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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) April 1, 1996
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TELEDYNE, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-5212 95-2282626
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(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
2049 Century Park East
Los Angeles, California 90067-6046
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(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (310) 277-3311
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Item 5. OTHER EVENTS.
On April 1, 1996, a Delaware corporation to be renamed Allegheny
Teledyne Incorporated (originally named XYZ/Power, Inc.) ("ATI"), Teledyne,
Inc., a Delaware corporation ("TI"), and Allegheny Ludlum Corporation, a
Pennsylvania corporation ("ALC"), entered into an Agreement and Plan of
Merger and Combination (the "Combination Agreement"). Pursuant to the
Combination Agreement and subject to the terms and conditions set forth
therein, separate wholly-owned subsidiaries of ATI will be formed and will
merge into each of TI and ALC, whereupon each of TI and ALC will become
wholly-owned subsidiaries of ATI (the "Combination"). At the Effective Time
(as defined in the Combination Agreement) of the Combination, each issued and
outstanding share of the Common Stock, par value $1.00 per share, of TI ("TI
Common Stock") will be converted into the right to receive 1.925 shares of
the Common Stock, par value $.10 per share, of ATI ("ATI Common Stock"), and
each issued and outstanding share of the Common Stock, par value $.10 per
share, of ALC ("ALC Common Stock") will be converted into the right to
receive one share of ATI Common Stock.
In connection with the Combination Agreement, Henry E. Singleton, George A.
Roberts (together with his wife) and Fayez Sarofim, each a director of TI, and
William P. Rutledge, Chairman of the Board and Chief Executive Officer and a
director of TI, and Donald B. Rice, President and Chief Operating Officer and a
director of TI, who own or have the exclusive right to vote an aggregate of
8,738,010 shares of TI Common Stock, each entered into an agreement (a
"Stockholder Agreement") with ALC pursuant to which each of them agreed to vote
all of his shares of TI Common Stock in favor of the transactions contemplated
by the Combination Agreement. In addition, and in connection with the
Combination Agreement, Richard P. Simmons, Chairman of the Board and a director
of ALC, Robert P. Bozzone, Vice Chairman of the Board and a director of ALC,
Arthur H. Aronson, President and Chief Executive Officer of ALC, and Charles J.
Queenan, Jr., a director of ALC, who own or have the exclusive right to vote an
aggregate of 22,252,797 shares of ALC Common Stock, each entered into an
agreement (a "Shareholder Agreement") with TI pursuant to which each of them
agreed to vote all of his shares of ALC Common Stock in favor of the
transactions contemplated by the Combination Agreement.
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Copies of the Combination Agreement and the respective forms of Stockholder
Agreement and Shareholder Agreement are filed herewith as Exhibits 2.1, 99.1 and
99.2, respectively. The foregoing descriptions are qualified in their entirety
by reference to the full text of such Exhibits.
Item 7. FINANCIAL STATEMENTS, PRO FORM FINANCIAL INFORMATION AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits. The following exhibits are filed as part of this Current
Report on Form 8-K:
2.1 Agreement and Plan of Merger and Combination, dated as of April 1,
1996, among XYZ/Power, Inc. (to be renamed Allegheny Teledyne
Incorporated), Allegheny Ludlum Corporation and Teledyne, Inc.
99.1 Form of Shareholder Agreement, dated as of April 1, 1996, between
Teledyne, Inc. and each of Messrs. Richard P. Simmons, Robert P.
Bozzone, Arthur H. Aronson and Charles J. Queenan, Jr.
99.2 Form of Stockholder Agreement, dated as of April 1, 1996, between
Allegheny Ludlum Corporation and each of Messrs. Henry E. Singleton,
George A. Roberts (together with his wife), Fayez Sarofim, William
P. Rutledge and Donald B. Rice
99.3 Press Release dated April 1, 1996
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TELEDYNE, INC.
By: /s/ Judith R. Nelson
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Judith R. Nelson
General Counsel and
Corporate Secretary
Date: April 3, 1996
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EXHIBIT INDEX
Exhibit Description Page
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2.1 Agreement and Plan of Merger and
Combination, dated as of April 1, 1996,
among XYZ/Power, Inc. (to be renamed
Allegheny Teledyne Incorporated),
Allegheny Ludlum Corporation and
Teledyne, Inc.
99.1 Form of Shareholder Agreement, dated as
of April 1, 1996, between Teledyne, Inc.
and each of Messrs. Richard P. Simmons,
Robert P. Bozzone, Arthur H. Aronson
and Charles J. Queenan, Jr.
99.2 Form of Stockholder Agreement, dated as
of April 1, 1996, between Allegheny Ludlum
Corporation and each of Messrs. Henry E.
Singleton, George A. Roberts (together
with his wife), Fayez Sarofim, William P.
Rutledge and Donald B. Rice
99.3 Press Release dated April 1, 1996
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AGREEMENT AND PLAN OF MERGER AND COMBINATION
dated as of April 1, 1996
among
XYZ/POWER, INC.,
ALLEGHENY LUDLUM CORPORATION
and
TELEDYNE, INC.
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TABLE OF CONTENTS
Page
----
ARTICLE I
THE COMBINATION........................................................ 2
Section 1.1 Effective Time of the Combination.............. 2
Section 1.2 Closing........................................ 2
Section 1.3 Effects of the Combination..................... 3
Section 1.4 Headquarters of Newco.......................... 3
ARTICLE II
CONVERSION OF SECURITIES............................................... 4
Section 2.1 Conversion of Capital Stock.................... 4
Section 2.2 Exchange of Certificates....................... 5
Section 2.3 No Further Transfers........................... 7
Section 2.4 No Fractional Shares........................... 7
Section 2.5 Withholding.................................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES......................................... 8
Section 3.1 Representations and Warranties of ALC and TI... 8
Section 3.2 Representations of Newco....................... 23
ARTICLE IV
COVENANTS.............................................................. 24
Section 4.1 No Solicitation................................ 24
Section 4.2 Stockholder Approvals.......................... 25
Section 4.3 Conduct of Business............................ 25
Section 4.4 Access to Information.......................... 28
Section 4.5 Legal Conditions to the Combination............ 28
Section 4.6 Public Announcements........................... 29
Section 4.7 Tax-Free Reorganization........................ 29
Section 4.8 Pooling Accounting............................. 29
Section 4.9 Affiliate Agreements........................... 29
Section 4.10 Representations, Covenants and Conditions;
Further Assurances............................. 30
Section 4.11 Stock Plans.................................... 30
Section 4.12 Indemnification; Insurance..................... 33
Section 4.13 TI Rights Plan................................. 35
Section 4.14 Notification of Certain Matters................ 36
Section 4.15 Formation of Merger Subs....................... 36
Section 4.16 Plan Documents................................. 36
Section 4.17 Newco Matters.................................. 36
ARTICLE V
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TABLE OF CONTENTS
(continued)
Page
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CONDITIONS TO COMBINATION.............................................. 37
Section 5.1 Conditions to Each Party's Obligation To Effect
the Combination................................ 37
Section 5.2 Additional Conditions to Obligations of ALC.... 38
Section 5.3 Additional Conditions to Obligation of TI...... 39
ARTICLE VI
TERMINATION AND AMENDMENT.............................................. 40
Section 6.1 Termination.................................... 40
Section 6.2 Effect of Termination.......................... 41
Section 6.3 Fees and Expenses.............................. 42
Section 6.4 Amendment...................................... 43
Section 6.5 Extension; Waiver.............................. 43
ARTICLE VII
MISCELLANEOUS.......................................................... 44
Section 7.1 Nonsurvival of Representations, Warranties and
Agreements..................................... 44
Section 7.2 Notices........................................ 44
Section 7.3 Interpretation................................. 45
Section 7.4 Knowledge...................................... 45
Section 7.5 Counterparts................................... 46
Section 7.6 Entire Agreement; No Third Party Beneficiaries. 46
Section 7.7 Governing Law.................................. 46
Section 7.8 Assignment..................................... 46
Section 7.9 Severability................................... 46
Section 7.10 Failure or Indulgence Not Waiver; Remedies
Cumulative..................................... 46
Annex A - Articles of Incorporation of New Corporation
Annex B - Bylaws of New Corporation
Annex C - Directors and Officers of New Corporation
Annex D - Form of Affiliate Agreement
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AGREEMENT AND PLAN OF MERGER AND COMBINATION
AGREEMENT AND PLAN OF MERGER AND COMBINATION ("AGREEMENT"), dated as of
April 1, 1996, by and among XYZ/Power, Inc., a Delaware corporation ("NEWCO"),
Allegheny Ludlum Corporation, a Pennsylvania corporation ("ALC"), and
Teledyne, Inc., a Delaware corporation ("TI").
WHEREAS, the Boards of Directors of the parties hereto have approved this
Agreement and deem it advisable and in the best interests of their respective
corporations and stockholders that ALC and TI enter into a strategic business
combination in order to advance the long-term business interests of ALC and TI;
and
WHEREAS, such strategic business combination of ALC and TI will be
effected pursuant to the terms of this Agreement by means of separate
transactions, the consummation of each of which is a condition to the
consummation of the other, in which a Pennsylvania corporation and wholly owned
subsidiary of Newco to be formed prior to the Effective Time ("ALC MERGER
SUB") will merge with and into ALC (the "ALC MERGER"), and a Delaware
corporation and wholly owned subsidiary of Newco to be formed prior to the
Effective Time ("TI MERGER SUB") will merge with and into TI (the "TI
MERGER"), whereupon ALC and TI will each become a wholly owned subsidiary of
Newco, and the shareholders of ALC and the stockholders of TI will become
shareholders of Newco (the "COMBINATION"); and
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to ALC's willingness to enter into this
Agreement, Henry E. Singleton, George A. Roberts, Fayez Sarofim, William P.
Rutledge and Donald B. Rice, each of whom is a stockholder of TI, have entered
into Stockholder Agreements (the "TI STOCKHOLDER AGREEMENTS") with ALC
pursuant to which such stockholders have agreed to vote their shares of Common
Stock, par value $1.00 per share, of TI ("TI COMMON STOCK") in favor of this
Agreement and the TI Merger and otherwise in favor of the Combination; and
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to TI's willingness to enter into this
Agreement, Richard P. Simmons, Robert P. Bozzone, Charles J. Queenan, Jr. and
Arthur H. Aronson, each of whom is a shareholder of ALC, have entered into
Shareholder Agreements (the "ALC SHAREHOLDER AGREEMENTS" and, together with
the TI Stockholder Agreements, the "STOCKHOLDER AGREEMENTS") with TI pursuant
to which such shareholders have agreed to vote their shares of Common Stock, par
value $0.10 per share, of ALC ("ALC COMMON STOCK") in favor of this Agreement
and the ALC Merger and otherwise in favor of the Combination; and
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WHEREAS, for federal income tax purposes, it is intended that each of the
ALC Merger and the TI Merger shall qualify either (i) as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "CODE"), or (ii) as a non-recognition exchange of stock under Section 351
of the Code; and
WHEREAS, for financial accounting purposes, it is intended that the
Combination shall be accounted for as a pooling of interests;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I
THE COMBINATION
Section 1.1 EFFECTIVE TIME OF THE COMBINATION. Subject to the
provisions of this Agreement, (i) articles of merger in such form (including, if
required, an agreement of merger or consolidation) as is required in order to
effect the ALC Merger under the relevant provisions of the Pennsylvania Business
Corporation Law (the "PBCL") and to the extent applicable, the Delaware
General Corporation Law (the "DGCL") (collectively, the "ARTICLES OF
MERGER"), and (ii) a certificate of merger in such form (including, if
required, an agreement of merger or consolidation) as is required in order to
effect the TI Merger under the relevant provisions of the DGCL (the
"CERTIFICATE OF MERGER") shall each be duly prepared, executed and
acknowledged by the appropriate party or parties and thereafter delivered to the
Department of State of the Commonwealth of Pennsylvania (in the case of the
Articles of Merger) and the Secretary of State of the State of Delaware (in the
case of the Certificate of Merger and, to the extent applicable, the Articles of
Merger) for filing as provided in the PBCL and the DGCL, respectively, as soon
as practicable on or after the Closing Date. The Combination, including the ALC
Merger and the TI Merger, shall become effective upon the filing of the Articles
of Merger with the Department of State of the Commonwealth of Pennsylvania and,
to the extent applicable, the Secretary of State of the State of Delaware, and
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware or at such time thereafter as is provided in the Articles of Merger
and the Certificate of Merger (the "EFFECTIVE TIME").
Section 1.2 CLOSING. The closing of the Combination (the
"CLOSING") will take place at 10:00 a.m., eastern time, on a date to be
specified by ALC and TI, which shall be as soon as practicable after all of the
conditions to the Combination set forth in Article V have been satisfied or
waived, subject to the rights of termination and abandonment hereinafter set
forth (the
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"CLOSING DATE"), at the offices of Kirkpatrick & Lockhart LLP, 1500 Oliver
Building, Pittsburgh, Pennsylvania 15222.
Section 1.3 EFFECTS OF THE COMBINATION.
(a) At the Effective Time (i) ALC Merger Sub shall be merged with and
into ALC and the separate existence of ALC Merger Sub will cease, (ii) TI Merger
Sub shall be merged with and into TI and the separate existence of TI Merger Sub
shall cease, (iii) the Articles of Incorporation and Bylaws of ALC Merger Sub as
in effect immediately prior to the ALC Merger shall become the Articles of
Incorporation and Bylaws of ALC as the surviving corporation of the ALC Merger,
(iv) the Certificate of Incorporation and Bylaws of TI as in effect immediately
prior to the Effective Time shall continue to be the Certificate of
Incorporation and Bylaws of TI as the surviving corporation of the TI Merger,
(v) the directors of ALC Merger Sub at the Effective Time shall be the directors
of ALC as the surviving corporation of the ALC Merger and hold office as
provided in the Bylaws of ALC as in effect beginning at the Effective Time, and
(vi) the directors of TI Merger Sub at the Effective Time shall be the directors
of TI as the surviving corporation of the TI Merger and hold office as provided
in the Bylaws of TI as in effect beginning at the Effective Time.
(b) The ALC Merger shall otherwise have the effects specified in
applicable provisions of the PBCL and the TI Merger shall otherwise have the
effects specified in applicable provisions of the DGCL.
(c) At the Effective Time, the Certificate of Incorporation and Bylaws
of Newco shall be amended and restated in their entireties to read as set forth
in Annexes A and B attached hereto, respectively.
(d) In accordance with Section 4.17, the directors and officers of Newco
shall initially be as set forth on Annex C attached hereto. At or before the
Effective Time, each of ALC and TI shall designate three additional directors to
serve on the Board of Directors of Newco, such that as of the Effective Time,
the Board of Directors shall consist of the initial nine members set forth on
Annex C together with such additional six persons so named.
Section 1.4 HEADQUARTERS OF NEWCO. The corporate headquarters of
Newco shall be maintained in Pittsburgh, Pennsylvania.
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ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 CONVERSION OF CAPITAL STOCK. As of the Effective
Time, by virtue of the Combination, including the ALC Merger and the TI Merger,
and without any action on the part of the holder of any shares of ALC Common
Stock, TI Common Stock or capital stock of Newco, ALC Merger Sub or TI Merger
Sub:
(a) The issued and outstanding shares of the capital stock of ALC Merger
Sub shall be converted into and become 1,000 fully paid and nonassessable shares
of Common Stock, par value $0.10 per share, of ALC, as the surviving corporation
of the ALC Merger.
