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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 29, 1999
Water Pik Technologies, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-15297 25-1843384
- ---------------------------- -------------- -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
660 Newport Center Drive, Suite 470
Newport Beach, California 92660
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:(949) 719-3700
Page 1 of 5 pages.
Exhibit Index on page 5.
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Item 5. Other Events.
On November 29, 1999, Allegheny Teledyne Incorporated, a
Delaware corporation ("ATI"), distributed all of the common stock of Water Pik
Technologies, Inc., a Delaware corporation (the "Company"), to the stockholders
of ATI in a tax-free transaction. An aggregate of 9,311,086 shares of common
stock, par value $.01, of the Company (the "Company Common Stock") were
distributed in the transaction.
The Company is comprised of certain businesses in the former
Consumer segment of ATI. An Information Statement with respect to the
distribution of the Company Common Stock was mailed to each ATI stockholder of
record as of November 22, 1999. As a result of the distribution of the Company
Common Stock, the Company is a separate publicly-traded company and the Company
Common Stock trades on the New York Stock Exchange under the symbol "PIK".
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired
None.
(b) Pro forma Financial Information
None.
(c) Exhibits
2.1 Separation and Distribution Agreement by and among Allegheny
Teledyne Incorporated, TDY Holdings, LLC, Teledyne Industries,
Inc. and Water Pik Technologies, Inc.
4.1 Rights Agreement between Water Pik Technologies, Inc. and
ChaseMellon Shareholder Services, L.L.C.
10.1 Tax Sharing and Indemnification Agreement between Allegheny
Teledyne Incorporated and Water Pik Technologies, Inc.
10.2 Interim Services Agreement between Allegheny
Page 2 of 5 pages.
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Teledyne Incorporated and Water Pik Technologies, Inc.
10.3 Employee Benefits Agreement between Allegheny Teledyne
Incorporated and Water Pik Technologies, Inc.
Page 3 of 5 pages.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Water Pik Technologies, Inc.
(Registrant)
Date: November 30, 1999 By:/s/ Michael P. Hoopis
------------------------------------
Michael P. Hoopis
President and
Chief Executive Officer
Page 4 of 5 pages.
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EXHIBIT INDEX
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2.1 Separation and Distribution Agreement by and among Allegheny
Teledyne Incorporated, TDY Holdings, LLC, Teledyne Industries,
Inc. and Water Pik Technologies, Inc.
4.1 Rights Agreement between Water Pik Technologies, Inc. and
ChaseMellon Shareholder Services, L.L.C.
10.1 Tax Sharing and Indemnification Agreement between Allegheny
Teledyne Incorporated and Water Pik Technologies, Inc.
10.2 Interim Services Agreement between Allegheny Teledyne
Incorporated and Water Pik Technologies, Inc.
10.3 Employee Benefits Agreement between Allegheny Teledyne
Incorporated and Water Pik Technologies, Inc.
Page 5 of 5 pages.
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Exhibit 2.1
SEPARATION AND DISTRIBUTION AGREEMENT
BY AND AMONG
ALLEGHENY TELEDYNE INCORPORATED,
TDY HOLDINGS, LLC,
TELEDYNE INDUSTRIES, INC.
AND
WATER PIK TECHNOLOGIES, INC.
DATED AS OF NOVEMBER 29, 1999
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Table of Contents
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Page
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ARTICLE I DEFINITIONS.......................................................................................2
ARTICLE II THE SEPARATION...................................................................................12
2.01. Transfer of Assets and Assumption of Liabilities.................................................12
2.02. Water Pik Assets.................................................................................13
2.03. Water Pik Liabilities............................................................................14
2.04. Termination of Agreements........................................................................15
2.05. Documents Relating to Transfer of Real Property Interests
and Tangible Property Located Thereon............................................................16
2.06. Documents Further Evidencing Transfers of Assets and
Assumption of Liabilities........................................................................16
2.07. Other Ancillary Agreements.......................................................................16
2.08. Disclaimer of Representations and Warranties.....................................................16
2.09. Financing Arrangements...........................................................................17
2.10. Governmental Approvals and Consents..............................................................17
2.11. Novation of Assumed Water Pik Liabilities........................................................18
2.12. Transfer of Subsidiary Assets and Assumption of Subsidiary Liabilities...........................19
2.13. Consummation of Purchase and Sale Agreement......................................................19
2.14. TI Contribution and Liquidation..................................................................19
2.15. Interim Distributions............................................................................19
ARTICLE III THE DISTRIBUTION.................................................................................19
3.01. The Distribution.................................................................................19
3.02. Actions Prior to the Distribution................................................................19
3.03. Fractional Shares................................................................................20
ARTICLE IV THE PUBLIC OFFERING..............................................................................21
4.01. The Public Offering..............................................................................21
4.02. Proceeds of the Public Offering..................................................................21
4.03. Remedies.........................................................................................21
ARTICLE V MUTUAL RELEASES; INDEMNIFICATION.................................................................22
5.01. Release of Pre-Distribution Claims...............................................................22
5.02. Indemnification by Water Pik.....................................................................24
5.03. Indemnification by ATI...........................................................................25
5.04. Indemnification Obligations Net of Insurance Proceeds and other Amounts..........................25
5.05. Procedures for Indemnification of Third Party Claims.............................................26
5.06. Additional Matters...............................................................................27
5.07. Remedies Cumulative..............................................................................27
5.08. Survival of Indemnities..........................................................................27
ARTICLE VI CERTAIN OTHER MATTERS............................................................................27
6.01. Insurance Matters................................................................................27
6.02. Certain Business Matters.........................................................................30
6.03. Late Payments....................................................................................30
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6.04. Certain Governance Matters.......................................................................30
ARTICLE VIII EXCHANGE OF INFORMATION; CONFIDENTIALITY.........................................................31
7.01. Agreement for Exchange of Information; Archives..................................................31
7.02. Ownership of Information.........................................................................32
7.03. Compensation for Providing Information...........................................................32
7.04. Record Retention.................................................................................32
7.05. Other Agreements Providing For Exchange of Information...........................................32
7.06. Production of Witnesses; Records; Cooperation....................................................32
7.07. Confidentiality..................................................................................33
7.08. Protective Arrangements..........................................................................34
ARTICLE VIII FURTHER ASSURANCES...............................................................................34
8.01. Further Assurances...............................................................................34
ARTICLE X TERMINATION......................................................................................35
9.01. Termination......................................................................................35
9.02. Effect of Termination............................................................................35
ARTICLE X MISCELLANEOUS....................................................................................35
10.01. Counterparts; Entire Agreement; Corporate Power..................................................35
10.02. Governing Law; Consent to Jurisdiction...........................................................36
10.03. Assignability....................................................................................37
10.04. Third Party Beneficiaries........................................................................37
10.05. Notices..........................................................................................37
10.06. Severability.....................................................................................38
10.07. Force Majeure....................................................................................38
10.09. Headings.........................................................................................38
10.10. Survival of Covenants............................................................................38
10.11. Waivers of Default...............................................................................38
10.12. Specific Performance.............................................................................38
10.13. Amendments.......................................................................................38
10.14. Interpretation...................................................................................39
10.15. Disputes.........................................................................................39
10.16. Exclusivity of Tax Sharing Agreement.............................................................41
</TABLE>
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SEPARATION AND DISTRIBUTION AGREEMENT
THIS SEPARATION AND DISTRIBUTION AGREEMENT, dated as of
November 29, 1999, is by and among Allegheny Teledyne Incorporated, a Delaware
corporation ("ATI"), TDY Holdings, LLC, a Delaware limited liability company the
sole member of which is ATI ("Holdings"), Teledyne Industries, Inc., a
California corporation and an indirect wholly owned subsidiary of ATI ("TII"),
and Water Pik Technologies, Inc., a Delaware corporation and wholly owned
subsidiary of TII ("Water Pik"). Capitalized terms used herein and not otherwise
defined shall have the respective meanings assigned to them in Article I hereof.
WHEREAS, the Board of Directors of ATI has determined that it
is in the best interests of ATI and its stockholders to separate ATI's existing
businesses into three independent businesses; and
WHEREAS, in furtherance of the foregoing, it is appropriate
and desirable to transfer the Water Pik Assets to Water Pik and to cause Water
Pik to assume the Water Pik Liabilities, all as more fully described in this
Agreement and the Ancillary Agreements; and
WHEREAS, ATI intends, subject to completion of the
transactions contemplated hereby (including the foregoing transfer of Water Pik
Assets and assumption of Water Pik Liabilities) and to the other terms of this
Agreement and to further action by its Board of Directors, to effect the
Distribution; and
WHEREAS, the Form 10 Registration Statement has become
effective under the Exchange Act; and
WHEREAS, ATI has received a private letter ruling from the
Internal Revenue Service to the effect that, among other things, the
Distribution will qualify as a tax-free distribution for federal income tax
purposes under Section 355 of the Code; and
WHEREAS, the Distribution is to be followed by the Public
Offering; and
WHEREAS, it is expected that, following certain transfers of
other Assets and assignments and assumptions of other Liabilities, ATI will
distribute to its stockholders all of the capital stock of Teledyne Technologies
Incorporated ("Teledyne Technologies") held directly or indirectly by ATI and
that, in connection therewith, ATI and Teledyne Technologies have entered into
agreements, including the Teledyne Technologies Separation and Distribution
Agreement, to address matters relating to the Teledyne Technologies
Distribution; and
WHEREAS, it is appropriate and desirable to set forth the
principal corporate transactions required to effect the Separation, the
Distribution and the Public Offering and certain other agreements that will
govern certain matters relating to the Separation, the Distribution and the
Public Offering and the relationships of ATI and Water Pik and their respective
Subsidiaries following the Separation and the Distribution;
NOW, THEREFORE, the parties, intending to be legally bound,
agree as follows:
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ARTICLE I
DEFINITIONS
For the purpose of this Agreement the following terms shall
have the following meanings:
1.01. ACTION means any demand, action, suit, countersuit,
arbitration, inquiry, proceeding or investigation by or before any federal,
state, local, foreign or international Governmental Authority or any arbitration
or mediation tribunal.
1.02. AFFILIATE of any Person means a Person that controls, is
controlled by, or is under common control with such Person. As used herein,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such entity, whether
through ownership of voting securities or other interests, by contract or
otherwise.
1.03. AGENT means the distribution agent to be appointed by
ATI to distribute to the stockholders of ATI the shares of Water Pik Common
Stock held by ATI pursuant to the Distribution.
1.04. AGREEMENT means this Separation and Distribution
Agreement, including all of the Schedules hereto.
1.05. ANCILLARY AGREEMENTS means the deeds, lease assignments
and assumptions, leases, subleases and sub-subleases, subscription or
contribution agreements, stock powers, and the supplemental and other agreements
and instruments related thereto contemplated by Article II, including the Laars
Inc. Transfer and Assumption Agreement, the Water Pik Inc. Transfer and
Assumption Agreement, the Purchase and Sale Agreement, the Employee Benefits
Agreement, the Interim Services Agreement, the Patent Assignments and related
powers of attorney and the Tax Sharing Agreement.
1.06. ASSETS means assets, properties and rights (including
goodwill), wherever located (including in the possession of vendors or other
third parties or elsewhere), whether real, personal or mixed, tangible,
intangible or contingent, in each case whether or not recorded or reflected or
required to be recorded or reflected on the books and records or financial
statements of any Person, including the following:
(a) all accounting and other books, records and files whether
in paper, microfilm, microfiche, computer tape or disc, magnetic tape
or any other form;
(b) all apparatus, computers and other electronic data
processing equipment, fixtures, machinery, equipment, furniture, office
equipment, automobiles, trucks, rolling stock, vessels, motor vehicles
and other transportation equipment, special and general tools, test
devices, prototypes and models and other tangible personal property;
(c) all inventories of materials, parts, raw materials,
supplies, work-in-process and finished goods and products;
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(d) all interests in real property of whatever nature,
including easements, whether as owner, lessor, sublessor, lessee,
sublessee or otherwise;
(e) all interests in any capital stock or other equity
interests of any Subsidiary or any other Person, all bonds, notes,
debentures or other securities issued by any Subsidiary or any other
Person, all loans, advances or other extensions of credit or capital
contributions to any Subsidiary or any other Person and all other
investments in securities of any Person;
(f) all license agreements, leases of personal property, open
purchase orders for raw materials, supplies, parts or services,
unfilled orders for the manufacture and sale of products and other
contracts, agreements or commitments;
(g) all deposits, letters of credit and performance and surety
bonds;
(h) Information, including that prepared by consultants and
other third parties;
(i) all domestic and foreign patents, copyrights, trade names,
domain names, trademarks, service marks and registrations and
applications for any of the foregoing, mask works, trade secrets,
inventions, other proprietary information and licenses from third
Persons granting the right to use any of the foregoing ("Intellectual
Property");
(j) all computer applications, programs and other software,
including operating software, network software, firmware, middleware,
internet web pages, design software, design tools, systems
documentation and instructions;
(k) all cost information, sales and pricing data, customer
prospect lists, supplier records, customer and supplier lists, customer
and vendor data, correspondence and lists, product literature, artwork,
design, development and manufacturing files, vendor and customer
drawings, formulations and specifications, quality records and reports
and other books, records, studies, surveys, reports, plans and
documents;
(l) all prepaid expenses, trade accounts and other accounts
and notes receivables;
(m) all rights under contracts or agreements, all claims or
rights against any Person arising from the ownership of any Asset, all
rights in connection with any bids or offers and all related claims,
choses in action or similar rights, whether accrued or contingent,
including any claims of infringement of Intellectual Property against
third parties;
(n) all rights as a named insured under insurance policies and
all rights in the nature of insurance, indemnification or contribution;
(o) all licenses, permits, approvals and authorizations which
have been issued by any Governmental Authority;
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(p) cash or cash equivalents, bank accounts, lock boxes and
other deposit agreements; and
(q) interest rate, currency, commodity or other swap, collar,
cap or other hedging or similar agreements or arrangements.
1.07. ATI AUTOMOBILE POLICIES means those ATI Policies that
(i) insure Water Pik or any other member of the Water Pik Group, and (ii)
provide automobile insurance.
1.08. ATI COMMON STOCK means the Common Stock, par value $0.10
per share, of ATI.
1.09. ATI GENERAL LIABILITY POLICIES means those ATI Policies
that (i) insure Water Pik or any other member of the Water Pik Group, and (ii)
provide general liability, public liability, or comprehensive general liability
insurance.
1.10. ATI GROUP means ATI and each Person (other than any
member of the Water Pik Group or the Water Pik Group) that is an Affiliate of
ATI immediately after the Effective Time.
1.11. ATI INDEMNITEES has the meaning set forth in Section
5.02.
1.12. ATI LIABILITIES means all Liabilities of ATI other than
Water Pik Liabilities and Teledyne Technologies Liabilities.
1.13. ATI POLICIES means policies of insurance that have been
issued to, or in favor of, ATI or Subsidiaries of ATI.
1.14. ATI PRODUCT LIABILITY POLICIES means those insurance ATI
Policies that (i) insure Water Pik or any other member of the Water Pik Group,
and (ii) provide product liability insurance.
1.15. ATI WORKERS COMPENSATION POLICIES means those ATI
Policies that (i) insure Water Pik or any other member of the Water Pik Group,
and (ii) provide workers compensation insurance.
1.16. CODE means the Internal Revenue Code of 1986, as
amended.
1.17. COMMISSION means the Securities and Exchange Commission.
1.18. CONSENTS means any consents, waivers or approvals from,
or notification requirements to, any third parties.
1.19. DESIGNATED OFFICERS means, (i) in the case of ATI, the
Senior Vice President, General Counsel and Secretary of ATI or his successor,
and (ii) in the case of Water Pik, the President of Water Pik or his successor.
1.20. DGCL means the Delaware General Corporation Law, as
amended.
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1.21. DISPUTES has the meaning set forth in Section 10.14.
1.22. DISTRIBUTION means the distribution by ATI on a pro rata
basis to holders of ATI Common Stock of all of the outstanding shares of Water
Pik Common Stock.
1.23. DISTRIBUTION DATE means the date on which the
Distribution occurs.
1.24. EFFECTIVE TIME means 12:00 noon, Eastern Standard Time
or Eastern Daylight Time (whichever shall be then in effect), on the
Distribution Date.
1.25. EMPLOYEE BENEFITS AGREEMENT means the Employee Benefits
Agreement, dated as of the date hereof, by and between ATI and Water Pik.
1.26. ENVIRONMENTAL LAW means any federal, state, local,
foreign or international statute, ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, common law (including tort and
environmental nuisance law), legal doctrine, order, judgment, decree,
injunction, requirement or agreement with any Governmental Authority, now or
hereafter in effect relating to health, safety, pollution or the environment
(including ambient air, surface water, groundwater, land surface or subsurface
strata) or to emissions, discharges, releases or threatened releases of any
substance currently or at any time hereafter listed, defined, designated or
classified as hazardous, toxic, waste, radioactive or dangerous, or otherwise
regulated, under any of the foregoing, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of any such substances, including the Comprehensive Environmental
Response, Compensation and Liability Act, the Superfund Amendments and
Reauthorization Act and the Resource Conservation and Recovery Act and
comparable provisions in state, local, foreign or international law.
1.27. ENVIRONMENTAL LIABILITIES means all Liabilities relating
to, arising out of or resulting from any Environmental Law or contract or
agreement relating to environmental, health or safety matters (including all
removal, remediation or cleanup costs, investigatory costs, governmental
response costs, natural resources damages, property damages, personal injury
damages, costs of compliance with any settlement, judgment or other
determination of Liability and indemnity, contribution or similar obligations)
and all costs and expenses (including allocated costs of in-house counsel and
other personnel), interest, fines, penalties or other monetary sanctions in
connection therewith.
1.28. EXCHANGE ACT means the Securities Exchange Act of 1934,
as amended, together with the rules and regulations promulgated thereunder.
1.29. EXCLUDED ASSETS has the meaning set forth in Section
2.02(b).
1.30. EXPENSE FACTORS means expense factors or similar factors
or multipliers set forth in policies of insurance or related agreements
applicable to liabilities, losses or defense costs insured thereunder that are
subject to a Self-Insurance Obligation.
1.31. FINANCING FACILITY means the credit facilities entered
into by Water Pik on or prior to the Distribution and any substitute or
successor credit facility.
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1.32. FORM 10 REGISTRATION STATEMENT means the registration
statement on Form 10 filed under the Exchange Act, pursuant to which Water Pik
Common Stock will be registered under the Exchange Act following the
Distribution, together with all amendments thereto.
1.33. GOVERNMENTAL APPROVALS means any notices, reports or
other filings to be made, or any consents, registrations, approvals, permits or
authorizations to be obtained from, any Governmental Authority.
1.34. GOVERNMENTAL AUTHORITY shall mean any federal, state,
local, foreign or international court, government, department, commission,
board, bureau, agency, official or other regulatory, administrative or
governmental authority.
1.35. GROUP means the ATI Group, the Water Pik Group or the
Teledyne Technologies Group, as the context requires.
1.36. INCURRED LOSSES means the sum of paid losses (indemnity
and loss adjustment expenses) and reserves for unpaid losses.
1.37. INDEMNIFYING PARTY has the meaning set forth in Section
5.04(a).
1.38. INDEMNITEE has the meaning set forth in Section 5.04(a).
1.39. INDEMNITY PAYMENT has the meaning set forth in Section
5.04(a).
1.40. INFORMATION means information, whether or not patentable
or copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
analyses, techniques, designs, specifications, drawings, blueprints, diagrams,
models, operating and maintenance manuals, prototypes, samples, flow charts,
data, computer data, disks, diskettes, tapes, computer programs or other
software, marketing plans, customer names, communications by or to attorneys
(including attorney-client privileged communications), memos and other materials
prepared by attorneys or under their direction (including attorney work
product), and other technical, financial, employee or business information or
data, whether prepared by or for any affected party.
1.41. INFORMATION STATEMENT means the Information Statement
forming a part of the Form 10 Registration Statement to be mailed to holders of
ATI Common Stock in connection with the Distribution.
1.42. INITIAL MEDIATION PERIOD has the meaning set forth in
Section 10.14.
1.43. INSURANCE POLICIES means the insurance policies written
by insurance carriers unaffiliated with ATI pursuant to which Water Pik or one
or more of its Subsidiaries (or their respective officers or directors) will be
insured parties after the Effective Time.
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1.44. INSURANCE PROCEEDS means those monies:
(a) received by an insured from an insurance carrier;
(b) paid by an insurance carrier on behalf of the insured; or
(c) received (including by way of set off) from any third
party in the nature of insurance, contribution or indemnification in
respect of any Liability;
in any such case net of any applicable premium adjustments (including reserves
and retrospectively rated premium adjustments) and net of any costs or expenses
(including allocated costs of in-house counsel and other personnel) incurred in
the collection thereof.
1.45. INTERIM SERVICES AGREEMENT means the Interim Services
Agreement, dated as of the date hereof, by and between ATI and Water Pik.
1.46. LAARS INC. means Laars Inc., a Delaware corporation.
1.47. LAARS INC. ASSETS means those Water Pik Assets described
in the Laars Inc. Transfer and Assumption Agreement.
1.48. LAARS INC. LIABILITIES means those Water Pik Liabilities
described in the Laars Inc. Transfer and Assumption Agreement.
1.49. LAARS INC. TRANSFER AND ASSUMPTION AGREEMENT means the
Asset Transfer and Liabilities Assumption Agreement, dated as of the date
hereof, between Water Pik and Laars Inc.
1.50. LIABILITIES means any and all losses, claims, charges,
debts, demands, actions, causes of action, suits, damages, obligations,
payments, costs and expenses, sums of money, accounts, reckonings, bonds,
specialties, indemnities and similar obligations, exonerations, covenants,
contracts, controversies, agreements, promises, doings, omissions, variances,
guarantees, make whole agreements and similar obligations, and other
liabilities, including all contractual obligations, whether absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, and including those arising under
any law, rule, regulation, Action, threatened or contemplated Action (including
the costs and expenses of demands, assessments, judgments, settlements and
compromises relating thereto and reasonable attorneys' fees and any and all
costs and expenses (including allocated costs of in-house counsel and other
personnel), whatsoever incurred in investigating, preparing or defending against
any such Actions or threatened or contemplated Actions), order or consent decree
of any Governmental Authority or any award of any arbitrator or mediator of any
kind, and those arising under any contract, commitment or undertaking, including
those arising under this Agreement or any Ancillary Agreement, in each case,
whether or not recorded or reflected or required to be recorded or reflected on
the books and records or financial statements of any Person.
1.51. NYSE means The New York Stock Exchange, Inc.
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1.52. NON-WATER PIK ASSETS means any Assets of ATI or any of
its Affiliates (including any member of the Water Pik Group) other than the
Water Pik Assets.
1.53. PATENT ASSIGNMENTS means the Patent Assignments,
effective as of the Distribution, executed and delivered by TII to Water Pik.
1.54 PER CASE MAXIMUM means (i) with respect to any single
occurrence covered under ATI Automobile Policies, $100,000 (inclusive of
indemnity and loss adjustment expenses multiplied by applicable Expense Factors)
and (ii) with respect to any single occurrence covered by ATI Workers
Compensation policies, $150,000 (inclusive of indemnity and loss adjustment
expenses multiplied by applicable Expense Factors).
1.55. PERSON means an individual, a general or limited
partnership, a corporation, a trust, a joint venture, an unincorporated
organization, a limited liability entity, any other entity and any Governmental
Authority.
1.56 POOLED LOSS COSTS ALLOCABLE TO WATER PIK means the share
allocated to Water Pik by virtue of its participation in a pooling arrangement
among ATI divisions applicable to claims that (i) are covered under ATI
Automobile Policies and ATI Workers Compensation Policies; (ii) exceed the Per
Case Maximum; and (iii) are within a policy's deductible or other form of
self-insurance, which allocation to Water Pik will be based upon the same or
substantially similar to those factors as have been applied immediately before
the Distribution Date.
1.57. PRIME RATE means the rate which PNC Bank, N.A.,
Pittsburgh, Pennsylvania (or any successor thereto or other commercial bank
agreed to by the parties hereto) announces from time to time as its prime
lending rate, as in effect from time to time.
1.58. PUBLIC OFFERING means the underwritten public offering
by Water Pik of shares of Water Pik Common Stock pursuant to the Public Offering
Registration Statement and as contemplated by the Tax Sharing Agreement.
1.59. PUBLIC OFFERING REGISTRATION STATEMENT means the
registration statement to be filed by Water Pik under the Securities Act of
1933, as amended, pursuant to which the offering and sale of shares of Water Pik
Common Stock to be issued in the Public Offering will be registered, together
with all amendments thereto.
1.60. PURCHASE AND SALE AGREEMENT means the Purchase and Sale
Agreement, dated as of the date hereof, between TICL Newco and TICL.
1.61. RECORD DATE means the close of business on the date
determined by the ATI Board of Directors as the record date for determining
stockholders of ATI entitled to receive shares of Water Pik Common Stock in the
Distribution.
1.62. RIGHTS means the Rights to be distributed by Water Pik
in respect of Water Pik Common Stock in accordance with Section 3.02 hereof and
pursuant to the Rights Agreement between Water Pik and ChaseMellon Shareholder
Services, L.L.C.
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1.63. RULING REQUEST means the request for ruling (including
all exhibits), as amended and supplemented, under Section 355 and other
provisions of the Code, originally filed on behalf of ATI on April 6, 1999 in
respect of the Distribution.
1.64. SECURITY INTEREST means any mortgage, security interest,
pledge, lien, charge, claim, option, right to acquire, voting or other
restriction, right-of-way, covenant, condition, easement, encroachment,
restriction on transfer, or other encumbrance of any nature whatsoever.
1.65. SELF INSURANCE obligation means an obligation by one or
more insureds to pay or reimburse to the issuers of an insurance policy (whether
by way of deductible, retrospective premium, premium adjustment, self-insured
retention or other form of self-insurance), indemnity, allocated loss expense,
and other proceeds multiplied by Expense Factors, if any.
1.66. SEPARATION means the transfer of the Water Pik Assets to
Water Pik and its Subsidiaries and the assumption by Water Pik and its
Subsidiaries of the Water Pik Liabilities, all as more fully described in this
Agreement and the Ancillary Agreements.
1.67. SUBSIDIARY of any Person means any corporation or other
organization whether incorporated or unincorporated of which at least a majority
of the securities or interests having by the terms thereof ordinary voting power
to elect at least a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such Person or by any one or more
of its Subsidiaries, or by such Person and one or more of its Subsidiaries;
provided, however that no Person that is not directly or indirectly wholly owned
by any other Person shall be a Subsidiary of such other Person unless such other
Person controls, or has the right, power or ability to control, that Person.
1.68. TAX SHARING AGREEMENT means the Tax Sharing and
Indemnification Agreement, dated as of the date hereof, as the same may be
amended, by and between ATI and Water Pik.
1.69. TAXES has the meaning set forth in the Tax Sharing
Agreement.
1.70. TELEDYNE TECHNOLOGIES COMMON STOCK means the Common
Stock, par value $.01 per share, of Teledyne Technologies.
1.71. TELEDYNE TECHNOLOGIES DISTRIBUTION means the
distribution by ATI on a pro rata basis to holders of ATI Common Stock of all of
the outstanding shares of Teledyne Technologies Common Stock owned by ATI.
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1.72. TELEDYNE TECHNOLOGIES GROUP means Teledyne Technologies,
each Subsidiary of Teledyne Technologies and each other Person that is
contemplated to be controlled directly or indirectly by Teledyne Technologies at
the time of the Teledyne Technologies Distribution.
1.73. TELEDYNE TECHNOLOGIES LIABILITIES has the meaning
assigned to that term in the Teledyne Technologies Separation and Distribution
Agreement.
1.74. TELEDYNE TECHNOLOGIES SEPARATION AND DISTRIBUTION
AGREEMENT means the Separation and Distribution Agreement, dated the date
hereof, among ATI, Holdings, TII and Teledyne Technologies.
1.75. THIRD PARTY CLAIM has the meaning set forth in Section
5.05(a).
1.76. TI means Teledyne, Inc., a Delaware corporation.
1.77. TICL means Teledyne Industries Canada Limited, an
Ontario corporation.
1.78. TICL ASSETS means those certain assets of TICL described
in the Purchase and Sale Agreement.
1.79. TICL LIABILITIES means those liabilities of TICL
described in the Purchase and Sale Agreement
1.80. TICL NEWCO means Water Pik Canada, Ltd., an Ontario
corporation wholly owned by Water Pik.
1.81. TI LIQUIDATION means the dissolution and liquidation of
TI in accordance with applicable provisions of the DGCL and Section 332 of the
Code, as a result of which Holdings will own all of the outstanding capital
stock of TII.
1.82. UNDERWRITERS means the managing underwriters for the
Public Offering.
1.83. UNDERWRITING AGREEMENT means an underwriting agreement
in customary form to be entered into among Water Pik and the Underwriters with
respect to the Public Offering.
1.84. UNPAID LOSSES means liabilities and losses, including
indemnity payments and allocated loss expenses, that are subject to a Self
Insurance Obligation and that, as of the Distribution Date have not been paid by
Water Pik or a member of Water Pik Group and that do not appear on Schedule
1.84.
1.85. WATER PIK ASSETS has the meaning set forth in Section
2.02(a).
1.86. WATER PIK BALANCE SHEET means the audited consolidated
balance sheet of Water Pik, including the notes thereto, as of September 30,
1999.
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1.87. WATER PIK BUSINESS means the business and operations of
the divisions and Subsidiaries of TI or TII comprising Teledyne Water Pik, Jandy
and Teledyne Laars and any business or operation conducted by Water Pik or any
Affiliate of Water Pik at any time on or after the Distribution Date.
1.88. WATER PIK COMMON STOCK means the Common Stock, $.01 par
value per share, of Water Pik and, after the distribution of Rights referred to
in Section 3.02, shall include the associated Rights.
1.89. WATER PIK CONTRACTS means the following contracts and
agreements to which TII or any of its Affiliates is a party or by it or any of
its Affiliates or any of their respective Assets is bound, whether as of the
date hereof or prior to or at the Effective Time, and whether or not in writing,
except for any such contract or agreement that is expressly contemplated to be
retained by any member of the ATI Group pursuant to any provision of this
Agreement or any Ancillary Agreement:
(a) any contract or agreement entered into in the name of, or
expressly on behalf of, any division, business unit or member of the
Water Pik Group;
(b) any contract or agreement that relates exclusively to the
Water Pik Business;
(c) federal, state and local government and other contracts
and agreements that relate exclusively to the Water Pik Business;
(d) any contract or agreement representing capital or
operating equipment lease obligations reflected on the Water Pik
Balance Sheet, including obligations as lessee under those contracts or
agreements listed on Schedule 1.89(d) (as such Schedule may be
supplemented after the date hereof and prior to the Effective Time to
assign capital and operating equipment lease obligations that relate
exclusively to the Water Pik Business and that were, are or may be
executed and delivered after the date of the Water Pik Balance Sheet);
(e) any contract or agreement that is otherwise expressly
contemplated pursuant to this Agreement or any of the Ancillary
Agreements to be assigned to Water Pik or any member of the Water Pik
Group;
(f) any guarantee, indemnity, representation, warranty or
other Liability of any member of the Water Pik Group or the ATI Group
in respect of any other Water Pik Contract, any Water Pik Liability or
the Water Pik Business (including guarantees of financing incurred by
customers or other third parties in connection with purchases of
products or services from the Water Pik Business); and
(g) the contracts, agreements and other documents listed or
described on Schedule 1.89(g)).
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1.90. WATER PIK GROUP means Water Pik, each Subsidiary of
Water Pik and each other Person that is contemplated to be controlled directly
or indirectly by Water Pik as of the Effective Time.
1.91. WATER PIK INC. means Water Pik, Inc., a Delaware
corporation.
1.92. WATER PIK INC. ASSETS means those Water Pik Assets
described in the Water Pik Inc. Transfer and Assumption Agreement.
1.93. WATER PIK INC. LIABILITIES means those Water Pik
Liabilities described in the Water Pik Inc. Transfer and Assumption Agreement.
1.94. WATER PIK INC. TRANSFER AND ASSUMPTION AGREEMENT means
the Asset and Transfer and Liabilities Assumption Agreement, dated as of the
date hereof, between Water Pik and Water Pik Inc.
1.95. WATER PIK INDEMNITEES has the meaning set forth in
Section 5.03(a).
1.96. WATER PIK LIABILITIES has the meaning set forth in
Section 2.03.
1.97. YEAR 2000 COMPLIANT means, with respect to an Asset,
that such Asset will (i) accurately process date/time data (including, but not
limited to, calculating, comparing, sorting, sequencing and calendar
generation), including single century formulas and multi-century formulas, from,
into and between the twentieth and twenty-first centuries and the years 1999 and
2000, including leap year calculations, and will not malfunction or generate
incorrect values or invalid results involving such dates/times; (ii) accurately
interface with other systems, as appropriate, in order to supply, receive or
process dates/times and other data, to the extent that other information
technology properly exchanges data with it; (iii) provide that date/time-related
functionalities, date/time fields and any user input interfaces include a four
digit year format and/or other indication of century, as applicable; and (iv)
not cause any other Asset that is otherwise Year 2000 Compliant to fail to be
Year 2000 Compliant.
ARTICLE II
THE SEPARATION
2.01. TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES. (a)
TII hereby assigns, transfers, conveys and delivers to Water Pik, and agrees to
cause its applicable Subsidiaries to assign, transfer, convey and deliver to
Water Pik, and Water Pik hereby accepts from TII and its Subsidiaries, in each
case effective as of the Effective Time, all of TII's and its applicable
Subsidiaries' respective right, title and interest in all Water Pik Assets.
(b) Effective as of the Effective Time, Water Pik hereby
assumes and agrees faithfully to perform, satisfy, discharge and fulfill all the
Water Pik Liabilities in accordance with their respective terms. Water Pik shall
be responsible for all Water Pik Liabilities, regardless of when or where such
Liabilities
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arose or arise or whether the facts on which they are based occurred prior to or
subsequent to the date hereof, regardless of where or against whom such
Liabilities are asserted or determined or whether asserted or determined prior
to the date hereof, and regardless of whether arising from or alleged to arise
from negligence, recklessness, violation of law, fraud or misrepresentation
(whether based on tort, contract, statute or otherwise) by any member of the ATI
Group or the Water Pik Group or any of their respective directors, officers,
employees, agents, Subsidiaries or Affiliates.
(c) In the event that at any time or from time to time after
the Distribution Date any party hereto (or any member of such party's respective
Group), shall receive or otherwise possess any Asset that is allocated to any
other Person pursuant to this Agreement or any Ancillary Agreement, such party
or member shall promptly transfer, or cause to be transferred, such Asset to the
Person so entitled thereto. Prior to any such transfer, the Person receiving or
possessing such Asset shall hold such Asset in trust for any such other Person.
