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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the fiscal year ended January 2, 2000 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from to
Commission file number: 1-15295
TELEDYNE TECHNOLOGIES INCORPORATED
(Exact name of registrant as specified in its charter)
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Delaware 25-1843385
(State of other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
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2049 Century Park East, Suite 1500
Los Angeles, California 90067-3101
(Address of principal executive office and Zip Code)
Registrant's telephone number, including area code: (310) 277-3311
Securities registered pursuant to Section 12(b) of the Act:
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Name of each exchange
Title of each class on which registered
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Common Stock, par value $.01 per share New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
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(Title of class)
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate by checkmark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
At March 23, 2000, the number of outstanding shares of Common Stock of the
registrant was 26,732,933. At March 23, 2000, the aggregate market value of the
registrant's Common Stock held by non-affiliates of the registrant was
approximately $350.7 million, based on the closing price of $13.625 per share as
reported on the New York Stock Exchange. Shares of Common Stock known by the
registrant to be beneficially owned by directors and executive officers subject
to Section 16 of the Securities Exchange Act of 1934 are not included in the
computation. The registrant, however, has made no determination that such
persons are "affiliates" within the meaning of Rule 12b-2 under the Securities
Exchange Act of 1934.
DOCUMENTS INCORPORATED BY REFERENCE
Selected portions of the registrant's proxy statement for its 2000 Annual
Meeting of Stockholders (the "2000 Proxy Statement") are incorporated by
reference in Part III of this Report. Information required by paragraphs (k) and
(l) of Item 402 of Regulation S-K is not incorporated by reference in this Form
10-K or in any other filing of the registrant. Such information shall not be
deemed "soliciting material" or to be filed with the Commission as permitted by
Instruction (9) to Item 402 of Regulation S-K.
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INDEX
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PAGE
NUMBER
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PART I
Item Business.................................................... 3
1.
Item Properties.................................................. 21
2.
Item Legal Proceedings........................................... 23
3.
Item Submission of Matters to a Vote of Security Holders......... 23
4.
PART II
Item Market for Registrant's Common Equity and Related
5. Stockholder Matters......................................... 24
Item Selected Financial Data..................................... 24
6.
Item Management's Discussion and Analysis of Financial Condition
7. and Results of Operations................................... 25
Item Quantitative and Qualitative Disclosure About Market Risk... 32
7A.
Item Financial Statements and Supplementary Data................. 32
8.
Item Changes in and Disagreements with Accountants on Accounting
9. and Financial Disclosure.................................... 32
PART
III
Item Directors and Executive Officers of the Registrant.......... 33
10.
Item Executive Compensation...................................... 33
11.
Item Security Ownership of Certain Beneficial Owners and
12. Management.................................................. 33
Item Certain Relationships and Related Transactions.............. 33
13.
PART IV
Item Exhibits, Financial Statement Schedules, and Reports on Form
14. 8-K......................................................... 33
INDEX TO FINANCIAL STATEMENTS AND RELATED INFORMATION F-1
SIGNATURES
EXHIBIT INDEX
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DEFINED TERMS
In this Form 10-K, Teledyne Technologies Incorporated is sometimes referred
to as the "Company", "Teledyne Technologies", or "TDY". References to ATI mean
Allegheny Technologies Incorporated, formerly known as Allegheny Teledyne
Incorporated, the company from which we were spun-off on November 29, 1999.
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PART I
ITEM 1. BUSINESS.
WHO WE ARE
Teledyne Technologies Incorporated is a leading provider of sophisticated
electronic and communications products, systems engineering solutions and
information technology services, and aerospace engines and components. Our
customers include aerospace prime contractors, general aviation companies,
government agencies and major communications and other commercial companies. We
serve high-value niche market segments where performance, precision and
reliability are critical and where we are in several cases the leading supplier.
Our businesses are interrelated by their use of technology to provide
cost-effective and value-added solutions.
Our products include avionic systems that collect and communicate
information for airlines and business aircraft systems; broadband communications
subsystems for wireless and satellite systems; engineering and information
technology services for space, defense and industrial customers; and engines for
general aviation aircraft and for cruise missiles.
Total sales in 1999 were $803.4 million, compared to $780.4 million and
$756.6 million in 1998 and 1997, respectively. Our segment operating profits
were $90.6 million, $89.2 million and $74.9 million in 1999, 1998 and 1997,
respectively. Approximately 57% of our total sales in 1999 was to commercial
customers and the balance was to the U.S. Government. Approximately 67% of these
U.S. Government sales were attributable to fixed-price type contracts and the
balance to cost plus fee type contracts. International sales accounted for
approximately 18% of total sales in 1999.
Our three business segments, their respective operating companies, and
their contribution to our sales in 1999, 1998 and 1997 are summarized in the
following table:
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PERCENTAGE OF SALES
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SEGMENT OPERATING BUSINESSES 1999 1998 1997
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Electronics and Communications Teledyne Electronic Technologies 43% 44% 45%
Systems Engineering Solutions Teledyne Brown Engineering, Inc. 28% 29% 28%
Aerospace Engines and Components Teledyne Continental Motors and 29% 27% 27%
Teledyne Cast Parts
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Teledyne Technologies was organized as a Delaware corporation on August 23,
1999. Teledyne Technologies is comprised of certain businesses of the former
Aerospace and Electronics segment of Allegheny Teledyne Incorporated, now known
as Allegheny Technologies Incorporated. On November 29, 1999, we were spun-off
from ATI after a strategic review concluded that our businesses would be able to
grow faster and be stronger competitors if they were combined as a separate
company. On such date, each holder of ATI stock as of the close of business on
November 22, 1999 received one share of TDY Common Stock for every seven shares
of ATI stock. Our origin dates back to Teledyne, Inc. founded in 1960 by Dr.
Henry Singleton.
Our principal executive offices are located at 2049 Century Park East,
Suite 1500, Los Angeles, California 90067-3101. Our telephone number is (310)
277-3311.
OUR BUSINESS SEGMENTS
ELECTRONICS AND COMMUNICATIONS
Our Electronics and Communications segment, through Teledyne Electronic
Technologies, applies proprietary technology, advanced software and hardware
design skills and manufacturing capabilities in three areas: Data Acquisition
and Communications Products; Precision Electronic Devices; and Electronic
Manufacturing.
Data Acquisition and Communication Products
We are a leading supplier of systems and software for data acquisition and
communications
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applications in commercial aviation, as well as critical components and
subsystems for wireless and satellite communications terminals. We are focused
on expanding our technology base to support the emerging needs for high data
rate (HDR) broadband communications technology.
We also supply a range of specialized components, subsystems and equipment
to domestic and international government aviation and aerospace customers. We
participate in the markets for data acquisition and communications equipment and
services for both air transport (including commercial passenger aircraft) and
business and commuter aircraft.
- Air Transport Products. Our aircraft information management solutions
are designed to increase the safety and efficiency of airline
transportation throughout the world. With over 200 commercial airline
customers, we are a leading supplier of digital flight data acquisition
systems for the commercial airline industry. We have provided these
systems for our airline customers for over one-half of Boeing aircraft
currently in production. We also provide our systems of certain aircraft
customers of Airbus Industrie's partner, DaimlerChrysler Aerospace
Airbus. These systems acquire both mandatory data for use by the
aircraft's flight data recorder, and record additional data for the
airline's use, such as performance and engine condition monitoring.
The markets for data acquisition and communications systems include both
new and retrofitted aircraft. Boeing estimates that the worldwide
operational air transport fleet will grow from a current fleet of 12,600
to 19,100 aircraft by 2008.
Our newest digital flight data acquisition units have the most advanced
features in the industry. These systems conform to the required expansion
of data recording capabilities, which were mandated by the Federal
Aviation Administration (FAA) in 1997. At that time, the FAA increased
the number of mandatory parameters to be monitored from 17 (prior to the
rule change) to 88 by the year 2002. Our flight data units also perform
additional, non-mandatory aircraft and engine condition monitoring for
use by airline customers.
- Business and Commuter Products. Communication capabilities for business
and commuter aircraft are growing rapidly as these aircraft have begun to
mirror air transport aircraft in data gathering and aircraft monitoring.
We are one of the largest suppliers of air-ground telephony, facsimile
and data transmission products to the growing business and commuter
aircraft market.
Bombardier Aerospace selected us to provide a suite of communications
products for its new, ultra long-range Global Express business jet. These
products include an air-to-ground telephone system and our Telelink(TM)
datalink system that link onboard avionics with ground service providers
to facilitate air traffic management and flight operations.
The business and commuter fleet is significantly larger than the
commercial air transport fleet, with approximately 27,000 aircraft
currently operational. Forecast International, an industry consultant,
projects that the business and commuter fleet will increase by
approximately 40% during the next decade. We expect continued demand for
both new installations and upgrades for these systems by business and
commuter aircraft customers.
- Wireless Ground Link. In March 1999, we demonstrated a prototype of our
new Wireless Ground Link that automates the transfer of in-flight data
recorded by our data acquisition systems to an airline's operations
center. Transmission of the data can occur anytime an aircraft is on the
ground utilizing the existing digital wireless infrastructure. The raw
data are then forwarded to the airline through the Internet, where our
Flight Data Replay and Analysis System can process them
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into useful formats. Such data can then be used by the airline in
scheduling maintenance services and implementing safety procedures.
- Wireless and Satellite Communication Components. Our communication
components and subsystems are used in satellite earth terminals,
communication satellites, and base stations for Personal Communication
Services (PCS) and wireless loops. The technology that we apply to
wireless and satellite communications originated in defense applications.
We supply power amplifiers used in the L, C and Ku band satellite uplink
transmitters. These products encompass both solid state monolithic
microwave integrated circuits (MMICs) and high power helix traveling wave
tubes. Markets include amplifiers for fixed wireless applications
operating in the Unlicensed National Information Infrastructure (U-NII)
band and Very Small Aperture Terminals (VSATs) used for credit card
verification, corporate networking and mobile news gathering.
The markets for both wireless and satellite systems are being driven by
the growing need for high data rate (HDR) communications. In order to
obtain sufficient bandwidth to support transmission of these data,
wireless and satellite systems are moving to higher frequencies.
We have developed a unique line of microwave filters that are
manufactured with a patented injection molding technique. These
metal-plated plastic filters are lighter in weight than competing metal
filters, and can be used efficiently in the new lightweight microcell and
picocell base stations for PCS systems. Our filters and our new VSAT
transceivers have applications in wireless local loops, which are used to
supply communications infrastructure in the developing world where the
cost and time to deploy wireline communications can be excessive.
- Defense and Space Electronics. We are a leading supplier of high power
traveling wave tubes for electronic warfare systems, radar systems, and
military satellite communications systems for both domestic and
international applications. Our tubes are used in airborne systems on
many aircraft, including the B-52, B-18, B-1B, F-15 and E-A6B, and Global
Hawk, and on surface systems, such as AEGIS ships. We believe that there
will be a continuing demand for our tubes in both new and existing
systems.
We believe that the use of traveling wave tubes for radar applications
will grow as these systems are upgraded with advanced capabilities that
cannot be achieved with current transmitter technologies.
We have also supplied thousands of microprocessor-controlled ejection
seat sequencers for U.S. Air Force and U.S. Navy tactical aircraft, such
as the F-16, F-18 and the new F-22 fighter.
Precision Electronic Devices
We develop and manufacture microelectronic devices, high-performance
relays, microelectromechanical systems (MEMS), high-density connectors and
precision instruments that are engineered for demanding applications in the
defense, commercial aerospace, medical, instrumentation and industrial markets
where small size, high performance and reliability are of paramount importance.
We also provide precision instruments to manufacturers in these industries.
- Microelectronic Devices. Our hybrid microcircuits are used in
applications such as military (including F-18 and F-22 aircraft and the
M1A2 tank), aerospace, medical and instrumentation systems. These compact
and complex electronic building blocks combine multiple transistors and
integrated circuits in multi-chip modules (MCMs). In late 1999, Harris
Corporation awarded us the contract to manufacture rugged fiber optic
transmitters and receivers for the new F-22 fighter program.
Approximately 50 transmit and
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receive modules are used on each aircraft to route data to and from
avionics equipment and the aircraft's central processor. Our fiber optic
transmitter and receiver modules are also used for video distribution on
the International Space Station.
We have applied our MCM technology to the manufacture of life sustaining
and life enhancing implantable medical devices, including cardiac
pacemakers and defibrillators, neural stimulators and cochlear implant
hearing aids. Newer products include biological signal sensors and
ambulatory digital recorders for diagnosis and monitoring of epilepsy and
sleep disorders. These products are distributed on a private label basis
by our customers. Our medical manufacturing operations are
FDA-registered, and like all of our electronic manufacturing facilities,
certified to IS0 9000.
- High Performance Relays. Our Teledyne Relays miniature electromechanical
relays are used where maintenance of signal fidelity is essential.
Examples of applications include switching of high-speed digital and
microwave signals in semiconductor and microwave test equipment, wireless
systems and communication satellites. According to Venture Development,
an industry consultant, the size of the telecommunications and
instrumentation relay market is approximately $870 million annually and
is expected to grow at more than 5% per year.
Growth in the transmission of broadband data via the Internet, increases
in clock speeds of microprocessors, and the migration of wireless and
satellite systems to higher frequency bands are all contributing to a
need for switching devices that operate at higher frequencies. During
1999, we added new products to our growing line of high frequency relays
and work towards introducing additional products in 2000.
- Microelectromechanical Systems. We are leveraging our experience with
precision electromechanical devices and microelectronics fabrication
technology to develop new MEMS. The first product we are developing in
this line is a microrelay based on an exclusively licensed patented
electromagnetic actuation technique. The microrelay will be significantly
smaller than current electromechanical relays, an important factor in
modern, miniaturized electronic systems, and will provide us with access
to a new market segment in which we do not currently compete.
- High-Density Connectors. We supply custom, low profile, surface mount
connectors for applications in commuter disk drives and consumer medical
electronic devices. We have increased our development efforts for
high-density microprocessor connectors, targeted for use in high-volume
applications such as personal computers and workstations and personal
communication systems handsets. We were issued a patent for a new, low-
cost method of producing high-density connectors in October 1999.
Prismark Partners, an industry consultant, estimates that the market for
this type of connector will grow from 100 million units per year in 1999
to 200 million by 2003, with the price of a typical connector expected to
be approximately $6.
- Precision Instruments. We design and manufacture precision instruments
for process applications in semiconductor and petrochemical manufacturing
with a broadline of analyzers for oxygen and other gases, vacuum gauges,
and mass flow meters and controllers. These instruments are sold under
the Teledyne Analytical Instruments and Teledyne Hastings brand names.
Our Model 2002(TM) sensor is a wide range digital vacuum meter used to
measure vacuum or pressure in various process control and other systems
applications.
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Electronic Manufacturing
We operate turnkey manufacturing facilities in Tennessee, Mexico and
Scotland for low-to-moderate volume, technically sophisticated products, ranging
from individual printed circuit board assemblies to complete electronic systems,
used in the aerospace, medical and communications industries. We manufacture
subsystems used in such diverse products as weapons release systems and medical
magnetic resonance imaging systems. Our customers include major aerospace and
electronic companies. Our production capabilities include through-hole,
surface-mount and multi-chip module assembly; and digital, analog, radio
frequency and microwave testing.
Our patented REGAL(R) rigid-flex technology combines rigid and flexible
printed circuits into one assembly that eliminates board-to-board connectors,
which results in improved reliability and packaging density. These rigid-flex
circuit boards are use in military (such as the AMRAAM missiles, the Airborne
Self-Protection Jammer and the Apache Longbow Helicopter), commercial aerospace
and medical applications. In late 1998, we added rapid prototyping capabilities
for rigid-flex printed circuits to improve customer service.
In 1999, we expanded our line of capital equipment for printed circuit
board manufacturing with an innovative copper plating system designed to plate
panels in ten minutes. This compact system occupies 50% less space than
conventional systems.
During 1998 we expanded our capacity for low-cost manufacturing in Mexico.
Subject to prevailing labor conditions, we plan additional growth in Mexico and
at our Scotland facility. According to Frost & Sullivan, an industry consultant,
the market for military electronic contract manufacturing services was
approximately $800 million in 1998 and is expected to grow at an 8% annual rate
as major military systems companies increasingly focus more on integration of
systems and rely on merchant suppliers for electronics manufacturing.
SYSTEMS ENGINEERING SOLUTIONS
Teledyne Brown Engineering, Inc. offers a wide range of engineering
solutions and information services to government defense, aerospace and
commercial customers. Our software solutions center on the following five areas:
- Aerospace Solutions
- Defense Solutions
- Information Services
- Environmental Solutions
- Enterprise Control and Energy Products
Aerospace Solutions
We provide a broad range of highly sophisticated engineering solutions and
services to U.S. space programs. U.S. Government budgeted expenditures in this
market are approximately $19.3 billion in 2000.
As the payload integration contractor for NASA's Marshall Space Flight
Center, we have had major responsibilities in the numerous scientific missions
of the Space Shuttle. This work has ranged from experiment planning, through
designing and fabricating interface hardware, to manning the mission control
center during flight operations.
The centerpiece of our current space activities is the International Space
Station. We are involved in both space-borne and ground-support hardware
development and we participate in mission planning and operations. We have
approximately 300 people working on International Space Station projects and
realized sales associated with these projects of approximately $29 million in
1999.
The development and integration of complex ground support equipment has
long been one of our specialties. Recognition of this is reflected in our
selection by the U.S. Air Force to produce three prototype aircraft cargo
loaders as a part of the Air Force's Next Generation Small Loader program.
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Defense Solutions
For over 45 years, we have played a key role in the development of U.S.
defense systems. The Department of Defense has budgeted $3.6 billion in
expenditures in 2000 for various missile defense programs, which are projected
to grow at a modest rate for the next five years. The current 2000 budget for
the National Missile Defense program is approximately $837 million and is
projected to grow to $1.8 billion in 2002. During the last 10 years alone, our
systems engineering solutions in defense technologies have averaged over
1,000,000 man-hours per year.
In ballistic missile defense programs, we have provided solutions in
systems engineering, integration, and testing; real-time distributed testing and
training; radar and optical systems design; command center development; and
intelligence studies and threat analysis. We provide battle simulation software
as part of our role for the U.S. Ballistic Missile Defense Organization's
National Missile Defense program.
We also provide an array of engineering solutions related to combat systems
technologies, including research and development test support, operational test
and evaluation, systems survivability analysis, and body armor development.
Information Services
One of our strongest capabilities is in information technology. The
government sector of the information technology market is approximately $33.6
billion in 1999, and is expected to grow at an annual rate of between 4% and
10%. Approximately 30% of our contracts are in this sector.
Our software products, most of which are certified to ISO 9001, are used
for highly diverse applications, such as high-fidelity simulations, multi-media
training, Internet website development, distributed real-time testing, and
command and control centers.
We have developed hundreds of simulation programs, including the Extended
Air Defense Simulation, which is used by friendly governments worldwide and was
combat-proven during Operation Desert Storm and more recent operations. We have
recently upgraded the U.S. Army's land-combat model to include amphibious and
tactical air operations.
We are recognized as a leader in the development of real-time, vehicle-and
weapons-integrated simulations for systems testing and training. Our Systems
Exerciser is a simulation tool used to verify the inter-operational
compatibility of geographically separated, complex defense systems. The Systems
Exerciser "drives" actual weapons systems with a simulated environment including
threats, weather, and terrain, creating a robust virtual world in which real
systems can operate and interact.
We have been continuously involved in weapons signature management
development efforts since 1989, with over 47 successful programs, of which 37
were sole source contracts. We are particularly well known for systems that
limit the detection of soldiers on the battlefield by radar or infrared sensors,
as to which we hold several issued and pending patents. The Optical Signatures
Code, which we developed and maintain, is the recognized standard in missile
defense. We also developed the world's largest on-line database for optical
signatures.
Environmental Solutions
We utilize our systems engineering solutions to assist the U.S. Government
in complying with terms of the Chemical Weapons Convention Treaty. This Treaty
requires the United States to destroy all chemical weapons and material by 2007.
As a 50% participant in a joint venture, we are developing alternative
technologies to incineration for the destruction of stockpile chemical
munitions. We are presently the only contractor operating in the non-stockpile
chemical munitions sector. As the prime contractor for the U.S. Army's
Non-Stockpile Chemical Materiel Demilitarization program, we are designing,
fabricating, integrating, and testing equipment to safely destroy small caches
of chemical munitions and materiel located in over 30 states.
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We were selected by the Air Force to establish and operate a highly
specified analysis laboratory for performing nuclear forensic analysis of gas
samples. Prior to selecting a contractor operation, military personnel at
McClellan Air Force Base in California operated this laboratory for many years.
Enterprise Control and Energy Products
Our systems engineering capabilities are applied to energy problems through
a variety of services and products. Our OpenVector(TM) supervisory control and
data acquisitions systems are used for managing over half of the gas
transportation pipelines in the United States, and we have some international
customers.
We manufacture and sell low power, continuously operating electrical
generators utilized in energy remote locations. We market our line of low-power
radioisotope thermoelectric generators under the SENTINEL(TM) brand name. One of
our units aboard the Pioneer spacecraft has exited the solar system, after
flawlessly providing power for more than two decades. Our TELAN(TM)
thermoelectric systems provide up to 90 watts of constant, reliable power at
remote locations throughout the world. Our recently announced 2.5-kilowatt
Minotaur(TM) engine-generator system runs on natural gas and is designed for
long-term, continuous, low-maintenance operation for the oil and gas production
industry, and to provide prime power for applications in emerging countries that
lack sophisticated infrastructures.
AEROSPACE ENGINES AND COMPONENTS
Our Aerospace Engines and Components Segment, through Teledyne Continental
Motors and Teledyne Cast Parts, focuses on the design, development and
manufacture of piston engines, turbine engines, electronic engine controls,
batteries and complex metal castings.
Piston Engines
We design, develop and manufacture piston engines and ignition systems for
major general aviation airframe manufacturers and provide spare parts and engine
rebuilding services. We are one of two primary worldwide producers of piston
engines and after-market service providers for the general aviation marketplace.
Over 300,000 piston-powered aircraft have been produced since the inception
of the general aviation industry. The active fleet of single and twin-engine
aircraft is estimated to be 165,000, with approximately 200,000 engines
currently in service. We estimate that our engines power approximately one half
of the active fleet. The average age of this fleet is approximately 30 years.
Our share of the installed base is extremely important in a business in which
repair and replacement parts can provide substantial ongoing revenue.
Our product lines included engines powering the industry benchmark Raytheon
Beech Bonanza and Baron aircraft, the Mooney Aircraft line of advanced single
engine aircraft, and the popular New Piper Seneca V twin-engine aircraft. In
addition to these long-standing products, our engines will power four new
high-speed composite aircraft currently entering production. These are the
Cirrus SR-20, Lancair Columbia, Diamond Katana C1, and the Extra 400.
The market for piston powered general aviation aircraft has shown a strong
resurgence in recent years. Following the passage of the General Aviation
Revitalization Act (GARA) of 1994, which limited manufacturers' product
liability for aircraft over 18 years in age, the domestic production of new
aircraft has increased from 444 new units in 1994 to over 1,500 units in 1998.
Following the passage of GARA, the industry has introduced new and advanced
airframes and avionics and increased the rate of spending for new product
research and development. Additionally, NASA is sponsoring technology
development programs aimed at increasing the efficient commercial use of small
general aviation aircraft. These programs include the demonstration of a new
piston aircraft engine for light aircraft that is fueled by Jet-A fuel. Teledyne
Continental Motors was selected to design and demonstrate this advanced engine.
In addition to the sales of new aircraft engines to aircraft producers, we
also actively support the aircraft engine aftermarket. Piston aircraft engines
are produced with a finite utiliza-
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tion life generally expressed as time between
overhaul (TBO). Rebuilding or overhauling of the engine is required at TBO,
which can range between 1,600 and 2,000 hours for our aircraft engines. With an
installed base of approximately 100,000 Teledyne Continental Motors engines and
an average aircraft utilization of 133 hours per year, approximately 10,000 of
our aircraft engines can be expected to require some degree of overhaul in the
aftermarket each year. Our aftermarket support includes the rebuilding of nearly
3,000 of these units annually with our Gold Medallion Rebuilt Engine. We also
provide a full complement of spare parts such as cylinders, crankcases, fuel
systems, crankshafts, camshafts and ignition products.
Our Aerosance unit has developed the first full authority digital
electronic controls for piston aircraft engines. These controls are designed to
automate many functions that currently require manual control, such as fuel flow
and power management. This system also saves fuel as a result of improved engine
management. We believe that these control systems, which are in the process of
FAA certification testing, will become standard equipment on new aircraft, and
will be retrofitted on higher-end, piston-powered general aviation aircraft.
In November 1999, we acquired certain assets of Long Island, New York-based
Mattituck Aviation Corporation, a privately owned aftermarket supplier and
piston engine rebuilder and overhauler to the general aviation marketplace. This
acquisition is expected to bring additional service capabilities to Teledyne
Continental Motors. These service capabilities should leverage our investments
in manufacturing excellence and the development of digital electronic controls
for piston aircraft engines.
Turbine Engines
We design, develop and manufacture small turbine engines for missiles and
unmanned aerial vehicles. We also produce engines that power military trainer
aircraft. Since the late 1950s, we have delivered over 21,000 of these engines
to defense contractors. We believe that the near-term demand for these engines
will increase as a result of the depletion of cruise missiles in recent
international conflicts.
Our J402 engine powers the HARPOON missile system. Derivatives of this
engine power the Standoff Land Attack Missile and the Standoff Land Attack
Missile Expanded Response. Over 7,700 of these engines have been produced for
these missile systems, which are deployed by the U.S. Navy and various NATO
countries.
A derivative of the J402 engine has been selected by Lockheed Martin
Corporation to power the Joint Air-to-Surface Standoff Missile (JASSM) that is
scheduled to be fielded in late 2001. We are the sole source provider for
engines for the JASSM system. The JASSM production requirement, which initially
was projected at 2,400 units, has been increased in recent months to 3,700
units.
Another of our engines provides the turbine power for the Improved Tactical
Air Launched Decoy being built for the U.S. Navy. This system enhances stand-off
capability by identifying the enemy radar sources for lethal weapons. This
low-cost turbine engine is the first of a family of lower-thrust engines to
enter production.
Another of our engines serves as the propulsion source for the T-37
aircraft, the primary jet trainer for the U.S. Air Force. This engine has been
in service for over 40 years and will continue to power the T-37 well into the
next decade. We are the sole source for major spare parts for this engine.
Battery Products
Our battery products operations specialize in the design, development and
manufacture of engineered products for the lead acid battery markets. We are
focused on providing engineered products in niche markets with more favorable
margins than typical battery products.
We design, develop and manufacture dry-charged batteries that can be stored
for years without deterioration. Our maintenance-free, valve-regulated,
recombinant batteries offer electrical performance and rechargeable characteris-
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tics that are superior to other types of maintenance-free batteries.
Our Gill(TM) line of lead acid batteries is widely recognized as the
premier dry-charged, starting and standby power source for general aviation.
More companies manufacturing new general aviation aircraft choose the Gill(TM)
product line than any other lead acid battery.
The technical characteristics of our batteries offer the possibility of
sales to growing non-aviation markets, such as the cable television and
telecommunications industries backup.
Cast Parts
Teledyne Cast Parts offers a wide range of complex sand-cast aluminum and
magnesium castings and nickel-based superalloy and stainless steel investment
castings to the aerospace and defense industries. Premium quality castings are
produced from various processes in accordance with military, aerospace and
commercial customer specifications to exacting tolerances and mechanical
strengths.
Our major customers include airframe and turbine engine manufacturers,
missile producers and other defense contractors. We supply castings to the U.S.
Navy for use in its Phalanx weapons system, as well as castings used in Tomahawk
Cruise Missiles, jet engines and armament systems for both airborne and land
vehicles.
Based on publicly available sales data, we estimate that the market for
aluminum and magnesium casting was approximately $1 billion in 1998 and the
market for air melt steel and vacuum melt superalloys was approximately $2.6
billion. The metals casting industry has been highly fragmented and has
experienced consolidation in recent years. We believe that this trend may
provide us with additional growth opportunities.
SALES AND MARKETING
No commercial customer accounted for more than 10% of our total sales
during 1999, 1998 or 1997. Approximately 43%, 40% and 40% of our total sales for
1999, 1998 and 1997 were derived from contracts with agencies of, and prime
contractors to, the U.S. Government. We do not regard sales to the U.S.
Government as constituting sales to a single customer, because various U.S.
Government customers exercise independent purchasing decisions.
Our principal U.S. Government customer is the U.S. Department of Defense.
Our largest program with the U.S. Government, the Systems Engineering and
Technical Assistance contract with the Space and Missiles Defense Command,
represented 5.8%, 7.3% and 7.1% of total sales for 1999, 1998 and 1997. Sales by
our segment to agencies of and prime contractors to the U.S. Government in each
of the past three years were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Electronics and
Communications........ $101.1 $102.4 $102.7
Systems Engineering
Solutions............. $185.4 $159.2 $158.0
Aerospace Engines and
Components............ $ 61.7 $ 46.8 $ 42.6
</TABLE>
Our sales and marketing approach varies by segment and by products within
our segments. A shared fundamental tenet is the commitment to work closely with
our customers to understand their needs, with an aim to secure preferred
supplier and longer-term relationships.
Our business segments use a combination of internal sales forces,
distributors and commissioned sales representatives to market and sell our
products and services. Products are also advertised in appropriate trade
journals and by means of various Internet web sites. To promote our products and
other capabilities, our personnel regularly participate in relevant trade shows
and professional associations. Many of our government contracts are awarded
after a competitive bidding process in which we seek to emphasize our ability to
provide superior products and technical solutions in addition to competitive
pricing.
COMPETITION
We believe that technological capabilities and innovation and the ability
to invest in the development of new and enhanced products are critical to
obtaining and maintaining leadership in our markets and the industries in which
we
11
<PAGE> 12
compete generally. Although we have certain
advantages that we believe help us compete in our markets effectively; each of
our markets is highly competitive. Our businesses vigorously compete on the
basis of quality, product performance and reliability, technical expertise,
price and service. Many of our competitors have, and potential competitors could
have, greater name recognition, a larger installed base of products, more
extensive engineering, manufacturing, marketing and distribution capabilities
and greater financial, technological and personnel resources than we do.
RESEARCH AND DEVELOPMENT
We spent a total of $215.9 million, $175.0 million and $188.4 million on
research and development for 1999, 1998 and 1997, respectively. Customer-funded
research and development, most of which was attributable to work under contracts
with the U.S. Government, represented approximately 87%, 86% and 85% of total
research and development costs for 1999, 1998 and 1997, respectively.
INTELLECTUAL PROPERTY
While we own and control various intellectual property rights, including
patents, trade secrets, confidential information, trademarks, trade names, and
copyrights, which, in the aggregate, are of material importance to our business,
our management believes that our business as a whole is not materially dependent
upon any one intellectual property or related group of such properties. We own
over 700 active patents and are licensed to use certain patents, technology and
other intellectual property rights owned and controlled by others. Similarly,
other companies are licensed to use certain patents, technology and other
intellectual property rights owned and controlled by us.
Pursuant to a Trademark License Agreement, an affiliate of ATI granted us
an exclusive license to use the "Teledyne" name and related logos, symbols and
marks in connection with our operations. We pay an annual fee of $100,000 for
this license and on November 24, 2004 have an option to purchase all rights and
interests in the Teledyne marks for $412,000.
Patents, patent applications and license agreements will expire or
terminate over time by operation of law, in accordance with their terms or
otherwise. We do not expect the expiration or termination of these patents,
patent applications and license agreements to have a material adverse effect on
our business, results of operations or financial condition.
EMPLOYEES
Out of a total workforce of approximately 5,800, about 1,400 individuals
have engineering, physics, mathematics or computer science degrees. The
International Union of United Automobile, Aerospace and Agricultural Implement
Workers of America represents approximately 370 of our employees under a
collective bargaining agreement that expires on December 16, 2000. We consider
our relations with our employees to be good.
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<PAGE> 13
EXECUTIVE MANAGEMENT
TDY's executive officers and segment presidents include:
<TABLE>
<CAPTION>
NAME AND TITLE AGE PRINCIPAL OCCUPATIONS LAST 5 YEARS
- -------------- --- ----------------------------------------
<S> <C> <C>
Executive Officers*:
Robert Mehrabian 58 Dr. Mehrabian has been the President and
President and Chief Executive Chief Executive Officer of TDY since its
Officer; Director formation. Prior to the spin-off, he was
the President and Chief Executive
Officer of ATI's Aerospace and
Electronics segment since July 1999 and
had served ATI at various senior
executive capacities since July 1997.
Before joining ATI, Dr. Mehrabian served
as President of Carnegie Mellon
University. He is a director of TDY,
Mellon Financial Corporation and PPG
Industries, Inc.
Stefan C. Riesenfeld 51 Mr. Riesenfeld has been the Executive
Executive Vice President and Chief Vice President and Chief Financial
Financial Officer Officer and the Treasurer of TDY since
the spin-off. From August 1999 to the
spin-off, he was the Executive Vice
President and Chief Financial Officer of
ATI's Aerospace and Electronics segment.
From 1996 to May 1999, Mr. Riesenfeld
was Chief Financial Officer of ICL, PLC,
a global information systems and
services company based in London,
England. From 1983 to 1996, he was with
Unisys Corporation where he served as
Vice President and Corporate Treasurer
from 1989.
John T. Kuelbs 57 Mr. Kuelbs has been the Senior Vice
Senior Vice President, General President, General Counsel and Secretary
Counsel and Secretary of TDY since the spin-off, having joined
ATI's Aerospace and Electronics segment
in October 1999. Mr. Kuelbs was Senior
Vice President - Acquisition Policy for
Raytheon Company from November 1998 to
September 1999 and Senior Vice
President-Legal of Raytheon Systems
Company from January 1998 to November
1998. Before Raytheon's acquisition of
Hughes Aircraft Company, Mr. Kuelbs
spent 17 years at Hughes Aircraft
Company where he served as Senior Vice
President, General Counsel and Secretary
from 1994 to 1998.
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
NAME AND TITLE AGE PRINCIPAL OCCUPATIONS LAST 5 YEARS
- -------------- --- ----------------------------------------
<S> <C> <C>
Nicholas L. Blauwiekel 44 Mr. Blauwiekel became Vice President -
Vice President - Human Resources Human Resources of TDY on March 1, 2000.
From October 1998 through February 2000,
he was Corporate Vice President, Human
Resources of Shiloh Industries, a
manufacturer of steel and advanced
materials located in Cleveland, Ohio.
From July 1996 to October 1998, Mr.
Blauwiekel was Vice President, Human
Resources of Cooper Automotive Company,
located in Chesterfield, Missouri. For
over 16 years prior thereto he held
various human resources management
positions with Eaton Corporation, a
global manufacturer of highly engineered
products which serve industrial,
vehicle, construction, commercial and
semiconductor markets.
Dale A. Schnittjer 55 Mr. Schnittjer has been the Controller
Controller of TDY since its spin-off. From 1998 to
the spin-off, Mr. Schnittjer served as a
financial executive to the Aerospace and
Electronics and Industrial Segments of
ATI. Prior to that, he was Vice
President-Finance of Teledyne Wah Chang
from 1997 to 1998 and Vice
President-Finance of Teledyne Specialty
Equipment from 1995 to 1997. Mr.
Schnittjer has held various financial
positions with several of Teledyne's
aerospace and electronics companies
since 1987.
Segment Management:
Marvin H. Fink 63 Mr. Fink has been the President of
President, Teledyne Electronic Technologies since
Teledyne Electronic Technologies 1993. Mr. Fink has held various
management positions with several of
Teledyne's aerospace and electronic
companies for over 37 years.
Richard A. Holloway 57 Mr. Holloway has been the President of
President, Teledyne Brown Engineering since
Teledyne Brown Engineering, Inc. February 1998. Prior thereto, he was
Senior Vice President, Government
Division of SCI Systems, Inc., a
provider of manufacturing and design
services to commercial companies, the
U.S. military and foreign governments.
Bryan L. Lewis 50 Mr. Lewis has been the President of
President, Teledyne Continental Motors since 1992.
Teledyne Continental Motors Mr. Lewis first joined Teledyne 18 years
ago as a project engineer for its
turbine engine business.
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
NAME AND TITLE AGE PRINCIPAL OCCUPATIONS LAST 5 YEARS
- -------------- --- ----------------------------------------
<S> <C> <C>
Charles E. McGill 64 Mr. McGill has been the President of
President, Teledyne Cast Parts since March 1999.
Teledyne Cast Parts Prior thereto, he was Vice President of
ATI's Aerospace and Electronics segment
and from 1993 through 1997, he was Vice
President, Finance and Administration of
Teledyne Electronic Technologies. Mr.
McGill has held various management and
financial positions with several of
Teledyne's aerospace and electronics
companies for over 34 years.
</TABLE>
- -------------------------
* Such officers are subject to the reporting and other requirements of Section
16 of the Securities Exchange Act of 1934, as amended.
Dr. Mehrabian has an Employment Agreement dated as of December 21, 1999
with Teledyne Technologies. A copy is filed as Exhibit 10.8 to this Form 10-K.
Each of the above-listed persons and six other members of management have
entered into Change in Control Severance Agreements with Teledyne Technologies.
A form of such agreement is filed as Exhibit 10.9 to this Form 10-K.
15
<PAGE> 16
RISK FACTORS; CAUTIONARY STATEMENT
AS TO FORWARD-LOOKING STATEMENTS
The following text highlights various risks and uncertainties associated
with Teledyne Technologies. These factors could materially affect
"forward-looking statements" (within the meaning of the Private Securities
Litigation Reform Act of 1995) that we may from time to time make, including
forward-looking statements contained in "Item 1. Business" and "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" of this Form 10-K and in TDY's 1999 Annual Report to Stockholders.
IF WE FAIL TO UNDERTAKE A PUBLIC OFFERING OF OUR COMMON STOCK WITHIN ONE YEAR
FOLLOWING THE SPIN-OFF, WE WILL BE IN BREACH OF OUR AGREEMENTS WITH ATI.
ATI received a tax ruling from the IRS stating in principle that the
spin-off will be tax-free to ATI and to ATI's stockholders. One of the
assumptions underlying the tax ruling is that we will undertake a public
offering of our Common Stock within one year following the spin-off and use the
anticipated gross proceeds of approximately $125 million (less associated costs)
for research and development and related capital projects, for the further
development of our manufacturing capabilities and for acquisitions and/or joint
ventures. Pursuant to the Separation and Distribution Agreement and the Tax
Sharing and Indemnification Agreement, we have also agreed with ATI to undertake
such a public offering. Our failure to do so would be a breach of those
agreements and subject us to substantial liabilities.
FAILURE OF REPRESENTATIONS AND ASSUMPTIONS UNDERLYING THE IRS TAX RULING COULD
CAUSE THE SPIN-OFF NOT TO BE TAX-FREE TO ATI OR TO ATI'S STOCKHOLDERS AND MAY
REQUIRE US TO INDEMNIFY ATI.
While the tax ruling relating to the qualification of the spin-off as a
tax-free distribution within the meaning of Section 355 of the Internal Revenue
Code generally is binding on the IRS, the continuing validity of the tax ruling
is subject to certain factual representations and assumptions, including the
assumption that we will complete a required public offering of our Common Stock
within one year following the spin-off, and use anticipated gross proceeds of
approximately $125 million (less associated costs) for research and development
and related capital projects, for the further development of our manufacturing
capabilities and for acquisitions and/or joint ventures. In light of current
market conditions and other factors, we cannot provide any assurances that we
can complete a public offering of such size in the required time period. TDY's
management is currently reviewing this public offering requirement.
If the spin-off were not to qualify as a tax-free distribution within the
meaning of Section 355 of the Code, ATI would recognize taxable gains generally
equal to the amount by which the fair market value of the Teledyne Technologies
Common Stock distributed to ATI's stockholders exceeded the tax basis in our
assets. In addition, the distribution of our Common Stock to each ATI
stockholder would generally be treated as taxable in an amount equal to the fair
market value of the Teledyne Technologies Common Stock such stockholder
receives.
If the spin-off qualified as a distribution under Section 355 of the Code
but failed to be tax-free to ATI because of certain post-spin-off circumstances
(such as an acquisition of Teledyne Technologies) ATI would recognize a taxable
gain as described above, but the distribution of our Common Stock in the
spin-off would generally be tax-free to each ATI stockholder.
The Tax Sharing and Indemnification Agreement provides that we will be
responsible for any taxes imposed on, or other amounts paid by, ATI, its agents
and representatives and its stockholders as a result of the failure of the
spin-off to qualify as a tax-free distribution within the meaning of Section 355
of the Code if the failure or disqualification is caused by certain
post-spin-off actions by or with respect to us (including our subsidiaries) or
our stockholders. For example, the acquisition of Teledyne Technologies by a
third party during the two-year period following the spin-off could cause such a
failure or disqualification. If any of the taxes or other amounts described
above were to become
16
<PAGE> 17
payable by us, the payment could have a material adverse effect on our financial
condition, results of operations and cash flow and could exceed our net worth by
a substantial amount.
OUR DEPENDENCE ON REVENUE FROM GOVERNMENT CONTRACTS SUBJECTS US TO THE RISK
THAT WE MAY NOT BE SUCCESSFUL IN BIDDING FOR FUTURE CONTRACTS AND THAT
GOVERNMENT FUNDING FOR THESE CONTRACTS MAY BE DELAYED OR CONTINUE TO DECREASE.
We perform work on a number of contracts with the Department of Defense and
other agencies and departments of the U.S. Government. Sales under contracts
with the U.S. Government as a whole, including sales under contracts with the
Department of Defense, as prime or subcontractor, represented approximately 43%
of our total revenue for 1999. Performance under government contracts has
certain inherent risks that could have a material effect on our business,
results of operations and financial condition.
Government contracts are conditioned upon the continuing availability of
Congressional appropriations. Congress typically appropriates funds for a given
program on a fiscal-year basis even though contract performance may take more
than one year. As a result, at the beginning of a major program, a contract is
typically only partially funded, and additional monies are normally committed to
the contract by the procuring agency only as appropriations are made by Congress
for future fiscal years.
The overall U.S. military budget declined in real dollars from the
mid-1980's through the early 1990's. Although U.S. military budgets have
stabilized in recent years, future levels of defense spending cannot be
predicted. Delays or further declines in U.S. military expenditures could
adversely affect our business, results of operations and financial condition,
depending upon the programs affected, the timing and size of the changes and our
ability to offset the impact with new business or cost reductions.
Most of our U.S. Government contracts are subject to termination by the
U.S. Government either at its convenience or upon the default of the contractor.
Termination-for-convenience provisions provide only for the recovery of costs
incurred or committed, settlement expenses, and profit on work completed prior
to termination. Termination-for-default imposes liability on the contractor for
excess costs incurred by the U.S. Government in reprocuring undelivered items
from another source.
We obtain many U.S. Government prime and subcontracts through the process
of competitive bidding. We may not be successful in having our bids accepted. In
addition, contracts may not be profitable.
A number of our U.S. Government prime and subcontracts are fixed-price type
contracts (67% in 1999). Under these types of contracts, we bear the inherent
risk that actual performance cost may exceed the fixed contract price. This is
particularly true where the contract was awarded and the price finalized in
advance of final completion of design. We believe that the U.S. Government is
increasingly requesting proposals for fixed-price type contracts.
We, like other government contractors, are subject to various audits,
reviews and investigations (including private party "whistleblower" lawsuits)
relating to our compliance with federal and state laws. In addition, we have a
compliance program designed to surface issues that may lead to voluntary
disclosures to the U.S. Government. Generally, claims arising out of these U.S.
Government inquiries and voluntary disclosures can be resolved without resorting
to litigation. However, should the business unit or division involved be charged
with wrongdoing, or should the U.S. Government determine that the unit or
division is not a "presently responsible contractor," that unit or division, and
conceivably our company as a whole, could be temporarily suspended or, in the
event of a conviction, could be debarred for up to three years from receiving
new government contracts or government-approved subcontracts. In addition, we
could expend substantial amounts in defending against such charges and in
damages, fines and penalties if such charges are proven or result in negotiated
settlements.
17
<PAGE> 18
WE MAY BE UNABLE TO SUCCESSFULLY INTRODUCE NEW AND ENHANCED PRODUCTS IN A
TIMELY AND COST-EFFECTIVE MANNER.
Our operating results will depend in part on our ability to introduce new
and enhanced products on a timely basis. Successful product development and
introduction depends on numerous factors, including our ability to anticipate
customer and market requirements, changes in technology and industry standards,
our ability to differentiate our offerings from offerings of our competitors,
and market acceptance.
We may not be able to develop and introduce new or enhanced products in a
timely and cost-effective manner or to develop and introduce products that
satisfy customer requirements. Our new products also may not achieve market
acceptance or correctly anticipate new industry standards and technological
changes.
TECHNOLOGICAL CHANGE COULD CAUSE CERTAIN OF OUR PRODUCTS OR SERVICES TO BECOME
OBSOLETE OR NON-COMPETITIVE.
The markets for a number of our products and services are generally
characterized by rapid technological development, evolving industry standards,
changes in customer requirements and new product introductions and enhancements.
A faster than anticipated change in one or more of the technologies related to
our products or services or in market demand for products or services based on a
particular technology could result in faster than anticipated obsolescence of
certain of our products or services and could have a material adverse effect on
our business, results of operation and financial condition. Currently accepted
industry standards are also subject to change, which may contribute to the
obsolescence of our products or services.
WE MAY NOT HAVE SUFFICIENT RESOURCES TO FUND PLANNED OR NECESSARY RESEARCH AND
DEVELOPMENT, CAPITAL EXPENDITURES AND POSSIBLE ACQUISITIONS.
In order to remain competitive, we must make substantial investments in
research and development to develop new and enhanced products and continuously
upgrade our process technology and manufacturing capabilities.
Although we believe that anticipated cash flows from operations and
available borrowings under our $200 million credit facility will be sufficient
to satisfy our working capital and normal operating requirements, we cannot fund
our planned research and development, capital investment programs and possible
acquisitions without additional financing. Our ability to raise additional
capital will depend on a variety of factors, some of which will not be within
our control, including investor perceptions of us, our businesses and the
industries in which we operate, and general economic and market conditions. We
may be unable to successfully raise needed capital and the amount of net
proceeds that will be available to us may not be sufficient to meet our needs.
Failure to successfully raise needed capital on a timely or cost-effective basis
could have a material adverse effect on our business, results of operations and
financial condition.
INCREASING COMPETITION COULD REDUCE THE DEMAND FOR OUR PRODUCTS AND SERVICES.
Although we have certain advantages that we believe help us compete in our
markets, each of our markets is highly competitive. Many of our competitors
have, and potential competitors could have, greater name recognition, a larger
installed base of products, more extensive engineering, manufacturing, marketing
and distribution capabilities and greater financial, technological and personnel
resources than we do. New or existing competitors may also develop new
technologies which could adversely affect the demand for our products and
services. Industry consolidation trends, particularly among aerospace and
defense contractors, could adversely affect demand for our products and
18
<PAGE> 19
services if prime contractors seek to control more aspects of
vertically-integrated projects.
WE SELL PRODUCTS AND SERVICES TO CUSTOMERS IN INDUSTRIES WHICH ARE CYCLICAL AND
SENSITIVE TO CHANGES IN GENERAL ECONOMIC ACTIVITY.
We derive significant revenues from the commercial aerospace industry.
Domestic and international commercial aerospace markets are cyclical in nature.
Historic demand for new commercial aircraft has been related to the stability
and health of domestic and international economies. Delays or changes in
aircraft and component orders could impact the future demand for our products
and have a material adverse effect on our business, results of operations and
financial condition.
In addition, we sell products and services to customers in industries that
are sensitive to the level of general economic activity and in mature industries
that are sensitive to capacity. Adverse economic conditions affecting these
industries may reduce demand for our products and services, which may reduce our
profits, or our production levels, or both.
WE ARE SUBJECT TO THE RISKS ASSOCIATED WITH INTERNATIONAL SALES.
During 1999, international sales accounted for approximately 18% of our
total revenues. We anticipate that future international sales will continue to
account for a significant percentage of our revenues. Risks associated with
these sales include:
- political and economic instability;
- export controls;
- changes in legal and regulatory requirements;
- U.S. and foreign government policy changes affecting the markets for our
products;
- changes in tax laws and tariffs;
- the impact of the transition to a common European currency;
- convertibility and transferability of
international currencies; and
- exchange rate fluctuations (which may affect sales to international
customers and the value of and profits earned on international sales when
converted into dollars).
Any of these factors could have a material adverse effect on our business,
results of operations and financial condition. Weak conditions in Asian
economies have affected our results of operations adversely.
PRODUCT LIABILITY CLAIMS OR RECALLS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
REPUTATION, BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
As a manufacturer and distributor of various products, our results of
operations are susceptible to adverse publicity regarding the quality or safety
of our products. In part, product liability claims challenging the safety of our
products may result in a decline in sales for a particular product which could
adversely affect our results of operations. This could be true even if the
claims themselves are proven to not be true or settled for immaterial amounts.
While we will have general liability and other insurance policies
concerning product liabilities, we will have self-insured retentions or
deductibles under such policies with respect to a portion of these liabilities.
For example, our annual self-insured retention for general aviation aircraft
liabilities incurred in connection with products manufactured by Teledyne
Continental Motors is $10 million.
Product recalls could also have a material adverse effect on our business,
results of operations and financial condition. For example, in the second
quarter of 1999, Teledyne Continental Motors engaged in a product recall of
piston engines produced in 1998, which had an adverse effect on our recent
financial performance. Product recalls have the potential for tarnishing a
company's reputation and could have a material adverse effect on the sales of
our products.
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<PAGE> 20
We cannot assure that we will not have additional product liability claims
or that we will not recall any additional products.
COMPLIANCE WITH INCREASING ENVIRONMENTAL REGULATIONS AND THE EFFECTS OF
POTENTIAL ENVIRONMENTAL LIABILITIES COULD HAVE A MATERIAL ADVERSE FINANCIAL
EFFECT ON US.
We, like other industry participants, are subject to various federal,
state, local and international environmental laws and regulations. We may be
subject to increasingly stringent environmental standards in the future. Future
developments, administrative actions or liabilities relating to environmental
matters could have a material adverse effect on our business, results of
operations or financial condition.
Some of our businesses work with highly dangerous substances which require
heightened standards of care. For example, as the prime contractor for the U.S.
Army's Non-Stockpile Chemical Materiel Demilitarization program, we are
responsible for the destruction of small caches of chemical munitions and
materiel located in over 30 states. The destruction of chemical weapons is an
inherently dangerous activity. Although we have not experienced any accidents or
other adverse consequences as a result of our participation in this program, we
cannot assure that we will not experience any problems in the future.
For additional discussion of environmental matters, see the information at
page 30 under the caption "Other Matters-Environmental" of "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Notes 2 and 13 to Notes to Consolidated Financial Statements.
HAVING MINIMAL OPERATING HISTORY AS AN INDEPENDENT COMPANY MAKES IT DIFFICULT
TO PREDICT OUR PROFITABILITY AS A STAND-ALONE COMPANY.
We do not have an external operating history as an independent company.
Prior to the spin-off, our businesses relied on ATI for various financial,
managerial and administrative services and have been able to benefit from the
earnings, financial resources, assets and cash flows of ATI's other businesses.
Since the spin-off, ATI is only obligated to provide us with minimal
transitional assistance and services.
We expect costs and expenses associated with the management of a public
company to be greater than the amount reflected in our historical financial
statements. We also will incur interest expense and be subject to the other
requirements associated with our credit facility. While we had been profitable
as part of ATI, there can be no assurance that, as a stand-alone company, our
future profits will be comparable to historical operating results before the
spin-off.
We have been dedicating significant managerial and other resources at the
corporate level to establish the infrastructure and systems necessary for us to
operate as an independent public company. While we believe that we have
sufficient management resources, we cannot assure you that this will be the case
or that we will successfully implement our operating and growth initiatives.
Failure to implement these initiatives successfully could have a material
adverse effect on our business, results of operations and financial condition.
OUR INABILITY TO ATTRACT AND RETAIN KEY PERSONNEL COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR FUTURE SUCCESS.
Our future success depends to a significant extent upon the continued
service of our executive officers and other key management and technical
personnel and on our ability to continue to attract, retain and motivate
qualified personnel. The loss of the services of one or more of our key
employees or our failure to attract, retain and motivate qualified personnel
could have a material adverse effect on our business, financial condition and
results of operations. In particular, the loss of the services of Robert
Mehrabian, our President and Chief Executive Officer, could materially and
adversely affect us.
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<PAGE> 21
ACQUISITIONS INVOLVE INHERENT RISKS THAT MAY ADVERSELY AFFECT OUR OPERATING
RESULTS AND FINANCIAL CONDITION.
Our growth strategy includes possible acquisitions. Acquisitions involve
various inherent risks, such as:
- our ability to assess accurately the value, strengths, weaknesses,
contingent and other liabilities and potential profitability of
acquisition candidates;
- the potential loss of key personnel of an acquired business;
- our ability to integrate acquired businesses and to achieve identified
financial and operating synergies anticipated to result from an
acquisition; and
- unanticipated changes in business and economic conditions affecting an
acquired business.
PROVISIONS OF OUR GOVERNING DOCUMENTS, APPLICABLE LAW, THE TAX SHARING AND
INDEMNIFICATION AGREEMENT WITH ATI AND OUR CHANGE IN CONTROL SEVERANCE
AGREEMENTS COULD MAKE AN ACQUISITION OF TELEDYNE TECHNOLOGIES MORE DIFFICULT.
Our Restated Certificate of Incorporation, Amended and Restated Bylaws and
Rights Agreement, and the General Corporation Law of the State of Delaware (the
"DGCL"), contain several provisions that could make the acquisition of control
of Teledyne Technologies in a transaction not approved by our board of directors
more difficult. Certain tax aspects of the spin-off could also discourage an
acquisition of control of Teledyne Technologies for some period of time. For
example, the acquisition of Teledyne Technologies by a third party during the
two-year period following the spin-off could result in the spin-off not
qualifying as a tax-free distribution within the meaning of Section 355 of the
Internal Revenue Code and trigger indemnification obligations of Teledyne
Technologies under the Tax Sharing and Indemnification Agreement. We have
entered into Change in Control Severance Agreements with 15 members of our
management, which could have an antitakeover effect.
ITEM 2. PROPERTIES.
Our principal facilities as of January 2, 2000 are listed below. Although
the facilities vary in terms of age and condition, our management believes that
these facilities have generally been well maintained.
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<TABLE>
<CAPTION>
SQUARE FOOTAGE
FACILITY LOCATION PRINCIPAL USE (OWNED/LEASED)
- --------------------------------------- --------------------------------------- -------------------
<S> <C> <C>
ELECTRONICS AND COMMUNICATIONS SEGMENT
Teledyne Electronic Technologies
Los Angeles, California Development and production of 123,000 (leased)
electronic components and subsystems. 17,000 (owned)
Los Angeles, California Production of digital data acquisition 154,000 (leased)
systems for monitoring commercial
aircraft and engines.
Lewisburg, Tennessee Development and production of 153,000 (owned)
electronic components and subsystems.
Mountain View, California Production of ferrite components, 100,000 (owned)
switching devices, filters and
monolithic microwave integrated
circuits.
Hawthorne, California Production of electronic components. 83,000 (owned)
Rancho Cordova, California Development of production of traveling 75,000 (owned)
wave tubes and power supplies for use 16,000 (leased)
in commercial markets.
SYSTEMS ENGINEERING SOLUTIONS SEGMENT
Teledyne Brown Engineering
Huntsville, Alabama Provision of engineered services and 474,000 (owned)
products, including systems 123,000 (leased)
engineering, optical engineering,
software and hardware engineering, and
instrumentation technology.
Hunt Valley, Maryland Manufacturing, assembling and 60,000 (leased)
maintenance of power generating
systems.
Oak Ridge, Tennessee Laboratories and offices in support of 40,000 (leased)
environmental services.
Washington, DC Defense program offices supporting 21,500 (leased)
governmental customers.
AEROSPACE ENGINES AND COMPONENTS
SEGMENT
Teledyne Continental Motors
Mobile, Alabama Design, development and production of 1,270,000 (leased)
new and rebuilt piston engines,
ignition systems and spare parts for
the general aviation market.
Redlands, California Manufacturing of batteries for the 91,000 (owned)
general aviation market.
Toledo, Ohio Design, development and production of 373,000 (leased)
small turbine engines for aerospace and
military markets.
Teledyne Cast Parts
Pomona, California Manufacturing of aluminum and magnesium 231,000 (owned)
castings for air frames, turbine
engines and missiles.
City of Industry, California Manufacturing of nickel-based 70,000 (owned)
superalloy and stainless steel
investment castings.
</TABLE>
We also own or lease facilities elsewhere in the U.S. and in countries
outside the U.S., including Tijuana, Mexico, Gloucester, England and
Cumbernauld, Scotland. Our executive offices are currently located at 2049
Century Park East, Suite 1500, Los Angeles, California 90067-3101 and are
subleased from a subsidiary of ATI.
22
<PAGE> 23
ITEM 3. LEGAL PROCEEDINGS.
From time to time, we become involved in various lawsuits, claims and
proceedings related to the conduct of our business. While we cannot predict the
outcome of any lawsuits, claims or proceedings, our management does not believe
that the disposition of any pending matters is likely to have a material adverse
effect on our financial condition or liquidity. The resolution in any reporting
period of one or more of these matters, however, could have a material adverse
effect on our results of operations for that period.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of TDY's stockholders during the fourth
quarter of 1999.
23
<PAGE> 24
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
On November 29, 1999, in connection with the distribution of our Common
Stock to record holders of ATI's stock as of the close of business on November
22, 1999, our Common Stock commenced trading "regular way" on the New York Stock
Exchange under the symbol "TDY". For the period from November 29, 1999 through
December 31, 1999, our stock traded at a high of $10 5/8 per share and at a low
of $7 13/16 per share. As of January 2, 2000, there were approximately 9,000
record holders of TDY's Common Stock.
ITEM 6. SELECTED FINANCIAL DATA.
The historical financial information below does not include pro forma
adjustments that reflect estimates of the expenses that would have been incurred
had Teledyne Technologies operated as an independent company and as capitalized
at the time of the spin-off for each period presented. The historical financial
information should be read in conjunction with "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations."
TELEDYNE TECHNOLOGIES INCORPORATED
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA(a)
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS 1999 1998 1997 1996 1995
-------------------- ------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PER-SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Sales............................................... $803.4 $780.4 $756.6 $716.4 $680.5
Net income.......................................... $ 49.0 $ 48.7 $ 41.6 $ 40.7 $ 30.9
Working capital..................................... $105.3 $ 78.6 $ 87.7 $104.2 $ 92.8
Total assets........................................ $317.4 $250.8 $255.4 $253.0 $234.3
Long-term debt, net................................. $ 97.0 n/a n/a n/a n/a
Stockholders' equity................................ $ 44.5 $106.4 $109.4 $128.0 $115.2
Basic earnings per common share(b).................. $ 1.79 $ 1.73 $ 1.48 $ 1.49 $ 1.23
Diluted earnings per common share(b)................ $ 1.79 $ 1.73 $ 1.48 $ 1.49 $ 1.23
</TABLE>
- -------------------------
(a) Effective November 29, 1999, the Company spun-off from ATI. The historical
financial information is not necessarily indicative of the results of
operations or financial position that would have occurred if Teledyne
Technologies had been a separate, independent company during the periods
presented, nor is it indicative of future performance.
(b) Prior to the spin-off, the average outstanding shares used to compute
earnings per share were based on a distribution ratio of one share of
Teledyne Technologies' Common Stock for every seven shares of ATI common
stock.
24
<PAGE> 25
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Effective November 29, 1999, Teledyne Technologies Incorporated was spun
off from ATI.
As a result of a strategic review initiated in 1998, ATI concluded that
certain of its aerospace and electronics businesses, which now comprise Teledyne
Technologies, would be able to grow faster and be stronger competitors if they
were combined as a separate company. The operations included in Teledyne
Technologies are a group of high technology businesses that have critical mass
and shared core competencies, are strategically complementary and have the
potential for profitable growth.
The following is Teledyne Technologies' pro forma financial information for
1999, 1998 and 1997.
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
(IN MILLIONS, EXCEPT
PER-SHARE AMOUNTS)
<S> <C> <C> <C>
SALES................... $803.4 $780.4 $756.6
COSTS AND EXPENSES
Cost of sales......... 587.7 572.1 551.1
Selling, general and
administrative
expenses............ 140.2 134.1 146.6
------ ------ ------
727.9 706.2 697.7
------ ------ ------
OPERATING PROFIT........ 75.5 74.2 58.9
Interest and debt
expense, net........ 8.1 8.0 8.0
Other income.......... 1.0 1.6 1.4
------ ------ ------
INCOME BEFORE INCOME
TAXES................. 68.4 67.8 52.3
Provision for income
taxes................. 27.5 28.0 20.1
------ ------ ------
NET INCOME.............. $ 40.9 $ 39.8 $ 32.2
====== ====== ======
DILUTED EARNINGS PER
COMMON SHARE.......... $ 1.50 $ 1.41 $ 1.15
====== ====== ======
</TABLE>
- -------------------------
The pro forma financial information above has been presented for
informational purposes only and may not reflect the results of operations of
Teledyne Technologies that would have occurred had Teledyne Technologies
operated as a separate, independent company for the periods presented. The pro
forma financial information should not be relied upon as being indicative of
future results. Pro forma adjustments reflect the estimated expense impacts
(primarily interest expense and corporate expenses) that would have been
incurred had Teledyne Technologies been operated as a separate company as of the
beginning of each year and as capitalized at the time of the spin-off for each
period presented. As part of the spin-off, Teledyne Technologies assumed $100
million in long-term debt incurred by ATI. Pro forma income includes pro forma
interest expense on this long-term debt as if it had been outstanding for all
periods presented. Pro forma income adjusts corporate expenses to an annual
level of $15 million from the amount previously allocated, which was lower.
1999 OVERVIEW
Teledyne Technologies is a leading provider of sophisticated electronic and
communication products, systems engineering solutions and information technology
services and aerospace engines and components. Our customers include aerospace
prime contractors, general aviation companies, government agencies and major
communications and other commercial companies. We serve high-value niche market
segments where performance, precision and reliability are critical and where we
are in several cases the leading supplier. Our businesses are interrelated by
their use of technology to provide cost-effective and value-added solutions.
Teledyne Technologies operates in three business segments: Electronics and
Communications; Systems Engineering Solutions; and Aerospace Engines and
Components. Our products include avionics systems that collect and communicate
information for airlines and business aircraft systems; broadband communication
subsystems for wireless and satellite systems; engineering and information
technology services for space, defense and industrial customers; and engines for
general aviation aircraft and for cruise missiles.
25
<PAGE> 26
Our segments' respective contributions to our total sales for 1999, 1998
and 1997 are summarized in the following table:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Electronics and
Communications........... 43% 44% 45%
Systems Engineering
Solutions................ 28% 29% 28%
Aerospace Engines and
Components............... 29% 27% 27%
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
RESULTS OF OPERATIONS
Teledyne Technologies reported 1999 sales of $803.4 million, compared with
sales of $780.4 million for 1998 and $756.6 million for 1997. Pro forma net
income was $40.9 million ($1.50 per diluted share) for 1999, compared with pro
forma net income of $39.8 million ($1.41 per diluted share) for 1998 and pro
forma net income of $32.2 million ($1.15 per diluted share) for 1997.
International sales represented approximately 18%, 22% and 21% of our total
sales for 1999, 1998 and 1997, respectively. Sales under contracts with the U.S.
Government, which included contracts with the Department of Defense, were
approximately 43%, 40% and 40% of our total sales for 1999, 1998 and 1997,
respectively.
In 1999, segment operating profit was $90.6 million, compared with $89.2
million in 1998 and $74.9 million in 1997. Included in operating profit was
pension income of $6.6 million in 1999, $1.7 million in 1998 and pension expense
of $722 thousand in 1997.
Net income, before pro forma adjustments, was $49.0 million ($1.79 per
diluted share) in 1999, compared with $48.7 million ($1.73 per diluted share) in
1998 and $41.6 million ($1.48 per diluted share) in 1997. The historical
financial statements reflect allocations representing corporate expense from ATI
of $7.3 million, $7.8 million, $7.6 million for 1999, 1998 and 1997,
respectively. These allocations were based on sales. The historical financial
statements for 1999 also include one month of actual corporate expenses incurred
by us after the spin-off and one month of interest costs on long-term debt. Cost
of sales increased from 1997 to 1998 and from 1998 to 1999 in line with sales.
Selling, general and administrative expenses decreased in 1998, compared with
1997, reflecting lower selling costs for each segment.
SEGMENTS
The following discussion of our three business segments should be read in
conjunction with Note 12 to Notes to Consolidated Financial Statements.
ELECTRONICS AND COMMUNICATIONS
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
(IN MILLIONS, EXCEPT AS INDICATED)
<S> <C> <C> <C>
Sales....................................................... $340.7 $342.1 $340.0
Operating profit............................................ $ 42.6 $ 42.6 $ 36.8
Operating profit % of sales................................. 12.5% 12.5% 10.8%
International sales % of sales.............................. 17.3% 22.2% 23.0%
Governmental sales % of sales............................... 29.6% 29.9% 30.2%
Capital expenditures........................................ $ 13.5 $ 10.3 $ 10.8
</TABLE>
Our Electronics and Communications segment, through Teledyne Electronic
Technologies, applies proprietary technology, advanced software and hardware
design skills and manufacturing capabilities in three areas: Data Acquisition
and Communications Products; Precision Electronic Devices; and Electronic
Manufacturing.
1999 Compared with 1998
Our Electronics and Communications segment sales were $340.7 million in
1999, down slightly from 1998 sales of $342.1 million. Operating profit was
$42.6 million, the same as 1998.
26
<PAGE> 27
Improved revenue growth and operating profit margins in the second half of
1999 allowed the segment to recover from a weak first half. For the year, sales
of data acquisition and communications products increased by 3%, led by strong
sales growth in communications equipment for business and commuter aircraft.
Precision electronic device sales declined by 6% as strong sales increases in
medical devices were offset by declines in other lines, particularly military
microelectronics. Electronic manufacturing sales grew modestly. Operating
profit, which was unchanged from 1998, reflected the sales impacts and included
the licensing of certain intellectual property.
1998 Compared with 1997
Sales for our Electronics and Communications segment increased 1% and
operating profit increased 16% in 1998, compared with 1997. Improvements in
sales and operating profit for the segment in 1998 were due primarily to
increases in sales and operating profit of data acquisition and communications
products, which increased by $9.8 million and $11.8 million, respectively. These
increases were attributable to expanded demand by commercial airlines as well as
for the business and commuter aircraft market. Improved sales and operating
profit for electronic contract manufacturing services of $7.4 million and $2.6
million, respectively, reflected continued strength in this market. These
improvements offset declines in sales and operating profit with respect to
precision electronic devices during the period, which decreased by $15.8 million
and $9.4 million, respectively, due to continuing economic difficulties in Asia
and the continued weakness in the semiconductor equipment market. Results for
1998 included a loss of $1.4 million associated with the contract development of
a low-level windshear alert system which was terminated in 1998.
SYSTEMS ENGINEERING SOLUTIONS
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
(IN MILLIONS, EXCEPT AS INDICATED)
<S> <C> <C> <C>
Sales....................................................... $226.5 $223.2 $210.4
Operating profit............................................ $ 20.2 $ 20.5 $ 13.1
Operating profit % of sales................................. 8.9% 9.2% 6.2%
International sales % of sales.............................. 13.3% 21.8% 17.4%
Governmental sales % of sales............................... 81.9% 71.3% 75.1%
Capital expenditures........................................ $ 2.0 $ 2.6 $ 2.3
</TABLE>
Our Systems Engineering Solutions segment, through Teledyne Brown
Engineering, offers a wide range of engineering solutions and information
services to government defense, aerospace and commercial customers.
1999 Compared with 1998
Sales for the Systems Engineering Solutions segment were $226.5 million, up
slightly from 1998 sales of $223.2 million. For 1999, operating income was $20.2
million, down from $20.5 million for 1998.
The aerospace, defense and environmental businesses all reported sales
increases in double digits, with our environmental business growing by 24%
relative to 1998. This strong performance was offset by a decline of $20.9
million in marine instrumentation products sales due to industry conditions
affecting petroleum exploration activity. While operating profit was down
slightly overall, significant increases in the rest of the business unit nearly
offset a decline of approximately $4 million in marine products.
