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): APRIL 1, 1996
ALLEGHENY LUDLUM CORPORATION
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 1-9498 25-1364894
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1000 SIX PPG PLACE, PITTSBURGH, PENNSYLVANIA 15222-5479
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 412-394-2800
Item 5. Other Events.
On April 1, 1996, a Delaware corporation to be named
Allegheny Teledyne Incorporated (formerly XYZ/Power, Inc.)
("ATI"), Allegheny Ludlum Corporation, a Pennsylvania corporation
("ALC"), and Teledyne, Inc., a Delaware corporation ("TI"),
entered into an Agreement and Plan of Merger and Combination (the
"Combination Agreement"). Pursuant to the Combination Agreement
and subject to the terms and conditions set forth therein,
separate wholly owned subsidiaries of ATI will merge into each of
ALC and TI, whereupon each of ALC and TI will become wholly owned
subsidiaries of ATI (the "Combination"). At the Effective Time
(as defined in the Combination Agreement) of the Combination,
each issued and outstanding share of the Common Stock, par value
$.10 per share, of ALC ("ALC Common Stock") will be converted
into the right to receive one share of the Common Stock, par
value $.10 per share of ATI ("ATI Common Stock"), and each issued
and outstanding share of the Common Stock, par value $1.00 per
share, of TI ("TI Common Stock"), will be converted into the
right to receive 1.925 shares of ATI Common Stock.
In connection with the Combination Agreement, Richard P.
Simmons, Chairman of the Board and a director of ALC, Robert P.
Bozzone, Vice Chairman of the Board and a director of ALC, Arthur
H. Aronson, President and Chief Executive Officer and a director
of ALC, and Charles J. Queenan, Jr., a director of ALC, who own
or have the exclusive right to vote an aggregate of 22,252,797
shares of ALC Common Stock, each entered into an agreement (a
"Shareholder Agreement") with TI pursuant to which each of them
agreed to vote all of his shares of ALC Common Stock in favor of
the transactions contemplated by the Combination Agreement. In
addition, and in connection with the Combination Agreement, Henry
E. Singleton, George A. Roberts (together with his spouse), and
Fayez Sarofim, each a director of TI, and William P. Rutledge,
Chairman of the Board and Chief Executive Officer and a director
of TI, and Donald B. Rice, President and Chief Operating Officer
and a director of TI, who own or have the exclusive right to vote
an aggregate of 8,738,010 shares of TI Common Stock, each entered
into an agreement (a "Stockholder Agreement") with ALC pursuant
to which each of them agreed to vote all of his shares of TI
Common Stock in favor of the transactions contemplated by the
Combination Agreement.
Copies of the Combination Agreement and the respective forms
of Shareholder Agreement and Stockholder Agreement are filed
herewith as Exhibits 2.1, 99.1 and 99.2, respectively. The
foregoing descriptions are qualified in their entirety by
reference to the full text of such Exhibits.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits. The following exhibits are filed as part of
this Current Report on Form 8-K:
Exhibit
Description No.
----------- --------
Agreement and Plan of Merger and Combination, 2.1
dated as of April 1, 1996, among
Allegheny Teledyne Incorporated (formerly
XYZ/Power, Inc.), Allegheny Ludlum Corporation
and Teledyne, Inc.
Form of Shareholder Agreement, dated as of 99.1
April 1, 1996, between Teledyne, Inc. and
each of Messrs. Richard P. Simmons, Robert
P. Bozzone, Arthur H. Aronson and Charles
J. Queenan, Jr.
Form of Stockholder Agreement, dated as of 99.2
April 1, 1996, between Allegheny Ludlum
Corporation and each of Messrs. Henry E.
Singleton, George A. Roberts, Fayez Sarofim,
William P. Rutledge and Donald B. Rice
Press Release dated April 1, 1996 99.3
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.
Allegheny Ludlum Corporation
Date: April 2, 1996 By:/s/Jon D. Walton
Jon D. Walton
Vice President - General
Counsel and Secretary
EXHIBIT INDEX
Exhibit Sequential
No. Description Page No.
------- ----------- ----------
2.1 Agreement and Plan of Merger and
Combination, dated as of April 1, 1996,
among Allegheny Teledyne Incorporated
(formerly XYZ/Power, Inc.), Allegheny
Ludlum Corporation and Teledyne, Inc.
99.1 Form of Shareholder Agreement, dated as
of April 1, 1996, between Teledyne, Inc.
and each of Messrs. Richard P. Simmons,
Robert P. Bozzone, Arthur H. Aronson and
Charles J. Queenan, Jr.
99.2 Form of Stockholder Agreement, dated as
of April 1, 1996, between Allegheny
Ludlum Corporation and each of Messrs.
Henry E. Singleton, George A. Roberts,
Fayez Sarofim, William P. Rutledge
and Donald B. Rice
99.3 Press Release dated April 1, 1996
AGREEMENT AND PLAN OF MERGER AND COMBINATION
dated as of April 1, 1996
among
XYZ/POWER, INC.,
ALLEGHENY LUDLUM CORPORATION
and
TELEDYNE, INC.
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TABLE OF CONTENTS
Page
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ARTICLE I
THE COMBINATION . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Effective Time of the Combination . . . . 2
Section 1.2 Closing . . . . . . . . . . . . . . . . . 2
Section 1.3 Effects of the Combination . . . . . . . 3
Section 1.4 Headquarters of Newco . . . . . . . . . . 3
ARTICLE II
CONVERSION OF SECURITIES . . . . . . . . . . . . . . . . 4
Section 2.1 Conversion of Capital Stock. . . . . . . 4
Section 2.2 Exchange of Certificates. . . . . . . . . 5
Section 2.3 No Further Transfers . . . . . . . . . . 7
Section 2.4 No Fractional Shares . . . . . . . . . . 7
Section 2.5 Withholding . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 8
Section 3.1 Representations and Warranties of ALC
and TI . . . . . . . . . . . . . . . . . 8
Section 3.2 Representations of Newco . . . . . . . . 24
ARTICLE IV
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.1 No Solicitation . . . . . . . . . . . . . 24
Section 4.2 Stockholder Approvals . . . . . . . . . . 25
Section 4.3 Conduct of Business . . . . . . . . . . . 26
Section 4.4 Access to Information . . . . . . . . . . 29
Section 4.5 Legal Conditions to the Combination . . . 29
Section 4.6 Public Announcements . . . . . . . . . . 29
Section 4.7 Tax-Free Reorganization . . . . . . . . . 29
Section 4.8 Pooling Accounting . . . . . . . . . . . 30
Section 4.9 Affiliate Agreements . . . . . . . . . . 30
Section 4.10 Representations, Covenants and
Conditions; Further Assurances . . . . . 30
Section 4.11 Stock Plans . . . . . . . . . . . . . . . 31
Section 4.12 Indemnification; Insurance . . . . . . . 34
Section 4.13 TI Rights Plan . . . . . . . . . . . . . 36
Section 4.14 Notification of Certain Matters . . . . . 36
Section 4.15 Formation of Merger Subs . . . . . . . . 37
Section 4.16 Plan Documents . . . . . . . . . . . . . 37
Section 4.17 Newco Matters . . . . . . . . . . . . . . 37
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<PAGE>
TABLE OF CONTENTS
(continued)
Page
----
ARTICLE V
CONDITIONS TO COMBINATION . . . . . . . . . . . . . . . 37
Section 5.1 Conditions to Each Party's Obligation To
Effect the Combination . . . . . . . . . 37
Section 5.2 Additional Conditions to Obligations of
ALC . . . . . . . . . . . . . . . . . . . 39
Section 5.3 Additional Conditions to Obligation of
TI . . . . . . . . . . . . . . . . . . . 40
ARTICLE VI
TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . 41
Section 6.1 Termination . . . . . . . . . . . . . . . 41
Section 6.2 Effect of Termination . . . . . . . . . . 42
Section 6.3 Fees and Expenses . . . . . . . . . . . . 43
Section 6.4 Amendment . . . . . . . . . . . . . . . . 44
Section 6.5 Extension; Waiver . . . . . . . . . . . . 45
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 45
Section 7.1 Nonsurvival of Representations,
Warranties and Agreements . . . . . . . . 45
Section 7.2 Notices . . . . . . . . . . . . . . . . . 45
Section 7.3 Interpretation . . . . . . . . . . . . . 46
Section 7.4 Knowledge . . . . . . . . . . . . . . . . 46
Section 7.5 Counterparts . . . . . . . . . . . . . . 47
Section 7.6 Entire Agreement; No Third Party
Beneficiaries . . . . . . . . . . . . . . 47
Section 7.7 Governing Law . . . . . . . . . . . . . . 47
Section 7.8 Assignment . . . . . . . . . . . . . . . 47
Section 7.9 Severability . . . . . . . . . . . . . . 47
Section 7.10 Failure or Indulgence Not Waiver;
Remedies Cumulative . . . . . . . . . . . 47
Annex A - Articles of Incorporation of New Corporation
Annex B - Bylaws of New Corporation
Annex C - Directors and Officers of New Corporation
Annex D - Form of Affiliate Agreement
- ii -
<PAGE>
AGREEMENT AND PLAN OF MERGER AND COMBINATION
AGREEMENT AND PLAN OF MERGER AND COMBINATION ("AGREEMENT"),
dated as of April 1, 1996, by and among XYZ/Power, Inc., a
Delaware corporation ("NEWCO"), Allegheny Ludlum Corporation, a
Pennsylvania corporation ("ALC"), and Teledyne, Inc., a Delaware
corporation ("TI").
WHEREAS, the Boards of Directors of the parties hereto have
approved this Agreement and deem it advisable and in the best
interests of their respective corporations and stockholders that
ALC and TI enter into a strategic business combination in order
to advance the long-term business interests of ALC and TI; and
WHEREAS, such strategic business combination of ALC and TI
will be effected pursuant to the terms of this Agreement by means
of separate transactions, the consummation of each of which is a
condition to the consummation of the other, in which a
Pennsylvania corporation and wholly owned subsidiary of Newco to
be formed prior to the Effective Time ("ALC MERGER SUB") will
merge with and into ALC (the "ALC MERGER"), and a Delaware
corporation and wholly owned subsidiary of Newco to be formed
prior to the Effective Time ("TI MERGER SUB") will merge with and
into TI (the "TI MERGER"), whereupon ALC and TI will each become
a wholly owned subsidiary of Newco, and the shareholders of ALC
and the stockholders of TI will become shareholders of Newco (the
"COMBINATION"); and
WHEREAS, concurrently with the execution and delivery of
this Agreement and as a condition and inducement to ALC's
willingness to enter into this Agreement, Henry E. Singleton,
George A. Roberts, Fayez Sarofim, William P. Rutledge and Donald
B. Rice, each of whom is a stockholder of TI, have entered into
Stockholder Agreements (the "TI STOCKHOLDER AGREEMENTS") with ALC
pursuant to which such stockholders have agreed to vote their
shares of Common Stock, par value $1.00 per share, of TI ("TI
COMMON STOCK") in favor of this Agreement and the TI Merger and
otherwise in favor of the Combination; and
WHEREAS, concurrently with the execution and delivery of
this Agreement and as a condition and inducement to TI's
willingness to enter into this Agreement, Richard P. Simmons,
Robert P. Bozzone, Charles J. Queenan, Jr. and Arthur H. Aronson,
each of whom is a shareholder of ALC, have entered into
Shareholder Agreements (the "ALC SHAREHOLDER AGREEMENTS" and,
together with the TI Stockholder Agreements, the "STOCKHOLDER
AGREEMENTS") with TI pursuant to which such shareholders have
agreed to vote their shares of Common Stock, par value $0.10 per
share, of ALC ("ALC COMMON STOCK") in favor of this Agreement and
the ALC Merger and otherwise in favor of the Combination; and
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WHEREAS, for federal income tax purposes, it is intended
that each of the ALC Merger and the TI Merger shall qualify
either (i) as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the
"CODE"), or (ii) as a non-recognition exchange of stock under
Section 351 of the Code; and
WHEREAS, for financial accounting purposes, it is intended
that the Combination shall be accounted for as a pooling of
interests;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements
set forth below, the parties agree as follows:
ARTICLE I
THE COMBINATION
Section 1.1 Effective Time of the Combination. Subject
to the provisions of this Agreement, (i) articles of merger in
such form (including, if required, an agreement of merger or
consolidation) as is required in order to effect the ALC Merger
under the relevant provisions of the Pennsylvania Business
Corporation Law (the "PBCL") and to the extent applicable, the
Delaware General Corporation Law (the "DGCL") (collectively, the
"ARTICLES OF MERGER"), and (ii) a certificate of merger in such
form (including, if required, an agreement of merger or
consolidation) as is required in order to effect the TI Merger
under the relevant provisions of the DGCL (the "CERTIFICATE OF
MERGER") shall each be duly prepared, executed and acknowledged
by the appropriate party or parties and thereafter delivered to
the Department of State of the Commonwealth of Pennsylvania (in
the case of the Articles of Merger) and the Secretary of State of
the State of Delaware (in the case of the Certificate of Merger
and, to the extent applicable, the Articles of Merger) for filing
as provided in the PBCL and the DGCL, respectively, as soon as
practicable on or after the Closing Date. The Combination,
including the ALC Merger and the TI Merger, shall become
effective upon the filing of the Articles of Merger with the
Department of State of the Commonwealth of Pennsylvania and, to
the extent applicable, the Secretary of State of the State of
Delaware, and the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware or at such time
thereafter as is provided in the Articles of Merger and the
Certificate of Merger (the "EFFECTIVE TIME").
Section 1.2 Closing. The closing of the Combination (the
"CLOSING") will take place at 10:00 a.m., eastern time, on a date
to be specified by ALC and TI, which shall be as soon as
practicable after all of the conditions to the Combination set
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forth in Article V have been satisfied or waived, subject to the
rights of termination and abandonment hereinafter set forth (the
"CLOSING DATE"), at the offices of Kirkpatrick & Lockhart LLP,
1500 Oliver Building, Pittsburgh, Pennsylvania 15222.
Section 1.3 Effects of the Combination.
(a) At the Effective Time (i) ALC Merger Sub shall be
merged with and into ALC and the separate existence of ALC Merger
Sub will cease, (ii) TI Merger Sub shall be merged with and into
TI and the separate existence of TI Merger Sub shall cease, (iii)
the Articles of Incorporation and Bylaws of ALC Merger Sub as in
effect immediately prior to the ALC Merger shall become the
Articles of Incorporation and Bylaws of ALC as the surviving
corporation of the ALC Merger, (iv) the Certificate of
Incorporation and Bylaws of TI as in effect immediately prior to
the Effective Time shall continue to be the Certificate of
Incorporation and Bylaws of TI as the surviving corporation of
the TI Merger, (v) the directors of ALC Merger Sub at the
Effective Time shall be the directors of ALC as the surviving
corporation of the ALC Merger and hold office as provided in the
Bylaws of ALC as in effect beginning at the Effective Time, and
(vi) the directors of TI Merger Sub at the Effective Time shall
be the directors of TI as the surviving corporation of the TI
Merger and hold office as provided in the Bylaws of TI as in
effect beginning at the Effective Time.
(b) The ALC Merger shall otherwise have the effects
specified in applicable provisions of the PBCL and the TI Merger
shall otherwise have the effects specified in applicable
provisions of the DGCL.
(c) At the Effective Time, the Certificate of Incorporation
and Bylaws of Newco shall be amended and restated in their
entireties to read as set forth in Annexes A and B attached
hereto, respectively.
(d) In accordance with Section 4.17, the directors and
officers of Newco shall initially be as set forth on Annex C
attached hereto. At or before the Effective Time, each of ALC
and TI shall designate three additional directors to serve on the
Board of Directors of Newco, such that as of the Effective Time,
the Board of Directors shall consist of the initial nine members
set forth on Annex C together with such additional six persons so
named.
Section 1.4 Headquarters of Newco. The corporate
headquarters of Newco shall be maintained in Pittsburgh,
Pennsylvania.
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ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the
Effective Time, by virtue of the Combination, including the ALC
Merger and the TI Merger, and without any action on the part of
the holder of any shares of ALC Common Stock, TI Common Stock or
capital stock of Newco, ALC Merger Sub or TI Merger Sub:
(a) The issued and outstanding shares of the capital stock
of ALC Merger Sub shall be converted into and become 1,000 fully
paid and nonassessable shares of Common Stock, par value $0.10
per share, of ALC, as the surviving corporation of the ALC
Merger.
(b) The issued and outstanding shares of the capital stock
of TI Merger Sub shall be converted into and become 1,000 fully
paid and nonassessable shares of Common Stock, par value $1.00
per share, of TI, as the surviving corporation of the TI Merger.
(c) Each issued and outstanding share of ALC Common Stock
other than shares of ALC Common Stock issued and held in the
treasury of ALC or owned of record by TI, TI Merger Sub or any
direct or indirect subsidiary thereof shall be converted into and
shall become, by virtue of the ALC Merger and without any further
action by the holder thereof, one (1) share of the Common Stock,
par value $0.10 per share of Newco ("NEWCO COMMON STOCK").
(d) Each issued and outstanding share of TI Common Stock
other than shares of TI Common Stock issued and held in the
treasury of TI or owned of record by ALC, ALC Merger Sub or any
direct or indirect subsidiary thereof shall be converted into and
shall become, by virtue of the TI Merger and without any further
action by the holder thereof, 1.925 shares of Newco Common Stock
(the ratio of 1 to 1.925 being referred to herein as the "TI
EXCHANGE RATIO").
(e) Each share of ALC Common Stock issued and held in the
treasury of ALC or owned of record by TI, TI Merger Sub or any
indirect subsidiary thereof immediately prior to the Effective
Time shall automatically be canceled and retired without any
conversion thereof, and no consideration shall be exchangeable
therefor.
(f) Each share of TI Common Stock issued and held in the
treasury of TI or owned of record by ALC, ALC Merger Sub or any
indirect subsidiary thereof immediately prior to the Effective
Time shall automatically be canceled and retired without any
conversion thereof, and no consideration shall be exchangeable
therefor.
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Section 2.2 Exchange of Certificates.
(a) After the Effective Time, each holder of a certificate
formerly evidencing shares of ALC Common Stock which have been
converted pursuant to Section 2.1(c) and each holder of a
certificate formerly evidencing shares of TI Common Stock which
have been converted pursuant to Section 2.1(d), upon surrender of
the same to Chemical Mellon Shareholder Services, L.L.C. or
another exchange agent selected by Newco (the "EXCHANGE AGENT")
as provided in Section 2.2(b) hereof, shall be entitled to
receive in exchange therefor (i) a certificate or certificates
representing the number of whole shares of Newco Common Stock
into which such shares of ALC Common Stock or TI Common Stock
shall have been converted as provided in this Article II and (ii)
as provided in Section 2.4, cash in lieu of any fractional share
of Newco Common Stock into which such shares of ALC Common Stock
or TI Common Stock would have otherwise been converted, without
any interest thereon. Until so surrendered, each certificate
formerly evidencing shares of ALC Common Stock or TI Common Stock
which have been so converted will be deemed for all corporate
purposes of Newco to evidence ownership of the number of whole
shares of Newco Common Stock for which the shares of ALC Common
Stock or TI Common Stock formerly represented thereby were
exchanged and the right to receive cash in lieu of fractional
shares as herein provided, without any interest thereon;
provided, however, that until such certificate is so surrendered,
no dividend payable to holders of record of Newco Common Stock as
of any date subsequent to the Effective Time shall be paid to the
holder of such certificate in respect of the shares of Newco
Common Stock evidenced thereby and such holder shall not be
entitled to vote such shares of Newco Common Stock. Upon
surrender of a certificate formerly evidencing shares of ALC
Common Stock or TI Common Stock which have been so converted,
there shall be paid to the record holder of the certificates of
Newco Common Stock issued in exchange therefor (i) at the time of
such surrender, the amount of dividends and any other
distributions theretofore paid with respect to such shares of
Newco Common Stock as of any date subsequent to the Effective
Time to the extent the same has not yet been paid to a public
official pursuant to abandoned property, escheat or similar laws
and (ii) at the appropriate payment date, the amount of dividends
and any other distributions with a record date after the
Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such shares of
Newco Common Stock. No interest shall be payable with respect to
the payment of such dividends.
(b) As soon as practicable after the Effective Time, the
Exchange Agent shall send a notice and a transmittal form to each
holder of certificates formerly evidencing shares of ALC Common
Stock and each holder of certificates formerly evidencing shares
of TI Common Stock (other than certificates formerly representing
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shares of ALC Common Stock and TI Common Stock to be canceled
pursuant to Sections 2.1(e) and 2.1(f)) advising such holder of
the effectiveness of the Combination and the procedure for
surrendering to the Exchange Agent (who may appoint forwarding
agents with the approval of Newco) such certificates for exchange
into certificates evidencing Newco Common Stock (including cash
in lieu of any fractional share). Each holder of certificates
theretofore evidencing shares of ALC Common Stock or TI Common
Stock, upon proper surrender thereof to the Exchange Agent
together and in accordance with such transmittal form, shall be
entitled to receive in exchange therefor certificates evidencing
Newco Common Stock (and cash in lieu of any fractional share)
deliverable in respect of the shares of ALC Common Stock or TI
Common Stock theretofore evidenced by the certificates so
surrendered. Notwithstanding the foregoing, neither the Exchange
Agent nor any party hereto shall be liable to a holder of
certificates theretofore representing shares of ALC Common Stock
or TI Common Stock for any amount which may be required to be
paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(c) If any certificate evidencing shares of Newco Common
Stock is to be delivered to a person other than the person in
whose name the certificates surrendered in exchange therefor are
registered, it shall be a condition to the issuance of such
certificate evidencing shares of Newco Common Stock that the
certificates so surrendered shall be properly endorsed or
accompanied by appropriate stock powers and otherwise in proper
form for transfer, that such transfer otherwise be proper and
that the person requesting such transfer pay to the Exchange
Agent any transfer or other taxes payable by reason of the
foregoing or establish to the satisfaction of the Exchange Agent
that such taxes have been paid or are not required to be paid.
(d) In the event any certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such certificate to be lost, stolen or
destroyed, Newco will issue in exchange for such lost, stolen or
destroyed certificate the certificate evidencing shares of Newco
Common Stock deliverable in respect thereof, as determined in
accordance with this Article II. When authorizing such issue of
the certificate of shares of Newco Common Stock in exchange
therefor, the Board of Directors of Newco may, in its discretion
and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate to give Newco
a bond in such sum as it may direct as indemnity against any
claim that may be made against Newco with respect to the
certificate alleged to have been lost, stolen or destroyed.
(e) Approval and adoption of this Agreement by the
shareholders of ALC and the stockholders TI shall constitute, as
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an integral part of the Combination, ratification of the
appointment of, and the reappointment of, said Exchange Agent.
Section 2.3 No Further Transfers. After the Effective
Time, there shall be no registration of transfers of shares on
the respective stock transfer books of ALC or TI of the shares of
ALC Common Stock and TI Common Stock that were outstanding
immediately prior to the Effective Time.
Section 2.4 No Fractional Shares. Neither certificates
nor scrip for fractional shares of Newco Common Stock will be
issued in the Combination, but in lieu thereof each holder of ALC
Common Stock and each holder of TI Common Stock otherwise
entitled to a fraction of a share of Newco Common Stock (after
aggregating all fractional shares of Newco Common Stock that
would otherwise be received by such holder) will be entitled
hereunder to receive a cash payment. The amount of such cash
payment shall equal, in the case of each fractional share, an
amount (rounded to the nearest whole cent), without interest,
calculated as the product of (i) such fraction, multiplied by
(ii) the average of the high and low per share sales prices for
the Newco Common Stock on the New York Stock Exchange for each of
the five (5) consecutive trading days immediately preceding the
Effective Time as quoted in the Wall Street Journal or other
reliable financial newspaper or publication, or, if the Newco
Common Stock does not trade prior to the Effective Time on a
"when issued" basis, the average of the high and low per share
sales prices for the Newco Common Stock on the trading day that
includes the Effective Time (or, if the Effective Time does not
occur on a trading day, on the first trading day thereafter).
For the purposes of the preceding sentence, a "trading day" means
a day on which trading generally takes place on the New York
Stock Exchange. No such fractional share interest shall entitle
the owner thereof to vote or to any rights of a stockholder of
Newco.
Section 2.5 Withholding. Newco or the Exchange Agent
shall be entitled to deduct and withhold from the consideration
otherwise payable or issuable pursuant to this Agreement to any
holder of ALC Common Stock or TI Common Stock such amounts as
Newco or the Exchange Agent is required to deduct and withhold
with respect to the making of such payment or issuance under the
Code, or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld by Newco or the Exchange
Agent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the shares of
ALC Common Stock or TI Common Stock in respect of which such
deduction and withholding was made by Newco or the Exchange
Agent.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of ALC and TI.