(b) The issued and outstanding shares of the capital stock of TI Merger
Sub shall be converted into and become 1,000 fully paid and nonassessable shares
of Common Stock, par value $1.00 per share, of TI, as the surviving corporation
of the TI Merger.
(c) Each issued and outstanding share of ALC Common Stock other than
shares of ALC Common Stock issued and held in the treasury of ALC or owned of
record by TI, TI Merger Sub or any direct or indirect subsidiary thereof shall
be converted into and shall become, by virtue of the ALC Merger and without any
further action by the holder thereof, one (1) share of the Common Stock, par
value $0.10 per share of Newco ("NEWCO COMMON STOCK").
(d) Each issued and outstanding share of TI Common Stock other than
shares of TI Common Stock issued and held in the treasury of TI or owned of
record by ALC, ALC Merger Sub or any direct or indirect subsidiary thereof shall
be converted into and shall become, by virtue of the TI Merger and without any
further action by the holder thereof, 1.925 shares of Newco Common Stock (the
ratio of 1 to 1.925 being referred to herein as the "TI EXCHANGE RATIO").
(e) Each share of ALC Common Stock issued and held in the treasury of
ALC or owned of record by TI, TI Merger Sub or any indirect subsidiary thereof
immediately prior to the Effective Time shall automatically be canceled and
retired without any conversion thereof, and no consideration shall be
exchangeable therefor.
(f) Each share of TI Common Stock issued and held in the treasury of TI
or owned of record by ALC, ALC Merger Sub or any indirect subsidiary thereof
immediately prior to the Effective Time shall automatically be canceled and
retired without any conversion thereof, and no consideration shall be
exchangeable therefor.
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Section 2.2 EXCHANGE OF CERTIFICATES.
(a) After the Effective Time, each holder of a certificate formerly
evidencing shares of ALC Common Stock which have been converted pursuant to
Section 2.1(c) and each holder of a certificate formerly evidencing shares of TI
Common Stock which have been converted pursuant to Section 2.1(d), upon
surrender of the same to Chemical Mellon Shareholder Services, L.L.C. or another
exchange agent selected by Newco (the "EXCHANGE AGENT") as provided in Section
2.2(b) hereof, shall be entitled to receive in exchange therefor (i) a
certificate or certificates representing the number of whole shares of Newco
Common Stock into which such shares of ALC Common Stock or TI Common Stock shall
have been converted as provided in this Article II and (ii) as provided in
Section 2.4, cash in lieu of any fractional share of Newco Common Stock into
which such shares of ALC Common Stock or TI Common Stock would have otherwise
been converted, without any interest thereon. Until so surrendered, each
certificate formerly evidencing shares of ALC Common Stock or TI Common Stock
which have been so converted will be deemed for all corporate purposes of Newco
to evidence ownership of the number of whole shares of Newco Common Stock for
which the shares of ALC Common Stock or TI Common Stock formerly represented
thereby were exchanged and the right to receive cash in lieu of fractional
shares as herein provided, without any interest thereon; PROVIDED, HOWEVER,
that until such certificate is so surrendered, no dividend payable to holders of
record of Newco Common Stock as of any date subsequent to the Effective Time
shall be paid to the holder of such certificate in respect of the shares of
Newco Common Stock evidenced thereby and such holder shall not be entitled to
vote such shares of Newco Common Stock. Upon surrender of a certificate
formerly evidencing shares of ALC Common Stock or TI Common Stock which have
been so converted, there shall be paid to the record holder of the certificates
of Newco Common Stock issued in exchange therefor (i) at the time of such
surrender, the amount of dividends and any other distributions theretofore paid
with respect to such shares of Newco Common Stock as of any date subsequent to
the Effective Time to the extent the same has not yet been paid to a public
official pursuant to abandoned property, escheat or similar laws and (ii) at the
appropriate payment date, the amount of dividends and any other distributions
with a record date after the Effective Time but prior to surrender and a payment
date subsequent to surrender payable with respect to such shares of Newco Common
Stock. No interest shall be payable with respect to the payment of such
dividends.
(b) As soon as practicable after the Effective Time, the Exchange Agent
shall send a notice and a transmittal form to each holder of certificates
formerly evidencing shares of ALC Common Stock and each holder of certificates
formerly evidencing shares of TI Common Stock (other than certificates formerly
representing shares of ALC Common Stock and TI Common Stock to be canceled
pursuant to Sections 2.1(e) and 2.1(f)) advising
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such holder of the effectiveness of the Combination and the procedure for
surrendering to the Exchange Agent (who may appoint forwarding agents with the
approval of Newco) such certificates for exchange into certificates evidencing
Newco Common Stock (including cash in lieu of any fractional share). Each
holder of certificates theretofore evidencing shares of ALC Common Stock or TI
Common Stock, upon proper surrender thereof to the Exchange Agent together and
in accordance with such transmittal form, shall be entitled to receive in
exchange therefor certificates evidencing Newco Common Stock (and cash in lieu
of any fractional share) deliverable in respect of the shares of ALC Common
Stock or TI Common Stock theretofore evidenced by the certificates so
surrendered. Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to a holder of certificates theretofore
representing shares of ALC Common Stock or TI Common Stock for any amount which
may be required to be paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(c) If any certificate evidencing shares of Newco Common Stock is to be
delivered to a person other than the person in whose name the certificates
surrendered in exchange therefor are registered, it shall be a condition to the
issuance of such certificate evidencing shares of Newco Common Stock that the
certificates so surrendered shall be properly endorsed or accompanied by
appropriate stock powers and otherwise in proper form for transfer, that such
transfer otherwise be proper and that the person requesting such transfer pay to
the Exchange Agent any transfer or other taxes payable by reason of the
foregoing or establish to the satisfaction of the Exchange Agent that such taxes
have been paid or are not required to be paid.
(d) In the event any certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such certificate to be lost, stolen or destroyed, Newco will issue in exchange
for such lost, stolen or destroyed certificate the certificate evidencing shares
of Newco Common Stock deliverable in respect thereof, as determined in
accordance with this Article II. When authorizing such issue of the certificate
of shares of Newco Common Stock in exchange therefor, the Board of Directors of
Newco may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate to give
Newco a bond in such sum as it may direct as indemnity against any claim that
may be made against Newco with respect to the certificate alleged to have been
lost, stolen or destroyed.
(e) Approval and adoption of this Agreement by the shareholders of ALC
and the stockholders TI shall constitute, as an integral part of the
Combination, ratification of the appointment of, and the reappointment of, said
Exchange Agent.
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Section 2.3 NO FURTHER TRANSFERS. After the Effective Time, there
shall be no registration of transfers of shares on the respective stock transfer
books of ALC or TI of the shares of ALC Common Stock and TI Common Stock that
were outstanding immediately prior to the Effective Time.
Section 2.4 NO FRACTIONAL SHARES. Neither certificates nor scrip for
fractional shares of Newco Common Stock will be issued in the Combination, but
in lieu thereof each holder of ALC Common Stock and each holder of TI Common
Stock otherwise entitled to a fraction of a share of Newco Common Stock
(after aggregating all fractional shares of Newco Common Stock that would
otherwise be received by such holder) will be entitled hereunder to receive a
cash payment. The amount of such cash payment shall equal, in the case of each
fractional share, an amount (rounded to the nearest whole cent), without
interest, calculated as the product of (i) such fraction, multiplied by (ii) the
average of the high and low per share sales prices for the Newco Common Stock on
the New York Stock Exchange for each of the five (5) consecutive trading days
immediately preceding the Effective Time as quoted in the Wall Street Journal or
other reliable financial newspaper or publication, or, if the Newco Common Stock
does not trade prior to the Effective Time on a "when issued" basis, the average
of the high and low per share sales prices for the Newco Common Stock on the
trading day that includes the Effective Time (or, if the Effective Time does not
occur on a trading day, on the first trading day thereafter). For the purposes
of the preceding sentence, a "trading day" means a day on which trading
generally takes place on the New York Stock Exchange. No such fractional share
interest shall entitle the owner thereof to vote or to any rights of a
stockholder of Newco.
Section 2.5 WITHHOLDING. Newco or the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable or
issuable pursuant to this Agreement to any holder of ALC Common Stock or TI
Common Stock such amounts as Newco or the Exchange Agent is required to deduct
and withhold with respect to the making of such payment or issuance under the
Code, or any provision of state, local or foreign tax law. To the extent that
amounts are so withheld by Newco or the Exchange Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of ALC Common Stock or TI Common Stock in respect of which
such deduction and withholding was made by Newco or the Exchange Agent.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 REPRESENTATIONS AND WARRANTIES OF ALC AND TI. When
used in connection with ALC or any of its respective Subsidiaries or TI or any
of its respective Subsidiaries, as the case may be, the term "MATERIAL ADVERSE
EFFECT" for all purposes of this Agreement means any change or effect that (i)
individually or when taken together with all other such changes or effects that
have occurred during any relevant time period prior to the date of determination
of the occurrence of the Material Adverse Effect, is or is reasonably likely to
be materially adverse to the business, assets (including intangible assets),
financial condition or results of operations or prospects of ALC and its
respective Subsidiaries or TI and its respective Subsidiaries, respectively, in
each case taken as a whole, or (ii) does or is reasonably likely to materially
adversely affect the ability of, in the case of ALC, ALC and its Subsidiaries
taken as a whole, or, in the case of TI, TI and its Subsidiaries taken as a
whole, as the case may be, to perform its respective obligations under this
Agreement or the Ancillary Documents (as hereinafter defined), to consummate the
transactions contemplated hereby or thereby or to conduct their respective
businesses after the Effective Time substantially as such businesses are being
conducted as of the date hereof. When used herein, the term "material" for all
purposes of this Agreement means material to the party referred to and its
Subsidiaries taken as a whole. Except as set forth in the disclosure letter
(designated as such specifically for purposes of this Agreement) delivered at or
prior to the execution hereof to ALC or TI, as the case may be, by TI and ALC,
respectively (each, a "DISCLOSURE LETTER"), ALC (except for paragraphs (c) and
(n) below) hereby represents and warrants to TI, TI Merger Sub and Newco, and TI
(except for paragraph (b) below), hereby represents and warrants to ALC, ALC
Merger Sub and Newco, that:
(a) CORPORATE ORGANIZATION AND QUALIFICATION. It and each of its
Subsidiaries (both domestic and foreign), is an entity duly formed, validly
existing and in good standing under the laws of its respective jurisdiction of
formation and is in good standing as a foreign entity in each jurisdiction where
the properties owned, leased or operated, or the business conducted, by it or
its Subsidiaries require such qualification, except for such failure to so
qualify or be in such good standing which does not constitute a Material Adverse
Effect. As used in this Agreement, the word "SUBSIDIARY" means, with respect
to any party, any corporation or other entity or organization, whether
incorporated or unincorporated, of which (i) such party or any other Subsidiary
of such party is a general partner (excluding partnerships, the general
partnership interests of which are held by such party or any Subsidiary of such
party that do not have a majority of the voting interest in such partnership) or
(ii) at least a majority of the securities or other interests
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having by their terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries, or by such party and
one or more of its Subsidiaries. It and each of its Subsidiaries has the
requisite corporate power and authority to carry on its respective businesses as
they are now being conducted. It has made available to the other a complete and
correct copy of its Articles or Certificate of Incorporation and Bylaws. Such
Articles or Certificate of Incorporation and Bylaws so delivered are in full
force and effect.
(b) AUTHORIZED CAPITAL OF ALC. The authorized capital stock of ALC
consists of 250,000,000 shares of ALC Common Stock, of which 65,991,891 shares
were outstanding as of March 29, 1996, and 50,000,000 shares of Preferred Stock,
par value $1.00 per share ("ALC PREFERRED STOCK"), of which no shares were
outstanding on such date. Since such date, no additional shares of capital
stock of ALC have been issued except for shares of ALC Common Stock which have
been issued pursuant to the exercise of options or rights outstanding as of such
date or pursuant to the purchase, designation or award of shares, under the ALC
Stock Plans (as defined below) in effect as of such date or granted or awarded
since such date in accordance with Article IV, and, except for grants made under
the ALC Stock Plans in accordance with Article IV, no options, warrants or other
rights to acquire shares of ALC Common Stock have been granted or issued by ALC
other than pursuant to ALC's Stock Acquisition and Retention Plan. As of such
date, 1,172,998 shares of ALC Common Stock were issuable upon exercise of
outstanding options under the ALC 1987 Stock Option Incentive Plan, as amended;
76,000 units, representing a maximum of 364,800 shares of ALC Common Stock, had
been awarded pursuant to ALC's Performance Share Plan for Key Employees; and
participants had elected to purchase shares of ALC Common Stock having an
aggregate value of up to $634,405 and to designate up to 3,700 shares of ALC
Common Stock under ALC's Stock Acquisition and Retention Plan, which will result
in the issuance of one share of ALC Common Stock for each share purchased or
designated. All of the outstanding shares of ALC Common Stock have been duly
authorized and are validly issued, fully paid and nonassessable. ALC has no
shares of ALC Common Stock or ALC Preferred Stock reserved for issuance, except
that, as of such date, 4,911,823 shares of ALC Common Stock were reserved for
issuance pursuant to ALC's 1987 Stock Option Incentive Plan, as amended,
1,665,659 shares of ALC Common Stock were reserved for issuance pursuant to
ALC's Performance Share Plan for Key Employees, 802,737 shares of ALC Common
Stock were reserved for issuance pursuant to ALC's Stock Acquisition and
Retention Plan, 89,897 shares were reserved for issuance pursuant 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
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no outstanding bonds, debentures, notes or other obligations the holders of
which have the right to vote (or are convertible into or exercisable or
exchangeable for securities having the right to vote) with the shareholders of
ALC on any matter. Each of the outstanding shares of capital stock of each of
ALC's corporate Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and, except for the outstanding capital stock of ALstrip, Inc.
(90% of which is owned by ALC) and except for shares held by officers and
directors of ALC and its Subsidiaries as nominees and for the benefit of ALC or
any of its Subsidiaries, owned, either directly or indirectly, by ALC free and
clear of all liens, pledges, security interests, claims or other encumbrances.
Except as set forth above, as of the date hereof there are no shares of capital
stock of ALC authorized, issued and outstanding, and there are no preemptive
rights or any outstanding subscriptions, options, warrants, rights, convertible
securities or other agreements or commitments of ALC or any of its Subsidiaries
of any character relating to the issued or unissued capital stock or other
securities of ALC or any of its Subsidiaries.
(c) AUTHORIZED CAPITAL OF TI. The authorized capital stock of TI
consists of 100,000,000 shares of TI Common Stock, of which 55,896,923 shares
were outstanding as of February 28, 1996, and 15,000,000 shares of Preferred
Stock, par value $1.00 per share ("TI PREFERRED STOCK"), including 100,000
shares of Series D Preferred Stock, of which none were outstanding as of such
date, and 5,000,000 shares of Series E Cumulative Preferred Stock, of which
2,763,722 shares of Series E Cumulative Preferred Stock were outstanding as of
March 29, 1996. No additional shares of capital stock of TI have been issued
except for shares of TI Common Stock which have been issued pursuant to the
exercise of options outstanding under the TI Stock Plans as of such date or
granted or awarded since such date in accordance with Article IV, and, except
for grants made under TI Stock Plans in accordance with Article IV, no options,
warrants or other rights to acquire TI Common Stock have been granted or issued
since such date by TI. As of March 11, 1996, 3,406,808 shares of TI Common
Stock were issuable upon exercise of outstanding options under the TI Stock
Plans. All of the outstanding shares of TI Common Stock and TI Series E
Preferred Stock have been duly authorized and are validly issued, fully paid and
nonassessable. TI has no TI Common Stock or TI Preferred Stock reserved for
issuance except for shares of TI Series D Preferred Stock issuable pursuant to
the Rights Agreement, dated as of January 4, 1995, between TI and Chemical Trust
Company of California, as Rights Agent (including any successor thereto) (the
"TI RIGHTS PLAN"), and except that, as of such date, 2,500,000 shares of TI
Common Stock were 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
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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
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agreement, certificate or instrument, as the case may be, of it enforceable
against it in accordance with its terms.