2.02. WATER PIK ASSETS. (a) For purposes of this Agreement,
"Water Pik Assets" shall mean (without duplication):
(i) all Assets reflected in the Water Pik Balance Sheet as
Assets of Water Pik and its Subsidiaries, subject to any dispositions
of any such Assets subsequent to the date of the Water Pik Balance
Sheet;
(ii) all Assets acquired by or for the exclusive benefit of
Water Pik subsequent to the date of the Water Pik Balance Sheet and
prior to the Effective Time that would have been reflected in the Water
Pik Balance Sheet as Assets of Water Pik had they been owned on the
date of the Water Pik Balance Sheet;
(iii) subject to Section 6.01, any rights of any member of the
Water Pik Group under any of the Insurance Policies, including any
rights thereunder arising after the Distribution Date in respect of any
Insurance Policies that are occurrence policies; and
(iv) (A) any Assets that any Ancillary Agreement contemplates
will be transferred to any member of the Water Pik Group, (B) any Water
Pik Contracts and (C) all issued and outstanding capital stock of the
Subsidiaries, the partnership interests and other Assets of TII listed
on Schedule 2.02(a)(iv).
Notwithstanding the foregoing, the Water Pik Assets shall not in any event
include the Excluded Assets referred to in Section 2.02(b) below.
(b) For the purposes of this Agreement, "Excluded Assets"
shall mean:
(i) the Assets listed or described on Schedule 2.02(b)(i);
and
(ii) any and all Assets that are expressly contemplated by
this Agreement or any Ancillary Agreement (or the Schedules hereto or
thereto) as Assets to be retained by ATI or any other member of the ATI
Group (including the Teledyne Technologies Group).
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(c) Water Pik acknowledges and agrees that the Assets reflected as
Water Pik Assets in the Water Pik Balance Sheet are so reflected based on the
books and records maintained, and other information supplied, by Water Pik
personnel, and that the Water Pik Assets constitute all of the Assets necessary
to operate the Water Pik Business as presently conducted.
2.03. WATER PIK LIABILITIES. For the purposes of this
Agreement, "Water Pik Liabilities" shall mean (without duplication):
(a) any and all Liabilities that are expressly contemplated by
this Agreement or any Ancillary Agreement (or the Schedules hereto or
thereto) as Liabilities to be assumed by Water Pik or any member of the
Water Pik Group, and all agreements, obligations and Liabilities of any
member of the Water Pik Group under this Agreement or any of the
Ancillary Agreements;
(b) all Liabilities, including any employee-related
Liabilities and Environmental Liabilities, relating to, arising out of
or resulting from:
(i) the operation of the Water Pik Business as
conducted at any time prior to, at or after the Effective Time
(including any Liability relating to, arising out of or
resulting from the design, manufacture and sale of products or
services of the Water Pik Business or from any act or failure
to act by any director, officer, employee, agent or
representative of any Person (whether or not such act or
failure to act is or was within such Person's authority));
(ii) the operation of any business conducted by any
member of the Water Pik Group at any time after the Effective
Time (including any Liability relating to, arising out of or
resulting from any act or failure to act by any director,
officer, employee, agent or representative of any Person
(whether or not such act or failure to act is or was within
such Person's authority)); or
(iii) any Water Pik Assets (including any Water Pik
Contracts and any real property and leasehold interests) or
ownership of any Water Pik Assets at any time prior to, at or
after the Effective Time;
in any such case whether arising before, on or after the Effective
Time, including, without limitation, the matters listed or described on
Schedule 2.03(b);
(c) all Liabilities relating to, arising out of or resulting
from the Financing Facility;
(d) all Liabilities reflected as liabilities or obligations of
Water Pik in the Water Pik Balance Sheet, subject to any discharge of
such Liabilities subsequent to the date of the Water Pik Balance Sheet,
and all liabilities or obligations of Water Pik incurred subsequent to
the date of the Water Pik Balance Sheet that would have been reflected
in
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the Water Pik Balance Sheet had they been incurred as of the date of
the Water Pik Balance Sheet;
(e) any Liabilities relating to, arising out of or resulting
from any infringement of any Intellectual Property of any third party,
including but not limited to patent rights, trademark and service mark
rights (registered and common law), trade dress rights, copyrights,
misappropriation of trade secret, based upon or resulting from the
operation of the Water Pik Business and regardless of whether said
infringement occurred prior to, on or after the Distribution Date;
(f) any and all guarantees by ATI or any member of the ATI
Group of obligations to assure payment or performance by or other
Liabilities of the Water Pik Group or the Water Pik Business; and
(g) any Liabilities relating to, arising out of, or resulting
from any of the Water Pik Assets and any products manufactured by the
Water Pik Business that are not Year 2000 Compliant.
2.04. TERMINATION OF AGREEMENTS. (a) Except as set forth in
Section 2.04(b), in furtherance of the releases and other provisions of Section
5.01 hereof, effective as of the Effective Time, Water Pik and each member of
the Water Pik Group, on the one hand, and each of ATI and the respective members
of the ATI Group, on the other hand, hereby terminate any and all agreements,
arrangements, commitments or understandings, whether or not in writing, between
or among Water Pik and/or any member of the Water Pik Group, on the one hand,
and ATI or any member of the ATI Group, on the other hand, including (except as
set forth in Schedule 2.04(a)) any intercompany accounts payable or accounts
receivable accrued as of the Effective Time that are reflected in the books and
records of the parties or otherwise documented in writing in accordance with
past practices; provided, however, to the extent that the termination of any
such agreement, arrangement, commitment or understanding is inconsistent with
any Ancillary Agreement, such termination shall be effective as of the date of
effectiveness of the applicable Ancillary Agreement. No such terminated
agreement, arrangement, commitment or understanding (including any provision
thereof which purports to survive termination) shall be of any further force or
effect after the Effective Time (or, to the extent contemplated by the proviso
to the immediately preceding sentence, after the effective time of the
applicable Ancillary Agreement). Each party shall, at the reasonable request of
any other party, take, or cause to be taken, such other actions as may be
necessary to effect the foregoing.
(b) The provisions of Section 2.04(a) shall not apply to any
of the following agreements, arrangements, commitments or understandings (or to
any of the provisions thereof): (i) this Agreement and the Ancillary Agreements
(and each other agreement or instrument expressly contemplated by this Agreement
or any Ancillary Agreement to be entered into by any of the parties hereto or
any of the members of their respective Groups); (ii) any agreements,
arrangements, commitments or understandings listed or described on Schedule
2.04(b)(ii); (iii) any agreements, arrangements, commitments or understandings
to which any Person other than the parties hereto and their respective
Affiliates is a party (it being understood that to the extent
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that the rights and obligations of the parties and the members of their
respective Groups under any such agreements, arrangements, commitments or
understandings constitute Water Pik Assets or Water Pik Liabilities, they shall
be assigned and assumed pursuant to Section 2.01); and (iv) any other
agreements, arrangements, commitments or understandings that this Agreement or
any Ancillary Agreement expressly contemplates will survive the Effective Time.
2.05. DOCUMENTS RELATING TO TRANSFER OF REAL PROPERTY
INTERESTS AND TANGIBLE PROPERTY LOCATED THEREON. In furtherance of the
assignment, transfer and conveyance of Water Pik Assets and the assumption of
Water Pik Liabilities set forth in Section 2.01(a) and (b), simultaneously with
the execution and delivery hereof or as promptly as practicable thereafter, each
of TII and Water Pik or their applicable Subsidiaries is executing and
delivering or will execute and deliver such deeds, lease assignments and
assumptions, leases, subleases and sub-subleases as may be necessary to
effectively transfer any real property and leasehold interests forming part of
the Water Pik Assets and conform to any laws, regulations or usage applicable in
the jurisdiction in which the relevant real property is located.
2.06. DOCUMENTS FURTHER EVIDENCING TRANSFERS OF ASSETS AND
ASSUMPTION OF LIABILITIES. In furtherance of the assignment, transfer and
conveyance of Water Pik Assets and the assumption of Water Pik Liabilities set
forth in Section 2.01(a) and (b), (i) TII shall execute and deliver, and shall
cause its Subsidiaries to execute and deliver, such further bills of sale, stock
powers, certificates of title, assignments of contracts and other instruments of
transfer, conveyance and assignment as and to the extent necessary to fully
evidence the transfer, conveyance and assignment of all of TII's and its
respective Subsidiaries' right, title and interest in and to the Water Pik
Assets to Water Pik and (ii) Water Pik shall execute and deliver to TII and its
Subsidiaries such further bills of sale, stock powers, certificates of title,
assumptions of contracts and other instruments of assumption as and to the
extent necessary to fully evidence the valid and effective assumption of the
Water Pik Liabilities by Water Pik.
2.07. OTHER ANCILLARY AGREEMENTS. Effective as of the date
hereof each of ATI, TII and Water Pik will execute and deliver, and cause any of
their respective Subsidiaries that are parties thereto to execute and deliver
all Ancillary Agreements to which it is a party.
2.08. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. Each of
ATI (on behalf of itself and each member of ATI, including TII) and Water Pik
(on behalf of itself and each member of the Water Pik Group) understands and
agrees that, except as expressly set forth herein or in any Ancillary Agreement,
no party to this Agreement, any Ancillary Agreement or any other agreement or
document contemplated by this Agreement, any Ancillary Agreement or otherwise,
is representing or warranting in any way as to the Assets, businesses or
Liabilities transferred or assumed as contemplated hereby or thereby (including
whether an asset is Year 2000 Compliant), as to any consents or approvals
required in connection therewith, as to the value or freedom from any Security
Interests of, or any other matter concerning, any Assets of such party, or as to
the absence of any defenses or rights of setoff or freedom from counterclaims
with respect to any claim or other Asset, including any accounts receivable, of
any party, or as to
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the legal sufficiency of any assignment, document or instrument delivered
hereunder to convey title to any Asset or thing of value upon the execution,
delivery and filing hereof or thereof. Without limiting the scope of the
foregoing, no party makes any representations or warranties as to the
Intellectual Property sought to be transferred herein, including, without
limitation, whether such Intellectual Property or any portion thereof is valid,
enforceable, freely transferable, free and clear of liens (except permitted
liens) or sufficient and complete in order to conduct the Water Pik Business,
whether any party herein owns, has the exclusive right to use or has the ability
to practice such Intellectual Property or any portion thereof, or whether such
Intellectual Property or the operation of any aspect of the Water Pik Business
infringes or conflicts in any way with any Intellectual Property right of any
third party. Except as may expressly be set forth herein or in any Ancillary
Agreement, all such Assets are being transferred on an "as is," "where is,"
"with all faults" basis (and, in the case of any real property, by means of a
quitclaim or similar form deed or conveyance) and the respective transferees
shall bear the economic and legal risks that any conveyance shall prove to be
insufficient to vest in the transferee good and marketable title, free and clear
of any Security Interest. Without limiting the foregoing, neither ATI nor any
other party hereto (excluding Water Pik), or to any Ancillary Agreement, is
making any representation or warranty to Water Pik or any other Person in
respect of the Water Pik Balance Sheet, including in respect of the accuracy or
presentation thereof, or the adequacy of accruals, reserves and other amounts
reflected thereon.
2.09. FINANCING ARRANGEMENTS. Each of the parties hereto
acknowledges that (a) ATI has arranged availability for up to $60 million in
senior secured financing pursuant to the Financing Facility, (b) that ATI has,
prior to the date hereof, incurred $34 million in indebtedness pursuant to such
Financing Facility; and (c) that ATI has used, or will use prior to the
Distribution Date, such indebtedness to refinance other outstanding indebtedness
of ATI. Water Pik agrees that, following the Distribution Date, Water Pik will
indemnify ATI (and all the other members of the ATI Group) and defend and hold
such parties harmless from and against all the obligations of ATI (or Water Pik)
arising under the Financing Facility (including the obligation to repay such $34
million in outstanding borrowings), with the effect that ATI (and all other
members of the ATI Group) shall have no further liability or obligation under
the Financing Facility.
2.10. GOVERNMENTAL APPROVALS AND CONSENTS. (a) To the extent
that the Separation requires any Governmental Approvals or Consents, the parties
will use all reasonable efforts to obtain any such Governmental Approvals and
Consents.
(b) If and to the extent that the valid, complete and
perfected transfer or assignment (or novation of any federal government
contract) to the Water Pik Group of any Water Pik Assets (or from the Water Pik
Group of any Non-Water Pik Assets) would be a violation of applicable laws or
require any Consent or Governmental Approval in connection with the Separation,
then, unless ATI shall otherwise determine, the transfer or assignment to or
from the Water Pik Group, as the case may be, of such Water Pik Assets or
Non-Water Pik Assets, respectively, shall be automatically deemed deferred and
any such purported transfer or assignment shall be null and void until such time
as all legal impediments are removed and/or such Consents or Governmental
Approvals have been obtained. Notwithstanding the foregoing, such
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Asset shall be deemed a Water Pik Asset for purposes of determining whether any
Liability is a Water Pik Liability.
(c) If the transfer or assignment of any Assets intended to be
transferred or assigned hereunder is not consummated prior to or at the
Effective Time, whether as a result of the provisions of Section 2.10(b) or for
any other reason, then the Person retaining such Asset shall thereafter hold
such Asset for the use and benefit, insofar as reasonably possible, of the
Person entitled thereto (at the expense of the Person entitled thereto). In
addition, the Person retaining such Asset shall take such other actions as may
be reasonably requested by the Person to whom such Asset is to be transferred in
order to place such Person, insofar as reasonably possible, in the same position
as if such Asset had been transferred as contemplated hereby and so that all the
benefits and burdens relating to such Water Pik Assets (or such Non-Water Pik
Assets, as the case may be), including possession, use, risk of loss, potential
for gain, and dominion, control and command over such Assets, are to inure from
and after the Effective Time to the Water Pik Group (or the ATI Group, as the
case may be).
(d) If and when the Consents and/or Governmental Approvals,
the absence of which caused the deferral of transfer of any Asset pursuant to
Section 2.10(b), are obtained, the transfer of the applicable Asset shall be
effected in accordance with the terms of this Agreement and/or the applicable
Ancillary Agreement.
(e) The Person retaining an Asset due to the deferral of the
transfer of such Asset shall not be obligated, in connection with the foregoing,
to expend any money unless the necessary funds are advanced by the Person
entitled to the Asset, other than reasonable out-of-pocket expenses, attorneys'
fees and recording or similar fees, all of which shall be promptly reimbursed by
the Person entitled to such Asset.
2.11. NOVATION OF ASSUMED WATER PIK LIABILITIES. (a) Each of
ATI, TII and Water Pik at the request of any of the others, shall use all
reasonable efforts to obtain, or to cause to be obtained, any consent,
substitution, approval or amendment required to novate (including with respect
to any federal government contract) or assign all obligations under agreements,
leases, licenses and other obligations or Liabilities, or to obtain in writing
the unconditional release of all parties to such arrangements other than any
member of the Water Pik Group, so that, in any such case, Water Pik and its
Subsidiaries will be solely responsible for such Liabilities; provided, however,
that no member of the ATI Group shall be obligated to pay any consideration
therefor to any third party from whom such consents, approvals, substitutions
and amendments are requested.
(b) If ATI, TII or Water Pik is unable to obtain, or to cause
to be obtained, any such required consent, approval, release, substitution or
amendment, the applicable member of the ATI Group shall continue to be bound by
such agreements, leases, licenses and other obligations and, unless not
permitted by law or the terms thereof, Water Pik shall, as agent or
subcontractor for ATI, TII or such other Person, as the case may be, pay,
perform and discharge fully all the obligations or other Liabilities of ATI, TII
or such other Person, as the case may be, thereunder from and after the date
hereof. Water Pik shall indemnify and defend each ATI Indemnitee and hold each
of them harmless against any Liabilities arising in connection therewith. Each
of ATI
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and TII, as the case may be, shall, without further consideration, pay and
remit, or cause to be paid or remitted, to Water Pik promptly all money, rights
and other consideration received by it or any member of its respective Group in
respect of such performance (unless any such consideration is an Excluded
Asset). If and when any such consent, approval, release, substitution or
amendment shall be obtained or such agreement, lease, license or other rights or
obligations shall otherwise become assignable or able to be novated, each of ATI
and TII, as the case may be, shall thereafter assign, or cause to be assigned,
all its rights, obligations and other Liabilities thereunder or any rights or
obligations of any member of its respective Group to Water Pik without payment
of further consideration and Water Pik shall, without the payment of any further
consideration, assume such rights and obligations.
2.12. TRANSFER OF SUBSIDIARY ASSETS AND ASSUMPTION OF
SUBSIDIARY LIABILITIES. Immediately following the transfer of Water Pik Assets
and assumption of Water Pik Liabilities contemplated by Section 2.01, Water Pik
shall contribute to Water Pik Inc. the Water Pik Inc. Assets and cause Water Pik
Inc. to assume the Water Pik Inc. Liabilities in accordance with the Water Pik
Inc. Transfer and Assumption Agreement, and shall contribute to Laars Inc. the
Laars Inc. Assets and cause Laars Inc. to assume the Laars Inc. Liabilities in
accordance with the Laars Inc. Transfer and Assumption Agreement.
2.13. CONSUMMATION OF PURCHASE AND SALE AGREEMENT. Immediately
following the transfer of Assets and assumption of Liabilities contemplated by
Section 2.12, the parties hereto will cause the transactions contemplated by the
Purchase and Sale Agreement to be consummated, pursuant to which TICL Newco will
purchase the TICL Assets from TICL for approximately $5,600,000 in cash.
2.14. TI CONTRIBUTION AND LIQUIDATION. Prior to consummation
of the transactions contemplated by Section 2.15, ATI will contribute to
Holdings all of the outstanding capital stock of TI and the TI Liquidation will
be effected.
2.15. INTERIM DISTRIBUTIONS. Following the TI Liquidation, TII
will distribute to Holdings and Holdings will distribute to ATI all of the
outstanding Water Pik Common Stock.
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ARTICLE III
THE DISTRIBUTION
3.01. THE DISTRIBUTION. The ATI Board shall have the sole and
absolute discretion to determine whether and when to effect the Distribution. If
the ATI Board declares the Distribution, on or prior to the Distribution Date,
ATI will deliver to the Agent for the benefit of holders of record of ATI Common
Stock on the Record Date, a single stock certificate, endorsed by ATI in blank,
representing all of the outstanding shares of Water Pik Common Stock then owned
by ATI or any member of the ATI Group, and will instruct the Agent to
distribute, or make book-entry credits for, one share of Water Pik Common Stock
in respect of every twenty shares of ATI Common Stock held by holders of record
of ATI Common Stock on the Record Date, subject to Section 3.03.
3.02. ACTIONS PRIOR TO THE DISTRIBUTION. Prior to the
Distribution:
(a) On such date as ATI shall determine, Water Pik shall mail
to the holders of ATI Common Stock the Information Statement.
(b) ATI and Water Pik shall cooperate in preparing, filing
with the Commission under the Securities Act and causing to become effective any
registration statements or amendments thereto that are appropriate to reflect
the establishment of or amendments to any employee benefit plan contemplated by
the Employee Benefits Agreement.
(c) ATI and Water Pik shall by means of a reclassification,
stock split or stock distribution or other means cause the number of outstanding
shares of Water Pik Common Stock held by ATI to be equal to the number of shares
to be distributed in the Distribution (as determined by ATI).
(d) ATI and Water Pik shall take all such action as may be
necessary or appropriate under the securities or blue sky laws of states or
other political subdivisions of the United States in connection with the
transactions contemplated by this Agreement or any Ancillary Agreement.
(e) Water Pik shall use all efforts to have approved an
application to permit listing of the Water Pik Common Stock on the NYSE or
another mutually agreeable stock exchange or quotation system.
(f) ATI and Water Pik shall take all actions which may be
required to elect or otherwise appoint as directors of Water Pik, on or prior to
the Distribution Date, the persons named in the Form 10 Registration Statement
to constitute the Board of Directors of Water Pik on the Distribution Date.
(g) ATI shall cause a Certificate of Amendment and Restatement
of the Water Pik Certificate of Incorporation substantially in the form filed
with the Form 10 Registration Statement, to be filed for record with the
Secretary of State of Delaware and to be in effect on the Distribution Date, and
the Board of Directors of Water Pik shall amend the Bylaws of Water Pik
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so that the Water Pik Bylaws are substantially in the form filed with the Form
10 Registration Statement.
(h) Water Pik shall declare a distribution of, and distribute,
one Right with respect to each share of Water Pik Common Stock to be distributed
in the Distribution.
(i) ATI and Water Pik shall take all actions as may be
necessary to approve the stock-based employee benefit plans of Water Pik in
order to satisfy the requirements of Section 162(m) and other applicable
provisions of the Code and any requirements of the NYSE (or any other stock
exchange or quotations system on which Water Pik Common Stock is to be listed or
traded).
3.03. FRACTIONAL SHARES. No certificates or scrip representing
fractional shares of Water Pik Common Stock will be distributed to holders of
ATI Common Stock in the Distribution. The Agent will, as soon as practicable
after the Distribution Date, (a) determine the number of whole shares and
fractional shares of Water Pik Common Stock allocable to each holder of record
of ATI Common Stock as of the Record Date, (b) aggregate all fractional shares
held by such holders, and (c) sell the whole shares attributable to the
aggregate of such fractional shares, in open market transactions, in each case
at the then prevailing trading prices, and to cause to be distributed to each
such holder, in lieu of any fractional share, without interest, such holder's
ratable share of the proceeds of such sale, after making appropriate deductions
of the amount required, if any, to be withheld for U.S. federal income tax
purposes.
ARTICLE IV
THE PUBLIC OFFERING
4.01. THE PUBLIC OFFERING. (a) Water Pik shall consummate the
Public Offering not later than one year following the Distribution Date. Actions
required in order to so consummate the Public Offering shall include, but not
necessarily be limited to, those specified in this Section 4.01.
(b) Water Pik shall file the Public Offering Registration
Statement not later than at the end of the eighth month following the month in
which the Distribution Date occurs, and shall file such amendments or
supplements thereto, as may be necessary in order to cause the same to become
and remain effective as required by law or by the Underwriters, including, but
not limited to, filing such amendments to the Public Offering Registration
Statement as may be required by the Underwriting Agreement, the Commission or
federal, state or foreign securities laws.
(c) Water Pik shall enter into the Underwriting Agreement and
shall comply with its obligations thereunder.
(d) Water Pik shall take all such action as may be necessary
or appropriate under state securities and blue sky laws of the United States
(and any comparable laws under any foreign jurisdictions) in connection with the
Public Offering.
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(e) Water Pik shall prepare, file and take all actions
necessary to make effective an application for listing of the Water Pik Common
Stock issued in the Public Offering on the NYSE, subject to official notice of
issuance.
(f) Water Pik shall participate in the preparation of
materials and presentations as the Underwriters shall deem necessary or
desirable.
(g) Water Pik shall pay all third party costs, fees and
expenses relating to the Public Offering, all of the reimbursable expenses of
the Underwriters pursuant to the Underwriting Agreement, all of the costs of
producing, printing, mailing and otherwise distributing the Prospectus, as well
as the Underwriters' discount as provided in the Underwriting Agreement.
4.02. PROCEEDS OF THE PUBLIC OFFERING. The Public Offering
will be a primary offering of Water Pik Common Stock and the net proceeds of the
Public Offering will be retained by Water Pik. Water Pik will use such net
proceeds as provided in the Tax Sharing Agreement and the Ruling Request.
4.03. REMEDIES. Water Pik acknowledges that its agreements in
this Article IV are of a special, unique, unusual and extraordinary character.
Because the failure of Water Pik to perform its obligations set forth in the
provisions of this Article IV could cause unique and extraordinary injury to
ATI, ATI shall, notwithstanding anything to the contrary herein, have the right
in addition to any other remedies available, at law or in equity, to seek an
injunction in a court of equity to compel Water Pik to perform such obligations.
Water Pik hereby waives any and all defenses it may have on the ground of lack
of jurisdiction or competence of the court to grant an injunction or other
equitable relief, or otherwise, and agrees that it will not assert any such
defense or any defense to a request by ATI for injunctive relief based on the
alleged existence of an adequate remedy at law or for money damages. Without
limiting the foregoing, Water Pik hereby waives the right to require ATI to post
any bond or other security with respect to any proceeding to enforce the
provisions of this Article IV. The existence of the rights of ATI set forth in
this Section 4.03 shall not preclude any other rights and remedies at law or in
equity which ATI may have.
ARTICLE V
MUTUAL RELEASES; INDEMNIFICATION
5.01. RELEASE OF PRE-DISTRIBUTION CLAIMS. (a) Except as
provided in Section 5.01(c), effective as of the Effective Time, Water Pik does
hereby, for itself and each other member of the Water Pik Group, their
respective Affiliates (other than any member of the ATI Group), successors and
assigns, and all Persons who at any time prior to the Effective Time have been
stockholders, directors, officers, agents or employees of any member of the
Water Pik Group (in each case, in their respective capacities as such), remise,
release and forever discharge each of ATI and Teledyne Technologies, the
respective members of the ATI Group and the Teledyne Technologies Group, their
respective Affiliates (other than any member of the Water Pik Group), successors
and assigns, and all Persons who at any time prior to the Effective Time have
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been stockholders, directors, officers, agents or employees of any member of ATI
or the Teledyne Technologies Group (in each case, in their respective capacities
as such), and their respective heirs, executors, administrators, successors and
assigns, from any and all Liabilities whatsoever, whether at law or in equity
(including any right of contribution), whether arising under any contract or
agreement, by operation of law or otherwise, existing or arising from any acts
or events occurring or failing to occur or alleged to have occurred or to have
failed to occur or any conditions existing or alleged to have existed on or
before the Effective Time, including in connection with the transactions and all
other activities undertaken to implement the Separation or the Distribution.
(b) Except as provided in Section 5.01(c), effective as of the
Effective Time, ATI does hereby, for itself and each other member of the ATI
Group and its Affiliates (other than any member of the Water Pik Group),
successors and assigns, and all Persons who at any time prior to the Effective
Time have been stockholders, directors, officers, agents or employees of any
member of the ATI Group (in each case, in their respective capacities as such),
remise, release and forever discharge Water Pik, the respective members of the
Water Pik Group, their respective Affiliates (other than any member of the ATI
Group), successors and assigns, and all Persons who at any time prior to the
Effective Time have been stockholders, directors, officers, agents or employees
of any member of the Water Pik Group (in each case, in their respective
capacities as such), and their respective heirs, executors, administrators,
successors and assigns, from any and all Liabilities whatsoever, whether at law
or in equity (including any right of contribution), whether arising under any
contract or agreement, by operation of law or otherwise, existing or arising
from any acts or events occurring or failing to occur or alleged to have
occurred or to have failed to occur or any conditions existing or alleged to
have existed on or before the Effective Time, including in connection with the
transactions and all other activities undertaken to implement the Separation or
the Distribution.
(c) Nothing contained in Section 5.01(a) or (b) shall impair
any right of any Person to enforce this Agreement, any Ancillary Agreement or
any agreements, arrangements, commitments or understandings that are specified
in Section 2.04(b) or the applicable Schedules thereto not to terminate as of
the Effective Time, in each case in accordance with its terms. Nothing contained
in Section 5.01(a) or (b) shall release any Person from:
(i) any Liability provided in or resulting from any agreement
among any members of the ATI Group or the Water Pik Group that is
specified in Section 2.04(b) or the applicable Schedules thereto as not
to terminate as of the Effective Time, or any other Liability specified
in such Section 2.04(b) as not to terminate as of the Effective Time;
(ii) any Liability, contingent or otherwise, assumed,
transferred, assigned or allocated to the Group of which such Person is
a member in accordance with, or any other Liability of any member of
any Group under, this Agreement or any Ancillary Agreement;
(iii) any Liability for the sale, lease, construction or
receipt of goods, property or services purchased, obtained or used in
the ordinary course of business by a member of one Group from a member
of any other Group prior to the Effective Time;
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(iv) any Liability for unpaid amounts for products or services
or refunds owing on products or services due on a value-received basis
for work done by a member of one Group at the request or on behalf of a
member of another Group;
(v) any Liability that the parties may have with respect to
indemnification or contribution pursuant to this Agreement for claims
brought against the parties by third Persons, which Liability shall be
governed by the provisions of this Article V and, if applicable, the
appropriate provisions of the Ancillary Agreements; or
(vi) any Liability the release of which would result in the
release of any Person other than a Person released pursuant to this
Section 5.01; provided that the parties agree not to bring suit or
permit any of their Subsidiaries to bring suit against any Person with
respect to any Liability to the extent that such Person would be
released with respect to such Liability by this Section 5.01 but for
the provisions of this clause (vi).
(d) Water Pik shall not make, and shall not permit any member
of the Water Pik Group to make, any claim or demand, or commence any Action
asserting any claim or demand, including any claim of contribution or
indemnification, against ATI, Teledyne Technologies or any member of the ATI
Group or Teledyne Technologies Group, or any other Person released pursuant to
Section 5.01(a), with respect to any Liabilities released pursuant to Section
5.01(a). Without limiting the generality of the foregoing, Water Pik shall not
make, and shall not permit any other member of the Water Pik Group to make, any
claim or demand, or commence any Action asserting any claim or demand, including
any claim of contribution or indemnification, against ATI, Teledyne Technologies
or any member of the ATI Group or the Teledyne Technologies Group, or any other
Person released pursuant to Section 5.01(a), with respect to whether any Asset
should or should not have been classified as a Water Pik Asset or whether any
Liability should or should not have been classified as a Water Pik Liability or
with respect to the Water Pik Balance Sheet, including in respect of the
accuracy or presentation thereof, or the adequacy of accruals, reserves and
other amounts reflected thereon. ATI shall not, and shall not permit any member
of the ATI Group, to make any claim or demand, or commence any Action asserting
any claim or demand, including any claim of contribution or any indemnification,
against Water Pik or any member of the Water Pik Group, or any other Person
released pursuant to Section 5.01(b), with respect to any Liabilities released
pursuant to Section 5.01(b).
(e) It is the intent of each of ATI and Water Pik by virtue of
the provisions of this Section 5.01 to provide for a full and complete release
and discharge of all Liabilities existing or arising from all acts and events
occurring or failing to occur or alleged to have occurred or to have failed to
occur and all conditions existing or alleged to have existed on or before the
Effective Time, between or among Water Pik or any member of the Water Pik Group,
on the one hand, and ATI, Water Pik or any member of the ATI Group or the
Teledyne Technologies Group, on the other hand (including any contractual
agreements or arrangements existing or alleged to exist between or among any
such members on or before the Effective Time), except as expressly set forth in
Section 5.01(c) or otherwise in this Agreement. At any time, at the request of
any other party, each party shall cause each member of its respective Group to
execute and deliver releases reflecting the provisions hereof.
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5.02. INDEMNIFICATION BY WATER PIK. Except as provided in
Section 5.04, Water Pik shall indemnify, defend and hold harmless ATI, each
member of the ATI Group and each of their respective directors, officers,
employees, agents and representatives, and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the "ATI
Indemnitees"), and Teledyne Technologies, each member of the Teledyne
Technologies Group and each of their respective directors, officers and
employees, and each of the heirs, executors, successors and assigns of any of
the foregoing (collectively, the "Teledyne Technologies Indemnitees"), from and
against any and all Liabilities of the ATI Indemnitees and the Teledyne
Technologies Indemnitees, respectively, relating to, arising out of or resulting
from any of the following items (without duplication):
(a) the failure of Water Pik or any other member of the Water
Pik Group or any other Person to pay, perform or otherwise promptly discharge
any Water Pik Liabilities or Water Pik Contract in accordance with their
respective terms, whether prior to or after the Effective Time or the date
hereof;
(b) the Water Pik Business, any Water Pik Liability or any
Water Pik Contract;
(c) any breach by Water Pik or any member of the Water Pik
Group of this Agreement or any of the Ancillary Agreements;
(d) the operation of the Water Pik Business, as conducted at
any time prior to, on or after the Distribution Date (including any Liability
relating to, arising out of or resulting from any act or failure to act by any
director, officer, employee, agent or representative (whether or not such act or
failure to act is or was within such Person's authority));
(e) any infringement of any Intellectual Property right of any
third party, including, but not limited to, patent rights, trademark and service
mark rights (registered and common law), trade dress rights, copyrights,
misappropriation of trade secret, based upon or resulting from the operation of
the Water Pik Business and regardless of whether said alleged infringement
occurred prior to, on or after the Distribution Date or any claim based on the
actual or alleged invalidity, unenforceability or transferability or ownership
of Intellectual Property to be transferred hereby or pursuant to any Ancillary
Agreement;
(f) Liabilities assumed by any member of the Water Pik Group
under any Ancillary Agreement;
(g) any guarantee, indemnity, representation, warranty or
other Liability of or made by any member of the ATI Group in respect of any
Liability or alleged Liability of any member of the Water Pik Group; and.
(h) any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
with respect to all information contained in the Form 10 Registration Statement
or the Information Statement.
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5.03. INDEMNIFICATION BY ATI . (a) ATI shall indemnify, defend
and hold harmless Water Pik, each member of the Water Pik Group and each of
their respective directors, officers, employees, agents and representatives, and
each of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "Water Pik Indemnitees"), from and against any and all
Liabilities of the Water Pik Indemnitees relating to, arising out of or
resulting from any of the following items (without duplication):
(a) the failure of ATI or any other member of the ATI Group to
pay, perform or otherwise promptly discharge any ATI Liabilities; and
(b) any breach by ATI of this Agreement or any of the
Ancillary Agreements.
5.04. INDEMNIFICATION OBLIGATIONS NET OF INSURANCE PROCEEDS
AND OTHER AMOUNTS. (a) The parties intend that any Liability subject to
indemnification or reimbursement pursuant to this Article V will be net of
Insurance Proceeds that actually reduce the amount of the Liability.
Accordingly, the amount which any party (an "Indemnifying Party") is required to
pay to any Person entitled to indemnification hereunder (an "Indemnitee") will
be reduced by any Insurance Proceeds theretofore actually recovered by or on
behalf of the Indemnitee in reduction of the related Liability. If an Indemnitee
receives a payment (an "Indemnity Payment") required by this Agreement from an
Indemnifying Party in respect of any Liability and subsequently receives
Insurance Proceeds, then the Indemnitee will pay to the Indemnifying Party an
amount equal to the excess of the Indemnity Payment received over the amount of
the Indemnity Payment that would have been due if the Insurance Proceeds had
been received, realized or recovered before the Indemnity Payment was made.
(b) An insurer who would otherwise be obligated to pay any
claim shall not be relieved of the responsibility with respect thereto or,
solely by virtue of the indemnification provisions hereof, have any subrogation
rights with respect thereto, it being expressly understood and agreed that no
insurer or any other third party shall be entitled to a "windfall" (i.e., a
benefit they would not be entitled to receive in the absence of the
indemnification provisions) by virtue of the indemnification provisions hereof.
Nothing contained in this Agreement or any Ancillary Agreement shall obligate
any member of any Group to seek to collect or recover any Insurance Proceeds.
