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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 29, 1999
Teledyne Technologies Incorporated
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(Exact name of registrant as specified in its charter)
Delaware 1-15295 25-1843385
- ---------------------------- ------------ -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2049 Century Park East, Los Angeles, California 90067-3101
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:(310) 277-3311
Page 1 of 5 pages.
Exhibit Index on page 5.
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Item 5. Other Events.
On November 29, 1999, Allegheny Teledyne Incorporated, a
Delaware corporation ("ATI"), distributed all of the common stock of Teledyne
Technologies Incorporated, a Delaware corporation (the "Company"), to the
stockholders of ATI in a tax-free transaction. An aggregate of 26,603,102 shares
of common stock, par value $.01, of the Company (the "Company Common Stock")
were distributed in the transaction.
The Company is comprised of certain businesses in the former
Aerospace and Electronics segment of ATI. An Information Statement with respect
to the distribution of the Company Common Stock was mailed to each ATI
stockholder of record as of November 22, 1999. As a result of the distribution
of the Company Common Stock, the Company is a separate publicly-traded company
and the Company Common Stock trades on the New York Stock Exchange under the
symbol "TDY".
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired
None.
(b) Pro forma Financial Information
None.
(c) Exhibits
2.1 Separation and Distribution Agreement by and among Allegheny
Teledyne Incorporated, TDY Holdings, LLC, Teledyne Industries,
Inc. and Teledyne Technologies Incorporated
4.1 Rights Agreement between Teledyne Technologies Incorporated and
ChaseMellon Shareholder Services, L.L.C.
10.1 Tax Sharing and Indemnification Agreement between Allegheny
Teledyne Incorporated and Teledyne Technologies Incorporated
Page 2 of 5 pages.
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10.2 Interim Services Agreement between Allegheny Teledyne Incorporated
and Teledyne Technologies Incorporated
10.3 Employee Benefits Agreement between Allegheny Teledyne
Incorporated and Teledyne Technologies Incorporated
10.4 Trademark License Agreement between Allegheny Teledyne
Incorporated and Teledyne Technologies Incorporated
Page 3 of 5 pages.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Teledyne Technologies Incorporated
(Registrant)
Date: November 30, 1999 By: /s/ John T. Kuelbs
-----------------------
John T. Kuelbs
Senior Vice President,
General Counsel and Secretary
Page 4 of 5 pages.
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EXHIBIT INDEX
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2.1 Separation and Distribution Agreement by and among Allegheny
Teledyne Incorporated, TDY Holdings, LLC, Teledyne Industries,
Inc. and Teledyne Technologies Incorporated
4.1 Rights Agreement between Teledyne Technologies Incorporated and
ChaseMellon Shareholder Services, L.L.C.
10.1 Tax Sharing and Indemnification Agreement between Allegheny
Teledyne Incorporated and Teledyne Technologies Incorporated
10.2 Interim Services Agreement between Allegheny Teledyne Incorporated
and Teledyne Technologies Incorporated
10.3 Employee Benefits Agreement between Allegheny Teledyne
Incorporated and Teledyne Technologies Incorporated
10.4 Trademark License Agreement between Allegheny Teledyne
Incorporated and Teledyne Technologies Incorporated
Page 5 of 5 pages.
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Exhibit 2.1
SEPARATION AND DISTRIBUTION AGREEMENT
BY AND AMONG
ALLEGHENY TELEDYNE INCORPORATED,
TDY HOLDINGS, LLC,
TELEDYNE INDUSTRIES, INC.
AND
TELEDYNE TECHNOLOGIES INCORPORATED
DATED AS OF NOVEMBER 29, 1999
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS................................................................................2
ARTICLE II THE SEPARATION...........................................................................13
2.01. Transfer of Assets and Assumption of Liabilities.....................................13
2.02. Teledyne Technologies Assets.........................................................14
2.03. Teledyne Technologies Liabilities....................................................14
2.04. Termination of Agreements............................................................16
2.05. Documents Relating to Transfer of Real Property Interests
and Tangible Property Located Thereon.............................................16
2.06. Documents Further Evidencing Transfers of Assets and
Assumption of Liabilities.........................................................17
2.07. Other Ancillary Agreements...........................................................17
2.08. Disclaimer of Representations and Warranties.........................................17
2.09. Financing Arrangements...............................................................18
2.10. Governmental Approvals and Consents..................................................18
2.11. Novation of Assumed Teledyne Technologies Liabilities................................19
2.12. Transfer of Brown Assets and Assumption of Brown Liabilities.........................20
2.13. Consummation of Purchase and Sale Agreements;
Interim Contribution..............................................................20
2.14. TI Contribution And Liquidation......................................................20
2.15. Interim Distributions................................................................20
ARTICLE III THE DISTRIBUTION........................................................................20
3.01. The Distribution.....................................................................20
3.02. Actions Prior to the Distribution....................................................20
3.03. Fractional Shares....................................................................21
ARTICLE IV THE PUBLIC OFFERING......................................................................22
4.01. The Public Offering..................................................................22
4.02. Proceeds of the Public Offering......................................................22
4.03. Remedies.............................................................................23
ARTICLE V MUTUAL RELEASES; INDEMNIFICATION..........................................................23
5.01. Release of Pre-Distribution Claims...................................................23
5.02. Indemnification by Teledyne Technologies.............................................25
5.03. Indemnification by ATI...............................................................26
5.04. Indemnification Obligations Net of Insurance Proceeds and Other Amounts..............27
5.05. Procedures for Indemnification of Third Party Claims.................................27
5.06. Additional Matters...................................................................28
5.07. Remedies Cumulative..................................................................29
5.08. Survival of Indemnities..............................................................29
</TABLE>
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<TABLE>
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ARTICLE VI CERTAIN OTHER MATTERS....................................................................29
6.01. Insurance Matters....................................................................29
6.02. Certain Business Matters.............................................................32
6.03. Late Payments........................................................................32
6.04. Certain Governance Matters...........................................................32
ARTICLE VII EXCHANGE OF INFORMATION; CONFIDENTIALITY................................................33
7.01. Agreement for Exchange of Information; Archives......................................33
7.02. Ownership of Information.............................................................33
7.03. Compensation For Providing Information...............................................33
7.04. Record Retention.....................................................................34
7.05. Other Agreements Providing for Exchange of Information...............................34
7.06. Production of Witnesses; Records; Cooperation........................................34
7.07. Confidentiality......................................................................35
7.08. Protective Arrangements..............................................................36
ARTICLE VIII FURTHER ASSURANCES......................................................................36
8.01. Further Assurances...................................................................36
ARTICLE IX TERMINATION..............................................................................37
9.01. Termination..........................................................................37
9.02. Effect of Termination................................................................37
ARTICLE X MISCELLANEOUS.............................................................................37
10.01. Counterparts; Entire Agreement; Corporate Power.....................................37
10.02. Governing Law; Consent to Jurisdiction..............................................38
10.03. Assignability.......................................................................38
10.04. Third Party Beneficiaries...........................................................39
10.05. Notices.............................................................................39
10.06. Severability........................................................................39
10.07. Force Majeure.......................................................................40
10.08. Headings............................................................................40
10.09. Survival of Covenants...............................................................40
10.10. Waivers of Default..................................................................40
10.11. Specific Performance................................................................40
10.12. Amendments..........................................................................40
10.13. Interpretation......................................................................41
10.14. Disputes............................................................................41
10.15. Exclusivity of Tax Sharing Agreement................................................42
</TABLE>
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SEPARATION AND DISTRIBUTION AGREEMENT
THIS SEPARATION AND DISTRIBUTION AGREEMENT, dated as of November 29,
1999, is by and among Allegheny Teledyne Incorporated, a Delaware corporation
("ATI"), TDY Holdings, LLC, a Delaware limited liability company the sole member
of which is ATI ("Holdings"), Teledyne Industries, Inc., a California
corporation and an indirect wholly owned subsidiary of ATI ("TII"), and Teledyne
Technologies Incorporated, a Delaware corporation and wholly owned subsidiary of
TII ("Teledyne Technologies"). Capitalized terms used herein and not otherwise
defined shall have the respective meanings assigned to them in Article I hereof.
WHEREAS, the Board of Directors of ATI has determined that it is in the
best interests of ATI and its stockholders to separate ATI's existing businesses
into three independent businesses; and
WHEREAS, in furtherance of the foregoing, it is appropriate and
desirable to transfer the Teledyne Technologies Assets to Teledyne Technologies
and to cause Teledyne Technologies to assume the Teledyne Technologies
Liabilities, all as more fully described in this Agreement and the Ancillary
Agreements; and
WHEREAS, ATI intends, subject to completion of the transactions
contemplated hereby (including the foregoing transfer of Teledyne Technologies
Assets and assumption of Teledyne Technologies Liabilities) and to the other
terms of this Agreement and to further action by its Board of Directors, to
effect the Distribution; and
WHEREAS, the Form 10 Registration Statement has become effective under
the Exchange Act; and
WHEREAS, ATI has received a private letter ruling from the Internal
Revenue Service to the effect that, among other things, the Distribution will
qualify as a tax-free distribution for federal income tax purposes under Section
355 of the Code; and
WHEREAS, the Distribution is to be followed by the Public Offering; and
WHEREAS, it is expected that, following certain transfers of other
Assets and assignments and assumptions of other Liabilities, ATI will distribute
to its stockholders all of the capital stock of Water Pik Technologies, Inc.
("Water Pik") held directly or indirectly by ATI and that, in connection
therewith, ATI and Water Pik have entered into agreements, including the Water
Pik Separation and Distribution Agreement, to address matters relating to the
Water Pik Distribution; and
WHEREAS, it is appropriate and desirable to set forth the principal
corporate transactions required to effect the Separation, the Distribution and
the Public Offering and certain other agreements that will govern certain
matters relating to the Separation, the Distribution and the Public Offering and
the relationships of ATI and Teledyne Technologies and their respective
Subsidiaries following the Separation and the Distribution;
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NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
For the purpose of this Agreement the following terms shall have the
following meanings:
1.01 ACTION means any demand, action, suit, countersuit, arbitration,
inquiry, proceeding or investigation by or before any federal, state, local,
foreign or international Governmental Authority or any arbitration or mediation
tribunal.
1.02 AFFILIATE of any Person means a Person that controls, is
controlled by, or is under common control with such Person. As used herein,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such entity, whether
through ownership of voting securities or other interests, by contract or
otherwise.
1.03 AGENT means the distribution agent to be appointed by ATI to
distribute to the stockholders of ATI the shares of Teledyne Technologies Common
Stock held by ATI pursuant to the Distribution.
1.04 AGREEMENT means this Separation and Distribution Agreement,
including all of the Schedules hereto.
1.05 ANCILLARY AGREEMENTS means the deeds, lease assignments and
assumptions, leases, subleases and sub-subleases, subscription or contribution
agreements, stock powers, and the supplemental and other agreements and
instruments related thereto contemplated by Article II, including the Brown
Transfer and Assumption Agreement, the Purchase and Sale Agreements, the
Employee Benefits Agreement, the Interim Services Agreement, the License
Agreement, the Patent Assignments and related agreements regarding powers of
attorney and the Tax Sharing Agreement.
1.06 ASSETS means assets, properties and rights (including goodwill),
wherever located (including in the possession of vendors or other third parties
or elsewhere), whether real, personal or mixed, tangible, intangible or
contingent, in each case whether or not recorded or reflected or required to be
recorded or reflected on the books and records or financial statements of any
Person, including the following:
(a) all accounting and other books, records and files whether in paper,
microfilm, microfiche, computer tape or disc, magnetic tape or any other form;
(b) all apparatus, computers and other electronic data processing
equipment, fixtures, machinery, equipment, furniture, office equipment,
automobiles, trucks, rolling stock, vessels, motor vehicles and other
transportation equipment, special and general tools, test devices, prototypes
and models and other tangible personal property;
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(c) all inventories of materials, parts, raw materials, supplies,
work-in-process and finished goods and products;
(d) all interests in real property of whatever nature, including
easements, whether as owner, lessor, sublessor, lessee, sublessee or otherwise;
(e) all interests in any capital stock or other equity interests of any
Subsidiary or any other Person, all bonds, notes, debentures or other securities
issued by any Subsidiary or any other Person, all loans, advances or other
extensions of credit or capital contributions to any Subsidiary or any other
Person and all other investments in securities of any Person;
(f) all license agreements, leases of personal property, open purchase
orders for raw materials, supplies, parts or services, unfilled orders for the
manufacture and sale of products and other contracts, agreements or commitments;
(g) all deposits, letters of credit and performance and surety bonds;
(h) Information, including that prepared by consultants and other
parties;
(i) all domestic and foreign patents, copyrights, trade names, domain
names, trademarks, service marks and registrations and applications for any of
the foregoing, mask works, trade secrets, inventions, other proprietary
information and licenses from third Persons granting the right to use any of the
foregoing ("Intellectual Property");
(j) all computer applications, programs and other software, including
operating software, network software, firmware, middleware, internet web pages,
design software, design tools, systems documentation and instructions;
(k) all cost information, sales and pricing data, customer prospect
lists, supplier records, customer and supplier lists, customer and vendor data,
correspondence and lists, product literature, artwork, design, development and
manufacturing files, vendor and customer drawings, formulations and
specifications, quality records and reports and other books, records, studies,
surveys, reports, plans and documents;
(l) all prepaid expenses, trade accounts and other accounts and notes
receivables;
(m) all rights under contracts or agreements, all claims or rights
against any Person arising from the ownership of any Asset, all rights in
connection with any bids or offers and all related claims, choses in action or
similar rights, whether accrued or contingent, including any claims of
infringement of Intellectual Property against third parties;
(n) all rights as a named insured under insurance policies and all
rights in the nature of insurance, indemnification or contribution;
(o) all licenses, permits, approvals and authorizations which have been
issued by any Governmental Authority;
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(p) cash or cash equivalents, bank accounts, lock boxes and other depos
it agreements; and
(q) interest rate, currency, commodity or other swap, collar, cap or
other hedging or similar agreements or arrangements.
1.07 ATI AUTOMOBILE POLICIES means those ATI Policies that (i) insure
Teledyne Technologies or any other member of the Teledyne Technologies Group,
and (ii) provide automobile insurance.
1.08 ATI COMMON STOCK means the Common Stock, par value $0.10 per
share, of ATI.
1.09 ATI GENERAL LIABILITY POLICIES means those ATI Policies that (i)
insure Teledyne Technologies or any other member of the Teledyne Technologies
Group, and (ii) provide general liability, public liability, or comprehensive
general liability insurance.
1.10 ATI GROUP means ATI and each Person (other than any member of the
Teledyne Technologies Group or the Water Pik Group) that is an Affiliate of ATI
immediately after the Effective Time.
1.11 ATI INDEMNITEES has the meaning set forth in Section 5.02.
1.12 ATI LIABILITIES means all Liabilities of ATI other than Teledyne
Technologies Liabilities and Water Pik Liabilities.
1.13 ATI POLICIES means policies of insurance that have been issued to,
or in favor of, ATI or Subsidiaries of ATI.
1.14 ATI PRODUCT LIABILITY POLICIES means those ATI Policies that (i)
insure Teledyne Technologies or any other member of the Teledyne Technologies
Group, and (ii) provide product liability insurance, other than aircraft
products liability insurance.
1.15 ATI WORKERS COMPENSATION POLICIES means those ATI Policies that
(i) insure Teledyne Technologies or any other member of the Teledyne
Technologies Group, and (ii) provide workers compensation insurance.
1.16 BROWN means Teledyne Brown Engineering, Inc., a Delaware
corporation and wholly owned subsidiary of Teledyne Technologies.
1.17 BROWN ASSETS means those Teledyne Technologies Assets described in
the Brown Transfer and Assumption Agreement.
1.18 BROWN LIABILITIES means those Teledyne Technologies Liabilities
described in the Brown Transfer and Assumption Agreement.
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1.19 BROWN TRANSFER AND ASSUMPTION AGREEMENT means the Asset Transfer
and Liabilities Assumption Agreement, dated as of the date hereof, between
Teledyne Technologies and Brown.
1.20 CODE means the Internal Revenue Code of 1986, as amended.
1.21 COMMISSION means the Securities and Exchange Commission.
1.22 CONSENTS means any consents, waivers or approvals from, or
notification requirements to, any third parties.
1.23 DESIGNATED OFFICERS means, (i) in the case of ATI, the Senior Vice
President, General Counsel and Secretary of ATI or his successor, and (ii) in
the case of Teledyne Technologies, the Senior Vice President, General Counsel
and Secretary of Teledyne Technologies or his successor.
1.24 DGCL means the Delaware General Corporation Law, as amended.
1.25 DISPUTES has the meaning set forth in Section 10.14.
1.26 DISTRIBUTION means the distribution by ATI on a pro rata basis to
holders of ATI Common Stock of all of the outstanding shares of Teledyne
Technologies Common Stock.
1.27 DISTRIBUTION DATE means the date on which the Distribution occurs.
1.28 EFFECTIVE TIME means 12:00 noon, Eastern Standard Time or Eastern
Daylight Time (whichever shall be then in effect), on the Distribution Date.
1.29 EMPLOYEE BENEFITS AGREEMENT means the Employee Benefits Agreement,
dated as of the date hereof, by and between ATI and Teledyne Technologies.
1.30 ENVIRONMENTAL LAW means any federal, state, local, foreign or
international statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, common law (including tort and environmental
nuisance law), legal doctrine, order, judgment, decree, injunction, requirement
or agreement with any Governmental Authority, now or hereafter in effect
relating to health, safety, pollution or the environment (including ambient air,
surface water, groundwater, land surface or subsurface strata) or to emissions,
discharges, releases or threatened releases of any substance currently or at any
time hereafter listed, defined, designated or classified as hazardous, toxic,
waste, radioactive or dangerous, or otherwise regulated, under any of the
foregoing, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of any such substances,
including the Comprehensive Environmental Response, Compensation and Liability
Act, the Superfund Amendments and Reauthorization Act and the Resource
Conservation and Recovery Act and comparable provisions in state, local, foreign
or international law.
1.31 ENVIRONMENTAL LIABILITIES means all Liabilities relating to,
arising out of or resulting from any Environmental Law or contract or agreement
relating to environmental,
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health or safety matters (including all removal, remediation or cleanup costs,
investigatory costs, governmental response costs, natural resources damages,
property damages, personal injury damages, costs of compliance with any
settlement, judgment or other determination of Liability and indemnity,
contribution or similar obligations) and all costs and expenses (including
allocated costs of in-house counsel and other personnel), interest, fines,
penalties or other monetary sanctions in connection therewith.
1.32 EXCHANGE ACT means the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
1.33 EXCLUDED ASSETS has the meaning set forth in Section 2.02(b).
1.34 EXPENSE FACTORS means expense factors or similar factors or
multipliers set forth in policies of insurance or related agreements applicable
to liabilities, losses or defense costs insured thereunder that are subject to a
Self-Insurance Obligation.
1.35 FINANCING FACILITY means the Credit Agreement, dated October 29,
1999, among ATI, Teledyne Technologies, Bank of America, N.A., as Administrative
Agent, Swing Line Lender and Issuing Lender, and the other financial
institutions party thereto, and any substitute or successor credit facility.
1.36 FORM 10 REGISTRATION STATEMENT means the registration statement on
Form 10 filed under the Exchange Act, pursuant to which Teledyne Technologies
Common Stock will be registered under the Exchange Act following the
Distribution, together with all amendments thereto.
1.37 GOVERNMENTAL APPROVALS means any notices, reports or other filings
to be made, or any consents, registrations, approvals, permits or authorizations
to be obtained from, any Governmental Authority.
1.38 GOVERNMENTAL AUTHORITY shall mean any federal, state, local,
foreign or international court, government, department, commission, board,
bureau, agency, official or other regulatory, administrative or governmental
authority.
1.39 GROUP means the ATI Group, the Teledyne Technologies Group or the
Water Pik Group, as the context requires.
1.40 INCURRED LOSSES means the sum of paid losses (indemnity and loss
adjustment expenses) and reserves for unpaid losses.
1.41 INDEMNIFYING PARTY has the meaning set forth in Section 5.04(a).
1.42 INDEMNITEE has the meaning set forth in Section 5.04(a).
1.43 INDEMNITY PAYMENT has the meaning set forth in Section 5.04(a).
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1.44 INDUSTRIES INTERNATIONAL means Teledyne Industries International,
Inc., a California corporation.
1.45 INDUSTRIES STOCK INTERESTS means an 83% common stock interest in
Ensambles de Precision, S.A. de C.V.
1.46 INFORMATION means information, whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
analyses, techniques, designs, specifications, drawings, blueprints, diagrams,
models, operating and maintenance manuals, prototypes, samples, flow charts,
data, computer data, disks, diskettes, tapes, computer programs or other
software, marketing plans, customer names, communications by or to attorneys
(including attorney-client privileged communications), memos and other materials
prepared by attorneys or under their direction (including attorney work
product), and other technical, financial, employee or business information or
data, whether prepared by or for any affected party.
1.47 INFORMATION STATEMENT means the Information Statement forming a
part of the Form 10 Registration Statement to be mailed to holders of ATI Common
Stock in connection with the Distribution.
1.48 INITIAL MEDIATION PERIOD has the meaning set forth in Section
10.14.
1.49 INSURANCE POLICIES means the insurance policies written by
insurance carriers unaffiliated with ATI pursuant to which Teledyne Technologies
or one or more of its Subsidiaries (or their respective officers or directors)
will be insured parties after the Effective Time.
1.50 INSURANCE PROCEEDS means those monies:
(a) received by an insured from an insurance carrier;
(b) paid by an insurance carrier on behalf of the insured; or
(c) received (including by way of set off) from any third party in the
nature of insurance, contribution or indemnification in respect of any
Liability;
in any such case net of any applicable premium adjustments (including reserves
and retrospectively rated premium adjustments) and net of any costs or expenses
(including allocated costs of in-house counsel and other personnel) incurred in
the collection thereof.
1.51 INTERIM SERVICES AGREEMENT means the Interim Services Agreement,
dated as of the date hereof, by and between ATI and Teledyne Technologies.
1.52 LIABILITIES means any and all losses, claims, charges, debts,
demands, actions, causes of action, suits, damages, obligations, payments, costs
and expenses, sums of money, accounts, reckonings, bonds, specialties,
indemnities and similar obligations, exonerations,
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covenants, contracts, controversies, agreements, promises, doings, omissions,
variances, guarantees, make whole agreements and similar obligations, and other
liabilities, including all contractual obligations, whether absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, and including those arising under
any law, rule, regulation, Action, threatened or contemplated Action (including
the costs and expenses of demands, assessments, judgments, settlements and
compromises relating thereto and reasonable attorneys' fees and any and all
costs and expenses (including allocated costs of in-house counsel and other
personnel), whatsoever incurred in investigating, preparing or defending against
any such Actions or threatened or contemplated Actions), order or consent decree
of any Governmental Authority or any award of any arbitrator or mediator of any
kind, and those arising under any contract, commitment or undertaking, including
those arising under this Agreement or any Ancillary Agreement, in each case,
whether or not recorded or reflected or required to be recorded or reflected on
the books and records or financial statements of any Person.
1.53 LICENSE AGREEMENT means the Trademark License Agreement, dated as
of the date hereof, by and between TII and Teledyne Technologies.
1.54 NYSE means The New York Stock Exchange, Inc.
1.55 NON-TELEDYNE TECHNOLOGIES ASSETS means any Assets of ATI or any of
its Affiliates (including any member of the Water Pik Group) other than the
Teledyne Technologies Assets.
1.56 PATENT ASSIGNMENTS means the Patent Assignments, effective as of
the Distribution, executed and delivered by TTI to Teledyne Technologies.
1.57 PER CASE MAXIMUM means (i) with respect to any single occurrence
covered under ATI General Liability Policies, ATI Product Liability Policies,
and ATI Automobile Policies, $100,000 (inclusive of indemnity and loss
adjustment expenses multiplied by applicable Expense Factors) and (ii) with
respect to any single occurrence covered by ATI Workers Compensation policies,
$150,000 (inclusive of indemnity and loss adjustment expenses multiplied by
applicable Expense Factors).
1.58 PERSON means an individual, a general or limited partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability entity, any other entity and any Governmental Authority.
1.59 POOLED LOSS COSTS ALLOCABLE TO TELEDYNE TECHNOLOGIES means the
share allocated to Teledyne Technologies by virtue of its participation in a
pooling arrangement among ATI divisions applicable to claims that (i) are
covered under ATI General Liability Policies, ATI Product Liability Policies,
ATI Automobile Policies, and ATI Workers Compensation Policies; (ii) exceed the
Per Case Maximum; and (iii) are within a policy's deductible or other form of
self-insurance, which allocation to Teledyne Technologies will be based upon the
same or substantially similar to those factors as have been applied immediately
before the Distribution Date.
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1.60 PRIME RATE means the rate which PNC Bank, N.A., Pittsburgh,
Pennsylvania (or any successor thereto or other commercial bank agreed to by the
parties hereto) announces from time to time as its prime lending rate, as in
effect from time to time.
1.61 PUBLIC OFFERING means the underwritten public offering by Teledyne
Technologies of shares of Teledyne Technologies Common Stock pursuant to the
Public Offering Registration Statement and as contemplated by the Tax Sharing
Agreement.
1.62 PUBLIC OFFERING REGISTRATION STATEMENT means the registration
statement to be filed by Teledyne Technologies under the Securities Act of 1933,
as amended, pursuant to which the offering and sale of shares of Teledyne
Technologies Common Stock to be issued in the Public Offering will be
registered, together with all amendments thereto.
1.63 PURCHASE AND SALE AGREEMENTS means (i) the Purchase and Sale
Agreement, dated as of the date hereof, between Brown and Teledyne
Environmental, (ii) the Purchase and Sale Agreement, dated as of the date
hereof, between Teledyne Ltd. and Teledyne Limited, (iii) the Purchase and Sale
Agreement, dated as of the date hereof, between Teledyne Technologies and
Industries International, and (iv) the Purchase and Sale Agreement, dated as of
the date hereof, between Industries International and Teledyne Investment.
1.64 RECORD DATE means the close of business on the date determined by
the ATI Board of Directors as the record date for determining stockholders of
ATI entitled to receive shares of Teledyne Technologies Common Stock in the
Distribution.
1.65 RIGHTS means the Rights to be distributed by Teledyne Technologies
in respect of Teledyne Technologies Common Stock in accordance with Section 3.02
hereof and pursuant to the Rights Agreement between Teledyne Technologies and
ChaseMellon Shareholder Services, L.L.C.
1.66 RULING REQUEST means the request for ruling (including all
exhibits), as amended and supplemented, under Section 355 and other provisions
of the Code, originally filed on behalf of ATI on April 6, 1999 in respect of
the Distribution.
1.67 SECURITY INTEREST means any mortgage, security interest, pledge,
lien, charge, claim, option, right to acquire, voting or other restriction,
right-of-way, covenant, condition, easement, encroachment, restriction on
transfer, or other encumbrance of any nature whatsoever.
1.68 SELF INSURANCE OBLIGATION means an obligation by one or more
insureds to pay or reimburse to the issuers of an insurance policy (whether by
way of deductible, retrospective premium, premium adjustment, self-insured
retention or other form of self-insurance), indemnity, allocated loss expense,
and other proceeds multiplied by Expense Factors, if any.
1.69 SEPARATION means the transfer of the Teledyne Technologies Assets
to Teledyne Technologies and its
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Subsidiaries and the assumption by Teledyne Technologies and its Subsidiaries of
the Teledyne Technologies Liabilities, all as more fully described in this
Agreement and the Ancillary Agreements.
1.70 SUBSIDIARY of any Person means any corporation or other
organization whether incorporated or unincorporated of which at least a majority
of the securities or interests having by the terms thereof ordinary voting power
to elect at least a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such Person or by any one or more
of its Subsidiaries, or by such Person and one or more of its Subsidiaries;
provided, however that no Person that is not directly or indirectly wholly owned
by any other Person shall be a Subsidiary of such other Person unless such other
Person controls, or has the right, power or ability to control, that Person.
1.71 TAX SHARING AGREEMENT means the Tax Sharing and Indemnification
Agreement, dated as of the date hereof, as the same may be amended, by and
between ATI and Teledyne Technologies.
1.72 TAXES has the meaning set forth in the Tax Sharing Agreement.
1.73 TELEDYNE ENVIRONMENTAL means Teledyne Environmental, Inc., a
California corporation wholly owned by TI.
1.74 TELEDYNE ENVIRONMENTAL ASSETS means those certain assets of
Teledyne Environmental described in the Purchase and Sale Agreement, dated as of
the date hereof, between Brown and Teledyne Environmental.
1.75 TELEDYNE INVESTMENT means Teledyne Investment, Inc., a Delaware
corporation.
1.76 TELEDYNE LIMITED means TDY Limited, a company organized under the
laws of the United Kingdom and an indirect wholly owned subsidiary of TI.
1.77 TELEDYNE LIMITED ASSETS means those certain assets of Teledyne
Limited described in the Purchase and Sale Agreement, dated as of the date
hereof, between TDY Limited and Teledyne Limited.
1.78 TELEDYNE LTD means Teledyne Limited, a corporation organized under
the laws of the United Kingdom and wholly owned by Teledyne Technologies.
1.79 TELEDYNE TECHNOLOGIES ASSETS has the meaning set forth in Section
2.02(a).
1.80 TELEDYNE TECHNOLOGIES BALANCE SHEET means the consolidated balance
sheet of Teledyne Technologies, including the notes thereto, as of September 30,
1999.
1.81 TELEDYNE TECHNOLOGIES BUSINESS means the business and operations
of the divisions and Subsidiaries of TI or TII comprising Teledyne Electronic
Technologies,
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Teledyne Brown Engineering, Teledyne Continental Motors and Teledyne Cast Parts
and any business or operation conducted by Teledyne Technologies or any
Affiliate of Teledyne Technologies at any time on or after the Distribution
Date.
1.82 TELEDYNE TECHNOLOGIES COMMON STOCK means the Common Stock, $.01
par value per share, of Teledyne Technologies and, after the distribution of
Rights referred to in Section 3.02, shall include the associated Rights.
1.83 TELEDYNE TECHNOLOGIES CONTRACTS means the following contracts and
agreements to which TII or any of its Affiliates is a party or by it or any of
its Affiliates or any of their respective Assets is bound, whether as of the
date hereof or prior to or at the Effective Time, and whether or not in writing,
except for any such contract or agreement that is expressly contemplated to be
retained by any member of the ATI Group pursuant to any provision of this
Agreement or any Ancillary Agreement:
(a) any contract or agreement entered into in the name of, or
expressly on behalf of, any division, business unit or member of the Teledyne
Technologies Group;
(b) any contract or agreement that relates exclusively to the Teledyne
Technologies Business;
(c) federal, state and local government and other contracts and
agreements that relate exclusively to the Teledyne Technologies Business;
(d) any contract or agreement representing capital or operating
equipment lease obligations reflected on the Teledyne Technologies Balance
Sheet, including obligations as lessee under those contracts or agreements
listed on Schedule 1.83(d) (as such Schedule may be supplemented after the date
hereof and prior to the Effective Time to assign capital and operating equipment
lease obligations that relate exclusively to the Teledyne Technologies Business
and that were, are or may be executed and delivered after the date of the
Teledyne Technologies Balance Sheet);
(e) any contract or agreement that is otherwise expressly contemplated
pursuant to this Agreement or any of the Ancillary Agreements to be assigned to
Teledyne Technologies or any member of the Teledyne Technologies Group;
(f) any guarantee, indemnity, representation, warranty or other
Liability of any member of the Teledyne Technologies Group or the ATI Group in
respect of any other Teledyne Technologies Contract, any Teledyne Technologies
Liability or the Teledyne Technologies Business (including guarantees of
financing incurred by customers or other third parties in connection with
purchases of products or services from the Teledyne Technologies Business); and
(g) the contracts, agreements and other documents listed or described
on Schedule 1.83(g).
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1.84 TELEDYNE TECHNOLOGIES GROUP means Teledyne Technologies, each
Subsidiary of Teledyne Technologies and each other Person that is contemplated
to be controlled directly or indirectly by Teledyne Technologies as of the
Effective Time.
1.85 TELEDYNE TECHNOLOGIES INDEMNITEES has the meaning set forth in
Section 5.03(a).
1.86 TELEDYNE TECHNOLOGIES LIABILITIES has the meaning set forth in
Section 2.03.
1.87 THIRD PARTY CLAIM has the meaning set forth in Section 5.05(a).
1.88 TI means Teledyne, Inc., a Delaware corporation, and its
successors and assigns.
1.89 TI LIQUIDATION means the dissolution and liquidation of TI in
accordance with applicable provisions of the DGCL and Section 332 of the Code,
as a result of which Holdings will own all of the outstanding capital stock of
TII.
1.90 TRADEMARK, SERVICE MARK AND TRADE DRESS ASSIGNMENT means the
Trademark, Service Mark and Trade Dress Assignment, dated as of the date hereof,
by TII to Teledyne Technologies.
1.91 UNDERWRITERS means the managing underwriters for the Public
Offering.
1.92 UNDERWRITING AGREEMENT means an underwriting agreement in
customary form to be entered into among Teledyne Technologies and the
Underwriters with respect to the Public Offering.
1.93 UNPAID LOSSES means liabilities and losses, including indemnity
payments and allocated loss expenses, that are subject to a Self Insurance
Obligation and that, as of the Distribution Date have not been paid by Teledyne
Technologies or a member of Teledyne Technologies Group and that do not appear
on Schedule 1.93.
1.94 WATER PIK COMMON STOCK means the Common Stock, par value $.01 per
share, of Water Pik.
1.95 WATER PIK DISTRIBUTION means the distribution by ATI on a pro rata
basis to holders of ATI Common Stock of all of the outstanding shares of Water
Pik Common Stock owned by ATI.
1.96 WATER PIK GROUP means Water Pik, each Subsidiary of Water Pik and
each other Person that is contemplated to be controlled directly or indirectly
by Water Pik at the time of the Water Pik Distribution.
1.97 WATER PIK LIABILITIES has the meaning assigned to that term in the
Water Pik Separation and Distribution Agreement.
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1.98 WATER PIK SEPARATION AND DISTRIBUTION AGREEMENT means the
Separation and Distribution Agreement, dated as of the date hereof, among ATI,
Holdings, TII and Water Pik.
1.99 YEAR 2000 COMPLIANT means, with respect to an Asset, that such
Asset will (i) accurately process date/time data (including, but not limited to,
calculating, comparing, sorting, sequencing and calendar generation), including
single century formulas and multi-century formulas, from, into and between the
twentieth and twenty-first centuries and the years 1999 and 2000, including leap
year calculations, and will not malfunction or generate incorrect values or
invalid results involving such dates/times; (ii) accurately interface with other
systems, as appropriate, in order to supply, receive or process dates/times and
other data, to the extent that other information technology properly exchanges
data with it; (iii) provide that date/time-related functionalities, date/time
fields and any user input interfaces include a four digit year format and/or
other indication of century, as applicable; and (iv) not cause any other Asset
that is otherwise Year 2000 Compliant to fail to be Year 2000 Compliant.
ARTICLE II
THE SEPARATION
2.01 TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES. (a) TII hereby
assigns, transfers, conveys and delivers to Teledyne Technologies, and agrees to
cause its applicable Subsidiaries to assign, transfer, convey and deliver to
Teledyne Technologies, and Teledyne Technologies hereby accepts from TII and its
Subsidiaries, in each case effective as of the Effective Time, all of TII's and
its applicable Subsidiaries' respective right, title and interest in all
Teledyne Technologies Assets.
(b) Effective as of the Effective Time, Teledyne Technologies hereby
assumes and agrees faithfully to perform, satisfy, discharge and fulfill all the
Teledyne Technologies Liabilities in accordance with their respective terms.
Teledyne Technologies shall be responsible for all Teledyne Technologies
Liabilities, regardless of when or where such Liabilities arose or arise or
whether the facts on which they are based occurred prior to or subsequent to the
date hereof, regardless of where or against whom such Liabilities are asserted
or determined or whether asserted or determined prior to the date hereof, and
regardless of whether arising from or alleged to arise from negligence,
recklessness, violation of law, fraud or misrepresentation (whether based on
tort, contract, statute or otherwise) by any member of the ATI Group or the
Teledyne Technologies Group or any of their respective directors, officers,
employees, agents, Subsidiaries or Affiliates.
(c) In the event that at any time or from time to time after the
Distribution Date any party hereto (or any member of such party's respective
Group), shall receive or otherwise possess any Asset that is allocated to any
other Person pursuant to this Agreement or any Ancillary Agreement, such party
or member shall promptly transfer, or cause to be transferred, such Asset to the
Person so entitled thereto. Prior to any such transfer, the Person receiving or
possessing such Asset shall hold such Asset in trust for any such other Person.
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2.02 TELEDYNE TECHNOLOGIES ASSETS. (a) For purposes of this Agreement,
"Teledyne Technologies Assets" shall mean (without duplication):
(i) all Assets reflected in the Teledyne Technologies Balance
Sheet as Assets of Teledyne Technologies and its Subsidiaries, subject
to any dispositions of any such Assets subsequent to the date of the
Teledyne Technologies Balance Sheet;
(ii) all Assets acquired by or for the exclusive benefit of
Teledyne Technologies subsequent to the date of the Teledyne
Technologies Balance Sheet and prior to the Effective Time that would
have been reflected in the Teledyne Technologies Balance Sheet as
Assets of Teledyne Technologies had they been owned on the date of the
Teledyne Technologies Balance Sheet;
(iii) subject to Section 6.01, any rights of any member of the
Teledyne Technologies Group under any of the Insurance Policies,
including any rights thereunder arising after the Distribution Date in
respect of any Insurance Policies that are occurrence policies; and
(iv) (A) any Assets that any Ancillary Agreement contemplates
will be transferred to any member of the Teledyne Technologies Group,
(B) any Teledyne Technologies Contracts and (C) all issued and
outstanding capital stock of the Subsidiaries, the partnership
interests and other Assets of TII listed on Schedule 2.02(a)(iv).
