alicia H. Hallett, as Trustee under the Trust
Agreement dated as of June 15, 1979
/s/ ALFRED N. LUTTER
-------------------------------------------------
Alfred N. Lutter, Jr., as Trustee under the Trust
Agreement dated as of January 19, 1988
/s/ RUTH H. LUTTER
-------------------------------------------------
Ruth H. Lutter, as Trustee under the Trust
Agreement dated as of January 19, 1988