(e) GOVERNMENTAL FILINGS; NO VIOLATIONS. (i) Other than the filings
provided for in Section 1.1, filings required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), filings
required under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
Act"), filings required under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), filings required under state securities and "Blue Sky"
laws, and any filings required to be made under the laws of any foreign
jurisdiction, no notices, reports or other filings are required to be made by it
or its Subsidiaries with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained by it or its Subsidiaries
from, any governmental or regulatory authority, agency, court, commission or
other entity, domestic or foreign ("GOVERNMENTAL ENTITY"), in connection with
the execution and delivery of this Agreement or any of the Ancillary Documents
by it and the consummation by it of the transactions contemplated hereby and
thereby, the failure of which to make or obtain would constitute a Material
Adverse Effect.
(ii) Neither the execution and delivery of this Agreement or any of the
Ancillary Documents by it, nor the consummation by it of any of the transactions
contemplated hereby or thereby, or any action required by applicable law as a
result thereof, will constitute or result in (A) a breach or violation of, or a
default under, its Articles or Certificate of Incorporation or Bylaws or the
comparable governing instruments of any of its Subsidiaries, (B) a breach or
violation of, a default (with or without the giving of notice or the passage of
time) under or the triggering of any payment or other obligations, or the right
of any third party to require a payment or performance of an obligation not
otherwise due, pursuant to, or accelerate vesting under, any existing collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, employee stock ownership, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any directors, officers or
employees of it or any of its Subsidiaries ("BENEFIT PLANS") or any grant or
award made under any of the foregoing, (C) a breach or violation of, a default
under, a change in the rights of any party under, or the acceleration of or the
creation of a lien, pledge, security interest or other 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
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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
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contingent and whether or not required to be reflected in financial statements
in accordance with United States generally accepted accounting principles, that
are material to the financial condition of it and its Subsidiaries taken as a
whole, other than (i) liabilities (or reserves therefor) reflected in its
consolidated balance sheet as of December 31, 1995 and (ii) normal or recurring
liabilities incurred since December 31, 1995 in the ordinary course of business
consistent with past practices. Its Disclosure Letter sets forth an accurate
and complete list of all contracts, agreements and other commitments and
arrangements pursuant to which it or any of its Subsidiaries has agreed to
indemnify or exonerate any person that would involve or be reasonably likely to
involve a material liability. Its Disclosure Letter also sets forth an accurate
and complete list of each contract, agreement or other commitment or arrangement
(including such with any collective bargaining unit, union or other entity or
group) that, pursuant to its terms, would give rights to any party as a result
of the execution and delivery of this Agreement or consummation of the
Combination, the exercise of which would constitute a Material Adverse Effect
(for this purpose, the definition thereof to include the effects listed in the
definition of "Material Adverse Effect" as applied to Newco and its Subsidiaries
from and after the Effective Time (a "NEWCO MATERIAL ADVERSE EFFECT")).
(h) ABSENCE OF CERTAIN CHANGES. Except as set forth in its SEC
Reports, since December 31, 1995, it and its Subsidiaries have conducted their
respective businesses only in, and have not engaged in any material transaction
other than in, the ordinary and usual course of such businesses and there has
not been (i) any change in it or any development or combination of developments
of which its officers have knowledge which constitutes a Material Adverse
Effect; (ii) any declaration, setting aside or payment of any dividend or other
distribution with respect to its capital stock except for regular cash dividends
of not more than $.13 per quarter in the case of ALC or, in the case of TI,
dividends on TI Common Stock in the aggregate amount of $.225 in cash per share
and $.15 in face amount of TI Series E Cumulative Preferred Stock per share
prior to the date of this Agreement and regular cash dividends of not more than
$.375 per quarter on the TI Common Stock and regular cash dividends on the TI
Series E Cumulative Preferred Stock 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
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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 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
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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
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for which the 30-day reporting requirement has not been waived, has been
required to be filed for any Pension Plan or by any ERISA Affiliate within the
12-month period ending on the date hereof.
(iv) All material contributions required to be made by it or any of its
Subsidiaries under the terms of any Plan have been timely made or have been
accrued pending full and timely payment. Except as described in its SEC
Reports, no Plan of an ERISA Affiliate has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the Code or Section
302 of ERISA. None of it, its Subsidiaries or its ERISA Affiliates has
provided, or is required to provide, security to any Plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Code.
(v) For all Pension Plans that are "defined benefit plans" within the
meaning of Section 3(35) of ERISA, the disclosures prepared under FAS 87 and set
forth in the footnotes to its financial statements as of and for the year ended
December 31, 1995 and included in the SEC Reports are true and correct in all
material respects. There has been no material adverse change in the financial
condition of any such Pension Plan since the last day of the most recent plan
year.
(vi) Except as described in its SEC Reports, neither it nor its
Subsidiaries have any obligations for retiree health and life benefits under any
Plan. With regard to health and life benefits for employees other than
employees covered by a collective bargaining agreement, or who are not residents
of the United States, the current plan documents contain no restrictions on the
rights of it or its Subsidiaries to amend or terminate any such Plan without
incurring liability thereunder with respect to unincurred benefit obligations.
(l) ENVIRONMENTAL MATTERS. (i) It and each of its Subsidiaries has
applied for and has in effect all Federal, state and local governmental
approvals, authorizations, certificates, 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,
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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
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Liability Act, other Environmental Laws or Foreign Environmental Laws or any
similar state or local law.
(m) BROKERS AND FINDERS. Neither it nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated hereby, except that ALC has retained Salomon
Brothers Inc as its financial advisor and TI has retained Goldman, Sachs & Co.
as its financial advisor in connection with the transactions contemplated
hereby, the arrangements with which have been disclosed in writing to the other
prior to the date hereof.
(n) TAKEOVER STATUTES; RIGHTS PLAN. The Board of Directors of TI has
taken all actions so that the restrictions contained in Section 203 of the DGCL
applicable to an "interested stockholder" or a "business combination" (as
defined in Section 203) will not apply to the execution, delivery or performance
of this Agreement or the Stockholder Agreements or the consummation of the
Combination (including the TI Merger) or the other transactions contemplated by
this Agreement or by the Stockholder Agreements. The TI Rights Plan does not
cause or permit, and will not cause or permit, TI stockholders to exercise
rights as a result of the existence or implementation of this Agreement or the
Stockholder Agreements, or any of the transactions contemplated hereby or
thereby.
(o) TAX AND ACCOUNTING MATTERS. Neither it nor any of its
Subsidiaries or affiliates has taken or agreed to take any action that would
prevent each of the ALC Merger and the TI Merger from being treated as either a
reorganization within the meaning of Section 368(a) of the Code or a
non-recognition exchange of stock under Section 351 of the Code, or would
prevent Newco from accounting for the business combination to be effected by the
Combination as a pooling of interests.
(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
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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.
(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
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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
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contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement.
(v) CERTAIN TRANSACTIONS. Except as set forth in its SEC Reports,
none of the officers or directors of it or of any of its Subsidiaries nor any
affiliate of it, and, to its knowledge, none of its key employees or the key
employees of any of its Subsidiaries, is a party to any transaction with it or
any of its Subsidiaries (other than for services as an employee, officer or
director and other than transactions between it and one or more of its direct or
indirect wholly owned Subsidiaries or between such Subsidiaries), including,
without limitation, any contract, agreement or other arrangement (i) providing
for the furnishing of services to or by, (ii) providing for rental of real or
personal property to or from, or (iii) otherwise requiring payments to or from,
any such officer, director, affiliate or key employee, any member of the family
of any such officer, director or key employee or any corporation, partnership,
trust or other entity in which any such officer, director or key employee has a
substantial interest (excluding the ownership of not more than two percent (2%)
of the capital stock of a publicly traded corporation) or which is an affiliate
of such officer, director or key employee, in each case covered by clauses (i)
through (iii) if such matter would be required to be disclosed pursuant to Item
404 of Regulation S-K promulgated by the SEC if such person was a person
identified in such Item.
(w) INFORMATION IN DISCLOSURE DOCUMENTS AND REGISTRATION STATEMENT.
None of the information supplied or to be supplied by it for inclusion or
incorporation by reference in (i) the registration statement on Form S-4 to be
filed with the SEC in connection with the issuance of shares of Newco Common
Stock in the Combination (the "S-4") will, at the time of the filing of the
S-4 and any amendments thereto and at the time the S-4 becomes effective under
the Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading, and (ii) the joint proxy statement/prospectus relating to the
meetings of TI's and ALC's stockholders to be held in connection with the
Combination and the offering of shares of Newco Common Stock to the holders of
shares of ALC Common Stock and TI Common Stock (the "JOINT PROXY STATEMENT")
will, at the date mailed to the stockholders and at the times of the meetings of
stockholders to be held in connection with the ALC Merger, the TI Merger and the
Combination, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading.
(x) OPINION OF FINANCIAL ADVISOR. It has received the opinion of its
financial advisor referred to in Section 3.1(m),
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dated the date hereof, to the effect that, as of such date, the transactions
contemplated hereby are fair to its stockholders from a financial point of view,
a copy of which opinion has been delivered to the other.
(y) NO EXISTING DISCUSSIONS. As of the date hereof, it is not
engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to an Acquisition Proposal (as defined in Section 4.1).
(z) RESTRICTIONS ON BUSINESS ACTIVITIES. Except for this Agreement
and to the extent disclosed in its Disclosure Letter, there is no agreement,
judgment, injunction, order or decree binding upon it or any of its Subsidiaries
that has or could reasonably be expected to have the effect of prohibiting or
impairing any material business practice of Newco, ALC, TI and their respective
Subsidiaries (in each case, taken as a whole), the acquisition of any material
property by Newco, ALC, TI and their respective Subsidiaries (in each case,
taken as a whole) or the conduct of the business by Newco, ALC, TI and their
respective Subsidiaries (in each case, taken as a whole) as such business is
currently conducted by ALC and TI and their respective Subsidiaries.
(aa) AGREEMENTS, CONTRACTS AND COMMITMENTS. Neither it nor any of its
Subsidiaries has breached, nor received in writing any claim or threat that it
has breached, any of the terms or conditions of any agreement, contract or
commitment (or any series of similar agreements, contracts or commitments)
which, individually or in the aggregate, would constitute a Material Adverse
Effect. Each such agreement, contract and commitment that has not expired or
been terminated is in full force and effect and is not subject to any material
default thereunder of which its officers have knowledge by any party obligated
to it thereunder.
Section 3.2 REPRESENTATIONS OF NEWCO. (a) Newco hereby
represents and warrants to ALC and TI that (i) it is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and has all requisite corporate power and
authority to enter into this Agreement, (ii) the execution and delivery by it of
this Agreement and the consummation by it of the transactions contemplated by
this Agreement have been duly authorized by all necessary corporate action on
its part, (iii) this Agreement has been duly executed and delivered by it and
constitutes the valid and binding obligation of it, enforceable against it in
accordance with its terms, (iv) it has delivered to each of ALC and TI a true
and correct copy of each of its Certificate of Incorporation and Bylaws as in
effect on the date hereof, (v) the execution and delivery of this Agreement by
it does not, and the consummation by it of the transactions contemplated by this
Agreement will not, conflict with or result or in a violation of, or default
under (with or without notice
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or lapse of time or both), any provision of its Certificate of Incorporation or
Bylaws, and (vi) it has engaged in no other business activities and has
conducted its operations only as contemplated hereby.
ARTICLE IV
COVENANTS
Section 4.1 NO SOLICITATION. From and after the date hereof until
the earlier of the termination of this Agreement in accordance with Article VI
and the Effective Time:
(a) Neither ALC nor TI shall, directly or indirectly, through any
officer, director, employee, representative or agent of it or any of its
Subsidiaries, (i) solicit, initiate, or encourage any inquiries or proposals
that constitute, or could reasonably be expected to lead to, a proposal or offer
for a merger, consolidation, business combination, sale of substantial assets,
sale of shares of capital stock (including without limitation by way of a tender
offer) or similar transactions involving it or any of its Subsidiaries, other
than the transactions contemplated by this Agreement (any of the foregoing
inquiries or proposals being referred to in this Agreement as an "ACQUISITION
Proposal"), (ii) engage in negotiations or discussions concerning, or provide
any non-public information to any person or entity relating to, any Acquisition
Proposal, or (iii) agree to, approve or recommend any Acquisition Proposal;
PROVIDED, HOWEVER, that nothing contained in this Agreement shall 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");
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or (B) taking any position with regard to an Acquisition Proposal pursuant to
Rules 14d-9 and 14e-2 under the Exchange Act which is consistent with the advice
of counsel concerning its Board's fiduciary duties under applicable law with
respect to a tender offer commenced by a third party (other than by public
announcement alone).
(b) Each of ALC and TI shall notify the other as soon as practicable
upon receipt by it (or its advisors) of any Acquisition Proposal or any request
for non-public information in connection with an Acquisition Proposal or for
access to its properties, books or records by any person or entity. Such notice
shall be made orally and in writing and shall indicate in reasonable detail the
identity of the offeror and the terms and conditions of such proposal, inquiry
or contact.
Section 4.2 STOCKHOLDER APPROVALS. As promptly as practicable
following the execution and delivery of this Agreement, unless this Agreement
shall have been previously terminated in accordance with Article VI, each of ALC
and TI shall submit this Agreement and the ALC Merger (in the case of ALC) and
the TI Merger (in the case of TI) to its stockholders for approval and adoption
at a meeting of its stockholders called for such purpose (the "ALC SHAREHOLDERS
MEETING" and "TI STOCKHOLDERS MEETING", respectively). Unless this Agreement
shall have been previously terminated in accordance with Article VI and subject
to Section 4.1, (i) the ALC Board shall recommend that the shareholders of ALC
vote to approve and adopt this Agreement and the ALC Merger and shall use its
best efforts to solicit and secure from its shareholders their approval and
adoption of this Agreement and the ALC Merger, and (ii) the TI Board shall
recommend that the stockholders of TI vote to approve and adopt this Agreement
and the TI Merger and shall use its best efforts to solicit and secure from its
stockholders their approval and adoption of this Agreement and the TI Merger.