1998 Compared with 1997
Sales for our Systems Engineering Solutions segment increased 6% and
operating profit increased 56% in 1998 compared with 1997. The improvement in
sales and operating profit was principally due to the increased sales and
operating profit of $18.6 million and $5.2 million, respectively, of marine
instrumentation products due to favorable conditions in the oil industry, as
27
<PAGE> 28
well as participation in defense programs, primarily ballistic missile defense
activities. Aerospace program sales decreased by $6.9 million in 1998 as a
result of the winding down of the NASA payload integration contract, but
operating profit for aerospace programs increased by $800 thousand due to
increased deliveries of international aerospace hardware.
AEROSPACE ENGINES AND COMPONENTS
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
(IN MILLIONS, EXCEPT AS INDICATED)
<S> <C> <C> <C>
Sales....................................................... $236.2 $215.1 $206.2
Operating profit............................................ $ 27.8 $ 26.1 $ 25.0
Operating profit % of sales................................. 11.8% 12.1% 12.1%
International sales % of sales.............................. 25.0% 22.5% 21.5%
Governmental sales % of sales............................... 26.1% 21.8% 20.7%
Capital expenditures........................................ $ 16.0 $ 5.2 $ 2.7
</TABLE>
Our Aerospace Engines and Components segment, through Teledyne Continental
Motors and Teledyne Cast Parts, focuses on the design, development and
manufacture of piston engines, turbine engines, electronic engine controls,
batteries and metal castings.
1999 Compared with 1998
Our Aerospace Engines and Components segment's 1999 sales were $236.2
million, which represented an increase of 10% from 1998 sales of $215.1 million.
For the year, 1999 operating profit rose 7% to $27.8 million compared with $26.1
million for 1998.
Engine related sales grew by over 15% in 1999, led by revenue increases of
over 50% in turbine engines relative to 1998. Strong profit improvement in
turbines was partially offset by a $3 million charge taken in the second quarter
for a piston engine product recall. Sales and operating profit in our Teledyne
Cast Parts business declined from the prior year due to production
inefficiencies, difficult market conditions and a shift in product mix.
1998 Compared with 1997
Sales for our Aerospace Engines and Components segment increased 4% and
operating profit increased 4% in 1998 compared with 1997. These sales and
operating profit increases were due principally to a $10.6 million increase in
sales and a $4.7 million increase in operating profit for new piston engine and
turbine engine programs. These increases offset higher costs associated with
manufacturing plant reconfiguration and the development of new products,
including new digital electronic piston engine controls and a NASA-sponsored new
piston engine program, as well as sales decreases of $1.7 million and a decrease
in operating profit of $3.6 million as a result of production inefficiencies and
delays in shipments experienced at Teledyne Cast Parts.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Our principal capital requirements are to fund working capital needs,
capital expenditures and debt service requirements. It is anticipated that
operating cash flow, together with available borrowings under the credit
facility described below, will be sufficient to meet these requirements in the
year 2000.
In 1999, cash provided from operations amounted to $47.4 million, compared
with $67.1 million in 1998 and $72.9 million in 1997. The decrease in cash
provided from operations in 1999, compared with 1998, reflected an increase in
accounts receivables in 1999, compared with 1998, while in 1998 accounts
receivable decreased from the prior year. The impact of the increase in accounts
receivable in 1999 was partially offset by higher accounts payable and income
taxes payable compared with the prior year.
28
<PAGE> 29
The January 2, 2000 balance sheet includes several accounts that were
transferred to Teledyne Technologies in connection with the spin-off that were
not included in the historical balance sheet at year end 1998. These amounts
include certain deferred tax assets of $10.8 million, deferred compensation
assets of $9.7 million, deferred compensation liabilities of $9.3 million, and
net unrecognized actuarial gains on pension obligation of $14.7 million.
Working capital increased to $105.3 million at year end 1999, compared with
$78.5 million at year end 1998. The increase in working capital was primarily
due to the increase in accounts receivable and current deferred tax asset
balances.
Net cash used in investing activities was primarily for capital
expenditures as presented below.
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
(IN MILLIONS)
<S> <C> <C> <C>
Electronics and
Communications.............. $13.5 $10.3 $10.8
Systems Engineering
Solutions................... 2.0 2.6 2.3
Aerospace Engines and
Components.................. 16.0 5.2 2.7
----- ----- -----
$31.5 $18.1 $15.8
===== ===== =====
</TABLE>
Our capital spending for 2000 is expected to be approximately $32.5
million. Commitments at January 2, 2000 for capital expenditures were less than
$2 million. The increase in property, plant and equipment primarily reflected
capital spending offset, in part, by depreciation.
Cash used in financing activities for 1999 primarily reflected net
transactions with ATI as well as net payments on long-term debt. Cash used in
financing activities for 1998 and 1997 only reflected net transactions with ATI.
A $200 million five-year revolving credit agreement that terminates in
November 2004 was arranged with a syndicate of banks in connection with the
spin-off. ATI drew $100 million under the facility prior to our assumption of
the facility. Teledyne Technologies assumed the repayment obligation for the
amount drawn by ATI. At January 2, 2000 we had $97 million outstanding under the
facility at an interest rate of 7.63%. Excluding interest and fees, no payments
are due under the credit facility until the facility terminates. The estimated
fair value of our long-term debt at January 2, 2000 was $97 million.
At year end 1999, Teledyne Technologies had approximately $103 million of
borrowing availability remaining under the credit facility. Borrowings under the
credit facility bear interest at variable rates based on the prevailing prime or
Eurodollar rates (or, in certain circumstances, the prevailing federal funds
rate) and these rates will depend, in part, on the ratio of consolidated total
indebtedness to consolidated total capitalization from time to time. The credit
facility requires the Company to comply with various financial covenants and
restrictions, including covenants and restrictions relating to indebtedness,
liens, investments, dividend payments, consolidated net worth, interest coverage
and the relationship of total consolidated indebtedness to earnings before
interest, taxes and depreciation and amortization. The credit agreement
prohibits the declaration of dividends or making other specified payments in
amounts exceeding 25% of cumulative net income after the effective date of the
credit agreement (which was $1.4 million as of January 2, 2000). The stock of
our wholly-owned subsidiary, Teledyne Brown Engineering, Inc., was pledged to
the lenders under the credit agreement as collateral to secure the obligations
under the credit agreement until certain conditions related to a public offering
of the Company's Common Stock are satisfied.
In connection with the spin-off, a new defined benefit pension plan was
established and we assumed the existing pension obligations for all of the
employees, both active and inactive, at the operations which perform government
contract work and for active employees at operations which do not perform
government contract work. ATI transferred pension assets to fund the new defined
benefit pension plan, which at the time of the transfer then had assets in
excess of liabilities.
In connection with the spin-off, ATI received a tax ruling from the IRS
stating in principle that the spin-off will be tax-free to ATI and to ATI's
stockholders. The continuing
29
<PAGE> 30
validity of the IRS tax ruling is subject to certain factual representations and
assumptions, including the completion of a public offering of our Common Stock
within one year following the spin-off and use of anticipated gross proceeds of
approximately $125 million (less associated costs) for research and development
and related capital projects, for the further development of manufacturing
capabilities and for acquisitions and/or joint ventures. Pursuant to the
Separation and Distribution Agreement, Teledyne Technologies agreed with ATI to
undertake such a public offering. In light of current market conditions and
other factors, we cannot provide any assurances that we will be able to complete
a public offering of such size in the required time period. Our management is
currently reviewing this public offering requirement.
The Tax Sharing and Indemnification Agreement between ATI and Teledyne
Technologies provides that we will indemnify ATI and its agents or
representatives for taxes imposed on, and other amounts paid by, them or ATI's
stockholders if we take actions or fail to take actions (such as completing the
public offering) that result in the spin-off not qualifying as a tax-free
distribution. If any of the taxes or other amounts described above were to
become payable by Teledyne Technologies, the payment could have a material
adverse effect on our financial condition, results of operations and cash flow
and could exceed Teledyne Technologies net worth by a substantial amount.
OTHER MATTERS
Taxes
The effective income tax rate was 40.2%, 41.3% and 39.4% in 1999, 1998 and
1997, respectively. Based on our history of operating earnings, expectations of
future operating earnings and potential tax planning strategies, it is more
likely than not that the deferred income tax assets at January 2, 2000 will be
realized.
Costs and Pricing
Inflationary trends in recent years have been moderate. We primarily use
the last-in, first-out method of inventory accounting that reflects current
costs in the costs of products sold. These costs, the increasing costs of
equipment and other costs are considered in establishing sales pricing polices.
The Company emphasizes cost containment in all aspects of its business.
Hedging Activities; Market Risk Disclosures
Teledyne Technologies generally does not actively engage in derivative
financial instruments such as futures contracts, options and swaps, forward
exchange contracts or interest rate swaps and futures. While we believe that
adequate controls are in place to monitor any hedging activities in which we may
engage, many factors, including those beyond our control such as changes in
domestic and foreign political and economic conditions, could adversely affect
these activities. At January 2, 2000 and January 3, 1999, there were no hedging
contracts outstanding.
Our primary exposure to market risk relates to changes in interest rates
and foreign currency exchange rates. We periodically evaluate these risks and
have taken measures to mitigate these risks. We own assets and operate
facilities in countries that have been politically stable. Also, our foreign
risk management objectives are geared towards stabilizing cash flow from the
effects of foreign currency fluctuations. We will, whenever practical, offset
local investments in foreign currencies with borrowings denominated in the same
currencies. All of the Company's long-term debt is based on a market interest
rate and, consequently, the fair value should not be affected materially by
changes in market interest rates. Overall, we believe that our exposure to
interest rate risk and foreign currency exchange rate changes is not material to
our financial condition or results of operations.
Environmental
Teledyne Technologies is subject to various federal, state, local and
international environmental laws and regulations which require that we
investigate and remediate the effects of the release or disposal of materials at
sites associated with past and present operations. This includes sites at which
we have been identified as a potentially responsible party under the Compre-
30
<PAGE> 31
hensive Environmental Response, Compensation and Liability Act, commonly known
as Superfund, and comparable state laws. We are currently involved in the
investigation and remediation of a number of sites. Reserves for environmental
investigation and remediation totaled approximately $1.2 million at January 2,
2000. As investigation and remediation of these sites proceed and new
information is received, we expect that accruals will be adjusted to reflect new
information. Based on current information, we do not believe that future
environmental costs, in excess of those already accrued, will materially and
adversely affect our financial condition or liquidity. However, resolution of
one or more of these environmental matters or future accrual adjustments in any
one reporting period could have a material adverse effect on our results of
operations for that period.
With respect to proceedings brought under the federal Superfund laws, or
similar state statutes, the Company has been identified as a potentially
responsible party at approximately 17 such sites, excluding those sites at which
we believe we have no future liability. Our involvement is very limited or de
minimis at approximately 10 of these sites, and the potential loss exposure with
respect to any of the remaining seven sites is not considered to be material.
For additional discussion of environmental matters, see Notes 2 and 13 to
Notes to Consolidated Financial Statements.
Government Contracts
Teledyne Technologies performs work on a number of contracts with the
Department of Defense and other agencies and departments of the U.S. Government.
Sales under contracts with the U.S. Government, which included contracts with
the Department of Defense, were approximately 43% of total sales in 1999 and 40%
of our total sales in both 1998 and 1997. For a breakdown of sales to the U.S.
Government by segment, see Note 12 to Notes to Consolidated Financial
Statements. Defense sales represented approximately 31%, 27% and 26% of our
total sales for 1999, 1998 and 1997, respectively.
Performance under government contracts has certain inherent risks that
could have material adverse effect on the Company's business, results of
operations and financial condition. Government contracts are conditioned upon
the continuing availability of Congressional appropriations, which usually
occurs on a fiscal year basis even though contract performance may take more
than one year. The overall U.S. military budget declined in real dollars from
the mid-1980s through the early 1990s. Although U.S. military budgets have
stabilized in recent years, future levels of defense spending cannot be
predicted. Delays or further declines in U.S. military expenditures could
adversely affect our business, results of operations and financial condition,
depending on the programs affected, the timing and size of the changes and our
ability to offset the impact with new business or cost reductions.
For information on accounts receivable from the U.S. Government, see Note 4
to Notes to Consolidated Financial Statements.
ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133--"Accounting for
Derivative Instruments and Hedging Activities," which establishes accounting and
reporting standards for derivative instruments and hedging activities. It
requires that an entity recognize all derivatives in the statement of financial
position and measure those instruments at fair value. In 1999, the FASB issued
SFAS No. 137--"Accounting for Derivative Instruments and Hedging Activities--
Deferral of the Effective Date of FASB Statement No. 133--an amendment of FASB
Statement No. 133," which defers the effective date of SFAS No. 133 for one
year. Teledyne Technologies must implement SFAS No. 133 by the first quarter of
2001 and has not yet made a final determination of its impact on the financial
statements.
YEAR 2000 READINESS DISCLOSURE
We spent approximately $1.3 million in 1999 and $2.0 million in 1998 to
address Year 2000 issues which excludes expenditures necessi-
31
<PAGE> 32
tated by ordinary business needs and continuing
technological advancements in the computer industry.
We have experienced no significant Year 2000 problems. We plan to monitor
our critical computer applications and those of our suppliers and vendors
throughout the year in the event that any latent Year 2000 matters arise.
CAUTIONARY STATEMENT AS TO FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and
Results of Operations, contains forward-looking statements, as defined in the
Private Securities Litigation Reform Act of 1995, relating to growth
opportunities and strategic plans. Actual results could differ materially from
these forward-looking statements. Many factors, including the extent and timing
of the required public offering, market, economic and political conditions, and
implementation difficulties, could change the anticipated results. Additional
information concerning factors that could cause actual results to differ
materially from those projected in the forward-looking statements is contained
on pages 16 to 21 of this Form 10-K under the caption "Risk Factors; Cautionary
Statements as to Forward-Looking Statements." Forward-looking statements are
generally accompanied by words such as "estimate", "project", "predict",
"believes" or "expect", that convey the uncertainty of future events or
outcomes. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information or otherwise.
REPORT OF MANAGEMENT
The management of Teledyne Technologies is responsible for the integrity of
our financial data. Fulfilling this responsibility requires the preparation and
presentation of consolidated financial statements in accordance with generally
accepted accounting principles. Management uses internal accounting controls,
corporate-wide policies and procedures and judgment so that such statements
reflect fairly our consolidated financial position, results of operations and
cash flows.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
The information required by this item is included in this Report at page 30
under the caption "Other Matters--Hedging Activities; Market Risk Disclosures"
of "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations."
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this item is included in this Report at page
F-1 through F-28. See the "Index to Financial Statements and Related
Information" at page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
32
<PAGE> 33
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
In addition to the information set forth under the caption "Executive
Management" in Part I of this Report, the information concerning the directors
of Teledyne Technologies required by this item is set forth in the 2000 Proxy
Statement under the caption "Election of Directors" and is incorporated herein
by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item is set forth in the 2000 Proxy
Statement under the captions "Director Compensation", "Executive Compensation"
and "Compensation Committee Interlocks and Insider Participation" and is
incorporated herein by reference. TDY does not incorporate by reference in this
Form 10-K either the "1999 Report on Executive Compensation" or the "Cumulative
Total Stockholder Return" section of the 2000 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this item is set forth in the 2000 Proxy
Statement under the caption "Stock Ownership Information" and is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item is set forth in the 2000 Proxy
Statement under the caption "Certain Transactions" and is incorporated herein by
reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Exhibits and Financial Statement Schedules:
(1) Financial Statements
See the "Index to Financial Statements and Related Information" at page F-1
of this Report, which is incorporated herein by reference.
(2) Financial Statement Schedules
See Schedule II captioned "Valuation and Qualifying Accounts" at page F-28
of this Report, which is incorporated herein by reference.
(3) Exhibits
A list of exhibits filed with this Form 10-K or incorporated by reference
is found in the Exhibit Index immediately following the signature page of this
Report and incorporated herein by reference.
(4) Reports on Form 8-K filed in the fourth quarter of 1999:
Current Report on Form 8-K dated as of November 29, 1999, as amended by
Amendment No. 1 (filed to report consummation of the spin-off and distribution
of TDY's Common Stock to ATI's stockholders).
33
<PAGE> 34
INDEX TO FINANCIAL STATEMENTS AND RELATED INFORMATION
<TABLE>
<S> <C>
Financial Statements:
Report of Independent Auditors............................ F-2
Consolidated Statements of Income......................... F-3
Consolidated Balance Sheets............................... F-4
Consolidated Statements of Stockholders' Equity........... F-5
Consolidated Statements of Cash Flows..................... F-6
Notes to Consolidated Financial Statements................ F-7
Quarterly Financial Data (Unaudited)...................... F-27
Financial Statement Schedule:
Schedule II--Valuation and Qualifying Accounts............ F-28
</TABLE>
F-1
<PAGE> 35
REPORT OF INDEPENDENT AUDITORS
To the Stockholders and Board of Directors
Teledyne Technologies Incorporated:
We have audited the accompanying consolidated balance sheets of Teledyne
Technologies Incorporated as of January 2, 2000 and January 3, 1999, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three fiscal years in the period ended January 2, 2000. Our
audits also included the financial statement schedule listed in the index at
Item 14(a). These financial statements and schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Teledyne
Technologies Incorporated at January 2, 2000 and January 3, 1999, and the
consolidated results of their operations and their cash flows for each of the
three fiscal years in the period ended January 2, 2000, in conformity with
accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/s/ Ernst & Young LLP
Los Angeles, California
January 26, 2000
F-2
<PAGE> 36
TELEDYNE TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
(IN MILLIONS, EXCEPT PER-SHARE AMOUNTS)
<S> <C> <C> <C>
SALES.............................................. $803.4 $780.4 $756.6
COSTS AND EXPENSES
Cost of sales.................................... 587.7 572.1 551.1
Selling, general and administrative expenses..... 133.9 126.9 138.2
------ ------ ------
721.6 699.0 689.3
------ ------ ------
OPERATING PROFIT................................... 81.8 81.4 67.3
Interest and debt expense, net................... .8 -- --
Other income..................................... 1.0 1.6 1.4
------ ------ ------
EARNINGS BEFORE INCOME TAXES....................... 82.0 83.0 68.7
Provision for income taxes......................... 33.0 34.3 27.1
------ ------ ------
NET INCOME......................................... $ 49.0 $ 48.7 $ 41.6
====== ====== ======
BASIC EARNINGS PER COMMON SHARE.................... $ 1.79 $ 1.73 $ 1.48
====== ====== ======
DILUTED EARNINGS PER COMMON SHARE.................. $ 1.79 $ 1.73 $ 1.48
====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 37
TELEDYNE TECHNOLOGIES INCORPORATED
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
1999 1998
------- -------
(IN MILLIONS,
EXCEPT SHARE AMOUNTS)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents................................. $ 7.1 $ --
Accounts receivable, net.................................. 117.6 103.2
Inventories, net.......................................... 53.7 53.2
Deferred income taxes, net................................ 21.7 12.9
Prepaid expenses and other current assets................. 4.5 1.7
------ ------
TOTAL CURRENT ASSETS................................... 204.6 171.0
------ ------
Property, plant and equipment, net........................ 62.1 43.0
Deferred income taxes, net................................ 25.6 22.1
Cost in excess of net assets acquired, net................ 8.2 9.4
Other assets.............................................. 16.9 5.3
------ ------
TOTAL ASSETS........................................... $317.4 $250.8
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable.......................................... $ 46.9 $ 43.4
Accrued liabilities....................................... 48.6 49.1
Income taxes payable...................................... 3.8 --
------ ------
TOTAL CURRENT LIABILITIES.............................. 99.3 92.5
Long-term debt............................................ 97.0 --
Net unrecognized actuarial gains on pension obligation.... 14.7 --
Accrued postretirement benefits........................... 33.6 32.9
Other long-term liabilities............................... 28.3 19.0
------ ------
TOTAL LIABILITIES...................................... 272.9 144.4
------ ------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.01 par value issued in 1999; authorized
125 million shares; outstanding shares:
1999--26,687,002....................................... .3 --
Additional paid-in capital................................ 37.9 --
Net advances from ATI..................................... -- 104.7
Retained earnings......................................... 5.6 --
Accumulated other comprehensive income.................... .7 1.7
------ ------
TOTAL STOCKHOLDERS' EQUITY............................. 44.5 106.4
------ ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............. $317.4 $250.8
====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 38
TELEDYNE TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
ACCUMULATED
ADVANCES ADDITIONAL OTHER TOTAL
(TO) FROM COMMON PAID-IN RETAINED COMPREHENSIVE STOCKHOLDERS'
ATI STOCK CAPITAL EARNINGS INCOME EQUITY
--------- ------- ---------- -------- ------------- -------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 29, 1996......... $ 126.1 $ -- $ -- $ -- $ 1.9 $ 128.0
Net income/comprehensive income.... 41.6 -- -- -- -- 41.6
Net transactions with ATI.......... (60.2) -- -- -- -- (60.2)
-------- ------- ------- ------- ------- -------
BALANCE, DECEMBER 28, 1997......... $ 107.5 $ -- $ -- $ $ 1.9 $ 109.4
Net income......................... 48.7 -- -- -- -- 48.7
Other comprehensive income,
net of tax:
Foreign currency translation
losses....................... -- -- -- -- (.2) (.2)
-------- ------- ------- ------- ------- -------
Comprehensive income............... 48.7 -- -- -- (.2) 48.5
Net transactions with ATI.......... (51.5) -- -- -- -- (51.5)
-------- ------- ------- ------- ------- -------
BALANCE, JANUARY 3, 1999........... $ 104.7 $ -- $ -- $ -- $ 1.7 $ 106.4
Net income......................... 43.4 -- -- -- -- 43.4
Other comprehensive income,
net of tax:
Foreign currency translation
losses....................... -- -- -- -- (.1) (.1)
-------- ------- ------- ------- ------- -------
Comprehensive income............... 43.4 -- -- -- (.1) 43.3
Net transactions with ATI.......... (47.5) -- -- -- -- (47.5)
-------- ------- ------- ------- ------- -------
BALANCE PRIOR TO SPIN-OFF, NOVEMBER
29, 1999......................... $ 100.6 $ -- $ -- $ -- $ 1.6 $ 102.2
Spin-off capitalization
transactions..................... (100.6) .3 37.9 -- (.9) (63.3)
-------- ------- ------- ------- ------- -------
Balance after spin-off $ -- $ .3 $ 37.9 $ -- $ .7 $ 38.9
Net income/comprehensive income.... -- -- -- 5.6 -- 5.6
-------- ------- ------- ------- ------- -------
BALANCE, JANUARY 2, 2000........... $ -- $ .3 $ 37.9 $ 5.6 $ .7 $ 44.5
======== ======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 39
TELEDYNE TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................................ $ 49.0 $ 48.7 $ 41.6
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization of assets................ 11.9 11.1 11.3
Deferred income taxes.................................. (1.4) (.4) .3
Gains on sale of property, plant and equipment......... (.1) (.4) --
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable............. (14.4) 17.8 .2
Increase in inventories................................ (.5) (6.1) (2.9)
Increase in prepaid expenses and other assets.......... (2.8) -- --
Increase in accounts payable........................... 3.6 .8 14.3
Increase (decrease) in accrued liabilities............. (.5) (5.5) 2.8
Increase in current income taxes payable............... 3.8 -- --
Increase in other long-term liabilities................ -- 2.9 3.1
Increase in accrued postretirement benefits............ .6 .2 .4
Other operating, net...................................... (1.8) (2.0) 1.8
------- ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES.............. 47.4 67.1 72.9
------- ------- -------
INVESTING ACTIVITIES
Purchases of property, plant and equipment................ (31.5) (18.1) (15.8)
Disposals of property, plant and equipment................ .1 .7 .1
Other investing, net...................................... (.7) 1.8 2.9
------- ------- -------
NET CASH USED BY INVESTING ACTIVITIES.................. (32.1) (15.6) (12.8)
------- ------- -------
FINANCING ACTIVITIES
Net payments on revolving credit agreement................ (3.0) -- --
Net advances/spin-off capitalization with ATI............. (5.2) (51.5) (60.2)
------- ------- -------
NET CASH USED BY FINANCING ACTIVITIES.................. (8.2) (51.5) (60.2)
------- ------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............ 7.1 -- (.1)
Cash and cash equivalents -- beginning of year.............. -- -- .1
------- ------- -------
CASH AND CASH EQUIVALENTS -- END OF YEAR.................... $ 7.1 $ -- $ --
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ALLEGHENY TELEDYNE INCORPORATED'S SPIN-OFF OF TELEDYNE TECHNOLOGIES
INCORPORATED
- --------------------------------------------------------------------------------
Effective November 29, 1999 (the Distribution Date), Teledyne Technologies
Incorporated (Teledyne Technologies or the Company) became an independent,
public company as a result of the distribution by Allegheny Teledyne
Incorporated, now known as Allegheny Technologies Incorporated (ATI) of the
Company's Common Stock, $.01 par value per share, to holders of ATI Common Stock
at a distribution ratio of one for seven (the spin-off). The spin-off has been
treated as a tax-free distribution for federal income tax purposes. Immediately
prior to the spin-off, ATI transferred certain of the businesses of ATI's
Aerospace and Electronics segment to the new corporation. ATI no longer has a
financial investment in Teledyne Technologies.
Teledyne Technologies consists of the operations of the Teledyne Electronic
Technologies division with operations in the United States, United Kingdom and
Mexico; Teledyne Brown Engineering division with operations in the United States
and United Kingdom; Teledyne Continental Motors and Teledyne Cast Parts
divisions, both with operations in the United States. Prior to the spin-off,
these operations were divisions of wholly-owned subsidiaries of ATI.
A $200 million five-year revolving credit agreement was arranged with a
syndicate of banks in connection with the spin-off. ATI drew $100 million under
the facility prior to the assumption of the facility by Teledyne Technologies.
Teledyne Technologies assumed the repayment obligation for the amount drawn by
ATI. In addition, prior to and in connection with the spin-off, Teledyne
Technologies and ATI entered into agreements providing for the separation of the
companies and governing various relationships for separating employee benefits
and tax obligations, indemnification and transition services.
The consolidated financial statements for periods prior to the spin-off
included certain expenses (primarily corporate expenses) based on an allocation
of the overall expense of ATI. ATI's historical cost basis of assets and
liabilities has been reflected in Teledyne Technologies' financial statements.
The financial information in these financial statements is not necessarily
indicative of results of operations, financial position and cash flows that
would have occurred if Teledyne Technologies had been a separate stand-alone
entity during the periods presented or of future results. The consolidated
financial statements included herein do not reflect changes that occurred in the
capitalization and operations of Teledyne Technologies as a result of, or after,
the spin-off other than for the period following the spin-off.
The following unaudited pro forma financial information is presented for
informational purposes only and may not reflect the results of operations or
financial position of Teledyne Technologies that would have occurred had
Teledyne Technologies operated as a separate, independent company for the
periods presented. The pro forma financial information should not be relied upon
as being indicative of future results. Pro forma adjustments reflect the
estimated expense impacts (primarily interest expense and corporate expenses)
that would have been incurred had Teledyne Technologies been operated as a
separate company as of the beginning of each year and as capitalized at the time
of the spin-off for each period presented. As part of the spin-off, Teledyne
Technologies assumed $100 million of long-term debt incurred by ATI. Pro forma
income includes pro forma interest expense on the long-term debt as if it had
been outstanding for all periods presented. Pro forma income adjusts corporate
expenses to an annual level of $15 million from the amount previously allocated,
F-7
<PAGE> 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
which was lower. The following is Teledyne Technologies unaudited pro forma
financial information for the 1999, 1998 and 1997 fiscal years:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE-DATA)
<S> <C> <C> <C>
SALES........................................... $803.4 $780.4 $756.6
COSTS AND EXPENSES
Cost of sales................................. 587.7 572.1 551.1
Selling, general and administrative
expenses................................... 140.2 134.1 146.6
------ ------ ------
727.9 706.2 697.7
------ ------ ------
OPERATING PROFIT................................ 75.5 74.2 58.9
Interest and debt expense, net................ 8.1 8.0 8.0
Other income.................................. 1.0 1.6 1.4
------ ------ ------
INCOME BEFORE INCOME TAXES...................... 68.4 67.8 52.3
Provision for income taxes...................... 27.5 28.0 20.1
------ ------ ------
NET INCOME...................................... $ 40.9 $ 39.8 $ 32.2
====== ====== ======
BASIC EARNINGS PER COMMON SHARE................. $ 1.50 $ 1.41 $ 1.15
====== ====== ======
DILUTED EARNINGS PER COMMON SHARE............... $ 1.50 $ 1.41 $ 1.15
====== ====== ======
</TABLE>
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of Teledyne Technologies include the
accounts of the businesses distributed by ATI and its subsidiaries as described
in Note 1. Significant intercompany accounts and transactions have been
eliminated. Certain financial statements, notes and supplementary data for prior
years have been changed to conform to the 1999 presentation.
FISCAL YEAR
The Company is on a 53/52-week fiscal year convention. Fiscal years 1999
and 1997 were 52-week years and ended on January 2, 2000 and December 28, 1997,
respectively and fiscal year 1998 was a 53-week year and ended on January 3,
1999. References to 1999, 1998 and 1997 are intended to refer to the respective
fiscal year unless otherwise noted.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts and related disclosures. Actual results
could differ from those estimates. Management believes that the estimates are
reasonable.
F-8
<PAGE> 42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
REVENUE RECOGNITION
Commercial sales and revenue from U.S. Government fixed-price type
contracts generally are recorded as shipments are made or as services are
rendered. Occasionally, for certain fixed-price type contracts that require
substantial performance over a long time period (one or more years) before
shipments begin, sales may be recorded based upon attainment of scheduled
performance milestones which could be time, event or expense driven. In these
few instances, invoices are submitted to the customer under a contractual
agreement and payments are made by the customer. Sales under cost-reimbursement
contracts are recorded as costs are incurred and fees are earned. Since certain
contracts extend over a long period of time, all revisions in cost and funding
estimates during the progress of work have the effect of adjusting the current
period earnings on a cumulative catch-up basis. If the current contract estimate
indicates a loss, provision is made for the total anticipated loss.
RESEARCH AND DEVELOPMENT
Company-funded research and development costs were $27.8 million in 1999,
$24.8 million in 1998 and $27.7 million in 1997, and include bid and proposal
costs, are expensed as incurred. Costs related to customer-funded research and
development contracts were $188.1 million in 1999, $150.3 million in 1998 and
$160.7 million in 1997 and are charged to costs and expenses as the related
sales are recorded. A portion of the costs incurred for Company-funded research
and development is recoverable through overhead cost allowances on government
contracts.
INCOME TAXES
Provision for income taxes includes deferred taxes resulting from temporary
differences in income for financial and tax purposes using the liability method.
Such temporary differences result primarily from differences in the carrying
value of assets and liabilities.
NET INCOME PER COMMON SHARE
The average number of shares of Teledyne Technologies' Common Stock used in
the computation of basic net income per common share was 27,303,421, 28,107,241
and 28,085,823 for the fiscal years ended January 2, 2000, January 3, 1999 and
December 28, 1997, respectively. Prior to the spin-off, the number of shares
outstanding was based on a distribution ratio of one share of Teledyne
Technologies' Common Stock for every seven shares of ATI common stock. The
average number of shares of Teledyne Technologies' Common Stock used in the
computation of diluted net income per common share was 27,334,737, 28,133,879
and 28,120,380 for the fiscal years ended January 2, 2000, January 3, 1999 and
December 28, 1997, respectively.
ACCOUNTS RECEIVABLE
Receivables are presented net of a reserve for doubtful accounts of $3.5
million at January 2, 2000 and $2.9 million at January 3, 1999. Expense recorded
for the reserve for doubtful accounts was $608 thousand, $1.4 million and $1.3
million for the 1999, 1998 and 1997 fiscal years, respectively. The Company
markets its products and services principally throughout the United States,
Europe, Japan and Canada to commercial customers and agencies of, and prime
contractors to, the U.S. Government. Trade credit is extended based
F-9
<PAGE> 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
upon evaluations of each customer's ability to perform its obligations, which
are updated periodically.
CASH AND CASH EQUIVALENTS
Cash equivalents consist of highly liquid money-market mutual funds and
bank deposits with initial maturities of three months or less. Cash equivalents
totaled approximately $5.5 million at January 2, 2000 and included only bank
deposits.
INVENTORIES
Inventories are stated at the lower of cost (last-in, first-out; first-in,
first-out; and average cost methods) or market, less progress payments. Costs
include direct material, direct labor, applicable manufacturing and engineering
overhead, and other direct costs.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is capitalized at cost. The method of
depreciation adopted for all property, plant and equipment placed into service
after July 1, 1996 is the straight-line method. For property, plant and
equipment acquired prior to July 1, 1996, depreciation is computed using a
combination of accelerated and straight-line methods. The Company believes the
straight-line method more appropriately reflects its financial results by better
allocating costs of new property over the useful lives of these assets.
COST IN EXCESS OF NET ASSETS ACQUIRED
Cost in excess of net assets acquired related to businesses purchased prior
to November 1970 is not being amortized. Cost in excess of net assets acquired
related to businesses purchased after November 1970 is being amortized on a
straight-line basis over periods not exceeding 15 years. Goodwill amortization
expense was $672 thousand, $582 thousand and $510 thousand in 1999, 1998 and
1997, respectively.
OTHER LONG-LIVED ASSETS
The carrying value of long-lived assets is periodically evaluated in
relation to the operating performance and future undiscounted cash flows of the
underlying businesses. Adjustments are made if the sum of expected future net
cash flows is less than book value. In 1997, the Company recorded an impairment
loss of approximately $1.8 million in general and administrative expenses
primarily to write off its investment in a limited liability corporation that
was determined to have no value. This determination was made as a result of
programs that were discontinued in the Systems Engineering Solutions business
segment in 1997.
ENVIRONMENTAL
Costs that mitigate or prevent future environmental contamination or extend
the life, increase the capacity or improve the safety or efficiency of property
utilized in current operations are capitalized. Other costs that relate to
current operations or an existing condition caused by past operations are
expensed. Environmental liabilities are recorded when the Company's liability is
probable and the costs are reasonably estimable, but generally not later than
the completion of the feasibility study or the Company's recommendation of a
remedy or commitment to an appropriate plan of action. The accruals are reviewed
F-10
<PAGE> 44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
periodically and, as investigations and remediations proceed, adjustments are
made as necessary. Accruals for losses from environmental remediation
obligations do not consider the effects of inflation, and anticipated
expenditures are not discounted to their present value. The accruals are not
reduced by possible recoveries from insurance carriers or other third parties,
but do reflect anticipated allocations among potentially responsible parties at
federal Superfund sites or similar state-managed sites and an assessment of the
likelihood that such parties will fulfill their obligations at such sites. The
measurement of environmental liabilities by the Company is based on currently
available facts, present laws and regulations, and current technology. Such
estimates take into consideration the Company's prior experience in site
investigation and remediation, the data concerning cleanup costs available from
other companies and regulatory authorities, and the professional judgment of the
Company's environmental experts in consultation with outside environmental
specialists, when necessary.
FOREIGN CURRENCY TRANSLATION
The Company's foreign entities' accounts are measured using local currency
as the functional currency. Assets and liabilities are translated at the
exchange rate in effect at year-end. Revenues and expenses are translated at the
rates of exchange prevailing during the year. Unrealized translation gains and
losses arising from differences in exchange rates from period to period are
included as a component of accumulated other comprehensive income in
stockholders' equity.
ACCOUNTING PRONOUNCEMENTS
SFAS No. 137 and 133 -- In June 1998, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No.
133--"Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for derivative instruments and
hedging activities. It requires that an entity recognize all derivatives in the
statement of financial position and measure those instruments at fair value. In
1999, the FASB issued SFAS No. 137--"Accounting for Derivative Instruments and
Hedging Activities--Deferral of the Effective Date of FASB Statement No. 133--an
amendment of FASB Statement No. 133," which defers the effective date of SFAS
No. 133 for one year. Teledyne Technologies must implement SFAS No. 133 by the
first quarter of 2001 and has not yet made a final determination of its impact
on the financial statements.
SFAS No. 132 -- Effective for 1998, Teledyne Technologies adopted the
provisions of SFAS No. 132--"Employers' Disclosures about Pensions and Other
Postretirement Benefits." This statement standardized the disclosure
requirements for pensions and other postretirement benefits and amends SFAS No.
87--"Employers' Accounting for Pensions", SFAS No. 88--"Employers' Accounting
for Settlements and Curtailments of Defined Benefit Pension Plans" and SFAS No.
106--"Employers' Accounting for Postretirement Benefits Other Than Pensions."
The provisions of SFAS No. 132 are disclosure oriented and do not change the
measurement or recognition of the plans. Accordingly, the implementation of SFAS
No. 132 did not have an impact on Teledyne Technologies' consolidated financial
position or results of operations.
SFAS No. 131 -- Effective for 1998, Teledyne Technologies adopted the
provisions of SFAS No. 131--"Disclosures about Segments of an Enterprise and
Related Information." This statement establishes standards for reporting and
display of information about operating
F-11
<PAGE> 45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
segments. It supersedes or amends several FASB statements, most notably, SFAS
No. 14--"Financial Reporting for Segments of a Business Enterprise." The
implementation of SFAS No. 131 did not have an impact on Teledyne Technologies'
consolidated financial position or results of operations.
SFAS No. 130 -- Effective for 1998, Teledyne Technologies adopted the
provisions of SFAS No. 130--"Reporting Comprehensive Income." This statement
establishes standards for reporting and display of comprehensive income and its
components in a full set of general purpose financial statements. The
implementation of SFAS No. 130 did not have an impact on Teledyne Technologies'
results of operations. Teledyne Technologies' comprehensive income is primarily
composed of net income and foreign currency translation adjustments. Teledyne
Technologies' comprehensive income was $48.9 million, $48.5 million and $41.6
million for 1999, 1998 and 1997, respectively.
HEDGING ACTIVITIES
Teledyne Technologies generally does not actively engage in derivative
financial instruments such as futures contracts, options and swaps, forward
exchange contracts or interest rate swaps and futures. While Teledyne
Technologies believes that adequate controls are in place to monitor any hedging
activities in which the Company may engage, many factors, including those beyond
its control such as changes in domestic and foreign political and economic
conditions, could adversely affect these activities. At January 2, 2000 and
January 3, 1999, there were no hedging contracts outstanding.
SUPPLEMENTAL CASH FLOW INFORMATION
Until the spin-off date, ATI was responsible for cash payments for federal,
foreign and state income taxes. No tax payments were made by Teledyne
Technologies from the date of the spin-off through year end. Interest paid by
Teledyne Technologies from the date of the spin-off to year end 1999 totaled
approximately $565 thousand.
NOTE 3. FINANCIAL INSTRUMENTS
- --------------------------------------------------------------------------------
Teledyne Technologies values financial instruments as required by SFAS No.
107--"Disclosures about Fair Value of Financial Instruments." The carrying
amounts of cash and cash equivalents approximate fair value because of the short
maturity of those instruments. Teledyne Technologies estimates the fair value of
its long-term debt based on the value of debt of similar maturity and
characteristics. The estimated fair value of Teledyne Technologies' long-term
debt at January 2, 2000 approximated the carrying value of $97 million.
The carrying value of other on-balance sheet financial instruments
approximates fair value, and the cost, if any, to terminate off-balance sheet
financial instruments is not significant.
F-12
<PAGE> 46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. ACCOUNTS RECEIVABLE
- --------------------------------------------------------------------------------
Accounts receivable are summarized as follows:
<TABLE>
<CAPTION>
1999 1998
------ ------
Balance at year end (IN MILLIONS)
<S> <C> <C>
U.S. Government and prime contractors contract
receivables:
Billed receivables................................. $ 27.1 $ 18.1
Unbilled receivables............................... 20.4 21.3
Other receivables, primarily commercial.............. 73.6 66.7
------ ------
121.1 106.1
Reserve for doubtful accounts........................ (3.5) (2.9)
------ ------
Total accounts receivable, net....................... $117.6 $103.2
====== ======
</TABLE>
The billed contract receivables from the U.S. Government and prime
contractors contain $9.8 million and $5.9 million at January 2, 2000 and January
3, 1999, respectively, due to long-term contracts. The unbilled contract
receivables from the U.S. Government and prime contractors contain $10.5 million
and $21.3 million at January 2, 2000 and January 3, 1999, respectively, due to
long-term contracts.
Unbilled contract receivables represent accumulated costs and profits
earned but not yet billed to customers. The Company believes that substantially
all such amounts will be billed and collected within one year.
NOTE 5. INVENTORIES
- --------------------------------------------------------------------------------
Inventories consisted of the following:
<TABLE>
<CAPTION>
1999 1998
------ ------
Balance at year end (IN MILLIONS)
<S> <C> <C>
Raw materials and supplies............................ $ 24.2 $ 23.3
Work in process....................................... 62.5 65.3
Finished goods........................................ 9.1 10.4
------ ------
Total inventories at current cost (first-in,
first-out).......................................... 95.8 99.0
LIFO reserve.......................................... (36.8) (39.0)
Progress payments..................................... (5.3) (6.8)
------ ------
Total inventories, net................................ $ 53.7 $ 53.2
====== ======
</TABLE>
Inventories, before progress payments, determined on the last-in, first-out
method were $55.8 million at January 2, 2000 and $56.3 million at January 3,
1999. The remainder of the inventory was determined using the first-in,
first-out and average cost methods. These inventory values do not differ
materially from current cost.
During 1999, 1998 and 1997, inventory usage resulted in liquidations of
last-in, first-out inventory quantities. These inventories were carried at the
lower costs prevailing in prior years as compared with the cost of current
purchases. The effect of these last-in, first-out
F-13
<PAGE> 47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
liquidations was to increase net income by $2.2 million in 1999, $264 thousand
in 1998 and $2.2 million in 1997.
Total inventories at current cost were net of $6.1 million and $5.1 million
at January 2, 2000 and January 3, 1999, respectively, which were related to
reserves for obsolete inventories.
Inventories, before progress payments, related to long-term contracts were
$8.8 million and $2.0 million at January 2, 2000 and January 3, 1999,
respectively. Progress payments related to long-term contracts were $1.9 million
and $125 thousand at January 2, 2000 and January 3, 1999, respectively.
Under the contractual arrangements by which progress payments are received,
the customer has a security interest in the inventories associated with specific
contracts.
NOTE 6. SUPPLEMENTAL BALANCE SHEET INFORMATION
- --------------------------------------------------------------------------------
Property, plant and equipment were as follows:
<TABLE>
<CAPTION>
1999 1998
------- -------
Balance at year end (IN MILLIONS)
<S> <C> <C>
Land................................................ $ 5.5 $ 5.5
Buildings........................................... 36.2 36.7
Equipment........................................... 152.7 135.5
------- -------
194.4 177.7
Accumulated depreciation and amortization........... (132.3) (134.7)
------- -------
Total property, plant and equipment, net............ $ 62.1 $ 43.0
======= =======
</TABLE>
Accrued liabilities included salaries and wages of $24.7 million and $22.6
million at January 2, 2000 and January 3, 1999, respectively. Other long-term
liabilities included reserves for self-insurance and deferred compensation
liabilities.
NOTE 7. STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------
COMMON STOCK
In connection with the spin-off 26,687,002 shares of Teledyne Technologies'
Common Stock were issued and are outstanding at year end 1999. This amount
includes 943 shares issued under the Non-Employee Director Stock Compensation
Plan.
PREFERRED STOCK
Authorized preferred stock may be issued with designations, powers and
preferences designated from time to time by the Board of Directors. At January
2, 2000, there were no shares of preferred stock issued.
STOCKHOLDER RIGHTS PLAN
On November 12, 1999, the Company's Board of Directors unanimously adopted
a stockholder rights plan under which preferred share purchase rights were
distributed as a dividend on each share of Teledyne Technologies' Common Stock
distributed to ATI's
F-14
<PAGE> 48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
stockholders in connection with the spin-off and each share to become
outstanding between the effective date of the spin-off and the earliest of the
distribution date, redemption date and final expiration date. The rights will be
exercisable only if a person or group acquires 15 percent or more of the
Company's Common Stock or announces a tender offer, the consummation of which
would result in ownership by a person or group of 15 percent or more of the
Common Stock. Each right will entitle stockholders to then buy one-hundredth of
a share of a new series of junior participating preferred stock at an exercise
price of $60. There are 1,250,000 shares of Series A Junior Participating
Preferred Stock authorized for issuance under the plan. The record date for the
distribution was the close of business of November 22, 1999. The rights will
expire on November 12, 2009, subject to earlier redemption or exchange by
Teledyne Technologies as described in the plan. The rights distribution is not
taxable to stockholders.
STOCK INCENTIVE PLAN
ATI sponsored an incentive plan that provided for stock option awards to
officers and key employees. Teledyne Technologies has officers and key employees
that have participated in this plan. In connection with the spin-off,
outstanding stock options held by Teledyne Technologies' employees were
converted into options to purchase Teledyne Technologies' Common Stock. The
number of shares and the exercise price of each ATI option that was converted to
a Teledyne Technologies' option was converted based upon a formula designed to
preserve the inherent economic value, vesting and term provisions of such ATI
options as of the Distribution Date. The exchange ratio and fair market value of
the Teledyne Technologies' Common Stock, upon active trading, also impacted the
number of options issued to Teledyne Technologies' employees.
Teledyne Technologies has established its own long-term incentive plan
which provides its Board of Directors the flexibility to grant restricted stock,
incentive stock options, stock appreciation rights and non-qualified stock
options to officers and employees of Teledyne Technologies.
The following disclosures are based on stock options held by Teledyne
Technologies' employees and have been converted from ATI options to Teledyne
Technologies' options as noted above. Teledyne Technologies accounts for its
stock option plans in accordance with APB Opinion 25--"Accounting for Stock
Issued to Employees" (APB 25), and related Interpretations. Under APB 25, no
compensation expense is recognized because the exercise price of the Company's
employee stock options equals the market price of the underlying stock at the
date of the grant.
If compensation cost for these options had been determined using the
fair-value method prescribed by FASB Statement No. 123, "Accounting for
Stock-based Compensation" (SFAS No. 123) net income would have been reduced by
$1.6 million, $673 thousand and $154 thousand for the fiscal years 1999, 1998
and 1997, respectively. Under SFAS No. 123, the fair value of each option grant
is estimated on the date of grant using the Black-Scholes
F-15
<PAGE> 49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
option-pricing model with the following weighted-average assumptions (there were
no option grants in 1997):
<TABLE>
<CAPTION>
1999 1998
----- -----
<S> <C> <C>
Expected dividend yield..................................... -- 2.8%
Expected volatility......................................... 40.1% 31.0%
Risk-free interest rate..................................... 5.5% 5.0%
Expected lives.............................................. 8.0 8.0
Weighted-average fair value of options granted during the
year...................................................... $4.91 $7.25
</TABLE>
Stock option transactions in ATI common stock under ATI's incentive plan
for Teledyne Technologies' employees have been converted to Teledyne
Technologies as noted above and are summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------------------- -------------------- ------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
--------- -------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Beginning balance......... 1,757,392 $12.36 643,985 $ 7.66 708,816 $ 7.58
Granted or issued......... 487,500 $ 8.93 1,123,968 $14.99 -- $ --
Exercised................. (91,329) $ 5.76 (12,213) $ 6.64 (64,831) $ 6.87
Canceled or expired....... (30,266) $13.42 -- $ -- -- $ --
--------- ------ --------- ------ ------- ------
Ending balance............ 2,123,297 $11.84 1,757,392 $12.36 643,985 $ 7.66
========= ====== ========= ====== ======= ======
Options exercisable at
year-end................ 856,087 $10.93 495,891 $ 7.27 409,997 $ 6.85
========= ====== ========= ====== ======= ======
</TABLE>
For options outstanding at year end 1999, the exercise prices were between
$5.57 and $17.60 and the weighted-average remaining contractual life was
approximately 8 years. For options exercisable at year end 1999 the exercise
prices were also between $5.57 and $17.60.
NON-EMPLOYEE DIRECTOR STOCK COMPENSATION PLAN
Teledyne Technologies also sponsors a stock option plan for non-employee
directors. At year end 1999, options for 15,073 shares were issued and
outstanding under the plan with exercise prices between $6.62 and $9.94 and a
weighted-average exercise price of $9.70. All of these options become
exercisable on November 29, 2000.
F-16
<PAGE> 50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8. RELATED PARTY TRANSACTIONS
- --------------------------------------------------------------------------------
The accompanying financial statements include transactions with ATI for the
year-to-date period ended November 29, 1999 and the 1998 and 1997 fiscal years:
<TABLE>
<CAPTION>
1999(A) 1998 1997
------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C>
Net advances from ATI, beginning of the year.............. $104.7 $ 107.5 $ 126.1
Net cash transactions with ATI:
Current provision for income taxes...................... 26.5 34.7 26.8
Insurance expense....................................... 15.9 17.2 18.6
Pension expense (income)................................ (5.8) (1.7) .7
Corporate general and administrative expense............ 7.3 7.8 7.6
Other net cash to ATI(b)................................ (91.4) (109.5) (113.9)
------ ------- -------
Net cash transactions with ATI.......................... (47.5) (51.5) (60.2)
Net income................................................ 43.4 48.7 41.6
------ ------- -------
Net advances from ATI, end of period...................... $100.6 $ 104.7 $ 107.5
====== ======= =======
</TABLE>
- -------------------------
(a) For the year-to-date period ending November 29, 1999.
(b) Includes $100 million in long-term debt incurred by ATI and assumed by
Teledyne Technologies.
Until the spin-off date, Teledyne Technologies participated in ATI's
centralized cash management system. Cash receipts in excess of cash requirements
were transferred to ATI. These transactions with ATI were non-interest bearing
and the net advances fluctuated on a daily basis.
Corporate general and administrative expenses represent allocations for
expenses incurred by ATI on the Company's behalf including costs for finance,
legal, tax and human resources functions. Amounts above were allocated based on
net sales, which management believes to be reasonable. Teledyne Technologies
participated in the defined benefit pension plan sponsored by ATI through the
date of the spin-off. The expense for the plan was allocated to Teledyne
Technologies based upon actuarially-determined amounts for the pension
obligation and assets ultimately transferred from ATI to Teledyne Technologies
at the time of the spin-off. Teledyne Technologies also participated in
casualty, medical and life insurance programs sponsored by ATI. Insurance
expense was allocated to Teledyne Technologies based upon actual losses incurred
plus a share of pooled catastrophic losses under the ATI self-insurance program.
In the opinion of management, the allocations of these expenses were reasonable.
In addition, prior to and in connection with the spin-off, Teledyne
Technologies and ATI entered into agreements providing for the separation of the
companies and governing various relationships for separating employee benefits
and tax obligations, indemnification and transition services.
Net sales include $1.4 million, $1.1 million and $293 thousand of sales to
other ATI subsidiaries for the eleven month period ended November 30, 1999 and
the fiscal years ended January 3, 1999 and December 28, 1997, respectively.
There was a receivable of $532 thousand at year end 1998 from other ATI
subsidiaries.
F-17
<PAGE> 51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9. LONG-TERM DEBT
- --------------------------------------------------------------------------------
Long-term debt at January 2, 2000, was $97 million in the form of bank
borrowings under a $200 million long-term, revolving credit agreement.
Borrowings under the agreement are on a revolving basis under commitments
available until November 2004. The Company had approximately $103 million of
borrowing availability under the credit facility at January 2, 2000.
The interest-rate applicable to borrowings under the agreement is, indexed
to the bank prime rate or the London Interbank Offered Rate (LIBOR), plus
appropriate spreads over such indices during the period of the credit agreement
and was 7.63% at January 2, 2000. The agreement also provides for a facility fee
which are currently equal to .35% of the credit line. The facility fee will vary
between .35% and .20% depending on Teledyne Technologies' capitalization ratio
as calculated from time to time. Interest expense incurred on long-term debt and
facility fees in 1999 were $796 thousand from the date of the spin-off.
The financial covenants of the revolving credit agreement require the
Company to maintain specified minimum consolidated net worth and ratios of
consolidated debt and interest expense to certain measures of income. Under the
most restrictive of these covenants, approximately $1.4 million of stockholders'
equity was available for dividends as of January 2, 2000.
NOTE 10. INCOME TAXES
- --------------------------------------------------------------------------------
Until the effective date of the spin-off, Teledyne Technologies was
included in the consolidated federal and certain state income tax returns of
ATI. ATI is responsible for paying the taxes related to such returns including
any subsequent adjustment resulting from the redetermination of such tax
liability by the applicable taxing authorities. Provision for income taxes was
calculated as if Teledyne Technologies had filed separate income tax returns for
all years presented. Provision for income taxes was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
(IN MILLIONS)
<S> <C> <C> <C>
Current
Federal.............................................. $27.7 $29.1 $22.3
State................................................ 6.4 5.1 4.1
Foreign.............................................. .3 .5 .4
----- ----- -----
34.4 34.7 26.8
----- ----- -----
Deferred
Federal.............................................. (1.3) (.4) .2
State................................................ (.1) -- .1
----- ----- -----
(1.4) (.4) .3
----- ----- -----
Provision for income taxes............................. $33.0 $34.3 $27.1
===== ===== =====
</TABLE>
F-18
<PAGE> 52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Income before income taxes included income from domestic operations of
$81.9 million for 1999, $82.2 million for 1998 and $68.8 million for 1997. The
following is a reconciliation of the statutory federal income tax rate to the
actual effective income tax rate:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
U.S. federal statutory tax rate........................... 35.0% 35.0% 35.0%
State and local taxes, net of federal benefit............. 5.2 4.5 3.8
Other..................................................... -- 1.8 .6
---- ---- ----
Effective income tax rate................................. 40.2% 41.3% 39.4%
==== ==== ====
</TABLE>
Deferred income taxes result from temporary differences in the recognition
of income and expense for financial and income tax reporting purposes, and
differences between the fair value of assets acquired in business combinations
accounted for as purchases for financial reporting purposes and their
corresponding tax bases. Deferred income taxes represent future tax benefits or
costs to be recognized when those temporary differences reverse. No valuation
allowance has been recorded for 1999 or 1998. The categories of assets and
liabilities that have resulted in differences in the timing of the recognition
of income and expense were as follows:
<TABLE>
<CAPTION>
1999 1998
----- -----
(IN MILLIONS)
<S> <C> <C>
Deferred income tax assets:
Postretirement benefits other than pensions.......... $12.6 $12.9
Reserves............................................. 16.1 10.0
Deferred compensation and other benefit plans........ 9.8 --
Inventory valuation.................................. 6.7 5.4
Accrued vacation..................................... 5.2 4.2
Other items.......................................... -- 4.2
----- -----
Total deferred income tax assets....................... 50.4 36.7
----- -----
Deferred income tax liabilities:
Property, plant and equipment differences............ 3.0 1.7
Other items.......................................... .1 --
----- -----
Total deferred income tax liabilities.................. 3.1 1.7
----- -----
Net deferred income tax asset.......................... $47.3 $35.0
===== =====
</TABLE>
NOTE 11. PENSION PLANS AND POSTRETIREMENT BENEFITS
- --------------------------------------------------------------------------------
Prior to the spin-off, certain Teledyne Technologies' employees
participated in the noncontributory defined benefit plan sponsored by ATI.
Benefits under the defined benefit plan are generally based on years of service
and/or final average pay. ATI funded the pension plan in accordance with the
requirements of the Employee Retirement Income Security Act of 1974, as amended,
and the Internal Revenue Code.
F-19
<PAGE> 53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Net periodic pension income or expense allocated to Teledyne Technologies
was $6.6 million of income, $1.7 of income and $722 thousand of expense in the
years ended January 2, 2000, January 3, 1999 and December 28, 1997,
respectively.
As of the spin-off date, Teledyne Technologies assumed the existing defined
benefit plan obligations for all of Teledyne Technologies' employees, both
active and inactive, at its companies that perform government contract work and
for Teledyne Technologies' active employees at its companies that do not perform
government contract work. ATI transferred pension assets to fund the new
Teledyne Technologies' defined benefit pension plan, which at the time of the
transfer then had assets in excess of liabilities.
Teledyne Technologies also participates in a 401(k) plan that is open to
all full time U.S. employees which is currently sponsored by ATI. The costs
associated with this plan were $2.9 million, $3.3 million, and $1.2 million for
fiscal 1999, 1998 and 1997, respectively. Teledyne Technologies intends to
establish its own 401(k) plan effective April 2000.
The Company sponsors several postretirement defined benefit plans covering
certain salaried and hourly employees. The plans provide health care and life
insurance benefits for eligible retirees. The following table sets forth the
components of net period pension benefit (income) expense for Teledyne
Technologies' defined benefit pension plans and post-retirement benefit plans
for fiscal 1999, 1998 and 1997:
<TABLE>
<CAPTION>
PENSION BENEFITS POSTRETIREMENT BENEFITS
-------------------------- -----------------------
1999 1998 1997 1999 1998 1997
------ ------ ------ ----- ----- -----
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Service cost -- benefits
earned during the period.... $ 12.7 $ 12.8 $ 13.2 $ .4 $ .3 $ .3
Interest cost on benefit
obligation.................. 23.6 22.6 21.0 1.8 1.7 1.8
Expected return on plan
assets...................... (35.9) (32.4) (28.4) -- -- --
Amortization of net transition
asset....................... (6.4) (6.4) (6.4) -- -- --
Amortization of prior service
cost........................ 2.1 2.1 1.3 (.4) (.4) (.4)
Recognized actuarial (gain)
loss........................ (2.7) (.4) -- (.4) (.1) --
------ ------ ------ ---- ---- ----
Net periodic benefit (income)
expense..................... $ (6.6) $ (1.7) $ .7 $1.4 $1.5 $1.7
====== ====== ====== ==== ==== ====
</TABLE>
F-20
<PAGE> 54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following table sets forth the reconciliation of the beginning and
ending balances of the benefit obligation of the defined benefit pension and
postretirement benefit plans:
<TABLE>
<CAPTION>
POSTRETIREMENT
PENSION BENEFITS BENEFITS
---------------- --------------
1999 1998 1999 1998
------ ------ ----- -----
(IN MILLIONS)
<S> <C> <C> <C> <C>
Changes in benefit obligation:
Benefit obligation -- beginning of year... $344.8 $329.3 $25.1 $26.6
Service cost -- benefits earned during the
period................................. 12.7 12.8 .3 .3
Interest cost on projected benefit
obligation............................. 23.6 22.6 1.8 1.7
Actuarial (gain) loss..................... (.2) (16.1) .7 (2.2)
Amendments................................ -- 9.5 -- --
Benefits paid............................. (13.9) (13.3) (.8) (1.3)
------ ------ ----- -----
Benefit obligation -- end of year........... $367.0 $344.8 $27.1 $25.1
====== ====== ===== =====
</TABLE>
The following table sets forth the reconciliation of the beginning and
ending balances of the fair value of plan assets for Teledyne Technologies'
defined benefit pension plans:
<TABLE>
<CAPTION>
PENSION BENEFITS
----------------
1999 1998
------ ------
(IN MILLIONS)
<S> <C> <C>
Changes in plan assets:
Fair value of plan assets -- beginning of year.............. $403.9 $367.0
Actual return on plan assets.............................. 47.5 50.0
Employer contribution..................................... .2 .2
Benefits paid............................................. (13.9) (13.3)
------ ------
Fair value of plan assets -- end of year.................... $437.7 $403.9
====== ======
</TABLE>
The weighted average discount rate used in determining the benefit
obligations was 7.0% as of January 2, 2000 and January 3, 1999. The weighted
average rate of increase in future compensation levels used in determining the
benefit obligations was approximately 4.5% in 1999 and 1998. The expected
weighted average long-term rate of return on assets was 9.0% in 1999 and 1998.
The following table sets forth the funded status and amounts recognized in
Teledyne Technologies' consolidated balance sheets for the postretirement
benefit plans at year end 1999 and year end 1998. The following table also sets
forth the funded status and amounts recognized in Teledyne Technologies'
consolidated balance sheets for the defined benefit pension plan at year end
1999. The amounts shown for 1998 for the defined benefit pension
F-21
<PAGE> 55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
plan are not reflected in consolidated balance sheet at year end 1998 since the
plan was not transferred until the date of the spin-off:
<TABLE>
<CAPTION>
POSTRETIREMENT
PENSION BENEFITS BENEFITS
---------------- ------------------
1999 1998 1999 1998
------ ------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Funded status.............................. $ 70.7 $ 59.1 $(27.1) $(25.1)
Unrecognized net transition obligation
(asset).................................. (11.1) (17.6) -- --
Unrecognized prior service cost............ 15.4 17.6 (1.1) (1.4)
Unrecognized net gain...................... (89.7) (80.5) (5.4) (6.4)
------ ------ ------ ------
Net amount recognized...................... $(14.7) $(21.4) $(33.6) $(32.9)
====== ====== ====== ======
Prepaid benefit cost....................... $(10.6) $(18.2) $ -- $ --
Accrued benefit liability.................. (5.5) (5.0) (33.6) (32.9)
Intangible asset........................... 1.4 1.7 -- --
Other...................................... -- .1 -- --
------ ------ ------ ------
Net amount recognized...................... $(14.7) $(21.4) $(33.6) $(32.9)
====== ====== ====== ======
</TABLE>
The annual assumed rate of increase in the per capita cost of covered
benefits (the health care cost trend rate) for health care plans was 8.4% in
2000 and was assumed to decrease to 5.0% in the year 2002 and remain at that
level thereafter. Assumed health care cost trend rates have a significant effect
on the amounts reported for the health care plans. A one percentage point
increase in the assumed health care cost trend rates would result in an increase
in the annual service and interest costs by $273 thousand for 1999 and would
result in an increase in the postretirement benefit obligation by $3.4 million
at January 2, 2000. A one percentage point decrease in the assumed health care
cost trend rates would result in a decrease in the annual service and interest
costs by $238 thousand for 1999 and would result in a decrease in the
postretirement benefit obligation by $3.0 million at January 2, 2000.
NOTE 12. BUSINESS SEGMENTS
- --------------------------------------------------------------------------------
Effective January 1, 1998, Teledyne Technologies adopted the provisions of
SFAS No. 131--"Disclosures about Segments of an Enterprise and Related
Information." Teledyne Technologies operates in three business segments:
Electronics and Communications, Systems Engineering Solutions and Aerospace
Engines and Components. The factors for determining the reportable segments were
based on the distinct nature of their operations. They are managed as separate
business units because each requires and is responsible for executing a unique
business strategy. The Electronics and Communications segment, through Teledyne
Electronic Technologies, applies proprietary technology, advanced software and
hardware design skills and manufacturing capabilities in three areas: Data
Acquisition and Communications Products; Precision Electronic Devices; and
Electronic Manufacturing Services. The Systems Engineering Solutions segment,
through Teledyne Brown Engineering, offers a wide range of engineering solutions
and information services to government defense, aerospace and commercial
customers. The Aerospace Engines and Components segment, through Teledyne
Continental Motors and Teledyne Cast Parts, focuses on the design, development
and
F-22
<PAGE> 56
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
manufacture of piston engines, turbine engines, electronic engine controls,
batteries and metal castings.
Identifiable assets are those assets used in the operations of the
segments. Corporate assets primarily consist of cash and cash equivalents,
deferred tax assets, pension assets and other assets.
Information on the Company's business segments was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
SALES
Electronics and Communications.................... $340.7 $342.1 $340.0
Systems Engineering Solutions..................... 226.5 223.2 210.4
Aerospace Engines and Components.................. 236.2 215.1 206.2
------ ------ ------
TOTAL SALES......................................... $803.4 $780.4 $756.6
====== ====== ======
OPERATING PROFIT
Electronics and Communications.................... $ 42.6 $ 42.6 $ 36.8
Systems Engineering Solutions..................... 20.2 20.5 13.1
Aerospace Engines and Components.................. 27.8 26.1 25.0
------ ------ ------
SEGMENT OPERATING PROFIT....................... 90.6 89.2 74.9
Corporate expense including interest........... (9.6) (7.8) (7.6)
Other income................................... 1.0 1.6 1.4
------ ------ ------
INCOME BEFORE TAXES............................... $ 82.0 $ 83.0 $ 68.7
====== ====== ======
DEPRECIATION AND AMORTIZATION
Electronics and Communications.................... $ 6.6 $ 5.7 $ 5.7
Systems Engineering Solutions..................... 2.5 2.9 3.1
Aerospace Engines and Components.................. 2.8 2.5 2.5
------ ------ ------
TOTAL DEPRECIATION AND AMORTIZATION................. $ 11.9 $ 11.1 $ 11.3
====== ====== ======
CAPITAL EXPENDITURES
Electronics and Communications.................... $ 13.5 $ 10.3 $ 10.8
Systems Engineering Solutions..................... 2.0 2.6 2.3
Aerospace Engines and Components.................. 16.0 5.2 2.7
------ ------ ------
TOTAL CAPITAL EXPENDITURES.......................... $ 31.5 $ 18.1 $ 15.8
====== ====== ======
IDENTIFIABLE ASSETS
Electronics and Communications.................... $109.0 $ 96.2 $ 93.1
Systems Engineering Solutions..................... 62.2 63.4 70.7
Aerospace Engines and Components.................. 79.0 56.2 57.0
Corporate......................................... 67.2 35.0 34.6
------ ------ ------
TOTAL IDENTIFIABLE ASSETS........................... $317.4 $250.8 $255.4
====== ====== ======
</TABLE>
F-23
<PAGE> 57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company's backlog of confirmed orders was approximately $373.7 million
at January 2, 2000 and $401.8 million at January 3, 1999.
Information on the Company's sales to the U.S. Government, including direct
sales as a prime contractor and indirect sales as a subcontractor, were as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Electronics and Communications.................... $101.1 $102.4 $102.7
Systems Engineering Solutions..................... 185.4 159.2 158.0
Aerospace Engines and Components.................. 61.7 46.8 42.6
------ ------ ------
Total U.S. Government sales......................... $348.2 $308.4 $303.3
====== ====== ======
</TABLE>
Sales to the U.S. Government included sales to the Department of Defense of
$246.3 million in 1999, $214.1 million in 1998 and $198.5 million in 1997.
Total international sales were $148.1 million in 1999, $172.9 million in
1998 and $159.2 million in 1997. Of these amounts, sales by operations in the
United States to customers in other countries were $131.1 million in 1999,
$159.3 million in 1998 and $144.0 million in 1997. There were no sales to
individual countries outside of the United States in excess of 10% of the
Company's net sales. Sales between business segments, which were not material,
generally were priced at prevailing market prices.
NOTE 13. COMMITMENTS AND CONTINGENCIES
- --------------------------------------------------------------------------------
Rental expense, under operating leases, net of sublease income, was $10.0
million in 1999, $10.4 million in 1998 and $10.2 million in 1997. Future minimum
rental commitments under operating leases with non-cancelable terms of more than
one year as of January 2, 2000, were as follows (in millions unless noted): $6.0
in 2000, $5.3 in 2001, $4.6 in 2002, $2.9 in 2003, $73 thousand in 2004 and $3.4
thereafter.
The Company is subject to federal, state and local environmental laws and
regulations which require that it investigate and remediate the effects of the
release or disposal of materials at sites associated with past and present
operations, including sites at which the Company has been identified as a
potentially responsible party under the federal Superfund laws and comparable
state laws. The Company has been identified as a potentially responsible party
at approximately 17 such sites, excluding those at which the Company believes it
has no future liability.
In accordance with the Company's accounting policy disclosed in Note 2,
environmental liabilities are recorded when the Company's liability is probable
and the costs are reasonably estimable. In many cases, however, investigations
are not yet at a stage where the Company has been able to determine whether it
is liable or, if liability is probable, to reasonably estimate the loss or range
of loss, or certain components thereof. Estimates of the Company's liability are
further subject to uncertainties regarding the nature and extent of site
contamination, the range of remediation alternatives available, evolving
remediation standards, imprecise engineering evaluations and estimates of
appropriate cleanup technology, methodology and cost, the extent of corrective
actions that may be required, and the number and financial condition of other
potentially responsible parties, as well as the extent of their
F-24
<PAGE> 58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
responsibility for the remediation. Accordingly, as investigation and
remediation of these sites proceeds, it is likely that adjustments in the
Company's accruals will be necessary to reflect new information. The amounts of
any such adjustments could have a material adverse effect on the Company's
results of operations in a given period, but the amounts, and the possible range
of loss in excess of the amounts accrued, are not reasonably estimable. Based on
currently available information, however, management does not believe that
future environmental costs in excess of those accrued with respect to sites with
which the Company has been identified are likely to have a material adverse
effect on the Company's financial condition or liquidity. However, there can be
no assurance that additional future developments, administrative actions or
liabilities relating to environmental matters will not have a material adverse
effect on the Company's financial condition or results of operations.
At January 2, 2000, the Company's reserves for environmental remediation
obligations totaled approximately $1.2 million, of which approximately $836
thousand were included in other current liabilities. The Company is evaluating
whether it may be able to recover a portion of future costs for environmental
liabilities from its insurance carriers and from third parties other than
participating potentially responsible parties.