5.05. PROCEDURES FOR INDEMNIFICATION OF THIRD PARTY CLAIMS.
(a) If an Indemnitee shall receive notice or otherwise learn of the assertion by
a Person (including any Governmental Authority) who is not a member of the ATI
Group or the Water Pik Group of any claim or of the commencement by any such
Person of any Action (collectively, a "Third Party Claim") with respect to which
an Indemnifying Party may be obligated to provide indemnification to such
Indemnitee pursuant to Section 5.02 or 5.03, or any other Section of this
Agreement or any Ancillary Agreement, such Indemnitee shall give such
Indemnifying Party and, if ATI is not the Indemnifying Party, ATI written notice
thereof as soon as practicable but in any event not less than 20 days after
becoming aware of such Third Party Claim. Any such notice shall describe the
Third Party Claim in reasonable detail. Notwithstanding the foregoing, the
failure of any Indemnitee or other Person to give notice as provided in this
Section 5.05(a) shall not relieve the related Indemnifying Party of its
obligations
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under this Article V, except to the extent that such Indemnifying Party is
actually prejudiced by such failure to give notice.
(b) An Indemnifying Party may elect to defend (and, unless the
Indemnifying Party has specified any reservations or exceptions, to seek to
settle or compromise), at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third Party Claim. Within 30 days after
the receipt of notice from an Indemnitee in accordance with Section 5.05(a) (or
sooner, if the nature of such Third Party Claim so requires), the Indemnifying
Party shall notify the Indemnitee of its election whether the Indemnifying Party
will assume responsibility for defending such Third Party Claim, which election
shall specify any reservations or exceptions. After notice from an Indemnifying
Party to an Indemnitee of its election to assume the defense of a Third Party
Claim, such Indemnitee shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof,
but the fees and expenses of such counsel shall be the expense of such
Indemnitee except as set forth in the next sentence. In the event that the
Indemnifying Party has elected to assume the defense of the Third Party Claim
but has specified, and continues to assert, any reservations or exceptions in
such notice, then, in any such case, the reasonable fees and expenses of one
separate counsel for all Indemnitees shall be borne by the Indemnifying Party.
(c) If an Indemnifying Party elects not to assume
responsibility for defending a Third Party Claim, or fails to notify an
Indemnitee of its election as provided in Section 5.05(b), such Indemnitee may
defend such Third Party Claim at the cost and expense (including allocated costs
of in-house counsel and other personnel) of the Indemnifying Party.
(d) Unless the Indemnifying Party has failed to assume the
defense of the Third Party Claim in accordance with the terms of this Agreement,
no Indemnitee may settle or compromise any Third Party Claim without the consent
of the Indemnifying Party.
(e) No Indemnifying Party shall consent to entry of any
judgment or enter into any settlement of the Third Party Claim without the
consent of the Indemnitee if the effect thereof is to permit any injunction,
declaratory judgment, other order or other nonmonetary relief to be entered,
directly or indirectly, against any Indemnitee.
5.06. ADDITIONAL MATTERS. (a) Any claim on account of a
Liability which does not result from a Third Party Claim shall be asserted by
written notice given by the Indemnitee to the related Indemnifying Party. Such
Indemnifying Party shall have a period of 30 days after the receipt of such
notice within which to respond thereto. If such Indemnifying Party does not
respond within such 30-day period, such Indemnifying Party shall be deemed to
have refused to accept responsibility to make payment. If such Indemnifying
Party does not respond within such 30-day period or rejects such claim in whole
or in part, such Indemnitee shall be free to pursue such remedies as may be
available to such party as contemplated by this Agreement and the Ancillary
Agreements.
(b) In the event of payment by or on behalf of any
Indemnifying Party to any Indemnitee in connection with any Third Party Claim,
such Indemnifying Party shall be subrogated to and shall stand in the place of
such Indemnitee as to any events or circumstances in
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respect of which such Indemnitee may have any right, defense or claim relating
to such Third Party Claim against any claimant or plaintiff asserting such Third
Party Claim or against any other person. Such Indemnitee shall cooperate with
such Indemnifying Party in a reasonable manner, and at the cost and expense
(including allocated costs of in-house counsel and other personnel) of such
Indemnifying Party, in prosecuting any subrogated right, defense or claim.
(c) In the event of an Action in which the Indemnifying Party
is not a named defendant, if either the Indemnified Party or Indemnifying Party
shall so request, the parties shall endeavor to substitute the Indemnifying
Party for the named defendant. If such substitution or addition cannot be
achieved for any reason or is not requested, the named defendant shall allow the
Indemnifying Party to manage the Action as set forth in this Section and the
Indemnifying Party shall fully indemnify the named defendant against all costs
of defending the Action (including court costs, sanctions imposed by a court,
attorneys' fees, experts' fees and all other external expenses, and the
allocated costs of in-house counsel and other personnel), the costs of any
judgment or settlement, and the cost of any interest or penalties relating to
any judgment or settlement.
5.07. REMEDIES CUMULATIVE. The remedies provided in this
Article V shall be cumulative and shall not preclude assertion by any Indemnitee
of any other rights or the seeking of any and all other remedies against any
Indemnifying Party.
5.08. SURVIVAL OF INDEMNITIES. The rights and obligations of
each of the Indemnitees under this Article V shall survive the sale or other
transfer by any party of any Assets or businesses or the assignment by it of any
Liabilities.
ARTICLE VI
CERTAIN OTHER MATTERS
6.01. INSURANCE MATTERS. (a) In no event shall ATI, any other
member of the ATI Group or any ATI Indemnitee have any liability or obligation
whatsoever to any member of the Water Pik Group in the event that any Insurance
Policy or other contract or policy of insurance shall be terminated or otherwise
cease to be in effect for any reason, shall be unavailable or inadequate to
cover any Liability of any member of the Water Pik Group for any reason
whatsoever or shall not be renewed or extended beyond the current expiration
date.
(b) (i) Except as otherwise provided in any Ancillary
Agreement, the parties intend by this Agreement that Water Pik and each other
member of the Water Pik Group be successors-in-interest to all rights that any
member of the Water Pik Group may have as of the Distribution Date as a
subsidiary, affiliate, division or department of ATI prior to the Distribution
Date under any policy of insurance issued to ATI and intended to insure the
Water Pik Group by any insurance carrier unaffiliated with ATI or under any
agreements related to such policies executed and delivered prior to the
Distribution Date, including any rights such member of the Water Pik Group may
have, as an insured or additional named insured, subsidiary, affiliate, division
or department, to avail itself of any such policy of insurance or any such
agreements related to such policies as in effect prior to the Distribution Date.
At the request of Water Pik, ATI shall take all reasonable steps, including the
execution and delivery of any instruments, to
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effect the foregoing; provided however that ATI shall not be required to pay any
amounts, waive any rights or incur any Liabilities in connection therewith.
(ii) Except as otherwise contemplated by any Ancillary
Agreement, after the Distribution Date, neither of ATI nor Water Pik or any
member of their respective Groups shall, without the consent of the other,
provide any such insurance carrier with a release, or amend, modify or waive any
rights under any such policy or agreement, if such release, amendment,
modification or waiver would adversely affect any rights or potential rights of
any member of the other Group thereunder; provided however that the foregoing
shall not (A) preclude any member of any Group from presenting any claim or from
exhausting any policy limit, (B) require any member of any Group to pay any
premium or other amount or to incur any Liability, or (C) require any member of
any Group to renew, extend or continue any policy in force. Each of Water Pik
and ATI will, and will cause its respective Group to, share such information as
is reasonably necessary in order to permit the other to manage and conduct its
insurance matters in an orderly fashion.
(c) This Agreement shall not be considered as an attempted
assignment of any policy of insurance or as a contract of insurance and shall
not be construed to waive any right or remedy of any member of the ATI Group in
respect of any Insurance Policy or any other contract or policy of insurance.
(d) Water Pik does hereby, for itself and each other member of
the Water Pik Group, agree that no member of the ATI Group or any ATI Indemnitee
shall have any Liability whatsoever as a result of the insurance policies and
practices of ATI and its Affiliates as in effect at any time prior to the
Distribution Date, including as a result of the level or scope of any such
insurance, the creditworthiness of any insurance carrier, the terms and
conditions of any policy, the adequacy or timeliness of any notice to any
insurance carrier with respect to any claim or potential claim or otherwise.
(e) Nothing in this Agreement shall be deemed to restrict any
member of the Water Pik Group from acquiring at its own expense any other
insurance policy in respect of any Liabilities or covering any period.
(f) With respect to policy periods prior to the Distribution
Date:
(i) Water Pik shall be responsible for: (A) all
Unpaid Losses (but not to exceed the applicable Per Case Maximum) as of
the Distribution Date attributable to Water Pik Liabilities covered
under ATI Automobile Policies and ATI Workers Compensation Policies for
policies in effect prior to the Distribution Date; and (B) Pooled Loss
Costs Allocable to Water Pik.
(ii) On or before June 1, 2000 and on a quarterly
basis thereafter, ATI shall provide Water Pik with a calculation of
amounts due ATI or refunds due Water Pik for Water Pik's obligations
incurred under ATI Automobile Policies and ATI Workers Compensation
Policies for policies under subparagraph immediately (i) above. The
initial calculations shall be based on (A) the change in total Incurred
Losses between the
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Distribution Date and March 31, 2000 for all such policies in effect
prior to the Distribution Date multiplied by the Expense Factors set
forth in such policies and applicable to such Incurred Losses, but
only with respect to that portion of Incurred Losses attributable to
Water Pik Liabilities not exceeding the applicable Per Case Maximum;
and (B) the change in Pooled Loss Costs Allocable to Water Pik for the
period between the Distribution Date and March 31, 2000 for all such
policies in effect prior to the Distribution Date. Subsequent
calculations shall be based on (A) the change in total Incurred Losses
for the subsequent quarterly periods multiplied by the Expense Factors
set forth in such policies and applicable to such losses; but only
with respect to that portion of losses attributable to Water Pik
Liabilities not exceeding the applicable Per Case Maximum, and (B) the
change in Pooled Loss Costs Allocable to Water Pik for the subsequent
quarterly period. It is specifically understood and agreed that Water
Pik Liabilities and losses that are covered under ATI Policies, other
than ATI Workers Compensation Policies and ATI Automobile Policies,
shall not be subject to a pooling arrangement among ATI divisions that
prior to the Distribution Date applied with respect to certain claims
subject to a Self-Insurance Obligation.
(iii) Within 30 days after receipt by Water Pik of
ATI's calculations referred to in subparagraph (ii) immediately above,
Water Pik on the one hand and ATI on the other hand shall pay to the
other the net amount owed after taking into account the combined
amounts reflected on the calculations.
(g) At its sole option, ATI shall have the right to handle,
defend, resolve, and administer claims in its sole discretion, with respect to
Water Pik Liabilities covered, in whole or in part, by ATI Policies, including,
without limitation, the reporting of claims to the issuers of such ATI Policies
insurance carriers, as well as the management, defense and settlement of claims.
ATI will not enter into any such settlement of a claim without the consent of
Water Pik (which will not be unreasonably withheld) if the effect thereof is to
render Water Pik liable for a monetary obligation with respect to such claim.
Water Pik agrees to cooperate, at its own expense, with ATI in the reporting,
handling, defense, resolution and administration of such claims. Alternatively,
ATI, at its sole option shall have the right to require, at any time and from
time to time, that Water Pik and any member of the Water Pik Group, at their
sole expense, defend, resolve and administer any one or more or all claims with
respect to Water Pik Liabilities covered in whole, or in part, by ATI Policies,
including without limitation, the reporting of claims to the issuers of such ATI
Policies, as well as the management, defense and settlement of such claims and,
if ATI exercises such option, Water Pik and members of the Water Pik Group, at
ATI's request, shall at their expense provide ATI with any and all information
concerning, and permit ATI to monitor, the foregoing management, defense,
settlement and insurance handling of such claims. Except with the express
written consent of ATI, neither Water Pik nor any member of the Water Pik Group
shall provide any issuer of ATI Policies with a release, nor shall they amend,
modify, or waive any rights under such ATI Policies, if such release, amendment,
modification or waiver would adversely affect rights or potential rights of ATI
or any other member of the ATI Group.
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(h) With respect to policies procured by or for the Water Pik
Group subsequent to January 1999 and to policy years commencing on or after the
Distribution Date, Water Pik shall be responsible for all aspects of claims
administration with respect to Water Pik Liabilities, and ATI shall have no
responsibility therefor whatsoever.
(i) With respect to any Water Pik Liabilities or Water Pik
losses covered under ATI Policies other than ATI Workers Compensation Policies
and ATI Automobile Policies, including, but not limited to ATI General Liability
Policies and ATI Product Liability Policies, Water Pik shall be responsible for
all Unpaid Losses and all costs and expenses that give rise to a Self-Insurance
Obligation. In the event that ATI pays any such costs and expenses, Water Pik
shall reimburse ATI within thirty days of receipt of a billing for any such
costs and expenses.
6.02. CERTAIN BUSINESS MATTERS. No member of any Group shall
have any duty to refrain from (i) engaging in the same or similar activities or
lines of business as any member of any other Group, (ii) doing business with any
potential or actual supplier or customer of any member of any other Group, or
(iii) engaging in, or refraining from, any other activities whatsoever relating
to any of the potential or actual suppliers or customers of any member of any
other Group.
6.03. LATE PAYMENTS. Except as expressly provided to the
contrary in this Agreement or in any Ancillary Agreement, any amount not paid
when due pursuant to this Agreement or any Ancillary Agreement (and any amounts
billed or otherwise invoiced or demanded and properly payable that are not paid
within 30 days of such bill, invoice or other demand) shall accrue interest at a
rate per annum equal to the Prime Rate plus 2%.
6.04. CERTAIN GOVERNANCE MATTERS. (a) Water Pik and ATI intend
that until the third annual meeting of stockholders of Water Pik held following
the Distribution Date, at least a majority of the members of the Board of
Directors of Water Pik will at all times consist of persons who are also members
of the Board of Directors of ATI. The initial members of the Board of Directors
of Water Pik and the respective initial Classes of the Board in which they will
serve are as follows:
Class I: Charles J. Queenan, Jr.
James E. Rohr
Class II: Michael P. Hoopis
William G. Ouchi
Class III: Robert P. Bozzone (Chairman)
W. Craig McClelland
(b) Water Pik will, with respect to the first annual meeting
of stockholders of Water Pik held following the Distribution Date, nominate for
election and recommend to stockholders the election of Charles J. Queenan, Jr.
and James E. Rohr (or, if either such candidate is unable or unwilling to serve,
such other candidate as Messrs. Bozzone and McClelland or the survivor of them
shall designate) to serve as a continuing Class I directors of Water Pik.
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(c) Water Pik shall take such action from time to time as ATI
requests in order to assure that, until the third annual meeting of stockholders
of Water Pik following the Distribution Date, at least a majority of the members
of the Board of Directors of Water Pik will at all times consist of persons who
are also members of the Board of Directors of ATI. Without limiting the
generality of the foregoing, if for any reason (including death, resignation or
disqualification) there are no directors of Water Pik who are also directors of
ATI, Water Pik will immediately take all action requested by ATI to appoint to
the Board of Directors of Water Pik such members of the Board of Directors of
ATI as ATI shall designate.
ARTICLE VII
EXCHANGE OF INFORMATION; CONFIDENTIALITY
7.01. AGREEMENT FOR EXCHANGE OF INFORMATION; ARCHIVES. (a)
Each of ATI and Water Pik, on behalf of itself and its respective Group, agrees
to provide, or cause to be provided, to each other Group, at any time before or
after the Distribution Date, as soon as reasonably practicable after written
request therefor, any Information in the possession or under the control of such
respective Group which the requesting party reasonably requires (i) to comply
with reporting, disclosure, filing or other requirements imposed on the
requesting party (including under applicable securities or tax laws) by a
Governmental Authority having jurisdiction over the requesting party, (ii) for
use in any other judicial, regulatory, administrative, tax or other proceeding
or in order to satisfy audit, accounting, claims, regulatory, litigation, tax or
other similar requirements, or (iii) to comply with its obligations under this
Agreement or any Ancillary Agreement; provided, however, that in the event that
any party determines that any such provision of Information could be
commercially detrimental, violate any law or agreement, or waive any
attorney-client privilege, the parties shall take all reasonable measures to
permit the compliance with such obligations in a manner that avoids any such
harm or consequence.
(b) After the Distribution Date, each of ATI and Water Pik
shall have access during regular business hours (as in effect from time to time)
to the documents and objects of historic significance that relate to the their
respective Businesses that are in the possession of any other of such parties or
members of their respective Groups. Any party seeking such access may, at its
cost, obtain copies (but not originals) of documents for bona fide business
purposes and may obtain objects for exhibition purposes for commercially
reasonable periods of time if required for bona fide business purposes, provided
that such party shall cause any such objects to be returned promptly in the same
condition in which they were delivered and shall comply with any rules,
procedures or other requirements, and shall be subject to any restrictions
(including prohibitions on removal of specified objects), that are then
applicable to the possessing party.
(c) After the Distribution Date, (i) Water Pik shall maintain
in effect adequate systems and controls to the extent necessary to enable the
members of the ATI Group to satisfy their respective reporting, accounting,
audit and other obligations, and (ii) Water Pik shall provide, or cause to be
provided, to ATI, all financial and other data and information as ATI determines
necessary or advisable in order to prepare ATI financial statements and reports
or filings with any Governmental Authority.
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7.02. OWNERSHIP OF INFORMATION. Any Information owned by one
Group that is provided to a requesting party pursuant to Section 7.01 shall be
deemed to remain the property of the providing party. Unless specifically set
forth herein, nothing contained in this Agreement shall be construed as granting
or conferring rights of license or otherwise in any such Information.
7.03. COMPENSATION FOR PROVIDING INFORMATION. The party
requesting such Information agrees to reimburse the other party for the
reasonable costs, if any, of creating, gathering and copying such Information,
to the extent that such costs are incurred for the benefit of the requesting
party. Except as may be otherwise specifically provided elsewhere in this
Agreement or in any other agreement between the parties, such costs shall be
computed in accordance with the providing party's standard methodology and
procedures.
7.04. RECORD RETENTION. To facilitate the possible exchange of
Information pursuant to this Article VII and other provisions of this Agreement
after the Distribution Date, the parties agree to use their reasonable best
efforts to retain all Information in their respective possession or control on
the Distribution Date in accordance with the policies of ATI as in effect on the
Distribution Date. No party will destroy, or permit any of its Subsidiaries to
destroy, any Information which the other party may have the right to obtain
pursuant to this Agreement prior to the seventh anniversary of the date hereof
without first using its reasonable best efforts to notify the other party of the
proposed destruction and giving the other party the opportunity to take
possession of such information prior to such destruction; provided, however,
that in the case of any Information relating to Taxes or to Environmental
Liabilities, such period shall be extended to the expiration of the applicable
statute of limitations (giving effect to any extensions thereof).
7.05. OTHER AGREEMENTS PROVIDING FOR EXCHANGE OF INFORMATION.
The rights and obligations granted under this Article VII are subject to any
specific limitations, qualifications or additional provisions on the sharing,
exchange or confidential treatment of Information set forth in any Ancillary
Agreement.
7.06. PRODUCTION OF WITNESSES; RECORDS; COOPERATION. (a) After
the Distribution Date, except in the case of an adversarial Action by one party
against another party, each party hereto shall use its reasonable efforts to
make available to each other party, upon written request, the former, current
and future directors, officers, employees, other personnel and agents of the
members of its respective Group as witnesses and any books, records or other
documents within its control or which it otherwise has the ability to make
available, to the extent that any such person (giving consideration to business
demands of such directors, officers, employees, other personnel and agents) or
books, records or other documents may reasonably be required in connection with
any Action in which the requesting party may from time to time be involved,
regardless of whether such Action is a matter with respect to which
indemnification may be sought hereunder. The requesting party shall bear all
costs and expenses (including allocated costs of in-house counsel and other
personnel) in connection therewith.
(b) If an Indemnifying Party chooses to defend or to seek to
compromise or settle any Third Party Claim, the other parties shall make
available to such Indemnifying Party, upon written request, the former, current
and future directors, officers, employees, other personnel and
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agents of the members of its respective Group as witnesses and any books,
records or other documents within its control or which it otherwise has the
ability to make available, to the extent that any such person (giving
consideration to business demands of such directors, officers, employees, other
personnel and agents) or books, records or other documents may reasonably be
required in connection with such defense, settlement or compromise, or such
prosecution, evaluation or pursuit, as the case may be, and shall otherwise
cooperate in such defense, settlement or compromise, or such prosecution,
evaluation or pursuit, as the case may be.
(c) Without limiting any provision of this Section, the
parties shall cooperate and consult to the extent reasonably necessary with
respect to any Action, and each of the parties agrees to cooperate, and to cause
each member of its respective Group to cooperate, with each other in the defense
of any infringement or similar claim with respect to any intellectual property
and shall not claim to acknowledge, or permit any member of its respective Group
to claim to acknowledge, the validity or infringing use of any intellectual
property of a third Person in a manner that would hamper or undermine the
defense of such infringement or similar claim.
(d) The obligation of the parties to provide witnesses
pursuant to this Section 7.06 is intended to be interpreted in a manner so as to
facilitate cooperation and shall include the obligation to provide as witnesses
inventors and other officers without regard to whether the witness or the
employer of the witness could assert a possible business conflict (subject to
the qualifications set forth in the first sentence of Section 7.06(a)).
(e) In connection with any matter contemplated by this Section
7.06, the parties will enter into a mutually acceptable joint defense agreement
so as to maintain to the extent practicable any applicable attorney-client
privilege or work product immunity of any member of any Group.
7.07. CONFIDENTIALITY. (a) Subject to Section 7.08, each of
ATI and Water Pik, on behalf of itself and each member of its respective Group,
agrees to hold, and to cause its respective directors, officers, employees,
agents, accountants, counsel and other advisors and representatives to hold, in
strict confidence, with at least the same degree of care that applies to ATI's
confidential and proprietary information pursuant to policies in effect as of
the Distribution Date, all Information concerning each such other Group that is
either in its possession or furnished by any such other Group or its respective
directors, officers, employees, agents, accountants, counsel and other advisors
and representatives at any time pursuant to this Agreement, any Ancillary
Agreement or otherwise, and shall not use any such Information other than for
such purposes as shall be expressly permitted hereunder or thereunder, except,
in each case, to the extent that such Information has been (i) in the public
domain through no fault of such party or any member of such Group or any of
their respective directors, officers, employees, agents, accountants, counsel
and other advisors and representatives, (ii) later lawfully acquired from other
sources by such party (or any member of such party's Group) which sources are
not themselves bound by a confidentiality obligation), or (iii) independently
generated without reference to any proprietary or confidential Information of
the other party.
(b) Each party agrees not to release or disclose, or permit to
be released or disclosed, any such Information to any other Person, except its
directors, officers, employees,
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agents, accountants, counsel and other advisors and representatives who need to
know such Information (who shall be advised of their obligations hereunder with
respect to such Information), except in compliance with Section 7.08. Without
limiting the foregoing, when any Information is no longer needed for the
purposes contemplated by this Agreement or any Ancillary Agreement, each party
will promptly after request of the other party either return to the other party
all Information in a tangible form (including all copies thereof and all notes,
extracts or summaries based thereon) or certify to the other party that it has
destroyed such Information (and such copies thereof and such notes, extracts or
summaries based thereon).
7.08. PROTECTIVE ARRANGEMENTS. In the event that any party or
any member of its Group either determines on the advice of its counsel that it
is required to disclose any Information pursuant to applicable law or receives
any demand under lawful process or from any Governmental Authority to disclose
or provide Information of any other party (or any member of any other party's
Group) that is subject to the confidentiality provisions hereof, such party
shall notify the other party prior to disclosing or providing such Information
and shall cooperate at the expense of the requesting party in seeking any
reasonable protective arrangements requested by such other party. Subject to the
foregoing, the Person that received such request may thereafter disclose or
provide Information to the extent required by such law (as so advised by
counsel) or by lawful process or such Governmental Authority.
ARTICLE VIII
FURTHER ASSURANCES
8.01. FURTHER ASSURANCES. (a) In addition to the actions
specifically provided for elsewhere in this Agreement, each of the parties
hereto shall use its reasonable efforts, prior to, on and after the Distribution
Date, to take, or cause to be taken, all actions, and to do, or cause to be
done, all things, reasonably necessary, proper or advisable under applicable
laws, regulations and agreements to consummate and make effective the
transactions contemplated by this Agreement and the Ancillary Agreements.
(b) Without limiting the foregoing, prior to, on and after the
date hereof, each party hereto shall cooperate with the other parties, and
without any further consideration, but at the expense of the requesting party,
to execute and deliver, or use its reasonable efforts to cause to be executed
and delivered, all instruments, including instruments of conveyance, assignment
and transfer, and to make all filings with, and to obtain all consents,
approvals or authorizations of, any Governmental Authority or any other Person
under any permit, license, agreement, indenture or other instrument (including
any Consents or Governmental Approvals), and to take all such other actions as
such party may reasonably be requested to take by any other party hereto from
time to time, consistent with the terms of this Agreement and the Ancillary
Agreements, in order to effectuate the provisions and purposes of this Agreement
and the Ancillary Agreements and the transfers of the Water Pik Assets and the
assignment and assumption of the Water Pik Liabilities and the other
transactions contemplated hereby and thereby. Without limiting the foregoing,
each party will, at the reasonable request, cost and expense of any other party,
take such other actions as may be reasonably necessary to vest in such other
party good and
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marketable title, free and clear of any Security Interest, if and to the extent
it is practicable to do so.
(c) On or prior to the Distribution Date, ATI and Water Pik in
their respective capacities as direct and indirect stockholders of their
respective Subsidiaries, shall each ratify any actions which are reasonably
necessary or desirable to be taken by ATI or Water Pik or any other Subsidiary
of ATI, as the case may be, to effectuate the transactions contemplated by this
Agreement.
(d) ATI and Water Pik, on behalf of itself and each of member
of its respective Group, waive (and agree not to assert against any of the
others) any claim or demand that any of them may have against any of the others
for any Liabilities or other claims relating to or arising out of: (i) the
failure of Water Pik or any member of the Water Pik Group, on the one hand, or
of ATI or any member of the ATI Group, on the other hand, to provide any
notification or disclosure required under any state Environmental Law in
connection with the Separation or the other transactions contemplated by this
Agreement, including the transfer by any member of any Group to any member of
any other Group of ownership or operational control of any Assets not previously
owned or operated by such transferee; or (ii) any inadequate, incorrect or
incomplete notification or disclosure under any such state Environmental Law by
the applicable transferor. To the extent any Liability to any Governmental
Authority or any third Person arises out of any action or inaction described in
clause (i) or (ii) above, the transferee of the applicable Asset hereby assumes
and agrees to pay any such Liability.
ARTICLE IX
TERMINATION
9.01. TERMINATION. This Agreement may be terminated by ATI at
any time prior to the Distribution.
9.02. EFFECT OF TERMINATION. In the event of any termination
of this Agreement pursuant to Section 9.01, no party to this Agreement (or any
of its directors or officers) shall have any Liability or further obligation to
any other party.
ARTICLE X
MISCELLANEOUS
10.01. COUNTERPARTS; ENTIRE AGREEMENT; CORPORATE POWER. (a)
This Agreement and each Ancillary Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
(b) This Agreement, and the Ancillary Agreements and the
Exhibits, Schedules and Appendices hereto and thereto contain the entire
agreement between the parties with respect to the subject matter hereof,
supersede all previous agreements, negotiations, discussions, writings,
understandings, commitments and conversations with respect to such subject
matter and
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there are no agreements or understandings between the parties other than those
set forth or referred to herein or therein.
(c) ATI represents on behalf of itself and each other member
of the ATI Group and Water Pik represents on behalf of itself and each other
member of the Water Pik Group, as follows:
(i) each such Person has the requisite corporate or
other power and authority and has taken all corporate or other action
necessary in order to execute, deliver and perform each of this
Agreement and each other Ancillary Agreements to which it is a party
and to consummate the transactions contemplated hereby and thereby; and
(ii) this Agreement and each Ancillary Agreement to
which it is a party has been duly executed and delivered by it and
constitutes a valid and binding agreement of it enforceable in
accordance with the terms thereof.
(d) Each party hereto acknowledges that it and each other
party hereto may be executing certain of the Ancillary Agreements by facsimile,
stamp or mechanical signature. Each party hereto expressly adopts and confirms
each such facsimile, stamp or mechanical signature made in its respective name
as if it were a manual signature, agrees that it will not assert that any such
signature is not adequate to bind such party to the same extent as if it were
signed manually and agrees that at the reasonable request of any other party
hereto at any time it will as promptly as reasonably practicable cause each such
Ancillary Agreement to be manually executed (any such execution to be as of the
date of the initial date thereof).
10.02. GOVERNING LAW; CONSENT TO JURISDICTION. (a) This
Agreement and, unless expressly provided therein, each Ancillary Agreement,
shall be governed by and construed and interpreted in accordance with the laws
of the Commonwealth of Pennsylvania as to all matters, including matters of
validity, construction, effect, enforceability, performance and remedies,
irrespective of the choice of laws principles of the Commonwealth of
Pennsylvania.
(b) Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of (i) the Court of Common Pleas of Allegheny County,
Pennsylvania and (ii) the United States District Court for the Western District
of Pennsylvania, for the purposes of any suit, action or other proceeding
arising out of this Agreement or any Ancillary Agreement or any transaction
contemplated hereby or thereby (and agrees not to commence any action, suit or
proceeding relating thereto except in such courts). Each of the parties hereto
further agrees that service of any process, summons, notice or document hand
delivered or sent by U.S. registered mail to such party's respective address set
forth in Section 10.05 will be effective service of process for any action, suit
or proceeding in Pennsylvania with respect to any matters to which it has
submitted to jurisdiction as set forth in the immediately preceding sentence.
Each of the parties hereto irrevocably and unconditionally waives any objection
to the laying of venue of any action, suit or proceeding arising out of this
Agreement or any Ancillary Agreement or the transactions contemplated hereby or
thereby in (i) the Court of Common Pleas of Allegheny County, Pennsylvania or
(ii) the United States District Court for the Western District of Pennsylvania,
and
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hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
10.03. ASSIGNABILITY. Except as set forth in any Ancillary
Agreement, this Agreement and each Ancillary Agreement shall be binding upon and
inure to the benefit of the parties hereto and thereto, respectively, and their
respective successors and assigns (including any direct or indirect assignee of
any of the Water Pik Assets); provided, however, that no party hereto or thereto
may assign its respective rights or delegate its respective obligations under
this Agreement or any Ancillary Agreement without the express prior written
consent of the other parties hereto or thereto.
10.04. THIRD PARTY BENEFICIARIES. Except for the
indemnification rights under this Agreement of any ATI Indemnitee, Water Pik
Indemnitee or Teledyne Technologies Indemnitee in their respective capacities as
such, (a) the provisions of this Agreement and each Ancillary Agreement are
solely for the benefit of the parties and are not intended to confer upon any
Person except the parties any rights or remedies hereunder, (b) there are no
third party beneficiaries of this Agreement or any Ancillary Agreement, and (c)
neither this Agreement nor any Ancillary Agreement shall provide any third
person with any remedy, claim, liability, reimbursement, claim of action or
other right in excess of those existing without reference to this Agreement or
any Ancillary Agreement. No party hereto shall have any right, remedy or claim
with respect to any provision of this Agreement or any Ancillary Agreement to
the extent such provision relates solely to the other two parties hereto or the
members of such other two parties' respective Groups. No party shall be required
to deliver any notice under this Agreement or under any Ancillary Agreement to
any other party with respect to any matter in which such other party has no
right, remedy or claim.
10.05. NOTICES. All notices or other communications under this
Agreement or any Ancillary Agreement shall be in writing and shall be deemed to
be duly given when (a) delivered in person or (b) deposited in the United States
mail or private express mail, postage prepaid, addressed as follows:
If to ATI, Holdings
or TII, to: Allegheny Teledyne Incorporated
1000 Six PPG Place
Pittsburgh, Pennsylvania 15222-5479
Attn: Senior Vice President, General Counsel & Secretary
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If to Water Pik
to: Water Pik Technologies, Inc.
660 Newport Center Drive, Suite 470
Newport Beach, California 92660
Attn: President
Any party may, by notice to the other party, change the address to which such
notices are to be given.
10.06. SEVERABILITY. If any provision of this Agreement or any
Ancillary Agreement or the application thereof to any Person or circumstance is
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions hereof or thereof, or the application of
such provision to Persons or circumstances or in jurisdictions other than those
as to which it has been held invalid or unenforceable, shall remain in full
force and effect and shall in no way be affected, impaired or invalidated
thereby, so long as the economic or legal substance of the transactions
contemplated hereby or thereby, as the case may be, is not affected in any
manner adverse to any party. Upon such determination, the parties shall
negotiate in good faith in an effort to agree upon such a suitable and equitable
provision to effect the original intent of the parties.
10.07. FORCE MAJEURE. No party shall be deemed in default of
this Agreement or any Ancillary Agreement to the extent that any delay or
failure in the performance of its obligations under this Agreement or any
Ancillary Agreement results from any cause beyond its reasonable control and
without its fault or negligence, such as acts of God, acts of civil or military
authority, embargoes, epidemics, war, riots, insurrections, fires, explosions,
earthquakes, floods, unusually severe weather conditions, labor problems or
unavailability of parts, or, in the case of computer systems, Year 2000 problems
or any failure in electrical or air conditioning equipment. In the event of any
such excused delay, the time for performance shall be extended for a period
equal to the time lost by reason of the delay.
10.08. HEADINGS. The article, section and paragraph headings
contained in this Agreement and in the Ancillary Agreements are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement or any Ancillary Agreement.
10.09. SURVIVAL OF COVENANTS. Except as expressly set forth in
any Ancillary Agreement, the covenants, representations and warranties contained
in this Agreement and each Ancillary Agreement, and liability for the breach of
any obligations contained herein, shall survive each of the Separation and the
Distribution and shall remain in full force and effect.
10.10. WAIVERS OF DEFAULT. Waiver by any party of any default
by the other party of any provision of this Agreement or any Ancillary Agreement
shall not be deemed a waiver by the waiving party of any subsequent or other
default, nor shall it prejudice the rights of the other party.
10.11. SPECIFIC PERFORMANCE. In the event of any actual or
threatened default in, or breach of, any of the terms, conditions and provisions
of this Agreement or any
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Ancillary Agreement, the party or parties who are or are to be thereby aggrieved
shall have the right to specific performance and injunctive or other equitable
relief of its rights under this Agreement or such Ancillary Agreement, in
addition to any and all other rights and remedies at law or in equity, and all
such rights and remedies shall be cumulative. The parties agree that the
remedies at law for any breach or threatened breach, including monetary damages,
are inadequate compensation for any loss and that any defense in any action for
specific performance that a remedy at law would be adequate is waived. Any
requirements for the securing or posting of any bond with such remedy are
waived.
10.12. AMENDMENTS. No provisions of this Agreement or any
Ancillary Agreement shall be deemed waived, amended, supplemented or modified by
any party, unless such waiver, amendment, supplement or modification is in
writing and signed by the authorized representative of the party against whom it
is sought to enforce such waiver, amendment, supplement or modification. Without
limiting the foregoing, the parties agree that any waiver, amendment, supplement
or modification of this Agreement or any Ancillary Agreement that solely relates
to and affects only two of the three parties hereto shall not require the
consent of the third party hereto.