Section 4.3 CONDUCT OF BUSINESS. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement in accordance with Article VI and the Effective Time, each of ALC and
TI agrees as to itself and its Subsidiaries (except (subject to the provisions
of Article IV other than this Section 4.3) to the extent provided in its
Disclosure Letter and except to the extent that the other shall otherwise
consent in writing), to carry on its business in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted, to pay its
debts and taxes when due subject to good faith disputes over such debts or
taxes, to pay or perform its other obligations when due, and, to use all
reasonable efforts consistent with past practices and policies to preserve
intact its present business organization, keep available the services of its
present officers and key employees and preserve its relationships with
customers, suppliers, distributors, licensors, licensees, and others having
business dealings with it, to the end that its goodwill and ongoing
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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
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pursuant to the terms of any existing Employment Agreement or Benefit Plan;
(f) maintain its books, accounts and records in the usual, ordinary and
regular manner and in material compliance with all applicable laws;
(g) pay and discharge all material federal, state, local and foreign
taxes imposed upon it or upon its income or profits, or upon any property
belonging to it, prior to the date on which penalties attach thereto, except to
the extent that it is currently contesting, in good faith and by proper
proceedings, the payment of such taxes and it maintains appropriate reserves
with respect thereto;
(h) use commercially reasonable efforts to meet its obligations under
all material contracts, agreements and instruments to which it is a party, and
not become in default thereunder which would constitute a Material Adverse
Effect;
(i) use commercially reasonable efforts to maintain its business and
assets in good repair, order and condition, reasonable wear and tear excepted,
and to maintain insurance upon such business and assets at least comparable in
amount and kind to that in effect on the date hereof;
(j) use commercially reasonable efforts to maintain its present
relationships and goodwill with suppliers, brokers, manufacturers,
representatives, distributors, customers and others having business relations
with it (PROVIDED that it may pursue overdue accounts and otherwise exercise
lawful remedies in its customary fashion);
(k) carry on and operate its business in, and only in, the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted and use its commercially reasonable efforts to cause its
representations and warranties set forth in this Agreement and in any Ancillary
Document to be true and correct, in all respects, on and as of the Effective
Time, subject only to changes in the ordinary course of business;
(l) not declare, set aside, make or pay any dividends or other
distributions with respect to its capital stock except for regular cash
dividends not to exceed $.13 per share of ALC Common Stock per quarter or $.375
per share of TI Common Stock per quarter and regular cash dividends on shares of
TI Series E Cumulative Preferred Stock, or purchase or redeem any shares of its
capital stock except, in the case of TI, share of TI Series E Cumulative
Preferred Stock, or agree to take any such action;
(m) not authorize or make any capital expenditure otherwise than in the
ordinary course of business;
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(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.
Section 4.4 ACCESS TO INFORMATION. Upon reasonable notice, each
of ALC and TI shall (and shall cause its Subsidiaries to) (i) afford to the
officers, employees, accountants, counsel and other representatives of the
other, access, during normal business hours during the period prior to the
earlier of the termination of this Agreement and the Effective Time, to all its
properties, books, contracts, commitments, records, officers, employees,
accountants, accountants' work papers, correspondence and affairs, and (ii)
cause its and their officers and employees to furnish to the other and its
authorized representatives any and all financial, technical and operating data
and other information pertaining to its businesses and those of its Subsidiaries
as the other shall from time to time reasonably request. Each party will hold
any such information which is subject to the Confidentiality Agreement in
accordance with and subject to the restrictions contained in the Confidentiality
Agreement. No information or knowledge obtained in any investigation pursuant
to this Section 4.4 shall affect or be deemed to modify any representation or
warranty contained in this Agreement or the conditions to the obligations of the
parties to consummate the Combination.
Section 4.5 LEGAL CONDITIONS TO THE COMBINATION. Each of the
parties hereto will take all reasonable actions necessary to comply promptly
with all legal requirements which may be imposed on it with respect to the
Combination (which actions shall include, without limitation, furnishing all
information required under the HSR Act and in connection with approvals of or
filings with any other Governmental Entity) and will promptly
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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 Newco to account for the business
combination to be effected by the Combination as a pooling of interests.
Section 4.9 AFFILIATE AGREEMENTS. Within two weeks following the
date of this Agreement, each of ALC and TI will provide the other with a list of
those persons who are, in its reasonable judgment after review by its
independent counsel, "affiliates" of it within the meaning of Rule 145
promulgated under the Securities Act ("RULE 145") (each such person who is an
"affiliate" within the meaning of Rule 145 is referred to herein as a "RULE 145
Affiliate"). Each of ALC and TI shall provide the other with such information
and documents as the other shall reasonably request for purposes of reviewing
such list and shall notify the other in writing regarding any change in the
identity of its Rule 145 Affiliates prior to the Closing
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Date. Each of ALC and TI shall use its commercially reasonable efforts to
deliver or cause to be delivered to the other prior to the Effective Time from
each of its Rule 145 Affiliates, an executed Affiliate Agreement, in
substantially the form attached hereto as Annex D (each an "AFFILIATE
AGREEMENT"). Newco shall be entitled to place appropriate legends on the
certificates evidencing any Newco Common Stock to be received by such Rule 145
Affiliates pursuant to the terms of this Agreement, and to issue appropriate
stop transfer instructions to the transfer agent for Newco Common Stock,
consistent with the terms of the Affiliate Agreements.
Section 4.10 REPRESENTATIONS, COVENANTS AND CONDITIONS; FURTHER
ASSURANCES.
(a) The parties hereto will each use its commercially reasonable efforts
(i) to take, and to cause their respective Subsidiaries to take, all actions
necessary to render accurate as of the Effective Time their respective
representations and warranties contained herein, (ii) to refrain, and to cause
their respective Subsidiaries to refrain, from taking any action which would
render any such representation or warranty inaccurate in any material respect as
of such time and (iii) to perform or cause to be satisfied, and to cause their
respective Subsidiaries to perform or cause to be satisfied, each covenant or
condition to be performed or satisfied by them.
(b) In addition to the provisions of Section 4.5 hereof and in
furtherance thereof, upon the terms and subject to the conditions hereof, each
of the parties hereto shall use all commercially reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, to obtain in a
timely manner all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and to otherwise satisfy or cause to be
satisfied all conditions precedent to its obligations under this Agreement.
Without limiting the generality of the foregoing, each of the parties agrees to
reasonably engage in discussions and negotiations and provide information to any
governmental authority with jurisdiction over the enforcement of any applicable
antitrust laws, in a reasonable effort to address any concerns on the part of
any such authority regarding the legality under any antitrust law of the
Combination. Notwithstanding the foregoing, nothing in this Agreement shall be
deemed to create any obligation of ALC or TI to agree to divest, abandon,
license or take similar action with respect to any assets (tangible or
intangible) of ALC, TI or Newco.
Section 4.11 STOCK PLANS. (a) Prior to the Effective Time, ALC
shall take such actions as may be necessary such that at the Effective Time each
option (an "ALC OPTION") to purchase a share of ALC Common Stock outstanding
pursuant to the ALC
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Stock Plans, whether or not then exercisable, shall become an option to
purchase, on the same terms and conditions (including per share exercise price),
a number of shares of Newco Common Stock equal to the number of shares of ALC
Common Stock subject to such ALC Option. At or prior to the Effective Time, ALC
shall make all necessary arrangements with respect to the applicable ALC Stock
Plans to permit the assumption of the unexercised ALC Options by Newco pursuant
to this Section 4.11; provided, however, that such arrangements shall not
include any change in the terms of the applicable ALC Stock Plans if such change
would, in the opinion of ALC's independent public accountants, have an adverse
effect on Newco's ability to account for the Combination as a pooling of
interests for financial reporting purposes.
(b) Prior to the Effective Time, ALC shall take such actions as may be
necessary such that at the Effective Time shares of ALC Common Stock issuable
pursuant to awards ("ALC AWARDS") under the ALC Performance Share Plan for Key
Employees and each right to purchase or otherwise acquire or to designate shares
of ALC Common Stock pursuant to the ALC Stock Acquisition and Retention Plan
("ALC RIGHTS"), whether or not then issuable or exercisable, shall become an
award or a right to purchase or otherwise acquire or to designate, on the same
terms and conditions (including per share price), a number of shares of Newco
Common Stock equal to the number of shares of ALC Common Stock subject to such
ALC Award or ALC Right. At or prior to the Effective Time, ALC shall make all
necessary arrangements with respect to the applicable ALC Stock Plans to permit
the assumption of the ALC Rights and ALC Awards by Newco pursuant to this
Section 4.11; provided, however, that such arrangements shall not include any
change in the terms of the applicable ALC Stock Plans if such change would, in
the opinion of ALC's independent public accountants, have an adverse effect on
Newco's ability to account for the Combination as a pooling of interests for
financial reporting purposes.
(c) Prior to the Effective Time, TI shall take such actions as may be
necessary such that at the Effective Time each right to purchase shares of TI
Common Stock pursuant to the TI ESPP ("TI RIGHTS"), whether or not then
issuable or exercisable, shall be converted into and become rights with respect
to shares of Newco Common Stock. At the Effective Time, (i) each TI Right
assumed by Newco shall relate solely to shares of Newco Common Stock, (ii) the
number of shares of Newco Common Stock subject to each TI Right shall be equal
to the number of shares of Newco Common Stock into which shares of TI Common
Stock subject to such TI Right would have been converted by virtue of the TI
Merger in accordance with Article II had such share of TI Common Stock been
outstanding at the Effective Time, and (iii) the per share price for each share
of Newco Common Stock subject to an TI Right shall be equal to (y) the price for
the share of Newco Common Stock that could otherwise be acquired pursuant to
such TI Right divided by (z) the TI Exchange Ratio, rounded up to the
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nearest cent. At or prior to the Effective Time, TI shall make all necessary
arrangements with respect to the TI ESPP to permit the assumption of the TI
Rights by Newco pursuant to this Section 4.11; provided, however, that such
arrangements shall not include any change in the terms of the TI ESPP if such
change would, in the opinion of TI's independent public accountants, have an
adverse effect on Newco's ability to account for the Combination as a pooling of
interests for financial accounting purposes.
(d) Prior to the Effective Time, TI shall take such actions as may be
necessary such that at the Effective Time each option (an "TI OPTION") to
purchase a share of TI Common Stock outstanding pursuant to the TI Stock Plans,
whether or not then exercisable, shall be converted into and become rights to
purchase shares of Newco Common Stock. At the Effective Time, (i) each TI
Option assumed by Newco may be exercised solely for shares of Newco Common
Stock, (ii) the number of shares of Newco Common Stock subject to each TI Option
shall be equal to the number of shares of Newco Common Stock into which shares
of TI Common Stock subject to such TI Option would have been converted by virtue
of the TI Merger in accordance with Article II, had such share of TI Common
Stock been outstanding at the Effective Time, and (iii) the per share exercise
price for each such TI Option shall be equal to (y) the exercise price for the
share of TI Common Stock otherwise purchasable pursuant to such TI Option
divided by (z) the TI Exchange Ratio, rounded up to the nearest cent. At or
prior to the Effective Time, TI shall make all necessary arrangements with
respect to the applicable TI Stock Plans to permit the assumption of the
unexercised TI Options by Newco pursuant to this Section 4.11; provided,
however, that such arrangements shall not include any change in the terms of the
applicable TI Stock Plans if such change would, in the opinion of TI's
independent public accountants, have an adverse effect on TI's ability to
account for the Combination as a pooling of interests for financial accounting
purposes.
(e) Effective at the Effective Time, Newco shall assume each ALC Option,
ALC Right, ALC Award, TI Option and TI Right (collectively, the "DERIVATIVE
SECURITIES") in accordance with the terms under which it was issued and any
applicable agreement by which it is evidenced. At or prior to the Effective
Time, Newco shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of Newco Common Stock for delivery upon exercise of
Derivative Securities assumed by it in accordance with this Section 4.11. As
soon as practicable after the Effective Time, Newco shall file a registration
statement on Form S-3 or Form S-8, as the case may be (or any successor or other
appropriate forms), or another appropriate form with respect to the shares of
Newco Common Stock subject to such Derivative Securities, and shall use its
commercially reasonable efforts to maintain the effectiveness of such
registration statement (and maintain the current status of the prospectus or
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prospectuses contained therein) for so long as such Derivative Securities remain
outstanding.
(f) As soon as practicable after the Effective Time, Newco shall deliver
to each holder of Derivative Securities an appropriate notice setting forth such
holder's rights pursuant thereto and such Derivative Security shall continue in
effect on the same terms and conditions (including further anti-dilution
provisions, and subject to the adjustments required by this Section 4.11 after
giving effect to the Combination). Newco shall comply with the terms of all
such Derivative Securities and ensure, to the extent required by, and subject to
the provisions of, any applicable ALC Stock Plan or TI Stock Plan that
Derivative Securities which qualified for special tax treatment prior to the
Effective Time continue to so qualify after the Effective Time.
(g) Approval and adoption of this Agreement by the shareholders of ALC
and the stockholders of TI shall constitute, as an integral part of the
Combination, ratification of the ALC Stock Plans and the TI Stock Plans by the
shareholders of Newco.
Section 4.12 INDEMNIFICATION; INSURANCE. (a) ALC shall, and
from and after the Effective Time Newco shall, indemnify, defend and hold
harmless each person who is now, or has been at any time through the date of
this Agreement or who becomes prior to the Effective Time, an officer, director
or employee of ALC or any of its Subsidiaries (the "ALC INDEMNIFIED PARTIES")
against (i) all losses, claims, damages, costs, expenses, liabilities or
judgments or amounts that are paid in settlement with the approval of the
indemnifying party (which approval shall not be unreasonably withheld) of or in
connection with any claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of the fact that such
person is or was a director, officer or employee of ALC or any of its
Subsidiaries or is or was a plan fiduciary serving at the request of ALC or any
of its Subsidiaries, whether pertaining to any matter existing or occurring at
or prior to the Effective Time and whether asserted or claimed prior to, or at
or after the Effective Time ("ALC INDEMNIFIED LIABILITIES") and (ii) all ALC
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to this Agreement or the transactions contemplated
hereby or any actual or proposed Alternative Transaction (as hereinafter
defined), whether proposed or occurring as of the date of this Agreement, prior
to such date or hereafter, in each case to the full extent a corporation is
permitted under the PBCL or the DGCL, as applicable, to indemnify its own
directors, officers and employees, as the case may be (and Newco will pay
expenses in advance of the final disposition of any such action or proceeding to
each ALC Indemnified Party to the full extent permitted by law upon receipt of
any undertaking contemplated by Section 1745 of the PBCL or Section 145 of the
DGCL, as applicable). Without limiting the foregoing, in the event that
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any such claim, action, suit, proceeding or investigation is brought against any
ALC Indemnified Party (whether arising before or after the Effective Time), (i)
the ALC Indemnified Parties may retain counsel satisfactory to them and ALC (or
them and Newco after the Effective Time), (ii) ALC (or after the Effective Time,
Newco) shall pay all reasonable fees and expenses of such counsel for the ALC
Indemnified Parties promptly as statements therefor are received, and (iii) ALC
(or after the Effective Time, Newco) will use all reasonable efforts to assist
in the vigorous defense of any such matter, provided that neither ALC nor Newco
shall be liable for any settlement of any claim effected without its written
consent, which consent, however, shall not be unreasonably withheld. Any ALC
Indemnified Party wishing to claim indemnification under this Section 4.12(a),
upon learning of any such claim, action, suit, proceeding or investigation,
shall notify ALC or, after the Effective Time, Newco (but the failure so to
notify shall not relieve ALC or Newco from any liability which it may have under
this Section 4.12(a) except to the extent such failure prejudices such party),
and shall deliver to ALC (or after the Effective Time, Newco) the undertaking
contemplated by Section 1745 of the PBCL or Section 145 of the DGCL, as
applicable. The ALC Indemnified Parties as a group may retain only one law firm
to represent them with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more ALC Indemnified Parties.