The timing of expenditures depends on a number of factors that vary by
site, including the nature and extent of contamination, the number of
potentially responsible parties, the timing of regulatory approvals, the
complexity of the investigation and remediation, and the standards for
remediation. The Company expects that it will expend present accruals over many
years, and will complete remediation of all sites with which it has been
identified in up to thirty years.
Various claims (whether based on U.S. Government or Company audits and
investigations or otherwise) have been or may be asserted against the Company
related to its U.S. Government contract work, including claims based on business
practices and cost classifications and actions under the False Claims Act.
Although such claims are generally resolved by detailed fact-finding and
negotiation, on those occasions when they are not so resolved, civil or criminal
legal or administrative proceedings may ensue. Depending on the circumstances
and the outcome, such proceedings could result in fines, penalties, compensatory
and treble damages or the cancellation or suspension of payments under one or
more U.S. Government contracts. Under government regulations, a company, or one
or more of its operating divisions or units, can also be suspended or debarred
from government contracts based on the results of investigations. However,
although the outcome of these matters cannot be predicted with certainty,
management does not believe there is any audit, review or investigation
currently pending against the Company of which management is aware that is
likely to result in suspension or debarment of the Company, or that is otherwise
likely to have a material adverse effect on the Company's financial condition or
liquidity, although the resolution in any reporting period of one or more of
these matters could have a material adverse effect on the Company's results of
operations for that period.
The Company learns from time to time that it has been named as a defendant
in civil actions filed under seal pursuant to the False Claims Act. Generally,
since such cases are under seal, the Company does not in all cases possess
sufficient information to determine whether the Company could sustain a material
loss in connection with such cases, or to reasonably estimate the amount of any
loss attributable to such cases.
In connection with the spin-off, ATI received a tax ruling from the
Internal Revenue Service stating that the spin-off will be tax-free to ATI and
to ATI's stockholders. The
F-25
<PAGE> 59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
continuing validity of the Internal Revenue Service tax ruling is subject to
certain factual representations and assumptions, including the Company's
completion of a public offering of the Company's Common Stock within one year
following the spin-off and use of the anticipated gross proceeds of
approximately $125 million (less associated costs) for research and development
and related capital projects, for the further development of the Company's
manufacturing capabilities and for acquisitions and/or joint ventures. Pursuant
to the Separation and Distribution Agreement that Teledyne Technologies signed
prior to the spin-off, the Company agreed with ATI to undertake such a public
offering.
The Tax Sharing and Indemnification Agreement between ATI and Teledyne
Technologies provides that the Company will indemnify ATI and its agents and
representatives for taxes imposed on, and other amounts paid by, them or ATI
stockholders if the Company takes actions or fails to take actions (such as
completing the public offering) that result in the spin-off not qualifying as a
tax-free distribution. If the Company were required to so indemnify ATI, such an
obligation could have a material adverse effect on its financial condition,
results of operations and cash flow and the amount the Company could be required
to pay could exceed its net worth by a substantial amount.
A number of other lawsuits, claims and proceedings have been or may be
asserted against the Company relating to the conduct of its business, including
those pertaining to product liability, patent infringement, commercial,
employment and employee benefits. While the outcome of litigation cannot be
predicted with certainty, and some of these lawsuits, claims or proceedings may
be determined adversely to the Company, management does not believe that the
disposition of any such pending matters is likely to have a material adverse
effect on the Company's financial condition or liquidity, although the
resolution in any reporting period of one or more of these matters could have a
material adverse effect on the Company's results of operations for that period.
F-26
<PAGE> 60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14. QUARTERLY FINANCIAL DATA (UNAUDITED)
- --------------------------------------------------------------------------------
The following is Teledyne Technologies' quarterly information:
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
(IN MILLIONS, EXCEPT PER-SHARE AMOUNTS)
<S> <C> <C> <C> <C>
FISCAL YEAR 1999(A)
SALES..................................... $202.0 $195.4 $205.6 $200.4
GROSS PROFIT.............................. $ 50.6 $ 50.2 $ 60.1 $ 54.8
NET INCOME................................ $ 11.9 $ 10.2 $ 13.8 $ 13.1
DILUTED EARNINGS PER SHARE................ $ .43 $ .37 $ .50 $ .49
FISCAL YEAR 1998(B)
Sales..................................... $198.8 $200.4 $189.5 $191.7
Gross profit.............................. $ 52.7 $ 55.1 $ 48.6 $ 51.9
Net income................................ $ 11.3 $ 13.9 $ 12.6 $ 10.9
Diluted earnings per share................ $ .40 $ .50 $ .45 $ .39
</TABLE>
- -------------------------
(a) Teledyne Technologies spun-off from ATI effective November 29, 1999.
(b) The 1998 third quarter results reflect the favorable impact of an adjustment
to product liability self-insurance reserves as a result of favorable
experience.
F-27
<PAGE> 61
SCHEDULE II
TELEDYNE TECHNOLOGIES INCORPORATED
VALUATION AND QUALIFYING ACCOUNTS
FOR THE FISCAL YEARS ENDED
JANUARY 2, 2000, JANUARY 3, 1999 AND DECEMBER 28, 1997
(IN MILLIONS)
<TABLE>
<CAPTION>
ADDITIONS
-----------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS(A) PERIOD
----------- ---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
FISCAL 1999
RESERVE FOR DOUBTFUL
ACCOUNTS $2.9 0.6 -- -- $3.5
FISCAL 1998
Reserve for doubtful
accounts $3.2 1.4 -- (1.7) $2.9
FISCAL 1997
Reserve for doubtful
accounts $2.0 1.3 -- (0.1) $3.2
</TABLE>
- -------------------------
(a) Represents write-offs of doubtful accounts.
F-28
<PAGE> 62
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized as of March 27, 2000.
TELEDYNE TECHNOLOGIES INCORPORATED
(Registrant)
By: /s/ ROBERT MEHRABIAN
-----------------------------------
Robert Mehrabian
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
* Chairman and Director March 27, 2000
- ------------------------------------------
Thomas A. Corcoran
/s/ ROBERT MEHRABIAN President and Chief March 27, 2000
- ------------------------------------------ Executive Officer
Robert Mehrabian (Principal Executive Officer)
and Director
/s/ STEFAN C. RIESENFELD Executive Vice President March 27, 2000
- ------------------------------------------ and Chief Financial Officer
Stefan C. Riesenfeld (Principal Financial Officer)
/s/ DALE A. SCHNITTJER Controller March 27, 2000
- ------------------------------------------ (Principal Accounting Officer)
Dale A. Schnittjer
* Director March 27, 2000
- ------------------------------------------
Robert P. Bozzone
* Director March 27, 2000
- ------------------------------------------
Paul S. Brentlinger
* Director March 27, 2000
- ------------------------------------------
Frank V. Cahouet
* Director March 27, 2000
- ------------------------------------------
Diane C. Creel
* Director March 27, 2000
- ------------------------------------------
C. Fred Fetterolf
* Director March 27, 2000
- ------------------------------------------
Charles J. Queenan, Jr.
</TABLE>
*By: /s/ JOHN T. KUELBS
--------------------------------------------------
John T. Kuelbs
Pursuant to Power of Attorney
filed as Exhibit 24.
<PAGE> 63
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
2.1 Separation and Distribution Agreement dated as of November
29, 1999 by and among Allegheny Teledyne Incorporated, TDY
Holdings, LLC, Teledyne Industries, Inc. and Teledyne
Technologies Incorporated (incorporated by reference to
Exhibit 2.1 to the Company's Current Report on Form 8-K
dated as of November 29, 1999 (File No. 1-15295))
3.1* Restated Certificate of Incorporation of Teledyne
Technologies Incorporated (including Certificate of
Designation of Series A Junior Participating Preferred
Stock)
3.2* Amended and Restated Bylaws of Teledyne Technologies
Incorporated
4.1 Rights Agreement dated as of November 29, 1999 between
Teledyne Technologies Incorporated and ChaseMellon
Shareholder Services, L.L.C. (incorporated by reference to
Exhibit 4.1 to the Company's Current Report on Form 8-K
dated as of November 29, 1999 (File No. 1-15295))
4.2* Credit Agreement dated as of October 29, 1999 among
Allegheny Teledyne Incorporated, Teledyne Technologies
Incorporated, Bank of America, N.A., as Administrative
Agent, Swing Line Lender and Issuing Lender, and the other
financial institutions party thereto
4.3* First Amendment to the Credit Agreement dated as of November
10, 1999
10.1 Tax Sharing and Indemnification Agreement between Allegheny
Teledyne Incorporated and Teledyne Technologies Incorporated
(incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K dated as of November 29, 1999
(File No. 1-15295))
10.2 Interim Services Agreement between Allegheny Teledyne
Incorporated and Teledyne Technologies Incorporated
(incorporated by reference to Exhibit 10.2 to the Company's
Current Report on Form 8-K dated as of November 29, 1999
(File No. 1-15295))
10.3 Employee Benefits Agreement between Allegheny Teledyne
Incorporated and Teledyne Technologies Incorporated
(incorporated by reference to Exhibit 10.3 to the Company's
Current Report on Form 8-K/A (Amendment No. 1) dated as of
November 29, 1999 (File No. 1-15295))+
10.4 Trademark License Agreement between Allegheny Teledyne
Incorporated and Teledyne Technologies Incorporated
(incorporated by reference to Exhibit 10.4 to the Company's
Current Report on Form 8-K dated as of November 29, 1999
(File No. 1-15295))
10.5* Teledyne Technologies Incorporated 1999 Incentive Plan, as
amended+
10.6* Teledyne Technologies Incorporated 1999 Non-Employee
Director Stock Compensation Plan+
10.7 Fee Continuation Plan for Non-Employee Directors
(incorporated by reference to Exhibit 10.7 to the Company's
Registration Statement on Form 10/A-1 filed on October 29,
1999 (File No. 1-15295))+
10.8* Employment Agreement dated as of December 31, 1999 between
Robert Mehrabian and Teledyne Technologies Incorporated+
10.9* Form of Change of Control Severance Agreement+
10.10* Teledyne Technologies Incorporated Executive Deferred
Compensation Plan+
10.11* Teledyne Technologies Incorporated Pension
Equalization/Benefit Restoration Plan+
21* Significant Subsidiary of Teledyne Technologies Incorporated
23* Consent of Ernst & Young LLP
24* Power of Attorney
27.1* Financial Data Schedule
27.2* Financial Data Schedule (Restated)
</TABLE>
- ---------------
* Filed herewith.
+ Denotes management contract or compensatory plan or arrangement required to be
filed as an Exhibit to this Form 10-K.
<PAGE> 1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
TELEDYNE TECHNOLOGIES INCORPORATED
The name of the corporation is Teledyne Technologies Incorporated. The
corporation's original Certificate of Incorporation was filed with the Secretary
of the State of Delaware on August 23, 1999.
This Restated Certificate of Incorporation restates and integrates and
also further amends the Certificate of Incorporation of the corporation, as
heretofore amended and supplemented, and was duly adopted in accordance with the
provisions of Sections 242 and 245 of the General Corporation Law of the State
of Delaware.
This Restated Certificate of Incorporation shall become effective upon
filing with the Delaware Secretary of State.
* * * * *
ONE: The name of the corporation is Teledyne Technologies Incorporated
(hereinafter referred to as the "Corporation").
TWO: The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle,
and the name of its registered agent at such address is The Corporation Trust
Company.
THREE: The purpose of the Corporation is to engage in any lawful act or
activity for which a Corporation may be organized under the Delaware General
Corporation Law.
FOUR: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is One Hundred Forty Million
(140,000,000) consisting of One Hundred Twenty-Five Million (125,000,000) shares
of Common Stock, par value one cent ($.01) per share (the "Common Stock"), and
Fifteen Million (15,000,000) shares of Preferred Stock, par value one cent
($.01) per share (the "Preferred Stock"). The term "Voting Stock" shall
hereafter refer to all shares of capital stock entitled to vote generally in the
election of directors.
A. Common Stock
1. Except where otherwise provided by law, by this Restated
Certificate of Incorporation, or by resolution of the Board of Directors
pursuant to this Article FOUR, the holders of the Common Stock issued and
outstanding shall have and possess the exclusive right to notice of
stockholders' meetings and the exclusive voting rights and powers of the capital
stock.
2. Subject to any preferential rights of the Preferred Stock,
dividends may be paid on the Common Stock, as and when declared by the Board of
Directors, out of any funds of the Corporation legally available for the payment
of such dividends.
1
<PAGE> 2
B. Preferred Stock
The Board of Directors is authorized, subject to any limitations
prescribed by law, to provide for the issuance of shares of Preferred Stock in
series, and by filing a certificate pursuant to the applicable law of the State
of Delaware (such certificate being hereinafter referred to as a "Preferred
Stock Designation"), to establish from time to time the number of shares to be
included in each such series, and to fix the designation, powers (including but
not limited to voting powers, if any), preferences and rights of the shares of
each such series and any qualifications, limitations or restrictions thereof.
The number of authorized shares of Preferred Stock may be increased or decreased
(but not below the number of shares thereof then outstanding) by the affirmative
vote of the holders of a majority of the Common Stock, without a vote of the
holders of the Preferred Stock, or of any series thereof, unless a vote of any
such holders is required pursuant to the terms of any Preferred Stock
Designation.
FIVE: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
A. The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. In addition to the powers and
authority expressly conferred upon them by statute or by this Restated
Certificate of Incorporation or the Bylaws of the Corporation, the directors are
hereby empowered to exercise all such powers and do all such acts and things as
may be exercised or done by the Corporation.
B. The Board of Directors may adopt, amend or repeal the Bylaws of the
Corporation. The stockholders of the Corporation may not adopt, amend or repeal
the Bylaws of the Corporation other than by the affirmative vote of 75% of the
combined voting power of all outstanding voting securities of the Corporation
entitled to vote generally in the election of directors of the Board of
Directors of the Corporation ("Voting Power"), voting together as a single
class.
C. The directors of the Corporation need not be elected by written
ballot unless the Bylaws so provide.
SIX: The Corporation reserves the right to amend and repeal any
provision contained in this Restated Certificate of Incorporation in the manner
from time to time prescribed by the laws of the State of Delaware. All rights
herein conferred are granted subject to this reservation.
SEVEN: A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which such director derived any
improper personal benefit. No amendment to or repeal of this Article SEVEN shall
apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of
2
<PAGE> 3
such director occurring prior to such amendment or repeal. If the Delaware
General Corporation Law is amended to authorize corporate action further
eliminating the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as amended.
EIGHT: A. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
is or was a director or an officer of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee or agent or in
any other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than such law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in connection
therewith; provided, however, that, except as provided in Section C of this
Article EIGHT with respect to proceedings to enforce rights to indemnification,
the Corporation shall indemnify any such indemnitee in connection with a
proceeding (or part thereof) initiated by such indemnitee only if such
proceeding (or part thereof) was authorized by the Board of Directors of the
Corporation.
B. Right to Advancement of Expenses. The right to indemnification
conferred in Section A of this Article EIGHT shall include the right to be paid
by the Corporation the expenses (including attorneys' fees) incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the Delaware General
Corporation Law requires, an advancement of expenses incurred by an indemnitee
in his or her capacity as a director or officer of the Corporation (and not in
any other capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Section B or otherwise. The rights to indemnification and to the
advancement of expenses conferred in Sections A and B of this Article EIGHT
shall be contract rights and such rights shall continue as to an indemnitee who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
C. Right of Indemnitee to Bring Suit. If a claim under Section A or B
of this Article EIGHT is not paid in full by the Corporation within sixty (60)
days after a written claim has been
3
<PAGE> 4
received by the Corporation, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be twenty (20) days, the
indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole or in part in any
such suit, or in a suit brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit. In
any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and in any suit brought by
the Corporation to recover an advancement of expenses pursuant to the terms of
an undertaking, the Corporation shall be entitled to recover such expenses upon
a final adjudication that the indemnitee has not met any applicable standard for
indemnification set forth in the Delaware General Corporation Law. Neither the
failure of the Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the indemnitee is proper in
the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has not met such
applicable standard of conduct, shall create a presumption that the indemnitee
has not met the applicable standard of conduct or, in the case of such a suit
brought by the indemnitee, be a defense to such suit. In any suit brought by the
indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder, or brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under this Article EIGHT or otherwise shall be on the Corporation.
D. Non-Exclusivity of Rights. The rights to indemnification and to the
advancement of expenses conferred in this Article EIGHT shall not be exclusive
of any other right which any person may have or hereafter acquire under any
statute, the Corporation's Restated Certificate of Incorporation, Bylaws,
agreement, vote of stockholders or disinterested directors or otherwise.
E. Insurance. The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
F. Indemnification of Employees and Agents of the Corporation. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to the advancement of expenses to
any employee or agent of the Corporation, including any subsidiary of the
Corporation, to the fullest extent of the provisions of this Article with
respect to the indemnification and advancement of expenses of directors and
officers of the Corporation.
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G. Amendment. Any repeal or modification of this Article EIGHT shall
not change the rights of any person to indemnification with respect to any
action or omission occurring prior to such repeal or modification.
NINE: The following provisions are inserted for the definition,
limitation and regulation of actions of the stockholders of the Corporation:
A. Action to be Taken at Stockholder Meetings Only. Any action required
or permitted to be taken by the stockholders of the Corporation must be effected
at a duly called annual or special meeting of such stockholders and may not be
effected by the written consent of such stockholders.
B. Calling of Special Meetings. Special meetings of the stockholders,
other than those required by statute, may be called only by the Board of
Directors pursuant to a resolution approved by a majority of the directors then
in office, the Chairman of the Board or the Chief Executive Officer. The Board
of Directors may postpone, reschedule or cancel any previously scheduled special
meeting.
Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
Board of Directors may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the Corporation's notice of meeting (a)
by or at the direction of the Board of Directors or (b) by any stockholder of
the Corporation who is a stockholder of record at the time of giving of notice
as provided in this Article NINE, Section B, who shall be entitled to vote at
the meeting and who complies with the notice procedures set forth in this
Article NINE, Section B. Nominations by stockholders of persons for election to
the Board of Directors may be made at such a special meeting of stockholders if
the stockholder's notice required by Article NINE, Section C shall be delivered
to the Secretary of the Corporation at the principal executive offices of the
Corporation not earlier than the ninetieth day prior to such special meeting and
not later than the close of business on the later of the seventy-fifth day prior
to such special meeting or the tenth day following the day on which a public
announcement (as defined in subparagraph (e) of Article NINE, Section C) is
first made of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting.
C. Notice of Nominations and Action to be Taken at an Annual Meeting.
(a) Nominations of persons for election to the Board of Directors of the
Corporation and the proposal of business to be considered by the stockholders
may be made at an annual meeting of stockholders (i) pursuant to the
Corporation's notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) by any stockholder of the Corporation who was a stockholder
of record at the time of giving of the notice provided for in this Article NINE,
Section C who is entitled to vote at the meeting and who complies with the
notice procedures set forth in this Article NINE, Section C.
(b) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (iii) of paragraph
(a) of this Article NINE, Section C, the stockholder must have given timely
notice thereof in writing to the Secretary of the
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Corporation and such business must be a proper matter for stockholder action
under the Delaware General Corporation Law. To be timely, a stockholder's notice
shall be delivered to the Secretary at the principal executive offices of the
Corporation not less than seventy-five days nor more than ninety days prior to
the first anniversary of the preceding year's annual meeting; provided, however,
that in the event that the date of the annual meeting is advanced by more than
thirty days or delayed by more than sixty days from such anniversary date, or in
the case of the first annual meeting of the Corporation's stockholders after the
Corporation becomes subject to the reporting requirements of Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), notice by the
stockholder to be timely must be so delivered not earlier than the ninetieth day
prior to such annual meeting and not later than the close of business on the
later of the sixtieth day prior to such annual meeting or the tenth day
following the day on which public announcement of the date of such meeting is
first made. Such stockholder's notice shall set forth (i) as to each person whom
the stockholder proposes to nominate for election or reelection as a director
all information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Exchange Act (including such
person's written consent to being named in the proxy statement as a nominee and
to serving as a director if elected); (ii) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any financial or other interest in such
business of such stockholder and the beneficial owner, if any, on whose behalf
the proposal is made; and (iii) as to the stockholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or proposal is made,
(1) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (2) the class and number
of shares of the Corporation which are owned beneficially and of record by such
stockholder and such beneficial owner.
(c) Notwithstanding anything in the second sentence of
paragraph (b) of this Article NINE, Section C to the contrary, in the event that
the number of directors to be elected to the Board of Directors of the
Corporation is increased and there is no public announcement naming all of the
nominees for director or specifying the size of the increased Board of Directors
made by the Corporation at least eighty-five days prior to the first anniversary
of the preceding year's annual meeting, a stockholder's notice required by this
Article NINE, Section C shall also be considered timely, but only with respect
to nominees for any new positions created by such increase, if it shall be
delivered to the Secretary at the principal executive offices of the Corporation
not later than the close of business on the tenth day following the day on which
such public announcement is first made by the Corporation.
(d) Only such persons who are nominated in accordance with the
procedures set forth in this Article NINE, Section C shall be eligible to serve
as directors and only such business shall be conducted at an annual meeting of
stockholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Article NINE, Section C. The presiding officer
of the meeting shall have the power and duty to determine whether a nomination
or any business proposed to be brought before the meeting was made in accordance
with the procedures set forth in this Article NINE, Section C and, if any
proposed nomination or
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business is not in compliance with this Article NINE, Section C, to declare that
such defective proposed business or nomination shall be disregarded.
(e) For purposes of this Article NINE, Section C, "public
announcement" shall mean disclosure in a press release reported by the Dow Jones
News Service, Associated Press or a comparable national news service or in a
document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(f) Notwithstanding the foregoing provisions of this Article
NINE, Section C, a stockholder shall also comply with all applicable
requirements of the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in this Article NINE, Section C. Nothing in
this Article NINE, Section C shall be deemed to affect any rights of
stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
(g) The Bylaws of the Corporation may contain additional
provisions not inconsistent with this Article NINE, Section C regarding
nominations of persons for election to the Board of Directors of the Corporation
and the proposal of business to be transacted by the stockholders. Without
limiting the category of such provisions which would not be inconsistent with
this Article NINE, Section C, a provision in the Bylaws of the Corporation which
sets forth additional information which must be provided by a stockholder in the
notice required by this Article NINE, Section C shall not be deemed to be so
inconsistent.
D. Voting. The stockholders shall not have the right to cumulate their
votes in the election of directors.
TEN: (A) Except as otherwise fixed pursuant to the provisions of
Article FOUR hereof relating to the rights of the holders of any class or series
of stock having a preference over the Common Stock as to dividends or upon
liquidation to elect additional directors under specified circumstances, the
number of directors of the Corporation shall be fixed from time to time by the
affirmative vote of a majority of the whole Board of Directors. The directors,
other than those who may be elected by the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation, shall be classified, with respect to the time for which they
severally hold office, into three classes: Class I, Class II and Class III. The
terms of office of the initial classes of directors shall be as follows: the
Class I Directors shall be elected to hold office for a term to expire at the
first annual meeting of stockholders after the initial classification of
directors; the Class II Directors shall be elected to hold office for a term to
expire at the second annual meeting of stockholders after the initial
classification of directors; and the Class III Directors shall be elected to
hold office for a term to expire at the third annual meeting of stockholders
after the initial classification of directors; and in the case of each class,
until their respective successors are duly elected and qualified. At each annual
meeting of stockholders the directors elected to succeed those whose terms have
expired shall be identified as being of the same class as the directors they
succeed and shall be elected to hold office for a
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<PAGE> 8
term to expire at the third annual meeting of stockholders after their election,
or until his or her earlier resignation or removal, and until their respective
successors are duly elected and qualified.
(B) Except as otherwise fixed pursuant to the provisions of Article
FOUR hereof relating to the rights of the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation to elect directors:
(a) In case of any increase in the number of directors, the
additional director or directors, and in case of any vacancy in the Board of
Directors due to death, resignation, removal, disqualification or any other
reason, the successors to fill the vacancies, shall be elected only by a
majority of the directors then in office, even though less than a quorum, or by
a sole remaining director and not by the stockholders, unless otherwise provided
by law or by resolution adopted by a majority of the whole Board of Directors.
(b) Directors appointed in the manner provided in paragraph
(a) to newly created directorships resulting from any increase in the authorized
number of directors or any vacancies on the Board of Directors resulting from
death, resignation, removal, disqualification or any other cause shall hold
office for a term expiring at the next annual meeting of stockholders at which
the term of the class to which they have been elected expires.
(c) No decrease in the number of directors constituting the
Board of Directors shall shorten the term of any incumbent director.
(C) Except as otherwise fixed pursuant to the provisions of Article
FOUR hereof relating to the rights of the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation to elect directors, any director or directors may be removed from
office at any time, but only for cause and only by the affirmative vote of 75%
of the Voting Power, voting together as a single class.
ELEVEN: In addition to any other considerations which the Board of
Directors, any committee thereof or any individual director lawfully may take
into account in determining whether to take or refrain from taking corporate
action on any matter, including making or declining to make any recommendations
to the stockholders of the Corporation, the Board of Directors, any committee
thereof or any individual director may in its, his or her discretion consider
the long term as well as the short term best interests of the Corporation
(including the possibility that these interests may best be served by the
continued independence of the Corporation), taking into account and weighing as
deemed appropriate the effects of such action on employees, suppliers,
distributors and customers of the Corporation and its subsidiaries and the
effect upon communities in which the offices or facilities of the Corporation
and its subsidiaries are located and any other factors considered pertinent.
This Article ELEVEN shall be deemed to grant discretionary authority to the
Board of Directors, any committee thereof and each individual director, and
shall not be deemed to provide to any specific constituency any right to be
considered.
TWELVE: In addition to the requirements of (i) law and (ii) the other
provisions of this Restated Certificate of Incorporation, the affirmative vote
of the holders of at least two-thirds of
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<PAGE> 9
the outstanding shares of Common Stock of the Corporation entitled to vote shall
be required for the adoption or authorization of a Fundamental Change unless the
Fundamental Change has been approved at a meeting of the Board of Directors by
the vote of more than two-thirds of the incumbent members of the Board of
Directors.
As used in this Article TWELVE, "Fundamental Change" shall mean (1) any
merger or consolidation of the Corporation with or into any other corporation,
(2) any sale, lease, exchange, transfer or other disposition, but excluding a
mortgage or any other security device, of all or substantially all of the assets
of the Corporation, (3) any merger or consolidation of a Significant Shareholder
with or into the Corporation or a direct or indirect subsidiary of the
Corporation, (4) any sale, lease, exchange, transfer or other disposition to the
Corporation or to a direct or indirect subsidiary of the Corporation of any
Common Stock of the Corporation held by a Significant Shareholder or any other
assets of a Significant Shareholder which, if included with all other
dispositions consummated during the same fiscal year of the Corporation by the
same Significant Shareholder, would result in dispositions of assets having an
aggregate fair value in excess of five percent of the total consolidated assets
of the Corporation as shown on its certified balance sheet as of the end of the
fiscal year preceding the proposed disposition, (5) any reclassification of
Common Stock of the Corporation, or any recapitalization involving Common Stock
of the Corporation, consummated within five years after a Significant
Shareholder becomes a Significant Shareholder, whereby the number of outstanding
shares of Common Stock is reduced or any of such shares are converted into or
exchanged for cash or other securities, (6) any dissolution and (7) any
agreement, contract or other arrangement providing for any of the transactions
described in this definition of Fundamental Change but, notwithstanding anything
to the contrary herein, Fundamental Change shall not include any merger pursuant
to the Delaware General Corporation Law, as amended from time to time, which
does not require a vote of the Corporation's stockholders for approval.
As used in this Article TWELVE, "Significant Shareholder" shall mean
any person who or which beneficially owns a number of shares of Common Stock of
the Corporation, whether or not such number includes shares not then outstanding
or entitled to vote, which exceeds a number equal to fifteen percent of the
outstanding shares of Common Stock of the Corporation entitled to vote, any and
all affiliates of such person and any and all associates and family members of
such person or any such affiliate.
THIRTEEN: Notwithstanding any other provisions of this Restated
Certificate of Incorporation or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any affirmative vote of the
holders of any particular class or series of Voting Stock required by law or
this Restated Certificate of Incorporation, the affirmative vote of the holders
or at least 75% of the Voting Power, voting together as a single class, shall be
required to alter, amend, supplement or repeal, or to adopt any provision
inconsistent with the purpose or intent of, paragraph B of Article FIVE and
Articles SEVEN, NINE, TEN, ELEVEN, TWELVE or THIRTEEN; provided, however, that
no amendment of Article TWELVE shall apply to any person who is a Significant
Shareholder at the time of the adoption of such amendment.
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<PAGE> 10
IN WITNESS WHEREOF, the corporation has caused this certificate to be
executed by the undersigned duly authorized officer on November 29, 1999.
TELEDYNE TECHNOLOGIES INCORPORATED
By: /s/ Robert Mehrabian
-------------------------------------------
Title: President and Chief Executive Officer
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<PAGE> 11
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.
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
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<PAGE> 12
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 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.
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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 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
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<PAGE> 14
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 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
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<PAGE> 15
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 the undersigned duly authorized officer this 29th
day of November, 1999.
/s/ Robert Mehrabian
-------------------------------------
President and Chief Executive Officer
<PAGE> 1
Exhibit 3.2
----------------------------------------------
AMENDED AND RESTATED BYLAWS
OF
TELEDYNE TECHNOLOGIES INCORPORATED
----------------------------------------------
ADOPTED: NOVEMBER 29, 1999
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<S> <C> <C>
ARTICLE I OFFICES.....................................................................................1
Section 1. Registered Office...........................................................1
Section 2. Other Offices...............................................................1
ARTICLE II MEETINGS OF STOCKHOLDERS....................................................................1
Section 1. Place of Meetings...........................................................1
Section 2. Annual Meeting..............................................................1
Section 3. Special Meetings............................................................1
Section 4. Notice of Meetings..........................................................1
Section 5. Quorum; Adjournment.........................................................2
Section 6. Proxies and Voting..........................................................2
Section 7. Stock List..................................................................2
ARTICLE III BOARD OF DIRECTORS..........................................................................3
Section 1. Duties and Powers...........................................................3
Section 3. Vacancies...................................................................4
Section 4. Meetings....................................................................4
Section 5. Quorum......................................................................5
Section 6. Actions of Board Without a Meeting..........................................5
Section 7. Meetings by Means of Conference Telephone...................................5
Section 8. Committees..................................................................5
Section 9. Compensation................................................................5
Section 10. Removal.....................................................................6
Section 11. Initial Period..............................................................6
ARTICLE IV OFFICERS....................................................................................6
Section 1. General.....................................................................6
Section 2. Election; Term of Office....................................................7
Section 3. Chairman of the Board.......................................................7
Section 4. Chief Executive Officer.....................................................7
Section 5. President...................................................................7
Section 6. Vice President..............................................................8
Section 7. Secretary...................................................................8
Section 8. Assistant Secretaries.......................................................8
Section 9. Treasurer...................................................................8
Section 10. Assistant Treasurers........................................................8
Section 11. Other Officers..............................................................9
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE V STOCK.......................................................................................9
Section 1. Form of Certificates; Uncertificated Shares.................................9
Section 2. Signatures..................................................................9
Section 3. Lost Certificates...........................................................9
Section 4. Transfers...................................................................9
Section 5. Record Date................................................................10
Section 6. Beneficial Owners..........................................................10
Section 7. Voting Securities Owned by the Corporation.................................10
ARTICLE VI NOTICES....................................................................................10
Section 1. Notices....................................................................10
Section 2. Waiver of Notice...........................................................11
ARTICLE VII GENERAL PROVISIONS.........................................................................11
Section 1. Dividends..................................................................11
Section 2. Disbursements..............................................................11
Section 3. Corporation Seal...........................................................11
ARTICLE VIII AMENDMENTS.................................................................................11
</TABLE>
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AMENDED AND RESTATED BYLAWS
OF
TELEDYNE TECHNOLOGIES INCORPORATED
--------------------------------------------
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may determine from time to time.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware, as shall be designated
from time to time by the Board of Directors or the officer of the Corporation
calling the meeting as authorized by the Corporation's Certificate of
Incorporation and stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
Section 2. Annual Meeting. Each Annual Meeting of Stockholders shall be
held on such date and at such time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting. At an Annual
Meeting, the stockholders shall elect directors, and transact such other
business as may properly be brought before the meeting.
Section 3. Special Meetings. Special meetings of the stockholders,
other than those required by statute, may be called only as provided in, and for
the purposes specified in accordance with, the Corporation's Certificate of
Incorporation.
Section 4. Notice of Meetings. Written notice of the place, date, and
time of each meeting of the stockholders shall be given not less than ten (10)
nor more than sixty (60) days before the date on which the meeting is to be
held, to each stockholder entitled to vote at such meeting, except as otherwise
provided herein or as required from time to time by the Delaware
<PAGE> 5
General Corporation Law or the Certificate of Incorporation. The notice of a
special meeting shall also state the purpose or purposes for which the meeting
is called.
Section 5. Quorum; Adjournment. At any meeting of the stockholders, the
holders of a majority of all of the shares of the stock entitled to vote at the
meeting, present in person or by proxy, shall constitute a quorum for all
purposes, unless or except to the extent that the presence of a larger number
may be required by law or the Certificate of Incorporation. If a quorum shall
fail to attend any meeting, the chairperson of the meeting or the holders of a
majority of the shares of stock entitled to vote who are present, in person or
by proxy, may adjourn the meeting to another place, date, or time until a quorum
shall be present or represented.
When a meeting is adjourned to another place, date or time, written
notice need not be given of the adjourned meeting if the place, date and time
thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than thirty
(30) days after the date for which the meeting was originally noticed, or if a
new record date is fixed for the adjourned meeting, written notice of the place,
date, and time of the adjourned meeting shall be given in conformity herewith.
At any adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
Section 6. Proxies and Voting. At any meeting of the stockholders,
every stockholder entitled to vote may vote in person or by proxy, authorized by
an instrument in writing or in such manner as may be prescribed by the Delaware
General Corporation Law, filed in accordance with the procedure established for
the meeting.
Each stockholder shall have one vote for every share of stock entitled
to vote which is registered in his name on the record date for the meeting,
except as otherwise provided herein or required by law or the Certificate of
Incorporation.
All voting, including on the election of directors but excepting where
otherwise provided herein or required by law or the Certificate of
Incorporation, may be by a voice vote; provided, however, that upon demand
therefor by a stockholder entitled to vote or such stockholder's proxy, or at
the discretion of the chairperson of the meeting, a stock vote shall be taken.
Every stock vote shall be taken by ballots, each of which shall state the name
of the stockholder or proxy voting and such other information as may be required
under the procedure established for the meeting. Every vote taken by ballots
shall be counted by an inspector or inspectors appointed by the Board of
Directors or the chairperson of the meeting.
All elections shall be determined by a plurality of the votes cast.
Except as otherwise required by law or the Certificate of Incorporation, all
other matters shall be determined by a majority of the votes cast. For purposes
of these Bylaws, a vote characterized as an abstention shall not count as a vote
"cast."
Section 7. Stock List. A complete list of stockholders entitled to vote
at any meeting of stockholders, arranged in alphabetical order for each class of
stock and showing the address of each such stockholder and the number of shares
registered in such stockholder's name, shall be open to the examination of any
such stockholder, for any purpose germane to the meeting, during
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ordinary business hours for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting during
the whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the identity
of the stockholders entitled to vote at the meeting and the number of shares
held by each of them.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Duties and Powers. The business of the Corporation shall be
managed by or under the direction of the Board of Directors which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by law or by the Certificate of Incorporation or by these Bylaws directed or
required to be exercised or done by the stockholders.
Section 2. Number and Term of Office. Subject to Section 11 of this
Article III, the Board of Directors shall consist of not less than four (4) and
not more than ten (10) members. Subject to the foregoing sentence, the number of
directors shall be fixed and may be changed from time to time by resolution duly
adopted by a majority of the directors then in office, except as otherwise
provided by law, the Certificate of Incorporation or these Bylaws. Except as
provided in Section 3 of this Article, directors shall be elected by the holders
of record of a plurality of the votes cast at Annual Meetings of stockholders.
Any director may resign at any time upon written notice to the Corporation.
Directors need not be stockholders.
The directors, other than those who may be elected by the holders of
any class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation, shall be classified, with respect to the time for
which they severally hold office, into three classes: Class I, Class II and
Class III. Each class shall consist, as nearly as may be possible, of one-third
of the whole number of the Board of Directors. The terms of office of the
initial classes of directors shall be as follows: the Class I Directors shall be
elected to hold office for a term to expire at the first Annual Meeting of
stockholders after the initial classification of directors; the Class II
Directors shall be elected to hold office for a term to expire at the second
Annual Meeting of stockholders; and the Class III Directors shall be elected to
hold office for a term to expire at the third Annual Meeting of stockholders;
and in the case of each class, until their respective successors are duly
elected and qualified. At each annual meeting of stockholders the directors
elected to succeed those whose terms have expired shall be identified as being
of the same class as the directors they succeed and shall be elected to hold
office for a term to expire at the third Annual Meeting of stockholders after
their election, or until his or her earlier resignation or removal, and until
their respective successors are duly elected and qualified. This paragraph of
Article III, Section 2 is also contained in Article TEN, Section (A) of the
Corporation's
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Certificate of Incorporation, and accordingly, may be altered, amended or
repealed only to the extent and at the time the comparable Certificate Article
is altered, amended or repealed.
Section 3. Vacancies. Except as otherwise fixed pursuant to the
provisions of Article FOUR of the Corporation's Certificate of Incorporation
relating to the rights of the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation to elect
directors:
(a) In case of any increase in the number of directors, the
additional director or directors, and in case of any vacancy in the Board of
Directors due to death, resignation, removal, disqualification or any other
reason, the successors to fill the vacancies, shall be elected by a majority of
the directors then in office, even though less than a quorum, or by a sole
remaining director.
(b) Directors appointed in the manner provided in paragraph (a) to
newly created directorships resulting from any increase in the authorized number
of directors or any vacancies on the Board of Directors resulting from death,
resignation, removal, disqualification or any other cause shall hold office for
a term expiring at the next Annual Meeting of stockholders at which the term of
the class to which they have been elected expires and until their successors are
duly elected and qualified, or until their earlier resignation or removal.
(c) No decrease in the number of directors constituting the Board
of Directors shall shorten the term of any incumbent director.
The foregoing provisions of this Article III, Section 3 are also
contained in Article TEN, Section (B) of the Corporation's Certificate of
Incorporation, and accordingly, may be altered, amended or repealed only to the
extent and at the time the comparable Certificate Article is altered, amended or
repealed.
Section 4. Meetings. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. The first meeting of each newly-elected Board of Directors shall be
held immediately following the Annual Meeting of Stockholders and no notice of
such meeting shall be necessary to be given the newly-elected directors in order
legally to constitute the meeting, provided a quorum shall be present. Regular
meetings of the Board of Directors may be held without notice at such time and
at such place as may from time to time be determined by the Board of Directors.
Special meetings of the Board of Directors may be called by the Chairman of the
Board, the President or a majority of the directors then in office. Notice
thereof stating the place, date and hour of the meeting shall be given to each
director either by mail not less than forty-eight (48) hours before the date of
the meeting, by telephone, telegram or facsimile transmission on twenty-four
(24) hours' notice, or on such shorter notice as the person or persons calling
such meeting may deem necessary or appropriate in the circumstances. Meetings
may be held at any time without notice if all the directors are present or if
all those not present waive such notice in accordance with Section 2 of Article
VI of these Bylaws.
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Section 5. Quorum. Except as may be otherwise specifically provided by
law, the Certificate of Incorporation or these Bylaws (including Section 11 of
this Article III), at all meetings of the Board of Directors, a majority of the
directors then in office shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors. If a quorum
shall not be present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 6. Actions of Board Without a Meeting. Unless otherwise
provided by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if all members of the Board
of Directors or committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
of Directors or committee.
Section 7. Meetings by Means of Conference Telephone. Unless otherwise
provided by the Certificate of Incorporation or these Bylaws, members of the
Board of Directors of the Corporation, or any committee designated by the Board
of Directors, may participate in a meeting of the Board of Directors or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section 7 shall constitute
presence in person at such meeting.
Section 8. Committees. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of any such committee. In the absence or disqualification of a member of a
committee, and in the absence of a designation by the Board of Directors of an
alternate member to replace the absent or disqualified member, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not such members constitute a quorum, may unanimously appoint another member
of the Board of Directors to act at the meeting in the place of any such absent
or disqualified member. Any committee, to the extent allowed by law and provided
in the Bylaw or resolution establishing such committee, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it. Each
committee shall keep regular minutes and report to the Board of Directors when
required.
Section 9. Compensation. Unless otherwise restricted by the Certificate
of Incorporation or these Bylaws, the Board of Directors shall have the
authority to fix the compensation of directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as director. No such payment shall preclude any director from
serving
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<PAGE> 9
the Corporation in any other capacity and receiving compensation therefor.
Members of special or standing committees may be allowed like compensation for
attending committee meetings.
Section 10. Removal. Any director or directors may be removed from
office only as provided in the Corporation's Certificate of Incorporation.
Section 11. Initial Period. (a) As used in these Bylaws, (i) the "Third
Annual Meeting" means the third Annual Meeting of stockholders held after the
date on which the common stock of the Corporation becomes registered pursuant to
Section 12 of the Securities Exchange Act of 1934, (ii) the "Initial Period"
means the period beginning on the date of the adoption of this Section 11 and
ending on the date of the Third Annual Meeting, (iii) "ATI" means Allegheny
Teledyne Incorporated, a Delaware corporation, (iv) and "Majority Directors"
means directors of the Corporation who are also members of the Board of
Directors of ATI.
(b) During the Initial Period, at least a majority of the
directors of the Corporation shall be Majority Directors. If the election of any
director at any time during the Initial Period or if a director's ceasing to be
a member of the Board of Directors of ATI results in the number of Majority
Directors being less than a majority of the directors of the Corporation then in
office, the number of directors shall be increased to the next largest number
such that the filling of the resulting vacancy or vacancies by the election of
one or more directors who are also members of the Board of Directors of ATI will
result in a majority of the directors of the Corporation being Majority
Directors, and the successor or successors to fill said vacancy or vacancies
shall be elected by a majority of the Majority Directors then in office, or by a
sole remaining Majority Director.
(c) In case of any vacancy in the Board of Directors during the
Initial Period due to death, resignation, removal or disqualification of or any
other reason affecting any Majority Director, the successor to fill the vacancy
shall be elected by a majority of the Majority Directors then in office, or by a
sole remaining Majority Director. Directors elected in the manner provided in
this paragraph (c) shall hold office for a term expiring at the next Annual
Meeting of stockholders at which the term of the class to which they have been
elected expires and until their successors are duly elected and qualified, or
until their earlier resignation or removal.
(d) During the Initial Period, no quorum shall exist at a meeting
of the Board of Directors and no act shall be the act of the Board of Directors
unless a majority of the directors present at any such meeting are Majority
Directors.
(e) The provisions of this Section 11 may not be altered, amended
or repealed during the Initial Period except by a resolution duly adopted by all
of the Majority Directors.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be appointed
by the Board of Directors and shall consist of a Chairman of the Board, a Chief
Executive Officer, a President,
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<PAGE> 10
such number of Vice Presidents as the Board of Directors shall elect from time
to time, a Secretary, a Treasurer (or a position with the duties and
responsibilities of a Treasurer) and such other officers and assistant officers
(if any) as the Board of Directors may elect from time to time. Any number of
offices may be held by the same person, unless the Certificate of Incorporation
or these Bylaws otherwise provide.
Section 2. Election; Term of Office. The Board of Directors at its
first meeting held after each Annual Meeting of stockholders shall elect a
Chairman of the Board or a President, or both, a Secretary and a Treasurer (or a
position with the duties and responsibilities of a Treasurer), and may also
elect at that meeting or any other meeting, such other officers and agents as it
shall deem necessary or appropriate. Each officer of the Corporation shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors together with the powers and duties customarily
exercised by such officer; and each officer of the Corporation shall hold office
until such officer's successor is elected and qualified or until such officer's
earlier resignation or removal. Any officer may resign at any time upon written
notice to the Corporation. The Board of Directors may remove any officer at any
time, with or without cause, by the affirmative vote of a majority of directors
then in office.
Section 3. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the stockholders and the Board of Directors and shall
have such other duties and powers as may be prescribed by the Board of Directors
from time to time. The Board of Directors may also designate one of its members
as Vice Chairman of the Board. The Vice Chairman of the Board shall, during the
absence or inability to act of the Chairman of the Board, have the powers and
perform the duties of the Chairman of the Board, and shall have such other
powers and perform such other duties as shall be prescribed from time to time by
the Board of Directors.
Section 4. Chief Executive Officer. The Chief Executive Officer shall
have general charge and control over the affairs of the Corporation, subject to
the Board of Directors, shall see that all orders and resolutions of the Board
of Directors are carried out, shall report thereon to the Board of Directors,
and shall have such other powers and perform such other duties as shall be
prescribed from time to time by the Board of Directors.
Section 5. President. The President shall have general and active
management of the business of the Corporation and shall see that all orders and
resolutions of the Board of Directors are carried into effect. The President
shall have and exercise such further powers and duties as may be specifically
delegated to or vested in the President from time to time by these Bylaws or the
Board of Directors. In the absence of the Chairman of the Board and the Vice
Chairman of the Board, or in the event of the inability of or refusal to act by
the Chairman of the Board and the Vice Chairman of the Board, or if the Board of
Directors has not designated a Chairman or Vice Chairman, the President shall
perform the duties of the Chairman of the Board, and, when so acting, shall have
all of the powers and be subject to all of the restrictions upon the Chairman of
the Board.
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Section 6. Vice President. In the absence of the President or in the
event of his inability or refusal to act, the Vice President (or in the event
there be more than one vice president, the vice presidents in the order
designated by the Board of Directors, or in the absence of any designation, then
in the order of their election) shall perform the duties of the President and,
when so acting, shall have all the powers of and be subject to all the
restrictions upon the President. The Vice Presidents shall perform such other
duties and have such other powers as the Board of Directors or the President may
from time to time prescribe.
Section 7. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing and special committees
when required. The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors
or the President. If the Secretary shall be unable or shall refuse to cause to
be given notice of all meetings of the stockholders and special meetings of the
Board of Directors, and if there be no Assistant Secretary, then either the
Board of Directors or the President may choose another officer to cause such
notice to be given. The Secretary shall have custody of the seal of the
Corporation and the Secretary or any Assistant Secretary, if there be one, shall
have authority to affix the same to any instrument requiring it and when so
affixed, it may be attested by the signature of the Secretary or by the
signature of any such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing by his or her signature. The Secretary shall see that all
books, reports, statements, certificates and other documents and records
required by law to be kept or filed are properly kept or filed, as the case may
be.
Section 8. Assistant Secretaries. Except as may be otherwise provided
in these Bylaws, Assistant Secretaries, if there be any, shall perform such
duties and have such powers as from time to time may be assigned to them by the
Board of Directors, the President, or the Secretary, and shall have the
authority to perform all functions of the Secretary, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
Secretary.
Section 9. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities, shall keep complete and accurate accounts of all
receipts and disbursements of the Corporation, and shall deposit all monies and
other valuable effects of the Corporation in its name and to its credit in such
banks and other depositories as may be designated from time to time by the Board
of Directors. The Treasurer shall disburse the funds of the Corporation, taking
proper vouchers and receipts for such disbursements. The Treasurer shall, when
and if required by the Board of Directors, give and file with the Corporation a
bond, in such form and amount and with such surety or sureties as shall be
satisfactory to the Board of Directors, for the faithful performance of his or
her duties as Treasurer. The Treasurer shall have such other powers and perform
such other duties as the Board of Directors or the President shall from time to
time prescribe.
Section 10. Assistant Treasurers. Except as may be otherwise provided
in these Bylaws, Assistant Treasurers, if there be any, shall perform such
duties and have such powers as from
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time to time may be assigned to them by the Board of Directors, the President,
or the Treasurer, and shall have the authority to perform all functions of the
Treasurer, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Treasurer.
Section 11. Other Officers. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as may be
assigned to them from time to time by the Board of Directors. The Board of
Directors may delegate to any officer of the Corporation the power to choose
such other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates; Uncertificated Shares. The shares of
the Corporation shall be represented by certificates; provided, that the Board
of Directors may provide by resolution or resolutions that some or all of any or
all classes or series of its stock shall be uncertificated shares in accordance
with the Delaware General Corporation Law. Any such resolution shall not apply
to shares represented by a certificate until such certificate is surrendered to
the Corporation. Notwithstanding the adoption of such a resolution by the Board
of Directors, every holder of stock in the Corporation represented by a
certificate, and upon request every holder of uncertificated shares of stock in
the Corporation, shall be entitled to have a certificate signed in the name of
the Corporation (i) by the Chairman of the Board or the President or a Vice
President and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary of the Corporation, certifying the number of shares
owned by such holder in the Corporation.
Section 2. Signatures. Any or all the signatures on the certificate may
be a facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the Corporation with the same effect as if such
person were such officer, transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or such owner's legal representative, to advertise the same in such
manner as the Board of Directors shall require and/or to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be transferable in
the manner prescribed by law and in these Bylaws. Transfers of stock shall be
made on the books of the Corporation only by the person named in the certificate
or in the Corporation's books as the
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registered owner of uncertificated shares or by such person's attorney lawfully
constituted in writing and upon the surrender of the certificate (if any)
therefor, which shall be cancelled before a new certificate shall be issued.
Section 5. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty (60) days nor less than ten (10) days
before the date of such meeting, nor more than sixty (60) days prior to any
other action. A determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 6. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.
Section 7. Voting Securities Owned by the Corporation. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the Chairman of the Board, the President,
any Vice President or the Secretary and any such officer may, in the name of and
on behalf of the Corporation, take all such action as any such officer may deem
advisable to vote in person or by proxy at any meeting of security holders of
any corporation in which the Corporation may own securities and at any such
meeting shall possess and may exercise any and all rights and power incident to
the ownership of such securities and which, as the owner thereof, the
Corporation might have exercised and possessed if present. The Board of
Directors may, by resolution, from time to time confer like powers upon any
other person or persons.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law, the
Certificate of Incorporation or these Bylaws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at such
person's address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Written notice may also
be given personally or by telegram, facsimile transmission, electronic mail,
telex or cable and such
10
<PAGE> 14
notice shall be deemed to be given at the time of receipt thereof if given
personally or at the time of transmission thereof if given by telegram,
facsimile transmission, electronic mail, telex or cable.
Section 2. Waiver of Notice. Whenever any notice is required by law,
the Certificate of Incorporation or these Bylaws to be given to any director,
member or a committee or stockholder, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to notice.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special meeting
or by any Committee of the Board of Directors having such authority at any
meeting thereof, and may be paid in cash, in property, in shares of the capital
stock or in any combination thereof. Before payment of any dividend, there may
be set aside out of any funds of the Corporation available for dividends such
sum or sums as the Board of Directors from time to time, in its absolute
discretion, deems proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for any proper purpose, and the Board of Directors may modify or
abolish any such reserve.
Section 2. Disbursements. All notes, checks, drafts and orders for the
payment of money issued by the Corporation shall be signed in the name of the
Corporation by such officers or such other persons as the Board of Directors may
designate from time to time.
Section 3. Corporation Seal. The corporate seal, if the Corporation
shall have a corporate seal, shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII
AMENDMENTS
Except as otherwise specifically provided in the particular Article of
these Bylaws to be altered, amended or repealed, these Bylaws may be altered,
amended or repealed and new Bylaws may be adopted at any meeting of the Board of
Directors or of the stockholders, provided notice of the proposed change was
given in the notice of the meeting.
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<PAGE> 1
EXHIBIT 4.2
================================================================================
CREDIT AGREEMENT
AMONG
ALLEGHENY TELEDYNE INCORPORATED,
TELEDYNE TECHNOLOGIES
INCORPORATED
AND
BANK OF AMERICA, N.A.
AS ADMINISTRATIVE AGENT, SWING LINE LENDER
AND
ISSUING LENDER
AND
THE OTHER FINANCIAL
INSTITUTIONS PARTY HERETO
DATED AS OF OCTOBER 19, 1999
BANC OF AMERICA SECURITIES LLC,
AS
SOLE ARRANGER AND SOLE BOOK MANAGER
[BANK OF AMERICA LOGO]
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS................................................................1
1.01 Defined Terms...................................................................................1
1.02 Use of Certain Terms...........................................................................27
1.03 Accounting Terms...............................................................................27
1.04 Rounding.......................................................................................27
1.05 Exhibits and Schedules.........................................................................27
1.06 References to Agreements and Laws..............................................................28
SECTION 2. THE COMMITMENTS AND EXTENSIONS OF CREDIT.......................................................28
2.01 Amount and Terms of Commitments................................................................28
2.02 Borrowings, Conversions and Continuations of Loans.............................................28
2.03 Letters of Credit..............................................................................29
2.04 Swing Line.....................................................................................34
2.05 Prepayments....................................................................................35
2.06 Reduction or Termination of Commitments........................................................36
2.07 Principal and Interest.........................................................................36
2.08 Fees...........................................................................................36
2.09 Computation of Interest and Fees...............................................................37
2.10 Making Payments................................................................................38
2.11 Funding Sources................................................................................38
2.12 Release of ALT.................................................................................39
SECTION 3. TAXES, YIELD PROTECTION AND ILLEGALITY.........................................................39
3.01 Taxes..........................................................................................39
3.02 Illegality.....................................................................................40
3.03 Inability to Determine Rates...................................................................40
3.04 Increased Cost and Reduced Return; Capital Adequacy............................................41
3.05 Breakfunding Costs.............................................................................42
3.06 Matters Applicable to all Requests for Compensation............................................42
3.07 Survival.......................................................................................42
SECTION 4. CONDITIONS PRECEDENT...........................................................................42
4.01 Conditions to Effectiveness of the Credit Agreement............................................42
4.02 Conditions of Initial Extension of Credit to ALT...............................................45
4.03 Conditions to Assumption of Obligations and Initial Extensions of Credit to TTI................47
4.04 Conditions to all Extensions of Credit.........................................................49
SECTION 5. REPRESENTATIONS AND WARRANTIES.................................................................50
5.01 Existence and Qualification; Power; Compliance with Laws.......................................50
5.02 Power; Authorization; Enforceable Obligations..................................................50
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
5.03 No Legal Bar...................................................................................50
5.04 Financial Statements; No Material Adverse Effect...............................................51
5.05 Litigation.....................................................................................51
5.06 No Default.....................................................................................51
5.07 Ownership of Property; Liens...................................................................52
5.08 Taxes..........................................................................................52
5.09 Margin Regulations; Investment Company Act; Public Utility Holding Company Act.................52
5.10 ERISA Compliance...............................................................................52
5.11 Intellectual Property..........................................................................53
5.12 Compliance With Laws...........................................................................53
5.13 Environmental Compliance.......................................................................53
5.14 Insurance......................................................................................53
5.15 Year 2000......................................................................................53
5.16 Disclosure.....................................................................................54
5.17 Solvency.......................................................................................54
SECTION 6. AFFIRMATIVE COVENANTS..........................................................................54
6.01 Financial Statements...........................................................................54
6.02 Certificates, Notices and Other Information....................................................55
6.03 Payment of Taxes...............................................................................56
6.04 Preservation of Existence......................................................................56
6.05 Maintenance of Properties......................................................................56
6.06 Maintenance of Insurance.......................................................................56
6.07 Compliance With Laws...........................................................................56
6.08 Inspection Rights..............................................................................57
6.09 Keeping of Records and Books of Account........................................................57
6.10 Compliance with ERISA..........................................................................57
6.11 Compliance With Agreements.....................................................................57
6.12 Use of Proceeds................................................................................57
6.13 Additional Borrower Parties....................................................................57
SECTION 7. NEGATIVE COVENANTS.............................................................................58
7.01 Indebtedness...................................................................................58
7.02 Liens and Negative Pledges.....................................................................59
7.03 Fundamental Changes............................................................................60
7.04 Dispositions...................................................................................61
7.05 Investments....................................................................................61
7.06 Restricted Payments............................................................................62
7.07 ERISA..........................................................................................62
7.08 Limitation on Nature of Business...............................................................62
7.09 Transactions with Affiliates...................................................................62
7.10 Hostile Acquisitions...........................................................................62
7.11 Limitations on Upstreaming, etc................................................................62
7.12 Financial Covenants............................................................................63
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
7.13 Limitation on Amendments to Spinoff Documents..................................................63
7.14 Limitation on Modifications of Indebtedness....................................................63
SECTION 8. EVENTS OF DEFAULT AND REMEDIES.................................................................63
8.01 Events of Default..............................................................................63
8.02 Remedies Upon Event of Default.................................................................66
SECTION 9. ADMINISTRATIVE AGENT...........................................................................68
9.01 Appointment and Authorization of Administrative Agent..........................................68
9.02 Delegation of Duties...........................................................................68
9.03 Liability of Administrative Agent..............................................................68
9.04 Reliance by Administrative Agent...............................................................69
9.05 Notice of Default..............................................................................69
9.06 Credit Decision; Disclosure of Information by Administrative Agent.............................70
9.07 Indemnification of Administrative Agent........................................................70
9.08 Administrative Agent in Individual Capacity....................................................71
9.09 Successor Administrative Agent.................................................................71
SECTION 10. MISCELLANEOUS..................................................................................72
10.01 Amendments; Consents...........................................................................72
10.02 Release of Collateral..........................................................................72
10.03 Transmission and Effectiveness of Notices and Signatures.......................................73
10.04 Attorney Costs, Expenses and Taxes.............................................................74
10.05 Binding Effect; Assignment.....................................................................75
10.06 Set-off........................................................................................76
10.07 Sharing of Payments............................................................................76
10.08 No Waiver; Cumulative Remedies.................................................................77
10.09 Usury..........................................................................................78
10.10 Counterparts...................................................................................78
10.11 Integration....................................................................................78
10.12 Nature of Lenders' Obligations.................................................................78
10.13 Survival of Representations and Warranties.....................................................78
10.14 Indemnity by Borrower..........................................................................79
10.15 Nonliability of Lenders........................................................................79
10.16 No Third Parties Benefited.....................................................................80
10.17 Severability...................................................................................80
10.18 Confidentiality................................................................................80
10.19 Further Assurances.............................................................................81
10.20 Headings.......................................................................................81
10.21 Time of the Essence............................................................................81
10.22 Foreign Lenders and Participants...............................................................81
10.23 Removal and/or Replacement of Lenders..........................................................82
10.24 Governing Law..................................................................................83
10.25 Waiver of Right to Trial by Jury; Other Waivers................................................83
10.26 Entire Agreement...............................................................................84
</TABLE>
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<PAGE> 5
EXHIBITS
FORM OF
A Request for Extension of Credit
B Compliance Certificate
C Note
D Notice of Assignment and Acceptance
E-1 Opinion of Counsel on the Signing Date
E-2 Opinion of Counsel on the ALT Closing Date
E-3 Opinion of Counsel on the TTI Closing Date
F ALT Global Note
G Guaranty
H Pledge Agreement
I ALT Subordination Agreement
J Assumption Agreement
SCHEDULES
1.01 Consolidated EBITDA; Consolidated EBIT; Consolidated Interest
Charges
2.01 Commitments and Pro Rata Shares
7.01(b) Existing Indebtedness of ALT and its Subsidiaries
7.01(c) Existing Indebtedness of TTI and its Subsidiaries
7.02(a) Liens of ALT and its Subsidiaries
7.02(b) Liens of TTI and its Subsidiaries
7.05(a) Investments by ALT and its Subsidiaries
7.05(b) Investments by TTI and its Subsidiaries
10.03 Eurodollar and Domestic Lending Offices, Addresses for Notices
- iv -
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CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of October 19, 1999, by and
among ALLEGHENY TELEDYNE INCORPORATED, a Delaware corporation ("ALT"), TELEDYNE
TECHNOLOGIES INCORPORATED, a Delaware corporation ("TTI"), each lender from time
to time party hereto (collectively, "Lenders" and individually, a "Lender"), and
BANK OF AMERICA, N.A., as Administrative Agent, Issuing Lender and Swing Line
Lender. BANK OF AMERICA SECURITIES LLC has acted as sole arranger and sole book
manager.
RECITALS
WHEREAS, ALT has incorporated TTI, a wholly-owned Subsidiary of ALT,
for the purpose of effecting the transfer by ALT to TTI of certain assets and
liabilities and operations of the Aerospace and Electronics segment of ALT (the
"Line of Business Transfer") in accordance with the Spinoff Documents (as
defined below).
WHEREAS, following consummation of the Line of Business Transfer, ALT
will make a distribution of all the capital stock of TTI to the stockholders of
ALT (the "Spinoff") in accordance with the Spinoff Documents (as defined below).
WHEREAS, ALT and TTI have requested that Lenders make credit facilities
available to ALT and TTI for the purposes set forth herein.
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto covenant and agree intending to be legally
bound as follows:
AGREEMENT
SECTION 1.
DEFINITIONS AND ACCOUNTING TERMS
1.01 DEFINED TERMS. As used in this Agreement, the following terms
shall have the meanings set forth below:
"Acquired Indebtedness" means Indebtedness of any Person that becomes a
Subsidiary of TTI after the TTI Closing Date pursuant to a Permitted
Acquisition, if such Indebtedness was outstanding prior to the time such Person
became a Subsidiary of TTI and was not created in contemplation of or in
connection with such Person becoming a Subsidiary of TTI and constitutes either
(i) obligations under capital leases or (ii) purchase money or other
Indebtedness incurred to finance the acquisition of fixed or capital assets and
otherwise satisfying the requirements of Section 7.02(h).
"Acquisition" means the acquisition, in one transaction or a series of
transactions, by Borrower or any of its Subsidiaries of all or substantially all
the stock, partnership or other equity interests or assets of any other Person
or all or substantially all of the assets of any division or business of any
other Person.
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<PAGE> 7
"Acquisition Consideration" means the purchase consideration for any
Permitted Acquisition and all other payments made and liabilities incurred by
Borrower or any of its Subsidiaries in exchange for, or as part of, or in
connection with, any Permitted Acquisition, whether paid in cash or by exchange
of assets or otherwise and whether payable at or prior to the consummation of
such Permitted Acquisition or deferred for payment at any future time, whether
or not any such future payment is subject to the occurrence of any contingency,
and includes any and all payments and liabilities representing the purchase
price and any assumptions of liabilities, "earn-outs" and other Profit Payment
Agreements, consulting agreements, services agreements and non-competition
agreements and other liabilities of every type and description.
"Administrative Agent" means Bank of America, N.A., in its capacity as
administrative agent under any of the Loan Documents, and any successor
administrative agent.
"Administrative Agent's Office" means Administrative Agent's address
and, as appropriate, account as set forth on Schedule 10.03, or such other
address or account as Administrative Agent hereafter may designate by written
notice to Borrower and Lenders.
"Administrative Agent-Related Persons" means Administrative Agent
(including any successor agent), together with its Affiliates (including, in the
case of Administrative Agent, the Arranger), and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
"Affiliate" means any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to be "controlled by" any other Person if such other
Person possesses, directly or indirectly, power (a) to vote 10% or more of the
securities (on a fully diluted basis) having ordinary voting power for the
election of directors or managing general partners; or (b) to direct or cause
the direction of the management and policies of such Person whether by contract
or otherwise.
"Agreement" means this Credit Agreement, as amended, restated,
extended, supplemented or otherwise modified in writing from time to time.
"ALT" has the meaning set forth in the introductory paragraph hereto.
"ALT Closing Date" means the date on which all the conditions precedent
in Section 4.02 are satisfied or waived in accordance with Section 4.02, which
date shall be no later than [November 15], 1999.
"ALT Global Note" means the promissory note made by Borrower in favor
of Administrative Agent for the account of Lenders, substantially in the form of
Exhibit F.
"ALT Subordination Agreement" means the ALT subordination and indemnity
agreement in the form of Exhibit I.
"Applicable Amount" means (a) prior to the consummation of a Qualified
Public Offering, (i) with respect to the Facility Fee, .35%, (ii) with respect
to the Utilization Fee, 0.0%,
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<PAGE> 8
(iii) with respect to the Base Rate, 0.75%, and (iv) with respect to the
Eurodollar Rate and Letters of Credit, 1.15%, and (b) from and after the
consummation of a Qualified Public Offering, the following amounts per annum,
based upon the Capitalization Ratio as set forth in the then most recent
Compliance Certificate received by Administrative Agent pursuant to Section
6.02(b) (provided, however, that, if this clause (b) is applicable, until
Administrative Agent receives the first Compliance Certificate after the TTI
Closing Date, such amounts shall be those indicated for pricing level I set
forth below):
<TABLE>
<CAPTION>
PRICING CAPITALIZATION RATIO FACILITY UTILIZATION BASE EURODOLLAR RATE/
LEVEL FEE FEE RATE LETTERS OF CREDIT
- --------------------- --------------------- -------------- ----------------- ----------------- -----------------------
<S> <C> <C> <C> <C> <C>
I Greater than or
equal to 55% .35% .25% .50% .90%
II Greater than or
equal to 45% .30% .25% .375% .825%
III Greater than or
equal to 35% .25% .25% .125% .625%
IV Less than 35% .20% .125% 0% .55%
</TABLE>
The Applicable Amount shall be in effect from the date the most recent
Compliance Certificate is received by Administrative Agent to but excluding the
date the next Compliance Certificate is received; provided, however, that if
Borrower fails to timely deliver the next Compliance Certificate, the Applicable
Amount from the date such Compliance Certificate was due to but excluding the
date such Compliance Certificate is received by Administrative Agent shall be
the highest pricing level set forth above, and, thereafter, the pricing level
indicated by such Compliance Certificate when received.
"Applicable Payment Date" means, (a) as to any Eurodollar Rate Loan,
the last day of the relevant Interest Period and any date that such Loan is
prepaid or converted in whole or in part and the Maturity Date; provided,
however, that if any Interest Period for a Eurodollar Rate Loan exceeds three
months, interest shall also be paid on the date which falls every three months
after the beginning of such Interest Period, and (b) as to any other
Obligations, the last Business Day of each calendar quarter and the Maturity
Date; provided, further, that interest accruing at the Default Rate shall be
payable from time to time at any time upon written demand of Administrative
Agent.
"Arranger" means Banc of America Securities LLC, in its capacity as
sole arranger and sole book manager.
"Assumption Agreement" means an assumption agreement in the form of
Exhibit J.
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<PAGE> 9
"Attorney Costs" means and includes all fees and disbursements of any
law firm or other external counsel and the allocated cost of internal legal
services and all disbursements of internal counsel.
"Audited ALT Financial Statements" means the audited consolidated
balance sheet of ALT and its Subsidiaries for the fiscal year ended December 31,
1998, and the related consolidated statements of income and cash flows for such
fiscal year of ALT.
"Audited TTI Financial Statements" means, collectively, (i) the audited
combined balance sheet of TTI for the fiscal years ended December 31, 1997 and
December 31, 1998, and (ii) the combined statements of income, stockholders
equity and cash flows for the fiscal years ended December 31, 1996, December 31,
1997 and December 31, 1998.
"Bank of America" means Bank of America, N.A.
"Base Rate" means, for any day, a fluctuating rate per annum equal to
the higher of (a) the Federal Funds Rate for such day plus 1/2 of 1% and (b) the
rate of interest in effect for such day as publicly announced from time to time
by Bank of America as its "prime rate." Such prime rate is a rate set by Bank of
America based upon various factors including Bank of America's costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate. Any change in such prime rate announced by Bank of America
shall take effect at the opening of business on the day specified in the public
announcement of such change.
"Base Rate Loan" means a Loan which bears interest based on the Base
Rate.
"Borrower" means (i) on or prior to the TTI Closing Date and the
assumption by TTI pursuant to the Assumption Agreement of ALT's Obligations
(other than ALT's Obligations under the ALT Subordination Agreement), ALT, and
(ii) thereafter, TTI.
"Borrower Party" means Borrower or any Person other than Lenders and
any Affiliates of Lenders, Administrative Agent and Issuing Lender from time to
time party to a Loan Document.
"Borrowing" and "Borrow" each mean, a borrowing hereunder consisting of
Loans of the same type made on the same day and, other than in the case of Base
Rate Loans, having the same Interest Period.
"Borrowing Date" means the date that a Loan is made, which shall be a
Business Day.
"Business Day" means any day other than a Saturday, Sunday, or other
day on which commercial banks are authorized to close under the Laws of, or are
in fact closed in, the state where Administrative Agent's Office is located or
the State of California and, if such day relates to any Eurodollar Rate Loan,
means any such day on which dealings in Dollar deposits are conducted by and
between banks in the London interbank eurodollar market.
