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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
-----
Allegheny Teledyne Inc.
-------------------------------------------------------------
(Name of Issuer)
Common Stock
---------------------------------------------------
(Title of Class of Securities)
017415 10 0
-----------------------------------------
(CUSIP Number)
Edmund M. Kaufman, Esq.
Irell & Manella LLP
333 South Hope Street #3300
Los Angeles, California 90071
213-620-1555
---------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
August 15, 1996
-----------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with this statement [X]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 017415 10 0 PAGE 2 OF 2 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Henry E. Singleton
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
N/A/
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 13,999,100
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY None
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 13,999,100
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
None
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
13,999,100
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
8.1%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
2 of 7
<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
This Statement relates to 13,999,100 shares (the "Shares") of the Common
Stock, par value $0.10 per share ("ATI Common Stock"), of Allegheny Teledyne
Incorporated, a Delaware corporation ("ATI"). The principal executive offices
of the Company are located at 1000 Six PPG Place, Pittsburgh, Pennsylvania
15222-5479.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (c), (f). This Statement is being filed on behalf of Dr. Henry E.
Singleton. Dr. Singleton is a rancher and investor. Dr. Singleton's business
address is 335 North Maple Drive, Beverly Hills, California 90210. Dr.
Singleton is a citizen of the United States. He is a director of ATI. He is a
co-founder of Teledyne, Inc. ("TI"), which became a wholly-owned subsidiary of
ATI on August 15, 1996 (see Item 3). He was Chairman of the Board of TI from
1960 to January 1991. From 1960 to 1986, he served as TI's Chief Executive
Officer.
(d) During the last five years, Dr. Singleton has not been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) During the last five years, Dr. Singleton has not been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
as a result of which he is or was subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On August 15, 1996, the "Effective Time," as defined in the Amended and
Restated Agreement and Plan of Merger and Combination referred to in Item 7 (the
"Combination Agreement"), occurred. At the Effective Time, each outstanding
share of the Common Stock, par value $1.00 per share ("TI Common Stock"), of TI
was converted into the right to receive 1.925 shares of ATI Common Stock. At
the Effective Time, Dr. Singleton owned 7,272,260 shares of TI Common Stock and,
accordingly, became entitled to receive the Shares as a result of the occurrence
of the Effective Time. Dr. Singleton had previously reported his ownership of
the 7,272,260 shares of TI Common Stock referred to above on a Schedule 13G, as
amended, and thereafter a Schedule 13D.
-3-
<PAGE>
ITEM 4. PURPOSE OF TRANSACTION.
Dr. Singleton holds the Shares for investment and does not have any plans
or proposals which relate to or would result in:
(a) the acquisition by any person of additional securities, or the
disposition of securities, of ATI;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving ATI or any of its subsidiaries;
(c) a sale or transfer of a material amount of assets of ATI or any of its
subsidiaries;
(d) any change in the present board of directors or management of ATI,
including any plans or proposals to change the number or terms of directors or
to fill any existing vacancies on the board;
(e) any material change in the present capitalization or dividend policy
of ATI;
(f) any other material change in ATI's business or corporate structure;
(g) changes in ATI's charter, bylaws, or instruments corresponding thereto
or other actions which may impede the acquisition of control of the Company by
any person;
(h) causing a class of securities of ATI to be delisted from a national
securities exchange or to cease to be authorized to be quoted on the National
Association of Securities Dealers Automated Quotation System;
(i) a class of equity securities of ATI becoming eligible for termination
of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934; or
(j) any action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Dr. Singleton has beneficial ownership of the 13,999,100 Shares owned
by him, which represent approximately 8.1% of the issued and outstanding shares
of ATI Common Stock (based on the information contained in the Prospectus dated
July 17, 1996 of ATI issued in connection with the respective special meetings
of the stockholders of TI and Allegheny Ludlum Corporation held on August 15,
1996 to vote on the Combination Agreement).
(b) Dr. Singleton has sole voting and dispositive power with respect to
the Shares.
-4-
<PAGE>
(c) Dr. Singleton has not effected any transactions relating to ATI Common
Stock within the past sixty days. See Item 3 regarding the occurrence of the
Effective Time.
(d) No other person is known to Dr. Singleton to have the right to receive
or the power to direct the receipt of dividends from, or the proceeds from the
sale of, the Shares.
(e) Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE COMPANY.
Except as set forth in the next paragraph, Dr. Singleton does not have any
contracts, arrangements, understandings or relationships (legal or otherwise)
with any person with respect to any securities of the Company, including, but
not limited to transfer or voting of any of such securities, finder's fees,
joint ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or loss, or the giving or withholding of proxies.
At the request of TI made pursuant to the Combination Agreement, Dr.
Singleton has entered into an agreement with ATI dated August 15, 1996 (the
"Affiliate Agreement") under which he has agreed, among other things; (i) to
comply with those restrictions on the transfer of the Shares that are
applicable, under the Securities Act of 1933 and the rules and regulations (the
"SEC Rules and Regulations") of the Securities and Exchange Commission (the
"SEC") promulgated thereunder, including Rule 145, to persons who were
affiliates of TI at the time the Combination Agreement was submitted to a vote
of TI's stockholders (which vote occurred on August 15, 1996 and which
restrictions relate to, among other things, the amount of Shares that may be
disposed of, and the manner of disposition thereof, under paragraphs (c), (e),
(f) and (g) of Rule 144 under the Rules and Regulations); and (ii) not to
dispose of any Shares until after such time as results covering at least thirty
days of combined operations of TI and Allegheny Ludlum Corporation have been
published by ATI within the meaning of Section 201.01 of the SEC's Certification
of Financial Reporting Policies. The foregoing summary of certain provisions of
the Affiliate Agreement is subject in its entirety to the full text thereof,
which is filed as Exhibit 2 hereto.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1. Amended and Restated Agreement and Plan of Merger and Combination,
- --------- dated as of April 1, 1996, by and among Allegheny Teledyne
Incorporated, Allegheny Ludlum Corporation, ALS Merger Corporation,
Teledyne, Inc. and TDY Merger, Inc.
Exhibit 2. Affiliate Agreement dated August 15, 1996, by and between Dr. Henry
- --------- E. Singleton and Allegheny Teledyne Incorporated.
-5-
<PAGE>
SIGNATURE.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: August 21, 1996
/s/ Henry E. Singleton
____________________________________
Henry E. Singleton
-6-
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
- ------- ----------- ----
<S> <C> <C>
Exhibit 1. Amended and Restated Agreement and Plan of Merger and
- --------- Combination, dated as of April 1, 1996, by and among
Allegheny Teledyne Incorporated, Allegheny Ludlum
Corporation, ALS Merger Corporation, Teledyne, Inc.
and TDY Merger, Inc.
Exhibit 2. Affiliate Agreement dated August 15, 1996, by and
- --------- between Dr. Henry E. Singleton and Allegheny
Teledyne Incorporated.
</TABLE>
-7-
<PAGE>
Exhibit 1
---------
-8-
<PAGE>
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER AND COMBINATION
DATED AS OF APRIL 1, 1996
AS AMENDED AND RESTATED
AMONG
ALLEGHENY TELEDYNE INCORPORATED,
ALLEGHENY LUDLUM CORPORATION,
ALS MERGER CORPORATION,
TELEDYNE, INC.
AND
TDY MERGER, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I
THE COMBINATION.......................................................... A-1
Section 1.1 Effective Time of the Combination....................... A-1
Section 1.2 Closing................................................. A-2
Section 1.3 Effects of the Combination.............................. A-2
Section 1.4 Headquarters of ATI..................................... A-2
ARTICLE II
CONVERSION OF SECURITIES................................................. A-2
Section 2.1 Conversion of Capital Stock............................. A-3
Section 2.2 Exchange of Certificates................................ A-3
Section 2.3 No Further Transfers.................................... A-4
Section 2.4 No Fractional Shares.................................... A-4
Section 2.5 Withholding............................................. A-5
Section 2.6 Retirement of ATI Common Stock Issued Prior to the
Effective Time.......................................... A-5
ARTICLE III
REPRESENTATIONS AND WARRANTIES........................................... A-5
Section 3.1 Representations and Warranties of ALC and TI............ A-5
Section 3.2 Representations of ATI, ALC Merger Sub and TI Merger
Sub..................................................... A-14
ARTICLE IV
COVENANTS................................................................ A-15
Section 4.1 No Solicitation......................................... A-15
Section 4.2 Stockholder Approvals................................... A-15
Section 4.3 Conduct of Business..................................... A-16
Section 4.4 Access to Information................................... A-17
Section 4.5 Legal Conditions to the Combination..................... A-18
Section 4.6 Public Announcements.................................... A-18
Section 4.7 Tax-Free Reorganization................................. A-18
Section 4.8 Pooling Accounting...................................... A-18
Section 4.9 Affiliate Agreements.................................... A-18
Section 4.10 Representations, Covenants and Conditions; Further
Assurances.............................................. A-18
Section 4.11 Stock Plans............................................. A-19
Section 4.12 Indemnification; Insurance.............................. A-20
Section 4.13 TI Rights Plan.......................................... A-22
Section 4.14 Notification of Certain Matters......................... A-22
Section 4.15 Plan Documents.......................................... A-22
Section 4.16 ATI Matters............................................. A-22
ARTICLE V
CONDITIONS TO COMBINATION................................................ A-23
Section 5.1 Conditions to Each Party's Obligation to Effect the
Combination............................................. A-23
Section 5.2 Additional Conditions to Obligation of ALC.............. A-24
Section 5.3 Additional Conditions to Obligation of TI............... A-24
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE VI
TERMINATION AND AMENDMENT............................................ A-25
Section 6.1 Termination......................................... A-25
Section 6.2 Effect of Termination............................... A-26
Section 6.3 Fees and Expenses................................... A-26
Section 6.4 Amendment........................................... A-27
Section 6.5 Extension; Waiver................................... A-27
ARTICLE VII
MISCELLANEOUS........................................................ A-27
Section 7.1 Nonsurvival of Representations, Warranties and
Agreements.......................................... A-27
Section 7.2 Notices............................................. A-27
Section 7.3 Interpretation...................................... A-28
Section 7.4 Knowledge........................................... A-29
Section 7.5 Counterparts........................................ A-29
Section 7.6 Entire Agreement; No Third Party Beneficiaries...... A-29
Section 7.7 Governing Law....................................... A-29
Section 7.8 Assignment.......................................... A-29
Section 7.9 Severability........................................ A-29
Section 7.10 Failure or Indulgence Not Waiver; Remedies
Cumulative.......................................... A-29
Annex A--Restated Certificate of Incorporation of Allegheny Teledyne
Incorporated
Annex B--Allegheny Teledyne Incorporated Amended and Restated Bylaws
Annex C--Directors and Officers of Allegheny Teledyne Incorporated
Annex D--Form of Affiliate Agreement
Annex E--Allegheny Teledyne Incorporated 1996 Incentive Plan
Annex F--Allegheny Teledyne Incorporated 1996 Non-Employee Director
Stock Compensation Plan
</TABLE>
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 Allegheny Teledyne Incorporated (formerly
XYZ/Power, Inc.), a Delaware corporation ("ATI"), Allegheny Ludlum
Corporation, a Pennsylvania corporation ("ALC"), ALS Merger Corporation, a
Pennsylvania corporation ("ALC MERGER SUB") and wholly owned subsidiary of
ATI, Teledyne, Inc., a Delaware corporation ("TI"), and TDY Merger, Inc., a
Delaware corporation ("TI MERGER SUB") and wholly owned subsidiary of ATI.
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 ALC Merger Sub will merge with and into ALC (the "ALC MERGER"), and
TI Merger Sub will merge with and into TI (the "TI MERGER"), whereupon ALC and
TI will each become a wholly owned subsidiary of ATI, and the shareholders of
ALC and the stockholders of TI will become shareholders of ATI (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
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
1
<PAGE>
"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 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 Merger Sub as
in effect immediately prior to the Effective Time shall become 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
ATI 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 4.16, the directors and officers of ATI shall
initially be as set forth on Annex C attached hereto.
Section 1.4 Headquarters of ATI. The corporate headquarters of ATI shall be
maintained in Pittsburgh, Pennsylvania.
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 ATI, ALC Merger Sub or TI Merger Sub:
2
<PAGE>
(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 ATI ("ATI 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 ATI 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.
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 ChaseMellon Shareholder Services, L.L.C. or another
exchange agent selected by ATI (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 ATI
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 ATI 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 ATI
to evidence ownership of the number of whole shares of ATI 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 ATI 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
ATI Common Stock evidenced thereby and such holder shall not be entitled to
vote such shares of ATI 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 ATI
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 ATI 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
3
<PAGE>
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 ATI 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 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 ATI)
such certificates for exchange into certificates evidencing ATI 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 ATI 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 ATI 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 ATI 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, ATI will issue in exchange for
such lost, stolen or destroyed certificate the certificate evidencing shares
of ATI Common Stock deliverable in respect thereof, as determined in
accordance with this Article II. When authorizing such issue of the
certificate of shares of ATI Common Stock in exchange therefor, the Board of
Directors of ATI 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 ATI a bond in such sum as it may direct as indemnity
against any claim that may be made against ATI 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 of TI shall constitute, as 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 ATI 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 ATI Common Stock (after
aggregating all fractional shares of ATI 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 ATI Common Stock on the New
York Stock Exchange for each of the five (5) consecutive trading days
immediately preceding the
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Effective Time as quoted in the Wall Street Journal or other reliable
financial newspaper or publication, or, if the ATI 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 ATI 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
ATI.
Section 2.5 Withholding. ATI 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 ATI 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 ATI 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 ATI or the Exchange Agent.
Section 2.6 Retirement of ATI Common Stock Issued Prior to the Effective
Time. ATI shall not issue any shares of ATI Common Stock prior to the
Effective Time other than shares issued to any person or entity approved by
both ALC and TI and on terms consistent with the following sentence. Any
shares of ATI Common Stock issued and outstanding immediately prior to the
Effective Time shall be re-acquired by ATI, and cancelled and retired,
immediately prior to or at the Effective Time.