(b) TI shall, and from and after the Effective Time Newco shall,
indemnify, defend and hold harmless each person who is now, or has been at any
time through the date of this Agreement or who becomes prior to the Effective
Time, an officer, director or employee of TI or any of its Subsidiaries (the
"TI INDEMNIFIED PARTIES") against (i) all losses, claims, damages, costs,
expenses, liabilities or judgments or amounts that are paid in settlement with
the approval of the indemnifying party (which approval shall not be unreasonably
withheld) of or in connection with any claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part out of
the fact that such person is or was a director, officer or employee of TI or any
of its Subsidiaries or is or was a plan fiduciary serving at the request of ALC
or any of its Subsidiaries, whether pertaining to any matter existing or
occurring at or prior to the Effective Time and whether asserted or claimed
prior to, or at or after the Effective Time ("TI INDEMNIFIED LIABILITIES") and
(ii) all TI Indemnified Liabilities based in whole or in part on, or arising in
whole or in part out of, or pertaining to this Agreement or the transactions
contemplated hereby or any actual or proposed Alternative Transaction (as
hereinafter defined), whether proposed or occurring as of the date of this
Agreement, prior to such date or hereafter, in each case to the full extent a
corporation is permitted under the DGCL to indemnify its own directors, officers
and employees, as the case may be (and Newco
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will pay expenses in advance of the final disposition of any such action or
proceeding to each TI Indemnified Party to the full extent permitted by law upon
receipt of any undertaking contemplated by Section 145(e) of the DGCL). Without
limiting the foregoing, in the event that any such claim, action, suit,
proceeding or investigation is brought against any TI Indemnified Party (whether
arising before or after the Effective Time), (i) the TI Indemnified Parties may
retain counsel satisfactory to them and TI (or them and Newco after the
Effective Time), (ii) TI (or after the Effective Time, Newco) shall pay all
reasonable fees and expenses of such counsel for the TI Indemnified Parties
promptly as statements therefor are received, and (iii) TI (or after the
Effective Time, Newco) will use all reasonable efforts to assist in the vigorous
defense of any such matter, provided that neither TI nor Newco shall be liable
for any settlement of any claim effected without its written consent, which
consent, however, shall not be unreasonably withheld. Any TI Indemnified Party
wishing to claim indemnification under this Section 4.12(b), upon learning of
any such claim, action, suit, proceeding or investigation, shall notify TI or,
after the Effective Time, Newco (but the failure so to notify shall not relieve
TI or Newco from any liability which it may have under this Section 4.12(b)
except to the extent such failure prejudices such party), and shall deliver to
ALC (or after the Effective Time, Newco) the undertaking contemplated by Section
145(e) of the DGCL. The TI Indemnified Parties as a group may retain only one
law firm to represent them with respect to each such matter unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more TI Indemnified
Parties.
(c) For a period of at least five years after the Effective Time, Newco
shall cause to be maintained in effect standard policies of directors' and
officers' liability insurance in an aggregate coverage amount not less than
the greater of the coverage amounts maintained by ALC and TI respectively as of
the date hereof and including coverage with respect to claims arising from
facts or events which occurred before the Effective Time to the extent
available; provided, that in no event shall Newco be required to expend, in
order to maintain or procure insurance coverage pursuant to this Section
4.12(c), any amount per annum in excess of 150 percent of the greater of the
per annum amounts paid by ALC and TI as of the date hereof.
(d) The provisions of this Section 4.12 are intended to be for the
benefit of, and shall be enforceable by, each ALC Indemnified Party and TI
Indemnified Party, and his or her heirs and representatives.
Section 4.13 TI RIGHTS PLAN. TI shall not redeem the rights issued
under the TI Rights Plan (but may delay any "distribution date" thereon or
render the rights inapplicable to
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this Agreement, the Combination, or the Stockholder Agreements or any action
permitted hereunder or thereunder) or amend or terminate the TI Rights Plan
prior to the earlier of the Effective Time or the termination of this Agreement
unless required to do so by a court of competent jurisdiction.
Section 4.14 NOTIFICATION OF CERTAIN MATTERS. Each of ALC and TI
shall give prompt notice to the other, of (i) the occurrence, or non-occurrence,
of any event the occurrence, or non-occurrence, of which would be reasonably
likely to cause any representation or warranty of it contained in this Agreement
to be materially untrue or inaccurate and (ii) any failure of it to materially
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice and FURTHER PROVIDED
that failure to give such notice shall not be treated as a breach of covenant
for the purposes of Section 6.1(g)(ii) unless the failure to give such notice
results in material prejudice to the other party.
Section 4.15 FORMATION OF MERGER SUBS. Prior to the Effective
Time, ALC shall cause ALC Merger Sub to be incorporated under the laws of the
Commonwealth of Pennsylvania and TI shall cause TI Merger Sub to be incorporated
under the laws of the State of Delaware, in each case with corporate powers and
purposes limited solely to effecting the ALC Merger and TI Merger, respectively,
and Newco shall subscribe to and become the sole holder of outstanding capital
stock of each of ALC Merger Sub and TI Merger Sub. Unless this Agreement shall
have been previously terminated in accordance with Article VI, Newco, as sole
stockholder of ALC Merger Sub and TI Merger Sub, shall, prior to the Effective
Time, consent in writing to the approval and adoption of this Agreement and the
ALC Merger and the TI Merger, and, subject to the terms of this Agreement, shall
otherwise cause ALC Merger Sub and TI Merger Sub to take such action as is
necessary or appropriate to effectuate the ALC Merger and the TI Merger,
respectively, including entering into and becoming a party to this Agreement.
Section 4.16 PLAN DOCUMENTS. Each of ALC and TI will furnish to
the other, on or before April 25, 1996, true and complete copies of the
documents evidencing its Plans, or setting forth the terms thereof, including,
without limitation, any trust instruments and/or insurance contracts, if any,
forming a part thereof, and all amendments thereto.
Section 4.17 NEWCO MATTERS. As soon as is practicable after the
execution and delivery of this Agreement, the parties hereto will take all
action necessary or appropriate to cause Newco's name to be changed to
"Allegheny Teledyne Incorporated" and to cause its directors and officers to
consist of those persons identified in Annex C attached hereto.
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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 Newco, ALC,
TI or any of their respective Subsidiaries with, and all consents, approvals and
authorizations required to be obtained prior to the Effective Time by Newco,
ALC, TI or any of their respective Subsidiaries from, any Governmental Entity in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby shall have been made or
obtained, except failures in the foregoing that do not have a Material Adverse
Effect.
(c) S-4. The S-4 shall have become effective under the Securities Act
and shall not be the subject of any stop order or proceedings seeking a stop
order.
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Combination or limiting or
restricting in any material respect Newco's conduct or operation of the
businesses of ALC and TI after the Combination shall have been issued, nor shall
there be any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Combination (including either the ALC Merger or the TI
Merger) which makes the consummation of the Combination (including either the
ALC Merger or the TI Merger) illegal.
(e) BLUE SKY LAWS. Newco shall have received all state securities or
"Blue Sky" permits and other authorizations necessary to issue shares of Newco
Common Stock pursuant to the Combination.
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(f) POOLING LETTERS. Newco shall have received letters from Ernst &
Young LLP and Arthur Andersen LLP, dated the date of the Joint Proxy Statement,
which letters shall be confirmed in writing at the Effective Time, stating that
the business combination to be effected by the Combination will qualify as a
pooling of interests transaction under generally accepted accounting principles.
(g) CONSENTS. Each of ALC and TI shall have obtained all consents
required to consummate the transactions contemplated by this Agreement,
including the Combination, and all other consents in connection with the
Combination and the other transactions contemplated hereby, the failure to
obtain which would constitute a Newco Material Adverse Effect.
(h) NYSE. The shares of Newco Common Stock to be issued in the
Combination shall have been approved for listing on the New York Stock Exchange
upon official notice of issuance.
(i) REPRESENTATIONS AND WARRANTIES. The representations of Newco set
forth in this Agreement shall be true and correct in all material respects as of
the date of this Agreement and (except to the extent such representations and
warranties are made as of an earlier date, which representations and warranties
shall be true and correct in all material respects at and as of such date) as of
the Closing Date as though made on and as of the Closing Date, in each case
except for changes contemplated by this Agreement.
(j) PENSION LAW CHANGES. No adoption of or amendment to any
statute, no promulgation of or revision to any regulation issued by the U. S.
Department of the Treasury, the U. S. Department of Labor or by the Pension
Benefit Guaranty Corporation, and no change in a position previously taken by
any one or more of foregoing agencies, shall have been effected or proposed
which has or would have the effect of prohibiting, or of limiting or restricting
in any material respect the merger of any Pension Plans of ALC and TI or its
economic equivalent or would cause a merger of such Pension Plans or its
economic equivalent to be illegal or impractical.
Section 5.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ALC. The
obligation of ALC to effect the ALC Merger is subject to the satisfaction of
each of the following additional conditions, any of which may be waived in
writing exclusively by ALC:
(a) REPRESENTATIONS AND WARRANTIES OF TI. The representations and
warranties of TI set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties are made as of an earlier date, which
representations and warranties shall be true and correct in all material
respects at and as of such date) as of the Closing Date as though made on and as
of the Closing Date, in
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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, to the effect that the ALC Merger
will be treated for federal income tax purposes either as a tax-free
reorganization within the meaning of Section 368(a) of the Code or as a
non-recognition exchange of stock under Section 351 of the Code. In rendering
such opinion, counsel may rely upon representations and certificates of Newco,
ALC, ALC Merger Sub, TI and TI Merger Sub.
(d) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
shall have been no changes, occurrences or circumstances involving the business,
results of operations or financial condition or prospects of TI and any of its
Subsidiaries that constitute a Material Adverse Effect.
Section 5.3 ADDITIONAL CONDITIONS TO OBLIGATION OF TI. The
obligation of TI to effect the Combination is subject to the satisfaction of
each of the following additional conditions, any of which may be waived, in
writing, exclusively by TI:
(a) REPRESENTATIONS AND WARRANTIES OF ALC. The representations and
warranties of ALC set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties are made as of an earlier date, which
representations and warranties shall be true and correct in all material
respects at and as of such date) as of the Closing Date as though made on and as
of the Closing Date, in each case except for changes contemplated by this
Agreement, and TI shall have received a certificate signed on behalf of ALC by
the Chief Executive Officer and the Chief Financial Officer of ALC to such
effect.
(b) PERFORMANCE OF OBLIGATIONS OF ALC. ALC shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and TI shall have received a
certificate signed on behalf of ALC by the Chief Executive Officer and the Chief
Financial Officer of ALC to such effect.
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(c) TAX OPINION. TI shall have received the opinion of Irell &
Manella LLP, counsel to TI, to the effect that the TI Merger will be treated for
federal income tax purposes as either a tax-free reorganization within the
meaning of Section 368(a) of the Code or as a non-recognition exchange of stock
under Section 351 of the Code. In rendering such opinion, counsel may rely upon
representations and certificates of Newco, ALC, ALC Merger Sub, TI and TI Merger
Sub.
(d) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
shall have been no changes, occurrences or circumstances involving the business,
results of operations or financial condition or prospects of ALC and any of its
Subsidiaries that constitute a Material Adverse Effect.
ARTICLE VI
TERMINATION AND AMENDMENT
Section 6.1 TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time by written notice by the terminating party to
the other party under the circumstances set forth below:
(a) by mutual written consent of ALC and TI; or
(b) by either ALC or TI if the Merger shall not have been consummated by
September 30, 1996 (provided that the right to terminate this Agreement under
this Section 6.1(b) shall not be available to any party whose failure to fulfill
any material obligation under this Agreement has been a cause of or has resulted
in the failure of the Combination to occur on or before such date); or
(c) by either ALC or TI if a court of competent jurisdiction or other
Governmental Entity shall have issued a nonappealable final order, decree or
ruling or taken any other action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Combination; or
(d) by ALC or TI, if, at the ALC Shareholders' Meeting or the TI
Stockholders' Meeting (including any adjournment or postponement), the requisite
vote of the shareholders of ALC in favor of this Agreement and the ALC Merger or
the stockholders of TI in favor of this Agreement and the TI Merger shall not
have been obtained; or
(e) by ALC, if (i) the Board of Directors of TI shall have withdrawn or
modified its recommendation of this Agreement or the Combination in a manner
adverse to consummation of the Combination or shall have resolved to do any of
the foregoing; (ii) the Board of Directors of TI shall have recommended to the
shareholders of TI an Alternative Transaction (as defined in
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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
(g) by ALC or TI, if (i) the other has breached any representation or
warranty contained in this Agreement, and such breach shall not have been cured
prior to the Effective Time (except where such breach would not have a material
adverse effect on the party having made such representation or warranty and its
Subsidiaries taken as a whole and would not constitute a Newco Material Adverse
Effect after giving effect to the transactions contemplated by this Agreement),
or (ii) if there has been a breach of a covenant or agreement set forth in this
Agreement on the part of the other, which shall not have been cured within 2
business days following receipt by the breaching party of written notice of such
breach from the other party (other than those set forth in Section 4.1, as to
which there shall be no cure period).
Section 6.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement as provided in Section 6.1, this Agreement shall immediately
become void and there shall be no liability or obligation on the part of any
party hereto or their respective officers, directors, stockholders or affiliates
arising from the execution and delivery of this Agreement or its termination,
except as set forth in Section 6.3 and further except to the extent that such
termination results from the wilful breach by a party of any of its
representations, warranties or covenants set forth in this Agreement; provided
that, the provisions of Section 6.3 of this Agreement shall
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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) (i) TI shall pay ALC a termination fee of $50,000,000 upon the
earliest to occur of the following events:
(1) the termination of this Agreement by ALC pursuant to Section 6.1(e);
or
(2) the termination of this Agreement by ALC pursuant to Section 6.1(g)
after a breach by TI of this Agreement; or
(3) the termination of this Agreement by ALC pursuant to Section 6.1(d)
as a result of the failure to receive the requisite vote for approval of this
Agreement and the TI Merger by the stockholders of TI at the TI Stockholders'
Meeting.
(d) (i) ALC shall pay TI a termination fee of $30,000,000 upon the
earliest to occur of the following events:
(1) the termination of this Agreement by TI pursuant to Section 6.1(f);
or
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(2) the termination of this Agreement by TI pursuant to Section 6.1(g)
after a breach by ALC of this Agreement; or
(3) the termination of this Agreement by TI pursuant to Section 6.1(d) as
a result of the failure to receive the requisite vote for approval of this
Agreement and the ALC Merger by the shareholders of ALC at the ALC Shareholders'
Meeting.
(e) The expenses and fees, if applicable, payable pursuant to Sections
6.3(b), 6.3(c) and 6.3(d) shall be paid in immediately available funds within
one business day after the first to occur of any of the events described in
Section 6.3(b), 6.3(c) and 6.3(d); PROVIDED, HOWEVER, that in no event shall
ALC or TI, as the case may be, be required to pay such expenses and fees to the
other, if, immediately prior to the termination of this Agreement, the party to
receive such expenses and fees was in material breach of its obligations under
this Agreement.
(f) As used in this Agreement, "ALTERNATIVE TRANSACTION" means either
(i) a transaction pursuant to which any person (or group of persons) (a "THIRD
PARTY") other than ALC or TI acquires more than 15% of the outstanding shares
of ALC Common Stock or TI Common Stock, as the case may be, pursuant to a tender
offer or exchange offer or otherwise (ii) a merger or other business combination
involving ALC or TI pursuant to which any Third Party acquires more than 15% of
the outstanding equity securities of ALC or TI or the entity surviving such
merger or business combination, (iii) any other transaction pursuant to which
any Third Party acquires control of assets (including for this purpose the
outstanding equity securities of Subsidiaries of ALC or TI, and the entity
surviving any merger or business combination including any of them) of ALC or TI
having a fair market value (as determined by the Board of Directors of ALC or
TI, as the case may be, in good faith) equal to more than 15% of the fair market
value of all the assets of ALC or TI and its Subsidiaries taken as a whole
immediately prior to such transaction, or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
Section 6.4 AMENDMENT. This Agreement may be amended by the
parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Combination by the stockholders of TI, but, after any such
approval, no amendment shall be made which by law requires further approval by
such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of all of the
parties hereto.