- 4 -
<PAGE> 10
"Capitalization Ratio" means, as of any date of determination, for
Borrower and its Subsidiaries on a consolidated basis, the ratio of (a)
Consolidated Total Indebtedness as of such date to (b) Consolidated Total
Capitalization as of such date.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means all property of the Borrower Parties, now owned or
hereafter acquired, with respect to which a Lien is purported to be created by
the Pledge Agreement.
"Collateral Release Date" means the date on which each of the following
shall have occurred: (i) TTI shall have consummated a Qualified Public Offering
on or before the date that is 12 months after the ALT Closing Date, (ii) no
Default or Event of Default shall have occurred and be continuing, (iii)
Borrower shall have delivered to Administrative Agent a written request for the
release of the Collateral and a certificate of the chief financial officer of
Borrower certifying that the requirements of clauses (i) and (ii) of this
definition have been satisfied.
"Commitment" means, for each Lender, the obligation of such Lender to
make Extensions of Credit in an aggregate principal amount not exceeding the
amount set forth opposite such Lender's name on Schedule 2.01 at any one time
outstanding, as such amount may be reduced or adjusted from time to time in
accordance with this Agreement (collectively, the "combined Commitments").
"Compliance Certificate" means a certificate in the form of Exhibit B,
properly completed and signed by a Responsible Officer of Borrower.
"Consolidated EBIT" means, for any period, for TTI and its Subsidiaries
on a consolidated basis, an amount equal to the sum of (a) Consolidated Net
Income, (b) Consolidated Interest Charges, and (c) the amount of taxes, based on
or measured by income, used or included in the determination of such
Consolidated Net Income.
"Consolidated EBITDA" means, for any period, for TTI and its
Subsidiaries on a consolidated basis, an amount equal to the sum of (a)
Consolidated Net Income, (b) Consolidated Interest Charges, (c) the amount of
taxes, based on or measured by income, used or included in the determination of
such Consolidated Net Income, and (d) the amount of depreciation and
amortization expense deducted in determining such Consolidated Net Income;
provided that for purposes of calculating Consolidated EBITDA of TTI and its
Subsidiaries for any period, (i) the Consolidated EBITDA of any Person or assets
acquired by TTI and its Subsidiaries in a Permitted Acquisition during such
period shall be included on a pro forma basis for such period (assuming the
consummation of such Permitted Acquisition and the incurrence or assumption of
any Indebtedness in connection therewith occurred on the first day of such
period) and (ii) the Consolidated EBITDA of any Person or assets Disposed of by
TTI or its Subsidiaries during such period shall be excluded for such period
(assuming the consummation of such Disposition and the repayment of any
Indebtedness in connection therewith occurred on the first day of such period).
- 5 -
<PAGE> 11
"Consolidated Interest Charges" means, for any period, for TTI and its
Subsidiaries on a consolidated basis, the sum of all interest, premium payments,
fees, charges and related expenses payable for such period by TTI and its
Subsidiaries in connection with Indebtedness (including capitalized interest and
other fees and charges incurred under any asset securitization program), in each
case to the extent treated as interest in accordance with GAAP (including any
such amounts payable in respect of Indebtedness of any Person acquired during
such period and in respect of Indebtedness incurred in connection with such
acquisition, in each case as if such Indebtedness was incurred on the first day
of such period).
"Consolidated Net Income" means, for any period, for TTI and its
Subsidiaries on a consolidated basis, the net income of TTI and its Subsidiaries
from continuing operations after extraordinary items (excluding gains or losses
from Dispositions of assets) for that period, determined in accordance with
GAAP.
"Consolidated Net Worth" means, as of any date of determination, for
TTI and its Subsidiaries on a consolidated basis, Stockholders' Equity of TTI
and its Subsidiaries on that date, determined in accordance with GAAP.
"Consolidated Total Assets" means, as of any date of determination, for
TTI and its Subsidiaries on a consolidated basis, the value of all properties
and all right, title and interest in such properties which would be classified
as assets of TTI and its Subsidiaries, determined in accordance with GAAP.
"Consolidated Total Capitalization" means, as of any date of
determination, the sum of (i) Consolidated Total Indebtedness, and (ii)
Consolidated Net Worth, in each case as of such date.
"Consolidated Total Indebtedness" means, as of any date of
determination, for TTI and its Subsidiaries on a consolidated basis, the sum of
(a) the outstanding principal amount of all obligations and liabilities of TTI
and its Subsidiaries, whether current or long-term, for borrowed money
(including Extensions of Credit hereunder), (b) that portion of obligations with
respect to capital leases that are capitalized in the consolidated balance sheet
of TTI and its Subsidiaries, (c) without duplication, all Guaranty Obligations
with respect to Indebtedness of the type specified in subsections (a) and (b)
above of Persons other than TTI or any of its Subsidiaries, (d) the outstanding
principal amount of all obligations and liabilities, whether current or
long-term, associated with any sale by TTI or any of its Subsidiaries of its
accounts receivable, (e) Synthetic Lease Obligations of TTI and its
Subsidiaries, (f) Indebtedness of TTI and its Subsidiaries in respect of Swap
Contracts, in each case, determined in accordance with GAAP, and (g) Joint
Venture Indebtedness of TTI and its Subsidiaries.
"Continuation" and "Continue" mean, with respect to any Eurodollar Rate
Loan, the continuation of such Eurodollar Rate Loan as a Eurodollar Rate Loan on
the last day of the Interest Period for such Loan.
- 6 -
<PAGE> 12
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.
"Conversion" and "Convert" mean, with respect to any Loan, the
conversion of such Loan from or into another type of Loan.
"Debtor Relief Laws" means the Bankruptcy Code of the United States of
America, and all other liquidation, conservatorship, bankruptcy, assignment for
the benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States of America or
other applicable jurisdictions from time to time in effect affecting the rights
of creditors generally.
"Default" means any event that, with the giving of any notice, the
passage of time, or both, would be an Event of Default.
"Default Rate" means an interest rate equal to the Base Rate plus the
Applicable Amount, if any, applicable to Base Rate Loans plus 2% per annum, to
the fullest extent permitted by applicable Laws; provided, however, that with
respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate
equal to the interest rate (including any Applicable Amount) otherwise
applicable to such Loan plus 2% per annum.
"Designated Deposit Account" means a deposit account to be maintained
by Borrower with Bank of America, as from time to time designated by Borrower by
written notification to Administrative Agent.
"Disposition" means the sale, transfer, license (excluding the license
of property that has a fair market value, individually or in the aggregate, of
not greater than $________) or other disposition (including any sale and
leaseback transaction) of any property by any Person, including any sale,
assignment, transfer or other disposal with or without recourse of any notes or
accounts receivable or any rights and claims associated therewith, and the terms
"Dispose" and "Disposed of" have correlative meanings.
"Dollar" and "$" means lawful money of the United States of America.
"Eligible Assignee" means (a) a financial institution organized under
the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (b) a commercial bank organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development, or a political subdivision of any such
country, and having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency located in the
United States; (c) a Person that is primarily engaged in the business of
commercial banking and that is (i) a Subsidiary of a Lender, (ii) a Subsidiary
of a Person of which a Lender is a Subsidiary, or (iii) a Person of which a
Lender is a Subsidiary; (d) another Lender; (e) any other entity which is an
"accredited investor" (as defined in Regulation D under the Securities Act of
1933, as
- 7 -
<PAGE> 13
amended) which extends credit or buys loans as one of its businesses, including
but not limited to, insurance companies, mutual funds and lease financing
companies; or (f) other lenders or institutional investors consented to in
writing in advance by Administrative Agent and, so long as no Default or Event
of Default shall have occurred and be continuing, Borrower. No Borrower Party or
any Affiliate of a Borrower Party shall be an Eligible Assignee.
"Environmental Laws" means all foreign, federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case relating to environmental, health, safety and land use matters
applicable to any property.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
any regulations issued pursuant thereto, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with Borrower within the meaning of Sections
414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes
of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by Borrower or any ERISA Affiliate
from a Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or
the commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan;
or (f) the imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon Borrower or
any ERISA Affiliate.
"Eurodollar Base Rate" has the meaning set forth in the definition of
Eurodollar Rate.
"Eurodollar Rate" means for any Interest Period with respect to any
Eurodollar Rate Loan, a rate per annum determined by Administrative Agent
pursuant to the following formula:
Eurodollar Base Rate
Eurodollar Rate = ------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Base Rate" means, for such Interest Period:
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<PAGE> 14
(a) the rate per annum (carried out to the fifth decimal
place) equal to the rate determined by Administrative Agent to be the
offered rate that appears on the page of the Telerate Screen that
displays an average British Bankers Association Interest Settlement
Rate for deposits in dollars (for delivery on the first day of such
Interest Period) with a term equivalent to such Interest Period,
determined as of approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period, or
(b) in the event the rate referenced in the preceding
subsection (a) does not appear on such page or service or such page or
service shall cease to be available, the rate per annum (carried out to
the fifth decimal place) equal to the rate determined by Administrative
Agent to be the offered rate on such other page or other service that
displays an average British Bankers Association Interest Settlement
Rate for deposits in dollars (for delivery on the first day of such
Interest Period) with a term equivalent to such Interest Period,
determined as of approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period, or
(c) in the event the rates referenced in the preceding
subsections (a) and (b) are not available, the rate per annum
determined by Administrative Agent as the rate of interest at which
dollar deposits (for delivery on the first day of such Interest Period)
in same day funds in the approximate amount of the applicable
Eurodollar Rate Loan and with a term equivalent to such Interest Period
would be offered by its London Branch to major banks in the eurodollar
market at their request at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period.
"Eurodollar Reserve Percentage" means, for any day during any
Interest Period, the reserve percentage (expressed as a decimal,
rounded upward to the next 1/100th of 1%) in effect on such day,
whether or not applicable to any Lender, under regulations issued from
time to time by the Board of Governors of the Federal Reserve System
for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) with
respect to Eurocurrency funding (currently referred to as "Eurocurrency
liabilities"). The Eurodollar Rate for each outstanding Eurodollar Rate
Loan shall be adjusted automatically as of the effective date of any
change in the Eurodollar Reserve Percentage.
"Eurodollar Rate Loan" means a Loan bearing interest based on
the Eurodollar Rate.
"Event of Default" means any of the events specified in
Section 8.
"Existing ALT Credit Agreement" means that certain Credit Agreement,
dated as of August 30, 1996, among ALT, the lenders from time to time parties
thereto, Bank of America Illinois, The Chase Manhattan Bank, Mellon Bank, N.A.
and PNC Bank, National Association, as managing agents, and PNC Bank, National
Association, as documentation and administrative agent, as amended by First
Amendment to Credit Agreement, dated as of August 31, 1997, Second Amendment to
Credit Agreement, dated as of March 24, 1998, Third Amendment to Credit
Agreement dated as of March 30, 1999, Fourth Amendment to Credit Agreement and
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<PAGE> 15
Waiver, dated as of August 6, 1999, and [identify any additional required
consent to Loan Documents and Spinoff Documents].
"Extension of Credit" means (a) the Borrowing of Loans, (b) the
Conversion or Continuation of any Loans, or (c) any Letter of Credit Action
which has the effect of increasing the amount of any Letter of Credit, extending
the maturity of any Letter of Credit or making any material modification to any
Letter of Credit or the reimbursement of drawings thereunder (collectively, the
"Extensions of Credit").
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards to the nearest 1/100 of 1%) equal to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank on the Business Day next succeeding such day; provided that
(a) if such day is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate charged to Bank of America on such day on such
transactions as determined by Administrative Agent.
"Foreign Subsidiary" means any "controlled foreign corporation" within
the meaning of Section 957(a) of the Code as to which TTI or any of its
Subsidiaries is a "United States shareholder" as defined in Section 951(b) of
the Code; provided that a "controlled foreign corporation" that is treated as a
pass through entity for United States federal income tax purposes shall not be a
Foreign Subsidiary while so treated.
"Form 10" means TTI's Form 10 Report, as filed with the Securities and
Exchange Commission on September 13, 1999, including, without limitation, the
information statement contained therein, as amended, restated, extended,
supplemented or otherwise modified in writing from time to time in accordance
with this Agreement.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or such other principles as may be
approved by a significant segment of the accounting profession, that are
applicable to the circumstances as of the date of determination, consistently
applied. If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Loan Document, and either
Borrower or the Required Lenders shall so request, Administrative Agent, Lenders
and Borrower shall negotiate in good faith to amend such ratio or requirement to
preserve the original intent thereof in light of, and to reflect, such change in
GAAP (subject to the approval of the Required Lenders), provided that, until so
amended, (a) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (b) Borrower shall provide
to Administrative Agent and Lenders financial statements and other documents
required under this Agreement or as reasonably requested hereunder setting forth
a reconciliation between calculations of such ratio or requirement made before
and after giving effect to such change in GAAP.
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<PAGE> 16
"Governing State" means the State of New York.
"Governmental Authority" means (a) any international, foreign, federal,
state, county or municipal government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau, commission,
department, instrumentality, central bank or public body, or (c) any court,
administrative tribunal or public utility.
"Guaranty" means collectively, (i) the guaranty substantially in the
form of Exhibit G, and (ii) any supplements thereto substantially in the form of
Annex A to Exhibit G executed and delivered pursuant to Section 6.13.
"Guarantor" means each Material Subsidiary of TTI (other than any
Foreign Subsidiary) that is a party to the Guaranty.
"Guaranty Obligation" means, as to any Person, any (a) guaranty by that
Person of Indebtedness of, or other obligation payable or performable by, any
other Person or (b) agreement, undertaking or arrangement given by that Person
to an obligee of any other Person with respect to the payment or performance of
an obligation by, or the financial condition of, such other Person, whether
direct, indirect or contingent, including any purchase or repurchase agreement
covering such obligation or any collateral security therefor, any agreement to
provide funds (by means of loans, capital contributions or otherwise) to such
other Person, any agreement to support the solvency or level of any balance
sheet item of such other Person or any "keep-well" or other arrangement of
whatever nature given for the purpose of assuring or holding harmless such
obligee against loss with respect to any obligation of such other Person;
provided, however, that the term Guaranty Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guaranty Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the related primary obligation, or
portion thereof, covered by such Guaranty Obligation or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by the Person in good faith.
"Indebtedness" means, as to any Person at any time, all items which
would, in conformity with GAAP, be classified as liabilities on a balance sheet
of such Person at such time (excluding trade and other accounts payable in the
ordinary course of business in accordance with customary trade terms and which
are not overdue for a period of more than 90 days and excluding deferred taxes),
but in any event including:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(b) any direct or contingent obligations of such Person
arising under letters of credit (including standby and commercial),
banker's acceptances, bank guaranties, surety bonds and similar
instruments;
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<PAGE> 17
(c) net obligations under any Swap Contract in an amount equal
to (i) if such Swap Contract has been closed out, any outstanding
termination value thereof, or (ii) if such Swap Contract has not been
closed out, the mark-to-market value thereof determined on the basis of
readily available quotations provided by any recognized dealer in such
type of Swap Contract;
(d) whether or not so included as liabilities in accordance
with GAAP, all obligations of such Person to pay the deferred purchase
price of property or services, and indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being
purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited
in recourse;
(e) lease payment obligations under capital leases or
Synthetic Lease Obligations;
(f) all Guaranty Obligations of such Person in respect of any
of the foregoing;
(g) obligations and liabilities associated with any sale by
such Person of its accounts receivable; and
(h) Joint Venture Indebtedness.
"Indemnified Liabilities" has the meaning set forth in Section 10.14.
"Interest Coverage Ratio" means, as of any date of determination, the
ratio of (a) Consolidated EBIT for the period of the four prior fiscal quarters
ending on such date to (b) Consolidated Interest Charges during such period
(giving pro forma effect to the Line of Business Transfer and the Spinoff);
provided, however, that for purposes of determining Consolidated EBIT and
Consolidated Interest Charges for any period of four fiscal quarters that
includes the quarters ended December 31, 1998, March 31, 1999, June 30, 1999 or
September 30, 1999, Consolidated EBIT and Consolidated Interest Charges for such
fiscal quarters shall be as set forth on Schedule 1.01 (which shall give pro
forma effect to the Line of Business Transfer and the Spinoff).
"Interest Period" means, for each Eurodollar Rate Loan as requested by
Borrower, (a) initially, the period commencing on the date such Eurodollar Rate
Loan is disbursed, Continued as, or Converted into, a Eurodollar Rate Loan and
(b) thereafter, the period commencing on the last day of the preceding Interest
Period, and ending, in each case, on the earlier of (x) the scheduled Maturity
Date, or (y) one, two, three or six months thereafter; provided that:
(i) any Interest Period that would otherwise end on a day that is
not a Business Day shall be extended to the next succeeding Business Day unless
such Business Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Business Day;
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<PAGE> 18
(ii) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; and
(iii) unless Administrative Agent otherwise consents, there may not
be more than 10 Interest Periods in effect at any time.
"Investment" means, as to any Person, any acquisition or any investment
by such Person, whether by means of the purchase or other acquisition of stock
or other securities of any other Person or by means of a loan, creating a debt,
capital contribution, guaranty or other debt or equity participation or interest
in any other Person, including any partnership and joint venture interests in
such other Person. For purposes of covenant compliance, the amount of any
Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.
"IRS" means the Internal Revenue Service.
"Issuing Lender" means Bank of America, or any successor issuing lender
hereunder.
"Joint Venture Indebtedness" means, as to any Person at any time, all
Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer, unless and to the extent such Indebtedness
is expressly made non-recourse to such Person except for customary exceptions
approved by the Required Lenders.
"Laws" or "Law" means, collectively, all international, foreign,
federal, state and local statutes, treaties, rules, guidelines, regulations,
ordinances, codes and administrative or judicial precedents or authorities,
including the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration
thereof, in each case whether or not having the force of law.
"Lender" means each lender from time to time party hereto, Issuing
Lender and Swing Line Lender.
"Lending Office" means, as to any Lender, the office or offices of such
Lender described as such on Schedule 10.03, or such other office or offices as
such Lender may from time to time notify Borrower and Administrative Agent.
"Letter of Credit" means any letter of credit issued or outstanding
hereunder. A Letter of Credit may be a financial letter of credit only.
"Letter of Credit Action" means the issuance, supplement, amendment,
renewal, extension, modification or other action relating to a Letter of Credit.
"Letter of Credit Application" means an application for a Letter of
Credit Action as shall at any time be in use by Issuing Lender.
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<PAGE> 19
"Letter of Credit Cash Collateral Account" means a blocked deposit
account at Bank of America with respect to which Borrower hereby grants a
security interest in such account to Administrative Agent for and on behalf of
Lenders as security for Letter of Credit Usage and with respect to which
Borrower agrees to execute and deliver from time to time such documentation as
Administrative Agent may reasonably request to further assure and confirm such
security interest.
"Letter of Credit Commitment" means an amount equal to the lesser of
the combined Commitments and $25,000,000.
"Letter of Credit Expiration Date" means the date which is 30 days
prior to the Maturity Date.
"Letter of Credit Usage" means, as at any date of determination, the
aggregate undrawn face amount of outstanding Letters of Credit plus the
aggregate amount of all drawings under the Letters of Credit honored by Issuing
Lender and not reimbursed to Issuing Lender by Borrower or converted into Loans.
"Leverage Ratio" means, as of any date of determination, for TTI and
its Subsidiaries on a consolidated basis, the ratio of (a) Consolidated Total
Indebtedness as of such date (giving pro forma effect to the Line of Business
Transfer and the Spinoff) to (b) Consolidated EBITDA for the period of the four
fiscal quarters ending on that date; provided, however, that for purposes of
determining Consolidated EBITDA for any period of four fiscal quarters that
includes the quarters ended December 31, 1998, March 31, 1999, June 30, 1999 or
September 30, 1999, Consolidated EBITDA for such fiscal quarters shall be as set
forth on Schedule 1.01 (which shall give pro forma effect to the Line of
Business Transfer and the Spinoff and shall be subject to adjustments for
Permitted Acquisitions occurring after the TTI Closing Date as described in the
definition of "Consolidated EBITDA").
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement (in the nature of compensating balances, cash collateral accounts or
security interests), encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable Laws of any jurisdiction), including
the interest of a purchaser of accounts receivable.
"Line of Business Transfer" has the meaning set forth in the recitals
hereto.
"Loan" means any advance made by any Lender to Borrower as provided in
Section 2 (collectively, the "Loans").
"Loan Documents" means this Agreement, the Guaranty, the Pledge
Agreement, the ALT Subordination Agreement, the Assumption Agreement, any Letter
of Credit Application, any
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<PAGE> 20
Request for Extension of Credit and any Note (including, without limitation, the
ALT Global Note), certificate, any fee letter, any commitment letter, and other
instrument, document or agreement from time to time delivered in connection with
this Agreement.
"Material Adverse Effect" means any set of circumstances or events
which (a) has or would reasonably be expected to have any material adverse
effect whatsoever upon the validity or enforceability of any Loan Document, (b)
is or would reasonably be expected to be material and adverse to the condition
(financial or otherwise), business, assets, operations or liabilities
(contingent or otherwise) of Borrower and its Subsidiaries taken as a whole, or
(c) materially impairs or would reasonably be expected to materially impair the
ability of any Borrower and its Subsidiaries taken as a whole to perform the
Obligations. For purposes of this definition, the phrase "Borrower and its
Subsidiaries" means (i) on and prior to the consummation of the Spinoff and the
assumption by TTI of ALT's Obligations (other than ALT's Obligations under the
ALT Subordination Agreement) pursuant to the Assumption Agreement, each of (a)
ALT and its Subsidiaries, or (b) the assets and liabilities and operations of
the Aerospace and Electronics segment of ALT intended to be transferred in
connection with the Line of Business Transfer to TTI and its Subsidiaries, and
(ii) following the consummation of the Spinoff and the assumption by TTI of
ALT's Obligations (other than ALT's Obligations under the ALT Subordination
Agreement) pursuant to the Assumption Agreement, TTI and its Subsidiaries.
"Material Subsidiary" means, as of any date of determination, any
Subsidiary of TTI that has on such date (i) Total Assets constituting ten
percent or more of Consolidated Total Assets or (ii) total revenues constituting
ten percent or more of the consolidated total revenues of TTI and its
Subsidiaries, determined in accordance with GAAP.
"Maturity Date" means (i) if the Spinoff has not been consummated in
accordance with the terms of the Spinoff Documents and applicable Law on or
before such date, the date that is one month following the ALT Closing Date and
(ii) otherwise, the date that is five years following the ALT Closing Date, in
each case, as it may be earlier terminated or extended in accordance with the
terms hereof.
"Minimum Amount" means, with respect to each of the following actions,
the minimum amount and any multiples in excess thereof set forth opposite such
action:
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<PAGE> 21
<TABLE>
<CAPTION>
MINIMUM AMOUNT INCREMENTS IN
TYPE OF ACTION EXCESS THEREOF
--------------------------------------------- ------------------- ---------------------
<S> <C> <C>
Borrowing of, prepayment of, or Conversion $500,000 $100,000
into, Base Rate Loans
Borrowing of, prepayment of, Continuation $5,000,000 $1,000,000
of, or Conversion into, Eurodollar Rate
Loans
Borrowing of, or prepayment of, Swing Line $100,000 None
Loans
Letter of Credit Action [$100,000] None
Reduction in Commitments $1,000,000 $500,000
Assignments $10,000,000 $1,000,000
</TABLE>
"Multiemployer Plan" means any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA.
"Notes" means, collectively (i) each promissory note made by Borrower
in favor of a Lender evidencing Loans made by such Lender, substantially in the
form of Exhibit C.
"Notice of Assignment and Acceptance" means a Notice of Assignment and
Acceptance substantially in the form of Exhibit D.
"Obligations" means all advances to, and debts, liabilities,
obligations (including, without limitation, obligations to provide cash
collateral and indemnification obligations), covenants and duties of, any
Borrower Party arising under any Loan Document, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising and including interest that
accrues after the commencement of any proceeding under any Debtor Relief Laws by
or against any Borrower Party or any Subsidiary or Affiliate of any Borrower
Party.
"Ordinary Course Dispositions" means:
(a) Dispositions of obsolete or worn out property, whether now
owned or hereafter acquired, in the ordinary course of business;
(b) Dispositions of cash, cash equivalents, inventory and
other property in the ordinary course of business;
(c) Dispositions of property in the ordinary course of
business to the extent that such property is exchanged for credit
against the purchase price of similar replacement property, or the
proceeds of such sale are reasonably promptly applied to the purchase
price of such replacement property or where TTI or its Subsidiary
determine
- 16 -
<PAGE> 22
in good faith that the failure to replace such equipment will not be
detrimental to the business of TTI or such Subsidiary; and
(d) Dispositions of assets or property by any Subsidiary of
TTI to TTI or another wholly-owned Solvent Subsidiary of TTI;
provided, however, that no such Disposition shall be for less than the fair
market value of the property being disposed of.
"Ordinary Course Indebtedness" means:
(a) Indebtedness under the Loan Documents;
(b) intercompany Guaranty Obligations of TTI or any of its
Subsidiaries guarantying Indebtedness and other obligations otherwise
permitted hereunder of TTI or any wholly-owned Subsidiary of TTI;
(c) Indebtedness arising from the honoring of a check, draft
or similar instrument against insufficient funds; and
(d) Ordinary Course Swap Obligations.
"Ordinary Course Investments" means:
(a) Investments consisting of cash and cash equivalents;
(b) Investments consisting of advances to officers, directors
and employees of TTI and its Subsidiaries for travel, entertainment,
relocation and analogous ordinary business purposes;
(c) Investments of TTI in any Guarantor and Investments of any
Subsidiary of TTI in TTI or any Guarantor;
(d) Investments consisting of or evidencing the extension of
credit to customers or suppliers of TTI and its Subsidiaries in the
ordinary course of business and any Investments received in
satisfaction or partial satisfaction thereof; and
(e) Investments consisting of Guaranty Obligations permitted
by Section 7.01.
"Ordinary Course Liens" means:
(a) Liens pursuant to any Loan Document;
(b) Liens for taxes not yet due or which are being contested
in good faith and by appropriate proceedings, if adequate reserves with
respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;
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<PAGE> 23
(c) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 30 days or
which are being contested in good faith and by appropriate proceedings,
if adequate reserves with respect thereto are maintained on the books
of the applicable Person;
(d) pledges or deposits in connection with worker's
compensation, unemployment insurance and other social security
legislation;
(e) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(f) easements, rights-of-way, restrictions and other similar
encumbrances affecting real property which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract
from the value of the property subject thereto or materially interfere
with the ordinary conduct of the business of any Person; and
(g) attachment, judgment or other similar Liens arising in
connection with litigation or other legal proceedings (and not
otherwise a Default hereunder) in the ordinary course of business that
is currently being contested in good faith by appropriate proceedings,
so long as adequate reserves with respect thereto are maintained on the
books of the applicable Person in accordance with GAAP and no material
property is subject to a material risk of loss or forfeiture.
"Ordinary Course Swap Obligations" means all obligations (contingent or
otherwise) of TTI or any Subsidiary existing or arising under any Swap Contract,
provided that each of the following criteria is satisfied: (a) such obligations
are (or were) entered into by such Person in the ordinary course of business for
the purpose of directly mitigating risks associated with liabilities,
commitments or property held or reasonably anticipated by such Person, or
changes in the value of securities issued by such Person in conjunction with a
securities repurchase program not otherwise prohibited hereunder, and not for
purposes of speculation or taking a "market view;" and (b) such Swap Contracts
do not contain (i) any provision ("walk-away" provision) exonerating the
non-defaulting party from its obligation to make payments on outstanding
transactions to the defaulting party, or (ii) any provision creating or
permitting the declaration of an event of default, termination event or similar
event upon the occurrence of an Event of Default hereunder (other than an Event
of Default under Section 8.01(f)(ii)).
"Organization Documents" means, (a) with respect to any corporation,
the certificate or articles of incorporation and the bylaws; (b) with respect to
any limited liability company, the articles of formation and operating
agreement; and (c) with respect to any partnership, joint venture or other form
of business entity, the partnership agreement and any agreement, filing or
notice with respect thereto filed with the secretary of state of the state of
its formation, in each case as amended from time to time.
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<PAGE> 24
"Outstanding Obligations" means, as of any date, and giving effect to
making any Extensions of Credit requested on such date and all payments,
repayments and prepayments made on such date, (a) when reference is made to all
Lenders, the sum of (i) the aggregate outstanding principal amount of all Loans,
and (ii) all Letter of Credit Usage, and (b) when reference is made to one
Lender the sum of (i) the aggregate outstanding principal amount of all Loans
(excluding, in the case of the Swing Line Lender, Swing Line Loans) made by such
Lender, (ii) such Lender's ratable participation in all Letter of Credit Usage,
and (iii) such Lender's ratable participation in all outstanding Swing Line
Loans.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto established under ERISA.
"Pension Plan" means any "employee pension benefit plan" (as such term
is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by Borrower or any
ERISA Affiliates or to which Borrower or any ERISA Affiliate contributes or has
an obligation to contribute, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any time during
the immediately preceding five plan years.
"Permitted Acquisition" means any non-hostile Acquisition by TTI or any
Guarantor if all of the following conditions are met:
(a) before and immediately after giving effect thereto, (i) no
Default or Event of Default has occurred and is continuing or would
result therefrom, and (ii) the representations and warranties of each
Borrower Party set forth in the Loan Documents shall be true and
correct in all material respects on and as of the date of such
Acquisition, as though made on and as of such date, other than any such
representations or warranties that by their terms refer to a date other
than the date of such Acquisition, in which case such representations
and warranties shall be true and correct in all material respects as of
such other date;
(b) such Acquisition has not been preceded by an unsolicited
tender offer for such Person by TTI or any of its Affiliates;
(c) all transactions related thereto shall be consummated in
accordance with applicable Laws;
(d) in the case of any Acquisition of shares, partnership
interests or other equity interests in any Person, such Acquisition is
an Acquisition of 80% of the equity interests in such Person and, after
giving effect to such Acquisition, such Person becomes an 80%-owned
Subsidiary of TTI;
(e) all actions required to be taken, if any, with respect to
any acquired or newly formed Subsidiary under Section 6.13 shall have
been taken;
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<PAGE> 25
(f) such assets are used for, or such Person is engaged in, a
line of business permitted under Section 7.08;
(g) in the event that the Acquisition Consideration payable in
connection with such Acquisition is in excess of $50,000,000, (i) at
least 10 days prior to entering into such Acquisition, or any agreement
therefor, TTI delivers notice thereof to Administrative Agent, (ii) at
least 5 days prior to the consummation of such Acquisition, TTI
delivers to Administrative Agent and Lenders a certificate signed by
the chief financial officer of TTI calculating the Capitalization
Ratio, Consolidated Net Worth, the Interest Coverage Ratio and the
Leverage Ratio, each on a pro forma basis so as to give effect to such
Acquisition and all Acquisition Consideration therefor and all other
Indebtedness assumed or incurred by TTI or any of its Subsidiaries in
connection therewith, and attaching TTI's then-current good faith and
reasonable financial projections for the first fiscal quarter ending
after the consummation of such Acquisition and the succeeding three
quarters, demonstrating (to the reasonable satisfaction of the Required
Lenders) that, after giving effect to such Acquisition, (A) TTI would
have been in compliance with the covenants set forth in Section 7.12 as
of the last day of TTI's fiscal quarter most recently ended prior to
the consummation of such Acquisition and (B) based solely on such
projections and without any assurance that such projections will be
achieved, TTI can reasonably be expected to remain in compliance with
such covenants for the twelve-month period following the consummation
of such Acquisition, and to have sufficient cash liquidity to conduct
its business, to support working capital requirements, to make required
income tax distributions and pay its debts and other liabilities as
they become due and otherwise remain Solvent, and (iii) prior to the
inclusion in the calculation of Consolidated EBITDA of the Consolidated
EBITDA of the Person and its consolidated Subsidiaries or the assets to
be acquired in such Acquisition, TTI delivers to Administrative Agent
the consolidated balance sheet of such acquired Person and its
consolidated Subsidiaries (or, in the case of an Acquisition of assets,
a consolidated balance sheet reflecting such assets in a manner
reasonably satisfactory to Administrative Agent) as at the end of the
period preceding the acquisition of such Person or assets and the
related consolidated statements of income and stockholders' equity and
of cash flows for the period in respect of which Consolidated EBITDA is
to be calculated, and such financial statements (x) have been
previously provided to Administrative Agent and Lenders and (y) either
(1) have been reported on without a qualification arising out of the
scope of the audit by independent certified public accountants of
nationally recognized standing or (2) have been approved by
Administrative Agent;
(h) after giving effect to such Acquisition, (A) TTI would
have been in compliance with the covenants set forth in Section 7.12 as
of the last day of TTI's fiscal quarter most recently ended prior to
the consummation of such Acquisition and (B) based solely on TTI's
then-current good faith and reasonable financial projections for the
fiscal quarter ending after the consummation of such Acquisition and
the succeeding three quarters and without any assurance that such
projections will be achieved, TTI can reasonably be expected to remain
in compliance with such covenants for the twelve-
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<PAGE> 26
month period following the consummation of such Acquisition, and to
have sufficient cash liquidity to conduct its business, to support
working capital requirements, to make required income tax distributions
and pay its debts and other liabilities as they become due and
otherwise remain Solvent;
(i) neither TTI nor any of its Subsidiaries shall incur,
assume or otherwise become liable for or subject to any Indebtedness in
connection with such Acquisition except for Indebtedness permitted by
Section 7.01;
(j) the assets acquired in such Acquisition shall be acquired
free and clear of all Liens other than Ordinary Course Liens and Liens
permitted by Section 7.02(i); and
(k) as soon as reasonably practicable and, in any event,
within 45 days following the date of such Acquisition, Administrative
Agent shall have received copies of all acquisition documents related
thereto and legal opinions, evidence of solvency and other documents
and instruments reasonably requested by Administrative Agent in
connection with such Acquisition.
"Person" means any individual, trustee, corporation, general
partnership, limited partnership, limited liability company, joint stock
company, trust, unincorporated organization, bank, business association, firm,
joint venture, Governmental Authority, or otherwise.
"Plan" means any employee benefit plan maintained or contributed to by
a Borrower Party or by any trade or business (whether or not incorporated) under
common control with a Borrower Party as defined in Section 4001(b) of ERISA and
insured by the Pension Benefit Guaranty Corporation under Title IV of ERISA.
"Pledge Agreement" means, collectively, (i) the pledge agreement
executed and delivered by each Material Subsidiary of TTI (other than any
Foreign Subsidiary), substantially in the form of Exhibit H, and (ii) any
supplements thereto substantially in the form of Annex A to Exhibit H executed
and delivered pursuant to Section 6.13.
"Private Letter Ruling" mean an IRS private letter ruling confirming
the tax free treatment of the Spinoff under Section 355 of the Code, as amended,
restated, extended, supplemented or otherwise modified in writing from time to
time in accordance with this Agreement.
"Profit Payment Agreement" means any agreement to make any payment the
amount of which is, or the terms of payment of which are, in any respect subject
to or contingent upon the revenues, income, cash flow or profits (or the like)
of any Person or business.
"Pro Rata Share" means, with respect to each Lender, the percentage of
the combined Commitments set forth opposite the name of that Lender on Schedule
2.01, as such share may be adjusted pursuant to Section 10.23.
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<PAGE> 27
"Qualified Public Offering" means an underwritten public offering,
pursuant to an effective registration statement under the Securities Act of
1933, as amended, of shares of common stock of TTI which results in gross
proceeds to TTI of not less than $115,000,000.
"Reportable Event" means any of the events set forth in Section 4043(b)
of ERISA or the regulations thereunder, a withdrawal from a Plan described in
Section 4063 of ERISA, or a cessation of operations described in Section 4062(e)
of ERISA.
"Request for Extension of Credit" means a written request substantially
in the form of Exhibit A duly completed and signed by a Responsible Officer, or
a telephonic request followed by such a written request, in each case delivered
to Administrative Agent by Requisite Notice. In the case of a request for a new
or amended Letter of Credit, the written Letter of Credit Application shall be
deemed to be the Request for Extension of Credit.
"Required Lenders" means (a) as of any date of determination if the
Commitments are then in effect, Lenders (excluding any Lenders not funding when
required to so hereunder) having in the aggregate more than 50% of the combined
Commitments then in effect and (b) as of any date of determination if the
Commitments have then been terminated and there are Loans and/or Letter of
Credit Usage outstanding, Lenders holding Loans and Letter of Credit Usage
aggregating more than 50% of the aggregate outstanding principal amount of the
Loans and Letter of Credit Usage.
"Requisite Notice" means, unless otherwise provided herein, (a)
irrevocable written notice to the intended recipient or (b) except with respect
to Letter of Credit Actions (which must be in writing), irrevocable telephonic
notice to the intended recipient, promptly followed by a written notice to such
recipient. Such notices shall be (i) delivered to such recipient at the address
or telephone number specified on Schedule 10.03 or as otherwise designated by
such recipient by Requisite Notice to each other party hereto, and (ii) if made
by any Borrower Party, given or made by a Responsible Officer of such Borrower
Party. Any written notice delivered in connection with any Loan Document shall
be in the form, if any, prescribed in the applicable section hereof or thereof
and may be delivered as provided in Section 10.03. Any notice sent by other than
hardcopy shall be promptly confirmed by a telephone call to the recipient and,
if requested by Administrative Agent, by a manually-signed hardcopy thereof.
"Requisite Time" means, with respect to any of the actions listed
below, the time and date set forth below opposite such action (all times are
local time (standard or daylight) as observed in the state where Administrative
Agent's Office is located):
<TABLE>
<CAPTION>
TYPE OF ACTION TIME DATE OF ACTION
---------------------------------------------------- ---------------- --------------------------------------------
<S> <C> <C>
Delivery of Request for Extension of
Credit for, or notice for:
o Borrowing of, prepayment of, or 9:00 A.M. Same date as such Borrowing, prepayment or
Conversion into, Base Rate Loans Conversion
o Borrowing of, prepayment of, Continuation 10:00 A.M. 3 Business Days prior to such Borrowing,
of, or Conversion into, Eurodollar Rate Loans prepayment or Conversion
</TABLE>
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<PAGE> 28
<TABLE>
<S> <C> <C>
o Borrowing of, or prepayment of, Swing 1:00 P.M. Same date as such Borrowing or prepayment
Line Loans
2 Business Days prior to such action (or
o Letter of Credit Action 10:00 A.M. such lesser time which is acceptable to
Issuing Lender)
o Voluntary reduction in or termination of 10:00 A.M. 2 Business Days prior to such reduction or
Commitments termination
o Payments by Lenders or Borrower to 11:00 A.M. On date payment is due
Administrative Agent
</TABLE>
"Responsible Officer" means the president, chief financial officer,
treasurer or assistant treasurer of any Borrower Party. Any document or
certificate hereunder that is signed by a Responsible Officer of a Borrower
Party shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Borrower Party
and such Responsible Officer shall be conclusively presumed to have acted on
behalf of such Borrower Party.
"Restricted Payment" means:
(a) the declaration or payment of any dividend or distribution
by Borrower or any of its Subsidiaries, either in cash or property, on
any shares of the capital stock of any class of Borrower or any of its
Subsidiaries (except dividends or other distributions payable solely in
shares of capital stock of Borrower or any of its Subsidiaries or
payable by a Subsidiary to Borrower or another wholly-owned Subsidiary
of Borrower that is a Guarantor);
(b) the purchase, redemption or retirement by Borrower or any
of its Subsidiaries of any shares of its capital stock of any class or
any warrants, rights or options to purchase or acquire any shares of
its capital stock, whether directly or indirectly;
(c) any other payment or distribution by Borrower or any of
its Subsidiaries in respect of its capital stock, either directly or
indirectly;
(d) any Investment other than an Investment otherwise
permitted under any Loan Document; and
(e) the prepayment, repayment, redemption, defeasance or other
acquisition or retirement for value prior to any scheduled maturity,
scheduled repayment or scheduled sinking fund payment, or the
segregation of funds for any such prepayment, repayment, redemption,
defeasance or other acquisition or retirement for value, of any
Indebtedness
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<PAGE> 29
not otherwise expressly permitted under any Loan Document to be so
paid, except scheduled repayments of Indebtedness created under the
Existing ALT Credit Agreement, as in effect on the date hereof.
"Separation and Distribution Agreement" means that certain Separation
and Distribution Agreement, entered into in connection with the Spinoff, among
ALT, TII Holdings, LLC, Teledyne Industries, Inc. and TTI.
"Signing Date" means the date on which all the conditions precedent in
Section 4.01 are satisfied or waived in accordance with Section 4.01, which date
shall be no later than October 29, 1999.
"Solvent" means, when used with respect to any Person, as of any date
of determination, that (a) the amount of the "present fair saleable value" of
the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state Laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, (d) such Person will be able to pay its debts as they mature, and
(e) such Person is not insolvent within the meaning of any applicable Law. For
purposes of this definition, (i) "debt" means liability on a "claim", and (ii)
"claim" means any (x) right to payment, whether or not such a right is reduced
to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured.
"Spinoff" has the meaning set forth in the introductory paragraph
hereto.
"Spinoff Documents" means, collectively, (i) the Form 10, (ii) the
Private Letter Ruling, (iii) the Separation and Distribution Agreement, (iv) the
Tax Sharing and Indemnification Agreement, (iv) the Interim Services Agreement,
entered into in connection with the Spinoff, between ALT and TTI, (v) the
Employee Benefits Agreement, entered into in connection with the Spinoff,
between ALT and TTI, (vi) the Trademark License Agreement, entered into in
connection with the Spinoff, among TII Holdings, LLC and TTI, and (vii) and all
schedules, exhibits, annexes and amendments thereto and all side letters and
agreements affecting the terms thereof or entered into in connection therewith.
"Stockholders' Equity" means, as of any date of determination for TTI
and its Subsidiaries on a consolidated basis, stockholders' equity as of that
date determined in accordance with GAAP.
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<PAGE> 30
"Subsidiary" means a corporation, partnership, joint venture, limited
liability company or other business entity of which a majority of the shares of
securities or other interests having ordinary voting power for the election of
directors or other governing body (other than securities or interests having
such power only by reason of the happening of a contingency) are at the time
beneficially owned, or the management of which is otherwise controlled,
directly, or indirectly through one or more intermediaries, or both, by
Borrower.
"Swap Contract" means (a) any and all rate swap transactions, basis
swaps, forward rate transactions, commodity swaps, commodity options, forward
commodity contracts, equity or equity index swaps or options, bond or bond price
or bond index swaps or options or forward bond or forward bond price or forward
bond index transactions, interest rate options, forward foreign exchange
transactions, cap transactions, floor transactions, collar transactions,
currency swap transactions, cross-currency rate swap transactions, currency
options, or any other similar transactions or any combination of any of the
foregoing (including any options to enter into any of the foregoing), whether or
not any such transaction is governed by or subject to any master agreement, or
(b) any and all transactions of any kind, and the related confirmations, which
are subject to the terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association,
Inc., or any other master agreement (any such master agreement, together with
any related schedules, as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, a "Master Agreement"), including any such
obligations or liabilities under any Master Agreement.
"Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, any outstanding termination value(s), and
(b) for any date prior to the date referenced in clause (a) the amount(s)
determined as the mark-to-market value(s) for such Swap Contracts, as determined
based upon one or more mid-market or other readily available quotations provided
by any recognized dealer in such Swap Contracts (which may include any Lender).
"Swing Line" means the revolving line of credit established by Swing
Line Lender in favor of Borrower pursuant to Section 2.04.
"Swing Line Commitment" means an amount equal to the lesser of (a)
$10,000,000 and (b) the combined Commitments.
"Swing Line Lender" means Bank of America, or any successor swing line
lender hereunder.
"Swing Line Loan" means a loan which bears interest at a rate per annum
equal to interest payable on a Base Rate Loan (plus the Applicable Amount, if
any) and made by Swing Line Lender to Borrower under the Swing Line.
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<PAGE> 31
"Swing Line Outstandings" means, as of any date, the aggregate
principal amount of all outstanding Swing Line Loans.
"Synthetic Lease Obligations" means all monetary obligations of a
Person under (a) a so-called synthetic, off-balance sheet or tax retention
lease, or (b) an agreement for the use or possession of property creating
obligations which do not appear on the balance sheet of such Person but which,
upon the insolvency or bankruptcy of such Person, would be characterized as the
Indebtedness of such Person (without regard to accounting treatment).
"Tax Sharing and Indemnification Agreement" means that certain Tax
Sharing and Indemnification Agreement, entered into in connection with the
Spinoff, between ALT and TTI.
"Threshold Amount" means $10,000,000.
"Total Assets" means, as of any date of determination, for any Person,
the value of all properties and all right, title and interest in such properties
which would be classified as assets of such Person, determined in accordance
with GAAP.
"to the best knowledge of" means, when modifying a representation,
warranty or other statement of any Person, that the fact or situation described
therein is known by such Person (or, in the case of a Person other than a
natural Person, known by any officer of such Person) making the representation,
warranty or other statement, or with the exercise of reasonable due diligence
under the circumstances (in accordance with the standard of what a reasonable
Person in similar circumstances would have done) would have been known by such
Person (or, in the case of a Person other than a natural Person, would have been
known by an officer of such Person).
"TTI" has the meaning set forth in the introductory paragraph hereto.
"TTI Closing Date" means the date on which all the conditions precedent
in Section 4.03 are satisfied or waived in accordance with Section 4.03, which
date shall be no later the date that is one month following the ALT Closing
Date.
"TTI Financial Statements" means, collectively, (i) the Audited TTI
Financial Statements and (ii) the Unaudited TTI Financial Statements.
"TTI Group" means, collectively, TTI and its Subsidiaries.
"type", when used with respect to any Loan, means the designation of
whether such Loan is a Base Rate Loan or a Eurodollar Rate Loan.
"Unaudited TTI Financial Statements" means the unaudited pro forma
consolidated statement of income of TTI for the fiscal year ended December 31,
1998, (ii) the unaudited pro forma consolidated balance sheet of TTI as at June
30, 1999, (iii) the unaudited pro forma consolidated statement of income of TTI
for the six months ended June 30, 1999, and (iv) [___________________].
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<PAGE> 32
"Unfunded Pension Liability" means the excess of a Pension Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Pension Plan's assets, determined in accordance with the assumptions
used for funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even though the right
so to vote has been suspended by the happening of such a contingency.
1.02 USE OF CERTAIN TERMS.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto or thereto, unless otherwise defined therein.
(b) As used herein, unless the context requires otherwise, the
masculine, feminine and neuter genders and the singular and plural include one
another.
(c) The words "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. The term "including" is by
way of example and not limitation. References herein to a Section, subsection or
clause shall refer to the appropriate Section, subsection or clause in this
Agreement.
(d) The term "or" is disjunctive; the term "and" is
conjunctive. The term "shall" is mandatory; the term "may" is permissive.
Masculine terms also apply to females; feminine terms also apply to males.
1.03 ACCOUNTING TERMS. All accounting terms not specifically or
completely defined in this Agreement shall be construed in conformity with, and
all financial data required to be submitted by this Agreement shall be prepared
in conformity with, GAAP applied on a consistent basis, as in effect from time
to time, applied in a manner consistent with that used in preparing the Audited
Financial Statements, except as otherwise specifically prescribed herein.
1.04 ROUNDING. Any financial ratios required to be maintained by
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed in this
Agreement and rounding the result up or down to the nearest number (with a
round-up if there is no nearest number) to the number of places by which such
ratio is expressed in this Agreement.
1.05 EXHIBITS AND SCHEDULES. All exhibits and schedules to this
Agreement, either as originally existing or as the same may from time to time be
supplemented, modified or amended, are incorporated herein by this reference.
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<PAGE> 33
1.06 REFERENCES TO AGREEMENTS AND LAWS. Unless otherwise expressly
provided herein, (a) references to the Loan Documents, the Private Letter
Ruling, the Form 10 and the other Spinoff Documents shall include all
amendments, restatements, extensions, supplements or other modifications thereto
in accordance with this Agreement, (b) references to agreements and other
contractual instruments (other than those included in clause (a) above) shall
include all amendments, restatements, extensions, supplements or other
modifications thereto (unless prohibited by any Loan Document), and (c)
references to any statute or regulation shall include all statutory and
regulatory provisions consolidating, amending, replacing, supplementing or
interpreting the statute or regulation.
SECTION 2.
THE COMMITMENTS AND EXTENSIONS OF CREDIT
2.01 AMOUNT AND TERMS OF COMMITMENTS.
(a) Subject to the terms and conditions set forth in this
Agreement, each Lender severally agrees to make, Convert and Continue Loans
until the Maturity Date as Borrower may from time to time request; provided,
however, that the Outstanding Obligations of each Lender shall not exceed such
Lender's Commitment, and the Outstanding Obligations of all Lenders shall not
exceed the combined Commitments at any time. Subject to the foregoing and the
other terms and conditions hereof, Borrower may borrow, Convert, Continue,
prepay and reborrow Loans as set forth herein without premium or penalty.
(b) Loans made by each Lender shall be evidenced by one or
more loan accounts or records maintained by such Lender in the ordinary course
of business. Upon the request of any Lender made through Administrative Agent,
such Lender's Loans may be evidenced by one or more Notes, instead of or in
addition to loan accounts; provided that Loans made to ALT shall be evidenced by
the ALT Global Note only. Each such Lender may attach schedules to its Note(s)
and endorse thereon the date, amount and maturity of its Loans and payments with
respect thereto. Such loan accounts, records or Notes shall be conclusive absent
manifest error of the amount of such Loans and payments thereon. Any failure to
so record or any error in doing so shall not, however, limit or otherwise affect
the obligation of Borrower to pay any amount owing with respect to the Loans.
2.02 BORROWINGS, CONVERSIONS AND CONTINUATIONS OF LOANS.
(a) Borrower may irrevocably request a Borrowing, Conversion
or Continuation of Loans in a Minimum Amount therefor by delivering a Request
for Extension of Credit therefor by Requisite Notice to Administrative Agent not
later than the Requisite Time therefor. All Borrowings, Conversions and
Continuations shall constitute Base Rate Loans unless properly and timely
otherwise designated as set forth in the prior sentence.
(b) Following receipt of a Request for Extension of Credit,
Administrative Agent shall promptly notify each Lender of its Pro Rata Share
thereof by Requisite Notice. In the case of a Borrowing of Loans, each Lender
shall make the funds for its Loan available to
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<PAGE> 34
Administrative Agent at Administrative Agent's Office not later than the
Requisite Time therefor on the Business Day specified in such Request for
Extension of Credit. Upon satisfaction of the applicable conditions set forth in
Section 4, all funds so received shall be made available to Borrower in like
funds received.
(c) Administrative Agent shall promptly notify Borrower and
Lenders of the interest rate applicable to any Loan other than a Base Rate Loan
upon determination of same.
(d) Except as otherwise provided herein, a Eurodollar Rate
Loan may be Continued or Converted only on the last day of the Interest Period
for such Eurodollar Rate Loan. No Loans may be requested as, Converted into or
Continued as Eurodollar Rate Loans during the existence of a Default or Event of
Default. During the existence of a Default or Event of Default, the Required
Lenders may demand that any or all of the then outstanding Eurodollar Rate Loans
be Converted immediately into Base Rate Loans. Such Conversion shall be
effective upon notice to Borrower and shall continue so long as such Default or
Event of Default continues to exist.
(e) If a Loan is to be made on the same date that another Loan
is due and payable, Borrower or Lenders, as the case may be, shall, unless
Administrative Agent otherwise requests, make available to Administrative Agent
the net amount of funds giving effect to both such Loans and the effect for
purposes of this Agreement shall be the same as if separate transfers of funds
had been made with respect to each such Loan.
(f) The failure of any Lender to make any Loan on any date
shall not relieve any other Lender of any obligation to make a Loan on such
date, but no Lender shall be responsible for the failure of any other Lender to
so make its Loan.
2.03 LETTERS OF CREDIT.
(a) THE LETTER OF CREDIT COMMITMENT. Subject to the terms and
conditions hereof, at any time and from time to time from the TTI Closing Date
through the Letter of Credit Expiration Date, Issuing Lender shall take such
Letter of Credit Actions under the Commitments as Borrower may request;
provided, however, that (i) the Outstanding Obligations of each Lender shall not
exceed such Lender's Commitment and the Outstanding Obligations of all Lenders
shall not exceed the combined Commitments at any time, and (ii) the aggregate
outstanding Letter of Credit Usage shall not exceed the Letter of Credit
Commitment at any time. Each Letter of Credit Action shall be in a form
reasonably acceptable to Issuing Lender and shall not violate any policies of
Issuing Lender. Subject to subsection (f) below and unless consented to by the
Issuing Lender and the Required Lenders, no Letter of Credit may expire more
than 12 months after the date of its issuance or last renewal; provided,
however, that no Letter of Credit shall expire after the Letter of Credit
Expiration Date. If any Letter of Credit Usage remains outstanding after the
Letter of Credit Expiration Date, Borrower shall, not later than the Letter of
Credit Expiration Date, deposit cash in an amount equal to such Letter of Credit
Usage in a Letter of Credit Cash Collateral Account.
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<PAGE> 35
(b) REQUESTING LETTER OF CREDIT ACTIONS. Borrower may
irrevocably request a Letter of Credit Action in a Minimum Amount therefor by
delivering a Letter of Credit Application therefor to Issuing Lender, with a
copy to Administrative Agent (who shall notify Lenders), by Requisite Notice not
later than the Requisite Time therefor. Unless Administrative Agent notifies
Issuing Lender that such Letter of Credit Action is not permitted hereunder or
Issuing Lender determines that such Letter of Credit Action is contrary to any
Laws or policies of Issuing Lender or does not otherwise conform to the
requirements of this Agreement, Issuing Lender shall effect such Letter of
Credit Action. This Agreement shall control in the event of any conflict with
any Letter of Credit Application. Upon the issuance of a Letter of Credit, each
Lender shall be deemed to have purchased a pro rata participation in such Letter
of Credit from Issuing Lender in an amount equal to that Lender's Pro Rata
Share.
(c) REIMBURSEMENT OF PAYMENTS UNDER LETTERS OF CREDIT.
Borrower shall reimburse Issuing Lender through Administrative Agent for any
payment that Issuing Lender makes under a Letter of Credit on or before the date
of such payment; provided, however, that if the conditions precedent set forth
in Section 4 can be satisfied, Borrower may request a Borrowing of Loans to
reimburse Issuing Lender for such payment on or before the date thereof by
complying with Section 2.02, or Borrower may allow a deemed Borrowing of Loans
which are Base Rate Loans to take place on such payment date pursuant to
subsection (e) below.
(d) FUNDING BY LENDERS WHEN ISSUING LENDER NOT REIMBURSED.
Upon any drawing under a Letter of Credit, Issuing Lender shall notify
Administrative Agent and Borrower. If Borrower fails to timely make the payment
required pursuant to subsection (c) above, Issuing Lender shall notify
Administrative Agent of such fact and the amount of such unreimbursed payment.
Administrative Agent shall promptly notify each Lender of its Pro Rata Share of
such amount by Requisite Notice. Each Lender shall make funds in an amount equal
its Pro Rata Share of such amount available to Administrative Agent at
Administrative Agent's Office not later than the Requisite Time on the Business
Day specified by Administrative Agent, and Administrative Agent shall remit the
funds so received to reimburse Issuing Lender. The obligation of each Lender to
so reimburse Issuing Lender shall be absolute and unconditional and shall not be
affected by the occurrence of an Event of Default or any other occurrence or
event. Any such reimbursement shall not relieve or otherwise impair the
obligation of Borrower to reimburse Issuing Lender for the amount of any payment
made by Issuing Lender under any Letter of Credit, together with interest as
provided herein.
(e) NATURE OF LENDERS' FUNDING. If the conditions precedent
set forth in Section 4 can be satisfied (except for the giving of a Request for
Extension of Credit) on the date Borrower is obligated to make, but fails to
make, a reimbursement of a payment under a Letter of Credit, the funding by
Lenders pursuant to subsection (d) above shall be deemed to be part of a
Borrowing of Loans which are Base Rate Loans (without regard to the Minimum
Amount therefor) requested by Borrower. If the conditions precedent set forth in
Section 4 cannot be satisfied on the date Borrower is obligated to make, but
fails to make, a reimbursement of a payment under a Letter of Credit, the
funding by Lenders pursuant to subsection (d) above shall be deemed to be a
funding by each Lender of its participation in such Letter of Credit, and such
funds shall be payable by Borrower upon demand and shall bear interest at the
Default Rate
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payable on demand, and each Lender making such funding shall thereupon acquire a
pro rata participation, to the extent of such reimbursement, in the claim of
Issuing Lender against Borrower in respect of such payment and shall share, in
accordance with that pro rata participation, in any payment made by Borrower
with respect to such claim. If Administrative Agent or Issuing Lender is
required at any time to return to Borrower, or to a trustee, receiver,
liquidator, custodian, or any official under any proceeding under Debtor Relief
Laws, any portion of the payments made by Borrower to Administrative Agent for
the account of Issuing Lender pursuant to this subsection in reimbursement of a
payment made under a Letter of Credit or interest or fee thereon, each Lender
shall, on demand of Administrative Agent, forthwith return to Administrative
Agent or Issuing Lender the amount of its Pro Rata Share of any amounts so
returned by Administrative Agent or Issuing Lender plus interest thereon from
the date such demand is made to the date such amounts are returned by such
Lender to Administrative Agent or Issuing Lender, at a rate per annum equal to
the daily Federal Funds Rate.
(f) SPECIAL PROVISIONS RELATING TO EVERGREEN LETTERS OF
CREDIT. Borrower may request Letters of Credit that have automatic extension or
renewal provisions ("evergreen" Letters of Credit) so long as Issuing Lender has
the right to not permit any such extension or renewal at least annually within a
notice period to be agreed upon at the time each such Letter of Credit is
issued. Once an evergreen Letter of Credit is issued, unless Administrative
Agent has notified Issuing Lender that all Lenders have elected not to permit
such extension or renewal, the Borrower Parties, Administrative Agent and
Lenders shall be deemed to authorize (but may not require) Issuing Lender to, in
its sole and absolute discretion, permit the renewal of such evergreen Letter of
Credit at any time to a date not later than the Letter of Credit Expiration
Date, and, unless directed by Issuing Lender, Borrower shall not be required to
request such extension or renewal. Notwithstanding the foregoing, Issuing Lender
may, in its sole and absolute discretion, upon not less than 60 days' advance
notice to Borrower, elect not to permit an evergreen Letter of Credit to be
extended or renewed at any time.
(g) OBLIGATIONS ABSOLUTE. The obligation of Borrower to pay to
Issuing Lender the amount of any payment made by Issuing Lender under any Letter
of Credit shall be absolute, unconditional, and irrevocable. Without limiting
the foregoing, Borrower's obligation shall not be affected by any of the
following circumstances:
(i) any lack of validity or enforceability of the
Letter of Credit, this Agreement, or any other agreement or instrument relating
thereto;
(ii) any amendment or waiver of or any consent to
departure from the Letter of Credit, this Agreement, or any other agreement or
instrument relating thereto;
(iii) the existence of any claim, setoff, defense, or
other rights which Borrower may have at any time against Issuing Lender,
Administrative Agent or any Lender, any beneficiary of the Letter of Credit (or
any persons or entities for whom any such beneficiary may be acting) or any
other Person, whether in connection with the Letter of Credit, this Agreement,
or any other agreement or instrument relating thereto, or any unrelated
transactions;
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(iv) any demand, statement, or any other document
presented under the Letter of Credit proving to be forged, fraudulent, invalid,
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever so long as any such document appeared to
comply with the terms of the Letter of Credit;
(v) payment by Issuing Lender in good faith under the
Letter of Credit against presentation of a draft or any accompanying document
which does not strictly comply with the terms of the Letter of Credit; or any
payment made by Issuing Lender under any Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the
benefit of creditors, liquidator, receiver or other representative of or
successor to any beneficiary or any transferee of any Letter of Credit,
including any arising in connection with any proceeding under any Debtor Relief
Laws;
(vi) the existence, character, quality, quantity,
condition, packing, value or delivery of any property purported to be
represented by documents presented in connection with any Letter of Credit or
for any difference between any such property and the character, quality,
quantity, condition, or value of such property as described in such documents;
(vii) the time, place, manner, order or contents of
shipments or deliveries of property as described in documents presented in
connection with any Letter of Credit or the existence, nature and extent of any
insurance relative thereto;
(viii) the solvency or financial responsibility of
any party issuing any documents in connection with a Letter of Credit;
(ix) any failure or delay in notice of shipments or
arrival of any property;
(x) any error in the transmission of any message
relating to a Letter of Credit not caused by Issuing Lender, or any delay or
interruption in any such message;
(xi) any error, neglect or default of any
correspondent of Issuing Lender in connection with a Letter of Credit;
(xii) any consequence arising from acts of God, wars,
insurrections, civil unrest, disturbances, labor disputes, emergency conditions
or other causes beyond the control of Issuing Lender;
(xiii) so long as Issuing Lender in good faith
determines that the document appears to comply with the terms of the Letter of
Credit, the form, accuracy, genuineness or legal effect of any contract or
document referred to in any document submitted to Issuing Lender in connection
with a Letter of Credit; and
(xiv) where Issuing Lender has acted in good faith
under any other circumstances whatsoever.
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In addition, Borrower will promptly examine a copy of each Letter of
Credit and amendments thereto delivered to it and, in the event of any claim of
noncompliance with Borrower's instructions or other irregularity, Borrower will
immediately notify Issuing Lender in writing. Borrower shall be conclusively
deemed to have waived any such claim against Issuing Lender and its
correspondents unless such notice is given as aforesaid.
(h) ROLE OF ISSUING LENDER. Each Lender and Borrower Party
agree that, in paying any drawing under a Letter of Credit, Issuing Lender shall
not have any responsibility to obtain any document (other than any sight draft,
certificates and documents expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document. No
Administrative Agent-Related Person nor any of the respective correspondents,
participants or assignees of Issuing Lender shall be liable to any Lender for
any action taken or omitted in connection herewith at the request or with the
approval of Lenders or the Required Lenders, as applicable; any action taken or
omitted in the absence of gross negligence or willful misconduct as determined
in a final, nonappealable judgment by a court of competent jurisdiction; or the
due execution, effectiveness, validity or enforceability of any document or
instrument related to any Letter of Credit. Borrower hereby assumes all risks of
the acts or omissions of any beneficiary or transferee with respect to its use
of any Letter of Credit; provided, however, that this assumption is not intended
to, and shall not, preclude Borrower's pursuing such rights and remedies as it
may have against the beneficiary or transferee at law or under any other
agreement. No Administrative Agent-Related Person, nor any of the respective
correspondents, participants or assignees of Issuing Lender, shall be liable or
responsible for any of the matters described in subsection (g) above. In
furtherance and not in limitation of the foregoing, Issuing Lender may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary,
and Issuing Lender shall not be responsible for the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason.
(i) APPLICABILITY OF ISP98. Unless otherwise expressly agreed
by the Issuing Lender and Borrower when a Letter of Credit is issued,
performance under Letters of Credit by the Issuing Lender, its correspondents,
and beneficiaries will be governed by the rules of the "International Standby
Practices 1998" (ISP98) or such later revision as may be published by the
International Chamber of Commerce.
(j) LETTER OF CREDIT FEE. On each Applicable Payment Date,
Borrower shall pay to Administrative Agent in arrears, for the account of each
Lender in accordance with its Pro Rata Share, a Letter of Credit fee equal to
the indicated Applicable Amount for Letters of Credit times the actual daily
maximum amount available to be drawn under each Letter of Credit since the later
of the TTI Closing Date and the previous Applicable Payment Date. If there is
any change in the Applicable Amount during any quarter, the actual daily amount
shall be computed and multiplied by the Applicable Amount separately for each
period during such quarter that such Applicable Amount was in effect.
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(k) FRONTING FEE AND DOCUMENTARY AND PROCESSING CHARGES
PAYABLE TO ISSUING LENDER. Borrower shall pay to Administrative Agent for the
sole account of Issuing Lender a fronting fee in an amount equal to 1/8 of 1%
per annum on the daily average face amount thereof, payable quarterly in arrears
on each Applicable Payment Date. In addition, Borrower shall pay directly to
Issuing Lender for its sole account its customary documentary and processing
charges in accordance with its standard schedule, as from time to time in
effect, for any Letter of Credit Action or other occurrence relating to a Letter
of Credit for which such charges are customarily made. Such fees and charges are
nonrefundable.
2.04 SWING LINE.
(a) Subject to the terms and conditions set forth in this
Agreement, Swing Line Lender agrees to make Swing Line Loans from the TTI
Closing Date until the Maturity Date in such amounts as Borrower may from time
to time request; provided, however, that (i) the aggregate principal amount of
all Swing Line Loans shall not exceed the Swing Line Commitment, and (ii) the
Outstanding Obligations of each Lender shall not exceed such Lender's Commitment
and the Outstanding Obligations of all Lenders shall not exceed the combined
Commitments at any time. Swing Line Lender may terminate or suspend the Swing
Line at any time and from time to time in its sole discretion upon at least 24
hours prior notice to Borrower. Without the consent of the Required Lenders and
Swing Line Lender, no Swing Line Loan shall be made during the continuation of
an Event of Default. Borrower may borrow, repay and reborrow under this Section.
Unless notified to the contrary by Swing Line Lender, Borrowings under the Swing
Line shall be made in the Minimum Amount therefor upon Requisite Notice made to
Swing Line Lender not later than the Requisite Time therefor. Each such request
for a Swing Line Loan shall constitute a representation and warranty by Borrower
that the conditions set forth in Sections 4.04(a) and (b) are satisfied.
Promptly after receipt of such request, Swing Line Lender shall obtain
telephonic verification from Administrative Agent that there is availability for
such Swing Line Loan under the Commitments. Unless notified to the contrary by
Swing Line Lender, each repayment of a Swing Line Loan shall be made directly to
Swing Line Lender in the Minimum Amount therefor by payment or debit at a demand
deposit account at the Swing Line Lender. All payments received after the
Requisite Time therefor shall be deemed received on the next succeeding Business
Day. Swing Line Lender shall promptly notify Administrative Agent of the Swing
Line Outstandings each time there is a change therein. Upon the making of a
Swing Line Loan, each Lender shall be deemed to have purchased from Swing Line
Lender a risk participation therein in an amount equal to that Lender's Pro Rata
Share times the amount of the Swing Line Loan.
(b) Swing Line Loans shall bear interest at a fluctuating rate
per annum equal to the rate of interest payable on Base Rate Loans (plus the
Applicable Amount, if any) payable on such dates, not more frequent than
monthly, as may be specified by Swing Line Lender and, in any event, on the
Maturity Date. Interest on Swing Line Loans shall be payable upon demand of
Swing Line Lender, and Swing Line Lender shall be responsible for invoicing
Borrower for such interest. The interest payable on Swing Line Loans is solely
for the account of Swing Line Lender.
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(c) The Swing Line Loans shall be payable on the earliest of
(i) the fifth Business Day after it is made, (ii) the Maturity Date and (iii)
upon demand made by Swing Line Lender.
(d) Unless Borrower has made other arrangements satisfactory
to Swing Line Lender in Swing Line Lender's sole discretion, if any Swing Line
Loan remains outstanding in excess of five consecutive Business Days, then on
the next Business Day, Borrower shall repay such Swing Line Loan by payment
directly to Swing Line Lender or by debit at a demand deposit account at Swing
Line Lender not later than the Requisite Time for payments hereunder. Borrower
shall also pay accrued interest on any principal amount so repaid.
(e) If Borrower fails to timely make any principal or interest
payment required pursuant to subsection (d) above, Swing Line Lender shall
notify Administrative Agent of such fact and the unpaid amount. Administrative
Agent shall promptly notify each Lender of its Pro Rata Share of such amount by
Requisite Notice. Each Lender shall make funds in an amount equal its Pro Rata
Share of such amount available to Administrative Agent at Administrative Agent's
Office not later than the Requisite Time for payments hereunder on the following
Business Day. The obligation of each Lender to make such payment shall be
absolute and unconditional and shall not be affected by the occurrence of an
Event of Default or any other occurrence or event. Any such payment shall not
relieve or otherwise impair the obligation of Borrower to repay Swing Line
Lender for any amount of Swing Line Loans, together with interest as provided
herein.
(f) If the conditions precedent set forth in Section 4 can be
satisfied (except for the giving of a Request for Extension of Credit) on any
date Borrower is obligated to make, but fails to make, a repayment of Swing Line
Loans, the funding by Lenders pursuant to subsection (e) above shall be deemed
to be part of a Borrowing of Loans which are Base Rate Loans (without regard to
the Minimum Amount therefor) requested by Borrower. If the conditions precedent
set forth in Section 4 cannot be satisfied on the date Borrower is obligated to
make, but fails to make, such payment, the funding by Lenders pursuant to
subsection (e) above shall be deemed to be a funding by each Lender of its
participation in such Swing Line Loans, and such funds shall be payable by
Borrower upon demand and shall bear interest at the Default Rate, and each
Lender making such funding shall thereupon acquire a pro rata participation, to
the extent of such payment, in the claim of Swing Line Lender against Borrower
in respect of such payment and shall share, in accordance with that pro rata
participation, in any payment made by Borrower with respect to such claim.