10.13. INTERPRETATION. Words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to
include the other genders as the context requires. The terms "hereof," "herein,"
and "herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement (or the applicable Ancillary Agreement) as
a whole (including all of the Schedules, Exhibits and Appendices hereto and
thereto) and not to any particular provision of this Agreement (or such
Ancillary Agreement). Article, Section, Exhibit, Schedule and Appendix
references are to the Articles, Sections, Exhibits, Schedules and Appendices to
this Agreement (or the applicable Ancillary Agreement) unless otherwise
specified. The word "including" and words of similar import when used in this
Agreement (or the applicable Ancillary Agreement) shall mean "including, without
limitation," unless the context otherwise requires or unless otherwise
specified. The word "or" shall not be exclusive. Unless expressly stated to the
contrary in this Agreement or in any Ancillary Agreement, all references to "the
date hereof," "the date of this Agreement," "hereby" and "hereupon" and words of
similar import shall all be references to November 29, 1999, regardless of any
amendment or restatement hereof.
10.14. DISPUTES. (a) Resolution of any and all disputes
arising from or in connection with this Agreement other than those arising from
or in connection with Article IV of this Agreement, whether based on contract,
tort, statute or otherwise, including, but not limited to, disputes in
connection with claims by third parties (collectively, "Disputes"), shall be
subject to the provisions of this Section 10.14; provided, however, that nothing
contained herein shall preclude any party from seeking or obtaining (i)
injunctive relief or (ii) equitable or other judicial relief to enforce the
provisions hereof or to preserve the status quo pending resolution of Disputes
hereunder.
(b) Any party may give the other parties written notice of any
Dispute not resolved in the normal course of business. The parties shall attempt
in good faith to resolve any Dispute promptly by negotiation between executives
of the parties who have authority to settle
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the controversy. Within 15 days after delivery of the notice, the foregoing
executives of both parties shall meet at a mutually acceptable time and place,
and thereafter as often as they reasonably deem necessary for a period not to
exceed five days, to attempt to resolve the Dispute. All reasonable requests for
information made by one party to the other will be honored. If the parties do
not resolve the Dispute within such 20 day period (the "Initial Mediation
Period"), the parties shall attempt in good faith to resolve the Dispute by
negotiation between or among the Designated Officers. The Designated Officers
shall meet at a mutually acceptable time and place (but in no event no later
than 15 days following the expiration of the Initial Mediation Period) and
thereafter as often as they reasonably deem necessary for a period not to exceed
15 days, to attempt to resolve the Dispute.
(c) If the Dispute has not been resolved by negotiation within
50 days of the first party's notice, or if the parties failed to meet within 15
days of the first party's notice, or if the Designated Officers failed to meet
within 35 days of the first party's notice, any party may commence any
litigation or other procedure allowed by law.
10.15. EXCLUSIVITY OF TAX SHARING AGREEMENT. Notwithstanding
anything in this Agreement to the contrary, and subject to the provisions of
Article IV hereof, the Tax Sharing Agreement will be the exclusive agreement
among the parties with respect to all matters pertaining to Taxes, including,
without limitation, indemnification with respect to matters pertaining to Taxes
and indemnification with respect to the qualification of the Distribution as a
tax-free distribution under Section 355 and related provisions of the Code.
IN WITNESS WHEREOF, the parties have caused this Separation
and Distribution Agreement to be executed by their duly authorized
representatives.
ALLEGHENY TELEDYNE INCORPORATED
By: /s/ Jon D. Walton
____________________________________
Name:
Title:
TDY HOLDINGS, LLC
By: /s/ Jon D. Walton
____________________________________
Name:
Title:
TELEDYNE INDUSTRIES, INC.
By: /s/ Jon D. Walton
____________________________________
Name:
Title:
41
<PAGE> 45
WATER PIK TECHNOLOGIES, INC.
By: /s/ Michael Hoopis
____________________________________
Name:
Title:
JOINDER
The undersigned, Water Pik Inc. and Laars Inc. hereby join this Separation
and Distribution Agreement and agree, intending to be legally bound, to be
jointly and severally liable with Water Pik Technologies, Inc. for obligations
of Water Pik Technologies, Inc. under this Separation and Distribution
Agreement.
WATER PIK, INC.
By: /s/ Michael Hoopis
____________________________________
Name:
Title:
LAARS, INC.
By: /s/ Michael Hoopis
____________________________________
Name:
Title:
42
<PAGE> 1
Exhibit 4.1
WATER PIK TECHNOLOGIES, INC.
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
RIGHTS AGENT
---------------
RIGHTS AGREEMENT
DATED AS OF NOVEMBER 12, 1999
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
Section 1. Definitions..................................................1
Section 2. Appointment of Rights Agent..................................4
Section 3. Issue of Right Certificates..................................4
Section 4. Form of Right Certificates...................................6
Section 5. Countersignature and Registration............................6
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates...........................................7
Section 7. Exercise of Rights: Purchase Price; Expiration Date
of Rights ...................................................7
Section 8. Cancellation and Destruction of Right Certificates...........8
Section 9. Availability of Preferred Shares.............................8
Section 10. Preferred Shares Record Date.................................9
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights....................................................9
Section 12. Certificate of Adjustments..................................15
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power...............................................15
Section 14. Fractional Rights and Fractional Shares.....................16
Section 15. Rights of Action............................................16
Section 16. Agreement of Right Holders..................................17
Section 17. Right Certificate Holder Not Deemed a Stockholder...........17
Section 18. Concerning the Rights Agent.................................18
Section 19. Merger or Consolidation or Change of Name of
Rights Agent................................................18
Section 20. Duties of Rights Agent......................................19
Section 21. Change of Rights Agent......................................21
Section 22. Issuance of New Right Certificates..........................21
Section 23. Redemption..................................................21
Section 24. Exchange....................................................22
Section 25. Notice of Certain Events....................................23
Section 26. Notices.....................................................24
Section 27. Supplements and Amendments..................................24
Section 28. Successors..................................................24
<PAGE> 3
Section 29. Benefits of this Rights Agreement...........................25
Section 30. Severability................................................25
Section 31. Governing Law...............................................25
Section 32. Counterparts................................................25
Section 33. Descriptive Headings........................................25
<PAGE> 4
Agreement, dated as of November 12, 1999, between WATER PIK
TECHNOLOGIES, INC., a Delaware corporation (the "Company"), and CHASEMELLON
SHAREHOLDER SERVICES, L.L.C., a New Jersey limited liability company (the
"Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as hereinafter defined) of the Company to be distributed in the distribution of
Common Shares of the Company (the "Spin-Off") by Allegheny Teledyne
Incorporated, a Delaware corporation ("ATI"), to ATI's stockholders, each Right
representing the right to purchase one one-hundredth of a Preferred Share (as
hereinafter defined) upon the terms and subject to the conditions herein set
forth, and has further authorized and directed the issuance of one Right with
respect to each Common Share of the Company that shall become outstanding
between the effective date of the Spin-Off (the "Record Date") and the earliest
of the Distribution Date, the Redemption Date and the Final Expiration Date (as
such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Definitions. For purposes of this Rights Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the Common Shares of the Company then outstanding, but shall
not include the Company, any Subsidiary of the Company, any employee benefit
plan of ATI, the Company or any Subsidiary of the Company, or any entity holding
Common Shares for or pursuant to the terms of any such plan. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the result of an
acquisition of Common Shares of the Company by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 15% or more of the Common Shares then
outstanding; provided, however, that if a Person shall become the Beneficial
Owner of 15% or more of the Common Shares then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional Common Shares, then such Person
shall be deemed to be an "Acquiring Person." Notwithstanding the foregoing, if
the Board of Directors of the Company determines in good faith that a Person who
would otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this Section 1(a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Shares so that
such Person would no longer be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this Section 1(a), then such Person shall not be deemed
to be an "Acquiring Person" for any purposes of this Rights Agreement.
Notwithstanding the foregoing provisions of this Section 1(a), ATI shall not be
deemed to be an Acquiring Party by virtue of its ownership of capital stock of
the Company prior to the Spin-Off.
<PAGE> 5
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date of this Rights Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any Securities:
(i) that such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) that such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members
with respect to a bona fide public offering of Securities), upon the
exercise of conversion rights, exchange rights, rights (other than
these Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, Securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered Securities are accepted
for purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any Security if the agreement, arrangement or understanding to
vote such Security (1) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
rules and regulations promulgated under the Exchange Act and (2) is
not also then reportable on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) that are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of
Securities) for the purpose of holding, acquiring, voting (except to
the extent contemplated by the provisos to Section l(c)(ii)) or
disposing of any Securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of Securities of the Company, shall mean the
number of such Securities then issued and outstanding together with the number
of such Securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
2
<PAGE> 6
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the State of California and/or
the State of New York are authorized or obligated by law or executive order to
close.
(e) "Close of business" on any given date shall mean 5:00 P.M.,
Eastern time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Eastern time, on the next succeeding
Business Day.
(f) "Common Shares" when used with reference to the Company shall
mean the shares of common stock, par value $.01 per share, of the Company.
"Common Shares" when used with reference to any Person other than the Company
shall mean the capital stock (or equity interest) with the greatest voting power
of such other Person or, if such other Person is a Subsidiary of another Person,
the Person that ultimately controls such first-mentioned Person.
(g) "Company" shall have the meaning set forth in the preamble
hereof.
(h) "Current per share market price" shall have the meaning set
forth in Section 11(d).
(i) "Distribution Date" shall have the meaning set forth in Section
3(a).
(j) "Equivalent preferred shares" shall have the meaning set forth
in Section 11(b).
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(l) "Exchange Ratio" shall have the meaning set forth in Section
24(a).
(m) "Final Expiration Date" shall have the meaning set forth in
Section 7(a).
(n) "Person" shall mean any individual, firm, corporation, limited
liability company or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(o) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company having
the rights and preferences set forth in the form of Certificate of Designations
attached to this Rights Agreement as Exhibit A.
(p) "Purchase Price" shall have the meaning set forth in Section 4.
(q) "Record Date" shall have the meaning set forth in the recitals
hereof.
(r) "Redemption Date" shall have the meaning set forth in Section
7(a).
(s) "Redemption Price" shall have the meaning set forth in Section
23(a).
(t) "Right" shall have the meaning set forth in the recitals hereof.
(u) "Right Certificate" shall have the meaning set forth in Section
3(a).
(v) "Rights Agent" shall have the meaning set forth in the preamble
hereof.
3
<PAGE> 7
(w) "Security" shall have the meaning set forth in Section
3(a)(10) of the Exchange Act.
(x) "Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
(y) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interests is owned, directly or indirectly, by such Person.
(z) "Trading Day" shall have the meaning set forth in Section
11(d)(i).
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Right Certificates. (a) Until the earlier of (i)
the Shares Acquisition Date or (ii) the tenth business day (or such later date
as may be determined by action of the Board of Directors prior to such time as
any Person becomes an Acquiring Person) after the date of the commencement or
the announcement of an intention to commence by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company or any entity holding Common Shares for or
pursuant to the terms of any such plan) of a tender or exchange offer the
consummation of which would result in any Person becoming the Beneficial Owner
of Common Shares of the Company aggregating 15% or more of the then outstanding
Common Shares (including any such date which is after the date of this Rights
Agreement and prior to the issuance of the Rights; the earlier of such dates
being herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of Section 3(b)) by the certificates for
Common Shares registered in the names of the holders thereof (which certificates
shall also be deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Right Certificates will be
transferable only in connection with the transfer of Common Shares. As soon as
practicable after the Distribution Date, the Company will prepare and execute,
the Rights Agent will countersign, and the Company will send or cause to be sent
(and the Rights Agent will, if requested, send) by first-class, insured,
postage-prepaid mail, to each record holder of Common Shares as of the close of
business on the Distribution Date at the address of such holder shown on the
records of the Company a Right Certificate, in substantially the form of Exhibit
B hereto, evidencing one Right for each Common Share so held (a "Right
Certificate"). As of the Distribution Date, the Rights will be evidenced solely
by such Right Certificates.
(b) Until the Distribution Date (or the earlier of the Redemption
Date or the Final Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby.
4
<PAGE> 8
(c) Until the earliest of the Distribution Date, the Redemption Date
or the Final Expiration Date, certificates for Common Stock shall have impressed
on, printed on, written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Water
Pik Technologies, Inc. and ChaseMellon Shareholder Services,
L.L.C., dated as of November 12, 1999, as amended from time to
time (as so amended, the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of which
is on file at the principal executive offices of Water Pik
Technologies, Inc. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate.
Water Pik Technologies, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, Rights
issued to any Person who becomes an Acquiring Person (as defined
in the Rights Agreement) may become null and void.
With respect to the certificates containing the foregoing legend, until
the Distribution Date the Rights associated with the Common Shares represented
by such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
(d) Until the earliest of the Distribution Date, the Redemption
Date or the Final Expiration Date, confirmations and account statements sent to
holders of Common Shares in book-entry form and initial transaction statements
relating to the registration, pledge or release from pledge of Common Shares in
uncertificated form shall have impressed on, printed on, written on or otherwise
affixed to them substantially the following legend:
The shares of the Common Stock, par value $.01 per share, of Water Pik
Technologies, Inc., to which this statement relates also evidence and entitle
the holder thereof to certain Rights as set forth in a Rights Agreement between
Water Pik Technologies, Inc. and ChaseMellon Shareholder Services, L.L.C., dated
as of November 12, 1999 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the principal
executive offices of Water Pik Technologies, Inc. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by the shares to which this
statement relates. Water Pik Technologies, Inc. will mail to the holder of the
shares to which this statement relates and any registered pledgee of
uncertificated shares a copy of the Rights Agreement without charge after
receipt of a written request therefor.
5
<PAGE> 9
Under certain circumstances, as set forth in the Rights Agreement,
Rights issued to any Person who becomes an Acquiring Person (as defined in the
Rights Agreement) may become null and void.
With respect to Common Shares in book-entry form for which there has
been sent a confirmation or account statement and Common Shares in
uncertificated form for which there has been sent an initial transaction
statement containing the foregoing legend, until the Distribution Date, the
rights associated with such Common Shares shall be evidenced by such Common
Shares alone, and the registration of transfer or pledge, or the release from
pledge, of any such Common Shares shall also constitute the registration of
transfer or pledge, or the release from pledge, as the case may be, of the
rights associated with such Common Shares. (e) In the event that the Company
purchases or acquires any Common Shares after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares shall be deemed
cancelled and retired so that the Company shall not be entitled to exercise any
Rights associated with Common Shares that are no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be substantially the same as Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate, which do
not affect the duties or responsibilities of the Rights Agent, and as are not
inconsistent with the provisions of this Rights Agreement or as may be required
to comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or automated
quotation system on which the Rights may from time to time be listed or to
conform to usage. Subject to the provisions of Section 22, the Right
Certificates shall entitle the holders thereof to purchase such number of one
one-hundredths of a Preferred Share as shall be set forth therein at the price
per one one-hundredth of a Preferred Share set forth therein (the "Purchase
Price"), but the number of such one one-hundredths of a Preferred Share and the
Purchase Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents, or its
Treasurer, either manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned. In
case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates nevertheless may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of execution of this Rights Agreement any such
Person was not such an officer.
6
<PAGE> 10
Following the Distribution Date and receipt by the Rights Agent of the
notice and list of record holders referred to in Section 3(a), the Rights Agent
will keep or cause to be kept, at its office designated pursuant to Section 26
hereof, books for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the holders of the
Right Certificates, the number of Rights evidenced on its face by each of the
Right Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Section 14, at any time after the close of business on the
Distribution Date and at or prior to the close of business on the earlier of the
Redemption Date or the Final Expiration Date, any Right Certificate or Right
Certificates (other than Right Certificates representing Rights that have become
void pursuant to Section 11(a)(ii) or that have been exchanged pursuant to
Section 24) may be transferred, split up, combined or exchanged for another
Right Certificate or Right Certificates, entitling the registered holder to
purchase a like number of one one-hundredths of a Preferred Share as the Right
Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make such request in
writing delivered to the Rights Agent and shall surrender the Right Certificate
or Right Certificates to be transferred, split up, combined or exchanged at the
office of the Rights Agent. Thereupon the Rights Agent shall countersign and
deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates. The Rights Agent shall not be required to process any
transaction contemplated in this Section 6 unless and until it has received
written evidence that all taxes and governmental charges have been paid.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate and, in case of loss, theft or destruction, of indemnity or security
satisfactory to them and, at the Company's request, reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto and upon
surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered holder in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights: Purchase Price; Expiration Date of
Rights. (a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each one one-hundredth of a
Preferred Share as to which Rights are being exercised, at or prior to the
earliest of (i) the close of business on November 12, 2009 (the "Final
Expiration Date"), (ii) the time at which the Rights are to be redeemed as
provided in Section 23 (the "Redemption Date"), or (iii) the time at which such
Rights are to be exchanged as provided in Section 24.
7
<PAGE> 11
(b) The Purchase Price for each one one-hundredth of a Preferred
Share purchasable pursuant to the exercise of a Right shall initially be $60,
shall be subject to adjustment from time to time as provided in Section 11 or
13, and shall be payable in lawful money of the United States of America in
accordance with Section 7 (c).
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount equal
to any applicable tax or governmental charge required to be paid by the holder
of such Right Certificate in accordance with Section 9 by certified check,
cashier's check or money order payable to the order of the Company, the Rights
Agent shall thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Shares certificates for the number of Preferred Shares to be
purchased and the Company hereby authorizes such transfer agent to comply with
all such requests or (B) requisition from the depositary agent depositary
receipts representing such number of one one-hundredths of a Preferred Share as
are to be purchased (in which case certificates for the Preferred Shares
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the depositary agent to comply
with such request, (ii) when necessary to comply with this Agreement,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 14, (iii) promptly after receipt
of such certificates or depositary receipts, cause the same to be delivered to
or upon the order of the registered holder of such Right Certificate, registered
in such name or names as may be designated by such holder, and (iv) when
necessary to comply with this Agreement, after receipt, promptly deliver such
cash to or upon the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 6 and Section 14.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company or shall, at the written request
of the Company, destroy such cancelled Right Certificates and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Preferred Shares. The Company covenants and
agrees that it will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares or any Preferred Shares held in its
treasury the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7. The
Company
8
<PAGE> 12
covenants and agrees that it will take all such action as may be necessary to
ensure that all Preferred Shares delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such Preferred Shares (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when due and
payable any and all taxes and governmental charges which may be payable in
respect of the issuance or delivery of the Right Certificates or of any
Preferred Shares upon the exercise of Rights. The Company shall not, however, be
required to pay any tax or governmental charge which may be payable in respect
of any transfer or delivery of Right Certificates to a person other than, or any
issuance or delivery of certificates or depositary receipts for Preferred Shares
in a name other than that of, the registered holder of the Right Certificate
evidencing the Rights surrendered for exercise or to issue or to deliver any
certificates or depositary receipts for Preferred Shares upon the exercise of
any Rights until any such tax shall have been paid (any such tax being payable
by the holder of such Right Certificate at the time of surrender) or until it
has been established to the Company's reasonable satisfaction that no such tax
is due.
Section 10. Preferred Shares Record Date. Each Person in whose name any
certificate for Preferred Shares is issued upon an exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable taxes or governmental charges)
was made; provided, however, that if the date of such surrender and payment is a
date upon which the Preferred Share transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such shares on
and such certificate shall be dated the next succeeding Business Day on which
the Preferred Share transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of the Preferred Shares for
which such Rights shall be exercisable, including, without limitation, the right
to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event that the Company shall at any time after the date
of this Rights Agreement (A) declare a dividend on the Preferred Shares payable
in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification and the number and kind of
shares of capital stock issuable on such date shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate
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<PAGE> 13
number and kind of shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when the Preferred Share
transfer books of the Company were open, he would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right.
(ii) Subject to Section 24, in the event that any Person becomes an
Acquiring Person, each holder of a Right shall thereafter have a right to
receive, upon exercise thereof at a price equal to the then-current Purchase
Price multiplied by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable, in accordance with the terms of this Rights
Agreement and in lieu of Preferred Shares, such number of Common Shares of the
Company as shall equal the result obtained by (A) multiplying the then-current
Purchase Price by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable and dividing that product by (B) 50% of the
current per share market price of the Common Shares (determined pursuant to
Section 11(d)) on the date of such event. In the event that any Person shall
become an Acquiring Person and the Rights shall then be outstanding, the Company
shall not take any action which would eliminate or diminish the benefits
intended to be afforded by the Rights.
From and after the occurrence of such event, any Rights that are or
were acquired or beneficially owned by any Acquiring Person (or any Associate or
Affiliate of such Acquiring Person) shall be void and any holder of such Rights
shall thereafter have no right to exercise such Rights under any provision of
this Rights Agreement. No Right Certificate shall be issued pursuant to Section
3 to represent Rights beneficially owned by an Acquiring Person or any Associate
or Affiliate thereof whose Rights have become void pursuant to the preceding
sentence; no Right Certificate shall be issued at any time for the transfer of
any Rights to an Acquiring Person or any Associate or Affiliate thereof or to
any nominee of such Acquiring Person, Associate or Affiliate as such Rights
would be void pursuant to the preceding sentence; and any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring Person shall be
canceled.
(iii) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii), the
Company shall take all such action as may be necessary to authorize additional
Common Shares for issuance upon exercise of the Rights. In the event the Company
shall, after good faith effort, be unable to take all such action as may be
necessary to authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be issuable upon exercise
of a Right, a number of Preferred Shares or fraction thereof such that the
product of the current per share market price of one Preferred Share multiplied
by such number or fraction is equal to the current per share market price of one
Common Share as of the date of issuance of such Preferred Shares or fraction
thereof.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or
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<PAGE> 14
Securities convertible into or exchangeable for Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion or exchange price per share, if a Security convertible
into or exchangeable for Preferred Shares or equivalent preferred shares) less
than the then-current per share market price of the Preferred Shares on such
record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number of Preferred
Shares and/or equivalent preferred shares so to be offered (and/or the aggregate
initial conversion or exchange price of the convertible or exchangeable
Securities so to be offered) would purchase at such current market price and the
denominator of which shall be the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or equivalent
preferred shares to be offered for subscription or purchase (or into or for
which the convertible or exchangeable Securities so to be offered are initially
convertible or exchangeable); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. Preferred Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for making a
distribution to all holders of the Preferred Shares (including any such
distribution to be made in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation) of assets or evidences
of indebtedness (other than a regular quarterly cash dividend or a dividend
payable in Preferred Shares) or subscription rights or warrants (excluding those
referred to in Section 11(b)), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then-current per share market price of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share, and the denominator of which shall be such
current per share market price of the Preferred Shares; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
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<PAGE> 15
(d) (i) For the purpose of any computation hereunder, the "current per
share market price" of any Security on any date shall be deemed to be the
average of the daily closing prices per share or other unit of such Security for
the 30 consecutive Trading Days immediately prior to and not including such
date; provided, however, that in the event that the current per share market
price of a Security is to be determined for any date during a period prior to
and not including the announcement by the issuer of such Security of (A) a
dividend or distribution on such Security payable in shares or other units of
such Security or Securities convertible into or exchangeable for such shares or
other units of such Security, or (B) any subdivision, combination or
reclassification of such Security and does not end prior to the expiration of 30
Trading Days after the ex-dividend date for such dividend or distribution or the
record date for such subdivision, combination or reclassification, then, and in
each such case, the current per share market price shall be appropriately
adjusted to reflect such dividend, distribution, subdivision, combination or
reclassification. The closing price of a Security for any Trading Day shall be
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if such Security is not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on the
principal national securities exchange on which such Security is listed or
admitted to trading or, if such Security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or such other system then in use, or, if on any
such Trading Day such Security is not reported by any such system, the average
of the closing bid and asked prices as furnished by a professional market maker
making a market in such Security selected by the Board of Directors of the
Company. The term "Trading Day" for any Security shall mean a day on which the
principal national securities exchange on which such Security is listed or
admitted to trading is open for the transaction of business or, if such Security
is not listed or admitted to trading on any national securities exchange, a
Business Day.
(ii) For the purpose of any computation hereunder, the current per
share market price of the Preferred Shares shall be determined in accordance
with the method set forth in Section 11(d)(i) if possible. If the Preferred
Shares are not publicly traded, the current per share market price of the
Preferred Shares shall be conclusively deemed to be the current per share market
price of the Common Shares as determined pursuant to Section 11(d)(i) multiplied
by one hundred (appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof). If neither the
Common Shares nor the Preferred Shares are publicly held or listed or traded,
current per share market price shall mean the fair value per share as determined
in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this
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<PAGE> 16
Section 11 shall be made to the nearest cent or to the nearest one one-millionth
of a Preferred Share or one ten-thousandth of any other Security, as the case
may be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such adjustment or (ii)
the date of the expiration of the right to exercise any Rights.
(f) If, as a result of an adjustment made pursuant to Section
11(a), the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred Shares,
then the number of such other shares so receivable upon exercise of any Right
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Preferred
Shares contained in Section 11(a) through (c) inclusive, and the provisions of
Sections 7, 9, 10 and 13 with respect to the Preferred Shares shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised the option provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of any
calculation made pursuant to Section 11(b) or (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a Preferred Share (calculated to the nearest one one-millionth
of a Preferred Share) obtained by (i) multiplying (A) the number of one
one-hundredths of a share covered by a Right immediately prior to this
adjustment by (B) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. The Company shall provide written
notice of any public announcement to the Rights Agent, in addition to a copy of
such announcement. This record date may be the date on which the Purchase Price
is adjusted or any day thereafter, but, if Right Certificates have been issued,
shall be at least 10 days later than the date of the public announcement. If
Right Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Right Certificates
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<PAGE> 17
on such record date Right Certificates evidencing, subject to Section 14, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment and, upon
surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of one one-hundredths of a Preferred Share issuable upon exercise
of the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of one one-hundredths of a
Preferred Share which were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, issuing to the holder of any Right exercised after such record date the
Preferred Shares and other Securities of the Company, if any, issuable upon such
exercise over and above the Preferred Shares and other Securities of the
Company, if any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional shares or Securities upon the
occurrence of the event requiring such adjustment. In the event of any
adjustment, the Company shall provide written notice to the Rights Agent.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares or issuance
wholly for cash of Preferred Shares or Securities which by their terms are
convertible into or exchangeable for Preferred Shares, of dividends on Preferred
Shares payable in Preferred Shares or of rights, options or warrants referred to
in Section 11(b) hereafter made by the Company to holders of its Preferred
Shares shall not be taxable to such stockholders.
(n) In the event that at any time after the Record Date and prior
to the Distribution Date, the Company shall (i) pay any dividend on the Common
Shares payable in Common Shares or (ii) effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares) into a greater or
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<PAGE> 18
lesser number of Common Shares, then in any such case (A) the number of one
one-hundredths of a Preferred Share purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number of one
one-hundredths of a Preferred Share so purchasable immediately prior to such
event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (B) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively whenever such a
dividend is paid or such a subdivision, combination or consolidation is
effected.
Section 12. Certificate of Adjustments. Whenever an adjustment is made
as provided in Section 11 or 13, the Company shall promptly (a) prepare a
certificate setting forth such adjustment and a brief, reasonably detailed
statement of the facts, computations and methodology of accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for the
Common Shares or the Preferred Shares a copy of such certificate, and (c) mail
such certificate or a brief summary thereof to each holder of a Right
Certificate in accordance with Section 25.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. In the event that, directly or indirectly, at any time after a
Person has become an Acquiring Person, (a) the Company shall consolidate with,
or merge with and into, any other Person, (b) any Person shall consolidate with
the Company or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
transaction, all or part of the Common Shares shall be changed into or exchanged
for stock or other Securities of any other Person (or the Company) or cash or
any other property, or (c) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries, taken as a whole, to any
Person other than the Company or one or more of its wholly owned Subsidiaries,
then, and in each such case, proper provision shall be made so that (i) each
holder of a Right (except as otherwise provided herein) shall thereafter have
the right to receive, upon exercise thereof at a price equal to the then-current
Purchase Price multiplied by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable, in accordance with the terms of
this Rights Agreement and in lieu of Preferred Shares, such number of Common
Shares of such other Person (including the Company as the successor or surviving
corporation) as shall equal the result obtained by (A) multiplying the
then-current Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable and dividing that product by (B) 50%
of the current per share market price of the Common Shares of such other Person
(determined pursuant to Section 11(d)) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) the issuer of such Common Shares
shall thereafter be liable for and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of the
Company pursuant to this Rights Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such issuer; and (iv) such issuer shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9) in connection with
such consummation as may be necessary to assure that the provisions hereof shall
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<PAGE> 19
thereafter be applicable, as nearly as reasonably may be, in relation to the
Common Shares thereafter deliverable upon exercise of the Rights. The Company
shall not consummate any such consolidation, merger, sale or transfer unless
prior thereto the Company and such issuer shall have executed and delivered to
the Rights Agent a supplemental agreement so providing. The Company shall not
enter into any transaction of the kind referred to in this Section 13 if at the
time of such transaction there are any rights, warrants, instruments or
securities outstanding or any agreements or arrangements which, as a result of
the consummation of such transaction, would eliminate or substantially diminish
the benefits intended to be afforded by the Rights. The provisions of this
Section 13 shall similarly apply to successive mergers, consolidations, sales
and other transfers.
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to any registered holder of a Right Certificate with
regard to which a fractional Right would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value of a whole Right.
For purposes of this Section 14(a), the current market value of a whole Right
shall be the closing price of the Rights on the Trading Day immediately prior to
the date on which fractional Rights would otherwise have been issuable
(determined in accordance with Section 11(d)(i)). If for any such date no
closing price of the Rights can be determined, the current market value of a
whole Right shall be its fair value on such date as determined in good faith by
the Board of Directors of the Company.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a Preferred Share).
Fractions of Preferred Shares in integral multiples of one one-hundredth of a
Preferred Share may, at the election of the Company, be evidenced by depositary
receipts pursuant to an appropriate agreement between the Company and a
depositary selected by it; provided, that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the Preferred
Shares represented by such depositary receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-hundredth of a Preferred
Share, the Company shall pay to any registered holder of a Right Certificate at
the time Rights represented thereby are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one Preferred
Share. For purposes of this Section 14(b), the current market value of a
Preferred Share shall be the closing price of a Preferred Share on the Trading
Day immediately prior to the date of such exercise (determined in accordance
with Section 11(d)(i)).
(c) The holder of a Right by the acceptance of such Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Rights Agreement, excepting the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the
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<PAGE> 20
registered holders of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of Common Shares), without the
consent of the Rights Agent or of the holder of any other Right Certificate (or,
prior to the Distribution Date, of Common Shares), may, in his own behalf and
for his own benefit, enforce and may institute and maintain any suit, action or
proceeding against the Company to enforce or otherwise act in respect of his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Rights Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Rights Agreement and will be entitled to
specific performance of the obligations under and injunctive relief against
actual or threatened violations of the obligations of any Person subject to this
Rights Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, Rights will be transferable
only in connection with the transfer of the applicable Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person
in whose name a Right Certificate (or, prior to the Distribution Date, the
associated Common Share certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on any Right Certificate or the associated Common Share certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary.
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree, judgment or ruling (whether interlocutory or
final) issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such order,
decree, judgment or ruling lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other Securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as
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<PAGE> 21
such, any of the rights of a stockholder of the Company, including any right to
vote for the election of directors or upon any matter submitted to stockholders
at any meeting thereof or to give or withhold consent to any corporate action or
to receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25) or to receive dividends or subscription rights or
otherwise, until the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the preparation,
delivery, amendment, administration and execution of this Rights Agreement and
the exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, damage, judgment, fine, penalty, claim, demand, settlement cost or
expense incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent for any action taken, suffered or omitted by the
Rights Agent in connection with the acceptance and administration of this Rights
Agreement, including, without limitation, the costs and expenses of defending
against any claim of liability in the premises. The indemnity provided herein
shall survive the termination of this Agreement and the termination and
expiration of the Rights. The costs and expenses incurred in enforcing this
right of indemnification shall be paid by the Company. Anything to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
punitive, indirect, consequential or incidental loss or damage of any kind
whatsoever (including, but not limited to, lost profits), even if the Rights
Agent has been advised of the possibility of such loss or damage. Any liability
of the Rights Agent under this Agreement will be limited to the amount of fees
paid by the Company to the Rights Agent hereunder.
The Rights Agent shall be authorized and protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with the acceptance and administration of this Rights Agreement in
reliance upon any Right Certificate or certificate for the Preferred Shares or
Common Shares or for other Securities of the Company, instrument of assignment
or transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or document believed
by it to be genuine and to be signed, executed and, where necessary, verified or
acknowledged by the proper Person or Persons or otherwise in reliance upon the
advice of counsel as set forth in Section 20. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained. The Rights Agent shall not be deemed to have any duty or notice
unless and until the Company has provided the Rights Agent with written notice.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any Person into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated or any Person resulting from any
merger or consolidation to which the Rights Agent or any successor Rights Agent
shall be a party or any Person succeeding to the stock transfer or shareholders
services business of the Rights Agent or any successor Rights Agent shall be the
successor to the Rights Agent under this Rights Agreement without the execution
or filing of any paper or any further act on the part of any of the parties
hereto; provided, that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions
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<PAGE> 22
of Section 21. In case at the time such successor Rights Agent shall succeed to
the agency created by this Rights Agreement any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Rights Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations expressly imposed by this Rights Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent and the Rights
Agent shall incur no liability for, or in respect of, any action taken, suffered
or omitted by it in good faith and in accordance with such opinion.
(b) The Rights Agent shall not be deemed to have knowledge of any
fact or matter pertaining to the performance of its duties under this Rights
Agreement, except such facts or matters as are evidenced by records which are
required to be created and maintained by it hereunder or to the extent it shall
have been advised thereof in writing by the Company or by a holder of Rights.
Whenever in the performance of its duties under this Rights Agreement the Rights
Agent shall deem it necessary or desirable that any fact or matter be proved or
established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization and protection to the Rights Agent and the Rights
Agent shall incur no liability for, or in respect of, any action taken, suffered
or omitted in good faith by it under the provisions of this Rights Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith or willful misconduct.
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<PAGE> 23
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Rights Agreement or in
the Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including any Rights becoming void pursuant to Section 11(a)(ii)) or
any adjustment in the terms of the Rights (including the manner, method or
amount thereof) provided for in Section 3, 11, 13, 23 or 24 or the ascertaining
of the existence of facts that would require any such change or adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after actual notice that such change or adjustment is required); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be issued pursuant to
this Rights Agreement or any Right Certificate or as to whether any Preferred
Shares will, when issued, be validly authorized and issued and fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Secretary or the Treasurer of the Company and to apply
to such officers for advice or instructions in connection with its duties, and
such instructions shall be full authorization and protection to the Rights Agent
and the Rights Agent shall incur no liability for, or in respect of, any action
taken, suffered or omitted by it in good faith in accordance with instructions
of any such officer or for any delay in acting while waiting for those
instructions. The Rights Agent may conclusively rely on the most recent
instructions given by any such officer.