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
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extent legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto by the other parties hereto and (iii) waive
compliance with any of the agreements or conditions contained herein for their
benefit. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party.
ARTICLE VII
MISCELLANEOUS
Section 7.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. None of the representations, warranties and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for the agreements contained in Article II,
Sections 6.2, 6.3, the last sentence of Section 6.4 and Article VII, and the
agreements of the Affiliates of ALC and TI delivered pursuant to Section 4.9.
The Confidentiality Agreement shall survive the execution and delivery of this
Agreement.
Section 7.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to ALC, to:
Allegheny Ludlum Corporation
1000 Six PPG Place
Pittsburgh, Pennsylvania 15222
Attention: Chairman
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with a copy to:
Jon D. Walton
Vice President-General Counsel and Secretary
Allegheny Ludlum Corporation
1000 Six PPG Place
Pittsburgh, Pennsylvania 15222
and to:
Ronald D. West
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, Pennsylvania 15222
(b) if to TI, to:
Teledyne, Inc.
2049 Century Park East
Los Angeles, California 90067-3101
Attention: Chairman and Chief Executive Officer
with a copy to:
Judith R. Nelson
General Counsel and Secretary
Teledyne, Inc.
2049 Century Park East
Los Angeles, California 90067-3101
and to:
Edmund M. Kaufman
Irell & Manella LLP
333 South Hope Street
Los Angeles, California 90071-3042
Section 7.3 INTERPRETATION. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words
"INCLUDE," "INCLUDES" or "INCLUDING" are used in this Agreement they shall
be deemed to be followed by the words "without limitation." The phrases "THE
DATE OF THIS AGREEMENT", "THE DATE HEREOF," and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to April 1,
1996.
Section 7.4 KNOWLEDGE. All references in this Agreement or any
certificate to knowledge of ALC or TI shall mean the knowledge of any officer or
officers of such party (but only the officer executing any such certificate, in
the case of a
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certificate) and shall reflect reasonable inquiry by such officer or officers in
connection specifically with respect to the statement made to such knowledge.
Section 7.5 COUNTERPARTS. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
Section 7.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement (including the documents and the instruments referred to herein) and
the Stockholder Agreements constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, and, except for the provisions of
Section 4.12, are not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
Section 7.7 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without regard to
any applicable conflicts of law.
Section 7.8 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
Section 7.9 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
Section 7.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part or any party hereto in the exercise of any right
hereunder shall impair such right or 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
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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.
XYZ/POWER, INC. ALLEGHENY LUDLUM CORPORATION
By_______________________________ By_____________________________
Title____________________________ Title__________________________
TELEDYNE, INC.
By___________________________
Title________________________
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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
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The Board of Directors is authorized, subject to any
limitations prescribed by law, to provide for the issuance of shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware (such certificate being hereinafter
referred to as a "Preferred Stock Designation"), to establish from time to time
the number of shares to be included in each such series, and to fix the
designation, powers (including but not limited to voting powers, if any),
preferences and rights of the shares of each such series and any qualifications,
limitations or restrictions thereof. The number of authorized shares of
Preferred Stock may be increased or decreased (but not below the number of
shares thereof then outstanding) by the affirmative vote of the holders of a
majority of the Common Stock, without a vote of the holders of the Preferred
Stock, or of any series thereof, unless a vote of any such holders is required
pursuant to the terms of any Preferred Stock Designation.
FIVE: The following provisions are inserted for the management of
the business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
A. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors. In addition
to the powers and authority expressly conferred upon them by statute or by
this Restated Certificate of Incorporation or the Bylaws of the
Corporation, the directors are hereby empowered to exercise all such
powers and do all such acts and things as may be exercised or done by the
Corporation.
B. The Board of Directors may adopt, amend or repeal the
Bylaws of the Corporation.
C. The directors of the Corporation need not be elected by
written ballot unless the Bylaws so provide.
SIX: The Corporation reserves the right to amend and repeal any
provision contained in this Restated Certificate of Incorporation in the manner
from time to time prescribed by the laws of the State of Delaware. All rights
herein conferred are granted subject to this reservation.
SEVEN: A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which such director derived any
improper personal benefit. No amendment to or repeal of this Article SEVEN
shall apply to or have any 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
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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 so amended. Any repeal or modification
of this provision shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
EIGHT: A. RIGHT TO INDEMNIFICATION. Each person who was or is
made a party or is threatened to be made a party to or is otherwise involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
is or was a director or an officer of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another Corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee or agent or in
any other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than such law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, excise taxes or penalties and amounts paid in settlement)
reasonably incurred or suffered by such indemnitee in connection therewith;
provided, however, that, except as provided in Section C of this Article EIGHT
with respect to proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the Board of Directors of the Corporation.
B. RIGHT TO ADVANCEMENT OF EXPENSES. The right to
indemnification conferred in Section A of this Article EIGHT shall include the
right to be paid by the Corporation the expenses (including attorneys' fees)
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee in his or her capacity as a director or officer (and not in any
other capacity in which service was or is 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
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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 Chief Executive Officer.
The Board of Directors may postpone, reschedule or cancel any previously
scheduled special meeting.
Only such business shall be conducted at a special meeting of stockholders
as shall have been brought before the meeting pursuant to the Corporation's
notice of meeting. Nominations of persons for election to the Board of
Directors may be made at a special meeting of stockholders at which directors
are to be elected pursuant to the Corporation's notice of meeting (a) by or at
the direction of the Board of Directors or (b) by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice as
provided in this Article NINE, Clause (B), who shall be entitled to vote at the
meeting and who complies with the notice procedures set forth in this Article
NINE, Clause (B). Nominations by stockholders of persons for election to the
Board of Directors may be made at such a special meeting of stockholders if the
stockholder's notice required by Article NINE, Clause (C) shall be delivered to
the Secretary of the Corporation at the principal executive offices of the
Corporation not earlier than the ninetieth day prior to such special meeting and
not later than the close of business on the later of the seventy-fifth day prior
to such special meeting or the tenth day following the day on which a public
announcement (as defined in subparagraph (e) of Article NINE, Clause (C)) is
first made of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting.
C. NOTICE OF NOMINATIONS AND ACTION TO BE TAKEN AT AN ANNUAL MEETING.
(a) Nominations of persons for election to the board of directors of the
Corporation and the proposal of business to be considered by the stockholders
may be made at an annual meeting of stockholders (i) pursuant to the
Corporation's notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) by any stockholder of the Corporation who was a stockholder
of record at the time of giving of the notice
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provided for in this Article NINE, Section (C) who is entitled to vote at the
meeting and who complied with the notice procedures set forth in this Article
NINE, Section (C).
(b) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (iii) of paragraph (a) of
this Article NINE, Section (C), the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation and such business must be
a proper matter for stockholder action under the General Corporation Law of the
State of Delaware. To be timely, a stockholder's notice shall be delivered to
the Secretary at the principal executive offices of the Corporation not less
than seventy-five days nor more than ninety days prior to the first anniversary
of the preceding year's annual meeting; provided, however, that in the event
that the date of the annual meeting is advanced by more than thirty days or
delayed by more than sixty days from such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than the ninetieth day
prior to such annual meeting and not later than the close of business on the
later of the sixtieth day prior to such annual meeting or the tenth day
following the day on which public announcement of the date of such meeting is
first made. Such stockholder's notice shall set forth (i) as to each person
whom the stockholder proposes to nominate for election or reelection as a
director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (ii) as to any other business that the stockholder
proposes to bring before the meeting, a brief description of the business
desired to be brought before the meeting, the reasons for conducting such
business at the meeting and any financial or other interest in such business of
such stockholder and the beneficial owner, if any, on whose behalf the proposal
is made; and (iii) as to the stockholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination or proposal is made (1) the name
and address of such stockholder, as they appear on the Corporation's books, and
of such beneficial owner and (2) the class and number of shares of the
Corporation which are owned beneficially and of record by such stockholder and
such beneficial owner.
(c) Notwithstanding anything in the second sentence of paragraph (b) of
this Article NINE, Section (C) to the contrary, in the event that the number of
directors to be elected to the board of directors of the Corporation is
increased and there is no public announcement naming all of the nominees for
director or specifying the size of the increased board of directors made by the
Corporation at least eighty-five days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice required by this Article
NINE, Section (C) shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it shall be
delivered to the Secretary at the principal executive offices of the Corporation
not later than the close of business on the tenth day following the day on which
such public announcement is first made by the Corporation.
(d) Only such persons who are nominated in accordance with the
procedures set forth in this Article NINE, Section (C) shall be eligible to
serve as directors and only
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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, Clause (C) regarding nominations of persons
for election to the Board of Directors of the Corporation and the proposal of
business to be transacted by the stockholders. Without limiting the category of
such provisions which would not be inconsistent with this Article NINE, Clause
(C), a provision in the bylaws of the Corporation which sets forth additional
information which must be provided by a stockholder in the notice required by
this Article NINE, Clause (C) shall not be deemed to be so inconsistent.
D. VOTING. The stockholders shall not have the right to cumulate
their votes in the election of directors.
TEN: (A) Except as otherwise fixed pursuant to the provisions of Article
FOUR hereof relating to the rights of the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation to elect additional directors under specified circumstances, the
number of directors of the Corporation shall be fixed from time to time by or
pursuant to the Bylaws. The directors, other than those who may be elected by
the holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation, shall be classified, with respect to
the time for which they severally hold office, into three classes: Class I,
Class II and Class III. Each class shall consist, as nearly as may be possible,
of one-third of the whole number of the Board of Directors. The terms of office
of the initial classes of directors shall be as follows: the Class I Directors
shall be elected to hold office for a term to expire at the first annual meeting
of stockholders thereafter, or until his or her earlier resignation or removal;
the Class II Directors shall be elected to hold office for a
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term to expire at the second annual meeting of stockholders thereafter, or until
his or her earlier resignation or removal; and the Class III Directors shall be
elected to hold office for a term to expire at the third annual meeting of
stockholders thereafter, or until his or her earlier resignation or removal, and
in the case of each class, until their respective successors are duly elected
and qualified. At each annual meeting of stockholders the directors elected to
succeed those whose terms have expired shall be identified as being of the same
class as the directors they succeed and shall be elected to hold office for a
term to expire at the third annual meeting of stockholders after their election,
or until his or her earlier resignation or removal, and until their respective
successors are duly elected and qualified.
(B) Except as otherwise fixed pursuant to the provisions of Article FOUR
hereof relating to the rights of the holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation to
elect directors:
(a) In case of any increase in the number of directors, the additional
director or directors, and in case of any vacancy in the Board of Directors due
to death, resignation, removal, disqualification or any other reason, the
successors to fill the vacancies, shall be elected by a majority of the
directors then in office, even though less than a quorum, or by a sole remaining
director.
(b) Directors appointed in the manner provided in paragraph (a) to newly
created directorships resulting from any increase in the authorized number of
directors or any vacancies on the Board of Directors resulting from death,
resignation, removal, disqualification or any other cause shall hold office for
a term expiring at the next annual meeting of stockholders at which the term of
the class to which they have been elected expires.
(c) No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
(C) Except as otherwise fixed pursuant to the provisions of Article FOUR
hereof relating to the rights of the holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation to
elect directors, any director or directors may be removed from office at any
time, but only for cause and only by the affirmative vote of (x) 75% of the
Voting Power, voting together as a single class, or (y) a majority of the Board
of Directors.
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,
-8-
<PAGE>
distributors and customers of the Corporation and its subsidiaries and the
effect upon communities in which the offices or facilities of the Corporation
and its subsidiaries are located and any other factors considered pertinent.
This Article ELEVEN shall be deemed to grant discretionary authority to the
Board of Directors, any committee thereof and each individual director, and
shall not be deemed to provide to any specific constituency any right to be
considered.
TWELVE: In addition to the requirements of (i) law, and (ii) the other
provisions of this Restated Certificate of Incorporation, the affirmative vote
of the holders of at least two-thirds of the outstanding shares of Common Stock
of the Corporation entitled to vote shall be required for the adoption or
authorization of a Fundamental Change unless the Fundamental Change has been
approved at a meeting of the Board of Directors by the vote of more than
two-thirds of the incumbent members of the Board of Directors.
As used in this Article Twelve, "Fundamental Change" shall mean (1) any
merger or consolidation of the Corporation with or into any other corporation,
(2) any sale, lease, exchange, transfer or other disposition, but excluding a
mortgage or any other security device, of all or substantially all of the assets
of the Corporation, (3) any merger or consolidation of a Significant Shareholder
with or into the Corporation or a direct or indirect subsidiary of the
Corporation, (4) any sale, lease, exchange, transfer or other disposition to the
Corporation or to a direct or indirect subsidiary of the Corporation of any
Common Stock of the Corporation held by a Significant Shareholder or any other
assets of a Significant Shareholder which, if included with all other
dispositions consummated during the same fiscal year of the Corporation by the
same Significant Shareholder, would result in dispositions of assets having an
aggregate fair value in excess of five percent of the total consolidated assets
of the Corporation as shown on its certified balance sheet as of the end of the
fiscal year preceding the proposed disposition, (5) any reclassification of
Common Stock of the Corporation, or any recapitalization involving Common Stock
of the Corporation, consummated within five years after a Significant
Shareholder becomes a Significant Shareholder, 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.
-9-
<PAGE>
THIRTEEN: Notwithstanding any other provisions of this Restated
Certificate of Incorporation or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any affirmative vote of the
holders of any particular class or series of Voting Stock required by law or
this Restated Certificate of Incorporation, the affirmative vote of the holders
or at least 75% of the Voting Power, voting together as a single class, shall be
required to alter, amend, supplement or repeal, or to adopt any provision
inconsistent with the purpose or intent of, Articles NINE, TEN, ELEVEN, TWELVE
or THIRTEEN; PROVIDED, HOWEVER, that no amendment of Article TWELVE shall apply
to any person who is an Interested Shareholder at the time of the adoption of
such amendment.
- 10 -
ANNEX B
.............................................
ALLEGHENY TELEDYNE INCORPORATED
AMENDED AND RESTATED BYLAWS
...............................................