Notwithstanding the foregoing, the Teledyne Technologies Assets shall not in any
event include the Excluded Assets referred to in Section 2.02(b) below.
(b) For the purposes of this Agreement, "Excluded Assets" shall mean:
(i) the Assets listed or described on Schedule 2.02(b)(i); and
(ii) any and all Assets that are expressly contemplated by
this Agreement or any Ancillary Agreement (or the Schedules hereto or
thereto) as Assets to be retained by ATI or any other member of the ATI
Group (including the Water Pik Group).
(c) Teledyne Technologies acknowledges and agrees that the Assets
reflected as Teledyne Technologies Assets in the Teledyne Technologies Balance
Sheet are so reflected based on the books and records maintained, and other
information supplied, by Teledyne Technologies personnel, and that the Teledyne
Technologies Assets constitute all of the Assets necessary to operate the
Teledyne Technologies Business as presently conducted.
2.03 TELEDYNE TECHNOLOGIES LIABILITIES. For the purposes of this
Agreement, "Teledyne Technologies Liabilities" shall mean (without duplication):
(i) any and all Liabilities that are expressly contemplated by this
Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as
Liabilities to be assumed by Teledyne Technologies or any member of the Teledyne
Technologies Group, and all agreements,
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obligations and Liabilities of any member of the Teledyne Technologies Group
under this Agreement or any of the Ancillary Agreements;
(ii) all Liabilities, including any employee-related Liabilities and
Environmental Liabilities, relating to, arising out of or resulting from:
(A) the operation of the Teledyne Technologies Business as
conducted at any time prior to, at or after the Effective Time
(including any Liability relating to, arising out of or resulting from
the design, manufacture and sale of products or services of the
Teledyne Technologies Business or from any act or failure to act by any
director, officer, employee, agent or representative of any Person
(whether or not such act or failure to act is or was within such
Person's authority));
(B) the operation of any business conducted by any member of
the Teledyne Technologies Group at any time after the Effective Time
(including any Liability relating to, arising out of or resulting from
any act or failure to act by any director, officer, employee, agent or
representative of any Person (whether or not such act or failure to act
is or was within such Person's authority)); or
(C) any Teledyne Technologies Assets (including any Teledyne
Technologies Contracts and any real property and leasehold interests)
or ownership of any Teledyne Technologies Assets at any time prior to,
at or after the Effective Time;
in any such case whether arising before, on or after the Effective Time,
including, without limitation, the matters listed or described on Schedule
2.03(ii);
(iii) all Liabilities relating to, arising out of or resulting from the
Financing Facility;
(iv) all Liabilities reflected as liabilities or obligations of
Teledyne Technologies in the Teledyne Technologies Balance Sheet, subject to any
discharge of such Liabilities subsequent to the date of the Teledyne
Technologies Balance Sheet, and all liabilities or obligations of Teledyne
Technologies incurred subsequent to the date of the Teledyne Technologies
Balance Sheet that would have been reflected in the Teledyne Technologies
Balance Sheet had they been incurred as of the date of the Teledyne Technologies
Balance Sheet;
(v) any Liabilities relating to, arising out of or resulting from any
infringement of any intellectual property of any third party, including but not
limited to patent rights, trademark and service mark rights (registered and
common law), trade dress rights, copyrights, misappropriation of trade secret,
based upon or resulting from the operation of the Teledyne Technologies Business
and regardless of whether said infringement occurred prior to, on or after the
Distribution Date;
(vi) all obligations of ATI or Teledyne Technologies under the advance
agreement made and entered into the 15th day of July, 1999, by and between the
United States Department of Defense on behalf of the United States of America
and ATI and any other advance agreements that such parties may enter into prior
to the Distribution Date;
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(vii) any and all guarantees by ATI or any member of the ATI Group of
obligations to assure payment or performance by or other Liabilities of the
Teledyne Technologies Group or the Teledyne Technologies Business; and
(viii) any Liabilities relating to, arising out of, or resulting from
any of the Teledyne Technologies Assets and any products manufactured by the
Teledyne Technologies Business that are not Year 2000 Compliant.
2.04 TERMINATION OF AGREEMENTS. (a) Except as set forth in Section
2.04(b), in furtherance of the releases and other provisions of Section 5.01
hereof, effective as of the Effective Time, Teledyne Technologies and each
member of the Teledyne Technologies Group, on the one hand, and each of ATI and
the respective members of the ATI Group, on the other hand, hereby terminate any
and all agreements, arrangements, commitments or understandings, whether or not
in writing, between or among Teledyne Technologies and/or any member of the
Teledyne Technologies Group, on the one hand, and ATI or any member of the ATI
Group, on the other hand, including (except as set forth in Schedule 2.04(a))
any intercompany accounts payable or accounts receivable accrued as of the
Effective Time that are reflected in the books and records of the parties or
otherwise documented in writing in accordance with past practices; provided,
however, to the extent that the termination of any such agreement, arrangement,
commitment or understanding is inconsistent with any Ancillary Agreement, such
termination shall be effective as of the date of effectiveness of the applicable
Ancillary Agreement. No such terminated agreement, arrangement, commitment or
understanding (including any provision thereof which purports to survive
termination) shall be of any further force or effect after the Effective Time
(or, to the extent contemplated by the proviso to the immediately preceding
sentence, after the effective time of the applicable Ancillary Agreement). Each
party shall, at the reasonable request of any other party, take, or cause to be
taken, such other actions as may be necessary to effect the foregoing.
(b) The provisions of Section 2.04(a) shall not apply to any of the
following agreements, arrangements, commitments or understandings (or to any of
the provisions thereof): (i) this Agreement and the Ancillary Agreements (and
each other agreement or instrument expressly contemplated by this Agreement or
any Ancillary Agreement to be entered into by any of the parties hereto or any
of the members of their respective Groups); (ii) any agreements, arrangements,
commitments or understandings listed or described on Schedule 2.04(b)(ii); (iii)
any agreements, arrangements, commitments or understandings to which any Person
other than the parties hereto and their respective Affiliates is a party (it
being understood that to the extent that the rights and obligations of the
parties and the members of their respective Groups under any such agreements,
arrangements, commitments or understandings constitute Teledyne Technologies
Assets or Teledyne Technologies Liabilities, they shall be assigned and assumed
pursuant to Section 2.01); and (iv) any other agreements, arrangements,
commitments or understandings that this Agreement or any Ancillary Agreement
expressly contemplates will survive the Effective Time.
2.05 DOCUMENTS RELATING TO TRANSFER OF REAL PROPERTY INTERESTS AND
TANGIBLE PROPERTY LOCATED THEREON. In furtherance of the assignment, transfer
and conveyance of Teledyne Technologies Assets and the assumption of
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Teledyne Technologies Liabilities set forth in Section 2.01(a) and (b),
simultaneously with the execution and delivery hereof or as promptly as
practicable thereafter, each of TII and Teledyne Technologies or their
applicable Subsidiaries is executing and delivering or will execute and deliver
such deeds, lease assignments and assumptions, leases, subleases and
sub-subleases as may be necessary to effectively transfer any real property and
leasehold interests forming part of the Teledyne Technologies Assets and conform
to any laws, regulations or usage applicable in the jurisdiction in which the
relevant real property is located.
2.06 DOCUMENTS FURTHER EVIDENCING TRANSFERS OF ASSETS AND ASSUMPTION OF
LIABILITIES. In furtherance of the assignment, transfer and conveyance of
Teledyne Technologies Assets and the assumption of Teledyne Technologies
Liabilities set forth in Section 2.01(a) and (b), (i) TII shall execute and
deliver, and shall cause its Subsidiaries to execute and deliver, such further
bills of sale, stock powers, certificates of title, assignments of contracts and
other instruments of transfer, conveyance and assignment as and to the extent
necessary to fully evidence the transfer, conveyance and assignment of all of
TII's and its respective Subsidiaries' right, title and interest in and to the
Teledyne Technologies Assets to Teledyne Technologies and (ii) Teledyne
Technologies shall execute and deliver to TII and its Subsidiaries such further
bills of sale, stock powers, certificates of title, assumptions of contracts and
other instruments of assumption as and to the extent necessary to fully evidence
the valid and effective assumption of the Teledyne Technologies Liabilities by
Teledyne Technologies.
2.07 OTHER ANCILLARY AGREEMENTS. Effective as of the date hereof each
of ATI, TII and Teledyne Technologies will execute and deliver, and cause any of
their respective Subsidiaries that are parties thereto to execute and deliver
all Ancillary Agreements to which it is a party.
2.08 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. Each of ATI (on
behalf of itself and each member of ATI, including TII) and Teledyne
Technologies (on behalf of itself and each member of the Teledyne Technologies
Group) understands and agrees that, except as expressly set forth herein or in
any Ancillary Agreement, no party to this Agreement, any Ancillary Agreement or
any other agreement or document contemplated by this Agreement, any Ancillary
Agreement or otherwise, is representing or warranting in any way as to the
Assets, businesses or Liabilities transferred or assumed as contemplated hereby
or thereby (including whether an Asset is Year 2000 Compliant), as to any
consents or approvals required in connection therewith, as to the value or
freedom from any Security Interests of, or any other matter concerning, any
Assets of such party, or as to the absence of any defenses or rights of setoff
or freedom from counterclaims with respect to any claim or other Asset,
including any accounts receivable, of any party, or as to the legal sufficiency
of any assignment, document or instrument delivered hereunder to convey title to
any Asset or thing of value upon the execution, delivery and filing hereof or
thereof. Without limiting the scope of the foregoing, no party makes any
representations or warranties as to the Intellectual Property sought to be
transferred herein, including, without limitation, whether such Intellectual
Property or any portion thereof is valid, enforceable, freely transferable, free
and clear of liens (except permitted liens) or sufficient and complete in order
to conduct the Teledyne Technologies Business, whether any party herein owns,
has the exclusive right to use or has the ability to practice such Intellectual
Property or any portion thereof, or whether such Intellectual Property or the
operation of any aspect of the
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Teledyne Technologies Business infringes or conflicts in any way with any
Intellectual Property right of any third party. Except as may expressly be set
forth herein or in any Ancillary Agreement, all such Assets are being
transferred on an "as is," "where is," "with all faults" basis (and, in the case
of any real property, by means of a quitclaim or similar form deed or
conveyance) and the respective transferees shall bear the economic and legal
risks that any conveyance shall prove to be insufficient to vest in the
transferee good and marketable title, free and clear of any Security Interest.
Without limiting the foregoing, neither ATI nor any other party hereto
(excluding Teledyne Technologies), or to any Ancillary Agreement, is making any
representation or warranty to Teledyne Technologies or any other Person in
respect of the Teledyne Technologies Balance Sheet, including in respect of the
accuracy or presentation thereof, or the adequacy of accruals, reserves and
other amounts reflected thereon.
2.09 FINANCING ARRANGEMENTS. Each of the parties hereto acknowledges
that (a) ATI has arranged availability for up to $200 million in senior secured
financing pursuant to the Financing Facility, (b) that ATI has, prior to the
date hereof, incurred $100 million in indebtedness pursuant to such Financing
Facility; and (c) that ATI has used, or will use prior to the Distribution Date,
such indebtedness to refinance other outstanding indebtedness of ATI. Teledyne
Technologies agrees that, following the Distribution Date, Teledyne Technologies
will indemnify ATI (and all the other members of the ATI Group) and defend and
hold such parties harmless from and against all the obligations of ATI (or
Teledyne Technologies) arising under the Financing Facility (including the
obligation to repay such $100 million in outstanding borrowings), with the
effect that ATI (and all other members of the ATI Group) shall have no further
liability or obligation under the Financing Facility.
2.10 GOVERNMENTAL APPROVALS AND CONSENTS. (a) To the extent that the
Separation requires any Governmental Approvals or Consents, the parties will use
all reasonable efforts to obtain any such Governmental Approvals and Consents.
(b) If and to the extent that the valid, complete and perfected
transfer or assignment (or novation of any federal government contract) to the
Teledyne Technologies Group of any Teledyne Technologies Assets (or from the
Teledyne Technologies Group of any Non-Teledyne Technologies Assets) would be a
violation of applicable laws or require any Consent or Governmental Approval in
connection with the Separation, then, unless ATI shall otherwise determine, the
transfer or assignment to or from the Teledyne Technologies Group, as the case
may be, of such Teledyne Technologies Assets or Non-Teledyne Technologies
Assets, respectively, shall be automatically deemed deferred and any such
purported transfer or assignment shall be null and void until such time as all
legal impediments are removed and/or such Consents or Governmental Approvals
have been obtained. Notwithstanding the foregoing, such Asset shall be deemed a
Teledyne Technologies Asset for purposes of determining whether any Liability is
a Teledyne Technologies Liability.
(c) If the transfer or assignment of any Assets intended to be
transferred or assigned hereunder is not consummated prior to or at the
Effective Time, whether as a result of the provisions of Section 2.10(b) or for
any other reason, then the Person retaining such Asset shall thereafter hold
such Asset for the use and benefit, insofar as reasonably possible, of the
Person entitled thereto (at the expense of the Person entitled thereto). In
addition, the Person retaining
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such Asset shall take such other actions as may be reasonably requested by the
Person to whom such Asset is to be transferred in order to place such Person,
insofar as reasonably possible, in the same position as if such Asset had been
transferred as contemplated hereby and so that all the benefits and burdens
relating to such Teledyne Technologies Assets (or such Non-Teledyne Technologies
Assets, as the case may be), including possession, use, risk of loss, potential
for gain, and dominion, control and command over such Assets, are to inure from
and after the Effective Time to the Teledyne Technologies Group (or the ATI
Group, as the case may be).
(d) If and when the Consents and/or Governmental Approvals, the absence
of which caused the deferral of transfer of any Asset pursuant to Section
2.10(b), are obtained, the transfer of the applicable Asset shall be effected in
accordance with the terms of this Agreement and/or the applicable Ancillary
Agreement.
(e) The Person retaining an Asset due to the deferral of the transfer
of such Asset shall not be obligated, in connection with the foregoing, to
expend any money unless the necessary funds are advanced by the Person entitled
to the Asset, other than reasonable out-of-pocket expenses, attorneys' fees and
recording or similar fees, all of which shall be promptly reimbursed by the
Person entitled to such Asset.
2.11 NOVATION OF ASSUMED TELEDYNE TECHNOLOGIES LIABILITIES. (a) Each of
ATI, TII and Teledyne Technologies at the request of any of the others, shall
use all reasonable efforts to obtain, or to cause to be obtained, any consent,
substitution, approval or amendment required to novate (including with respect
to any federal government contract) or assign all obligations under agreements,
leases, licenses and other obligations or Liabilities, or to obtain in writing
the unconditional release of all parties to such arrangements other than any
member of the Teledyne Technologies Group, so that, in any such case, Teledyne
Technologies and its Subsidiaries will be solely responsible for such
Liabilities; provided, however, that no member of the ATI Group shall be
obligated to pay any consideration therefor to any third party from whom such
consents, approvals, substitutions and amendments are requested.
(b) If ATI, TII or Teledyne Technologies is unable to obtain, or to
cause to be obtained, any such required consent, approval, release, substitution
or amendment, the applicable member of the ATI Group shall continue to be bound
by such agreements, leases, licenses and other obligations and, unless not
permitted by law or the terms thereof, Teledyne Technologies shall, as agent or
subcontractor for ATI, TII or such other Person, as the case may be, pay,
perform and discharge fully all the obligations or other Liabilities of ATI, TII
or such other Person, as the case may be, thereunder from and after the date
hereof. Teledyne Technologies shall indemnify and defend each ATI Indemnitee and
hold each of them harmless against any Liabilities arising in connection
therewith. Each of ATI and TII, as the case may be, shall, without further
consideration, pay and remit, or cause to be paid or remitted, to Teledyne
Technologies promptly all money, rights and other consideration received by it
or any member of its respective Group in respect of such performance (unless any
such consideration is an Excluded Asset). If and when any such consent,
approval, release, substitution or amendment shall be obtained or such
agreement, lease, license or other rights or obligations shall otherwise become
assignable or able to be novated, each of ATI and TII, as the case may be, shall
thereafter assign, or cause to be assigned, all its rights, obligations and
other Liabilities thereunder or any rights or
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obligations of any member of its respective Group to Teledyne Technologies
without payment of further consideration and Teledyne Technologies shall,
without the payment of any further consideration, assume such rights and
obligations.
2.12 TRANSFER OF BROWN ASSETS AND ASSUMPTION OF BROWN LIABILITIES.
Immediately following the transfer of Teledyne Technologies Assets and
assumption of Teledyne Technologies Liabilities contemplated by Section 2.01,
Teledyne Technologies shall contribute to Brown approximately $6,800,000 in cash
and the Brown Assets and cause Brown to assume the Brown Liabilities, all in
accordance with the Brown Transfer and Assumption Agreement.
2.13 CONSUMMATION OF PURCHASE AND SALE AGREEMENTS; INTERIM
CONTRIBUTION. Immediately following the transfer of Assets and assumption of
Liabilities contemplated by Section 2.12, the parties hereto will cause the
transactions contemplated by the Purchase and Sale Agreements to be consummated,
pursuant to which (i) Brown will purchase the Teledyne Environmental Assets from
Teledyne Environmental for approximately $6,800,000 in cash, (ii) Teledyne Ltd
will purchase the Teledyne Limited Assets from Teledyne Limited for
approximately $5,700,000 in cash, (iii) Teledyne Technologies will purchase the
Industries Stock Interests from Industries International for approximately
$200,000 in cash, and (iv) Teledyne Investment will purchase a 1% common stock
interest in Ensambles de Precision, S.A. de C.V. from Industries International
for approximately $2,000 in cash.
2.14 TI CONTRIBUTION AND LIQUIDATION. Prior to consummation of the
transactions contemplated by Section 2.15, ATI will contribute to Holdings all
of the outstanding capital stock of TI and the TI Liquidation will be effected.
2.15 INTERIM DISTRIBUTIONS. Following the TI Liquidation, TII will
distribute to Holdings and Holdings will distribute to ATI all of the
outstanding Teledyne Technologies Common Stock.
ARTICLE III
THE DISTRIBUTION
3.01 THE DISTRIBUTION. The ATI Board shall have the sole and absolute
discretion to determine whether and when to effect the Distribution. If the ATI
Board declares the Distribution, on or prior to the Distribution Date, ATI will
deliver to the Agent for the benefit of holders of record of ATI Common Stock on
the Record Date, a single stock certificate, endorsed by ATI in blank,
representing all of the outstanding shares of Teledyne Technologies Common Stock
then owned by ATI or any member of the ATI Group, and will instruct the Agent to
distribute, or make book-entry credits for, one share of Teledyne Technologies
Common Stock in respect of every seven shares of ATI Common Stock held by
holders of record of ATI Common Stock on the Record Date, subject to Section
3.03.
3.02 ACTIONS PRIOR TO THE DISTRIBUTION. Prior to the Distribution:
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(a) On such date as ATI shall determine, Teledyne Technologies shall
mail to the holders of ATI Common Stock the Information Statement.
(b) ATI and Teledyne Technologies shall cooperate in preparing, filing
with the Commission under the Securities Act and causing to become effective any
registration statements or amendments thereto that are appropriate to reflect
the establishment of or amendments to any employee benefit plan contemplated by
the Employee Benefits Agreement.
(c) ATI and Teledyne Technologies shall by means of a reclassification,
stock split or stock distribution or other means cause the number of outstanding
shares of Teledyne Technologies Common Stock held by ATI to be equal to the
number of shares to be distributed in the Distribution (as determined by ATI).
(d) ATI and Teledyne Technologies shall take all such action as may be
necessary or appropriate under the securities or blue sky laws of states or
other political subdivisions of the United States in connection with the
transactions contemplated by this Agreement or any Ancillary Agreement.
(e) Teledyne Technologies shall use all efforts to have approved an
application to permit listing of the Teledyne Technologies Common Stock on the
NYSE or another mutually agreeable stock exchange or quotation system.
(f) ATI and Teledyne Technologies shall take all actions which may be
required to elect or otherwise appoint as directors of Teledyne Technologies, on
or prior to the Distribution Date, the persons named in the Form 10 Registration
Statement to constitute the Board of Directors of Teledyne Technologies on the
Distribution Date.
(g) ATI shall cause a Certificate of Amendment and Restatement of the
Teledyne Technologies Certificate of Incorporation substantially in the form
filed with the Form 10 Registration Statement, to be filed for record with the
Secretary of State of Delaware and to be in effect on the Distribution Date, and
the Board of Directors of Teledyne Technologies shall amend the Bylaws of
Teledyne Technologies so that the Teledyne Technologies Bylaws are substantially
in the form filed with the Form 10 Registration Statement.
(h) Teledyne Technologies shall declare a distribution of, and
distribute, one Right with respect to each share of Teledyne Technologies Common
Stock to be distributed in the Distribution.
(i) ATI and Teledyne Technologies shall take all actions as may be
necessary to approve the stock-based employee benefit plans of Teledyne
Technologies in order to satisfy the requirements of Section 162(m) and other
applicable provisions of the Code and any requirements of the NYSE (or any other
stock exchange or quotations system on which Teledyne Technologies Common Stock
is to be listed or traded).
3.03 FRACTIONAL SHARES. No certificates or scrip representing
fractional shares of Teledyne Technologies Common Stock will be distributed to
holders of ATI Common Stock in the Distribution. The Agent will, as soon as
practicable after the Distribution Date, (a) determine
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the number of whole shares and fractional shares of Teledyne Technologies Common
Stock allocable to each holder of record of ATI Common Stock as of the Record
Date, (b) aggregate all fractional shares held by such holders, and (c) sell the
whole shares attributable to the aggregate of such fractional shares, in open
market transactions, in each case at the then prevailing trading prices, and to
cause to be distributed to each such holder, in lieu of any fractional share,
without interest, such holder's ratable share of the proceeds of such sale,
after making appropriate deductions of the amount required, if any, to be
withheld for U.S. federal income tax purposes.
ARTICLE IV
THE PUBLIC OFFERING
4.01 THE PUBLIC OFFERING. (a) Teledyne Technologies shall consummate
the Public Offering not later than one year following the Distribution Date.
Actions required in order to so consummate the Public Offering shall include,
but not necessarily be limited to, those specified in this Section 4.01.
(b) Teledyne Technologies shall file the Public Offering Registration
Statement not later than at the end of the eighth month following the month in
which the Distribution Date occurs, and shall file such amendments or
supplements thereto, as may be necessary in order to cause the same to become
and remain effective as required by law or by the Underwriters, including, but
not limited to, filing such amendments to the Public Offering Registration
Statement as may be required by the Underwriting Agreement, the Commission or
federal, state or foreign securities laws.
(c) Teledyne Technologies shall enter into the Underwriting Agreement
and shall comply with its obligations thereunder.
(d) Teledyne Technologies shall take all such action as may be
necessary or appropriate under state securities and blue sky laws of the United
States (and any comparable laws under any foreign jurisdictions) in connection
with the Public Offering.
(e) Teledyne Technologies shall prepare, file and take all actions
necessary to make effective an application for listing of the Teledyne
Technologies Common Stock issued in the Public Offering on the NYSE, subject to
official notice of issuance.
(f) Teledyne Technologies shall participate in the preparation of
materials and presentations as the Underwriters shall deem necessary or
desirable.
(g) Teledyne Technologies shall pay all third party costs, fees and
expenses relating to the Public Offering, all of the reimbursable expenses of
the Underwriters pursuant to the Underwriting Agreement, all of the costs of
producing, printing, mailing and otherwise distributing the Prospectus, as well
as the Underwriters' discount as provided in the Underwriting Agreement.
4.02 PROCEEDS OF THE PUBLIC OFFERING. The Public Offering will be a
primary offering of Teledyne Technologies Common Stock and the net proceeds of
the Public
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Offering will be retained by Teledyne Technologies. Teledyne Technologies will
use such net proceeds as provided in the Tax Sharing Agreement and the Ruling
Request.
4.03 REMEDIES. Teledyne Technologies acknowledges that its agreements
in this Article IV are of a special, unique, unusual and extraordinary
character. Because the failure of Teledyne Technologies to perform its
obligations set forth in the provisions of this Article IV could cause unique
and extraordinary injury to ATI, ATI shall, notwithstanding anything to the
contrary herein, have the right in addition to any other remedies available, at
law or in equity, to seek an injunction in a court of equity to compel Teledyne
Technologies to perform such obligations. Teledyne Technologies hereby waives
any and all defenses it may have on the ground of lack of jurisdiction or
competence of the court to grant an injunction or other equitable relief, or
otherwise, and agrees that it will not assert any such defense or any defense to
a request by ATI for injunctive relief based on the alleged existence of an
adequate remedy at law or for money damages. Without limiting the foregoing,
Teledyne Technologies hereby waives the right to require ATI to post any bond or
other security with respect to any proceeding to enforce the provisions of this
Article IV. The existence of the rights of ATI set forth in this Section 4.03
shall not preclude any other rights and remedies at law or in equity which ATI
may have.
ARTICLE V
MUTUAL RELEASES; INDEMNIFICATION
5.01 RELEASE OF PRE-DISTRIBUTION CLAIMS. (a) Except as provided in
Section 5.01(c), effective as of the Effective Time, Teledyne Technologies does
hereby, for itself and each other member of the Teledyne Technologies Group,
their respective Affiliates (other than any member of the ATI Group), successors
and assigns, and all Persons who at any time prior to the Effective Time have
been stockholders, directors, officers, agents or employees of any member of the
Teledyne Technologies Group (in each case, in their respective capacities as
such), remise, release and forever discharge each of ATI and Water Pik, the
respective members of the ATI Group and the Water Pik Group, their respective
Affiliates (other than any member of the Teledyne Technologies Group),
successors and assigns, and all Persons who at any time prior to the Effective
Time have been stockholders, directors, officers, agents or employees of any
member of ATI or the Water Pik Group (in each case, in their respective
capacities as such), and their respective heirs, executors, administrators,
successors and assigns, from any and all Liabilities whatsoever, whether at law
or in equity (including any right of contribution), whether arising under any
contract or agreement, by operation of law or otherwise, existing or arising
from any acts or events occurring or failing to occur or alleged to have
occurred or to have failed to occur or any conditions existing or alleged to
have existed on or before the Effective Time, including in connection with the
transactions and all other activities undertaken to implement the Separation or
the Distribution.
(b) Except as provided in Section 5.01(c), effective as of the
Effective Time, ATI does hereby, for itself and each other member of the ATI
Group and its Affiliates (other than any member of the Teledyne Technologies
Group), successors and assigns, and all Persons who at any time prior to the
Effective Time have been stockholders, directors, officers, agents or employees
of any member of the ATI Group (in each case, in their respective capacities as
such), remise,
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release and forever discharge Teledyne Technologies, the respective members of
the Teledyne Technologies Group, their respective Affiliates (other than any
member of the ATI Group), successors and assigns, and all Persons who at any
time prior to the Effective Time have been stockholders, directors, officers,
agents or employees of any member of the Teledyne Technologies Group (in each
case, in their respective capacities as such), and their respective heirs,
executors, administrators, successors and assigns, from any and all Liabilities
whatsoever, whether at law or in equity (including any right of contribution),
whether arising under any contract or agreement, by operation of law or
otherwise, existing or arising from any acts or events occurring or failing to
occur or alleged to have occurred or to have failed to occur or any conditions
existing or alleged to have existed on or before the Effective Time, including
in connection with the transactions and all other activities undertaken to
implement the Separation or the Distribution.
(c) Nothing contained in Section 5.01(a) or (b) shall impair any right
of any Person to enforce this Agreement, any Ancillary Agreement or any
agreements, arrangements, commitments or understandings that are specified in
Section 2.04(b) or the applicable Schedules thereto not to terminate as of the
Effective Time, in each case in accordance with its terms. Nothing contained in
Section 5.01(a) or (b) shall release any Person from:
(i) any Liability provided in or resulting from any agreement
among any members of the ATI Group or the Teledyne Technologies Group
that is specified in Section 2.04(b) or the applicable Schedules
thereto as not to terminate as of the Effective Time, or any other
Liability specified in such Section 2.04(b) as not to terminate as of
the Effective Time;
(ii) any Liability, contingent or otherwise, assumed,
transferred, assigned or allocated to the Group of which such Person is
a member in accordance with, or any other Liability of any member of
any Group under, this Agreement or any Ancillary Agreement;
(iii) any Liability for the sale, lease, construction or
receipt of goods, property or services purchased, obtained or used in
the ordinary course of business by a member of one Group from a member
of any other Group prior to the Effective Time;
(iv) any Liability for unpaid amounts for products or services
or refunds owing on products or services due on a value-received basis
for work done by a member of one Group at the request or on behalf of a
member of another Group;
(v) any Liability that the parties may have with respect to
indemnification or contribution pursuant to this Agreement for claims
brought against the parties by third Persons, which Liability shall be
governed by the provisions of this Article V and, if applicable, the
appropriate provisions of the Ancillary Agreements; or
(vi) any Liability the release of which would result in the
release of any Person other than a Person released pursuant to this
Section 5.01; provided that the parties agree not to bring suit or
permit any of their Subsidiaries to bring suit against any Person with
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respect to any Liability to the extent that such Person would be
released with respect to such Liability by this Section 5.01 but for
the provisions of this clause (vi).
(d) Teledyne Technologies shall not make, and shall not permit any
member of the Teledyne Technologies Group to make, any claim or demand, or
commence any Action asserting any claim or demand, including any claim of
contribution or indemnification, against ATI, Water Pik or any member of the ATI
Group or Water Pik Group, or any other Person released pursuant to Section
5.01(a), with respect to any Liabilities released pursuant to Section 5.01(a).
Without limiting the generality of the foregoing, Teledyne Technologies shall
not make, and shall not permit any other member of the Teledyne Technologies
Group to make, any claim or demand, or commence any Action asserting any claim
or demand, including any claim of contribution or indemnification, against ATI,
Water Pik or any member of the ATI Group or the Water Pik Group, or any other
Person released pursuant to Section 5.01(a), with respect to whether any Asset
should or should not have been classified as a Teledyne Technologies Asset or
whether any Liability should or should not have been classified as a Teledyne
Technologies Liability or with respect to the Teledyne Technologies Balance
Sheet, including in respect of the accuracy or presentation thereof, or the
adequacy of accruals, reserves and other amounts reflected thereon. ATI shall
not, and shall not permit any member of the ATI Group, to make any claim or
demand, or commence any Action asserting any claim or demand, including any
claim of contribution or any indemnification, against Teledyne Technologies or
any member of the Teledyne Technologies Group, or any other Person released
pursuant to Section 5.01(b), with respect to any Liabilities released pursuant
to Section 5.01(b).
(e) It is the intent of each of ATI and Teledyne Technologies by virtue
of the provisions of this Section 5.01 to provide for a full and complete
release and discharge of all Liabilities existing or arising from all acts and
events occurring or failing to occur or alleged to have occurred or to have
failed to occur and all conditions existing or alleged to have existed on or
before the Effective Time, between or among Teledyne Technologies or any member
of the Teledyne Technologies Group, on the one hand, and ATI, Water Pik or any
member of the ATI Group or the Water Pik Group, on the other hand (including any
contractual agreements or arrangements existing or alleged to exist between or
among any such members on or before the Effective Time), except as expressly set
forth in Section 5.01(c) or otherwise in this Agreement. At any time, at the
request of any other party, each party shall cause each member of its respective
Group to execute and deliver releases reflecting the provisions hereof.
5.02 INDEMNIFICATION BY TELEDYNE TECHNOLOGIES. Except as provided in
Section 5.04, Teledyne Technologies shall indemnify, defend and hold harmless
ATI, each member of the ATI Group and each of their respective directors,
officers, employees, agents and representatives, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"ATI Indemnitees"), and Water Pik, each member of the Water Pik Group and each
of their respective directors, officers and employees, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"Water Pik Indemnitees"), from and against any and all Liabilities of the ATI
Indemnitees and the Water Pik Indemnitees, respectively, relating to, arising
out of or resulting from any of the following items (without duplication):
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(a) the failure of Teledyne Technologies or any other member of the
Teledyne Technologies Group or any other Person to pay, perform or otherwise
promptly discharge any Teledyne Technologies Liabilities or Teledyne
Technologies Contract in accordance with their respective terms, whether prior
to or after the Effective Time or the date hereof;
(b) the Teledyne Technologies Business, any Teledyne Technologies
Liability or any Teledyne Technologies Contract;
(c) any breach by Teledyne Technologies or any member of the Teledyne
Technologies Group of this Agreement or any of the Ancillary Agreements;
(d) the operation of the Teledyne Technologies Business, as conducted
at any time prior to, on or after the Distribution Date (including any Liability
relating to, arising out of or resulting from any act or failure to act by any
director, officer, employee, agent or representative (whether or not such act or
failure to act is or was within such Person's authority));
(e) any infringement of any Intellectual Property right of any third
party, including, but not limited to, patent rights, trademark and service mark
rights (registered and common law), trade dress rights, copyrights,
misappropriation of trade secret, based upon or resulting from the operation of
the Teledyne Technologies Business and regardless of whether said alleged
infringement occurred prior to, on or after the Distribution Date or any claim
based on the actual or alleged invalidity, unenforceability or transferability
or ownership of Intellectual Property to be transferred hereby or pursuant to
any Ancillary Agreement;
(f) Liabilities assumed by any member of the Teledyne Technologies
Group under any Ancillary Agreement;
(g) any guarantee, indemnity, representation, warranty or other
Liability of or made by any member of the ATI Group in respect of any Liability
or alleged Liability of any member of the Teledyne Technologies Group; and
(h) any untrue statement or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, with respect
to all information contained in the Form 10 Registration Statement or the
Information Statement.
5.03 INDEMNIFICATION BY ATI. (a) ATI shall indemnify, defend and hold
harmless Teledyne Technologies, each member of the Teledyne Technologies Group
and each of their respective directors, officers, employees, agents and
representatives, and each of the heirs, executors, successors and assigns of any
of the foregoing (collectively, the "Teledyne Technologies Indemnitees"), from
and against any and all Liabilities of the Teledyne Technologies Indemnitees
relating to, arising out of or resulting from any of the following items
(without duplication):
(i) the failure of ATI or any other member of the ATI Group to
pay, perform or otherwise promptly discharge any ATI Liabilities; and
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(ii) any breach by ATI of this Agreement or any of the
Ancillary Agreements.
5.04 INDEMNIFICATION OBLIGATIONS NET OF INSURANCE PROCEEDS AND OTHER
AMOUNTS. (a) The parties intend that any Liability subject to indemnification or
reimbursement pursuant to this Article V will be net of Insurance Proceeds that
actually reduce the amount of the Liability. Accordingly, the amount which any
party (an "Indemnifying Party") is required to pay to any Person entitled to
indemnification hereunder (an "Indemnitee") will be reduced by any Insurance
Proceeds theretofore actually recovered by or on behalf of the Indemnitee in
reduction of the related Liability. If an Indemnitee receives a payment (an
"Indemnity Payment") required by this Agreement from an Indemnifying Party in
respect of any Liability and subsequently receives Insurance Proceeds, then the
Indemnitee will pay to the Indemnifying Party an amount equal to the excess of
the Indemnity Payment received over the amount of the Indemnity Payment that
would have been due if the Insurance Proceeds had been received, realized or
recovered before the Indemnity Payment was made.
(b) An insurer who would otherwise be obligated to pay any claim shall
not be relieved of the responsibility with respect thereto or, solely by virtue
of the indemnification provisions hereof, have any subrogation rights with
respect thereto, it being expressly understood and agreed that no insurer or any
other third party shall be entitled to a "windfall" (i.e., a benefit they would
not be entitled to receive in the absence of the indemnification provisions) by
virtue of the indemnification provisions hereof. Nothing contained in this
Agreement or any Ancillary Agreement shall obligate any member of any Group to
seek to collect or recover any Insurance Proceeds.
5.05 PROCEDURES FOR INDEMNIFICATION OF THIRD PARTY CLAIMS. (a) If an
Indemnitee shall receive notice or otherwise learn of the assertion by a Person
(including any Governmental Authority) who is not a member of the ATI Group or
the Teledyne Technologies Group of any claim or of the commencement by any such
Person of any Action (collectively, a "Third Party Claim") with respect to which
an Indemnifying Party may be obligated to provide indemnification to such
Indemnitee pursuant to Section 5.02 or 5.03, or any other Section of this
Agreement or any Ancillary Agreement, such Indemnitee shall give such
Indemnifying Party and, if ATI is not the Indemnifying Party, ATI written notice
thereof as soon as practicable but in any event not less than 20 days after
becoming aware of such Third Party Claim. Any such notice shall describe the
Third Party Claim in reasonable detail. Notwithstanding the foregoing, the
failure of any Indemnitee or other Person to give notice as provided in this
Section 5.05(a) shall not relieve the related Indemnifying Party of its
obligations under this Article V, except to the extent that such Indemnifying
Party is actually prejudiced by such failure to give notice.
(b) An Indemnifying Party may elect to defend (and, unless the
Indemnifying Party has specified any reservations or exceptions, to seek to
settle or compromise), at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third Party Claim. Within 30 days after
the receipt of notice from an Indemnitee in accordance with Section 5.05(a) (or
sooner, if the nature of such Third Party Claim so requires), the Indemnifying
Party shall notify the Indemnitee of its election whether the Indemnifying Party
will assume responsibility for defending such Third Party Claim, which election
shall specify any reservations or exceptions. After notice from an Indemnifying
Party to an Indemnitee of its election to assume the defense of
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a Third Party Claim, such Indemnitee shall have the right to employ separate
counsel and to participate in (but not control) the defense, compromise, or
settlement thereof, but the fees and expenses of such counsel shall be the
expense of such Indemnitee except as set forth in the next sentence. In the
event that the Indemnifying Party has elected to assume the defense of the Third
Party Claim but has specified, and continues to assert, any reservations or
exceptions in such notice, then, in any such case, the reasonable fees and
expenses of one separate counsel for all Indemnitees shall be borne by the
Indemnifying Party.