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 ATI, and TI (except for paragraph (b) below), hereby
represents and warrants to ALC, ALC Merger Sub and ATI, 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
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such party or any Subsidiary of such party that do not have a 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 two shares 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 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
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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 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 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"),
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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 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 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
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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 ATI and its Subsidiaries from and
after the Effective Time (a "ATI 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) except as contemplated by Section 4.3(l), 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 $.31
per quarter on the TI Common Stock and regular cash dividends on the TI Series
E Cumulative Preferred Stock 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.
(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
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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-
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.
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(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.
(1) 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, 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 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
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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 ATI from accounting
for the business combination to be effected by the Combination as a pooling of
interests.
(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.
(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.
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(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 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.
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(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 ATI Common
Stock in 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 ATI 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 ATI, ALC, TI and
their respective Subsidiaries (in each case, taken as a whole), the
acquisition of any material property by ATI, ALC, TI and their respective
Subsidiaries (in each case, taken as a whole) or the conduct of the business
by ATI, 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 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 ATI, ALC Merger Sub and TI Merger Sub. Each
of ATI, ALC Merger Sub and TI Merger Sub 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
Articles or Certificate of Incorporation and Bylaws, (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
in a violation of, or default under (with or without notice or lapse of time
or both), any provision of its Articles or Certificate of Incorporation or
Bylaws, and (vi) it has engaged in no other business activities and has
conducted its operations only as contemplated hereby.
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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 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. (a) 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 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.
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(b) Unless this Agreement shall have been previously terminated in
accordance with Article VI, ATI, as the 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 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 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
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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;
(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 in the second quarter of 1996 and
$.16 per share of ALC Common Stock in the third quarter of 1996 and thereafter
or $.31 per share of TI Common Stock per quarter and regular cash dividends on
shares of TI Series E Cumulative Preferred Stock (including the dividend
payable in connection with the redemption thereof), or purchase or redeem any
shares of its capital stock except, in the case of TI, shares 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.
Prior to the Effective Time, none of ATI, ALC Merger Sub or TI Merger Sub
shall conduct any business other than for the purpose of fulfilling its
respective obligations under, and consummating the transactions contemplated
by, this Agreement.
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
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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 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 ATI 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"). ATI shall be entitled to place
appropriate legends on the certificates evidencing any ATI 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
ATI 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
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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 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 ATI.
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 ATI 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 ATI 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 ATI'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 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
ATI 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 ATI 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
ATI'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 of a participant under
the TI ESPP ("TI ESPP Rights") to have shares of TI Common Stock purchased for
the TI ESPP account of such participant, both with contributions made by such
participant and with the matching contributions of TI, shall be converted into
and become a right to have shares of ATI Common Stock purchased for such
participant's TI ESPP account on terms whereby the "Price" (as defined in the
TI ESPP) shall mean either (i) with respect to treasury shares or authorized
but unissued shares purchased from ATI, the average of the closing sale prices
per share of TI Common Stock divided by 1.925 (with respect to trading days
prior to and including the date on which the Effective Time occurs) or ATI
Common Stock (with respect to trading days following but excluding the date on
which the Effective Time occurs), as the case may be, quoted in The Wall
Street Journal or successor journal for the last five trading days of the
calendar month preceding the "Purchase Date" (as defined in the TI ESPP), or
(ii) with respect to issued and outstanding shares of ATI Common Stock
purchased on the open market, the average price per share of ATI Common Stock
paid by the "Plan Administrator" (as defined in the TI ESPP) on such Purchase
Date. At or prior to the Effective
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Time, TI shall make all necessary arrangements with respect to the TI ESPP to
permit the assumption of the TI ESPP Rights by ATI 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 ATI'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 ATI Common Stock. At the Effective Time, (i) each
TI Option assumed by ATI may be exercised solely for shares of ATI Common
Stock, (ii) the number of shares of ATI Common Stock subject to each TI Option
shall be equal to the number of shares of ATI Common Stock into which shares
of TI Common Stock subject to such TI Option 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
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 ATI 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, ATI 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, ATI shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of ATI 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, ATI 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 ATI 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, ATI 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). ATI 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, as an integral part of the
Combination, ratification of the ALC Stock Plans and the TI Stock Plans, and
the issuance of ATI Common Stock in accordance with the terms of the
Derivative Securities, by the shareholders of ATI.
Section 4.12 Indemnification; Insurance. (a) ALC shall, and from and after
the Effective Time ATI 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
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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 ATI 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 ATI after the
Effective Time), (ii) ALC (or after the Effective Time, ATI) 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, ATI) will use all reasonable efforts to assist in the vigorous
defense of any such matter, provided that neither ALC nor ATI 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, ATI (but the failure so to notify
shall not relieve ALC or ATI from any 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, ATI) 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 ATI 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
ATI 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 ATI after
the Effective Time), (ii) TI (or after the Effective Time, ATI) 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, ATI) will use all reasonable efforts to assist in the vigorous
defense of any such matter, provided that neither TI nor ATI 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 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, ATI (but the failure so to notify shall not relieve
TI or
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ATI 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, ATI) 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, ATI 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 ATI 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 (subject to the
following sentence) 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. As soon as practicable after the
date hereof, TI shall amend the TI Rights Plan in a manner satisfactory to ALC
such that it provides that the rights issued thereunder shall expire and cease
to be exercisable at the Effective Time.
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 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 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 4.16 ATI 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 ATI's directors and officers to consist of those
persons identified in Annex C attached hereto. At or prior to the Effective
Time, ATI will (i) adopt the Allegheny Teledyne Incorporated 1996 Incentive
Plan in the form attached hereto as Annex E and the Allegheny Teledyne
Incorporated 1996 Non-Employee Director Stock Compensation Plan in the form
attached hereto as Annex F, and (ii) take all corporate action necessary to
reserve for issuance a sufficient number of shares of ATI Common Stock for
issuance upon exercise of stock options and other rights subject to grant
under the plans referred to in the immediately preceding sentence.
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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 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 ATI, 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 ATI,
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 ATI'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. ATI shall have received all state securities or "Blue
Sky" permits and other authorizations necessary to issue shares of ATI Common
Stock pursuant to the Combination.
(f) Pooling Letters. Allegheny Ludlum shall have received a letter from
Ernst & Young LLP and Teledyne shall have received a letter from Arthur
Andersen LLP, each such letter to be dated the date of the Joint Proxy
Statement, which letters shall be confirmed in writing on the date on which
the Effective Time occurs (the "EFFECTIVE DATE"), to the effect (i) in the
case of the letters from Ernst & Young LLP to Allegheny Ludlum, that Allegheny
Ludlum qualifies as an entity that may be a party to a business combination
for which the pooling of interests method of accounting is available and that
the business combination to be effected by the Combination will be treated for
accounting purposes as a pooling of interests transaction under generally
accepted accounting principles, and (ii) in the case of the letters from
Arthur Andersen LLP to Teledyne, that Teledyne qualifies as an entity that may
be a party to a business combination for which the pooling of interests method
of accounting is available.
(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 in connection with the Combination and the
other transactions contemplated hereby, the failure to obtain which would
constitute a ATI Material Adverse Effect.
(h) NYSE. The shares of ATI 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 ATI, ALC Merger
Sub and TI Merger Sub 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.
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(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 Obligation 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 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, dated the Effective Date, 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 ATI, 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, dated the Effective Date, to the effect that the TI Merger will
be treated for federal income tax purposes as either a tax-free
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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 ATI, 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 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 Combination 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 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
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(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 ATI
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.
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) 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) 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
(2) the termination of this Agreement by TI pursuant to Section 6.1(g) after
a breach by ALC of this Agreement; or
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(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.
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):
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(a) if to ALC, to:
Allegheny Ludlum Corporation
1000 Six PPG Place
Pittsburgh, Pennsylvania 15222
Attention: Chairman
Telecopy No. (412) 394-3010
with a copy to:
Jon D. Walton
Vice President-General Counsel and Secretary
Allegheny Ludlum Corporation
1000 Six PPG Place
Pittsburgh, Pennsylvania 15222
Telecopy No. (412) 394-3010
and to:
Ronald D. West
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, Pennsylvania 15222
Telecopy No. (412) 355-6501
(b) if to TI, to:
Teledyne, Inc.
2049 Century Park East
Los Angeles, California 90067-3101
Attention: Chairman and Chief Executive Officer
Telecopy No. (310) 551-4204
with copies to:
Judith R. Nelson, Secretary
Elizabeth J. Keefer, General Counsel
Teledyne, Inc.
2049 Century Park East
Los Angeles, California 90067-3101
Telecopy No. (310) 551-4366
and to:
Edmund M. Kaufman
Irell & Manella LLP
333 South Hope Street
Los Angeles, California 90071-3042
Telecopy No. (213) 229-0515
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,"
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"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 the knowledge of ALC or TI shall mean the 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 of any party hereto in the exercise of any right
hereunder shall impair such right or 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.
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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.
ALLEGHENY TELEDYNE INCORPORATED ALLEGHENY LUDLUM CORPORATION
By: /s/ Richard P. Simmons By: /s/ Richard P. Simmons
--------------------------------- -----------------------------
Title: Chairman of the Board Title: Chairman
/s/ William P. Rutledge TELEDYNE, INC.
- ------------------------------------ By: /s/ William P. Rutledge
Title: President and Chief Executive -----------------------------
Officer Title: Chairman of the Board and
Chief Executive Officer
ALS MERGER CORPORATION
By: /s/ Richard P. Simmons
---------------------------------
Title: President
TDY MERGER, INC.
By: /s/ William P. Rutledge
---------------------------------
Title: President
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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.
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B. The Board of Directors may adopt, amend or repeal the Bylaws of
the Corporation. The stockholders of the Corporation may not adopt,
amend or repeal the Bylaws of the Corporation other than by the
affirmative vote of 75% of the combined voting power of all outstanding
voting securities of the Corporation entitled to vote generally in the
election of directors of the Board of Directors of the Corporation
("Voting Power"), voting together as a single class.
C. The directors of the Corporation need not be elected by written
ballot unless the Bylaws so provide.
SIX: The Corporation reserves the right to amend and repeal any provision
contained in this Restated Certificate of Incorporation in the manner from
time to time prescribed by the laws of the State of Delaware. All rights
herein conferred are granted subject to this reservation.
SEVEN: A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which such director derived
any improper personal benefit. No amendment to or repeal of this Article SEVEN
shall apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment or repeal. If the Delaware
General Corporation Law is amended to authorize corporate action further
eliminating the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as amended.
EIGHT: A. Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is otherwise involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is or was a
director or an officer of the Corporation or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan (hereinafter an
"indemnitee"), whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation to provide
prior to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) reasonably incurred or suffered by such indemnitee in
connection therewith; provided, however, that, except as provided in Section C
of this Article EIGHT with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee
only if such proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation.
B. Right to Advancement of Expenses. The right to indemnification conferred
in Section A of this Article EIGHT shall include the right to be paid by the
Corporation the expenses (including attorneys' fees) incurred in defending any
such proceeding in advance of its final disposition (hereinafter an
"advancement of expenses"); provided, however, that, if the Delaware General
Corporation Law requires, an advancement of expenses incurred by an indemnitee
in his or her capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such indemnitee, including, without
limitation, service to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"),
by or on behalf of such indemnitee, to repay all amounts so advanced if it
shall ultimately be determined by final judicial decision from which there is
no further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Section B or otherwise. The rights to indemnification and to the advancement
of expenses conferred in Sections A and B of this Article EIGHT shall be
contract rights and such rights shall continue as to an indemnitee who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
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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 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.
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Only such business shall be conducted at a special meeting of stockholders
as shall have been brought before the meeting pursuant to the Corporation's
notice of meeting. Nominations of persons for election to the Board of
Directors may be made at a special meeting of stockholders at which directors
are to be elected pursuant to the Corporation's notice of meeting (a) by or at
the direction of the Board of Directors or (b) by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice as
provided in this Article NINE, Section B, who shall be entitled to vote at the
meeting and who complies with the notice procedures set forth in this Article
NINE, 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, Section C shall be
delivered to the Secretary of the Corporation at the principal executive
offices of the Corporation not earlier than the ninetieth day prior to such
special meeting and not later than the close of business on the later of the
seventy-fifth day prior to such special meeting or the tenth day following the
day on which a public announcement (as defined in subparagraph (e) of Article
NINE, Section C) is first made of the special meeting and of the nominees
proposed by the Board of Directors to be elected at such meeting.
C. Notice of Nominations and Action to be Taken at an Annual Meeting.
(a) Nominations of persons for election to the board of directors of the
Corporation and the proposal of business to be considered by the stockholders
may be made at an annual meeting of stockholders (i) pursuant to the
Corporation's notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) by any stockholder of the Corporation who was a stockholder
of record at the time of giving of the notice provided for in this Article
NINE, Section C who is entitled to vote at the meeting and who complies with
the notice procedures set forth in this Article NINE, Section C.
(b) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (iii) of paragraph (a) of
this Article NINE, Section (C), the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation and such business must
be a proper matter for stockholder action under the Delaware General
Corporation Law. To be timely, a stockholder's notice shall be delivered to
the Secretary at the principal executive offices of the Corporation not less
than seventy-five days nor more than ninety days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than thirty
days or delayed by more than sixty days from such anniversary date, or in the
case of the first annual meeting of the Corporation's stockholders after the
Corporation becomes subject to the reporting requirements of Section 12 of the
Securities Exchange Act of 1934, as amended, notice by the stockholder to be
timely must be so delivered not earlier than the ninetieth day prior to such
annual meeting and not later than the close of business on the later of the
sixtieth day prior to such annual meeting or the tenth day following the day
on which public announcement of the date of such meeting is first made. Such
stockholder's notice shall set forth (i) as to each person whom the
stockholder proposes to nominate for election or reelection as a director all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the 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
4
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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 in compliance with this
Article NINE, Section C, to declare that such defective proposed business or
nomination shall be disregarded.
(e) For purposes of this Article NINE, Section C, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or a comparable national news service or in a
document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(f) Notwithstanding the foregoing provisions of this Article NINE, Section
C, a stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Article NINE, Section C. Nothing in this Article
NINE, Section C shall be deemed to affect any rights of stockholders to
request inclusion of proposals in the Corporation's proxy statement pursuant
to Rule 14a-8 under the Exchange Act.