(h) The Rights Agent and any stockholder, affiliate, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other Securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
the Rights Agent under this Rights Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any other
Person or legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss resulting from any such act, default,
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<PAGE> 24
neglect or misconduct; absent gross negligence, willful misconduct or bad faith,
in the selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares or Preferred Shares by registered or
certified mail and to the holders of the Right Certificates by first-class mail.
The Company may remove the Rights Agent or any successor Rights Agent upon 30
days' notice in writing mailed to the Rights Agent or successor Rights Agent, as
the case may be, and to each transfer agent of the Common Shares or Preferred
Shares by registered or certified mail and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(which holder shall, with such notice, submit such holder's Right Certificate
for inspection by the Company), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a Person subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as the Rights Agent without further act or deed; but the predecessor
Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment the Company shall file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of the Common
Shares or Preferred Shares and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein shall not affect
the legality or validity of the resignation or removal of the Rights Agent or
the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other Securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Rights Agreement.
Section 23. Redemption. (a) The Board of Directors of the Company may,
at its option, at any time prior to such time as any Person becomes an Acquiring
Person, redeem all but not less than all of the outstanding Rights at a price of
$.01 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price"). The redemption
of the Rights by the Board of Directors may be made effective at such time, on
such basis and with such conditions as the Board of Directors in its sole
discretion may establish; and
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<PAGE> 25
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23 and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall promptly
give public notice of any such redemption; provided, however, that the failure
to give, or any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of Directors ordering
the redemption of the Rights, the Company shall mail a notice of redemption to
all holders of the outstanding Rights at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Shares. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not any particular holder receives notice. Each such notice of redemption will
state the method by which payment of the Redemption Price will be made. Neither
the Company nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 or in Section 24 and other than in
connection with the purchase of Common Shares prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company may, at
its option, at any time after any Person becomes an Acquiring Person, exchange
all or part of the then outstanding and exercisable Rights (which shall not
include any Rights that have become null and void pursuant to the provisions of
Section 11(a)(ii)) for Common Shares at an exchange ratio of one Common Share
per Right (the "Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights will terminate and the only right thereafter of the holders
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange and written
notice to the Rights Agent of such exchange; provided, however, that the failure
to give, or any defect in, any such notice shall not affect the validity of such
exchange. The Company promptly shall mail notice of such exchange to all holders
of such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not any particular holder receives notice. Each such
notice of exchange will state the method by which the exchange of the Common
Shares for Rights will be effected and, in the event of any partial exchange,
the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 11(a)(ii)) held by each holder
of Rights.
(c) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit an exchange of
Rights in accordance with this
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<PAGE> 26
Section 24, the Company shall take all such action as may be necessary to
authorize additional Common Shares for issuance upon exchange of the Rights. In
the event the Company shall, after good faith effort, be unable to take all such
action as may be necessary to authorize such additional Common Shares, the
Company shall substitute, for each Common Share that would otherwise be issuable
upon exchange of a Right, a number of Preferred Shares or equivalent preferred
shares or fraction thereof such that the product of the current per share market
price of one Preferred Share or equivalent preferred share multiplied by such
number or fraction is equal to the current per share market price of one Common
Share as of the date of issuance of such Preferred Shares or equivalent
preferred shares or fraction thereof.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares in
an exchange. In lieu of such fractional Common Shares, the Company shall pay to
any registered holder of a Right Certificate with regard to which a fractional
Common Share would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of a whole Common Share. For purposes of
this paragraph (d), the current market value of a whole Common Share shall be
the closing price of a Common Share on the Trading Day immediately prior to the
date of exchange pursuant to this Section 24 (determined in accordance with
Section 11(d)(i)).
Section 25. Notice of Certain Events. (a) In case the Company shall
propose (i) to pay any dividend payable in stock of any class to the holders of
its Preferred Shares or to make any other distribution to the holders of its
Preferred Shares (other than a regular quarterly cash dividend), (ii) to offer
to the holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any other class
or any other Securities, (iii) to effect any reclassification of its Preferred
Shares (other than a reclassification involving only the subdivision of
outstanding Preferred Shares), (iv) to effect any consolidation or merger into
or with, or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries, taken as a whole, to, any other Person, or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 26, a notice of such proposed action,
which shall specify (x) the record date for the purposes of such stock dividend
or distribution of rights or warrants or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and (y) the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of the Preferred Shares for purposes of such action, and
in the case of any such other action at least 10 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Common Shares and/or Preferred Shares, whichever shall be the
earlier.
(b) In case the event set forth in Section 11(a)(ii) shall occur,
then the Company shall as soon as practicable thereafter give to each holder of
a Right Certificate, in accordance with Section 26, a notice of the occurrence
of such event, which notice shall describe such event and the consequences of
such event to holders of Rights under said Section 11(a)(ii).
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<PAGE> 27
Section 26. Notices. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Water Pik Technologies, Inc.
660 Newport Center Drive
Suite 470
Newport Beach, California 92660
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand
authorized by this Rights Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
Overpeck Centre
85 Challenger Road
Ridgefield Park, NJ 07660
Attention: General Counsel
Notices or demands authorized by this Rights Agreement to be given or
made by the Company or the Rights Agent to the holder of any Right Certificate
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments. The Company may from time to
time supplement or amend this Rights Agreement without the approval of any
holders of Right Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provision herein, or to make any other provisions with respect to
the Rights which the Company may deem necessary or desirable, any such
supplement or amendment to be evidenced by a writing signed by the Company and
the Rights Agent; provided, however, that from and after such time as any Person
becomes an Acquiring Person this Rights Agreement shall not be amended in any
manner which would adversely affect the interests of the holders of Rights.
Without limiting the foregoing, the Company may at any time prior to such time
as any Person becomes an Acquiring Person amend this Rights Agreement to extend
the Final Expiration Date or change the Purchase Price hereunder. Pursuant to
any supplement or amendment of this Agreement, the Rights Agent cannot be
required to change or increase its duties or obligations hereunder unless agreed
to in writing.
Section 28. Successors. All the covenants and provisions of this Rights
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
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<PAGE> 28
Section 29. Benefits of this Rights Agreement. Nothing in this Rights
Agreement shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Rights Agreement; but this Rights Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares).
Section 30. Severability. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 31. Governing Law. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 32. Counterparts. This Rights Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed and attested all as of the day and year first
above written.
Attest: WATER PIK TECHNOLOGIES, INC.
By: /s/ Mary W. Snyder By: /s/ James L. Murdy
------------------------------ -------------------------------
Title: Title:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
Attest: Rights Agent
By: /s/ Anita Landreau By: /s/ Rita A. Swartz
------------------------------ -------------------------------
Title: Assistant Vice President Title: Vice President
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<PAGE> 29
Exhibit A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
WATER PIK TECHNOLOGIES, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Water Pik Technologies, Inc., 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 500,000. 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.
<PAGE> 30
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Series
A Preferred Stock with respect to dividends, the holders of shares of Series A
Preferred Stock, in preference to the holders of shares of Common Stock, par
value $.01 per share (the "Common Stock"), of the Corporation and of any other
junior stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September and
December in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $1 or (b) subject to the provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all cash dividends and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided, that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1 per share on the
Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear
2
<PAGE> 31
interest. Dividends paid on the shares of Series A Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 100 votes
on all matters submitted to a vote of the stockholders of the Corporation. In
the event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Series A Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) Except as set forth herein or as otherwise provided by law, holders
of Series A Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of the Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends or make any other distributions on
any shares of stock ranking junior (as to dividends) to the Series A Preferred
Stock;
(ii) declare or pay dividends or make any other distributions
on any shares of stock ranking on a parity (as to dividends) with the Series A
Preferred Stock, except dividends paid
3
<PAGE> 32
ratably on the Series A Preferred Stock and all such parity stock on which
dividends are payable and in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(iii) redeem, purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; provided, that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock or any shares of stock ranking on a
parity with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled 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
4
<PAGE> 33
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 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.
5
<PAGE> 34
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its Chairman of the Board and attested by its
Secretary this __ day of ______________, 1999.
Attest:
- --------------------------------- -------------------------------------
Secretary President and Chief Executive Officer
6
<PAGE> 35
Exhibit B
Form of Right Certificate
Certificate No. R-
-------------------------
Rights
NOT EXERCISABLE AFTER NOVEMBER 12, 2009 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
WATER PIK TECHNOLOGIES, INC.
This certifies that _______________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of November 12, 1999, as amended from time to
time (as so amended, the "Rights Agreement"), between Water Pik Technologies,
Inc., a Delaware corporation (the "Company"), and ChaseMellon Shareholder
Services, L.L.C., a New Jersey limited liability company (the "Rights Agent"),
to purchase from the Company at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to 5:00 P.M., Eastern time,
on November 12, 2009 at the principal office of the Rights Agent, or at the
office of its successor as Rights Agent, one one-hundredth of a fully paid
non-assessable share of Series A Junior Participating Preferred Stock, par value
$.01 per share (the "Preferred Shares"), of the Company, at a purchase price of
$60 per one one-hundredth of a Preferred Share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of one one-hundredths of a Preferred Share which may
be purchased upon exercise hereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of November 12, 1999, based on
the Preferred Shares as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of one one-hundredths of a
Preferred Share which may be purchased upon the exercise of the Rights evidenced
by this Right Certificate are subject to modification and adjustment upon the
happening of certain events.
This Right Certificate is subject to all of the terms, covenants and
restrictions of the Rights Agreement, which terms, covenants and restrictions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights
<PAGE> 36
Agreement are on file at the principal executive offices of the Company and the
above-mentioned office of the Rights Agent.
Subject to the provisions of the Rights Agreement, this Right
Certificate, with or without other Right Certificates, upon surrender at the
principal office of the Rights Agent, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of Preferred Shares as
the Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Right Certificate or Right Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for shares of the
Company's Common Stock, par value $.01 per share, or Preferred Shares.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable upon exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company, including any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, to give or withhold consent to any corporate action, to receive
notice of meetings or other actions affecting stockholders (except as provided
in the Rights Agreement), or to receive dividends or subscription rights, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
2
<PAGE> 37
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ________________________.
ATTEST: WATER PIK TECHNOLOGIES, INC.
By:
- ------------------------------ --------------------------------
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Rights Agent
By
----------------------------
Authorized Signature
3
<PAGE> 38
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer this Right Certificate.)
FOR VALUE RECEIVED ____________________________________ hereby sells,
assigns and transfers unto ______________________________________________
(Please print name and address of transferee)
___________________________________________________________ this Right
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ________________, as his Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated:
--------------------------------
--------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
- --------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
Signature
- -----------------------------------
4
<PAGE> 39
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by this Right Certificate.)
To: WATER PIK TECHNOLOGIES, INC.
The undersigned hereby irrevocably elects to exercise __________________ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:
Please insert social security or other identifying number
- ------------------------------------------------------------------------
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
- -----------------------------------------------------------
(Please print name and address)
- -----------------------------------------------------------
- -----------------------------------------------------------
Dated:
----------------------------------
- ----------------------------------------
Signature
5
<PAGE> 40
Form of Reverse Side of Right Certificate - continued
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
- --------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
- ----------------------------------------
Signature
- --------------------------------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to Purchase, as the
case may be, must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of Assignment or the
Form of Election to Purchase, as the case may be, is not completed, the Company
and the Rights Agent will deem the beneficial owner of the Rights evidenced by
this Right Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement) and such Assignment or Election to
Purchase will not be honored.
6
<PAGE> 1
Exhibit 10.1
TAX SHARING AND INDEMNIFICATION AGREEMENT
THIS TAX SHARING AND INDEMNIFICATION AGREEMENT (the "Agreement"), dated
as of November 29, 1999, is made by and between Allegheny Teledyne Incorporated,
a Delaware corporation ("ATI") on behalf of itself and each member of the ATI
Consolidated Group, and Water Pik Technologies, Inc., a Delaware corporation
("SPINCO"), on behalf of itself and each member of the SPINCO Group and their
respective successors.
Witnesseth:
WHEREAS, ATI has determined to effect the Distribution pursuant to the
Distribution Agreement;
WHEREAS, the IRS has issued the IRS Ruling which states the tax
treatment of the Distribution and the Other Transactions;
WHEREAS, the parties are entering into this Agreement to ensure the
continuing effectiveness of the IRS Ruling, to provide for certain indemnities,
and to provide for various administrative matters relating to Taxes, including:
1. the preparation and filing of Tax Returns along with the payment of
Taxes shown due and payable thereon;
2. the retention and maintenance of relevant records necessary to
prepare and file appropriate Tax Returns, as well as providing for appropriate
access to those records by the parties to this Agreement;
3. the conduct of audits, examinations, and proceedings by appropriate
government entities which could result in a redetermination of Taxes; and
4. the cooperation of all parties with one another in order to fulfill
their duties and responsibilities under this Agreement and under the Code and
other applicable law; and
WHEREAS, it is the intent of the parties that SPINCO or the appropriate
member of the SPINCO Group shall economically bear the burden of all Taxes
otherwise imposed upon or attributable to the Operations of members of the
SPINCO Group occurring after the Effective Date, and that SPINCO will be
responsible for and reimburse ATI for any Incremental Tax Assessment.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
conditions contained in this Agreement, and intending to be legally bound
hereby, the parties hereto agree as follows:
<PAGE> 2
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. For the purposes of this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural of the terms involved):
ADJUSTMENT means any final change in the Tax Liability of a taxpayer.
AFFILIATE means, when used with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with such Person.
AFFILIATED PERSON has the meaning ascribed to such term in the
Investment Company Act of 1940, as amended, and the rules and regulations
promulgated thereunder.
AGREEMENT means this Tax Sharing and Indemnification Agreement.
ASSOCIATES has the meaning ascribed to such term in the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
ATI CONSOLIDATED RETURN means any Tax Return that includes any member
of the ATI Consolidated Group.
ATI CONSOLIDATED GROUP means, as of any relevant date, ATI and its
Subsidiaries, determined as of such date.
BENEFICIAL OWNERSHIP has the meaning ascribed to such term in the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
BUSINESS TAXES means any Tax (except for federal income, state income
or franchise, and local and foreign gross or net income) including interest,
penalties, and other assessments thereon that is attributable to Operations of
SPINCO or members of the SPINCO Group for a tax period ending prior to or
including the Effective Date.
BUSINESS TAX RETURNS means all reports, estimates, declarations of
estimated tax, information statements and returns relating to or required to be
filed in connection with any Business Taxes, including information returns or
reports with respect to backup withholding and other payments to third parties.
CODE means the Internal Revenue Code of 1986, as amended, and the
Treasury regulations promulgated thereunder.
COMBINED RETURN shall mean all state income tax returns which ATI files
on a combined or unitary basis with respect to some or all of its Subsidiaries.
DISQUALIFIED SPINCO STOCK is defined at Section 5.2.
2
<PAGE> 3
DISTRIBUTION means the distribution of SPINCO common stock to the
stockholders of ATI pursuant to the Distribution Agreement.
DISTRIBUTION AGREEMENT means the Separation and Distribution Agreement
among ATI, SPINCO and certain other parties dated as of November 29, 1999.
EFFECTIVE DATE means the date on which the Distribution occurs.
EFFECTIVE TIME means 5 p.m., Eastern Standard Time or Eastern Daylight
Time (whichever shall then be in effect), on the Effective Date.
FINAL DETERMINATION means the final resolution of any Tax matter. A
Final Determination shall result from the first to occur of:
1. the expiration of 30 days after the IRS's acceptance of a
Waiver of Restrictions on Assessment and Collection of Deficiency in
Tax and Acceptance of Overassessment on Form 870 or 870-AD (or any
successor comparable form) (the "Waiver"), except as to reserved
matters specified therein, or the expiration of 30 days after
acceptance by any other taxing authority of a comparable agreement or
form under the laws of any other jurisdiction, including state, local,
and foreign jurisdictions; unless, within such period, the taxpayer
gives notice to the other party to this Agreement of the taxpayer's
intention to attempt to recover all or part of any amount paid pursuant
to the Waiver by the filing of a timely claim for refund;
2. a decision, judgment, decree, or other order by a court of
competent jurisdiction that is not subject to further judicial review
(by appeal or otherwise) and has become final;
3. the execution of a closing agreement under Code Section
7121, or the acceptance by the IRS of an offer in compromise under Code
Section 7122, or comparable agreements under the laws of any other
jurisdiction, including state, local, and foreign jurisdictions, except
as to reserved matters specified therein;
4. the expiration of the time for filing a claim for refund or
for instituting suit in respect of a claim for refund that was
disallowed in whole or in part by the IRS or any other taxing
authority;
5. the expiration of the applicable statute of limitations; or
6. an agreement by the parties hereto that a Final
Determination has been made.
GROSS ASSET VALUE means, when used with respect to a specified Person,
the fair market value of such Person's assets unencumbered by any liabilities.
GROUP has the meaning ascribed to such term in the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
3
<PAGE> 4
INCREMENTAL TAX ASSESSMENT means any increase in Business Taxes imposed
upon ATI after the date hereof.
INDEMNIFIED LIABILITY is defined at Section 7.1.
INDEMNIFIED PARTY is defined at Section 6.1.
INDEMNIFYING PARTIES is defined at Section 6.1.
INTERNAL DISTRIBUTIONS means the distributions of SPINCO common stock
by Teledyne Industries, Inc. to TDY Holdings, LLC, a Delaware limited liability
company wholly owned by ATI, and by TDY Holdings, LLC to ATI.
IRS means the U.S. Internal Revenue Service.
IRS INTEREST RATE means the rate of interest imposed from time to time
on underpayments of income tax pursuant to Code Section 6621(a)(2).
IRS RULING means the private letter ruling (together with any
supplements) issued by the IRS in respect of the Ruling Request.
OPERATIONS means any business activity of any SPINCO business unit, as
described in the Ruling Request.
OTHER TRANSACTIONS means the Internal Distributions and all other
transactions related to the Distribution and described in the Ruling Request,
including all modifications to such transactions reflected in supplements to the
Ruling Request.
PERSON means any natural person, corporation, limited liability
company, business trust, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.
POST-DISTRIBUTION PERIOD means any taxable period that begins after the
Effective Date.
PRE-DISTRIBUTION PERIOD means any taxable period that ends on or before
the Effective Date.
PROCEEDING is defined at Section 8.2(a).
PUBLIC OFFERING means the first public offering of SPINCO common stock
following the Distribution. The gross proceeds of such Public Offering shall be
approximately $50 million or such other amount as ATI, in its sole discretion,
may approve.
RESTRICTED PERIOD means the two year period following the Effective
Date.
4
<PAGE> 5
RESTRICTED REDEMPTION PERIOD means the two year period beginning on the
Effective Date and ending two years following the Public Offering.
RULING REQUEST means the request for ruling (including all exhibits),
under Section 355, and other provisions of the Code, as originally filed on
behalf of ATI on April 6, 1999, as amended and supplemented, in respect of the
Distribution.
SPINCO GROUP means: (i) as of any relevant date after the Effective
Date, SPINCO and its Subsidiaries determined as of such date; and (ii) as of any
relevant date on or before the Effective Date, SPINCO and those businesses which
become part of SPINCO or its Subsidiaries as contemplated by the Distribution
Agreement, whether or not such Persons or businesses were Subsidiaries of SPINCO
before the Distribution.
STRADDLE PERIOD means any taxable period with respect to a Tax Return,
that begins on or before the Effective Date and ends after the Effective Date.
SUBSIDIARY means with respect to ATI or SPINCO, any Person of which ATI
or SPINCO, respectively, controls or owns, directly or indirectly, more than 50%
of the stock or other equity interest entitled to vote on the election of
members to the board of directors or similar governing body.
TAXES means all federal, state, local and foreign gross or net income,
gross receipts, withholding, payroll, franchise, transfer, sales, use, value
added, estimated or other taxes of any kind whatsoever or similar charges and
assessments, such as customs, duties and the like, or other amounts paid in
respect thereof, including all interest, penalties and additions imposed with
respect to such amounts.
TAX LIABILITY means the net amount of Taxes due and paid or payable for
any taxable period, determined after applying all tax credits and all applicable
carrybacks or carryovers for net operating losses, net capital losses, unused
general business tax credits, or any other Tax items arising from a prior or
subsequent taxable period, and all other relevant adjustments.
TAX RETURNS means all reports, estimates, declarations of estimated
tax, information statements and returns relating to or required to be filed in
connection with any Taxes, other than Business Taxes, including information
returns or reports with respect to backup withholding and other payments to
third parties.
ARTICLE II
FILING OF TAX RETURNS AND PAYMENT OF TAXES
SECTION 2.1. TAX RETURNS REQUIRED TO BE FILED PRIOR TO DISTRIBUTION
DATE. ATI shall file or cause to be filed all Tax Returns of ATI and any member
of the ATI Consolidated Group required to be filed (after giving effect to any
valid extension of time in which to make such filings) prior to the Effective
Date and shall pay or cause to be paid any Tax Liability due with respect to
such Tax Returns.
5
<PAGE> 6
SECTION 2.2. TAX RETURNS FOR PRE-DISTRIBUTION PERIODS.
(a) SPINCO shall prepare or cause to be prepared, consistent with past
practice, Business Tax Returns for the Pre-Distribution Period and shall pay or
cause to be paid any Tax Liability due with respect to such Business Tax
Returns. ATI will promptly notify SPINCO of any audit, assessment, notice, levy,
or questionnaire with respect to Business Taxes. SPINCO shall control all
matters relating to such Business Taxes and shall pay or cause to be paid and/or
indemnify ATI or cause ATI to be indemnified, whatever the case may be, for and
defend and hold ATI harmless against any Incremental Tax Assessment set forth in
a Final Determination of Business Taxes. Payment to ATI with respect to such
Incremental Tax Assessment shall be made in the same manner as if SPINCO were an
Indemnifying Party as set forth in Section 8.3.
(b) Except as provided in Section 2.2(a), ATI shall prepare or cause to
be prepared, for Pre-Distribution Periods, all (1) Combined Returns and (2) Tax
Returns required to be filed on a separate return basis by any member of the ATI
Consolidated Group, in each case, which Tax Returns are not required to be
(after giving effect to any valid extensions), and are not, filed on or prior to
the Effective Date and shall pay or cause to be paid any Tax Liability due with
respect to such Tax Returns. With respect to Tax Returns described in this
Section 2.2(b), ATI shall prepare the returns in a manner, absent any
intervening law change, consistent with ATI's preparation of Tax Returns covered
by Section 2.1. With respect to any Tax Returns described in part (2) of the
first sentence of this Section 2.2(b) relating to a member of the SPINCO Group,
ATI shall file such Tax Returns with the appropriate tax authority, pursuant to
a power of attorney executed and delivered to ATI by SPINCO pursuant to Section
10.15 hereof and shall pay or cause to be paid any Tax Liability due with
respect to such Tax Returns.
(c) Notwithstanding Section 2.2(a), ATI will be responsible for paying
Business Taxes that arise directly from the Distribution and Other Transactions.
For this Section 2.2(c) to apply, ATI must consent in writing, which consent
shall not be unreasonably withheld, that the amount of such Business Taxes has
been correctly determined. In addition, ATI shall have the right to control any
audit, litigation or proceeding regarding such Business Taxes.
SECTION 2.3. TAX RETURNS FOR POST-DISTRIBUTION PERIODS. SPINCO shall
(a) prepare and file or cause to be prepared and filed all Tax Returns required
to be filed by any member of the SPINCO Group for any Post-Distribution Period
and (b) pay or cause to be paid any Tax Liability due with respect to such Tax
Returns.
SECTION 2.4. TAX RETURNS FOR STRADDLE PERIOD. ATI shall prepare all Tax
Returns of or which include any member of the SPINCO Group for a Straddle
Period. ATI shall pay or cause to be paid and shall defend, indemnify and hold
SPINCO and members of the SPINCO Group harmless against the Tax Liabilities
attributable to the affected member or members of the SPINCO Group for the
portion of the Straddle Period ending on the Effective Date and SPINCO shall pay
or cause to be paid and shall defend, indemnify, and hold ATI and members of the
ATI Consolidated Group harmless against the Tax Liabilities attributable to the
affected member or members of the SPINCO Group for the remainder of the Straddle
Period beginning with the day after the Effective Date. ATI's determination of
Tax Liabilities up to and
6
<PAGE> 7
following the Effective Date shall be based on ATI's interim closing of the
books, determined as of the Effective Time, of the affected member or members of
the SPINCO Group.
SECTION 2.5. TAX-BASIS BALANCE SHEETS. In the case of any business that
was conducted prior to the Effective Date as a division of ATI, its Subsidiaries
or a member of the ATI Consolidated Group and which will be conducted after the
Effective Date by a member of the SPINCO Group, ATI shall prepare and furnish to
SPINCO, within 120 days after the Effective Date, a tax-basis balance sheet,
prepared consistent with past practices, relating to such business as of the
Effective Date.
ARTICLE III
COOPERATION AND EXCHANGE OF INFORMATION; AUDITS AND ADJUSTMENTS
SECTION 3.1. TAX RETURN INFORMATION.
(a) SPINCO shall, and shall cause each appropriate member of the SPINCO
Group to, provide ATI with all information and other assistance reasonably
requested by ATI to enable the members of the ATI Consolidated Group to prepare
and file ATI Consolidated Returns required to be filed by the ATI Consolidated
Group pursuant to this Agreement.
(b) ATI shall, and shall cause each appropriate member of the ATI
Consolidated Group to, provide SPINCO with all information and other assistance
reasonably requested by SPINCO to enable the members of the SPINCO Group to
prepare and file SPINCO Returns required to be filed by the SPINCO Group
pursuant to this Agreement.
(c) Within 60 days of the Effective Date, SPINCO shall provide and
cause each appropriate member of the SPINCO Group to provide to ATI customary
tax packages prepared consistent with past practice for any Pre-Distribution
Period or Straddle Period.
SECTION 3.2. AUDITS AND ADJUSTMENTS.
(a) Except as provided for in Section 3.3, ATI shall have full control
over and absolute discretion with respect to all matters relating to any Tax
Return covered by Section 2.1, Section 2.2 or Section 2.4.
(b) SPINCO shall have full control over and absolute discretion with
respect to all Tax Returns covered by Section 2.3.
(c) SPINCO agrees to cooperate with ATI in the negotiation, settlement,
and litigation of or other proceeding regarding any liability for or refund of
Taxes of any member paid or payable by the ATI Consolidated Group.
(d) ATI agrees to cooperate with SPINCO in the negotiation, settlement,
and litigation of or other proceeding regarding any liability for Taxes paid or
payable by any member of the SPINCO Group.
7
<PAGE> 8
(e) ATI will promptly notify SPINCO in writing of any Adjustment
involving a change in the tax basis of any asset of SPINCO, specifying the
nature of the change so that the SPINCO Group will be able to reflect the
revised basis in its tax books and records for periods beginning on or after the
Effective Date.
(f) In the event of a conflict between the operation of this Section
3.2 and Articles VI, VII, or VIII, those Articles will take precedence over this
Section 3.2.
SECTION 3.3. CARRYBACKS. SPINCO shall make an election under Section
172(b)(3) of the Code to relinquish the entire carryback period with respect to
any net operating loss attributable to SPINCO or any of its Subsidiaries in any
taxable period beginning after or including the Effective Date that could be
carried back to a taxable year of SPINCO or any Subsidiaries ending on or before
the Effective Date. Neither ATI nor any member of the ATI Consolidated Group
shall be required to pay to SPINCO or its Subsidiaries any refund or credit of
Taxes that results from the carryback to any taxable period ending on or before
the Effective Date of any net operating loss, capital loss, or tax credit
attributable to SPINCO or any of its Subsidiaries in any taxable period
beginning after or including the Effective Date.
ARTICLE IV
RETENTION OF RECORDS; STATUTES OF LIMITATIONS
SECTION 4.1. RETENTION OF RECORDS. ATI and SPINCO agree to retain the
appropriate records which may affect the determination of the liability for
Taxes of any member of the ATI Consolidated Group or the SPINCO Group,
respectively, until such time as there has been a Final Determination with
respect to such liability for Taxes. A party may satisfy its obligations under
the preceding sentence by allowing the other party to duplicate records at such
second party's expense.
SECTION 4.2. DESTRUCTION OF RECORDS. Any member of the SPINCO Group
intending to destroy any materials, records, or documents relating to Taxes
shall provide ATI 90 days advance notice and the reasonable opportunity to copy
or take possession of such materials, records, or documents.
SECTION 4.3. STATUTE OF LIMITATIONS. ATI and SPINCO will notify each
other in writing of any waivers or extensions of the applicable statute of
limitations that may affect the period for which any materials, records, or
documents must be retained.
ARTICLE V
REPRESENTATIONS AND COVENANTS
SECTION 5.1. COMPLIANCE WITH IRS RULING. SPINCO shall, and shall cause
each member of the SPINCO Group to, comply with each representation and
statement concerning SPINCO and the SPINCO Group made in the Ruling Request and
in the materials submitted to the IRS in connection with the Ruling Request,
including, without limitation, statements relating to actions regarding the
Public Offering and the use of Public Offering proceeds by the SPINCO Group.
SPINCO has reviewed the materials submitted to the IRS in
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connection with the Ruling Request and represents to ATI that these materials,
including without limitation, any statements and representations concerning
SPINCO, its business operations, capital structure and/or organization, are
complete and accurate. During the Restricted Period, neither SPINCO nor any
member of the SPINCO Group shall take any action, refrain from taking any action
or enter into any transaction or series of transactions or agree to take any
action, refrain from taking any action or enter into any transaction or series
of transactions that could jeopardize the tax-free status of the Distribution,
including any action, inaction or transaction that would be inconsistent with
any representation or statement made to the IRS in connection with the Ruling
Request, unless prior thereto SPINCO obtains the express written consent of ATI
which consent will be granted, if at all, in the sole discretion of ATI. SPINCO
hereby represents and warrants to ATI that SPINCO has no intention to undertake
or allow to be undertaken any of the transactions set forth in Section
5.2(a)(iii), nor does SPINCO or any member of the SPINCO Group have any
intention to cease to engage in the active conduct of its trade or business
(within the meaning of Section 355(b)(2) of the Code).
SECTION 5.2. COVENANTS.
(a) Without limiting the generality of Section 5.1, SPINCO and each
member of the SPINCO Group jointly and severally covenant and agree with ATI
that during the Restricted Period or, in the case of a transaction described in
Section 5.2(a)(iii)(4), the Restricted Redemption Period:
(i) SPINCO and the members of the SPINCO Group will continue
to engage in its business, and will continue to maintain a substantial
portion of their respective assets and business operations, as they
existed immediately prior to the Distribution; provided that the
foregoing shall not be deemed to prohibit SPINCO and the members of the
SPINCO Group from entering into or acquiring other businesses or
operations or from disposing of or shutting down segments of such
Businesses so long as SPINCO and the members of the SPINCO Group
continue to engage in such businesses and continue to so maintain such
substantial portion of their assets and business operations;
(ii) SPINCO will continue to manage and to own (A) directly,
assets which represent at least 50% of the Gross Asset Value which
SPINCO managed and owned directly immediately after the Distribution,
and (B) directly or indirectly, through one or more entities, assets
which represent at least 50% of the Gross Asset Value which SPINCO
owned indirectly through one or more entities immediately after the
Distribution;
(iii) xcept as provided in Section 5.2(c), neither SPINCO nor
any of its Affiliates nor any of its or their respective directors,
officers or other representatives (acting in their capacity as
directors, officers, or representatives) will undertake, authorize,
approve, recommend, permit, facilitate, or enter into any contract, or
consummate any transaction with respect to:
(1) the issuance of SPINCO common stock (including
options, warrants, rights or securities exercisable for, or
convertible into, SPINCO
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common stock) in a single transaction or in a series of
related or unrelated transactions (including the Public
Offering) which represents (treating any such options,
warrants, rights, or securities as exercised or converted) 40%
or more of the outstanding shares of SPINCO common stock;
(2) the issuance of any class or series of capital
stock or any other instrument (other than SPINCO common stock
and options, warrants, rights or securities exercisable for,
or convertible into, SPINCO common stock) that would
constitute equity for federal tax purposes (such classes or
series of capital stock and other instruments being referred
to herein as "Disqualified SPINCO Stock");
(3) the issuance of any options, rights, warrants,
securities or similar arrangements exercisable for, or
convertible into, Disqualified SPINCO Stock;
(4) any redemptions, repurchases or other
acquisitions of capital stock or other equity interests in
SPINCO by SPINCO; and/or
(5) the dissolution, merger, or complete or partial
liquidation of SPINCO or any announcement of such action.
(b) In addition to the other representations, warranties, covenants and
agreements set forth in this Agreement, SPINCO and each member of the SPINCO
Group will take, or refrain from taking, as the case may be, such actions as ATI
may request to ensure that the Distributions and the Other Transactions qualify
for the tax-free treatment stated in the IRS Ruling, including, without
limitation, such actions as ATI determines may be necessary to preserve the
validity of the IRS Ruling. Without limiting the generality of the foregoing,
SPINCO and the SPINCO Group shall cooperate with ATI if ATI, in its sole
discretion, determines to obtain additional or supplemental IRS rulings
pertaining to whether any actual or proposed change in facts and circumstances
affects the tax-free status of the Distribution or the Other Transactions.
Regardless of the fact that ATI shall control matters set forth in the preceding
sentence of this Section 5.2(b), the ATI Consolidated Group, on one hand, and
SPINCO and the SPINCO Group, on the other hand, shall equally bear
responsibility for all expenses associated with any such additional or
supplemental IRS rulings; provided, however, that any expenses associated with
any additional or supplemental IRS Rulings based on a proposed action or
omission by SPINCO or a member of the SPINCO Group will be borne solely by
SPINCO.
(c) Following the Effective Date, SPINCO and its Affiliates shall not
take any action or engage in conduct otherwise prohibited by Section 5.2 unless
prior to such action or conduct, as the case may be, SPINCO receives express
written consent from ATI which consent will be granted, if at all, in the sole
discretion of ATI.
(d) SPINCO will consummate the Public Offering within one year after
the Effective Date and will use the Public Offering proceeds in the manner and
during time periods set forth in the Ruling Request.
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(e) If, within two years after the Public Offering, SPINCO disposes of
any assets, other than inventory, SPINCO will use the proceeds (net of tax and
transaction costs) from such disposition in a manner that is, in ATI's sole
discretion, consistent with the business purpose of expanding SPINCO's business
as set forth in the Ruling Request.