(c) If an Indemnifying Party elects not to assume responsibility for
defending a Third Party Claim, or fails to notify an Indemnitee of its election
as provided in Section 5.05(b), such Indemnitee may defend such Third Party
Claim at the cost and expense (including allocated costs of in-house counsel and
other personnel) of the Indemnifying Party.
(d) Unless the Indemnifying Party has failed to assume the defense of
the Third Party Claim in accordance with the terms of this Agreement, no
Indemnitee may settle or compromise any Third Party Claim without the consent of
the Indemnifying Party.
(e) No Indemnifying Party shall consent to entry of any judgment or
enter into any settlement of the Third Party Claim without the consent of the
Indemnitee if the effect thereof is to permit any injunction, declaratory
judgment, other order or other nonmonetary relief to be entered, directly or
indirectly, against any Indemnitee.
5.06 ADDITIONAL MATTERS. (a) Any claim on account of a Liability which
does not result from a Third Party Claim shall be asserted by written notice
given by the Indemnitee to the related Indemnifying Party. Such Indemnifying
Party shall have a period of 30 days after the receipt of such notice within
which to respond thereto. If such Indemnifying Party does not respond within
such 30-day period, such Indemnifying Party shall be deemed to have refused to
accept responsibility to make payment. If such Indemnifying Party does not
respond within such 30-day period or rejects such claim in whole or in part,
such Indemnitee shall be free to pursue such remedies as may be available to
such party as contemplated by this Agreement and the Ancillary Agreements.
(b) In the event of payment by or on behalf of any Indemnifying Party
to any Indemnitee in connection with any Third Party Claim, such Indemnifying
Party shall be subrogated to and shall stand in the place of such Indemnitee as
to any events or circumstances in respect of which such Indemnitee may have any
right, defense or claim relating to such Third Party Claim against any claimant
or plaintiff asserting such Third Party Claim or against any other person. Such
Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner,
and at the cost and expense (including allocated costs of in-house counsel and
other personnel) of such Indemnifying Party, in prosecuting any subrogated
right, defense or claim.
(c) In the event of an Action in which the Indemnifying Party is not a
named defendant, if either the Indemnified Party or Indemnifying Party shall so
request, the parties shall endeavor to substitute the Indemnifying Party for the
named defendant. If such substitution or addition cannot be achieved for any
reason or is not requested, the named defendant shall allow the Indemnifying
Party to manage the Action as set forth in this Section and the Indemnifying
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Party shall fully indemnify the named defendant against all costs of defending
the Action (including court costs, sanctions imposed by a court, attorneys'
fees, experts' fees and all other external expenses, and the allocated costs of
in-house counsel and other personnel), the costs of any judgment or settlement,
and the cost of any interest or penalties relating to any judgment or
settlement.
5.07 REMEDIES CUMULATIVE. The remedies provided in this Article V shall
be cumulative and shall not preclude assertion by any Indemnitee of any other
rights or the seeking of any and all other remedies against any Indemnifying
Party.
5.08 SURVIVAL OF INDEMNITIES. The rights and obligations of each of the
Indemnitees under this Article V shall survive the sale or other transfer by any
party of any Assets or businesses or the assignment by it of any Liabilities.
ARTICLE VI
CERTAIN OTHER MATTERS
6.01 INSURANCE MATTERS. (a) In no event shall ATI, any other member of
the ATI Group or any ATI Indemnitee have any liability or obligation whatsoever
to any member of the Teledyne Technologies Group in the event that any Insurance
Policy or other contract or policy of insurance shall be terminated or otherwise
cease to be in effect for any reason, shall be unavailable or inadequate to
cover any Liability of any member of the Teledyne Technologies Group for any
reason whatsoever or shall not be renewed or extended beyond the current
expiration date.
(b) (i) Except as otherwise provided in any Ancillary Agreement, the
parties intend by this Agreement that Teledyne Technologies and each other
member of the Teledyne Technologies Group be successors-in-interest to all
rights that any member of the Teledyne Technologies Group may have as of the
Distribution Date as a subsidiary, affiliate, division or department of ATI
prior to the Distribution Date under any policy of insurance issued to ATI and
intended to insure the Teledyne Technologies Group by any insurance carrier
unaffiliated with ATI or under any agreements related to such policies executed
and delivered prior to the Distribution Date, including any rights such member
of the Teledyne Technologies Group may have, as an insured or additional named
insured, subsidiary, affiliate, division or department, to avail itself of any
such policy of insurance or any such agreements related to such policies as in
effect prior to the Distribution Date. At the request of Teledyne Technologies,
ATI shall take all reasonable steps, including the execution and delivery of any
instruments, to effect the foregoing; provided however that ATI shall not be
required to pay any amounts, waive any rights or incur any Liabilities in
connection therewith.
(ii) Except as otherwise contemplated by any Ancillary Agreement, after
the Distribution Date, neither ATI nor Teledyne Technologies or any member of
their respective Groups shall, without the consent of the other, provide any
such insurance carrier with a release, or amend, modify or waive any rights
under any such policy or agreement, if such release, amendment, modification or
waiver would adversely affect any rights or potential rights of any
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member of the other Group thereunder; provided however that the foregoing shall
not (A) preclude any member of any Group from presenting any claim or from
exhausting any policy limit, (B) require any member of any Group to pay any
premium or other amount or to incur any Liability, or (C) require any member of
any Group to renew, extend or continue any policy in force. Each of Teledyne
Technologies and ATI will, and will cause its respective Group to, share such
information as is reasonably necessary in order to permit the other to manage
and conduct its insurance matters in an orderly fashion.
(c) This Agreement shall not be considered as an attempted assignment
of any policy of insurance or as a contract of insurance and shall not be
construed to waive any right or remedy of any member of the ATI Group in respect
of any Insurance Policy or any other contract or policy of insurance.
(d) Teledyne Technologies does hereby, for itself and each other member
of the Teledyne Technologies Group, agree that no member of the ATI Group or any
ATI Indemnitee shall have any Liability whatsoever as a result of the insurance
policies and practices of ATI and its Affiliates as in effect at any time prior
to the Distribution Date, including as a result of the level or scope of any
such insurance, the creditworthiness of any insurance carrier, the terms and
conditions of any policy, the adequacy or timeliness of any notice to any
insurance carrier with respect to any claim or potential claim or otherwise.
(e) Nothing in this Agreement shall be deemed to restrict any member of
the Teledyne Technologies Group from acquiring at its own expense any other
insurance policy in respect of any Liabilities or covering any period.
(f) With respect to policy periods prior to the Distribution Date:
(i) Teledyne Technologies shall be responsible for: (A) all Unpaid
Losses (but not to exceed the applicable Per Case Maximum) as of the
Distribution Date attributable to Teledyne Technologies Liabilities covered
under ATI General Liability Policies, ATI Automobile Policies, ATI Workers
Compensation Policies and ATI Product Liability Policies for policies in effect
prior to the Distribution Date; and (B) Pooled Loss Costs Allocable to Teledyne
Technologies.
(ii) On or before June 1, 2000 and on a quarterly basis thereafter, ATI
shall provide Teledyne Technologies with a calculation of amounts due ATI or
refunds due Teledyne Technologies for Teledyne Technologies' obligations
incurred under ATI General Liability Policies, ATI Automobile Policies, ATI
Workers Compensation Policies and ATI Product Liability Policies for policies
under subparagraph (i) immediately above. The initial calculations shall be
based on (A) the change in total Incurred Losses between the Distribution Date
and March 31, 2000 for all such policies in effect prior to the Distribution
Date multiplied by the Expense Factors set forth in such policies and applicable
to such Incurred Losses, but only with respect to that portion of Incurred
Losses attributable to Teledyne Technologies Liabilities not exceeding the
applicable Per Case Maximum; and (B) the change in Pooled Loss Costs Allocable
to Teledyne Technologies for the period between the Distribution Date and March
31, 2000 for all such policies in effect prior to the Distribution Date.
Subsequent calculations shall be based on (A) the change in total Incurred
Losses for the subsequent quarterly periods multiplied by the
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Expense Factors set forth in such policies and applicable to such losses; but
only with respect to that portion of losses attributable to Teledyne
Technologies Liabilities not exceeding the applicable Per Case Maximum, and (B)
the change in Pooled Loss Costs Allocable to Teledyne Technologies for the
subsequent quarterly period.
(iii) Within 30 days after receipt by Teledyne Technologies of ATI's
calculations referred to in subparagraph (ii) immediately above, Teledyne
Technologies on the one hand and ATI on the other hand shall pay to the other
the net amount owed after taking into account the combined amounts reflected on
the calculations.
(g) At its sole option, ATI shall have the right to handle, defend,
resolve, and administer any and all claims in its sole discretion, with respect
to Teledyne Technologies Liabilities covered, in whole or in part, by ATI
Policies, including, without limitation, the reporting of claims to the issuers
of such ATI Policies, as well as the management, defense and settlement of
claims. ATI will not enter into any such settlement of a claim without the
consent of Teledyne Technologies (which will not be unreasonably withheld) if
the effect thereof is to render Teledyne Technologies liable for a monetary
obligation with respect to such claim. Teledyne Technologies agrees to
cooperate, at its own expense, with ATI in the reporting, handling, defense,
resolution and administration of such claims. Alternatively, ATI, at its sole
option shall have the right to require, at any time and from time to time, that
Teledyne Technologies and any member of the Teledyne Technologies Group, at
their sole expense, defend, resolve and administer any one or more or all claims
with respect to Teledyne Technologies Liabilities covered in whole, or in part,
by ATI Policies, including without limitation, the reporting of claims to the
issuers of such ATI Policies, as well as the management, defense and settlement
of such claims and, if ATI exercises such option, Teledyne Technologies and
members of the Teledyne Technologies Group, at ATI's request, shall at their
expense provide ATI with any and all information concerning, and permit ATI to
monitor, the foregoing management, defense, settlement and insurance handling of
such claims. Except with the express written consent of ATI, neither Teledyne
Technologies nor any member of the Teledyne Technologies Group shall provide any
issuer of ATI Policies with a release, nor shall they amend, modify, or waive
any rights under such ATI Policies, if such release, amendment, modification or
waiver would adversely affect rights or potential rights of ATI or any other
member of the ATI Group.
(h) With respect to policies procured by or for the Teledyne
Technologies Group subsequent to January 1999 and to policy years commencing on
or after the Distribution Date, Teledyne Technologies shall be responsible for
all aspects of claims administration with respect to Teledyne Technologies
Liabilities, and ATI shall have no responsibility therefor whatsoever.
(i) With respect to any Teledyne Technologies Liabilities or Teledyne
Technologies losses covered under ATI Policies, other than ATI General Liability
Policies, ATI Automobile Policies, ATI Workers Compensation Policies and ATI
Product Liability Policies, Teledyne Technologies shall be responsible for all
Unpaid Losses and all costs and expenses that give rise to a Self-Insurance
Obligation. In the event that ATI pays any such costs and expenses, Teledyne
Technologies shall reimburse ATI within thirty days of receipt of a billing for
any such costs and expenses.
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6.02 CERTAIN BUSINESS MATTERS. No member of any Group shall have any
duty to refrain from (i) engaging in the same or similar activities or lines of
business as any member of any other Group, (ii) doing business with any
potential or actual supplier or customer of any member of any other Group, or
(iii) engaging in, or refraining from, any other activities whatsoever relating
to any of the potential or actual suppliers or customers of any member of any
other Group.
6.03 LATE PAYMENTS. Except as expressly provided to the contrary in
this Agreement or in any Ancillary Agreement, any amount not paid when due
pursuant to this Agreement or any Ancillary Agreement (and any amounts billed or
otherwise invoiced or demanded and properly payable that are not paid within 30
days of such bill, invoice or other demand) shall accrue interest at a rate per
annum equal to the Prime Rate plus 2%.
6.04 CERTAIN GOVERNANCE MATTERS. (a) Teledyne Technologies and ATI
intend that until the third annual meeting of stockholders of Teledyne
Technologies held following the Distribution Date, at least a majority of the
members of the Board of Directors of Teledyne Technologies will at all times
consist of persons who are also members of the Board of Directors of ATI. The
initial members of the Board of Directors of Teledyne Technologies and the
respective initial Classes of the Board in which they will serve are as follows:
Class I: Thomas A. Corcoran (Chairman)
Diane C. Creel
C. Fred Fetterolf
Class II: Paul S. Brentlinger
Robert Mehrabian
Class III: Robert P. Bozzone
Frank V. Cahouet
Charles J. Queenan, Jr.
(b) Teledyne Technologies will, with respect to the first annual
meeting of stockholders of Teledyne Technologies held following the Distribution
Date, nominate for election and recommend to stockholders the election of Thomas
A. Corcoran, Diane C. Creel and C. Fred Fetterolf (or, if any such candidate
unable or unwilling to serve, such other candidate as Messrs. Bozzone, Cahouet
and Queenan or the survivor of them shall designate) to serve as a continuing
Class I director of Teledyne Technologies.
(c) Teledyne Technologies shall take such action from time to time as
ATI requests in order to assure that, until the third annual meeting of
stockholders of Teledyne Technologies following the Distribution Date, at least
a majority of the members of the Board of Directors of Teledyne Technologies
will at all times consist of persons who are also members of the Board of
Directors of ATI. Without limiting the generality of the foregoing, if for any
reason (including death, resignation or disqualification) there are no directors
of Teledyne Technologies who are also directors of ATI, Teledyne Technologies
will immediately take all action requested by ATI to appoint to the Board of
Directors of Teledyne Technologies such members of the Board of Directors of ATI
as ATI shall designate.
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ARTICLE VII
EXCHANGE OF INFORMATION; CONFIDENTIALITY
7.01 AGREEMENT FOR EXCHANGE OF INFORMATION; ARCHIVES. (a) Each of ATI
and Teledyne Technologies, on behalf of itself and its respective Group, agrees
to provide, or cause to be provided, to each other Group, at any time before or
after the Distribution Date, as soon as reasonably practicable after written
request therefor, any Information in the possession or under the control of such
respective Group which the requesting party reasonably requires (i) to comply
with reporting, disclosure, filing or other requirements imposed on the
requesting party (including under applicable securities or tax laws) by a
Governmental Authority having jurisdiction over the requesting party, (ii) for
use in any other judicial, regulatory, administrative, tax or other proceeding
or in order to satisfy audit, accounting, claims, regulatory, litigation, tax or
other similar requirements, or (iii) to comply with its obligations under this
Agreement or any Ancillary Agreement; provided, however, that in the event that
any party determines that any such provision of Information could be
commercially detrimental, violate any law or agreement, or waive any
attorney-client privilege, the parties shall take all reasonable measures to
permit the compliance with such obligations in a manner that avoids any such
harm or consequence.
(b) After the Distribution Date, each of ATI and Teledyne Technologies
shall have access during regular business hours (as in effect from time to time)
to the documents and objects of historic significance that relate to the their
respective Businesses that are in the possession of any other of such parties or
members of their respective Groups. Any party seeking such access may, at its
cost, obtain copies (but not originals) of documents for bona fide business
purposes and may obtain objects for exhibition purposes for commercially
reasonable periods of time if required for bona fide business purposes, provided
that such party shall cause any such objects to be returned promptly in the same
condition in which they were delivered and shall comply with any rules,
procedures or other requirements, and shall be subject to any restrictions
(including prohibitions on removal of specified objects), that are then
applicable to the possessing party.
(c) After the Distribution Date, (i) Teledyne Technologies shall
maintain in effect adequate systems and controls to the extent necessary to
enable the members of the ATI Group to satisfy their respective reporting,
accounting, audit and other obligations, and (ii) Teledyne Technologies shall
provide, or cause to be provided, to ATI, all financial and other data and
information as ATI determines necessary or advisable in order to prepare ATI
financial statements and reports or filings with any Governmental Authority.
7.02 OWNERSHIP OF INFORMATION. Any Information owned by one Group that
is provided to a requesting party pursuant to Section 7.01 shall be deemed to
remain the property of the providing party. Unless specifically set forth
herein, nothing contained in this Agreement shall be construed as granting or
conferring rights of license or otherwise in any such Information.
7.03 COMPENSATION FOR PROVIDING INFORMATION. The party requesting such
Information agrees to reimburse the other party for the reasonable costs, if
any, of creating, gathering and copying such Information, to the extent that
such costs are incurred for the benefit of the requesting party. Except as may
be otherwise specifically provided elsewhere in this
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Agreement or in any other agreement between the parties, such costs shall be
computed in accordance with the providing party's standard methodology and
procedures.
7.04 RECORD RETENTION. To facilitate the possible exchange of
Information pursuant to this Article VII and other provisions of this Agreement
after the Distribution Date, the parties agree to use their reasonable best
efforts to retain all Information in their respective possession or control on
the Distribution Date in accordance with the policies of ATI as in effect on the
Distribution Date. No party will destroy, or permit any of its Subsidiaries to
destroy, any Information which the other party may have the right to obtain
pursuant to this Agreement prior to the seventh anniversary of the date hereof
without first using its reasonable best efforts to notify the other party of the
proposed destruction and giving the other party the opportunity to take
possession of such information prior to such destruction; provided, however,
that in the case of any Information relating to Taxes or to Environmental
Liabilities, such period shall be extended to the expiration of the applicable
statute of limitations (giving effect to any extensions thereof).
7.05 OTHER AGREEMENTS PROVIDING FOR EXCHANGE OF INFORMATION. The rights
and obligations granted under this Article VII are subject to any specific
limitations, qualifications or additional provisions on the sharing, exchange or
confidential treatment of Information set forth in any Ancillary Agreement.
7.06 PRODUCTION OF WITNESSES; RECORDS; COOPERATION. (a) After the
Distribution Date, except in the case of an adversarial Action by one party
against another party, each party hereto shall use its reasonable efforts to
make available to each other party, upon written request, the former, current
and future directors, officers, employees, other personnel and agents of the
members of its respective Group as witnesses and any books, records or other
documents within its control or which it otherwise has the ability to make
available, to the extent that any such person (giving consideration to business
demands of such directors, officers, employees, other personnel and agents) or
books, records or other documents may reasonably be required in connection with
any Action in which the requesting party may from time to time be involved,
regardless of whether such Action is a matter with respect to which
indemnification may be sought hereunder. The requesting party shall bear all
costs and expenses (including allocated costs of in-house counsel and other
personnel) in connection therewith.
(b) If an Indemnifying Party chooses to defend or to seek to compromise
or settle any Third Party Claim, the other parties shall make available to such
Indemnifying Party, upon written request, the former, current and future
directors, officers, employees, other personnel and agents of the members of its
respective Group as witnesses and any books, records or other documents within
its control or which it otherwise has the ability to make available, to the
extent that any such person (giving consideration to business demands of such
directors, officers, employees, other personnel and agents) or books, records or
other documents may reasonably be required in connection with such defense,
settlement or compromise, or such prosecution, evaluation or pursuit, as the
case may be, and shall otherwise cooperate in such defense, settlement or
compromise, or such prosecution, evaluation or pursuit, as the case may be.
(c) Without limiting any provision of this Section, the parties shall
cooperate and consult to the extent reasonably necessary with respect to any
Action, and each of the parties
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agrees to cooperate, and to cause each member of its respective Group to
cooperate, with each other in the defense of any infringement or similar claim
with respect to any intellectual property and shall not claim to acknowledge, or
permit any member of its respective Group to claim to acknowledge, the validity
or infringing use of any intellectual property of a third Person in a manner
that would hamper or undermine the defense of such infringement or similar
claim.
(d) The obligation of the parties to provide witnesses pursuant to this
Section 7.06 is intended to be interpreted in a manner so as to facilitate
cooperation and shall include the obligation to provide as witnesses inventors
and other officers without regard to whether the witness or the employer of the
witness could assert a possible business conflict (subject to the qualifications
set forth in the first sentence of Section 7.06(a)).
(e) In connection with any matter contemplated by this Section 7.06,
the parties will enter into a mutually acceptable joint defense agreement so as
to maintain to the extent practicable any applicable attorney-client privilege
or work product immunity of any member of any Group.
7.07 CONFIDENTIALITY. (a) Subject to Section 7.08, each of ATI and
Teledyne Technologies, on behalf of itself and each member of its respective
Group, agrees to hold, and to cause its respective directors, officers,
employees, agents, accountants, counsel and other advisors and representatives
to hold, in strict confidence, with at least the same degree of care that
applies to ATI's confidential and proprietary information pursuant to policies
in effect as of the Distribution Date, all Information concerning each such
other Group that is either in its possession or furnished by any such other
Group or its respective directors, officers, employees, agents, accountants,
counsel and other advisors and representatives at any time pursuant to this
Agreement, any Ancillary Agreement or otherwise, and shall not use any such
Information other than for such purposes as shall be expressly permitted
hereunder or thereunder, except, in each case, to the extent that such
Information has been (i) in the public domain through no fault of such party or
any member of such Group or any of their respective directors, officers,
employees, agents, accountants, counsel and other advisors and representatives,
(ii) later lawfully acquired from other sources by such party (or any member of
such party's Group) which sources are not themselves bound by a confidentiality
obligation), or (iii) independently generated without reference to any
proprietary or confidential Information of the other party.
(b) Each party agrees not to release or disclose, or permit to be
released or disclosed, any such Information to any other Person, except its
directors, officers, employees, agents, accountants, counsel and other advisors
and representatives who need to know such Information (who shall be advised of
their obligations hereunder with respect to such Information), except in
compliance with Section 7.08. Without limiting the foregoing, when any
Information is no longer needed for the purposes contemplated by this Agreement
or any Ancillary Agreement, each party will promptly after request of the other
party either return to the other party all Information in a tangible form
(including all copies thereof and all notes, extracts or summaries based
thereon) or certify to the other party that it has destroyed such Information
(and such copies thereof and such notes, extracts or summaries based thereon).
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7.08 PROTECTIVE ARRANGEMENTS. In the event that any party or any member
of its Group either determines on the advice of its counsel that it is required
to disclose any Information pursuant to applicable law or receives any demand
under lawful process or from any Governmental Authority to disclose or provide
Information of any other party (or any member of any other party's Group) that
is subject to the confidentiality provisions hereof, such party shall notify the
other party prior to disclosing or providing such Information and shall
cooperate at the expense of the requesting party in seeking any reasonable
protective arrangements requested by such other party. Subject to the foregoing,
the Person that received such request may thereafter disclose or provide
Information to the extent required by such law (as so advised by counsel) or by
lawful process or such Governmental Authority.
ARTICLE VIII
FURTHER ASSURANCES
8.01 FURTHER ASSURANCES. (a) In addition to the actions specifically
provided for elsewhere in this Agreement, each of the parties hereto shall use
its reasonable efforts, prior to, on and after the Distribution Date, to take,
or cause to be taken, all actions, and to do, or cause to be done, all things,
reasonably necessary, proper or advisable under applicable laws, regulations and
agreements to consummate and make effective the transactions contemplated by
this Agreement and the Ancillary Agreements.
(b) Without limiting the foregoing, prior to, on and after the date
hereof, each party hereto shall cooperate with the other parties, and without
any further consideration, but at the expense of the requesting party, to
execute and deliver, or use its reasonable efforts to cause to be executed and
delivered, all instruments, including instruments of conveyance, assignment and
transfer, and to make all filings with, and to obtain all consents, approvals or
authorizations of, any Governmental Authority or any other Person under any
permit, license, agreement, indenture or other instrument (including any
Consents or Governmental Approvals), and to take all such other actions as such
party may reasonably be requested to take by any other party hereto from time to
time, consistent with the terms of this Agreement and the Ancillary Agreements,
in order to effectuate the provisions and purposes of this Agreement and the
Ancillary Agreements and the transfers of the Teledyne Technologies Assets and
the assignment and assumption of the Teledyne Technologies Liabilities and the
other transactions contemplated hereby and thereby. Without limiting the
foregoing, each party will, at the reasonable request, cost and expense of any
other party, take such other actions as may be reasonably necessary to vest in
such other party good and marketable title, free and clear of any Security
Interest, if and to the extent it is practicable to do so.
(c) On or prior to the Distribution Date, ATI and Teledyne Technologies
in their respective capacities as direct and indirect stockholders of their
respective Subsidiaries, shall each ratify any actions which are reasonably
necessary or desirable to be taken by ATI or Teledyne Technologies or any other
Subsidiary of ATI, as the case may be, to effectuate the transactions
contemplated by this Agreement.
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(d) ATI and Teledyne Technologies, on behalf of itself and each member
of its respective Group, waive (and agree not to assert against any of the
others) any claim or demand that any of them may have against any of the others
for any Liabilities or other claims relating to or arising out of: (i) the
failure of Teledyne Technologies or any member of the Teledyne Technologies
Group, on the one hand, or of ATI or any member of the ATI Group, on the other
hand, to provide any notification or disclosure required under any state
Environmental Law in connection with the Separation or the other transactions
contemplated by this Agreement, including the transfer by any member of any
Group to any member of any other Group of ownership or operational control of
any Assets not previously owned or operated by such transferee; or (ii) any
inadequate, incorrect or incomplete notification or disclosure under any such
state Environmental Law by the applicable transferor. To the extent any
Liability to any Governmental Authority or any third Person arises out of any
action or inaction described in clause (i) or (ii) above, the transferee of the
applicable Asset hereby assumes and agrees to pay any such Liability.
ARTICLE IX
TERMINATION
9.01 TERMINATION. This Agreement may be terminated by ATI at any time
prior to the Distribution.
9.02 EFFECT OF TERMINATION. In the event of any termination of this
Agreement pursuant to Section 9.01, no party to this Agreement (or any of its
directors or officers) shall have any Liability or further obligation to any
other party.
ARTICLE X
MISCELLANEOUS
10.01. COUNTERPARTS; ENTIRE AGREEMENT; CORPORATE POWER. (a) This
Agreement and each Ancillary Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
(b) This Agreement, and the Ancillary Agreements and the Exhibits,
Schedules and Appendices hereto and thereto contain the entire agreement between
the parties with respect to the subject matter hereof, supersede all previous
agreements, negotiations, discussions, writings, understandings, commitments and
conversations with respect to such subject matter and there are no agreements or
understandings between the parties other than those set forth or referred to
herein or therein.
(c) ATI represents on behalf of itself and each other member of the ATI
Group, and Teledyne Technologies represents on behalf of itself and each other
member of the Teledyne Technologies Group, as follows:
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(i) each such Person has the requisite corporate or other
power and authority and has taken all corporate or other action
necessary in order to execute, deliver and perform each of this
Agreement and each other Ancillary Agreements to which it is a party
and to consummate the transactions contemplated hereby and thereby; and
(ii) this Agreement and each Ancillary Agreement to which it
is a party has been duly executed and delivered by it and constitutes a
valid and binding agreement of it enforceable in accordance with the
terms thereof.
(d) Each party hereto acknowledges that it and each other party hereto
may be executing certain of the Ancillary Agreements by facsimile, stamp or
mechanical signature. Each party hereto expressly adopts and confirms each such
facsimile, stamp or mechanical signature made in its respective name as if it
were a manual signature, agrees that it will not assert that any such signature
is not adequate to bind such party to the same extent as if it were signed
manually and agrees that at the reasonable request of any other party hereto at
any time it will as promptly as reasonably practicable cause each such Ancillary
Agreement to be manually executed (any such execution to be as of the date of
the initial date thereof).
10.02. GOVERNING LAW; CONSENT TO JURISDICTION. (a) This Agreement and,
unless expressly provided therein, each Ancillary Agreement, shall be governed
by and construed and interpreted in accordance with the laws of the Commonwealth
of Pennsylvania as to all matters, including matters of validity, construction,
effect, enforceability, performance and remedies, irrespective of the choice of
laws principles of the Commonwealth of Pennsylvania.
(b) Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of (i) the Court of Common Pleas of Allegheny County, Pennsylvania
and (ii) the United States District Court for the Western District of
Pennsylvania, for the purposes of any suit, action or other proceeding arising
out of this Agreement or any Ancillary Agreement or any transaction contemplated
hereby or thereby (and agrees not to commence any action, suit or proceeding
relating thereto except in such courts). Each of the parties hereto further
agrees that service of any process, summons, notice or document hand delivered
or sent by U.S. registered mail to such party's respective address set forth in
Section 10.05 will be effective service of process for any action, suit or
proceeding in Pennsylvania with respect to any matters to which it has submitted
to jurisdiction as set forth in the immediately preceding sentence. Each of the
parties hereto irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or any Ancillary Agreement or the transactions contemplated hereby or thereby in
(i) the Court of Common Pleas of Allegheny County, Pennsylvania or (ii) the
United States District Court for the Western District of Pennsylvania, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
10.03. ASSIGNABILITY. Except as set forth in any Ancillary Agreement,
this Agreement and each Ancillary Agreement shall be binding upon and inure to
the benefit of the parties hereto and thereto, respectively, and their
respective successors and assigns (including any direct or indirect assignee of
any of the Teledyne Technologies Assets); provided, however, that
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no party hereto or thereto may assign its respective rights or delegate its
respective obligations under this Agreement or any Ancillary Agreement without
the express prior written consent of the other parties hereto or thereto.
10.04. THIRD PARTY BENEFICIARIES. Except for the indemnification rights
under this Agreement of any ATI Indemnitee, Teledyne Technologies Indemnitee or
Water Pik Indemnitee in their respective capacities as such, (a) the provisions
of this Agreement and each Ancillary Agreement are solely for the benefit of the
parties and are not intended to confer upon any Person except the parties any
rights or remedies hereunder, (b) there are no third party beneficiaries of this
Agreement or any Ancillary Agreement, and (c) neither this Agreement nor any
Ancillary Agreement shall provide any third person with any remedy, claim,
liability, reimbursement, claim of action or other right in excess of those
existing without reference to this Agreement or any Ancillary Agreement. No
party hereto shall have any right, remedy or claim with respect to any provision
of this Agreement or any Ancillary Agreement to the extent such provision
relates solely to the other two parties hereto or the members of such other two
parties' respective Groups. No party shall be required to deliver any notice
under this Agreement or under any Ancillary Agreement to any other party with
respect to any matter in which such other party has no right, remedy or claim.
10.05. NOTICES. All notices or other communications under this
Agreement or any Ancillary Agreement shall be in writing and shall be deemed to
be duly given when (a) delivered in person or (b) deposited in the United States
mail or private express mail, postage prepaid, addressed as follows:
If to ATI, Holdings or TII, to: Allegheny Teledyne Incorporated
1000 Six PPG Place
Pittsburgh, Pennsylvania 15222-5479
Attn: Senior Vice President, General
Counsel and Secretary
If to Teledyne Technologies, to: Teledyne Technologies Incorporated
2049 Century Park East
Los Angeles, California 90067-3101
Attn: Senior Vice President, General
Counsel and Secretary
Any party may, by notice to the other party, change the address to which such
notices are to be given.
10.06. SEVERABILITY. If any provision of this Agreement or any
Ancillary Agreement or the application thereof to any Person or circumstance is
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions hereof or thereof, or the application of
such provision to Persons or circumstances or in jurisdictions other than those
as to
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which it has been held invalid or unenforceable, shall remain in full force and
effect and shall in no way be affected, impaired or invalidated thereby, so long
as the economic or legal substance of the transactions contemplated hereby or
thereby, as the case may be, is not affected in any manner adverse to any party.
Upon such determination, the parties shall negotiate in good faith in an effort
to agree upon such a suitable and equitable provision to effect the original
intent of the parties.
10.07. FORCE MAJEURE. No party shall be deemed in default of this
Agreement or any Ancillary Agreement to the extent that any delay or failure in
the performance of its obligations under this Agreement or any Ancillary
Agreement results from any cause beyond its reasonable control and without its
fault or negligence, such as acts of God, acts of civil or military authority,
embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes,
floods, unusually severe weather conditions, labor problems or unavailability of
parts, or, in the case of computer systems, Year 2000 problems or any failure in
electrical or air conditioning equipment. In the event of any such excused
delay, the time for performance shall be extended for a period equal to the time
lost by reason of the delay.
10.08. HEADINGS. The article, section and paragraph headings contained
in this Agreement and in the Ancillary Agreements are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement or any Ancillary Agreement.
10.09. SURVIVAL OF COVENANTS. Except as expressly set forth in any
Ancillary Agreement, the covenants, representations and warranties contained in
this Agreement and each Ancillary Agreement, and liability for the breach of any
obligations contained herein, shall survive each of the Separation and the
Distribution and shall remain in full force and effect.
10.10. WAIVERS OF DEFAULT. Waiver by any party of any default by the
other party of any provision of this Agreement or any Ancillary Agreement shall
not be deemed a waiver by the waiving party of any subsequent or other default,
nor shall it prejudice the rights of the other party.
10.11. SPECIFIC PERFORMANCE. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of this
Agreement or any Ancillary Agreement, the party or parties who are or are to be
thereby aggrieved shall have the right to specific performance and injunctive or
other equitable relief of its rights under this Agreement or such Ancillary
Agreement, in addition to any and all other rights and remedies at law or in
equity, and all such rights and remedies shall be cumulative. The parties agree
that the remedies at law for any breach or threatened breach, including monetary
damages, are inadequate compensation for any loss and that any defense in any
action for specific performance that a remedy at law would be adequate is
waived. Any requirements for the securing or posting of any bond with such
remedy are waived.
10.12. AMENDMENTS. No provisions of this Agreement or any Ancillary
Agreement shall be deemed waived, amended, supplemented or modified by any
party, unless such waiver, amendment, supplement or modification is in writing
and signed by the authorized representative of the party against whom it is
sought to enforce such waiver, amendment, supplement or
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<PAGE> 44
modification. Without limiting the foregoing, the parties agree that any waiver,
amendment, supplement or modification of this Agreement or any Ancillary
Agreement that solely relates to and affects only two of the three parties
hereto shall not require the consent of the third party hereto.
10.13. INTERPRETATION. Words in the singular shall be held to include
the plural and vice versa and words of one gender shall be held to include the
other genders as the context requires. The terms "hereof," "herein," and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement (or the applicable Ancillary Agreement) as
a whole (including all of the Schedules, Exhibits and Appendices hereto and
thereto) and not to any particular provision of this Agreement (or such
Ancillary Agreement). Article, Section, Exhibit, Schedule and Appendix
references are to the Articles, Sections, Exhibits, Schedules and Appendices to
this Agreement (or the applicable Ancillary Agreement) unless otherwise
specified. The word "including" and words of similar import when used in this
Agreement (or the applicable Ancillary Agreement) shall mean "including, without
limitation," unless the context otherwise requires or unless otherwise
specified. The word "or" shall not be exclusive. Unless expressly stated to the
contrary in this Agreement or in any Ancillary Agreement, all references to "the
date hereof," "the date of this Agreement," "hereby" and "hereupon" and words of
similar import shall all be references to November 29, 1999, regardless of any
amendment or restatement hereof.
10.14. DISPUTES. (a) Resolution of any and all disputes arising from or
in connection with this Agreement other than those arising from or in connection
with Article IV of this Agreement, whether based on contract, tort, statute or
otherwise, including, but not limited to, disputes in connection with claims by
third parties (collectively, "Disputes"), shall be subject to the provisions of
this Section 10.14; provided, however, that nothing contained herein shall
preclude any party from seeking or obtaining (i) injunctive relief or (ii)
equitable or other judicial relief to enforce the provisions hereof or to
preserve the status quo pending resolution of Disputes hereunder.
(b) Any party may give the other parties written notice of any Dispute
not resolved in the normal course of business. The parties shall attempt in good
faith to resolve any Dispute promptly by negotiation between executives of the
parties who have authority to settle the controversy. Within 15 days after
delivery of the notice, the foregoing executives of both parties shall meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary for a period not to exceed five days, to attempt to resolve the
Dispute. All reasonable requests for information made by one party to the other
will be honored. If the parties do not resolve the Dispute within such 20 day
period (the "Initial Mediation Period"), the parties shall attempt in good faith
to resolve the Dispute by negotiation between or among the Designated Officers.
The Designated Officers shall meet at a mutually acceptable time and place (but
in no event no later than 15 days following the expiration of the Initial
Mediation Period) and thereafter as often as they reasonably deem necessary for
a period not to exceed 15 days, to attempt to resolve the Dispute.
(c) If the Dispute has not been resolved by negotiation within 50 days
of the first party's notice, or if the parties failed to meet within 15 days of
the first party's notice, or if the
41
<PAGE> 45
Designated Officers failed to meet within 35 days of the first party's notice,
any party may commence any litigation or other procedure allowed by law.
10.15. EXCLUSIVITY OF TAX SHARING AGREEMENT. Notwithstanding anything
in this Agreement to the contrary, and subject to the provisions of Article IV
hereof, the Tax Sharing Agreement will be the exclusive agreement among the
parties with respect to all matters pertaining to Taxes, including, without
limitation, indemnification with respect to matters pertaining to Taxes and
indemnification with respect to the qualification of the Distribution as a
tax-free distribution under Section 355 and related provisions of the Code.
42
<PAGE> 46
IN WITNESS WHEREOF, the parties have caused this Separation and
Distribution Agreement to be executed by their duly authorized representatives.
ALLEGHENY TELEDYNE INCORPORATED
By: /s/ James L. Murdy
--------------------------------
Name:
Title:
TDY HOLDINGS, LLC
By: /s/ James L. Murdy
--------------------------------
Name:
Title:
TELEDYNE INDUSTRIES, INC.