(g) The Bylaws of the Corporation may contain additional provisions not
inconsistent with this Article NINE, Section C regarding nominations of
persons for election to the Board of Directors of the Corporation and the
proposal of business to be transacted by the stockholders. Without limiting
the category of such provisions which would not be inconsistent with this
Article NINE, Section C, a provision in the bylaws of the Corporation which
sets forth additional information which must be provided by a stockholder in
the notice required by this Article NINE, Section C shall not be deemed to be
so inconsistent.
D. Voting. The stockholders shall not have the right to cumulate their votes
in the election of directors.
TEN: (A) Except as otherwise fixed pursuant to the provisions of Article
FOUR hereof relating to the rights of the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation to elect additional directors under specified circumstances, the
number of directors of the Corporation shall be fixed from time to time by the
affirmative vote of a majority of the whole Board of Directors. The directors,
other than those who may be elected by the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation, shall be classified, with respect to the time for which they
severally hold office, into three classes: Class I, Class II and Class III.
The terms of office of the initial classes of directors shall be as follows:
the Class I Directors shall be elected to hold office for a term to expire at
the first annual meeting of stockholders after the initial classification of
directors; the Class II Directors shall be elected to hold office for a term
to expire at the second annual meeting of stockholders after the initial
classification of directors; and the Class III Directors shall be elected to
hold office for a term to expire at the third annual meeting of stockholders
after the initial classification of directors; and in the case of each class,
until their respective successors are duly elected and qualified. At each
annual meeting of stockholders the directors elected to succeed those whose
terms have expired shall be identified as being of the same class as the
directors they succeed and shall be elected to hold office for a 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.
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(B) Except as otherwise fixed pursuant to the provisions of Article FOUR
hereof relating to the rights of the holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation
to elect directors:
(a) In case of any increase in the number of directors, the additional
director or directors, and in case of any vacancy in the Board of Directors
due to death, resignation, removal, disqualification or any other reason, the
successors to fill the vacancies, shall be elected only by a majority of the
directors then in office, even though less than a quorum, or by a sole
remaining director and not by the stockholders, unless otherwise provided by
law or by resolution adopted by a majority of the whole Board of Directors.
(b) Directors appointed in the manner provided in paragraph (a) to newly
created directorships resulting from any increase in the authorized number of
directors or any vacancies on the Board of Directors resulting from death,
resignation, removal, disqualification or any other cause shall hold office
for a term expiring at the next annual meeting of stockholders at which the
term of the class to which they have been elected expires.
(c) No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
(C) Except as otherwise fixed pursuant to the provisions of Article FOUR
hereof relating to the rights of the holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation
to elect directors, any director or directors may be removed from office at
any time, but only for cause and only by the affirmative vote of 75% of the
Voting Power, voting together as a single class.
ELEVEN: In addition to any other considerations which the Board of
Directors, any committee thereof or any individual director lawfully may take
into account in determining whether to take or refrain from taking corporate
action on any matter, including making or declining to make any
recommendations to the stockholders of the Corporation, the Board of
Directors, any committee thereof or any individual director may in its, his or
her discretion consider the long term as well as the short term best interests
of the Corporation (including the possibility that these interests may best be
served by the continued independence of the Corporation), taking into account
and weighing as deemed appropriate the effects of such action on employees,
suppliers, distributors and customers of the Corporation and its subsidiaries
and the effect upon communities in which the offices or facilities of the
Corporation and its subsidiaries are located and any other factors considered
pertinent. This Article ELEVEN shall be deemed to grant discretionary
authority to the Board of Directors, any committee thereof and each individual
director, and shall not be deemed to provide to any specific constituency any
right to be considered.
TWELVE: In addition to the requirements of (i) law and (ii) the other
provisions of this Restated Certificate of Incorporation, the affirmative vote
of the holders of at least two-thirds of 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
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of the Corporation as shown on its certified balance sheet as of the end of
the fiscal year preceding the proposed disposition, (5) any reclassification
of Common Stock of the Corporation, or any recapitalization involving Common
Stock of the Corporation, consummated within five years after a Significant
Shareholder becomes a Significant Shareholder, whereby the number of
outstanding shares of Common Stock is reduced or any of such shares are
converted into or exchanged for cash or other securities, (6) any dissolution
and (7) any agreement, contract or other arrangement providing for any of the
transactions described in this definition of Fundamental Change but,
notwithstanding anything to the contrary herein, Fundamental Change shall not
include any merger pursuant to the Delaware General Corporation Law, as
amended from time to time, which does not require a vote of the Corporation's
stockholders for approval.
As used in this Article TWELVE, "Significant Shareholder" shall mean any
person who or which beneficially owns a number of shares of Common Stock of
the Corporation, whether or not such number includes shares not then
outstanding or entitled to vote, which exceeds a number equal to fifteen
percent of the outstanding shares of Common Stock of the Corporation entitled
to vote, any and all affiliates of such person and any and all associates and
family members of such person or any such affiliate.
THIRTEEN: Notwithstanding any other provisions of this Restated Certificate
of Incorporation or any provision of law which might otherwise permit a lesser
vote or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of Voting Stock required by law or this Restated
Certificate of Incorporation, the affirmative vote of the holders or at least
75% of the Voting Power, voting together as a single class, shall be required
to alter, amend, supplement or repeal, or to adopt any provision inconsistent
with the purpose or intent of, paragraph B of Article FIVE and Articles SEVEN,
NINE, TEN, ELEVEN, TWELVE or THIRTEEN; provided, however, that no amendment of
Article TWELVE shall apply to any person who is a Significant Shareholder at
the time of the adoption of such amendment.
7
<PAGE>
ANNEX B
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ALLEGHENY TELEDYNE INCORPORATED
AMENDED AND RESTATED BYLAWS
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<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C>
ARTICLE I OFFICES.......................................................... 1
Section 1. Registered Office............................................. 1
Section 2. Corporate Headquarters........................................ 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........................................... 1
Section 6. Proxies and Voting............................................ 2
Section 7. Stock List.................................................... 2
ARTICLE III BOARD OF DIRECTORS............................................. 2
Section 1. Duties and Powers............................................. 2
Section 2. Number and Term of Office..................................... 2
Section 3. Vacancies..................................................... 3
Section 4. Meetings...................................................... 3
Section 5. Quorum........................................................ 4
Section 6. Actions of Board Without a Meeting............................ 4
Section 7. Meetings by Means of Conference Telephone..................... 4
Section 8. Committees.................................................... 4
Section 9. Compensation.................................................. 4
Section 10. Removal...................................................... 4
ARTICLE IV OFFICERS........................................................ 4
Section 1. General....................................................... 4
Section 2. Election; Term of Office...................................... 4
Section 3. Chairman of the Board......................................... 5
Section 4. Chief Executive Officer....................................... 5
Section 5. President..................................................... 5
Section 6. Vice President................................................ 5
Section 7. Secretary..................................................... 5
Section 8. Assistant Secretaries......................................... 6
Section 9. Treasurer..................................................... 6
Section 10. Assistant Treasurers......................................... 6
Section 11. Other Officers............................................... 6
ARTICLE V STOCK............................................................ 6
Section 1. Form of Certificates.......................................... 6
Section 2. Signatures.................................................... 6
Section 3. Lost Certificates............................................. 6
Section 4. Transfers..................................................... 7
Section 5. Record Date................................................... 7
Section 6. Beneficial Owners............................................. 7
Section 7. Voting Securities Owned by the Corporation.................... 7
</TABLE>
i
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE VI NOTICES......................................................... 7
Section 1. Notices....................................................... 7
Section 2. Waiver of Notice.............................................. 7
ARTICLE VII GENERAL PROVISIONS............................................. 8
Section 1. Dividends..................................................... 8
Section 2. Disbursements................................................. 8
Section 3. Corporation Seal.............................................. 8
ARTICLE VIII AMENDMENTS.................................................... 8
</TABLE>
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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, County of Allegheny,
Commonwealth of 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 stockholders for the election
of directors or for any other purpose shall be held at such time and place,
either within or without the State of Delaware, as shall be designated from
time to time by the Board of Directors or the officer of the Corporation
calling the meeting as authorized by the Corporation's Certificate of
Incorporation and stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
Section 2. Annual Meeting. Each annual meeting of stockholders shall be held
on such date and at such time as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting, at 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 voting power 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 voting power 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.
<PAGE>
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 at the
discretion of the chairman 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 chairman of the meeting.
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 the affirmative vote of the holders of a
majority of the shares of stock entitled to vote represented in person or by
proxy at the meeting.
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 and affairs 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 the annual meetings of stockholders. Any director may resign at
any time upon written notice to the Corporation. Directors need not be
stockholders.
2
<PAGE>
The directors, other than those who may be elected by the holders of any
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation, shall be classified, with respect to the time
for which they severally hold office, into three classes: Class I, Class II
and Class III. The terms of office of the initial classes of directors shall
be as follows: the Class I Directors shall be elected to hold office for a
term to expire at the first annual meeting of stockholders after the initial
classification of the directors, 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 after the initial
classification of the directors, 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 after the initial
classification of the directors, 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.
(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.
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.
3
<PAGE>
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 total number of directors shall constitute a
quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act
of the Board of Directors. If a quorum shall not be present at any meeting of
the Board of Directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting,
until a quorum shall be present.
Section 6. Actions of Board Without a Meeting. Unless otherwise provided by
the Certificate of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board
of Directors or committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
of Directors or committee.
Section 7. Meetings by Means of Conference Telephone. Unless otherwise
provided by the Certificate of Incorporation or these Bylaws, members of the
Board of Directors of the Corporation, or any committee designated by the
Board of Directors, may participate in a meeting of the Board of Directors or
such committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this Section 7 shall
constitute presence in person at such meeting.
Section 8. Committees. The Board of Directors may, by resolution passed by a
majority of the 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. 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 and expense reimbursement of directors including the
authority to fix the compensation and expense reimbursement of members of
special or standing committees and the chairmen of such committees. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
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
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, and a President, such number of Vice Presidents as the
Board of Directors shall elect from time to time (one or more of whom may be
designated Executive Vice Presidents), 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
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(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
direction of 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. 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 Chief Executive Officer (if a
member of the Board of Directors) 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 5. President. The President shall have general and active management
of the business of the Corporation, subject to the direction of the Board of
Directors, and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The President shall have and exercise such
further powers and duties as may be specifically delegated to or vested in the
President from time to time by these Bylaws or the Board of Directors.
Section 6. Vice President. In the absence of the President or in the event
of inability of or refusal to act by the President, 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
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kept or filed are properly kept or filed, as the case may be except as
otherwise provided in the Bylaws of the Corporation or by resolution of the
Board of Directors.
Section 8. Assistant Secretaries. Except as may be otherwise provided in
these Bylaws, Assistant Secretaries, if there be any, shall perform such
duties and have such powers as from time to time may be assigned to them by
the Board of Directors, the President, or the Secretary, and in the absence of
the Secretary or in the event of the inability of or refusal to act by the
Secretary, the Assistant Secretary (or if there be more than one Assistant
Secretary, the Assistant Secretaries in the order designated by the Board of
Directors or in the absence of any designation, then in order of their
election) 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 in the absence of the
Treasurer or in the event of the inability of or refusal to act by the
Treasurer, the Assistant Treasurer (or if there be more than one Assistant
Treasurer, the Assistant Treasurers in the order designated by the Board of
Directors or in the absence of any designation, then in the order of their
election) 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 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
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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 shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by law.
Section 7. Voting Securities Owned by the Corporation. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the Chairman of the Board, the President, any
Vice President or the Secretary and any such officer may, in the name of and
on behalf of the Corporation, take all such action as any such officer may
deem advisable to vote in person or by proxy at any meeting of security
holders of any corporation in which the Corporation may own securities and at
any such meeting shall possess and may exercise any and all rights and power
incident to the ownership of such securities and which, as the owner thereof,
the Corporation might have exercised and possessed if present. The Board of
Directors may, by resolution, from time to time confer like powers upon any
other person or persons.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law, the
Certificate of Incorporation or these Bylaws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at such
person's address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Written notice may also
be given personally or by telegram, facsimile transmission, telex or cable or
by overnight delivery or courier service 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,
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signed by the person or persons entitled to such notice, whether before or
after the time stated therein, shall be deemed equivalent to notice.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting or by any
Committee of the Board of Directors having such authority at any meeting
thereof, and may be paid in cash, in property, in shares of the capital stock
or in any combination thereof. Before payment of any dividend, there may be
set aside out of any funds of the Corporation available for dividends such sum
or sums as the Board of Directors from time to time, in its absolute
discretion, deems proper as a reserve or reserves to meet contingencies, or
for equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for any proper purpose, and the Board of Directors may modify
or abolish any such reserve.
Section 2. Disbursements. All notes, checks, drafts and orders for the
payment of money issued by the Corporation shall be signed in the name of the
Corporation by such officers or such other persons as the Board of Directors
may 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
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.
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ANNEX C
DIRECTORS OF ATI:
Initial Directors of ATI:
Richard P. Simmons
Robert P. Bozzone
Arthur H. Aronson
Paul S. Brentlinger
C. Fred Fetterolf
Thomas Marshall
W. Craig McClelland
Charles J. Queenan, Jr.
James E. Rohr
Frank V. Cahouet
Diane C. Creel
William G. Ouchi
George A. Roberts
William P. Rutledge
Fayez Sarofim
Henry E. Singleton
Ms. Creel, Messrs. Fetterolf, Marshall and Simmons and Dr. Singleton will
be members of a class that will serve an initial term expiring at the first
annual meeting of stockholders of ATI to be held after the Effective Time;
Messrs. Aronson, Brentlinger, Rohr and Sarofim and Drs. Ouchi and Roberts
will be members of a class that will serve an initial term expiring at the
second annual meeting of stockholders of ATI to be held after the Effective
Time; and Messrs. Bozzone, Cahouet, McClelland, Queenan and Rutledge will
be members of a class that will serve an initial term expiring at the third
annual meeting of stockholders of ATI to be held after the Effective Time.