2.05 PREPAYMENTS.
(a) Upon Requisite Notice to Administrative Agent not later
than the Requisite Time therefor, Borrower may at any time and from time to time
voluntarily prepay Loans in part in the Minimum Amount therefor or in full
without premium or penalty. Administrative Agent will promptly notify each
Lender thereof and of such Lender's Pro Rata Share of such prepayment. Any
prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued
interest thereon, together with the costs set forth in Section 3.05.
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(b) If for any reason the Outstanding Obligations exceed the
combined Commitments as in effect or as reduced or because of any limitation set
forth in this Agreement or otherwise, Borrower shall immediately prepay Loans
and/or deposit cash in a Letter of Credit Cash Collateral Account in an
aggregate amount equal to such excess.
2.06 REDUCTION OR TERMINATION OF COMMITMENTS. Upon Requisite Notice to
Administrative Agent not later than the Requisite Time therefor, Borrower may at
any time and from time to time, without premium or penalty, permanently and
irrevocably reduce the Commitments in a Minimum Amount therefor to an amount not
less than the Outstanding Obligations at such time or terminate the Commitments.
Any such reduction or termination shall be accompanied by payment of all accrued
and unpaid fees payable under Section 2.08 with respect to the portion of the
Commitments being reduced or terminated. Administrative Agent shall promptly
notify Lenders of any such request for reduction or termination of the
Commitments. Each Lender's Commitment shall be reduced by an amount equal to
such Lender's Pro Rata Share times the amount of such reduction.
2.07 PRINCIPAL AND INTEREST.
(a) If not sooner paid, Borrower agrees to pay the outstanding
principal amount of each Loan on the Maturity Date.
(b) Subject to subsection (c) below, Borrower shall pay
interest on the unpaid principal amount of each Loan (before and after default,
before and after maturity, before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Laws) from the date
borrowed until paid in full (whether by acceleration or otherwise) on each
Applicable Payment Date at a rate per annum equal to the interest rate
determined in accordance with the definition of such type of Loan, plus, to the
extent applicable in each case, the Applicable Amount.
(c) If any amount payable by any Borrower Party under any Loan
Document is not paid when due (without regard to any applicable grace periods),
it shall thereafter bear interest (after as well as before entry of judgment
thereon to the extent permitted by law) at a fluctuating interest rate per annum
at all times equal to the Default Rate to the fullest extent permitted by
applicable Law. Accrued and unpaid interest on past due amounts (including
interest on past due interest) shall be payable upon demand.
2.08 FEES.
(a) UTILIZATION FEE. After the consummation of a Qualified
Public Offering, Borrower shall pay to Administrative Agent for the account of
each Lender pro rata according to its Pro Rata Share, a utilization fee equal to
the Applicable Amount times the actual daily amount of the Outstanding
Obligations (including Swing Line Loans) in respect of each day on which the
actual daily amount of such Outstanding Obligations exceeds an amount equal to
50% of the combined Commitments. The utilization fee shall accrue at all times
from and after the consummation of a Qualified Public Offering until the
Maturity Date and shall be payable
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quarterly in arrears on each Applicable Payment Date. The utilization fee shall
be calculated quarterly in arrears, and if there is any change in the Applicable
Amount during any quarter, the actual daily amount shall be computed and
multiplied by the Applicable Amount separately for each period during such
quarter that such Applicable Amount was in effect.
(b) FACILITY FEE. Borrower shall pay to Administrative Agent
for the account of each Lender a facility fee equal to the Applicable Amount
times the actual daily amount of each Lender's Commitment, regardless of usage.
The facility fee shall accrue at all times from the Signing Date until the
Maturity Date and shall be payable quarterly in arrears on each Applicable
Payment Date. The facility fee shall be calculated quarterly in arrears, and if
there is any change in the Applicable Amount during any quarter, the actual
daily amount shall be computed and multiplied by the Applicable Amount
separately for each period during such quarter that such Applicable Amount was
in effect. The facility fee shall accrue at all times, including at any time
during which one or more conditions in Section 4 are not met.
(c) AGENT FEES. Borrower shall pay to Administrative Agent an
agency fee and such other fees, if any, in such amounts and at such times as set
forth in a separate letter agreement or agreements among Borrower,
Administrative Agent and Arranger. The agency fee is for the services to be
performed by Administrative Agent in acting as Administrative Agent and is fully
earned on the date paid. Any such fees paid to Administrative Agent are solely
for its own account and are nonrefundable.
(d) STRUCTURING AND SYNDICATING FEE. On the Signing Date,
Borrower shall pay to the Arranger a structuring and syndicating fee in the
amount set forth in a separate letter agreement among Borrower, Administrative
Agent and Arranger. Such arrangement fee is for the services of Arranger in
structuring and syndicating the credit facilities under this Agreement and is
fully earned on the date paid. The structuring and syndicating fee paid to
Arranger is solely for its own account and is nonrefundable.
(e) LENDERS' UPFRONT FEE. On the ALT Closing Date, Borrower
shall pay to Administrative Agent, for the respective accounts of Lenders pro
rata according to their Pro Rata Share, an upfront fee in an amount set forth in
a separate letter from the Arranger to each Lender and acknowledged by that
Lender as the applicable upfront fee for such Lender. Such upfront fees are for
the credit facilities committed by each Lender under this Agreement and are
fully earned on the date paid. The upfront fee paid to each Lender is solely for
its own account and is nonrefundable.
2.09 COMPUTATION OF INTEREST AND FEES. Computation of interest on Base
Rate Loans when the Base Rate is determined by Bank of America's "prime rate"
shall be calculated on the basis of a year of 365 or 366 days, as the case may
be, and the actual number of days elapsed. Computation of all other types of
interest and all fees shall be calculated on the basis of a year of 360 days and
the actual number of days elapsed, which results in a higher yield to Lenders
than a method based on a year of 365 or 366 days. Interest shall accrue on each
Loan for the day on which the Loan is made, and shall not accrue on a Loan, or
any portion thereof, for the day on
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which the Loan or such portion is paid, provided that any Loan that is repaid on
the same day on which it is made shall bear interest for one day.
2.10 MAKING PAYMENTS.
(a) Except as otherwise provided herein, all payments by
Borrower or any Lender shall be made to Administrative Agent at Administrative
Agent's Office not later than the Requisite Time for such type of payment. All
payments received after such Requisite Time shall be deemed received on the next
succeeding Business Day. All payments shall be made in immediately available
funds in lawful money of the United States of America. All payments by Borrower
shall be made without condition or deduction for any counterclaim, defense,
recoupment or setoff.
(b) Upon satisfaction of any applicable terms and conditions
set forth herein, Administrative Agent shall promptly make any amounts received
in accordance with the prior subsection available in like funds received as
follows: (i) if payable to Borrower, by crediting the Designated Deposit
Account, and (ii) if payable to any Lender, by wire transfer to such Lender at
the address specified in Schedule 10.03.
(c) Subject to the definition of "Interest Period," if any
payment to be made by any Borrower Party shall come due on a day other than a
Business Day, payment shall instead be considered due on the next succeeding
Business Day, and such extension of time shall be reflected in computing
interest and fees.
(d) Except as otherwise provided in Section 2.03(c) with
respect to Borrower reimbursing drawings under Letters of Credit, unless
Borrower or any Lender has notified Administrative Agent prior to the date any
payment to be made by it is due, that it does not intend to remit such payment,
Administrative Agent may, in its sole and absolute discretion, assume that
Borrower or such Lender, as the case may be, has timely remitted such payment
and may, in its sole and absolute discretion and in reliance thereon, make
available such payment to the Person entitled thereto. If such payment was not
in fact remitted to Administrative Agent in immediately available funds, then:
(i) if Borrower failed to make such payment, each
Lender shall forthwith on demand repay to Administrative Agent the amount of
such assumed payment made available to such Lender, together with interest
thereon in respect of each day from and including the date such amount was made
available by Administrative Agent to such Lender to the date such amount is
repaid to Administrative Agent at the Federal Funds Rate; and
(ii) if any Lender failed to make such payment,
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Lender. If such Lender does not pay such corresponding amount
forthwith upon Administrative Agent's demand therefor, Administrative Agent
promptly shall notify Borrower, and Borrower shall pay such corresponding amount
to Administrative Agent. Administrative Agent also shall be entitled to recover
interest on such corresponding amount in respect of each day from the date such
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corresponding amount was made available by Administrative Agent to Borrower to
the date such corresponding amount is recovered by Administrative Agent, (A)
from such Lender at a rate per annum equal to the daily Federal Funds Rate, and
(B) from Borrower, at a rate per annum equal to the interest rate applicable to
such Borrowing. Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Commitment or to prejudice any rights which
Administrative Agent or Borrower may have against any Lender as a result of any
default by such Lender hereunder.
2.11 FUNDING SOURCES. Nothing in this Agreement shall be deemed to
obligate any Lender to obtain the funds for any Loan in any particular place or
manner or to constitute a representation by any Lender that it has obtained or
will obtain the funds for any Loan in any particular place or manner.
2.12 RELEASE OF ALT. Upon the effectiveness of the assumption by TTI
pursuant to the Assumption Agreement of the Obligations of ALT, ALT shall be
released in full from such Obligations (other than ALT's Obligations under the
ALT Subordination Agreement) and shall have no further Obligations under the
Loan Documents (except for its Obligations under the ALT Subordination
Agreement), in each case, without further action on the part of Administrative
Agent or any Lender. In connection with such release, Administrative Agent shall
execute all such further documents and instruments as may be reasonably
requested by ALT in order to more fully evidence or effect such release. All
such deliveries shall be at the expense of ALT, with no liability to
Administrative Agent or any Lender, and with no representation or warranty by or
recourse to Administrative Agent or any Lender.
SECTION 3.
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 TAXES.
(a) Any and all payments by Borrower to or for the account of
Administrative Agent or any Lender under any Loan Document shall be made free
and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case of
Administrative Agent and any Lender, taxes imposed on or measured by its net
income, and franchise taxes imposed on it (in lieu of net income taxes), by the
jurisdiction (or any political subdivision thereof) under the Laws of which
Administrative Agent or such Lender, as the case may be, is organized or
maintains a lending office (all such non-excluded taxes, duties, levies,
imposts, deductions, assessments, fees, withholdings or similar charges, and
liabilities being hereinafter referred to as "Taxes"). If Borrower shall be
required by any Laws to deduct any Taxes from or in respect of any sum payable
under any Loan Document to Administrative Agent or any Lender, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section), Administrative Agent and such Lender receives an amount equal to
the sum it would have received had no such deductions been made, (ii) Borrower
shall make such deductions, (iii) Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority
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in accordance with applicable Laws, and (iv) within 30 days after the date of
such payment, Borrower shall furnish to Administrative Agent (who shall forward
the same to such Lender) the original or a certified copy of a receipt
evidencing payment thereof.
(b) In addition, Borrower agrees to pay any and all present or
future stamp, court or documentary taxes and any other excise or property taxes
or charges or similar levies which arise from any payment made under any Loan
Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (hereinafter
referred to as "Other Taxes").
(c) If Borrower shall be required by the Laws of any
jurisdiction outside the United States to deduct any Taxes from or in respect of
any sum payable under any Loan Document to Administrative Agent or any Lender,
Borrower shall also pay to such Lender or Administrative Agent (for the account
of such Lender), at the time interest is paid, such additional amount that the
respective Lender specifies as necessary to preserve the after-tax yield (after
factoring in United States (federal and state) taxes imposed on or measured by
net income) the Lender would have received if such deductions (including
deductions applicable to additional sums payable under this Section) had not
been made.
(d) Borrower agrees to indemnify Administrative Agent and each
Lender for the full amount of Taxes and Other Taxes (including any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section) paid by Administrative Agent and such Lender and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. The obligations of Borrower under this subsection shall survive payment
of all Obligations.
3.02 ILLEGALITY. If any Lender determines that any Laws have made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Eurodollar Rate Loans, or materially restricts the authority of such Lender to
purchase or sell, or to take deposits of, Dollars in the applicable eurodollar
market, or to determine or charge interest rates based upon the Eurodollar Rate,
then, on notice thereof by Lender to Borrower through Administrative Agent, any
obligation of that Lender to make Eurodollar Rate Loans shall be suspended until
Lender notifies Administrative Agent and Borrower that the circumstances giving
rise to such determination no longer exist. Upon receipt of such notice,
Borrower shall, upon demand from such Lender (with a copy to Administrative
Agent), prepay or Convert all Eurodollar Rate Loans of that Lender, either on
the last day of the Interest Period thereof, if Lender may lawfully continue to
maintain such Eurodollar Rate Loans to such day, or immediately, if Lender may
not lawfully continue to maintain such Eurodollar Rate Loans. Each Lender agrees
to designate a different Lending Office if such designation will avoid the need
for such notice and will not, in the good faith judgment of such Lender,
otherwise be materially disadvantageous to such Lender.
3.03 INABILITY TO DETERMINE RATES. If, in connection with any Request
for Extension of Credit involving any Eurodollar Rate Loan, Administrative Agent
determines that (a) Dollar deposits are not being offered to banks in the
applicable eurodollar market for the applicable
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amount and Interest Period of the requested Eurodollar Rate Loan, (b) adequate
and reasonable means do not exist for determining the underlying interest rate
for such Eurodollar Rate Loan, or (c) such underlying interest rate does not
adequately and fairly reflect the cost to any Lender of funding such Eurodollar
Rate Loan, Administrative Agent will promptly notify Borrower and all Lenders.
Thereafter, the obligation of all Lenders to make or maintain such Eurodollar
Rate Loan shall be suspended until Administrative Agent revokes such notice.
Upon receipt of such notice, Borrower may revoke any pending request for a
Borrowing of Eurodollar Rate Loans or, failing that, be deemed to have converted
such request into a request for a Borrowing of Base Rate Loans in the amount
specified therein.
3.04 INCREASED COST AND REDUCED RETURN; CAPITAL ADEQUACY.
(a) If any Lender determines that any Laws:
(i) subject such Lender to any Tax, duty, or other
charge with respect to any Eurodollar Rate Loans or its obligation to make
Eurodollar Rate Loans, or change the basis on which taxes are imposed on any
amounts payable to such Lender under this Agreement in respect of any Eurodollar
Rate Loans;
(ii) shall impose or modify any reserve, special
deposit, or similar requirement (other than the reserve requirement utilized in
the determination of the Eurodollar Rate) relating to any extensions of credit
or other assets of, or any deposits with or other liabilities or commitments of,
such Lender (including its Commitment); or
(iii) shall impose on such Lender or on the
eurodollar interbank market any other condition affecting this Agreement or any
of such extensions of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender of
making, Converting into, Continuing, or maintaining any Eurodollar Rate Loans or
to reduce any sum received or receivable by such Lender under this Agreement
with respect to any Eurodollar Rate Loans, then from time to time upon demand of
such Lender (with a copy of such demand to Administrative Agent), Borrower shall
pay to such Lender such additional amounts as will compensate such Lender for
such increased cost or reduction.
(b) If any Lender determines that any change in or the
interpretation of any Laws have the effect of reducing the rate of return on the
capital of such Lender or compliance by such Lender (or its Lending Office) or
any corporation controlling such Lender as a consequence of such Lender's
obligations hereunder (taking into consideration its policies with respect to
capital adequacy and such Lender's desired return on capital), then from time to
time upon demand of such Lender (with a copy to Administrative Agent), Borrower
shall pay to such Lender such additional amounts as will compensate such Lender
for such reduction.
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3.05 BREAKFUNDING COSTS. Upon demand of any Lender (with a copy to
Administrative Agent) from time to time, Borrower shall promptly compensate such
Lender for and hold such Lender harmless from any loss, cost or expense incurred
by it as a result of:
(a) any Continuation, Conversion, payment or prepayment of any
Loan other than a Base Rate Loan on a day other than the last day of the
Interest Period for such Loan (whether voluntary, mandatory, automatic, by
reason of acceleration, or otherwise); or
(b) any failure by Borrower (for a reason other than the
failure of such Lender to make a Loan) to prepay, borrow, Continue or Convert
any Loan other than a Base Rate Loan on the date or in the amount notified by
Borrower;
including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained.
Borrower shall also pay any customary administrative fees charged by such Lender
in connection with the foregoing.
3.06 MATTERS APPLICABLE TO ALL REQUESTS FOR COMPENSATION.
(a) A certificate of Administrative Agent claiming
compensation under this Section 3 and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of clearly
demonstrable error. In determining such amount, Administrative Agent may use any
reasonable averaging and attribution methods. For purposes of this Section 3, a
Lender shall be deemed to have funded each Eurodollar Rate Loan at the
Eurodollar Base Rate used in determining the Eurodollar Rate for such Loan by a
matching deposit or other borrowing in the eurodollar interbank market, whether
or not such Eurodollar Rate Loan was in fact so funded.
(b) Upon any Lender making a claim for compensation under
Sections 3.01 or 3.04, Borrower may remove and replace such Lender in accordance
with Section 10.23.
3.07 SURVIVAL. All of Borrower's obligations under this Section 3 shall
survive termination of the Commitments and payment in full of all Obligations.
SECTION 4.
CONDITIONS PRECEDENT
4.01 CONDITIONS TO EFFECTIVENESS OF THE CREDIT AGREEMENT. The
effectiveness of this Agreement is subject to satisfaction of the following
conditions precedent:
(a) Unless waived by all Lenders (or by Administrative Agent
with respect to immaterial matters, or items specified in subsections (iv) or
(v) below, that the Borrower has given assurances reasonably satisfactory to
Administrative Agent that they will be delivered promptly following the Signing
Date), Administrative Agent's receipt of the following, each of which shall be
originals unless otherwise specified, each properly executed by a Responsible
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Officer of each applicable Borrower Party, each dated on or about the Signing
Date and each in form and substance reasonably satisfactory to Administrative
Agent and its legal counsel:
(i) executed counterparts of this Agreement and the
ALT Subordination Agreement, sufficient in number for distribution to
Administrative Agent, Lenders, ALT and TTI;
(ii) the ALT Global Note executed by ALT in favor of
Administrative Agent for the account of each Lender, in a principal amount equal
to the combined Commitments;
(iii) such certificates or resolutions or other
action, incumbency certificates and/or other certificates of Responsible
Officers of each Borrower Party as Administrative Agent may reasonably require
to establish the identities of and verify the authority and capacity of each
Responsible Officer thereof authorized to act as a Responsible Officer thereof;
(iv) certified copies of each Borrower Party's
Organization Documents and a certificate of good standing for each Borrower
Party in its jurisdiction of organization;
(v) a certificate signed by a Responsible Officer of
ALT certifying that (A) the conditions specified in Sections 4.01(c) and 4.01(d)
have been satisfied, and (B) there has been no event or circumstance since
December 31, 1998 which would reasonably be expected to have a Material Adverse
Effect;
(vi) an opinion of counsel to Borrower substantially
in the form of Exhibit E-1 hereto; and
(vii) such other assurances, certificates, documents,
consents or opinions as Administrative Agent, Issuing Lender or the Required
Lenders reasonably may require.
(b) Administrative Agent, Arranger, each Lender and/or their
respective Affiliates shall have received all fees and expenses required to be
paid on or before the Signing Date.
(c) The representations and warranties made by Borrower
herein, or which are contained in any certificate, document or financial or
other statement furnished at any time under or in connection herewith or
therewith, shall be true and correct in all material respects on and as of the
Signing Date.
(d) Each Borrower Party shall be in compliance with all the
terms and provisions of the Loan Documents to which it is a party, and no
Default or Event of Default shall have occurred and be continuing.
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(e) Borrower shall have paid all Attorney Costs of
Administrative Agent to the extent invoiced prior to or on the Signing Date,
plus such additional amounts of Attorney Costs as shall constitute its
reasonable estimate of Attorney Costs incurred or to be incurred by it through
the closing proceedings (provided that such estimate shall not thereafter
preclude final settling of accounts between Borrower and Administrative Agent).
(f) Administrative Agent and Lenders shall have received the
Form 10 and all amendments thereto and the other Spinoff Documents (or, to the
extent not then finalized, the then current drafts thereof), including (x) the
form and substance of the private letter requests to the IRS regarding the tax
free treatment of the Spinoff, (y) the Private Letter Ruling, and (z) all
documents relating to the indemnification by TTI of ALT regarding the tax-free
treatment of the Spinoff (which indemnification shall be subordinated to the
prior payment in full of all Obligations pursuant to the ALT Subordination
Agreement), which documents shall, in each case, be satisfactory in form and
substance to Administrative Agent and the Lenders. The Spinoff Documents shall
contain mutual indemnification terms relating to existing direct and contingent
obligations of ALT and TTI, all in form and substance satisfactory to
Administrative Agent in its discretion.
(g) The corporate, capital and ownership structure and
management of TTI and its Subsidiaries (before and after giving effect to the
Line of Business Transfer and to the Spinoff) including, without limitation, the
execution of employment contracts with key executives of the lines of business
transferred in connection with the Line of Business Transfer, shall be
satisfactory to Administrative Agent.
(h) Administrative Agent shall have completed, with results
reasonably satisfactory to Administrative Agent and its counsel, its reasonable
due diligence investigation, including, without limitation, with respect to
litigation, tax (including all matters relating to the tax free treatment of the
Spinoff), accounting, labor, insurance, pension liabilities (actual or
contingent), real estate leases, environmental matters, material contracts, debt
agreements, property ownership, contingent liabilities and management of ALT,
TTI and their respective Subsidiaries (before and after giving effect to the
Line of Business Transfer and to the Spinoff).
(i) There shall not have occurred a material adverse change
since December 31, 1998 in the business, assets, liabilities (actual or
contingent), operations or condition (financial or otherwise) of Borrower and
its Subsidiaries taken as a whole or of TTI and its Subsidiaries taken as a
whole or in the facts and information regarding such entities as represented on
or prior to the Signing Date.
(j) Administrative Agent and Lenders shall have received and
reviewed, with results satisfactory to Administrative Agent and Lenders,
information confirming that (a) ALT, TTI and their respective Subsidiaries are
taking all necessary and appropriate steps to ascertain the extent of, and to
quantify and successfully address, business and financial risks facing ALT, TTI
and their respective Subsidiaries as a result of what is commonly referred to as
the "Year 2000 problem" (i.e., the inability of certain computer applications
and devices containing imbedded computer chips to recognize correctly and
perform properly date-sensitive functions
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involving certain dates prior to and after December 31, 1999), including risks
resulting from the failure of key vendors and customers of ALT, TTI and their
respective Subsidiaries to successfully address the Year 2000 problem, and (b)
ALT's, TTI's and their respective Subsidiaries' material computer applications
and those of their key vendors and customers will, on a timely basis, adequately
address the Year 2000 problem in all material respects.
(k) All governmental and third party consents required to be
obtained on or before the Signing Date (other than any third party consents the
failure of which to obtain on or before the Signing Date would not reasonably be
expected to have a Material Adverse Effect), including but not limited to the
consent of the lenders under the Existing ALT Credit Agreement, necessary or
desirable in connection with the Line of Business Transfer, the Spinoff and the
other transactions contemplated hereby and by the Spinoff Documents shall have
been obtained; all such consents and approvals shall be in full force and
effect; and all applicable waiting periods shall have expired without any action
being taken by any authority that could restrain, prevent or impose any material
adverse conditions on the Line of Business Transfer, the Spinoff or such other
transactions or that could seek to enjoin or threaten any of the foregoing, and
no Law shall be applicable which in the judgment of Administrative Agent could
have such effect.
(l) There shall not exist (a) any order, decree, judgment,
ruling or injunction which restrains the consummation of the Spinoff or the
Extensions of Credit in the manner contemplated by the Spinoff Documents or the
Loan Documents, and (b) any pending or threatened action, suit, investigation or
proceeding, which, if adversely determined, could materially and adversely
affect ALT, TTI or any of their respective Subsidiaries, any transaction
contemplated hereby or by the Spinoff Documents or the ability of ALT, TTI or
any of their respective Subsidiaries to perform their obligations under the Loan
Documents or the ability of Lenders to exercise their rights thereunder.
(m) Borrower shall have delivered to Administrative Agent a
certificate of a Responsible Officer of Borrower certifying that the insurance
required to be maintained pursuant to Section 6.06 is in full force and effect,
is adequate in nature and amount and complies with Borrower's and each
Subsidiary's obligations under Section 6.06.
4.02 CONDITIONS OF INITIAL EXTENSION OF CREDIT TO ALT. The obligation
of each Lender to make the initial Extension of Credit to ALT is subject to
satisfaction of the following conditions precedent:
(a) Unless waived by all Lenders (or by Administrative Agent
with respect to immaterial matters, or items specified in subsections (ii) or
(iii) below, that the Borrower has given assurances reasonably satisfactory to
Administrative Agent that they will be delivered promptly following the ALT
Closing Date), Administrative Agent's receipt of the following, each of which
shall be originals unless otherwise specified, each properly executed by a
Responsible Officer of each applicable Borrower Party, each dated on or about
the ALT Closing Date and each in form and substance reasonably satisfactory to
Administrative Agent and its legal counsel:
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(i) such certificates or resolutions or other action,
incumbency certificates and/or other certificates of Responsible Officers of
each Borrower Party as Administrative Agent may reasonably require to establish
the identities of and verify the authority and capacity of each Responsible
Officer thereof authorized to act as a Responsible Officer thereof;
(ii) certified copies of each Borrower Party's
Organization Documents and a certificate of good standing for each Borrower
Party in its jurisdiction of organization;
(iii) a certificate signed by a Responsible Officer
of ALT certifying that (A) the conditions specified in Sections 4.02(c) and
4.02(d) have been satisfied, and (B) there has been no event or circumstance
since December 31, 1998 which would reasonably be expected to have a Material
Adverse Effect;
(iv) an opinion of counsel to Borrower substantially
in the form of Exhibit E-2 hereto; and
(v) such other assurances, certificates, documents,
consents or opinions as Administrative Agent, Issuing Lender or the Required
Lenders reasonably may require.
(b) Administrative Agent, Arranger, each Lender and/or their
respective Affiliates shall have received all fees and expenses required to be
paid on or before the ALT Closing Date.
(c) The representations and warranties made by Borrower
herein, or which are contained in any certificate, document or financial or
other statement furnished at any time under or in connection herewith or
therewith, shall be true and correct in all material respects on and as of the
ALT Closing Date.
(d) Each Borrower Party shall be in compliance with all the
terms and provisions of the Loan Documents to which it is a party, and no
Default or Event of Default shall have occurred and be continuing.
(e) All conditions precedent to the Spinoff set forth in the
Spinoff Documents (in each case, with no material modifications from such
documents (or, to the extent applicable, the drafts thereof) reviewed by Lenders
on or before the Signing Date) shall have been satisfied in accordance with the
terms thereof.
(f) All governmental and third party consents (other than any
third party consents the failure of which to obtain on or before the ALT Closing
Date would not reasonably be expected to have a Material Adverse Effect),
including but not limited to (x) the consent of the lenders under the Existing
ALT Credit Agreement and (y) the receipt of the Private Letter Ruling in form
and substance satisfactory to all Lenders, and approvals necessary or desirable
in connection with the Line of Business Transfer, the Spinoff and the other
transactions contemplated hereby and by the Spinoff Documents shall have been
obtained; all such rulings,
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consents and approvals shall be in full force and effect without modification;
and all applicable waiting periods shall have expired without any action being
taken by any authority that could restrain, prevent or impose any material
adverse conditions on the Line of Business Transfer, the Spinoff or such other
transactions or that could seek to enjoin or threaten any of the foregoing, and
no Law shall be applicable which in the judgment of Administrative Agent could
have such effect.
(g) There shall not exist (a) any order, decree, judgment,
ruling or injunction which restrains the consummation of the Line of Business
Transfer or the Spinoff or the Extensions of Credit in the manner contemplated
by the Spinoff Documents or the Loan Documents, and (b) any pending or
threatened action, suit, investigation or proceeding, which, if adversely
determined, could reasonably be expected to materially and adversely affect ALT,
TTI or any of their respective Subsidiaries, any transaction contemplated hereby
or by the Spinoff Documents or the ability of ALT, TTI or any of their
respective Subsidiaries to perform their obligations under the Loan Documents or
the ability of Lenders to exercise their rights thereunder.
(h) There shall not have occurred a material adverse change
since December 31, 1998 in the business, assets, liabilities (actual or
contingent), operations or condition (financial or otherwise) of ALT and its
Subsidiaries taken as a whole or of TTI and its Subsidiaries taken as a whole or
in the facts and information regarding such entities as represented on or prior
to the ALT Closing Date.
(i) [Administrative Agent shall have received a satisfactory
reliance letter entitling Administrative Agent, Arranger and Lenders to rely on
all fairness and/or solvency opinions delivered in connection with the Line of
Business Transfer and the Spinoff.]
4.03 CONDITIONS TO ASSUMPTION OF OBLIGATIONS AND INITIAL EXTENSIONS OF
CREDIT TO TTI. The assumption by TTI of the Obligations of ALT (other than ALT's
Obligations under the ALT Subordination Agreement) and the obligation of each
Lender to make the initial Extensions of Credit to TTI are subject to
satisfaction of the following conditions precedent:
(a) Unless waived by all Lenders (or by Administrative Agent
with respect to immaterial matters, or items specified in subsections (iii) or
(iv) below, that Borrower has given assurances reasonably satisfactory to
Administrative Agent that they will be delivered promptly following the Signing
Date), Administrative Agent's receipt of the following, each of which shall be
originals unless otherwise specified, each properly executed by a Responsible
Officer of each applicable Borrower Party, each dated on or about the Signing
Date and each in form and substance reasonably satisfactory to Administrative
Agent and its legal counsel:
(i) executed counterparts of the Assumption
Agreement, the Guaranty and the Pledge Agreement, sufficient in number for
distribution to Administrative Agent, Lenders, ALT and TTI;
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(ii) Notes executed by TTI in favor of each Lender
requesting a Note, each in a principal amount equal to that Lender's Commitment;
(iii) such certificates or resolutions or other
action, incumbency certificates and/or other certificates of Responsible
Officers of each Borrower Party as Administrative Agent may reasonably require
to establish the identities of and verify the authority and capacity of each
Responsible Officer thereof authorized to act as a Responsible Officer thereof;
(iv) certified copies of each Borrower Party's
Organization Documents and a certificate of good standing for each Borrower
Party in its jurisdiction of organization;
(v) a certificate signed by a Responsible Officer of
each of ALT and TTI certifying that (A) the conditions specified in Sections
4.03(c) and 4.03(d) have been satisfied, and (B) there has been no event or
circumstance since December 31, 1998 which would reasonably be expected to have
a Material Adverse Effect;
(vi) an opinion of counsel to Borrower substantially
in the form of Exhibit E-3 hereto; and
(vii) such other assurances, certificates, documents,
consents or opinions as Administrative Agent, Issuing Lender or the Required
Lenders reasonably may require.
(b) Administrative Agent, Arranger, each Lender and/or their
respective Affiliates shall have received all fees and expenses required to be
paid on or before the TTI Closing Date.
(c) The representations and warranties made by Borrower
herein, or which are contained in any certificate, document or financial or
other statement furnished at any time under or in connection herewith or
therewith, shall be true and correct in all material respects on and as of the
TTI Closing Date.
(d) Each Borrower Party shall be in compliance with all the
terms and provisions of the Loan Documents to which it is a party, and no
Default or Event of Default shall have occurred and be continuing.
(e) Both the Line of Business Transfer and the Spinoff shall
have been (or shall concurrently be) consummated in accordance with the terms of
the Spinoff Documents (in each case, with no material modifications from such
documents (or, to the extent applicable, the drafts thereof) reviewed by
Administrative Agent and Lenders prior to the ALT Closing Date) and in
compliance in all material respects with applicable Law and regulatory
approvals. None of the Spinoff Documents shall have been altered, amended or
otherwise changed or supplemented or any condition therein waived without the
prior written consent of Administrative Agent.
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(f) There shall not exist (i) any order, decree, judgment,
ruling or injunction which restrains the consummation of the Line of Business
Transfer or the Spinoff or the Extensions of Credit in the manner contemplated
by the Spinoff Documents or the Loan Documents, and (ii) any pending or
threatened action, suit, investigation or proceeding, which, if adversely
determined, could materially and adversely affect ALT, TTI or any of their
respective Subsidiaries, any transaction contemplated hereby or by the Spinoff
Documents or the ability of ALT, TTI or any of their respective Subsidiaries to
perform their obligations under the Loan Documents or the ability of Lenders to
exercise their rights thereunder.
(g) After giving effect to the transactions contemplated by
the Line of Business Transfer and the Spinoff, and the assumption by TTI of
ALT's Obligations (other than ALT's Obligations under the ALT Subordination
Agreement) pursuant to the Assumption Agreement, (i) each of TTI and each of its
Subsidiaries, taken as a whole, Borrower and each Material Subsidiary shall be
Solvent, and (ii) the Leverage Ratio on such date shall be not greater than 3.0:
1.0, and, with respect to the matters set forth in clauses (i) and (ii), TTI
shall have delivered to Administrative Agent and all Lenders a certificate of
its chief financial officer (together with supporting calculations), in form and
substance satisfactory to Administrative Agent, to such effect.
(h) After giving effect to any outstanding Extensions of
Credit, the combined Commitments shall exceed the Outstanding Obligations by not
less than $100,000,000.
4.04 CONDITIONS TO ALL EXTENSIONS OF CREDIT. In addition to any
applicable conditions precedent set forth elsewhere in this Section 4 or in
Section 2, the obligation of each Lender to honor any Request for Extension of
Credit is subject to the following conditions precedent:
(a) the representations and warranties of Borrower contained
in Section 5, or which are contained in any certificate, document or financial
or other statement furnished at any time under or in connection herewith or
therewith, shall be true and correct in all material respects on and as of the
date of such Extension of Credit, except to the extent that such representations
and warranties specifically refer to any earlier date.
(b) no Default or Event of Default exists or would result from
such proposed Extension of Credit.
(c) Administrative Agent shall have timely received a Request
for Extension of Credit by Requisite Notice by the Requisite Time therefor.
(d) Administrative Agent shall have received, in form and
substance satisfactory to it, such other assurances, certificates, documents or
consents related to the foregoing as Administrative Agent or Required Lenders
reasonably may require.
Each Request for Extension of Credit by Borrower shall be deemed to be
a representation and warranty that the conditions specified in Sections 4.04(a)
and (b) have been satisfied and on and as of the date of such Extension of
Credit.
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SECTION 5.
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Administrative Agent and Lenders
that:
5.01 EXISTENCE AND QUALIFICATION; POWER; COMPLIANCE WITH LAWS. Each
Borrower Party is a corporation, partnership or limited liability company duly
organized or formed, validly existing and in good standing under the Laws of the
state of its incorporation or organization, has the power and authority and the
legal right to own and operate its properties, to lease the properties it
operates and to conduct its business, is duly qualified and in good standing
under the Laws of each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification (other
than under the Laws of any jurisdiction in which the failure to be so qualified
as a foreign corporation or other entity would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect), and is in
compliance with all Laws except to the extent that noncompliance does not have a
Material Adverse Effect.
5.02 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each Borrower Party
has the power and authority and the legal right to make, deliver and perform
each Loan Document and Spinoff Document to which it is a party and Borrower has
power and authority to Borrow and request the issuance of Letters of Credit
hereunder and has taken all necessary action to authorize the Borrowings and
other Extensions of Credit on the terms and conditions of this Agreement and to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents and Spinoff Documents to which it is a party. No consent or
authorization of, filing with, or other act by or in respect of any Governmental
Authority, is required in connection with the Borrowings and other Extensions of
Credit hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement, any of the other Loan Documents or any Spinoff
Document, other than any consent or authorization of, filing with, or other act
by or in respect of any Governmental Authority, the failure of which to have
been obtained on or before the date hereof would not reasonably be expected to
have a Material Adverse Effect. The Loan Documents have been duly executed and
delivered by each Borrower Party party thereto, and constitute a legal, valid
and binding obligation of each such Borrower Party, enforceable against each
such Borrower Party in accordance with their respective terms. Upon the due
execution and delivery by each Borrower Party party thereto, the Spinoff
Documents shall constitute a legal, valid and binding obligation of each such
Borrower Party, enforceable against each such Borrower Party in accordance with
their respective terms.
5.03 NO LEGAL BAR. Other than exceptions to any of the following (other
than the requirements of clause (a)(i) below) that could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect, the
execution, delivery, and performance by each Borrower Party of the Loan
Documents and Spinoff Documents to which it is a party and compliance with the
provisions thereof have been duly authorized by all requisite action on the part
of such Borrower Party and do not and will not (a) violate or conflict with, or
result in a breach of, or require any consent under (i) any Organization
Documents of such Borrower Party or any of its Subsidiaries, (ii) any applicable
Laws, rules, or regulations or any order, writ, injunction, or decree of any
Governmental Authority or arbitrator, or (iii) any Contractual
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Obligation (including, without limitation, any Spinoff Document) of such
Borrower Party or any of its Subsidiaries or by which any of them or any of
their property is bound or subject, (b) constitute a default under any such
Contractual Obligation, or (c) result in, or require, the creation or imposition
of any Lien on any of the properties of such Borrower Party or any of its
Subsidiaries. Neither the consummation of the transactions contemplated by, nor
the execution and delivery of, the Loan Documents and the Spinoff Documents will
constitute or result in a tortious interference with any Contractual Obligation
of any Borrower Party.
5.04 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT.
(a) The Audited ALT Financial Statements and the Audited TTI
Financial Statements (i) were prepared in accordance with GAAP consistently
applied throughout the periods covered thereby, except as otherwise expressly
noted therein; (ii) fairly present in all material respects the financial
condition of ALT and its Subsidiaries and TTI and its Subsidiaries,
respectively, as of the dates thereof and their results of operations for the
periods covered thereby in accordance with GAAP consistently applied throughout
the periods covered thereby, except as otherwise expressly noted therein; and
(iii) show all material indebtedness and other liabilities, direct or
contingent, of ALT and its Subsidiaries and TTI and its Subsidiaries,
respectively, as of the dates thereof, including liabilities for taxes, material
commitments and Indebtedness in accordance with GAAP consistently applied
throughout the periods covered thereby.
(b) The Unaudited TTI Financial Statements (i) were prepared
in accordance with GAAP consistently applied throughout the periods covered
thereby, except as otherwise expressly noted therein, (ii) fairly present in all
material respects the pro forma financial condition of TTI and its Subsidiaries
as of the dates thereof and their pro forma results of operations for the
periods covered thereby; and (iii) show all pro forma material indebtedness and
other liabilities, direct or contingent, of TTI and its Subsidiaries as of the
dates thereof, including liabilities for taxes, material commitments and
Indebtedness in accordance with GAAP consistently applied throughout the periods
covered thereby.
(c) Since December 31, 1998, there has been no event or
circumstance which would reasonably be expected to have a Material Adverse
Effect.
5.05 LITIGATION. No litigation, investigation or proceeding of or
before an arbitrator or Governmental Authority is pending or, to the knowledge
of Borrower, threatened by or against any Borrower Party or any of its
Subsidiaries or against any of their properties or revenues which, if determined
adversely, would reasonably be expected to have a Material Adverse Effect.
5.06 NO DEFAULT. Neither any Borrower Party nor any of their respective
Subsidiaries are in default under or with respect to any Contractual Obligation
(including, without limitation, any Spinoff Document) which could have a
Material Adverse Effect, and no Default or Event of Default has occurred and is
continuing or will result from the consummation of this Agreement, any of the
other Loan Documents or any Spinoff Document, or the making of the Extensions of
Credit hereunder.
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5.07 OWNERSHIP OF PROPERTY; LIENS. Each Borrower Party and its
Subsidiaries have valid fee or leasehold interests in all material real property
which they use in their respective businesses, and each Borrower Party and their
respective Subsidiaries have good and marketable title to all their other
material property, and none of such material property is subject to any Lien,
except as permitted in Section 7.02.
5.08 TAXES. Each Borrower Party and its Subsidiaries have filed all
[federal and other material] tax returns which are required to be filed, and
have paid, or made provision for the payment of, all taxes with respect to the
periods, property or transactions covered by said returns, or pursuant to any
assessment received by such Borrower Party or its respective Subsidiaries,
except (a) such taxes, if any, as are being contested in good faith by
appropriate proceedings and as to which adequate reserves have been established
and maintained in accordance with GAAP, and (b) immaterial taxes; provided,
however, that in each case no material item or portion of property of any
Borrower Party or any of its Subsidiaries is in jeopardy of being seized, levied
upon or forfeited.
5.09 MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING
COMPANY ACT.
(a) No Borrower Party is engaged or will engage, principally
or as one of its important activities, in the business of extending credit for
the purpose of "purchasing" or "carrying" "margin stock" within the respective
meanings of each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect. No part of the proceeds of any Extensions of Credit hereunder will be
used for "purchasing" or "carrying" "margin stock" as so defined or for any
purpose which violates, or which would be inconsistent with, the provisions of
Regulations T, U or X of such Board of Governors.
(b) No Borrower Party or any of its Subsidiaries (i) is a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or (ii) is or is required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended.
5.10 ERISA COMPLIANCE.
(a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other federal or state Laws.
Each Plan that is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS or an application for
such a letter is currently being processed by the IRS with respect thereto and,
to the best knowledge of Borrower, nothing has occurred which would prevent, or
cause the loss of, such qualification. Borrower and each ERISA Affiliate have
made all required contributions to each Plan subject to Section 412 of the Code,
and no application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code has been made with respect to any
Plan.
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(b) There are no pending or, to the best knowledge of
Borrower, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan that would reasonably be expected to have a
Material Adverse Effect. There has been no prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan that would
reasonably be expected to have a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Sections 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither Borrower nor
any ERISA Affiliate has engaged in a transaction that could be subject to
Sections 4069 or 4212(c) of ERISA.
5.11 INTELLECTUAL PROPERTY. Each Borrower Party and its Subsidiaries
own, or possess the right to use, all material trademarks, trade names,
copyrights, patents, patent rights, franchises, licenses and other intangible
assets that are used in the conduct of their respective businesses as now
operated, and none of such items conflicts with the valid trademark, trade name,
copyright, patent, patent right or intangible asset of any other Person to the
extent that such conflict would reasonably be expected to have a Material
Adverse Effect.
5.12 COMPLIANCE WITH LAWS. Each Borrower Party and its Subsidiaries are
in compliance in all material respects with all Laws that are applicable to it.
5.13 ENVIRONMENTAL COMPLIANCE. Each Borrower Party and its Subsidiaries
conduct in the ordinary course of business a review of the effect of existing
Environmental Laws and claims alleging potential liability or responsibility for
violation of any Environmental Law on their respective businesses, operations
and properties, and as a result thereof Borrower has reasonably concluded that
such Environmental Laws and claims could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
5.14 INSURANCE. The properties of each Borrower Party and its
Subsidiaries are insured with financially sound and reputable insurance
companies not Affiliates of Borrower, in such amounts, with such deductibles and
covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where Borrower or such
Subsidiary operates.
5.15 YEAR 2000. Borrower has (a) initiated a review and assessment of
all material areas within its and each of its Subsidiaries' business and
operations (including those affected by customers and vendors) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications and devices containing imbedded computer chips used by any Borrower
Party or any of its Subsidiaries (or their respective key customers and vendors)
may be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to
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and any date after December 31, 1999), (b) developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis, and (c) to date, implemented
that plan in all material respects in accordance with that timetable. Based on
the foregoing, Borrower believes that all computer applications and devices
containing imbedded computer chips (including those of its and its Subsidiaries'
key customers and vendors) that are material to its or any of its Subsidiaries'
business and operations are reasonably expected on a timely basis to be able to
perform properly date-sensitive functions for all dates before and after January
1, 2000 (that is, be "Year 2000 Compliant"), except to the extent that a failure
to do so would not reasonably be expected to have a Material Adverse Effect.
5.16 DISCLOSURE. No statement, information, report, representation, or
warranty made by any Borrower Party in any Loan Document or Spinoff Document or
furnished to Administrative Agent or any Lender in connection with any Loan
Document or Spinoff Document contains any untrue statement of a material fact or
omits to state any material fact necessary to make the statements herein or
therein not misleading.
5.17 SOLVENCY. Each of Borrower and its Subsidiaries, taken as a whole,
the Borrower and each Material Subsidiary is, and after giving effect to the
Line of Business Transfer, the Spinoff, the assumption by TTI of ALT's
Obligations (other than ALT's Obligations under the ALT Subordination Agreement)
pursuant to the Assumption Agreement and the incurrence of all Indebtedness and
obligations being incurred in connection with the Loan Documents, the Line of
Business Transfer and the Spinoff will be and will continue to be, Solvent.
SECTION 6.
AFFIRMATIVE COVENANTS
So long as any Obligation remains unpaid or unperformed, or any portion
of the Commitments remains outstanding, Borrower shall, and shall (except in the
case of Borrower's reporting covenants) cause each of its Subsidiaries to:
6.01 FINANCIAL STATEMENTS. Deliver to Administrative Agent in form and
detail reasonably satisfactory to Administrative Agent and the Required Lenders,
with sufficient copies for each Lender:
(a) as soon as available, but in any event within 100 days
after the end of each fiscal year of Borrower, a consolidated balance sheet of
Borrower and its Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of income and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail, audited and accompanied by a report and opinion of an
independent certified public accountant of nationally recognized standing, which
report and opinion shall be prepared in accordance with GAAP and shall not be
subject to any qualifications or exceptions as to the scope of the audit nor to
any qualifications and exceptions (including possible errors generated by
financial reporting and related systems due to the Year 2000 Problem) not
reasonably acceptable to the Required Lenders; and
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(b) as soon as available, but in any event within 50 days
after the end of each of the first three fiscal quarters of each fiscal year of
Borrower [commencing with the fiscal quarter ended March 31, 2000], a
consolidated balance sheet of Borrower and its Subsidiaries as at the end of
such fiscal quarter, and the related consolidated statements of income and cash
flows for such fiscal quarter and for the portion of Borrower's fiscal year then
ended, setting forth in each case in comparative form the figures for the
corresponding fiscal quarter of the previous fiscal year and the corresponding
portion of the previous fiscal year, all in reasonable detail and certified by a
Responsible Officer of Borrower as fairly presenting in all material respects
the financial condition, results of operations and cash flows of Borrower and
its Subsidiaries in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes.
6.02 CERTIFICATES, NOTICES AND OTHER INFORMATION. Deliver to
Administrative Agent in form and detail reasonably satisfactory to
Administrative Agent and the Required Lenders, with sufficient copies for each
Lender:
(a) concurrently with the delivery of the financial statements
referred to in Sections 6.01(a) and (b), a duly completed Compliance Certificate
signed by a Responsible Officer of Borrower;
(b) promptly after the same are available, copies of each
annual report, proxy or financial statement or other report or communication
sent to the stockholders of Borrower, and copies of all annual, regular,
periodic and special reports and registration statements which Borrower may file
or be required to file with the Securities and Exchange Commission under
Sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and not
otherwise required to be delivered to Administrative Agent pursuant hereto;
(c) promptly after the occurrence thereof, notice of any
Default or Event of Default;
(d) promptly after the commencement thereof, notice of any
litigation, investigation or proceeding affecting any Borrower Party in which
there is a reasonable possibility of an adverse determination and which, if
adversely determined, would reasonably be expected to have a Material Adverse
Effect;
(e) promptly after the occurrence thereof, notice of any
Reportable Event with respect to any Plan or a decision to terminate any Plan,
or the institution of proceedings or the taking or expected taking of any other
action to terminate any Plan or withdraw from any Plan;
(f) promptly of any discovery or determination that any
computer application (including those of its key suppliers and vendors) that is
material to any Borrower Parties' or any of their Subsidiaries' business and
operations will not be Year 2000 Compliant on a timely basis, except to the
extent that such failure would not reasonably be expected to have a Material
Adverse Effect;
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(g) promptly after receipt thereof, copies of any notice
relating to revocation of the Private Letter Ruling and any claim for
indemnification, individually or in the aggregate, in excess of the Threshold
Amount under any Spinoff Document;
(h) concurrently with the delivery of the financial statements
referred to in Section 6.01(a), a certificate of a Responsible Officer of
Borrower certifying that the insurance required to be maintained pursuant to
Section 6.06 is in full force and effect, is adequate in nature and amount and
complies with Borrower's and each Subsidiary's obligations under Section 6.06;
and
(i) promptly, such other data and information as from time to
time may be reasonably requested by Administrative Agent, or, through
Administrative Agent or any Lender.
Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer of Borrower in reasonable detail setting
forth details of the occurrence referred to therein and stating what action
Borrower has taken and proposes to take with respect thereto.
6.03 PAYMENT OF TAXES. Pay and discharge in all material respects when
due all taxes, assessments, and governmental charges, Ordinary Course Liens or
levies imposed on any Borrower Party or its Subsidiaries or on its income or
profits or any of its property, except for any such tax, assessment, charge, or
levy which is an Ordinary Course Lien under subsection (b) of the definition of
such term.
6.04 PRESERVATION OF EXISTENCE. Preserve and maintain its existence,
licenses, permits, rights, franchises and privileges necessary or desirable in
the normal conduct of its business, except as permitted under Section 7.03 or,
with respect to such licenses, permits, rights, franchises and privileges, where
failure to do so would not reasonably be expected to have a Material Adverse
Effect.
6.05 MAINTENANCE OF PROPERTIES. Maintain, preserve and protect all of
its material properties and equipment necessary in the operation of its business
in good order and condition, subject to wear and tear in the ordinary course of
business, and not permit any waste of its properties, except where the failure
to do so would not reasonably be expected to have a Material Adverse Effect.
6.06 MAINTENANCE OF INSURANCE. Maintain liability and casualty
insurance with responsible insurance companies in such amounts and against such
risks as is customary for similarly situated businesses.
6.07 COMPLIANCE WITH LAWS.
(a) Comply with the requirements of all applicable Laws and
orders of any Governmental Authority, noncompliance with which would reasonably
be expected to have a Material Adverse Effect.
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(b) Conduct its operations and keep and maintain its property
in compliance with all Environmental Laws, noncompliance with which would
reasonably be expected to have a Material Adverse Effect.
6.08 INSPECTION RIGHTS. At any time during regular business hours and
as often as reasonably requested, permit Administrative Agent or any Lender, or
any employee, agent or representative thereof, to examine and make copies and
abstracts from the Borrower Parties' records and books of account and to visit
and inspect their properties and to discuss their affairs, finances and accounts
with any of their Responsible Officers, and, upon request, furnish promptly to
Administrative Agent or any Lender true copies of all [publicly available]
financial information.
6.09 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Keep in all material
respects adequate records and books of account reflecting all financial
transactions in conformity with GAAP, consistently applied, and in material
conformity with all applicable requirements of any Governmental Authority having
regulatory jurisdiction over Borrower or any of its Subsidiaries.
6.10 COMPLIANCE WITH ERISA. Cause, and cause each of its ERISA
Affiliates to: (a) maintain each Plan in compliance in all material respects
with the applicable provisions of ERISA, the Code and other federal or state
Law; (b) cause each Plan which is qualified under Section 401(a) of the Code to
maintain such qualification; and (c) make all required contributions to any Plan
subject to Section 412 of the Code.
6.11 COMPLIANCE WITH AGREEMENTS. Promptly and comply [fully] [in all
material respects] with the Private Letter Ruling and all Spinoff Documents and
all other Contractual Obligations under all material agreements, indentures,
leases and/or instruments to which any one or more of them is a party, except
for any such Contractual Obligations (a) the performance of which would cause a
Default, (b) then being contested by any of them in good faith by appropriate
proceedings, or (c) if the failure to comply therewith would not reasonably be
expected to have a Material Adverse Effect.
6.12 USE OF PROCEEDS. Use the proceeds of Extensions of Credit: (i) for
the repayment of a portion of ALT's indebtedness related to the assets to be
transferred by ALT to TTI in accordance with the Spinoff Documents in
conjunction with the Spinoff, (ii) for working capital, capital expenditures,
and other lawful general corporate purposes of TTI following consummation of the
Spinoff, and (iii) to finance acquisitions by TTI following consummation of the
Spinoff to the extent expressly permitted under the Loan Documents.
6.13 ADDITIONAL BORROWER PARTIES. Substantially concurrently with the
formation or acquisition of any Material Subsidiary of TTI (and upon any
Subsidiary of TTI becoming a Material Subsidiary), (i) cause such Subsidiary
(unless such Subsidiary is a Foreign Subsidiary) to guarantee the payment and
performance of the Obligations hereunder and under the other Loan Documents by
executing and delivering to Administrative Agent a supplement to the Guaranty in
substantially the form of Annex A to Exhibit G, (ii) at all times prior to the
Collateral Release Date, (A) cause such Subsidiary (unless such Subsidiary is a
Foreign
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Subsidiary) to execute and deliver to Administrative Agent a supplement to the
Pledge Agreement, in substantially the form of Annex A to Exhibit H (whereby
such Subsidiary shall grant a Lien on those of its assets described in the
Pledge Agreement), (B) promptly pledge to Administrative Agent or cause to be
pledged to Administrative Agent all of the outstanding capital stock of such
Subsidiary (or, if such Subsidiary is a Foreign Subsidiary, 65% of such capital
stock) owned by TTI or any of its Subsidiaries to secure such Borrower Party's
Obligations under the Loan Documents, and (C) promptly take, and cause such
Subsidiary and each other Borrower Party to take all action necessary or (in the
opinion of Administrative Agent or the Required Lenders) desirable to perfect
and protect the Liens intended to be created by the Pledge Agreement, as amended
pursuant to this Section 6.13, and (iii) promptly deliver to Administrative
Agent such opinions of counsel, if any, as Administrative Agent or the Required
Lenders may reasonably require with respect to the foregoing (including opinions
as to enforceability and, prior to the Collateral Release Date, perfection of
security interests).
SECTION 7.
NEGATIVE COVENANTS
So long as any Obligations remain unpaid or unperformed, or any portion
of the Commitments remains outstanding, Borrower shall not, nor shall it permit
any of its Subsidiaries to, directly or indirectly:
7.01 INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Ordinary Course Indebtedness of TTI and its Subsidiaries;
(b) Indebtedness of ALT and its Subsidiaries (other than any
member of the TTI Group) outstanding on the date hereof and listed on Schedule
7.01(b) and any refinancings, refundings, renewals or extensions thereof,
provided that (i) the amount of such Indebtedness is not increased at the time
of such refinancing, refunding, renewal or extension except by an amount equal
to the premium or other amount paid, and fees and expenses incurred, in
connection with such refinancing and by an amount equal to any utilized
commitments thereunder, and (ii) no member of the TTI Group is an obligor or
guarantor in respect thereof;
(c) Indebtedness of TTI and its Subsidiaries outstanding on
the date hereof and listed on Schedule 7.01(c) and any refinancings, refundings,
renewals or extensions thereof, provided that the amount of such Indebtedness is
not increased at the time of such refinancing, refunding, renewal or extension
except by an amount equal to the premium or other amount paid, and fees and
expenses incurred, in connection with such refinancing and by an amount equal to
any utilized commitments thereunder;
(d) Indebtedness of TTI and the Guarantors secured by Liens
permitted by Section 7.02(h) in an aggregate principal amount not to exceed
$25,000,000 at any time outstanding;
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(e) additional unsecured (except to the extent of any Liens
permitted pursuant to Section 7.02(k)) Indebtedness of TTI and the Guarantors;
provided such additional Indebtedness, when added to the then outstanding
Indebtedness of TTI and its Subsidiaries, would not cause TTI to be in violation
of Section 7.12; and provided further that (i) the additional Indebtedness
permitted pursuant to this clause (e) which is incurred by (A) the Guarantors
shall not exceed, in the aggregate at any one time outstanding, $25,000,000 or
(B) Joint Venture Indebtedness of TTI and its Subsidiaries shall not exceed, in
the aggregate at any time outstanding $10,000,000, and (ii) Indebtedness
incurred pursuant to this clause (e) may not contain covenants more restrictive
than or in addition to those contained herein;
(f) Acquired Indebtedness of TTI and its Subsidiaries in an
aggregate principal amount not to exceed $25,000,000 at any time outstanding;
and
(g) on and prior to the TTI Closing Date, Indebtedness of ALT
and its Subsidiaries (other than any member of the TTI Group) to the extent
permitted under Section 5.1 of the Existing ALT Credit Agreement, as in effect
on the date hereof.
7.02 LIENS. Incur, assume or suffer to exist, any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, except:
(a) Liens of ALT and its Subsidiaries (other than any member
of the TTI Group) existing on the date hereof and listed on Schedule 7.02(a) and
any renewals or extensions thereof, provided that (i) the obligations secured or
benefited thereby or the property covered thereby are not increased, except as
permitted by Section 7.01(b), and (ii) no capital stock of or assets of any
member of the TTI Group are encumbered thereby;
(b) Liens of TTI and its Subsidiaries existing on the date
hereof and listed on Schedule 7.02(b) and any renewals or extensions thereof,
provided that the obligations secured or benefited thereby or the property
covered thereby are not increased, except as permitted by Section 7.01(c);
(c) Ordinary Course Liens of TTI and its Subsidiaries;
(d) Security interests granted by TTI or any of its
Subsidiaries in favor of lessors of personal property, which property is the
subject of a true lease between such lessor and TTI or any of its Subsidiaries
as lessee;
(e) [Liens granted by TTI or any of its Subsidiaries against
production contracts to secure Indebtedness of TTI or any of its Subsidiaries
permitted hereunder that is incurred to acquire equipment and facilities
required to produce the items being sold pursuant to such production contracts;]
(f) [Liens granted by TTI or any of its Subsidiaries in favor
of any Governmental Authority created pursuant to production contracts with such
Governmental Authority to which TTI or any of its Subsidiaries is a party in
[describe property subject to Liens];]
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(g) Liens of TTI and its Subsidiaries arising solely by virtue
of any statutory or common law provision relating to banker's liens, rights of
set-off or similar rights and remedies as to deposit accounts or other funds
maintained with a creditor depository institution; provided that (i) such
deposit account is not a dedicated cash collateral account and is not subject to
restrictions against access by TTI or any of its Subsidiaries in excess of those
set forth by regulations promulgated by the Federal Reserve Board, and (ii) such
deposit account is not intended by TTI or any of its Subsidiaries to provide
collateral to the depository institution;
(h) Liens granted by TTI and the Guarantors securing
Indebtedness of TTI or any Guarantor incurred after the TTI Closing Date
pursuant to Section 7.02(d) to finance the acquisition of fixed or capital
assets, provided that (i) such Liens shall be created substantially
simultaneously with the acquisition of such fixed or capital assets, (ii) such
Liens do not at any time encumber any property other than the property financed
by such Indebtedness and (iii) the amount of Indebtedness secured thereby is not
increased;
(i) any Lien on any property or asset owned by TTI or any of
its Subsidiaries that was existing on such property or asset prior to the
acquisition thereof by TTI or such Subsidiary or that was owned by any Person
that becomes a Subsidiary of TTI after the date hereof prior to the time such
Person became a Subsidiary of TTI, in each case, if (i) such Lien was not
created in contemplation of or in connection with such acquisition or such
Person becoming a Subsidiary of TTI, as the case may be, (ii) such Lien is not
enforceable against, or spread to cover, any other property or assets of TTI or
any of its Subsidiaries, and (iii) such Lien secures only (A) those obligations
(including Acquired Indebtedness other than Acquisition Consideration) that it
secures on the date of such acquisition or the date such Person becomes a
Subsidiary of TTI, as the case may be and (B) Acquired Indebtedness permitted
hereunder;
(j) on and prior to the TTI Closing Date, Liens granted by ALT
and its Subsidiaries (other than any member of the TTI Group) on property and
assets of ALT and its Subsidiaries (other than any capital stock of or assets of
any member of the TTI Group) to the extent permitted under Section 5.2 of the
Existing ALT Credit Agreement, as in effect on the date hereof; and
(k) other Liens which secure Indebtedness of TTI and its
Subsidiaries; provided that neither the aggregate principal amount of
Indebtedness secured thereby nor the fair market value of the property subject
to such Liens shall at any time exceed $10,000,000.
7.03 FUNDAMENTAL CHANGES. Merge or consolidate with or into any Person
or liquidate, wind-up or dissolve itself, or permit or suffer any liquidation or
dissolution or sell all or substantially all of its assets, except, that so long
as no Default or Event of Default exists or would result therefrom:
(a) any Solvent Subsidiary of TTI may merge with (i) TTI
provided that TTI shall be the continuing or surviving corporation, (ii) with
any one or more other Solvent Subsidiaries of TTI (provided that if either party
to such merger is a Guarantor, the surviving entity shall be a Guarantor), and
(iii) with any joint ventures, partnerships and other Persons, so
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long as such joint ventures, partnerships and other Persons will, as a result of
making such merger and all other contemporaneous related transactions, become a
wholly owned Subsidiary of TTI; provided that when any wholly-owned Material
Subsidiary of TTI is merging into another Subsidiary of TTI, the wholly-owned
Material Subsidiary of TTI shall be the continuing or surviving Person;
(b) any Subsidiary of TTI may sell all or substantially all of
its assets (upon voluntary liquidation or otherwise), to TTI or any of its
Solvent Subsidiaries that is a Guarantor; provided that when any wholly-owned
Subsidiary of TTI is selling all or substantially all of its assets to another
Subsidiary of TTI, the Subsidiary acquiring such assets shall be a wholly-owned
Subsidiary of TTI;
(c) on and prior to the TTI Closing Date, ALT and its
Subsidiaries (other than any member of the TTI Group) may merge or consolidate
with other Persons to the extent permitted under Section 5.6 of the Existing ALT
Credit Agreement, as in effect on the date hereof;
(d) Dispositions permitted under Sections 7.04(a), (c) and
(d); and
(e) [Teledyne to describe specific elements of Spinoff that
need to be permitted].
7.04 DISPOSITIONS. Make any Dispositions, except:
(a) Ordinary Course Dispositions by TTI and its Subsidiaries;
(b) Dispositions by TTI and its Subsidiaries permitted by
Section 7.03;
(c) Dispositions by TTI and its Subsidiaries, so long as the
book value of any assets or property Disposed of in any fiscal year of TTI does
not exceed in the aggregate ten percent of Consolidated Total Assets determined
as of the last day of the immediately preceding fiscal year; and
(d) on and prior to the TTI Closing Date, Dispositions by ALT
and its Subsidiaries (other than any member of the TTI Group) to the extent
permitted under Section 5.5 of the Existing ALT Credit Agreement, as in effect
on the date hereof.
7.05 INVESTMENTS. Make or hold any Investments, except:
(a) Investments by ALT and its Subsidiaries (other than any
member of the TTI Group) existing on the date hereof and listed on Schedule
7.05(a);
(b) Investments by TTI and its Subsidiaries existing on the
date hereof and listed on Schedule 7.05(b);
(c) Ordinary Course Investments by TTI and its Subsidiaries;
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(d) Investments by TTI and its Subsidiaries permitted by
Section 7.03;
(e) Permitted Acquisitions;
(f) Investments by TTI and the Guarantors after the TTI
Closing Date in an aggregate amount not to exceed, when combined with the amount
of Restricted Payments made pursuant to clause (iii) of Section 7.06, an amount
equal to the sum of $5,000,000 and 25% of cumulative Consolidated Net Income
since the TTI Closing Date; and
(g) on and prior to the TTI Closing Date, Investments by ALT
and its Subsidiaries (other than any member of the TTI Group) permitted under
Section 5.1 of the Existing ALT Credit Agreement, as in effect on the date
hereof.
7.06 RESTRICTED PAYMENTS. Make any Restricted Payments, except (i) the
special distribution by ALT of all of the capital stock of TTI to the
stockholders of ALT in accordance with the Spinoff Documents, (ii) on and prior
to the TTI Closing Date, ALT and its Subsidiaries (other than any member of the
TTI Group) may make Restricted Payments to the extent permitted under the
Existing ALT Credit Agreement, as in effect on the date hereof, and (iii) from
and after the TTI Closing Date, TTI and its Subsidiaries may make dividends and
other distributions payable solely in cash in an aggregate amount not to exceed,
when combined with the amount of Investments made pursuant to Section 7.05(f),
an amount equal to the sum of $5,000,000 and 25% of cumulative Consolidated Net
Income since the TTI Closing Date.
7.07 ERISA. At any time engage in a transaction which could be subject
to Sections 4069 or 4212(c) of ERISA, or permit any Pension Plan to (a) engage
in any non-exempt "prohibited transaction" (as defined in Section 4975 of the
Code); (b) fail to comply with ERISA or any other applicable Laws; or (c) incur
any material "accumulated funding deficiency" (as defined in Section 302 of
ERISA), which, with respect to each event listed above, would reasonably be
expected to have a Material Adverse Effect.
7.08 LIMITATION ON NATURE OF BUSINESS. Enter into any business, either
directly or through a Subsidiary, except for (i) any business in which Borrower
or the applicable Subsidiary is engaged on the date hereof, (ii) any business
that is reasonably related thereto, or (iii) any business that is in
substantially the same industry as any business conducted by Borrower or such
Subsidiary on the date hereof.
7.09 TRANSACTIONS WITH AFFILIATES. Enter into any transaction of any
kind with any Affiliate of Borrower other than arm's-length transactions with
Affiliates that are otherwise permitted hereunder.
7.10 HOSTILE ACQUISITIONS. Use the proceeds of any Extension of Credit
in connection with the acquisition of any voting interest in any Person if such
acquisition is opposed by the board of directors or management of such Person.
7.11 LIMITATIONS ON UPSTREAMING, ETC. Suffer to exist or become
effective any restriction or limitation on the ability of Borrower or any of its
Subsidiaries (or, in the case of
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clause (a) only, any Subsidiary of Borrower) to: (a) make Restricted Payments,
(b) pay or subordinate any Indebtedness owed to Borrower or any other
Subsidiary, (c) make Investments in Borrower or any other Subsidiary or (d)
transfer any of its assets to Borrower or any other Subsidiary, except for the
restrictions contained in the Loan Documents.
7.12 FINANCIAL COVENANTS.
(a) CONSOLIDATED NET WORTH. Permit Consolidated Net Worth at
any time to be less than the sum of (a) an amount equal to 75% of Consolidated
Net Worth as of the TTI Closing Date, (b) an amount equal to 50% of the
Consolidated Net Income earned in each fiscal quarter of TTI ending after the
TTI Closing Date (with no deduction for a net loss in any such fiscal quarter)
and (c) an amount equal to 75% of the net proceeds after the TTI Closing Date of
the issuance and sale of capital stock of TTI (including upon any conversion of
debt securities of TTI into such capital stock).
(b) INTEREST COVERAGE RATIO. Permit the Interest Coverage
Ratio as of the end of any fiscal quarter of TTI to be less than 3.0: 1.0.
(c) LEVERAGE RATIO. Permit the Leverage Ratio at any time to
be greater than 3.0: 1.0.
7.13 LIMITATION ON AMENDMENTS TO SPINOFF DOCUMENTS. Amend, supplement,
replace or otherwise modify (whether pursuant to a waiver granted by or to such
Person or otherwise) or fail to enforce the terms and conditions of any Spinoff
Document, except for exceptions to the foregoing that could not, individually or
in the aggregate, reasonably be expected to be adverse to Administrative Agent
or any Lender.
7.14 LIMITATION ON MODIFICATIONS OF INDEBTEDNESS. Except as otherwise
permitted under Section 7.01(b), amend, modify or otherwise change, or consent
or agree to any amendment, modification, waiver or other change to, any of the
terms (including, without limitation, the subordination terms) of any
Indebtedness (excluding the Indebtedness hereunder) (other than any such
amendment, modification, waiver or other change which (i) would extend the
maturity or reduce the amount of any payment of principal thereof, reduce the
rate or extend the date for payment of interest thereon and (ii) does not
involve the payment of a consent fee).
SECTION 8.