By: /s/ James L. Murdy
--------------------------------
Name:
Title:
TELEDYNE TECHNOLOGIES INCORPORATED
By: /s/ Robert Mehrabian
--------------------------------
Name:
Title:
43
<PAGE> 1
Exhibit 4.1
TELEDYNE TECHNOLOGIES INCORPORATED
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
RIGHTS AGENT
----------------
RIGHTS AGREEMENT
DATED AS OF NOVEMBER 12, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Section 1. Definitions..........................................................................1
Section 2. Appointment of Rights Agent..........................................................4
Section 4. Form of Right Certificates...........................................................6
Section 5. Countersignature and Registration....................................................6
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates..............................6
Section 7. Exercise of Rights: Purchase Price; Expiration Date of Rights........................7
Section 8. Cancellation and Destruction of Right Certificates...................................8
Section 9. Availability of Preferred Shares.....................................................8
Section 10. Preferred Shares Record Date.........................................................9
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights...................9
Section 12. Certificate of Adjustments..........................................................15
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power................15
Section 14. Fractional Rights and Fractional Shares.............................................16
Section 15. Rights of Action....................................................................16
Section 16. Agreement of Right Holders..........................................................17
Section 17. Right Certificate Holder Not Deemed a Stockholder...................................17
Section 18. Concerning the Rights Agent.........................................................17
Section 19. Merger or Consolidation or Change of Name of Rights Agent...........................18
Section 20. Duties of Rights Agent..............................................................19
Section 21. Change of Rights Agent..............................................................20
Section 22. Issuance of New Right Certificates..................................................21
Section 23. Redemption..........................................................................21
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 24. Exchange............................................................................22
Section 25. Notice of Certain Events............................................................23
Section 26. Notices.............................................................................23
Section 27. Supplements and Amendments..........................................................24
Section 28. Successors..........................................................................24
Section 29. Benefits of this Rights Agreement...................................................24
Section 30. Severability........................................................................24
Section 31. Governing Law.......................................................................25
Section 32. Counterparts........................................................................25
Section 33. Descriptive Headings................................................................25
EXHIBIT A
Section 1. Designation and Amount.......................................................A-1
Section 2. Dividends and Distributions..................................................A-2
Section 3. Voting Rights................................................................A-3
Section 4. Certain Restrictions.........................................................A-3
Section 5. Reacquired Shares............................................................A-4
Section 6. Liquidation, Dissolution or Winding Up.......................................A-4
Section 7. Consolidation, Merger, etc...................................................A-5
Section 8. No Redemption................................................................A-5
Section 9. Rank.........................................................................A-5
Section 10. Amendment....................................................................A-5
</TABLE>
EXHIBIT B
ii
<PAGE> 4
Agreement, dated as of November 12, 1999, between TELEDYNE TECHNOLOGIES
INCORPORATED, a Delaware corporation (the "Company"), and CHASEMELLON
SHAREHOLDER SERVICES, L.L.C., a New Jersey limited liability company (the
"Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as hereinafter defined) of the Company to be distributed in the distribution of
Common Shares of the Company (the "Spin-Off") by Allegheny Teledyne
Incorporated, a Delaware corporation ("ATI"), to ATI's stockholders, each Right
representing the right to purchase one one-hundredth of a Preferred Share (as
hereinafter defined) upon the terms and subject to the conditions herein set
forth, and has further authorized and directed the issuance of one Right with
respect to each Common Share of the Company that shall become outstanding
between the effective date of the Spin-Off (the "Record Date") and the earliest
of the Distribution Date, the Redemption Date and the Final Expiration Date (as
such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Definitions. For purposes of this Rights Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15 % or more of the Common Shares of the Company then
outstanding, but shall not include the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any Subsidiary of the Company or
ATI, any entity holding Common Shares for or pursuant to the terms of any such
plan. Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of an acquisition of Common Shares of the Company by the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15 % or more
of the Common Shares then outstanding; provided, however, that if a Person shall
become the Beneficial Owner of 15 % or more of the Common Shares then
outstanding by reason of share purchases by the Company and shall, after such
share purchases by the Company, become the Beneficial Owner of any additional
Common Shares, then such Person shall be deemed to be an "Acquiring Person."
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this Section 1(a),
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person would no
longer be an "Acquiring Person," as defined pursuant to the foregoing provisions
of this Section 1(a), then such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Rights Agreement. Notwithstanding the foregoing
provisions of this Section 1(a), ATI shall not be deemed to be an Acquiring
Person by virtue of its ownership of capital stock of the Company prior to the
Spin-Off.
<PAGE> 5
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date of this Rights Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "beneficially own" any Securities:
(i) that such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly;
(ii) that such Person or any of such Person's Affiliates or Associates
has (A) the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
Securities), upon the exercise of conversion rights, exchange rights, rights
(other than these Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, Securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates until
such tendered Securities are accepted for purchase or exchange; or (B) the right
to vote pursuant to any agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any Security if the agreement, arrangement or understanding to
vote such Security (1) arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations promulgated
under the Exchange Act and (2) is not also then reportable on Schedule 13D under
the Exchange Act (or any comparable or successor report); or
(iii) that are beneficially owned, directly or indirectly, by any other
Person with which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with respect to a bona
fide public offering of Securities) for the purpose of holding, acquiring,
voting (except to the extent contemplated by the provisos to Section l(c)(ii))
or disposing of any Securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of Securities of the Company, shall mean the
number of such Securities then issued and outstanding together with the number
of such Securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in the State of California and/or the
State of New York are authorized or obligated by law or executive order to
close.
2
<PAGE> 6
(e) "Close of business" on any given date shall mean 5:00 P.M., Eastern
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 P.M., Eastern time, on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company shall mean
the shares of common stock, par value $.01 per share, of the Company. "Common
Shares" when used with reference to any Person other than the Company shall mean
the capital stock (or equity interest) with the greatest voting power of such
other Person or, if such other Person is a Subsidiary of another Person, the
Person that ultimately controls such first-mentioned Person.
(g) "Company" shall have the meaning set forth in the preamble hereof.
(h) "Current per share market price" shall have the meaning set forth
in Section 11(d).
(i) "Distribution Date" shall have the meaning set forth in Section
3(a).
(j) "Equivalent preferred shares" shall have the meaning set forth in
Section 11(b).
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(l) "Exchange Ratio" shall have the meaning set forth in Section 24(a).
(m) "Final Expiration Date" shall have the meaning set forth in Section
7(a).
(n) "Person" shall mean any individual, firm, corporation, limited
liability company or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(o) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company having
the rights and preferences set forth in the form of Certificate of Designations
attached to this Rights Agreement as Exhibit A.
(p) "Purchase Price" shall have the meaning set forth in Section 4.
(q) "Record Date" shall have the meaning set forth in the recitals
hereof.
(r) "Redemption Date" shall have the meaning set forth in Section 7(a).
(s) "Redemption Price" shall have the meaning set forth in Section
23(a).
(t) "Right" shall have the meaning set forth in the recitals hereof.
(u) "Right Certificate" shall have the meaning set forth in Section
3(a).
(v) "Rights Agent" shall have the meaning set forth in the preamble
hereof.
(w) "Security" shall have the meaning set forth in Section 3(a)(10) of
the Exchange Act.
3
<PAGE> 7
(x) "Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
(y) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interests is owned, directly or indirectly, by such Person.
(z) "Trading Day" shall have the meaning set forth in Section 11(d)(i).
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Right Certificates. (a) Until the earlier of (i)
the Shares Acquisition Date or (ii) the tenth business day (or such later date
as may be determined by action of the Board of Directors prior to such time as
any Person becomes an Acquiring Person) after the date of the commencement or
the announcement of an intention to commence by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company or any entity holding Common Shares for or
pursuant to the terms of any such plan) of a tender or exchange offer the
consummation of which would result in any Person becoming the Beneficial Owner
of Common Shares of the Company aggregating 15% or more of the then outstanding
Common Shares (including any such date which is after the date of this Rights
Agreement and prior to the issuance of the Rights; the earlier of such dates
being herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of Section 3(b)) by the certificates for
Common Shares registered in the names of the holders thereof (which certificates
shall also be deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Right Certificates will be
transferable only in connection with the transfer of Common Shares. As soon as
practicable after the Distribution Date, the Company will prepare and execute,
the Rights Agent will countersign, and the Company will send or cause to be sent
(and the Rights Agent will, if requested, send) by first-class, insured,
postage-prepaid mail, to each record holder of Common Shares as of the close of
business on the Distribution Date at the address of such holder shown on the
records of the Company a Right Certificate, in substantially the form of Exhibit
B hereto, evidencing one Right for each Common Share so held (a "Right
Certificate"). As of the Distribution Date, the Rights will be evidenced solely
by such Right Certificates.
(b) Until the Distribution Date (or the earlier of the Redemption Date
or the Final Expiration Date), the surrender for transfer of any certificate for
Common Shares outstanding on the Record Date shall also constitute the transfer
of the Rights associated with the Common Shares represented thereby.
(c) Until the earliest of the Distribution Date, the Redemption Date or
the Final Expiration Date, certificates for Common Shares shall have impressed
on, printed on, written on or otherwise affixed to them the following legend:
4
<PAGE> 8
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Teledyne Technologies
Incorporated and ChaseMellon Shareholder Services, L.L.C., dated as of November
12, 1999, as amended from time to time (as so amended, the "Rights Agreement"),
the terms of which are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of Teledyne Technologies
Incorporated. Under certain circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate. Teledyne Technologies Incorporated will mail to
the holder of this certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. Under certain circumstances, as set
forth in the Rights Agreement, Rights issued to any Person who becomes an
Acquiring Person (as defined in the Rights Agreement) may become null and void.
With respect to the certificates containing the foregoing legend, until
the Distribution Date the Rights associated with the Common Shares represented
by such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
(d) Until the earliest of the Distribution Date, the Redemption Date or
the Final Expiration Date, confirmations and account statements sent to holders
of Common Shares in book-entry form and initial transaction statements relating
to the registration, pledge or release from pledge of Common Shares in
uncertificated form shall have impressed on, printed on, written on or otherwise
affixed to them substantially the following legend:
The shares of the Common Stock, par value $.01 per share, of Teledyne
Technologies Incorporated, to which this statement relates also evidence and
entitle the holder thereof to certain Rights as set forth in a Rights Agreement
between Teledyne Technologies Incorporated and ChaseMellon Shareholder Services,
L.L.C., dated as of November 12, 1999 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy of which is on file
at the principal executive offices of Teledyne Technologies Incorporated. Under
certain circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by the shares
to which this statement relates. Teledyne Technologies Incorporated will mail to
the holder of the shares to which this statement relates and any registered
pledgee of uncertificated shares a copy of the Rights Agreement without charge
after receipt of a written request therefor. Under certain circumstances, as set
forth in the Rights Agreement, Rights issued to any Person who becomes an
Acquiring Person (as defined in the Rights Agreement) may become null and void.
With respect to Common Shares in book-entry form for which there has
been sent a confirmation or account statement and Common Shares in
uncertificated form for which there has been sent an initial transaction
statement containing the foregoing legend, until the Distribution Date, the
rights associated with such Common Shares shall be evidenced by such Common
Shares alone, and the registration of transfer or pledge, or the release from
pledge, of any such Common Shares shall also constitute the registration of
transfer or pledge, or the release from pledge, as the case may be, of the
rights associated with such Common Shares.
5
<PAGE> 9
(e) In the event that the Company purchases or acquires any Common
Shares after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Shares shall be deemed cancelled and retired so that
the Company shall not be entitled to exercise any Rights associated with Common
Shares that are no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be substantially the same as Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate, which do
not affect the duties or responsibilities of the Rights Agent, and as are not
inconsistent with the provisions of this Rights Agreement or as may be required
to comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or automated
quotation system on which the Rights may from time to time be listed or to
conform to usage. Subject to the provisions of Section 22, the Right
Certificates shall entitle the holders thereof to purchase such number of one
one-hundredths of a Preferred Share as shall be set forth therein at the price
per one one-hundredth of a Preferred Share set forth therein (the "Purchase
Price"), but the number of such one one-hundredths of a Preferred Share and the
Purchase Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents, or its
Treasurer, either manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned. In
case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates nevertheless may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of execution of this Rights Agreement any such
Person was not such an officer.
Following the Distribution Date and receipt by the Rights Agent of the
notice and list of record holders of Rights referred to in Section 3(a) hereof,
the Rights Agent will keep or cause to be kept, at its office designated
pursuant to Section 26 hereof, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names and addresses of
the holders of the Right Certificates, the number of Rights evidenced on its
face by each of the Right Certificates and the date of each of the Right
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Section 14, at any time after the close of business on the
Distribution Date and at or prior to the close of business on the earlier of the
Redemption Date or the Final Expiration Date, any Right Certificate or Right
6
<PAGE> 10
Certificates (other than Right Certificates representing Rights that have become
void pursuant to Section 11(a)(ii) or that have been exchanged pursuant to
Section 24) may be transferred, split up, combined or exchanged for another
Right Certificate or Right Certificates, entitling the registered holder to
purchase a like number of one one-hundredths of a Preferred Share as the Right
Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make such request in
writing delivered to the Rights Agent and shall surrender the Right Certificate
or Right Certificates to be transferred, split up, combined or exchanged at the
office of the Rights Agent. Thereupon the Rights Agent shall countersign and
deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates. The Rights Agent shall not be required to process any
transaction contemplated in this Section 6 unless and until it has received
written evidence that all taxes and governmental charges have been paid.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate and, in case of loss, theft or destruction, of indemnity or security
satisfactory to them and, at the Company's request, reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto and upon
surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered holder in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights: Purchase Price; Expiration Date of
Rights. (a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the office of the Rights Agent, together
with payment of the Purchase Price for each one one-hundredth of a Preferred
Share as to which Rights are being exercised, at or prior to the earliest of (i)
the close of business on November 12, 2009 (the "Final Expiration Date"), (ii)
the time at which the Rights are to be redeemed as provided in Section 23 (the
"Redemption Date"), or (iii) the time at which such Rights are to be exchanged
as provided in Section 24.
(b) The Purchase Price for each one one-hundredth of a Preferred Share
purchasable pursuant to the exercise of a Right shall initially be $60, shall be
subject to adjustment from time to time as provided in Section 11 or 13, and
shall be payable in lawful money of the United States of America in accordance
with Section 7 (c).
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount equal
to any applicable tax or governmental charge required to be paid by the holder
of such Right Certificate in accordance with Section 9 by certified check,
cashier's check or money order payable to the order of the Company, the Rights
7
<PAGE> 11
Agent shall thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Shares certificates for the number of Preferred Shares to be
purchased and the Company hereby authorizes such transfer agent to comply with
all such requests or (B) requisition from the depositary agent depositary
receipts representing such number of one one-hundredths of a Preferred Share as
are to be purchased (in which case certificates for the Preferred Shares
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the depositary agent to comply
with such request, (ii) when necessary to comply with this Agreement,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 14, (iii) promptly after receipt
of such certificates or depositary receipts, cause the same to be delivered to
or upon the order of the registered holder of such Right Certificate, registered
in such name or names as may be designated by such holder, and (iv) when
necessary to comply with this Agreement, after receipt, promptly deliver such
cash to or upon the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 6 and Section 14.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver the
Rights Certificates to the Rights Agent for cancellation and retirement and the
Rights Agent shall so cancel and retire, any other Right Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Right Certificates to the Company or shall, at
the written request of the Company, destroy such cancelled Right Certificates
and in such case shall deliver a certificate of destruction thereof to the
Company.
Section 9. Availability of Preferred Shares. The Company covenants and
agrees that it will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares or any Preferred Shares held in its
treasury the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7. The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Preferred Shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such Preferred Shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when due and
payable any and all taxes and governmental charges which may be payable in
respect of the issuance or delivery of the Right Certificates or of any
Preferred Shares upon the exercise of Rights. The Company shall not, however, be
required to pay any tax or governmental charges which may be payable in respect
of any transfer or delivery of Right Certificates to a person other than, or any
issuance or
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delivery of certificates or depositary receipts for Preferred Shares in a name
other than that of, the registered holder of the Right Certificate evidencing
the Rights surrendered for exercise or to issue or to deliver any certificates
or depositary receipts for Preferred Shares upon the exercise of any Rights
until any such tax shall have been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender) or until it has been
established to the Company's reasonable satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each Person in whose name any
certificate for Preferred Shares is issued upon an exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable taxes and governmental
charges) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Share transfer books of the Company
are closed, such person shall be deemed to have become the record holder of such
shares on and such certificate shall be dated the next succeeding Business Day
on which the Preferred Share transfer books of the Company are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of the Preferred Shares for
which such Rights shall be exercisable, including, without limitation, the right
to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event that the Company shall at any time after the date
of this Rights Agreement (A) declare a dividend on the Preferred Shares payable
in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification and the number and kind of
shares of capital stock issuable on such date shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Share transfer books of the Company were open, he would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.
(ii) Subject to Section 24, in the event that any Person becomes an
Acquiring Person, each holder of a Right shall thereafter have a right to
receive, upon exercise thereof at a price equal to the then-current Purchase
Price multiplied by the number of one one-hundredths of a
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<PAGE> 13
Preferred Share for which a Right is then exercisable, in accordance with the
terms of this Rights Agreement and in lieu of Preferred Shares, such number of
Common Shares of the Company as shall equal the result obtained by (A)
multiplying the then-current Purchase Price by the number of one one-hundredths
of a Preferred Share for which a Right is then exercisable and dividing that
product by (B) 50% of the current per share market price of the Common Shares
(determined pursuant to Section 11(d)) on the date of such event. In the event
that any Person shall become an Acquiring Person and the Rights shall then be
outstanding, the Company shall not take any action which would eliminate or
diminish the benefits intended to be afforded by the Rights.
From and after the occurrence of such event, any Rights that are or
were acquired or beneficially owned by any Acquiring Person (or any Associate or
Affiliate of such Acquiring Person) shall be void and any holder of such Rights
shall thereafter have no right to exercise such Rights under any provision of
this Rights Agreement. No Right Certificate shall be issued pursuant to Section
3 to represent Rights beneficially owned by an Acquiring Person or any Associate
or Affiliate thereof whose Rights have become void pursuant to the preceding
sentence; no Right Certificate shall be issued at any time for the transfer of
any Rights to an Acquiring Person or any Associate or Affiliate thereof or to
any nominee of such Acquiring Person, Associate or Affiliate as such Rights
would be void pursuant to the preceding sentence; and any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring Person shall be
canceled.
(iii) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii), the
Company shall take all such action as may be necessary to authorize additional
Common Shares for issuance upon exercise of the Rights. In the event the Company
shall, after good faith effort, be unable to take all such action as may be
necessary to authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be issuable upon exercise
of a Right, a number of Preferred Shares or fraction thereof such that the
product of the current per share market price of one Preferred Share multiplied
by such number or fraction is equal to the current per share market price of one
Common Share as of the date of issuance of such Preferred Shares or fraction
thereof.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or Securities convertible into or exchangeable for Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion or exchange price per share, if a
Security convertible into or exchangeable for Preferred Shares or equivalent
preferred shares) less than the then-current per share market price of the
Preferred Shares on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date plus the
number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion or exchange price of the convertible or
exchangeable Securities so to be offered)
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<PAGE> 14
would purchase at such current market price and the denominator of which shall
be the number of Preferred Shares outstanding on such record date plus the
number of additional Preferred Shares and/or equivalent preferred shares to be
offered for subscription or purchase (or into or for which the convertible or
exchangeable Securities so to be offered are initially convertible or
exchangeable); provided, however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one Right. In
case such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.
Preferred Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such rights, options or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(c) In case the Company shall fix a record date for making a
distribution to all holders of the Preferred Shares (including any such
distribution to be made in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation) of assets or evidences
of indebtedness (other than a regular quarterly cash dividend or a dividend
payable in Preferred Shares) or subscription rights or warrants (excluding those
referred to in Section 11(b)), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then-current per share market price of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share, and the denominator of which shall be such
current per share market price of the Preferred Shares; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder, the "current per
share market price" of any Security on any date shall be deemed to be the
average of the daily closing prices per share or other unit of such Security for
the 30 consecutive Trading Days immediately prior to and not including such
date; provided, however, that in the event that the current per share market
price of a Security is to be determined for any date during a period prior to
and not including the announcement by the issuer of such Security of (A) a
dividend or distribution on such Security payable in shares or other units of
such Security or Securities convertible into or exchangeable for such shares or
other units of such Security, or (B) any subdivision, combination or
reclassification of such Security and does not end prior to the expiration of 30
Trading Days after the ex-dividend date for such dividend or distribution or the
record date for such subdivision, combination or reclassification, then, and in
each such case, the current per share market price shall be
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<PAGE> 15
appropriately adjusted to reflect such dividend, distribution, subdivision,
combination or reclassification. The closing price of a Security for any Trading
Day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if such Security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on the
principal national securities exchange on which such Security is listed or
admitted to trading or, if such Security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or such other system then in use, or, if on any
such Trading Day such Security is not reported by any such system, the average
of the closing bid and asked prices as furnished by a professional market maker
making a market in such Security selected by the Board of Directors of the
Company. The term "Trading Day" for any Security shall mean a day on which the
principal national securities exchange on which such Security is listed or
admitted to trading is open for the transaction of business or, if such Security
is not listed or admitted to trading on any national securities exchange, a
Business Day.
(ii) For the purpose of any computation hereunder, the current per
share market price of the Preferred Shares shall be determined in accordance
with the method set forth in Section 11(d)(i) if possible. If the Preferred
Shares are not publicly traded, the current per share market price of the
Preferred Shares shall be conclusively deemed to be the current per share market
price of the Common Shares as determined pursuant to Section 11(d)(i) multiplied
by one hundred (appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof). If neither the
Common Shares nor the Preferred Shares are publicly held or listed or traded,
current per share market price shall mean the fair value per share as determined
in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one one-millionth of a
Preferred Share or one ten-thousandth of any other Security, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such adjustment or (ii)
the date of the expiration of the right to exercise any Rights.
(f) If, as a result of an adjustment made pursuant to Section 11(a),
the holder of any Right thereafter exercised shall become entitled to receive
any shares of capital stock of the Company other than Preferred Shares, then the
number of such other shares so receivable upon exercise of any Right shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred Shares
contained in
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Section 11(a) through (c) inclusive, and the provisions of Sections 7, 9, 10 and
13 with respect to the Preferred Shares shall apply on like terms to any such
other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised the option provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of any
calculation made pursuant to Section 11(b) or (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a Preferred Share (calculated to the nearest one one-millionth
of a Preferred Share) obtained by (i) multiplying (A) the number of one
one-hundredths of a share covered by a Right immediately prior to this
adjustment by (B) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. The Company shall provide written
notice of any public announcement to the Rights Agent, in addition to a copy of
such announcement. This record date may be the date on which the Purchase Price
is adjusted or any day thereafter, but, if Right Certificates have been issued,
shall be at least 10 days later than the date of the public announcement. If
Right Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Right Certificates
on such record date Right Certificates evidencing, subject to Section 14, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment and, upon
surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
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(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a Preferred Share issuable upon exercise of
the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of one one-hundredths of a
Preferred Share which were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-hundredth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, issuing to the holder of any Right exercised after such record date the
Preferred Shares and other Securities of the Company, if any, issuable upon such
exercise over and above the Preferred Shares and other Securities of the
Company, if any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional shares or Securities upon the
occurrence of the event requiring such adjustment. In the event of any
adjustment, the Company shall provide written notice to the Rights Agent.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares or issuance
wholly for cash of Preferred Shares or Securities which by their terms are
convertible into or exchangeable for Preferred Shares, of dividends on Preferred
Shares payable in Preferred Shares or of rights, options or warrants referred to
in Section 11(b) hereafter made by the Company to holders of its Preferred
Shares shall not be taxable to such stockholders.
(n) In the event that at any time after the Record Date and prior to
the Distribution Date, the Company shall (i) pay any dividend on the Common
Shares payable in Common Shares or (ii) effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares) into a greater or lesser number of Common
Shares, then in any such case (A) the number of one one-hundredths of a
Preferred Share purchasable after such event upon proper exercise of each Right
shall be determined by multiplying the number of one one-hundredths of a
Preferred Share so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of Common Shares outstanding immediately
before such event and the denominator of which is the number of Common Shares
outstanding immediately after such event, and (B) each Common Share outstanding
immediately after such event shall have issued with respect to it that number of
Rights which each Common Share outstanding immediately prior to such event had
issued with respect to it. The adjustments provided for in this Section 11(n)
shall be made successively whenever such a dividend is paid or such a
subdivision, combination or consolidation is effected.
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Section 12. Certificate of Adjustments. Whenever an adjustment is made
as provided in Section 11 or 13, the Company shall promptly (a) prepare a
certificate setting forth such adjustment and a brief, reasonably detailed
statement of the facts, computations and methodology of accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for the
Common Shares or the Preferred Shares a copy of such certificate, and (c) mail
such certificate or a brief summary thereof to each holder of a Right
Certificate in accordance with Section 25.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. In the event that, directly or indirectly, at any time after a
Person has become an Acquiring Person, (a) the Company shall consolidate with,
or merge with and into, any other Person, (b) any Person shall consolidate with
the Company or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
transaction, all or part of the Common Shares shall be changed into or exchanged
for stock or other Securities of any other Person (or the Company) or cash or
any other property, or (c) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries, taken as a whole, to any
Person other than the Company or one or more of its wholly owned Subsidiaries,
then, and in each such case, proper provision shall be made so that (i) each
holder of a Right (except as otherwise provided herein) shall thereafter have
the right to receive, upon exercise thereof at a price equal to the then-current
Purchase Price multiplied by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable, in accordance with the terms of
this Rights Agreement and in lieu of Preferred Shares, such number of Common
Shares of such other Person (including the Company as the successor or surviving
corporation) as shall equal the result obtained by (A) multiplying the
then-current Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable and dividing that product by (B) 50%
of the current per share market price of the Common Shares of such other Person
(determined pursuant to Section 11(d)) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) the issuer of such Common Shares
shall thereafter be liable for and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of the
Company pursuant to this Rights Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such issuer; and (iv) such issuer shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9) in connection with
such consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
Common Shares thereafter deliverable upon exercise of the Rights. The Company
shall not consummate any such consolidation, merger, sale or transfer unless
prior thereto the Company and such issuer shall have executed and delivered to
the Rights Agent a supplemental agreement so providing. The Company shall not
enter into any transaction of the kind referred to in this Section 13 if at the
time of such transaction there are any rights, warrants, instruments or
securities outstanding or any agreements or arrangements which, as a result of
the consummation of such transaction, would eliminate or substantially diminish
the benefits intended to be afforded by the Rights. The provisions of this
Section 13 shall similarly apply to successive mergers, consolidations, sales
and other transfers.
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<PAGE> 19
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to any registered holder of a Right Certificate with
regard to which a fractional Right would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value of a whole Right.
For purposes of this Section 14(a), the current market value of a whole Right
shall be the closing price of the Rights on the Trading Day immediately prior to
the date on which fractional Rights would otherwise have been issuable
(determined in accordance with Section 11(d)(i)). If for any such date no
closing price of the Rights can be determined, the current market value of a
whole Right shall be its fair value on such date as determined in good faith by
the Board of Directors of the Company.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredth of a Preferred Share
may, at the election of the Company, be evidenced by depositary receipts
pursuant to an appropriate agreement between the Company and a depositary
selected by it; provided, that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the Preferred Shares
represented by such depositary receipts. In lieu of fractional Preferred Shares
that are not integral multiples of one one-hundredth of a Preferred Share, the
Company shall pay to any registered holder of a Right Certificate at the time
Rights represented thereby are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of one Preferred Share.
For purposes of this Section 14(b), the current market value of a Preferred
Share shall be the closing price of a Preferred Share on the Trading Day
immediately prior to the date of such exercise (determined in accordance with
Section 11(d)(i)).
(c) The holder of a Right by the acceptance of such Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Rights Agreement, excepting the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of Common Shares), may, in his own behalf and for his own
benefit, enforce and may institute and maintain any suit, action or proceeding
against the Company to enforce or otherwise act in respect of his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Rights Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Rights Agreement and will be entitled to specific
performance of the obligations under and injunctive relief against actual or
threatened violations of the obligations of any Person subject to this Rights
Agreement.
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Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, Rights will be transferable only in
connection with the transfer of the applicable Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person in
whose name a Right Certificate (or, prior to the Distribution Date, the
associated Common Share certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on any Right Certificate or the associated Common Share certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary.
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree, judgment or ruling (whether interlocutory or
final) issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such order,
decree, judgment or ruling lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other Securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company,
including any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof or to give or withhold consent
to any corporate action or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 25) or to receive
dividends or subscription rights or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with
the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the preparation,
delivery, amendment, administration and execution of this Rights Agreement and
the exercise and performance of its duties hereunder. The Company also agrees to
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<PAGE> 21
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or
expense incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent for any action taken, suffered or omitted by the
Rights Agent in connection with the acceptance and administration of this Rights
Agreement, including, without limitation, the costs and expenses of defending
against any claim of liability in the premises. The indemnity provided herein
shall survive the termination of this Agreement and the termination and
expiration of the Rights. The costs and expenses incurred in enforcing this
right of indemnification shall be paid by the Company. Anything to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
punitive, indirect, consequential or incidental loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Rights Agent
has been advised of the possibility of such loss or damage. Any liability of the
Rights Agent under this Rights Agreement will be limited to the amount of fees
paid by the Company to the Rights Agent hereunder.
The Rights Agent shall be authorized and protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with the acceptance and administration of this Rights Agreement in
reliance upon any Right Certificate or certificate for the Preferred Shares or
Common Shares or for other Securities of the Company, instrument of assignment
or transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or document believed
by it to be genuine and to be signed, executed and, where necessary, verified or
acknowledged by the proper Person or Persons or otherwise in reliance upon the
advice of counsel as set forth in Section 20. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained. The Rights Agent shall not be deemed to have any duty or notice
unless and until the Company has provided the Rights Agent with written notice.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any Person into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated or any Person resulting from any
merger or consolidation to which the Rights Agent or any successor Rights Agent
shall be a party or any Person succeeding to the stock transfer or shareholder
services business of the Rights Agent or any successor Rights Agent shall be the
successor to the Rights Agent under this Rights Agreement without the execution
or filing of any paper or any further act on the part of any of the parties
hereto; provided, that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21. In case at the time
such successor Rights Agent shall succeed to the agency created by this Rights
Agreement any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this Rights
Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned;
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<PAGE> 22
and in case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations expressly imposed by this Rights Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent and the Rights Agent
shall incur no liability for, or in respect of, any action taken, suffered or
omitted by it in good faith and in accordance with such opinion.
(b) The Rights Agent shall not be deemed to have knowledge of any fact
or matter pertaining to the performance of its duties under this Rights
Agreement, except such facts or matters as are evidenced by records which are
required to be created and maintained by it hereunder or to the extent it shall
have been advised thereof in writing by the Company or by a holder of Rights.
Whenever in the performance of its duties under this Rights Agreement the Rights
Agent shall deem it necessary or desirable that any fact or matter be proved or
established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization and protection to the Rights Agent and the Rights
Agent shall incur no liability for, or in respect of, any action taken, suffered
or omitted in good faith by it under the provisions of this Rights Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Rights Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Rights Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including any Rights becoming void pursuant to Section 11(a)(ii)) or
any adjustment in the terms of the Rights (including the manner, method or
amount thereof) provided for in Section 3, 11, 13, 23 or 24 or the ascertaining
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<PAGE> 23
of the existence of facts that would require any such change or adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after actual notice that such change or adjustment is required); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be issued pursuant to
this Rights Agreement or any Right Certificate or as to whether any Preferred
Shares will, when issued, be validly authorized and issued and fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Secretary or the Treasurer of the Company and to apply
to such officers for advice or instructions in connection with its duties, and
such instructions shall be full authorization and protection to the Rights Agent
and the Rights Agent shall incur no liability for, or in respect of, any action
taken, suffered or omitted by it in good faith in accordance with instructions
of any such officer or for any delay in acting while waiting for those
instructions. The Rights Agent may conclusively rely on the most recent
instructions given by any such officer.
(h) The Rights Agent and any stockholder, affiliate, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other Securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
the Rights Agent under this Rights Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any other
Person or legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss resulting from any such act, default, neglect or
misconduct; absent gross negligence, bad faith or willful misconduct in the
selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares or Preferred Shares by registered or
certified mail and to the holders of the Right Certificates by first-class mail.
The Company may remove the Rights Agent or any successor Rights Agent upon 30
days' notice in writing mailed to the Rights Agent or successor Rights Agent, as
the case may be, and to each transfer agent of the Common Shares or Preferred
Shares by registered or certified mail and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days
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<PAGE> 24
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (which holder shall, with such notice,
submit such holder's Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a Person
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as the Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment the Company
shall file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Shares or Preferred Shares and mail a notice
thereof in writing to the registered holders of the Right Certificates. Failure
to give any notice provided for in this Section 21, however, or any defect
therein shall not affect the legality or validity of the resignation or removal
of the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other Securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Rights Agreement.
Section 23. Redemption. (a) The Board of Directors of the Company may,
at its option, at any time prior to such time as any Person becomes an Acquiring
Person, redeem all but not less than all of the outstanding Rights at a price of
$.01 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price"). The redemption
of the Rights by the Board of Directors may be made effective at such time, on
such basis and with such conditions as the Board of Directors in its sole
discretion may establish.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23 and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall promptly
give public notice of any such redemption; provided, however, that the failure
to give, or any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of Directors ordering
the redemption of the Rights, the Company shall mail a notice of redemption to
all holders of the outstanding Rights at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Shares. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not any particular holder receives notice. Each such notice of redemption will
state the method by which payment of the
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<PAGE> 25
Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23 or in
Section 24 and other than in connection with the purchase of Common Shares prior
to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company may, at
its option, at any time after any Person becomes an Acquiring Person, exchange
all or part of the then outstanding and exercisable Rights (which shall not
include any Rights that have become null and void pursuant to the provisions of
Section 11(a)(ii)) for Common Shares at an exchange ratio of one Common Share
per Right (the "Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights will terminate and the only right thereafter of the holders
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange and written
notice to the Rights Agent of such exchange; provided, however, that the failure
to give, or any defect in, any such notice shall not affect the validity of such
exchange. The Company promptly shall mail notice of such exchange to all holders
of such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not any particular holder receives notice. Each such
notice of exchange will state the method by which the exchange of the Common
Shares for Rights will be effected and, in the event of any partial exchange,
the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 11(a)(ii)) held by each holder
of Rights.
(c) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit an exchange of
Rights in accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional Common Shares for issuance
upon exchange of the Rights. In the event the Company shall, after good faith
effort, be unable to take all such action as may be necessary to authorize such
additional Common Shares, the Company shall substitute, for each Common Share
that would otherwise be issuable upon exchange of a Right, a number of Preferred
Shares or equivalent preferred shares or fraction thereof such that the product
of the current per share market price of one Preferred Share or equivalent
preferred share multiplied by such number or fraction is equal to the current
per share market price of one Common Share as of the date of issuance of such
Preferred Shares or equivalent preferred shares or fraction thereof.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares in
an exchange. In lieu of such
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<PAGE> 26
fractional Common Shares, the Company shall pay to any registered holder of a
Right Certificate with regard to which a fractional Common Share would otherwise
be issuable an amount in cash equal to the same fraction of the current market
value of a whole Common Share. For purposes of this paragraph (d), the current
market value of a whole Common Share shall be the closing price of a Common
Share on the Trading Day immediately prior to the date of exchange pursuant to
this Section 24 (determined in accordance with Section 11(d)(i)).
Section 25. Notice of Certain Events. (a) In case the Company shall
propose (i) to pay any dividend payable in stock of any class to the holders of
its Preferred Shares or to make any other distribution to the holders of its
Preferred Shares (other than a regular quarterly cash dividend), (ii) to offer
to the holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any other class
or any other Securities, (iii) to effect any reclassification of its Preferred
Shares (other than a reclassification involving only the subdivision of
outstanding Preferred Shares), (iv) to effect any consolidation or merger into
or with, or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries, taken as a whole, to, any other Person, or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 26, a notice of such proposed action,
which shall specify (x) the record date for the purposes of such stock dividend
or distribution of rights or warrants or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and (y) the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of the Preferred Shares for purposes of such action, and
in the case of any such other action at least 10 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Common Shares and/or Preferred Shares, whichever shall be the
earlier.
(b) In case the event set forth in Section 11(a)(ii) shall occur, then
the Company shall as soon as practicable thereafter give to each holder of a
Right Certificate, in accordance with Section 26, a notice of the occurrence of
such event, which notice shall describe such event and the consequences of such
event to holders of Rights under said Section 11(a)(ii).
Section 26. Notices. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Teledyne Technologies Incorporated
2049 Century Park East
Los Angeles, California 90067-3101
Attention: Corporate Secretary
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<PAGE> 27
Subject to the provisions of Section 21, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
Overpeck Centre
85 Challenger Road
Ridgefield Park, NJ 07660
Attention: General Counsel
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may from time to
time supplement or amend this Rights Agreement without the approval of any
holders of Right Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provision herein, or to make any other provisions with respect to
the Rights which the Company may deem necessary or desirable, any such
supplement or amendment to be evidenced by a writing signed by the Company and
the Rights Agent; provided, however, that from and after such time as any Person
becomes an Acquiring Person this Rights Agreement shall not be amended in any
manner which would adversely affect the interests of the holders of Rights.
Without limiting the foregoing, the Company may at any time prior to such time
as any Person becomes an Acquiring Person amend this Rights Agreement to extend
the Final Expiration Date or change the Purchase Price hereunder. Pursuant to
any supplement or amendment of this Agreement, the Rights Agent cannot be
required to change or increase its duties or obligations hereunder unless agreed
to in writing.
Section 28. Successors. All the covenants and provisions of this Rights
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Rights Agreement. Nothing in this Rights
Agreement shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Rights Agreement; but this Rights Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares).