If, prior to the Effective Time, any of Messrs. Simmons, Bozzone, Aronson,
Brentlinger, Fetterolf, Marshall, McClelland, Queenan or Rohr shall die or
otherwise be unable or unwilling to serve, then a substitute for each such
person shall be named by ALC. If, prior to the Effective Time, any of Ms.
Creel or Messrs. Cahouet, Rutledge or Sarofim, or Drs. Ouchi, Roberts or
Singleton shall die or otherwise be unable or unwilling to serve, then a
substitute for each such person shall be named by TI.
OFFICERS OF ATI:
Chairman of the Board and Chairman of the Executive Committee: Richard P.
Simmons
Vice Chairman of the Board: Robert P. Bozzone
President and Chief Executive Officer: William P. Rutledge
Executive Vice President: Arthur H. Aronson
Senior Vice President and Chief Financial Officer: James L. Murdy
Vice President--General Counsel and Secretary: Jon D. Walton
<PAGE>
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 Amended and Restated Agreement and
Plan of Merger and Combination, dated as of April 1, 1996 (the "Agreement"),
among Allegheny Teledyne Incorporated, a Delaware corporation ("ATI"), ALC,
ALS Merger Corporation, a Pennsylvania corporation, TI and TDY Merger, Inc., a
Delaware corporation, at the Effective Time (as defined in the Agreement) ALC
and TI will each become a wholly owned subsidiary of ATI.
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
("ATI Common Stock"), of ATI. 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, ATI
that in the event the undersigned receives any ATI Common Stock in the
Combination:
(A) The undersigned shall not make any sale, transfer or other
disposition of the ATI 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 ATI 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 ATI
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 ATI Common Stock has
not been registered under the Act, the undersigned may not sell, transfer
or otherwise dispose of ATI 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 ATI, such sale, transfer or other disposition is otherwise
exempt from registration under the Act.
<PAGE>
Allegheny Teledyne Incorporated
, 1996
Page 2
(D) The undersigned understands that ATI will be under no obligation to
register the sale, transfer or other disposition of the ATI 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 ATI's transfer agent with respect to the ATI Common Stock owned by
the undersigned and that there may be placed on the certificates for the
ATI 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 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
Allegheny Teledyne Incorporated."
(F) The undersigned also understands that unless the transfer by the
undersigned of the undersigned's ATI Common Stock has been registered under
the Act or is a sale made in conformity with the provisions of this letter,
ATI 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 ATI (i) a copy of a letter
from the staff of the Commission, or an opinion of counsel, in form and
substance reasonably satisfactory to ATI 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.
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Allegheny Teledyne Incorporated
, 1996
Page 3
The undersigned further represents and warrants to, and covenants with, ATI
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 ATI
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 ATI 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:
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ANNEX E
ALLEGHENY TELEDYNE INCORPORATED
1996 INCENTIVE PLAN
ARTICLE I
PURPOSE AND ADOPTION OF THE PLAN
1.01 PURPOSE. The purpose of the Allegheny Teledyne Incorporated 1996
Incentive Plan (hereinafter referred to as the "Plan") is to assist in
attracting and retaining highly competent employees, to act as an incentive in
motivating selected officers and other key employees of Allegheny Teledyne
Incorporated and its Subsidiaries to achieve long-term corporate objectives and
to enable cash incentive awards to qualify as performance-based for purposes of
the tax deduction limitations under Section 162(m) of the Code.
1.02 ADOPTION AND TERM. The Plan has been approved by the Board of Directors
of Allegheny Teledyne Incorporated, to be effective as of the effective date of
the transactions described in the Amended and Restated Agreement and Plan of
Merger and Combination, dated as of April 1, 1996, by and among Allegheny
Teledyne Incorporated, Allegheny Ludlum Corporation, ALS Merger Corporation,
Teledyne, Inc. and TDY Merger, Inc. (the "Effective Date"), but is subject to
the approval of the stockholders of Allegheny Ludlum Corporation and Teledyne,
Inc. The Plan shall remain in effect until terminated by action of the Board;
provided, however, that no Incentive Stock Option may be granted hereunder
after the tenth anniversary of the Effective Date and the provisions of
Articles VII, VIII, IX and X with respect to performance-based awards to
"covered employees" under Section 162(m) of the Code shall expire as of the
fifth anniversary of the Effective Date.
ARTICLE II
DEFINITIONS
For the purpose of this Plan, capitalized terms shall have the following
meanings:
2.01 AWARD means any one or a combination of Non-Qualified Stock Options or
Incentive Stock Options described in Article VI, Stock Appreciation Rights
described in Article VI, Restricted Shares described in Article VII,
Performance Awards described in Article VIII, Awards of cash or any other Award
made under the terms of the Plan.
2.02 AWARD AGREEMENT means a written agreement between the Company and a
Participant or a written acknowledgment from the Company to a Participant
specifically setting forth the terms and conditions of an Award granted under
the Plan.
2.03 AWARD PERIOD means, with respect to an Award, the period of time set
forth in the Award Agreement during which specified target performance goals
must be achieved or other conditions set forth in the Award Agreement must be
satisfied.
2.04 BENEFICIARY means an individual, trust or estate who or which, by a
written designation of the Participant filed with the Company or by operation
of law, succeeds to the rights and obligations of the Participant under the
Plan and the Award Agreement upon the Participant's death.
2.05 BOARD means the Board of Directors of the Company.
<PAGE>
2.06 CHANGE IN CONTROL means, and shall be deemed to have occurred upon the
occurrence of, any one of the following events:
(a) The acquisition in one or more transactions, other than from the
Company, by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of a number
of Company Voting Securities in excess of 25% of the Company Voting
Securities unless such acquisition has been approved by the Board;
(b) Any election has occurred of persons to the Board that causes two-
thirds of the Board to consist of persons other than (i) persons who were
members of the Board on the Effective Date and (ii) persons who were
nominated for elections as members of the Board at a time when two-thirds
of the Board consisted of persons who were members of the Board on the
Effective Date; provided, however, that any person nominated for election
by a Board at least two-thirds of whom constituted persons described in
clauses (i) and/or (ii) or by persons who were themselves nominated by such
Board shall, for this purpose, be deemed to have been nominated by a Board
composed of persons described in clause (i);
(c) Approval by the stockholders of the Company of a reorganization,
merger or consolidation, unless, following such reorganization, merger or
consolidation, all or substantially all of the individuals and entities who
were the respective beneficial owners of the Outstanding Common Stock and
Company Voting Securities immediately prior to such reorganization, merger
or consolidation, following such reorganization, merger or consolidation
beneficially own, directly or indirectly, more than seventy five (75%) of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors or trustees, as the case may be, of
the entity resulting from such reorganization, merger or consolidation in
substantially the same proportion as their ownership of the Outstanding
Common Stock and Company Voting Securities immediately prior to such
reorganization, merger or consolidation, as the case may be; or
(d) Approval by the stockholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) a sale or other
disposition of all or substantially all the assets of the Company.
2.07 CODE means the Internal Revenue Code of 1986, as amended. References to
a section of the Code shall include that section and any comparable section or
sections of any future legislation that amends, supplements or supersedes said
section.
2.08 COMMITTEE means the Committee defined in Section 3.01.
2.09 COMPANY means Allegheny Teledyne Incorporated, a Delaware corporation,
and its successors.
2.10 COMMON STOCK means Common Stock of the Company, par value $.10 per
share.
2.11 COMPANY VOTING SECURITIES means the combined voting power of all
outstanding voting securities of the Company entitled to vote generally in the
election of directors to the Board.
2.12 DATE OF GRANT means the date designated by the Committee as the date as
of which it grants an Award, which shall not be earlier than the date on which
the Committee approves the granting of such Award.
2.13 EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
2.14 EXERCISE PRICE means, with respect to a Stock Appreciation Right, the
amount established by the Committee in the Award Agreement which is to be
subtracted from the Fair Market Value on the date of exercise in order to
determine the amount of the payment to be made to the Participant, as further
described in Section 6.02(b).
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2.15 FAIR MARKET VALUE means, on any date, the average of the high and low
quoted sales prices of a share of Common Stock, as reported on the Composite
Tape for New York Stock Exchange Listed Companies on such date or, if there
were no sales on such date, on the last date preceding such date on which a
sale was reported.
2.16 INCENTIVE STOCK OPTION means a stock option within the meaning of
Section 422 of the Code.
2.17 MERGER means any merger, reorganization, consolidation, exchange,
transfer of assets or other transaction having similar effect involving the
Company.
2.18 NON-QUALIFIED STOCK OPTION means a stock option which is not an
Incentive Stock Option.
2.19 OPTIONS means all Non-Qualified Stock Options and Incentive Stock
Options granted at any time under the Plan.
2.20 OUTSTANDING COMMON STOCK means, at any time, the issued and outstanding
shares of Common Stock.
2.21 PARTICIPANT means a person designated to receive an Award under the
Plan in accordance with Section 5.01.
2.22 PERFORMANCE AWARDS means Awards granted in accordance with Article
VIII.
2.23 PERFORMANCE GOALS means operating income, operating profit (earnings
from continuing operations before interest and taxes), earnings per share,
return on investment or working capital, return on stockholders' equity,
economic value added (the amount, if any, by which net operating profit after
tax exceeds a reference cost of capital), reductions in inventory, inventory
turns and on-time delivery performance, any one of which may be measured with
respect to the Company or any one or more of its Subsidiaries and divisions
and either in absolute terms or as compared to another company or companies,
and quantifiable, objective measures of individual performance relevant to the
particular individual's job responsibilities.
2.24 PLAN means the Allegheny Teledyne Incorporated 1996 Incentive Plan as
described herein, as the same may be amended from time to time.
2.25 PURCHASE PRICE, with respect to Options, shall have the meaning set
forth in Section 6.01(b).
2.26 RESTORATION OPTION means a Non-Qualified Stock Option granted pursuant
to Section 6.01(f).
2.27 RESTRICTED SHARES means Common Stock subject to restrictions imposed in
connection with Awards granted under Article VII.
2.28 RETIREMENT means early or normal retirement under a pension plan or
arrangement of the Company or one of its Subsidiaries in which the Participant
participates.
2.29 RULE 16B-3 means Rule 16b-3 promulgated by the Securities and Exchange
Commission under Section 16 of the Exchange Act, as the same may be amended
from time to time, and any successor rule.
2.30 STOCK APPRECIATION RIGHTS means Awards granted in accordance with
Article VI.
2.31 SUBSIDIARY means a subsidiary of the Company within the meaning of
Section 424(f) of the Code.
2.32 TERMINATION OF EMPLOYMENT means the voluntary or involuntary
termination of a Participant's employment with the Company or a Subsidiary for
any reason, including death, disability, retirement or as the result of the
divestiture of the Participant's employer or any similar transaction in which
the Participant's employer ceases to be the Company or one of its
Subsidiaries. Whether entering military or other government service shall
constitute Termination of Employment, or whether a Termination of Employment
shall occur as a result of disability, shall be determined in each case by the
Committee in its sole discretion.
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ARTICLE III
ADMINISTRATION
3.01 COMMITTEE. The Plan shall be administered by a committee of the Board
("Committee") comprised of at least two persons. The Committee shall have
exclusive and final authority in each determination, interpretation or other
action affecting the Plan and its Participants. The Committee shall have the
sole discretionary authority to interpret the Plan, to establish and modify
administrative rules for the Plan, to impose such conditions and restrictions
on Awards as it determines appropriate, to cancel Awards (including those made
pursuant to other plans of the Company) and to substitute new Options for
previously awarded Options which, at the time of such substitution, have an
exercise price in excess of the Fair Market Value of the underlying Common
Stock (including options granted under other incentive compensation programs
of the Company) with the consent of the recipient, and to take such steps in
connection with the Plan and Awards granted hereunder as it may deem necessary
or advisable. The Committee shall not, however, have or exercise any
discretion that would disqualify amounts payable under Article X as
performance-based compensation for purposes of Section 162(m) of the Code. The
Committee may delegate such of its powers and authority under the Plan as it
deems appropriate to a subcommittee of the Committee and/or designated
officers or employees of the Company. In addition, the full Board may exercise
any of the powers and authority of the Committee under the Plan. In the event
of such delegation of authority or exercise of authority by the Board,
references in the Plan to the Committee shall be deemed to refer, as
appropriate, to the delegate of the Committee or the Board. The selection of
members of the Committee or any subcommittee thereof, and any delegation by
the Committee to designated officers or employees, under this Section 3.01
shall comply with Section 16(b) of the Exchange Act, the performance-based
provisions of Section 162(m) of the Code, and the regulations promulgated
under each of such statutory provisions, or the respective successors to such
statutory provisions or regulations, as in effect from time to time.
ARTICLE IV
SHARES
4.01 NUMBER OF SHARES ISSUABLE. The total number of shares initially
authorized to be issued under the Plan shall be 9,000,000 shares of Common
Stock. The number of shares available for issuance under the Plan shall be
further subject to adjustment in accordance with Section 11.07. The shares to
be offered under the Plan shall be authorized and unissued Common Stock, or
issued Common Stock which shall have been reacquired by the Company.
4.02 SHARES SUBJECT TO TERMINATED AWARDS. Common Stock covered by any
unexercised portions of terminated Options (including canceled Options)
granted under Article VI, Common Stock forfeited as provided in Section
7.02(a) and Common Stock subject to any Awards which are otherwise surrendered
by the Participant may again be subject to new Awards under the Plan. Common
Stock subject to Options, or portions thereof, which have been surrendered in
connection with the exercise of Stock Appreciation Rights shall not be
available for subsequent Awards under the Plan, but Common Stock issued in
payment of such Stock Appreciation Rights shall not be charged against the
number of shares of Common Stock available for the grant of Awards hereunder.