EVENTS OF DEFAULT AND REMEDIES
8.01 EVENTS OF DEFAULT. Any one or more of the following events shall
constitute an Event of Default:
(a) Borrower fails to pay any principal on any Outstanding
Obligation (other than fees) as and on the date when due; or
(b) Borrower fails to pay any interest on any Outstanding
Obligation, or any fees payable under Section 2.08 due hereunder, or any other
fees or amount payable to
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Administrative Agent or any Lender under any Loan Document, in each case, within
five days after the date when due; or
(c) Any default occurs in the observance or performance of any
agreement contained in Sections 6.01, 6.02, 6.08 or 7; or
(d) The occurrence of an Event of Default (as such term is or
may hereafter be specifically defined in any other Loan Document) under any
other Loan Document; or any Borrower Party fails to perform or observe any other
covenant or agreement (not specified in subsections (a), (b) or (c) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues for 30 days; or
(e) Any representation or warranty in any Loan Document or in
any certificate, agreement, instrument or other document made or delivered by
any Borrower Party pursuant to or in connection with any Loan Document proves to
have been incorrect in any material respect when made or deemed made; or
(f) (i) any Borrower Party (x) defaults in any payment when
due of principal of or interest on any Indebtedness (other than Indebtedness
hereunder) or (y) defaults in the observance or performance of any other
agreement or condition relating to any Indebtedness (other than Indebtedness
hereunder) or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur, the effect of which default or
other event is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, Indebtedness
having an aggregate principal amount in excess of the Threshold Amount to be
demanded or become due (automatically or otherwise) prior to its stated
maturity, or any Guaranty Obligation in such amount to become payable or cash
collateral in respect thereof to be demanded, or any Borrower Party is unable or
admits in writing its inability to pay its debts as they mature; or (ii) the
occurrence under any Swap Contract of an Early Termination Date (as defined in
such Swap Contract) resulting from (x) any event of default under such Swap
Contract as to which Borrower or any Subsidiary is the Defaulting Party (as
defined in such Swap Contract) or (y) any Termination Event under any Swap
Contract (as defined therein) as to which Borrower or any Subsidiary is an
Affected Party (as defined therein), if, in either event, the Swap Termination
Value owed by Borrower or such Subsidiary as a result thereof is greater than
the Threshold Amount; or
(g) Any Loan Document, at any time after its execution and
delivery and for any reason other than the agreement of all Lenders or
satisfaction in full of all the Obligations and termination of the combined
Commitments, ceases (other than, in the case of the Pledge Agreement, pursuant
to the terms thereof on or after the Collateral Release Date) to be in full
force and effect or is declared by a court of competent jurisdiction to be null
and void, invalid or unenforceable in any respect; or any Borrower Party denies
that it has any or further liability or obligation under any Loan Document, or
purports to revoke, terminate or rescind any Loan Document; or
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(h) The Pledge Agreement, at any time after its execution and
delivery and for any reason other than the agreement of all Lenders or
satisfaction in full of all the Obligations and termination of the combined
Commitments, ceases (other than pursuant to the terms thereof on or after the
Collateral Release Date) to create a valid and perfected first priority Lien on
the Collateral purported to be covered thereby; or
(i) A final judgment against any Borrower Party is entered for
the payment of money in excess of the Threshold Amount, or any non-monetary
final judgment is entered against any Borrower Party which has a Material
Adverse Effect and, in each case if such judgment remains unsatisfied without
procurement of a stay of execution within 30 calendar days after the date of
entry of judgment or, if earlier, five days prior to the date of any proposed
sale, or any writ or warrant of attachment or execution or similar process is
issued or levied against all or any material part of the property of any such
Person and is not released, vacated or fully bonded within 30 calendar days
after its issue or levy; or
(j) Any Borrower Party or any of its Subsidiaries institutes
or consents to the institution of any proceeding under Debtor Relief Laws, or
makes an assignment for the benefit of creditors; or applies for or consents to
the appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of its
property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or consent
of that Person and the appointment continues undischarged or unstayed for 60
calendar days; or any proceeding under Debtor Relief Laws relating to any such
Person or to all or any part of its property is instituted without the consent
of that Person and continues undismissed or unstayed for 60 calendar days, or an
order for relief is entered in any such proceeding; or
(k) (i) An ERISA Event occurs with respect to a Pension Plan
or Multiemployer Plan which has resulted or would reasonably be expected to
result in liability of Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold
Amount; (ii) the aggregate amount of Unfunded Pension Liability among all
Pension Plans at any time exceeds the Threshold Amount; or (iii) Borrower or any
ERISA Affiliate fails to pay when due, after the expiration of any applicable
grace period, any installment payment with respect to its withdrawal liability
under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in
excess of the Threshold Amount; or
(l) TTI fails, on or before the date that is 12 months after
the ALT Closing Date, to consummate a Qualified Public Offering; or
(m) The Private Letter Ruling is withdrawn or otherwise ceases
to be in full force and effect or is declared by a court of competent
jurisdiction to be null and void, invalid or unenforceable in any respect; or,
prior to its satisfaction of its liabilities and obligations thereunder, any
Borrower Party denies that it has any or further liability or obligation under
the Private Letter Ruling, or fails to satisfy any condition contained therein,
or purports to revoke, terminate or rescind the Private Letter Ruling; or
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(n) Any Person or two or more Persons acting in concert shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended), directly or indirectly, of Voting Stock of Borrower (or other
securities convertible into such Voting Stock) representing 25% or more of the
combined voting power of all Voting Stock of Borrower; or (ii) during any period
of up to 24 consecutive months, commencing after the date of this Agreement,
individuals who at the beginning of such 24-month period were directors of
Borrower, or individuals whose nomination for election to the board of directors
of Borrower was recommended by at least 66-2/3% of the then directors of
Borrower, shall cease for any reason to constitute a majority of the board of
directors of Borrower; or (iii) any Person or two or more Persons acting in
concert shall have acquired by contract or otherwise, or shall have entered into
a contract or arrangement that, upon consummation, will result in its or their
acquisition of, control over Voting Stock of Borrower (or other securities
convertible into such securities) representing 25% or more of the combined
voting power of all Voting Stock of Borrower; or
(o) There shall be any suspension or debarment of any
contracting rights of Borrower or any of its Material Subsidiaries (or a
division of any thereof) in effect for more than 30 days from its commencement
(or Borrower shall learn that any such suspension or debarment shall be imposed
for a period in excess of 30 days); or
(p) An indemnification claim in excess of the Threshold Amount
shall be made against any member of the TTI Group by ALT, any of its Affiliates
or any of their respective stockholders pursuant to, or in connection with, any
of the Spinoff Documents including, without limitation, pursuant to Section 6.1
of the Tax Sharing and Indemnification Agreement and Section 5.02 of the
Separation and Distribution Agreement.
8.02 REMEDIES UPON EVENT OF DEFAULT. Without limiting any other rights
or remedies of Administrative Agent or Lenders provided for elsewhere in this
Agreement, or the other Loan Documents, or by applicable Law, or in equity, or
otherwise:
(a) Upon the occurrence, and during the continuance, of any
Event of Default other than an Event of Default described in Section 8.01(j):
(i) the Required Lenders may request Administrative
Agent to, and Administrative Agent thereupon shall, terminate the Commitments
and/or declare all or any part of the unpaid principal of all Loans, all
interest accrued and unpaid thereon and all other amounts payable under the Loan
Documents to be immediately due and payable, whereupon the same shall become and
be immediately due and payable, without protest, presentment, notice of
dishonor, demand or further notice of any kind, all of which are expressly
waived by Borrower; and
(ii) Issuing Lender may, with the approval of
Administrative Agent on behalf of the Required Lenders, demand immediate payment
by Borrower of an amount equal to the aggregate amount of all outstanding
Letters of Credit Usage to be held in a Letter of Credit Cash Collateral
Account.
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(b) Upon the occurrence of any Event of Default described in
Section 8.01(j):
(i) the Commitments and all other obligations of
Administrative Agent or Lenders shall automatically terminate without notice to
or demand upon Borrower, which are expressly waived by Borrower;
(ii) the unpaid principal of all Loans, all interest
accrued and unpaid thereon and all other amounts payable under the Loan
Documents shall be immediately due and payable, without protest, presentment,
notice of dishonor, demand or further notice of any kind, all of which are
expressly waived by Borrower; and
(iii) an amount equal to the aggregate amount of all
outstanding Letters of Credit Usage shall be immediately due and payable to
Issuing Lender without notice to or demand upon Borrower, which are expressly
waived by Borrower, to be held in a Letter of Credit Cash Collateral Account.
(c) Upon the occurrence of any Event of Default, Lenders and
Administrative Agent, or any of them, without notice to (except as expressly
provided for in any Loan Document) or demand upon Borrower, which are expressly
waived by Borrower (except as to notices expressly provided for in any Loan
Document), may proceed to (but only with the consent of the Required Lenders)
protect, exercise and enforce their rights and remedies under the Loan Documents
against any Borrower Party and such other rights and remedies as are provided by
Law or equity or otherwise.
(d) Except as permitted by Section 10.06, no Lender may
exercise any rights or remedies with respect to the Obligations without the
consent of the Required Lenders in their sole and absolute discretion. The order
and manner in which Administrative Agent's and Lenders' rights and remedies are
to be exercised shall be determined by the Required Lenders in their sole and
absolute discretion. Regardless of how a Lender may treat payments for the
purpose of its own accounting, for the purpose of computing the Obligations
hereunder, payments shall be applied first, to costs and expenses (including
Attorney Costs) incurred by Administrative Agent and each Lender, second, to the
payment of accrued and unpaid interest on the Loans to and including the date of
such application, third, to the payment of the unpaid principal of the Loans,
and fourth, to the payment of all other amounts (including fees) then owing to
Administrative Agent and Lenders under the Loan Documents, in each case paid pro
rata to each Lender in the same proportions that the aggregate Obligations owed
to each Lender under the Loan Documents bear to the aggregate Obligations owed
under the Loan Documents to all Lenders, without priority or preference among
Lenders. No application of payments will cure any Event of Default, or prevent
acceleration, or continued acceleration, of amounts payable under the Loan
Documents, or prevent the exercise, or continued exercise, of rights or remedies
of Administrative Agent and Lenders hereunder or thereunder or at Law or in
equity or otherwise.
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SECTION 9.
ADMINISTRATIVE AGENT
9.01 APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT.
(a) Each Lender hereby irrevocably (subject to Section 9.09)
appoints, designates and authorizes Administrative Agent to take such action on
its behalf under the provisions of this Agreement and each other Loan Document
and to exercise such powers and perform such duties as are expressly delegated
to it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary contained elsewhere in this Agreement or in any other Loan
Document, Administrative Agent shall not have any duties or responsibilities,
except those expressly set forth herein, nor shall Administrative Agent have or
be deemed to have any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against Administrative Agent. Without limiting the generality of the foregoing
sentence, the use of the term "agent" in this Agreement with reference to
Administrative Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
(b) Issuing Lender shall act on behalf of Lenders with respect
to any Letters of Credit issued by it and the documents associated therewith
until such time and except for so long as Administrative Agent may agree at the
request of the Required Lenders to act for Issuing Lender with respect thereto;
provided, however, that Issuing Lender shall have all of the benefits and
immunities (i) provided to Administrative Agent in this Section 9 with respect
to any acts taken or omissions suffered by Issuing Lender in connection with
Letters of Credit issued by it or proposed to be issued by it and the
application and agreements for letters of credit pertaining to the Letters of
Credit as fully as if the term "Administrative Agent" as used in this Section 9
included Issuing Lender with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to Issuing Lender.
9.02 DELEGATION OF DUTIES. Administrative Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Administrative Agent shall not
be responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
9.03 LIABILITY OF ADMINISTRATIVE AGENT. None of Administrative
Agent-Related Persons shall (i) be liable for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or any other
Loan Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct as determined in a final, nonappealable
judgment by a court of competent jurisdiction), or (ii) be responsible in any
manner to any Lender for any recital, statement, representation or warranty made
by Borrower or
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any Subsidiary or Affiliate of Borrower, or any officer thereof, contained in
this Agreement or in any other Loan Document or Spinoff Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Administrative Agent under or in connection with, this Agreement,
any other Loan Document or any Spinoff Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement, any other Loan
Document or any Spinoff Document, or for any failure of Borrower or any other
party to any Loan Document or Spinoff Document to perform its obligations
hereunder or thereunder. No Administrative Agent-Related Person shall be under
any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement, any other Loan Document or any Spinoff Document, or to inspect the
properties, books or records of Borrower or any of Borrower's Subsidiaries or
Affiliates.
9.04 RELIANCE BY ADMINISTRATIVE AGENT.
(a) Administrative Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrower),
independent accountants and other experts selected by Administrative Agent.
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders or all Lenders, as
the case may be, as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the Required Lenders or all
Lenders, if required hereunder, and such request and any action taken or failure
to act pursuant thereto shall be binding upon all Lenders. Where this Agreement
expressly permits or prohibits an action unless the Required Lenders otherwise
determine, and in all other instances, Administrative Agent may, but shall not
be required to, initiate any solicitation for the consent or a vote of Lenders.
(b) For purposes of determining compliance with the conditions
specified in Sections 4.01, 4.02 and 4.03, each Lender that has executed this
Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter either sent by Administrative
Agent to such Lender for consent, approval, acceptance or satisfaction, or
required thereunder to be consented to or approved by or acceptable or
satisfactory to such Lender.
9.05 NOTICE OF DEFAULT. Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to Administrative Agent for the account of Lenders, unless
Administrative Agent shall have received written notice from a Lender or
Borrower referring to this Agreement, describing such Default or Event of
Default and
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stating that such notice is a "notice of default". Administrative Agent will
notify Lenders of its receipt of any such notice. Administrative Agent shall
take such action with respect to such Default or Event of Default as may be
requested by the Required Lenders in accordance with Section 8; provided,
however, that unless and until Administrative Agent has received any such
request, Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable or in the best interest of Lenders.
9.06 CREDIT DECISION; DISCLOSURE OF INFORMATION BY ADMINISTRATIVE
AGENT. Each Lender acknowledges that none of Administrative Agent-Related
Persons has made any representation or warranty to it, and that no act by
Administrative Agent hereinafter taken, including any consent to and acceptance
of any assignment or review of the affairs of Borrower and its Subsidiaries,
shall be deemed to constitute any representation or warranty by any
Administrative Agent-Related Person to any Lender as to any matter, including
whether Administrative Agent-Related Persons have disclosed material information
in their possession. Each Lender, including any Lender by assignment, represents
to Administrative Agent and Borrower that it has, independently and without
reliance upon any Administrative Agent-Related Person and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, prospects, operations, property,
financial and other condition and creditworthiness of Borrower and its
Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to Borrower hereunder. Each Lender also
represents that it will, independently and without reliance upon any
Administrative Agent-Related Person and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under this
Agreement and the other Loan Documents, and to make such investigations as it
deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrower or any
of its Subsidiaries. Except for notices, reports and other documents expressly
required to be furnished to Lenders by Administrative Agent herein,
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of
Borrower or any of its Subsidiaries which may come into the possession of any of
Administrative Agent-Related Persons.
9.07 INDEMNIFICATION OF ADMINISTRATIVE AGENT. Whether or not the
transactions contemplated hereby are consummated, Lenders shall indemnify upon
demand each Administrative Agent-Related Person (to the extent not reimbursed by
or on behalf of Borrower and without limiting the obligation of Borrower to do
so), pro rata, and hold harmless each Administrative Agent-Related Person from
and against any and all Indemnified Liabilities incurred by it; provided,
however, that no Lender shall be liable for the payment to any Administrative
Agent-Related Person of any portion of such Indemnified Liabilities resulting
from such Person's gross negligence or willful misconduct as determined by a
final nonappealable judgment by a court of competent jurisdiction; provided,
however, that no action
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taken in accordance with the directions of the Required Lenders or all Lenders,
as the case may be, shall be deemed to constitute gross negligence or willful
misconduct for purposes of this Section. Without limitation of the foregoing,
each Lender shall reimburse Administrative Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney Costs) incurred
by Administrative Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that
Administrative Agent is not reimbursed for such expenses by or on behalf of
Borrower. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Administrative
Agent.
9.08 ADMINISTRATIVE AGENT IN INDIVIDUAL CAPACITY. Bank of America and
its Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business with
Borrower and its Subsidiaries and Affiliates as though Bank of America were not
Administrative Agent or Issuing Lender hereunder or Swing Line Lender and
without notice to or consent of Lenders. Lenders acknowledge that, pursuant to
such activities, Bank of America or its Affiliates may receive information
regarding Borrower or its Affiliates (including information that may be subject
to confidentiality obligations in favor of Borrower or such Affiliate) and
acknowledge that Administrative Agent shall be under no obligation to provide
such information to them. With respect to its Loans and Letters of Credit, Bank
of America shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though it were not Administrative
Agent or Issuing Lender.
9.09 SUCCESSOR ADMINISTRATIVE AGENT. Administrative Agent may, and at
the request of the Required Lenders shall, resign as Administrative Agent upon
30 days' notice to Lenders and Borrower. If Administrative Agent resigns under
this Agreement, the Required Lenders shall appoint from among Lenders a
successor administrative agent for Lenders which successor administrative agent
shall, so long as no Default or Event of Default shall have occurred and be
continuing, be approved by Borrower. If no successor administrative agent is
appointed prior to the effective date of the resignation of Administrative
Agent, Administrative Agent may appoint, after consulting with Lenders and
Borrower, a successor administrative agent from among Lenders. Upon the
acceptance of its appointment as successor administrative agent hereunder, such
successor administrative agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and the term "Administrative Agent"
shall mean such successor administrative agent and the retiring Administrative
Agent's appointment, powers and duties as Administrative Agent shall be
terminated. After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Section 9 and Sections 10.04 and
10.12 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. If no successor
administrative agent has accepted appointment as Administrative Agent by the
date which is 30 days following a retiring Administrative Agent's notice of
resignation, the retiring Administrative Agent's resignation shall nevertheless
thereupon become effective and Lenders shall perform all of the duties of
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Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. Notwithstanding the foregoing,
however, Bank of America may not be removed as Administrative Agent at the
request of the Required Lenders unless Bank of America shall also simultaneously
be replaced as "Issuing Lender" and "Swing Line Lender" hereunder pursuant to
documentation in form and substance reasonably satisfactory to Bank of America.
SECTION 10.
MISCELLANEOUS
10.01 AMENDMENTS; CONSENTS. No amendment, modification, supplement,
extension, termination or waiver of any provision of this Agreement or any other
Loan Document, no approval or consent thereunder, and no consent to any
departure by any Borrower Party therefrom shall be effective unless in writing
signed by Borrower and the Required Lenders and acknowledged by Administrative
Agent, and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. Except as otherwise
expressly provided herein, without the approval in writing of Borrower,
Administrative Agent and all Lenders, no amendment, modification, supplement,
termination, waiver or consent may be effective:
(a) to reduce the amount of principal, principal prepayments
or the rate of interest payable on, any Loan, or the amount of any fee or other
amount payable to any Lender under the Loan Documents (unless such modification
is consented to by each Lender entitled to receive such fee) or to waive an
Event of Default consisting of the failure of Borrower to pay when due
principal, interest or any utilization fee or facility fee;
(b) to postpone any date fixed for any payment of principal
of, prepayment of principal of, or any installment of interest on, any Loan or
any installment of any fee payable to Lenders under Section 2.08, to extend the
term of, or increase the amount of, any Lender's Commitment (it being understood
that a waiver of an Event of Default shall not constitute an extension or
increase in the Commitment of any Lender) or modify the Pro Rata Share of any
Lender;
(c) to amend the provisions of the definition of "Required
Lenders", Sections 4, 9, this Section 10.01 or Section 10.07;
(d) to amend any provision of this Agreement that expressly
requires the consent or approval of all Lenders;
(e) to release all or substantially all of the Guarantors from
their guarantee obligations under the Guaranty; or
(f) to release all or substantially all of the Collateral
(other than pursuant to Section 10.02);
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provided, however, that (i) no amendment, waiver or consent shall, unless in
writing and signed by Issuing Lender in addition to Borrower and Required
Lenders or all Lenders, as the case may be, affect the rights or duties of
Issuing Lender under any Loan Document relating to Letters of Credit, (ii) no
amendment, waiver or consent shall, unless in writing and signed by
Administrative Agent in addition to Borrower and Required Lenders or all
Lenders, as the case may be, affect the rights or duties of Administrative Agent
under any Loan Document, (iii) no amendment, waiver or consent shall, unless in
writing and signed by Swing Line Lender in addition to Borrower and Required
Lenders or all Lenders, as the case may be, affect the rights or duties of Swing
Line Lender under any Loan Document, and (iv) any fee letter may be amended, or
rights or privileges thereunder waived, in a writing executed by the parties
thereto. Any amendment, modification, supplement, termination, waiver or consent
pursuant to this Section shall apply equally to, and shall be binding upon, all
Lenders and Administrative Agent.
10.02 Release of Collateral. Anything contained in this Agreement or
any of the other Loan Documents to the contrary notwithstanding, on the
Collateral Release Date, the Pledge Agreement shall be terminated, and all
Collateral pledged thereunder shall be released, without further action on the
part of Administrative Agent or any Lender (the date of such release, the
"Collateral Release Date"). Any release of Collateral pledged under the Pledge
Agreement in accordance with the provisions of this Section 10.02 shall be
deemed to be a release of such pledged Collateral approved by all Lenders for
purposes of the Loan Documents. In connection with any such release,
Administrative Agent shall execute all such further documents and instruments as
may be reasonably requested by Borrower in order to more fully evidence or
effect such release. All such deliveries shall be at the expense of Borrower,
with no liability to Administrative Agent or any Lender, and with no
representation or warranty by or recourse to Administrative Agent or any Lender.
Notwithstanding anything to the contrary herein or in any other Loan Document,
the Guaranty shall not be terminated on the Collateral Release Date.
10.03 TRANSMISSION AND EFFECTIVENESS OF NOTICES AND SIGNATURES.
(a) MODES OF DELIVERY. Except as otherwise provided in any
Loan Document, notices, requests, demands, directions, agreements and documents
delivered in connection with the Loan Documents (collectively, "communications")
shall be transmitted by Requisite Notice to the number and address set forth on
Schedule 10.03, may be delivered by the following modes of delivery, and shall
be effective as follows:
MODE OF DELIVERY EFFECTIVE ON EARLIER OF ACTUAL RECEIPT AND:
- --------------------------------------------------------------------------------
Courier Scheduled delivery date
Facsimile When transmission in legible form complete
Mail Fourth Business Day after deposit in U.S.
mail first class postage pre-paid
Personal delivery When received
Telephone When conversation completed
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provided, however, that communications delivered to Administrative Agent
pursuant to Section 2 shall not be effective until actually received by
Administrative Agent.
(b) RELIANCE BY ADMINISTRATIVE AGENT AND LENDERS.
Administrative Agent and Lenders shall be entitled to rely and act on any
communications purportedly given by or on behalf of any Borrower Party even if
such communications (i) were not made in a manner specified herein, (ii) were
incomplete, (iii) were not preceded or followed by any other notice specified
herein, or (iv) the terms thereof, as understood by the recipient, varied from
any subsequent related communications provided for herein. Borrower shall
indemnify Administrative Agent and Lenders from any loss, cost, expense or
liability as a result of relying on any communications permitted herein. The
obligations of Borrower in this subsection shall survive payment of all
Obligations.
(c) EFFECTIVENESS OF FACSIMILE SIGNATURES. Signatures on
communications may be transmitted by facsimile; provided that the Administrative
Agent may, in its sole and absolute discretion in each instance, require the
delivery of originally executed signature pages. The effectiveness of any such
facsimile signatures accepted by Administrative Agent shall, subject to
applicable Law, have the same force and effect as manual signatures and shall be
binding on all Borrower Parties and Administrative Agent and Lenders.
Administrative Agent may also require that any such facsimile signature be
confirmed by a manually-signed hardcopy thereof; provided, however, that the
failure to request any such manually-signed hardcopy confirmation shall not
affect the effectiveness of any facsimile signatures.
10.04 ATTORNEY COSTS, EXPENSES AND TAXES. Borrower agrees (a) to pay or
reimburse Administrative Agent for all reasonable costs and expenses incurred in
connection with the development, preparation, negotiation and execution of the
Loan Documents, and the development, preparation, negotiation and execution of
any amendment, waiver, consent, supplement or modification to, any Loan
Documents, and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including reasonable Attorney Costs, and (b) to pay or reimburse
Administrative Agent and each Lender for all costs and expenses incurred in
connection with any refinancing, restructuring, reorganization (including a
bankruptcy reorganization) and enforcement or attempted enforcement, or
preservation of any rights under any Loan Documents, and any other documents
prepared in connection herewith or therewith, or in connection with any
refinancing, or restructuring of any such documents in the nature of a "workout"
or of any insolvency or bankruptcy proceeding, including all Attorney Costs. The
foregoing costs and expenses shall include all (and, in the case of clause (a)
of the immediately preceding sentence only, all reasonable) search, filing,
recording, title insurance and appraisal charges and fees and taxes related
thereto, and other out-of-pocket expenses incurred by Administrative Agent and
the cost of independent public accountants and other outside experts retained by
Administrative Agent or any Lender. Such costs and expenses shall also include
administrative costs of Administrative Agent reasonably attributable to the
administration of the
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Loan Documents. Any amount payable by Borrower under this Section shall bear
interest from the second Business Day following the date of demand for payment
at the Default Rate, unless waived by Administrative Agent. The agreements in
this Section shall survive repayment of all Obligations.
10.05 BINDING EFFECT; ASSIGNMENT.
(a) This Agreement and the other Loan Documents to which
Borrower is a party will be binding upon and inure to the benefit of Borrower,
Administrative Agent, Lenders and their respective successors and assigns,
except that, Borrower may not assign its rights hereunder or thereunder or any
interest herein or therein without the prior written consent of all Lenders and
any such attempted assignment shall be void. Any Lender may at any time pledge
its Note or any other instrument evidencing its rights as a Lender under this
Agreement to a Federal Reserve Bank, but no such pledge shall release that
Lender from its obligations hereunder or grant to such Federal Reserve Bank the
rights of a Lender hereunder absent foreclosure of such pledge.
(b) From time to time following the Signing Date, each Lender
may assign to one or more Eligible Assignees all or any portion of its Pro Rata
Share of its Commitment and/or Extensions of Credit; provided that (i) such
assignment, if not to a Lender or an Affiliate of the assigning Lender, shall be
consented to by Borrower at all times other than during the existence of a
Default or Event of Default and Administrative Agent, Issuing Lender and Swing
Line Lender (which approval of Borrower shall not be unreasonably withheld or
delayed), (ii) a copy of a duly signed and completed Notice of Assignment and
Acceptance shall be delivered to Administrative Agent, (iii) except in the case
of an assignment to an Affiliate of the assigning Lender, to another Lender or
of the entire remaining Commitment of the assigning Lender, the assignment shall
not assign a Pro Rata Share equivalent to less than the Minimum Amount therefor,
and (iv) the effective date of any such assignment shall be as specified in the
Notice of Assignment and Acceptance, but not earlier than the date which is five
Business Days after the date Administrative Agent has received the Notice of
Assignment and Acceptance. Upon acceptance by Administrative Agent of such
Notice Assignment and Acceptance and consent thereto by Administrative Agent,
Issuing Lender and Swing Line Lender and payment of the requisite fee described
below, the Eligible Assignee named therein shall be a Lender for all purposes of
this Agreement, with the Pro Rata Share therein set forth and, to the extent of
such Pro Rata Share, the assigning Lender shall be released from its further
obligations under this Agreement. Borrower agrees that it shall execute and
deliver upon request (against delivery by the assigning Lender to Borrower of
any Note) to such assignee Lender, one or more Notes evidencing that assignee
Lender's Pro Rata Share, and to the assigning Lender if requested, one or more
Notes evidencing the remaining balance Pro Rata Share retained by the assigning
Lender; provided that Loans made to ALT shall be evidenced by the ALT Global
Note only. Administrative Agent's consent to and acceptance of any assignment
shall not be deemed to constitute any representation or warranty by any
Administrative Agent-Related Person as to any matter.
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(c) After receipt of a completed Notice of Assignment and
Acceptance, and receipt of an assignment fee of $3,500 from such Eligible
Assignee (including Affiliates of assigning Lenders), Administrative Agent
shall, promptly following the effective date thereof, provide to Borrower and
Lenders a revised Schedule 10.03 giving effect thereto.
(d) Each Lender may from time to time grant participations to
one or more other Person (including another Lender) all or any portion of its
Pro Rata Share of its Commitment and/or Extensions of Credit; provided, however,
that (i) such Lender's obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) the participating banks or other
financial institutions shall not be a Lender hereunder for any purpose except,
if the participation agreement so provides, for the purposes of Section 3 (but
only to the extent that the cost of such benefits to Borrower does not exceed
the cost which Borrower would have incurred in respect of such Lender absent the
participation) and subject to Sections 10.06 and 10.07, (iv) Borrower,
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, (v) the participation shall not restrict an
increase in the Commitment or in granting Lender's Pro Rata Share, so long as
the amount of the participation interest is not affected thereby, and (vi) the
consent of the holder of such participation interest shall not be required for
amendments or waivers of provisions of the Loan Documents; provided, however,
that the assigning Lender may, in any agreement with a participant, give such
participant the right to consent to any matter which (A) extends the Maturity
Date as to such participant or any other date upon which any payment of money is
due to such participant, (B) reduces the rate of interest owing to such
participant, any fee or any other monetary amount owing to such participant, (C)
reduces the amount of any installment of principal owing to such participant, or
(D) releases of all or substantially all of the Guarantors or releases of all or
substantially all of the Collateral (other than pursuant to Section 10.02).
10.06 SET-OFF. In addition to any rights and remedies of Administrative
Agent and Lenders or any assignee or participant of Lenders or any Affiliates
thereof (each, a "Proceeding Party") provided by law or in equity or otherwise,
upon the occurrence and during the continuance of any Event of Default, each
Proceeding Party is authorized at any time and from time to time, without prior
notice to Borrower, any such notice being waived by Borrower to the fullest
extent permitted by law, to proceed directly, by right of set-off, banker's lien
or counterclaim, or otherwise, against any assets of the Borrower Parties which
may be in the hands of such Proceeding Party (including all general or special,
time or demand, provisional or other deposits and other indebtedness owing by
such Proceeding Party to or for the credit or the account of Borrower) and apply
such assets against the Obligations, irrespective of whether such Proceeding
Party shall have made any demand therefor and although such Obligations may be
unmatured. Each Lender agrees promptly to notify Borrower and Administrative
Agent after any such set-off and application made by such Lender; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application.
10.07 SHARING OF PAYMENTS. Each Lender severally agrees that if it,
through the exercise of any right of setoff, banker's lien or counterclaim
against Borrower, or otherwise,
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receives payment of the Obligations held by it that is ratably more than any
other Lender, through any means, receives in payment of the Obligations held by
that Lender, then, subject to applicable Laws: (a) Lender exercising the right
of setoff, banker's lien or counterclaim or otherwise receiving such payment
shall purchase, and shall be deemed to have simultaneously purchased, from the
other Lender a participation in the Obligations held by the other Lender and
shall pay to the other Lender a purchase price in an amount so that the share of
the Obligations held by each Lender after the exercise of the right of setoff,
banker's lien or counterclaim or receipt of payment shall be in the same
proportion that existed prior to the exercise of the right of setoff, banker's
lien or counterclaim or receipt of payment; and (b) such other adjustments and
purchases of participations shall be made from time to time as shall be
equitable to ensure that all of Lenders share any payment obtained in respect of
the Obligations ratably in accordance with each Lender's Pro Rata Share of the
Obligations immediately prior to, and without taking into account, the payment;
provided that, if all or any portion of a disproportionate payment obtained as a
result of the exercise of the right of setoff, banker's lien, counterclaim or
otherwise is thereafter recovered from the purchasing Lender by Borrower or any
Person claiming through or succeeding to the rights of Borrower, the purchase of
a participation shall be rescinded and the purchase price thereof shall be
restored to the extent of the recovery, but without interest. Each Lender that
purchases a participation in the Obligations pursuant to this Section shall from
and after the purchase have the right to give all notices, requests, demands,
directions and other communications under this Agreement with respect to the
portion of the Obligations purchased to the same extent as though the purchasing
Lender were the original owner of the Obligations purchased. Borrower expressly
consents to the foregoing arrangements and agrees that any Lender holding a
participation in an Obligation so purchased may exercise any and all rights of
setoff, banker's lien or counterclaim or otherwise with respect to the
participation as fully as if Lender were the original owner of the Obligation
purchased.
10.08 NO WAIVER; CUMULATIVE REMEDIES.
(a) No failure by any Lender or Administrative Agent to
exercise, and no delay by any Lender or Administrative Agent in exercising, any
right, remedy, power or privilege hereunder, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege under any Loan Document preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege.
(b) The rights, remedies, powers and privileges herein or
therein provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by Law. Any decision by Administrative Agent or
any Lender not to require payment of any interest (including Default Interest),
fee, cost or other amount payable under any Loan Document or to calculate any
amount payable by a particular method on any occasion shall in no way limit or
be deemed a waiver of Administrative Agent's or such Lender's right to require
full payment thereof, or to calculate an amount payable by another method that
is not inconsistent with this Agreement, on any other or subsequent occasion.
(c) The terms and conditions of Section 9 are inserted for the
sole benefit of Administrative Agent and Lenders; the same may be waived in
whole or in part, with or without
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terms or conditions, in respect of any Extension of Credit without prejudicing
Administrative Agent's or Lenders' rights to assert them in whole or in part in
respect of any other Extension of Credit.
10.09 USURY. Notwithstanding anything to the contrary contained in any
Loan Document, the interest and fees paid or agreed to be paid under the Loan
Documents shall not exceed the maximum rate of non-usurious interest permitted
by applicable Law (the "Maximum Rate"). If Administrative Agent or any Lender
shall receive interest or a fee in an amount that exceeds the Maximum Rate, the
excessive interest or fee shall be applied to the principal of the Outstanding
Obligations or, if it exceeds the unpaid principal, refunded to Borrower. In
determining whether the interest or a fee contracted for, charged, or received
by Administrative Agent or a Lender exceeds the Maximum Rate, such Person may,
to the extent permitted by applicable Law, (a) characterize any payment that is
not principal as an expense, fee, or premium rather than interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations.
10.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.11 INTEGRATION. This Agreement, together with the other Loan
Documents and any letter agreements referred to herein, comprises the complete
and integrated agreement of the parties on the subject matter hereof and
supersedes all prior agreements, written or oral, on the subject matter hereof.
In the event of any conflict between the provisions of this Agreement and those
of any other Loan Document, the provisions of this Agreement shall control and
govern; provided that the inclusion of supplemental rights or remedies in favor
of Administrative Agent or Lenders in any other Loan Document shall not be
deemed a conflict with this Agreement. Each Loan Document was drafted with the
joint participation of the respective parties thereto and shall be construed
neither against nor in favor of any party, but rather in accordance with the
fair meaning thereof.
10.12 NATURE OF LENDERS' OBLIGATIONS. The obligations of Lenders
hereunder are several and not joint or joint and several. Nothing contained in
this Agreement or any other Loan Document and no action taken by Administrative
Agent or Lenders or any of them pursuant hereto or thereto may, or may be deemed
to, make Lenders a partnership, an association, a joint venture or other entity,
either among themselves or with Borrower or any Affiliate of Borrower. Each
Lender's obligation to make any Extension of Credit pursuant hereto is several
and not joint or joint and several, and in the case of the initial Extension of
Credit only is conditioned upon the performance by all other Lenders of their
obligations to make initial Extensions of Credit. A default by any Lender will
not increase the Pro Rata Share attributable to any other Lender.
10.13 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder and in any Loan Document, certificate or statement
delivered
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pursuant hereto or thereto or in connection herewith or therewith shall survive
the execution and delivery thereof but shall terminate the later of (a) when the
Commitments are terminated and (b) when no Obligations remain outstanding under
any Loan Document. Such representations and warranties have been or will be
relied upon by Administrative Agent and each Lender, notwithstanding any
investigation made by Administrative Agent or any Lender or on their behalf.
10.14 INDEMNITY BY BORROWER. Borrower agrees to indemnify, save and
hold harmless each Administrative Agent-Related Person and each Lender and their
respective Affiliates, directors, officers, agents, advisors and employees
(collectively the "Indemnitees") from and against, and to pay upon demand: (a)
any and all claims, demands, actions or causes of action that are asserted
against any Indemnitee by any Person relating directly or indirectly to a claim,
demand, action or cause of action that such Person asserts or may assert against
any Borrower Party, any of their Affiliates or any of their officers or
directors; (b) any and all claims, demands, actions or causes of action arising
out of or relating to, the Spinoff Documents, the Spinoff, the Line of Business
Transfer, the Loan Documents, any predecessor loan documents, the Commitments,
the use or contemplated use of the proceeds of any Extension of Credit, or the
relationship of any Borrower Party, Administrative Agent and Lenders under this
Agreement; (c) any administrative or investigative proceeding by any
Governmental Authority arising out of or related to a claim, demand, action or
cause of action described in subsection (a) or (b) above; and (d) any and all
liabilities, losses, costs or expenses (including reasonable Attorney Costs)
that any Indemnitee suffers or incurs as a result of the assertion of any
foregoing claim, demand, action, cause of action or proceeding, or as a result
of the preparation of any defense in connection with any foregoing claim,
demand, action, cause of action or proceeding, in all cases, whether or not an
Indemnitee is a party to such claim, demand, action, cause of action or
proceeding, including those liabilities caused by an Indemnitee's own negligence
(all the foregoing, collectively, the "Indemnified Liabilities"); provided that
no Indemnitee shall be entitled to indemnification for any loss caused by its
own gross negligence or willful misconduct as determined by a final
nonappealable judgment by a court of competent jurisdiction. No Indemnitee shall
be liable for any damages arising from the use by others of information or other
materials obtained through internet, Intralinks or other similar information
transmission systems in connection with Extensions of Credit or the Loan
Documents. The obligations of Borrower under this Section shall survive payment
of all Obligations.
10.15 NONLIABILITY OF LENDERS. Borrower acknowledges and agrees that:
(a) Any inspections of any property of Borrower made by or
through Administrative Agent or Lenders are for purposes of administration of
the Loan Documents only, and Borrower is not entitled to rely upon the same
(whether or not such inspections are at the expense of Borrower);
(b) By accepting or approving anything required to be
observed, performed, fulfilled or given to Administrative Agent or Lenders
pursuant to the Loan Documents, neither Administrative Agent nor Lenders shall
be deemed to have warranted or represented the sufficiency, legality,
effectiveness or legal effect of the same, or of any term, provision or
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condition thereof, and such acceptance or approval thereof shall not constitute
a warranty or representation to anyone with respect thereto by Administrative
Agent or Lenders;
(c) The relationship between Borrower and Administrative Agent
and Lenders is, and shall at all times remain, solely that of borrower and
lenders; neither Administrative Agent nor Lenders shall under any circumstance
be construed to be partners or joint venturers of Borrower or its Affiliates;
neither Administrative Agent nor Lenders shall under any circumstance be deemed
to be in a relationship of confidence or trust or a fiduciary relationship with
Borrower or its Affiliates, or to owe any fiduciary duty to Borrower or its
Affiliates; neither Administrative Agent nor Lenders undertake or assume any
responsibility or duty to Borrower or its Affiliates to select, review, inspect,
supervise, pass judgment upon or inform Borrower or its Affiliates of any matter
in connection with their property or the operations of Borrower or its
Affiliates; Borrower and its Affiliates shall rely entirely upon their own
judgment with respect to such matters; and any review, inspection, supervision,
exercise of judgment or supply of information undertaken or assumed by
Administrative Agent or Lenders in connection with such matters is solely for
the protection of Administrative Agent and Lenders and neither Borrower nor any
other Person is entitled to rely thereon; and
(d) Administrative Agent and Lenders shall not be responsible
or liable to any Person for any loss, damage, liability or claim of any kind
relating to injury or death to Persons or damage to property caused by the
actions, inaction or negligence of Borrower and/or its Affiliates and Borrower
hereby indemnifies and holds Administrative Agent and Lenders harmless from any
such loss, damage, liability or claim. The obligations of Borrower under this
subsection shall survive payment of all Obligations.
10.16 NO THIRD PARTIES BENEFITED. This Agreement is made for the
purpose of defining and setting forth certain obligations, rights and duties of
Borrower, Administrative Agent and Lenders in connection with the Extensions of
Credit, and is made for the sole benefit of Borrower, Administrative Agent and
Lenders, and Administrative Agent's and Lenders' successors and assigns. Except
as provided in Sections 10.05 and 10.14, no other Person shall have any rights
of any nature hereunder or by reason hereof.
10.17 SEVERABILITY. Any provision of the Loan Documents that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.18 CONFIDENTIALITY. Administrative Agent and each Lender shall use
any confidential non-public information concerning the Borrower Parties and
their Subsidiaries that is furnished to Administrative Agent or such Lender by
or on behalf of the Borrower Parties and their Subsidiaries in writing in
connection with the Loan Documents (collectively, "Confidential Information")
solely for the purpose of evaluating and providing products and services to them
and administering and enforcing the Loan Documents, and it will hold the
Confidential Information in confidence. Notwithstanding the foregoing,
Administrative Agent and each
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Lender may disclose Confidential Information (a) to their Affiliates or any of
their or their Affiliates' directors, officers, employees, advisors, or
representatives (collectively, the "Representatives") whom it determines need to
know such information for the purposes set forth in this Section; (b) to any
bank or financial institution or other entity to which such Lender has assigned
or desires to assign an interest or participation in the Loan Documents or the
Obligations, provided that any such foregoing recipient of such Confidential
Information agrees to keep such Confidential Information confidential as
specified herein; (c) to any governmental agency or regulatory body having or
claiming to have authority to regulate or oversee any aspect of Administrative
Agent's or such Lender's business or that of their Representatives in connection
with the exercise of such authority or claimed authority; (d) to the extent
necessary or appropriate to effect or preserve Administrative Agent's or such
Lender's or any of their Affiliates' security (if any) for any Obligation or to
enforce any right or remedy or in connection with any claims asserted by or
against Administrative Agent or such Lender or any of their Representatives; and
(e) pursuant to, and as required to comply with, any subpoena or any similar
legal process; provided that, to the extent permitted under applicable Law,
Administrative Agent or such Lender, as the case may be, shall notify Borrower
of any such requirement applicable to it so that Borrower may seek a protective
order or other appropriate remedy to prevent the disclosure thereof. For
purposes hereof, the term "Confidential Information" shall not include
information that (x) is in Administrative Agent's or a Lender's possession prior
to its being provided by or on behalf of the Borrower Parties, provided that
such information is not known by Administrative Agent or such Lender to be
subject to another confidentiality agreement with, or other legal or contractual
obligation of confidentiality to, a Borrower Party, (y) is or becomes publicly
available (other than through a breach hereof by Administrative Agent or such
Lender), or (z) becomes available to Administrative Agent or such Lender on a
nonconfidential basis, provided that the source of such information was not
known by Administrative Agent or such Lender to be bound by a confidentiality
agreement or other legal or contractual obligation of confidentiality with
respect to such information.
10.19 FURTHER ASSURANCES. Borrower and its Subsidiaries shall, at their
expense and without expense to Lenders or Administrative Agent, do, execute and
deliver such further acts and documents as any Lender or Administrative Agent
from time to time reasonably requires for the assuring and confirming unto
Lenders or Administrative Agent of the rights hereby created or intended now or
hereafter so to be, or for carrying out the intention or facilitating the
performance of the terms of any Loan Document.
10.20 HEADINGS. Section headings in this Agreement and the other Loan
Documents are included for convenience of reference only and are not part of
this Agreement or the other Loan Documents for any other purpose.
10.21 TIME OF THE ESSENCE. Time is of the essence of the Loan
Documents.
10.22 FOREIGN LENDERS AND PARTICIPANTS. Each Lender, and each holder of
a participation interest herein, that is a "foreign corporation, partnership or
trust" within the meaning of the Code shall deliver to Administrative Agent,
prior to receipt of any payment subject to withholding (or after accepting an
assignment or receiving a participation interest
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herein), two duly signed completed copies of either Form W-8BEN or any successor
thereto (relating to such Person and entitling it to a complete exemption from
withholding on all payments to be made to such Person by Borrower pursuant to
this Agreement) or Form W-8ECI or any successor thereto (relating to all
payments to be made to such Person by Borrower pursuant to this Agreement) of
the IRS or such other evidence satisfactory to Borrower and Administrative Agent
that no withholding under the federal income tax Laws is required with respect
to such Person. Thereafter and from time to time, each such Person shall (a)
promptly submit to Administrative Agent such additional duly completed and
signed copies of one of such forms (or such successor forms as shall be adopted
from time to time by the relevant United States taxing authorities) as may then
be available under then current United States Laws and regulations to avoid, or
such evidence as is satisfactory to Borrower and Administrative Agent of any
available exemption from, United States withholding taxes in respect of all
payments to be made to such Person by Borrower pursuant to this Agreement, and
(b) take such steps as shall not be materially disadvantageous to it, in the
reasonable judgment of such Lender, and as may be reasonably necessary
(including the re-designation of its Lending Office, if any) to avoid any
requirement of applicable Laws that Borrower make any deduction or withholding
for taxes from amounts payable to such Person. If such Persons fails to deliver
the above forms or other documentation, then Administrative Agent may withhold
from any interest payment to such Person an amount equivalent to the applicable
withholding tax imposed by Sections 1441 and 1442 of the Code, without
reduction. If any Governmental Authority asserts that Administrative Agent did
not properly withhold any tax or other amount from payments made in respect of
such Person, such Person shall indemnify Administrative Agent therefor,
including all penalties and interest and costs and expenses (including Attorney
Costs) of Administrative Agent. The obligation of Lenders under this subsection
shall survive the payment of all Obligations and the resignation or replacement
of Administrative Agent.
10.23 REMOVAL AND/OR REPLACEMENT OF LENDERS.
(a) Under any circumstances set forth in this Agreement
providing that Borrower shall have the right to remove and/or replace a Lender
as a party to this Agreement, Borrower may, upon notice to such Lender and
Administrative Agent, remove such Lender by (i) non ratably terminating such
Lender's Commitment and/or (ii) causing such Lender to assign its Commitment to
one or more other Lenders or Eligible Assignees acceptable to Borrower,
Administrative Agent, Swing Line Lender and Issuing Bank. Any removed or
replaced Lender shall be entitled to (x) payment in full of all principal,
interest, fees and other amounts owing to such Lender through the date of
termination or assignment (including any amounts payable pursuant to Section
3.05), (y) appropriate assurances and indemnities (which may include letters of
credit) as such Lender may reasonably require with respect to its participation
interest in any Letters of Credit or any Swing Line Loans then outstanding and
(z) a release of such Lender from its obligations under the Loan Documents. Any
Lender being replaced shall execute and deliver a Notice of Assignment and
Acceptance covering that Lender's Commitment. Administrative Agent shall
distribute an amended Schedule 2.01, which shall thereafter be incorporated into
this Agreement, to reflect adjustments to Lenders and their Commitments.
- 82 -
<PAGE> 88
(b) In order to make all Lender's interests in any outstanding
Extensions of Credit ratable in accordance with any revised Pro Rata Shares
after giving effect to the removal or replacement of a Lender, Borrower shall
pay or prepay, if necessary, on the effective date thereof, all outstanding
Extensions of Credit of all Lenders, together with any amounts due under Section
3.05. Borrower may then request Extensions of Credit from Lenders in accordance
with their revised Pro Rata Shares.
10.24 GOVERNING LAW.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, the LAW OF THE GOVERNING STATE applicable to agreements made
and to be performed entirely within such State; PROVIDED THAT ADMINISTRATIVE
Agent AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF THE GOVERNING STATE OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF THE
GOVERNING STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH BORROWER
PARTY, ADMINISTRATIVE Agent AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH
BORROWER PARTY, ADMINISTRATIVE Agent AND EACH LENDER IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN
DOCUMENT OR OTHER DOCUMENT RELATED HERETO. EACH BORROWER PARTY, ADMINISTRATIVE
Agent AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF THE
GOVERNING STATE.
10.25 WAIVER OF RIGHT TO TRIAL BY JURY; OTHER WAIVERS. EACH PARTY TO
THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT
TO
- 83 -
<PAGE> 89
TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT WAIVES, TO THE FULLEST EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION
OR PROCEEDING REFERRED TO IN SECTION 10.24(b) ANY SPECIAL, EXEMPLARY, PUNITIVE
OR CONSEQUENTIAL DAMAGES.
10.26 ENTIRE AGREEMENT. THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND
ANY LETTER AGREEMENTS REFERRED TO HEREIN REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
- 84 -
<PAGE> 90
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed as of the date first above written.
ALLEGHENY TELEDYNE INCORPORATED
By: /s/ Robert S. Park
--------------------------------------
Name: Robert S. Park
Title: Vice President-Treasurer
TELEDYNE TECHNOLOGIES INCORPORATED
By: /s/ Stefan Riesenfeld
--------------------------------------
Name: Stefan Riesenfeld
Title: Executive Vice President and Chief
Financial Officer
BANK OF AMERICA, N.A.,
as Administrative Agent
By: /s/ Gina Meador
--------------------------------------
Name: Gina Meador
Title: Vice President
BANK OF AMERICA, N.A.,
as Issuing Lender, Lender and Swing Line Lender
By: /s/ Michelle L. Hilse
--------------------------------------
Name: Michelle L. Hilse
Title: Vice President
- 85 -
<PAGE> 91
MELLON BANK, N.A.,
as Syndication Agent and Lender
By: /s/ John N. Cate
--------------------------------------
Name: John N. Cate
Title: Vice President
- 86 -
<PAGE> 92
THE CHASE MANHATTAN BANK,
as Syndication Agent and Lender
By: /s/ Richard C. Smith
--------------------------------------
Name: Richard C. Smith
Title: Vice President
- 87 -
<PAGE> 93
THE BANK OF NEW YORK,
as Co-Agent and Lender
By: /s/ Elizabeth T. Ying
--------------------------------------
Name: Elizabeth T. Ying
Title: Vice President
- 88 -
<PAGE> 94
BANK ONE, NA,
as Co-Agent and Lender
By: /s/ Mark A. Isley
--------------------------------------
Name: Mark A. Isley
Title: First Vice President
- 89 -
<PAGE> 95
NATIONAL CITY BANK OF PENNSYLVANIA,
as Co-Agent and Lender
By: /s/ Michael A. Heinricher
--------------------------------------
Name: Michael A. Heinricher
Title: Assistant Vice President
- 90 -
<PAGE> 96
BANK OF TOKYO - MITSUBISHI TRUST COMPANY,
as Lender
By: /s/ J. R. Jeffers
--------------------------------------
Name: J. R. Jeffers
Title: SVP & Manager
- 91 -
<PAGE> 97
THE FUJI BANK, LIMITED,
as Lender
By: /s/ Hiromitsu Ugawa
--------------------------------------
Name: Hiromitsu Ugawa
Title: Senior Vice President
- 92 -
<PAGE> 98
WACHOVIA BANK, N.A.,
as Lender
By: /s/ Charles S. Zimmerman
--------------------------------------
Name: Charles S. Zimmerman
Title: Vice President
- 93 -
<PAGE> 1
Exhibit 4.3
FIRST AMENDMENT
TO
CREDIT AGREEMENT
DATED AS OF NOVEMBER 10, 1999
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is
among ALLEGHENY TELEDYNE INCORPORATED, a Delaware corporation ("ALT"), TELEDYNE
TECHNOLOGIES INCORPORATED, a Delaware corporation ("TTI"), the financial
institutions and other entities party to the Credit Agreement referred to below
as Lenders (the "Lenders"), and BANK OF AMERICA, N.A., as Administrative Agent
(in such capacity, the "Administrative Agent"), Issuing Lender and Swing Line
Lender under such Credit Agreement.
PRELIMINARY STATEMENTS:
1. Reference is made to the Credit Agreement (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement")
dated as of October 29, 1999 among ALT, TTI, the Lenders, Mellon Bank, N.A. and
The Chase Manhattan Bank, as Syndication Agents, The Bank of New York, Bank One,
NA and National City Bank of Pennsylvania, as Co-Agents and Bank of America,
N.A., as Administrative Agent, Issuing Lender and Swing Line Lender. Capitalized
terms used and not otherwise defined herein have the meanings set forth in the
Credit Agreement.
2. ALT and TTI have requested an amendment to the definition
of the term "ALT Closing Date" as set forth in the Credit Agreement and the
Lenders have agreed, subject to the provisions of this Amendment, to amend the
Credit Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree intending to be legally bound, as
follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. Effective as of the
Amendment Effective Date (as defined in Section 2 hereof), the Credit Agreement
is hereby amended as follows:
(a) Section 1.01 of the Credit Agreement is hereby amended by
amending and restating the following defined terms in their entirety to read as
follows:
"'ALT Closing Date' means the date on which all the conditions
precedent in Section 4.02 are satisfied or waived in accordance with
Section 4.02, which date shall be no later than December 15, 1999.
'Maturity Date' means (i) if the ALT Closing Date does not
occur on or before December 15, 1999, December 15, 1999, (ii) if the
TTI Closing Date does not occur on or
<PAGE> 2
before the date that is one month following the ALT Closing Date, the
date that is one month following the ALT Closing Date, (iii) otherwise,
the date that is five years following the ALT Closing Date, in each
case, as it may be earlier terminated or extended in accordance with
the terms hereof."
(b) Section 2.08(e) of the Credit Agreement is hereby amended
and restated in its entirety to read as follows:
"(e) LENDERS' UPFRONT FEE. ALT shall pay to Administrative
Agent, for the respective accounts of Lenders pro rata according to
their Pro Rata Share, an upfront fee in an amount set forth in a
separate letter from the Arranger to each Lender and acknowledged by
that Lender as the applicable upfront fee for such Lender. Such upfront
fee shall be payable in two equal installments of 50% of the total
amount of such upfront fee, with the first such installment due and
payable on November 24, 1999 and the second such installment due and
payable on the earlier of the ALT Closing Date and the Maturity Date.
Such upfront fees are for the combined Commitments made by each Lender
under this Agreement and are fully earned on the date paid. The upfront
fee paid to each Lender is solely for its own account and is
nonrefundable."
SECTION 2. CONDITIONS TO EFFECTIVENESS. The amendments set
forth herein shall become effective on the date (the "Amendment Effective Date")
on which the Administrative Agent shall have executed this Amendment and shall
have received counterparts of this Amendment executed by ALT, TTI and each
Lender.
SECTION 3. REPRESENTATIONS AND WARRANTIES. Each of ALT and TTI
represents and warrants as follows:
(a) AUTHORITY. Each of ALT and TTI has the requisite corporate
power and authority to execute and deliver this Amendment and to perform its
obligations hereunder and under the Loan Documents (in each case as modified
hereby) to which it is a party. The execution, delivery and performance by each
of ALT and TTI of this Amendment and the performance by each Borrower Party of
each Loan Document (in each case as modified hereby) to which it is a party have
been duly approved by all necessary corporate action of such Borrower Party and
no other corporate proceedings on the part of such Borrower Party are necessary
to consummate such transactions.
(b) ENFORCEABILITY. This Amendment has been duly executed and
delivered by each of ALT and TTI. This Amendment and each Loan Document (in each
case as modified hereby) is the legal, valid and binding obligation of each
Borrower Party party hereto and thereto, enforceable against such Borrower Party
in accordance with its terms, and is in full force and effect.
(c) REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in each Loan Document executed and delivered on the Signing
Date and (except to the extent that such representations and warranties
specifically refer to any earlier date) are true and
2
<PAGE> 3
correct on and as of the date hereof as though made on and as of the date hereof
and will be true and correct on and as of the Amendment Effective Date as though
made on and as of such date.
(d) NO DEFAULT. After giving effect to this Amendment, no
event has occurred and is continuing that constitutes a Default or Event of
Default under any Loan Document executed and delivered on the Signing Date.
SECTION 4. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS AND
THE CREDIT DOCUMENTS.
(a) Upon and after the effectiveness of this Amendment, each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or
words of like import referring to the Credit Agreement, and each reference in
the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as modified hereby.
(b) Except as specifically modified above, the Credit
Agreement and the other Loan Documents executed and delivered on the Signing
Date are and shall continue to be in full force and effect and are hereby in all
respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of the Administrative Agent or the Lenders under any
of the Loan Documents, nor constitute a waiver of any provision of any of the
Loan Documents.
SECTION 5. COSTS, EXPENSES AND TAXES. ALT agrees (a) to pay or
reimburse Administrative Agent for all reasonable costs and expenses incurred in
connection with the development, preparation, negotiation and execution of this
Amendment and any other documents prepared in connection herewith, and the
consummation and administration of the transactions contemplated hereby,
including reasonable Attorney Costs, and (b) to pay or reimburse Administrative
Agent and each Lender for all costs and expenses incurred in connection with any
refinancing, restructuring, reorganization (including a bankruptcy
reorganization) and enforcement or attempted enforcement, or preservation of any
rights under this Amendment, and any other documents prepared in connection
herewith, or in connection with any refinancing, or restructuring of any such
documents in the nature of a "workout" or of any insolvency or bankruptcy
proceeding, including all Attorney Costs. The foregoing costs and expenses shall
include all (and, in the case of clause (a) of the immediately preceding
sentence only, all reasonable) search, filing, recording, title insurance and
appraisal charges and fees and taxes related thereto, and (and, in the case of
clause (a) of the immediately preceding sentence only, all reasonable) other
out-of-pocket expenses incurred by Administrative Agent and the cost of
independent public accountants and other outside experts retained by
Administrative Agent or any Lender. Such costs and expenses shall also include
administrative costs of Administrative Agent reasonably attributable to the
administration of the Loan Documents (as modified hereby). Any amount payable by
ALT under this Section shall bear interest from the second Business Day
following the date of demand for payment at the Default Rate, unless waived by
Administrative Agent. The agreements in this Section shall survive repayment of
all Obligations.
3
<PAGE> 4
SECTION 6. COUNTERPARTS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same agreement.
Delivery of an executed counterpart of a signature page to this Amendment by
telefacsimile shall be effective as delivery of a manually executed counterpart
of this Amendment.
SECTION 7. GOVERNING LAW. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
[Signature Pages Follow]
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first written above.
ALLEGHENY TELEDYNE INCORPORATED
By: /s/ Robert S. Park
---------------------------------
Name: Robert S. Park
Title: Vice President-Treasurer
<PAGE> 6
TELEDYNE TECHNOLOGIES INCORPORATED
By: /s/ Stefan Riesenfeld
---------------------------------
Name: Stefan Riesenfeld
Title: Executive Vice President and Chief
Financial Officer
<PAGE> 7
BANK OF AMERICA, N.A.,
as Administrative Agent
By: /s/ Gina Meador
---------------------------
Name: Gina Meador
Title: Vice President
<PAGE> 8
BANK OF AMERICA, N.A.,
as Issuing Lender, Lender and Swing Line Lender
By: /s/ Michelle L. Hilse
--------------------------------
Name: Michelle L. Hilse
Title: Vice President
<PAGE> 9
MELLON BANK, N.A.,
as Syndication Agent and Lender
By: /s/ John N. Cate
----------------------------
Name: John N. Cate
Title: Vice President
<PAGE> 10
THE CHASE MANHATTAN BANK,
as Syndication Agent and Lender
By: /s/ Richard C. Smith
--------------------------
Name: Richard C. Smith
Title: Vice President
<PAGE> 11
THE BANK OF NEW YORK,
as Co-Agent and Lender
By: /s/ Elizabeth T. Ying
---------------------------
Name: Elizabeth T. Ying
Title: Vice President
<PAGE> 12
BANK ONE, NA,
as Co-Agent and Lender
By: /s/ Mark A. Isley
----------------------------
Name: Mark A. Isley
Title: First Vice President
<PAGE> 13
NATIONAL CITY BANK OF PENNSYLVANIA,
as Co-Agent and Lender
By: /s/ Michael A. Heinricher
------------------------------
Name: Michael A. Heinricher
Title: Assistant Vice President
<PAGE> 14
BANK OF TOKYO - MITSUBISHI TRUST
COMPANY,
as Lender
By: /s/ J. R. Jeffers
------------------------------
Name: J. R. Jeffers
Title: SVP & Manager
<PAGE> 15
THE FUJI BANK, LIMITED,
as Lender
By: /s/ Hiromitsu Ugawa
----------------------------
Name: Hiromitsu Ugawa
Title: Senior Vice President
<PAGE> 16
WACHOVIA BANK, N.A.,
as Lender
By: /s/ Charles S. Zimmerman
------------------------------
Name: Charles S. Zimmerman
Title: Vice President
<PAGE> 1
Exhibit 10.5
TELEDYNE TECHNOLOGIES INCORPORATED
1999 INCENTIVE PLAN
(As amended through January 26, 2000)
ARTICLE I
PURPOSE AND ADOPTION OF THE PLAN
1.01. PURPOSE. The purpose of the Teledyne Technologies Incorporated
1999 Incentive Plan (hereinafter referred to as the "Plan") is to assist in
attracting and retaining highly competent employees, to act as an incentive in
motivating selected officers and other key employees of Teledyne Technologies
Incorporated and its Subsidiaries to achieve long-term corporate objectives and
to enable cash incentive awards to qualify as performance-based for purposes of
the tax deduction limitations under Section 162(m) of the Code.
1.02. ADOPTION AND TERM. The Plan has been approved by the Board of
Directors of Teledyne Technologies Incorporated, to be effective as of the
effective date of the distribution by Allegheny Teledyne Incorporated to its
stockholders of Teledyne Technologies Incorporated Common Stock (the "Effective
Date"), but is subject to the approval of the stockholders of the Company. The
Plan shall remain in effect until terminated by action of the Board; provided,
however, that no Incentive Stock Option may be granted hereunder after the tenth
anniversary of the Effective Date and the provisions of Articles VII, VIII, IX
and X with respect to performance-based awards to "covered employees" under
Section 162(m) of the Code shall expire as of the fifth anniversary of the
Effective Date.
ARTICLE II
DEFINITIONS
For the purpose of this Plan, capitalized terms shall have the
following meanings:
2.01. AWARD means any one or a combination of Non-Qualified Stock
Options or Incentive Stock Options described in Article VI, Stock Appreciation
Rights described in Article VI, Restricted Shares described in Article VII,
Performance Awards described in Article VIII, Awards of cash or any other Award
made under the terms of the Plan.
2.02. AWARD AGREEMENT means a written agreement between the Company and
a Participant or a written acknowledgment from the Company to a Participant
specifically setting forth the terms and conditions of an Award granted under
the Plan.
2.03. AWARD PERIOD means, with respect to an Award, the period of time
set forth in the Award Agreement during which specified target performance goals
must be achieved or other conditions set forth in the Award Agreement must be
satisfied.
<PAGE> 2
2.04. BENEFICIARY means an individual, trust or estate who or which, by
a written designation of the Participant filed with the Company or by operation
of law, succeeds to the rights and obligations of the Participant under the Plan
and the Award Agreement upon the Participant's death.
2.05. BOARD means the Board of Directors of the Company.
2.06. CHANGE IN CONTROL means, and shall be deemed to have occurred
upon the occurrence of, any one of the following events:
(a) The acquisition in one or more transactions, other than
from the Company, by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of a
number of Company Voting Securities in excess of 25% of the Company Voting
Securities unless such acquisition has been approved by the Board;
(b) Any election has occurred of persons to the Board that
causes two-thirds of the Board to consist of persons other than (i) persons who
were members of the Board on the Effective Date and (ii) persons who were
nominated for elections as members of the Board at a time when two-thirds of the
Board consisted of persons who were members of the Board on the Effective Date,
provided, however, that any person nominated for election by a Board at least
two-thirds of whom constituted persons described in clauses (i) and/or (ii) or
by persons who were themselves nominated by such Board shall, for this purpose,
be deemed to have been nominated by a Board composed of persons described in
clause (i);
(c) Approval by the stockholders of the Company of a
reorganization, merger or consolidation, unless, following such reorganization,
merger or consolidation, all or substantially all of the individuals and
entities who were the respective beneficial owners of the Outstanding Common
Stock and Company Voting Securities immediately prior to such reorganization,
merger or consolidation, following such reorganization, merger or consolidation
beneficially own, directly or indirectly, more than seventy five (75%) of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors or trustees, as the case may be, of the
entity resulting from such reorganization, merger or consolidation in
substantially the same proportion as their ownership of the Outstanding Common
Stock and Company Voting Securities immediately prior to such reorganization,
merger or consolidation, as the case may be; or
(d) Approval by the stockholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) a sale or other
disposition of all or substantially all the assets of the Company.
2.07. CODE means the Internal Revenue Code of 1986, as amended.
References to a section of the Code shall include that section and any
comparable section or sections of any future legislation that amends,
supplements or supersedes said section.
2
<PAGE> 3
2.08. COMMITTEE means the Committee defined in Section 3.01.
2.09. COMPANY means Teledyne Technologies Incorporated, a Delaware
corporation, and its successors.
2.10. COMMON STOCK means Common Stock of the Company, par value $0.01
per share.
2.11. COMPANY VOTING SECURITIES means the combined voting power of all
outstanding voting securities of the Company entitled to vote generally in the
election of directors to the Board.
2.12. DATE OF GRANT means the date designated by the Committee as the
date as of which it grants an Award, which shall not be earlier than the date on
which the Committee approves the granting of such Award.
2.13. EXCHANGE ACT means the Securities Exchange Act of 1934, as
amended.
2.14. EXERCISE PRICE means, with respect to a Stock Appreciation Right,
the amount established by the Committee in the Award Agreement which is to be
subtracted from the Fair Market Value on the date of exercise in order to
determine the amount of the payment to be made to the Participant, as further
described in Section 6.02(b).
2.15. FAIR MARKET VALUE means, on any date, the average of the high and
low quoted sales prices of a share of Common Stock, as reported on the Composite
Tape for New York Stock Exchange Listed Companies on such date or, if there were
no sales on such date, on the last date preceding such date on which a sale was
reported.
2.16. INCENTIVE STOCK OPTION means a stock option within the meaning of
Section 422 of the Code.
2.17. MERGER means any merger, reorganization, consolidation, exchange,
transfer of assets or other transaction having similar effect involving the
Company.
2.18. NON-QUALIFIED STOCK OPTION means a stock option which is not an
Incentive Stock Option.
2.19. OPTIONS means all Non-Qualified Stock Options and Incentive Stock
Options granted at any time under the Plan.
2.20. OUTSTANDING COMMON STOCK means, at any time, the issued and
outstanding shares of Common Stock.
3
<PAGE> 4
2.21. PARTICIPANT means a person designated to receive an Award under
the Plan in accordance with Section 5.01.
2.22. PERFORMANCE AWARDS means Awards granted in accordance with
Article VIII.
2.23. PERFORMANCE GOALS means operating income, operating profit
(earnings from continuing operations before interest and taxes), earnings per
share, return on investment or working capital, return on stockholders' equity,
economic value added (the amount, if any, by which net operating profit after
tax exceeds a reference cost of capital), reductions in inventory, inventory
turns and on-time delivery performance, any one of which may be measured with
respect to the Company or any one or more of its Subsidiaries and divisions and
either in absolute terms or as compared to another company or companies, and
quantifiable, objective measures of individual performance relevant to the
particular individual's job responsibilities.
2.24. PLAN means the Teledyne Technologies Incorporated 1999 Incentive
Plan as described herein, as the same may be amended from time to time.
2.25. PURCHASE PRICE, with respect to Options, shall have the meaning
set forth in Section 6.01(b).
2.26. RESTORATION OPTION means a Non-Qualified Stock Option granted
pursuant to Section 6.01(f).
2.27. RESTRICTED SHARES means Common Stock subject to restrictions
imposed in connection with Awards granted under Article VII.
2.28. RETIREMENT means early or normal retirement under a pension plan
or arrangement of the Company or one of its Subsidiaries in which the
Participant participates.
2.29. RULE 16B-3 means Rule 16b-3 promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act, as the same may be
amended from time to time, and any successor rule.
2.30. STOCK APPRECIATION RIGHTS means Awards granted in accordance with
Article VI.
2.31. SUBSIDIARY means a subsidiary of the Company within the meaning
of Section 424(f) of the Code.
2.32. TERMINATION OF EMPLOYMENT means the voluntary or involuntary
termination of a Participant's employment with the Company or a Subsidiary for
any reason, including death, disability, retirement or as the result of the
divestiture of the Participant's employer or any similar transaction in which
the Participant's employer ceases to be the Company or one of its Subsidiaries.
Whether entering military or other government service shall
4
<PAGE> 5
constitute Termination of Employment, or whether a Termination of Employment
shall occur as a result of disability, shall be determined in each case by the
Committee in its sole discretion.
ARTICLE III
ADMINISTRATION
3.01. COMMITTEE. The Plan shall be administered by a committee of the
Board ("Committee") comprised of at least two persons. The Committee shall have
exclusive and final authority in each determination, interpretation or other
action affecting the Plan and its Participants. The Committee shall have the
sole discretionary authority to interpret the Plan, to establish and modify
administrative rules for the Plan, to impose such conditions and restrictions on
Awards as it determines appropriate, to cancel Awards (including those made
pursuant to other plans of the Company) and to substitute new Options for
previously awarded Options which, at the time of such substitution, have an
exercise price in excess of the Fair Market Value of the underlying Common Stock
(including options granted under other incentive compensation programs of the
Company) with the consent of the recipient, and to take such steps in connection
with the Plan and Awards granted hereunder as it may deem necessary or
advisable. The Committee shall not, however, have or exercise any discretion
that would disqualify amounts payable under Article X as performance-based
compensation for purposes of Section 162(m) of the Code. The Committee may
delegate such of its powers and authority under the Plan as it deems appropriate
to a subcommittee of the Committee and/or designated officers or employees of
the Company. In addition, the full Board may exercise any of the powers and
authority of the Committee under the Plan. In the event of such delegation of
authority or exercise of authority by the Board, references in the Plan to the
Committee shall be deemed to refer, as appropriate, to the delegate of the
Committee or the Board. Actions taken by the Committee or any subcommittee
thereof, and any delegation by the Committee to designated officers or
employees, under this Section 3.01 shall comply with Section 16(b) of the
Exchange Act, the performance-based provisions of Section 162(m) of the Code,
and the regulations promulgated under each of such statutory provisions, or the
respective successors to such statutory provisions or regulations, as in effect
from time to time, to the extent applicable.