ARTICLE VI
SPINCO INDEMNITY OBLIGATIONS
SECTION 6.1. SPINCO INDEMNITY. If SPINCO, or another member (or former
member) of the SPINCO Group (collectively, the "Indemnifying Parties") takes or
fails to take any action whether or not prohibited or required by Article V or
violates a representation or covenant in Article V or in the Ruling Request, and
the Distribution or any of the Other Transactions fail to or otherwise do not
qualify for the tax treatment stated in the IRS Ruling as a result of such
action, failure to take action, or violation, then the Indemnifying Parties
shall jointly and severally defend, indemnify and hold harmless ATI and each
member of the ATI Consolidated Group and each of their respective directors,
officers, employees, agents or other representatives (collectively, and/or
individually, as the case may be, the "Indemnified Party") against any liability
for such Taxes which the Indemnified Party may assume or otherwise incur and any
and all Taxes or other liabilities directly or indirectly imposed upon or
incurred by the Indemnified Party as a result of such failure or lack of
qualification, including, without limitation, any liability of the Indemnified
Party arising from Taxes imposed on stockholders of ATI whether or not any
stockholder or stockholders of ATI, or the IRS or other taxing authority,
successfully seeks recourse against the Indemnified Party on account of any such
failure.
SECTION 6.2. TENDER OFFER OR PURCHASE OFFER. Notwithstanding anything
to the contrary set forth in this Agreement, if, during the Restricted Period,
any Person or Group of Affiliated Persons or Associates acquires Beneficial
Ownership of SPINCO common stock (or any other class of outstanding SPINCO
stock) or commences a tender or other purchase offer for the capital stock of
SPINCO or initiates any other form of transaction to acquire directly or
indirectly SPINCO capital stock, upon consummation of which such Person or Group
of Affiliated Persons or Associates would acquire Beneficial Ownership of SPINCO
common stock (or any other class of outstanding SPINCO stock or equity) and as a
result thereof the Distribution or any of the Other Transactions shall fail to
or otherwise do not qualify for the tax treatment stated in the IRS Ruling then
the Indemnifying Parties shall defend, indemnify and hold harmless the
Indemnified Party against any liability for Taxes which the Indemnified Party
may assume or otherwise incur and any and all Taxes or other liabilities
directly or indirectly imposed upon or incurred by any Indemnified Party and/or
its stockholders as a result of such failure.
SECTION 6.3. EFFECT OF EXPRESS WRITTEN CONSENT OF ATI. The Indemnified
Party shall be defended, indemnified and held harmless under Section 6.1 without
regard to the fact that the Indemnifying Party may have received the express
written consent of ATI as contemplated by Article V. The Indemnified Party shall
be defended, indemnified and held harmless under Section 6.2 whether or not the
acquisition of Beneficial Ownership results from a transaction which is not
prohibited under Article V.
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ARTICLE VII
CALCULATION OF SPINCO INDEMNITY AMOUNTS
SECTION 7.1. AMOUNT OF INDEMNITY. The amount indemnified against under
Article VI ("Indemnified Liability") for a Tax based on or determined with
reference to income shall be deemed to be, for each applicable taxing
jurisdiction, an amount determined by multiplying (i) the taxing jurisdiction's
highest marginal corporate income or tax rate for the taxable period in which
the Distribution or Other Transaction occurs, times (ii) the gain or income of
the Indemnified Party which is subject to such Tax. In the case of other
Indemnified Liabilities, the amount of the Indemnified Liability shall be equal
to the amount so owed. In addition, the amount of any Indemnified Liability
shall be increased by any interest, costs, legal and professional fees,
additions, expenses and penalties incurred by the Indemnified Party. All amounts
payable under this Article VII shall, to the extent that such amounts constitute
taxable income, be grossed-up, based on the tax rate referred to in clause (i)
of the first sentence of this Section 7.1.
ARTICLE VIII
PROCEDURAL ASPECTS OF SPINCO INDEMNITY
SECTION 8.1. GENERAL.
(a) If either the Indemnified Party or any of the Indemnifying Parties
receives any written notice of deficiency, claim or adjustment or any other
written communication from a taxing authority or any other Person that may
result in an Indemnified Liability, the party receiving such notice or
communication shall promptly give written notice thereof to the other parties,
provided that any delay by the Indemnified Party in so notifying an Indemnifying
Party shall not relieve the Indemnifying Party of any liability hereunder,
except to the extent the Indemnifying Party is materially and adversely
prejudiced by such delay.
(b) Each party hereto undertakes and agrees that from and after such
time as it obtains knowledge that any representative of a taxing authority has
begun to investigate or inquire into the Distribution or any of the Other
Transactions (whether or not such investigation or inquiry is a formal or
informal investigation or inquiry), such party shall (i) notify the other
parties thereof, provided that any delay by the Indemnified Party in so
notifying the Indemnifying Party shall not relieve the Indemnifying Party of any
liability hereunder (except to the extent the Indemnifying Party is materially
and adversely prejudiced by such delay), (ii) consult with the other parties
from time to time as to the conduct of such investigation or inquiry, (iii)
provide the other parties with copies of all correspondence with such taxing
authority or any representative thereof or other Person pertaining to such
investigation or inquiry, and (iv) arrange for a representative of the other
parties to be present at all meetings with such taxing authority or any
representative thereof pertaining to such investigation or inquiry.
(c) SPINCO undertakes and agrees to give full cooperation and support
to ATI, including without limitation, attestations and/or access to Information,
as requested by ATI, to document and verify the use of the Public Offering
proceeds in the manner and during the time period set forth in the Ruling
Request. SPINCO will submit a quarterly accounting to ATI, due
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within 30 days after the end of each calendar quarter, which sets forth in
detail the use of Public Offering proceeds. This information will be submitted
to ATI in a format substantially similar to the chart attached hereto as
Appendix I.
SECTION 8.2. CONTESTS.
(a) If (i) the Indemnifying Party furnishes the Indemnified Party with
evidence satisfactory to the Indemnified Party of its ability to pay the full
amount of the Indemnified Liability and (ii) such Indemnifying Party
acknowledges in writing that the asserted liability is an Indemnified Liability,
such Indemnifying Party may assume and direct the tax examination,
administrative appeal, hearing, arbitration, suit or other proceeding (each a
"Proceeding") commenced, filed or otherwise initiated or convened to investigate
or resolve the existence and extent of such Indemnified Liability.
(b) Notwithstanding the foregoing, if at any time during a Proceeding
controlled by the Indemnifying Party pursuant to Section 8.2(a), such
Indemnifying Party fails to provide evidence satisfactory to the Indemnified
Party of its continuing ability to pay the full amount of the Indemnified
Liability or the Indemnified Party determines that such Indemnifying Party may
be unable to pay the full amount of the Indemnified Liability, then the
Indemnified Party may immediately assume control of and direct the Proceedings.
(c) During the period in which the Indemnifying Party assumes and
directs the Proceeding, if the Indemnified Liability is grouped with other
unrelated asserted liabilities or issues in the Proceeding, the parties shall
use their respective best efforts to cause the Indemnified Liability to be the
subject of a separate proceeding. If such severance is not possible, the
Indemnifying Party shall assume and direct and be responsible only for the
matters relating to the Indemnified Liability.
(d) In addition to the amounts referred to in Section 6.1, an
Indemnifying Party shall pay all out-of-pocket expenses and other costs related
to the Indemnified Liability, including but not limited to fees for attorneys,
accountants, expert witnesses or other consultants retained by such Indemnifying
Party and/or the Indemnified Party with respect to a claim pursuant to this
Agreement. To the extent that any such expenses and other costs have been or are
paid by an Indemnified Party, the Indemnifying Party shall promptly upon written
request reimburse the Indemnified Party therefor.
(e) An Indemnifying Party shall not pay (unless otherwise required by a
proper notice of levy and after prompt written notification to the Indemnified
Party of receipt of notice and demand for payment), settle, compromise or
concede any portion of the Indemnified Liability without the express written
consent of the Indemnified Party. An Indemnifying Party shall, on a timely
basis, keep the Indemnified Party informed of all developments in the Proceeding
and provide the Indemnified Party with copies of all pleadings, briefs, orders,
and other written papers; provided that in the event that the Indemnifying Party
determines that the providing of a written paper could waive an attorney-client
privilege, the parties shall take all reasonable measures to permit the
compliance with such obligation in a manner that avoids such consequence.
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(f) Any Proceeding which is not controlled or which is no longer
controlled by an Indemnifying Party pursuant to Section 8.2 shall be controlled
and directed exclusively by the Indemnified Party, and any related out-of-pocket
expenses and other costs incurred by the Indemnified Party, including but not
limited to, fees for attorneys, accountants, expert witnesses or other
consultants, with respect to a claim pursuant to this Agreement, shall be
reimbursed by such Indemnifying Party. An Indemnified Party will not be required
to pursue the claim in federal district court, the Court of Federal Claims or
any state or foreign court if as a prerequisite to such court's jurisdiction,
the Indemnified Party is required to pay the asserted liability unless the funds
necessary to invoke such jurisdiction are provided by such Indemnifying Party.
SECTION 8.3. TIME AND MANNER OF PAYMENT. Upon receipt of notice of a
Final Determination, an Indemnifying Party shall pay, within seven (7) business
days of such receipt, to the Indemnified Party the amount of the Indemnified
Liability and any expenses or other costs indemnified against (less, in the case
of an Indemnified Liability for Taxes, any amount of such Taxes paid directly by
an Indemnifying Party to the taxing authority). With respect to payments of an
Indemnified Liability for amounts other than Taxes including any and all
Liabilities with respect to ATI stockholders, the Indemnifying Party shall pay
to the Indemnified Party the amount of this Indemnified Liability within seven
(7) days of a final determination of the amount of such Liability and, in the
case of Liabilities with respect to ATI stockholders, no less than seven (7)
days prior to the date that payment is required to be made to such stockholders.
Such payment shall be paid by wire transfer of immediately available funds to an
account designated by the Indemnified Party by written notice to an Indemnifying
Party at the address specified in Section 10.11 prior to the due date of such
payment. If an Indemnifying Party delays making payment beyond the due date
hereunder, such party shall pay interest on the amount unpaid at the IRS
Interest Rate for each day and the actual number of days for which any amount
due hereunder is unpaid.
SECTION 8.4. COOPERATION. The parties shall cooperate with one another
in a timely manner in any administrative or judicial Proceeding involving any
matter that may result in an Indemnified Liability.
SECTION 8.5. ADMINISTRATION. ATI's and SPINCO's Chief Tax Officer or
other designated tax representative shall have primary responsibility for the
day-to-day administration of the provisions of this Agreement.
ARTICLE IX
DISPUTES
SECTION 9.1. DISPUTES.
(a) Resolution of any and all disputes arising from or in connection
with this Agreement, whether based on contract, tort, statute or otherwise,
including, but not limited to, unreasonable withholding of consent and disputes
in connection with claims by third parties (collectively, "Disputes"), shall be
subject to the provisions of this Section 9.1; provided, however, that nothing
contained herein shall preclude either party from seeking or obtaining (i)
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injunctive relief or (ii) equitable or other judicial relief to enforce the
provisions hereof or to preserve the status quo pending the final resolution of
Disputes hereunder.
(b) Either party may give the other party written notice of any Dispute
not resolved in the normal course of business. The parties shall attempt in good
faith to resolve any Dispute promptly by negotiation between executives of the
parties who have authority to settle the controversy. Within 15 days after
delivery of the notice, the foregoing executives of both parties shall meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary for a period not to exceed 5 days, to attempt to resolve the
Dispute. All reasonable requests for information made by one party to the other
will be honored. If the parties do not resolve the Dispute within such 20 day
period (the "Initial Mediation Period"), the parties shall attempt in good faith
to resolve the Dispute by negotiation between (a) in the case of ATI, the Chief
Financial Officer and General Counsel, and (b) in the case of SPINCO, the Chief
Financial Officer and General Counsel (collectively, the "Designated Officers").
Such officers shall meet at a mutually acceptable time and place (but in any
event no later than 20 days following the expiration of the Initial Mediation
Period) and thereafter as often as they reasonably deem necessary for a period
not to exceed 20 days, to attempt to resolve the Dispute.
(c) If the Dispute has not been resolved by negotiation within 50 days
of the first party's notice, or if the parties failed to meet within 15 days of
the first party's notice, or if the Designated Officers failed to meet within 35
days of the first party's notice, either party may commence any litigation or
other procedure allowed by law.
ARTICLE X
GENERAL
SECTION 10.1. ELECTIONS UNDER CODE SECTION 1552. Nothing in this
Agreement is intended to change or otherwise affect any election made by or on
behalf of the ATI Consolidated Group with respect to the calculation of earnings
and profits under Code Section 1552.
SECTION 10.2. PRE-DISTRIBUTION EARNINGS AND PROFITS. ATI and SPINCO
agree to allocate pre-Distribution earnings and profits in accordance with
Treasury Regulation Sections 1.312-10 and 1.1502-33.
SECTION 10.3. REMEDIES. SPINCO acknowledges that its obligations under
Article V of this Agreement are of a special, unique, unusual and extraordinary
character. Because the failure of SPINCO to perform its obligations set forth in
Article V of this Agreement could cause unique and extraordinary injury to ATI,
ATI shall, notwithstanding anything to the contrary herein, have the right in
addition to any other remedies available, at law or in equity, to seek an
injunction in a court of equity to compel SPINCO to perform such obligations.
SPINCO hereby waives any and all defenses it may have on the ground of lack of
jurisdiction or competence of the court to grant an injunction or other
equitable relief, or otherwise, and agrees that it will not assert any such
defense or any defense to a request by ATI for injunctive relief based on the
alleged existence of an adequate remedy at law or for money damages. Without
limiting the foregoing, SPINCO hereby waives the right to require ATI to post
any bond or other security
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with respect to any proceeding to enforce any provisions of this Agreement. The
existence of the rights of ATI set forth in this Section 10.3 shall not preclude
any other rights and remedies at law or in equity which ATI may have.
SECTION 10.4. ASSIGNMENT. Neither of the parties may assign or delegate
any of its rights or duties under this Agreement without the prior written
consent of the other party. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
permitted assigns, by merger, acquisition of assets or otherwise.
SECTION 10.5. FURTHER ASSURANCES. Subject to the provisions hereof, the
parties hereto shall make, execute, acknowledge, and deliver such other
instruments and documents, and take all such other actions, as may be reasonably
required in order to effectuate the purposes of this Agreement and to consummate
the transactions contemplated hereby. Subject to the provisions hereof, each of
the parties shall, in connection with entering into this Agreement, performing
its obligations hereunder and taking any and all actions relating hereto, comply
with all applicable laws, regulations, orders, and decrees, and promptly provide
the other parties with all such information as they may reasonably request in
order to be able to comply with the provisions of this Agreement.
SECTION 10.6. WAIVERS. No failure or delay on the part of the parties
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such right or power, preclude
any other or further exercise thereof or the exercise of any other right or
power. No modification or waiver of any provision of this Agreement nor consent
to any departure by the parties therefrom shall in any event be effective unless
the same shall be in writing, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given.
SECTION 10.7. CHANGE OF LAW. If, due to any change in applicable law or
regulations or their interpretation by any court of law or other governing body
having jurisdiction subsequent to the date of this Agreement, performance of any
provision of this Agreement or any transaction contemplated thereby shall become
impracticable or impossible, the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such provision.
SECTION 10.8. CONFIDENTIALITY. Subject to any contrary requirement of
law and the right of each party to enforce its rights hereunder in any legal
action, each party agrees that it shall keep strictly confidential, and shall
cause its employees and agents to keep strictly confidential, any information
which it or any of its employees or agents may acquire pursuant to, or in the
course of performing its obligations under, any provision of this Agreement.
SECTION 10.9. HEADINGS. Descriptive headings are for convenience only
and shall not control or affect the meaning or construction of any provision of
this Agreement.
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SECTION 10.10. COUNTERPARTS. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by the parties hereto,
and each such executed counterpart shall be, and shall be deemed to be, an
original instrument.
SECTION 10.11. NOTICES. All notices, requests, claims and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery by
hand, by reputable overnight courier service, by facsimile transmission, or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 10.11)
listed below:
Allegheny Teledyne Incorporated
1000 Six PPG Place
Pittsburgh, Pennsylvania 15222-5479
Attn: Jon D. Walton, Senior Vice President, General Counsel
and Secretary
Fax No.: 412-394-2837
Water Pik Technologies, Inc.
660 Newport Center Drive
Suite 470
Newport Beach, California 92660
Attn: Michael P. Hoopis, President and Chief Executive Officer
Fax No.: 949-719-6472
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Notice given by hand shall be deemed
delivered when received by the recipient. Notice given by mail as set out above
shall be deemed delivered five (5) calendar days after the date the same is
mailed. Notice given by reputable overnight courier shall be deemed delivered on
the next following business day after the same is sent. Notice given by
facsimile transmission shall be deemed delivered on the day of transmission
provided telephone confirmation of receipt is obtained promptly after completion
of transmission.
SECTION 10.12. COSTS AND EXPENSES. Unless otherwise specifically
provided herein, each party agrees to pay its own costs and expenses resulting
from the fulfillment of its respective obligations hereunder.
SECTION 10.13. CANCELLATION OF PRIOR TAX ALLOCATION OR TAX-SHARING
AGREEMENTS. On or prior to the Effective Date, ATI shall cancel or cause to be
canceled all agreements (other than this Agreement) providing for the allocation
or sharing of Taxes to which any member of the SPINCO Group would otherwise be
bound following the Distribution.
SECTION 10.14. INTEREST ON LATE PAYMENTS. If a party makes any payment
beyond the due date hereunder, such party shall pay interest on the amount
unpaid at the IRS
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Interest Rate for each day and the actual number of days for which any amount
due hereunder is unpaid.
SECTION 10.15. POWER OF ATTORNEY. Each member of the SPINCO Group shall
execute and deliver to ATI any power of attorney or other document reasonably
requested by ATI in connection with the filing of the Tax Returns and payment of
Taxes described in Article II hereof, or any Proceeding described in Article
VIII hereof. Each member of the ATI Consolidated Group shall execute and deliver
to SPINCO a power of attorney in connection with any matters controlled by
SPINCO under Section 2.2.
SECTION 10.16. GENERAL. This Agreement, including the attachments,
shall constitute the entire agreement between the parties hereto with respect to
the subject matter hereof and shall supersede all prior agreements and
undertakings, both written and oral, between the parties with respect to the
subject matter hereof and thereof. This Agreement may not be amended or modified
except (a) by an instrument in writing signed by, or on behalf of, the parties
or (b) by a waiver in accordance with Section 10.6. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
respective present and future Subsidiaries, and nothing herein, express or
implied, is intended to or shall confer upon any third parties any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
SECTION 10.17. GOVERNING LAW: CONSENT TO JURISDICTION.
(a) This Agreement shall be governed by and construed and interpreted
in accordance with the laws of the Commonwealth of Pennsylvania as to all
matters, including matters of validity, construction, effect, enforceability,
performance and remedies, irrespective of the choice of laws and principles of
the laws of the Commonwealth of Pennsylvania.
(b) Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of (i) the Court of Common Pleas of Allegheny County, Pennsylvania
and (ii) the United States District Court for the Western District of
Pennsylvania, for the purposes of any suit, action or other proceeding arising
out of this Agreement or any transaction contemplated hereby or thereby (and
agrees not to commence any action, suit or proceeding relating thereto except in
such courts). Each of the parties hereto further agrees that service of any
process, summons, notice or document hand delivered or sent by U.S. registered
mail to such parties respective address set forth in Section 10.11 will be
effective service of process for any action, suit or proceeding in Pennsylvania
with respect to any matters to which it has submitted to jurisdiction as set
forth in the immediately preceding sentence. Each of the parties hereto
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby or thereby (i) the Court of Common Pleas of Allegheny
County, Pennsylvania or (ii) the United States District Court for the Western
District of Pennsylvania, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an inconvenient
forum.
18
<PAGE> 19
SECTION 10.18. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their respective officers, each of whom is duly authorized, all
as of the Effective Date.
ALLEGHENY TELEDYNE INCORPORATED
By: /s/ Jon D. Walton
-----------------------------------
(Name)
(Title)
WATER PIK TECHNOLOGIES, INC.
By: /s/ Michael Hoopis
-----------------------------------
(Name)
(Title)
WATER PIK, INC.
By: /s/ Michael Hoopis
-----------------------------------
(Name)
(Title)
LAARS, INC.
By: /s/ Michael Hoopis
-----------------------------------
(Name)
(Title)
<PAGE> 1
Exhibit 10.2
INTERIM SERVICES AGREEMENT
THIS INTERIM SERVICES AGREEMENT, dated as of November 29, 1999 (the
"Agreement"), is between Allegheny Teledyne Incorporated, a Delaware corporation
("Provider" or "ATI") and Water Pik Technologies, Inc., a Delaware corporation
("User" or "Water Pik");
WHEREAS, pursuant to a Separation and Distribution Agreement, dated as
of November 29, 1999 (the "Distribution Agreement"), Provider will distribute
the stock of User to Provider's stockholders (the "Distribution"), following
which Distribution each of Provider and User will continue in existence as
independent, publicly-traded companies; and
WHEREAS, this Agreement is entered into pursuant to the Distribution
Agreement and sets forth the terms on which Provider will, for a limited period,
provide certain transition services to, and permit the use of certain of its
assets by, User following the Distribution referred to above; and
WHEREAS, capitalized terms used herein, unless otherwise defined
herein, shall have the meaning assigned to them in the Distribution Agreement.
NOW, THEREFORE, in consideration of the respective agreements and
covenants contained in this Agreement, and intending to be legally bound hereby,
the parties agree as follows:
SECTION 1. SERVICES. (a) Subject to the terms of this Agreement,
Provider shall provide, or shall cause another member of the ATI Group to
provide, the services described on Schedule A to User, or another member of the
Water Pik Group designated by User, from and after the Distribution Date and
during the time periods specified on said Schedule. Provider (or such other
member of the ATI Group) shall supply such services substantially in accordance
with Provider's normal practices in providing such services as of the
Distribution Date (except as otherwise provided in Schedule A).
(b) In consideration for the Services, User shall pay to Provider the
amounts set forth on Schedule A. Provider shall invoice User on a monthly basis
for the Services provided to User. Amounts due under such invoices shall be
payable within thirty days after receipt.
(c) Provider and User agree to cooperate and to make all reasonable
efforts to work together to take such actions as are reasonably necessary to
eliminate the need for or to otherwise discontinue as expeditiously as
reasonably possible the Services performed under this Agreement.
(d) Provider shall be permitted to cause third parties to provide
Services to User hereunder (in lieu of Provider or a member of the ATI Group),
at Provider's sole discretion.
SECTION 2. TERM. The term of this Agreement shall be a period of 12
months, commencing on the Distribution Date and ending on the first year
anniversary of the Distribution Date; unless otherwise indicated on Schedule A;
provided, however, that User may terminate any
<PAGE> 2
of the Services provided hereunder on not less than 30 days prior written notice
to Provider. The parties may extend the term of this Agreement by written
agreement signed by both parties. Notwithstanding the foregoing, if (i) either
party fails to perform any material provision of this Agreement and the failure
to perform is not corrected within 15 days after the other party gives written
notice of such default or (ii) User fails to make any payment required under
this Agreement at the time it is due and such failure is not corrected within
five days after written notice of such failure, then the non-defaulting party
may terminate this Agreement effective at the end of such five-day notice
period.
SECTION 3. STANDARD OF CONDUCT; LIMITATION OF LIABILITY. (a) Provider
shall have no liability with respect to its furnishing any of the Services
hereunder to User except on account of Provider's willful misconduct or gross
negligence. In agreeing to provide the Services as an accommodation to User,
Provider is not making any representation or warranty as to the quality,
suitability or adequacy of the Services for any purpose or use, including
without limitation any representation as to whether any asset of Provider or any
third party is Year 2000 Compliant. Without limiting generality of the
foregoing, Water Pik understands and agrees that ATI assumes no responsibility
for the adequacy or accuracy of the Water Pik's financial statements or filings
with the Securities and Exchange Commission. In providing the Services, Provider
shall not be obligated to (i) hire any additional employees, (ii) maintain the
employment of any specific employee, or (iii) purchase, lease or license any
additional equipment or other assets. For the purposes of this Agreement, "Year
2000 Compliant" means, with respect to an Asset, that such Asset will (A)
accurately process date/time data (including, but not limited to, calculating,
comparing, sorting, sequencing and calendar generation), including single
century formulas and multi-century formulas, from, into and between the
twentieth and twenty-first centuries and the years 1999 and 2000, including leap
year calculations, and will not malfunction or generate incorrect values or
invalid results involving such dates/times; (B) accurately interface with other
systems, as appropriate, in order to supply, receive or process dates/times and
other data, to the extent that other information technology properly exchanges
data with it; (C) provide that date/time-related functionalities, date/time
fields and any user input interfaces include a four digit year format and/or
other indication of century, as applicable; and (D) not cause any other Asset
that is otherwise Year 2000 Compliant to fail to be Year 2000 Compliant.
(b) It is understood and agreed that Provider shall not be obligated to
perform or to cause to be performed any services hereunder in a volume or
quantity which substantially exceeds the historical volumes or quantities of
such services performed for User or other members of the Water Pik Group. The
parties further acknowledge that it is User's intention to provide to itself, or
procure the services to be provided by Provider hereunder from third parties
other than Provider, as promptly as is reasonably practicable following the
Distribution Date. Provider will not be required to perform or to cause to be
performed any of the Services for the benefit of any third party or any other
entity other than User or any directly or indirectly wholly owned subsidiary or
majority owned affiliate of User.
(c) Provider's maximum liability to, and the sole remedy of, User for
breach of this Agreement shall be the lesser of (i) User's incremental
out-of-pocket cost of performing such
2
<PAGE> 3
service itself or (ii) User's incremental out-of-pocket cost of obtaining such
service from a third party (provided, that User shall exercise all reasonable
efforts under the circumstances to minimize the cost of any such alternative to
such services by selecting the most cost-effective alternatives which provide
the functional equivalent of the services replaced) or if lesser, the amount
paid by user to Provider hereunder. Notwithstanding anything to the contrary
herein, (A) in no event shall Provider have any liability to User for special or
consequential damages under this Agreement, including as a result of Provider's
breach of this Agreement or the gross negligence or willful misconduct of
Provider under this Agreement, and (B) in no event shall Provider have any
liability of any kind under this Agreement to any third party.
(d) Except as otherwise provided in the foregoing paragraphs (a) - (c)
of this Section 3, User shall be solely liable and responsible for, and shall
indemnify Provider and its directors, officers, employees, agents,
representatives and affiliates from, any and all claims, liabilities,
obligations, losses, costs, expenses, litigation, proceedings, taxes,
assessments, charges, demands or judgments of any kind or nature whatsoever
("Losses") for acts or omissions in furnishing Services to User under this
Agreement. Upon termination of this Agreement or the earlier termination of any
Services, User shall be obligated to return to Provider as soon as is reasonably
practicable, any equipment or other property of Provider relating to the
Services which is in User's control or possession and which is not an asset to
be retained by User under the Distribution Agreement or the Ancillary
Agreements.
SECTION 4. FORCE MAJEURE. Neither party shall be responsible for
failure or delay in performance of any service to be performed hereunder, nor
shall either party be responsible for failure or delay in receiving such
service, if caused by an act of God, act of public enemy, war, government acts
or regulations, fire, flood, hurricane, embargo, quarantine, epidemic, labor
stoppages, accident, explosion, unusually severe weather, any Asset of such
party or third party that is not Year 2000 Compliant or other cause similar or
dissimilar to the foregoing beyond their control (herein called "Force
Majeure"); provided, however, that prior to being relieved of any of its
obligations, the party whose performance has been interrupted by such
circumstances shall use reasonable efforts to remove or otherwise address the
effects of any such event or condition as soon as practicable and shall promptly
give written notice to the other party upon the occurrence of any of such events
or circumstances and shall use reasonable efforts to resume full performance of
this Agreement as soon as is practicable. Notwithstanding the foregoing, to the
extent services are available after the occurrence of a Force Majeure event,
User shall be entitled to, and Provider shall provide, a level of services
equivalent to the proportionate share of services used by User immediately prior
to the occurrence of any such Force Majeure event.
SECTION 5. CONFIDENTIALITY. Any and all information which is exchanged
by the parties in connection with this Agreement, whether of a technical or
business nature, shall be considered confidential. The parties agree that such
confidential information shall be treated in accordance with the terms and
provisions of the Distribution Agreement.
SECTION 6. AMENDMENT. This Agreement may be amended only by a writing
signed by each of the parties.
3
<PAGE> 4
SECTION 7. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute a single instrument.
SECTION 8. THIRD PARTIES. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
or entity other than User and Provider (and its associated indemnified parties
under Section 3(d)) any rights or remedies under, or by reason of, this
Agreement.
SECTION 9. WAIVERS. Any waiver by any party of any breach of or failure
to comply with any provision of this Agreement by any other party to this
Agreement shall be in writing and shall not be construed as, or constitute, a
continuing waiver of such provision, or a waiver of any other breach of, or
failure to comply with, any other provision of this Agreement.
SECTION 10. GOVERNING LAW; CONSTRUCTION. This Agreement shall be
construed and enforced in accordance with and governed by the internal
substantive laws of the Commonwealth of Pennsylvania. The headings in this
Agreement are solely for convenience of reference and shall not be given any
effect in the construction or interpretation of this Agreement. References to
Sections are references to Sections of this Agreement. The Schedule to this
Agreement is incorporated herein and is part of this Agreement.
SECTION 11. NOTICES. All notices, requests, claims and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery by
hand, by reputable overnight courier service, by facsimile transmission, or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 11) listed
below:
if to Allegheny Teledyne Incorporated:
Allegheny Teledyne Incorporated
1000 Six PPG Place
Pittsburgh, PA 15222-5479
Attention: Senior Vice President,
General Counsel and Secretary
Fax No.: 412-394-2837
4
<PAGE> 5
if to Water Pik Technologies, Inc.:
Water Pik Technologies, Inc.
660 Newport Center Drive, Suite 470
Newport Beach, CA 92660
Attention: President
Fax No.: 949-719-6472
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Notice given by hand shall be deemed
delivered when received by the recipient. Notice given by mail as set out above
shall be deemed delivered five calendar days after the date the same is mailed.
Notice given by reputable overnight courier shall be deemed delivered on the
next following business day after the same is sent. Notice given by facsimile
transmission shall be deemed delivered on the day of transmission provided
telephone confirmation of receipt is obtained promptly after completion of
transmission.
SECTION 12. ASSIGNMENT. Neither of the parties may assign or delegate
any of its rights or duties under this Agreement without the prior written
consent of the other party. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
permitted assigns.
SECTION 13. DISPUTES. (a) Resolution of any and all disputes arising
from or in connection with this Agreement, whether based on contract, tort,
statute or otherwise, including, but not limited to, disputes in connection with
claims by third parties (collectively, "Disputes"), shall be subject to the
provisions of this Section 13; provided, however, that nothing contained herein
shall preclude either party from seeking or obtaining (i) injunctive relief or
(ii) equitable or other judicial relief to enforce the provisions hereof or to
preserve the status quo pending resolution of Disputes hereunder.
(b) Either party may give the other party written notice of any Dispute
not resolved in the normal course of business. The parties shall attempt in good
faith to resolve any Dispute promptly by negotiation between executives of the
parties who have authority to settle the controversy. Within 15 days after
delivery of the notice, the foregoing executives of both parties shall meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary for a period not to exceed 5 days, to attempt to resolve the
Dispute. All reasonable requests for information made by one party to the other
will be honored. If the parties do not resolve the Dispute within such 20 day
period (the "Initial Mediation Period"), the parties shall attempt in good faith
to resolve the Dispute by negotiation between (i) in the case of Allegheny
Teledyne Incorporated, the Senior Vice President, General Counsel and Secretary
and (ii) in the case of Water Pik, the General Counsel (collectively, the
"Designated Officers"). Such officers shall meet at a mutually acceptable time
and place (but in any event no later than 15 days following the expiration of
the Initial Mediation Period) and thereafter as often as they reasonably deem
necessary for a period not to exceed 15 days, to attempt to resolve the Dispute.
(c) If the Dispute has not been resolved by negotiation within 50 days
of the first party's notice, or if the parties failed to meet within 30 days of
the first party's notice, or if the
5
<PAGE> 6
Designated Officers failed to meet within 35 days of the first party's notice,
either party may commence any litigation or other procedure allowed by law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
ALLEGHENY TELEDYNE INCORPORATED
By: /s/ Jon D. Walton
----------------------------
Title:_________________________
WATER PIK TECHNOLOGIES, INC.
By: /s/ Michael Hoopis
----------------------------
Title:_________________________
6
<PAGE> 1
Exhibit 10.3
EMPLOYEE BENEFITS AGREEMENT
BETWEEN
ALLEGHENY TELEDYNE INCORPORATED
AND
WATER PIK TECHNOLOGIES, INC.
DATED AS OF NOVEMBER 29, 1999
<PAGE> 2
INDEX
PAGE
----
ARTICLE I DEFINITIONS ........................................................1
ARTICLE II GENERAL PRINCIPLES.................................................5
2.1 ASSUMPTION OF LIABILITIES........................................5
2.2 ESTABLISHMENT OF WATER PIK PLANS.................................6
2.3 TERMS OF PARTICIPATION BY WATER PIK INDIVIDUALS IN WATER PIK
PLANS.........................................................6
ARTICLE III DEFINED BENEFIT PLANS.............................................7
3.1 FREEZING OF PENSION PLAN BENEFITS................................7
3.2 CREDITING SERVICE UNDER ATI'S PENSION PLAN.......................7
ARTICLE IV DEFINED CONTRIBUTION PLANS.........................................8
4.1 401(k) PLAN......................................................8
4.2 ASSUMPTION OF JANDY INDUSTRIES, INC. EMPLOYEE SAVINGS PLAN.......9
ARTICLE V HEALTH AND WELFARE PLANS............................................9
5.1 ASSUMPTION OF HEALTH AND WELFARE PLAN LIABILITIES................9
5.2 VENDOR CONTRACTS................................................10
5.3 PROCEDURES FOR AMENDMENTS TO PLANS, PLAN DESIGNS,
ADMINISTRATIVE PRACTICES, AND VENDOR CONTRACTS...............12
5.4 ATI SICKNESS AND ACCIDENT, LONG TERM DISABILITY AND PENSION
DISABILITY BENEFITS..........................................13
5.5 POST-RETIREMENT HEALTH AND LIFE INSURANCE BENEFITS..............13
5.6 COBRA AND DIRECT PAY............................................13
5.7 POST-DISTRIBUTION TRANSITIONAL ARRANGEMENTS.....................13
5.8 APPLICATION OF ARTICLE V TO WATER PIK ENTITIES..................15
ARTICLE VI EXECUTIVE BENEFITS AND NON-EMPLOYEE DIRECTOR BENEFITS.............15
6.1 ASSUMPTION OF OBLIGATIONS.......................................15
6.2 CONSENTS AND NOTIFICATIONS......................................15
6.3 ATI 1999 BONUS PLAN.............................................16
6.4 ATI INCENTIVE PLANS.............................................16
6.5 ATI NONQUALIFIED DEFERRED COMPENSATION PROGRAMS.................18
6.6 NON-EMPLOYEE DIRECTOR BENEFITS..................................19
6.7 CONFIDENTIALITY AND PROPRIETARY INFORMATION.....................19
ARTICLE VII GENERAL AND ADMINISTRATIVE.......................................19
7.1 INTERIM SERVICES AGREEMENT......................................19
<PAGE> 3
7.2 PAYMENT OF LIABILITIES, PLAN EXPENSES AND RELATED MATTERS........19
7.3 SHARING OF PARTICIPANT INFORMATION...............................20
7.4 REPORTING AND DISCLOSURE AND COMMUNICATIONS TO
PARTICIPANTS..................................................20
7.5 NON-TERMINATION OF EMPLOYMENT; NO THIRD-PARTY
BENEFICIARIES.................................................20
7.6 BENEFICIARY DESIGNATIONS.........................................21
7.7 REQUESTS FOR IRS RULINGS AND DOL OPINIONS........................21
7.8 FIDUCIARY MATTERS................................................21
7.9 COLLECTIVE BARGAINING............................................21
7.10 CONSENT OF THIRD PARTIES........................................21
7.11 INDEMNIFICATION OF ATI..........................................21
ARTICLE VIII MISCELLANEOUS....................................................22
8.1 FOREIGN PLANS....................................................22
8.2 EFFECT IF DISTRIBUTION DOES NOT OCCUR............................22
8.3 RELATIONSHIP OF PARTIES..........................................22
8.4 AFFILIATES.......................................................22
8.5 COUNTERPARTS; ENTIRE AGREEMENT; CORPORATE POWER..................22
8.6 GOVERNING LAW; CONSENT TO JURISDICTION...........................23
8.7 ASSIGNABILITY....................................................23
8.8 THIRD PARTY BENEFICIARIES........................................24
8.9 NOTICES..........................................................24
8.10 SEVERABILITY....................................................24
8.11 HEADINGS........................................................24
8.12 WAIVERS OF DEFAULT..............................................24
8.13 AMENDMENTS......................................................24
8.14 INTERPRETATION..................................................25
8.15 DISPUTES........................................................25
ii
<PAGE> 4
EMPLOYEE BENEFITS AGREEMENT
November 29 , 1999
The parties to this Employee Benefits Agreement, dated as of the date
written above, are Allegheny Teledyne Incorporated, a Delaware corporation
("ATI"), and Water Pik Technologies, Inc., a Delaware corporation ("Water Pik").