ARTICLE V
PARTICIPATION
5.01 ELIGIBLE PARTICIPANTS. Participants in the Plan shall be such officers
and other key employees of the Company and its Subsidiaries, whether or not
members of the Board, as the Committee, in its sole discretion, may designate
from time to time. The Committee's designation of a Participant in any year
shall not require the Committee to designate such person to receive Awards or
grants in any other year. The designation of a Participant to receive awards
or grants under one portion of the Plan does not require the Committee to
include such Participant under other portions of the Plan. The Committee shall
consider such factors as it deems pertinent in selecting Participants and in
determining the type and amount of their respective Awards. Notwithstanding
any provision herein to the contrary, the Committee may grant Awards under the
Plan, other than Incentive Stock
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Options, to non-employees who, in the judgment of the Committee, render
significant services to the Company or any of its Subsidiaries, on such terms
and conditions as the Committee deems appropriate and consistent with the
intent of the Plan. Subject to adjustment in accordance with Section 11.07, in
any calendar year, no Participant shall be granted Awards in respect of more
than 750,000 shares of Common Stock (whether through grants of Options or
Stock Appreciation Rights or other grants of Common Stock or rights with
respect thereto) and $3,000,000 in cash.
ARTICLE VI
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
6.01 OPTION AWARDS.
(A) GRANT OF OPTIONS. The Committee may grant, to such Participants as
the Committee may select, Options entitling the Participant to purchase
shares of Common Stock from the Company in such number, at such price, and
on such terms and subject to such conditions, not inconsistent with the
terms of this Plan, as may be established by the Committee. The terms of
any Option granted under this Plan shall be set forth in an Award
Agreement.
(B) PURCHASE PRICE OF OPTIONS. The Purchase Price of each share of Common
Stock which may be purchased upon exercise of any Option granted under the
Plan shall be determined by the Committee; provided, however, that the
Purchase Price of the Common Stock purchased pursuant to Options designated
by the Committee as Incentive Stock Options shall be equal to or greater
than the Fair Market Value on the Date of Grant as required under Section
422 of the Code.
(C) DESIGNATION OF OPTIONS. Except as otherwise expressly provided in the
Plan, the Committee may designate, at the time of the grant of each Option,
the Option as an Incentive Stock Option or a Non-Qualified Stock Option.
(D) INCENTIVE STOCK OPTION SHARE LIMITATION. No Participant may be
granted Incentive Stock Options under the Plan (or any other plans of the
Company and its Subsidiaries) which would result in shares with an
aggregate Fair Market Value (measured on the Date of Grant) of more than
$100,000 first becoming exercisable in any one calendar year.
(E) RIGHTS AS A SHAREHOLDER. A Participant or a transferee of an Option
pursuant to Section 11.04 shall have no rights as a shareholder with
respect to Common Stock covered by an Option until the Participant or
transferee shall have become the holder of record of any such shares, and
no adjustment shall be made for dividends in cash or other property or
distributions or other rights with respect to any such Common Stock for
which the record date is prior to the date on which the Participant or a
transferee of the Option shall have become the holder of record of any such
shares covered by the Option; provided, however, that Participants are
entitled to share adjustments to reflect capital changes under Section
11.07.
(F) RESTORATION OPTIONS UPON THE EXERCISE OF A NON-QUALIFIED STOCK
OPTION. In the event that any Participant delivers to the Company, or has
withheld from the shares otherwise issuable upon the exercise of a Non-
Qualified Stock Option, shares of Common Stock in payment of the Purchase
Price of any Non-Qualified Stock Option granted hereunder in accordance
with Section 6.04, the Committee shall have the authority to grant or
provide for the automatic grant of a Restoration Option to such
Participant. The grant of a Restoration Option shall be subject to the
satisfaction of such conditions or criteria as the Committee in its sole
discretion shall establish from time to time. A Restoration Option shall
entitle the holder thereof to purchase a number of shares of Common Stock
equal to the number of such shares so delivered or withheld upon exercise
of the original Option and, in the discretion of the Committee, the number
of shares, if any, delivered or withheld to the Corporation to satisfy any
withholding tax liability arising in connection
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with the exercise of the original Option. A Restoration Option shall have a
per share Purchase Price of not less than 100% of the per share Fair Market
Value of the Common Stock on the date of grant of such Restoration Option,
a term not longer than the remaining term of the original Option at the
time of exercise thereof, and such other terms and conditions as the
Committee in its sole discretion shall determine.
6.02 STOCK APPRECIATION RIGHTS.
(A) STOCK APPRECIATION RIGHT AWARDS. The Committee is authorized to grant
to any Participant one or more Stock Appreciation Rights. Such Stock
Appreciation Rights may be granted either independent of or in tandem with
Options granted to the same Participant. Stock Appreciation Rights granted
in tandem with Options may be granted simultaneously with, or, in the case
of Non-Qualified Stock Options, subsequent to, the grant to such
Participant of the related Option; provided, however, that: (i) any Option
covering any share of Common Stock shall expire and not be exercisable upon
the exercise of any Stock Appreciation Right with respect to the same
share, (ii) any Stock Appreciation Right covering any share of Common Stock
shall expire and not be exercisable upon the exercise of any related Option
with respect to the same share, and (iii) an Option and Stock Appreciation
Right covering the same share of Common Stock may not be exercised
simultaneously. Upon exercise of a Stock Appreciation Right with respect to
a share of Common Stock, the Participant shall be entitled to receive an
amount equal to the excess, if any, of (A) the Fair Market Value of a share
of Common Stock on the date of exercise over (B) the Exercise Price of such
Stock Appreciation Right established in the Award Agreement, which amount
shall be payable as provided in Section 6.02(c).
(B) EXERCISE PRICE. The Exercise Price established under any Stock
Appreciation Right granted under this Plan shall be determined by the
Committee, but in the case of Stock Appreciation Rights granted in tandem
with Options shall not be less than the Purchase Price of the related
Option. Upon exercise of Stock Appreciation Rights granted in tandem with
Options, the number of shares subject to exercise under any related Option
shall automatically be reduced by the number of shares of Common Stock
represented by the Option or portion thereof which are surrendered as a
result of the exercise of such Stock Appreciation Rights.
(C) PAYMENT OF INCREMENTAL VALUE. Any payment which may become due from
the Company by reason of a Participant's exercise of a Stock Appreciation
Right may be paid to the Participant as determined by the Committee (i) all
in cash, (ii) all in Common Stock, or (iii) in any combination of cash and
Common Stock. In the event that all or a portion of the payment is made in
Common Stock, the number of shares of Common Stock delivered in
satisfaction of such payment shall be determined by dividing the amount of
such payment or portion thereof by the Fair Market Value on the Exercise
Date. No fractional share of Common Stock shall be issued to make any
payment in respect of Stock Appreciation Rights; if any fractional share
would be issuable, the combination of cash and Common Stock payable to the
Participant shall be adjusted as directed by the Committee to avoid the
issuance of any fractional share.
6.03 TERMS OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.
(A) CONDITIONS ON EXERCISE. An Award Agreement with respect to Options
and/or Stock Appreciation Rights may contain such waiting periods, exercise
dates and restrictions on exercise (including, but not limited to, periodic
installments) as may be determined by the Committee at the time of grant.
(B) DURATION OF OPTIONS AND STOCK APPRECIATION RIGHTS. Options and Stock
Appreciation Rights shall terminate after the first to occur of the
following events:
(i) Expiration of the Option or Stock Appreciation Right as provided
in the Award Agreement; or
(ii) Termination of the Award as provided in Section 6.03(e),
following the Participant's Termination of Employment; or
(iii) In the case of an Incentive Stock Option, ten years from the
Date of Grant; or
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(iv) Solely in the case of a Stock Appreciation Right granted in
tandem with an Option, upon the expiration of the related Option.
(C) ACCELERATION OF EXERCISE TIME. The Committee, in its sole discretion,
shall have the right (but shall not in any case be obligated), exercisable
at any time after the Date of Grant, to permit the exercise of any Option
or Stock Appreciation Right prior to the time such Option or Stock
Appreciation Right would otherwise become exercisable under the terms of
the Award Agreement.
(D) EXTENSION OF EXERCISE TIME. In addition to the extensions permitted
under Section 6.03(e) in the event of Termination of Employment, the
Committee, in its sole discretion, shall have the right (but shall not in
any case be obligated), exercisable on or at any time after the Date of
Grant, to permit any Option or Stock Appreciation Right granted under this
Plan to be exercised after its expiration date described in Section
6.03(e), subject, however, to the limitations described in Section
6.03(b)(i), (iii), and (iv).
(E) EXERCISE OF OPTIONS OR STOCK APPRECIATION RIGHTS UPON TERMINATION OF
EMPLOYMENT.
(I) TERMINATION OF VESTED OPTIONS AND STOCK APPRECIATION RIGHTS UPON
TERMINATION OF EMPLOYMENT.
(A) TERMINATION. In the event of Termination of Employment of a
Participant other than by reason of death, disability or Retirement,
the right of the Participant to exercise the Option or Stock
Appreciation Right under the Plan shall terminate on the 90th day (or,
if such day is not a business day, the next business day) after the
date of such Termination of Employment, unless the exercise period is
extended by the Committee in accordance with Section 6.03(d) or Section
6.03(e)(ii) applies. In no event, however, may any Option or Stock
Appreciation Right be exercised later than the date of expiration of
the Option determined pursuant to Section 6.03(b)(i), (iii) or (iv).
(B) DISABILITY OR RETIREMENT. In the event of a Participant's
Termination of Employment by reason of disability or Retirement, the
right of the Participant to exercise the Options or Stock Appreciation
Rights which he or she was entitled to exercise upon Termination of
Employment (or which became exercisable at a later date pursuant to
Section 6.03(e)(ii)) shall terminate two years after the date of such
Termination of Employment, unless the exercise period is extended by
the Committee in accordance with Section 6.03(d). In no event, however,
may any Option or Stock Appreciation Right be exercised later than the
date of expiration of the Option determined pursuant to Section
6.03(b)(i), (iii) or (iv).
(C) DEATH. In the event of the death of a Participant while employed
by the Company or a Subsidiary or within the additional period of time
from the date of the Participant's Termination of Employment and prior
to the expiration of the Option or Stock Appreciation Right as may be
permitted in Section 6.03(e)(i)(B) or Section 6.03(d) above, to the
extent the right to exercise the Option or Stock Appreciation Right
accrued as of the date of such Termination of Employment and did not
expire during such additional period and prior to the Participant's
death, the right of the Participant's Beneficiary to exercise the
Option or Stock Appreciation Right under the Plan shall terminate upon
the expiration of three years from the date of the Participant's death
(but in no event more than two years from the date of the Participant's
Termination of Employment by reason of disability or Retirement),
unless the exercise period is extended by the Committee in accordance
with Section 6.03(d). In no event, however, may any Option or Stock
Appreciation Right be exercised later than the date of expiration of
the Option determined pursuant to Section 6.03(b)(i), (iii) or (iv).
(II) TERMINATION OF UNVESTED OPTIONS OR STOCK APPRECIATION RIGHTS UPON
TERMINATION OF EMPLOYMENT. Subject to Section 6.03(c), (i) to the extent
the right to exercise an Option or a Stock Appreciation Right granted to an
employee of the Company or any of its Subsidiaries, or any portion thereof,
has not accrued as of the date of Termination of Employment, such right
shall expire at the date of such Termination of Employment and (ii) to the
extent the right to exercise an Option or a Stock Appreciation Right
granted to a non-employee, or any portion thereof, has not accrued as of
the date on which such non-employee ceases, in the judgment of the
Committee, to render significant services to the Company or any of the
Subsidiaries such right shall expire at the date of such cessation.
Notwithstanding
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the foregoing, the unvested Options and Stock Appreciation Rights of a
Participant who terminates employment and who continues to render
significant services to the Company or any of its Subsidiaries after his or
her Termination of Employment shall continue to vest during the period in
which the individual continues to render such services.
6.04 EXERCISE PROCEDURES. Each Option and Stock Appreciation Right granted
under the Plan shall be exercised by written notice to the Company which must
be received by the officer or employee of the Company designated in the Award
Agreement on or before the close of business on the expiration date of the
Award. The Purchase Price of shares purchased upon exercise of an Option
granted under the Plan shall be paid in full in cash by the Participant
pursuant to the Award Agreement; provided, however, that the Committee may
(but shall not be required to) permit payment to be made by delivery to the
Company of either (a) Common Stock (which may include Restricted Shares or
shares otherwise issuable in connection with the exercise of the Option,
subject to such rules as the Committee deems appropriate) or (b) any
combination of cash and Common Stock, or (c) such other consideration as the
Committee deems appropriate and in compliance with applicable law (including
payment in accordance with a cashless exercise program under which, if so
instructed by the Participant, Common Stock may be issued directly to the
Participant's broker or dealer upon receipt of an irrevocable written notice
of exercise from the Participant). In the event that any Common Stock shall be
transferred to the Company to satisfy all or any part of the Purchase Price,
the part of the Purchase Price deemed to have been satisfied by such transfer
of Common Stock shall be equal to the product derived by multiplying the Fair
Market Value as of the date of exercise times the number of shares of Common
Stock transferred to the Company. The Participant may not transfer to the
Company in satisfaction of the Purchase Price any fractional share of Common
Stock. Any part of the Purchase Price paid in cash upon the exercise of any
Option shall be added to the general funds of the Company and may be used for
any proper corporate purpose. Unless the Committee shall otherwise determine,
any Common Stock transferred to the Company as payment of all or part of the
Purchase Price upon the exercise of any Option shall be held as treasury
shares.
6.05 CHANGE IN CONTROL. Unless otherwise provided by the Committee in the
applicable Award Agreement, in the event of a Change in Control, all Options
outstanding on the date of such Change in Control, and all Stock Appreciation
Rights shall become immediately and fully exercisable. The provisions of this
Section 6.05 shall not be applicable to any Options or Stock Appreciation
Rights granted to a Participant if any Change in Control results from such
Participant's beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act) of Common Stock or Company Voting Securities.
ARTICLE VII
RESTRICTED SHARES
7.01 RESTRICTED SHARE AWARDS. The Committee may grant to any Participant an
Award of Common Stock in such number of shares, and on such terms, conditions
and restrictions, whether based on performance standards, periods of service,
retention by the Participant of ownership of purchased or designated shares of
Common Stock or other criteria, as the Committee shall establish. With respect
to performance-based Awards of Restricted Shares to "covered employees" (as
defined in Section 162(m) of the Code), performance targets will be limited to
specified levels of one or more of the Performance Goals. The terms of any
Restricted Share Award granted under this Plan shall be set forth in an Award
Agreement which shall contain provisions determined by the Committee and not
inconsistent with this Plan.