ARTICLE IV
SHARES
4.01. NUMBER OF SHARES ISSUABLE. The total number of shares authorized
to be issued under the Plan shall be 4,000,000 shares of Common Stock. If the
number of issued and outstanding shares of Common Stock is increased after
January 26, 2000, the total number of shares available under the Plan will be
increased by 10% of such increase. No more than 2,650,000 shares of Common Stock
may be issued under the Plan as Incentive Stock Options. The number of shares
available for issuance under the Plan shall be further subject to adjustment in
accordance with Section 11.07. The shares to be offered under the Plan shall be
authorized and unissued Common Stock or issued Common Stock which shall have
been reacquired by the Company.
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4.02. SHARES SUBJECT TO TERMINATED AWARDS. Common Stock covered by any
unexercised portions of terminated Options (including canceled Options) granted
under Article VI, Common Stock forfeited as provided in Section 7.02(a) and
Common Stock subject to any Awards which are otherwise surrendered by the
Participant may again be subject to new Awards under the Plan. Common Stock
subject to Options, or portions thereof, which have been surrendered in
connection with the exercise of Stock Appreciation Rights shall not be available
for subsequent Awards under the Plan, but Common Stock issued in payment of such
Stock Appreciation Rights shall not be charged against the number of shares of
Common Stock available for the grant of Awards hereunder.
ARTICLE V
PARTICIPATION
5.01. ELIGIBLE PARTICIPANTS. Participants in the Plan shall be such
officers and other key employees of the Company and its Subsidiaries, whether or
not members of the Board, as the Committee, in its sole discretion, may
designate from time to time. The Committee's designation of a Participant in any
year shall not require the Committee to designate such person to receive Awards
or grants in any other year. The designation of a Participant to receive awards
or grants under one portion of the Plan does not require the Committee to
include such Participant under other portions of the Plan. The Committee shall
consider such factors as it deems pertinent in selecting Participants and in
determining the type and amount of their respective Awards. Notwithstanding any
provision herein to the contrary, the Committee may grant Awards under the Plan,
other than Incentive Stock Options, to non-employees who, in the judgment of the
Committee, render significant services to the Company or any of its
Subsidiaries, on such terms and conditions as the Committee deems appropriate
and consistent with the intent of the Plan. Subject to adjustment in accordance
with Section 11.07, in any calendar year, no Participant shall be granted Awards
in respect of more than 750,000 shares of Common Stock (whether through grants
of Options or Stock Appreciation Rights or other grants of Common Stock or
rights with respect thereto) and $3 million in cash.
ARTICLE VI
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
6.01. OPTION AWARDS.
(a) GRANT OF OPTIONS. The Committee may grant, to such
Participants as the Committee may select, Options entitling the Participant to
purchase shares of Common Stock from the Company in such number, at such price,
and on such terms and subject to such conditions, not inconsistent with the
terms of this Plan, as may be established by the Committee. The terms of any
Option granted under this Plan shall be set forth in an Award Agreement.
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(b) PURCHASE PRICE OF OPTIONS. The Purchase Price of each
share of Common Stock which may be purchased upon exercise of any Option granted
under the Plan shall be determined by the Committee; provided, however, that the
Purchase Price of the Common Stock purchased pursuant to Options designated by
the Committee as Incentive Stock Options shall be equal to or greater than the
Fair Market Value on the Date of Grant as required under Section 422 of the
Code.
(c) DESIGNATION OF OPTIONS. Except as otherwise expressly
provided in the Plan, the Committee may designate, at the time of the grant of
each Option, the Option as an Incentive Stock Option or a Non-Qualified Stock
Option.
(d) INCENTIVE STOCK OPTION SHARE LIMITATION. No Participant
may be granted Incentive Stock Options under the Plan (or any other plans of the
Company and its Subsidiaries) which would result in shares with an aggregate
Fair Market Value (measured on the Date of Grant) of more than $100,000 first
becoming exercisable in any one calendar year.
(e) RIGHTS AS A STOCKHOLDER. A Participant or a transferee of
an Option pursuant to Section 11.04 shall have no rights as a stockholder with
respect to Common Stock covered by an Option until the Participant or transferee
shall have become the holder of record of any such shares, and no adjustment
shall be made for dividends in cash or other property or distributions or other
rights with respect to any such Common Stock for which the record date is prior
to the date on which the Participant or a transferee of the Option shall have
become the holder of record of any such shares covered by the Option; provided,
however, that Participants are entitled to share adjustments to reflect capital
changes under Section 11.07.
(f) RESTORATION OPTIONS UPON THE EXERCISE OF A NON-QUALIFIED
STOCK OPTION. In the event that any Participant delivers to the Company, or has
withheld from the shares otherwise issuable upon the exercise of a Non-Qualified
Stock Option, shares of Common Stock in payment of the Purchase Price of any
Non-Qualified Stock Option granted hereunder in accordance with Section 6.04,
the Committee shall have the authority to grant or provide for the automatic
grant of a Restoration Option to such Participant. The grant of a Restoration
Option shall be subject to the satisfaction of such conditions or criteria as
the Committee in its sole discretion shall establish from time to time. A
Restoration Option shall entitle the holder thereof to purchase a number of
shares of Common Stock equal to the number of such shares so delivered or
withheld upon exercise of the original Option and, in the discretion of the
Committee, the number of shares, if any, delivered or withheld to the
Corporation to satisfy any withholding tax liability arising in connection with
the exercise of the original Option. A Restoration Option shall have a per share
Purchase Price of not less than 100% of the per share Fair Market Value of the
Common Stock on the date of grant of such Restoration Option, a term not longer
than the remaining term of the original Option at the time of exercise thereof,
and such other terms and conditions as the Committee in its sole discretion
shall determine.
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6.02. STOCK APPRECIATION RIGHTS.
(a) STOCK APPRECIATION RIGHT AWARDS. The Committee is
authorized to grant to any Participant one or more Stock Appreciation Rights.
Such Stock Appreciation Rights may be granted either independent of or in tandem
with Options granted to the same Participant. Stock Appreciation Rights granted
in tandem with Options may be granted simultaneously with, or, in the case of
Non-Qualified Stock Options, subsequent to, the grant to such Participant of the
related Option; provided however, that: (i) any Option covering any share of
Common Stock shall expire and not be exercisable upon the exercise of any Stock
Appreciation Right with respect to the same share, (ii) any Stock Appreciation
Right covering any share of Common Stock shall expire and not be exercisable
upon the exercise of any related Option with respect to the same share, and
(iii) an Option and Stock Appreciation Right covering the same share of Common
Stock may not be exercised simultaneously. Upon exercise of a Stock Appreciation
Right with respect to a share of Common Stock, the Participant shall be entitled
to receive an amount equal to the excess, if any, of (A) the Fair Market Value
of a share of Common Stock on the date of exercise over (B) the Exercise Price
of such Stock Appreciation Right established in the Award Agreement, which
amount shall be payable as provided in Section 6.02(c).
(b) EXERCISE PRICE. The Exercise Price established under any
Stock Appreciation Right granted under this Plan shall be determined by the
Committee, but in the case of Stock Appreciation Rights granted in tandem with
Options shall not be less than the Purchase Price of the related Option. Upon
exercise of Stock Appreciation Rights granted in tandem with options, the number
of shares subject to exercise under any related Option shall automatically be
reduced by the number of shares of Common Stock represented by the Option or
portion thereof which are surrendered as a result of the exercise of such Stock
Appreciation Rights.
(c) PAYMENT OF INCREMENTAL VALUE. Any payment which may become
due from the Company by reason of a Participant's exercise of a Stock
Appreciation Right may be paid to the Participant as determined by the Committee
(i) all in cash, (ii) all in Common Stock, or (iii) in any combination of cash
and Common Stock. In the event that all or a portion of the payment is made in
Common Stock, the number of shares of Common Stock delivered in satisfaction of
such payment shall be determined by dividing the amount of such payment or
portion thereof by the Fair Market Value on the Exercise Date. No fractional
share of Common Stock shall be issued to make any payment in respect of Stock
Appreciation Rights; if any fractional share would be issuable, the combination
of cash and Common Stock payable to the Participant shall be adjusted as
directed by the Committee to avoid the issuance of any fractional share.
6.03. TERMS OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.
(a) CONDITIONS ON EXERCISE. An Award Agreement with respect to
Options and/or Stock Appreciation Rights may contain such waiting periods,
exercise dates and restrictions on exercise (including, but not limited to,
periodic installments) as may be determined by the Committee at the time of
grant.
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(b) DURATION OF OPTIONS AND STOCK APPRECIATION RIGHTS. Options
and Stock Appreciation Rights shall terminate upon the first to occur of the
following events:
(i) Expiration of the Option or Stock Appreciation
Right as provided in the Award Agreement; or
(ii) Termination of the Award in the event of a
Participant's disability, Retirement, death or other Termination of Employment
as provided in the Award Agreement; or
(iii) In the case of an Incentive Stock Option, ten
years from the Date of Grant; or
(iv) Solely in the case of a Stock Appreciation Right
granted in tandem with an Option, upon the expiration of the related Option.
(c) ACCELERATION OR EXTENSION OF EXERCISE TIME. The Committee,
in its sole discretion, shall have the right (but shall not be obligated),
exercisable on or at any time after the Date of Grant, to permit the exercise of
an Option or Stock Appreciation Right (i) prior to the time such Option or Stock
Appreciation Right would become exercisable under the terms of the Award
Agreement, (ii) after the termination of the Option or Stock Appreciation Right
under the terms of the Award Agreement, or (iii) after the expiration of the
Option or Stock Appreciation Right.
6.04. EXERCISE PROCEDURES. Each Option and Stock Appreciation Right
granted under the Plan shall be exercised by written notice to the Company which
must be received by the officer or employee of the Company designated in the
Award Agreement on or before the close of business on the expiration date of the
Award. The Purchase Price of shares purchased upon exercise of an Option granted
under the Plan shall be paid in full in cash by the Participant pursuant to the
Award Agreement; provided however, that the Committee may (but shall not be
required to) permit payment to be made by delivery to the Company of either (a)
Common Stock (which may include Restricted Shares or shares otherwise issuable
in connection with the exercise of the Option, subject to such rules as the
Committee deems appropriate) or (b) any combination of cash and Common Stock, or
(c) such other consideration as the Committee deems appropriate and in
compliance with applicable law (including payment in accordance with a cashless
exercise program under which, if so instructed by the Participant, Common Stock
may be issued directly to the Participant's broker or dealer upon receipt of an
irrevocable written notice of exercise from the Participant). In the event that
any Common Stock shall be transferred to the Company to satisfy all or any part
of the Purchase Price, the part of the Purchase Price deemed to have been
satisfied by such transfer of Common Stock shall be equal to the product derived
by multiplying the Fair Market Value as of the date of exercise times the number
of shares of Common Stock transferred to the Company. The Participant may not
transfer to the Company in satisfaction of the Purchase Price any fractional
share of Common Stock. Any part of the Purchase Price paid in cash upon the
exercise of any Option shall be added to the general
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funds of the Company and may be used for any proper corporate purpose. Unless
the Committee shall otherwise determine, any Common Stock transferred to the
Company as payment of all or part of the Purchase Price upon the exercise of any
Option shall be held as treasury shares.
6.05. CHANGE IN CONTROL. Unless otherwise provided by the Committee in
the applicable Award Agreement, in the event of a Change in Control, all Options
outstanding on the date of such Change in Control, and all Stock Appreciation
Rights shall become immediately and fully exercisable. The provisions of this
Section 6.05 shall not be applicable to any Options or Stock Appreciation Rights
granted to a Participant if any Change in Control results from such
Participant's beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act) of Common Stock or Company Voting Securities.
ARTICLE VII
RESTRICTED SHARES
7.01. RESTRICTED SHARE AWARDS. The Committee may grant to any
Participant an Award of Common Stock in such number of shares, and on such
terms, conditions and restrictions, whether based on performance standards,
periods of service, retention by the Participant of ownership of purchased or
designated shares of Common Stock or other criteria, as the Committee shall
establish. With respect to performance-based Awards of Restricted Shares to
"covered employees" (as defined in Section 162(m) of the Code), performance
targets will be limited to specified levels of one or more of the Performance
Goals. The terms of any Restricted Share Award granted under this Plan shall be
set forth in an Award Agreement which shall contain provisions determined by the
Committee and not inconsistent with this Plan.
(a) ISSUANCE OF RESTRICTED SHARES. As soon as practicable
after the Date of Grant of a Restricted Share Award by the Committee, the
Company shall cause to be transferred on the books of the Company, or its agent,
Common Stock, registered on behalf of the Participant, evidencing the Restricted
Shares covered by the Award, but subject to forfeiture to the Company as of the
Date of Grant if an Award Agreement with respect to the Restricted Shares
covered by the Award is not duly executed by the Participant and timely returned
to the Company. All Common Stock covered by Awards under this Article VII shall
be subject to the restrictions, terms and conditions contained in the Plan and
the Award Agreement entered into by the Participant. Until the lapse or release
of all restrictions applicable to an Award of Restricted Shares, the share
certificates representing such Restricted Shares may be held in custody by the
Company, its designee, or, if the certificates bear a restrictive legend, by the
Participant. Upon the lapse or release of all restrictions with respect to an
Award as described in Section 7.01(d), one or more share certificates,
registered in the name of the Participant, for an appropriate number of shares
as provided in Section 7.01(d), free of any restrictions set forth in the Plan
and the Award Agreement shall be delivered to the Participant.
(b) STOCKHOLDER RIGHTS. Beginning on the Date of Grant of the
Restricted Share Award and subject to execution of the Award Agreement as
provided in Section 7.01(a), the Participant shall become a stockholder of the
Company with respect to all shares
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subject to the Award Agreement and shall have all of the rights of a
shareholder, including, but not limited to, the right to vote such shares and
the right to receive dividends; provided, however, that any Common Stock
distributed as a dividend or otherwise with respect to any Restricted Shares as
to which the restrictions have not yet lapsed, shall be subject to the same
restrictions as such Restricted Shares and held or restricted as provided in
Section 7.01(a).
(c) RESTRICTION ON TRANSFERABILITY. None of the Restricted
Shares may be assigned or transferred (other than by will or the laws of descent
and distribution, or to an inter vivos trust with respect to which the
Participant is treated as the owner under Sections 671 through 677 of the Code,
except to the extent that Section 16 of the Exchange Act limits a participant's
right to make such transfers), pledged or sold prior to lapse of the
restrictions applicable thereto.
(d) DELIVERY OF SHARES UPON VESTING. Upon expiration or
earlier termination of the forfeiture period without a forfeiture and the
satisfaction of or release from any other conditions prescribed by the
Committee, or at such earlier time as provided under the provisions of Section
7.03, the restrictions applicable to the Restricted Shares shall lapse. As
promptly as administratively feasible thereafter, subject to the requirements of
Section 11.05, the Company shall deliver to the Participant or, in case of the
Participant's death, to the Participant's Beneficiary, one or more share
certificates for the appropriate number of shares of Common Stock, free of all
such restrictions, except for any restrictions that may be imposed by law.
7.02. TERMS OF RESTRICTED SHARES.
(a) FORFEITURE OF RESTRICTED SHARES. Subject to Sections
7.02(b) and 7.03, all Restricted Shares shall be forfeited and returned to the
Company and all rights of the Participant with respect to such Restricted Shares
shall terminate unless the Participant continues in the service of the Company
or a Subsidiary as an employee until the expiration of the forfeiture period for
such Restricted Shares and satisfies any and all other conditions set forth in
the Award Agreement. The Committee shall determine the forfeiture period (which
may, but need not, lapse in installments) and any other terms and conditions
applicable with respect to any Restricted Share Award.
(b) WAIVER OF FORFEITURE PERIOD. Notwithstanding anything
contained in this Article VII to the contrary, the Committee may, in its sole
discretion, waive the forfeiture period and any other conditions set forth in
any Award Agreement under appropriate circumstances (including the death,
disability or Retirement of the Participant or a material change in
circumstances arising after the date of an Award) and subject to such terms and
conditions (including forfeiture of a proportionate number of the Restricted
Shares) as the Committee shall deem appropriate.
7.03. CHANGE IN CONTROL. Unless otherwise provided by the Committee in
the applicable Award Agreement, in the event of a Change in Control, all
restrictions applicable to the Restricted Share Award shall terminate fully and
the Participant shall immediately have the
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right to the delivery of share certificate or certificates for such shares in
accordance with Section 7.01(d).
ARTICLE VIII
PERFORMANCE AWARDS
8.01. PERFORMANCE AWARDS.
(a) AWARD PERIODS AND CALCULATIONS OF POTENTIAL INCENTIVE
AMOUNTS. The Committee may grant Performance Awards to Participants. A
Performance Award shall consist of the right to receive a payment (measured by
the Fair Market Value of a specified number of shares of Common Stock, increases
in such Fair Market Value during the Award Period and/or a fixed cash amount)
contingent upon the extent to which certain predetermined performance targets
have been met during an Award Period. Performance Awards may be made in
conjunction with, or in addition to, Restricted Share Awards made under Article
VII. The Award Period shall be two or more fiscal or calendar years as
determined by the Committee. The Committee, in its discretion and under such
terms as it deems appropriate, may permit newly eligible employees, such as
those who are promoted or newly hired, to receive Performance Awards after an
Award Period has commenced.
(b) PERFORMANCE TARGETS. The performance targets may include
such goals related to the performance of the Company or, where relevant, any one
or more of its Subsidiaries or divisions and/or the performance of a Participant
as may be established by the Committee in its discretion. In the case of
Performance Awards to "covered employees" (as defined in Section 162(m) of the
Code), the targets will be limited to specified levels of one or more of the
Performance Goals. The performance targets established by the Committee may vary
for different Award Periods and need not be the same for each Participant
receiving a Performance Award in an Award Period. Except to the extent
inconsistent with the performance-based compensation exception under Section
162(m) of the Code, in the case of Performance Awards granted to employees to
whom such section is applicable, the Committee, in its discretion, but only
under extraordinary circumstances as determined by the Committee, may change any
prior determination of performance targets for any Award Period at any time
prior to the final determination of the Award when events or transactions occur
to cause the performance targets to be an inappropriate measure of achievement.
(c) EARNING PERFORMANCE AWARDS. The Committee, at or as soon
as practicable after the Date of Grant, shall prescribe a formula to determine
the percentage of the Performance Award to be earned based upon the degree of
attainment of performance targets.
(d) PAYMENT OF EARNED PERFORMANCE AWARDS. Subject to the
requirements of Section 11.05, payments of earned Performance Awards shall be
made in cash or Common Stock, or a combination of cash and Common Stock, in the
discretion of the Committee. The Committee, in its sole discretion, may define
such terms and conditions with respect to the payment of earned Performance
Awards as it may deem desirable.
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8.02. TERMS OF PERFORMANCE AWARDS.
(a) TERMINATION OF EMPLOYMENT. Unless otherwise provided below
or in Section 8.03, in the case of a Participant's Termination of Employment
prior to the end of an Award Period, the Participant will not have earned any
Performance Awards.
(b) RETIREMENT. If a Participant's Termination of Employment
is because of Retirement prior to the end of an Award Period, the Participant
will not be paid any Performance Awards, unless the Committee, in its sole and
exclusive discretion, determines that an Award should be paid. In such a case,
the Participant shall be entitled to receive a pro-rata portion of his or her
Award as determined under Subsection (d).
(c) DEATH OR DISABILITY. If a Participant's Termination of
Employment is due to death or disability (as determined in the sole and
exclusive discretion of the Committee) prior to the end of an Award Period, the
Participant or the Participant's personal representative shall be entitled to
receive a pro-rata share of his or her Award as determined under Subsection (d).
(d) PRO-RATA PAYMENT. The amount of any payment made to a
Participant whose employment is terminated by Retirement, death or disability
(under circumstances described in Subsections (b) and (c)) will be the amount
determined by multiplying the amount of the Performance Award which would have
been earned, determined at the end of the Award Period, had such employment not
been terminated, by a fraction, the numerator of which is the number of whole
months such Participant was employed during the Award Period, and the
denominator of which is the total number of months of the Award Period. Any such
payment made to a Participant whose employment is terminated prior to the end of
an Award Period under this Section 8.02 shall be made at the end of the
respective Award Period, unless otherwise determined by the Committee in its
sole discretion. Any partial payment previously made or credited to a deferred
account for the benefit of a Participant as provided under Section 8.01(d) of
the Plan shall be subtracted from the amount otherwise determined as payable as
provided in this Section.
(e) OTHER EVENTS. Notwithstanding anything to the contrary in
this Article VIII, the Committee may, in its sole and exclusive discretion,
determine to pay all or any portion of a Performance Award to a Participant who
has terminated employment prior to the end of an Award Period under certain
circumstances (including the death, disability or retirement of the Participant
or a material change in circumstances arising after the Date of Grant) and
subject to such terms and conditions as the Committee shall deem appropriate.
8.03. CHANGE IN CONTROL. Unless otherwise provided by the Committee in
the applicable Award Agreement, in the event of a Change in Control, all
Performance Awards for all Award Periods shall immediately become fully payable
to all Participants and shall be paid to Participants in accordance with Section
8.02(d), within 30 days after such Change in Control.
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ARTICLE IX
OTHER STOCK-BASED AWARDS
9.01. GRANT OF OTHER STOCK-BASED AWARDS. Other stock-based awards,
consisting of stock purchase rights (with or without loans to Participants by
the Company containing such terms as the Committee shall determine), Awards of
cash, Awards of Common Stock, or Awards valued in whole or in part by reference
to, or otherwise based on, Common Stock, may be granted either alone or in
addition to or in conjunction with other Awards under the Plan. Subject to the
provisions of the Plan, the Committee shall have sole and complete authority to
determine the persons to whom and the time or times at which such Awards shall
be made, the number of shares of Common Stock to be granted pursuant to such
Awards, and all other conditions of the Awards. Any such Award shall be
confirmed by an Award Agreement executed by the Committee and the Participant,
which Award Agreement shall contain such provisions as the Committee determines
to be necessary or appropriate to carry out the intent of this Plan with respect
to such Award.
9.02. TERMS OF OTHER STOCK-BASED AWARDS. In addition to the terms and
conditions specified in the Award Agreement, Awards made pursuant to this
Article IX shall be subject to the following:
(a) Any Common Stock subject to Awards made under this Article
IX may not be sold, assigned, transferred, pledged or otherwise encumbered prior
to the date on which the shares are issued, or, if later, the date on which any
applicable restriction, performance or deferral period lapses; and
(b) If specified by the Committee in the Award Agreement, the
recipient of an Award under this Article IX shall be entitled to receive,
currently or on a deferred basis, interest or dividends or dividend equivalents
with respect to the Common Stock or other securities covered by the Award; and
(c) The Award Agreement with respect to any Award shall
contain provisions dealing with the disposition of such Award in the event of a
Termination of Employment prior to the exercise, realization or payment of such
Award, whether such termination occurs because of Retirement, disability, death
or other reason, with such provisions to take account of the specific nature and
purpose of the Award.
9.03. FOREIGN QUALIFIED AWARDS. Awards under the Plan may be granted to
such employees of the Company and its Subsidiaries who are residing in foreign
jurisdictions as the Committee in its sole discretion may determine from time to
time. The Committee may adopt such supplements to the Plan as may be necessary
or appropriate to comply with the applicable laws of such foreign jurisdictions
and to afford Participants favorable treatment under such laws; provided,
however, that no Award shall be granted under any such supplement with terms or
conditions inconsistent with the provision set forth in the Plan.
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ARTICLE X
SHORT-TERM CASH INCENTIVE AWARDS
10.01. ELIGIBILITY. Executive officers of the Company who are from time
to time determined by the Committee to be "covered employees" for purposes of
Section 162(m) of the Code will be eligible to receive short-term cash incentive
awards under this Article X.
10.02. AWARDS.
(a) PERFORMANCE TARGETS. For each fiscal year of the Company
after fiscal year 1999, the Committee shall establish objective performance
targets based on specified levels of one or more of the Performance Goals. Such
performance targets shall be established by the Committee on a timely basis to
ensure that the targets are considered "preestablished" for purposes of Section
162(m) of the Code.
(b) AMOUNTS OF AWARDS. In conjunction with the establishment
of performance targets for a fiscal year, the Committee shall adopt an objective
formula (on the basis of percentages of Participants' salaries, shares in a
bonus pool or otherwise) for computing the respective amounts payable under the
Plan to Participants if and to the extent that the performance targets are
attained. Such formula shall comply with the requirements applicable to
performance-based compensation plans under Section 162(m) of the Code and, to
the extent based on percentages of a bonus pool, such percentages shall not
exceed 100% in the aggregate.
(c) PAYMENT OF AWARDS. Awards will be payable to Participants
in cash each year upon prior written certification by the Committee of
attainment of the specified performance targets for the preceding fiscal year.
(d) NEGATIVE DISCRETION. Notwithstanding the attainment by the
Company of the specified performance targets, the Committee shall have the
discretion, which need not be exercised uniformly among the Participants, to
reduce or eliminate the award that would be otherwise paid.
(e) GUIDELINES. The Committee shall adopt from time to time
written policies for its implementation of this Article X. Such guidelines shall
reflect the intention of the Company that all payments hereunder qualify as
performance-based compensation under Section 162(m) of the Code.
(f) NON-EXCLUSIVE ARRANGEMENT. The adoption and operation of
this Article X shall not preclude the Board or the Committee from approving
other short-term incentive compensation arrangements for the benefit of
individuals who are Participants hereunder as the Board or Committee, as the
case may be, deems appropriate and in the best of the Company.
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ARTICLE XI
TERMS APPLICABLE GENERALLY TO AWARDS GRANTED UNDER THE PLAN
11.01. PLAN PROVISIONS CONTROL AWARD TERMS. Except as provided in
Section 11.16, the terms of the Plan shall govern all Awards granted under the
Plan, and in no event shall the Committee have the power to grant any Award
under the Plan which is contrary to any of the provisions of the Plan. In the
event any provision of any Award granted under the Plan shall conflict with any
term in the Plan as constituted on the Date of Grant of such Award, the term in
the Plan as constituted on the Date of Grant of such Award shall control. Except
as provided in Section 11.03 and Section 11.07, the terms of any Award granted
under the Plan may not be changed after the Date of Grant of such Award so as to
materially decrease the value of the Award without the express written approval
of the holder.
11.02. AWARD AGREEMENT. No person shall have any rights under any Award
granted under the Plan unless and until the Company and the Participant to whom
such Award shall have been granted shall have executed and delivered an Award
Agreement or received any other Award acknowledgment authorized by the Committee
expressly granting the Award to such person and containing provisions setting
forth the terms of the Award.
11.03. MODIFICATION OF AWARD AFTER GRANT. No Award granted under the
Plan to a Participant may be modified (unless such modification does not
materially decrease the value of the Award) after the Date of Grant except by
express written agreement between the Company and the Participant, provided that
any such change (a) shall not be inconsistent with the terms of the Plan, and
(b) shall be approved by the Committee.
11.04. LIMITATION ON TRANSFER. Except as provided in Section 7.01(c) in
the case of Restricted Shares, a Participant's rights and interest under the
Plan may not be assigned or transferred other than by will or the laws of
descent and distribution, and during the lifetime of a Participant, only the
Participant personally (or the Participant's personal representative) may
exercise rights under the Plan. The Participant's Beneficiary may exercise the
Participant's rights to the extent they are exercisable under the Plan following
the death of the Participant. Notwithstanding the foregoing, to the extent
permitted under Section 16(b) of the Exchange Act with respect to Participants
subject to such Section, the Committee may grant Non-Qualified Stock Options
that are transferable, without payment of consideration, to immediate family
members of the Participant or to trusts or partnerships for such family members,
and the Committee may also amend outstanding Non-Qualified Stock Options to
provide for such transferability.
11.05. TAXES. The Company shall be entitled, if the Committee deems it
necessary or desirable, to withhold (or secure payment from the Participant in
lieu of withholding) the amount of any withholding or other tax required by law
to be withheld or paid by the Company with respect to any amount payable and/or
shares issuable under such Participant's Award, or with respect to any income
recognized upon a disqualifying disposition of shares received pursuant to the
exercise of an Incentive Stock Option, and the Company may defer payment or
issuance of
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<PAGE> 17
the cash or shares upon exercise or vesting of an Award unless indemnified to
its satisfaction against any liability for any such tax. The amount of such
withholding or tax payment shall be determined by the Committee and shall be
payable by the Participant at such time as the Committee determines in
accordance with the following rules:
(a) The Participant shall have the right to elect to meet his
or her withholding requirement (i) by having withheld from such Award at the
appropriate time that number of shares of Common Stock, rounded up to the next
whole share, whose Fair Market Value is equal to the amount of withholding taxes
due, (ii) by direct payment to the Company in cash of the amount of any taxes
required to be withheld with respect to such Award or (iii) by a combination of
shares and cash.
(b) The Committee shall have the discretion as to any Award,
to cause the Company to pay to tax authorities for the benefit of any
Participant, or to reimburse such Participant for the individual taxes which are
due on the grant, exercise or vesting of any share Award, or the lapse of any
restriction on any share Award (whether by reason of a Participant's filing of
an election under Section 83(b) of the Code or otherwise), including, but not
limited to, Federal income tax, state income tax, local income tax and excise
tax under Section 4999 of the Code, as well as for any such taxes as may be
imposed upon such tax payment or reimbursement.
(c) In the case of Participants who are subject to Section 16
of the Exchange Act, the Committee may impose such limitations and restrictions
as it deems necessary or appropriate with respect to the delivery or withholding
of shares of Common Stock to meet tax withholding obligations.
11.06. SURRENDER OF AWARDS. Any Award granted under the Plan may be
surrendered to the Company for cancellation on such terms as the Committee and
the holder approve.
11.07. ADJUSTMENTS TO REFLECT CAPITAL CHANGES.
(a) RECAPITALIZATION. The number and kind of shares subject to
outstanding Awards, the Purchase Price or Exercise Price for such shares, the
number and kind of shares available for Awards subsequently granted under the
Plan and the maximum number of shares in respect of which Awards can be made to
any Participant in any calendar year shall be appropriately adjusted to reflect
any stock dividend, stock split, combination or exchange of shares, merger,
consolidation or other change in capitalization with a similar substantive
effect upon the Plan or the Awards granted under the Plan. The Committee shall
have the power and sole discretion to determine the amount of the adjustment to
be made in each case.
(b) MERGER. After any Merger in which the Company is the
surviving corporation, each Participant shall, at no additional cost, be
entitled upon any exercise of all Options or receipt of other Award to receive
(subject to any required action by shareholders), in lieu of the number of
shares of Common Stock receivable or exercisable pursuant to such Award, the
number and class of shares or other securities to which such Participant would
have been
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<PAGE> 18
entitled pursuant to the terms of the Merger if, at the time of the Merger, such
Participant had been the holder of record of a number of shares equal to the
number of shares receivable or exercisable pursuant to such Award. Comparable
rights shall accrue to each Participant in the event of successive Mergers of
the character described above. In the event of a Merger in which the Company is
not the surviving corporation, the surviving, continuing, successor, or
purchasing corporation, as the case may be (the "Acquiring Corporation"), shall
either assume the Company's rights and obligations under outstanding Award
Agreements or substitute awards in respect of the Acquiring Corporation's stock
for such outstanding Awards. In the event the Acquiring Corporation fails to
assume or substitute for such outstanding Awards, the Board shall provide that
any unexercisable and/or unvested portion of the outstanding Awards shall be
immediately exercisable and vested as of a date prior to such Merger, as the
Board so determines. The exercise and/or vesting of any Award that was
permissible solely by reason of this Section 11.07(b) shall be conditioned upon
the consummation of the Merger. Any Options which are neither assumed by the
Acquiring Corporation nor exercised as of the date of the Merger shall terminate
effective as of the effective date of the Merger.
(c) OPTIONS TO PURCHASE SHARES OR STOCK OF ACQUIRED COMPANIES.
After any Merger in which the Company or a Subsidiary shall be a surviving
corporation, the Committee may grant substituted options under the provisions of
the Plan, pursuant to Section 424 of the Code, replacing old options granted
under a plan of another party to the Merger whose shares or stock subject to the
old options may no longer be issued following the Merger. The foregoing
adjustments and manner of application of the foregoing provisions shall be
determined by the Committee in its sole discretion. Any such adjustments may
provide for the elimination of any fractional shares which might otherwise
become subject to any Options.
11.08. NO RIGHT TO EMPLOYMENT. No employee or other person shall have
any claim of right to be granted an Award under this Plan. Neither the Plan nor
any action taken hereunder shall be construed as giving any employee any right
to be retained in the employ of the Company or any of its Subsidiaries.
11.09. AWARDS NOT INCLUDABLE FOR BENEFIT PURPOSES. Payments received by
a Participant pursuant to the provisions of the Plan shall not be included in
the determination of benefits under any pension, group insurance or other
benefit plan applicable to the Participant which is maintained by the Company or
any of its Subsidiaries, except as may be provided under the terms of such plans
or determined by the Board.
11.10. GOVERNING LAW. All determinations made and actions taken
pursuant to the Plan shall be governed by the laws of the State of Delaware and
construed in accordance therewith.
11.11. NO STRICT CONSTRUCTION. No rule of strict construction shall be
implied against the Company, the Committee, or any other person in the
interpretation of any of the terms of the Plan, any Award granted under the Plan
or any rule or procedure established by the Committee.
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<PAGE> 19
11.12. COMPLIANCE WITH RULE 16b-3. It is intended that, unless the
Committee determines otherwise, Awards under the Plan be eligible for exemption
under Rule 16b-3. The Board is authorized to amend the Plan and to make any such
modifications to Award Agreements to comply with Rule 16b-3, as it may be
amended from time to time, and to make any other such amendments or
modifications as it deems necessary or appropriate to better accomplish the
purposes of the Plan in light of any amendments made to Rule 16b-3.
11.13. CAPTIONS. The captions (i.e., all Section headings) used in the
Plan are for convenience only, do not constitute a part of the Plan, and shall
not be deemed to limit, characterize or affect in any way any provisions of the
Plan, and all provisions of the Plan shall be construed as if no captions have
been used in the Plan.
11.14. SEVERABILITY. Whenever possible, each provision in the Plan and
every Award at any time granted under the Plan shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of the Plan or any Award at any time granted under the Plan shall be held to be
prohibited by or invalid under applicable law, then (a) such provision shall be
deemed amended to accomplish the objectives of the provision as originally
written to the fullest extent permitted by law and (b) all other provisions of
the Plan and every other Award at any time granted under the Plan shall remain
in full force and effect.
11.15. AMENDMENT AND TERMINATION.
(a) AMENDMENT. The Board shall have complete power and
authority to amend the Plan at any time; provided, however, that the Board shall
not, without the requisite affirmative approval of shareholders of the Company,
make any amendment which requires shareholder approval under the Code or under
any other applicable law or rule of any stock exchange which lists Common Stock
or Company Voting Securities. No termination or amendment of the Plan may,
without the consent of the Participant to whom any Award shall theretofore have
been granted under the Plan, adversely affect the right of such individual under
such Award.
(b) TERMINATION. The Board shall have the right and the power
to terminate the Plan at any time. No Award shall be granted under the Plan
after the termination of the Plan, but the termination of the Plan shall not
have any other effect and any Award outstanding at the time of the termination
of the Plan may be exercised after termination of the Plan at any time prior to
the expiration date of such Award to the same extent such Award would have been
exercisable had the Plan not terminated.
11.16. SPECIAL PROVISION RELATING TO CERTAIN STOCK ISSUANCES.
Notwithstanding anything to the contrary contained in this Plan, shares of
Common Stock authorized to be issued under this Plan may be issued to pay awards
originally made under and satisfy options originally granted under the Allegheny
Teledyne Incorporated 1996 Incentive Plan or any other stock option plan adopted
by ATI (an "ATI Plan"), as provided in the Employee Benefits Agreement dated as
of November 29, 1999, between the Company and
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<PAGE> 20
Allegheny Teledyne Incorporated. All shares of Common Stock issued in payment of
an award or grant shall be governed exclusively by the terms of such award or
grant under the applicable ATI Plan, and any terms of this Plan inconsistent
therewith shall be inapplicable to such shares.
20
<PAGE> 1
Exhibit 10.6
TELEDYNE TECHNOLOGIES INCORPORATED
1999 NON-EMPLOYEE DIRECTOR STOCK COMPENSATION PLAN
(As of November 12, 1999)
ARTICLE I.
GENERAL
1.1. Purpose. It is the purpose of the Plan to promote the interests of
the Company and its stockholders by attracting, retaining and providing an
incentive to Non-Employee Directors through the acquisition of a proprietary
interest in the Company and an increased personal interest in its performance.
This purpose will be served by providing an opportunity for Non-Employee
Directors to elect to receive Stock Options and/or Common Stock in lieu of
Director's Retainer Fee Payments, the automatic payment of a portion of the
Director's Retainer Fee Payment in the form of Common Stock to those
Non-Employee Directors not electing to receive such portion in the form of Stock
Options and/or Common Stock and granting each Non-Employee Director annually an
option covering 2,000 shares of Common Stock.
1.2. Adoption and Term. The Plan has been approved by the Board and
shall become effective as of the Effective Date (as hereinafter defined). The
Plan shall terminate without further action upon the earlier of (a) the tenth
anniversary of the effective date, and (b) the first date upon which no shares
of Common Stock remain available for issuance under the Plan.
1.3. Definitions. As used herein the following terms have the following
meanings:
(a) "Annual Options" means the Stock Options issuable under
Section 4.4(a) of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended. References to a section of the Code shall include
that section and any comparable section or sections of any
future legislation that amends, supplements or supersedes said
section.
(d) "Common Stock" means the common stock, par value $0.01 per
share, of the Company.
(e) "Company" means Teledyne Technologies Incorporated, a
Delaware corporation, and any successor thereto.
(f) "Compensation Year" means each calendar year or portion
thereof during which the Plan is in effect.
<PAGE> 2
(g) "Director" means a member of the Board.
(h) "Director's Retainer Fee Payment" means the dollar value
of that portion of the annual retainer fee payable by the
Company to a Non-Employee Director for serving as a Director
and for serving as the chair of the Board or any committee of
the Board as of a particular Payment Date, as established by
the Board and in effect from time to time.
(i) "Effective Date" means the effective date of the
distribution by Allegheny Teledyne Incorporated to its
stockholders of the Common Stock.
(j) "Employee" means any employee of the Company or an
affiliate.
(k) "Exchange Act" means the Securities Exchange Act of 1934,
as amended. References to a section of the Exchange Act or
rule promulgated thereunder shall include that section or rule
and any comparable section(s) or rule(s) of any future
legislation or rulemaking that amends, supplements or
supersedes said section or rule.
(l) "Fair Market Value" means, as of any given date, the
average of the high and low trading prices of the Common Stock
on such date as reported on the New York Stock Exchange, or,
if the Common Stock is not then traded on the New York Stock
Exchange, on such other national securities exchange on which
the Common Stock is admitted to trade, or, if none, on the
National Association of Securities Dealers Automated Quotation
System if the Common Stock is admitted for quotation thereon;
provided, however, if there were no sales reported as of such
date, Fair Market Value shall be computed as of the last date
preceding such date on which a sale was reported; provided,
further, that if any such exchange or quotation system is
closed on any day on which Fair Market Value is to be
determined, Fair Market Value shall be determined as of the
first date immediately preceding such date on which such
exchange or quotation system was open for trading.
(m) "Non-Employee Director" means a Director who is not an
Employee.
(n) "Non-Employee Director Notice" means a written notice
delivered in accordance with Section 4.2.
(o) "Payment Date" means the first business day of January and
July of each Compensation Year on which the Director's
Retainer Fee Payment for serving as a Director is paid by the
Company and the first business day of January of each
Compensation Year on which the Director's Retainer Fee Payment
for serving as the chair of the Board or any committee of the
Board is paid by the Company.
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<PAGE> 3
(p) "Plan" means this Teledyne Technologies Incorporated 1999
Non-Employee Director Stock Compensation Plan, as it may
hereafter be amended from time to time.
(q) "Retainer Fee Options" means the Stock Options issuable
under Section 4.3 of the Plan.
(r) "Stock Options" means options to purchase shares of Common
Stock of the Company issuable hereunder.
1.4. Shares Subject to the Plan. The shares to be offered under the
Plan shall consist of the Company's authorized but unissued Common Stock or
treasury shares and, subject to adjustment as provided in Section 5.1 hereof,
the aggregate amount of such stock which may be issued or subject to Stock
Options issued hereunder shall not exceed 200,000 shares. If any Stock Option
granted under the Plan shall expire or terminate for any reason, without having
been exercised or vested in full, as the case may be, the unpurchased shares
subject thereto shall again be available for issuance under the Plan. Stock
Options granted under the Plan will not be qualified as "incentive stock
options" under Section 422 of the Code.
ARTICLE II.
ADMINISTRATION
2.1. The Board. The Plan shall be administered by the Board. Subject to
the provisions of the Plan, the Board shall interpret the Plan, promulgate,
amend, and rescind rules and regulations relating to the Plan and make all other
determinations necessary or advisable for its administration. Interpretation and
construction of any provision of the Plan by the Board shall be final and
conclusive. Notwithstanding the foregoing, the Board shall have or exercise no
discretion with respect to the selection of persons eligible to participate
hereunder, the determination of the number of shares of Common Stock or number
of Stock Options issuable to any person or any other aspect of Plan
administration with respect to which such discretion is not permitted in order
for grants of shares of Common Stock and Stock Options to be exempt under Rule
16b-3 promulgated under the Exchange Act.
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<PAGE> 4
ARTICLE III.
PARTICIPATION
3.1. Participants. Each Non-Employee Director shall participate in the
Plan on the terms and conditions hereinafter set forth.
ARTICLE IV.
PAYMENT OF DIRECTOR'S FEES
4.1. General. The Director's Retainer Fee Payment shall be paid to each
Non-Employee Director, as of each Payment Date, as set forth in the Plan and
subject to such other payment policies and procedures as the Board may establish
from time to time. If, for the applicable Compensation Year, a Non-Employee
Director has not made an election pursuant to Section 4.2 to receive Stock
Options or Common Stock in lieu of at least twenty-five percent (25%) of the
Director's Retainer Fee Payment, then seventy-five percent (75%) of such
Director's Retainer Fee Payment shall be paid in cash and twenty-five percent
(25%) of the Director's Retainer Fee Payment shall be paid in the form of Common
Stock.
4.2. Non-Employee Director Notice. A Non-Employee Director may file
with the Secretary of the Company or other designee of the Board of Directors
prior to the commencement of a Compensation Year a Non-Employee Director Notice
making an election to receive either twenty-five percent (25%), fifty percent
(50%), seventy-five percent (75%) or one hundred (100%) of his or her Director's
Retainer Fee Payment in the form of Stock Options and/or Common Stock with the
balance to be paid in cash. If a Director does not timely file an election, he
or she shall receive twenty-five percent (25%) of the Director's Retainer Fee
Payment in Common Stock and seventy-five percent (75%) in cash. Notwithstanding
the foregoing, elections to receive Common Stock or Stock Options may be made at
any time during a Compensation Year so long as such elections are made
irrevocably in advance of receiving the corresponding Common Stock or Stock
Options and approved in accordance with Rule 16b-3 under the Exchange Act.
4.3 Conversion of Retainer Fee Payment to Shares. Each Non-Employee
Director who pursuant to Section 4.1 or 4.2 is to receive Common Stock as all or
part of his or her Director's Retainer Fee Payment with respect to a
Compensation Year and who is elected or reelected or is a continuing
Non-Employee Director as of the date of commencement of such Compensation Year
as of the applicable Payment Date, shall receive as of each Payment Date during
such Compensation Year a number of shares of Common Stock equal to the quotient
obtained by dividing (i) the amount of the Director's Retainer Fee Payment to be
paid in the form of Common Stock by (ii) the Fair Market Value of the Common
Stock per share on such Payment Date. Cash shall be paid in lieu of any
fractional shares.
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<PAGE> 5
4.4 Stock Options
(a) Annual Option Grants. An Annual Option covering 2,000 shares of
Common Stock shall be granted to each Non-Employee Director on the Effective
Date, subject to approval by the stockholders of the Company. Thereafter, an
Annual Option covering 2,000 shares of Common Stock will be granted to each
Non-Employee Director automatically at the conclusion of each Company Annual
Meeting. If, after the Effective Date, a director first becomes a Non-Employee
Director on a date other than an Annual Meeting date, an Annual Option covering
2,000 shares of Common Stock will be granted to such director on his or her
first date of Board service. The purchase price of the Common Stock covered by
each Annual Option will be the Fair Market Value of a share of Common Stock as
of the date of grant of the Annual Option.
(b) Retainer Fees Options. Retainer Fee Options will be granted on the
Payment Dates of each Compensation Year. The number of shares of Common Stock to
be subject to a Retainer Fee Option shall be equal to the nearest number of
whole shares determined by multiplying the Fair Market Value of a share of
Company Common Stock on the date of grant by 0.3333 and dividing the result into
the applicable portion of the Director's Retainer Fee Payment elected to be
received as Stock Options by the Non-Employee Director for the Compensation
Year. The purchase price of each share covered by each Retainer Fee Option shall
be equal to the Fair Market Value of a share of Common Stock on the date of
grant of the Retainer Fee Option multiplied by 0.6666.
(c) Duration and Exercise of Stock Options. Subject to Section 4.4(f)
below, Annual Options and Retainer Fee Options become exercisable on the first
anniversary of the date on which they were granted. Stock Options shall
terminate upon the expiration of ten years from the date of grant. No Stock
Option may be exercised for a fraction of a share and no partial exercise of any
Stock Option may be for less than one hundred (100) shares.
(d) Purchase Price. The purchase price for the shares shall be paid in
full at the time of exercise (i) in cash or by check payable to the order of the
Company, (ii) by delivery of shares of Common Stock of the Company already owned
by, and in the possession of Stock Option holder, or (iii) by delivering a
properly executed exercise notice together with irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan proceeds to
pay the Stock Option price (in which case the exercise will be effective upon
receipt of such proceeds by the Company). Shares of Common Stock used to satisfy
the exercise price of a Stock Option shall be valued at their Fair Market Value
on the date of exercise.
(e) Transferability. Stock Options granted hereunder shall not be
transferable, other than by will or the laws of descent and distribution, and
shall be exercisable during a Stock Option holder's lifetime only by the Stock
Option holder or by his or her guardian or legal representative, except to the
extent transfer is permitted by Rule 16b-3 promulgated under the Exchange Act
and approved by the Board or its designee. Subject
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<PAGE> 6
to the foregoing, Stock Options shall not be assigned, pledged or otherwise
encumbered by the holder thereof, either voluntarily or by operation of law.
(f) Termination of Directorship. If a director ceases to be a director
of the Company for any reason other than death or removal by the Board of
Directors or the stockholders, the director's Stock Options shall continue to
vest as provided in Section 4.4 (c) above and the right of the Optionee to
exercise such Stock Options shall continue until the options expire in
accordance with Section 4.4(c). In no event may a Stock Option be exercised
after the expiration of the period specified in Section 4.4(c). In the event of
death of a director or former director who holds an outstanding Stock Option,
all unvested Stock Options shall automatically become fully vested as of the
date of death and the right of his or her estate or beneficiary to exercise the
Stock Options shall terminate upon the expiration of twelve months from the date
of death, but in no event may a Stock Option be exercised after the expiration
of the Option Period. In the event of removal of a director from the Board of
Directors, all rights of such director in a Stock Option that the director was
entitled to exercise on the date of removal shall terminate on the 30th day (or,
if such day is not a business day, on the next business day) after the date of
removal, but in no event may such Stock Options be exercised after the
expiration of the Option Period.
ARTICLE V.
MISCELLANEOUS
5.1. Adjustments Upon Changes in Common Stock. The number and kind of
shares available for issuance under the Plan, and the number and kind of shares
subject to, and the exercise price of, outstanding Stock Options, shall be
appropriately adjusted to prevent dilution or enlargement of rights by reason of
any stock dividend, stock split, combination or exchange of shares,
recapitalization, merger, consolidation or other change in capitalization with a
similar substantive effect upon the Plan or the shares issuable under the Plan.
5.2. Amendment and Termination. The Board shall have complete power and
authority to amend the Plan at any time; provided, however, that the Board shall
not, without the affirmative approval of the shareholders of the Company, make
any amendment which requires shareholder approval under any applicable law or
regulation of a national stock exchange on which the Common Stock is traded. The
Board shall have the right and the power to terminate the Plan at any time. No
amendment or termination of the Plan may, without the consent of the
Non-Employee Director, adversely affect the right of such Non-Employee Director
with respect to any Stock Options then outstanding.
5.3. Requirements of Law. The issuance of Common Stock under the Plan
shall be subject to all applicable laws, rules and regulations and to such
approval by governmental agencies as may be required.
5.4. No Guarantee of Membership. Nothing in the Plan shall confer upon
a
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<PAGE> 7
Non-Employee Director any right to continue to serve as a Director.
5.5 Construction. Words of any gender used in the Plan shall be
construed to include any other gender, unless the context requires otherwise.
5.6 Governing Law. This Plan shall be governed by, construed and
interpreted in accordance with the laws of the State of Delaware, without regard
to its principles of conflict of law, as to all matters, including matters of
validity, construction, effect, performance and remedies.
7
<PAGE> 1
Exhibit 10.8
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Employment Agreement") is made and
entered into as of the 21st day of December, 1999 by and between Teledyne
Technologies Incorporated, a Delaware corporation with its executive offices at
2049 Century Park East, 15th Floor, Los Angeles, California 90067-3101(the
"Company"), and Dr. Robert Mehrabian, an individual residing at 5388 Baseline
Avenue, Santa Ynez, California 93460 (the "Executive").
RECITALS
WHEREAS, the Company hired the Executive and the Executive agreed to
serve as the Company's President and Chief Executive Officer ("CEO"); and
WHEREAS, the Personnel and Compensation Committee of the Board of
Directors (the "Committee") authorized the Company to enter into and the Company
and the Executive entered into a Change in Control Severance Agreement dated as
of December 21, 1999 (the "CIC Agreement"); and
WHEREAS, the CIC Agreement provides for payment of severance benefits
if the Executive's employment is terminated under circumstances described in the
CIC Agreement; and
WHEREAS, the Company wishes to supplement the CIC Agreement with
respect to the Executive by specifying in this Employment Agreement the
Executive's titles and the types and rates of compensation to which he is
entitled during his employment with the Company.
NOW, THEREFORE, in consideration of the respective covenants and
agreements hereinafter set forth, and intending to be legally bound, the parties
hereto agree as follows:
1. Term of Agreement. This Employment Agreement shall be effective as
of the date first above written and shall continue in effect until December 31,
2000, unless extended as described in the next sentence. Effective as of
November 1, 2000 and, if previously extended, each November 1st thereafter, the
term of this Employment Agreement shall be extended for one additional year
unless one party shall give written notice to the other on or before October 31,
2000 or, if previously extended, the then next October 31st that the term will
not be thereafter extended. If such notice is given by either party, the
Executive may retire on the first December 31st following receipt of such
notice.
2. Employment Agreement to Supplement the CIC Agreement. This
Employment Agreement shall supplement the CIC Agreement and the terms and
conditions of this Employment Agreement are not intended to alter or vary the
terms and conditions of the CIC Agreement. The intention of this Employment
Agreement is to memorialize certain terms and conditions of the employment of
the Executive which are particular to him and not specified in the CIC
Agreement. Except as specifically set forth herein, initially capitalized terms
shall have the meaning ascribed thereto under the CIC Agreement which is
incorporated herein and made a part hereof as if set forth at length.
<PAGE> 2
3. Position and Duties. The Company shall employ Executive and the
Executive shall serve as the President and CEO of the Company and shall have
primary responsibility to manage and direct the day-to-day business of the
Company including the generation of income and control of expenses. Subject to
the approval of the Board of Directors of the Company, the Executive may serve
as a director of charitable organizations and/or for profit corporations which
do not compete with the Company or any of its subsidiaries and affiliates. The
Company acknowledges that Executive serves as a director of Mellon Financial
Corporation and PPG Industries, Inc. as of the date hereof and agrees that the
Executive may continue to serve as a director of those corporations.
4. Compensation. The Executive shall receive the following items of
compensation at the rates thereof set forth below.
a. Base Salary. During the Term, the Company shall pay Executive a base
salary at the annualized rate of Five Hundred Thousand ($500,000)
Dollars ("Base Salary"). Base Salary shall be paid periodically in
accordance with normal Company payroll practices applicable to
executive employees.
b. Participation in Compensation Plans and Programs. In accordance with
the respective terms and conditions of the respective plans and
programs, the Executive shall be entitled to participate in the
following compensation plans and programs:
1. AIP. In the AIP at an annual opportunity at 80% of
Base Salary if targets are reached at 100%, or such
greater percentage if provided in the AIP for any
year.
2. PSP. In the PSP at an opportunity equal to 150% of
Base Salary if targets are reached at 100%, or such
greater percentage if provided in the PSP for any
measurement period.
3. SARP. In the SARP at the level approved by the
Committee. In the event Allegheny Technologies
Incorporated alters to the benefit of participants
the terms and conditions of its SARP, to the extent
those alterations are not made applicable to the
Executive by the terms of those alterations, the
Company shall make arrangements so that the Executive
is made whole for the benefits of such alterations.
4. Stock Options. In addition to the initial award of
300,000 stock options made as of November 29, 1999,
eligibility to receive future grants of options in a
number determined by the Personnel and Compensation
Committee of the Board of Directors, each subject to
the terms and conditions of the Stock Option
Incentive Plan.
5. Employee Benefits. The Executive shall participate in each
qualified, non-qualified and supplemental employee benefit, executive benefit,
fringe benefit and perquisite plan, policy or arrangement of the Company
applicable to executive level employees, including, but not limited to, expense
reimbursement policies, a country club and a city club membership,
- 2 -
<PAGE> 3
and use of an automobile, in each case, in accordance with the terms and
conditions thereof (including tax equalization payments to the extent provided
with respect to such plans by Allegheny Teledyne Incorporated on or prior to
November 29, 1999) as in effect from time to time. Nothing in this Employment
Agreement shall be construed as preventing the amendment or termination of any
such plan, policy or arrangement by the Company so long as such amendment or
termination affects all executive employees of the Company then participating.
6. Non-Qualified Pension Arrangement. In addition to the employee
benefits described in Section 5, the Company will pay to the Executive (or his
designee if amounts are payable after the death of the Executive) following his
Retirement (as defined below), as payments supplemental to any accrued pension
under the Company's qualified pension plan, an annual amount, paid in equal
monthly installments, equal to 50% of his Base Compensation at the rate in
effect on the date of his Retirement. Such annual amount shall be paid each year
for a number of years following his Retirement equal to the number of whole and
fractional years of service, not in excess of ten (10), the Executive has
rendered to the Company (including the period from August, 1997 through and
including November, 1999 rendered as service to the Company's predecessor,
Allegheny Teledyne Incorporated). For purposes of Section 6 of this Employment
Agreement and without effect upon whether the Executive is deemed to be retired
under the CIC Agreement, the Executive will be deemed to have a Retirement upon
his separation from service with the Company for any reason other than for
Cause.
7. Binding Agreement. The Company will use its best efforts to require
any successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise to all or substantially all of the business and/or assets of the
Company) to expressly assume and agree to perform this Employment Agreement and
the CIC Agreement in the same manner and to the same extent that the Company
would be required to perform them if no such succession had taken place. Failure
of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be deemed to be a termination without
Cause for purposes of this Employment Agreement and the CIC Agreement. For
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be the Date of Termination.
8. Notices. Any notice required or permitted under this Agreement shall
be given in writing and shall be deemed to have been effectively made or given
if personally delivered at the address first above written or such other address
as may be given by one party to the other.
9. Withholding. The Company shall be entitled to withhold, or cause to
be withheld, from payment any amount payable under this Employment Agreement of
any payroll and withholding taxes required by law, as determined by the Company
in good faith.
10. Governing Law. This Agreement shall be construed, interpreted, and
governed in accordance with the laws of the State of California without
reference to rules relating to conflict of law.
11. Headings. The headings of sections are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
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<PAGE> 4
12. Counterparts. This Agreement may be executed by either of the
parties hereto in counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the day and year first above written.
EXECUTIVE
By: /s/ Robert Mehrabian
-------------------------
Robert Mehrabian
TELEDYNE TECHNOLOGIES INCORPORATED
By: /s/ Thomas A. Corcoran
-------------------------
Name: Thomas A. Corcoran
Title: Chairman
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<PAGE> 1
Exhibit 10.9
FORM OF CHANGE OF CONTROL SEVERANCE AGREEMENT
[This is the form of Change of Control Agreement that has been entered into with
the following executive officers and nine other key employees.
<TABLE>
<CAPTION>
Name of Executive Officer Title Date of Agreement Section
- ------------------------- ----- ----------------- -------
1(m) level
----------
<S> <C> <C> <C>
Robert Mehrabian President and December 21, 1999 three times
Chief Executive Officer
Stefan C. Riesenfeld Executive Vice President December 21, 1999 three times
and Chief Financial Officer
John T. Kuelbs Senior Vice President, December 21, 1999 three times
General Counsel and Secretary
Nicholas L. Blauwiekel Senior Vice President of March 9, 2000 three times
Human Resources
Dale A. Schnittjer Controller December 21, 1999 two times]
</TABLE>
THIS AGREEMENT ("Agreement") is made and entered into as of
this ___ day of ________________ (the "Effective Date"), by and among Teledyne
Technologies Incorporated, a Delaware corporation (hereinafter referred to as
the "Company"), and ____________________, an individual residing at the address
set forth on the signature page of this Agreement (the "Executive").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company (the "Board")
has approved the Company entering into this agreement providing for certain
severance protection for the Executive following a Change in Control (as
hereinafter defined);
WHEREAS, the Board of the Company believes that, should the
possibility of a Change in Control arise, it is imperative that the Company be
able to receive and rely upon the Executive's advice, if requested, as to the
best interests of the Company and its stockholders without concern that he or
she might be distracted by the personal uncertainties and risks created by the
possibility of a Change in Control; and
WHEREAS, in addition to the Executive's regular duties, he or
she may be called upon to assist in the assessment of a possible Change in
Control, advise management and the Board of the Company as to whether such
Change in Control would be in the best interests of the Company and its
stockholders, and to take such other actions as the Board determines to be
appropriate;
NOW, THEREFORE, to assure the Company that it will have the
continued dedication of the Executive and the availability of his or her advice
and counsel notwithstanding the possibility, threat, or occurrence of a Change
in Control, and to induce the Executive to remain in the employ of the Company,
and for good and valuable consideration and the mutual
<PAGE> 2
covenants set forth herein, the Company and the Executive, intending to be
legally bound, agree as follows:
Article I. Definitions
Whenever used in this Agreement, the following terms shall have the
meanings set forth below when the initial letter of the word or abbreviation is
capitalized:
(a) "Accrued Obligations" means, as of the Effective Date of Termination, the
sum of (i) the Executive's Base Compensation through and including the Effective
Date of Termination, (ii) the amount of any bonus, incentive compensation,
deferred compensation and other cash compensation accrued by the Executive as of
the Effective Date of Termination under the terms of any such arrangement and
not then paid, including, but not limited to, AIP accrued but not paid for a
year ending prior to the year in which occur, the Effective Date of Termination,
(iii) unused vacation time monetized at the then rate of Base Compensation, (iv)
expense reimbursements or other cash entitlements, (v) amounts accrued under any
qualified, non-qualified or supplemental employee benefit plan, payroll
practice, policy or perquisite.
(b) "AIP" means the Company's Annual Incentive Plan as it exists on the date
hereof and as it may be amended, supplemented or modified from time to time or
any successor plan.
(c) "Base Compensation" shall mean (1) the highest annual rate of base salary of
the Executive within the time period consisting of one year prior to the date of
a Change in Control and the Effective Date of Termination and (2) the AIP bonus
target for performance in the calendar year that a Change in Control occurs or
the actual AIP payment for the year immediately preceding the Change in Control,
whichever is higher.
(d) "Beneficiary" shall mean the persons or entities designated or deemed
designated by the Executive pursuant to Section 7.2 herein.
(e) "Board" shall mean the Board of Directors of the Company.
(f) For purposes hereof, the term "Cause" shall mean the Executive's conviction
of a felony, breach of a fiduciary duty involving personal profit to the
Executive or intentional failure to perform stated duties reasonably associated
with the Executive's position; provided, however, an intentional failure to
perform stated duties shall not constitute Cause unless and until the Board
provides the Executive with written notice setting forth the specific duties
that, in the Board's view, the Executive has failed to perform and the Executive
is provided a period of thirty (30) days to cure such specific failure(s) to the
reasonable satisfaction of the Board.
(g) For the purposes of this Agreement, "Change in Control" shall mean, and
shall be deemed to have occurred upon the occurrence of, any of the following
events:
(1) The Company acquires actual knowledge that (x) any Person, other
than the Company, a subsidiary, any employee benefit plan(s) sponsored
by the Company or a
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<PAGE> 3
subsidiary, has acquired the Beneficial Ownership, directly or
indirectly, of securities of the Company entitling such Person to 20%
or more of the Voting Power of the Company, or (y) any Person or
Persons agree to act together for the purpose of acquiring, holding,
voting or disposing of securities of the Company or to act in concert
or otherwise with the purpose or effect of changing or influencing
control of the Company, or in connection with or as Beneficial
Ownership, directly or indirectly, of securities of the Company
entitling such Person(s) to 20% or more of the Voting Power of the
Company; or
(2) The completion of a Tender Offer is made to acquire securities of
the Company entitling the holders thereof to 20% or more of the Voting
Power of the Company; or
(3) The occurrence of a successful solicitation subject to Rule 14a-11
under the Securities Exchange Act of 1934 as amended (or any successor
Rule) (the "1934 Act") relating to the election or removal of 50% or
more of the members of the Board or any class of the Board shall be
made by any person other than the Company or less than 51% of the
members of the Board (excluding vacant seats) shall be Continuing
Directors; or
(4) The occurrence of a merger, consolidation, share exchange, division
or sale or other disposition of assets of the Company as a result of
which the stockholders of the Company immediately prior to such
transaction shall not hold, directly or indirectly, immediately
following such transaction a majority of the Voting Power of (i) in the
case of a merger or consolidation, the surviving or resulting
corporation, (ii) in the case of a share exchange, the acquiring
corporation or (iii) in the case of a division or a sale or other
disposition of assets, each surviving, resulting or acquiring
corporation which, immediately following the transaction, holds more
than 20% of the consolidated assets of the Company immediately prior to
the transaction;
provided, however that (A) if securities beneficially owned by Executive are
included in determining the Beneficial Ownership of a Person referred to in
Section (i), (B) if Executive is named pursuant to Item 2 of the Schedule 14D-1
(or any similar successor filing requirement) required to be filed by the bidder
making a Tender Offer referred to in Section (ii) or (C) if Executive is a
"participant" as defined in Instruction 3 to Item 4 of Schedule 14A under the
1934 Act in a solicitation referred to in Section (iii) then no Change of
Control with respect to Executive shall be deemed to have occurred by reason of
any such event.
For the purposes of Section 1(g), the following terms shall
have the following meanings:
(i) The term "Person" shall be used as that term is used in Section
13(d) and 14(d) of the 1934 Act as in effect on the Effective Date
hereof.
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<PAGE> 4
(ii) "Beneficial Ownership" shall be determined as provided in Rule
13d-3 under the 1934 Act as in effect on the Effective Date hereof.
(iii) A specified percentage of "Voting Power" of a company shall mean
such number of the Voting Shares as shall enable the holders thereof to
cast such percentage of all the votes which could be cast in an annual
election of directors (without consideration of the rights of any class
of stock, other than the common stock of the company, to elect
directors by a separate class vote); and "Voting Shares" shall mean all
securities of a company entitling the holders thereof to vote in an
annual election of directors (without consideration of the rights of
any class of stock, other than the common stock of the company, to
elect directors by a separate class vote).
(iv) "Tender Offer" shall mean a tender offer or exchange offer to
acquire securities of the Company (other than such an offer made by the
Company or any subsidiary), whether or not such offer is approved or
opposed by the Board.
(v) "Continuing Directors" shall mean a director of the Company who
either (x) was a director of the Company on the date hereof or (y) is
an individual whose election, or nomination for election, as a director
of the Company was approved by a vote of at least two-thirds of the
directors then still in office who were Continuing Directors (other
than an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election
of directors of the Company which would be subject to Rule 14a-11 under
the 1934 Act, or any successor Rule).
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(i) "Effective Date of Termination" shall mean the date on which the Executive's
employment terminates in a circumstance in which Section 2.1 provides for
Severance Benefits (as defined in Section 2.1).
(j) "Good Reason" shall mean, without the Executive's express written consent,
the occurrence of any one or more of the following:
(1) A material diminution of the Executive's authorities, duties,
responsibilities, or status (including offices, titles, or reporting
relationships) as an employee of the Company from those in effect as of one
hundred eighty (180) days prior to the Change in Control or as of the date of
execution of this Agreement if a Change in Control occurs within one hundred
eighty (180) days of the execution of this Agreement (the "Reference Date") or
the assignment to the Executive of duties or responsibilities inconsistent with
his position as of the Reference Date, other than an insubstantial and
inadvertent act that is remedied by the Company promptly after receipt of notice
thereof given by the Executive, and other than any such alteration which is
consented to by the Executive in writing;
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<PAGE> 5
(2) The Company's requiring the Executive to be based at a location in
excess of thirty-five (35) miles from the location of the Executive's principal
job location or office immediately prior to the Change in Control, except for
required travel on the Company's business to an extent substantially consistent
with the Executive's present business obligations;
(3) A reduction in the Executive's annual salary or any material
reduction by the Company of the Executive's other compensation or benefits from
that in effect on the Reference Date or on the date of the Change in Control,
whichever is greater;
(4) The failure of the Company to obtain an agreement satisfactory to
the Executive from any successor to the Company to assume and agree to perform
the Company's obligations under this Agreement, as contemplated in Article 5
herein; and
(5) Any purported termination by the Company of the Executive's
employment that is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 2.6 below, and for purposes of this Agreement, no
such purported termination shall be effective.
The Executive's right to terminate employment for Good Reason shall not be
affected by the Executive's (A) incapacity due to physical or mental illness or
(B) continued employment following the occurrence of any event constituting Good
Reason herein.
(k) "PSP" means the Company's Performance Share Program as it exists on the date
hereof and as it may be, amended, supplemented, or modified from time to time or
any successor plan.
(l) "SARP" means the Company's Stock Acquisition and Retention Program as it
exists on the date hereof and as it may be, amended, supplemented or modified
from time to time or any successor plan.
(m) "Severance Compensation" means [three/two times] Base Compensation.
Article II. Severance Benefits
2.1 Right to Severance Benefits. The Executive shall be entitled to
receive from the Company severance benefits described in Section 2.2 below
(collectively, the "Severance Benefits") if a Change in Control shall occur and
within twenty-four (24) months after the Change in Control either of the
following shall occur:
(a) an involuntary termination of the Executive's
employment with the Company without Cause; or
(b) a voluntary termination of the Executive's employment
with the Company for Good Reason.
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<PAGE> 6
2.2 Severance Benefits. In the event that the Executive becomes
entitled to receive Severance Benefits, as provided in Section 2.1, the Company
shall provide the Executive with total Severance Benefits as follows (but
subject to Sections 2.5 and 2.6):
(a) The Executive shall receive a single lump sum cash
Severance Compensation payment within thirty (30)
days of the Effective Date of Termination.
(b) The Executive shall receive the Accrued Obligations.
(c) The Executive shall receive as AIP for the year in
which occurs the Effective Date of Termination a lump
sum cash payment paid within thirty (30) days of the
Effective Date of Termination equal to that which
would have been paid if corporate and personal
performance had achieved 120% of target objectives
established for the annual period in which the Change
in Control occurred, multiplied by a fraction, the
numerator of which is the number of days elapsed in
the current fiscal period to the Effective Date of
Termination, and the denominator of which is 365.