When used in connection with ALC or any of its respective
Subsidiaries or TI or any of its respective Subsidiaries, as the
case may be, the term "MATERIAL ADVERSE EFFECT" for all purposes
of this Agreement means any change or effect that
(i) individually or when taken together with all other such
changes or effects that have occurred during any relevant time
period prior to the date of determination of the occurrence of
the Material Adverse Effect, is or is reasonably likely to be
materially adverse to the business, assets (including intangible
assets), financial condition or results of operations or
prospects of ALC and its respective Subsidiaries or TI and its
respective Subsidiaries, respectively, in each case taken as a
whole, or (ii) does or is reasonably likely to materially
adversely affect the ability of, in the case of ALC, ALC and its
Subsidiaries taken as a whole, or, in the case of TI, TI and its
Subsidiaries taken as a whole, as the case may be, to perform its
respective obligations under this Agreement or the Ancillary
Documents (as hereinafter defined), to consummate the
transactions contemplated hereby or thereby or to conduct their
respective businesses after the Effective Time substantially as
such businesses are being conducted as of the date hereof. When
used herein, the term "material" for all purposes of this
Agreement means material to the party referred to and its
Subsidiaries taken as a whole. Except as set forth in the
disclosure letter (designated as such specifically for purposes
of this Agreement) delivered at or prior to the execution hereof
to ALC or TI, as the case may be, by TI and ALC, respectively
(each, a "DISCLOSURE LETTER"), ALC (except for paragraphs (c) and
(n) below) hereby represents and warrants to TI, TI Merger Sub
and Newco, and TI (except for paragraph (b) below), hereby
represents and warrants to ALC, ALC Merger Sub and Newco, that:
(a) Corporate Organization and Qualification. It and each
of its Subsidiaries (both domestic and foreign), is an entity
duly formed, validly existing and in good standing under the laws
of its respective jurisdiction of formation and is in good
standing as a foreign entity in each jurisdiction where the
properties owned, leased or operated, or the business conducted,
by it or its Subsidiaries require such qualification, except for
such failure to so qualify or be in such good standing which does
not constitute a Material Adverse Effect. As used in this
Agreement, the word "SUBSIDIARY" means, with respect to any
party, any corporation or other entity or organization, whether
incorporated or unincorporated, of which (i) such party or any
other Subsidiary of such party is a general partner (excluding
partnerships, the general partnership interests of which are held
by such party or any Subsidiary of such party that do not have a
8
<PAGE>
majority of the voting interest in such partnership) or (ii) at
least a majority of the securities or other interests having by
their terms ordinary voting power to elect 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 party or by any one or
more of its Subsidiaries, or by such party and one or more of its
Subsidiaries. It and each of its Subsidiaries has the requisite
corporate power and authority to carry on its respective
businesses as they are now being conducted. It has made
available to the other a complete and correct copy of its
Articles or Certificate of Incorporation and Bylaws. Such
Articles or Certificate of Incorporation and Bylaws so delivered
are in full force and effect.
(b) Authorized Capital of ALC. The authorized capital
stock of ALC consists of 250,000,000 shares of ALC Common Stock,
of which 65,991,891 shares were outstanding as of March 29, 1996,
and 50,000,000 shares of Preferred Stock, par value $1.00 per
share ("ALC PREFERRED STOCK"), of which no shares were
outstanding on such date. Since such date, no additional shares
of capital stock of ALC have been issued except for shares of ALC
Common Stock which have been issued pursuant to the exercise of
options or rights outstanding as of such date or pursuant to the
purchase, designation or award of shares, under the ALC Stock
Plans (as defined below) in effect as of such date or granted or
awarded since such date in accordance with Article IV, and,
except for grants made under the ALC Stock Plans in accordance
with Article IV, no options, warrants or other rights to acquire
shares of ALC Common Stock have been granted or issued by ALC
other than pursuant to ALC's Stock Acquisition and Retention
Plan. As of such date, 1,172,998 shares of ALC Common Stock were
issuable upon exercise of outstanding options under the ALC 1987
Stock Option Incentive Plan, as amended; 76,000 units,
representing a maximum of 364,800 shares of ALC Common Stock, had
been awarded pursuant to ALC's Performance Share Plan for Key
Employees; and participants had elected to purchase shares of ALC
Common Stock having an aggregate value of up to $634,405 and to
designate up to 3,700 shares of ALC Common Stock under ALC's
Stock Acquisition and Retention Plan, which will result in the
issuance of one share of ALC Common Stock for each share
purchased or designated. All of the outstanding shares of ALC
Common Stock have been duly authorized and are validly issued,
fully paid and nonassessable. ALC has no shares of ALC Common
Stock or ALC Preferred Stock reserved for issuance, except that,
as of such date, 4,911,823 shares of ALC Common Stock were
reserved for issuance pursuant to ALC's 1987 Stock Option
Incentive Plan, as amended, 1,665,659 shares of ALC Common Stock
were reserved for issuance pursuant to ALC's Performance Share
Plan for Key Employees, 802,737 shares of ALC Common Stock were
reserved for issuance pursuant to ALC's Stock Acquisition and
Retention Plan, 89,897 shares were reserved for issuance pursuant
9
to ALC's Director Share Incentive Plan and 250,000 shares were
reserved for issuance under ALC's 1996 Non-Employee Director
Stock Compensation Plan (such ALC plans are referred to herein
together as the "ALC STOCK PLANS"). ALC has no outstanding bonds,
debentures, notes or other obligations the holders of which have
the right to vote (or are convertible into or exercisable or
exchangeable for securities having the right to vote) with the
shareholders of ALC on any matter. Each of the outstanding
shares of capital stock of each of ALC's corporate Subsidiaries
is duly authorized, validly issued, fully paid and nonassessable
and, except for the outstanding capital stock of ALstrip, Inc.
(90% of which is owned by ALC) and except for shares held by
officers and directors of ALC and its Subsidiaries as nominees
and for the benefit of ALC or any of its Subsidiaries, owned,
either directly or indirectly, by ALC free and clear of all
liens, pledges, security interests, claims or other encumbrances.
Except as set forth above, as of the date hereof there are no
shares of capital stock of ALC authorized, issued and
outstanding, and there are no preemptive rights or any
outstanding subscriptions, options, warrants, rights, convertible
securities or other agreements or commitments of ALC or any of
its Subsidiaries of any character relating to the issued or
unissued capital stock or other securities of ALC or any of its
Subsidiaries.
(c) Authorized Capital of TI. The authorized capital stock
of TI consists of 100,000,000 shares of TI Common Stock, of which
55,896,923 shares were outstanding as of February 28, 1996, and
15,000,000 shares of Preferred Stock, par value $1.00 per share
("TI PREFERRED STOCK"), including 100,000 shares of Series D
Preferred Stock, of which none were outstanding as of such date,
and 5,000,000 shares of Series E Cumulative Preferred Stock, of
which 2,763,722 shares of Series E Cumulative Preferred Stock
were outstanding as of March 29, 1996. No additional shares of
capital stock of TI have been issued except for shares of TI
Common Stock which have been issued pursuant to the exercise of
options outstanding under the TI Stock Plans as of such date or
granted or awarded since such date in accordance with Article IV,
and, except for grants made under TI Stock Plans in accordance
with Article IV, no options, warrants or other rights to acquire
TI Common Stock have been granted or issued since such date by
TI. As of March 11, 1996, 3,406,808 shares of TI Common Stock
were issuable upon exercise of outstanding options under the TI
Stock Plans. All of the outstanding shares of TI Common Stock
and TI Series E Preferred Stock have been duly authorized and are
validly issued, fully paid and nonassessable. TI has no TI
Common Stock or TI Preferred Stock reserved for issuance except
for shares of TI Series D Preferred Stock issuable pursuant to
the Rights Agreement, dated as of January 4, 1995, between TI and
Chemical Trust Company of California, as Rights Agent (including
any successor thereto) (the "TI RIGHTS PLAN"), and except that,
as of such date, 2,500,000 shares of TI Common Stock were
10
reserved for issuance pursuant to TI's 1990 Stock Option Plan,
2,500,000 shares of TI Common Stock were reserved for issuance
pursuant to TI's 1994 Long-Term Incentive Plan, 200,000 shares of
TI Common Stock were reserved for issuance pursuant to TI's 1995
Non-Employee Director Stock Option Plan, and 2,500,000 shares of
TI Common Stock were reserved for issuance pursuant to TI's
Employee Stock Purchase Plan (The Stock Advantage) (the "TI ESPP"
and together with such other TI plans, the "TI STOCK PLANS"). TI
does not have outstanding any bonds, debentures, notes or other
obligations the holders of which have the right to vote (or are
convertible into or exercisable or exchangeable for securities
having the right to vote) with the stockholders of TI on any
matter. Each of the outstanding shares of capital stock of each
of TI's corporate Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable and, except for shares held
by officers and directors of TI and its Subsidiaries as nominees
and for the benefit of TI or any of its Subsidiaries, owned,
either directly or indirectly, by TI free and clear of all liens,
pledges, security interests, claims or other encumbrances except
for pledges of capital stock of Subsidiaries that are not
significant subsidiaries (as defined in Regulation S-X
promulgated by the Securities and Exchange Commission (the
"SEC")) pursuant to financing arrangements entered into in the
ordinary course of business and in effect as of the date hereof.
Except as set forth above, as of the date hereof there are no
shares of capital stock of TI authorized, issued or outstanding,
and there are no preemptive rights or any outstanding
subscriptions, options, warrants, rights, convertible securities
or other agreements or commitments of TI or any of its
Subsidiaries of any character relating to the issued or unissued
capital stock or other securities of TI or any of its
Subsidiaries.
(d) Corporate Authority. Subject only to approval of this
Agreement and the ALC Merger by (in the case of ALC) the
affirmative vote of at least a majority of the votes cast by
holders of ALC Common Stock entitled to vote thereon, and to the
approval of this Agreement and the TI Merger by (in the case of
TI) the holders of at least a majority of the outstanding shares
of TI Common Stock, it has the requisite corporate power and
authority and has taken all corporate action necessary in order
to execute and deliver this Agreement and any other agreement,
instrument or certificate (collectively, the "ANCILLARY
DOCUMENTS") to be executed or delivered by it pursuant hereto,
and to consummate the transactions contemplated hereby and
thereby. Its Board of Directors has approved this Agreement and
the Combination and (i) in the case of ALC, the TI Stockholder
Agreements, and (ii) in the case of TI, the ALC Shareholder
Agreements and (for purposes of Section 203 of the DGCL and the
TI Rights Plan) the TI Stockholder Agreements, and has directed
that this Agreement and the ALC Merger (in the case of ALC) and
TI Merger (in the case of TI) be submitted to its stockholders
11
for approval and adoption in accordance with applicable law and
its Articles or Certificate of Incorporation and Bylaws, and,
subject to Section 4.1(a) below, has recommended that its
stockholders approve this Agreement and the ALC Merger (in the
case of ALC) and the TI Merger (in the case of TI). This
Agreement and each Ancillary Document to be executed and
delivered by it pursuant hereto is a valid and binding agreement,
certificate or instrument, as the case may be, of it enforceable
against it in accordance with its terms.
(e) Governmental Filings; No Violations. (i) Other than
the filings provided for in Section 1.1, filings required under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), filings required under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), filings
required under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), filings required under state securities and
"Blue Sky" laws, and any filings required to be made under the
laws of any foreign jurisdiction, no notices, reports or other
filings are required to be made by it or its Subsidiaries with,
nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by it or its Subsidiaries
from, any governmental or regulatory authority, agency, court,
commission or other entity, domestic or foreign ("GOVERNMENTAL
ENTITY"), in connection with the execution and delivery of this
Agreement or any of the Ancillary Documents by it and the
consummation by it of the transactions contemplated hereby and
thereby, the failure of which to make or obtain would constitute
a Material Adverse Effect.
(ii) Neither the execution and delivery of this Agreement
or any of the Ancillary Documents by it, nor the consummation by
it of any of the transactions contemplated hereby or thereby, or
any action required by applicable law as a result thereof, will
constitute or result in (A) a breach or violation of, or a
default under, its Articles or Certificate of Incorporation or
Bylaws or the comparable governing instruments of any of its
Subsidiaries, (B) a breach or violation of, a default (with or
without the giving of notice or the passage of time) under or the
triggering of any payment or other obligations, or the right of
any third party to require a payment or performance of an
obligation not otherwise due, pursuant to, or accelerate vesting
under, any existing collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension,
retirement, employee stock ownership, deferred compensation,
employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any
directors, officers or employees of it or any of its Subsidiaries
("BENEFIT PLANS") or any grant or award made under any of the
foregoing, (C) a breach or violation of, a default under, a
change in the rights of any party under, or the acceleration of
or the creation of a lien, pledge, security interest or other
12
encumbrance on assets (with or without the giving of notice or
the lapse of time) pursuant to, any provision of any note, bond,
mortgage, indenture, agreement, lease, contract, instrument,
arrangement or other obligation of it or any of its Subsidiaries
or (D) a breach or violation of any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or
non-governmental permit, license, franchise or other similar
right or authorization to which it or any of its Subsidiaries is
subject except, in the case of clauses (B), (C) or (D) above, for
such breaches, violations, defaults, accelerations or changes
that would not constitute a Material Adverse Effect. Its
Disclosure Letter sets forth, to the knowledge of its officers, a
list of any consents, approvals or waivers required under or
pursuant to any of the foregoing to be obtained prior to
consummation of the transactions contemplated by this Agreement.
It will use commercially reasonable efforts to obtain the
consents, approvals or waivers referred to in its Disclosure
Letter.
(f) SEC Reports; Financial Statements. Each of ALC and TI
has delivered to the other a copy of each report, proxy statement
or information statement filed by it since December 31, 1993 and
prior to the date hereof, each in the form (including exhibits
and any amendments thereto and all documents incorporated by
reference therein) filed with the SEC under the Exchange Act
(collectively, the "SEC REPORTS"). As of their respective dates,
its SEC Reports did not and any report, proxy statement or
information statement filed by it with the SEC subsequent to the
date hereof (collectively, "SUBSEQUENT SEC REPORTS") will not,
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements made therein, in the light of the
circumstances under which they were made, not misleading. As of
their respective dates, each of its consolidated balance sheets
included in or incorporated by reference into the SEC Reports or
Subsequent SEC Reports (including the related notes and
schedules) fairly presented (with respect to the SEC Reports) or
will fairly present (with respect to the Subsequent SEC Reports)
the consolidated financial position of it and its Subsidiaries as
of its date, and each of the consolidated statements of income,
of stockholders' equity and of cash flows included in or
incorporated by reference into the SEC Reports or Subsequent SEC
Reports (including any related notes and schedules) fairly
presented (with respect to the SEC Reports) or will fairly
present (with respect to the Subsequent SEC Reports) the results
of operations, stockholders' equity and cash flows of it and its
Subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to normal year-end audit
adjustments which would not be material in amount or effect), in
each case in accordance with United States generally accepted
accounting principles consistently applied during the periods
involved, except as may be noted therein. Except for the SEC
13
Reports and the Subsequent SEC Reports, since December 31, 1993,
neither ALC nor any of its Subsidiaries (in the case of ALC) nor
TI nor any of its Subsidiaries (in the case of TI) is or was
required to file any report, proxy statement or information
statement with the SEC pursuant to the requirements of the
Exchange Act, the Securities Act or otherwise.
(g) Absence of Undisclosed Liabilities. Except as set
forth in its Disclosure Letter or its SEC Reports, it and its
Subsidiaries do not have any liabilities, whether accrued or
contingent and whether or not required to be reflected in
financial statements in accordance with United States generally
accepted accounting principles, that are material to the
financial condition of it and its Subsidiaries taken as a whole,
other than (i) liabilities (or reserves therefor) reflected in
its consolidated balance sheet as of December 31, 1995 and (ii)
normal or recurring liabilities incurred since December 31, 1995
in the ordinary course of business consistent with past
practices. Its Disclosure Letter sets forth an accurate and
complete list of all contracts, agreements and other commitments
and arrangements pursuant to which it or any of its Subsidiaries
has agreed to indemnify or exonerate any person that would
involve or be reasonably likely to involve a material liability.
Its Disclosure Letter also sets forth an accurate and complete
list of each contract, agreement or other commitment or
arrangement (including such with any collective bargaining unit,
union or other entity or group) that, pursuant to its terms,
would give rights to any party as a result of the execution and
delivery of this Agreement or consummation of the Combination,
the exercise of which would constitute a Material Adverse Effect
(for this purpose, the definition thereof to include the effects
listed in the definition of "Material Adverse Effect" as applied
to Newco and its Subsidiaries from and after the Effective Time
(a "NEWCO MATERIAL ADVERSE EFFECT")).
(h) Absence of Certain Changes. Except as set forth in its
SEC Reports, since December 31, 1995, it and its Subsidiaries
have conducted their respective businesses only in, and have not
engaged in any material transaction other than in, the ordinary
and usual course of such businesses and there has not been (i)
any change in it or any development or combination of
developments of which its officers have knowledge which
constitutes a Material Adverse Effect; (ii) any declaration,
setting aside or payment of any dividend or other distribution
with respect to its capital stock except for regular cash
dividends of not more than $.13 per quarter in the case of ALC
or, in the case of TI, dividends on TI Common Stock in the
aggregate amount of $.225 in cash per share and $.15 in face
amount of TI Series E Cumulative Preferred Stock per share prior
to the date of this Agreement and regular cash dividends of not
more than $.375 per quarter on the TI Common Stock and regular
cash dividends on the TI Series E Cumulative Preferred Stock
14
thereafter; or (iii) any change by it in accounting principles,
practices or methods. Since March 15, 1996, except as provided
for herein and other than in the ordinary course consistent with
past practice, there has not been any increase in the
compensation payable or which could become payable by it or its
Subsidiaries to their officers or key employees, or any material
amendment of any of its Benefit Plans.
(i) Litigation. Except as described in its SEC Reports,
there are no civil, criminal or administrative actions, suits,
claims, hearings, investigations or proceedings pending or, to
the knowledge of its officers, threatened, against it or any of
its Subsidiaries that have resulted or are reasonably likely to
result in any claims against, or obligations or liabilities of,
it or any of its Subsidiaries, that constitutes a Material
Adverse Effect.
(j) Taxes. All federal, state, local and foreign tax
returns required to be filed by or on behalf of it or any of its
Subsidiaries have been timely filed or requests for extension
have been timely filed and any such extension shall have been
granted and not have expired other than those returns with
respect to which the failure to timely file or the failure to
request an extension of the time for filing would not have a
Material Adverse Effect, and all such filed returns are complete
and accurate in all material respects. Except as currently being
contested in good faith or with respect to which adequate
reserves have been made in its financial statements referenced in
Section 3.1(f), all taxes required to be shown on returns or to
be paid with respect to returns for which extensions have been
filed by it have been paid in full or have been recorded on its
consolidated balance sheet and consolidated statement of earnings
or income in accordance with United States generally accepted
accounting principles. There is no outstanding audit
examination, deficiency, or refund litigation with respect to any
taxes of it or any of its Subsidiaries that might reasonably be
expected to result in a determination that would constitute a
Material Adverse Effect, except for any such examination,
deficiency or litigation as to which adequate reserves are
reflected in the financial statements referenced in
Section 3.1(f). All taxes, interest, additions, and penalties
due with respect to completed and settled examinations or
concluded litigation relating to it or any of its Subsidiaries
have been paid in full or have been recorded on its balance sheet
and consolidated statement of earnings or income (in accordance
with United States generally accepted accounting principles).
Neither it nor any of its Subsidiaries has executed an extension
or waiver of any statute of limitations on the assessment or
collection of any tax due that is currently in effect, the
failure to pay which would constitute a Material Adverse Effect.
15
(k) Employee Benefits. (i) All benefit plans as defined in
Section 3(3) of the Employee Retirement Security Act of 1974, as
amended ("ERISA"), covering employees or former employees of it
or its Subsidiaries (excluding Foreign Plans) which are pension
plans, disability plans, life insurance plans or severance plans,
and all benefit plans, contracts or arrangements covering non-
resident aliens (with respect to the United States) or covering
employees or former employees of any foreign Subsidiaries other
than government-sponsored programs or government-required
benefits which are referred to herein as "FOREIGN PLANS", are
referred to collectively as "PLANS."
(ii) Except for such incidents of actual or possible
noncompliance which would not constitute a Material Adverse
Effect, (A) all of its Plans, to the extent subject to ERISA, are
in substantial compliance with ERISA, (B) each Plan which is an
"employee pension benefit plan" within the meaning of Section
3(2) of ERISA ("PENSION PLAN") and which is intended to be
qualified under Section 401(a) of the Code has received a
favorable determination letter covering the Tax Reform Act of
1986 from the Internal Revenue Service or application for such a
favorable determination has been made within the applicable
remedial amendment period provided by the Code, and it is not
aware of any circumstances likely to result in revocation of any
such favorable determination letter, (C) each Plan which is a
group health plan within the meaning of Section 4980B(g)(2) of
the Code is in substantial compliance with the requirements of
Section 4980B of the Code, and (D) there is no pending or, to the
knowledge of its officers, threatened litigation, investigation
or audit relating to the Plans other than claims for benefits
made in the ordinary course. Neither it nor any Subsidiary has
engaged in a transaction with respect to any Plan that, assuming
the taxable period of such transaction expired as of the date
hereof, could subject it or any of its Subsidiaries to a tax or
penalty imposed by either Section 4975 of the Code or Section
502(i) of ERISA in an amount which would reasonably be expected
to constitute a Material Adverse Effect. Neither it nor any of
its Subsidiaries has completely or partially withdrawn from a
"multiemployer plan" within the meaning of Section 3(37) of ERISA
or has suffered a 70% decline in "contribution base units" within
the meaning of Section 4205(b)(1)(A) of ERISA in any plan year
beginning after 1979. No withdrawal liability has been or is
expected to be incurred by it or its Subsidiaries with respect to
any multiemployer plan in which it or any of its Subsidiaries
participates or a former Subsidiary participated and it has no
reason to believe that any such liability will arise as a result
of the consummation of the Combination. It has furnished to the
other a copy of the most recent annual report of the trustee of
each such multiemployer plan and, to the knowledge of its
management, each such report is true, accurate and complete.
Each of its Foreign Plans complies and, to its knowledge, each
benefit plan, contract or arrangement (other than government-
16
sponsored programs or government-required benefits) covering
employees or former employees of any of its Subsidiaries doing
business in any other foreign jurisdiction complies, with all
applicable laws governing its administration and maintenance,
except for such incidents of actual or possible noncompliance
which would not constitute a Material Adverse Effect.
(iii) No material liability under Subtitle C or D of Title
IV of ERISA has been or is expected to be incurred by it or any
Subsidiary with respect to any ongoing, frozen or terminated Plan
currently or formerly maintained by any of them, or any Plan of
any entity which is considered one employer with it or any of its
Subsidiaries under Section 4001 of ERISA or Section 414 of the
Code (an "ERISA AFFILIATE"). No notice of a "reportable event",
within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to
be filed for any Pension Plan or by any ERISA Affiliate within
the 12-month period ending on the date hereof.
(iv) All material contributions required to be made by it
or any of its Subsidiaries under the terms of any Plan have been
timely made or have been accrued pending full and timely payment.
Except as described in its SEC Reports, no Plan of an ERISA
Affiliate has an "accumulated funding deficiency" (whether or not
waived) within the meaning of Section 412 of the Code or Section
302 of ERISA. None of it, its Subsidiaries or its ERISA
Affiliates has provided, or is required to provide, security to
any Plan of an ERISA Affiliate pursuant to Section 401(a)(29) of
the Code.
(v) For all Pension Plans that are "defined benefit plans"
within the meaning of Section 3(35) of ERISA, the disclosures
prepared under FAS 87 and set forth in the footnotes to its
financial statements as of and for the year ended December 31,
1995 and included in the SEC Reports are true and correct in all
material respects. There has been no material adverse change in
the financial condition of any such Pension Plan since the last
day of the most recent plan year.
(vi) Except as described in its SEC Reports, neither it nor
its Subsidiaries have any obligations for retiree health and life
benefits under any Plan. With regard to health and life benefits
for employees other than employees covered by a collective
bargaining agreement, or who are not residents of the United
States, the current plan documents contain no restrictions on the
rights of it or its Subsidiaries to amend or terminate any such
Plan without incurring liability thereunder with respect to
unincurred benefit obligations.
(l) Environmental Matters. (i) It and each of its
Subsidiaries has applied for and has in effect all Federal, state
and local governmental approvals, authorizations, certificates,
17
filings, franchises, licenses, notices, permits and rights
("ENVIRONMENTAL PERMITS") under applicable statutes, laws,
ordinances, rules, orders and regulations which are administered,
interpreted or enforced by the U.S. Environmental Protection
Agency or state and local agencies with jurisdiction over
pollution or protection of the environment (collectively,
"ENVIRONMENTAL LAWS") necessary for it to carry on its business
as now conducted, and there has occurred no default under any
such Environmental Permit, except for the lack of Environmental
Permits and for defaults under Environmental Permits which would
not constitute a Material Adverse Effect. Neither it nor any of
its Subsidiaries has received written notice from any foreign
government or agency with jurisdiction over pollution or
protection of the environment of its or any such Subsidiary's
failure to have in effect, or of any default under, any
comparable Environmental Permit under applicable statutes, laws,
ordinances, rules, orders and regulations of such foreign
government or agency (collectively, "FOREIGN ENVIRONMENTAL LAWS")
necessary for it to carry on its or such Subsidiary's business in
any foreign jurisdiction, except for such notices regarding the
lack of such comparable Environmental Permits, and for such
defaults, which do not constitute a Material Adverse Effect.