(A) ISSUANCE OF RESTRICTED SHARES. As soon as practicable after the Date
of Grant of a Restricted Share Award by the Committee, the Company shall
cause to be transferred on the books of the Company, or its agent, Common
Stock, registered on behalf of the Participant, evidencing the Restricted
Shares covered by the Award, but subject to forfeiture to the Company as of
the Date of Grant if an Award Agreement with respect to the Restricted
Shares covered by the Award is not duly executed by the Participant and
timely returned to the Company. All Common Stock covered by Awards under
this Article VII shall be subject to the restrictions, terms and conditions
contained in the Plan and the Award Agreement
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entered into by the Participant. Until the lapse or release of all
restrictions applicable to an Award of Restricted Shares the share
certificates representing such Restricted Shares may be held in custody by
the Company, its designee, or, if the certificates bear a restrictive
legend, by the Participant. Upon the lapse or release of all restrictions
with respect to an Award as described in Section 7.01(d), one or more share
certificates, registered in the name of the Participant, for an appropriate
number of shares as provided in Section 7.01(d), free of any restrictions
set forth in the Plan and the Award Agreement shall be delivered to the
Participant.
(B) SHAREHOLDER RIGHTS. Beginning on the Date of Grant of the Restricted
Share Award and subject to execution of the Award Agreement as provided in
Section 7.01(a), the Participant shall become a shareholder of the Company
with respect to all shares subject to the Award Agreement and shall have
all of the rights of a shareholder, including, but not limited to, the
right to vote such shares and the right to receive dividends; provided,
however, that any Common Stock distributed as a dividend or otherwise with
respect to any Restricted Shares as to which the restrictions have not yet
lapsed, shall be subject to the same restrictions as such Restricted Shares
and held or restricted as provided in Section 7.01(a).
(C) RESTRICTION ON TRANSFERABILITY. None of the Restricted Shares may be
assigned or transferred (other than by will or the laws of descent and
distribution, or to an inter vivos trust with respect to which the
Participant is treated as the owner under Sections 671 through 677 of the
Code except to the extent that Section 16 of the Exchange Act limits a
participant's right to make such transfers), pledged or sold prior to lapse
of the restrictions applicable thereto.
(D) DELIVERY OF SHARES UPON VESTING. Upon expiration or earlier
termination of the forfeiture period without a forfeiture and the
satisfaction of or release from any other conditions prescribed by the
Committee, or at such earlier time as provided under the provisions of
Section 7.03, the restrictions applicable to the Restricted Shares shall
lapse. As promptly as administratively feasible thereafter, subject to the
requirements of Section 11.05, the Company shall deliver to the Participant
or, in case of the Participant's death, to the Participant's Beneficiary,
one or more share certificates for the appropriate number of shares of
Common Stock, free of all such restrictions, except for any restrictions
that may be imposed by law.
7.02 TERMS OF RESTRICTED SHARES.
(A) FORFEITURE OF RESTRICTED SHARES. Subject to Sections 7.02(b) and
7.03, all Restricted Shares shall be forfeited and returned to the Company
and all rights of the Participant with respect to such Restricted Shares
shall terminate unless the Participant continues in the service of the
Company or a Subsidiary as an employee until the expiration of the
forfeiture period for such Restricted Shares and satisfies any and all
other conditions set forth in the Award Agreement. The Committee shall
determine the forfeiture period (which may, but need not, lapse in
installments) and any other terms and conditions applicable with respect to
any Restricted Share Award.
(B) WAIVER OF FORFEITURE PERIOD. Notwithstanding anything contained in
this Article VII to the contrary, the Committee may, in its sole
discretion, waive the forfeiture period and any other conditions set forth
in any Award Agreement under appropriate circumstances (including the
death, disability or Retirement of the Participant or a material change in
circumstances arising after the date of an Award) and subject to such terms
and conditions (including forfeiture of a proportionate number of the
Restricted Shares) as the Committee shall deem appropriate.
7.03 CHANGE IN CONTROL. Unless otherwise provided by the Committee in the
applicable Award Agreement, in the event of a Change in Control, all
restrictions applicable to the Restricted Share Award shall terminate fully
and the Participant shall immediately have the right to the delivery of share
certificate or certificates for such shares in accordance with Section
7.01(d).
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ARTICLE VIII
PERFORMANCE AWARDS
8.01 PERFORMANCE AWARDS.
(A) AWARD PERIODS AND CALCULATIONS OF POTENTIAL INCENTIVE AMOUNTS. The
Committee may grant Performance Awards to Participants. A Performance Award
shall consist of the right to receive a payment (measured by the Fair
Market Value of a specified number of shares of Common Stock, increases in
such Fair Market Value during the Award Period and/or a fixed cash amount)
contingent upon the extent to which certain predetermined performance
targets have been met during an Award Period. Performance Awards may be
made in conjunction with, or in addition to, Restricted Share Awards made
under Article VII. The Award Period shall be two or more fiscal or calendar
years as determined by the Committee. The Committee, in its discretion and
under such terms as it deems appropriate, may permit newly eligible
employees, such as those who are promoted or newly hired, to receive
Performance Awards after an Award Period has commenced.
(B) PERFORMANCE TARGETS. The performance targets may include such goals
related to the performance of the Company or, where relevant, any one or
more of its Subsidiaries or divisions and/or the performance of a
Participant as may be established by the Committee in its discretion. In
the case of Performance Awards to "covered employees" (as defined in
Section 162(m) of the Code), the targets will be limited to specified
levels of one or more of the Performance Goals. The performance targets
established by the Committee may vary for different Award Periods and need
not be the same for each Participant receiving a Performance Award in an
Award Period. Except to the extent inconsistent with the performance-based
compensation exception under Section 162(m) of the Code, in the case of
Performance Awards granted to employees to whom such section is applicable,
the Committee, in its discretion, but only under extraordinary
circumstances as determined by the Committee, may change any prior
determination of performance targets for any Award Period at any time prior
to the final determination of the Award when events or transactions occur
to cause the performance targets to be an inappropriate measure of
achievement.
(C) EARNING PERFORMANCE AWARDS. The Committee, at or as soon as
practicable after the Date of Grant, shall prescribe a formula to determine
the percentage of the Performance Award to be earned based upon the degree
of attainment of performance targets.
(D) PAYMENT OF EARNED PERFORMANCE AWARDS. Subject to the requirements of
Section 11.05, payments of earned Performance Awards shall be made in cash
or Common Stock, or a combination of cash and Common Stock, in the
discretion of the Committee. The Committee, in its sole discretion, may
define such terms and conditions with respect to the payment of earned
Performance Awards as it may deem desirable.
8.02 TERMS OF PERFORMANCE AWARDS.
(A) TERMINATION OF EMPLOYMENT. Unless otherwise provided below or in
Section 8.03, in the case of a Participant's Termination of Employment
prior to the end of an Award Period, the Participant will not have earned
any Performance Awards.
(B) RETIREMENT. If a Participant's Termination of Employment is because
of Retirement prior to the end of an Award Period, the Participant will not
be paid any Performance Awards, unless the Committee, in its sole and
exclusive discretion, determines that an Award should be paid. In such a
case, the Participant shall be entitled to receive a pro-rata portion of
his or her Award as determined under Subsection (d).
(C) DEATH OR DISABILITY. If a Participant's Termination of Employment is
due to death or disability (as determined in the sole and exclusive
discretion of the Committee) prior to the end of an Award Period,
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the Participant or the Participant's personal representative shall be
entitled to receive a pro-rata share of his or her Award as determined
under Subsection (d).
(D) PRO-RATA PAYMENT. The amount of any payment made to a Participant
whose employment is terminated by Retirement, death or disability (under
circumstances described in Subsections (b) and (c)) will be the amount
determined by multiplying the amount of the Performance Award which would
have been earned, determined at the end of the Award Period, had such
employment not been terminated, by a fraction, the numerator of which is
the number of whole months such Participant was employed during the Award
Period, and the denominator of which is the total number of months of the
Award Period. Any such payment made to a Participant whose employment is
terminated prior to the end of an Award Period under this Section 8.02
shall be made at the end of the respective Award Period, unless otherwise
determined by the Committee in its sole discretion. Any partial payment
previously made or credited to a deferred account for the benefit of a
Participant as provided under Section 8.01(d) of the Plan shall be
subtracted from the amount otherwise determined as payable as provided in
this Section.
(E) OTHER EVENTS. Notwithstanding anything to the contrary in this
Article VIII, the Committee may, in its sole and exclusive discretion,
determine to pay all or any portion of a Performance Award to a Participant
who has terminated employment prior to the end of an Award Period under
certain circumstances (including the death, disability or Retirement of the
Participant or a material change in circumstances arising after the Date of
Grant) and subject to such terms and conditions as the Committee shall deem
appropriate.
8.03 CHANGE IN CONTROL. Unless otherwise provided by the Committee in the
applicable Award Agreement, in the event of a Change in Control, all
Performance Awards for all Award Periods shall immediately become fully
payable to all Participants and shall be paid to Participants, in accordance
with Section 8.01(d), within 30 days after such Change in Control.
ARTICLE IX
OTHER STOCK-BASED AWARDS
9.01 GRANT OF OTHER STOCK-BASED AWARDS. Other stock-based awards, consisting
of stock purchase rights (with or without loans to Participants by the Company
containing such terms as the Committee shall determine), Awards of cash,
Awards of Common Stock, or Awards valued in whole or in part by reference to,
or otherwise based on, Common Stock, may be granted either alone or in
addition to or in conjunction with other Awards under the Plan. Subject to the
provisions of the Plan, the Committee shall have sole and complete authority
to determine the persons to whom and the time or times at which such Awards
shall be made, the number of shares of Common Stock to be granted pursuant to
such Awards, and all other conditions of the Awards. Any such Award shall be
confirmed by an Award Agreement executed by the Committee and the Participant,
which Award Agreement shall contain such provisions as the Committee
determines to be necessary or appropriate to carry out the intent of this Plan
with respect to such Award.
9.02 TERMS OF OTHER STOCK-BASED AWARDS. In addition to the terms and
conditions specified in the Award Agreement, Awards made pursuant to this
Article IX shall be subject to the following:
(a) Any Common Stock subject to Awards made under this Article IX may not
be sold, assigned, transferred, pledged or otherwise encumbered prior to
the date on which the shares are issued, or, if later, the date on which
any applicable restriction, performance or deferral period lapses; and
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(b) If specified by the Committee in the Award Agreement, the recipient
of an Award under this Article IX shall be entitled to receive, currently
or on a deferred basis, interest or dividends or dividend equivalents with
respect to the Common Stock or other securities covered by the Award; and
(c) The Award Agreement with respect to any Award shall contain
provisions dealing with the disposition of such Award in the event of a
Termination of Employment prior to the exercise, realization or payment of
such Award, whether such termination occurs because of Retirement,
disability, death or other reason, with such provisions to take account of
the specific nature and purpose of the Award.
9.03 FOREIGN QUALIFIED AWARDS. Awards under the Plan may be granted to such
employees of the Company and its Subsidiaries who are residing in foreign
jurisdictions as the Committee in its sole discretion may determine from time
to time. The Committee may adopt such supplements to the Plan as may be
necessary or appropriate to comply with the applicable laws of such foreign
jurisdictions and to afford Participants favorable treatment under such laws;
provided, however, that no Award shall be granted under any such supplement
with terms or conditions inconsistent with the provision set forth in the
Plan.
ARTICLE X
SHORT-TERM CASH INCENTIVE AWARDS
10.01 ELIGIBILITY. Executive officers of the Company who are from time to
time determined by the Committee to be "covered employees" for purposes of
Section 162(m) of the Code will be eligible to receive short-term cash
incentive awards under this Article X.
10.02 AWARDS.
(A) PERFORMANCE TARGETS. For each fiscal year of the Company after fiscal
year 1996, the Committee shall establish objective performance targets
based on specified levels of one or more of the Performance Goals. Such
performance targets shall be established by the Committee on a timely basis
to ensure that the targets are considered "preestablished" for purposes of
Section 162(m) of the Code.
(B) AMOUNTS OF AWARDS. In conjunction with the establishment of
performance targets for a fiscal year, the Committee shall adopt an
objective formula (on the basis of percentages of Participants' salaries,
shares in a bonus pool or otherwise) for computing the respective amounts
payable under the Plan to Participants if and to the extent that the
performance targets are attained. Such formula shall comply with the
requirements applicable to performance-based compensation plans under
Section 162(m) of the Code and, to the extent based on percentages of a
bonus pool, such percentages shall not exceed 100% in the aggregate.
(C) PAYMENT OF AWARDS. Awards will be payable to Participants in cash
each year upon prior written certification by the Committee of attainment
of the specified performance targets for the preceding fiscal year.
(D) NEGATIVE DISCRETION. Notwithstanding the attainment by the Company of
the specified performance targets, the Committee shall have the discretion,
which need not be exercised uniformly among the Participants, to reduce or
eliminate the award that would be otherwise paid.
(E) GUIDELINES. The Committee shall adopt from time to time written
policies for its implementation of this Article X. Such guidelines shall
reflect the intention of the Company that all payments hereunder qualify as
performance-based compensation under Section 162(m) of the Code.
(F) NON-EXCLUSIVE ARRANGEMENT. The adoption and operation of this Article
X shall not preclude the Board or the Committee from approving other short-
term incentive compensation arrangements for the
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benefit of individuals who are Participants hereunder as the Board or
Committee, as the case may be, deems appropriate and in the best interests
of the Company.
ARTICLE XI
TERMS APPLICABLE GENERALLY TO AWARDS GRANTED UNDER THE PLAN
11.01 PLAN PROVISIONS CONTROL AWARD TERMS. Except as provided in Section
11.16, the terms of the Plan shall govern all Awards granted under the Plan,
and in no event shall the Committee have the power to grant any Award under
the Plan which is contrary to any of the provisions of the Plan. In the event
any provision of any Award granted under the Plan shall conflict with any term
in the Plan as constituted on the Date of Grant of such Award, the term in the
Plan as constituted on the Date of Grant of such Award shall control. Except
as provided in Section 11.03 and Section 11.07, the terms of any Award granted
under the Plan may not be changed after the Date of Grant of such Award so as
to materially decrease the value of the Award without the express written
approval of the holder.