Section 30. Severability. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
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<PAGE> 28
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 31. Governing Law. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 32. Counterparts. This Rights Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed and attested all as of the day and year first
above written.
TELEDYNE TECHNOLOGIES
Attest: INCORPORATED
By: /s/ Mary W. Snyder By: /s/ James L. Murdy
---------------------------- -----------------------------
Title: Title:
-------------------------- ---------------------------
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
Attest: Rights Agent
By: /s/ Anita Landreau By: /s/ Rita A. Swartz
---------------------------- -----------------------------
Title: Assistant Vice President Title: Vice President
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<PAGE> 29
Exhibit A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
TELEDYNE TECHNOLOGIES INCORPORATED
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Teledyne Technologies Incorporated, a corporation organized and
existing under the General Corporation Law of the State of Delaware (hereinafter
called the "Corporation"), hereby certifies that the following resolution was
adopted by the Board of Directors of the Corporation as required by Section 151
of the General Corporation Law at a meeting duly called and held on November 12,
1999.
RESOLVED, that, pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Certificate
of Incorporation, the Board of Directors hereby creates a series of Preferred
Stock, par value $.01 per share (the "Preferred Stock"), of the Corporation and
hereby states the designation and number of shares and fixes the relative
rights, preferences, and limitations thereof as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 1,250,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion or exchange of any outstanding securities issued by the
Corporation convertible into or exchangeable for shares of Series A Preferred
Stock.
A-1
<PAGE> 30
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Series
A Preferred Stock with respect to dividends, the holders of shares of Series A
Preferred Stock, in preference to the holders of shares of Common Stock, par
value $.01 per share (the "Common Stock"), of the Corporation and of any other
junior stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September and
December in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $1 or (b) subject to the provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all cash dividends and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided, that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1 per share on the
Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear
A-2
<PAGE> 31
interest. Dividends paid on the shares of Series A Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 100 votes
on all matters submitted to a vote of the stockholders of the Corporation. In
the event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Series A Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) Except as set forth herein or as otherwise provided by law, holders
of Series A Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of the Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends or make any other distributions on any
shares of stock ranking junior (as to dividends) to the Series A Preferred
Stock;
(ii) declare or pay dividends or make any other distributions on any
shares of stock ranking on a parity (as to dividends) with the Series A
Preferred Stock, except dividends paid
A-3
<PAGE> 32
ratably on the Series A Preferred Stock and all such parity stock on which
dividends are payable and in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(iii) redeem, purchase or otherwise acquire for consideration shares of
any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; provided, that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for consideration any shares
of Series A Preferred Stock or any shares of stock ranking on a parity with the
Series A Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized and unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or otherwise required
by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have received
$100 per share, plus an amount equal to the accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment;
provided, that the holders of shares of Series A Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except distributions made ratably
on the Series A Preferred Stock and all such parity stock in proportion to the
total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock or effect a
A-4
<PAGE> 33
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (1) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock shall
not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets, junior to all other
series of the Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the shares of Series A
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of at least two-thirds of the outstanding shares of Series A
Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its Chairman of the Board and attested by its
Secretary this _____ day of _____________, 1999.
Attest:
------------------------------- -------------------------------------
Secretary President and Chief Executive Officer
A-5
<PAGE> 34
Exhibit B
Form of Right Certificate
Certificate No. R- Rights
NOT EXERCISABLE AFTER NOVEMBER 12, 2009 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
TELEDYNE TECHNOLOGIES INCORPORATED
This certifies that _______________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of November 12, 1999, as amended from time to
time (as so amended, the "Rights Agreement"), between Teledyne Technologies
Incorporated, a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., a New Jersey limited liability company (the
"Rights Agent"), to purchase from the Company at any time after the Distribution
Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M.,
Eastern time, on November 12, 2009 at the principal office of the Rights Agent,
or at the office of its successor as Rights Agent, one one-hundredth of a fully
paid non-assessable share of Series A Junior Participating Preferred Stock, par
value $.01 per share (the "Preferred Shares"), of the Company, at a purchase
price of $60 per one one-hundredth of a Preferred Share (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of one one-hundredths of a Preferred Share which may
be purchased upon exercise hereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of November 12, 1999, based on
the Preferred Shares as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of one one-hundredths of a
Preferred Share which may be purchased upon the exercise of the Rights evidenced
by this Right Certificate are subject to modification and adjustment upon the
happening of certain events.
This Right Certificate is subject to all of the terms, covenants and
restrictions of the Rights Agreement, which terms, covenants and restrictions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned office of the Rights Agent.
B-1
<PAGE> 35
Subject to the provisions of the Rights Agreement, this Right
Certificate, with or without other Right Certificates, upon surrender at the
principal office of the Rights Agent, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of Preferred Shares as
the Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Right Certificate or Right Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for shares of the
Company's Common Stock, par value $.01 per share, or Preferred Shares.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable upon exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company, including any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, to give or withhold consent to any corporate action, to receive
notice of meetings or other actions affecting stockholders (except as provided
in the Rights Agreement), or to receive dividends or subscription rights, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
B-2
<PAGE> 36
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ___________________ .
TELEDYNE TECHNOLOGIES
ATTEST: INCORPORATED
By
- ---------------------------------- ----------------------------------
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Rights Agent
By
--------------------------------
Authorized Signature
B-3
<PAGE> 37
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer this Right Certificate.)
FOR VALUE RECEIVED _______________________________________________
hereby sells, assigns and transfers unto
_____________________________________________________________________ (Please
print name and address of transferee)
______________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ________________, as his
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated:
-------------------------------
-------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
-------------------------------
-------------------------------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
------------------------------------
Signature
B-4
<PAGE> 38
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights represented by
this Right Certificate.)
To: TELEDYNE TECHNOLOGIES INCORPORATED
The undersigned hereby irrevocably elects to exercise_________________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights and requests that certificates for
such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
- ------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
- ------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
- --------------------------------------------------------------------------------
- ------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
- ------------------------------------
Dated:
------------------------------
- ------------------------------------
Signature
B-5
<PAGE> 39
Form of Reverse Side of Right Certificate - continued
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
================================================================================
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
- ------------------------------------
Signature
================================================================================
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
B-6
<PAGE> 1
Exhibit 10.1
TAX SHARING AND INDEMNIFICATION AGREEMENT
THIS TAX SHARING AND INDEMNIFICATION AGREEMENT (the "Agreement"), dated
as of November 29, 1999, is made by and between Allegheny Teledyne Incorporated,
a Delaware corporation ("ATI") on behalf of itself and each member of the ATI
Consolidated Group, and Teledyne Technologies Incorporated, a Delaware
corporation ("SPINCO"), on behalf of itself and each member of the SPINCO Group
and their respective successors.
Witnesseth:
WHEREAS, ATI has determined to effect the Distribution pursuant to the
Distribution Agreement;
WHEREAS, the IRS has issued the IRS Ruling which states the tax
treatment of the Distribution and the Other Transactions;
WHEREAS, the parties are entering into this Agreement to ensure the
continuing effectiveness of the IRS Ruling, to provide for certain indemnities,
and to provide for various administrative matters relating to Taxes, including:
1. the preparation and filing of Tax Returns along with the payment of
Taxes shown due and payable thereon;
2. the retention and maintenance of relevant records necessary to
prepare and file appropriate Tax Returns, as well as providing for appropriate
access to those records by the parties to this Agreement;
3. the conduct of audits, examinations, and proceedings by appropriate
government entities which could result in a redetermination of Taxes; and
4. the cooperation of all parties with one another in order to fulfill
their duties and responsibilities under this Agreement and under the Code and
other applicable law; and
WHEREAS, it is the intent of the parties that SPINCO or the appropriate
member of the SPINCO Group shall economically bear the burden of all Taxes
otherwise imposed upon or attributable to the Operations of members of the
SPINCO Group occurring after the Effective Date, and that SPINCO will be
responsible for and reimburse ATI for any Incremental Tax Assessment.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
conditions contained in this Agreement, and intending to be legally bound
hereby, the parties hereto agree as follows:
<PAGE> 2
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. For the purposes of this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural of the terms involved):
ADJUSTMENT means any final change in the Tax Liability of a taxpayer.
AFFILIATE means, when used with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with such Person.
AFFILIATED PERSON has the meaning ascribed to such term in the
Investment Company Act of 1940, as amended, and the rules and regulations
promulgated thereunder.
AGREEMENT means this Tax Sharing and Indemnification Agreement.
ASSOCIATES has the meaning ascribed to such term in the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
ATI CONSOLIDATED RETURN means any Tax Return that includes any member
of the ATI Consolidated Group.
ATI CONSOLIDATED GROUP means, as of any relevant date, ATI and its
Subsidiaries, determined as of such date.
BENEFICIAL OWNERSHIP has the meaning ascribed to such term in the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
BUSINESS TAXES means any Tax (except for federal income, state income
or franchise, and local and foreign gross or net income) including interest,
penalties, and other assessments thereon that is attributable to Operations of
SPINCO or members of the SPINCO Group for a tax period ending prior to or
including the Effective Date.
BUSINESS TAX RETURNS means all reports, estimates, declarations of
estimated tax, information statements and returns relating to or required to be
filed in connection with any Business Taxes, including information returns or
reports with respect to backup withholding and other payments to third parties.
CODE means the Internal Revenue Code of 1986, as amended, and the
Treasury regulations promulgated thereunder.
COMBINED RETURN shall mean all state income tax returns which ATI files
on a combined or unitary basis with respect to some or all of its Subsidiaries.
2
<PAGE> 3
DISQUALIFIED SPINCO STOCK is defined at Section 5.2.
DISTRIBUTION means the distribution of SPINCO common stock to the
stockholders of ATI pursuant to the Distribution Agreement.
DISTRIBUTION AGREEMENT means the Separation and Distribution Agreement
among ATI, SPINCO and certain other parties dated as of November 29, 1999.
EFFECTIVE DATE means the date on which the Distribution occurs.
EFFECTIVE TIME means 5 p.m., Eastern Standard Time or Eastern Daylight
Time (whichever shall then be in effect), on the Effective Date.
FINAL DETERMINATION means the final resolution of any Tax matter. A
Final Determination shall result from the first to occur of:
1. the expiration of 30 days after the IRS's acceptance of a
Waiver of Restrictions on Assessment and Collection of Deficiency in
Tax and Acceptance of Overassessment on Form 870 or 870-AD (or any
successor comparable form) (the "Waiver"), except as to reserved
matters specified therein, or the expiration of 30 days after
acceptance by any other taxing authority of a comparable agreement or
form under the laws of any other jurisdiction, including state, local,
and foreign jurisdictions; unless, within such period, the taxpayer
gives notice to the other party to this Agreement of the taxpayer's
intention to attempt to recover all or part of any amount paid pursuant
to the Waiver by the filing of a timely claim for refund;
2. a decision, judgment, decree, or other order by a court of
competent jurisdiction that is not subject to further judicial review
(by appeal or otherwise) and has become final;
3. the execution of a closing agreement under Code Section
7121, or the acceptance by the IRS of an offer in compromise under Code
Section 7122, or comparable agreements under the laws of any other
jurisdiction, including state, local, and foreign jurisdictions, except
as to reserved matters specified therein;
4. the expiration of the time for filing a claim for refund or
for instituting suit in respect of a claim for refund that was
disallowed in whole or in part by the IRS or any other taxing
authority;
5. the expiration of the applicable statute of limitations; or
6. an agreement by the parties hereto that a Final
Determination has been made.
3
<PAGE> 4
GROSS ASSET VALUE means, when used with respect to a specified Person,
the fair market value of such Person's assets unencumbered by any liabilities.
GROUP has the meaning ascribed to such term in the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
INCREMENTAL TAX ASSESSMENT means any increase in Business Taxes imposed
upon ATI after the date hereof.
INDEMNIFIED LIABILITY is defined at Section 7.1.
INDEMNIFIED PARTY is defined at Section 6.1.
INDEMNIFYING PARTIES is defined at Section 6.1.
INTERNAL DISTRIBUTIONS means the distributions of SPINCO common stock
by Teledyne Industries, Inc. to TDY Holdings, LLC, a Delaware limited liability
company wholly owned by ATI, and by TDY Holdings, LLC to ATI.
IRS means the U.S. Internal Revenue Service.
IRS INTEREST RATE means the rate of interest imposed from time to time
on underpayments of income tax pursuant to Code Section 6621(a)(2).
IRS RULING means the private letter ruling (together with any
supplements) issued by the IRS in respect of the Ruling Request.
OPERATIONS means any business activity of any SPINCO business unit, as
described in the Ruling Request.
OTHER TRANSACTIONS means the Internal Distributions and all other
transactions related to the Distribution and described in the Ruling Request,
including all modifications to such transactions reflected in supplements to the
Ruling Request.
PERSON means any natural person, corporation, limited liability
company, business trust, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.
POST-DISTRIBUTION PERIOD means any taxable period that begins after the
Effective Date.
PRE-DISTRIBUTION PERIOD means any taxable period that ends on or before
the Effective Date.
PROCEEDING is defined at Section 8.2(a).
4
<PAGE> 5
PUBLIC OFFERING means the first public offering of SPINCO common stock
following the Distribution. The gross proceeds of such Public Offering shall be
approximately $125 million or such other amount as ATI, in its sole discretion,
may approve.
RESTRICTED PERIOD means the two year period following the Effective
Date.
RESTRICTED REDEMPTION PERIOD means the two year period beginning on the
Effective Date and ending two years following the Public Offering.
RULING REQUEST means the request for ruling (including all exhibits),
under Section 355, and other provisions of the Code, as originally filed on
behalf of ATI on April 6, 1999, as amended and supplemented, in respect of the
Distribution.
SPINCO GROUP means: (i) as of any relevant date after the Effective
Date, SPINCO and its Subsidiaries determined as of such date; and (ii) as of any
relevant date on or before the Effective Date, SPINCO and those businesses which
become part of SPINCO or its Subsidiaries as contemplated by the Distribution
Agreement, whether or not such Persons or businesses were Subsidiaries of SPINCO
before the Distribution.
STRADDLE PERIOD means any taxable period with respect to a Tax Return,
that begins on or before the Effective Date and ends after the Effective Date.
SUBSIDIARY means with respect to ATI or SPINCO, any Person of which ATI
or SPINCO, respectively, controls or owns, directly or indirectly, more than 50%
of the stock or other equity interest entitled to vote on the election of
members to the board of directors or similar governing body.
TAXES means all federal, state, local and foreign gross or net income,
gross receipts, withholding, payroll, franchise, transfer, sales, use, value
added, estimated or other taxes of any kind whatsoever or similar charges and
assessments, such as customs, duties and the like, or other amounts paid in
respect thereof, including all interest, penalties and additions imposed with
respect to such amounts.
TAX LIABILITY means the net amount of Taxes due and paid or payable for
any taxable period, determined after applying all tax credits and all applicable
carrybacks or carryovers for net operating losses, net capital losses, unused
general business tax credits, or any other Tax items arising from a prior or
subsequent taxable period, and all other relevant adjustments.
TAX RETURNS means all reports, estimates, declarations of estimated
tax, information statements and returns relating to or required to be filed in
connection with any Taxes, other than Business Taxes, including information
returns or reports with respect to backup withholding and other payments to
third parties.
5
<PAGE> 6
ARTICLE II
FILING OF TAX RETURNS AND PAYMENT OF TAXES
SECTION 2.1. TAX RETURNS REQUIRED TO BE FILED PRIOR TO DISTRIBUTION
DATE. ATI shall file or cause to be filed all Tax Returns of ATI and any member
of the ATI Consolidated Group required to be filed (after giving effect to any
valid extension of time in which to make such filings) prior to the Effective
Date and shall pay or cause to be paid any Tax Liability due with respect to
such Tax Returns.
SECTION 2.2. TAX RETURNS FOR PRE-DISTRIBUTION PERIODS.
(a) SPINCO shall prepare or cause to be prepared, consistent with past
practice, Business Tax Returns for the Pre-Distribution Period and shall pay or
cause to be paid any Tax Liability due with respect to such Business Tax
Returns. ATI will promptly notify SPINCO of any audit, assessment, notice, levy,
or questionnaire with respect to Business Taxes. SPINCO shall control all
matters relating to such Business Taxes and shall pay or cause to be paid and/or
indemnify ATI or cause ATI to be indemnified, whatever the case may be, for and
defend and hold ATI harmless against any Incremental Tax Assessment set forth in
a Final Determination of Business Taxes. Payment to ATI with respect to such
Incremental Tax Assessment shall be made in the same manner as if SPINCO were an
Indemnifying Party as set forth in Section 8.3.
(b) Except as provided in Section 2.2(a), ATI shall prepare or cause to
be prepared, for Pre-Distribution Periods, all (1) Combined Returns and (2) Tax
Returns required to be filed on a separate return basis by any member of the ATI
Consolidated Group, in each case, which Tax Returns are not required to be
(after giving effect to any valid extensions), and are not, filed on or prior to
the Effective Date and shall pay or cause to be paid any Tax Liability due with
respect to such Tax Returns. With respect to Tax Returns described in this
Section 2.2(b), ATI shall prepare the returns in a manner, absent any
intervening law change, consistent with ATI's preparation of Tax Returns covered
by Section 2.1. With respect to any Tax Returns described in part (2) of the
first sentence of this Section 2.2(b) relating to a member of the SPINCO Group,
ATI shall file such Tax Returns with the appropriate tax authority, pursuant to
a power of attorney executed and delivered to ATI by SPINCO pursuant to Section
10.15 hereof and shall pay or cause to be paid any Tax Liability due with
respect to such Tax Returns.
(c) Notwithstanding Section 2.2(a), ATI will be responsible for paying
Business Taxes that arise directly from the Distribution and Other Transactions.
For this Section 2.2(c) to apply, ATI must consent in writing, which consent
shall not be unreasonably withheld, that the amount of such Business Taxes has
been correctly determined. In addition, ATI shall have the right to control any
audit, litigation or proceeding regarding such Business Taxes.
SECTION 2.3. TAX RETURNS FOR POST-DISTRIBUTION PERIODS. SPINCO shall
(a) prepare and file or cause to be prepared and filed all Tax Returns required
to be filed by any member of the SPINCO Group for any Post-Distribution Period
and (b) pay or cause to be paid any Tax Liability due with respect to such Tax
Returns.
6
<PAGE> 7
SECTION 2.4. TAX RETURNS FOR STRADDLE PERIOD. ATI shall prepare all Tax
Returns of or which include any member of the SPINCO Group for a Straddle
Period. ATI shall pay or cause to be paid and shall defend, indemnify and hold
SPINCO and members of the SPINCO Group harmless against the Tax Liabilities
attributable to the affected member or members of the SPINCO Group for the
portion of the Straddle Period ending on the Effective Date and SPINCO shall pay
or cause to be paid and shall defend, indemnify, and hold ATI and members of the
ATI Consolidated Group harmless against the Tax Liabilities attributable to the
affected member or members of the SPINCO Group for the remainder of the Straddle
Period beginning with the day after the Effective Date. ATI's determination of
Tax Liabilities up to and following the Effective Date shall be based on ATI's
interim closing of the books, determined as of the Effective Time, of the
affected member or members of the SPINCO Group.
SECTION 2.5. TAX-BASIS BALANCE SHEETS. In the case of any business that
was conducted prior to the Effective Date as a division of ATI, its Subsidiaries
or a member of the ATI Consolidated Group and which will be conducted after the
Effective Date by a member of the SPINCO Group, ATI shall prepare and furnish to
SPINCO, within 120 days after the Effective Date, a tax-basis balance sheet,
prepared consistent with past practices, relating to such business as of the
Effective Date.
ARTICLE III
COOPERATION AND EXCHANGE OF INFORMATION; AUDITS AND ADJUSTMENTS;
SECTION 3.1. TAX RETURN INFORMATION
(a) SPINCO shall, and shall cause each appropriate member of the SPINCO
Group to, provide ATI with all information and other assistance reasonably
requested by ATI to enable the members of the ATI Consolidated Group to prepare
and file ATI Consolidated Returns required to be filed by the ATI Consolidated
Group pursuant to this Agreement.
(b) ATI shall, and shall cause each appropriate member of the ATI
Consolidated Group to, provide SPINCO with all information and other assistance
reasonably requested by SPINCO to enable the members of the SPINCO Group to
prepare and file SPINCO Returns required to be filed by the SPINCO Group
pursuant to this Agreement.
(c) Within 60 days of the Effective Date, SPINCO shall provide and
cause each appropriate member of the SPINCO Group to provide to ATI customary
tax packages prepared consistent with past practice for any Pre-Distribution
Period or Straddle Period.
SECTION 3.2. AUDITS AND ADJUSTMENTS
(a) Except as provided for in Section 3.3, ATI shall have full control
over and absolute discretion with respect to all matters relating to any Tax
Return covered by Section 2.1, Section 2.2 or Section 2.4.
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(b) SPINCO shall have full control over and absolute discretion with
respect to all Tax Returns covered by Section 2.3.
(c) SPINCO agrees to cooperate with ATI in the negotiation, settlement,
and litigation of or other proceeding regarding any liability for or refund of
Taxes of any member paid or payable by the ATI Consolidated Group.
(d) ATI agrees to cooperate with SPINCO in the negotiation, settlement,
and litigation of or other proceeding regarding any liability for Taxes paid or
payable by any member of the SPINCO Group.
(e) ATI will promptly notify SPINCO in writing of any Adjustment
involving a change in the tax basis of any asset of SPINCO, specifying the
nature of the change so that the SPINCO Group will be able to reflect the
revised basis in its tax books and records for periods beginning on or after the
Effective Date.
(f) In the event of a conflict between the operation of this Section
3.2 and Articles VI, VII, or VIII, those Articles will take precedence over this
Section 3.2.
SECTION 3.3. CARRYBACKS. SPINCO shall make an election under Section
172(b)(3) of the Code to relinquish the entire carryback period with respect to
any net operating loss attributable to SPINCO or any of its Subsidiaries in any
taxable period beginning after or including the Effective Date that could be
carried back to a taxable year of SPINCO or any Subsidiaries ending on or before
the Effective Date. Neither ATI nor any member of the ATI Consolidated Group
shall be required to pay to SPINCO or its Subsidiaries any refund or credit of
Taxes that results from the carryback to any taxable period ending on or before
the Effective Date of any net operating loss, capital loss, or tax credit
attributable to SPINCO or any of its Subsidiaries in any taxable period
beginning after or including the Effective Date.
ARTICLE IV
RETENTION OF RECORDS; STATUTES OF LIMITATIONS
SECTION 4.1. RETENTION OF RECORDS. ATI and SPINCO agree to retain the
appropriate records which may affect the determination of the liability for
Taxes of any member of the ATI Consolidated Group or the SPINCO Group,
respectively, until such time as there has been a Final Determination with
respect to such liability for Taxes. A party may satisfy its obligations under
the preceding sentence by allowing the other party to duplicate records at such
second party's expense.
SECTION 4.2. DESTRUCTION OF RECORDS. Any member of the SPINCO Group
intending to destroy any materials, records, or documents relating to Taxes
shall provide ATI 90 days advance notice and the reasonable opportunity to copy
or take possession of such materials, records, or documents.
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SECTION 4.3. STATUTE OF LIMITATIONS. ATI and SPINCO will notify each
other in writing of any waivers or extensions of the applicable statute of
limitations that may affect the period for which any materials, records, or
documents must be retained.
ARTICLE V
REPRESENTATIONS AND COVENANTS
SECTION 5.1. COMPLIANCE WITH IRS RULING. SPINCO shall, and shall cause
each member of the SPINCO Group to, comply with each representation and
statement concerning SPINCO and the SPINCO Group made in the Ruling Request and
in the materials submitted to the IRS in connection with the Ruling Request,
including, without limitation, statements relating to actions regarding the
Public Offering and the use of Public Offering proceeds by the SPINCO Group.
SPINCO has reviewed the materials submitted to the IRS in connection with the
Ruling Request and represents to ATI that these materials, including without
limitation, any statements and representations concerning SPINCO, its business
operations, capital structure and/or organization, are complete and accurate.
During the Restricted Period, neither SPINCO nor any member of the SPINCO Group
shall take any action, refrain from taking any action or enter into any
transaction or series of transactions or agree to take any action, refrain from
taking any action or enter into any transaction or series of transactions that
could jeopardize the tax-free status of the Distribution, including any action,
inaction or transaction that would be inconsistent with any representation or
statement made to the IRS in connection with the Ruling Request, unless prior
thereto SPINCO obtains the express written consent of ATI which consent will be
granted, if at all, in the sole discretion of ATI. SPINCO hereby represents and
warrants to ATI that SPINCO has no intention to undertake or allow to be
undertaken any of the transactions set forth in Section 5.2(a)(iii), nor does
SPINCO or any member of the SPINCO Group have any intention to cease to engage
in the active conduct of its trade or business (within the meaning of Section
355(b)(2) of the Code).
SECTION 5.2. COVENANTS.
(a) Without limiting the generality of Section 5.1, SPINCO and each
member of the SPINCO Group jointly and severally covenant and agree with ATI
that during the Restricted Period or, in the case of a transaction described in
Section 5.2(a)(iii)(4), the Restricted Redemption Period:
(i) SPINCO and the members of the SPINCO Group will continue
to engage in its business, and will continue to maintain a substantial
portion of their respective assets and business operations, as they
existed immediately prior to the Distribution; provided that the
foregoing shall not be deemed to prohibit SPINCO and the members of the
SPINCO Group from entering into or acquiring other businesses or
operations or from disposing of or shutting down segments of such
Businesses so long as SPINCO and the members of the SPINCO Group
continue to engage in such businesses and continue to so maintain such
substantial portion of their assets and business operations;
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(ii) SPINCO will continue to manage and to own (A) directly,
assets which represent at least 50% of the Gross Asset Value which
SPINCO managed and owned directly immediately after the Distribution,
and (B) directly or indirectly, through one or more entities, assets
which represent at least 50% of the Gross Asset Value which SPINCO
owned indirectly through one or more entities immediately after the
Distribution;
(iii) Except as provided in Section 5.2(c), neither SPINCO nor
any of its Affiliates nor any of its or their respective directors,
officers or other representatives (acting in their capacity as
directors, officers, or representatives) will undertake, authorize,
approve, recommend, permit, facilitate, or enter into any contract, or
consummate any transaction with respect to:
(1) the issuance of SPINCO common stock (including
options, warrants, rights or securities exercisable for, or
convertible into, SPINCO common stock) in a single transaction
or in a series of related or unrelated transactions (including
the Public Offering) which represents (treating any such
options, warrants, rights, or securities as exercised or
converted) 40% or more of the outstanding shares of SPINCO
common stock;
(2) the issuance of any class or series of capital
stock or any other instrument (other than SPINCO common stock
and options, warrants, rights or securities exercisable for,
or convertible into, SPINCO common stock) that would
constitute equity for federal tax purposes (such classes or
series of capital stock and other instruments being referred
to herein as "Disqualified SPINCO Stock");
(3) the issuance of any options, rights, warrants,
securities or similar arrangements exercisable for, or
convertible into, Disqualified SPINCO Stock;
(4) any redemptions, repurchases or other
acquisitions of capital stock or other equity interests in
SPINCO by SPINCO; and/or
(5) the dissolution, merger, or complete or partial
liquidation of SPINCO or any announcement of such action.
(b) In addition to the other representations, warranties, covenants and
agreements set forth in this Agreement, SPINCO and each member of the SPINCO
Group will take, or refrain from taking, as the case may be, such actions as ATI
may request to ensure that the Distributions and the Other Transactions qualify
for the tax-free treatment stated in the IRS Ruling, including, without
limitation, such actions as ATI determines may be necessary to preserve the
validity of the IRS Ruling. Without limiting the generality of the foregoing,
SPINCO and the SPINCO Group shall cooperate with ATI if ATI, in its sole
discretion, determines to obtain additional or supplemental IRS rulings
pertaining to whether any actual or proposed change in facts and circumstances
affects the tax-free status of the Distribution or the Other Transactions.
Regardless of the fact that ATI shall control matters set forth in the preceding
sentence of this Section 5.2(b), the ATI Consolidated Group, on one hand, and
SPINCO and the SPINCO Group, on the other
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hand, shall equally bear responsibility for all expenses associated with any
such additional or supplemental IRS rulings; provided, however, that any
expenses associated with any additional or supplemental IRS Rulings based on a
proposed action or omission by SPINCO or a member of the SPINCO Group will be
borne solely by SPINCO.
(c) Following the Effective Date, SPINCO and its Affiliates shall not
take any action or engage in conduct otherwise prohibited by Section 5.2 unless
prior to such action or conduct, as the case may be, SPINCO receives express
written consent from ATI which consent will be granted, if at all, in the sole
discretion of ATI.
(d) SPINCO will consummate the Public Offering within one year after
the Effective Date and will use the Public Offering proceeds in the manner and
during time periods set forth in the Ruling Request.
(e) If, within two years after the Public Offering, SPINCO disposes of
any assets, other than inventory, SPINCO will use the proceeds (net of tax and
transaction costs) from such disposition in a manner that is, in ATI's sole
discretion, consistent with the business purpose of expanding SPINCO's business
as set forth in the Ruling Request.
ARTICLE VI
SPINCO INDEMNITY OBLIGATIONS
SECTION 6.1. SPINCO INDEMNITY. If SPINCO, or another member (or former
member) of the SPINCO Group (collectively, the "Indemnifying Parties") takes or
fails to take any action whether or not prohibited or required by Article V or
violates a representation or covenant in Article V or in the Ruling Request, and
the Distribution or any of the Other Transactions fail to or otherwise do not
qualify for the tax treatment stated in the IRS Ruling as a result of such
action, failure to take action, or violation, then the Indemnifying Parties
shall jointly and severally defend, indemnify and hold harmless ATI and each
member of the ATI Consolidated Group and each of their respective directors,
officers, employees, agents or other representatives (collectively, and/or
individually, as the case may be, the "Indemnified Party") against any liability
for such Taxes which the Indemnified Party may assume or otherwise incur and any
and all Taxes or other liabilities directly or indirectly imposed upon or
incurred by the Indemnified Party as a result of such failure or lack of
qualification, including, without limitation, any liability of the Indemnified
Party arising from Taxes imposed on stockholders of ATI whether or not any
stockholder or stockholders of ATI, or the IRS or other taxing authority,
successfully seeks recourse against the Indemnified Party on account of any such
failure.
SECTION 6.2. TENDER OFFER OR PURCHASE OFFER. Notwithstanding anything
to the contrary set forth in this Agreement, if, during the Restricted Period,
any Person or Group of Affiliated Persons or Associates acquires Beneficial
Ownership of SPINCO common stock (or any other class of outstanding SPINCO
stock) or commences a tender or other purchase offer for the capital stock of
SPINCO or initiates any other form of transaction to acquire directly or
indirectly SPINCO capital stock, upon consummation of which such Person or Group
of Affiliated Persons or Associates would acquire Beneficial Ownership of SPINCO
common stock
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(or any other class of outstanding SPINCO stock or equity) and as a result
thereof the Distribution or any of the Other Transactions shall fail to or
otherwise do not qualify for the tax treatment stated in the IRS Ruling then the
Indemnifying Parties shall defend, indemnify and hold harmless the Indemnified
Party against any liability for Taxes which the Indemnified Party may assume or
otherwise incur and any and all Taxes or other liabilities directly or
indirectly imposed upon or incurred by any Indemnified Party and/or its
stockholders as a result of such failure.
SECTION 6.3. EFFECT OF EXPRESS WRITTEN CONSENT OF ATI. The Indemnified
Party shall be defended, indemnified and held harmless under Section 6.1 without
regard to the fact that the Indemnifying Party may have received the express
written consent of ATI as contemplated by Article V. The Indemnified Party shall
be defended, indemnified and held harmless under Section 6.2 whether or not the
acquisition of Beneficial Ownership results from a transaction which is not
prohibited under Article V.
ARTICLE VII
CALCULATION OF SPINCO INDEMNITY AMOUNTS
SECTION 7.1. AMOUNT OF INDEMNITY. The amount indemnified against under
Article VI ("Indemnified Liability") for a Tax based on or determined with
reference to income shall be deemed to be, for each applicable taxing
jurisdiction, an amount determined by multiplying (i) the taxing jurisdiction's
highest marginal corporate income or tax rate for the taxable period in which
the Distribution or Other Transaction occurs, times (ii) the gain or income of
the Indemnified Party which is subject to such Tax. In the case of other
Indemnified Liabilities, the amount of the Indemnified Liability shall be equal
to the amount so owed. In addition, the amount of any Indemnified Liability
shall be increased by any interest, costs, legal and professional fees,
additions, expenses and penalties incurred by the Indemnified Party. All amounts
payable under this Article VII shall, to the extent that such amounts constitute
taxable income, be grossed-up, based on the tax rate referred to in clause (i)
of the first sentence of this Section 7.1.
ARTICLE VIII
PROCEDURAL ASPECTS OF SPINCO INDEMNITY
SECTION 8.1. GENERAL.
(a) If either the Indemnified Party or any of the Indemnifying Parties
receives any written notice of deficiency, claim or adjustment or any other
written communication from a taxing authority or any other Person that may
result in an Indemnified Liability, the party receiving such notice or
communication shall promptly give written notice thereof to the other parties,
provided that any delay by the Indemnified Party in so notifying an Indemnifying
Party shall not relieve the Indemnifying Party of any liability hereunder,
except to the extent the Indemnifying Party is materially and adversely
prejudiced by such delay.
(b) Each party hereto undertakes and agrees that from and after such
time as it obtains knowledge that any representative of a taxing authority has
begun to investigate or inquire into the Distribution or any of the Other
Transactions (whether or not such investigation or inquiry is a
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formal or informal investigation or inquiry), such party shall (i) notify the
other parties thereof, provided that any delay by the Indemnified Party in so
notifying the Indemnifying Party shall not relieve the Indemnifying Party of any
liability hereunder (except to the extent the Indemnifying Party is materially
and adversely prejudiced by such delay), (ii) consult with the other parties
from time to time as to the conduct of such investigation or inquiry, (iii)
provide the other parties with copies of all correspondence with such taxing
authority or any representative thereof or other Person pertaining to such
investigation or inquiry, and (iv) arrange for a representative of the other
parties to be present at all meetings with such taxing authority or any
representative thereof pertaining to such investigation or inquiry.
(c) SPINCO undertakes and agrees to give full cooperation and support
to ATI, including without limitation, attestations and/or access to Information,
as requested by ATI, to document and verify the use of the Public Offering
proceeds in the manner and during the time period set forth in the Ruling
Request. SPINCO will submit a quarterly accounting to ATI, due within 30 days
after the end of each calendar quarter, which sets forth in detail the use of
Public Offering proceeds. This information will be submitted to ATI in a format
substantially similar to the chart attached hereto as Appendix I.
SECTION 8.2. CONTESTS.
(a) If (i) the Indemnifying Party furnishes the Indemnified Party with
evidence satisfactory to the Indemnified Party of its ability to pay the full
amount of the Indemnified Liability and (ii) such Indemnifying Party
acknowledges in writing that the asserted liability is an Indemnified Liability,
such Indemnifying Party may assume and direct the tax examination,
administrative appeal, hearing, arbitration, suit or other proceeding (each a
"Proceeding") commenced, filed or otherwise initiated or convened to investigate
or resolve the existence and extent of such Indemnified Liability.
(b) Notwithstanding the foregoing, if at any time during a Proceeding
controlled by the Indemnifying Party pursuant to Section 8.2(a), such
Indemnifying Party fails to provide evidence satisfactory to the Indemnified
Party of its continuing ability to pay the full amount of the Indemnified
Liability or the Indemnified Party determines that such Indemnifying Party may
be unable to pay the full amount of the Indemnified Liability, then the
Indemnified Party may immediately assume control of and direct the Proceedings.
(c) During the period in which the Indemnifying Party assumes and
directs the Proceeding, if the Indemnified Liability is grouped with other
unrelated asserted liabilities or issues in the Proceeding, the parties shall
use their respective best efforts to cause the Indemnified Liability to be the
subject of a separate proceeding. If such severance is not possible, the
Indemnifying Party shall assume and direct and be responsible only for the
matters relating to the Indemnified Liability.
(d) In addition to the amounts referred to in Section 6.1, an
Indemnifying Party shall pay all out-of-pocket expenses and other costs related
to the Indemnified Liability, including but not limited to fees for attorneys,
accountants, expert witnesses or other consultants retained by
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such Indemnifying Party and/or the Indemnified Party with respect to a claim
pursuant to this Agreement. To the extent that any such expenses and other costs
have been or are paid by an Indemnified Party, the Indemnifying Party shall
promptly upon written request reimburse the Indemnified Party therefor.
(e) An Indemnifying Party shall not pay (unless otherwise required by a
proper notice of levy and after prompt written notification to the Indemnified
Party of receipt of notice and demand for payment), settle, compromise or
concede any portion of the Indemnified Liability without the express written
consent of the Indemnified Party. An Indemnifying Party shall, on a timely
basis, keep the Indemnified Party informed of all developments in the Proceeding
and provide the Indemnified Party with copies of all pleadings, briefs, orders,
and other written papers; provided that in the event that the Indemnifying Party
determines that the providing of a written paper could waive an attorney-client
privilege, the parties shall take all reasonable measures to permit the
compliance with such obligation in a manner that avoids such consequence.
(f) Any Proceeding which is not controlled or which is no longer
controlled by an Indemnifying Party pursuant to Section 8.2 shall be controlled
and directed exclusively by the Indemnified Party, and any related out-of-pocket
expenses and other costs incurred by the Indemnified Party, including but not
limited to, fees for attorneys, accountants, expert witnesses or other
consultants, with respect to a claim pursuant to this Agreement, shall be
reimbursed by such Indemnifying Party. An Indemnified Party will not be required
to pursue the claim in federal district court, the Court of Federal Claims or
any state or foreign court if as a prerequisite to such court's jurisdiction,
the Indemnified Party is required to pay the asserted liability unless the funds
necessary to invoke such jurisdiction are provided by such Indemnifying Party.