Capitalized terms used herein (other than the formal names of ATI Plans (as
defined below) and related trusts of ATI) and not otherwise defined shall have
the respective meanings assigned to them in Article I hereof or as assigned to
them in the Separation and Distribution Agreement (as defined below).
WHEREAS, the Board of Directors of ATI has determined that it is in the
best interests of ATI and its stockholders to separate ATI's consumer products
businesses into an independent business entity;
WHEREAS, in furtherance of the foregoing, ATI and Water Pik have
entered into a Separation and Distribution Agreement, dated as of the date
hereof (the "Separation and Distribution Agreement"), and certain other
agreements that will govern certain matters relating to the Separation, the
Distribution and the relationship of ATI and Water Pik, and their respective
Subsidiaries following the Distribution; and
WHEREAS, pursuant to the Separation and Distribution Agreement, ATI and
Water Pik have agreed to enter into this agreement allocating assets,
liabilities and responsibilities with respect to certain employee compensation
and benefit plans and programs between them.
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement the following terms shall have the
following meanings:
1.1 Agreement means this Employee Benefits Agreement, including all the
Schedules and Exhibits hereto.
1.2 ASO Contract is defined in Section 5.2(a)(i).
1.3 ATI Entity means any entity that is, at the relevant time, an
Affiliate of ATI, except that, for periods beginning Immediately After the
Distribution Date, the term "ATI Entity" shall not include Water Pik or a Water
Pik Entity.
1.4 ATI Executive means an employee or former employee of ATI, an ATI
Entity, Water Pik or a Water Pik Entity, who immediately before the Close of the
Distribution Date is eligible to participate in or receive a benefit under any
ATI Executive Benefit Plan.
<PAGE> 5
1.5 ATI Master Pension Trust means the master trust under which the
assets of the ATI Pension Plan are held.
1.6 ATI Pension Plan means the Allegheny Teledyne Incorporated Pension
Plan.
1.7 ATI Stock Value means the closing price per share of ATI Common
Stock (regular way) on the NYSE on November 22, 1999.
1.8 Award means an award under the Incentive Plan, including
Performance Awards and SARP Awards. When immediately preceded by "ATI," the term
Award (including the term Performance Award or SARP Award) means an award under
the ATI Incentive Plan. When immediately preceded by "Water Pik," the term Award
(including the term Performance Award or SARP Award) means an award under the
Water Pik Incentive Plan.
1.9 Benefit Liabilities means any Liabilities (as defined in the
Separation and Distribution Agreement) relating to any contributions,
compensation or other benefits accrued or payable under any profit sharing,
pension, savings, deferred compensation, fringe benefit, insurance, medical,
medical reimbursement, life, disability, accident, post-retirement health or
welfare benefit, stock option, stock purchase, sick pay, vacation, employment,
severance, termination or other compensation or benefit plan, agreement,
contract, policy, trust fund or arrangement.
1.10 Change is defined in Section 5.3(b)(i).
1.11 Close of the Distribution Date means 5:00 P.M., Eastern Standard
Time or Eastern Daylight Time (whichever shall then be in effect), on the
Distribution Date.
1.12 COBRA means the continuation coverage requirements for "group
health plans" under Title X of the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, and as codified in Code Section 4980B and ERISA
Sections 601 through 608.
1.13 Code means the Internal Revenue Code of 1986, as amended.
Reference to a specific Code provision also includes any proposed, temporary, or
final regulation in force under that provision.
1.14 Corporate-Owned Life Insurance Policies means the life insurance
policies owned by ATI insuring the lives of certain ATI Executives and certain
other highly compensated employees of ATI or an ATI Entity.
1.15 DOL means the United States Department of Labor.
1.16 ERISA means the Employee Retirement Income Security Act of 1974,
as amended. Reference to a specific provision of ERISA also includes any
proposed, temporary, or final regulation in force under that provision.
1.17 Executive Benefit Plans, when immediately preceded by "ATI," means
the executive benefit plans, programs, and arrangements established, maintained,
agreed upon, or
2
<PAGE> 6
assumed by ATI or an ATI Entity for the benefit of employees and former
employees of ATI or an ATI Entity before the Close of the Distribution Date as
listed in Schedule 1.17. When immediately preceded by "Water Pik," Executive
Benefit Plans means the executive benefit plans and programs to be established
by Water Pik pursuant to Section 2.2 that correspond to the respective ATI
Executive Benefit Plans.
1.18 Foreign Plan means a Plan maintained by ATI, an ATI Entity, Water
Pik, or a Water Pik Entity for the benefit of employees outside the U.S.
1.19 Group Insurance Policies is defined in Section 5.2(b)(i).
1.20 HCRA Plan, when immediately preceded by "ATI," means the ATI
Health Care Reimbursement Account Plan. When immediately preceded by "Water
Pik," HCRA Plan means the Health Care Reimbursement Account Plan to be
established by Water Pik pursuant to Section 2.2.
1.21 Health and Welfare Plans, when immediately preceded by "ATI,"
means the health and welfare plans listed on Schedule 1.21 established and
maintained by ATI for the benefit of employees and retirees of ATI and certain
ATI Entities, and such other welfare plans or programs as may apply to such
employees and retirees of ATI or an ATI Entity before the Close of the
Distribution Date. When immediately preceded by "Water Pik," Health and Welfare
Plans means the health and welfare plans to be established by Water Pik pursuant
to Section 2.2 that correspond to the respective ATI Health and Welfare Plans.
1.22 HMO means a health maintenance organization that provides benefits
under one or more of the ATI Health and Welfare Plans or the Water Pik Health
and Welfare Plans.
1.23 HMO Agreements is defined in Section 5.2(c)(i).
1.24 Immediately After the Distribution Date means 5:01 P.M., Eastern
Standard Time or Eastern Daylight Time (whichever shall then be in effect), on
the Distribution Date.
1.25 Incentive Plan, when immediately preceded by "ATI," means any of
the Allegheny Teledyne Incorporated 1996 Incentive Plan, any predecessor
Incentive Plan thereto and any other stock-based incentive plans assumed by ATI
by reason of merger, combination, acquisition or otherwise. When immediately
preceded by "Water Pik," Incentive Plan means the Incentive Plan to be
established by Water Pik pursuant to Section 2.2.
1.26 IRS means the Internal Revenue Service.
1.27 Material Feature means any feature of a Plan that could reasonably
be expected to be of material importance to the sponsoring employer or the
participants and beneficiaries of the Plan, which could include, depending on
the type and purpose of the particular Plan, the class or classes of employees
eligible to participate in such Plan, the nature, type, form, source, and level
of benefits provided by the employer under such Plan and the amount or level of
contributions, if any, required to be made by participants (or their dependents
or beneficiaries) to or under such Plan.
3
<PAGE> 7
1.28 Non-Employee Director, when immediately preceded by "ATI," means a
member of ATI's Board of Directors who is not an employee of ATI or an ATI
Entity. When immediately preceded by "Water Pik," Non-Employee Director means a
member of Water Pik's Board of Directors who is not an employee of ATI, an ATI
Entity, Water Pik or a Water Pik Entity.
1.29 Non-Employee Director Plans, when immediately preceded by "ATI,"
means the Allegheny Teledyne Incorporated 1996 Non-Employee Director Stock
Compensation Plan and the Allegheny Teledyne Incorporated Fee Continuation Plan
for Non-Employee Directors. When immediately preceded by "Water Pik,"
Non-Employee Director Plans means the plans and programs to be established by
Water Pik pursuant to Section 2.2 that correspond to the ATI Non-Employee
Director Plans.
1.30 Nonqualified Deferred Compensation Programs, when immediately
preceded by "ATI," means the Allegheny Teledyne Incorporated Executive Deferred
Compensation Plan, the Allegheny Teledyne Incorporated Supplemental Pension Plan
and the Teledyne, Inc. Pension Equalization Plan. When immediately preceded by
"Water Pik," Deferral Plan means the Executive Deferred Compensation Plan to be
established by Water Pik pursuant to Section 2.2.
1.31 Option, when immediately preceded by "ATI," means an option to
purchase ATI Common Stock and, when immediately preceded by "Water Pik," Option
means an option to purchase Water Pik Common Stock, in each case pursuant to an
Incentive Plan.
1.32 PBGC means the Pension Benefit Guaranty Corporation.
1.33 Performance Award means any Award granted pursuant to the terms of
the Performance Share Program.
1.34 Performance Share Program means the Allegheny Teledyne
Incorporated Performance Share Program adopted pursuant to Administrative Rules
under the ATI Incentive Plan.
1.35 Plan, when immediately preceded by "ATI" or "Water Pik," means any
plan, policy, program, payroll practice, on-going arrangement, contract, trust,
insurance policy or other agreement or funding vehicle providing benefits to
employees, former employees or Non-Employee Directors of ATI or an ATI Entity,
or Water Pik or a Water Pik Entity, as applicable.
1.36 Ratio means the amount obtained by dividing the ATI Stock Value by
the Water Pik Stock Value.
1.37 Reasonable Efforts means such acts or actions that, in the
reasonable good faith opinion of the party taking such acts or actions, are
calculated to achieve, or otherwise further, the applicable provisions to which
the term applies; provided, however, to the extent any costs, fees or other
expenditures (the "Expenses") occur as a result of a party's use of Reasonable
Efforts and such expenses are not expressly allocated under the terms of this
Agreement or any Ancillary Agreement, such Expenses shall be borne by the party
for whose benefit such Expenses are incurred and such party shall indemnify and
hold harmless the other party with respect to such Expenses.
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1.38 SARP, when immediately preceded by "ATI," means the Allegheny
Teledyne Incorporated Stock Acquisition and Retention Program.
1.39 SARP Award means any Award granted pursuant to the terms of the
SARP.
1.40 Separation and Distribution Agreement is defined in the third
paragraph of the preamble of this Agreement.
1.41 Stock Purchase Plan, when immediately preceded by "ATI," means the
Allegheny Teledyne Incorporated Employee Stock Purchase Plan. When immediately
preceded by "Water Pik," Stock Purchase Plan means the employee stock purchase
plan to be established by Water Pik pursuant to Section 2.2.
1.42 Teledyne means Teledyne, Inc., a Delaware corporation, or its
successors and assigns.
1.43 Teledyne 401(k) Plan means the Teledyne, Inc. 401(k) Plan.
1.44 Water Pik Entity means any Person that is, at the relevant time, a
Subsidiary of Water Pik or is otherwise controlled, directly or indirectly, by
Water Pik.
1.45 Water Pik 401(k) Plan means the 401(k) plan established by Water
Pik effective no later than April 1, 2000 pursuant to Section 2.2.
1.46 Water Pik Individual means any individual who, Immediately After
the Distribution Date is an active hourly or salaried employee of Water Pik or a
Water Pik Entity.
1.47 Water Pik Stock Value means the opening price per share of Water
Pik Common Stock on the day following the Distribution Date.
ARTICLE II
GENERAL PRINCIPLES
2.1 ASSUMPTION OF LIABILITIES. Except as otherwise expressly
provided in Section 3.1 or Article VI, Water Pik hereby assumes and agrees to
pay, perform, fulfill and discharge, in accordance with their respective terms,
all of the following (regardless of when or where such Benefit Liabilities arose
or arise or were or are incurred): (i) all Benefit Liabilities to or relating to
Water Pik Individuals, and their respective dependents and beneficiaries, in
each case relating to, arising out of or resulting from employment by ATI or an
ATI Entity before the Distribution Date (including Benefit Liabilities under ATI
Plans and Water Pik Plans); (ii) all other Benefit Liabilities to or relating to
Water Pik Individuals and other employees of Water Pik or a Water Pik Entity,
and their dependents and beneficiaries, to the extent relating to, arising out
of or resulting from future, present or former employment with Water Pik or a
Water Pik Entity (including Benefit Liabilities under ATI Plans and Water Pik
Plans); (iii) all Benefit Liabilities relating to, arising out of or resulting
from any other actual or alleged employment relationship with Water Pik or a
Water Pik Entity; (iv) all Benefit Liabilities relating to, arising out of or
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resulting from the imposition of withdrawal liability under Subtitle E of Title
IV of ERISA as a result of a complete or partial withdrawal of any ATI Entity
from a "multiemployer plan" within the meaning of ERISA Section 4021 which
occurs solely as a result of the Separation or the Distribution; and (v) all
other Benefit Liabilities relating to, arising out of or resulting from
obligations, liabilities and responsibilities expressly assumed or retained by
Water Pik, a Water Pik Entity, or a Water Pik Plan pursuant to this Agreement.
Notwithstanding the generality of the foregoing, Water Pik does not assume or
agree to pay, perform, fulfill or discharge any Benefit Liabilities relating to,
arising out of or resulting from the Teledyne Savings and Retirement Supplement
Plan.
2.2 ESTABLISHMENT OF WATER PIK PLANS. Effective prior to or within a
reasonable time after the Distribution Date, Water Pik shall adopt, or cause to
be adopted, the amended Teledyne 401(k) Plan for the period between the
Distribution Date and April 1, 2000, the Water Pik Stock Purchase Plan, the
Water Pik Health and Welfare Plans, and the Water Pik Executive Benefit Plans
for the benefit of the Water Pik Individuals and other current and future
employees of Water Pik and the Water Pik Entities; provided, however, that Water
Pik may, in its sole discretion, elect not to adopt or establish the Plan or
Plans listed in Schedule 2.2(a). Subject to the provisions of Section 4.1
regarding the Water Pik 401(k) Plan, or as otherwise may be set forth in
Schedule 2.2(b), the foregoing Water Pik Plans shall be substantially identical
in all Material Features to the corresponding ATI Plans as in effect as of the
Close of the Distribution Date. Effective prior to or within a reasonable time
after the Distribution Date, Water Pik shall adopt, or cause to be adopted, the
Water Pik Non-Employee Director Plans, for the benefit of Water Pik Non-Employee
Directors. The Water Pik Non-Employee Director Plans shall be substantially
similar in all Material Features to the corresponding ATI Non-Employee Director
Plans as in effect on the Distribution Date. No later than April 1, 2000, Water
Pik shall adopt the Water Pik 401(k) Plan and its related trust, which Water Pik
401(k) Plan shall provide for employer contributions, independent of employee
contributions and expressed as a rate of participant compensation, determined
appropriate by Water Pik in its sole discretion in light of Water Pik's choice
not to sponsor a defined benefit plan.
2.3 TERMS OF PARTICIPATION BY WATER PIK INDIVIDUALS IN WATER PIK PLANS.
The Water Pik Plans shall be, with respect to Water Pik Individuals, in all
respects the successors in interest to, and shall not provide benefits that
duplicate benefits provided by, the corresponding ATI Plans. ATI and Water Pik
shall agree on methods and procedures, including amending the respective Plan
documents and/or requesting approvals or consents of Water Pik Individuals where
the parties deem appropriate, to prevent Water Pik Individuals from receiving
duplicative benefits from the ATI Plans and the Water Pik Plans. With respect to
Water Pik Individuals, each Water Pik Plan shall provide that all service, all
compensation and all other benefit-affecting determinations that, as of the
Close of the Distribution Date, were recognized under the corresponding ATI Plan
shall, as of Immediately After the Distribution Date, receive full recognition,
credit, and validity and be taken into account under such Water Pik Plan to the
same extent as if such items occurred under such Water Pik Plan, except to the
extent that duplication of benefits would result. The provisions of this
Agreement for the transfer of assets from certain trusts relating to ATI Plans
(including Foreign Plans) to the corresponding trusts relating to Water Pik
Plans (including Foreign Plans) are based upon the understanding of the parties
that each such Water Pik Plan will assume all Benefit Liabilities of the
corresponding ATI
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Plan to or relating to Water Pik Individuals, as provided for herein. If any
such Benefit Liabilities are not effectively assumed by the appropriate Water
Pik Plan, then the amount of assets transferred to the trust relating to such
Water Pik Plan from the trust relating to the corresponding ATI Plan shall be
recomputed as set forth below, but taking into account the retention of such
Benefit Liabilities by such ATI Plan, and assets shall be transferred by the
trust relating to such Water Pik Plan to the trust relating to such ATI Plan so
as to place each such trust in the position it would have been in, had the
initial asset transfer been made in accordance with such recomputed amount of
assets.
ARTICLE III
DEFINED BENEFIT PLANS
3.1 FREEZING OF PENSION PLAN BENEFITS. Effective upon the applicable of
the dates under Section 3.2, the accrued benefits with respect to Water Pik
Individuals who, as of the Distribution Date, were participants under the ATI
Pension Plan shall be frozen and such Individuals shall not accrue any
additional benefits from and after the Distribution Date under the ATI Pension
Plan. The assets and Benefit Liabilities with respect to such Individuals,
determined as of the Distribution Date, shall be retained by the ATI Pension
Plan and its related trust and paid therefrom when due under the terms of the
ATI Pension Plan.
3.2 CREDITING SERVICE UNDER ATI'S PENSION PLAN.
(a) VESTING. Water Pik Individuals who, as of the Distribution Date,
were participants in the ATI Pension Plan will continue to receive service
credit for vesting and retirement benefit eligibility purposes under the ATI
Pension Plan for service actually rendered to Water Pik during the period
commencing on the Distribution Date and ending April 1, 2000.
(b) BENEFIT ACCRUAL. Water Pik Individuals who, as of the Distribution
Date, were participants in the ATI Pension Plan will continue to receive service
credit for benefit accrual purposes under the ATI Pension Plan for service
actually rendered to Water Pik during the period commencing on the Distribution
Date and ending April 2, 2000. Benefits accrued with respect to service credited
pursuant to this Section 3.2 shall be paid by the ATI Pension Plan at the same
times and under the same terms and conditions as applicable to benefits accrued
under the ATI Pension Plan.
(c) DISTRIBUTION OF BENEFITS FROM ATI PENSION PLAN TO WATER PIK
INDIVIDUALS. For purposes of the ATI Pension Plan, the date which is the earlier
of the applicable of (i) a Water Pik's Individual's actual separation from
service with Water Pik or (ii) April 1, 2000 shall be for each Water Pik
Individual a separation from service with the employer and Water Pik Individuals
who are eligible to commence receipt of benefits under the ATI Pension Plan may,
in their respective discretion, apply at any time after the applicable date
described above to commence benefits to the extent then payable and subject to
the terms and conditions of the ATI Pension Plan. The Distribution Date does
not, however, constitute and shall not be treated under the ATI Pension Plan as
a sale or otherwise as an event permitting Water Pik Individuals to elect to
receive a lump sum form of distribution under the ATI Pension Plan.
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ARTICLE IV
DEFINED CONTRIBUTION PLANS
4.1 401(k) PLAN.
(a) ADOPTION BY WATER PIK OF TELEDYNE 401(k) PLAN AMENDED TO BE A
MULTIPLE EMPLOYER PLAN. On or before the Distribution Date, the Teledyne 401(k)
Plan will be amended by Teledyne to be and become a multiple employer plan under
which Water Pik may elect to be a contributing sponsor and to provide
participation to Water Pik Individuals under the terms and conditions set forth
in the Teledyne 401(k) Plan for a period ending on the earlier of (i) adoption
by Water Pik of the Water Pik 401(k) Plan or (ii) April 1, 2000. The right to
amend the Teledyne 401(k) Plan in any respect shall be exclusively within the
power of Teledyne at all relevant times. As amended, the Teledyne 401(k) Plan
shall provide that (A) Water Pik Individuals shall not be permitted to direct
investments after the Distribution Date in shares of common stock of ATI ("ATI
Common Stock") or in the common stock of any corporation spun off by ATI on the
Distribution Date other than Water Pik and (B) that each Water Pik Individual
shall have the right to direct the administrator of the Teledyne 401(k) Plan to
liquidate the interests of Water Pik Individuals in the ATI Common Stock, Water
Pik Common Stock or the common stock of any other previously related corporation
and direct the method of reinvestment of the proceeds of such sale from among
the options then available under the Teledyne 401(k) Plan.
(b) ESTABLISHMENT OF WATER PIK 401(k) PLAN AND TRUST. The Water Pik
401(k) Plan, established by Water Pik pursuant to Section 2.2 no later than
April 1, 2000, (i) shall be a qualified defined contribution plan within the
meaning of Code Section 401(a), (ii) except as provided under Section 4.1(c),
shall contain provisions, terms and conditions substantially similar to the
provisions, terms and conditions of the Teledyne 401(k) Plan, including
provisions with respect to ATI Common Stock and the common stock of Water Pik
and any other corporation spun off by ATI on the Distribution Date, and shall
further provide that Water Pik Individuals may maintain investments in ATI
Common Stock, Water Pik Common Stock and/or stock of any previously related
corporation until December 31, 2002 and, if ATI Common Stock and/or common stock
of any previously related corporation other than Water Pik is held in accounts
of Water Pik Individuals in the Teledyne 401(k) Plan as of December 31, 2002,
the interests of Water Pik Individuals shall be liquidated by the Plan
administrator and the proceeds reinvested in Water Pik Common Stock, and (iii)
shall provide coverage from and after the earlier of (i) its adoption by Water
Pik or (ii) April 1, 2000 with respect to Water Pik Individuals who, as of the
later of the dates above, were participants in the Teledyne 401(k) Plan as
amended as described in Section 4.1(a). The trust related to the Water Pik
401(k) Plan, established by Water Pik pursuant to Section 2.2, shall be exempt
from taxation under Code Section 501(a).
(c) ASSUMPTION OF LIABILITIES AND TRANSFER OF ASSETS.
(i) Effective Immediately After the Distribution Date and
until the earlier of (i) the date of adoption by Water Pik of the Water
Pik 401(k) Plan or (ii) April 1, 2000, ATI shall administer or cause
the administration of the assets and Benefit Liabilities of the
Teledyne 401(k) Plan with respect to both Teledyne employees and Water
Pik Individuals.
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Water Pik shall pay to ATI, within thirty (30) days of presentment of
an invoice therefor, an amount equal to the actual cost incurred by ATI
for administration of the assets and Benefit Liabilities in the
Teledyne 401(k) Plan relating to Water Pik Individuals. Water Pik
Individuals shall continue to accrue service credit under the Teledyne
401(k) Plan for vesting and benefit eligibility purposes until the
earlier of (i) the date of adoption by Water Pik of the Water Pik
401(k) Plan or (ii) April 1, 2000. Effective as of the earlier of (i)
the adoption by Water Pik of the Water Pik 401(k) Plan or (ii) April 1,
2000: (A) the Water Pik 401(k) Plan shall assume and be solely
responsible for all Benefit Liabilities to or relating to Water Pik
Individuals under the Water Pik 401(k) Plan, and (B) ATI shall cause an
amount equal to the aggregate account balances of the Water Pik
Individuals participating under the Teledyne 401(k) Plan, whether such
amounts are vested or unvested under the terms of the Teledyne 401(k)
Plan, which are held by the related trust as of the applicable of (i)
the date of adoption by Water Pik of the Water Pik 401(k) Plan or (ii)
April 1, 2000 to be transferred to the Water Pik 401(k) Plan, and its
related trust, and Water Pik shall cause such transferred accounts to
be accepted by such plan and trust. In ATI's sole and absolute
discretion, the amount so transferred may be in cash or in kind or a
combination thereof; provided, however, that the following shall be
transferred in kind: (A) shares of ATI Common Stock, shares of Water
Pik Common Stock allocated to participants' accounts as a result of the
Distribution and shares of Teledyne Technologies Incorporated Common
Stock allocated to participants' accounts as a result of the spin-off
of ATI's aerospace and electronics businesses; and (B) all promissory
notes reflecting participant loans to Water Pik Individuals under the
Teledyne 401(k) Plan outstanding as of the time of transfer.
(ii) If any benefit with respect to a Water Pik Individual
under the Teledyne 401(k) Plan is subject to a qualified domestic
relations order at the time of transfer, all documentation concerning
such qualified domestic relations order shall be assigned to the Water
Pik 401(k) Plan.
4.2 ASSUMPTION OF JANDY INDUSTRIES, INC. EMPLOYEES SAVINGS PLAN.
Effective Immediately After the Effective Date, Water Pik will assume
sponsorship of and liability and responsibility for the Jandy Industries, Inc.
Employees Savings Plan.
ARTICLE V
HEALTH AND WELFARE PLANS
5.1 ASSUMPTION OF HEALTH AND WELFARE PLAN LIABILITIES.
(a) Immediately After the Distribution Date, all Benefit Liabilities to
or relating to Water Pik Individuals under the ATI Health and Welfare Plans
shall cease to be Benefit Liabilities of the ATI Health and Welfare Plans and
shall be assumed by the corresponding Water Pik Health and Welfare Plans.
(b) Notwithstanding Section 5.1(a), all treatments which have been
pre-certified for or are being provided to a Water Pik Individual as of the
Close of the Distribution Date shall be provided without interruption under the
appropriate ATI Health and Welfare Plan until such
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treatment is concluded or discontinued pursuant to applicable plan rules and
limitations, but Water Pik shall continue to be responsible for all Benefit
Liabilities relating to, arising out of or resulting from such ongoing
treatments as of the Close of the Distribution Date.
5.2 VENDOR CONTRACTS.
(a) THIRD-PARTY ASO CONTRACTS.
(i) ATI shall use its Reasonable Efforts to amend each
administrative services only contract with a third-party administrator
that relates to any of the ATI Health and Welfare Plans (an "ASO
Contract") in existence as of the date of this Agreement to permit
Water Pik to participate in the terms and conditions of such ASO
Contract from Immediately After the Distribution Date until December
31, 2000. ATI shall use its Reasonable Efforts to cause all ASO
Contracts into which ATI enters after the date of this Agreement but
before the Close of the Distribution Date to allow Water Pik to
participate in the terms and conditions thereof effective Immediately
After the Distribution Date on the same basis as ATI.
(ii) ATI shall have the right to determine, and shall promptly
notify Water Pik of, the manner in which Water Pik's participation in
the terms and conditions of ASO Contracts as set forth above shall be
effectuated. The permissible ways in which Water Pik's participation
may be effectuated include automatically making Water Pik a party to
the ASO Contracts or obligating the third party to enter into a
separate ASO Contract with Water Pik providing for the same terms and
conditions as are contained in the ASO Contracts to which ATI is a
party (or such other arrangement as to which ATI and Water Pik shall
mutually agree). Such terms and conditions shall include the financial
and termination provisions, performance standards, methodology,
auditing policies, quality measures, reporting requirements and target
claims. Water Pik hereby authorizes ATI to act on its behalf to extend
to Water Pik the terms and conditions of the ASO Contracts. Water Pik
shall fully cooperate with ATI in such efforts, and Water Pik shall not
perform any act, including discussing any alternative arrangements with
any third party, that would prejudice ATI's efforts.
(b) GROUP INSURANCE POLICIES.
(i) This Section 5.2(b) applies to group insurance policies
not subject to allocation or transfer pursuant to the foregoing
provisions of this Article V ("Group Insurance Policies").
(ii) ATI shall use its Reasonable Efforts to amend each Group
Insurance Policy in existence as of the date of this Agreement for the
provision or administration of benefits under the ATI Health and
Welfare Plans to permit Water Pik to participate in the terms and
conditions of such policy from Immediately After the Distribution Date
until December 31, 2000. ATI shall use its Reasonable Efforts to cause
all Group Insurance Policies into which ATI enters or which ATI renews
after the date of this Agreement but before the Close of the
Distribution Date to allow Water Pik to participate in the terms
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and conditions thereof effective Immediately After the Distribution
Date on the same basis as ATI.
(iii) Water Pik's participation in the terms and conditions of
each such Group Insurance Policy shall be effectuated by obligating the
insurance company that issued such insurance policy to ATI to issue one
or more separate policies to Water Pik. Such terms and conditions shall
include the financial and termination provisions, performance standards
and target claims. Water Pik hereby unconditionally and irrevocably
authorizes ATI to act on its behalf to extend to Water Pik the terms
and conditions of such Group Insurance Policies. Water Pik shall fully
cooperate with ATI in such efforts, and Water Pik shall not perform any
act, including discussing any alternative arrangements with third
parties, that would prejudice ATI's efforts.
(c) HMO AGREEMENTS.
(i) Before the Distribution Date, ATI shall use its Reasonable
Efforts to amend all letter agreements with HMOs that provide medical
services under the ATI Medical Plans for 1999 ("HMO Agreements") in
existence as of the date of this Agreement to permit Water Pik to
participate in the terms and conditions of such HMO Agreements, in each
case, from Immediately After the Distribution Date until December 31,
2000. ATI shall use its Reasonable Efforts to cause all HMO Agreements
into which ATI enters after the date of this Agreement but before the
Close of the Distribution Date to allow Water Pik to participate in the
terms and conditions of such HMO Agreements from Immediately After the
Distribution Date until December 31, 2000 on the same basis as ATI.
(ii) ATI shall have the right to determine, and shall promptly
notify Water Pik of, the manner in which Water Pik's participation in
the terms and conditions of all HMO Agreements as set forth above shall
be effectuated. The permissible ways in which Water Pik's participation
may be effectuated include automatically making Water Pik a party to
the HMO Agreements or obligating the HMOs to enter into letter
agreements with Water Pik which are identical to the HMO Agreements (or
such other arrangements as to which ATI and Water Pik shall mutually
agree). Such terms and conditions shall include the financial and
termination provisions of the HMO Agreements. Water Pik hereby
authorizes ATI to act on its behalf to extend to Water Pik the terms
and conditions of the HMO Agreements. Water Pik shall fully cooperate
with ATI in such efforts, and Water Pik shall not perform any act,
including discussing any alternative arrangements with any third-party,
that would prejudice ATI's efforts.
(iii) Notwithstanding anything in this Article V to the
contrary, Water Pik shall have the sole discretion to determine which
HMOs to offer to the participants in the Water Pik Health and Welfare
Plans for 2001 and subsequent years, and all HMO Agreements in which
Water Pik participates pursuant to this Section 5.2(c) shall provide
Water Pik with the right to discontinue its participation effective
January 1, 2001.
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5.3 PROCEDURES FOR AMENDMENTS TO PLANS, PLAN DESIGNS, ADMINISTRATIVE
PRACTICES, AND VENDOR CONTRACTS.
(a) AMENDMENTS TO PLAN DOCUMENTS. From Immediately After the
Distribution Date through December 31, 2000, Water Pik shall not amend any Water
Pik Health and Welfare Plan or Plans, and Water Pik shall have no rights or
privileges with respect to such Plans other than those rights and privileges
contained in any policy, contract or other written arrangement governing such
Plans. During any period in which ATI is providing Interim Services with respect
to any Water Pik Health and Welfare Plan pursuant to Section 7.1, ATI shall have
the right to amend any applicable Water Pik Health and Welfare Plan; provided
that, in ATI's reasonable good faith opinion, such amendment will have no
material adverse impact on the Water Pik Health and Welfare Plan or its
participants or, to the extent a material adverse impact would occur, such
impact would affect both the applicable Water Pik Health and Welfare Plan and
any corresponding ATI Health and Welfare Plan and any costs incurred as a result
of such amendment shall be borne by ATI and Water Pik in the same proportion
that Water Pik and ATI employees, respectively, participate.
(b) CHANGES IN VENDOR CONTRACTS, GROUP INSURANCE POLICIES, PLAN DESIGN,
AND ADMINISTRATION PRACTICES AND PROCEDURES.
(i) From Immediately After the Distribution Date until
December 31, 2000, Water Pik shall not materially modify, or take other
action which would have a material effect on, any of the following
items (each such modification, a "Change"): (A) the termination date,
administration, or operation of (1) an ASO contract between ATI or
Water Pik and a third-party administrator, (2) a Group Insurance Policy
issued to ATI or Water Pik, or (3) an HMO Agreement with ATI or Water
Pik, in each case, the material terms and conditions of which contracts
and policies are extended to Water Pik or to which Water Pik becomes a
party pursuant to Section 5.2; (B) the design of either an ATI Health
and Welfare Plan or a Water Pik Health and Welfare Plan; or (C) the
financing, operation, administration or delivery of benefits under
either an ATI Health and Welfare Plan or a Water Pik Health and Welfare
Plan.
(ii) During any period in which ATI is providing Interim
Services with respect to any Water Pik Health and Welfare Plan pursuant
to Section 7.1, ATI shall be permitted to make any Change to such Water
Pik Plan; provided that, in ATI's reasonable good faith opinion, such
Change would affect both the applicable Water Pik Health and Welfare
Plan and any corresponding ATI Health and Welfare Plan and any costs
incurred as a result of such amendment shall be borne proportionally by
ATI and Water Pik in the same proportion that Water Pik and ATI
employees, respectively, participate.
(c) EMPLOYEE CONTRIBUTIONS. Except as otherwise expressly provided in
Sections 5.3(a) and 5.3(b), as of January 1, 2001, Water Pik shall have the
right, in its sole and absolute discretion and without compliance with Sections
5.3(a) and 5.3(b), to increase or decrease the amount of employee contributions
under their respective Health and Welfare Plans.