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I OFFICES. . . . . . . . . . . . . . . . . . . 1
Section 1. Registered Office. . . . . . . 1
Section 3. Other Offices. . . . . . . . . 1
ARTICLE II MEETINGS OF STOCKHOLDERS. . . . . . . . . . 1
Section 1. Place of Meetings. . . . . . . 1
Section 2. Annual Meeting . . . . . . . . 1
Section 3. Special Meetings . . . . . . . 1
Section 4. Notice of Meetings . . . . . . 1
Section 5. Quorum; Adjournment. . . . . . 2
Section 6. Proxies and Voting . . . . . . 2
Section 7. Stock List . . . . . . . . . . 3
ARTICLE III BOARD OF DIRECTORS . . . . . . . . . . . . 3
Section 1. Duties and Powers. . . . . . . 3
Section 2. Number and Term of Office. . . 3
Section 3. Vacancies. . . . . . . . . . . 4
Section 4. Meetings . . . . . . . . . . . 4
Section 5. Quorum . . . . . . . . . . . . 5
Section 6. Actions of Board Without a
Meeting . . . . . . . . . . . 5
Section 7. Meetings by Means of
Conference Telephone. . . . . 5
Section 8. Committees . . . . . . . . . . 5
i
<PAGE>
Page
----
Section 9. Compensation . . . . . . . . . 6
Section 10. Removal. . . . . . . . . . . . 6
ARTICLE IV OFFICERS. . . . . . . . . . . . . . . . . . 6
Section 1. General. . . . . . . . . . . . 6
Section 2. Election; Term of Office . . . 6
Section 3. Chairman of the Board. . . . . 6
Section 4. Chief Executive Officer. . . . 7
Section 5. President. . . . . . . . . . . 7
Section 6. Vice President . . . . . . . . 7
Section 7. Secretary. . . . . . . . . . . 7
Section 8. Assistant Secretaries. . . . . 8
Section 9. Treasurer. . . . . . . . . . . 8
Section 10. Assistant Treasurers . . . . . 8
Section 11. Other Officers . . . . . . . . 8
ARTICLE V STOCK. . . . . . . . . . . . . . . . . . . . 9
Section 1. Form of Certificates . . . . . 9
Section 2. Signatures . . . . . . . . . . 9
Section 3. Lost Certificates. . . . . . . 9
Section 4. Transfers. . . . . . . . . . . 9
Section 5. Record Date. . . . . . . . . . 9
Section 6. Beneficial Owners. . . . . . . 10
Section 7. Voting Securities Owned by
the Corporation . . . . . . . 10
ii
<PAGE>
Page
----
ARTICLE VI NOTICES . . . . . . . . . . . . . . . . . . 10
Section 1. Notices. . . . . . . . . . . . 10
Section 2. Waiver of Notice . . . . . . . 10
ARTICLE VII GENERAL PROVISIONS . . . . . . . . . . . . 11
Section 1. Dividends. . . . . . . . . . . 11
Section 2. Disbursements. . . . . . . . . 11
Section 3. Corporation Seal . . . . . . . 11
ARTICLE VIII DIRECTORS' LIABILITY AND
INDEMNIFICATION . . . . . . . . . . . . . . . . 11
Section 1. Directors' Liability.. . . . . 11
Section 2. Right to Indemnification . . . 12
Section 3. Right to Advancement of
Expenses. . . . . . . . . . . 12
Section 4. Right of Indemnitee to
Bring Suit. . . . . . . . . . 12
Section 5. Non-Exclusivity of Rights. . . 13
Section 6. Insurance. . . . . . . . . . . 13
Section 7. Indemnification of Employees
and Agents of the
Corporation. . . . . . . . . 13
Section 8. Amendment. . . . . . . . . . . 14
ARTICLE IX AMENDMENTS. . . . . . . . . . . . . . . . . 14
iii
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
ALLEGHENY TELEDYNE INCORPORATED
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, State
of Delaware.
SECTION 2. CORPORATE HEADQUARTERS. The corporate headquarters of
the Corporation shall be in the City of Pittsburgh, Pennsylvania.
SECTION 3. OTHER OFFICES. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. Meetings of the 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
<PAGE>
time to time by the Delaware General Corporation Law or the Certificate of
Incorporation. The notice of a special meeting shall also state the purpose or
purposes for which the meeting is called.
SECTION 5. QUORUM; ADJOURNMENT. At any meeting of the stockholders,
the holders of a majority of all of the shares of the stock entitled to vote at
the meeting, present in person or by proxy, shall constitute a quorum for all
purposes, unless or except to the extent that the presence of a larger number
may be required by law or the Certificate of Incorporation. If a quorum shall
fail to attend any meeting, the chairman of the meeting or the holders of a
majority of the shares of stock entitled to vote who are present, in person or
by proxy, may adjourn the meeting to another place, date, or time without notice
other than announcement at the meeting, until a quorum shall be present or
represented.
When a meeting is adjourned to another place, date or time, written
notice need not be given of the adjourned meeting if the place, date and time
thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than
thirty (30) days after the date for which the meeting was originally noticed, or
if a new record date is fixed for the adjourned meeting, written notice of the
place, date, and time of the adjourned meeting shall be given in conformity
herewith. At any adjourned meeting, any business may be transacted which might
have been transacted at the original meeting.
SECTION 6. PROXIES AND VOTING. At any meeting of the stockholders,
every stockholder entitled to vote may vote in person or by proxy authorized by
an instrument in writing filed in accordance with the procedure established for
the meeting.
Each stockholder shall have one vote for every share of stock entitled
to vote which is registered in his name on the record date for the meeting,
except as otherwise provided herein or required by law or the Certificate of
Incorporation.
All voting, including on the election of directors but excepting where
otherwise provided herein or required by law or the Certificate of
Incorporation, may be by a voice vote; provided, however, that upon demand
therefor by a stockholder entitled to vote or such stockholder's proxy, or at
the discretion of the chairperson of the meeting, a stock vote shall be taken.
Every stock vote shall be taken by ballots, each of which shall state the name
of the stockholder or proxy voting and such other information as may be required
under the procedure established for the meeting. Every vote taken by ballots
shall be counted by an inspector or inspectors appointed by the Board of
Directors or the chairperson of the meeting.
All elections shall be determined by a plurality of the votes cast,
and except as otherwise required by law or the Certificate of Incorporation, all
other matters shall be determined by a majority of the votes cast.
2
<PAGE>
SECTION 7. STOCK LIST. A complete list of stockholders entitled to
vote at any meeting of stockholders, arranged in alphabetical order for each
class of stock and showing the address of each such stockholder and the number
of shares registered in such stockholder's name, shall be open to the
examination of any such stockholder, for any purpose germane to the meeting,
during ordinary business hours for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting during
the whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the
identity of the stockholders entitled to vote at the meeting and the number of
shares held by each of them.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. DUTIES AND POWERS. The business of the Corporation shall
be managed by or under the direction of the Board of Directors which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by law or by the Certificate of Incorporation or by these
Bylaws directed or required to be exercised or done by the stockholders.
SECTION 2. NUMBER AND TERM OF OFFICE. The Board of Directors shall
consist of one (1) or more members. The number of directors shall be fixed and
may be changed from time to time by resolution duly adopted by a majority of the
directors then in office, except as otherwise provided by law or the Certificate
of Incorporation. Except as provided in Section 3 of this Article, directors
shall be elected by the holders of record of a plurality of the votes cast at
Annual Meetings of Stockholders. Any director may resign at any time upon
written notice to the Corporation. Directors need not be stockholders.
The directors, other than those who may be elected by the holders of
any class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation, shall be classified, with respect to the time for
which they severally hold office, into three classes: Class I, Class II and
Class III. Each class shall consist, as nearly as may be possible, of one-third
of the whole number of the Board of Directors. The terms of office of the
initial classes of directors shall be as follows: the Class I Directors shall
be elected to hold office for a term to expire at the first annual meeting of
stockholders thereafter, or until his or her earlier resignation or removal; the
Class II Directors shall be elected to hold office for a term to expire at the
second annual meeting of stockholders thereafter, or until his or her earlier
resignation or removal; and the Class III Directors shall be elected to hold
office for a term to expire at the third annual meeting of stockholders
thereafter, or until his or her earlier resignation or removal, and in the case
of each class, until their respective successors are duly elected
3
<PAGE>
and qualified. At each annual meeting of stockholders the directors elected to
succeed those whose terms have expired shall be identified as being of the same
class as the directors they succeed and shall be elected to hold office for a
term to expire at the third annual meeting of stockholders after their election,
or until his or her earlier resignation or removal, and until their respective
successors are duly elected and qualified. This paragraph of Article III,
Section 2 is also contained in Article TEN, Section (A) of the Corporation's
Certificate of Incorporation, and accordingly, may be altered, amended or
repealed only to the extent and at the time the comparable Certificate Article
is altered, amended or repealed.
SECTION 3. VACANCIES. Except as otherwise fixed pursuant to the
provisions of Article FOUR of the Corporation's Certificate of Incorporation
relating to the rights of the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation to elect
directors:
(a) In case of any increase in the number of directors, the additional
director or directors, and in case of any vacancy in the Board of Directors due
to death, resignation, removal, disqualification or any other reason, the
successors to fill the vacancies, shall be elected by a majority of the
directors then in office, even though less than a quorum, or by a sole remaining
director, and the director or directors so chosen shall hold office until the
next Annual Meeting or special meeting of stockholders duly called for that
purpose and until their successors are duly elected and qualified, or until
their earlier resignation or removal.
(b) Directors appointed in the manner provided in paragraph (a) to
newly created directorships resulting from any increase in the authorized number
of directors or any vacancies on the Board of Directors resulting from death,
resignation, removal, disqualification or any other cause shall hold office for
a term expiring at the next annual meeting of stockholders at which the term of
the class to which they have been elected expires.
(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
4
<PAGE>
time be determined by the Board of Directors. Special meetings of the Board of
Directors may be called by the Chairman of the Board, the President or a
majority of the directors then in office. Notice thereof stating the place,
date and hour of the meeting shall be given to each director either by mail not
less than forty-eight (48) hours before the date of the meeting, by telephone,
telegram or facsimile transmission on twenty-four (24) hours' notice, or on such
shorter notice as the person or persons calling such meeting may deem necessary
or appropriate in the circumstances. Meetings may be held at any time without
notice if all the directors are present or if all those not present waive such
notice in accordance with Section 2 of Article VI of these Bylaws.
SECTION 5. QUORUM. Except as may be otherwise specifically provided
by law, the Certificate of Incorporation or these Bylaws, at all meetings of the
Board of Directors, a majority of the directors then in office shall constitute
a quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors. If a quorum shall not be present at any meeting of the
Board of Directors, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present.
SECTION 6. ACTIONS OF BOARD WITHOUT A MEETING. Unless otherwise
provided by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if all members of the Board
of Directors or committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
of Directors or committee.
SECTION 7. MEETINGS BY MEANS OF CONFERENCE TELEPHONE. Unless
otherwise provided by the Certificate of Incorporation or these Bylaws, members
of the Board of Directors of the Corporation, or any committee designated by the
Board of Directors, may participate in a meeting of the Board of Directors or
such committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this Section 7 shall
constitute presence in person at such meeting.
SECTION 8. COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the directors then in office, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of any such committee. In the absence or
disqualification of a member of a committee, and in the absence of a designation
by the Board of Directors of an alternate member to replace the absent or
disqualified member, the member or members thereof present at any meeting and
not disqualified from voting, whether or not such members constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any committee,
to the extent allowed by law and provided in the Bylaw or resolution
establishing such
5
<PAGE>
committee, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers which
may require it. Each committee shall keep regular minutes and report to the
Board of Directors when required.
SECTION 9. COMPENSATION. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, the Board of Directors shall have
the authority to fix the compensation of directors. The directors may be paid
their expenses, if any, of attendance at each meeting of the Board of Directors
and may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
SECTION 10. REMOVAL. Any director or directors may be removed from
office only as provided in the Corporation's Certificate of Incorporation.
ARTICLE IV
OFFICERS
SECTION 1. GENERAL. The officers of the Corporation shall be
appointed by the Board of Directors and shall consist of a Chairman of the
Board, a Chief Executive Officer, a President, such number of Vice Presidents as
the Board of Directors shall elect from time to time, a Secretary, a Treasurer
(or a position with the duties and responsibilities of a Treasurer) and such
other officers and assistant officers (if any) as the Board of Directors may
from time to time appoint. Any number of offices may be held by the same
person, unless the Certificate of Incorporation or these Bylaws otherwise
provide.
SECTION 2. ELECTION; TERM OF OFFICE. The Board of Directors at its
first meeting held after each Annual Meeting of Stockholders shall elect a
Chairman of the Board or a President, or both, a Secretary and a Treasurer (or a
position with the duties and responsibilities of a Treasurer), and may also
elect at that meeting or any other meeting, such other officers and agents as it
shall deem necessary or appropriate. Each officer of the Corporation shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors together with the powers and duties customarily
exercised by such officer; and each officer of the Corporation shall hold office
until such officer's successor is elected and qualified or until such officer's
earlier resignation or removal. Any officer may resign at any time upon written
notice to the Corporation. The Board of Directors may at any time, with or
without cause, by the affirmative vote of a majority of directors then in
office, remove any officer.
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the stockholders and the Board of Directors and shall
have such other
6
<PAGE>
duties and powers as may be prescribed by the Board of Directors from time to
time. The Board of Directors may also designate one of its members as Vice
Chairman of the Board. The Vice Chairman of the Board shall, during the absence
or inability to act of the Chairman of the Board, have the powers and perform
the duties of the Chairman of the Board, and shall have such other powers and
perform such other duties as shall be prescribed from time to time by the Board
of Directors.
SECTION 4. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer
shall have general charge and control over the affairs of the Corporation,
subject to the Board of Directors, shall see that all orders and resolutions of
the Board of Directors are carried out, shall report thereon to the Board of
Directors, and shall have such other powers and perform such other duties as
shall be prescribed from time to time by the Board of Directors.
SECTION 5. PRESIDENT. The President shall have general and active
management of the business of the Corporation and shall see that all orders and
resolutions of the Board of Directors are carried into effect. The President
shall have and exercise such further powers and duties as may be specifically
delegated to or vested in the President from time to time by these Bylaws or the
Board of Directors. In the absence of the Chairman of the Board or the Vice
Chairman of the Board (if any) or in the event of the inability of or refusal to
act by the Chairman of the Board or the Vice Chairman of the Board (if any), or
if the Board has not designated a Chairman or Vice Chairman, the President shall
perform the duties of the Chairman of the Board, and when so acting, shall have
all of the powers and be subject to all of the restrictions upon the Chairman of
the Board.
SECTION 6. VICE PRESIDENT. In the absence of the President or in the
event of his inability or refusal to act, the Vice President (or in the event
there be more than one vice president, the vice presidents in the order
designated by the directors, or in the absence of any designation, then in the
order of their election) shall perform the duties of the President, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the President. The vice presidents shall perform such other duties and have
such other powers as the Board of Directors or the President may from time to
time prescribe.
SECTION 7. SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors
or the President. If the Secretary shall be unable or shall refuse to cause to
be given notice of all meetings of the stockholders and special meetings of the
Board of Directors, and if there be no Assistant Secretary, then either the
Board of Directors or the President may choose another officer to cause such
notice to be given. The Secretary shall have custody of the seal of the
Corporation and the Secretary or any
7
<PAGE>
Assistant Secretary, if there be one, shall have authority to affix the same to
any instrument requiring it and when so affixed, it may be attested by the
signature of the Secretary or by the signature of any such Assistant Secretary.
The Board of Directors may give general authority to any other officer to affix
the seal of the Corporation and to attest the affixing by his or her signature.
The Secretary shall see that all books, reports, statements, certificates and
other documents and records required by law to be kept or filed are properly
kept or filed, as the case may be.
SECTION 8. ASSISTANT SECRETARIES. Except as may be otherwise
provided in these Bylaws, Assistant Secretaries, if there be any, shall perform
such duties and have such powers as from time to time may be assigned to them by
the Board of Directors, the President, or the Secretary, and shall have the
authority to perform all functions of the Secretary, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
Secretary.