(ii) To its knowledge, it and each of its Subsidiaries is,
and has been, in compliance with applicable Environmental Laws
and Foreign Environmental Laws, except for instances of possible
noncompliance which do not constitute a Material Adverse Effect.
(iii) There is no suit, action, proceeding or inquiry
pending or, to its knowledge, threatened before any court,
governmental agency or authority or other forum in which it or
any of its Subsidiaries has been or, with respect to threatened
suits, actions and proceedings, may be named as a defendant (a)
for alleged noncompliance (including by any predecessor) with any
Environmental Law or Foreign Environmental Law or (b) relating to
the release into the environment of any Hazardous Material (as
hereinafter defined), asbestos, polychlorinated biphenyls or oil,
whether or not occurring at, on, under or involving a site owned,
leased or operated by it or any of its Subsidiaries, or (c) any
site or location for which it or its Subsidiaries has been
designated as a potentially responsible party under any federal,
state, local or foreign superfund law, or (d) any claim,
potential claim or express reservation of responsibility for
damages to natural resources, except in each of the cases (a)
through (d) above for any such suits, actions, proceedings and
inquiries which do not constitute a Material Adverse Effect.
(iv) During the period of ownership or operation by it and
its current or former Subsidiaries of any of their respective
current or formerly owned properties, there have been no
underground storage tanks (whether currently active or not) and
no polychlorinated biphenyls in transformers or other electrical
18
equipment and there have been no releases of Hazardous Material
or of asbestos, polychlorinated biphenyls or oil in, on, under or
affecting such properties or, to its knowledge, any surrounding
site, except in each case for those which do not constitute a
Material Adverse Effect. Prior to the period of ownership or
operation by it or its current or former Subsidiaries of any of
their respective current or formerly owned properties, to the
knowledge of its officers, there were no releases of Hazardous
Material or asbestos, polychlorinated biphenyls or oil or other
petroleum products in, on, under or affecting any such property
or any surrounding site, except in each case for those which do
not constitute a Material Adverse Effect. "HAZARDOUS MATERIAL"
shall mean any pollutant, contaminant, or hazardous substance
within the meaning of the Comprehensive Environmental Response,
Compensation, and Liability Act, other Environmental Laws or
Foreign Environmental Laws or any similar state or local law.
(m) Brokers and Finders. Neither it nor any of its
officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees,
commissions or finder's fees in connection with the transactions
contemplated hereby, except that ALC has retained Salomon
Brothers Inc as its financial advisor and TI has retained
Goldman, Sachs & Co. as its financial advisor in connection with
the transactions contemplated hereby, the arrangements with which
have been disclosed in writing to the other prior to the date
hereof.
(n) Takeover Statutes; Rights Plan. The Board of Directors
of TI has taken all actions so that the restrictions contained in
Section 203 of the DGCL applicable to an "interested stockholder"
or a "business combination" (as defined in Section 203) will not
apply to the execution, delivery or performance of this Agreement
or the Stockholder Agreements or the consummation of the
Combination (including the TI Merger) or the other transactions
contemplated by this Agreement or by the Stockholder Agreements.
The TI Rights Plan does not cause or permit, and will not cause
or permit, TI stockholders to exercise rights as a result of the
existence or implementation of this Agreement or the Stockholder
Agreements, or any of the transactions contemplated hereby or
thereby.
(o) Tax and Accounting Matters. Neither it nor any of its
Subsidiaries or affiliates has taken or agreed to take any action
that would prevent each of the ALC Merger and the TI Merger from
being treated as either a reorganization within the meaning of
Section 368(a) of the Code or a non-recognition exchange of stock
under Section 351 of the Code, or would prevent Newco from
accounting for the business combination to be effected by the
Combination as a pooling of interests.
19
(p) Labor Matters. It has previously furnished to the
other true and complete copies of all labor and collective
bargaining agreements to which it or its Subsidiaries is a party
and that are currently in effect, together with all amendments
thereto (if any). There are no strikes or other work stoppages
involving any employees of it or any of its Subsidiaries and
there are no material labor disputes by any labor organization in
progress or pending or, to the knowledge of its officers,
threatened against it or any of its Subsidiaries that would
constitute a Material Adverse Effect. To the knowledge of its
officers, it and its Subsidiaries are in compliance with all
applicable laws and regulations in respect of employment and
employment practices, terms and conditions of employment, wages
and hours, occupational safety, health or welfare conditions
relating to premises occupied, and civil rights, non-compliance
with which would constitute a Material Adverse Effect. There are
no charges of unfair labor practices pending before any
governmental authority involving or affecting it or any of its
Subsidiaries that would constitute a Material Adverse Effect. It
has not been notified that any customer or supplier of it or any
Subsidiary is involved in or threatened with or affected by any
strike or other labor disturbance or dispute, litigation or
administrative proceeding or judgment, order, injunction, decree
or award, the consequences of which would constitute a Material
Adverse Effect.
(q) Compliance with Laws. It and each of its Subsidiaries
has all permits, licenses, certificates of authority, orders, and
approvals of, and has made all filings, applications, and
registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to
permit it to carry on its business as it is presently conducted,
except for such permits, licenses, certificates, orders and
approvals, the absence of which would not constitute a Material
Adverse Effect ("MATERIAL PERMITS"). All Material Permits are in
full force and effect, and, to the knowledge of its officers, no
suspension or cancellation of any of them is threatened. Except
as described in its SEC Reports, to the knowledge of its
officers, the operations of it and of each of its Subsidiaries
are in compliance with all applicable federal, state and local
and foreign laws, rules and regulations, and neither it nor any
of its Subsidiaries has received written notice from any federal,
state, local or foreign government, agency or individual
regarding noncompliance by it or any such Subsidiary with any
federal, state, local or foreign laws, rules or regulations, in
each case including, without limitation, the Foreign Corrupt
Practices Act and the False Claims Act, each as amended, and
laws, rules and regulations relating to the employment of
individuals, civil rights and occupational safety and health,
except for instances of actual or possible noncompliance which
would not constitute a Material Adverse Effect.
20
(r) Title to Assets. Each of it and its Subsidiaries has
good and marketable title to its properties and assets (other
than property as to which it is lessee), except for such defects
in title that would not constitute a Material Adverse Effect and
encumbrances for obligations incurred in the ordinary course of
business and reflected in its consolidated balance sheet as of
December 31, 1995 or incurred thereafter in the ordinary course
of business consistent with past practice.
(s) Intellectual Property. It and its Subsidiaries either
own, or to its knowledge, have valid, binding and enforceable
rights to use all patents, trademarks, trade names, service
marks, service names, copyrights, other proprietary intellectual
property rights, applications therefor and licenses or other
rights in respect thereof ("INTELLECTUAL PROPERTY") used or held
for use or necessary in connection with the business of it or its
Subsidiaries, without any conflict with the rights of others,
except for such conflicts that have not had and are not
reasonably likely to constitute a Material Adverse Effect.
Neither it nor any of its Subsidiaries has, as of the date
hereof, received any notice from any other person pertaining to
or challenging the right of it or its Subsidiaries to use any
Intellectual Property or any trade secrets, proprietary
information, inventions, know-how, processes and procedures owned
or used by or licensed to it or any of its Subsidiaries, except
with respect to rights the loss of which, individually or in the
aggregate, have not had and are not reasonably likely to
constitute a Material Adverse Effect. To its knowledge, none of
its or its Subsidiaries' personnel is in violation of any term of
any employment contract, patent disclosure agreement or any other
contract or agreement relating to the relationship of any such
employee with it or its Subsidiaries or any other party the
result of which has had or is reasonably likely to constitute a
Material Adverse Effect.
(t) Insurance. It and each of its Subsidiaries has in
effect valid and effective policies of insurance, issued by
companies believed by it to be sound and reputable, insuring it
or such Subsidiary (as the case may be) for losses customarily
insured against by others engaged in similar lines of business.
Such policies are reasonable, in both scope and amount, in light
of the risks attendant to the businesses conducted by it and its
Subsidiaries. During the past five years, all insurance policies
covering products liability and general liability maintained by
or for the benefit of it or its Subsidiaries have been
"occurrence" policies and not "claims made" policies.
(u) Employment and Change in Control Agreements.
(i) Its Disclosure Letter sets forth a true and
complete list of all agreements with any officer or director of
it or any of its Subsidiaries to which it or any of its
21
Subsidiaries is a party, providing for the terms of his or her
employment with it or any of its Subsidiaries and the terms of
his or her severance or other payments upon termination of such
employment (the "EMPLOYMENT AGREEMENTS"). It has previously
furnished to the other true and complete copies of all Employment
Agreements, together with all amendments thereto (if any).
(ii) Except as it disclosed in its SEC Reports, and
except as provided for in this Agreement, neither it nor any of
its Subsidiaries is a party to any oral or written (i) agreement
with any officer or other key employee of it or any of its
Subsidiaries (A) the benefits of which are contingent, or the
terms of which are materially altered, upon the occurrence of a
transaction involving it of the nature contemplated by this
Agreement or (B) providing for compensation payments that would
not be deductible by it for federal income tax purposes, or (ii)
agreement or Benefit Plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement.
(v) Certain Transactions. Except as set forth in its SEC
Reports, none of the officers or directors of it or of any of its
Subsidiaries nor any affiliate of it, and, to its knowledge, none
of its key employees or the key employees of any of its
Subsidiaries, is a party to any transaction with it or any of its
Subsidiaries (other than for services as an employee, officer or
director and other than transactions between it and one or more
of its direct or indirect wholly owned Subsidiaries or between
such Subsidiaries), including, without limitation, any contract,
agreement or other arrangement (i) providing for the furnishing
of services to or by, (ii) providing for rental of real or
personal property to or from, or (iii) otherwise requiring
payments to or from, any such officer, director, affiliate or key
employee, any member of the family of any such officer, director
or key employee or any corporation, partnership, trust or other
entity in which any such officer, director or key employee has a
substantial interest (excluding the ownership of not more than
two percent (2%) of the capital stock of a publicly traded
corporation) or which is an affiliate of such officer, director
or key employee, in each case covered by clauses (i) through
(iii) if such matter would be required to be disclosed pursuant
to Item 404 of Regulation S-K promulgated by the SEC if such
person was a person identified in such Item.
(w) Information in Disclosure Documents and Registration
Statement. None of the information supplied or to be supplied by
it for inclusion or incorporation by reference in (i) the
registration statement on Form S-4 to be filed with the SEC in
connection with the issuance of shares of Newco Common Stock in
22
the Combination (the "S-4") will, at the time of the filing of
the S-4 and any amendments thereto and at the time the S-4
becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made,
not misleading, and (ii) the joint proxy statement/prospectus
relating to the meetings of TI's and ALC's stockholders to be
held in connection with the Combination and the offering of
shares of Newco Common Stock to the holders of shares of ALC
Common Stock and TI Common Stock (the "JOINT PROXY STATEMENT")
will, at the date mailed to the stockholders and at the times of
the meetings of stockholders to be held in connection with the
ALC Merger, the TI Merger and the Combination, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they are made, not misleading.
(x) Opinion of Financial Advisor. It has received the
opinion of its financial advisor referred to in Section 3.1(m),
dated the date hereof, to the effect that, as of such date, the
transactions contemplated hereby are fair to its stockholders
from a financial point of view, a copy of which opinion has been
delivered to the other.
(y) No Existing Discussions. As of the date hereof, it is
not engaged, directly or indirectly, in any discussions or
negotiations with any other party with respect to an Acquisition
Proposal (as defined in Section 4.1).
(z) Restrictions on Business Activities. Except for this
Agreement and to the extent disclosed in its Disclosure Letter,
there is no agreement, judgment, injunction, order or decree
binding upon it or any of its Subsidiaries that has or could
reasonably be expected to have the effect of prohibiting or
impairing any material business practice of Newco, ALC, TI and
their respective Subsidiaries (in each case, taken as a whole),
the acquisition of any material property by Newco, ALC, TI and
their respective Subsidiaries (in each case, taken as a whole) or
the conduct of the business by Newco, ALC, TI and their
respective Subsidiaries (in each case, taken as a whole) as such
business is currently conducted by ALC and TI and their
respective Subsidiaries.
(aa) Agreements, Contracts and Commitments. Neither it nor
any of its Subsidiaries has breached, nor received in writing any
claim or threat that it has breached, any of the terms or
conditions of any agreement, contract or commitment (or any
series of similar agreements, contracts or commitments) which,
individually or in the aggregate, would constitute a Material
Adverse Effect. Each such agreement, contract and commitment
23
that has not expired or been terminated is in full force and
effect and is not subject to any material default thereunder of
which its officers have knowledge by any party obligated to it
thereunder.
Section 3.2 Representations of Newco. (a) Newco hereby
represents and warrants to ALC and TI that (i) it is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has
all requisite corporate power and authority to enter into this
Agreement, (ii) the execution and delivery by it of this
Agreement and the consummation by it of the transactions
contemplated by this Agreement have been duly authorized by all
necessary corporate action on its part, (iii) this Agreement has
been duly executed and delivered by it and constitutes the valid
and binding obligation of it, enforceable against it in
accordance with its terms, (iv) it has delivered to each of ALC
and TI a true and correct copy of each of its Certificate of
Incorporation and Bylaws as in effect on the date hereof, (v) the
execution and delivery of this Agreement by it does not, and the
consummation by it of the transactions contemplated by this
Agreement will not, conflict with or result or in a violation of,
or default under (with or without notice or lapse of time or
both), any provision of its Certificate of Incorporation or
Bylaws, and (vi) it has engaged in no other business activities
and has conducted its operations only as contemplated hereby.
ARTICLE IV
COVENANTS
Section 4.1 No Solicitation. From and after the date
hereof until the earlier of the termination of this Agreement in
accordance with Article VI and the Effective Time:
(a) Neither ALC nor TI shall, directly or indirectly,
through any officer, director, employee, representative or agent
of it or any of its Subsidiaries, (i) solicit, initiate, or
encourage any inquiries or proposals that constitute, or could
reasonably be expected to lead to, a proposal or offer for a
merger, consolidation, business combination, sale of substantial
assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transactions
involving it or any of its Subsidiaries, other than the
transactions contemplated by this Agreement (any of the foregoing
inquiries or proposals being referred to in this Agreement as an
"ACQUISITION PROPOSAL"), (ii) engage in negotiations or
discussions concerning, or provide any non-public information to
any person or entity relating to, any Acquisition Proposal, or
(iii) agree to, approve or recommend any Acquisition Proposal;
provided, however, that nothing contained in this Agreement shall
24
prevent it or its Board from (A) furnishing non-public
information to, or entering into discussions or negotiations
with, any person or entity in connection with an unsolicited bona
fide written Acquisition Proposal by such person or entity or
recommending an unsolicited bona fide written Acquisition
Proposal to its stockholders, if and only to the extent that (1)
its Board believes in good faith (after consultation with its
financial advisor, and based upon the written opinion of such
financial advisor) that such Acquisition Proposal would, if
consummated, result in a transaction (an "ACQUISITION
TRANSACTION") more favorable to its stockholders from a financial
point of view than the transaction contemplated by this Agreement
(any such more favorable Acquisition Transaction being referred
to in this Agreement as a "Superior Proposal") and its Board
determines in good faith based on a written opinion of outside
legal counsel that such action is necessary for it to comply with
its fiduciary duties to stockholders under applicable law and (2)
prior to furnishing such non-public information to, or entering
into discussions or negotiations with, such person or entity, its
Board receives from such person or entity an executed
confidentiality agreement with terms no more favorable to such
party than those contained in the respective Confidentiality
Agreements dated March 1 and March 4, 1996 between ALC and TI
("CONFIDENTIALITY AGREEMENT"); or (B) taking any position with
regard to an Acquisition Proposal pursuant to Rules 14d-9 and
14e-2 under the Exchange Act which is consistent with the advice
of counsel concerning its Board's fiduciary duties under
applicable law with respect to a tender offer commenced by a
third party (other than by public announcement alone).
(b) Each of ALC and TI shall notify the other as soon as
practicable upon receipt by it (or its advisors) of any
Acquisition Proposal or any request for non-public information in
connection with an Acquisition Proposal or for access to its
properties, books or records by any person or entity. Such
notice shall be made orally and in writing and shall indicate in
reasonable detail the identity of the offeror and the terms and
conditions of such proposal, inquiry or contact.
Section 4.2 Stockholder Approvals. As promptly as
practicable following the execution and delivery of this
Agreement, unless this Agreement shall have been previously
terminated in accordance with Article VI, each of ALC and TI
shall submit this Agreement and the ALC Merger (in the case of
ALC) and the TI Merger (in the case of TI) to its stockholders
for approval and adoption at a meeting of its stockholders called
for such purpose (the "ALC SHAREHOLDERS MEETING" and "TI
STOCKHOLDERS MEETING", respectively). Unless this Agreement
shall have been previously terminated in accordance with Article
VI and subject to Section 4.1, (i) the ALC Board shall recommend
that the shareholders of ALC vote to approve and adopt this
Agreement and the ALC Merger and shall use its best efforts to
25
solicit and secure from its shareholders their approval and
adoption of this Agreement and the ALC Merger, and (ii) the TI
Board shall recommend that the stockholders of TI vote to approve
and adopt this Agreement and the TI Merger and shall use its best
efforts to solicit and secure from its stockholders their
approval and adoption of this Agreement and the TI Merger.
Section 4.3 Conduct of Business. During the period from
the date of this Agreement and continuing until the earlier of
the termination of this Agreement in accordance with Article VI
and the Effective Time, each of ALC and TI agrees as to itself
and its Subsidiaries (except (subject to the provisions of
Article IV other than this Section 4.3) to the extent provided in
its Disclosure Letter and except to the extent that the other
shall otherwise consent in writing), to carry on its business in
the usual, regular and ordinary course in substantially the same
manner as heretofore conducted, to pay its debts and taxes when
due subject to good faith disputes over such debts or taxes, to
pay or perform its other obligations when due, and, to use all
reasonable efforts consistent with past practices and policies to
preserve intact its present business organization, keep available
the services of its present officers and key employees and
preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others having business
dealings with it, to the end that its goodwill and ongoing
business be substantially unimpaired at the Effective Time.
Except as expressly contemplated by this Agreement, and not in
limitation of the foregoing, during the aforesaid period each of
ALC and TI shall (and shall cause its Subsidiaries to), except
(subject to the provisions of Article IV other than this Section
4.3) as otherwise provided in its Disclosure Letter or except as
approved in writing by the other party:
(a) preserve and maintain its corporate existence and all
of its rights, privileges and franchises reasonably necessary or
desirable in the normal conduct of its business;
(b) not acquire any stock or other interest in, nor (except
in the ordinary course of business) purchase any assets of, any
corporation, partnership, association or other business
organization or entity or any division thereof (except any stock
or assets distributed to it or any of its Subsidiaries as part of
any bankruptcy or other creditor settlement or pursuant to a plan
of reorganization), nor agree to do any of the foregoing;
(c) not sell, lease, assign, transfer or otherwise dispose
of any of its assets (including, without limitation, patents,
trade secrets or licenses), nor create any mortgage, security
interest or other lien on any of its assets, except as permitted
by this Agreement or in the ordinary course of business and
except that it and each of its Subsidiaries may sell or otherwise
26
dispose of any assets which are held for disposition as of the
date hereof or are obsolete;
(d) not incur any indebtedness for borrowed money or any
obligation under any guarantee or "make whole" or capital support
agreement or arrangement, other than as a result of borrowings or
drawdowns, the issuance of letters of credit for its account and
the incurrence of interest, letter of credit reimbursement
obligations and other obligations incurred in the ordinary course
of business consistent with past practice;
(e) not (i) alter, amend or repeal any provision of its
Articles or Certificate of Incorporation or Bylaws, (ii) change
the number of its directors (other than as a result of the death,
retirement or resignation of a director), (iii) except in the
ordinary course of its business, form or acquire any Subsidiaries
not existing as of the date of this Agreement, (iv) except in the
ordinary course of its business, enter into, modify or terminate
any material contracts or agreement to which it is a party or
agree to do so, (v) modify any Employment Agreement, or (vi)
declare, pay, commit to or incur any obligation of any kind for
the payment of any bonus, additional salary or compensation or
retirement, termination, welfare or severance benefits payable or
to become payable to any of its employees or such other persons,
except in any such case for obligations incurred in the ordinary
course of business and consistent with past practice and such
matters as are required pursuant to the terms of any existing
Employment Agreement or Benefit Plan;
(f) maintain its books, accounts and records in the usual,
ordinary and regular manner and in material compliance with all
applicable laws;
(g) pay and discharge all material federal, state, local
and foreign taxes imposed upon it or upon its income or profits,
or upon any property belonging to it, prior to the date on which
penalties attach thereto, except to the extent that it is
currently contesting, in good faith and by proper proceedings,
the payment of such taxes and it maintains appropriate reserves
with respect thereto;
(h) use commercially reasonable efforts to meet its
obligations under all material contracts, agreements and
instruments to which it is a party, and not become in default
thereunder which would constitute a Material Adverse Effect;
(i) use commercially reasonable efforts to maintain its
business and assets in good repair, order and condition,
reasonable wear and tear excepted, and to maintain insurance upon
such business and assets at least comparable in amount and kind
to that in effect on the date hereof;
27
(j) use commercially reasonable efforts to maintain its
present relationships and goodwill with suppliers, brokers,
manufacturers, representatives, distributors, customers and
others having business relations with it (provided that it may
pursue overdue accounts and otherwise exercise lawful remedies in
its customary fashion);
(k) carry on and operate its business in, and only in, the
usual, regular and ordinary course in substantially the same
manner as heretofore conducted and use its commercially
reasonable efforts to cause its representations and warranties
set forth in this Agreement and in any Ancillary Document to be
true and correct, in all respects, on and as of the Effective
Time, subject only to changes in the ordinary course of business;
(l) not declare, set aside, make or pay any dividends or
other distributions with respect to its capital stock except for
regular cash dividends not to exceed $.13 per share of ALC Common
Stock per quarter or $.375 per share of TI Common Stock per
quarter and regular cash dividends on shares of TI Series E
Cumulative Preferred Stock, or purchase or redeem any shares of
its capital stock except, in the case of TI, share of TI Series E
Cumulative Preferred Stock, or agree to take any such action;
(m) not authorize or make any capital expenditure otherwise
than in the ordinary course of business;
(n) not increase the number of shares authorized or issued
and outstanding of its capital stock, nor grant or make any
pledge, option, warrant, call, commitment, right or agreement of
any character relating to its capital stock, nor issue or sell
any shares of its capital stock or securities convertible into
such capital stock, or any bonds, promissory notes, debentures or
other corporate securities or become obligated so to sell or
issue any such securities or obligations, except, in any case,
issuance of shares of ALC Common Stock or TI Common Stock
pursuant to (i) the exercise of options, warrants or other rights
outstanding as of the date hereof and referred to in Sections
3.1(b) or (c), (ii) the purchase, designation or award of shares
under the ALC Stock Acquisition Retention Plan, (iii) the grant
of options or awards under the ALC Stock Plans or the TI Stock
Plans to newly-hired employees in amounts consistent with
policies for such grants in effect on the date hereof, (iv) the
grant of options to acquire not more than 1,000,000 shares of ALC
Common Stock in the aggregate pursuant to the ALC Stock Plans,
(v) the issuance of shares of ALC Common Stock pursuant to ALC's
1996 Non-Employee Director Stock Option Plan, (vi) the issuance
of shares of TI Common Stock pursuant to the TI ESPP, or (vii)
the grant of options to acquire not more than 700,000 shares of
TI Common Stock in the aggregate pursuant to the TI Stock Plans.
28
Section 4.4 Access to Information. Upon reasonable
notice, each of ALC and TI shall (and shall cause its
Subsidiaries to) (i) afford to the officers, employees,
accountants, counsel and other representatives of the other,
access, during normal business hours during the period prior to
the earlier of the termination of this Agreement and the
Effective Time, to all its properties, books, contracts,
commitments, records, officers, employees, accountants,
accountants' work papers, correspondence and affairs, and (ii)
cause its and their officers and employees to furnish to the
other and its authorized representatives any and all financial,
technical and operating data and other information pertaining to
its businesses and those of its Subsidiaries as the other shall
from time to time reasonably request. Each party will hold any
such information which is subject to the Confidentiality
Agreement in accordance with and subject to the restrictions
contained in the Confidentiality Agreement. No information or
knowledge obtained in any investigation pursuant to this Section
4.4 shall affect or be deemed to modify any representation or
warranty contained in this Agreement or the conditions to the
obligations of the parties to consummate the Combination.