(d) The Executive shall receive a lump sum payment paid
within thirty (30) days of the Effective Date of
Termination (in accordance with the then current PSP;
provided that any portion of the PSP award which
would have been paid in stock under the PSP is to be
paid in cash based on the current market value of the
stock) which payment will be determined based upon
actual performance for the number of full years of
completed then current PSP measurement period(s) at
the time of the Effective Date of Termination and for
years not yet completed in the then current PSP
measurement period(s) Executive will be assumed to
have met all applicable goals at 120% of performance.
(e) All welfare benefits, including medical, dental,
vision, life and disability benefits pursuant to
plans under which the Executive and/or the
Executive's family is eligible to receive benefits
and/or coverage shall be continued for a period of
thirty-six (36) months after the Effective Date of
Termination. Such benefits shall be provided to the
Executive at no less than the same coverage level as
in effect as of the date of the Change in Control.
The Company shall pay the full cost of such continued
benefits, except that the Executive shall bear any
portion of such cost as was required to be borne by
key executives of the Company generally at the date
of the Change in Control. Notwithstanding the
foregoing, the benefits described in this Section
2.2(e) may be discontinued prior to the end of the
periods provided in this Section to the extent, but
only to the extent, that the Executive receives
substantially similar benefits from a subsequent
employer. In the event any insurance carrier shall
refuse to provide coverage to a former employee, the
Company shall secure comparable
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<PAGE> 7
coverage or may self-insure the benefits if it pays
such benefits together with a payment to the
Executive equal to the federal income tax
consequences of payments to a former highly
compensated employee from a discriminatory
self-insured plan.
(f) The Executive shall be entitled to reimbursement for
actual payments made for professional outplacement
services or job search not to exceed $25,000 in the
aggregate.
(g) In determining the Executive's pension benefit
following entitlement to a Severance Benefit, the
Executive shall be deemed to have satisfied the age
and service requirements for full vesting under the
Company's qualified (within applicable legal
parameters), non-qualified and supplemental pension
plans as of the Effective Date of Termination such
that the Executive shall be entitled to receive the
full accrued benefit under all such plans in effect
as of the date of the Change in Control, without any
actuarial reduction for early payment.
2.3. Stock Options. All Company stock options previously granted to the
Executive shall be fully vested and exercisable immediately upon a Change in
Control. Such options shall be exercisable for the remainder of the term
established by the Company's stock option plan as if the options had vested in
accordance with the normal vesting schedule and the Executive had remained an
employee of the Company. Company stock acquired pursuant to any such exercise
may be sold by the Executive free of any Company restrictions, whatsoever (other
than those imposed by federal and state securities laws).
2.4. SARP. In the event of entitlement to a Severance Benefit, all
forfeiture restrictions on all Company stock purchased by or granted to the
Executive under the Company's SARP shall lapse and all shares of restricted
stock shall vest. All of the foregoing shares may be sold by the Executive free
of any Company restrictions whatsoever (other than those imposed by federal and
state securities laws). Any promissory notes of Executive under the SARP shall
be paid off by the Executive within ninety (90) days after Executive's receipt
of the Severance Benefits.
2.5. Termination for any Other Reason. If the Executive's employment
with the Company is terminated under any circumstances other than those set
forth in Section 2.1, including without limitation by reason of retirement,
death, disability, discharge for Cause or resignation without Good Reason, or
any termination, for any reason, that occurs prior to a Change in Control (other
than as provided below) or after twenty-four (24) months following a Change in
Control, the Executive shall have no right to receive the Severance Benefits
under this Agreement or to receive any payments in respect of this Agreement. In
such event Executive's benefits, if any, in respect of such termination shall be
determined in accordance with the Company's retirement, survivor's benefits,
insurance, and other applicable plans, programs, policies and practices then in
effect. Notwithstanding anything in this Agreement to the contrary, if the
Executive's employment with the Company is terminated at any time from three (3)
to
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<PAGE> 8
eight (8) months prior to the date on which a Change in Control occurs either
(i) by the Company other than for Cause or (ii) by the Executive for Good
Reason, and it is reasonably demonstrated that termination of employment (a) was
at the request of an unrelated third party who has taken steps reasonably
calculated to effect a Change in Control, or (b) otherwise arose in connection
with or in anticipation of the Change in Control, then for all purposes of this
Agreement the termination shall be deemed to have occurred as if immediately
following a Change in Control for Good Reason and the Executive shall be
entitled to Severance Benefits as provided in Section 2.2 hereof.
Notwithstanding anything in this Agreement to the contrary, if the Executive's
employment with the Company is terminated at any time within three (3) months
prior to the date on which a Change in Control occurs either (i) by the Company
other than for Cause or (ii) by the Executive for Good Reason, such termination
shall conclusively be deemed to have occurred as if immediately following a
Change in Control for Good Reason and the Executive shall be entitled to
Severance Benefits as provided in Section 2.2. hereof.
2.6. Notice of Termination. Any termination by the Company for Cause or
by the Executive for Good Reason shall be communicated by Notice of Termination
to the other party. For purposes of this Agreement, a "Notice of Termination"
shall mean a written notice which shall indicate the specific termination
provision in this Agreement relied upon, and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
2.7. Withholding of Taxes. The Company shall withhold from any amounts
payable under this Agreement all Federal, state, local, or other taxes that are
legally required to be withheld.
2.8. Certain Additional Payments by the Company.
(a) Notwithstanding anything in this Agreement to the
contrary, in the event it shall be determined that
any economic benefit or payment or distribution by
the Company to or for the benefit of the Executive,
whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement
or otherwise (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax
(such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a
"Gross-Up-Payment") in an amount such that after
payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such
taxes), including any Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed
upon the Payments.
(b) Subject to the provisions of Section 2.8(c), all
determinations required to be made under this Section
2.8, including whether a Gross-Up Payment is required
and the amount of such Gross-Up Payment, shall be
made by the
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<PAGE> 9
Company's regular outside independent public
accounting firm (the "Accounting Firm") which shall
provide detailed supporting calculations both to the
Company and the Executive within fifteen (15)
business days of the Effective Date of Termination,
if applicable, or such earlier time as is requested
by the Company . The initial Gross-Up Payment, if
any, as determined pursuant to this Section 2.8(b),
shall be paid to the Executive within five (5) days
of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that
no Excise Tax is payable by the Executive, it shall
furnish the Executive with an opinion that he or she
has substantial authority not to report any Excise
Tax or excess parachute payments on his or her
federal income tax return. Any determination by the
Accounting Firm shall be binding upon the Company and
the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time
of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments
which will not have been made by the Company should
have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the
event that the Company exhausts its remedies pursuant
to Section 2.8(c) and the Executive thereafter is
required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to
or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company
of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten
(10) business days after the later of either (i) the
date the Executive has actual knowledge of such
claim, or (ii) ten (10) days after the Internal
Revenue Service issues to the Executive either a
written report proposing imposition of the Excise Tax
or a statutory notice of deficiency with respect
thereto, and shall apprise the Company of the nature
of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay
such claim prior to the expiration of the thirty-day
period following the date on which he gives such
notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such
period that the Company desires to contest such
claim, the Executive shall: (i) give the Company any
information reasonably requested by the Company
relating to such claim, (ii) take such action in
connection with contesting such claim as the Company
shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an
attorney reasonably selected by the Company, (iii)
cooperate with the Company in good faith in order
effectively to contest such claim, (iv) permit the
Company to participate in any
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<PAGE> 10
proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly
all costs and expenses (including additional interest
and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax
or income tax, including interest and penalties with
respect thereto, imposed as a result of such
representation and payment of costs and expenses.
Without limitation of the foregoing provisions of
this Section 2.8(c), the Company shall control all
proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and
all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct
the Executive to request or accede to a request for
an extension of the statute of limitations with
respect only to the tax claimed, or pay the tax
claimed and sue for a refund or contest the claim in
any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any
administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as
the Company shall determine; provided, however, that
if the Company directs the Executive to pay such
claim and sue for a refund, the Company shall advance
the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any
Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect
to such advance or with respect to any imputed income
with respect to such advance; and provided further
that any extension of the statute of limitations
requested or acceded to by the Executive at the
Company's request and relating to payment of taxes
for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore,
the Company's control of the contest shall be limited
to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 2.8(c),
the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall
(subject to the Company's complying with the
requirements of Section 2.8(c)) promptly pay to the
Company the amount of such refund (together with any
interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company
pursuant to Section 2.8(c), a determination is made
that the Executive shall not be entitled to any
refund with respect to such claim and the Company
does not notify the Executive in writing of its
intent to contest such denial of refund prior to the
expiration of thirty (30) days after such
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determination, then such advance shall be forgiven
and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
(e) In the event that any state or municipality or
subdivision thereof shall subject any Payment to any
special tax which shall be in addition to the
generally applicable income tax imposed by such
state, municipality, or subdivision with respect to
receipt of such Payment, the foregoing provisions of
this Section 2.8 shall apply, mutatis mutandis, with
respect to such special tax.
Article III. The Company's Payment Obligation
3.1 Payment Obligations Absolute. Except as otherwise provided in the
last sentence of Section 2.2(e), the Company's obligation to make the payments
and the arrangements provided for in this Agreement shall be absolute and
unconditional, and shall not be affected by any circumstances, including,
without limitation, any offset, counterclaim, recoupment, defense, or other
right that the Company may have against the Executive or any other party. All
amounts payable by the Company under this Agreement shall be paid without notice
or demand. Each and every payment made hereunder by the Company shall be final,
and the Company shall not seek to recover all or any part of such payment from
the Executive or from whomsoever may be entitled thereto, for any reasons
whatsoever. Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall have no obligation to make any payment to the
Executive hereunder to the extent, but only to the extent, that such payment is
prohibited by the terms of any final order of a Federal or state court or
regulatory agency of competent jurisdiction; provided, however, that such an
order shall not affect, impair, or invalidate any provision of this Agreement
not expressly subject to such order.
3.2 Contractual Rights to Payments and Benefits. This Agreement
establishes and vests in the Executive a contractual right to the payments and
benefits to which he or she is entitled hereunder. Nothing herein contained
shall require or be deemed to require, or prohibit or be deemed to prohibit, the
Company to segregate, earmark, or otherwise set aside any funds or other assets,
in trust or otherwise, to provide for any payments to be made or required
hereunder. The Executive shall not be obligated to seek other employment in
mitigation of the amounts payable or arrangements made under any provision of
this Agreement, and the obtaining of any such other employment shall in no event
effect any reduction of the Company's obligations to make the payments and
arrangements required to be made under this Agreement, except to the extent
provided in the last sentence of Section 2.2(e).
Article IV . Enforcement and Legal Remedies
4.1. Consent to Jurisdiction. Each of the parties hereto irrevocably
consents to personal jurisdiction in any action brought in connection with this
Agreement in the United States District Court for the Central District of
California or any California court of competent jurisdiction. The parties also
consent to venue in the above forums and to the convenience of the
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<PAGE> 12
above forums. Any suit brought to enforce the provisions of this Agreement must
be brought in the aforementioned forums.
4.2 Cost of Enforcement. In the event that it shall be necessary or
desirable for the Executive to retain legal counsel in connection with the
enforcement of any or all of his or her rights to Severance Benefits under
Section 2.2 of this Agreement, and provided that the Executive substantially
prevails in the enforcement of such rights, the Company, as applicable, shall
pay (or the Executive shall be entitled to recover from the Company, as the case
may be) the Executive's reasonable attorneys' fees, costs and expenses in
connection with the enforcement of his or her rights.
Article V. Binding Effect; Successors
The rights of the parties hereunder shall inure to the benefit of their
respective successors, assigns, nominees, or other legal representatives. The
Company shall require any successor (whether direct or indirect, by purchase,
merger, reorganization, consolidation, acquisition of property or stock,
liquidation, or otherwise) to all or a significant portion of the assets of the
Company, as the case may be, by agreement in form and substance reasonably
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company, as the
case may be, would be required to perform if no such succession had taken place.
Regardless of whether such agreement is executed, this Agreement shall be
binding upon any successor in accordance with the operation of law and such
successor shall be deemed the "Company", as the case may be, for purposes of
this Agreement.
Article VI. Term of Agreement
The term of this Agreement shall commence on the Effective Date and
shall continue in effect for three (3) full years (the "Term") unless further
extended as provided in this Article. The Term of this Agreement shall be
automatically and without action by either party extended for one additional
calendar month on the last business day of each calendar month so that at any
given time there are no fewer than 35 nor more than 36 months remaining unless
one party gives written notice to the other that it no longer wishes to extend
the Term of this Agreement, after which written notice, the Term shall not be
further extended except as may be provided in the following sentence. However,
in the event a Change in Control occurs during the Term, this Agreement will
remain in effect for the longer of: (i) thirty-six (36) months beyond the month
in which such Change in Control occurred; or (ii) until all obligations of the
Company hereunder have been fulfilled and all benefits required hereunder have
been paid to the Executive or other party entitled thereto.
Article VII. Miscellaneous
7.1 Employment Status. Neither this Agreement nor any provision hereof
shall be deemed to create or confer upon the Executive any right to be retained
in the employ of the Company or any subsidiary or other affiliate thereof.
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<PAGE> 13
7.2 Beneficiaries. The Executive may designate one or more persons or
entities as the primary and/or contingent Beneficiaries of any Severance
Benefits owing to the Executive under this Agreement. Such designation must be
in the form of a signed writing acceptable to the Board of Directors of the
Company. The Executive may make or change such designation at any time.
7.3 Entire Agreement. This Agreement contains the entire understanding
of the Company and the Executive with respect to the subject matter hereof. Any
payments actually made under this Agreement in the event of the Executive's
termination of employment shall be in lieu of any severance benefits payable
under any severance plan, program, or policy of the Company to which the
Executive might otherwise be entitled.
7.4 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular, and the singular shall include the plural.
7.5 Notices. All notices, requests, demands, and other communications
hereunder must be in writing and shall be deemed to have been duly given if
delivered by hand or mailed within the continental United States by first-class
certified mail, return receipt requested, postage prepaid, to the other party,
addressed as follows:
(a) If to the Company:
Teledyne Technologies Incorporated
2049 Century Park East
15th Floor
Los Angeles, California 90067
Attn: Senior Vice President, General Counsel and Secretary
(b) If to Executive, to him or her at the address set forth at the end
of this Agreement. Addresses may be changed by written notice sent to the other
party at the last recorded address of that party.
7.6 Execution in Counterparts. The parties hereto in counterparts may
execute this Agreement, each of which shall be deemed to be original, but all
such counterparts shall constitute one and the same instrument, and all
signatures need not appear on any one counterpart.
7.7. Severability. In the event any provision of this Agreement shall
be held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Agreement, and the Agreement shall be
construed and enforced as if the illegal or invalid provision had not been
included. Further, the captions of this Agreement are for convenience of
reference and not part of the provisions hereof and shall have no force and
effect.
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<PAGE> 14
7.8. Modification. No provision of this Agreement may be modified,
waived, or discharged unless such modification, waiver, or discharge is agreed
to in writing and signed by the Executive and on behalf of the Company.
7.9 Applicable Law. To the extent not preempted by the laws of the
United States, the laws of the State of California, other than the conflict of
law provisions thereof, shall be the controlling laws in all matters relating to
this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
TELEDYNE TECHNOLOGIES INCORPORATED
By:____________________________________
Name:__________________________________
Title:_________________________________
EXECUTIVE
_______________________________________
Name:
Address:
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<PAGE> 1
Exhibit 10.10
TELEDYNE TECHNOLOGIES INCORPORATED
EXECUTIVE DEFERRED COMPENSATION PLAN
as effective November 29, 1999
<PAGE> 2
TABLE OF CONTENTS
1 PURPOSE...................................................1
2 DEFINITIONS...............................................1
3 PARTICIPATION.............................................4
4 DEFERRAL ELECTIONS........................................4
5 PARTICIPANT ACCOUNTS......................................6
6 VESTING...................................................7
7 DISTRIBUTIONS.............................................7
8 PRE-DISTRIBUTION DEATH BENEFIT............................9
9 ADMINISTRATION...........................................10
10 MISCELLANEOUS............................................12
<PAGE> 3
1 PURPOSE. The Teledyne Technologies Incorporated Executive Deferred
Compensation Plan (the "Plan") is established initially to provide benefits to
employees of Teledyne Technologies Incorporated who were employees of Allegheny
Teledyne Incorporated or its subsidiaries and participated in the Allegheny
Teledyne Incorporated Executive Deferred Compensation Plan. This Plan accepted
the benefit payment obligations of the Allegheny Teledyne Incorporated Executive
Deferred Compensation Plan (the Prior Plan as defined below) with respect to
former participants in the ATI Plan who became employees of Teledyne
Technologies Incorporated or any of its subsidiaries on or within sixty days of
the Effective Date. Following the Effective Date, Eligible Employees may
participate under the terms and conditions of this Plan with respect to their
service to and compensation from Teledyne Technologies Incorporated. The
Teledyne Technologies Incorporated Executive Deferred Compensation Plan is an
unfunded plan maintained for the purpose of providing deferred compensation for
a select group of management or highly compensated employees, within the meaning
of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and 29 CFR 2520.104-23.
2 DEFINITIONS.
2.1 "Account" shall mean the bookkeeping account maintained by the
Committee for each Participant that is credited with (1) the portion of the
Participant's Salary that he elects to defer (including transfers to this Plan
from the Allegheny Teledyne Incorporated Executive Deferred Compensation Plan),
(2) the portion of the Participant's Bonus that he elects to defer, (3) portions
of the Participant's account balance under the Prior Plan and (4) earnings on
such amounts.
2.2 "Beneficiary" shall mean the Participant's spouse or, if the
Participant has no spouse or the spouse consents in writing in the presence of a
notary public, the person or persons, trustee, or other legal entity or entities
last designated by the Participant on a form substantially as set forth in
Exhibit "A" attached hereto to receive the benefits specified hereunder in the
event of the Participant's death. If the Participant has not designated a
beneficiary or if no person designated as a beneficiary survives the
Participant, the payment of the Participant's benefits under this Plan following
his death shall be made (a) to the Participant's spouse, if living, (b) if his
spouse is not then living, to his then living issue by right of representation,
(c) if neither his spouse nor his issue are then living, to his then living
parents, or (d) if none of the above are then living, to his estate.
Notwithstanding the foregoing, the Beneficiary of an Insurable Participant under
the Plan must be the same as the beneficiary designated with respect to the
benefit provided under Article 8 hereof if the Insurable Participant dies prior
to his Payment Eligibility Date.
2.3 "Bonus" shall mean the award or awards payable under the Teledyne
Technologies Incorporated management bonus program (or the comparable annual
incentive plan of a subsidiary, if applicable, and any predecessor or successor
program to any such annual incentive plan).
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<PAGE> 4
2.4 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.5 "Committee" shall mean the administrative committee appointed
pursuant to Section 9.1 of the Plan.
2.6 "Company" shall mean Teledyne Technologies Incorporated, a Delaware
corporation, and any corporation which is a subsidiary of the corporation
(within the meaning of Code Section 424(f)) involving Teledyne Technologies
Incorporated, unless the context requires otherwise.
2.7 "Compensation" shall mean the Salary and Bonus paid by the Company
to a Participant.
2.8 "Director of Human Resources" shall mean such person as the
Committee may from time to time designate and, in the absence of such
designation, the Chief Financial Officer of Teledyne Technologies Incorporated.
2.09 "Effective Date" shall mean November 29, 1999.
2.10 "Eligible Employee" shall mean:
2.10.1 For a Plan Year other than the short Plan Year covering
the period from the Effective Date to December 31, 1999, each employee
of the Company who: (a) as of December 1 of the preceding Plan Year
holds the title of president of an operating company; or (b) received
Compensation during the preceding Plan Year at least equal to the
amount specified in Section 414(q)(1)(B) of the Code, as such amount is
adjusted for such calendar year by the Secretary of the Treasury for
increases in the cost of living.
2.10.2 For the short Plan Year of the Plan covering the period
from the Effective Date to December 31, 1999, each employee of the
Company who: (a) as of the Effective Date holds the title of president
of an operating company; or (b) for employees of Teledyne Technologies
Incorporated who were participants in the Allegheny Teledyne
Incorporated Executive Deferred Compensation Plan prior to the
Effective Date, received (from the Company and Allegheny Teledyne
Incorporated or an affiliate) or is expected to receive Compensation
during the applicable calendar year at least equal to the amount
specified in Section 414(q)(1)(B) of the Code, as such amount is
adjusted for such calendar year by the Secretary of the Treasury for
increases in the cost of living.
2.10.3 For any Plan Year beginning on or after the Effective
Date which includes an employee's date of hire, each employee of the
Company who: (a) as of the employee's date of hire holds the title of
president of an operating company; or (b) receives Compensation during
such Plan Year at least equal to the amount specified in Section
4.14(q)(1)(B) of the Code. For purposes of this Section 2.10.3 only,
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<PAGE> 5
Compensation shall include Salary that would be paid if the employee's
Salary were paid for the full Plan Year.
2.11 "Fund" or "Funds" shall mean one or more of the mutual funds,
investment portfolios or contracts selected by the Committee pursuant to Section
4.2.2.
2.12 "Initial Election Period" shall mean the first thirty days of the
first Plan Year during which an employee of the Company is an Eligible Employee
or, in the case of an employee who is an Eligible Employee on his date of hire
after the Effective Date, the first thirty days after such date of hire;
provided, however, for the short Plan Year beginning on November 29, 1999 and
ending on December 31, 1999, the Committee may keep in effect any election made
for the 1999 Plan Year of the Prior Plan.
2.13 "Insurable Participant" shall mean a Participant who satisfies
underwriting standards for the issuance of life insurance determined by the
insurance company selected by the Company to provide the pre-distribution death
benefit described in Article 8.
2.14 "Interest Rate" shall mean, for each Fund, the net rate, expressed
as a percent, of gain or loss on the assets of such Fund for the applicable
period.
2.15 "Participant" shall mean any Eligible Employee who, prior to the
Effective Date, has not announced his intention to retire and who (a) elects to
defer Compensation in accordance with Section 4.1, or (b) has an account balance
under the Prior Plan.
2.16 "Payment Eligibility Date" shall mean the earlier of (i) the date
selected by an Eligible Employee on his Deferred Election form, but no such date
shall be before the end of the Plan Year which is three calendar years after the
end of the Plan Year for which such election is made or (ii) the first day of
the month following the end of the calendar quarter in which a Participant
terminates employment or dies. A Participant receiving benefits under the
Company's short-term disability plan or on an approved leave of absence shall
not be deemed to have terminated employment for purposes of the Plan.
2.17 "Plan" shall mean the Teledyne Technologies Incorporated
Executive Deferred Compensation Plan as set forth herein, or as amended from
time to time. This Plan is the successor plan to the Allegheny Teledyne
Incorporated Executive Deferred Compensation Plan (the Prior Plan as defined
below) with respect to Participants in the Prior Plan who, as of the Effective
Date, became employees of the Company in connection with the spin off to
stockholders of Allegheny Teledyne Incorporated of the stock of the Company on
November 29, 1999. The Prior Plan was adopted Allegheny Teledyne Incorporated in
1996 and the Prior Plan assumed the payment obligations of the Teledyne, Inc.
Executive Deferred Compensation Plan with regard to then Participants in such
plan. As of the Effective Date, the Company assumed all payment obligations of
benefits accrued by employees of the Company on November 29, 1999, whether such
benefits were accrued under the Prior Plan or its predecessor.
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<PAGE> 6
2.18 "Plan Year" shall mean the calendar year, except that the initial
Plan Year shall be the period from the Effective Date through December 31, 1999.
2.19 "Prior Plan" shall mean, with respect to employees of the Company
as of November 29, 1999 who participated in the Prior Plan on or before November
29, 1999, the Allegheny Teledyne Incorporated Executive Deferred Compensation
Plan, and its predecessor plan, the Teledyne, Inc. Executive Deferred
Compensation Plan.
2.20 "Retirement" shall mean the date as of which a Participant
commences to receive a benefit under a pension plan maintained by the Company,
the date as of which a Participant commences to receive disability benefits
under the Company's long-term disability plan or, in the case of a Participant
who is not entitled to benefits under the Company's long-term disability plan,
the date the Committee determines is the first date the Participant satisfies
the definition of disability set forth in that plan.
2.21 "Salary" shall mean the base rate of pay that an employee is
entitled to receive for services rendered to the Company.
3 PARTICIPATION. An Eligible Employee who, prior to the Effective Date, has not
announced his intention to retire shall become a Participant in the Plan on (a)
the first day of the first pay period for which he elects to defer a portion of
his Compensation in accordance with Section 4.1, or (b) the Effective Date if he
has an account balance under the Prior Plan.
4 DEFERRAL ELECTIONS.
4.1 Elections to Defer Compensation.
4.1.1 General Rule. An Eligible Employee may elect to defer,
in increments of 1% and subject to the limitation set forth herein, up to 50% of
his Salary and, separately, up to 100% of his Bonus for the calendar year
following the calendar year in which a written election, on a form approved by
the Director of Human Resources, to defer Salary and/or Bonus is delivered to
the Director of Human Resources. Each election to defer Salary and/or Bonus
shall be effective for only the next succeeding calendar, shall expire on the
last day of the calendar year next following its delivery and shall specify the
Participant's elections as to distribution time and form from among those then
permitted under the Plan. No election may be for less than 5% of the Salary or
Bonus payment, respectively, and no election shall exceed an amount which would
prevent the Eligible Employee from making required or elected contributions
under employee benefit plans or to have required federal, state and local income
or payroll tax payments made or such other amounts as determined appropriate by
the Committee. An election to defer Salary or Bonus with respect to services
rendered during a calendar year must be filed with the Director of Human
Resources on or before December 1 of the preceding calendar year.
4.1.2 Committee Discretion. Notwithstanding Section 4.1.1 and
in addition to any other power or discretion granted to the Committee, the
Committee may, in its sole discretion and on a case-by-case basis, permit one or
more Eligible Employees to elect to defer
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<PAGE> 7
more than 50% of his Salary. In the event that the Committee permits one or more
Eligible Employees to defer more than 50% of his Salary, the amount permitted to
be deferred shall not exceed the amount necessary to permit the Eligible
Employee to make contributions, as elected by or required of the Eligible
Employee, under employee benefit plans, and to have withheld applicable federal,
state and local income or payroll tax and such other amounts as determined
appropriate by the Committee.
4.1.2 Initial Election Period. Each Eligible Employee may
elect to defer Compensation by filing with the Director of Human Resources an
election, on a form provided by the Committee, no later than the last day of his
Initial Election Period. An election to defer Compensation during the Initial
Election Period shall be effective with respect to the Participant's Salary
earned during the first pay period beginning after the election and with respect
to the portion of the Participant's Bonus attributable to the portion of the
calendar year following the election. For the short Plan Year beginning November
29, 1999 and ending on December 31, 1999, the Committee may keep in effect any
election made by a Participant under the Prior Plan for the 1999 Plan Year of
the Prior Plan.
4.1.3 Elections other than Elections during the Initial
Election Period. Subject to the limitations of Section 4.1.2 above, any Eligible
Employee who fails to elect to defer Compensation during his Initial Election
Period may subsequently elect to defer Compensation, and any Eligible Employee
who has terminated a prior Salary deferral election may elect to again defer
Salary, by filing with the Director of Human Resources an election, on a form
provided by the Committee, to defer Compensation as described in Section 4.1.1
above. An election to defer Salary payable during a calendar year must be filed
with the Director of Human Resources on or before December 1 of the preceding
calendar year. An election to defer Bonus payable with respect to services
rendered during a calendar year must be filed with the Director of Human
Resources on or before December 1 of the preceding calendar year.
4.1.4 Duration of Salary Deferral Election. Any Salary
deferral election made under Section 4.1.2 or Section 4.1.3 shall remain in
effect, notwithstanding any change in the Participant's Salary, until changed or
terminated in accordance with the terms of this Section 4.1.2.4; provided,
however, that such election shall terminate for any Plan Year for which the
Participant is not an Eligible Employee. A Participant may increase, decrease or
terminate his Salary deferral election with respect to Salary earned during a
calendar year by filing a new election, in accordance with the terms of this
Section 4.1, with the Director of Human Resources on or before December 1 of the
preceding calendar year.
4.1.5 Duration of Bonus Deferral Election. Any Bonus deferral
election made under Section 4.1.2 or Section 4.1.3 shall be irrevocable and
shall apply only to the Bonus payable with respect to services performed during
the calendar year for which the election is made. For each subsequent calendar
year, an Eligible Employee must make a new election, subject to the limitations
set forth in this Section 4.1, to defer a percentage of his Bonus. Such election
shall be on forms provided by the Committee and shall be filed with the Director
of Human Resources on or before December 1 of the calendar year preceding the
calendar year in which the services that are to result in the Bonus are
performed.
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<PAGE> 8
4.1.6 Extension of Election Deadline. Notwithstanding the
foregoing provisions of this Section 4.1, the Committee may extend the deadline
for filing elections set forth in Sections 4.1.3, 4.1.4 and 4.1.5 from December
1 of a particular calendar year as the Committee shall determine. The Committee
shall give notice of such extension to all Eligible Employees.
4.2 Investment Elections.
4.2.1 Investment Options. The Committee shall select from time
to time the types of mutual funds, investment portfolios underlying universal
life products or contracts in which Participants' Accounts shall be deemed to be
invested. At the time an Eligible Employee first becomes a Participant, the
Participant shall file with the Director of Human Resources a form provided by
the Committee designating which of such types of mutual funds, investment
portfolios or contracts the Participant's Account shall be deemed to be invested
in for purposes of determining the amount of earnings to be credited to such
Account. In making the designation pursuant to this Section 4.2.1, the
Participant may specify that all or any portion of his Account, designated in
whole percentages, be deemed to be invested in one or more of the types of
mutual funds, investment portfolios or contracts selected by the Committee. A
Participant may change monthly the designation made under this Section 4.2.1 by
filing with the Director of Human Resources an election, on a form provided by
the Committee, at any time during a month, with such change to be effective as
of the first day of the month immediately succeeding the date on which such form
is filed. If a Participant fails to elect a type of fund under this Section
4.2.1, any prior election shall remain in effect or, if there is no prior
election of types of funds, any deferral election made by the Participant shall
be void. If a Participant who receives allocations to his Account only pursuant
to Sections 5.3 and 5.4 fails to elect a type of fund under this Section 4.2.1,
he shall be deemed to have elected the fund or contract designated by the
Committee as the default fund.
4.2.2 Committee Selection of Funds. Although the Participant
may designate the type of mutual funds, investment portfolios or contracts
pursuant to Section 4.2.1, the Committee shall select from time to time, in its
sole discretion, a commercially available fund, portfolio or contract of each of
the types selected pursuant to Section 4.2.1 to be the Funds. The Interest Rate
of each such Fund shall be used to determine the amount of earnings to be
credited to Participants' Accounts under Section 5.4.
5 PARTICIPANT ACCOUNTS. The Committee shall establish and maintain an Account
for each Participant under the Plan. Each Participant's Account shall be further
divided into separate subaccounts ("subaccounts"), each of which corresponds to
a mutual fund, investment portfolio or contract elected by the Participant in
accordance with Section 4.2. A Participant's Account shall be credited as
follows:
5.1 Salary Credits. As of the last day of each month, the Committee
shall credit the subaccounts of the Participant's Account with an amount equal
to Salary deferred by the Participant during each pay period ending in that
month in accordance with the Participant's election under Section 4.2; that is,
the portion of the Participant's deferred Salary that the
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<PAGE> 9
Participant has elected to be deemed to be invested in a certain type of Fund
shall be credited to the subaccount corresponding to that Fund.
5.2 Bonus Credits. As of the last day of the month in which the Bonus
is payable, the Committee shall credit the subaccounts of the Participant's
Account with an amount equal to the portion of the Bonus deferred by the
Participant in accordance with the Participant's election under Section 4.2;
that is, the portion of the Participant's deferred Bonus that the Participant
has elected to be deemed to be invested in a particular type of Fund shall be
credited to the subaccount corresponding to that Fund.
5.3 Prior Plan Credits. As of the Effective Date, the Committee shall
credit the subaccounts of the Participant's Account with an amount equal to the
Participant's account balance under the Prior Plan as of the Effective Date.
5.4 Earnings Credits. As of the last day of each month in which any
amount remains credited to a Participant's Account, each subaccount of a
Participant's Account shall be credited with earnings in an amount equal to that
determined by multiplying the balance credited to such subaccount as of the last
day of the preceding month by the Interest Rate for that month for the
corresponding Fund selected by the Company pursuant to Section 4.2.2.
6 VESTING. A Participant's Account shall be 100 percent vested at all times.
7 DISTRIBUTIONS.
7.1 Amount and Time of Distribution.
7.1.1 Payment as of Payment Eligibility Date. Each Participant
(or, in the case of his death, his Beneficiary) shall be entitled to receive a
distribution of benefits under this Plan as soon as practicable following his
Payment Eligibility Date. The amount payable to a Participant shall be the
amount credited to the Participant's Account as of his Payment Eligibility Date.
7.1.2 Payment Prior to Payment Eligibility Date. A Participant
may elect by filing with the Director of Human Resources a form substantially as
set forth in Exhibit "B" attached hereto to receive an amount equal to ninety
percent of his Account balance at any time prior to his Payment Eligibility
Date. If the Participant makes an election described in this Section 7.1.2: the
balance of the Participant's Account not distributed to the Participant shall be
forfeited to the Company; the amount to which he is entitled under this Section
7.1.2 shall be distributed to the Participant in a single lump sum within thirty
days following such election; the Participant shall be prohibited from
participating in the Plan for the balance of the Plan Year in which this
distribution is made and the following Plan Year; and any elections previously
made pursuant to Article 4 of this Plan shall cease to be effective.
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<PAGE> 10
7.2 Form of Distribution.
7.2.1 Pre-Retirement Distributions. If a Participant's Payment
Eligibility Date occurs prior to the date of his Retirement, the Participant's
Account shall be paid to such Participant in the form of payment elected by the
Participant from among the forms available under Section 7.2.3 or, if no
election is made on a timely basis, in a single lump sum.
7.2.2 Post-Retirement Distributions. If a Participant's
Payment Eligibility Date occurs on or after the date of his Retirement, the
Participant's Account shall be paid to such Participant or, in the event of the
Participant's death on or after his Payment Eligibility Date, his Beneficiary in
the form of sixty quarterly installments. Such installment payments shall
commence on the Participant's Payment Eligibility Date or as soon thereafter as
is practicable and shall continue on the first day of each of the 59 calendar
quarters thereafter.
7.2.3 Election of Optional Form of Distributions.
Notwithstanding the provisions of Section 7.2.2, a Participant whose Payment
Eligibility Date occurs on or after the date of his Retirement may elect to
receive distribution of his Account balance in a single lump sum, twenty
quarterly installments, or forty quarterly installments provided that at least
one year prior to his Payment Eligibility Date, the Director of Human Resources
receives from the Participant a notice, in substantially the form of Exhibit "C"
attached hereto, that the Participant elects to receive payment in one of such
optional forms. Any such payment shall be made or commence to be made as of the
Participant's Payment Eligibility Date. Any election made pursuant to this
Section 7.2.3 may be revoked by filing notice of such revocation with the
Director of Human Resources on or before the date which is one year prior to the
Participant's Payment Eligibility Date.
7.2.4 Method for Calculating Installments. If a Participant or
Beneficiary receives payment of his Account balance in installments pursuant to
Section 7.2.2 or 7.2.3, the amount of each quarterly installment payable during
the Plan Year which includes the Participant's Payment Eligibility Date shall
equal the Participant's Account balance on the Payment Eligibility Date divided
by the total number of installments the Participant or Beneficiary is scheduled
to receive. The amount of each quarterly installment payable during each
succeeding Plan Year, other than the last Plan Year in which the Participant or
Beneficiary receives installment payments under the Plan, shall equal the
Participant's Account balance on September 30 of the preceding Plan Year divided
by the number of installments remaining to be paid after the last day of such
preceding Plan Year. The amount of each quarterly installment payable during the
last Plan Year in which the Participant or Beneficiary receives installment
payments under the Plan shall equal the Participant's Account balance on the
last day of the second preceding calendar quarter divided by the number of
installments remaining to be paid after the last day of the preceding calendar
quarter, except that the final quarterly installment shall be equal to the
remaining balance in the Participant's Account.
7.2.5 Small Account Balances. Notwithstanding any other
provision of this Section 7.2, if a Participant's Account balance on his Payment
Eligibility Date is $30,000 or less, such Account balance shall be paid in a
single lump sum.
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<PAGE> 11
8 PRE-DISTRIBUTION DEATH BENEFIT.
8.1 Amount of Benefit. The Company shall own and maintain one or more
life insurance policies on the life of each Insurable Participant (collectively,
the "Policy") each with a death benefit no less than the death benefit payable
under this Section 8.1. Until an employee of the Company (other than a
Participant who has already been determined not to be an Insurable Participant)
completes an application for the Policy, any deferral elections made by the
employee pursuant to Article 4 hereof shall be void. If an Insurable Participant
shall die at least sixty days following the first day of the month in which
allocations pursuant to Article 5 of the Plan are first made to his Account and
prior to his Payment Eligibility Date, his Beneficiary shall receive directly
from the insurance company issuing the Policy in a single lump sum an amount
equal the lesser of (1) or (2):
(1) the greatest of (i) the amount of insurance coverage in effect
on December 31, 1998, if applicable, (ii) the Participant's
Account balance as of a relevant time or (iii) $1,000,000; or
(2) the greater of: (i) ten times the amounts allocated to the
Insurable Participant's Account pursuant to Sections 5.1
and/or 5.2 during the first twelve months in which the
Insurable Participant receives allocations to his Account; or
(ii) two times the Insurable Participant's Account balance as
of his date of death if the Insurable Participant has not
attained age 56 at the date of death or, if the Insurable
Participant is age 56 or older at death, 1.5 times the
Insurable Participant's Account balance as of his date of
death.
8.2 Other Rules.
8.2.1 Reduction of Account Balance. Notwithstanding anything
contained herein to the contrary, any benefits otherwise payable with respect to
an Insurable Participant under this Plan shall be reduced by the value of
benefits received by the Insurable Participant's Beneficiary under the Policy.
8.2.2 Death on or After Payment Eligibility Date. If an
Insurable Participant shall die on or after his Payment Eligibility Date, his
Beneficiary shall receive no benefits under the Policy and any death benefits
thereunder shall be paid to the Company.
8.2.3 Effect of Account Distribution Prior to Payment
Eligibility Date. If an Insurable Participant receives a distribution pursuant
to Section 7.1.2, for purposes of Section 8.1.1, the first twelve months in
which he receives allocations to his Account shall be deemed to be the first
Plan Year after such distribution in which he receives allocations under Section
5.1 or 5.2 and, for purposes of Section 8.1.2, the Insurable Participant's
Account shall include only amounts allocated to the Insurable Participant's
Account following such distribution and prior to his date of death.
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<PAGE> 12
8.2.4 Death Prior to Eligibility for Pre-Distribution Death
Benefit. If a Participant should die before completing the sixty-day eligibility
period for the pre-distribution death benefit set forth in Section 8.1, his
Beneficiary shall receive only the balance in the Participant's Account as of
the Participant's Payment Eligibility Date.
8.2.5 Failure to Remain Insurable. Notwithstanding the
foregoing provisions of this Article 8, if a Participant satisfies the
definition of an Insurable Participant (as set forth in Section 2.14) at the
time he becomes a Participant, but fails to satisfy such definition thereafter,
the pre-distribution death benefit payable to the Participant's Beneficiary
shall equal the lesser of:
(1) the pre-distribution death benefit determined
under the foregoing provisions of this Article 8; or
(2) the death benefit under the Policy payable to the
Participant's Beneficiary at the time the Participant fails to satisfy the
definition of an Insurable Participant.
9 ADMINISTRATION.
9.1 Committee Action. The Plan shall be administered by the Committee,
consisting of at least three members, appointed by and holding office at the
pleasure of the Chief Financial Officer of Teledyne Technologies Incorporated.
The Committee shall act at meetings by an affirmative vote of a majority of the
members of the Committee. Any action permitted to be taken at a meeting may be
taken without a meeting if a written consent to the action is signed by all
members of the Committee and such written consent is filed with the minutes of
the proceedings of the Committee. A member of the Committee shall not vote or
act upon any matter which relates solely to himself as a Participant. The
Chairman or any other member or members of the Committee designated by the
Chairman may execute any certificate or other written direction on behalf of the
Committee.
9.2 Powers and Duties of the Committee. The Committee, on behalf of the
Participants and their Beneficiaries, shall enforce the Plan in accordance with
its terms, shall be charged with the general administration of the Plan, and
shall have all powers necessary to accomplish its purposes, including, but not
by way of limitation, the following:
o To determine all questions relating to the
eligibility of employees to participate;
o To construe and interpret the terms and provisions of
this Plan;
o To compute and certify to the amount and kind of
benefits payable to Participants and their
Beneficiaries;
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<PAGE> 13
o To maintain all records that may be necessary for the
administration of the Plan;
o To provide for the disclosure of all information and
the filing or provision of all reports and statements
to Participants, Beneficiaries or governmental
agencies as shall be required by law;
o To make and publish such rules for the regulation of
the Plan and procedures for the administration of the
Plan as are not inconsistent with the terms hereof;
and
o To appoint a plan administrator or, any other agent,
and to delegate to such person such powers and duties
in connection with the administration of the Plan as
the Committee may from time to time prescribe.
9.3 Construction and Interpretation. The Committee shall have full
discretion to construe and interpret the terms and provisions of this Plan,
which interpretation or construction shall be final and binding on all parties,
including but not limited to the Company and any Participant or Beneficiary. The
Committee shall administer such terms and provisions in a uniform and
nondiscriminatory manner and in full accordance with any and all laws applicable
to the Plan.
9.4 Information. To enable the Committee to perform its functions,
the Company shall supply full and timely information to the Committee on all
matters relating to the Compensation of all Participants, their death or other
cause of termination, and such other pertinent facts as the Committee may
require.
9.5 Compensation, Expenses and Indemnity.
9.5.1 The members of the Committee shall serve without
compensation for their services hereunder.
9.5.2 The Committee is authorized at the expense of the
Company to employ such legal counsel as it may deem advisable to assist in the
performance of its duties hereunder. Expenses and fees in connection with the
administration of the Plan shall be paid by the Company.
9.5.3 The Company shall indemnify and save harmless the
Committee and each member thereof, and the Chief Financial Officer, the Director
of Human Resources, and any delegate of the Committee who is an employee of the
Company against any and all expenses, liabilities and claims, including legal
fees to defend against such liabilities and claims, arising out of their
discharge of responsibilities under or incident to the Plan, other than expenses
and liabilities arising out of willful misconduct. This indemnity shall not
preclude such further indemnities as may be available under insurance purchased
by the Company or provided by the
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<PAGE> 14
Company under any bylaw, agreement or otherwise, as such indemnities are
permitted under applicable law.
9.6 Quarterly Statements. Under procedures established by the
Committee, a Participant shall receive quarterly statements with respect to such
Participant's Account.
10 MISCELLANEOUS.
10.1 Unsecured General Creditor. Participants and their Beneficiaries,
heirs, successors, and assigns shall have no legal or equitable rights, claims,
or interest in any specific property or assets of the Company. No assets of the
Company shall be held in any way as collateral security for the fulfilling of
the obligations of the Company under this Plan. The Company's obligation under
the Plan shall be merely that of an unfunded and unsecured promise of the
Company to pay money in the future, and the rights of the Participants and
Beneficiaries shall be no greater than those of unsecured general creditors. The
Plan is intended to be unfunded for tax purposes and for purposes of Title I of
ERISA.
10.2 Restriction Against Assignment. The Company shall pay all amounts
payable hereunder only to the person or persons designated by the Plan and not
to any other person or corporation. No part of a Participant's Account shall be
liable for the debts, contracts, or engagements of any Participant, his
Beneficiary, or successors in interest, nor shall a Participant's Account be
subject to execution by levy, attachment, or garnishment or by any other legal
or equitable proceeding, nor shall any such person have any right to alienate,
anticipate, commute, pledge, encumber, or assign any benefits or payments
hereunder in any manner whatsoever.
10.3 No Right to Continued Employment. Neither an employee's
participation in the Plan, nor his rights to his Account shall confer upon such
employee any right with respect to continuance of employment by or receipt of
Bonuses from the Company, nor shall such items interfere in any way with the
right of the Company to terminate such employee's employment or alter such
employee's Compensation at any time.
10.4 Withholding. There shall be deducted from each payment made under
the Plan or, if such payment is not large enough, from any other funds payable
to the Participant, all taxes which the Company determines are required to be
withheld with respect to such payment under the Plan. The Company shall have the
right to reduce any payment by the amount of cash sufficient to provide the
amount of said taxes.
10.5 Amendment, Modification, Suspension or Termination. The Personnel
and Compensation Committee of the Company's Board of Directors may amend,
modify, suspend or terminate the Plan in whole or in part except that no
amendment, modification, suspension or termination shall reduce any amounts then
credited to a Participant's Account. The Company shall provide notice of such
action to all Participants and Beneficiaries of deceased Participants.
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<PAGE> 15
10.6 Governing Law. Except to the extent that it is preempted by
federal law, this Plan shall be construed, governed and administered in
accordance with the laws of the State of Delaware.
10.7 Receipt or Release. Any payment to a Participant or the
Participant's Beneficiary in accordance with the provisions of the Plan,
including but not limited to any payment from an insurance company, shall, to
the extent thereof, be in full satisfaction of all claims under the Plan against
the Committee and the Company. Any payment, whether by the Company or an
insurance company, to a Participant or the Participant's Beneficiary of an
amount described in Section 5.3 shall, to the extent thereof, be in full
satisfaction of all claims to such amount which the Participant or his
Beneficiary or any beneficiary designated in accordance with the Prior Plan may
have against the Company or any other person under the Prior Plan. The Committee
may require such Participant or Beneficiary, as a condition precedent to such
payment, to execute a receipt and release to such effect. The Company has
assumed the payment liabilities with respect to Participants in this Plan from
the Prior Plan and indemnified Allegheny Teledyne Incorporated from any and all
payment liabilities with respect to the amount of benefits accrued prior to the
Effective Date.
10.8 Payments on Behalf of Minors. In the event that any amount becomes
payable under the Plan to a minor or a person who, in the sole judgment of the
Committee, is considered by reason of physical or mental condition to be unable
to give a valid receipt therefore, the Committee may direct that such payment be
made only to the conservator or the guardian of the estate of such person
appointed by a court of competent jurisdiction or such other person or in such
other manner as the Committee determines is necessary to assure that the payment
will legally discharge the Plan's obligation to such person. Any payment made
pursuant to such determination shall constitute a full release and discharge of
the Committee and the Company.
10.9 Miscellaneous. All pronouns and any variations thereof contained
herein shall be deemed to refer to masculine or feminine, singular or plural, as
the identity of the person or persons may require. The headings used in this
Plan are for convenience only and shall not be construed in interpreting this
Plan.
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<PAGE> 16
EXHIBIT A
BENEFICIARY DESIGNATION
I hereby designate the following individual or entity to receive any
benefits to which I am entitled under the Teledyne Technologies Incorporated
Executive Deferred Compensation Plan if such benefits become payable after my
death:
Name:
Address:
Relationship:
Social Security or Tax Identification Number:
I understand and acknowledge that if I am married on the date of my death and I
have designated above someone other than the individual who is my spouse on the
date of my death, such designation shall not be effective unless my spouse
consents in writing as set forth on the following page in the presence of a
notary.
Date Signature
Printed Name
<PAGE> 17
SPOUSAL CONSENT TO BENEFICIARY DESIGNATION
I am the spouse of _____________________. I hereby consent to the
designation made by my spouse of ____________________ as the beneficiary under
the Teledyne Technologies Incorporated Executive Deferred Compensation Plan. I
understand that this consent is valid only with respect to the naming of the
beneficiary indicated on the prior page and that the designation of any other
beneficiary will not be valid unless I consent in writing to such designation.
This consent is being voluntarily given, and no undue influence or
coercion has been exercised in connection with my consent to the designation
made by my spouse of the beneficiary named on the prior page rather than myself
as the beneficiary under the Teledyne Technologies Incorporated Executive
Deferred Compensation Plan.
Date Spouse's Signature
Print Spouse's Name
State of __________________
County of__________________
On __________ (date) before me _______________(name, title) personally
appeared ___________________________ (name of spouse)
personally known to me (or)
proved to me on the basis of
satisfactory evidence
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person executed the
instrument.
WITNESS my hand and official seal.
Signature of Notary
<PAGE> 18
EXHIBIT B
DISTRIBUTION PRIOR TO PAYMENT ELIGIBILITY DATE
Pursuant to Section 7.1.2 of the Teledyne Technologies Incorporated
Executive Deferred Compensation Plan (the "Plan"), I hereby elect to receive
distribution of ninety percent (90%) of my account balance under the Plan within
thirty days of the receipt of this election by the Director of Human Resources
of Teledyne Technologies Incorporated.
I understand and acknowledge that as a result of this election:
1. The balance of my account under the Plan not distributed to me shall
be forfeited to Teledyne Technologies Incorporated;
2. I shall be prohibited from participating in the Plan for the balance
of the Plan Year in which this distribution is made and the following Plan Year;
3. Any deferral elections previously made pursuant to Article 4 of the
Plan shall cease to be effective; and
4. The pre-distribution death benefit provided under the Plan shall
cease to be available to my beneficiary following this distribution. If I resume
participation in the Plan to the extent permitted by the Plan in accordance with
paragraph 2 above, my beneficiary may again be eligible to receive a death
benefit under the Plan but such death benefit shall be computed only with
respect to allocations to my account under the Plan following such distribution
and prior to my date of death.
Date Signature
Printed Name
Received by Teledyne Technologies Incorporated
on
by
<PAGE> 19
EXHIBIT C
ELECTION OF FORM OF DISTRIBUTION
Pursuant to Section 7.2.3 of the Teledyne Technologies Incorporated
Executive Deferred Compensation Plan (the "Plan"), I hereby notify Teledyne
Technologies Incorporated that instead of receiving distribution of my Account
balance under the Plan in sixty quarterly installments, I hereby elect that my
Account balance under the Plan be paid to me in one of the following forms:
forty quarterly installments;
twenty quarterly installments; or
a single lump sum.
I understand that in order for this election to be effective:
1. This notice must be received by Teledyne Technologies Incorporated,
c/o the Director of Human Resources, 2049 Century Park East, 15th Floor, Los
Angeles, California 90067, at least one year prior to my Payment Eligibility
Date; and
2. My Payment Eligibility Date, as that term is defined in the Plan,
must occur on or after the date as of which I commence to receive a benefit
under a pension plan maintained by Teledyne Technologies Incorporated or a
subsidiary, the date as of which I commence to receive disability benefits under
the long-term disability plan of Teledyne Technologies Incorporated or a
subsidiary, or, if I am not entitled to benefits under the long-term disability
plan of Teledyne Technologies Incorporated or a subsidiary, the date the
Administrative Committee of the Plan determines is the first date I satisfy the
definition of disability set forth in such disability plan.
Date Signature
Printed Name
Received by Teledyne Technologies
Incorporated
on
by
<PAGE> 1
Exhibit 10.11
TELEDYNE TECHNOLOGIES INCORPORATED
PENSION EQUALIZATION/BENEFIT RESTORATION PLAN
As of November 29, 1999
<PAGE> 2
PURPOSE
The purpose of the Teledyne Technologies Incorporated Pension
Equalization/Benefit Restoration Plan is to provide certain corporate employees
of Teledyne Technologies Incorporated who participate in qualified pension and
profit sharing plans with benefits and retirement income equal to that which
they would have received (i) but for the limitations imposed on plans which are
qualified within the meaning of Section 401(a) of the Code by Sections
401(a)(17), 401(k), 401(m), 402(g) or 415 of the Internal Revenue Code of 1986,
as amended, and (ii) but for participation in the Teledyne Technologies
Incorporated Executive Deferred Compensation Plan (the "Executive Deferred
Compensation Plan"), by supplementing, on an unfunded basis, amounts payable
under such qualified plans with amounts paid under this Plan.
Allegheny Ludlum Corporation and, thereafter, Allegheny Teledyne
Incorporated ("ATI") sponsored a Benefit Restoration Plan for several years
prior to the spin off of the Corporation from ATI. At that time, the Corporation
adopted this Plan, permitted each participant in the Prior Plan hired by the
Corporation to participate in this Plan and credited each such person with an
initial balance equal to his or her balance under the Prior Plan.
ARTICLE I. DEFINITIONS
1.01 "Administrator" shall mean the person or committee appointed by
the Board for such purpose under Article VI.
1.02 "Code" shall mean the Internal Revenue Code of 1986, as the same
shall be amended from time to time.
1.03 "Corporation" shall mean Teledyne Technologies Incorporated, a
Delaware corporation.
1.04 "Defined Benefit Portion" shall mean that portion of this Plan
that relates to restoration of benefits under the Pension Plan.
1.05 "DCP" shall mean the Teledyne Technologies Incorporated Executive
Deferred Compensation Plan.
1.06 "Defined Contribution Portion" shall mean that portion of this
Plan which relates to the restoration of aggregate benefits under the Teledyne
Technologies Incorporated 401(k) Plan or such other Defined Contribution Plan in
effect from time to time.
1.07 "Employee" shall mean any employee of the Corporation.
1.08 "Limitations" shall mean any limitation, with respect to a
qualified plan, within the meaning of Section 401(a) of the Code, on the amount
of contributions or the accrual or payment of benefits to or on behalf of a
Participant as imposed under Section 401(a)(17), Section 401(k),
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<PAGE> 3
Section 401(m), Section 402(g), Section 415 and/or under any other Section of
the Code hereinafter adopted which shall be the successor of any of them or have
the effect of any of them.
1.09 "Matching Contributions" shall mean the contributions made by the
Corporation under the Defined Contribution Portion.
1.10 "Participant" shall mean any Employee who meets the conditions for
participation set forth in Article III.
1.11 "Pension Plan" shall mean the Teledyne Technologies Incorporated
Pension Plan, as in effect as of the relevant time, or its predecessor the
Allegheny Teledyne Incorporated Pension Plan.
1.12 "Plan" shall mean this Teledyne Technologies Incorporated Pension
Equalization/ Benefit Restoration Plan.
1.13. "Prior Plan" shall mean the Allegheny Teledyne Incorporated
Benefit Restoration Plan.
ARTICLE II. EFFECTIVE DATE
The Effective Date of this Plan is November 29, 1999.
ARTICLE III. PARTICIPATION
3.01 Group Eligible to Participate. Participation is limited to that
group of highly compensated Employees eligible to participate in the Annual
Incentive Program, or a successor plan as in effect from time to time comparable
to the Annual Incentive Plan or its successor.
3.02 Contributions by Participants. Participants shall not be permitted
to make contributions in any form to this Plan.
ARTICLE IV. DEFINED BENEFIT PORTION
4.01 Restoration of Pension Plan Benefits. In respect of each
Participant who participates or participated in the Pension Plan, the
Corporation agrees to pay to the Participant, without requirement for
Participant contribution upon his retirement, a retirement benefit equal to the
difference between (a) and (b):
(a) the maximum life annuity to which the participant would be
entitled under the Pension Plan upon his or her retirement
determined (i) without regard to the Limitations and (ii) by
including as compensation for purposes of the Pension Plan formula
for benefits, as if paid in the year deferred, Participant
deferrals under the DCP; less
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<PAGE> 4
(b) the life annuity which is actually paid to the participant under
the Pension Plan after giving effect to the Limitations.
Notwithstanding any provision to the contrary, each participant who was a
participant in the Prior Plan shall be a Participant in this Plan with a Defined
Benefit Portion balance no less at any given time than his or her balance under
the Prior Plan.
4.02 Elections and Calculations. Any election made by a Participant
pursuant to the Pension Plan relating to his benefit thereunder shall be deemed
an election hereunder and the Participant shall be deemed to have made the same
election hereunder without requirement of additional elections. All calculations
pursuant to the Defined Benefit Portion shall be consistent with those used in
determining benefits under the Pension Plan, including, but not limited to,
calculation of actuarial equivalents for optional forms of benefits and
reductions for early payment.
4.03 Reports. The Corporation may, but shall not be required to, send
reports from time to time to each Participant regarding the amounts to which he
is entitled under this Plan.
4.04 Payment of Restored Defined Benefit Portion Benefits. When a
Participant retires within the meaning of the Pension Plan or dies, the
Corporation shall pay to the Participant or his or her beneficiary, as the case
may be, the amounts determined under this Article IV in the same manner, at the
same times and frequencies and subject to the same terms and conditions (except
as set forth herein) which the Participant's benefits are paid under the Pension
Plan.
ARTICLE V. DEFINED CONTRIBUTION PORTION
5.01 Restoration of Savings Portion. The applicable, if any, of the
following amounts shall be credited to a Participant's Defined Contribution
Portion:
(a) Restoration of Deferrals for Effect of Limitations. In the event a
Participant is deferring or contributing the maximum amount then
permitted under the Limitations and such contributed amount is
less than the amount which could be deferred or contributed by the
Participant to the Corporation's defined contribution plan as then
in effect without regard to the Limitations, the Participant's
Defined Contribution Portion shall be credited with an amount
equal to the difference between (i) the amount which would have
been contributed as a Corporation matching contribution without
regard to the Limitations and (ii) the amount actually contributed
on the Participant's behalf as matching contributions.
(b) Restoration of Matching Contributions for Participation in the
DCP. A Participant's Defined Contribution Portion shall be
credited with an amount equal to the amount of Matching
Contributions the Participant would have received on his or her
deferrals, if any, to the DCP if such deferrals under the DCP were
compensation for purposes of the Corporation's defined
contribution plan as then in effect, the Participant
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<PAGE> 5
contributed at the same rate with respect to the DCP deferrals as
the rate then elected by the Participant for the defined
contribution plan and the Limitations did not apply.
5.02 Earnings. Balances in Participant's Defined Contribution Portion
shall be credited with earnings as of the last day of each calendar year at the
rate then in effect under one of the investment funds offered under the defined
contribution plan as determined from time to time by the Committee.
5.03 Accounting. The Administrator shall establish on its records, for
bookkeeping purposes, an account for each Participant receiving credits under
this Deferred Contribution Portion to record the amount credited as
contributions under Section 5.01 and earnings, if any, pursuant to Section 5.02.
The Administrator shall post any contributions to such bookkeeping account
within thirty (30) days of the date a contribution would have been made to the
appropriate of the Plans under this Article V. The Administrator shall respond
to any inquiry of any Participant concerning the status of his account within
thirty (30) days of receipt thereof.
5.04 No Withdrawals or Loans. No withdrawals of or loans against any
balance under the Plan may be made at any time by a Participant.
5.05 Payment of Restored Defined Contribution Portion Benefit.
(a) Death. In the event of a Participant's death, his then balance in
his or her Defined Contribution Portion (including any Corporation
contributions for such calendar year pursuant to Section 5.01 whether
or not then actually made, net of withholding of applicable federal,
state and local taxes) shall be distributed in a single cash payment to
his beneficiary designated pursuant to the Corporation's defined
contribution plan as then in effect as soon as administratively
feasible after the Administrator receives notice of such death.
(b) Disability, Retirement or Other Severance from Service. In the
event of the Participant's Disability, Retirement or other severance
from service, his then balance in his or her Defined Contribution
Portion (including Corporation contributions for such calendar year
pursuant to Section 5.01 whether or not then actually made, net of
withholding or applicable federal, state and local income tax) shall be
distributed in a single cash payment to him as soon as administratively
feasible after the Administrator receives notice of such event;
provided, however, with the consent of the Administrator, the
Participant may elect in the tax year of the Participant prior to the
tax year in which the distribution is then due to be made or to
commence to receive such amount at a later time and/or in a different
form of payment.
ARTICLE VI. ADMINISTRATION
6.01 Administration. The Plan shall be administered by the
Administrator appointed for such purpose by the Board who shall have the power
and duty to interpret the Plan and to make such rules and regulations as the
Administrator, in its discretion, shall deem appropriate. The
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<PAGE> 6
Administrator may retain such experts, consultants, or advisors as it, in its
discretion deems necessary or appropriate to the administration of the Plan
and/or may delegate to the Corporation or to employees of Corporation such
duties as it may deem necessary or appropriate. Any determination of the
Administrator shall be final, conclusive and binding for all parties.
ARTICLE VII. AMENDMENT AND TERMINATION
The Corporation shall have the right to amend or terminate this Plan at
any time; provided that no amendment shall be made which would have the effect
of decreasing the amount payable to any Participants hereunder.
ARTICLE VIII. ASSIGNMENT
No benefit or other right under or created by this Plan shall be
assignable by any Participant or the Participant's beneficiary by pledge or
otherwise. Any attempt to assign, pledge or otherwise dispose of or anticipate
benefits under this Plan shall be void.
ARTICLE IX. BENEFITS UNFUNDED
The benefits provided under this Plan shall be unfunded. All payments
of benefits hereunder shall be made by the Corporation from general assets and
the Corporation will not be obligated to establish any special or separate fund
or make other segregation of assets to assure the payment of any benefits
hereunder. In the event the Corporation establishes any fund or segregation, no
party who is or becomes entitled to receive amounts hereunder shall have any
right to assert any claim, levy or lien thereon or assert any right thereto
unless such right is specifically set forth in writing. The rights of any party
to receive payments of any benefits hereunder shall be no greater than the
rights of an unsecured creditor of the Corporation.
ARTICLE X. MISCELLANEOUS
10.01 Applicable Law. This Plan shall be governed by, and construed in
accordance with, the law of the State of California, except with regard to its
principles of conflicts of laws or to the extent that the law of the State of
California shall have been specifically preempted by federal law.
10.02 Incapacity of Recipient of Benefits. If any person entitled to
receive benefits hereunder shall be physically or mentally incapable of
receiving or acknowledging receipt of any payment of benefits, the Corporation,
upon the receipt of satisfactory evidence that such incapacitated person is so
incapacitated and that another person or institution is maintaining him or her
and that no guardian or committee has been appointed for him or her, may provide
for such payment of benefits hereunder to such person or institution maintaining
him or her, and such payments so made shall be deemed for every purpose to have
been made to such incapacitated person.
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<PAGE> 7
10.03 Liability of Officers and Directors of the Corporation. No past,
present or future officer or director of the Corporation shall be personally
liable to any Participant, beneficiary or other person under any provision of
this Plan.
10.04 Assets Owned by the Corporation. Nothing contained herein shall
be deemed to give any Participant or his beneficiary any interest in any
specific property of the Corporation or any right except to receive such
distributions as are expressly provided for in this Plan.
10.05 Withholding. The payment of any benefits under this Plan shall be
net of any federal, state and local taxes that the Corporation is required to
withhold.
10.06 Meaning of Certain Words. As used herein any gender shall include
all other genders and the singular shall include the plural and the plural shall
include the singular in all cases where such meaning would be appropriate. The
terms "herein", "hereto", "hereunder", and the like shall be deemed to refer to
this Plan as a whole and not to any particular paragraph or other subdivision of
this Plan.
7
<PAGE> 1
Exhibit 21
Significant Subsidiary
of Teledyne Technologies Incorporated
Teledyne Brown Engineering, Inc. (a Delaware corporation)
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Teledyne Technologies Incorporated ("TDY") of our report dated January 26,
2000, included in the 1999 Annual Report to Stockholders of Teledyne
Technologies Incorporated.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-94739) pertaining to the TDY 1999 Incentive Plan, Registration
Statement (Form S-8 No. 333-91781) pertaining to the TDY Executive Deferred
Compensation Plan, Registration Statement (Form S-8 No. 333-91785) pertaining to
Teledyne 401(k) Plan, Registration Statement (Form S-8 No. 333-91787) pertaining
to TDY Employee Stock Purchase Plan and in the Registration Statement (Form S-8
No. 333-91791) pertaining to TDY Non-Employee Director Stock Compensation Plan
of our report dated January 26, 2000, with respect to the consolidated financial
statements incorporated herein by reference.
/s/ Ernst & Young LLP
Los Angeles, California
March 27, 2000
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
Teledyne Technologies Incorporated - 1999 Annual Report on Form 10-K
The undersigned directors and officers of Teledyne Technologies
Incorporated, a Delaware corporation ("TDY"), do hereby constitute and appoint
John T. Kuelbs and Melanie S. Cibik, or either of them, our true and lawful
attorneys and agents, to execute, file and deliver the Annual Report on Form
10-K of TDY for its 1999 fiscal year ("Form 10-K"), in our name and on our
behalf in our capacities as directors and officers of TDY as listed below, and
to do any and all acts or things, in our name and on our behalf in our
capacities as directors and officers of TDY as listed below, which said
attorneys and agents, or either of them, may deem necessary or advisable to
enable TDY to comply with the Securities Exchange Act of 1934 and any rules,
regulations and requirements of the Securities and Exchange Commission in
connection with the Form 10-K (including without limitation executing, filing
and delivering any amendments to the Form 10-K), and the undersigned do hereby
ratify and confirm all that said attorneys and agents, or either of them, shall
do or cause to be done by virtue hereof.
Witness the due execution hereof as of March 9, 2000.
<TABLE>
<S> <C>
/s/ Thomas A. Corcoran Chairman and Director
- -----------------------------
Thomas A. Corcoran
/s/ Robert Mehrabian President and Chief and Chief Executive Officer
- ----------------------------- (Principal Executive Officer) and Director
Robert Mehrabian
/s/ Stefan C. Riesenfeld Executive Vice President and Chief Financial
- ----------------------------- Officer (Principal Financial Officer)
Stefan C. Riesenfeld
/s/ Dale A. Schnittjer Controller (Principal Accounting Officer)
- -----------------------------
Dale A. Schnittjer
/s/ Robert P. Bozzone Director
- -----------------------------
Robert P. Bozzone
/s/ Paul S. Brentlinger Director
- -----------------------------
Paul S. Brentlinger
/s/ Frank V. Cahouet Director
- -----------------------------
Frank V. Cahouet
/s/ Diane C. Creel Director
- -----------------------------
Diane C. Creel
/s/ C. Fred Fetterolf Director
- -----------------------------
C. Fred Fetterolf
/s/ Charles J. Queenan, Jr. Director
- -----------------------------
Charles J. Queenan, Jr.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF TELEDYNE TECHNOLOGIES FOR THE FISCAL YEAR
ENDED JANUARY 2, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS, WHICH ARE IN ITS FORM 10-K
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-02-2000
<PERIOD-START> JAN-03-1999
<PERIOD-END> JAN-02-2000
<CASH> 7,100
<SECURITIES> 0
<RECEIVABLES> 121,009
<ALLOWANCES> 3,452
<INVENTORY> 53,667
<CURRENT-ASSETS> 204,581
<PP&E> 194,444
<DEPRECIATION> 132,303
<TOTAL-ASSETS> 317,367
<CURRENT-LIABILITIES> 99,301
<BONDS> 97,000
0
0
<COMMON> 270
<OTHER-SE> 44,217
<TOTAL-LIABILITY-AND-EQUITY> 317,367
<SALES> 803,384
<TOTAL-REVENUES> 803,384
<CGS> 587,714
<TOTAL-COSTS> 587,714
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 822
<INCOME-PRETAX> 81,977
<INCOME-TAX> 32,955
<INCOME-CONTINUING> 49,022
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,022
<EPS-BASIC> 1.79
<EPS-DILUTED> 1.79
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS RESTATED SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S COMBINED STATEMENT OF INCOME FOR THE FISCAL YEAR ENDED JANUARY 3,
1999 AND THE NINE MONTHS ENDED OCTOBER 3, 1999 AND COMBINED BALANCE SHEET AS
OF JANUARY 3, 1999 AND OCTOBER 3, 1999 AND COMBINED BALANCE SHEET AS OF
JANUARY 3, 1999 AND OCTOBER 3, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK>0001094285
<NAME> TELEDYNE TECHNOLOGIES INCORPORATED
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS
<FISCAL-YEAR-END> JAN-03-1999 JAN-02-2000
<PERIOD-START> DEC-28-1997 JAN-03-1999
<PERIOD-END> JAN-03-1999 OCT-03-1998
<CASH> 0 0
<SECURITIES> 0 0
<RECEIVABLES> 106,088 123,724
<ALLOWANCES> 2,890 3,461
<INVENTORY> 53,186 53,852
<CURRENT-ASSETS> 171,048 195,491
<PP&E> 177,776 182,737
<DEPRECIATION> 134,754 132,284
<TOTAL-ASSETS> 250,819 277,497
<CURRENT-LIABILITIES> 92,480 102,406
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 106,402 126,370
<TOTAL-LIABILITY-AND-EQUITY> 250,819 277,497
<SALES> 780,393 602,978
<TOTAL-REVENUES> 780,393 602,978
<CGS> 572,087 442,146
<TOTAL-COSTS> 572,087 442,146
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 82,993 61,048
<INCOME-TAX> 34,276 25,213
<INCOME-CONTINUING> 48,717 35,835
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 48,717 35,835
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
</TABLE>