11.02 AWARD AGREEMENT. No person shall have any rights under any Award
granted under the Plan unless and until the Company and the Participant to
whom such Award shall have been granted shall have executed and delivered an
Award Agreement or received any other Award acknowledgment authorized by the
Committee expressly granting the Award to such person and containing
provisions setting forth the terms of the Award.
11.03 MODIFICATION OF AWARD AFTER GRANT. No Award granted under the Plan to
a Participant may be modified (unless such modification does not materially
decrease the value of the Award) after the Date of Grant except by express
written agreement between the Company and the Participant, provided that any
such change (a) shall not be inconsistent with the terms of the Plan, and (b)
shall be approved by the Committee.
11.04 LIMITATION ON TRANSFER. Except as provided in Section 7.01(c) in the
case of Restricted Shares, a Participant's rights and interest under the Plan
may not be assigned or transferred other than by will or the laws of descent
and distribution, and during the lifetime of a Participant, only the
Participant personally (or the Participant's personal representative) may
exercise rights under the Plan. The Participant's Beneficiary may exercise the
Participant's rights to the extent they are exercisable under the Plan
following the death of the Participant. Notwithstanding the foregoing to the
extent permitted under Section 16(b) of the Exchange Act with respect to
Participants subject to such Section, the Committee may grant Non-Qualified
Stock Options that are transferable, without payment of consideration, to
immediate family members of the Participant or to trusts or partnerships for
such family members, and the Committee may also amend outstanding Non-
Qualified Stock Options to provide for such transferability.
11.05 TAXES. The Company shall be entitled, if the Committee deems it
necessary or desirable, to withhold (or secure payment from the Participant in
lieu of withholding) the amount of any withholding or other tax required by
law to be withheld or paid by the Company with respect to any amount payable
and/or shares issuable under such Participant's Award, or with respect to any
income recognized upon a disqualifying disposition of shares received pursuant
to the exercise of an Incentive Stock Option, and the Company may defer
payment or issuance of the cash or shares upon exercise or vesting of an Award
unless indemnified to its satisfaction against any liability for any such tax.
The amount of such withholding or tax payment shall be determined by the
Committee and shall be payable by the Participant at such time as the
Committee determines in accordance with the following rules:
(a) The Participant shall have the right to elect to meet his or her
withholding requirement (i) by having withheld from such Award at the
appropriate time that number of shares of Common Stock, rounded up to the
next whole share, whose Fair Market Value is equal to the amount of
withholding taxes due, (ii) by direct payment to the Company in cash of the
amount of any taxes required to be withheld with respect to such Award or
(iii) by a combination of shares and cash.
(b) The Committee shall have the discretion as to any Award, to cause the
Company to pay to tax authorities for the benefit of any Participant, or to
reimburse such Participant for the individual taxes which
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are due on the grant, exercise or vesting of any share Award, or the lapse
of any restriction on any share Award (whether by reason of a Participant's
filing of an election under Section 83(b) of the Code or otherwise),
including, but not limited to, Federal income tax, state income tax, local
income tax and excise tax under Section 4999 of the Code, as well as for
any such taxes as may be imposed upon such tax payment or reimbursement.
(c) In the case of Participants who are subject to Section 16 of the
Exchange Act, the Committee may impose such limitations and restrictions as
it deems necessary or appropriate with respect to the delivery or
withholding of shares of Common Stock to meet tax withholding obligations.
11.06 SURRENDER OF AWARDS. Any Award granted under the Plan may be
surrendered to the Company for cancellation on such terms as the Committee and
the holder approve.
11.07 ADJUSTMENTS TO REFLECT CAPITAL CHANGES.
(A) RECAPITALIZATION. The number and kind of shares subject to
outstanding Awards, the Purchase Price or Exercise Price for such shares,
the number and kind of shares available for Awards subsequently granted
under the Plan and the maximum number of shares in respect of which Awards
can be made to any Participant in any calendar year shall be appropriately
adjusted to reflect any stock dividend, stock split, combination or
exchange of shares, merger, consolidation or other change in capitalization
with a similar substantive effect upon the Plan or the Awards granted under
the Plan. The Committee shall have the power and sole discretion to
determine the amount of the adjustment to be made in each case.
(B) MERGER. After any Merger in which the Company is the surviving
corporation, each Participant shall, at no additional cost, be entitled
upon any exercise of all Options or receipt of other Award to receive
(subject to any required action by shareholders), in lieu of the number of
shares of Common Stock receivable or exercisable pursuant to such Award,
the number and class of shares or other securities to which such
Participant would have been entitled pursuant to the terms of the Merger
if, at the time of the Merger, such Participant had been the holder of
record of a number of shares equal to the number of shares receivable or
exercisable pursuant to such Award. Comparable rights shall accrue to each
Participant in the event of successive Mergers of the character described
above. In the event of a Merger in which the Company is not the surviving
corporation, the surviving, continuing, successor, or purchasing
corporation, as the case may be (the "Acquiring Corporation"), shall either
assume the Company's rights and obligations under outstanding Award
Agreements or substitute awards in respect of the Acquiring Corporation's
stock for such outstanding Awards. In the event the Acquiring Corporation
fails to assume or substitute for such outstanding Awards, the Board shall
provide that any unexercisable and/or unvested portion of the outstanding
Awards shall be immediately exercisable and vested as of a date prior to
such Merger, as the Board so determines. The exercise and/or vesting of any
Award that was permissible solely by reason of this Section 11.07(b) shall
be conditioned upon the consummation of the Merger. Any Options which are
neither assumed by the Acquiring Corporation nor exercised as of the date
of the Merger shall terminate effective as of the effective date of the
Merger.
(C) OPTIONS TO PURCHASE SHARES OR STOCK OF ACQUIRED COMPANIES. After any
Merger in which the Company or a Subsidiary shall be a surviving
corporation, the Committee may grant substituted options under the
provisions of the Plan, pursuant to Section 424 of the Code, replacing old
options granted under a plan of another party to the merger whose shares or
stock subject to the old options may no longer be issued following the
Merger. The foregoing adjustments and manner of application of the
foregoing provisions shall be determined by the Committee in its sole
discretion. Any such adjustments may provide for the elimination of any
fractional shares which might otherwise become subject to any Options.
11.08 NO RIGHT TO EMPLOYMENT. No employee or other person shall have any
claim of right to be granted an Award under this Plan. Neither the Plan nor
any action taken hereunder shall be construed as giving any employee any right
to be retained in the employ of the Company or any of its Subsidiaries.
11.09 AWARDS NOT INCLUDABLE FOR BENEFIT PURPOSES. Payments received by a
Participant pursuant to the provisions of the Plan shall not be included in
the determination of benefits under any pension, group insurance
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or other benefit plan applicable to the Participant which is maintained by the
Company or any of its Subsidiaries, except as may be provided under the terms
of such plans or determined by the Board.
11.10 GOVERNING LAW. All determinations made and actions taken pursuant to
the Plan shall be governed by the laws of the State of Delaware and construed
in accordance therewith.
11.11 NO STRICT CONSTRUCTION. No rule of strict construction shall be
implied against the Company, the Committee, or any other person in the
interpretation of any of the terms of the Plan, any Award granted under the
Plan or any rule or procedure established by the Committee.
11.12 COMPLIANCE WITH RULE 16B-3. It is intended that, unless the Committee
determines otherwise, Awards under the Plan be eligible for exemption under
Rule 16b-3. The Board is authorized to amend the Plan and to make any such
modifications to Award Agreements to comply with Rule 16b-3, as it may be
amended from time to time, and to make any other such amendments or
modifications as it deems necessary or appropriate to better accomplish the
purposes of the Plan in light of any amendments made to Rule 16b-3.
11.13 CAPTIONS. The captions (i.e., all Section headings) used in the Plan
are for convenience only, do not constitute a part of the Plan, and shall not
be deemed to limit, characterize or affect in any way any provisions of the
Plan, and all provisions of the Plan shall be construed as if no captions have
been used in the Plan.
11.14 SEVERABILITY. Whenever possible, each provision in the Plan and every
Award at any time granted under the Plan shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of the
Plan or any Award at any time granted under the Plan shall be held to be
prohibited by or invalid under applicable law, then (a) such provision shall
be deemed amended to accomplish the objectives of the provision as originally
written to the fullest extent permitted by law and (b) all other provisions of
the Plan and every other Award at any time granted under the Plan shall remain
in full force and effect.
11.15 AMENDMENT AND TERMINATION.
(A) AMENDMENT. The Board shall have complete power and authority to amend
the Plan at any time; provided, however, that the Board shall not, without
the requisite affirmative approval of shareholders of the Company, make any
amendment which requires shareholder approval under Rule 16b-3 or the Code,
unless such compliance is no longer desired under Rule 16b-3, the Code or
under any other applicable law or rule of any stock exchange which lists
Common Stock or Company Voting Securities. No termination or amendment of
the Plan may, without the consent of the Participant to whom any Award
shall theretofore have been granted under the Plan, adversely affect the
right of such individual under such Award.
(B) TERMINATION. The Board shall have the right and the power to
terminate the Plan at any time. No Award shall be granted under the Plan
after the termination of the Plan, but the termination of the Plan shall
not have any other effect and any Award outstanding at the time of the
termination of the Plan may be exercised after termination of the Plan at
any time prior to the expiration date of such Award to the same extent such
Award would have been exercisable had the Plan not terminated.
11.16 SPECIAL PROVISION RELATING TO CERTAIN STOCK ISSUANCES. Notwithstanding
anything to the contrary contained in this Plan, shares of Common Stock
authorized to be issued under this Plan may be issued to pay awards made under
the Performance Share Plan for Key Employees of Allegheny Ludlum Corporation
and Subsidiaries (As Amended and Restated) (the "Allegheny Ludlum Performance
Plan") and the Teledyne, Inc. Senior Executive Performance Plan (the "Teledyne
SEP Plan"). All decisions with respect to the making of awards, and the
payment of such awards in shares of Common Stock, under the Allegheny Ludlum
Performance Plan or the Teledyne SEP Plan (each a "Subsidiary Plan") shall be
made by the body in whom the power to administer the applicable Subsidiary
Plan is vested from time to time and shall be complied with by the Committee
and the Company. All shares of Common Stock issued in payment of an award
under either Subsidiary Plan shall be governed exclusively by the terms of
such award, and any terms of this Plan inconsistent therewith shall be
inapplicable to such shares.
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ANNEX F
ALLEGHENY TELEDYNE INCORPORATED
1996 NON-EMPLOYEE DIRECTOR STOCK COMPENSATION PLAN
ARTICLE I. GENERAL
1.01 Purpose. It is the purpose of the Plan to promote the interests of the
Company and its stockholders by attracting, retaining and providing an
incentive to Non-Employee Directors through the acquisition of a proprietary
interest in the Company and an increased personal interest in its performance.
This purpose will be served by providing an opportunity for Non-Employee
Directors to elect to receive Stock Options and/or Common Stock in lieu of
Director's Fees, the automatic payment of a portion of the Director's Retainer
Fee Payment in the form of Common Stock to those Non-Employee Directors not
electing to receive such portion in the form of Stock Options and/or Common
Stock and granting each Non-Employee Director annually an option covering
1,000 shares of Common Stock.
1.02 Adoption and Term. The Plan has been approved by the Board and, subject
to approval by the stockholders of Allegheny Ludlum Corporation and Teledyne,
Inc., respectively, shall become effective as of the Effective Date (as
hereinafter defined). The Plan shall terminate without further action upon the
earlier of (a) the tenth anniversary of the Effective Date, and (b) the first
date upon which no shares of Common Stock remain available for issuance under
the Plan.
1.03 Definitions. As used herein the following terms have the following
meanings:
(a) "Annual Options" means the Stock Options issuable under Section 4.04(a)
of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended. References
to a section of the Code shall include that section and any comparable
section or sections of any future legislation that amends, supplements
or supersedes said section.
(d) "Common Stock" means the common stock, par value $0.10 per share, of
the Company.
(e) "Company" means Allegheny Teledyne Incorporated, a Delaware
corporation, and any successor thereto.
(f) "Compensation Year" means each calendar year or portion thereof during
which the Plan is in effect.
(g) "Director" means a member of the Board.
(h) "Director's Fees" means the Director's Retainer Fee Payments and the
Director's Meeting Fee Payments.
(i) "Director's Meeting Fee Payment" means the dollar value of the fees
which the Non-Employee Director would be entitled to receive for
attending meetings of the Board or any committee of the Board or for
serving as the chair of the Board or any committee of the Board.
(j) "Director's Retainer Fee Payment" means the dollar value of that
portion of the annual retainer fee payable by the Company to a Non-
Employee Director as of a particular Quarterly Payment Date, as
established by the Board and in effect from time to time.
(k) "Effective Date" means the date on which the "Effective Time" occurs.
The term "Effective Time" shall have the meaning set forth in the
Amended and Restated Agreement and Plan of Merger and Combination,
dated as of April 1, 1996, by and among the Company, Allegheny Ludlum
Corporation, ALS Merger Corporation, Teledyne, Inc. and TDY Merger,
Inc.
(l) "Employee" means any employee of the Company or an affiliate.
(m) "Fair Market Value" means, as of any given date, the average of the
high and low trading prices of the Common Stock on such date as
reported on the New York Stock Exchange, or, if the Common
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Stock is not then traded on the New York Stock Exchange, on such other
national securities exchange on which the Common Stock is admitted to
trade, or, if none, on the National Association of Securities Dealers
Automated Quotation System if the Common Stock is admitted for quotation
thereon; provided, however, if there were no sales reported as of such
date, Fair Market Value shall be computed as of the last date preceding
such date on which a sale was reported; provided, further, that if any
such exchange or quotation system is closed on any day on which Fair
Market Value is to be determined, Fair Market Value shall be determined as
of the first date immediately preceding such date on which such exchange
or quotation system was open for trading.