Section 4.5 Legal Conditions to the Combination. Each of
the parties hereto will take all reasonable actions necessary to
comply promptly with all legal requirements which may be imposed
on it with respect to the Combination (which actions shall
include, without limitation, furnishing all information required
under the HSR Act and in connection with approvals of or filings
with any other Governmental Entity) and will promptly cooperate
with and furnish information to each other in connection with any
such requirements imposed upon any of them or any of their
Subsidiaries in connection with the Combination. Each of the
parties hereto will, and will cause its Subsidiaries to, take all
reasonable actions necessary to obtain (and will cooperate with
each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or
other public third party, required to be obtained or made by any
of the parties hereto or any of their Subsidiaries in connection
with the Combination or the taking of any action contemplated
thereby or by this Agreement.
Section 4.6 Public Announcements. Neither ALC nor TI
shall make any press release or other written public statement or
publicly deliver any formally prepared oral statement concerning
the matters covered by this Agreement without the approval of the
other, except as required by law or applicable regulation, and
each shall in all events use its best efforts to permit such
other parties an opportunity to review and comment upon any such
release or statement prior to dissemination.
Section 4.7 Tax-Free Reorganization. The parties hereto
shall each use its best efforts to cause each of the ALC Merger
29
and the TI Merger to be treated either as a reorganization within
the meaning of Section 368(a) of the Code or as a non-recognition
exchange of stock pursuant to Section 351 of the Code.
Section 4.8 Pooling Accounting. The parties hereto shall
each use its best efforts to cause the business combination to be
effected by the Combination to be accounted for as a pooling of
interests. In particular, but without limitation of the
foregoing, each party will take all remedial and other actions
that are reasonably necessary or advisable (including, if
necessary, the sale of treasury stock by such party) in order to
ensure such accounting treatment. ALC and TI shall each use all
commercially reasonable efforts to cause its Rule 145 Affiliates
(as hereinafter defined) not to take any action that would
adversely affect the ability of Newco to account for the business
combination to be effected by the Combination as a pooling of
interests.
Section 4.9 Affiliate Agreements. Within two weeks
following the date of this Agreement, each of ALC and TI will
provide the other with a list of those persons who are, in its
reasonable judgment after review by its independent counsel,
"affiliates" of it within the meaning of Rule 145 promulgated
under the Securities Act ("RULE 145") (each such person who is an
"affiliate" within the meaning of Rule 145 is referred to herein
as a "RULE 145 AFFILIATE"). Each of ALC and TI shall provide the
other with such information and documents as the other shall
reasonably request for purposes of reviewing such list and shall
notify the other in writing regarding any change in the identity
of its Rule 145 Affiliates prior to the Closing Date. Each of
ALC and TI shall use its commercially reasonable efforts to
deliver or cause to be delivered to the other prior to the
Effective Time from each of its Rule 145 Affiliates, an executed
Affiliate Agreement, in substantially the form attached hereto as
Annex D (each an "AFFILIATE AGREEMENT"). Newco shall be entitled
to place appropriate legends on the certificates evidencing any
Newco Common Stock to be received by such Rule 145 Affiliates
pursuant to the terms of this Agreement, and to issue appropriate
stop transfer instructions to the transfer agent for Newco Common
Stock, consistent with the terms of the Affiliate Agreements.
Section 4.10 Representations, Covenants and Conditions;
Further Assurances.
(a) The parties hereto will each use its commercially
reasonable efforts (i) to take, and to cause their respective
Subsidiaries to take, all actions necessary to render accurate as
of the Effective Time their respective representations and
warranties contained herein, (ii) to refrain, and to cause their
respective Subsidiaries to refrain, from taking any action which
would render any such representation or warranty inaccurate in
any material respect as of such time and (iii) to perform or
30
cause to be satisfied, and to cause their respective Subsidiaries
to perform or cause to be satisfied, each covenant or condition
to be performed or satisfied by them.
(b) In addition to the provisions of Section 4.5 hereof and
in furtherance thereof, upon the terms and subject to the
conditions hereof, each of the parties hereto shall use all
commercially reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective
as promptly as practicable the transactions contemplated by this
Agreement, to obtain in a timely manner all necessary waivers,
consents and approvals and to effect all necessary registrations
and filings, and to otherwise satisfy or cause to be satisfied
all conditions precedent to its obligations under this Agreement.
Without limiting the generality of the foregoing, each of the
parties agrees to reasonably engage in discussions and
negotiations and provide information to any governmental
authority with jurisdiction over the enforcement of any
applicable antitrust laws, in a reasonable effort to address any
concerns on the part of any such authority regarding the legality
under any antitrust law of the Combination. Notwithstanding the
foregoing, nothing in this Agreement shall be deemed to create
any obligation of ALC or TI to agree to divest, abandon, license
or take similar action with respect to any assets (tangible or
intangible) of ALC, TI or Newco.
Section 4.11 Stock Plans. (a) Prior to the Effective
Time, ALC shall take such actions as may be necessary such that
at the Effective Time each option (an "ALC OPTION") to purchase a
share of ALC Common Stock outstanding pursuant to the ALC Stock
Plans, whether or not then exercisable, shall become an option to
purchase, on the same terms and conditions (including per share
exercise price), a number of shares of Newco Common Stock equal
to the number of shares of ALC Common Stock subject to such ALC
Option. At or prior to the Effective Time, ALC shall make all
necessary arrangements with respect to the applicable ALC Stock
Plans to permit the assumption of the unexercised ALC Options by
Newco pursuant to this Section 4.11; provided, however, that such
arrangements shall not include any change in the terms of the
applicable ALC Stock Plans if such change would, in the opinion
of ALC's independent public accountants, have an adverse effect
on Newco's ability to account for the Combination as a pooling of
interests for financial reporting purposes.
(b) Prior to the Effective Time, ALC shall take such
actions as may be necessary such that at the Effective Time
shares of ALC Common Stock issuable pursuant to awards ("ALC
AWARDS") under the ALC Performance Share Plan for Key Employees
and each right to purchase or otherwise acquire or to designate
shares of ALC Common Stock pursuant to the ALC Stock Acquisition
and Retention Plan ("ALC RIGHTS"), whether or not then issuable
31
or exercisable, shall become an award or a right to purchase or
otherwise acquire or to designate, on the same terms and
conditions (including per share price), a number of shares of
Newco Common Stock equal to the number of shares of ALC Common
Stock subject to such ALC Award or ALC Right. At or prior to the
Effective Time, ALC shall make all necessary arrangements with
respect to the applicable ALC Stock Plans to permit the
assumption of the ALC Rights and ALC Awards by Newco pursuant to
this Section 4.11; provided, however, that such arrangements
shall not include any change in the terms of the applicable ALC
Stock Plans if such change would, in the opinion of ALC's
independent public accountants, have an adverse effect on Newco's
ability to account for the Combination as a pooling of interests
for financial reporting purposes.
(c) Prior to the Effective Time, TI shall take such actions
as may be necessary such that at the Effective Time each right to
purchase shares of TI Common Stock pursuant to the TI ESPP ("TI
RIGHTS"), whether or not then issuable or exercisable, shall be
converted into and become rights with respect to shares of Newco
Common Stock. At the Effective Time, (i) each TI Right assumed
by Newco shall relate solely to shares of Newco Common Stock,
(ii) the number of shares of Newco Common Stock subject to each
TI Right shall be equal to the number of shares of Newco Common
Stock into which shares of TI Common Stock subject to such TI
Right would have been converted by virtue of the TI Merger in
accordance with Article II had such share of TI Common Stock been
outstanding at the Effective Time, and (iii) the per share price
for each share of Newco Common Stock subject to an TI Right shall
be equal to (y) the price for the share of Newco Common Stock
that could otherwise be acquired pursuant to such TI Right
divided by (z) the TI Exchange Ratio, rounded up to the nearest
cent. At or prior to the Effective Time, TI shall make all
necessary arrangements with respect to the TI ESPP to permit the
assumption of the TI Rights by Newco pursuant to this Section
4.11; provided, however, that such arrangements shall not include
any change in the terms of the TI ESPP if such change would, in
the opinion of TI's independent public accountants, have an
adverse effect on Newco's ability to account for the Combination
as a pooling of interests for financial accounting purposes.
(d) Prior to the Effective Time, TI shall take such actions
as may be necessary such that at the Effective Time each option
(an "TI OPTION") to purchase a share of TI Common Stock
outstanding pursuant to the TI Stock Plans, whether or not then
exercisable, shall be converted into and become rights to
purchase shares of Newco Common Stock. At the Effective Time,
(i) each TI Option assumed by Newco may be exercised solely for
shares of Newco Common Stock, (ii) the number of shares of Newco
Common Stock subject to each TI Option shall be equal to the
number of shares of Newco Common Stock into which shares of TI
Common Stock subject to such TI Option would have been converted
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by virtue of the TI Merger in accordance with Article II, had
such share of TI Common Stock been outstanding at the Effective
Time, and (iii) the per share exercise price for each such TI
Option shall be equal to (y) the exercise price for the share of
TI Common Stock otherwise purchasable pursuant to such TI Option
divided by (z) the TI Exchange Ratio, rounded up to the nearest
cent. At or prior to the Effective Time, TI shall make all
necessary arrangements with respect to the applicable TI Stock
Plans to permit the assumption of the unexercised TI Options by
Newco pursuant to this Section 4.11; provided, however, that such
arrangements shall not include any change in the terms of the
applicable TI Stock Plans if such change would, in the opinion of
TI's independent public accountants, have an adverse effect on
TI's ability to account for the Combination as a pooling of
interests for financial accounting purposes.
(e) Effective at the Effective Time, Newco shall assume
each ALC Option, ALC Right, ALC Award, TI Option and TI Right
(collectively, the "DERIVATIVE SECURITIES") in accordance with
the terms under which it was issued and any applicable agreement
by which it is evidenced. At or prior to the Effective Time,
Newco shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Newco Common Stock for
delivery upon exercise of Derivative Securities assumed by it in
accordance with this Section 4.11. As soon as practicable after
the Effective Time, Newco shall file a registration statement on
Form S-3 or Form S-8, as the case may be (or any successor or
other appropriate forms), or another appropriate form with
respect to the shares of Newco Common Stock subject to such
Derivative Securities, and shall use its commercially reasonable
efforts to maintain the effectiveness of such registration
statement (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such Derivative
Securities remain outstanding.
(f) As soon as practicable after the Effective Time, Newco
shall deliver to each holder of Derivative Securities an
appropriate notice setting forth such holder's rights pursuant
thereto and such Derivative Security shall continue in effect on
the same terms and conditions (including further anti-dilution
provisions, and subject to the adjustments required by this
Section 4.11 after giving effect to the Combination). Newco
shall comply with the terms of all such Derivative Securities and
ensure, to the extent required by, and subject to the provisions
of, any applicable ALC Stock Plan or TI Stock Plan that
Derivative Securities which qualified for special tax treatment
prior to the Effective Time continue to so qualify after the
Effective Time.
(g) Approval and adoption of this Agreement by the
shareholders of ALC and the stockholders of TI shall constitute,
33
as an integral part of the Combination, ratification of the ALC
Stock Plans and the TI Stock Plans by the shareholders of Newco.
Section 4.12 Indemnification; Insurance. (a) ALC shall,
and from and after the Effective Time Newco shall, indemnify,
defend and hold harmless each person who is now, or has been at
any time through the date of this Agreement or who becomes prior
to the Effective Time, an officer, director or employee of ALC or
any of its Subsidiaries (the "ALC INDEMNIFIED PARTIES") against
(i) all losses, claims, damages, costs, expenses, liabilities or
judgments or amounts that are paid in settlement with the
approval of the indemnifying party (which approval shall not be
unreasonably withheld) of or in connection with any claim,
action, suit, proceeding or investigation based in whole or in
part on or arising in whole or in part out of the fact that such
person is or was a director, officer or employee of ALC or any of
its Subsidiaries or is or was a plan fiduciary serving at the
request of ALC or any of its Subsidiaries, whether pertaining to
any matter existing or occurring at or prior to the Effective
Time and whether asserted or claimed prior to, or at or after the
Effective Time ("ALC INDEMNIFIED LIABILITIES") and (ii) all ALC
Indemnified Liabilities based in whole or in part on, or arising
in whole or in part out of, or pertaining to this Agreement or
the transactions contemplated hereby or any actual or proposed
Alternative Transaction (as hereinafter defined), whether
proposed or occurring as of the date of this Agreement, prior to
such date or hereafter, in each case to the full extent a
corporation is permitted under the PBCL or the DGCL, as
applicable, to indemnify its own directors, officers and
employees, as the case may be (and Newco will pay expenses in
advance of the final disposition of any such action or proceeding
to each ALC Indemnified Party to the full extent permitted by law
upon receipt of any undertaking contemplated by Section 1745 of
the PBCL or Section 145 of the DGCL, as applicable). Without
limiting the foregoing, in the event that any such claim, action,
suit, proceeding or investigation is brought against any ALC
Indemnified Party (whether arising before or after the Effective
Time), (i) the ALC Indemnified Parties may retain counsel
satisfactory to them and ALC (or them and Newco after the
Effective Time), (ii) ALC (or after the Effective Time, Newco)
shall pay all reasonable fees and expenses of such counsel for
the ALC Indemnified Parties promptly as statements therefor are
received, and (iii) ALC (or after the Effective Time, Newco) will
use all reasonable efforts to assist in the vigorous defense of
any such matter, provided that neither ALC nor Newco shall be
liable for any settlement of any claim effected without its
written consent, which consent, however, shall not be
unreasonably withheld. Any ALC Indemnified Party wishing to
claim indemnification under this Section 4.12(a), upon learning
of any such claim, action, suit, proceeding or investigation,
shall notify ALC or, after the Effective Time, Newco (but the
failure so to notify shall not relieve ALC or Newco from any
34
liability which it may have under this Section 4.12(a) except to
the extent such failure prejudices such party), and shall deliver
to ALC (or after the Effective Time, Newco) the undertaking
contemplated by Section 1745 of the PBCL or Section 145 of the
DGCL, as applicable. The ALC Indemnified Parties as a group may
retain only one law firm to represent them with respect to each
such matter unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between
the positions of any two or more ALC Indemnified Parties.
(b) TI shall, and from and after the Effective Time Newco
shall, indemnify, defend and hold harmless each person who is
now, or has been at any time through the date of this Agreement
or who becomes prior to the Effective Time, an officer, director
or employee of TI or any of its Subsidiaries (the "TI INDEMNIFIED
PARTIES") against (i) all losses, claims, damages, costs,
expenses, liabilities or judgments or amounts that are paid in
settlement with the approval of the indemnifying party (which
approval shall not be unreasonably withheld) of or in connection
with any claim, action, suit, proceeding or investigation based
in whole or in part on or arising in whole or in part out of the
fact that such person is or was a director, officer or employee
of TI or any of its Subsidiaries or is or was a plan fiduciary
serving at the request of ALC or any of its Subsidiaries, whether
pertaining to any matter existing or occurring at or prior to the
Effective Time and whether asserted or claimed prior to, or at or
after the Effective Time ("TI Indemnified Liabilities") and (ii)
all TI Indemnified Liabilities based in whole or in part on, or
arising in whole or in part out of, or pertaining to this
Agreement or the transactions contemplated hereby or any actual
or proposed Alternative Transaction (as hereinafter defined),
whether proposed or occurring as of the date of this Agreement,
prior to such date or hereafter, in each case to the full extent
a corporation is permitted under the DGCL to indemnify its own
directors, officers and employees, as the case may be (and Newco
will pay expenses in advance of the final disposition of any such
action or proceeding to each TI Indemnified Party to the full
extent permitted by law upon receipt of any undertaking
contemplated by Section 145(e) of the DGCL). Without limiting
the foregoing, in the event that any such claim, action, suit,
proceeding or investigation is brought against any TI Indemnified
Party (whether arising before or after the Effective Time), (i)
the TI Indemnified Parties may retain counsel satisfactory to
them and TI (or them and Newco after the Effective Time), (ii) TI
(or after the Effective Time, Newco) shall pay all reasonable
fees and expenses of such counsel for the TI Indemnified Parties
promptly as statements therefor are received, and (iii) TI (or
after the Effective Time, Newco) will use all reasonable efforts
to assist in the vigorous defense of any such matter, provided
that neither TI nor Newco shall be liable for any settlement of
any claim effected without its written consent, which consent,
however, shall not be unreasonably withheld. Any TI Indemnified
35
Party wishing to claim indemnification under this Section
4.12(b), upon learning of any such claim, action, suit,
proceeding or investigation, shall notify TI or, after the
Effective Time, Newco (but the failure so to notify shall not
relieve TI or Newco from any liability which it may have under
this Section 4.12(b) except to the extent such failure prejudices
such party), and shall deliver to ALC (or after the Effective
Time, Newco) the undertaking contemplated by Section 145(e) of
the DGCL. The TI Indemnified Parties as a group may retain only
one law firm to represent them with respect to each such matter
unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the
positions of any two or more TI Indemnified Parties.
(c) For a period of at least five years after the Effective
Time, Newco shall cause to be maintained in effect standard
policies of directors' and officers' liability insurance in an
aggregate coverage amount not less than the greater of the
coverage amounts maintained by ALC and TI respectively as of the
date hereof and including coverage with respect to claims arising
from facts or events which occurred before the Effective Time to
the extent available; provided, that in no event shall Newco be
required to expend, in order to maintain or procure insurance
coverage pursuant to this Section 4.12(c), any amount per annum
in excess of 150 percent of the greater of the per annum amounts
paid by ALC and TI as of the date hereof.
(d) The provisions of this Section 4.12 are intended to be
for the benefit of, and shall be enforceable by, each ALC
Indemnified Party and TI Indemnified Party, and his or her heirs
and representatives.
Section 4.13 TI Rights Plan. TI shall not redeem the
rights issued under the TI Rights Plan (but may delay any
"distribution date" thereon or render the rights inapplicable to
this Agreement, the Combination, or the Stockholder Agreements or
any action permitted hereunder or thereunder) or amend or
terminate the TI Rights Plan prior to the earlier of the
Effective Time or the termination of this Agreement unless
required to do so by a court of competent jurisdiction.
Section 4.14 Notification of Certain Matters. Each of ALC
and TI shall give prompt notice to the other, of (i) the
occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which would be reasonably likely to cause any
representation or warranty of it contained in this Agreement to
be materially untrue or inaccurate and (ii) any failure of it to
materially comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice and
36
further provided that failure to give such notice shall not be
treated as a breach of covenant for the purposes of Section
6.1(g)(ii) unless the failure to give such notice results in
material prejudice to the other party.
Section 4.15 Formation of Merger Subs. Prior to the
Effective Time, ALC shall cause ALC Merger Sub to be incorporated
under the laws of the Commonwealth of Pennsylvania and TI shall
cause TI Merger Sub to be incorporated under the laws of the
State of Delaware, in each case with corporate powers and
purposes limited solely to effecting the ALC Merger and TI
Merger, respectively, and Newco shall subscribe to and become the
sole holder of outstanding capital stock of each of ALC Merger
Sub and TI Merger Sub. Unless this Agreement shall have been
previously terminated in accordance with Article VI, Newco, as
sole stockholder of ALC Merger Sub and TI Merger Sub, shall,
prior to the Effective Time, consent in writing to the approval
and adoption of this Agreement and the ALC Merger and the TI
Merger, and, subject to the terms of this Agreement, shall
otherwise cause ALC Merger Sub and TI Merger Sub to take such
action as is necessary or appropriate to effectuate the ALC
Merger and the TI Merger, respectively, including entering into
and becoming a party to this Agreement.
Section 4.16 Plan Documents. Each of ALC and TI will
furnish to the other, on or before April 25, 1996, true and
complete copies of the documents evidencing its Plans, or setting
forth the terms thereof, including, without limitation, any trust
instruments and/or insurance contracts, if any, forming a part
thereof, and all amendments thereto.
Section 4.17 Newco Matters. As soon as is practicable
after the execution and delivery of this Agreement, the parties
hereto will take all action necessary or appropriate to cause
Newco's name to be changed to "Allegheny Teledyne Incorporated"
and to cause its directors and officers to consist of those
persons identified in Annex C attached hereto.
ARTICLE V
CONDITIONS TO COMBINATION
Section 5.1 Conditions to Each Party's Obligation To
Effect the Combination. The respective obligations of each party
to this Agreement to effect the Combination shall be subject to
the satisfaction prior to the Closing Date of the following
conditions:
(a) Stockholder Approvals. This Agreement and the ALC
Merger shall have been approved and adopted by the affirmative
vote of at least a majority of the votes cast by holders of ALC
37
Common Stock entitled to vote thereon, and this Agreement and the
TI Merger shall have been approved and adopted by the affirmative
vote of the holders of a majority of the outstanding shares of TI
Common Stock.
(b) Governmental and Regulatory Consents. The waiting
period applicable to the consummation of the Combination under
the HSR Act shall have expired or been terminated and, other than
the filings provided for in Section 1.1, all filings required to
be made prior to the Effective Time by Newco, ALC, TI or any of
their respective Subsidiaries with, and all consents, approvals
and authorizations required to be obtained prior to the Effective
Time by Newco, ALC, TI or any of their respective Subsidiaries
from, any Governmental Entity in connection with the execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby shall have been made or
obtained, except failures in the foregoing that do not have a
Material Adverse Effect.
(c) S-4. The S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
(d) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other
legal or regulatory restraint or prohibition preventing the
consummation of the Combination or limiting or restricting in any
material respect Newco's conduct or operation of the businesses
of ALC and TI after the Combination shall have been issued, nor
shall there be any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Combination
(including either the ALC Merger or the TI Merger) which makes
the consummation of the Combination (including either the ALC
Merger or the TI Merger) illegal.
(e) Blue Sky Laws. Newco shall have received all state
securities or "Blue Sky" permits and other authorizations
necessary to issue shares of Newco Common Stock pursuant to the
Combination.
(f) Pooling Letters. Newco shall have received letters
from Ernst & Young LLP and Arthur Andersen LLP, dated the date of
the Joint Proxy Statement, which letters shall be confirmed in
writing at the Effective Time, stating that the business
combination to be effected by the Combination will qualify as a
pooling of interests transaction under generally accepted
accounting principles.
(g) Consents. Each of ALC and TI shall have obtained all
consents required to consummate the transactions contemplated by
this Agreement, including the Combination, and all other consents
38
in connection with the Combination and the other transactions
contemplated hereby, the failure to obtain which would constitute
a Newco Material Adverse Effect.
(h) NYSE. The shares of Newco Common Stock to be issued in
the Combination shall have been approved for listing on the New
York Stock Exchange upon official notice of issuance.
(i) Representations and Warranties. The representations of
Newco set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and
(except to the extent such representations and warranties are
made as of an earlier date, which representations and warranties
shall be true and correct in all material respects at and as of
such date) as of the Closing Date as though made on and as of the
Closing Date, in each case except for changes contemplated by
this Agreement.
(j) Pension Law Changes. No adoption of or amendment to
any statute, no promulgation of or revision to any regulation
issued by the U. S. Department of the Treasury, the U. S.
Department of Labor or by the Pension Benefit Guaranty
Corporation, and no change in a position previously taken by any
one or more of foregoing agencies, shall have been effected or
proposed which has or would have the effect of prohibiting, or of
limiting or restricting in any material respect the merger of any
Pension Plans of ALC and TI or its economic equivalent or would
cause a merger of such Pension Plans or its economic equivalent
to be illegal or impractical.
Section 5.2 Additional Conditions to Obligations of ALC.
The obligation of ALC to effect the ALC Merger is subject to the
satisfaction of each of the following additional conditions, any
of which may be waived in writing exclusively by ALC:
(a) Representations and Warranties of TI. The
representations and warranties of TI set forth in this Agreement
shall be true and correct in all material respects as of the date
of this Agreement and (except to the extent such representations
and warranties are made as of an earlier date, which
representations and warranties shall be true and correct in all
material respects at and as of such date) as of the Closing Date
as though made on and as of the Closing Date, in each case except
for changes contemplated by this Agreement, and ALC shall have
received a certificate signed on behalf of TI by the Chief
Executive Officer and the Chief Financial Officer of TI to such
effect.
(b) Performance of Obligations of TI. TI shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing
Date, and ALC shall have received a certificate signed on behalf
39
of TI by the Chief Executive Officer and the Chief Financial
Officer of TI to such effect.
(c) Tax Opinion. ALC shall have received a written opinion
from Kirkpatrick & Lockhart LLP, counsel to ALC, to the effect
that the ALC Merger will be treated for federal income tax
purposes either as a tax-free reorganization within the meaning
of Section 368(a) of the Code or as a non-recognition exchange of
stock under Section 351 of the Code. In rendering such opinion,
counsel may rely upon representations and certificates of Newco,
ALC, ALC Merger Sub, TI and TI Merger Sub.
(d) Material Adverse Change. Since the date of this
Agreement, there shall have been no changes, occurrences or
circumstances involving the business, results of operations or
financial condition or prospects of TI and any of its
Subsidiaries that constitute a Material Adverse Effect.
Section 5.3 Additional Conditions to Obligation of TI.