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5.4 ATI SICKNESS AND ACCIDENT, LONG TERM DISABILITY AND PENSION
DISABILITY BENEFITS. ATI shall transfer to Water Pik, effective Immediately
After the Distribution Date, responsibility for administering all claims
incurred by Water Pik Individuals and other employees and former employees of
Water Pik and the Water Pik Entities before the Close of the Distribution Date
that are administered by ATI as of the Close of the Distribution Date. Water Pik
shall administer such claims in the same manner, and using the same methods and
procedures, as ATI used in administering such claims. Water Pik shall have sole
discretionary authority to make any necessary determinations with respect to
such claims, including entering into settlements with respect to such claims.
5.5 POST-RETIREMENT HEALTH AND LIFE INSURANCE BENEFITS. As soon as
practicable after the Distribution Date, Water Pik shall provide ATI with a list
of all Water Pik Individuals who are, to the best knowledge of Water Pik,
eligible to receive retiree medical or dental coverage under the ATI Health and
Welfare Plans from and after the Distribution Date and/or post-retirement life
insurance coverage under the ATI Group Life Program, and the type of retiree
medical or dental coverage and the level of life insurance coverage for which
they are eligible, as applicable.
5.6 COBRA AND DIRECT PAY. Effective Immediately After the Distribution
Date, Water Pik shall solely be responsible for administering compliance with
the health care continuation coverage requirements of COBRA and the Water Pik
Health and Welfare plans, and, with respect to Water Pik Individuals, the ATI
Health and Welfare Plans.
5.7 POST-DISTRIBUTION TRANSITIONAL ARRANGEMENTS.
(a) CONTINUANCE OF ELECTIONS, CO-PAYMENTS AND MAXIMUM BENEFITS.
(i) Water Pik shall cause the Water Pik Health and Welfare
Plans to recognize and maintain all coverage and contribution elections
made by Water Pik Individuals under the ATI Health and Welfare Plans
and apply such elections under the Water Pik Health and Welfare Plans
for the remainder of the period or periods for which such elections are
by their terms applicable. The transfer or other movement of employment
from ATI to Water Pik at any time before the Close of the Distribution
Date shall neither constitute nor be treated as a "status change" under
the ATI Health and Welfare Plans or the Water Pik Health and Welfare
Plans.
(ii) Water Pik shall cause the Water Pik Health and Welfare
Plans to recognize and give credit for (A) all amounts applied to
deductibles, out-of-pocket maximums, and other applicable benefit
coverage limits with respect to which such expenses have been incurred
by Water Pik Individuals under the ATI Health and Welfare Plans for the
remainder of the year in which the Distribution occurs, and (B) all
benefits paid to Water Pik Individuals under the ATI Health and Welfare
Plans for purposes of determining when such persons have reached their
lifetime maximum benefits under the Water Pik Health and Welfare Plans.
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(iii) Water Pik shall recognize and maintain through December
31, 1999 all eligible populations covered by the ATI Health and Welfare
Plans (as defined in the applicable ATI Health and Welfare Plan
documents), including Class I and Class II dependents, term and
temporary employees, alternate benefit plan employees, and all
categories of part-time employees (which are fully and non-fully
eligible for company contributions).
(iv) Water Pik shall (A) provide coverage to Water Pik
Individuals under the Water Pik Group Life Program without the need to
undergo a physical examination or otherwise provide evidence of
insurability, and (B) recognize and maintain all irrevocable
assignments and accelerated benefit option elections made by Water Pik
Individuals under the ATI Group Life Program.
(b) OTHER POST-DISTRIBUTION TRANSITIONAL RULES.
(i) ATI HCRA PLAN. To the extent any Water Pik Individual
contributed to an account under the ATI HCRA Plan during the calendar
year that includes the Distribution Date, effective as of the Close of
the Distribution Date, ATI shall transfer to the Water Pik HCRA Plan
the account balances of Water Pik Individuals for such calendar year
under the ATI HCRA Plan, regardless of whether the account balance is
positive or negative.
(ii) ATI CHILD/ELDER CARE REIMBURSEMENT ACCOUNT PLAN. To the
extent any Water Pik Individual contributed to the ATI CECRA Plan
during the calendar year that includes the Distribution Date, ATI shall
transfer the account balances of Water Pik Individuals for such
calendar year in the ATI CECRA Plan to the Water Pik CECRA Plan.
(iii) POST-RETIREMENT MEDICAL PLAN. For the period ending on
December 31st of the calendar year which is five calendar years after
the Distribution Date, Water Pik shall comply with all cost maintenance
period requirements and benefit maintenance period requirements under
Code Sections 401(h) or 420 that are applicable to post-retirement
health benefits under the Water Pik Health Plans for any pension asset
transfers pursuant to Code Section 420 by or on behalf of ATI for
qualified current retiree health liabilities (as defined under Code
Section 420). With respect to any pension asset transfers pursuant to
Code Section 420, Water Pik shall obtain ATI's prior written approval
before amending any Water Pik Health Plan with respect to the provision
of post-retirement health benefits during the cost maintenance or
benefit maintenance periods to which the ATI Health Plans are subject
pursuant to Code Section 420 and no such amendment shall be effective
in any respect until ATI's prior written approval is obtained. No
pension asset transfer pursuant to Code Section 420 shall be made by
Water Pik after the date hereof and before the Close of the
Distribution Date unless Water Pik and ATI so agree.
(iv) HEALTH AND WELFARE PLANS SUBROGATION RECOVERY. After the
Close of the Distribution Date, ATI shall pay to Water Pik any amounts
ATI
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recovers from time to time through subrogation or otherwise for claims
incurred by or reimbursed to any Water Pik Individual. If Water Pik
recovers any amounts through subrogation or otherwise for claims
incurred by or reimbursed to employees and former employees of ATI or
an ATI Entity and their respective beneficiaries and dependents (other
than Water Pik Individuals), Water Pik shall pay such amounts to ATI.
5.8 APPLICATION OF ARTICLE V TO WATER PIK ENTITIES. Any reference
in this Article V to "Water Pik" shall include a reference to a Water Pik Entity
when and to the extent ATI or Water Pik has caused the Water Pik Entity to (a)
become a party to a vendor contract, group insurance contract, or HMO letter
agreement associated with a Water Pik Health and Welfare Plan, (b) become a
self-insured entity for the purposes of one or more Water Pik Health and Welfare
Plans, (c) assume all or a portion of the liabilities or administrative
responsibilities for benefits which arose before the Close of the Distribution
Date under an ATI Health and Welfare Plan and which were expressly assumed by
Water Pik pursuant to the terms of this Agreement, or (d) take any other action,
extend any coverage, assume any other liability or fulfill any other
responsibility that Water Pik would otherwise be required to take under the
terms of this Article V, unless it is clear from the context that the particular
reference is not intended to include a Water Pik Entity. In all such instances
in which a reference in this Article V to "Water Pik" includes a reference to a
Water Pik Entity, Water Pik shall be responsible to ATI for ensuring that the
Water Pik Entity complies with the applicable terms of this Agreement and the
Water Pik Individuals allocated to such Water Pik Entity shall have the same
rights and entitlements to benefits under the applicable Water Pik Health and
Welfare Plans that the Water Pik Individual would have had if he or she had
instead been allocated to Water Pik. Further, each such Water Pik Entity, unless
otherwise expressly provided under the terms of this Agreement or any Ancillary
Agreement, shall defend, indemnify and hold harmless ATI for any costs incurred
by ATI pursuant to the provisions of Article V on behalf of or related to such
Water Pik Entity.
ARTICLE VI
EXECUTIVE BENEFITS AND NON-EMPLOYEE DIRECTOR BENEFITS
6.1 ASSUMPTION OF OBLIGATIONS. Except (i) for Benefit Liabilities
arising under the Teledyne Pension Equalization Plan and (ii) as otherwise
expressly provided in this Article VI, effective Immediately After the
Distribution Date, Water Pik and the Water Pik Entities shall assume and be
solely responsible for all Benefit Liabilities to or relating to Water Pik
Individuals under all ATI Executive Benefit Plans.
6.2 CONSENTS AND NOTIFICATIONS. ATI and Water Pik shall use their
Reasonable Efforts to obtain, or cause to be obtained, to the extent necessary,
the written consent of each Water Pik Individual who is a party to a separate
agreement between the Individual and ATI and/or a participant in any ATI
Executive Benefit Plan, to the treatment of such individual agreement and/or
Executive Benefit Plan, as applicable, in accordance with this Article VI,
including the assumption by Water Pik and the Water Pik Entities, of sole
responsibility for, and the release of ATI and the ATI Entities from, all
Benefit Liabilities thereunder; provided, that no failure to seek or to obtain
any such consent shall have any effect upon the obligations of Water Pik and the
Water Pik Entities with respect to such Benefit Liabilities.
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6.3 ATI 1999 BONUS PLAN. Subject to the provisions of Section
6.4(a)(ii)(B), Water Pik shall be responsible for determining, with respect to
all Awards that would otherwise be payable under any bonus Plan or arrangement
to Water Pik Individuals for the 1999 performance year, (a) the extent to which
established performance criteria (as interpreted by Water Pik, in its sole
discretion, after taking into account the effects of the Distribution) have been
met and (b) the payment level for each Water Pik Individual.
6.4 ATI INCENTIVE PLANS. ATI and Water Pik shall use their Reasonable
Efforts to take all actions necessary or appropriate so that each outstanding
Award granted under any ATI Incentive Plan held by any Water Pik Individual
shall be determined, converted or replaced, as the case may be, as set forth in
this Section 6.4 with an Award under the Water Pik Incentive Plan.
(a) WATER PIK INDIVIDUALS WHO ARE ACTIVE EMPLOYEES OF WATER PIK.
(i) STOCK OPTIONS. Water Pik shall cause each ATI Option that
is outstanding as of the Close of the Distribution Date and is held by
a Water Pik Individual to be converted, effective Immediately After the
Distribution Date, to a Water Pik Option (a "Converted Option"). Such
Converted Option shall provide for the option to purchase a number of
shares of Water Pik Common Stock equal to the number of shares of ATI
Common Stock subject to such ATI Option as of the Close of the
Distribution Date, multiplied by the Ratio, and then rounded up to the
nearest whole share. The per-share exercise price of such Converted
Option shall equal the per-share exercise price of such ATI Option as
of the Close of the Distribution Date divided by the Ratio. Each such
Converted Option shall otherwise have the same terms and conditions as
were applicable to the corresponding ATI Option as of the Close of the
Distribution Date, except that references to ATI and its Affiliates
shall be amended to refer to Water Pik and its Affiliates.
(ii) PERFORMANCE AWARDS.
(A) The current performance period under the ATI
Performance Share Program is the three-year period commencing
on January 1, 1998. Either prior to or within a reasonable
time after the Distribution Date, in accordance with the
provisions of Section 6.4(a)(ii)(B), the applicable ATI
Performance Award under the ATI Performance Share Program
shall be determined by ATI with respect to each Water Pik
Individual for the period from January 1, 1998 through the
Distribution Date. Effective Immediately After the
Distribution Date, Water Pik and the Water Pik Entities shall
assume and be solely responsible for all Benefit Liabilities
to or relating to Water Pik Individuals with respect to the
administration and distribution of Performance Awards to such
Water Pik Individuals.
(B) Notwithstanding the provisions of Section 6.3,
the ATI Personnel and Compensation Committee or the Stock
Incentive Award Subcommittee, as the case may be, shall
determine, in its sole and absolute discretion, with respect
to
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each Water Pik Individual, the extent to which, as of the
Distribution Date, such Individual has achieved target
performance levels established under the ATI Performance Share
Program and the appropriate Performance Award for such
Individual based upon such performance. The Performance Award
so determined shall be pro-rated by multiplying the
Performance Award determined under the preceding sentence by a
fraction, the numerator of which shall be equal to the number
of months from and including January 1, 1998 to the month in
which the Distribution Date occurs and the denominator of
which shall be 36. The Performance Award as determined
hereunder shall be distributed by Water Pik and the Water Pik
Entities to the applicable Water Pik Individual as provided
under the terms of the Performance Share Program; provided,
however, that any ATI Common Stock allocated or otherwise
awarded to a Water Pik Individual as part of a Performance
Award under the provisions of this Section 6.4(a)(ii) shall,
prior to any distribution to such Individual and, in any
event, no later than Immediately After the Distribution Date,
be converted into Water Pik Common Stock by multiplying the
number of shares of ATI Common Stock subject to such
Performance Award by an appropriate ratio, as determined by
ATI's Board of Directors or an applicable Committee thereof
and then rounding up the product to the nearest whole share.
(iii) SARP. As of the Distribution Date, all shares of ATI
Common Stock issued and outstanding held by a Water Pik Individual
under the ATI SARP as Designated Stock or Purchased Stock (as those
terms are defined in the ATI SARP) shall continue to be so held, and
the shares of Water Pik Common Stock received by Water Pik Individuals
in respect of their Purchased Stock and Designated Stock pursuant to
the distribution terms of Article III of the Separation and
Distribution Agreement and the shares of Teledyne Technologies
Incorporated Common Stock received by Water Pik Individuals in respect
of their Purchased Stock and Designated Stock as a result of the
spin-off of Teledyne Technologies Incorporated by ATI to ATI's
stockholders shall also be considered Designated Stock or Purchased
Stock, as the case may be, subject to the terms of the ATI SARP.
Effective Immediately After the Distribution Date, Water Pik shall
assume all Benefit Liabilities to or relating to Water Pik Individuals
under the ATI SARP relating to the Restricted Stock (as that term is
defined in the ATI SARP), but ATI shall retain all promissory notes
payable by participants into the ATI SARP, including Water Pik
Individuals, to the order of ATI, and the collateral with respect to
such notes shall include all shares of ATI Common Stock that were
pledged as collateral for purposes of the ATI SARP immediately prior to
the Distribution Date as well as the shares of Water Pik Common Stock
and Teledyne Technologies Incorporated Common Stock issued in respect
of such shares of ATI Common Stock held as collateral. Effective
Immediately After the Distribution Date, pursuant to the terms of the
ATI SARP, all Water Pik Individuals holding awards of Restricted Stock
under the ATI SARP as of the Distribution Date shall receive, without
any further action on their part and in substitution for all shares of
Restricted Stock held immediately prior to the Distribution Date by
such Water Pik Individuals under the ATI SARP, a number of shares of
Water Pik Common Stock determined by multiplying the number of shares
of ATI Common Stock that are held
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immediately prior to the Distribution Date as Restricted Stock under
the ATI SARP by an appropriate ratio, as determined by ATI's Board of
Directors or an applicable Committee thereof then rounding the product
up to the nearest whole share, and such shares of Water Pik Common
Stock shall be subject to the same restrictions as the shares of ATI
Common Stock prior to the conversion.
(b) WATER PIK INDIVIDUALS WHO ARE NOT ACTIVE EMPLOYEES OF WATER PIK.
Each outstanding Award that is held by an individual who, as of the Close of the
Distribution Date, would otherwise be a Water Pik Individual but is not an
active employee of or on leave of absence from Water Pik or a Water Pik Entity
shall remain outstanding Immediately After the Distribution Date in accordance
with its terms as applicable as of the Close of the Distribution Date, subject
to such adjustments as may be applicable to outstanding Awards held by
individuals who remain active employees of or on leave of absence from ATI or an
ATI Entity after the Distribution Date.
6.5 ATI NONQUALIFIED DEFERRED COMPENSATION PROGRAMS.
(a) ASSUMPTION OF LIABILITIES AND TRANSFER OF ASSETS. Subject to the
provisions of Section 6.1, effective Immediately After the Distribution Date,
Water Pik shall assume all Benefit Liabilities to or relating to Water Pik
Individuals under the ATI Nonqualified Deferred Compensation Programs. Effective
Immediately After the Distribution Date, to the extent ATI has acquired
Corporate-Owned Life Insurance Policies as a source of payment of liabilities
which are or may be payable under the Allegheny Teledyne Incorporated Executive
Deferred Compensation Plan with respect to Water Pik Individuals, ATI shall, in
ATI's sole discretion, (i) transfer an amount in cash equal to the cash
surrender value of such policies or (ii) cause the transfer, either by
assignment or any other reasonable means, to Water Pik of Corporate-Owned Life
Insurance Policies on the lives of such Water Pik Individuals and such other
employees or former employees of ATI or its subsidiaries as ATI may, in its sole
discretion select, or any portion thereof, having in the aggregate a cash
surrender value equal to the amount of any Benefit Liabilities for Water Pik
Individuals under the Allegheny Teledyne Incorporated Executive Deferred
Compensation Plan.
(b) CORPORATE-OWNED LIFE INSURANCE. ATI and Water Pik shall take all
actions necessary to replicate the manner in which ATI has heretofore held
Corporate-Owned Life Insurance Policies, and executing or accepting delivery of
any assignments reasonably requested by either party or any insurance company
insuring one or more lives under the Corporate-Owned Life Insurance Policies, as
may be necessary or appropriate in order to assign those Policies insuring Water
Pik Individuals to Water Pik, effective Immediately After the Distribution Date.
If a Corporate-Owned Life Insurance Policy is so assigned to Water Pik, Water
Pik shall assume and be solely responsible for all Benefit Liabilities, and
shall be entitled to all benefits, thereunder, effective as of the earlier of
(i) the Close of the Distribution Date and (ii) the date of such assignment. ATI
and Water Pik shall continue, liquidate and/or administer such Corporate-Owned
Life Insurance Policies on terms and conditions agreed to by ATI and
Water Pik. ATI and Water Pik shall share all information that may be necessary
to identify the individuals insured by
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the Corporate-Owned Life Insurance Policies owned by ATI and/or Water Pik and to
determine when and whether such individuals are deceased.
6.6 NON-EMPLOYEE DIRECTOR BENEFITS. The parties intend that all Water
Pik Non-Employee Directors who were ATI Non-Employee Directors prior to the
Distribution Date may continue to serve as ATI Non-Employee Directors. In
furtherance of such intention, ATI shall retain all Benefit Liabilities with
respect to the services of its Non-Employee Directors under the ATI Non-Employee
Director Plans accrued as of the Distribution Date. Water Pik assumes no Benefit
Liabilities under the ATI Non-Employee Director Plans.
6.7 CONFIDENTIALITY AND PROPRIETARY INFORMATION. No provision of this
Agreement shall be deemed to release any individual for a violation of any
agreement or policy pertaining to confidential or proprietary information of ATI
or any of its Affiliates, or otherwise relieve any individual of his or her
obligations under any such agreement or policy.
ARTICLE VII
GENERAL AND ADMINISTRATIVE
7.1 INTERIM SERVICES AGREEMENT. Effective on or before the Distribution
Date, ATI and Water Pik shall enter into an agreement relating to the
coordination of and payment for transition services to be provided by ATI
regarding the establishment and administration of the Water Pik Plans (the
"Interim Services Agreement"). The provisions of the Interim Services Agreement
shall be incorporated by reference in this Agreement and shall become a part of
this Agreement.
7.2 PAYMENT OF LIABILITIES, PLAN EXPENSES AND RELATED MATTERS.
(a) ACTUARIAL AND ACCOUNTING METHODOLOGIES AND ASSUMPTIONS. For
purposes of this Agreement, unless specifically indicated otherwise: (i) all
actuarial methodologies and assumptions used for a particular Plan shall (except
to the extent otherwise determined by ATI and Water Pik to be reasonable or
necessary) be substantially the same as those used in the actuarial valuation of
that Plan used to determine minimum funding requirements under ERISA Section 302
and Code Section 412(c) for 1999, or, if such Plan is not subject to such
minimum funding requirements, the assumptions used to prepare ATI's audited
financial statements for 1999, as the case may be; and (ii) the value of plan
assets shall be the value established by ATI for purposes of audited financial
statements of the relevant plan or trust for the period ending on the date as of
which the valuation is to be made. Except as otherwise contemplated by this
Agreement or as required by law, all determinations as to the amount or
valuation of any assets of or relating to any ATI Plan (whether or not such
assets are being transferred to a Water Pik Plan) shall be made by ATI in its
sole and absolute discretion and such determination shall be final and binding
on all parties.
(b) PAYMENT OF LIABILITIES; DETERMINATION OF EMPLOYEE STATUS. Water Pik
shall pay directly, or reimburse ATI promptly for, all Benefit Liabilities
assumed by it
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pursuant to this Agreement, including all compensation payable to Water Pik
Individuals for services rendered while in the employ of ATI or an ATI Entity
before becoming a Water Pik Individual (to the extent not charged for pursuant
to Section 7.1 or another Ancillary Agreement). To the extent the amount of such
Benefit Liabilities is not yet determinable because the status of individuals as
Water Pik Individuals is not yet determined, except as otherwise specified
herein or in another Ancillary Agreement with respect to particular Benefit
Liabilities, Water Pik shall make such payments or reimbursements based upon
ATI's reasonable estimates of the amounts thereof, and when such status is
determined, Water Pik shall make additional reimbursements or payments, or ATI
shall reimburse Water Pik, to the extent necessary to reflect the actual amount
of such Benefit Liabilities. In determining the number of individuals in any
particular group of employees described in this Agreement (such as "Water Pik
Individuals"), no individual shall be counted twice. Determinations of what
entity employs or employed a particular individual shall be made by reference to
the applicable legal entity and/or other appropriate accounting code, to the
extent possible.
7.3 SHARING OF PARTICIPANT INFORMATION. ATI and Water Pik shall share,
ATI shall cause each applicable ATI Entity to share, and Water Pik shall cause
each applicable Water Pik Entity to share, with each other and their respective
agents and vendors (without obtaining releases) all participant information
necessary for the efficient and accurate administration of each of the ATI Plans
and the Water Pik Plans. ATI and Water Pik and their respective authorized
agents shall, subject to applicable laws on confidentiality, be given reasonable
and timely access to, and may make copies of, all information relating to the
subjects of this Agreement in the custody of the other party, to the extent
necessary for such administration. Until December 31, 2000, all participant
information shall be provided in a manner and medium that is compatible with the
data processing systems of ATI as in effect on the Close of the Distribution
Date, unless otherwise agreed to by ATI and Water Pik.
7.4 REPORTING AND DISCLOSURE AND COMMUNICATIONS TO PARTICIPANTS. Water
Pik shall take, and shall cause each other applicable Water Pik Entity to take,
all actions necessary or appropriate to facilitate the distribution of all
applicable ATI Plan-related communications and materials to Water Pik
Individuals and their beneficiaries, including summary plan descriptions and
related summaries of material modification, summary annual reports, investment
information, prospectuses, notices and enrollment material related to the Water
Pik Plans. Water Pik shall pay ATI the cost relating to the copies of all such
documents provided to Water Pik, except to the extent such costs are charged
pursuant to Section 7.1 or pursuant to an Ancillary Agreement. Water Pik shall
assist, and Water Pik shall cause each other applicable Water Pik Entity to
assist, ATI in complying with all reporting and disclosure requirements of
ERISA, including the preparation of Form 5500 annual reports for the ATI Plans,
where applicable.
7.5 NON-TERMINATION OF EMPLOYMENT; NO THIRD-PARTY BENEFICIARIES. No
provision of this Agreement or the Separation and Distribution Agreement shall
be construed to create any right, or accelerate entitlement, to any compensation
or benefit whatsoever on the part of any Water Pik Individual or other future,
present or former employee of ATI, an ATI Entity, Water Pik, or a Water Pik
Entity under any ATI Plan or Water Pik Plan or otherwise. Without limiting the
generality of the foregoing: (i) the Distribution shall
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not cause any employee to be deemed to have incurred a termination of employment
which entitles such individual to the commencement of benefits under any of the
ATI Plans, any of the Water Pik Plans, or any individual agreements; and (ii)
except as expressly provided in this Agreement, nothing in this Agreement shall
preclude Water Pik, at any time after the Close of the Distribution Date, from
amending, merging, modifying, terminating, eliminating, reducing, or otherwise
altering in any respect any Water Pik Plan, any benefit under any Plan or any
trust, insurance policy or funding vehicle related to any Water Pik Plan unless
such change could or will increase the obligations of ATI or any ATI Entity
under any Plan or agreement.
7.6 BENEFICIARY DESIGNATIONS. All beneficiary designations made by
Water Pik Individuals for ATI Plans shall be transferred to and be in full force
and effect under the corresponding Water Pik Plans until such beneficiary
designations are replaced or revoked by the Water Pik Individual who made the
beneficiary designation.
7.7 REQUESTS FOR IRS RULINGS AND DOL OPINIONS. Water Pik shall
cooperate fully with ATI on any issue relating to the transactions contemplated
by this Agreement for which ATI elects to seek a determination letter or private
letter ruling from the IRS or an advisory opinion from the DOL. ATI shall
cooperate fully with Water Pik with respect to any request for a determination
letter or private letter ruling from the IRS or advisory opinion from the DOL
with respect to any of the Water Pik Plans relating to the transactions
contemplated by this Agreement.
7.8 FIDUCIARY MATTERS. ATI and Water Pik each acknowledges that actions
required to be taken pursuant to this Agreement may be subject to fiduciary
duties or standards of conduct under ERISA or other applicable law, and no party
shall be deemed to be in violation of this Agreement if it fails to comply with
any provisions hereof based upon its good faith determination that to do so
would violate such a fiduciary duty or standard.
7.9 COLLECTIVE BARGAINING. To the extent any provision of this
Agreement is contrary to the provisions of any collective bargaining agreement
to which ATI or any Affiliate of ATI is a party, the terms of such collective
bargaining agreement shall prevail. Should any provisions of this Agreement be
deemed to relate to a topic determined by an appropriate authority to be a
mandatory subject of collective bargaining, ATI or Water Pik may be obligated to
bargain with the union representing affected employees concerning those
subjects. Neither party will agree to a modification of any collective
bargaining agreement without the consent of the other.
7.10 CONSENT OF THIRD PARTIES. If any provision of this Agreement is
dependent on the consent of any third party (such as a vendor or a union) and
such consent is withheld, ATI and Water Pik shall use their Reasonable Efforts
to implement the applicable provisions of this Agreement to the full extent
practicable. If any provision of this Agreement cannot be implemented due to the
failure of such third party to consent, ATI and Water Pik shall negotiate in
good faith to implement the provision in a mutually satisfactory manner.
7.11 INDEMNIFICATION OF ATI. Water Pik shall indemnify, defend and hold
harmless ATI, each ATI Entity and each of their respective directors, officers
and employees, and
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each of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "ATI Indemnitees") from and against (i) any and all Benefit
Liabilities of the ATI Indemnitees to the extent any such Benefit Liabilities
are assumed by Water Pik or a Water Pik Entity under this Agreement and (ii) any
and all changes or modifications to any rights, privileges or benefits of or
relating to any Water Pik Individual as provided in or otherwise contemplated by
this Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1 FOREIGN PLANS. To the extent that Water Pik has or assumes any
responsibility for sponsorship, maintenance or administration of any Foreign
Plan, ATI shall have no responsibility or liability with respect to such Plan
and Water Pik shall indemnify and hold harmless ATI from any liability under
such Plan.
8.2 EFFECT IF DISTRIBUTION DOES NOT OCCUR. If the Distribution does not
occur, then all actions and events that are, under this Agreement, to be taken
or occur effective as of the Close of the Distribution Date, Immediately After
the Distribution Date, or otherwise in connection with the Distribution, shall
not be taken or occur except to the extent specifically agreed by Water Pik and
ATI.
8.3 RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be deemed
or construed by the parties or any third party as creating the relationship of
principal and agent, partnership or joint venture between the parties, it being
understood and agreed that no provision contained herein, and no act of the
parties, shall be deemed to create any relationship between the parties other
than the relationship set forth herein.
8.4 AFFILIATES. Each of ATI and Water Pik shall cause to be performed,
and hereby guarantees the performance of, all actions, agreements and
obligations set forth in this Agreement to be performed by an ATI Entity or a
Water Pik Entity, respectively.
8.5 COUNTERPARTS; ENTIRE AGREEMENT; CORPORATE POWER.
(a) This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other party.
(b) This Agreement, and the Exhibits, Schedules and Appendices hereto
and thereto contain the entire agreement between the parties with respect to the
subject matter hereof, supersede all previous agreements, negotiations,
discussions, writings, understandings, commitments and conversations with
respect to such subject matter and there are no agreements or understandings
between the parties other than those set forth or referred to herein or therein.
(c) ATI represents on behalf of itself and each ATI Entity, and Water
Pik represents on behalf of itself and each Water Pik Entity, as follows:
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(i) each such Person has the requisite corporate or other
power and authority and has taken all corporate or other action necessary in
order to execute, deliver and perform each of this Agreement and to consummate
the transactions contemplated hereby; and
(ii) this Agreement has been duly executed and delivered by it
and constitutes a valid and binding agreement of it enforceable in accordance
with the terms thereof.
(d) Each party hereto acknowledges that it and each other party hereto
may be executing this Agreement by facsimile, stamp or mechanical signature.
Each party hereto expressly adopts and confirms each such facsimile, stamp or
mechanical signature made in its respective name as if it were a manual
signature, agrees that it will not assert that any such signature is not
adequate to bind such party to the same extent as if it were signed manually and
agrees that at the reasonable request of any other party hereto at any time it
will as promptly as reasonably practicable cause this Agreement to be manually
executed (any such execution to be as of the date of the initial date thereof).
8.6 GOVERNING LAW; CONSENT TO JURISDICTION.
(a) This Agreement shall be governed by and construed and interpreted
in accordance with the laws of the Commonwealth of Pennsylvania as to all
matters, including matters of validity, construction, effect, enforceability,
performance and remedies, irrespective of the choice of laws principles of the
Commonwealth of Pennsylvania.
(b) Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of (i) the Court of Common Pleas of Allegheny County, Pennsylvania
and (ii) the United States District Court for the Western District of
Pennsylvania, for the purposes of any suit, action or other proceeding arising
out of this Agreement or any transaction contemplated hereby (and agrees not to
commence any action, suit or proceeding relating thereto except in such courts).
Each of the parties hereto further agrees that service of any process, summons,
notice or document hand delivered or sent by U.S. registered mail to such
party's respective address set forth in Section 8.9 will be effective service of
process for any action, suit or proceeding in Pennsylvania with respect to any
matters to which it has submitted to jurisdiction as set forth in the
immediately preceding sentence. Each of the parties hereto irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Court of Common Pleas of Allegheny County, Pennsylvania or
(ii) the United States District Court for the Western District of Pennsylvania,
and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
8.7 ASSIGNABILITY. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns;
provided, however, that no party hereto may assign its respective rights or
delegate its respective obligations under this Agreement without the express
prior written consent of the other party hereto.
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8.8 THIRD PARTY BENEFICIARIES. Except as otherwise expressly provided
herein, (a) the provisions of this Agreement are solely for the benefit of the
parties and are not intended to confer upon any Person except the parties any
rights or remedies hereunder, (b) there are no third party beneficiaries of this
Agreement, and (c) this Agreement shall not provide any third person with any
remedy, claim, liability, reimbursement, claim of action or other right in
excess of those existing without reference to this Agreement. No party shall be
required to deliver any notice under this Agreement to any other party with
respect to any matter in which such other party has no right, remedy or claim.
8.9 NOTICES. All notices or other communications under this Agreement
shall be in writing and shall be deemed to be duly given when (a) delivered in
person or (b) deposited in the United States mail or private express mail,
postage prepaid, addressed as follows:
If to ATI, to: Allegheny Teledyne Incorporated
1000 Six PPG Place
Pittsburgh, Pennsylvania 15222-5479
Attn: Senior Vice President, General Counsel
and Secretary
If to Water Pik, to: Water Pik Technologies, Inc.
600 Newport Center Drive, Suite 470
Newport Beach, California 92660
Attn: President
Any party may, by notice to the other party, change the address to which such
notices are to be given.
8.10 SEVERABILITY. If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof or thereof, or the application of such provision to Persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby or thereby, as the case
may be, is not affected in any manner adverse to any party. Upon such
determination, the parties shall negotiate in good faith in an effort to agree
upon such a suitable and equitable provision to effect the original intent of
the parties.
8.11 HEADINGS. The article, section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
8.12 WAIVERS OF DEFAULT. Waiver by any party of any default by the
other party of any provision of this Agreement shall not be deemed a waiver by
the waiving party of any subsequent or other default, nor shall it prejudice the
rights of the other party.
8.13 AMENDMENTS. No provisions of this Agreement shall be deemed
waived, amended, supplemented or modified by any party, unless such waiver,
amendment, supplement or
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modification is in writing and signed by the authorized representative of the
party against whom it is sought to enforce such waiver, amendment, supplement or
modification.
8.14 INTERPRETATION. Words in the singular shall be held to include the
plural and vice versa and words of one gender shall be held to include the other
genders as the context requires. The terms "hereof," "herein," and "herewith"
and words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole (including all of the Schedules, Exhibits and
Appendices hereto) and not to any particular provision of this Agreement.
Article, Section, Exhibit, Schedule and Appendix references are to the Articles,
Sections, Exhibits, Schedules and Appendices to this Agreement unless otherwise
specified. The word "including" and words of similar import when used in this
Agreement shall mean "including, without limitation," unless the context
otherwise requires or unless otherwise specified. The word "or" shall not be
exclusive. Unless expressly stated to the contrary in this Agreement, all
references to "the date hereof," "the date of this Agreement," "hereby" and
"hereupon" and words of similar input shall all be references to November 29,
1999, regardless of any amendment or restatement hereof.
8.15 DISPUTES. (a) Resolution of any and all disputes arising from or
in connection with this Agreement, whether based on contract, tort, statute or
otherwise, including, but not limited to, disputes in connection with claims by
third parties (collectively, "Disputes"), shall be subject to the provisions of
this Section 8.15; provided, however, that nothing contained herein shall
preclude any party from seeking or obtaining (i) injunctive relief or (ii)
equitable or other judicial relief to enforce the provisions hereof or to
preserve the status quo pending resolution of Disputes hereunder.
(b) Any party may give the other parties written notice of any Dispute
not resolved in the normal course of business. The parties shall attempt in good
faith to resolve any Dispute promptly by negotiation between executives of the
parties who have authority to settle the controversy. Within 15 days after
delivery of the notice, the foregoing executives of both parties shall meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary for a period not to exceed five days, to attempt to resolve the
Dispute. All reasonable requests for information made by one party to the other
will be honored. If the parties do not resolve the Dispute within such 20 day
period (the "Initial Mediation Period"), the parties shall attempt in good faith
to resolve the Dispute by negotiation between or among the Designated Officers
(as defined in the Separation and Distribution Agreement). The Designated
Officers shall meet at a mutually acceptable time and place (but in no event no
later than 15 days following the expiration of the Initial Mediation Period) and
thereafter as often as they reasonably deem necessary for a period not to exceed
15 days, to attempt to resolve the Dispute.
(c) If the Dispute has not been resolved by negotiation within 50 days
of the first party's notice, or if the parties failed to meet within 15 days of
the first party's notice, or if the Designated Officers failed to meet within 35
days of the first party's notice, any party may commence any litigation or other
procedure allowed by law.
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IN WITNESS WHEREOF, the parties have caused this Employee Benefits
Agreement to be duly executed as of the day and year first above written.
ALLEGHENY TELEDYNE INCORPORATED
By: /s/ Jon D. Walton
----------------------------
Title:_________________________
WATER PIK TECHNOLOGIES, INC.
By: /s/ Michael Hoopis
----------------------------
Title:_________________________
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