SECTION 8.3. TIME AND MANNER OF PAYMENT. Upon receipt of notice of a
Final Determination, an Indemnifying Party shall pay, within seven (7) business
days of such receipt, to the Indemnified Party the amount of the Indemnified
Liability and any expenses or other costs indemnified against (less, in the case
of an Indemnified Liability for Taxes, any amount of such Taxes paid directly by
an Indemnifying Party to the taxing authority). With respect to payments of an
Indemnified Liability for amounts other than Taxes including any and all
Liabilities with respect to ATI stockholders, the Indemnifying Party shall pay
to the Indemnified Party the amount of this Indemnified Liability within seven
(7) days of a final determination of the amount of such Liability and, in the
case of Liabilities with respect to ATI stockholders, no less than seven (7)
days prior to the date that payment is required to be made to such stockholders.
Such payment shall be paid by wire transfer of immediately available funds to an
account designated by the Indemnified Party by written notice to an Indemnifying
Party at the address specified in Section 10.11 prior to the due date of such
payment. If an Indemnifying Party delays making payment beyond the due date
hereunder, such party shall pay interest on the amount unpaid at the IRS
Interest Rate for each day and the actual number of days for which any amount
due hereunder is unpaid.
SECTION 8.4. COOPERATION. The parties shall cooperate with one another
in a timely manner in any administrative or judicial Proceeding involving any
matter that may result in an Indemnified Liability.
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SECTION 8.5. ADMINISTRATION. ATI's and SPINCO's Chief Tax Officer or
other designated tax representative shall have primary responsibility for the
day-to-day administration of the provisions of this Agreement.
ARTICLE IX
DISPUTES
SECTION 9.1. DISPUTES.
(a) Resolution of any and all disputes arising from or in connection
with this Agreement, whether based on contract, tort, statute or otherwise,
including, but not limited to, unreasonable withholding of consent and disputes
in connection with claims by third parties (collectively, "Disputes"), shall be
subject to the provisions of this Section 9.1; provided, however, that nothing
contained herein shall preclude either party from seeking or obtaining (i)
injunctive relief or (ii) equitable or other judicial relief to enforce the
provisions hereof or to preserve the status quo pending the final resolution of
Disputes hereunder.
(b) Either party may give the other party written notice of any Dispute
not resolved in the normal course of business. The parties shall attempt in good
faith to resolve any Dispute promptly by negotiation between executives of the
parties who have authority to settle the controversy. Within 15 days after
delivery of the notice, the foregoing executives of both parties shall meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary for a period not to exceed 5 days, to attempt to resolve the
Dispute. All reasonable requests for information made by one party to the other
will be honored. If the parties do not resolve the Dispute within such 20 day
period (the "Initial Mediation Period"), the parties shall attempt in good faith
to resolve the Dispute by negotiation between (a) in the case of ATI, the Chief
Financial Officer and General Counsel, and (b) in the case of SPINCO, the Chief
Financial Officer and General Counsel (collectively, the "Designated Officers").
Such officers shall meet at a mutually acceptable time and place (but in any
event no later than 20 days following the expiration of the Initial Mediation
Period) and thereafter as often as they reasonably deem necessary for a period
not to exceed 20 days, to attempt to resolve the Dispute.
(c) If the Dispute has not been resolved by negotiation within 50 days
of the first party's notice, or if the parties failed to meet within 15 days of
the first party's notice, or if the Designated Officers failed to meet within 35
days of the first party's notice, either party may commence any litigation or
other procedure allowed by law.
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ARTICLE X
GENERAL
SECTION 10.1. ELECTIONS UNDER CODE SECTION 1552. Nothing in this
Agreement is intended to change or otherwise affect any election made by or on
behalf of the ATI Consolidated Group with respect to the calculation of earnings
and profits under Code Section 1552.
SECTION 10.2. PRE-DISTRIBUTION EARNINGS AND PROFITS. ATI and SPINCO
agree to allocate pre-Distribution earnings and profits in accordance with
Treasury Regulation Sections 1.312-10 and 1.1502-33.
SECTION 10.3. REMEDIES. SPINCO acknowledges that its obligations under
Article V of this Agreement are of a special, unique, unusual and extraordinary
character. Because the failure of SPINCO to perform its obligations set forth in
Article V of this Agreement could cause unique and extraordinary injury to ATI,
ATI shall, notwithstanding anything to the contrary herein, have the right in
addition to any other remedies available, at law or in equity, to seek an
injunction in a court of equity to compel SPINCO to perform such obligations.
SPINCO hereby waives any and all defenses it may have on the ground of lack of
jurisdiction or competence of the court to grant an injunction or other
equitable relief, or otherwise, and agrees that it will not assert any such
defense or any defense to a request by ATI for injunctive relief based on the
alleged existence of an adequate remedy at law or for money damages. Without
limiting the foregoing, SPINCO hereby waives the right to require ATI to post
any bond or other security with respect to any proceeding to enforce any
provisions of this Agreement. The existence of the rights of ATI set forth in
this Section 10.3 shall not preclude any other rights and remedies at law or in
equity which ATI may have.
SECTION 10.4. ASSIGNMENT. Neither of the parties may assign or delegate
any of its rights or duties under this Agreement without the prior written
consent of the other party. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
permitted assigns, by merger, acquisition of assets or otherwise.
SECTION 10.5. FURTHER ASSURANCES. Subject to the provisions hereof, the
parties hereto shall make, execute, acknowledge, and deliver such other
instruments and documents, and take all such other actions, as may be reasonably
required in order to effectuate the purposes of this Agreement and to consummate
the transactions contemplated hereby. Subject to the provisions hereof, each of
the parties shall, in connection with entering into this Agreement, performing
its obligations hereunder and taking any and all actions relating hereto, comply
with all applicable laws, regulations, orders, and decrees, and promptly provide
the other parties with all such information as they may reasonably request in
order to be able to comply with the provisions of this Agreement.
SECTION 10.6. WAIVERS. No failure or delay on the part of the parties
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce
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such right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. No modification or waiver of any provision
of this Agreement nor consent to any departure by the parties therefrom shall in
any event be effective unless the same shall be in writing, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given.
SECTION 10.7. CHANGE OF LAW. If, due to any change in applicable law or
regulations or their interpretation by any court of law or other governing body
having jurisdiction subsequent to the date of this Agreement, performance of any
provision of this Agreement or any transaction contemplated thereby shall become
impracticable or impossible, the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such provision.
SECTION 10.8. CONFIDENTIALITY. Subject to any contrary requirement of
law and the right of each party to enforce its rights hereunder in any legal
action, each party agrees that it shall keep strictly confidential, and shall
cause its employees and agents to keep strictly confidential, any information
which it or any of its employees or agents may acquire pursuant to, or in the
course of performing its obligations under, any provision of this Agreement.
SECTION 10.9. HEADINGS. Descriptive headings are for convenience only
and shall not control or affect the meaning or construction of any provision of
this Agreement.
SECTION 10.10. COUNTERPARTS. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by the parties hereto,
and each such executed counterpart shall be, and shall be deemed to be, an
original instrument.
SECTION 10.11. NOTICES. All notices, requests, claims and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery by
hand, by reputable overnight courier service, by facsimile transmission, or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 10.11)
listed below:
Allegheny Teledyne Incorporated
1000 Six PPG Place
Pittsburgh, Pennsylvania 15222-5479
Attn: Jon D. Walton
Senior Vice President, General Counsel
and Secretary
Fax No.: 412-394-2837
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Teledyne Technologies Incorporated
2049 Century Park East
Los Angeles, California 90067-3101
Attn: John T. Kuelbs
Senior Vice President, General Counsel
and Secretary
Attn: Fax No.: 310-551-4366
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Notice given by hand shall be deemed
delivered when received by the recipient. Notice given by mail as set out above
shall be deemed delivered five (5) calendar days after the date the same is
mailed. Notice given by reputable overnight courier shall be deemed delivered on
the next following business day after the same is sent. Notice given by
facsimile transmission shall be deemed delivered on the day of transmission
provided telephone confirmation of receipt is obtained promptly after completion
of transmission.
SECTION 10.12. COSTS AND EXPENSES. Unless otherwise specifically
provided herein, each party agrees to pay its own costs and expenses resulting
from the fulfillment of its respective obligations hereunder.
SECTION 10.13. CANCELLATION OF PRIOR TAX ALLOCATION OR TAX-SHARING
AGREEMENTS. On or prior to the Effective Date, ATI shall cancel or cause to be
canceled all agreements (other than this Agreement) providing for the allocation
or sharing of Taxes to which any member of the SPINCO Group would otherwise be
bound following the Distribution.
SECTION 10.14. INTEREST ON LATE PAYMENTS. If a party makes any payment
beyond the due date hereunder, such party shall pay interest on the amount
unpaid at the IRS Interest Rate for each day and the actual number of days for
which any amount due hereunder is unpaid.
SECTION 10.15. POWER OF ATTORNEY. Each member of the SPINCO Group shall
execute and deliver to ATI any power of attorney or other document reasonably
requested by ATI in connection with the filing of the Tax Returns and payment of
Taxes described in Article II hereof, or any Proceeding described in Article
VIII hereof. Each member of the ATI Consolidated Group shall execute and deliver
to SPINCO a power of attorney in connection with any matters controlled by
SPINCO under Section 2.2.
SECTION 10.16. GENERAL. This Agreement, including the attachments,
shall constitute the entire agreement between the parties hereto with respect to
the subject matter hereof and shall supersede all prior agreements and
undertakings, both written and oral, between the parties with respect to the
subject matter hereof and thereof. This Agreement may not be amended or modified
except (a) by an instrument in writing signed by, or on behalf of, the parties
or (b) by a waiver in accordance with Section 10.6. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
respective present and future Subsidiaries, and nothing
18
<PAGE> 19
herein, express or implied, is intended to or shall confer upon any third
parties any legal or equitable right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
SECTION 10.17. GOVERNING LAW: CONSENT TO JURISDICTION.
(a) This Agreement shall be governed by and construed and interpreted
in accordance with the laws of the Commonwealth of Pennsylvania as to all
matters, including matters of validity, construction, effect, enforceability,
performance and remedies, irrespective of the choice of laws and principles of
the laws of the Commonwealth of Pennsylvania.
(b) Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of (i) the Court of Common Pleas of Allegheny County, Pennsylvania
and (ii) the United States District Court for the Western District of
Pennsylvania, for the purposes of any suit, action or other proceeding arising
out of this Agreement or any transaction contemplated hereby or thereby (and
agrees not to commence any action, suit or proceeding relating thereto except in
such courts). Each of the parties hereto further agrees that service of any
process, summons, notice or document hand delivered or sent by U.S. registered
mail to such parties respective address set forth in Section 10.11 will be
effective service of process for any action, suit or proceeding in Pennsylvania
with respect to any matters to which it has submitted to jurisdiction as set
forth in the immediately preceding sentence. Each of the parties hereto
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby or thereby (i) the Court of Common Pleas of Allegheny
County, Pennsylvania or (ii) the United States District Court for the Western
District of Pennsylvania, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an inconvenient
forum.
SECTION 10.18. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
19
<PAGE> 20
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their respective officers, each of whom is duly authorized, all
as of the Effective Date.
ALLEGHENY TELEDYNE
INCORPORATED
By: /s/ James L. Murdy
-------------------------------------------
James L. Murdy
Executive Vice President-Finance and
Administration and Chief Financial Officer
TELEDYNE TECHNOLOGIES
INCORPORATED
By: /s/ Robert Mehrabian
-------------------------------------------
Robert Mehrabian
President and Chief Executive Officer
TELEDYNE BROWN ENGINEERING,
INC.
By: /s/ Robert Mehrabian
-------------------------------------------
Robert Mehrabian
President and Chief Executive Officer
20
<PAGE> 1
Exhibit 10.2
INTERIM SERVICES AGREEMENT
THIS INTERIM SERVICES AGREEMENT, dated as of November 29, 1999 (the
"Agreement"), is between Allegheny Teledyne Incorporated, a Delaware corporation
("Provider" or "ATI") and Teledyne Technologies Incorporated, a Delaware
corporation ("User" or "Teledyne Technologies");
WHEREAS, pursuant to a Separation and Distribution Agreement, dated as
of November 29, 1999 (the "Distribution Agreement"), Provider will distribute
the stock of User to Provider's stockholders (the "Distribution"), following
which Distribution each of Provider and User will continue in existence as
independent, publicly-traded companies; and
WHEREAS, this Agreement is entered into pursuant to the Distribution
Agreement and sets forth the terms on which Provider will, for a limited period,
provide certain transition services to, and permit the use of certain of its
assets by, User following the Distribution referred to above; and
WHEREAS, capitalized terms used herein, unless otherwise defined
herein, shall have the meaning assigned to them in the Distribution Agreement.
NOW, THEREFORE, in consideration of the respective agreements and
covenants contained in this Agreement, and intending to be legally bound hereby,
the parties agree as follows:
SECTION 1. SERVICES. (a) Subject to the terms of this Agreement,
Provider shall provide, or shall cause another member of the ATI Group to
provide, the services described on Schedule A to User, or another member of the
Teledyne Technologies Group designated by User, from and after the Distribution
Date and during the time periods specified on said Schedule. Provider (or such
other member of the ATI Group) shall supply such services substantially in
accordance with Provider's normal practices in providing such services as of the
Distribution Date (except as otherwise provided in Schedule A).
(b) In consideration for the Services, User shall pay to Provider the
amounts set forth on Schedule A. Provider shall invoice User on a monthly basis
for the Services provided to User. Amounts due under such invoices shall be
payable within thirty days after receipt.
(c) Provider and User agree to cooperate and to make all reasonable
efforts to work together to take such actions as are reasonably necessary to
eliminate the need for or to otherwise discontinue as expeditiously as
reasonably possible the Services performed under this Agreement.
(d) Provider shall be permitted to cause third parties to provide
Services to User hereunder (in lieu of Provider or a member of the ATI Group),
at Provider's sole discretion.
<PAGE> 2
SECTION 2. TERM. The term of this Agreement shall be a period of twelve
months, commencing on the Distribution Date and ending on the first year
anniversary of the Distribution Date, unless otherwise indicated on Schedule A;
provided, however, that User may terminate any of the Services provided
hereunder on not less than 30 days prior written notice to Provider, unless
otherwise indicated on Schedule A. The parties may extend the term of this
Agreement by written agreement signed by both parties. Notwithstanding the
foregoing, if (i) either party fails to perform any material provision of this
Agreement and the failure to perform is not corrected within 15 days after the
other party gives written notice of such default or (ii) User fails to make any
payment required under this Agreement at the time it is due and such failure is
not corrected within five days after written notice of such failure, then the
non-defaulting party may terminate this Agreement, effective at the end of such
five-day notice period.
SECTION 3. STANDARD OF CONDUCT; LIMITATION OF LIABILITY. (a) Provider
shall have no liability with respect to its furnishing any of the Services
hereunder to User except on account of Provider's willful misconduct or gross
negligence. In agreeing to provide the Services as an accommodation to User,
Provider is not making any representation or warranty as to the quality,
suitability or adequacy of the Services for any purpose or use, including
without limitation any representation as to whether any Asset of Provider or any
third party is Year 2000 Compliant. Without limiting generality of the
foregoing, Teledyne Technologies understands and agrees that ATI assumes no
responsibility for the adequacy or accuracy of the Teledyne Technologies'
financial statements or filings with the Securities and Exchange Commission. In
providing the Services, Provider shall not be obligated to (i) hire any
additional employees, (ii) maintain the employment of any specific employee, or
(iii) purchase, lease or license any additional equipment or other assets. For
the purposes of this Agreement, "Year 2000 Compliant" means, with respect to an
Asset, that such Asset will (A) accurately process date/time data (including,
but not limited to, calculating, comparing, sorting, sequencing and calendar
generation), including single century formulas and multi-century formulas, from,
into and between the twentieth and twenty-first centuries and the years 1999 and
2000, including leap year calculations, and will not malfunction or generate
incorrect values or invalid results involving such dates/times; (B) accurately
interface with other systems, as appropriate, in order to supply, receive or
process dates/times and other data, to the extent that other information
technology properly exchanges data with it; (C) provide that date/time-related
functionalities, date/time fields and any user input interfaces include a four
digit year format and/or other indication of century, as applicable; and (D) not
cause any other Asset that is otherwise Year 2000 Compliant to fail to be Year
2000 Compliant.
(b) It is understood and agreed that Provider shall not be obligated to
perform or to cause to be performed any services hereunder in a volume or
quantity which substantially exceeds the historical volumes or quantities of
such services performed for User or other members of the Teledyne Technologies
Group. The parties further acknowledge that it is User's intention to provide to
itself, or procure the services to be provided by Provider hereunder from third
parties other than Provider, as promptly as is reasonably practicable following
the Distribution Date. Provider will not be required to perform or to cause to
be performed any of the Services for the benefit of any third party or any other
entity other than User or any directly or indirectly wholly owned subsidiary or
majority owned affiliate of User.
2
<PAGE> 3
(c) Provider's maximum liability to, and the sole remedy of, User for
breach of this Agreement shall be the lesser of (i) User's incremental
out-of-pocket cost of performing such service itself or (ii) User's incremental
out-of-pocket cost of obtaining such service from a third party (provided, that
User shall exercise all reasonable efforts under the circumstances to minimize
the cost of any such alternative to such services by selecting the most
cost-effective alternatives which provide the functional equivalent of the
services replaced) or, if lesser, the amounts paid by User to Provider
hereunder. Notwithstanding anything to the contrary herein, (A) in no event
shall Provider have any liability to User for special or consequential damages
under this Agreement, including as a result of Provider's breach of this
Agreement or the gross negligence or willful misconduct of Provider under this
Agreement, and (B) in no event shall Provider have any liability of any kind
under this Agreement to any third party.
(d) Except as otherwise provided in the foregoing paragraphs (a) - (c)
of this Section 3, User shall be solely liable and responsible for, and shall
indemnify Provider and its directors, officers, employees, agents,
representatives and affiliates from, any and all claims, liabilities,
obligations, losses, costs, expenses, litigation, proceedings, taxes,
assessments, charges, demands or judgments of any kind or nature whatsoever
("Losses") for acts or omissions in furnishing Services to User under this
Agreement. Upon termination of this Agreement or the earlier termination of any
Services, User shall be obligated to return to Provider as soon as is reasonably
practicable, any equipment or other property of Provider relating to the
Services which is in User's control or possession and which is not an asset to
be retained by User under the Distribution Agreement or the Ancillary
Agreements.
SECTION 4. FORCE MAJEURE. Neither party shall be responsible for
failure or delay in performance of any service to be performed hereunder, nor
shall either party be responsible for failure or delay in receiving such
service, if caused by an act of God, act of public enemy, war, government acts
or regulations, fire, flood, hurricane, embargo, quarantine, epidemic, labor
stoppages, accident, explosion, unusually severe weather, any Asset of such
party or a third party that is not Year 2000 Compliant or other cause similar or
dissimilar to the foregoing beyond their control (herein called "Force
Majeure"); provided, however, that prior to being relieved of any of its
obligations, the party whose performance has been interrupted by such
circumstances shall use reasonable efforts to remove or otherwise address the
effects of any such event or condition as soon as practicable and shall promptly
give written notice to the other party upon the occurrence of any of such events
or circumstances and shall use reasonable efforts to resume full performance of
this Agreement as soon as is practicable. Notwithstanding the foregoing, to the
extent services are available after the occurrence of a Force Majeure event,
User shall be entitled to, and Provider shall provide, a level of services
equivalent to the proportionate share of services used by User immediately prior
to the occurrence of any such Force Majeure event.
SECTION 5. CONFIDENTIALITY. Any and all information which is exchanged
by the parties in connection with this Agreement, whether of a technical or
business nature, shall be considered confidential. The parties agree that such
confidential information shall be treated in accordance with the terms and
provisions of the Distribution Agreement.
3
<PAGE> 4
SECTION 6. AMENDMENT. This Agreement may be amended only by a writing
signed by each of the parties.
SECTION 7. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute a single instrument.
SECTION 8. THIRD PARTIES. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
or entity other than User and Provider (and its associated indemnified parties
under Section 3(d)) any rights or remedies under, or by reason of, this
Agreement.
SECTION 9. WAIVERS. Any waiver by any party of any breach of or failure
to comply with any provision of this Agreement by any other party to this
Agreement shall be in writing and shall not be construed as, or constitute, a
continuing waiver of such provision, or a waiver of any other breach of, or
failure to comply with, any other provision of this Agreement.
SECTION 10. GOVERNING LAW; CONSTRUCTION. This Agreement shall be
construed and enforced in accordance with and governed by the internal
substantive laws of the Commonwealth of Pennsylvania. The headings in this
Agreement are solely for convenience of reference and shall not be given any
effect in the construction or interpretation of this Agreement. References to
Sections are references to Sections of this Agreement. The Schedule to this
Agreement is incorporated herein and is part of this Agreement.
SECTION 11. NOTICES. All notices, requests, claims and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery by
hand, by reputable overnight courier service, by facsimile transmission, or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 11) listed
below:
if to Allegheny Teledyne Incorporated: Allegheny Teledyne Incorporated
1000 Six PPG Place
Pittsburgh, PA 15222-5479
Attention: Senior Vice President,
General Counsel and
Secretary
Fax No.: 412-394-2837
if to Teledyne Technologies Incorporated: Teledyne Technologies Incorporated
2049 Century Park East
Los Angeles, CA 90067-3101
Attention: Senior Vice President,
General Counsel and
Secretary
Fax No.: 310-551-4366
4
<PAGE> 5
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Notice given by hand shall be deemed
delivered when received by the recipient. Notice given by mail as set out above
shall be deemed delivered five calendar days after the date the same is mailed.
Notice given by reputable overnight courier shall be deemed delivered on the
next following business day after the same is sent. Notice given by facsimile
transmission shall be deemed delivered on the day of transmission provided
telephone confirmation of receipt is obtained promptly after completion of
transmission.
SECTION 12. ASSIGNMENT. Neither of the parties may assign or delegate
any of its rights or duties under this Agreement without the prior written
consent of the other party. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
permitted assigns.
SECTION 13. DISPUTES. (a) Resolution of any and all disputes arising
from or in connection with this Agreement, whether based on contract, tort,
statute or otherwise, including, but not limited to, disputes in connection with
claims by third parties (collectively, "Disputes"), shall be subject to the
provisions of this Section 13; provided, however, that nothing contained herein
shall preclude either party from seeking or obtaining (i) injunctive relief or
(ii) equitable or other judicial relief to enforce the provisions hereof or to
preserve the status quo pending resolution of Disputes hereunder.
(b) Either party may give the other party written notice of any Dispute
not resolved in the normal course of business. The parties shall attempt in good
faith to resolve any Dispute promptly by negotiation between executives of the
parties who have authority to settle the controversy. Within 15 days after
delivery of the notice, the foregoing executives of both parties shall meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary for a period not to exceed 5 days, to attempt to resolve the
Dispute. All reasonable requests for information made by one party to the other
will be honored. If the parties do not resolve the Dispute within such 20 day
period (the "Initial Mediation Period"), the parties shall attempt in good faith
to resolve the Dispute by negotiation between (i) in the case of Allegheny
Teledyne Incorporated, the Senior Vice President, General Counsel and Secretary
and (ii) in the case of Teledyne Technologies, the General Counsel
(collectively, the "Designated Officers"). Such officers shall meet at a
mutually acceptable time and place (but in any event no later than 15 days
following the expiration of the Initial Mediation Period) and thereafter as
often as they reasonably deem necessary for a period not to exceed 15 days, to
attempt to resolve the Dispute.
5
<PAGE> 6
(c) If the Dispute has not been resolved by negotiation within 50 days
of the first party's notice, or if the parties failed to meet within 30 days of
the first party's notice, or if the Designated Officers failed to meet within 35
days of the first party's notice, either party may commence any litigation or
other procedure allowed by law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
ALLEGHENY TELEDYNE
INCORPORATED
By: /s/ James L. Murdy
---------------------------------
Title:
---------------------------------
TELEDYNE TECHNOLOGIES
INCORPORATED
By: /s/ Robert Mehrabian
---------------------------------
Title:
---------------------------------
6
<PAGE> 1
Exhibit 10.3
EMPLOYEE BENEFITS AGREEMENT
BETWEEN
ALLEGHENY TELEDYNE INCORPORATED
AND
TELEDYNE TECHNOLOGIES INCORPORATED
DATED AS OF NOVEMBER 29, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS...........................................................................1
ARTICLE II GENERAL PRINCIPLES...................................................................6
2.1 ASSUMPTION OF LIABILITIES...............................................................6
2.2 ESTABLISHMENT OF TELEDYNE TECHNOLOGIES PLANS............................................6
2.3 TERMS OF PARTICIPATION BY TELEDYNE TECHNOLOGIES INDIVIDUALS IN TELEDYNE
TECHNOLOGIES PLANS.....................................................................7
ARTICLE III DEFINED BENEFIT PLANS...............................................................8
3.1 ESTABLISHMENT OF TELEDYNE TECHNOLOGIES PENSION PLAN AND TRUST...........................8
3.2 ASSUMPTION OF PENSION PLAN LIABILITIES AND ALLOCATION OF INTERESTS IN THE ATI
MASTER PENSION TRUST...................................................................8
3.3 FREEZING OF PENSION PLAN BENEFITS.......................................................9
3.4 CREDITING SERVICE UNDER ATI'S PENSION PLAN..............................................9
ARTICLE IV DEFINED CONTRIBUTION PLANS...........................................................9
4.1 401(k) PLAN.............................................................................9
4.2 PACIFIC AVIONICS CORPORATION PROFIT SHARING PLAN.......................................11
ARTICLE V HEALTH AND WELFARE PLANS.............................................................11
5.1 ASSUMPTION OF HEALTH AND WELFARE PLAN LIABILITIES......................................11
5.2 VENDOR CONTRACTS.......................................................................11
5.3 PROCEDURES FOR AMENDMENTS TO PLANS, PLAN DESIGNS, ADMINISTRATIVE PRACTICES,
AND VENDOR CONTRACTS..................................................................13
5.4 ATI SICKNESS AND ACCIDENT, LONG TERM DISABILITY AND PENSION DISABILITY
BENEFITS..............................................................................14
5.5 POST-RETIREMENT HEALTH AND LIFE INSURANCE BENEFITS.....................................15
5.6 COBRA AND DIRECT PAY...................................................................15
5.7 POST-DISTRIBUTION TRANSITIONAL ARRANGEMENTS............................................15
5.8 APPLICATION OF ARTICLE V TO TELEDYNE TECHNOLOGIES ENTITIES.............................16
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI EXECUTIVE BENEFITS AND NON-EMPLOYEE DIRECTOR BENEFITS...............................17
6.1 ASSUMPTION OF OBLIGATIONS..............................................................17
6.2 CONSENTS AND NOTIFICATIONS.............................................................17
6.3 ATI 1999 BONUS PLAN....................................................................17
6.4 ATI INCENTIVE PLANS....................................................................18
6.5 ATI NONQUALIFIED DEFERRED COMPENSATION PROGRAMS........................................20
6.6 NON-EMPLOYEE DIRECTOR BENEFITS.........................................................21
6.7 CONFIDENTIALITY AND PROPRIETARY INFORMATION............................................21
ARTICLE VII GENERAL AND ADMINISTRATIVE.........................................................21
7.1 INTERIM SERVICES AGREEMENT.............................................................21
7.2 PAYMENT OF LIABILITIES, PLAN EXPENSES AND RELATED MATTERS..............................21
7.3 SHARING OF PARTICIPANT INFORMATION.....................................................22
7.4 REPORTING AND DISCLOSURE AND COMMUNICATIONS TO PARTICIPANTS............................22
7.5 NON-TERMINATION OF EMPLOYMENT; NO THIRD-PARTY BENEFICIARIES............................23
7.6 BENEFICIARY DESIGNATIONS...............................................................23
7.7 REQUESTS FOR IRS RULINGS AND DOL OPINIONS..............................................23
7.8 FIDUCIARY MATTERS......................................................................23
7.9 COLLECTIVE BARGAINING..................................................................23
7.10 CONSENT OF THIRD PARTIES..............................................................24
7.11 INDEMNIFICATION OF ATI................................................................24
ARTICLE VIII MISCELLANEOUS.....................................................................24
8.1 FOREIGN PLANS..........................................................................24
8.2 EFFECT IF DISTRIBUTION DOES NOT OCCUR..................................................24
8.3 RELATIONSHIP OF PARTIES................................................................24
8.4 AFFILIATES.............................................................................24
8.5 COUNTERPARTS; ENTIRE AGREEMENT; CORPORATE POWER........................................24
8.6 GOVERNING LAW; CONSENT TO JURISDICTION.................................................25
8.7 ASSIGNABILITY..........................................................................26
8.8 THIRD PARTY BENEFICIARIES..............................................................26
8.9 NOTICES................................................................................26
8.10 SEVERABILITY..........................................................................26
8.12 HEADINGS..............................................................................27
8.13 WAIVERS OF DEFAULT....................................................................27
8.15 AMENDMENTS............................................................................27
8.16 INTERPRETATION........................................................................27
8.17 DISPUTES..............................................................................27
</TABLE>
ii
<PAGE> 4
EMPLOYEE BENEFITS AGREEMENT
November 29, 1999
The parties to this Employee Benefits Agreement, dated as of the date
written above, are Allegheny Teledyne Incorporated, a Delaware corporation
("ATI"), and Teledyne Technologies Incorporated, a Delaware corporation
("Teledyne Technologies"). Capitalized terms used herein (other than the formal
names of ATI Plans (as defined below) and related trusts of ATI) and not
otherwise defined shall have the respective meanings assigned to them in Article
I hereof or as assigned to them in the Separation and Distribution Agreement (as
defined below).
WHEREAS, the Board of Directors of ATI has determined that it is in the
best interests of ATI and its stockholders to separate ATI's aerospace and
electronics businesses into an independent business entity;
WHEREAS, in furtherance of the foregoing, ATI and Teledyne Technologies
have entered into a Separation and Distribution Agreement, dated as of the date
hereof (the "Separation and Distribution Agreement"), and certain other
agreements that will govern certain matters relating to the Separation, the
Distribution and the relationship of ATI and Teledyne Technologies, and their
respective Subsidiaries following the Distribution; and
WHEREAS, pursuant to the Separation and Distribution Agreement, ATI and
Teledyne Technologies have agreed to enter into this agreement allocating
assets, liabilities and responsibilities with respect to certain employee
compensation and benefit plans and programs between them.
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement the following terms shall have the
following meanings:
1.1 Agreement means this Employee Benefits Agreement,
including all the Schedules and Exhibits hereto.
1.2 ASO Contract is defined in Section 5.2(a)(i).
1.3 ATI Entity means any entity that is, at the relevant time,
an Affiliate of ATI, except that, for periods beginning Immediately After the
Distribution Date, the term "ATI Entity" shall not include Teledyne Technologies
or a Teledyne Technologies Entity.
1.4 ATI Executive means an employee or former employee of ATI,
an ATI Entity, Teledyne Technologies or a Teledyne Technologies Entity, who
immediately before the
<PAGE> 5
Close of the Distribution Date is eligible to participate in or receive a
benefit under any ATI Executive Benefit Plan.
1.5 ATI Master Pension Trust means the master trust under
which the assets of the ATI Pension Plan are held.
1.6 ATI Pension Plan means the Allegheny Teledyne Incorporated
Pension Plan.
1.7 ATI Stock Value means the closing price per share of ATI
Common Stock (regular way) on the NYSE on November 22, 1999.
1.8 Award means an award under the Incentive Plan, including
Performance Awards and SARP Awards. When immediately preceded by "ATI," the term
Award (including the term Performance Award or SARP Award) means an award under
the ATI Incentive Plan. When immediately preceded by "Teledyne Technologies,"
the term Award (including the term Performance Award or SARP Award) means an
award under the Teledyne Technologies Incentive Plan.
1.9 Benefit Liabilities means any Liabilities (as defined in
the Separation and Distribution Agreement) relating to any contributions,
compensation or other benefits accrued or payable under any profit sharing,
pension, savings, deferred compensation, fringe benefit, insurance, medical,
medical reimbursement, life, disability, accident, post-retirement health or
welfare benefit, stock option, stock purchase, sick pay, vacation, employment,
severance, termination or other compensation or benefit plan, agreement,
contract, policy, trust fund or arrangement.
1.10 Change is defined in Section 5.3(b)(i).
1.11 Close of the Distribution Date means 5:00 P.M., Eastern
Standard Time or Eastern Daylight Time (whichever shall then be in effect), on
the Distribution Date.
1.12 COBRA means the continuation coverage requirements for
"group health plans" under Title X of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and as codified in Code Section 4980B
and ERISA Sections 601 through 608.
1.13 Code means the Internal Revenue Code of 1986, as amended.
Reference to a specific Code provision also includes any proposed, temporary, or
final regulation in force under that provision.
1.14 Corporate-Owned Life Insurance Policies means the life
insurance policies owned by ATI insuring the lives of certain ATI Executives and
certain other highly compensated employees of ATI or an ATI Entity.
1.15 DOL means the United States Department of Labor.
2
<PAGE> 6
1.16 ERISA means the Employee Retirement Income Security Act
of 1974, as amended. Reference to a specific provision of ERISA also includes
any proposed, temporary, or final regulation in force under that provision.
1.17 Executive Benefit Plans, when immediately preceded by
"ATI," means the executive benefit plans, programs, and arrangements
established, maintained, agreed upon, or assumed by ATI or an ATI Entity for the
benefit of employees and former employees of ATI or an ATI Entity before the
Close of the Distribution Date as listed in Schedule 1.17. When immediately
preceded by "Teledyne Technologies," Executive Benefit Plans means the executive
benefit plans and programs to be established by Teledyne Technologies pursuant
to Section 2.2 that correspond to the respective ATI Executive Benefit Plans.
1.18 Foreign Plan means a Plan maintained by ATI, an ATI
Entity, Teledyne Technologies, or a Teledyne Technologies Entity for the benefit
of employees outside the U.S.
1.19 Group Insurance Policies is defined in Section 5.2(b)(i).
1.20 HCRA Plan, when immediately preceded by "ATI," means the
ATI Health Care Reimbursement Account Plan. When immediately preceded by
"Teledyne Technologies," HCRA Plan means the Health Care Reimbursement Account
Plan to be established by Teledyne Technologies pursuant to Section 2.2.
1.21 Health and Welfare Plans, when immediately preceded by
"ATI," means the health and welfare plans listed on Schedule 1.21 established
and maintained by ATI for the benefit of employees and retirees of ATI and
certain ATI Entities, and such other welfare plans or programs as may apply to
such employees and retirees of ATI or an ATI Entity before the Close of the
Distribution Date. When immediately preceded by "Teledyne Technologies," Health
and Welfare Plans means the health and welfare plans to be established by
Teledyne Technologies pursuant to Section 2.2 that correspond to the respective
ATI Health and Welfare Plans.
1.22 HMO means a health maintenance organization that provides
benefits under one or more of the ATI Health and Welfare Plans or the Teledyne
Technologies Health and Welfare Plans.
1.23 HMO Agreements is defined in Section 5.2(c)(i).
1.24 Immediately After the Distribution Date means 5:01 P.M.,
Eastern Standard Time or Eastern Daylight Time (whichever shall then be in
effect), on the Distribution Date.
1.25 Incentive Plan, when immediately preceded by "ATI," means
any of the Allegheny Teledyne Incorporated 1996 Incentive Plan, any predecessor
Incentive Plan thereto and any other stock-based incentive plans assumed by ATI
by reason of merger, combination, acquisition or otherwise. When immediately
preceded by "Teledyne Technologies," Incentive Plan means the Incentive Plan to
be established by Teledyne Technologies pursuant to Section 2.2.
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1.26 IRS means the Internal Revenue Service.
1.27 Material Feature means any feature of a Plan that could
reasonably be expected to be of material importance to the sponsoring employer
or the participants and beneficiaries of the Plan, which could include,
depending on the type and purpose of the particular Plan, the class or classes
of employees eligible to participate in such Plan, the nature, type, form,
source, and level of benefits provided by the employer under such Plan and the
amount or level of contributions, if any, required to be made by participants
(or their dependents or beneficiaries) to or under such Plan.
1.28 Non-Employee Director, when immediately preceded by
"ATI," means a member of ATI's Board of Directors who is not an employee of ATI
or an ATI Entity. When immediately preceded by "Teledyne Technologies,"
Non-Employee Director means a member of Teledyne Technologies' Board of
Directors who is not an employee of Teledyne Technologies or a Teledyne
Technologies Entity.
1.29 Non-Employee Director Plans, when immediately preceded by
"ATI," means the Allegheny Teledyne Incorporated 1996 Non-Employee Director
Stock Compensation Plan and the Allegheny Teledyne Incorporated Fee Continuation
Plan for Non-Employee Directors. When immediately preceded by "Teledyne
Technologies," Non-Employee Director Plans means the plans and programs to be
established by Teledyne Technologies pursuant to Section 2.2 that correspond to
the ATI Non-Employee Director Plans.
1.30 Nonqualified Deferred Compensation Programs, when
immediately preceded by "ATI," means the Allegheny Teledyne Incorporated
Executive Deferred Compensation Plan, the Allegheny Teledyne Incorporated
Supplemental Pension Plan and the Teledyne, Inc. Pension Equalization Plan. When
immediately preceded by "Teledyne Technologies," Deferral Plan means the
Executive Deferred Compensation Plan to be established by Teledyne Technologies
pursuant to Section 2.2.
1.31 Option, when immediately preceded by "ATI," means an
option to purchase ATI Common Stock and, when immediately preceded by "Teledyne
Technologies," Option means an option to purchase Teledyne Technologies Common
Stock, in each case pursuant to an Incentive Plan.