The obligation of TI to effect the Combination is subject to the
satisfaction of each of the following additional conditions, any
of which may be waived, in writing, exclusively by TI:
(a) Representations and Warranties of ALC. The
representations and warranties of ALC set forth in this Agreement
shall be true and correct in all material respects as of the date
of this Agreement and (except to the extent such representations
and warranties are made as of an earlier date, which
representations and warranties shall be true and correct in all
material respects at and as of such date) as of the Closing Date
as though made on and as of the Closing Date, in each case except
for changes contemplated by this Agreement, and TI shall have
received a certificate signed on behalf of ALC by the Chief
Executive Officer and the Chief Financial Officer of ALC to such
effect.
(b) Performance Of Obligations of ALC. ALC shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing
Date, and TI shall have received a certificate signed on behalf
of ALC by the Chief Executive Officer and the Chief Financial
Officer of ALC to such effect.
(c) Tax Opinion. TI shall have received the opinion of
Irell & Manella LLP, counsel to TI, to the effect that the TI
Merger will be treated for federal income tax purposes as either
a tax-free reorganization within the meaning of Section 368(a) of
the Code or as a non-recognition exchange of stock under Section
351 of the Code. In rendering such opinion, counsel may rely
upon representations and certificates of Newco, ALC, ALC Merger
Sub, TI and TI Merger Sub.
40
(d) Material Adverse Change. Since the date of this
Agreement, there shall have been no changes, occurrences or
circumstances involving the business, results of operations or
financial condition or prospects of ALC and any of its
Subsidiaries that constitute a Material Adverse Effect.
ARTICLE VI
TERMINATION AND AMENDMENT
Section 6.1 Termination. This Agreement may be
terminated at any time prior to the Effective Time by written
notice by the terminating party to the other party under the
circumstances set forth below:
(a) by mutual written consent of ALC and TI; or
(b) by either ALC or TI if the Merger shall not have been
consummated by September 30, 1996 (provided that the right to
terminate this Agreement under this Section 6.1(b) shall not be
available to any party whose failure to fulfill any material
obligation under this Agreement has been a cause of or has
resulted in the failure of the Combination to occur on or before
such date); or
(c) by either ALC or TI if a court of competent
jurisdiction or other Governmental Entity shall have issued a
nonappealable final order, decree or ruling or taken any other
action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Combination;
or
(d) by ALC or TI, if, at the ALC Shareholders' Meeting or
the TI Stockholders' Meeting (including any adjournment or
postponement), the requisite vote of the shareholders of ALC in
favor of this Agreement and the ALC Merger or the stockholders of
TI in favor of this Agreement and the TI Merger shall not have
been obtained; or
(e) by ALC, if (i) the Board of Directors of TI shall have
withdrawn or modified its recommendation of this Agreement or the
Combination in a manner adverse to consummation of the
Combination or shall have resolved to do any of the foregoing;
(ii) the Board of Directors of TI shall have recommended to the
shareholders of TI an Alternative Transaction (as defined in
Section 6.3(f)); (iii) a tender offer or exchange offer for 15%
or more of the outstanding shares of TI Common Stock is commenced
(other than by ALC or an affiliate of ALC) and the Board of
Directors of TI recommends that the shareholders of TI tender
their shares in such tender or exchange offer, or (iv) for any
reason TI fails to call and hold the TI Shareholders' Meeting by
September 30, 1996, unless such failure is due to the fact that
41
the Registration Statement was not declared effective
sufficiently in advance of such date to enable TI to hold the TI
Shareholders' Meeting by such date; or
(f) by TI, if (i) the Board of Directors of ALC shall have
withdrawn or modified its recommendation of this Agreement or the
Combination in a manner adverse to consummation of the
Combination or shall have resolved to do any of the foregoing;
(ii) the Board of Directors of ALC shall have recommended to the
shareholders of ALC an Alternative Transaction (as defined in
Section 6.3(f)); (iii) a tender offer or exchange offer for 15%
or more of the outstanding shares of ALC Common Stock is
commenced (other than by TI or an affiliate of TI) and the Board
of Directors of ALC recommends that the stockholders of ALC
tender their shares in such tender or exchange offer, or (iv) for
any reason ALC fails to call and hold the ALC Shareholders'
Meeting by September 30, 1996, unless such failure is due to the
fact that the Registration Statement was not declared effective
sufficiently in advance of such date to enable ALC to hold the
ALC Shareholders' Meeting by such date; or
(g) by ALC or TI, if (i) the other has breached any
representation or warranty contained in this Agreement, and such
breach shall not have been cured prior to the Effective Time
(except where such breach would not have a material adverse
effect on the party having made such representation or warranty
and its Subsidiaries taken as a whole and would not constitute a
Newco Material Adverse Effect after giving effect to the
transactions contemplated by this Agreement), or (ii) if there
has been a breach of a covenant or agreement set forth in this
Agreement on the part of the other, which shall not have been
cured within 2 business days following receipt by the breaching
party of written notice of such breach from the other party
(other than those set forth in Section 4.1, as to which there
shall be no cure period).
Section 6.2 Effect of Termination. In the event of
termination of this Agreement as provided in Section 6.1, this
Agreement shall immediately become void and there shall be no
liability or obligation on the part of any party hereto or their
respective officers, directors, stockholders or affiliates
arising from the execution and delivery of this Agreement or its
termination, except as set forth in Section 6.3 and further
except to the extent that such termination results from the
wilful breach by a party of any of its representations,
warranties or covenants set forth in this Agreement; provided
that, the provisions of Section 6.3 of this Agreement shall
remain in full force and effect and survive any termination of
this Agreement.
42
Section 6.3 Fees and Expenses.
(a) Except as set forth in this Section 6.3, all fees and
expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party
incurring such expenses, whether or not the Combination is
consummated; provided, however, that ALC and TI shall share
equally all fees and expenses, other than attorneys' fees,
incurred in relation to the printing and filing of the Joint
Proxy Statement (including any related preliminary materials) and
the Registration Statement (including financial statements and
exhibits) and any amendments or supplements.
(b) TI shall reimburse ALC for out-of-pocket expenses
incurred by ALC relating to the transactions contemplated by this
Agreement prior to termination (including, but not limited to,
fees and expenses of ALC's counsel, accountants and financial
advisors), upon the termination of this Agreement by ALC pursuant
to Section 6.1(d) as a result of the failure to receive the
requisite vote for approval of this Agreement and the TI Merger
by the stockholders of TI at the TI Stockholders' Meeting, or
pursuant to Section 6.1(e) or Section 6.1(g), and ALC shall
reimburse TI for out-of-pocket expenses incurred by TI relating
to the transactions contemplated by this Agreement prior to
termination (including, but not limited to, fees and expenses of
TI's counsel, accountants and financial advisors), upon the
termination of this Agreement by TI pursuant to Section 6.1(d) as
a result of the failure to receive the requisite vote for
approval of this Agreement and the ALC Merger by the shareholders
of ALC at the ALC Shareholders' Meeting, or pursuant to Section
6.1(f) or Section 6.1(g).
(c) (i) TI shall pay ALC a termination fee of $50,000,000
upon the earliest to occur of the following events:
(1) the termination of this Agreement by ALC pursuant to
Section 6.1(e); or
(2) the termination of this Agreement by ALC pursuant to
Section 6.1(g) after a breach by TI of this Agreement; or
(3) the termination of this Agreement by ALC pursuant to
Section 6.1(d) as a result of the failure to receive the
requisite vote for approval of this Agreement and the TI Merger
by the stockholders of TI at the TI Stockholders' Meeting.
(d) (i) ALC shall pay TI a termination fee of $30,000,000
upon the earliest to occur of the following events:
(1) the termination of this Agreement by TI pursuant to
Section 6.1(f); or
43
(2) the termination of this Agreement by TI pursuant to
Section 6.1(g) after a breach by ALC of this Agreement; or
(3) the termination of this Agreement by TI pursuant to
Section 6.1(d) as a result of the failure to receive the
requisite vote for approval of this Agreement and the ALC Merger
by the shareholders of ALC at the ALC Shareholders' Meeting.
(e) The expenses and fees, if applicable, payable pursuant
to Sections 6.3(b), 6.3(c) and 6.3(d) shall be paid in
immediately available funds within one business day after the
first to occur of any of the events described in Section 6.3(b),
6.3(c) and 6.3(d); provided, however, that in no event shall ALC
or TI, as the case may be, be required to pay such expenses and
fees to the other, if, immediately prior to the termination of
this Agreement, the party to receive such expenses and fees was
in material breach of its obligations under this Agreement.
(f) As used in this Agreement, "ALTERNATIVE TRANSACTION"
means either (i) a transaction pursuant to which any person (or
group of persons) (a "THIRD PARTY") other than ALC or TI acquires
more than 15% of the outstanding shares of ALC Common Stock or TI
Common Stock, as the case may be, pursuant to a tender offer or
exchange offer or otherwise (ii) a merger or other business
combination involving ALC or TI pursuant to which any Third Party
acquires more than 15% of the outstanding equity securities of
ALC or TI or the entity surviving such merger or business
combination, (iii) any other transaction pursuant to which any
Third Party acquires control of assets (including for this
purpose the outstanding equity securities of Subsidiaries of ALC
or TI, and the entity surviving any merger or business
combination including any of them) of ALC or TI having a fair
market value (as determined by the Board of Directors of ALC or
TI, as the case may be, in good faith) equal to more than 15% of
the fair market value of all the assets of ALC or TI and its
Subsidiaries taken as a whole immediately prior to such
transaction, or (iv) any public announcement of a proposal, plan
or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
Section 6.4 Amendment. This Agreement may be amended by
the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after
approval of the matters presented in connection with the
Combination by the stockholders of TI, but, after any such
approval, no amendment shall be made which by law requires
further approval by such stockholders without such further
approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of all of the parties
hereto.
44
Section 6.5 Extension; Waiver. At any time prior to the
Effective Time, the parties hereto, by action taken or authorized
by their respective Boards of Directors, may, to the extent
legally allowed, (i) extend the time for the performance of any
of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto by
the other parties hereto and (iii) waive compliance with any of
the agreements or conditions contained herein for their benefit.
Any agreement on the part of a party hereto to any such extension
or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Nonsurvival of Representations, Warranties
and Agreements. None of the representations, warranties and
agreements in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time,
except for the agreements contained in Article II, Sections 6.2,
6.3, the last sentence of Section 6.4 and Article VII, and the
agreements of the Affiliates of ALC and TI delivered pursuant to
Section 4.9. The Confidentiality Agreement shall survive the
execution and delivery of this Agreement.
Section 7.2 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or
mailed by registered certified mail (return receipt requested) to
the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to ALC, to:
Allegheny Ludlum Corporation
1000 Six PPG Place
Pittsburgh, Pennsylvania 15222
Attention: Chairman
45
with a copy to:
Jon D. Walton
Vice President-General Counsel and Secretary
Allegheny Ludlum Corporation
1000 Six PPG Place
Pittsburgh, Pennsylvania 15222
and to:
Ronald D. West
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, Pennsylvania 15222
(b) if to TI, to:
Teledyne, Inc.
2049 Century Park East
Los Angeles, California 90067-3101
Attention: Chairman and Chief Executive Officer
with a copy to:
Judith R. Nelson
General Counsel and Secretary
Teledyne, Inc.
2049 Century Park East
Los Angeles, California 90067-3101
and to:
Edmund M. Kaufman
Irell & Manella LLP
333 South Hope Street
Los Angeles, California 90071-3042
Section 7.3 Interpretation. When a reference is made in
this Agreement to Sections, such reference shall be to a Section
of this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words
"INCLUDE," "INCLUDES" or "INCLUDING" are used in this Agreement
they shall be deemed to be followed by the words "without
limitation." The phrases "THE DATE OF THIS AGREEMENT", "THE DATE
HEREOF," and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to April 1, 1996.
Section 7.4 Knowledge. All references in this Agreement
or any certificate to knowledge of ALC or TI shall mean the
46
knowledge of any officer or officers of such party (but only the
officer executing any such certificate, in the case of a
certificate) and shall reflect reasonable inquiry by such officer
or officers in connection specifically with respect to the
statement made to such knowledge.
Section 7.5 Counterparts. This Agreement may be executed
in two or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when two or
more counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 7.6 Entire Agreement; No Third Party
Beneficiaries. This Agreement (including the documents and the
instruments referred to herein) and the Stockholder Agreements
constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, and, except
for the provisions of Section 4.12, are not intended to confer
upon any person other than the parties hereto any rights or
remedies hereunder.
Section 7.7 Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the State
of Delaware without regard to any applicable conflicts of law.
Section 7.8 Assignment. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
Section 7.9 Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law, or public policy, all other
conditions 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 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 to the
end that transactions contemplated hereby are fulfilled to the
extent possible.
Section 7.10 Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part or any party hereto
in the exercise of any right hereunder shall impair such right or
47
be construed to be a waiver of, or acquiescence in, any breach of
any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
48
IN WITNESS WHEREOF, the parties have caused this Agreement
to be signed by their respective officers, thereunto duly
authorized, as of the date first set forth above.
XYZ/POWER, INC. ALLEGHENY LUDLUM CORPORATION
By:/s/Richard P. Simmons By:/s/Richard P. Simmons
---------------------- ------------------------
Title: President Title: Chairman
TELEDYNE, INC.
By:/s/Donald B. Rice
-------------------
Title: President
49
<PAGE>
ANNEX A
RESTATED CERTIFICATE OF INCORPORATION
OF
ALLEGHENY TELEDYNE INCORPORATED
ONE: The name of the corporation is Allegheny
Teledyne Incorporated (hereinafter referred to as the
"Corporation").
TWO: The address of the Corporation's registered
office in the State of Delaware is 1209 Orange Street, in the
City of Wilmington, County of New Castle, and the name of its
registered agent at such address is The Corporation Trust
Company.
THREE: The purpose of the Corporation is to engage in
any lawful act or activity for which a Corporation may be
organized under the Delaware General Corporation Law.
FOUR: The total number of shares of all classes of
stock which the Corporation shall have authority to issue is
Six Hundred Fifty Million (650,000,000), consisting of Six
Hundred Million (600,000,000) shares of Common Stock, par
value ten cents ($.10) per share (the "Common Stock"), and
Fifty Million (50,000,000) shares of Preferred Stock, par
value ten cents ($.10) per share (the "Preferred Stock"). The
term "Voting Stock" shall hereafter refer to all shares of
capital stock entitled to vote generally in the election of
directors.
A. Common Stock
1. Except where otherwise provided by law, by
this Restated Certificate of Incorporation, or by resolution
of the Board of Directors pursuant to this Article FOUR, the
holders of the Common Stock issued and outstanding shall have
and possess the exclusive right to notice of stockholders'
meetings and the exclusive voting rights and powers of the
capital stock.
2. Subject to any preferential rights of the
Preferred Stock, dividends may be paid on the Common Stock, as
and when declared by the Board of Directors, out of any funds
of the corporation legally available for the payment of such
dividends.
B. Preferred Stock
The Board of Directors is authorized, subject
to any limitations prescribed by law, to provide for the
issuance of shares of Preferred Stock in series, and by filing
a certificate pursuant to the applicable law of the State of
Delaware (such certificate being hereinafter referred to as a
"Preferred Stock Designation"), to establish from time to time
the number of shares to be included in each such series, and
to fix the designation, powers (including but not limited to
voting powers, if any), preferences and rights of the shares
of each such series and any qualifications, limitations or
restrictions thereof. The number of authorized shares of
Preferred Stock may be increased or decreased (but not below
the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the Common
Stock, without a vote of the holders of the Preferred Stock,
or of any series thereof, unless a vote of any such holders is
required pursuant to the terms of any Preferred Stock
Designation.
FIVE: The following provisions are inserted for
the management of the business and the conduct of the affairs
of the Corporation, and for further definition, limitation and
regulation of the powers of the Corporation and of its
directors and stockholders:
A. The business and affairs of the
Corporation shall be managed by or under the direction of
the Board of Directors. In addition to the powers and
authority expressly conferred upon them by statute or by
this Restated Certificate of Incorporation or the Bylaws
of the Corporation, the directors are hereby empowered to
exercise all such powers and do all such acts and things
as may be exercised or done by the Corporation.
B. The Board of Directors may adopt, amend or
repeal the Bylaws of the Corporation.
C. The directors of the Corporation need not
be elected by written ballot unless the Bylaws so
provide.
SIX: The Corporation reserves the right to amend and
repeal any provision contained in this Restated Certificate of
Incorporation in the manner from time to time prescribed by
the laws of the State of Delaware. All rights herein
conferred are granted subject to this reservation.
SEVEN: A director of the Corporation shall not be
personally liable to the Corporation or its stockholders for
monetary damages for any breach of fiduciary duty as a
director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which such
director derived any improper personal benefit. No amendment
to or repeal of this Article SEVEN shall apply to or have any
2
effect on the liability or alleged liability of any director
of the Corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment
or repeal. If the Delaware General Corporation Law is amended
to authorize corporate action further eliminating the personal
liability of directors, then the liability of a director of
the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as
amended. Any repeal or modification of this provision shall
not adversely affect any right or protection of a director of
the Corporation existing at the time of such repeal or
modification.
EIGHT: A. Right to Indemnification. Each person who
was or is made a party or is threatened to be made a party to
or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or
she is or was a director or an officer of the Corporation or
is or was serving at the request of the Corporation as a
director, officer, employee or agent of another Corporation or
of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity
while serving as a director, officer, employee or agent, shall
be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation
to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments,
fines, excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee
in connection therewith; provided, however, that, except as
provided in Section C of this Article EIGHT with respect to
proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection
with a proceeding (or part thereof) initiated by such
indemnitee only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation.
B. Right to Advancement of Expenses. The
right to indemnification conferred in Section A of this
Article EIGHT shall include the right to be paid by the
Corporation the expenses (including attorneys' fees) incurred
in defending any such proceeding in advance of its final
disposition (hereinafter an "advancement of expenses");
provided, however, that, if the Delaware General Corporation
Law requires, an advancement of expenses incurred by an
indemnitee in his or her capacity as a director or officer
(and not in any other capacity in which service was or is
3
rendered by such indemnitee, including, without limitation,
service to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay
all amounts so advanced if it shall ultimately be determined
by final judicial decision from which there is no further
right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses
under this Section B or otherwise. The rights to
indemnification and to the advancement of expenses conferred
in Sections A and B of this Article EIGHT shall be contract
rights and such rights shall continue as to an indemnitee who
has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the indemnitee's heirs,
executors and administrators.
C. Right of Indemnitee to Bring Suit. If a
claim under Section A or B of this Article EIGHT is not paid
in full by the Corporation within sixty (60) days after a
written claim has been received by the Corporation, except in
the case of a claim for an advancement of expenses, in which
case the applicable period shall be twenty (20) days, the
indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit, or in a suit
brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the
indemnitee shall be entitled to be paid also the expense of
prosecuting or defending such suit. In (i) any suit brought
by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a
defense that, and (ii) in any suit brought by the Corporation
to recover an advancement of expenses pursuant to the terms of
an undertaking, the Corporation shall be entitled to recover
such expenses upon a final adjudication that, the indemnitee
has not met any applicable standard for indemnification set
forth in the Delaware General Corporation Law. Neither the
failure of the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that
indemnification of the indemnitee is proper in the
circumstances because the indemnitee has met the applicable
standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has
not met such applicable standard of conduct, shall create a
presumption that the indemnitee has not met the applicable
standard of conduct or, in the case of such a suit brought by
the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to
indemnification or to an advancement of expenses hereunder, or
brought by the Corporation to recover an advancement or
expenses pursuant to the terms of an undertaking, the burden
4
of proving that the indemnitee is not entitled to be
indemnified, or to such advancement of expenses, under this
Article EIGHT or otherwise shall be on the Corporation.
D. Non-Exclusivity of Rights. The rights to
indemnification and to the advancement of expenses conferred
in this Article EIGHT shall not be exclusive of any other
right which any person may have or hereafter acquire under any
statute, the Corporation's Restated Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or
disinterested directors or otherwise.
E. Insurance. The Corporation may maintain
insurance, at its expense, to protect itself and any director,
officer, employee or agent of the Corporation or another
Corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or
not the Corporation would have the power to indemnify such
person against such expense, liability or loss under the
Delaware General Corporation Law.
F. Indemnification of Employees and Agents of
the Corporation. The Corporation may, to the extent
authorized from time to time by the Board of Directors, grant
rights to indemnification and to the advancement of expenses
to any employee or agent of the Corporation to the fullest
extent of the provisions of this Article with respect to the
indemnification and advancement of expenses of directors and
officers of the Corporation.
G. Amendment. Any repeal or modification of
this Article EIGHT shall not change the rights of any officer
or director to indemnification with respect to any action or
omission occurring prior to such repeal or modification.
NINE: The following provisions are inserted for the
definition, limitation and regulation of actions of the
stockholders of the Corporation:
A. Action to be Taken at Stockholder Meetings Only.
Any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly
called annual or special meeting of such stockholders and may
not be effected by the written consent of such stockholders.
B. Calling of Special Meetings. Special meetings of
the stockholders, other than those required by statute, may be
called only by the Board of Directors pursuant to a resolution
approved by a majority of the directors then in office, the
Chairman of the Board or the Chief Executive Officer. The
Board of Directors may postpone, reschedule or cancel any
previously scheduled special meeting.
Only such business shall be conducted at a special
meeting of stockholders as shall have been brought before the
5
meeting pursuant to the Corporation's notice of meeting.
Nominations of persons for election to the Board of Directors
may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the Corporation's
notice of meeting (a) by or at the direction of the Board of
Directors or (b) by any stockholder of the Corporation who is
a stockholder of record at the time of giving of notice as
provided in this Article NINE, Clause (B), who shall be
entitled to vote at the meeting and who complies with the
notice procedures set forth in this Article NINE, Clause (B).
Nominations by stockholders of persons for election to the
Board of Directors may be made at such a special meeting of
stockholders if the stockholder's notice required by Article
NINE, Clause (C) shall be delivered to the Secretary of the
Corporation at the principal executive offices of the
Corporation not earlier than the ninetieth day prior to such
special meeting and not later than the close of business on
the later of the seventy-fifth day prior to such special
meeting or the tenth day following the day on which a public
announcement (as defined in subparagraph (e) of Article NINE,
Clause (C)) is first made of the special meeting and of the
nominees proposed by the Board of Directors to be elected at
such meeting.
C. Notice of Nominations and Action to be Taken at an
Annual Meeting.
(a) Nominations of persons for election to the board of
directors of the Corporation and the proposal of business to
be considered by the stockholders may be made at an annual
meeting of stockholders (i) pursuant to the Corporation's
notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) by any stockholder of the Corporation who
was a stockholder of record at the time of giving of the
notice provided for in this Article NINE, Section (C) who is
entitled to vote at the meeting and who complied with the
notice procedures set forth in this Article NINE, Section (C).
(b) For nominations or other business to be properly
brought before an annual meeting by a stockholder pursuant to
clause (iii) of paragraph (a) of this Article NINE, Section
(C), the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation and such business
must be a proper matter for stockholder action under the
General Corporation Law of the State of Delaware. To be
timely, a stockholder's notice shall be delivered to the
Secretary at the principal executive offices of the
Corporation not less than seventy-five days nor more than
ninety days prior to the first anniversary of the preceding
year's annual meeting; provided, however, that in the event
that the date of the annual meeting is advanced by more than
thirty days or delayed by more than sixty days from such
anniversary date, notice by the stockholder to be timely must
be so delivered not earlier than the ninetieth day prior to
6
such annual meeting and not later than the close of business
on the later of the sixtieth day prior to such annual meeting
or the tenth day following the day on which public
announcement of the date of such meeting is first made. Such
stockholder's notice shall set forth (i) as to each person
whom the stockholder proposes to nominate for election or
reelection as a director all information relating to such
person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")
(including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if
elected); (ii) as to any other business that the stockholder
proposes to bring before the meeting, a brief description of
the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any
financial or other interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf
the proposal is made; and (iii) as to the stockholder giving
the notice and the beneficial owner, if any, on whose behalf
the nomination or proposal is made (1) the name and address of
such stockholder, as they appear on the Corporation's books,
and of such beneficial owner and (2) the class and number of
shares of the Corporation which are owned beneficially and of
record by such stockholder and such beneficial owner.
(c) Notwithstanding anything in the second sentence of
paragraph (b) of this Article NINE, Section (C) to the
contrary, in the event that the number of directors to be
elected to the board of directors of the Corporation is
increased and there is no public announcement naming all of
the nominees for director or specifying the size of the
increased board of directors made by the Corporation at least
eighty-five days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice
required by this Article NINE, Section (C) shall also be
considered timely, but only with respect to nominees for any
new positions created by such increase, if it shall be
delivered to the Secretary at the principal executive offices
of the Corporation not later than the close of business on the
tenth day following the day on which such public announcement
is first made by the Corporation.
(d) Only such persons who are nominated in accordance
with the procedures set forth in this Article NINE,
Section (C) shall be eligible to serve as directors and only
such business shall be conducted at an annual meeting of
stockholders as shall have been brought before the meeting in
accordance with the procedures set forth in this Article NINE,
Section (C). The presiding officer of the meeting shall have
the power and duty to determine whether a nomination or any
business proposed to be brought before the meeting was made in
accordance with the procedures set forth in this Article NINE,
Section (C) and, if any proposed nomination or business is not
7
in compliance with this Article NINE, Section (C), to declare
that such defective proposed business or nomination shall be
disregarded.