(n) "Meeting Fee Options" means the Stock Options issuable under Section
4.04(c) of the Plan.
(o) "Non-Employee Director" means a Director who is not an Employee.
(p) "Non-Employee Director Notice" means a written notice delivered in
accordance with Section 4.02.
(q) "Plan" means this Allegheny Teledyne Incorporated 1996 Non-Employee
Director Stock Compensation Plan, as it may hereafter be amended from
time to time.
(r) "Quarterly Payment Date" means each of the quarterly dates on which the
Director's Fee Payment is paid by the Company.
(s) "Retainer Fee Options" means the Stock Options issuable under Section
4.04(b) of the Plan.
(t) "Stock Options" means options to purchase shares of Common Stock of the
Company issuable hereunder.
1.04 Shares Subject to the Plan. The shares to be offered under the Plan
shall consist of the Company's authorized but unissued Common Stock or
treasury shares and, subject to adjustment as provided in Section 5.01 hereof,
the aggregate amount of such stock which may be issued or subject to Stock
Options issued hereunder shall not exceed 700,000. If any Stock Option granted
under the Plan shall expire or terminate for any reason, without having been
exercised or vested in full, as the case may be, the unpurchased shares
subject thereto shall again be available for issuance under the Plan. Stock
Options granted under the Plan will not be qualified as "incentive stock
options" under Section 422 of the Code.
ARTICLE II. ADMINISTRATION
2.01 The Board. The Plan shall be administered by the Board. Subject to the
provisions of the Plan, the Board shall interpret the Plan, promulgate, amend,
and rescind rules and regulations relating to the Plan and make all other
determinations necessary or advisable for its administration. Interpretation
and construction of any provision of the Plan by the Board shall be final and
conclusive. Notwithstanding the foregoing, the Board shall have or exercise no
discretion with respect to the selection of persons eligible to participate
hereunder, the determination of the number of shares of Common Stock or number
of Stock Options issuable to any person or any other aspect of Plan
administration with respect to which such discretion is not permitted in order
for grants of shares of Common Stock and Stock Options to be exempt under Rule
16b-3 under the Securities Exchange Act of 1934, as amended.
ARTICLE III. PARTICIPATION
3.01 Participants. Each Non-Employee Director shall participate in the Plan
on the terms and conditions hereinafter set forth.
ARTICLE IV. PAYMENT OF DIRECTOR'S FEES
4.01 General. The Director's Retainer Fee Payment shall be paid to each Non-
Employee Director, as of each Quarterly Payment Date, as set forth in the Plan
and subject to such other payment policies and procedures as the Board may
establish from time to time. Director's Meeting Fee payments shall be paid
reasonably
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promptly following the date of the meeting to which such payments relate. If
for the applicable Compensation Year such Non-Employee Director has not made
an election to receive Stock Options or Common Stock in lieu of at least one-
fourth (1/4) of the Director's Retainer Fee Payment pursuant to Section 4.02,
three-fourths (3/4) of the Director's Retainer Fee Payment shall be paid in
cash and one-fourth (1/4) of the Director's Retainer Fee Payment shall be paid
in the form of Common Stock.
4.02 Non-Employee Director Notice. Non-Employee Directors may file with the
Committee or its designee at least six months prior to the commencement of a
Compensation Year, and at such other times as the Board may approve, a Non-
Employee Director Notice electing to receive (a) a specified portion (but not
below twenty five percent (25%)) of his or her Director's Retainer Fee Payment
in the form of Stock Options and/or Common Stock, and/or (b) a specified
portion of his or her Director's Meeting Fee Payment in the form of Stock
Options and/or Common Stock. Notwithstanding the foregoing, elections to
receive Common Stock or Stock Options may be made at any time during a
Compensation Year so long as such elections are made irrevocably at least six
months in advance of receiving the corresponding Common Stock or Stock Options
or otherwise as the Board may permit and (i) the director making such election
became a Non-Employee Director less than six months before the commencement of
the subject Compensation Year, or (ii) such elections relate to the Common
Stock or Stock Options for service in calendar years 1996 and 1997. In the
case of such irrevocable election, the Common Stock and/or Stock Options shall
be granted at the later of (i) the first business day which is six months and
one day after the date of the director's election to receive a Common Stock or
Stock Option or (ii) the date on which Stock Options or shares of Common Stock
otherwise would be issued.
4.03 Conversion to Shares.
(a) Director's Retainer Fee Payment. Each Non-Employee Director who pursuant
to Section 4.01 or 4.02 is to receive Common Stock as part of his or her
Director's Retainer Fee Payment with respect to a Compensation Year and who is
elected or reelected or is a continuing Non-Employee Director as of the date
of commencement of such Compensation Year and as of the applicable Quarterly
Payment Date, shall receive as of each Quarterly Payment Date during such
Compensation Year a number of shares of Common Stock equal to the quotient
obtained by dividing (i) the amount of the Director's Retainer Fee Payment to
be paid in the form of Common Stock by (ii) the Fair Market Value of the
Common Stock per share on such Quarterly Payment Date. Cash shall be paid in
lieu of any fractional shares.
(b) Director's Meeting Fee Payment. Each Non-Employee Director who has duly
filed a Non-Employee Director Notice in accordance with Section 4.02 with
respect to a Compensation Year and elected to receive all or any portion of
the Director's Meeting Fee Payment in the form of Common Stock shall receive
on the first business day in January of the next following Compensation Year a
number of shares of Common Stock equal to the quotient obtained by dividing
(i) the amount of the Director's Meeting Fee Payment for the Compensation Year
to be paid in the form of Common Stock by (ii) the Fair Market Value of the
Common Stock per share on the day immediately preceding the date of issuance
of such Common Stock. Cash shall be paid in lieu of any fractional shares.
4.04 Stock Options.
(a) Annual Option Grants. Conditioned on the occurrence of the Effective
Time, an Annual Option covering 1,000 shares of Common Stock is hereby granted
to each Non-Employee Director as of (and with the date of grant for all
purposes of the Plan being), the first trading day for Common Stock following
the Effective Date. Thereafter, an Annual Option covering 1,000 shares of
Common Stock will be granted to each Non-Employee Director automatically at
the conclusion of each Company annual meeting. If, after the date of adoption
of this Plan, a director first becomes a Non-Employee Director on a date other
than an annual meeting date, an Annual Option covering 1,000 shares of Common
Stock will be granted to such director on his or her first date of Board
service. The purchase price of the Common Stock covered by each Annual Option
will be the Fair Market Value of a share of Common Stock as of the date of
grant of the Annual Option.
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(b) Retainer Fees Options. Retainer Fees Options for a Compensation Year
will be granted on January 2 of such Compensation Year (or if such January 2
is not a business day, on the next succeeding business day) for service during
such Compensation Year. The number of shares of Common Stock to be subject to
a Retainer Fees Option shall be equal to the nearest number of whole shares
determined by multiplying the Fair Market Value of a share of Company Common
Stock on the date of grant by 0.3333 and dividing the result into the portion
of the Director's Retainer Fee Payment elected to be received as Stock Options
by the Non-Employee Director for the Compensation Year. The purchase price of
each share covered by each Retainer Fee Option shall be equal to the Fair
Market Value of a share of Common Stock on the date of grant of the Retainer
Fee Option multiplied by 0.6666.
(c) Meeting Fee Options. Meeting Fee Options for a Compensation Year will be
granted on January 2 of the next following Compensation Year (or if such
January 2 is not a business day, on the next succeeding business day) after
the conclusion of the Compensation Year. The number of shares of Common Stock
to be subject to a Meeting Fee Option shall be equal to the nearest number of
whole shares determined by multiplying the Fair Market Value of a share of
Company Common Stock on the date of grant by 0.3333 and dividing the result
into the portion of the Director's Meeting Fee Payment elected to be received
as Stock Options by the Non-Employee Director. The purchase price of each
share covered by each Meeting Fee Option shall be equal to the Fair Market
Value of a share of Common Stock on the date of grant of the Meeting Fee
Option multiplied by 0.6666.
(d) Duration and Exercise of Stock Options. Subject to Section 4.04(g)
below, Annual Options and Retainer Fee Options become exercisable on the first
anniversary of the date on which they were granted and Meeting Fee Options
become exercisable immediately upon grant. Stock Options shall terminate upon
the expiration of ten years from the date of grant. No Stock Option may be
exercised for a fraction of a share and no partial exercise of any Stock
Option may be for less than one hundred (100) shares.
(e) Purchase Price. The purchase price for the shares shall be paid in full
at the time of exercise (i) in cash or by check payable to the order of the
Company, (ii) by delivery of shares of Common Stock of the Company owned by
the Stock Option holder, or (iii) by delivering a properly executed exercise
notice together with irrevocable instructions to a broker to deliver promptly
to the Company the amount of sale or loan proceeds to pay the Stock Option
price (in which case the exercise will be effective upon receipt of such
proceeds by the Company). Shares of Common Stock used to satisfy the exercise
price of a Stock Option shall be valued at their Fair Market Value on the date
of exercise.
(f) Transferability. Stock Options granted hereunder shall not be
transferable, other than by will or the laws of descent and distribution and
shall be exercisable during a Stock Option holder's lifetime only by the Stock
Option holder or by his or her guardian or legal representative, except to the
extent (i) transfer is permitted by Rule 16b-3 promulgated under the Exchange
Act, and (ii) approved by the Committee. Subject to the foregoing, Stock
Options shall not be assigned, pledged or otherwise encumbered by the holder
thereof, either voluntarily or by operation of law.
(g) Termination of Directorship. All rights of a director in a Stock Option,
to the extent that the Stock Option has not been exercised, shall terminate
three months after the date of the termination of his or her services as a
director for any reason other than (i) the death of the director, (ii)
cessation of services as a director because the individual, although nominated
by the Board, is not elected by the stockholders to the Board, or (iii)
retirement because of total and permanent disability as defined in Section
22(e)(3) of the Code (collectively, "Termination Events"). If a director
ceases to be a director of the Company because of a Termination Event, (i) the
nearest whole number of unexercisable Stock Options shall immediately become
exercisable which equals the number of full months actually served by the
director as a Non-Employee Director during the Compensation Year at issue
divided by 12, multiplied by the number of unexercisable Stock Options on the
date of the Termination Event. The remaining unexercisable portion of all such
Stock Options shall terminate. All then exercisable Stock Options shall expire
twelve months after the date of a Termination Event.
4
<PAGE>
ARTICLE V. MISCELLANEOUS
5.01 Adjustments Upon Changes in Common Stock. The number and kind of shares
available for issuance under the Plan, and the number and kind of shares
subject to, and the exercise price of, outstanding Stock Options, shall be
appropriately adjusted to prevent dilution or enlargement of rights by reason
of any stock dividend, stock split, combination or exchange of shares,
recapitalization, merger, consolidation or other change in capitalization with
a similar substantive effect upon the Plan or the shares issuable under the
Plan.
5.02 Amendment and Termination. The Board shall have complete power and
authority to amend the Plan at any time; provided, however, that the Board
shall not, without the affirmative approval of the shareholders of the
Company, increase the number of shares of Common Stock available for issuance
hereunder or make any other amendment which requires shareholder approval
under Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended, unless the Board determines that such compliance is no longer
desired, or under any applicable law. The Board shall have the right and the
power to terminate the Plan at any time. No amendment or termination of the
Plan may, without the consent of the Non-Employee Director, adversely affect
the right of such Non-Employee Director with respect to any Stock Options then
outstanding.
5.03 Requirements of Law. The issuance of Common Stock under the Plan shall
be subject to all applicable laws, rules and regulations and to such approval
by governmental agencies as may be required.
5.04 No Guarantee of Membership. Nothing in the Plan shall confer upon a
Non-Employee Director any right to continue to serve as a Director.
5.05 Construction. Words of any gender used in the Plan shall be construed
to include any other gender, unless the context requires otherwise.
5
<PAGE>
EXHIBIT 2
August 15, 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, as amended and restated (the
"Agreement"), among Allegheny Teledyne Incorporated, a Delaware corporation
("ATI"), ALC, ALS Merger Corporation, TI and TDY Merger, Inc., at the Effective
Time (as defined in the Agreement) ALC and TI will each become a wholly owned
subsidiary of ATI.
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 ("ATI
Common Stock"), of ATI. 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, ATI
that in the event the undersigned receives any ATI Common Stock in the
Combination:
<PAGE>
Allegheny Teledyne Incorporated
August 15, 1996
Page 2
(A) The undersigned shall not make any sale, transfer or other
disposition of the ATI 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 ATI 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
ATI 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 ATI Common Stock has
not been registered under the Act, the undersigned may not sell, transfer
or otherwise dispose of ATI 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 ATI, such sale, transfer or other disposition is otherwise
exempt from registration under the Act.
(D) The undersigned understands that ATI will be under no obligation
to register the sale, transfer or other disposition of the ATI 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 ATI's transfer agent with respect to the ATI Common Stock owned
by the undersigned and that there may be placed on the certificates for the
ATI 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 1933
applies. The shares represented by this certificate may only be
transferred in
<PAGE>
Allegheny Teledyne Incorporated
August 15, 1996
Page 3
accordance with the terms of a letter agreement dated August 15, 1996,
a copy of which agreement is on file at the principal offices of
Allegheny Teledyne Incorporated."
(F) The undersigned also understands that unless the transfer by the
undersigned of the undersigned's ATI Common Stock has been registered under
the Act or is a sale made in conformity with the provisions of this letter,
ATI 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 ATI (i) a copy of a letter
from the staff of the Commission, or an opinion of counsel, in form and
substance reasonably satisfactory to ATI 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, ATI
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 ATI Common Stock
received by the undersigned in the Combination
<PAGE>
Allegheny Teledyne Incorporated
August 15, 1996
Page 4
until after such time as results covering at least 30 days of combined
operations of ALC and TI have been published by ATI within the meaning of
Section 201.01 of the Commission's Codification of Financial Reporting Policies.
Very truly yours,
/s/ Henry E. Singleton
Acknowledged this 15th day
of August, 1996.
ALLEGHENY TELEDYNE INCORPORATED
By: /s/ Jon D. Walton
_______________________
Name: Jon D. Walton
Vice President-General Counsel and Secretary