1.32 PBGC means the Pension Benefit Guaranty Corporation.
1.33 Performance Award means any Award granted pursuant to the
terms of the Performance Share Program.
1.34 Performance Share Program means the Allegheny Teledyne
Incorporated Performance Share Program adopted pursuant to Administrative Rules
under the ATI Incentive Plan.
1.35 Plan, when immediately preceded by "ATI" or "Teledyne
Technologies," means any plan, policy, program, payroll practice, on-going
arrangement, contract, trust, insurance policy or other agreement or funding
vehicle providing benefits to employees, former
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employees or Non-Employee Directors of ATI or an ATI Entity, or Teledyne
Technologies or a Teledyne Technologies Entity, as applicable.
1.36 Ratio means the amount obtained by dividing the ATI Stock
Value by the Teledyne Technologies Stock Value.
1.37 Reasonable Efforts means such acts or actions that, in
the reasonable good faith opinion of the party taking such acts or actions, are
calculated to achieve, or otherwise further, the applicable provisions to which
the term applies; provided, however, to the extent any costs, fees or other
expenditures (the "Expenses") occur as a result of a party's use of Reasonable
Efforts and such expenses are not expressly allocated under the terms of this
Agreement or any Ancillary Agreement, such Expenses shall be borne by the party
for whose benefit such Expenses are incurred and such party shall indemnify and
hold harmless the other party with respect to such Expenses.
1.38 SARP, when immediately preceded by "ATI," means the
Allegheny Teledyne Incorporated Stock Acquisition and Retention Program.
1.39 SARP Award means any Award granted pursuant to the terms
of the SARP.
1.40 Section 414(l) Amount is defined in the last sentence of
Section 3.2(a).
1.41 Separation and Distribution Agreement is defined in the
third paragraph of the preamble of this Agreement.
1.42 Stock Purchase Plan when immediately preceded by "ATI,"
means the Allegheny Teledyne Incorporated Employee Stock Purchase Plan. When
immediately preceded by "Teledyne Technologies," Stock Purchase Plan means the
employee stock purchase plan to be established by Teledyne Technologies pursuant
to Section 2.2.
1.43 Teledyne means Teledyne, Inc., a Delaware corporation, or
its successors or assigns.
1.44 Teledyne 401(k) Plan means the Teledyne, Inc. 401(k)
Plan.
1.45 Teledyne Technologies Entity means any Person that is, at
the relevant time, a Subsidiary of Teledyne Technologies or is otherwise
controlled, directly or indirectly, by Teledyne Technologies.
1.46 Teledyne Technologies 401(k) Plan means, for the period
between the Close of the Distribution Date and April 1, 2000, that portion of
the Teledyne 401(k) Plan amended as described in Section 4.1(a) and, for the
period on and after April 1, 2000, the separate 401(k) plan established by
Teledyne Technologies effective no later than April 1, 2000.
1.47 Teledyne Technologies Individual means any individual
who, Immediately After the Distribution Date, (i) is an active hourly or
salaried employee of one of the Teledyne
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Technologies Entities or (ii) is a former hourly or salaried employee who is in
pay status or deferred vested status under the ATI Pension Plan of one of the
Teledyne Technologies Entities listed in Schedule 1.47.
1.48 Teledyne Technologies Pension Plan means the pension plan
established by Teledyne Technologies pursuant to Article III and Section 2.2.
1.49 Teledyne Technologies Pension Plan Participants means,
collectively, the Teledyne Technologies Individuals who are eligible to
participate and/or receive benefits under the terms of the Teledyne Technologies
Pension Plan.
1.50 Teledyne Technologies Stock Value means the opening price
per share of Teledyne Technologies Common Stock on the NYSE on the day following
the Distribution Date.
ARTICLE II
GENERAL PRINCIPLES
2.1 ASSUMPTION OF LIABILITIES. Except as otherwise expressly provided
in Article III and Article VI, Teledyne Technologies hereby assumes and agrees
to pay, perform, fulfill and discharge, in accordance with their respective
terms, all of the following (regardless of when or where such Benefit
Liabilities arose or arise or were or are incurred): (i) all Benefit Liabilities
to or relating to Teledyne Technologies Individuals, and their respective
dependents and beneficiaries, in each case relating to, arising out of or
resulting from employment by ATI or an ATI Entity before the Distribution Date
(including Benefit Liabilities under ATI Plans and Teledyne Technologies Plans);
(ii) all other Benefit Liabilities to or relating to Teledyne Technologies
Individuals and other employees of Teledyne Technologies or a Teledyne
Technologies Entity, and their dependents and beneficiaries, to the extent
relating to, arising out of or resulting from future, present or former
employment with Teledyne Technologies or a Teledyne Technologies Entity
(including Benefit Liabilities under ATI Plans and Teledyne Technologies Plans);
(iii) all Benefit Liabilities relating to, arising out of or resulting from any
other actual or alleged employment relationship with Teledyne Technologies or a
Teledyne Technologies Entity; (iv) all Benefit Liabilities relating to, arising
out of or resulting from the imposition of withdrawal liability under Subtitle E
of Title IV of ERISA as a result of a complete or partial withdrawal of any ATI
Entity from a "multiemployer plan" within the meaning of ERISA Section 4021
which occurs solely as a result of the Separation or the Distribution; and (v)
all other Benefit Liabilities relating to, arising out of or resulting from
obligations, liabilities and responsibilities expressly assumed or retained by
Teledyne Technologies, a Teledyne Technologies Entity, or a Teledyne
Technologies Plan pursuant to this Agreement. Notwithstanding the generality of
the foregoing, Teledyne Technologies does not assume or agree to pay, perform,
fulfill or discharge any Benefit Liabilities relating to, arising out of or
resulting from the Teledyne Savings and Retirement Supplemental Plan.
2.2 ESTABLISHMENT OF TELEDYNE TECHNOLOGIES PLANS. Effective prior
to the Distribution Date, Teledyne Technologies shall adopt, or cause to be
adopted, the
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Teledyne Technologies Pension Plan and its related trust, the amended Teledyne
401(k) Plan for the period between the Distribution Date and April 1, 2000, the
Teledyne Technologies Stock Purchase Plan, the Teledyne Technologies Health and
Welfare Plans, and the Teledyne Technologies Executive Benefit Plans for the
benefit of the Teledyne Technologies Individuals and other current and future
employees of Teledyne Technologies and the Teledyne Technologies Entities;
provided, however, that Teledyne Technologies may, in its sole discretion, elect
not to adopt or establish the Plan or Plans listed in Schedule 2.2(a). Subject
to the provisions of Section 4.1 regarding the Teledyne Technologies 401(k)
Plan, or as otherwise may be set forth in Schedule 2.2(b), the foregoing
Teledyne Technologies Plans shall be substantially identical in all Material
Features to the corresponding ATI Plans as in effect as of the Close of the
Distribution Date. Effective prior to or within a reasonable time after the
Distribution Date, Teledyne Technologies shall adopt, or cause to be adopted,
the Teledyne Technologies Non-Employee Director Plans, for the benefit of
Teledyne Technologies Non-Employee Directors. The Teledyne Technologies
Non-Employee Director Plans shall be substantially similar in all Material
Features to the corresponding ATI Non-Employee Director Plans as in effect on
the Distribution Date. Effective no later than April 1, 2000, Teledyne
Technologies shall adopt the Teledyne Technologies 401(k) Plan and its related
trust.
2.3 TERMS OF PARTICIPATION BY TELEDYNE TECHNOLOGIES INDIVIDUALS IN
TELEDYNE TECHNOLOGIES PLANS. The Teledyne Technologies Plans shall be, with
respect to Teledyne Technologies Individuals, in all respects the successors in
interest to, and shall not provide benefits that duplicate benefits provided by,
the corresponding ATI Plans. ATI and Teledyne Technologies shall agree on
methods and procedures, including amending the respective Plan documents and/or
requesting approvals or consents of Teledyne Technologies Individuals where the
parties deem appropriate, to prevent Teledyne Technologies Individuals from
receiving duplicative benefits from the ATI Plans and the Teledyne Technologies
Plans. With respect to Teledyne Technologies Individuals, each Teledyne
Technologies Plan shall provide that all service, all compensation and all other
benefit-affecting determinations that, as of the Close of the Distribution Date,
were recognized under the corresponding ATI Plan shall, as of Immediately After
the Distribution Date, receive full recognition, credit, and validity and be
taken into account under such Teledyne Technologies Plan to the same extent as
if such items occurred under such Teledyne Technologies Plan, except to the
extent that duplication of benefits would result. The provisions of this
Agreement for the transfer of assets from certain trusts relating to ATI Plans
(including Foreign Plans) to the corresponding trusts relating to Teledyne
Technologies Plans (including Foreign Plans) are based upon the understanding of
the parties that each such Teledyne Technologies Plan will assume all Benefit
Liabilities of the corresponding ATI Plan to or relating to Teledyne
Technologies Individuals, as provided for herein. If any such Benefit
Liabilities are not effectively assumed by the appropriate Teledyne Technologies
Plan, then the amount of assets transferred to the trust relating to such
Teledyne Technologies Plan from the trust relating to the corresponding ATI Plan
shall be recomputed as set forth below, but taking into account the retention of
such Benefit Liabilities by such ATI Plan, and assets shall be transferred by
the trust relating to such Teledyne Technologies Plan to the trust relating to
such ATI Plan so as to place each such trust in the position it would have been
in, had the initial asset transfer been made in accordance with such recomputed
amount of assets.
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ARTICLE III
DEFINED BENEFIT PLANS
3.1 ESTABLISHMENT OF TELEDYNE TECHNOLOGIES PENSION PLAN AND TRUST. The
Teledyne Technologies Pension Plan, established by Teledyne Technologies
pursuant to Section 2.2, (i) shall be a qualified defined benefit pension plan
within the meaning of Code Section 401(a), (ii) shall contain provisions, terms
and conditions substantially similar to the provisions, terms and conditions of
the ATI Pension Plan, (iii) shall provide coverage to and assume the benefit
payment obligations of the ATI Pension Plan with respect to the Teledyne
Technologies Pension Plan Participants, (iv) shall provide a benefit formula
which shall accrue benefits for eligible Teledyne Technologies Individuals at a
rate substantially similar to the rate at which benefits are accrued under the
ATI Pension Plan and (v) shall provide that the Teledyne Technologies Pension
Plan cannot be amended to increase the rate of benefit accrual until January 1,
2001 without the prior written consent of ATI. The trust related to the Teledyne
Technologies Pension Plan, established by Teledyne Technologies pursuant to
Section 2.2, is intended to be exempt from taxation under Code Section 501(a)
and Teledyne Technologies shall take all steps necessary or appropriate to cause
such trust to meet the requirements for tax exemption under Code Section 501(a).
3.2 ASSUMPTION OF PENSION PLAN LIABILITIES AND ALLOCATION OF INTERESTS
IN THE ATI MASTER PENSION TRUST.
(a) CALCULATION OF ASSET ALLOCATION. A nationally-recognized
actuarial firm, selected by ATI in its sole and absolute discretion (the
"Actuary"), shall determine the Section 414(l) Amount effective as of the
Distribution Date. As soon as practicable after the Distribution Date, the
Actuary shall deliver to ATI and Teledyne Technologies a written report, with
the necessary supporting data, setting forth the calculations by the Actuary of
the Section 414(l) Amount and a certification that such amount complies with
Section 414(l) of the Code. The Actuary's determination of the Section 414(l)
Amount shall be final and binding on all parties hereto and for all purposes
hereunder. The costs of the Actuary with respect to the determination of the
Section 414(l) Amount under this Section 3.2(a) shall be borne equally by ATI
and Teledyne Technologies. The "Section 414(l) Amount" means the minimum amount
required to be transferred from the ATI Pension Plan to the Teledyne
Technologies Pension Plan with respect to the Teledyne Technologies Pension Plan
Participants pursuant to Section 208 of ERISA and Section 414(l) of the Code and
the applicable rulings and regulations thereunder using actuarial assumptions
deemed reasonable in the aggregate by the Actuary within the meaning of Treasury
Regulation Section 1.414(l)-1(b)(9) with respect to plan terminations occurring
as of the Distribution Date.
(b) TRANSFER OF ASSETS. As soon as practicable after
determination of the Section 414(l) Amount in accordance with the procedures set
forth in Section 3.2(a) but in no event earlier than two (2) business days after
the Distribution Date or more than sixty (60) days after the Distribution Date,
ATI shall cause to be transferred from the ATI Master Pension Trust to the
Teledyne Technologies Master Pension Trust assets in a form determined by ATI in
its sole
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discretion with a market value then equal to the sum of (i) the Section 414(l)
Amount and (ii) up to $50,000,000, together with interest on such Section 414(l)
Amount for the period from the Distribution Date to the date of transfer at a
rate equal to the rate of interest on 90-day U.S. Treasury bills as of the
Distribution Date, reduced by the amount of any benefit payments due and made to
or on behalf of any of the Teledyne Technologies Individuals from the ATI Master
Pension Trust during such period and not taken into account in determining the
Section 414(l) Amount. As of the date of such transfer of assets, Teledyne
Technologies shall assume all Benefit Liabilities to or relating to Teledyne
Technologies Pension Plan Participants under ATI's Pension Plan and ATI's
Pension Plan shall retain no liability for such benefits.
3.3 FREEZING OF PENSION PLAN BENEFITS. Effective Immediately After the
Distribution Date, the accrued benefits with respect to Teledyne Technologies
Individuals who, as of the Distribution Date, were participants under the ATI
Pension Plan shall be frozen and such Individuals shall not accrue any
additional benefits from and after the Distribution Date under the ATI Pension
Plan. The assets and Benefit Liabilities with respect to such Individuals,
determined as of the Distribution Date, shall be retained by the ATI Pension
Plan and its related trust and paid therefrom when due under the terms of the
ATI Pension Plan.
3.4 CREDITING SERVICE UNDER ATI'S PENSION PLAN. Teledyne Technologies
Individuals other than Teledyne Technologies Pension Plan Participants who, as
of the Distribution Date, were participants in the ATI Pension Plan will
continue to receive service credit for vesting and retirement benefit
eligibility purposes under the ATI Pension Plan for service with Teledyne
Technologies after the Distribution Date.
ARTICLE IV
DEFINED CONTRIBUTION PLANS
4.1 401(k) PLAN.
(a) ADOPTION BY TELEDYNE TECHNOLOGIES OF TELEDYNE 401(k) PLAN
AMENDED TO BE A MULTIPLE EMPLOYER PLAN. On or before the Distribution Date, the
Teledyne 401(k) Plan will be amended by Teledyne to be and become a multiple
employer plan under which Teledyne Technologies may elect to be a contributing
sponsor and to provide participation to Teledyne Technologies Individuals under
the terms and conditions set forth in the Teledyne 401(k) Plan for a period
ending on the earlier of (i) adoption by Teledyne Technologies of the Teledyne
Technologies 401(k) Plan or (ii) April 1, 2000. The right to amend the Teledyne
401(k) Plan in any respect shall be exclusively within the power of Teledyne at
all relevant times. As amended, the Teledyne 401(k) Plan shall provide that (A)
Teledyne Technologies Individuals shall not be permitted to direct investments
after the Distribution Date in shares of common stock of ATI ("ATI Common
Stock") or in the common stock of any corporation spun off by ATI on the
Distribution Date other than Teledyne Technologies and (B) that each Teledyne
Technologies Individual shall have the right to direct the administrator of the
Teledyne 401(k) Plan to liquidate such Teledyne Technologies Individual's
interest in shares of ATI Common Stock, Teledyne Technologies Common Stock or
the common
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stock of any other previously related corporation and direct the method of
reinvestment of the proceeds of such sale from among the options then available
under the Teledyne 401(k) Plan.
(b) ESTABLISHMENT OF TELEDYNE TECHNOLOGIES 401(k) PLAN AND
TRUST. The Teledyne Technologies 401(k) Plan, established by Teledyne
Technologies no later than April 1, 2000 pursuant to Section 2.2, (i) shall be a
qualified defined contribution plan within the meaning of Code Section 401(a),
(ii) except as provided under Section 4.1(c), shall contain provisions, terms
and conditions substantially similar to the provisions, terms and conditions of
the Teledyne 401(k) Plan, including provisions with respect to the ATI Common
Stock and the common stock of Teledyne Technologies and any other corporation
spun off by ATI on the Distribution Date, and shall further provide that
Teledyne Technologies Individuals may maintain investments in ATI Common Stock,
Teledyne Technologies Common Stock and/or stock of any previously related
corporation until December 31, 2002 and, if ATI Common Stock and/or common stock
of any previously related corporation other than Teledyne Technologies is held
in accounts of Teledyne Technologies Individuals in the Teledyne 401(k) Plan as
of December 31, 2002, interests of Teledyne Technologies Individuals in such
stock shall be liquidated by the Plan administrator and the proceeds reinvested
in Teledyne Technologies Common Stock, and (iii) shall provide coverage from and
after the earlier of (i) its adoption by Teledyne Technologies or (ii) April 1,
2000 with respect to Teledyne Technologies Individuals who, as of the later of
the dates above, were participants in the Teledyne 401(k) Plan, as amended as
described in Section 4.1(a). The trust related to the Teledyne Technologies
401(k) Plan, established by Teledyne Technologies pursuant to Section 2.2, shall
be exempt from taxation under Code Section 501(a).
(c) ASSUMPTION OF LIABILITIES AND TRANSFER OF ASSETS.
(i) Effective Immediately After the Distribution Date
and until the earlier of (i) the date of adoption by Teledyne Technologies of
the Teledyne Technologies 401(k) Plan or (ii) April 1, 2000, ATI shall
administer or cause the administration of the assets and Benefit Liabilities of
the Teledyne 401(k) Plan with respect to both Teledyne employees and Teledyne
Technologies Individuals. Teledyne Technologies shall pay to ATI, within thirty
days of presentment of an invoice therefor, an amount equal to the actual cost
incurred by ATI for administration of the assets and Benefit Liabilities in the
Teledyne 401(k) Plan relating to Teledyne Technologies Individuals. Teledyne
Technologies Individuals shall continue to accrue service credit under the
Teledyne 401(k) Plan for vesting and benefit eligibility purposes until the
earlier of (i) the date of adoption by Teledyne Technologies of the Teledyne
Technologies 401(k) Plan or (ii) April 1, 2000. Effective as of the earlier of
(i) adoption by Teledyne Technologies of the Teledyne Technologies 401(k) Plan
or (ii) April 1, 2000: (A) the Teledyne Technologies 401(k) Plan shall assume
and be solely responsible for all Benefit Liabilities to or relating to Teledyne
Technologies Individuals under the Teledyne Technologies 401(k) Plan, and (B)
ATI shall cause an amount equal to the aggregate account balances of the
Teledyne Technologies Individuals participating under the Teledyne 401(k) Plan,
whether such amounts are vested or unvested under the terms of the Teledyne
401(k) Plan, which are held by the related trust as of the applicable of (i) the
date of adoption by Teledyne Technologies of the Teledyne Technologies 401(k)
Plan or (ii) April 1, 2000 (or such other date as may be agreed by ATI and
Teledyne Technologies) to be transferred to the Teledyne Technologies 401(k)
Plan, and its related trust,
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and Teledyne Technologies shall cause such transferred accounts to be accepted
by such plan and trust. In ATI's sole and absolute discretion, the amount so
transferred may be in cash or in kind or a combination thereof; provided,
however, that the following shall be transferred in kind: (A) shares of ATI
Common Stock, shares of Teledyne Technologies Common Stock allocated to
participants' accounts as a result of the Distribution and shares of Water Pik
Technologies, Inc. Common Stock allocated to participants' accounts as a result
of the spin-off of ATI's consumer business; and (B) all promissory notes
reflecting participant loans to Teledyne Technologies Individuals under the
Teledyne 401(k) Plan outstanding as of the time of transfer.
(ii) If any benefit with respect to a Teledyne
Technologies Individual under the Teledyne 401(k) Plan is subject to a qualified
domestic relations order at the time of transfer, all documentation concerning
such qualified domestic relations order shall be assigned to the Teledyne
Technologies 401(k) Plan.
4.2 PACIFIC AVIONICS CORPORATION PROFIT SHARING PLAN. Effective
Immediately After the Distribution Date, Teledyne Technologies will assume
sponsorship of and all liabilities and responsibilities for the Pacific Avionics
Corporation Profit Sharing Plan.
ARTICLE V
HEALTH AND WELFARE PLANS
5.1 ASSUMPTION OF HEALTH AND WELFARE PLAN LIABILITIES.
(a) Immediately After the Distribution Date, all Benefit
Liabilities to or relating to Teledyne Technologies Individuals under the ATI
Health and Welfare Plans shall cease to be Benefit Liabilities of the ATI Health
and Welfare Plans and shall be assumed by the corresponding Teledyne
Technologies Health and Welfare Plans.
(b) Notwithstanding Section 5.1(a), all treatments which have
been pre-certified for or are being provided to a Teledyne Technologies
Individual as of the Close of the Distribution Date shall be provided without
interruption under the appropriate ATI Health and Welfare Plan until such
treatment is concluded or discontinued pursuant to applicable plan rules and
limitations, but Teledyne Technologies shall continue to be responsible for all
Benefit Liabilities relating to, arising out of or resulting from such ongoing
treatments as of the Close of the Distribution Date.
5.2 VENDOR CONTRACTS.
(a) THIRD-PARTY ASO CONTRACTS.
(i) ATI shall use its Reasonable Efforts to amend
each administrative services only contract with a third-party administrator that
relates to any of the ATI Health and Welfare Plans (an "ASO Contract") in
existence as of the date of this Agreement to permit Teledyne Technologies to
participate in the terms and conditions of such ASO Contract from
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Immediately After the Distribution Date until December 31, 2000. ATI shall use
its Reasonable Efforts to cause all ASO Contracts into which ATI enters after
the date of this Agreement but before the Close of the Distribution Date to
allow Teledyne Technologies to participate in the terms and conditions thereof
effective Immediately After the Distribution Date on the same basis as ATI.
(ii) ATI shall have the right to determine, and shall
promptly notify Teledyne Technologies of, the manner in which Teledyne
Technologies' participation in the terms and conditions of ASO Contracts as set
forth above shall be effectuated. The permissible ways in which Teledyne
Technologies' participation may be effectuated include automatically making
Teledyne Technologies a party to the ASO Contracts or obligating the third party
to enter into a separate ASO Contract with Teledyne Technologies providing for
the same terms and conditions as are contained in the ASO Contracts to which ATI
is a party (or such other arrangement as to which ATI and Teledyne Technologies
shall mutually agree). Such terms and conditions shall include the financial and
termination provisions, performance standards, methodology, auditing policies,
quality measures, reporting requirements and target claims. Teledyne
Technologies hereby authorizes ATI to act on its behalf to extend to Teledyne
Technologies the terms and conditions of the ASO Contracts. Teledyne
Technologies shall fully cooperate with ATI in such efforts, and Teledyne
Technologies shall not perform any act, including discussing any alternative
arrangements with any third party, that would prejudice ATI's efforts.
(b) GROUP INSURANCE POLICIES.
(i) This Section 5.2(b) applies to group insurance
policies not subject to allocation or transfer pursuant to the foregoing
provisions of this Article V ("Group Insurance Policies").
(ii) ATI shall use its Reasonable Efforts to amend
each Group Insurance Policy in existence as of the date of this Agreement for
the provision or administration of benefits under the ATI Health and Welfare
Plans to permit Teledyne Technologies to participate in the terms and conditions
of such policy from Immediately After the Distribution Date until December 31,
2000. ATI shall use its Reasonable Efforts to cause all Group Insurance Policies
into which ATI enters or which ATI renews after the date of this Agreement but
before the Close of the Distribution Date to allow Teledyne Technologies to
participate in the terms and conditions thereof effective Immediately After the
Distribution Date on the same basis as ATI.
(iii) Teledyne Technologies' participation in the
terms and conditions of each such Group Insurance Policy shall be effectuated by
obligating the insurance company that issued such insurance policy to ATI to
issue one or more separate policies to Teledyne Technologies. Such terms and
conditions shall include the financial and termination provisions, performance
standards and target claims. Teledyne Technologies hereby unconditionally and
irrevocably authorizes ATI to act on its behalf to extend to Teledyne
Technologies the terms and conditions of such Group Insurance Policies. Teledyne
Technologies shall fully cooperate with ATI in such efforts, and Teledyne
Technologies shall not perform any act, including discussing any alternative
arrangements with third parties, that would prejudice ATI's efforts.
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(c) HMO AGREEMENTS.
(i) Before the Distribution Date, ATI shall use its
Reasonable Efforts to amend all letter agreements with HMOs that provide medical
services under the ATI Medical Plans for 1999 ("HMO Agreements") in existence as
of the date of this Agreement to permit Teledyne Technologies to participate in
the terms and conditions of such HMO Agreements, in each case, from Immediately
After the Distribution Date until December 31, 2000. ATI shall use its
Reasonable Efforts to cause all HMO Agreements into which ATI enters after the
date of this Agreement but before the Close of the Distribution Date to allow
Teledyne Technologies to participate in the terms and conditions of such HMO
Agreements from Immediately After the Distribution Date until December 31, 2000
on the same basis as ATI.
(ii) ATI shall have the right to determine, and shall
promptly notify Teledyne Technologies of, the manner in which Teledyne
Technologies' participation in the terms and conditions of all HMO Agreements as
set forth above shall be effectuated. The permissible ways in which Teledyne
Technologies' participation may be effectuated include automatically making
Teledyne Technologies a party to the HMO Agreements or obligating the HMOs to
enter into letter agreements with Teledyne Technologies which are identical to
the HMO Agreements (or such other arrangement as to which ATI and Teledyne
Technologies shall mutually agree). Such terms and conditions shall include the
financial and termination provisions of the HMO Agreements. Teledyne
Technologies hereby authorizes ATI to act on its behalf to extend to Teledyne
Technologies the terms and conditions of the HMO Agreements. Teledyne
Technologies shall fully cooperate with ATI in such efforts, and Teledyne
Technologies shall not perform any act, including discussing any alternative
arrangements with any third-party, that would prejudice ATI's efforts.
(iii) Notwithstanding anything in this Article V to
the contrary, Teledyne Technologies shall have the sole discretion to determine
which HMOs to offer to the participants in the Teledyne Technologies Health and
Welfare Plans for 2001 and subsequent years, and all HMO Agreements in which
Teledyne Technologies participates pursuant to this Section 5.2(c) shall provide
Teledyne Technologies with the right to discontinue its participation effective
January 1, 2001.
5.3 PROCEDURES FOR AMENDMENTS TO PLANS, PLAN DESIGNS, ADMINISTRATIVE
PRACTICES, AND VENDOR CONTRACTS.
(a) AMENDMENTS TO PLAN DOCUMENTS. From Immediately After the
Distribution Date through December 31, 2000, Teledyne Technologies shall not
amend any Teledyne Technologies Health and Welfare Plan or Plans, and Teledyne
Technologies shall have no rights or privileges with respect to such Plans other
than those rights and privileges contained in any policy, contract or other
written arrangement governing such Plans. During any period in which ATI is
providing Interim Services with respect to any Teledyne Technologies Health and
Welfare Plan pursuant to Section 7.1, ATI shall have the right to amend any
applicable Teledyne Technologies Health and Welfare Plan; provided that, in
ATI's reasonable good faith opinion, such amendment will have no material
adverse impact on the Teledyne Technologies Health and Welfare Plan or its
participants or, to the extent a material adverse impact would occur, such
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impact would affect both the applicable Teledyne Technologies Health and Welfare
Plan and any corresponding ATI Health and Welfare Plan and any costs incurred as
a result of such amendment shall be borne by ATI and Teledyne Technologies in
the same proportion that Teledyne Technologies and ATI employees, respectively,
participate.
(b) CHANGES IN VENDOR CONTRACTS, GROUP INSURANCE POLICIES,
PLAN DESIGN, AND ADMINISTRATION PRACTICES AND PROCEDURES.
(i) From Immediately After the Distribution Date
until December 31, 2000, Teledyne Technologies shall not materially modify, or
take other action which would have a material effect on, any of the following
items (each such modification, a "Change"): (A) the termination date,
administration, or operation of (1) an ASO contract between ATI or Teledyne
Technologies and a third-party administrator, (2) a Group Insurance Policy
issued to ATI or Teledyne Technologies, or (3) an HMO Agreement with ATI or
Teledyne Technologies, in each case, the material terms and conditions of which
contracts and policies are extended to Teledyne Technologies or to which
Teledyne Technologies becomes a party pursuant to Section 5.2; (B) the design of
either an ATI Health and Welfare Plan or a Teledyne Technologies Health and
Welfare Plan; or (C) the financing, operation, administration or delivery of
benefits under either an ATI Health and Welfare Plan or a Teledyne Technologies
Health and Welfare Plan.
(ii) During any period in which ATI is providing
Interim Services with respect to any Teledyne Technologies Health and Welfare
Plan pursuant to Section 7.1, ATI shall be permitted to make any Change to such
Teledyne Technologies Plan; provided that, in ATI's reasonable good faith
opinion, such Change would affect both the applicable Teledyne Technologies
Health and Welfare Plan and any corresponding ATI Health and Welfare Plan and
any costs incurred as a result of such amendment shall be borne by ATI and
Teledyne Technologies in the same proportion that Teledyne Technologies and ATI
employees, respectively, participate.
(c) EMPLOYEE CONTRIBUTIONS. Except as otherwise expressly
provided in Sections 5.3(a) and 5.3(b), as of January 1, 2001, Teledyne
Technologies shall have the right, in its sole and absolute discretion and
without compliance with Sections 5.3(a) and 5.3(b), to increase or decrease the
amount of employee contributions under their respective Health and Welfare
Plans.
5.4 ATI SICKNESS AND ACCIDENT, LONG TERM DISABILITY AND PENSION
DISABILITY BENEFITS. ATI shall transfer to Teledyne Technologies, effective
Immediately After the Distribution Date, responsibility for administering all
claims incurred by Teledyne Technologies Individuals and other employees and
former employees of Teledyne Technologies and the Teledyne Technologies Entities
before the Close of the Distribution Date that are administered by ATI as of the
Close of the Distribution Date. Teledyne Technologies shall administer such
claims in the same manner, and using the same methods and procedures, as ATI
used in administering such claims. Teledyne Technologies shall have sole
discretionary authority to make any necessary determinations with respect to
such claims, including entering into settlements with respect to such claims.
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5.5 POST-RETIREMENT HEALTH AND LIFE INSURANCE BENEFITS. As soon as
practicable after the Distribution Date, Teledyne Technologies shall provide ATI
with a list of all Teledyne Technologies Individuals who are, to the best
knowledge of Teledyne Technologies, eligible to receive retiree medical or
dental coverage under the ATI Health and Welfare Plans from and after the
Distribution Date and/or post-retirement life insurance coverage under the ATI
Group Life Program, and the type of retiree medical or dental coverage and the
level of life insurance coverage for which they are eligible, as applicable.
5.6 COBRA AND DIRECT PAY. Effective Immediately After the
Distribution Date, Teledyne Technologies shall solely be responsible for
administering compliance with the health care continuation coverage requirements
of COBRA and the Teledyne Technologies Health and Welfare plans, and, with
respect to Teledyne Technologies Individuals, the ATI Health and Welfare Plans.
5.7 POST-DISTRIBUTION TRANSITIONAL ARRANGEMENTS.
(a) CONTINUANCE OF ELECTIONS, CO-PAYMENTS AND MAXIMUM
BENEFITS.
(i) Teledyne Technologies shall cause the Teledyne
Technologies Health and Welfare Plans to recognize and maintain all coverage and
contribution elections made by Teledyne Technologies Individuals under the ATI
Health and Welfare Plans and apply such elections under the Teledyne
Technologies Health and Welfare Plans for the remainder of the period or periods
for which such elections are by their terms applicable. The transfer or other
movement of employment from ATI to Teledyne Technologies at any time before the
Close of the Distribution Date shall neither constitute nor be treated as a
"status change" under the ATI Health and Welfare Plans or the Teledyne
Technologies Health and Welfare Plans.
(ii) Teledyne Technologies shall cause the Teledyne
Technologies Health and Welfare Plans to recognize and give credit for (A) all
amounts applied to deductibles, out-of-pocket maximums, and other applicable
benefit coverage limits with respect to which such expenses have been incurred
by Teledyne Technologies Individuals under the ATI Health and Welfare Plans for
the remainder of the year in which the Distribution occurs, and (B) all benefits
paid to Teledyne Technologies Individuals under the ATI Health and Welfare Plans
for purposes of determining when such persons have reached their lifetime
maximum benefits under the Teledyne Technologies Health and Welfare Plans.
(iii) Teledyne Technologies shall recognize and
maintain through December 31, 1999 all eligible populations covered by the ATI
Health and Welfare Plans (as defined in the applicable ATI Health and Welfare
Plan documents), including Class I and Class II dependents, term and temporary
employees, alternate benefit plan employees, and all categories of part-time
employees (which are fully and non-fully eligible for company contributions).
(iv) Teledyne Technologies shall (A) provide coverage
to Teledyne Technologies Individuals under the Teledyne Technologies Group Life
Program without the need to undergo a physical examination or otherwise provide
evidence of insurability, and (B)
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recognize and maintain all irrevocable assignments and accelerated benefit
option elections made by Teledyne Technologies Individuals under the ATI Group
Life Program.
(b) OTHER POST-DISTRIBUTION TRANSITIONAL RULES.
(i) ATI HCRA PLAN. To the extent any Teledyne
Technologies Individual contributed to an account under the ATI HCRA Plan during
the calendar year that includes the Distribution Date, effective as of the Close
of the Distribution Date, ATI shall transfer to the Teledyne Technologies HCRA
Plan the account balances of Teledyne Technologies Individuals for such calendar
year under the ATI HCRA Plan, regardless of whether the account balance is
positive or negative.
(ii) ATI CHILD/ELDER CARE REIMBURSEMENT ACCOUNT PLAN.
To the extent any Teledyne Technologies Individual contributed to the ATI CECRA
Plan during the calendar year that includes the Distribution Date, ATI shall
transfer the account balances of Teledyne Technologies Individuals for such
calendar year in the ATI CECRA Plan to the Teledyne Technologies CECRA Plan.
(iii) POST-RETIREMENT MEDICAL PLAN. For a period
ending on December 31st of the calendar year which is five calendar years after
the Distribution Date, Teledyne Technologies shall comply with all cost
maintenance period requirements and benefit maintenance period requirements
under Code Section 401(h) or 420 that are applicable to post-retirement health
benefits under the Teledyne Technologies Health Plans for any pension asset
transfers pursuant to Code Section 420 by or on behalf of ATI for qualified
current retiree health liabilities (as defined under Code Section 420). With
respect to any pension asset transfers pursuant to Code Section 420, Teledyne
Technologies shall obtain ATI's prior written approval before amending any
Teledyne Technologies Health Plan with respect to the provision of
post-retirement health benefits during the cost maintenance or benefit
maintenance periods to which the ATI Health Plans are subject pursuant to Code
Section 420 and no such amendment shall be effective in any respect until ATI's
prior written approval is obtained. No pension asset transfer pursuant to Code
Section 420 shall be made by Teledyne Technologies after the date hereof and
before the Close of the Distribution Date unless Teledyne Technologies and ATI
so agree.
(iv) HEALTH AND WELFARE PLANS SUBROGATION RECOVERY.
After the Close of the Distribution Date, ATI shall pay to Teledyne Technologies
any amounts ATI recovers from time to time through subrogation or otherwise for
claims incurred by or reimbursed to any Teledyne Technologies Individual. If
Teledyne Technologies recovers any amounts through subrogation or otherwise for
claims incurred by or reimbursed to employees and former employees of ATI or an
ATI Entity and their respective beneficiaries and dependents (other than
Teledyne Technologies Individuals), Teledyne Technologies shall pay such amounts
to ATI.
5.8 APPLICATION OF ARTICLE V TO TELEDYNE TECHNOLOGIES ENTITIES. Any
reference in this Article V to "Teledyne Technologies" shall include a reference
to a Teledyne Technologies Entity when and to the extent ATI or Teledyne
Technologies has caused the Teledyne Technologies Entity to (a) become a party
to a vendor contract, group
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insurance contract, or HMO letter agreement associated with a Teledyne
Technologies Health and Welfare Plan, (b) become a self-insured entity for the
purposes of one or more Teledyne Technologies Health and Welfare Plans, (c)
assume all or a portion of the liabilities or administrative responsibilities
for benefits which arose before the Close of the Distribution Date under an ATI
Health and Welfare Plan and which were expressly assumed by Teledyne
Technologies pursuant to the terms of this Agreement, or (d) take any other
action, extend any coverage, assume any other liability or fulfill any other
responsibility that Teledyne Technologies would otherwise be required to take
under the terms of this Article V, unless it is clear from the context that the
particular reference is not intended to include a Teledyne Technologies Entity.
In all such instances in which a reference in this Article V to "Teledyne
Technologies" includes a reference to a Teledyne Technologies Entity, Teledyne
Technologies shall be responsible to ATI for ensuring that the Teledyne
Technologies Entity complies with the applicable terms of this Agreement and the
Teledyne Technologies Individuals allocated to such Teledyne Technologies Entity
shall have the same rights and entitlements to benefits under the applicable
Teledyne Technologies Health and Welfare Plans that the Teledyne Technologies
Individual would have had if he or she had instead been allocated to Teledyne
Technologies. Further, each such Teledyne Technologies Entity, unless otherwise
expressly provided under the terms of this Agreement or any Ancillary Agreement,
shall defend, indemnify and hold harmless ATI for any costs incurred by ATI
pursuant to the provisions of Article V on behalf of or related to such Teledyne
Technologies Entity.