(e) For purposes of this Article NINE, Section (C),
"public announcement" shall mean disclosure in a press release
reported by the Dow Jones News Service, Associated Press or a
comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange
Act.
(f) Notwithstanding the foregoing provisions of this
Article NINE, Section (C), a stockholder shall also comply
with all applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to the matters
set forth in this Article NINE, Section (C). Nothing in this
Article NINE, Section (C) shall be deemed to affect any rights
of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the
Exchange Act.
(g) The bylaws of the Corporation may contain additional
provisions not inconsistent with this Article NINE, Clause (C)
regarding nominations of persons for election to the Board of
Directors of the Corporation and the proposal of business to
be transacted by the stockholders. Without limiting the
category of such provisions which would not be inconsistent
with this Article NINE, Clause (C), a provision in the bylaws
of the Corporation which sets forth additional information
which must be provided by a stockholder in the notice required
by this Article NINE, Clause (C) shall not be deemed to be so
inconsistent.
D. Voting. The stockholders shall not have the right
to cumulate their votes in the election of directors.
TEN: (A) Except as otherwise fixed pursuant to the
provisions of Article FOUR hereof relating to the rights of
the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon
liquidation to elect additional directors under specified
circumstances, the number of directors of the Corporation
shall be fixed from time to time by or pursuant to the Bylaws.
The directors, other than those who may be elected by the
holders of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation,
shall be classified, with respect to the time for which they
severally hold office, into three classes: Class I, Class II
and Class III. Each class shall consist, as nearly as may be
possible, of one-third of the whole number of the Board of
Directors. The terms of office of the initial classes of
directors shall be as follows: the Class I Directors shall be
elected to hold office for a term to expire at the first
annual meeting of stockholders thereafter, or until his or her
8
earlier resignation or removal; the Class II Directors shall
be elected to hold office for a term to expire at the second
annual meeting of stockholders thereafter, or until his or her
earlier resignation or removal; and the Class III Directors
shall be elected to hold office for a term to expire at the
third annual meeting of stockholders thereafter, or until his
or her earlier resignation or removal, and in the case of each
class, until their respective successors are duly elected and
qualified. At each annual meeting of stockholders the
directors elected to succeed those whose terms have expired
shall be identified as being of the same class as the
directors they succeed and shall be elected to hold office for
a term to expire at the third annual meeting of stockholders
after their election, or until his or her earlier resignation
or removal, and until their respective successors are duly
elected and qualified.
(B) Except as otherwise fixed pursuant to the provisions
of Article FOUR hereof relating to the rights of the holders
of any class or series of stock having a preference over the
Common Stock as to dividends or upon liquidation to elect
directors:
(a) In case of any increase in the number of directors,
the additional director or directors, and in case of any
vacancy in the Board of Directors due to death, resignation,
removal, disqualification or any other reason, the successors
to fill the vacancies, shall be elected by a majority of the
directors then in office, even though less than a quorum, or
by a sole remaining director.
(b) Directors appointed in the manner provided in
paragraph (a) to newly created directorships resulting from
any increase in the authorized number of directors or any
vacancies on the Board of Directors resulting from death,
resignation, removal, disqualification or any other cause
shall hold office for a term expiring at the next annual
meeting of stockholders at which the term of the class to
which they have been elected expires.
(c) No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent
director.
(C) Except as otherwise fixed pursuant to the provisions
of Article FOUR hereof relating to the rights of the holders
of any class or series of stock having a preference over the
Common Stock as to dividends or upon liquidation to elect
directors, any director or directors may be removed from
office at any time, but only for cause and only by the
affirmative vote of (x) 75% of the Voting Power, voting
together as a single class, or (y) a majority of the Board of
Directors.
9
ELEVEN: In addition to any other considerations which
the Board of Directors, any committee thereof or any
individual director lawfully may take into account in
determining whether to take or refrain from taking corporate
action on any matter, including making or declining to make
any recommendations to the stockholders of the Corporation,
the Board of Directors, any committee thereof or any
individual director may in its, his or her discretion consider
the long term as well as the short term best interests of the
Corporation (including the possibility that these interests
may best be served by the continued independence of the
Corporation), taking into account and weighing as deemed
appropriate the effects of such action on employees,
suppliers, distributors and customers of the Corporation and
its subsidiaries and the effect upon communities in which the
offices or facilities of the Corporation and its subsidiaries
are located and any other factors considered pertinent. This
Article ELEVEN shall be deemed to grant discretionary
authority to the Board of Directors, any committee thereof and
each individual director, and shall not be deemed to provide
to any specific constituency any right to be considered.
TWELVE: In addition to the requirements of (i) law, and
(ii) the other provisions of this Restated Certificate of
Incorporation, the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Common Stock of the
Corporation entitled to vote shall be required for the
adoption or authorization of a Fundamental Change unless the
Fundamental Change has been approved at a meeting of the Board
of Directors by the vote of more than two-thirds of the
incumbent members of the Board of Directors.
As used in this Article Twelve, "Fundamental Change"
shall mean (1) any merger or consolidation of the Corporation
with or into any other corporation, (2) any sale, lease,
exchange, transfer or other disposition, but excluding a
mortgage or any other security device, of all or substantially
all of the assets of the Corporation, (3) any merger or
consolidation of a Significant Shareholder with or into the
Corporation or a direct or indirect subsidiary of the
Corporation, (4) any sale, lease, exchange, transfer or other
disposition to the Corporation or to a direct or indirect
subsidiary of the Corporation of any Common Stock of the
Corporation held by a Significant Shareholder or any other
assets of a Significant Shareholder which, if included with
all other dispositions consummated during the same fiscal year
of the Corporation by the same Significant Shareholder, would
result in dispositions of assets having an aggregate fair
value in excess of five percent of the total consolidated
assets of the Corporation as shown on its certified balance
sheet as of the end of the fiscal year preceding the proposed
disposition, (5) any reclassification of Common Stock of the
Corporation, or any recapitalization involving Common Stock of
the Corporation, consummated within five years after a
Significant Shareholder becomes a Significant Shareholder,
10
whereby the number of outstanding shares of Common Stock is
reduced or any of such shares are converted into or exchanged
for cash or other securities, (6) any dissolution and (7) any
agreement, contract or other arrangement providing for any of
the transactions described in this definition of Fundamental
Change but, notwithstanding anything to the contrary herein,
Fundamental Change shall not include any merger pursuant to
the Delaware General Corporation Law, as amended from time to
time, which does not require a vote of the Corporation's
stockholders for approval.
As used in this Article TWELVE, "Significant Shareholder"
shall mean any person who or which beneficially owns a number
of shares of Common Stock of the Corporation, whether or not
such number includes shares not then outstanding or entitled
to vote, which exceeds a number equal to fifteen percent of
the outstanding shares of Common Stock of the Corporation
entitled to vote, any and all affiliates of such person and
any and all associates and family members of such person or
any such affiliate.
THIRTEEN: Notwithstanding any other provisions of this
Restated Certificate of Incorporation or any provision of law
which might otherwise permit a lesser vote or no vote, but in
addition to any affirmative vote of the holders of any
particular class or series of Voting Stock required by law or
this Restated Certificate of Incorporation, the affirmative
vote of the holders or at least 75% of the Voting Power,
voting together as a single class, shall be required to alter,
amend, supplement or repeal, or to adopt any provision
inconsistent with the purpose or intent of, Articles NINE,
TEN, ELEVEN, TWELVE or THIRTEEN; provided, however, that no
amendment of Article TWELVE shall apply to any person who is
an Interested Shareholder at the time of the adoption of such
amendment.
11
<PAGE>
ANNEX B
..............................................................
ALLEGHENY TELEDYNE INCORPORATED
AMENDED AND RESTATED BYLAWS
..............................................................
<PAGE>
TABLE OF CONTENTS
--------------------
Page
-----
ARTICLE I OFFICES . . . . . . . . . . . . 1
Section 1. Registered Office . 1
Section 3. Other Offices . . . 1
ARTICLE II MEETINGS OF STOCKHOLDERS . . . 1
Section 1. Place of Meetings . 1
Section 2. Annual Meeting . . 1
Section 3. Special Meetings . 1
Section 4. Notice of Meetings 1
Section 5. Quorum; Adjournment 2
Section 6. Proxies and Voting 2
Section 7. Stock List . . . . 2
ARTICLE III BOARD OF DIRECTORS . . . . . 3
Section 1. Duties and Powers . 3
Section 2. Number and Term of
Office . . . . . . . . . . 3
Section 3. Vacancies . . . . . 4
Section 4. Meetings . . . . . 4
Section 5. Quorum . . . . . . 5
Section 6. Actions of Board
Without a Meeting . 5
Section 7. Meetings by Means of
Conference Telephone
5
Section 8. Committees . . . . 5
Section 9. Compensation . . . 6
Section 10. Removal . . . . . 6
ARTICLE IV OFFICERS . . . . . . . . . . . 6
i
Page
-----
Section 1. General . . . . . . 6
Section 2. Election; Term of
Office . . . . . . . . . . 6
Section 3. Chairman of the
Board . . . . . . . . . . 6
Section 4. Chief Executive
Officer . . . . . . . . . 7
Section 5. President . . . . . 7
Section 6. Vice President . . 7
Section 7. Secretary . . . . . 7
Section 8. Assistant
Secretaries . . . . . . . 8
Section 9. Treasurer . . . . . 8
Section 10. Assistant
Treasurers . . . . . . . . 8
Section 11. Other Officers . . 8
ARTICLE V STOCK . . . . . . . . . . . . . 8
Section 1. Form of Certificates
8
Section 2. Signatures . . . . 9
Section 3. Lost Certificates . 9
Section 4. Transfers . . . . . 9
Section 5. Record Date . . . . 9
Section 6. Beneficial Owners . 9
Section 7. Voting Securities
Owned by the Corporation
10
ARTICLE VI NOTICES . . . . . . . . . . . 10
Section 1. Notices . . . . . . 10
Section 2. Waiver of Notice . 10
ARTICLE VII GENERAL PROVISIONS . . . . . 10
ii
Page
-----
Section 1. Dividends . . . . . 10
Section 2. Disbursements . . . 11
Section 3. Corporation Seal . 11
ARTICLE VIII DIRECTORS' LIABILITY AND
INDEMNIFICATION . . . . . . . . . . 11
Section 1. Directors'
Liability. . . . . . . . . 11
Section 2. Right to
Indemnification . . . . . 11
Section 3. Right to Advancement
of
Expenses . . . . . 12
Section 4. Right of Indemnitee
to
Bring Suit . . . . 12
Section 5. Non-Exclusivity of
Rights . . . . . . . . . . 13
Section 6. Insurance . . . . . 13
Section 7. Indemnification of
Employees and
Agents of the Corporation
13
Section 8. Amendment. . . . . 13
ARTICLE IX AMENDMENTS . . . . . . . . . . 13
iii<PAGE>
AMENDED AND RESTATED BYLAWS
OF
ALLEGHENY TELEDYNE INCORPORATED
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of
the Corporation shall be in the City of Wilmington, County of
New Castle, State of Delaware.
Section 2. Corporate Headquarters. The corporate
headquarters of the Corporation shall be in the City of
Pittsburgh, Pennsylvania.
Section 3. Other Offices. The Corporation may also have
offices at such other places both within and without the State
of Delaware as the Board of Directors may from time to time
determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stock-
holders for the election of directors or for any other purpose
shall be held at such time and place, either within or without
the State of Delaware, as shall be designated from time to
time by the Board of Directors or the officer of the
Corporation calling the meeting as authorized by the
Corporation's Certificate of Incorporation and stated in the
notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. Annual Meeting. Each Annual Meeting of
Stockholders shall be held on such date and at such time as
shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting, at which
meetings the stockholders shall elect by a plurality vote a
Board of Directors, and transact such other business as may
properly be brought before the meeting.
Section 3. Special Meetings. Special meetings of the
stockholders, other than those required by statute, may be
called only as provided, and for the purposes specified, in
the Corporation's Certificate of Incorporation.
Section 4. Notice of Meetings. Written notice of the
place, date, and time of all meetings of the stockholders
shall be given not less than ten (10) nor more than sixty (60)
days before the date on which the meeting is to be held, to
each stockholder entitled to vote at such meeting, except as
otherwise provided herein or as required from time to time by
the Delaware General Corporation Law or the Certificate of
Incorporation. The notice of a special meeting shall also
state the purpose or purposes for which the meeting is called.
Section 5. Quorum; Adjournment. At any meeting of the
stockholders, the holders of a majority of all of the shares
of the stock entitled to vote at the meeting, present in
person or by proxy, shall constitute a quorum for all
purposes, unless or except to the extent that the presence of
a larger number may be required by law or the Certificate of
Incorporation. If a quorum shall fail to attend any meeting,
the chairman of the meeting or the holders of a majority of
the shares of stock entitled to vote who are present, in
person or by proxy, may adjourn the meeting to another place,
date, or time without notice other than announcement at the
meeting, until a quorum shall be present or represented.
When a meeting is adjourned to another place, date or
time, written notice need not be given of the adjourned
meeting if the place, date and time thereof are announced at
the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more
than thirty (30) days after the date for which the meeting was
originally noticed, or if a new record date is fixed for the
adjourned meeting, written notice of the place, date, and time
of the adjourned meeting shall be given in conformity
herewith. At any adjourned meeting, any business may be
transacted which might have been transacted at the original
meeting.
Section 6. Proxies and Voting. At any meeting of the
stockholders, every stockholder entitled to vote may vote in
person or by proxy authorized by an instrument in writing
filed in accordance with the procedure established for the
meeting.
Each stockholder shall have one vote for every share of
stock entitled to vote which is registered in his name on the
record date for the meeting, except as otherwise provided
herein or required by law or the Certificate of Incorporation.
All voting, including on the election of directors but
excepting where otherwise provided herein or required by law
or the Certificate of Incorporation, may be by a voice vote;
provided, however, that upon demand therefor by a stockholder
entitled to vote or such stockholder's proxy, or at the
discretion of the chairperson of the meeting, a stock vote
shall be taken. Every stock vote shall be taken by ballots,
each of which shall state the name of the stockholder or proxy
voting and such other information as may be required under the
procedure established for the meeting. Every vote taken by
ballots shall be counted by an inspector or inspectors
appointed by the Board of Directors or the chairperson of the
meeting.
2
All elections shall be determined by a plurality of the
votes cast, and except as otherwise required by law or the
Certificate of Incorporation, all other matters shall be
determined by a majority of the votes cast.
Section 7. Stock List. A complete list of stockholders
entitled to vote at any meeting of stockholders, arranged in
alphabetical order for each class of stock and showing the
address of each such stockholder and the number of shares
registered in such stockholder's name, shall be open to the
examination of any such stockholder, for any purpose germane
to the meeting, during ordinary business hours for a period of
at least ten (10) days prior to the meeting, either at a place
within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held.
The stock list shall also be kept at the place of the
meeting during the whole time thereof and shall be open to the
examination of any such stockholder who is present. This list
shall presumptively determine the identity of the stockholders
entitled to vote at the meeting and the number of shares held
by each of them.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Duties and Powers. The business of the
Corporation shall be managed by or under the direction of the
Board of Directors which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not
by law or by the Certificate of Incorporation or by these
Bylaws directed or required to be exercised or done by the
stockholders.
Section 2. Number and Term of Office. The Board of
Directors shall consist of one (1) or more members. The
number of directors shall be fixed and may be changed from
time to time by resolution duly adopted by a majority of the
directors then in office, except as otherwise provided by law
or the Certificate of Incorporation. Except as provided in
Section 3 of this Article, directors shall be elected by the
holders of record of a plurality of the votes cast at Annual
Meetings of Stockholders. Any director may resign at any time
upon written notice to the Corporation. Directors need not be
stockholders.
The directors, other than those who may be elected by
the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon
liquidation, shall be classified, with respect to the time for
which they severally hold office, into three classes: Class I,
Class II and Class III. Each class shall consist, as nearly
as may be possible, of one-third of the whole number of the
3
Board of Directors. The terms of office of the initial
classes of directors shall be as follows: the Class I
Directors shall be elected to hold office for a term to expire
at the first annual meeting of stockholders thereafter, or
until his or her earlier resignation or removal; the Class II
Directors shall be elected to hold office for a term to expire
at the second annual meeting of stockholders thereafter, or
until his or her earlier resignation or removal; and the Class
III Directors shall be elected to hold office for a term to
expire at the third annual meeting of stockholders thereafter,
or until his or her earlier resignation or removal, and in the
case of each class, until their respective successors are duly
elected and qualified. At each annual meeting of stockholders
the directors elected to succeed those whose terms have
expired shall be identified as being of the same class as the
directors they succeed and shall be elected to hold office for
a term to expire at the third annual meeting of stockholders
after their election, or until his or her earlier resignation
or removal, and until their respective successors are duly
elected and qualified. This paragraph of Article III, Section
2 is also contained in Article TEN, Section (A) of the
Corporation's Certificate of Incorporation, and accordingly,
may be altered, amended or repealed only to the extent and at
the time the comparable Certificate Article is altered,
amended or repealed.
Section 3. Vacancies. Except as otherwise fixed
pursuant to the provisions of Article FOUR of the
Corporation's Certificate of Incorporation relating to the
rights of the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon
liquidation to elect directors:
(a) In case of any increase in the number of directors,
the additional director or directors, and in case of any
vacancy in the Board of Directors due to death, resignation,
removal, disqualification or any other reason, the successors
to fill the vacancies, shall be elected by a majority of the
directors then in office, even though less than a quorum, or
by a sole remaining director, and the director or directors so
chosen shall hold office until the next Annual Meeting or
special meeting of stockholders duly called for that purpose
and until their successors are duly elected and qualified, or
until their earlier resignation or removal.
(b) Directors appointed in the manner provided in
paragraph (a) to newly created directorships resulting from
any increase in the authorized number of directors or any
vacancies on the Board of Directors resulting from death,
resignation, removal, disqualification or any other cause
shall hold office for a term expiring at the next annual
meeting of stockholders at which the term of the class to
which they have been elected expires.
4
(c) No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent
director.
This Article III, Section 3 is also contained in Article
TEN, Section (B) of the Corporation's Certificate of
Incorporation, and accordingly, may be altered, amended or
repealed only to the extent and at the time the comparable
Certificate Article is altered, amended or repealed.
Section 4. Meetings. The Board of Directors of the
Corporation may hold meetings, both regular and special,
either within or without the State of Delaware. The first
meeting of each newly-elected Board of Directors shall be held
immediately following the Annual Meeting of Stockholders and
no notice of such meeting shall be necessary to be given the
newly-elected directors in order legally to constitute the
meeting, provided a quorum shall be present. Regular meetings
of the Board of Directors may be held without notice at such
time and at such place as may from time to time be determined
by the Board of Directors. Special meetings of the Board of
Directors may be called by the Chairman of the Board, the
President or a majority of the directors then in office.
Notice thereof stating the place, date and hour of the meeting
shall be given to each director either by mail not less than
forty-eight (48) hours before the date of the meeting, by
telephone, telegram or facsimile transmission on twenty-
four (24) hours' notice, or on such shorter notice as the
person or persons calling such meeting may deem necessary or
appropriate in the circumstances. Meetings may be held at any
time without notice if all the directors are present or if all
those not present waive such notice in accordance with
Section 2 of Article VI of these Bylaws.
Section 5. Quorum. Except as may be otherwise
specifically provided by law, the Certificate of Incorporation
or these Bylaws, at all meetings of the Board of Directors, a
majority of the directors then in office shall constitute a
quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which
there is a quorum shall be the act of the Board of Directors.
If a quorum shall not be present at any meeting of the Board
of Directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 6. Actions of Board Without a Meeting. Unless
otherwise provided by the Certificate of Incorporation or
these Bylaws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting if all members of the
Board of Directors or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board of Directors or
committee.
5
Section 7. Meetings by Means of Conference Telephone.
Unless otherwise provided by the Certificate of Incorporation
or these Bylaws, members of the Board of Directors of the
Corporation, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of
Directors or such committee by means of a conference telephone
or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this Section 7 shall
constitute presence in person at such meeting.
Section 8. Committees. The Board of Directors may, by
resolution passed by a majority of the directors then in
office, designate one or more committees, each committee to
consist of one or more of the directors of the Corporation.
The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent
or disqualified member at any meeting of any such committee.
In the absence or disqualification of a member of a committee,
and in the absence of a designation by the Board of Directors
of an alternate member to replace the absent or disqualified
member, the member or members thereof present at any meeting
and not disqualified from voting, whether or not such members
constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. Any committee, to the
extent allowed by law and provided in the Bylaw or resolution
establishing such committee, shall have and may exercise all
the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all
papers which may require it. Each committee shall keep
regular minutes and report to the Board of Directors when
required.
Section 9. Compensation. Unless otherwise restricted by
the Certificate of Incorporation or these Bylaws, the Board of
Directors shall have the authority to fix the compensation of
directors. The directors may be paid their expenses, if any,
of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
Section 10. Removal. Any director or directors may be
removed from office only as provided in the Corporation's
Certificate of Incorporation.
ARTICLE IV
OFFICERS
6
Section 1. General. The officers of the Corporation
shall be appointed by the Board of Directors and shall consist
of a Chairman of the Board, a Chief Executive Officer, or a
President, such number of Vice Presidents as the Board of
Directors shall elect from time to time, a Secretary, a
Treasurer (or a position with the duties and responsibilities
of a Treasurer and such other officers and assistant officers
(if any) as the Board of Directors may from time to time
appoint). Any number of offices may be held by the same
person, unless the Certificate of Incorporation or these
Bylaws otherwise provide.
Section 2. Election; Term of Office. The Board of
Directors at its first meeting held after each Annual Meeting
of Stockholders shall elect a Chairman of the Board or a
President, or both, a Secretary and a Treasurer (or a position
with the duties and responsibilities of a Treasurer), and may
also elect at that meeting or any other meeting, such other
officers and agents as it shall deem necessary or appropriate.
Each officer of the Corporation shall exercise such powers and
perform such duties as shall be determined from time to time
by the Board of Directors together with the powers and duties
customarily exercised by such officer; and each officer of the
Corporation shall hold office until such officer's successor
is elected and qualified or until such officer's earlier
resignation or removal. Any officer may resign at any time
upon written notice to the Corporation. The Board of
Directors may at any time, with or without cause, by the
affirmative vote of a majority of directors then in office,
remove any officer.
Section 3. Chairman of the Board. The Chairman of the
Board shall preside at all meetings of the stockholders and
the Board of Directors and shall have such other duties and
powers as may be prescribed by the Board of Directors from
time to time. The Board of Directors may also designate one
of its members as Vice Chairman of the Board. The Vice
Chairman of the Board shall, during the absence or inability
to act of the Chairman of the Board, have the powers and
perform the duties of the Chairman of the Board, and shall
have such other powers and perform such other duties as shall
be prescribed from time to time by the Board of Directors.
Section 4. Chief Executive Officer. The Chief
Executive Officer shall have general charge and control over
the affairs of the Corporation, subject to the Board of
Directors, shall see that all orders and resolutions of the
Board of Directors are carried out, shall report thereon to
the Board of Directors, and shall have such other powers and
perform such other duties as shall be prescribed from time to
time by the Board of Directors.
Section 5. President. The President shall have general
and active management of the business of the Corporation and
shall see that all orders and resolutions of the Board of
7
Directors are carried into effect. The President shall have
and exercise such further powers and duties as may be
specifically delegated to or vested in the President from time
to time by these Bylaws or the Board of Directors. In the
absence of the Chairman of the Board or the Vice Chairman of
the Board (if any) or in the event of the inability of or
refusal to act by the Chairman of the Board or the Vice
Chairman of the Board (if any), or if the Board has not
designated a Chairman or Vice Chairman, the President shall
perform the duties of the Chairman of the Board, and when so
acting, shall have all of the powers and be subject to all of
the restrictions upon the Chairman of the Board.
Section 6. Vice President. In the absence of the
President or in the event of his inability or refusal to act,
the Vice President (or in the event there be more than one
vice president, the vice presidents in the order designated by
the directors, or in the absence of any designation, then in
the order of their election) shall perform the duties of the
President, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President.
The vice presidents shall perform such other duties and have
such other powers as the Board of Directors or the President
may from time to time prescribe.
Section 7. Secretary. The Secretary shall attend all
meetings of the Board of Directors and all meetings of
stockholders and record all the proceedings thereat in a book
or books to be kept for that purpose; the Secretary shall also
perform like duties for the standing committees when required.
The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board
of Directors, and shall perform such other duties as may be
prescribed by the Board of Directors or the President. If the
Secretary shall be unable or shall refuse to cause to be given
notice of all meetings of the stockholders and special
meetings of the Board of Directors, and if there be no
Assistant Secretary, then either the Board of Directors or the
President may choose another officer to cause such notice to
be given. The Secretary shall have custody of the seal of the
Corporation and the Secretary or any Assistant Secretary, if
there be one, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be
attested by the signature of the Secretary or by the signature
of any such Assistant Secretary. The Board of Directors may
give general authority to any other officer to affix the seal
of the Corporation and to attest the affixing by his or her
signature. The Secretary shall see that all books, reports,
statements, certificates and other documents and records
required by law to be kept or filed are properly kept or
filed, as the case may be.
Section 8. Assistant Secretaries. Except as may be
otherwise provided in these Bylaws, Assistant Secretaries, if
there be any, shall perform such duties and have such powers
8
as from time to time may be assigned to them by the Board of
Directors, the President, or the Secretary, and shall have the
authority to perform all functions of the Secretary, and when
so acting, shall have all the powers of and be subject to all
the restrictions upon the Secretary.
Section 9. Treasurer. The Treasurer shall have the
custody of the corporate funds and securities, shall keep
complete and accurate accounts of all receipts and
disbursements of the Corporation, and shall deposit all monies
and other valuable effects of the Corporation in its name and
to its credit in such banks and other depositories as may be
designated from time to time by the Board of Directors. The
Treasurer shall disburse the funds of the Corporation, taking
proper vouchers and receipts for such disbursements. The
Treasurer shall, when and if required by the Board of
Directors, give and file with the Corporation a bond, in such
form and amount and with such surety or sureties as shall be
satisfactory to the Board of Directors, for the faithful
performance of his or her duties as Treasurer. The Treasurer
shall have such other powers and perform such other duties as
the Board of Directors or the President shall from time to
time prescribe.
Section 10. Assistant Treasurers. Except as may be
otherwise provided in these Bylaws, Assistant Treasurers, if
there be any, shall perform such duties and have such powers
as from time to time may be assigned to them by the Board of
Directors, the President, or the Treasurer, and shall have the
authority to perform all functions of the Treasurer, and when
so acting, shall have all the powers of and be subject to all
the restrictions upon the Treasurer.
Section 11. Other Officers. Such other officers as the
Board of Directors may choose shall perform such duties and
have such powers as from time to time may be assigned to them
by the Board of Directors. The Board of Directors may
delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective
duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock
in the Corporation shall be entitled to have a certificate
signed, in the name of the Corporation (i) by the Chairman of
the Board or the President or a Vice President and (ii) by the
Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Corporation, certifying the number
of shares owned by such holder in the Corporation.
Section 2. Signatures. Any or all the signatures on the
certificate may be a facsimile. In case any officer, transfer
9
agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be
such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation
with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors
may direct a new certificate to be issued in place of any
certificate theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate
of stock to be lost, stolen or destroyed. When authorizing
such issue of a new certificate, the Board of Directors may,
in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed
certificate, or such owner's legal representative, to
advertise the same in such manner as the Board of Directors
shall require and/or to give the Corporation a bond in such
sum as it may direct as indemnity against any claim that may
be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these
Bylaws. Transfers of stock shall be made on the books of the
Corporation only by the person named in the certificate or by
such person's attorney lawfully constituted in writing and
upon the surrender of the certificate therefor, which shall be
cancelled before a new certificate shall be issued.
Section 5. Record Date. In order that the Corporation
may determine the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment
thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or
exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty (60) days nor less
than ten (10) days before the date of such meeting, nor more
than sixty (60) days prior to any other action. A
determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board
of Directors may fix a new record date for the adjourned
meeting.
Section 6. Beneficial Owners. The Corporation shall be
entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for
calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any
equitable or other claim to or interest in such share or
10
shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as
otherwise provided by law.
Section 7. Voting Securities Owned by the Corporation.
Powers of attorney, proxies, waivers of notice of meeting,
consents and other instruments relating to securities owned by
the Corporation may be executed in the name of and on behalf
of the Corporation by the Chairman of the Board, the
President, any Vice President or the Secretary and any such
officer may, in the name of and on behalf of the Corporation,
take all such action as any such officer may deem advisable
to vote in person or by proxy at any meeting of security
holders of any corporation in which the Corporation may own
securities and at any such meeting shall possess and may
exercise any and all rights and power incident to the
ownership of such securities and which, as the owner thereof,
the Corporation might have exercised and possessed if present.
The Board of Directors may, by resolution, from time to time
confer like powers upon any other person or persons.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required
by law, the Certificate of Incorporation or these Bylaws, to
be given to any director, member of a committee or stock-
holder, such notice may be given by mail, addressed to such
director, member of a committee or stockholder, at such
person's address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Written notice may also
be given personally or by telegram, facsimile transmission,
telex or cable and such notice shall be deemed to be given at
the time of receipt thereof if given personally or at the time
of transmission thereof if given by telegram, facsimile
transmission, telex or cable.
Section 2. Waiver of Notice. Whenever any notice is
required by law, the Certificate of Incorporation or these
Bylaws to be given to any director, member or a committee or
stockholder, a waiver thereof in writing, signed by the person
or persons entitled to such notice, whether before or after
the time stated therein, shall be deemed equivalent to notice.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock
of the Corporation, subject to the provisions of the
Certificate of Incorporation, if any, may be declared by the
11
Board of Directors at any regular or special meeting or by any
Committee of the Board of Directors having such authority at
any meeting thereof, and may be paid in cash, in property, in
shares of the capital stock or in any combination thereof.
Before payment of any dividend, there may be set aside out of
any funds of the Corporation available for dividends such sum
or sums as the Board of Directors from time to time, in its
absolute discretion, deems proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or
for any proper purpose, and the Board of Directors may modify
or abolish any such reserve.
Section 2. Disbursements. All notes, checks, drafts and
orders for the payment of money issued by the Corporation
shall be signed in the name of the Corporation by such
officers or such other persons as the Board of Directors may
from time to time designate.
Section 3. Corporation Seal. The corporate seal, if the
Corporation shall have a corporate seal, shall have inscribed
thereon the name of the Corporation, the year of its
organization and the words "Corporate Seal, Delaware". The
seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII
DIRECTORS' LIABILITY AND INDEMNIFICATION
Section 1. Directors' Liability. A director of the
Corporation shall not be personally liable to the Corporation
or its stockholders for monetary damages for any breach of
fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or
its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which such
director derived any improper personal benefit. If the
Delaware General Corporation Law is amended to authorize
corporate action further eliminating the personal liability of
directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted
by the Delaware General Corporation Law, as amended. Any
repeal or modification of this provision shall not adversely
affect any right or protection of a director of the
Corporation existing at the time of such repeal or
modification.
12
Section 2. Right to Indemnification. Each person who
was or is made a party or is threatened to be made a party to
or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or
she is or was a director or an officer of the Corporation or
is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity
while serving as a director, officer, employee or agent, shall
be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation
to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee
in connection therewith; provided, however, that, except as
provided in Section 4 of this Article VIII with respect to
proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection
with a proceeding (or part thereof) initiated by such
indemnitee only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation.
Section 3. Right to Advancement of Expenses. The right
to indemnification conferred in Section 2 of this Article VIII
shall include the right to be paid by the Corporation the
expenses (including attorneys' fees) incurred in defending any
such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however,
that, if the Delaware General Corporation Law requires, an
advancement of expenses incurred by an indemnitee in his or
her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such
indemnitee, including, without limitation, service to an
employee benefit plan) shall be made only upon delivery to the
Corporation of an undertaking (hereinafter an "undertaking"),
by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to
appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses
under this Section 3 or otherwise. The rights to
indemnification and to the advancement of expenses conferred
in Sections 2 and 3 of this Article VIII shall be contract
rights and such rights shall continue as to an indemnitee who
has ceased to be a director, officer, employee or agent and
13
shall inure to the benefit of the indemnitee's heirs,
executors and administrators.
Section 4. Right of Indemnitee to Bring Suit. If a
claim under Section 2 or 3 of this Article VIII is not paid in
full by the Corporation within sixty (60) days after a written
claim has been received by the Corporation, except in the case
of a claim for an advancement of expenses, in which case the
applicable period shall be twenty (20) days, the indemnitee
may at any time thereafter bring suit against the Corporation
to recover the unpaid amount of the claim. If successful in
whole or in part in any such suit, or in a suit brought by the
Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking, the indemnitee shall be entitled
to be paid also the expense of prosecuting or defending such
suit. In (i) any suit brought by the indemnitee to enforce a
right to indemnification hereunder (but not in a suit brought
by the indemnitee to enforce a right to an advancement of
expenses) it shall be a defense that, and (ii) in any suit
brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the
Corporation shall be entitled to recover such expenses upon a
final adjudication that, the indemnitee has not met any
applicable standard for indemnification set forth in the
Delaware General Corporation Law. Neither the failure of the
Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that
indemnification of the indemnitee is proper in the
circumstances because the indemnitee has met the applicable
standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has
not met such applicable standard of conduct, shall create a
presumption that the indemnitee has not met the applicable
standard of conduct or, in the case of such a suit brought by
the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to
indemnification or to an advancement of expenses hereunder, or
brought by the Corporation to recover an advancement or
expenses pursuant to the terms of an undertaking, the burden
or proving that the indemnitee is not entitled to be
indemnified, or to such advancement of expenses, under this
Article VIII or otherwise shall be on the Corporation.
Section 5. Non-Exclusivity of Rights. The rights to
indemnification and to the advancement of expenses conferred
in this Article VIII shall not be exclusive of any other right
which any person may have or hereafter acquire under any
statute, the Corporation's Certificate of Incorporation,
Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise.
14
Section 6. Insurance. The Corporation may maintain
insurance, at its expense, to protect itself and any director,
officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or
not the Corporation would have the power to indemnify such
person against such expense, liability or loss under the
Delaware General Corporation Law.
Section 7. Indemnification of Employees and Agents of
the Corporation. The Corporation may, to the extent
authorized from time to time by the Board of Directors, grant
rights to indemnification and to the advancement of expenses
to any employee or agent of the Corporation to the fullest
extent of the provisions of this Article with respect to the
indemnification and advancement of expenses of directors and
officers of the Corporation.
Section 8. Amendment. This Article VIII is also
contained in Articles SEVEN and EIGHT of the Corporation's
Certificate of Incorporation, and accordingly, may be altered,
amended or repealed only to the extent and at the time the
comparable Certificate Article is altered, amended or
repealed. Any repeal or modification of this Article VIII
shall not change the rights of an officer or director to
indemnification with respect to any action or omission
occurring prior to such repeal or modification.
ARTICLE IX
AMENDMENTS
Except as otherwise specifically stated within an Article
to be altered, amended or repealed, these Bylaws may be
altered, amended or repealed and new Bylaws may be adopted at
any meeting of the Board of Directors or of the stockholders,
provided notice of the proposed change was given in the notice
of the meeting.
15
THIS IS TO CERTIFY:
That I am the duly elected, qualified and acting
Secretary of Allegheny Teledyne Incorporated and that the
foregoing amended and restated bylaws were adopted as the
amended and restated bylaws of said corporation as of the ____
day of _____, 1996 by Unanimous Written Consent of the
Directors of said corporation.
Dated as of _________ __, 1996
--------------------------------
______________, Secretary
16
<PAGE>
ANNEX C
DIRECTORS OF NEWCO:
Initial Directors of NEWCO:
Richard P. Simmons
Robert P. Bozzone
Arthur H. Aronson
Charles J. Queenan, Jr.
Paul S. Brentlinger
Henry E. Singleton
George A. Roberts
William P. Rutledge
Donald B. Rice
At or prior to the Effective Time, three additional directors will be
named by ALC and three additional directors will be named by TI.
If any of Messrs. Simmons, Bozzone, Aronson, Queenan or Brentlinger
shall die or otherwise be unable or unwilling to serve, then a
substitute for each such person shall be named by ALC. If any of
Messrs. Singleton, Roberts, Rutledge or Rice shall die or otherwise be
unable or unwilling to serve, then a substitute for each such person
shall be named by TI.
OFFICERS OF NEWCO:
Chairman of the Board and
Chairman of the Executive Committee: Richard P. Simmons
President and Chief Executive Officer: William P. Rutledge
Executive Vice President: Arthur H. Aronson
Executive Vice President: Donald B. Rice
Senior Vice President and Chief Financial Officer: James L. Murdy
Vice President, General Counsel and Secretary: Jon D. Walton
ANNEX D
[Form of Affiliate Agreement]
____________, 1996
Allegheny Teledyne Incorporated
1000 Six PPG Place
Pittsburgh, Pennsylvania 15222
Ladies and Gentlemen:
The undersigned has been advised that as of the date
hereof the undersigned may be deemed to be an "affiliate" of
Allegheny Ludlum Corporation, a Pennsylvania corporation ("ALC"),
or Teledyne, Inc., a Delaware corporation ("TI"), as the term
"affiliate" is (i) defined for purposes of paragraphs (c) and (d)
of Rule 145 of the Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the
"Act"), and/or (ii) used in and for purposes of Accounting Series
Releases 130 and 135, as amended, of the Commission. Pursuant to
the terms of the Agreement and Plan of Merger and Combination,
dated as of April 1, 1996 (the "Agreement"), among XYZ/Power,
Inc. (now Allegheny Teledyne Incorporated), a Delaware
corporation ("Newco"), ALC and TI, at the Effective Time (as
defined in the Agreement) ALC and TI will each become a wholly
owned subsidiary of Newco.
As a result of the Combination (as defined in the
Agreement), the undersigned may receive shares of Common Stock,
par value $0.10 per share ("Newco Common Stock"), of Newco. The
undersigned would receive such shares in exchange for shares of
Common Stock, par value $0.10 per share, of ALC or shares of
Common Stock, par value $1.00 per share, of TI owned by the
undersigned.
The undersigned hereby represents and warrants to, and
covenants with, Newco that in the event the undersigned receives
any Newco Common Stock in the Combination:
D - 1
Allegheny Teledyne Incorporated
__________, 1996
Page 2
(A) The undersigned shall not make any sale, transfer
or other disposition of the Newco Common Stock in violation
of the Act or the Rules and Regulations.
(B) The undersigned has carefully read this letter and
discussed its requirements and other applicable limitations
upon the undersigned's ability to sell, transfer or
otherwise dispose of the Newco Common Stock, to the extent
the undersigned has felt it necessary, with the
undersigned's counsel.
(C) The undersigned has been advised that the issuance
of shares of Newco Common Stock to the undersigned in the
Combination has been registered under the Act by a
Registration Statement on Form S-4. However, the
undersigned has also been advised that because (i) at the
time of the Combination's submission for a vote of the
stockholders of ALC or TI the undersigned may be deemed an
affiliate of ALC or TI, as the case may be, and (ii) the
distribution by the undersigned of the Newco Common Stock
has not been registered under the Act, the undersigned may
not sell, transfer or otherwise dispose of Newco Common
Stock issued to the undersigned in the Combination unless
(a) such sale, transfer or other disposition has been
registered under the Act, (b) such sale, transfer or other
disposition is made in conformity with the volume and other
applicable limitations imposed by Rule 145 under the Act, or
(c) in the opinion of counsel reasonably acceptable to
Newco, such sale, transfer or other disposition is otherwise
exempt from registration under the Act.
(D) The undersigned understands that Newco will be
under no obligation to register the sale, transfer or other
disposition of the Newco Common Stock by the undersigned or
on the undersigned's behalf under the Act or to take any
other action necessary in order to make compliance with an
exemption from such registration available.
(E) The undersigned understands that stop transfer
instructions will be given to Newco's transfer agent with
respect to the Newco Common Stock owned by the undersigned
and that there may be placed on the certificates for the
Newco Common Stock issued to the undersigned, or any
substitutions therefor, a legend stating in substance:
"The shares represented by this
certificate were issued in a transaction to
which Rule 145 under the Securities Act of
D - 2
Allegheny Teledyne Incorporated
__________, 1996
Page 3
1933 applies. The shares represented by this
certificate may only be transferred in
accordance with the terms of a letter
agreement dated __________, 1996, a copy of
which agreement is on file at the principal
offices of New Corporation."
(F) The undersigned also understands that unless the
transfer by the undersigned of the undersigned's Newco
Common Stock has been registered under the Act or is a sale
made in conformity with the provisions of this letter, Newco
reserves the right, in its sole discretion, to place the
following legend on the certificates issued to any
transferee of shares from the undersigned:
"The shares represented by this
certificate have not been registered under
the Securities Act of 1933 and were acquired
from a person who received such shares in a
transaction to which Rule 145 under the
Securities Act of 1933 applies. The shares
have been acquired by the holder not with a
view to, or for resale in connection with,
any distribution thereof within the meaning
of the Securities Act of 1933 and may not be
offered, sold, pledged or otherwise
transferred except in accordance with an
exemption from the registration requirements
of the Securities Act of 1933."
It is understood and agreed that the legend set forth
in paragraph E or F above shall be removed by delivery of
substitute certificates without such legend if the undersigned
shall have delivered to Newco (i) a copy of a letter from the
staff of the Commission, or an opinion of counsel, in form and
substance reasonably satisfactory to Newco to the effect that
such legend is not required for purposes of the Act or (ii)
reasonably satisfactory evidence or representations that the
shares represented by such certificates are being or have been
transferred in a transaction made in conformity with the
provisions of Rule 145.
The undersigned further represents and warrants to, and
covenants with, Newco that the undersigned did not, within the 30
days prior to the Effective Time (as defined in the Agreement),
sell, transfer or otherwise dispose of any shares of the Common
Stock of either ALC or TI held by the undersigned, and that the
undersigned will not sell, transfer or otherwise dispose of the
D - 3
Allegheny Teledyne Incorporated
__________, 1996
Page 4
Newco Common Stock received by the undersigned in the Combination
until after such time as results covering at least 30 days of
combined operations of ALC and TI have been published by Newco
within the meaning of Section 201.01 of the Commission's
Codification of Financial Reporting Policies.
Very truly yours,
Acknowledged this ____ day
of ________, 1996.
ALLEGHENY TELEDYNE INCORPORATED
By: _______________________
Name:
D - 4
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT, dated as of April 1, 1996,
by and between Teledyne, Inc., a Delaware corporation ("TI"), and
the shareholder listed on the signature page hereof (such
shareholder being referred to herein as the "Shareholder");
WITNESSETH:
WHEREAS, the Shareholder, as of the date hereof, is the
owner of or has the sole right to vote the number of shares of
Common Stock, par value $0.10 per share (the "Common Stock"), of
Allegheny Ludlum Corporation, a Pennsylvania corporation (the
"Company"), set forth below the name of the Shareholder on the
signature page hereof (the "Shares"); and
WHEREAS, in reliance upon the execution and delivery of
this Agreement, TI will enter into an Agreement and Plan of
Merger and Combination, dated as of the date hereof (the
"Combination Agreement"), with XYZ/Power, Inc. and the Company
which provides, among other things, that upon the terms and
subject to the conditions thereof, the Company and TI will each
become a wholly owned subsidiary of New Corporation (the
"Combination"); and
WHEREAS, to induce TI to enter into the Combination
Agreement and to incur the obligations set forth therein, the
Shareholder is entering into this Agreement pursuant to which the
Shareholder agrees to vote in favor of the Combination and
certain other matters as set forth herein, and to make certain
agreements with respect to the Shares upon the terms and
conditions set forth herein;
NOW THEREFORE, in consideration of the foregoing and of
the mutual covenants and agreements set forth herein and for
other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereto agree as
follows:
Section 1. Voting of Shares; Proxy. (a) The
Shareholder agrees that until the earlier of (i) the Effective
Time (as defined in the Combination Agreement) or (ii) the date
on which the Combination Agreement is terminated (the earliest
- 1 -
thereof being hereinafter referred to as the "Expiration Date"),
the Shareholder shall vote all Shares owned by the Shareholder at
any meeting of the Company's shareholders (whether annual or
special and whether or not an adjourned meeting), or, if
applicable, take action by written consent (i) for adoption and
approval of the Combination Agreement and in favor of the ALC
Merger (as defined in the Combination Agreement) and otherwise in
favor of the Combination and any other transaction contemplated
by the Combination Agreement as such Combination Agreement may be
modified or amended from time to time and (ii) against any
action, omission or agreement which would or could impede or
interfere with, or have the effect of discouraging, the
Combination, including, without limitation, any Acquisition
Proposal (as defined in the Combination Agreement) other than the
Combination. Any such vote shall be cast or consent shall be
given in accordance with such procedures relating thereto as
shall ensure that it is duly counted for purposes of determining
that a quorum is present and for purposes of recording the
results of such vote or consent.
(b) At the request of TI, the Shareholder, in
furtherance of the transactions contemplated hereby and by the
Combination Agreement, and in order to secure the performance by
the Shareholder of his or her duties under this Agreement, shall
promptly execute, in accordance with the provisions of Section
1759(d) of the Pennsylvania Business Corporation Law, and deliver
to TI, an irrevocable proxy, substantially in the form of Annex A
hereto, and irrevocably appoint TI or its designees, with full
power of substitution, his or her attorney and proxy to vote, or,
if applicable, to give consent with respect to, all of the Shares
owned by the Shareholder in respect of any of the matters set
forth in, and in accordance with the provisions of, clauses (i)
and (ii) above of Section 1(a). The Shareholder acknowledges
that the proxy executed and delivered by him or her shall be
coupled with an interest, shall constitute, among other things,
an inducement for TI to enter into the Combination Agreement,
shall be irrevocable and shall not be terminated by operation of
law upon the occurrence of any event, including, without
limitation, the death or incapacity of the Shareholder.
Notwithstanding any provision contained in such proxy, such proxy
shall terminate upon the Expiration Date.
Section 2. Covenants of the Shareholder. The
Shareholder covenants and agrees for the benefit of TI that,
until the Expiration Date, he will:
(a) not sell, transfer, pledge, hypothecate, encumber,
assign, tender or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with
respect to the sale, transfer, pledge, hypothecation,
encumbrance, assignment, tender or other disposition of, any
- 2 -
of the Shares owned by him or her or any interest therein
(provided, that the foregoing shall not prevent the
Shareholder from transferring the Shares to an entity for
estate planning purposes, provided that the Shareholder
retains sole voting rights over the Shares or the estate
planning entity executes a joinder agreeing to be bound by
the terms of this Agreement);
(b) other than as expressly contemplated by this
Agreement, not grant any powers of attorney or proxies or
consents in respect of any of the Shares owned by him or
her, deposit any of the Shares owned by him into a voting
trust, enter into a voting agreement with respect to any of
the Shares owned by him or her or otherwise restrict the
ability of the holder of any of the Shares owned by him or
her freely to exercise all voting rights with respect
thereto;
(c) not, in his or her capacity as a shareholder of
the Company (it being understood that nothing in this
Shareholder Agreement shall restrict or affect Shareholder
in any other capacity, including as a director or officer,
as applicable, of the Company) and he or she shall direct
and use his or her best efforts to cause his or her agents
and representatives not to, initiate, solicit or encourage,
directly or indirectly, any inquiries or the making or
implementation of any Acquisition Proposal or engage in any
negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any
person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an
Acquisition Proposal. The Shareholder shall immediately
cease and cause to be terminated any existing activities,
including discussions or negotiations with any parties,
conducted heretofore with respect to any of the foregoing
and will take the necessary steps to inform his or her
agents and representatives of the obligations undertaken in
this Section 2(c). The Shareholder shall notify TI
immediately if any such inquiries or proposals are received
by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or
continued with, him or her; and
(d) not take any action whatsoever that, based on
advice from TI's or the Company's independent auditors would
or could prevent the Combination from qualifying for
"pooling of interests" accounting treatment.
Section 3. Covenants of TI. TI covenants and agrees
for the benefit of the Shareholder that (a) immediately upon
- 3 -
execution of this Agreement, TI shall enter into the Combination
Agreement, and (b) until the Expiration Date, it shall use all
reasonable efforts to take, or cause to be taken, all action, and
do, or cause to be done, all things necessary or advisable in
order to consummate and make effective the transactions
contemplated by this Agreement and the Combination Agreement,
consistent with the terms and conditions of each such agreement;
provided, however, that nothing in this Section 3, Section 12 or
any other provision of this Agreement is intended, nor shall it
be construed, to limit or in any way restrict TI's right or
ability to exercise any of its rights under the Combination
Agreement.
Section 4. Representations and Warranties of the
Shareholder. The Shareholder represents and warrants to TI that:
(a) the execution, delivery and performance by the Shareholder of
this Agreement will not conflict with, require a consent, waiver
or approval under, or result in a breach of or default under, any
of the terms of any contract, commitment or other obligation
(written or oral) to which the Shareholder is bound; (b) this
Agreement has been duly executed and delivered by the Shareholder
and constitutes a legal, valid and binding obligation of the
Shareholder, enforceable against the Shareholder in accordance
with its terms; (c) the Shareholder is the sole owner of or has
the sole right to vote the Shares and the Shares represent all
shares of Common Stock which the Shareholder is the sole owner of
or has the sole right to vote at the date hereof, and the
Shareholder does not have any right to acquire, nor is he the
"beneficial owner" (as such term is defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) of, any other
shares of any class of capital stock of the Company or any
securities convertible into or exchangeable or exercisable for
any shares of any class of capital stock of the Company (other
than shares subject to options or other rights granted by the
Company); (d) the Shareholder has full right, power and authority
to execute and deliver this Agreement and to perform his or her
obligations hereunder; and (e) the Shareholder owns the Shares
free and clear of all liens, claims, pledges, charges, proxies,
restrictions, encumbrances, proxies, voting trusts and voting
agreements of any nature whatsoever other than as provided by
this Agreement. The representations and warranties contained
herein shall be made as of the date hereof and as of each day
from the date hereof through and including the Effective Time (as
defined in the Combination Agreement).