ARTICLE VI
EXECUTIVE BENEFITS AND NON-EMPLOYEE DIRECTOR BENEFITS
6.1 ASSUMPTION OF OBLIGATIONS. Except as otherwise expressly provided
in this Article VI, effective Immediately After the Distribution Date, Teledyne
Technologies and the Teledyne Technologies Entities shall assume and be solely
responsible for all Benefit Liabilities to or relating to Teledyne Technologies
Individuals under all ATI Executive Benefit Plans.
6.2 CONSENTS AND NOTIFICATIONS. ATI and Teledyne Technologies shall use
their Reasonable Efforts to obtain, or cause to be obtained, to the extent
necessary, the written consent of each Teledyne Technologies Individual who is a
party to a separate agreement between the Individual and ATI and/or a
participant in any ATI Executive Benefit Plan, to the treatment of such
individual agreement and/or Executive Benefit Plan, as applicable, in accordance
with this Article VI, including the assumption by Teledyne Technologies and the
Teledyne Technologies Entities, of sole responsibility for, and the release of
ATI and the ATI Entities from, all Benefit Liabilities thereunder; provided,
that no failure to seek or to obtain any such consent shall have any effect upon
the obligations of Teledyne Technologies and the Teledyne Technologies Entities
with respect to such Benefit Liabilities.
6.3 ATI 1999 BONUS PLAN. Subject to the provisions of Section
6.4(a)(ii)(B), Teledyne Technologies shall be responsible for determining, with
respect to all Awards that would otherwise be payable under any bonus Plan or
arrangement to Teledyne Technologies Individuals for the 1999 performance year,
(a) the extent to which established performance criteria (as
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interpreted by Teledyne Technologies, in its sole discretion, after taking into
account the effects of the Distribution) have been met and (b) the payment level
for each Teledyne Technologies Individual.
6.4 ATI INCENTIVE PLANS. ATI and Teledyne Technologies shall use their
Reasonable Efforts to take all actions necessary or appropriate so that each
outstanding Award granted under any ATI Incentive Plan held by any Teledyne
Technologies Individual shall be determined, converted or replaced, as the case
may be, as set forth in this Section 6.4 with an Award under the Teledyne
Technologies Incentive Plan.
(a) TELEDYNE TECHNOLOGIES INDIVIDUALS WHO ARE ACTIVE EMPLOYEES
OF TELEDYNE TECHNOLOGIES.
(i) STOCK OPTIONS. Teledyne Technologies shall cause
each ATI Option that is outstanding as of the Close of the Distribution Date and
is held by a Teledyne Technologies Individual to be converted, effective
Immediately After the Distribution Date, to a Teledyne Technologies Option (a
"Converted Option"). Such Converted Option shall provide for the option to
purchase a number of shares of Teledyne Technologies Common Stock equal to the
number of shares of ATI Common Stock subject to such ATI Option as of the Close
of the Distribution Date, multiplied by the Ratio, and then rounded up to the
nearest whole share. The per-share exercise price of such Converted Option shall
equal the per-share exercise price of such ATI Option as of the Close of the
Distribution Date divided by the Ratio. Each such Converted Option shall
otherwise have the same terms and conditions as were applicable to the
corresponding ATI Option as of the Close of the Distribution Date, except that
references to ATI and its Affiliates shall be amended to refer to Teledyne
Technologies and its Affiliates.
(ii) PERFORMANCE AWARDS.
(A) The current performance period under the
ATI Performance Share Program is the three-year period commencing on January 1,
1998. Either prior to or within a reasonable time after the Distribution Date,
in accordance with the provisions of Section 6.4(a)(ii)(B), the applicable ATI
Performance Award under the ATI Performance Share Program shall be determined by
ATI with respect to each Teledyne Technologies Individual for the period from
January 1, 1998 through the Distribution Date. Effective Immediately After the
Distribution Date, Teledyne Technologies and the Teledyne Technologies Entities
shall assume and be solely responsible for all Benefit Liabilities to or
relating to Teledyne Technologies Individuals with respect to the administration
and distribution of Performance Awards to such Teledyne Technologies
Individuals.
(B) Notwithstanding the provisions of
Section 6.3, the ATI Personnel and Compensation Committee or the Stock Incentive
Award Subcommittee, as the case may be, shall determine, in its sole and
absolute discretion, with respect to each Teledyne Technologies Individual, the
extent to which, as of the Distribution Date, such Individual has achieved
target performance levels established under the ATI Performance Share Program
and the appropriate Performance Award for such Individual based upon such
performance. The Performance Award so determined shall be pro-rated by
multiplying the Performance Award
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determined under the preceding sentence by a fraction, the numerator of which
shall be equal to the number of months from and including January 1, 1998 to the
month in which the Distribution Date occurs and the denominator of which shall
be 36. The Performance Award as determined hereunder shall be distributed by
Teledyne Technologies and the Teledyne Technologies Entities to the applicable
Teledyne Technologies Individual as provided under the terms of the Performance
Share Program; provided, however, that any ATI Common Stock allocated or
otherwise awarded to a Teledyne Technologies Individual as part of a Performance
Award under the provisions of this Section 6.4(a)(ii) shall, prior to any
distribution to such Individual and, in any event, no later than Immediately
After the Distribution Date, be converted into Teledyne Technologies Common
Stock by multiplying the number of shares of ATI Common Stock subject to such
Performance Award by an appropriate ratio, as determined by ATI's Board of
Directors or an applicable Committee thereof and then rounding the product up to
the nearest whole share. Teledyne Technologies shall pay to the holder of such
Performance Award, at the time of such conversion, cash in lieu of any
fractional share based on the Teledyne Technologies Stock Value.
(iii) SARP. As of the Distribution Date, all shares
of ATI Common Stock issued and outstanding held by a Teledyne Technologies
Individual under the ATI SARP as Designated Stock or Purchased Stock (as those
terms are defined in the ATI SARP) shall continue to be so held, and the shares
of Teledyne Technologies Common Stock received by Teledyne Technologies
Individuals in respect of their Purchased Stock and Designated Stock pursuant to
the distribution terms of Article III of the Separation and Distribution
Agreement and the shares of Water Pik Technologies, Inc. Common Stock received
by Teledyne Technologies Individuals in respect of their Purchased Stock and
Designated Stock as a result of the spin-off of Water Pik Technologies, Inc. by
ATI to ATI's stockholders shall also be considered Designated Stock or Purchased
Stock, as the case may be, subject to the terms of the ATI SARP. Effective
Immediately After the Distribution Date, Teledyne Technologies shall assume all
Benefit Liabilities to or relating to Teledyne Technologies Individuals under
the ATI SARP relating to the Restricted Stock (as that term is defined in the
ATI SARP), but ATI shall retain all promissory notes payable by participants
into the ATI SARP, including Teledyne Technologies Individuals, to the order of
ATI, and the collateral with respect to such notes shall include all shares of
ATI Common Stock that were pledged as collateral for purposes of the ATI SARP
immediately prior to the Distribution Date as well as the shares of Teledyne
Technologies Common Stock and Water Pik Technologies, Inc. Common Stock issued
in respect of such shares of ATI Common Stock held as collateral. Effective
Immediately After the Distribution Date, pursuant to the terms of the ATI SARP,
all Teledyne Technologies Individuals holding awards of Restricted Stock under
the ATI SARP as of the Distribution Date shall receive, without any further
action on their part and in substitution for all shares of Restricted Stock held
immediately prior to the Distribution Date by such Teledyne Technologies
Individuals under the ATI SARP, a number of shares of Teledyne Technologies
Common Stock determined by multiplying the number of shares of ATI Common Stock
that are held immediately prior to the Distribution Date as Restricted Stock
under the ATI SARP by an appropriate ratio, as determined by ATI's Board of
Directors or an applicable Committee thereof then rounding the product up to the
nearest whole share, and such shares of Teledyne Technologies Common Stock shall
be subject to the same restrictions as the shares of ATI Common Stock prior to
the conversion.
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(b) TELEDYNE TECHNOLOGIES INDIVIDUALS WHO ARE NOT ACTIVE
EMPLOYEES OF TELEDYNE TECHNOLOGIES. Each outstanding Award that is held by an
individual who, as of the Close of the Distribution Date, would otherwise be a
Teledyne Technologies Individual but is not an active employee of or on leave of
absence from Teledyne Technologies or a Teledyne Technologies Entity shall
remain outstanding Immediately After the Distribution Date in accordance with
its terms as applicable as of the Close of the Distribution Date, subject to
such adjustments as may be applicable to outstanding Awards held by individuals
who remain active employees of or on leave of absence from ATI or an ATI Entity
after the Distribution Date.
6.5 ATI NONQUALIFIED DEFERRED COMPENSATION PROGRAMS.
(a) ASSUMPTION OF LIABILITIES AND TRANSFER OF ASSETS.
Effective Immediately After the Distribution Date, Teledyne Technologies shall
assume all Benefit Liabilities to or relating to Teledyne Technologies
Individuals under the ATI Nonqualified Deferred Compensation Programs. Effective
Immediately After the Distribution Date, to the extent ATI has acquired
Corporate-Owned Life Insurance Policies as a source of payment of liabilities
which are or may be payable under the Allegheny Teledyne Incorporated Executive
Deferred Compensation Plan with respect to Teledyne Technologies Individuals,
ATI shall cause the transfer, either by assignment or any other reasonable
means, to Teledyne Technologies of Policies on the lives of Teledyne
Technologies Individuals and such other employees or former employees of ATI or
its subsidiaries as ATI may, in its sole and absolute discretion select, or any
portion thereof, having in the aggregate a cash surrender value equal to the
amount of any Benefit Liabilities for Teledyne Technologies Individuals under
the Allegheny Teledyne Incorporated Executive Deferred Compensation Plan.
(b) GUARANTEE OF CERTAIN OBLIGATIONS. ATI shall guarantee to
Teledyne Technologies Individuals who are participants in the Teledyne, Inc.
Pension Equalization Plan payment of the Benefit Liabilities of Teledyne under
such plan to such participants as of the Distribution Date to the extent
Teledyne Technologies is unable to satisfy such Benefit Liabilities.
(c) CORPORATE-OWNED LIFE INSURANCE. ATI and Teledyne
Technologies shall take all actions necessary to replicate the manner in which
ATI has heretofore held Corporate-Owned Life Insurance Policies, and executing
or accepting delivery of any assignments reasonably requested by either party or
any insurance company insuring one or more lives under the Corporate-Owned Life
Insurance Policies, as may be necessary or appropriate in order to assign those
Policies insuring Teledyne Technologies Individuals to Teledyne Technologies,
effective Immediately After the Distribution Date. If a Corporate-Owned Life
Insurance Policy is so assigned to Teledyne Technologies, Teledyne Technologies
shall assume and be solely responsible for all Benefit Liabilities, and shall be
entitled to all benefits, thereunder, effective as of the earlier of (i) the
Close of the Distribution Date and (ii) the date of such assignment. ATI and
Teledyne Technologies shall continue, liquidate and/or administer such
Corporate-Owned Life Insurance Policies on terms and conditions agreed to by ATI
and Teledyne Technologies. ATI and Teledyne Technologies shall share all
information that may be necessary
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to identify the individuals insured by the Corporate-Owned Life Insurance
Policies owned by ATI and/or Teledyne Technologies and to determine when and
whether such individuals are deceased.
6.6 NON-EMPLOYEE DIRECTOR BENEFITS. The parties intend that all
Teledyne Technologies Non-Employee Directors who were ATI Non-Employee Directors
prior to the Distribution Date may continue to serve as ATI Non-Employee
Directors. In furtherance of such intention, ATI shall retain all Benefit
Liabilities with respect to the services of its Non-Employee Directors under the
ATI Non-Employee Director Plans accrued as of the Distribution Date. Teledyne
Technologies assumes no Benefit Liabilities under the ATI Non-Employee Director
Plans.
6.7 CONFIDENTIALITY AND PROPRIETARY INFORMATION. No provision of this
Agreement shall be deemed to release any individual for a violation of any
agreement or policy pertaining to confidential or proprietary information of ATI
or any of its Affiliates, or otherwise relieve any individual of his or her
obligations under any such agreement or policy.
ARTICLE VII
GENERAL AND ADMINISTRATIVE
7.1 INTERIM SERVICES AGREEMENT. Effective on or before the Distribution
Date, ATI and Teledyne Technologies shall enter into an agreement relating to
the coordination of and payment for interim services to be provided by ATI
regarding the establishment and administration of the Teledyne Technologies
Plans (the "Interim Services Agreement"). The provisions of the Interim Services
Agreement shall be incorporated by reference in this Agreement and shall become
a part of this Agreement.
7.2 PAYMENT OF LIABILITIES, PLAN EXPENSES AND RELATED MATTERS.
(a) ACTUARIAL AND ACCOUNTING METHODOLOGIES AND ASSUMPTIONS.
For purposes of this Agreement, unless specifically indicated otherwise: (i) all
actuarial methodologies and assumptions used for a particular Plan shall (except
to the extent otherwise determined by ATI and Teledyne Technologies to be
reasonable or necessary) be substantially the same as those used in the
actuarial valuation of that Plan used to determine minimum funding requirements
under ERISA Section 302 and Code Section 412(c) for 1999, or, if such Plan is
not subject to such minimum funding requirements, the assumptions used to
prepare ATI's audited financial statements for 1999, as the case may be; and
(ii) the value of plan assets shall be the value established by ATI for purposes
of audited financial statements of the relevant plan or trust for the period
ending on the date as of which the valuation is to be made. Except as otherwise
contemplated by this Agreement or as required by law, all determinations as to
the amount or valuation of any assets of or relating to any ATI Plan (whether or
not such assets are being transferred to a Teledyne Technologies Plan) shall be
made by ATI in its sole and absolute discretion and such determination shall be
final and binding on all parties.
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(b) PAYMENT OF LIABILITIES; DETERMINATION OF EMPLOYEE STATUS.
Teledyne Technologies shall pay directly, or reimburse ATI promptly for, all
Benefit Liabilities assumed by it pursuant to this Agreement, including all
compensation payable to Teledyne Technologies Individuals for services rendered
while in the employ of ATI or an ATI Entity before becoming a Teledyne
Technologies Individual (to the extent not charged for pursuant to Section 7.1
or another Ancillary Agreement). To the extent the amount of such Benefit
Liabilities is not yet determinable because the status of individuals as
Teledyne Technologies Individuals is not yet determined, except as otherwise
specified herein or in another Ancillary Agreement with respect to particular
Benefit Liabilities, Teledyne Technologies shall make such payments or
reimbursements based upon ATI's reasonable estimates of the amounts thereof, and
when such status is determined, Teledyne Technologies shall make additional
reimbursements or payments, or ATI shall reimburse Teledyne Technologies, to the
extent necessary to reflect the actual amount of such Benefit Liabilities. In
determining the number of individuals in any particular group of employees
described in this Agreement (such as "Teledyne Technologies Individuals"), no
individual shall be counted twice. Determinations of what entity employs or
employed a particular individual shall be made by reference to the applicable
legal entity and/or other appropriate accounting code, to the extent possible.
7.3 SHARING OF PARTICIPANT INFORMATION. ATI and Teledyne Technologies
shall share, ATI shall cause each applicable ATI Entity to share, and Teledyne
Technologies shall cause each applicable Teledyne Technologies Entity to share,
with each other and their respective agents and vendors (without obtaining
releases) all participant information necessary for the efficient and accurate
administration of each of the ATI Plans and the Teledyne Technologies Plans. ATI
and Teledyne Technologies and their respective authorized agents shall, subject
to applicable laws on confidentiality, be given reasonable and timely access to,
and may make copies of, all information relating to the subjects of this
Agreement in the custody of the other party, to the extent necessary for such
administration. Until December 31, 2000, all participant information shall be
provided in a manner and medium that is compatible with the data processing
systems of ATI as in effect on the Close of the Distribution Date, unless
otherwise agreed to by ATI and Teledyne Technologies.
7.4 REPORTING AND DISCLOSURE AND COMMUNICATIONS TO PARTICIPANTS.
Teledyne Technologies shall take, and shall cause each other applicable Teledyne
Technologies Entity to take, all actions necessary or appropriate to facilitate
the distribution of all applicable ATI Plan-related communications and materials
to Teledyne Technologies Individuals and their beneficiaries, including summary
plan descriptions and related summaries of material modification, summary annual
reports, investment information, prospectuses, notices and enrollment material
related to the Teledyne Technologies Plans. Teledyne Technologies shall pay ATI
the cost relating to the copies of all such documents provided to Teledyne
Technologies, except to the extent such costs are charged pursuant to Section
7.1 or pursuant to an Ancillary Agreement. Teledyne Technologies shall assist,
and Teledyne Technologies shall cause each other applicable Teledyne
Technologies Entity to assist, ATI in complying with all reporting and
disclosure requirements of ERISA, including the preparation of Form 5500 annual
reports for the ATI Plans, where applicable.
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7.5 NON-TERMINATION OF EMPLOYMENT; NO THIRD-PARTY BENEFICIARIES. No
provision of this Agreement or the Separation and Distribution Agreement shall
be construed to create any right, or accelerate entitlement, to any compensation
or benefit whatsoever on the part of any Teledyne Technologies Individual or
other future, present or former employee of ATI, an ATI Entity, Teledyne
Technologies, or a Teledyne Technologies Entity under any ATI Plan or Teledyne
Technologies Plan or otherwise. Without limiting the generality of the
foregoing: (i) the Distribution shall not cause any employee to be deemed to
have incurred a termination of employment which entitles such individual to the
commencement of benefits under any of the ATI Plans, any of the Teledyne
Technologies Plans, or any individual agreements; and (ii) except as expressly
provided in this Agreement, nothing in this Agreement shall preclude Teledyne
Technologies, at any time after the Close of the Distribution Date, from
amending, merging, modifying, terminating, eliminating, reducing, or otherwise
altering in any respect any Teledyne Technologies Plan, any benefit under any
Plan or any trust, insurance policy or funding vehicle related to any Teledyne
Technologies Plan unless such change could or will increase the obligations of
ATI or any ATI Entity under any plan or arrangement.
7.6 BENEFICIARY DESIGNATIONS. All beneficiary designations made by
Teledyne Technologies Individuals for ATI Plans shall be transferred to and be
in full force and effect under the corresponding Teledyne Technologies Plans
until such beneficiary designations are replaced or revoked by the Teledyne
Technologies Individual who made the beneficiary designation.
7.7 REQUESTS FOR IRS RULINGS AND DOL OPINIONS. Teledyne Technologies
shall cooperate fully with ATI on any issue relating to the transactions
contemplated by this Agreement for which ATI elects to seek a determination
letter or private letter ruling from the IRS or an advisory opinion from the
DOL. ATI shall cooperate fully with Teledyne Technologies with respect to any
request for a determination letter or private letter ruling from the IRS or
advisory opinion from the DOL with respect to any of the Teledyne Technologies
Plans relating to the transactions contemplated by this Agreement.
7.8 FIDUCIARY MATTERS. ATI and Teledyne Technologies each acknowledges
that actions required to be taken pursuant to this Agreement may be subject to
fiduciary duties or standards of conduct under ERISA or other applicable law,
and no party shall be deemed to be in violation of this Agreement if it fails to
comply with any provisions hereof based upon its good faith determination that
to do so would violate such a fiduciary duty or standard.
7.9 COLLECTIVE BARGAINING. To the extent any provision of this
Agreement is contrary to the provisions of any collective bargaining agreement
to which ATI or any Affiliate of ATI is a party, the terms of such collective
bargaining agreement shall prevail. Should any provisions of this Agreement be
deemed to relate to a topic determined by an appropriate authority to be a
mandatory subject of collective bargaining, ATI or Teledyne Technologies may be
obligated to bargain with the union representing affected employees concerning
those subjects. Neither party will agree to a modification of any collective
bargaining agreement without the consent of the other.
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7.10 CONSENT OF THIRD PARTIES. If any provision of this Agreement is
dependent on the consent of any third party (such as a vendor or a union) and
such consent is withheld, ATI and Teledyne Technologies shall use their
Reasonable Efforts to implement the applicable provisions of this Agreement to
the full extent practicable. If any provision of this Agreement cannot be
implemented due to the failure of such third party to consent, ATI and Teledyne
Technologies shall negotiate in good faith to implement the provision in a
mutually satisfactory manner.
7.11 INDEMNIFICATION OF ATI. Teledyne Technologies shall indemnify,
defend and hold harmless ATI, each ATI Entity and each of their respective
directors, officers and employees, and each of the heirs, executors, successors
and assigns of any of the foregoing (collectively, the "ATI Indemnitees") from
and against (i) any and all Benefit Liabilities of the ATI Indemnitees to the
extent any such Benefit Liabilities are assumed by Teledyne Technologies or a
Teledyne Technologies Entity under this Agreement and (ii) any and all changes
or modifications to any rights, privileges or benefits of or relating to any
Teledyne Technologies Individual as provided in or otherwise contemplated by
this Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1 FOREIGN PLANS. To the extent that Teledyne Technologies has or
assumes any responsibility for sponsorship, maintenance or administration of any
Foreign Plan, ATI shall have no responsibility or liability with respect to such
Plan and Teledyne Technologies shall indemnify and hold harmless ATI from any
liability under such Plan.
8.2 EFFECT IF DISTRIBUTION DOES NOT OCCUR. If the Distribution does not
occur, then all actions and events that are, under this Agreement, to be taken
or occur effective as of the Close of the Distribution Date, Immediately After
the Distribution Date, or otherwise in connection with the Distribution, shall
not be taken or occur except to the extent specifically agreed by Teledyne
Technologies and ATI.
8.3 RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be deemed
or construed by the parties or any third party as creating the relationship of
principal and agent, partnership or joint venture between the parties, it being
understood and agreed that no provision contained herein, and no act of the
parties, shall be deemed to create any relationship between the parties other
than the relationship set forth herein.
8.4 AFFILIATES. Each of ATI and Teledyne Technologies shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth in this Agreement to be performed by an ATI Entity or a
Teledyne Technologies Entity, respectively.
8.5 COUNTERPARTS; ENTIRE AGREEMENT; CORPORATE POWER. (a) This Agreement
may be executed in one or more counterparts, all of which shall be considered
one and
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the same agreement, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other party.
(b) This Agreement, and the Exhibits, Schedules and Appendices hereto
and thereto contain the entire agreement between the parties with respect to the
subject matter hereof, supersede all previous agreements, negotiations,
discussions, writings, understandings, commitments and conversations with
respect to such subject matter and there are no agreements or understandings
between the parties other than those set forth or referred to herein or therein.
(c) ATI represents on behalf of itself and each ATI Entity, and
Teledyne Technologies represents on behalf of itself and each Teledyne
Technologies Entity, as follows:
(i) each such Person has the requisite corporate or other
power and authority and has taken all corporate or other action necessary in
order to execute, deliver and perform each of this Agreement and to consummate
the transactions contemplated hereby; and
(ii) this Agreement has been duly executed and delivered by it
and constitutes a valid and binding agreement of it enforceable in accordance
with the terms thereof.
(d) Each party hereto acknowledges that it and each other party hereto
may be executing this Agreement by facsimile, stamp or mechanical signature.
Each party hereto expressly adopts and confirms each such facsimile, stamp or
mechanical signature made in its respective name as if it were a manual
signature, agrees that it will not assert that any such signature is not
adequate to bind such party to the same extent as if it were signed manually and
agrees that at the reasonable request of any other party hereto at any time it
will as promptly as reasonably practicable cause this Agreement to be manually
executed (any such execution to be as of the date of the initial date thereof).
8.6 GOVERNING LAW; CONSENT TO JURISDICTION.
(a) This Agreement shall be governed by and construed and interpreted
in accordance with the laws of the Commonwealth of Pennsylvania as to all
matters, including matters of validity, construction, effect, enforceability,
performance and remedies, irrespective of the choice of laws principles of the
Commonwealth of Pennsylvania.
(b) Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of (i) the Court of Common Pleas of Allegheny County, Pennsylvania
and (ii) the United States District Court for the Western District of
Pennsylvania, for the purposes of any suit, action or other proceeding arising
out of this Agreement or any transaction contemplated hereby (and agrees not to
commence any action, suit or proceeding relating thereto except in such courts).
Each of the parties hereto further agrees that service of any process, summons,
notice or document hand delivered or sent by U.S. registered mail to such
party's respective address set forth in Section 8.9 will be effective service of
process for any action, suit or proceeding in Pennsylvania with respect to any
matters to which it has submitted to jurisdiction as set forth in the
immediately preceding sentence. Each of the parties hereto irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions
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contemplated hereby in (i) the Court of Common Pleas of Allegheny County,
Pennsylvania or (ii) the United States District Court for the Western District
of Pennsylvania, and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
8.7 ASSIGNABILITY. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns;
provided, however, that no party hereto may assign its respective rights or
delegate its respective obligations under this Agreement without the express
prior written consent of the other party hereto.
8.8 THIRD PARTY BENEFICIARIES. Except as otherwise expressly provided
herein, (a) the provisions of this Agreement are solely for the benefit of the
parties and are not intended to confer upon any Person except the parties any
rights or remedies hereunder, (b) there are no third party beneficiaries of this
Agreement, and (c) this Agreement shall not provide any third person with any
remedy, claim, liability, reimbursement, claim of action or other right in
excess of those existing without reference to this Agreement. No party shall be
required to deliver any notice under this Agreement to any other party with
respect to any matter in which such other party has no right, remedy or claim.
8.9 NOTICES. All notices or other communications under this Agreement
shall be in writing and shall be deemed to be duly given when (a) delivered in
person or (b) deposited in the United States mail or private express mail,
postage prepaid, addressed as follows:
If to ATI, to: Allegheny Teledyne Incorporated
1000 Six PPG Place
Pittsburgh, Pennsylvania 15222-5479
Attn: Senior Vice President, General Counsel
and Secretary
If to Teledyne
Technologies, to: Teledyne Technologies Incorporated
2049 Century Park East
Los Angeles, California 90067-3101
Attn: Senior Vice President, General Counsel
and Secretary
Any party may, by notice to the other party, change the address to which such
notices are to be given.
8.10 SEVERABILITY. If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof or thereof, or the application of such provision to Persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby or thereby, as the case
may be, is not affected in any manner adverse to any party. Upon
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such determination, the parties shall negotiate in good faith in an effort to
agree upon such a suitable and equitable provision to effect the original intent
of the parties.
8.11 HEADINGS. The article, section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
8.12 WAIVERS OF DEFAULT. Waiver by any party of any default by the
other party of any provision of this Agreement shall not be deemed a waiver by
the waiving party of any subsequent or other default, nor shall it prejudice the
rights of the other party.
8.13 AMENDMENTS. No provisions of this Agreement shall be deemed
waived, amended, supplemented or modified by any party, unless such waiver,
amendment, supplement or modification is in writing and signed by the authorized
representative of the party against whom it is sought to enforce such waiver,
amendment, supplement or modification.
8.14 INTERPRETATION. Words in the singular shall be held to include the
plural and vice versa and words of one gender shall be held to include the other
genders as the context requires. The terms "hereof," "herein," and "herewith"
and words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole (including all of the Schedules, Exhibits and
Appendices hereto) and not to any particular provision of this Agreement.
Article, Section, Exhibit, Schedule and Appendix references are to the Articles,
Sections, Exhibits, Schedules and Appendices to this Agreement unless otherwise
specified. The word "including" and words of similar import when used in this
Agreement shall mean "including, without limitation," unless the context
otherwise requires or unless otherwise specified. The word "or" shall not be
exclusive. Unless expressly stated to the contrary in this Agreement, all
references to "the date hereof," "the date of this Agreement," "hereby" and
"hereupon" and words of similar import shall all be references to November 29,
1999, regardless of any amendment or restatement hereof.
8.15 DISPUTES.
(a) Resolution of any and all disputes arising from or in connection
with this Agreement, whether based on contract, tort, statute or otherwise,
including, but not limited to, disputes in connection with claims by third
parties (collectively, "Disputes"), shall be subject to the provisions of this
Section 8.15; provided, however, that nothing contained herein shall preclude
any party from seeking or obtaining (i) injunctive relief or (ii) equitable or
other judicial relief to enforce the provisions hereof or to preserve the status
quo pending resolution of Disputes hereunder.
(b) Any party may give the other parties written notice of any Dispute
not resolved in the normal course of business. The parties shall attempt in good
faith to resolve any Dispute promptly by negotiation between executives of the
parties who have authority to settle the controversy. Within 15 days after
delivery of the notice, the foregoing executives of both parties shall meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary for a period not to exceed five days, to attempt to resolve the
Dispute. All reasonable requests for information made by one party to the other
will be honored. If the parties
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do not resolve the Dispute within such 20 day period (the "Initial Mediation
Period"), the parties shall attempt in good faith to resolve the Dispute by
negotiation between or among the Designated Officers (as defined in the
Separation and Distribution Agreement). The Designated Officers shall meet at a
mutually acceptable time and place (but in no event no later than 15 days
following the expiration of the Initial Mediation Period) and thereafter as
often as they reasonably deem necessary for a period not to exceed 15 days, to
attempt to resolve the Dispute.
(c) If the Dispute has not been resolved by negotiation within 50 days
of the first party's notice, or if the parties failed to meet within 15 days of
the first party's notice, or if the Designated Officers failed to meet within 35
days of the first party's notice, any party may commence any litigation or other
procedure allowed by law.
IN WITNESS WHEREOF, the parties have caused this Employee Benefits
Agreement to be duly executed as of the day and year first above written.
ALLEGHENY TELEDYNE INCORPORATED
By /s/ James L. Murdy
-----------------------------------
Title
--------------------------------
TELEDYNE TECHNOLOGIES
INCORPORATED
By /s/ Robert Mehrabian
-----------------------------------
Title
--------------------------------
28
<PAGE> 1
TRADEMARK LICENSE AGREEMENT
THIS AGREEMENT, dated this 29th day of November, 1999, is made by and
between TDY HOLDINGS, LLC, a Delaware limited liability company (hereinafter
"HOLDINGS"); and TELEDYNE TECHNOLOGIES INCORPORATED, a Delaware corporation
(hereinafter "TELEDYNE TECHNOLOGIES").
WHEREAS, HOLDINGS is the owner of the entire right, title, and interest
in the TELEDYNE and TELEDYNE LOGO trademark registrations and applications in
the United States and foreign countries for numerous classes of goods and
services, and HOLDINGS' affiliates have used the word "TELEDYNE" as a trademark,
trade name, and service mark, and the TELEDYNE LOGO as a trademark and service
mark;
WHEREAS, the affiliates, divisions, operating companies, subsidiaries,
and business units of Allegheny Teledyne Incorporated used TELEDYNE and the
TELEDYNE LOGO as a trademark, trade name, or service mark in the United States
and foreign countries on and in connection with certain goods and services, as
shown in the Exhibit (hereinafter "TRADEMARKS"); and
WHEREAS, TELEDYNE TECHNOLOGIES desires to license the TRADEMARKS under
the terms and conditions hereinafter set forth.
In consideration of the mutual promises, and intending to be legally
bound, the parties agree as follows:
ARTICLE I - DEFINITIONS
1.0 "PRODUCTS" means and includes those products made, used, and sold,
and those services rendered by TELEDYNE TECHNOLOGIES prior to its formation,
reasonable product and services extensions, and such other related products and
services that may be added to this license upon written notice by TELEDYNE
TECHNOLOGIES to HOLDINGS.
ARTICLE II - LICENSE
2.0 HOLDINGS hereby grants to TELEDYNE TECHNOLOGIES a world-wide right
and license (subject to certain conditions hereinafter set forth):
(a) to use the word TELEDYNE as a trademark, trade name, and service
mark in connection with the Products of TELEDYNE TECHNOLOGIES, and
(b) to use the TELEDYNE LOGO as a trademark and service mark in
connection with Products of TELEDYNE TECHNOLOGIES.
2.1 Such license of paragraph 2.0 is exclusive, except for the
reservation of world-wide rights and licenses in HOLDINGS, for and on behalf of
its affiliates, to use TELEDYNE
<PAGE> 2
and TELEDYNE LOGO as a trademark, trade name, and service mark in connection
with any and all products sold and services rendered which do not compete with
the Products of TELEDYNE TECHNOLOGIES. This reservation shall continue until
terminated by HOLDINGS at its sole discretion.
ARTICLE III - LICENSE FEE
3.0 TELEDYNE TECHNOLOGIES shall pay to HOLDINGS an annual license fee
of US$ 100,000 for the license granted under ARTICLE II. The fee shall be
payable within thirty (30) days after the effective date of this Agreement, and
thereafter annually on the anniversary of the effective date, until terminated.
ARTICLE IV - OPTION TO PURCHASE
4.0 Unless this Agreement is terminated under Article VI, on the last
business day preceding the fifth year anniversary, TELEDYNE TECHNOLOGIES shall
have the right to purchase the TRADEMARKS for use within the scope of rights and
licenses granted in ARTICLE II and all other rights, title, and interest in the
TRADEMARKS at US$ 412,000, which the parties agree is the predicted fair market
value price on the fifth year anniversary. TELEDYNE TECHNOLOGIES shall give
notice to HOLDINGS of its intention to purchase within thirty (30) days prior to
the fifth year anniversary. Such purchase price shall be payable to HOLDINGS on
the last business day preceding the fifth year anniversary.
ARTICLE V - QUALITY
5.0 TELEDYNE TECHNOLOGIES agrees to establish and maintain product
specifications and product inspection and quality control procedures and records
satisfactory to HOLDINGS with respect to all Products, which specifications,
inspections, and procedures shall be at least equivalent to those in practice at
TELEDYNE TECHNOLOGIES at the time of this Agreement.
5.1 HOLDINGS shall have the right to monitor periodically the quality
of the Products used in connection with the TRADEMARKS and the proper usage of
the TRADEMARKS. TELEDYNE TECHNOLOGIES shall permit HOLDINGS to inspect TELEDYNE
TECHNOLOGIES plants, warehouses, and other establishments, and to inspect any
Products located therein, at any time during regular business hours with
reasonable notice.
5.2 TELEDYNE TECHNOLOGIES shall use and mark all Products with
TRADEMARKS as reasonably practical in the proper trademark manner, and shall
comply with all laws and regulations pertaining to the proper use and
designation of TRADEMARKS in all countries.
5.3 HOLDINGS shall have the right to revoke the license and rights if
the quality standards or proper usage are not maintained; provided that HOLDINGS
shall give written notice
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to TELEDYNE TECHNOLOGIES of any deficiency and a reasonable time to correct the
same before terminating this Agreement and license.
ARTICLE VI - TERM AND TERMINATION
6.0 This Agreement shall continue for one (1) year and shall be
automatically renewed for four (4) successive one-year periods and then shall
terminate unless terminated at an earlier date as provided herein.
6.1 TELEDYNE TECHNOLOGIES may terminate this Agreement and the license
hereunder for any reason upon written notification of its intention to do so at
least ninety (90) days prior to each anniversary date of this Agreement.
6.2 HOLDINGS may terminate this Agreement and the license hereunder for
cause (a) if TELEDYNE TECHNOLOGIES breaches any material condition of this
license, and fails to cure the breach within sixty (60) days or such other
period as the parties may agree after receiving notice of such breach, or (b) if
TELEDYNE TECHNOLOGIES discontinues business, becomes insolvent, appoints a
receiver, or goes into liquidation, or (c) if control of TELEDYNE TECHNOLOGIES
passes to any party or parties which HOLDINGS judges would be contrary to
interests of HOLDINGS or its affiliates.
6.3 Promptly after the termination of this Agreement and the license
granted hereunder, TELEDYNE TECHNOLOGIES shall have no further rights in
TRADEMARKS, shall discontinue use of the TRADEMARKS, shall take any and all
reasonable actions requested by HOLDINGS for establishing that it has no rights
in the TRADEMARK, and shall not adopt in place of TRADEMARKS, any word,
expression, portions or combinations thereof, or foreign language equivalents
that are confusingly similar thereto.
ARTICLE VII - MISCELLANEOUS
7.0 The parties acknowledge that the TRADEMARKS are owned by HOLDINGS,
and that TELEDYNE TECHNOLOGIES has the right to apply for registration of any
mark, portions thereof, or foreign language equivalents with the express written
approval of HOLDINGS, which shall not be unreasonably withheld.
7.1 TELEDYNE TECHNOLOGIES agrees that it will not infringe TRADEMARKS
by unauthorized use, will not contest the HOLDINGS rights in TRADEMARKS, nor
assist, encourage, or induce another in such use or contest. TELEDYNE
TECHNOLOGIES further agrees that neither it nor any person or entity which it
controls or is controlled by, shall assert any rights of ownership in the
licensed TRADEMARKS.
7.2 TELEDYNE TECHNOLOGIES shall defend, indemnify, and hold harmless
HOLDINGS and its affiliates and officers and directors against any and all
claims, demands, actions and causes of actions of any nature whatsoever in any
jurisdiction, and any expense incident to the defense thereof for injury to or
death to persons, and for loss of or damage to
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property arising in connection with the manufacture, assembly, sale by TELEDYNE
TECHNOLOGIES of Products in connection with the TRADEMARKS, regardless of the
legal theory.
7.3 TELEDYNE TECHNOLOGIES shall comply with all security and export
control laws and regulations of the United States and relevant foreign countries
in the sale of Products.
7.4 The rights and privileges granted to TELEDYNE TECHNOLOGIES are
personal, indivisible, and non-assignable.
7.5 This Agreement shall constitute the entire agreement between the
parties on this subject matter, and there are no other understandings, expressed
or implied, with respect to the subject matter of this Agreement, which shall
not be modified except in writing by both parties.
The parties have signed this Agreement to be effective as first written
above.
TELEDYNE TECHNOLOGIES TDY HOLDINGS, LLC
By: /s/ Robert Mehrabian By: /s/ James L. Murdy
------------------------------ -----------------------------
Name: Robert Mehrabian Name:
Title: President and Chief Executive Officer Title:
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EXHIBIT
(See attached list of US and foreign trademark applications and
registrations comprising TRADEMARKS)