Section 5. Adjustments; Additional Shares. In the
event (a) of any stock dividend, stock split, merger (other than
the Combination), recapitalization, reclassification,
combination, exchange of shares or the like of the capital stock
of the Company on, of or affecting the Shares or (b) that the
- 4 -
Shareholder shall become the beneficial owner of any additional
shares of Common Stock or other securities entitling the holder
thereof to vote or give consent with respect to the matters set
forth in Section 1, then the terms of this Agreement shall apply
to the shares of capital stock or other instruments or documents
held by the Shareholder immediately following the effectiveness
of the events described in clause (a) or the Shareholder becoming
the beneficial owner thereof as described in clause (b), as
though, in either case, they were Shares hereunder.
Section 6. Specific Performance. The Shareholder
acknowledges that the agreements contained in this Agreement are
an integral part of the transactions contemplated by the
Combination Agreement, and that, without these agreements, TI
would not enter into the Combination Agreement, and acknowledges
that damages would be an inadequate remedy for any breach by him
or her of the provisions of this Agreement. Accordingly, the
Shareholder and TI each agree that the obligations of the parties
hereunder shall be specifically enforceable and neither party
shall take any action to impede the other from seeking to enforce
such right of specific performance.
Section 7. Notices. All notices, requests, claims,
demands and other communications hereunder shall be effective
upon receipt (or refusal of receipt), shall be in writing and
shall be delivered in person, by telecopy or telefacsimile, by
telegram, by next-day courier service, or by mail (registered or
certified mail, postage prepaid, return receipt requested) to the
Shareholder at the address listed on the signature page hereof,
and to TI at 2049 Century Park East, Los Angeles, California
90067-3101 Attention: Secretary, telecopy number 310-551-4366, or
to such other address or telecopy number as any party may have
furnished to the other in writing in accordance herewith.
Section 8. Binding Effect; Survival. Upon execution
and delivery of this Agreement by TI, this Agreement shall become
effective as to the Shareholder at the time the Shareholder
executes and delivers this Agreement. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and
their respective heirs, personal representatives, successors and
assigns.
Section 9. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania applicable to agreements made and to
be performed entirely within such Commonwealth.
- 5 -
Section 10. Counterparts. This Agreement may be
executed in two counterparts, both of which shall be an original
and both of which together shall constitute one and the same
agreement.
Section 11. Effect of Headings. The Section headings
herein are for convenience of reference only and shall not affect
the construction hereof.
Section 12. Additional Agreements; Further Assurance.
Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use all reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement. The
Shareholder will provide TI with all documents which may
reasonably be requested by TI and will take reasonable steps to
enable TI to obtain all rights and benefits provided it
hereunder.
Section 13. Amendment; Waiver. No amendment or waiver
of any provision of this Agreement or consent to departure
therefrom shall be effective unless in writing and signed by TI
and the Shareholder, in the case of an amendment, or by the party
which is the beneficiary of any such provision, in the case of a
waiver or a consent to depart therefrom.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- 6 -
IN WITNESS WHEREOF, this Agreement has been duly
executed by the parties hereto all as of the day and year first
above written.
Teledyne, Inc.
By__________________________
Name:
Title:
_______________________
Shareholder
Address:
Number of Shares:
- 7 -
ANNEX A
[Form of Proxy]
IRREVOCABLE PROXY
In order to secure the performance of the duties of the
undersigned pursuant to the Shareholder Agreement, dated as of
April 1, 1996 (the "Shareholder Agreement"), between the
undersigned and Teledyne, Inc., a Delaware corporation, a copy of
such agreement being attached hereto and incorporated by
reference herein, the undersigned hereby irrevocably appoint(s)
______________ and ________________, and each of them, the
attorneys, agents and proxies, with full power of substitution in
each of them, for the undersigned and in the name, place and
stead of the undersigned, in respect of any of the matters set
forth in clauses (i) and (ii) of Section 1 of the Shareholder
Agreement, to vote or, if applicable, to give written consent, in
accordance with the provisions of said Section 1 and otherwise
act (consistent with the terms of the Shareholder Agreement) with
respect to all shares of Common Stock, par value $0.10 per share
(the "Shares"), of Allegheny Ludlum Corporation, a Pennsylvania
corporation (the "Company"), whether now owned or hereafter
acquired, which the undersigned is or may be entitled to vote at
any meeting of the Company held after the date hereof, whether
annual or special and whether or not an adjourned meeting, or, if
applicable, to give written consent with respect thereto. This
Proxy is coupled with an interest, shall be irrevocable and
binding on any successor in interest of the undersigned and shall
not be terminated by operation of law upon the occurrence of any
event, including, without limitation, the death or incapacity of
the undersigned. This Proxy shall operate to revoke any prior
proxy as to the Shares heretofore granted by the undersigned.
This Proxy shall terminate on September 30, 1996. This Proxy has
been executed in accordance with Section 1759(d) of the
Pennsylvania Business Corporation Law.
Dated: ______________________________
Dated: ______________________________
A-1
CONFIDENTIAL DRAFT OF 04/02/96
STOCKHOLDER AGREEMENT
---------------------
THIS STOCKHOLDER AGREEMENT, dated as of April 1, 1996,
by and between Allegheny Ludlum Corporation, a Pennsylvania
corporation ("ALC"), and the stockholder listed on the signature
page hereof (such stockholder and (with respect to Shares owned
jointly with his or her spouse) together with his or her spouse,
being referred to herein as the "Stockholder");
WITNESSETH:
WHEREAS, the Stockholder, as of the date hereof, is the
owner of or has the sole right to vote the number of shares of
Common Stock, par value $1.00 per share (the "Common Stock"), of
Teledyne, Inc., a Delaware corporation (the "Company"), set forth
below the name of the Stockholder on the signature page hereof
(the "Shares"); and
WHEREAS, in reliance upon the execution and delivery of
this Agreement, ALC will enter into an Agreement and Plan of
Merger and Combination, dated as of the date hereof (the
"Combination Agreement"), with New Corporation and the Company
which provides, among other things, that upon the terms and
subject to the conditions thereof ALC and the Company will each
become a wholly owned subsidiary of New Corporation (the
"Combination"); and
WHEREAS, to induce ALC to enter into the Combination
Agreement and to incur the obligations set forth therein, the
Stockholder is entering into this Agreement pursuant to which the
Stockholder agrees to vote in favor of the Combination and
certain other matters as set forth herein, and to make certain
agreements with respect to the Shares upon the terms and
conditions set forth herein;
NOW THEREFORE, in consideration of the foregoing and of
the mutual covenants and agreements set forth herein and for
other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereto agree as
follows:
PI1-596435.1
Section 1. Voting of Shares; Proxy. (a) The
Stockholder agrees that until the earlier of (i) the Effective
Time (as defined in the Combination Agreement) or (ii) the date
on which the Combination Agreement is terminated (the earliest
thereof being hereinafter referred to as the "Expiration Date"),
the Stockholder shall vote all Shares owned by the Stockholder at
any meeting of the Company's stockholders (whether annual or
special and whether or not an adjourned meeting), or, if
applicable, take action by written consent (i) for adoption and
approval of the Combination Agreement and in favor of the TI
Merger (as defined in the Combination Agreement) and otherwise in
favor of the Combination and any other transaction contemplated
by the Combination Agreement as such Combination Agreement may be
modified or amended from time to time and (ii) against any
action, omission or agreement which would or could impede or
interfere with, or have the effect of discouraging, the
Combination, including, without limitation, any Acquisition
Proposal (as defined in the Combination Agreement) other than the
Combination. Any such vote shall be cast or consent shall be
given in accordance with such procedures relating thereto as
shall ensure that it is duly counted for purposes of determining
that a quorum is present and for purposes of recording the
results of such vote or consent.
(b) At the request of ALC, the Stockholder, in
furtherance of the transactions contemplated hereby and by the
Combination Agreement, and in order to secure the performance by
the Stockholder of his or her duties under this Agreement, shall
promptly execute, in accordance with the provisions of
Section 212(e) of the Delaware General Corporation Law, and
deliver to ALC, an irrevocable proxy, substantially in the form
of Annex A hereto, and irrevocably appoint ALC or its designees,
with full power of substitution, his or her attorney and proxy to
vote, or, if applicable, to give consent with respect to, all of
the Shares owned by the Stockholder in respect of any of the
matters set forth in, and in accordance with the provisions of,
clauses (i) and (ii) above of Section 1(a). The Stockholder
acknowledges that the proxy executed and delivered by him or her
shall be coupled with an interest, shall constitute, among other
things, an inducement for ALC to enter into the Combination
Agreement, shall be irrevocable and shall not be terminated by
operation of law upon the occurrence of any event, including,
without limitation, the death or incapacity of the Stockholder.
Notwithstanding any provision contained in such proxy, such proxy
shall terminate upon the Expiration Date.
Section 2. Covenants of the Stockholder. The
Stockholder covenants and agrees for the benefit of ALC that,
until the Expiration Date, he will:
(a) not sell, transfer, pledge, hypothecate, encumber,
assign, tender or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with
respect to the sale, transfer, pledge, hypothecation,
encumbrance, assignment, tender or other disposition of, any
of the Shares owned by him or her or any interest therein
(provided, that the foregoing shall not prevent the
Stockholder from transferring the Shares to an entity for
estate planning purposes, provided that the Stockholder
retains sole voting rights over the Shares or the estate
planning entity executes a joinder agreeing to be bound by
the terms of this Agreement;
(b) other than as expressly contemplated by this
Agreement, not grant any powers of attorney or proxies or
consents in respect of any of the Shares owned by him or
her, deposit any of the Shares owned by him or her into a
voting trust, enter into a voting agreement with respect to
any of the Shares owned by him or her or otherwise restrict
the ability of the holder of any of the Shares owned by him
or her freely to exercise all voting rights with respect
thereto;
(c) not, in his or her capacity as a shareholder of
the Company (it being understood that nothing in this
Stockholder Agreement shall restrict or affect Stockholder
in any other capacity, including as a director or officer,
as applicable, of the Company) and he or she shall direct
and use his or her best efforts to cause his or her agents
and representatives not to, initiate, solicit or encourage,
directly or indirectly, any inquiries or the making or
implementation of any Acquisition Proposal or engage in any
negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any
person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an
Acquisition Proposal. The Stockholder shall immediately
cease and cause to be terminated any existing activities,
including discussions or negotiations with any parties,
conducted heretofore with respect to any of the foregoing
and will take the necessary steps to inform his or her
agents and representatives of the obligations undertaken in
this Section 2(c). The Stockholder shall notify ALC
immediately if any such inquiries or proposals are received
by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or
continued with, him or her; and
(d) not take any action whatsoever that, based on
advice from ALC's or the Company's independent auditors
would or could prevent the Combination from qualifying for
"pooling of interests" accounting treatment.
-3-
Section 3. Covenants of ALC. ALC covenants and agrees
for the benefit of the Stockholder that (a) immediately upon
execution of this Agreement, ALC shall enter into the Combination
Agreement, and (b) until the Expiration Date, it shall use all
reasonable efforts to take, or cause to be taken, all action, and
do, or cause to be done, all things necessary or advisable in
order to consummate and make effective the transactions
contemplated by this Agreement and the Combination Agreement,
consistent with the terms and conditions of each such agreement;
provided, however, that nothing in this Section 3, Section 12 or
any other provision of this Agreement is intended, nor shall it
be construed, to limit or in any way restrict ALC's right or
ability to exercise any of its rights under the Combination
Agreement.
Section 4. Representations and Warranties of the
Stockholder. The Stockholder represents and warrants to ALC
that: (a) the execution, delivery and performance by the
Stockholder of this Agreement will not conflict with, require a
consent, waiver or approval under, or result in a breach of or
default under, any of the terms of any contract, commitment or
other obligation (written or oral) to which the Stockholder is
bound; (b) this Agreement has been duly executed and delivered by
the Stockholder and constitutes a legal, valid and binding
obligation of the Stockholder, enforceable against the
Stockholder in accordance with its terms; (c) the Stockholder is
the sole owner of or has the sole right to vote the Shares and
the Shares represent all shares of Common Stock which the
Stockholder is the sole owner of or has the sole right to vote at
the date hereof, and the Stockholder does not have any right to
acquire, nor is he the "beneficial owner" (as such term is
defined in Rule 13d-3 under the Securities Exchange Act of 1934,
as amended) of, any other shares of any class of capital stock of
the Company or any securities convertible into or exchangeable or
exercisable for any shares of any class of capital stock of the
Company (other than shares subject to options or other rights
granted by the Company); (d) the Stockholder has full right,
power and authority to execute and deliver this Agreement and to
perform his or her obligations hereunder; and (e) the Stockholder
owns the Shares free and clear of all liens, claims, pledges,
charges, proxies, restrictions, encumbrances, proxies, voting
trusts and voting agreements of any nature whatsoever other than
as provided by this Agreement. The representations and
warranties contained herein shall be made as of the date hereof
and as of each day from the date hereof through and including the
Effective Time (as defined in the Combination Agreement).
Section 5. Adjustments; Additional Shares. In the
event (a) of any stock dividend, stock split, merger (other than
-4-
the Combination) recapitalization, reclassification, combination,
exchange of shares or the like of the capital stock of the
Company on, of or affecting the Shares or (b) that the
Stockholder shall become the beneficial owner of any additional
shares of Common Stock or other securities entitling the holder
thereof to vote or give consent with respect to the matters set
forth in Section 1, then the terms of this Agreement shall apply
to the shares of capital stock or other instruments or documents
held by the Stockholder immediately following the effectiveness
of the events described in clause (a) or the Stockholder becoming
the beneficial owner thereof as described in clause (b), as
though, in either case, they were Shares hereunder.
Section 6. Specific Performance. The Stockholder
acknowledges that the agreements contained in this Agreement are
an integral part of the transactions contemplated by the
Combination Agreement, and that, without these agreements, ALC
would not enter into the Combination Agreement, and acknowledges
that damages would be an inadequate remedy for any breach by him
or her of the provisions of this Agreement. Accordingly, the
Stockholder and ALC each agree that the obligations of the
parties hereunder shall be specifically enforceable and neither
party shall take any action to impede the other from seeking to
enforce such right of specific performance.
Section 7. Notices. All notices, requests, claims,
demands and other communications hereunder shall be effective
upon receipt (or refusal of receipt), shall be in writing and
shall be delivered in person, by telecopy or telefacsimile, by
telegram, by next-day courier service, or by mail (registered or
certified mail, postage prepaid, return receipt requested) to the
Stockholder at the address listed on the signature page hereof,
and to ALC at 1000 Six PPG Place, Pittsburgh, Pennsylvania 15222,
Attention: Secretary, telecopy number 412-394-3010, or to such
other address or telecopy number as any party may have furnished
to the other in writing in accordance herewith.
Section 8. Binding Effect; Survival. Upon execution
and delivery of this Agreement by ALC, this Agreement shall
become effective as to the Stockholder at the time the
Stockholder executes and delivers this Agreement. This Agreement
shall inure to the benefit of and be binding upon the parties
hereto and their respective heirs, personal representatives,
successors and assigns.
Section 9. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
-5-
State of Delaware applicable to agreements made and to be
performed entirely within such State.
Section 10. Counterparts. This Agreement may be
executed in two counterparts, both of which shall be an original
and both of which together shall constitute one and the same
agreement.
Section 11. Effect of Headings. The Section headings
herein are for convenience of reference only and shall not affect
the construction hereof.
Section 12. Additional Agreements; Further Assurance.
Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use all reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement. The
Stockholder will provide ALC with all documents which may
reasonably be requested by ALC and will take reasonable steps to
enable ALC to obtain all rights and benefits provided it
hereunder.
Section 13. Amendment; Waiver. No amendment or waiver
of any provision of this Agreement or consent to departure
therefrom shall be effective unless in writing and signed by ALC
and the Stockholder, in the case of an amendment, or by the party
which is the beneficiary of any such provision, in the case of a
waiver or a consent to depart therefrom.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-6-
IN WITNESS WHEREOF, this Agreement has been duly
executed by the parties hereto all as of the day and year first
above written.
ALLEGHENY LUDLUM CORPORATION
By___________________________
Name:________________________
Title:_______________________
__________________________
Stockholder
__________________________
Spouse
Address:
Number of Shares:
-7-
ANNEX A
[Form of Proxy]
IRREVOCABLE PROXY
In order to secure the performance of the duties of the
undersigned pursuant to the Stockholder Agreement, dated as of
April 1, 1996 (the "Stockholder Agreement"), between the
undersigned and Allegheny Ludlum Corporation., a Pennsylvania
corporation, a copy of such agreement being attached hereto and
incorporated by reference herein, the undersigned hereby
irrevocably appoints _________________ and ___________________,
and each of them, the attorneys, agents and proxies, with full
power of substitution in each of them, for the undersigned and in
the name, place and stead of the undersigned, in respect of any
of the matters set forth in clauses (i) and (ii) of Section 1 of
the Stockholder Agreement, to vote or, if applicable, to give
written consent, in accordance with the provisions of said
Section 1 and otherwise act (consistent with the terms of the
Stockholder Agreement) with respect to all shares of Common
Stock, par value $1.00 per share (the "Shares"), of Teledyne,
Inc., a Delaware corporation (the "Company"), whether now owned
or hereafter acquired, which the undersigned is or may be
entitled to vote at any meeting of the Company held after the
date hereof, whether annual or special and whether or not an
adjourned meeting, or, if applicable, to give written consent
with respect thereto. This Proxy is coupled with an interest,
shall be irrevocable and binding on any successor in interest of
the undersigned and shall not be terminated by operation of law
upon the occurrence of any event, including, without limitation,
the death or incapacity of the undersigned. This Proxy shall
operate to revoke any prior proxy as to the Shares heretofore
granted by the undersigned. This Proxy shall terminate on
September 30, 1996. This Proxy has been executed in accordance
with Section 212(e) of the Delaware General Corporation Law.
Dated:____________________ _______________________
Dated:____________________ _______________________
A-1
CONTACT: Bert Delano
Allegheny Ludlum Corporation
412/394-2813
Rosanne O'Brien
Teledyne, Inc.
310/551-4285
Fred Spar/Adam Weiner
Kekst and Company
212/593-2655
FOR IMMEDIATE RELEASE
ALLEGHENY LUDLUM AND TELEDYNE AGREE TO
STRATEGIC COMBINATION VALUED AT $3.2 BILLION
Combination To Be Accretive To Both Companies'
Earnings And Cash Flow
Business, Financial Synergies Total
More Than $85 Million Annually
PITTSBURGH, PA and LOS ANGELES, CALIF., April 1, 1996 -
Allegheny Ludlum Corporation (NYSE:ALS) and Teledyne, Inc.
(NYSE:TDY) today announced a strategic merger to maximize
shareholder value. The new company will be called Allegheny
Teledyne Incorporated. The combined company, with $4 billion in
annual sales, will be a world-class producer in specialty metals
and will maintain strong market positions in aviation and
electronics, industrial, and consumer products businesses.
Under the terms of the definitive agreement approved today
by the Boards of Directors of both companies, Allegheny Ludlum
shareholders will receive one share of Allegheny Teledyne common
stock for each share of Allegheny Ludlum common stock they own,
and Teledyne shareholders will receive 1.925 shares of common
stock in the new entity for each of their Teledyne shares. The
terms of the transaction provide Teledyne shareholders with a 27%
premium based on the close-of-market stock prices for both
companies on March 29, 1996. The transaction is expected to be
tax-free to shareholders and accounted for as a pooling of
interests.
Teledyne's strong earnings growth, together with Allegheny
Ludlum's long history of consistent profitability, is expected to
result in accretive earnings and cash flow to Allegheny Ludlum
shareholders as soon as the combination occurs. When the
significant business and financial synergies resulting from the
merger are considered, the transaction is expected to be
PI1-596561.1
accretive to the earnings and cash flow of both companies in the
first full year of combined operations. It is anticipated that
the cash flow of this new combination will comfortably allow
Allegheny Teledyne to pay an annual cash dividend of $.64 per
share, a 23% increase for Allegheny Ludlum shareholder.
Richard P. Simmons, Chairman of Allegheny Ludlum, stated,
"The combination of Allegheny Ludlum with Teledyne is an
excellent strategic fit both operationally and financially. Our
Board strongly believes that this transaction enhances Allegheny
Ludlum's long-term competitiveness in a manner that serves the
best interests of Allegheny Ludlum shareholders."
Arthur H. Aronson, Allegheny Ludlum's President and Chief
Executive Officer, added, "In specialty metals Teledyne's high-
quality products, production capabilities and strong distribution
system provide immediate cross-marketing opportunities worldwide,
while its engineering and technological expertise presents
exciting possibilities for new product development. Teledyne's
strong aviation and electronics, industrial, and consumer
products businesses provide Allegheny Ludlum opportunities in
attractive markets we do not currently serve, while balancing the
cyclicality of the metals business.
"We expect the combination to produce synergies of at least
$85 million per year in pretax earnings and $50 million of after-
tax cash flow. These amounts include the utilization of
Teledyne's pension surplus to fund Allegheny Ludlum's pension and
retiree medical expenses."
William P. Rutledge, Teledyne's Chairman and Chief Executive
Officer, stated, "We are extremely pleased to join forces with
Allegheny Ludlum. Our Board's efforts over the past year have
focused on finding a strategic option which would provide our
shareholders an immediate increase in value while preserving
longer-term growth opportunities. This combination does exactly
that. Not only does it provide Teledyne shareholders with an
immediate premium to the market value of Teledyne's shares, but
through business and financial synergies it establishes an even
stronger basis for earnings and cash flow accretion over the long
term.
"In addition, this transaction utilizes Teledyne's surplus
pension assets efficiently and ratifies the progress of our
business plans. It strengthens the prospects for long-term
Profitable Growth for our shareholders."
Donald B. Rice, President and Chief Operating Officer of
Teledyne, stated, "With Allegheny Teledyne, Teledyne shareholders
will gain increased opportunities in specialty metals and will
participate in a new entity featuring strong earnings, cash flow
and capital structure. Shareholders will have a continued stake
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in the operating improvements and earnings momentum being
generated by our business plans, and will receive even greater
benefit from new opportunities to share interrelated technologies
and skills across Allegheny Teledyne's businesses."
Following is a table showing combined 1995 revenues by
continuing business segments:
Amount Percentage
(millions)
Specialty Metals $2,362 58.3
Aviation & Electronics 1,015 25.0
Industrial 347 8.6
Consumer 327 8.1
______ _____
$4,051 100.0
The combined 1995 net income of the two companies was $274
million, and the combined net debt-to-market capitalization ratio
was approximately 14% at year-end. Based on 1995 sales, the
defense industry component of the combined company was
approximately 15%. Based on close-of-market prices on March 29,
1996, Allegheny Teledyne would have a combined market
capitalization of approximately $3.2 billion.
Allegheny Teledyne will be a holding company headquartered
in Pittsburgh, Pa. Its specialty metals operations will be
headquartered in Pittsburgh, Pa., and its diversified technology
operations will be headquartered in Los Angeles, Calif.
Under the definitive agreement, the Board of Directors of
Allegheny Teledyne will consist of Richard P. Simmons as Chairman
of the Board and Chairman of the Executive Committee and 14
additional members, half of whom will be named by Allegheny
Ludlum and half by Teledyne. William P. Rutledge will be
Allegheny Teledyne's President and Chief Executive Officer.
Arthur H. Aronson, Allegheny Ludlum's President and Chief
Executive Officer, and Donald B. Rice, Teledyne's President and
Chief Operating Officer, will become Executive Vice Presidents of
Allegheny Teledyne. In addition, Mr. Aronson will remain
President and Chief Executive Officer of Allegheny Teledyne's
Allegheny Ludlum subsidiary, while Dr. Rice will remain President
and will become Chief Executive Officer of the Teledyne
subsidiary.
In connection with the respective approvals of the
definitive combination agreement, the Board of Directors of
Allegheny Ludlum received advice from Salomon Brothers, and the
Board of Directors of Teledyne was advised by Goldman, Sachs &
Co.
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The transaction is conditioned on approval by the respective
companies' shareholders, as well as customary regulatory and
closing conditions. Allegheny Ludlum will schedule and hold a
special shareholders' meeting to consider the combination.
Teledyne's annual shareholders' meeting, scheduled for April 24,
1996 has been postponed.
Teledyne, Inc. is a federation of technology-based
businesses serving worldwide customers with commercial and
government-related aviation and electronics products; high-value
specialty metals for consumer, industrial and aviation
applications; and industrial and consumer products.
Allegheny Ludlum Corporation is a leading producer of a wide
range of specialty materials including stainless steels, tool
steels, high technology alloys and grain-oriented silicon steel.
* * *
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