SECTION 9. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities, shall keep complete and accurate accounts of all
receipts and disbursements of the Corporation, and shall deposit all monies and
other valuable effects of the Corporation in its name and to its credit in such
banks and other depositories as may be designated from time to time by the Board
of Directors. The Treasurer shall disburse the funds of the Corporation, taking
proper vouchers and receipts for such disbursements. The Treasurer shall, when
and if required by the Board of Directors, give and file with the Corporation a
bond, in such form and amount and with such surety or sureties as shall be
satisfactory to the Board of Directors, for the faithful performance of his or
her duties as Treasurer. The Treasurer shall have such other powers and perform
such other duties as the Board of Directors or the President shall from time to
time prescribe.
SECTION 10. ASSISTANT TREASURERS. Except as may be otherwise
provided in these Bylaws, Assistant Treasurers, if there be any, shall perform
such duties and have such powers as from time to time may be assigned to them by
the Board of Directors, the President, or the Treasurer, and shall have the
authority to perform all functions of the Treasurer, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
Treasurer.
SECTION 11. OTHER OFFICERS. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
8
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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 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.
9
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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 and
such notice shall be deemed to be given at the time of receipt thereof if given
personally or at the time of transmission thereof if given by telegram,
facsimile transmission, telex or cable.
SECTION 2. WAIVER OF NOTICE. Whenever any notice is required by law,
the Certificate of Incorporation or these Bylaws to be given to any director,
member or a committee or stockholder, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to notice.
10
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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
DIRECTORS' LIABILITY AND INDEMNIFICATION
SECTION 1. DIRECTORS' LIABILITY. A director of the Corporation shall
not be personally liable to the Corporation or its stockholders for monetary
damages for any breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law or (iv) for any transaction from which such
director derived any improper personal benefit. If the Delaware General
Corporation Law is amended to authorize corporate action further eliminating the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as amended. Any repeal or modification of
this provision shall not adversely affect any right or protection of a director
of the Corporation existing at the time of such repeal or modification.
11
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SECTION 2. RIGHT TO INDEMNIFICATION. Each person who was or is made
a party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
is or was a director or an officer of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee or agent or in
any other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than such law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, excise taxes or penalties and amounts paid in settlement)
reasonably incurred or suffered by such indemnitee in connection therewith;
provided, however, that, except as provided in Section 4 of this Article VIII
with respect to proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the Board of Directors of the Corporation.
SECTION 3. RIGHT TO ADVANCEMENT OF EXPENSES. The right to
indemnification conferred in Section 2 of this Article VIII shall include the
right to be paid by the Corporation the expenses (including attorneys' fees)
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee in his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Section 3 or otherwise. The rights to indemnification and to the
advancement of expenses conferred in Sections 2 and 3 of this Article VIII shall
be contract rights and such rights shall continue as to an indemnitee who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
SECTION 4. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under
Section 2 or 3 of this Article VIII is not paid in full by the Corporation
within sixty (60) days after a written claim has been received by the
Corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be twenty (20) days, the indemnitee may
at any time thereafter bring suit against the Corporation to recover
12
<PAGE>
the unpaid amount of the claim. If successful in whole or in part in any such
suit, or in a suit brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit. In
(i) any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and (ii) in any suit
brought by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the Corporation shall be entitled to recover such
expenses upon a final adjudication that, the indemnitee has not met any
applicable standard for indemnification set forth in the Delaware General
Corporation Law. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the indemnitee
has not met such applicable standard of conduct, shall create a presumption that
the indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or brought by the Corporation to recover an
advancement or expenses pursuant to the terms of an undertaking, the burden or
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Article VIII or otherwise shall be on the
Corporation.
SECTION 5. NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification
and to the advancement of expenses conferred in this Article VIII shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, the Corporation's Certificate of Incorporation, Bylaws,
agreement, vote of stockholders or disinterested directors or otherwise.
SECTION 6. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
SECTION 7. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE
CORPORATION. The Corporation may, to the extent authorized from time to time by
the Board of Directors, grant rights to indemnification and to the advancement
of expenses to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article with respect to the indemnification and
advancement of expenses of directors and officers of the Corporation.
13
<PAGE>
SECTION 8. AMENDMENT. This Article VIII is also contained in
Articles SEVEN and EIGHT of the Corporation's Certificate of Incorporation, and
accordingly, may be altered, amended or repealed only to the extent and at the
time the comparable Certificate Article is altered, amended or repealed. Any
repeal or modification of this Article VIII shall not change the rights of an
officer or director to indemnification with respect to any action or omission
occurring prior to such repeal or modification.
ARTICLE IX
AMENDMENTS
Except as otherwise specifically stated within an Article to
be altered, amended or repealed, these Bylaws may be altered, amended or
repealed and new Bylaws may be adopted at any meeting of the Board of Directors
or of the stockholders, provided notice of the proposed change was given in the
notice of the meeting.
14
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THIS IS TO CERTIFY:
That I am the duly elected, qualified and acting Secretary of Allegheny
Teledyne Incorporated and that the foregoing amended and restated bylaws were
adopted as the amended and restated bylaws of said corporation as of the ____
day of _____, 1996 by Unanimous Written Consent of the Directors of said
corporation.
Dated as of _________ __, 1996
______________________________
______________, Secretary
15
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ANNEX C
DIRECTORS OF NEWCO:
Initial Directors of NEWCO:
Richard P. Simmons
Robert P. Bozzone
Arthur H. Aronson
Charles J. Queenan, Jr.
Paul S. Brentlinger
Henry E. Singleton
George A. Roberts
William P. Rutledge
Donald B. Rice
At or prior to the Effective Time, three additional directors will be named
by ALC and three additional directors will be named by TI.
If any of Messrs. Simmons, Bozzone, Aronson, Queenan or Brentlinger shall
die or otherwise be unable or unwilling to serve, then a substitute for
each such person shall be named by ALC. If any of Messrs. Singleton,
Roberts, Rutledge or Rice shall die or otherwise be unable or unwilling to
serve, then a substitute for each such person shall be named by TI.
OFFICERS OF NEWCO:
Chairman of the Board and
Chairman of the Executive Committee: Richard P. Simmons
President and Chief Executive Officer: William P. Rutledge
Executive Vice President: Arthur H. Aronson
Executive Vice President: Donald B. Rice
Senior Vice President and Chief Financial Officer: James L. Murdy
Vice President, General Counsel and Secretary: Jon D. Walton
<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 Agreement and Plan of Merger and
Combination, dated as of April 1, 1996 (the "Agreement"), among XYZ/Power, Inc.
(now Allegheny Teledyne Incorporated), a Delaware corporation ("Newco"), ALC and
TI, at the Effective Time (as defined in the Agreement) ALC and TI will each
become a wholly owned subsidiary of Newco.
As a result of the Combination (as defined in the Agreement), the
undersigned may receive shares of Common Stock, par value $0.10 per share
("Newco Common Stock"), of Newco. The undersigned would receive such shares in
exchange for shares of Common Stock, par value $0.10 per share, of ALC or shares
of Common Stock, par value $1.00 per share, of TI owned by the undersigned.
The undersigned hereby represents and warrants to, and covenants with,
Newco that in the event the undersigned receives any Newco Common Stock in the
Combination:
D - 1
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Allegheny Teledyne Incorported
__________, 1996
Page 2
(A) The undersigned shall not make any sale, transfer or other
disposition of the Newco Common Stock in violation of the Act or the Rules
and Regulations.
(B) The undersigned has carefully read this letter and discussed its
requirements and other applicable limitations upon the undersigned's
ability to sell, transfer or otherwise dispose of the Newco Common Stock,
to the extent the undersigned has felt it necessary, with the undersigned's
counsel.
(C) The undersigned has been advised that the issuance of shares of
Newco Common Stock to the undersigned in the Combination has been
registered under the Act by a Registration Statement on Form S-4. However,
the undersigned has also been advised that because (i) at the time of the
Combination's submission for a vote of the stockholders of ALC or TI the
undersigned may be deemed an affiliate of ALC or TI, as the case may be,
and (ii) the distribution by the undersigned of the Newco Common Stock has
not been registered under the Act, the undersigned may not sell, transfer
or otherwise dispose of Newco Common Stock issued to the undersigned in the
Combination unless (a) such sale, transfer or other disposition has been
registered under the Act, (b) such sale, transfer or other disposition is
made in conformity with the volume and other applicable limitations imposed
by Rule 145 under the Act, or (c) in the opinion of counsel reasonably
acceptable to Newco, such sale, transfer or other disposition is otherwise
exempt from registration under the Act.
(D) The undersigned understands that Newco will be under no
obligation to register the sale, transfer or other disposition of the Newco
Common Stock by the undersigned or on the undersigned's behalf under the
Act or to take any other action necessary in order to make compliance with
an exemption from such registration available.
(E) The undersigned understands that stop transfer instructions will
be given to Newco's transfer agent with respect to the Newco Common Stock
owned by the undersigned and that there may be placed on the certificates
for the Newco Common Stock issued to the undersigned, or any substitutions
therefor, a legend stating in substance:
"The shares represented by this certificate were issued
in a transaction to which Rule 145 under the Securities Act
of 1933 applies. The shares represented by this certificate
may only be transferred in
D - 2
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Allegheny Teledyne Incorported
__________, 1996
Page 3
accordance with the terms of a letter agreement dated __________,
1996, a copy of which agreement is on file at the principal offices of
New Corporation."
(F) The undersigned also understands that unless the transfer by the
undersigned of the undersigned's Newco Common Stock has been registered
under the Act or is a sale made in conformity with the provisions of this
letter, Newco reserves the right, in its sole discretion, to place the
following legend on the certificates issued to any transferee of shares
from the undersigned:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and were
acquired from a person who received such shares in a
transaction to which Rule 145 under the Securities Act of
1933 applies. The shares have been acquired by the holder
not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities
Act of 1933 and may not be offered, sold, pledged or
otherwise transferred except in accordance with an exemption
from the registration requirements of the Securities Act of
1933."
It is understood and agreed that the legend set forth in paragraph E
or F above shall be removed by delivery of substitute certificates without such
legend if the undersigned shall have delivered to Newco (i) a copy of a letter
from the staff of the Commission, or an opinion of counsel, in form and
substance reasonably satisfactory to Newco to the effect that such legend is not
required for purposes of the Act or (ii) reasonably satisfactory evidence or
representations that the shares represented by such certificates are being or
have been transferred in a transaction made in conformity with the provisions of
Rule 145.
The undersigned further represents and warrants to, and covenants
with, Newco that the undersigned did not, within the 30 days prior to the
Effective Time (as defined in the Agreement), sell, transfer or otherwise
dispose of any shares of the Common Stock of either ALC or TI held by the
undersigned, and that the undersigned will not sell, transfer or otherwise
dispose of the Newco Common Stock received by the undersigned in the Combination
until after such time as results covering at least 30 days of combined
operations of ALC and TI have been published by Newco
D - 3
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Allegheny Teledyne Incorported
__________, 1996
Page 4
within the meaning of Section 201.01 of the Commission's Codification of
Financial Reporting Policies.
Very truly yours,
Acknowledged this ____ day
of ________, 1996.
ALLEGHENY TELEDYNE INCORPORATED
By: _______________________
Name:
D - 4
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SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT, dated as of April 1, 1996, by and between
Teledyne, Inc., a Delaware corporation ("TI"), and the shareholder listed on the
signature page hereof (such shareholder being referred to herein as the
"Shareholder");
WITNESSETH:
WHEREAS, the Shareholder, as of the date hereof, is the owner of or
has the sole right to vote the number of shares of Common Stock, par value $0.10
per share (the "Common Stock"), of Allegheny Ludlum Corporation, a Pennsylvania
corporation (the "Company"), set forth below the name of the Shareholder on the
signature page hereof (the "Shares"); and
WHEREAS, in reliance upon the execution and delivery of this
Agreement, TI will enter into an Agreement and Plan of Merger and Combination,
dated as of the date hereof (the "Combination Agreement"), with XYZ/Power, Inc.
and the Company which provides, among other things, that upon the terms and
subject to the conditions thereof, the Company and TI will each become a wholly
owned subsidiary of New Corporation (the "Combination"); and
WHEREAS, to induce TI to enter into the Combination Agreement and to
incur the obligations set forth therein, the Shareholder is entering into this
Agreement pursuant to which the Shareholder agrees to vote in favor of the
Combination and certain other matters as set forth herein, and to make certain
agreements with respect to the Shares upon the terms and conditions set forth
herein;
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
Section 1. VOTING OF SHARES; PROXY. (a) The Shareholder agrees that
until the earlier of (i) the Effective Time (as defined in the Combination
Agreement) or (ii) the date on which the Combination Agreement is terminated
(the earliest thereof being hereinafter referred to as the "Expiration Date"),
the Shareholder shall vote all Shares owned by the Shareholder at any meeting of
the Company's shareholders (whether annual or special and whether or not an
adjourned meeting), or, if
<PAGE>
applicable, take action by written consent (i) for adoption and approval of the
Combination Agreement and in favor of the ALC Merger (as defined in the
Combination Agreement) and otherwise in favor of the Combination and any other
transaction contemplated by the Combination Agreement as such Combination
Agreement may be modified or amended from time to time and (ii) against any
action, omission or agreement which would or could impede or interfere with, or
have the effect of discouraging, the Combination, including, without limitation,
any Acquisition Proposal (as defined in the Combination Agreement) other than
the Combination. Any such vote shall be cast or consent shall be given in
accordance with such procedures relating thereto as shall ensure that it is duly
counted for purposes of determining that a quorum is present and for purposes of
recording the results of such vote or consent.
(b) At the request of TI, the Shareholder, in furtherance of the
transactions contemplated hereby and by the Combination Agreement, and in order
to secure the performance by the Shareholder of his or her duties under this
Agreement, shall promptly execute, in accordance with the provisions of Section
1759(d) of the Pennsylvania Business Corporation Law, and deliver to TI, an
irrevocable proxy, substantially in the form of Annex A hereto, and irrevocably
appoint TI or its designees, with full power of substitution, his or her
attorney and proxy to vote, or, if applicable, to give consent with respect to,
all of the Shares owned by the Shareholder in respect of any of the matters set
forth in, and in accordance with the provisions of, clauses (i) and (ii) above
of Section 1(a). The Shareholder acknowledges that the proxy executed and
delivered by him or her shall be coupled with an interest, shall constitute,
among other things, an inducement for TI to enter into the Combination
Agreement, shall be irrevocable and shall not be terminated by operation of law
upon the occurrence of any event, including, without limitation, the death or
incapacity of the Shareholder. Notwithstanding any provision contained in such
proxy, such proxy shall terminate upon the Expiration Date.
Section 2. COVENANTS OF THE SHAREHOLDER. The Shareholder covenants
and agrees for the benefit of TI that, until the Expiration Date, he will:
(a) not sell, transfer, pledge, hypothecate, encumber, assign, tender
or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer, pledge,
hypothecation, encumbrance, assignment, tender or other disposition of, any
of the Shares owned by him or her or any interest therein (provided, that
the foregoing shall not prevent the Shareholder from transferring the
Shares to an entity for estate planning purposes, provided that the
Shareholder retains sole voting rights over the Shares or
-2-
<PAGE>
the estate planning entity executes a joinder agreeing to be bound by the
terms of this Agreement);
(b) other than as expressly contemplated by this Agreement, not grant
any powers of attorney or proxies or consents in respect of any of the
Shares owned by him or her, deposit any of the Shares owned by him into a
voting trust, enter into a voting agreement with respect to any of the
Shares owned by him or her or otherwise restrict the ability of the holder
of any of the Shares owned by him or her freely to exercise all voting
rights with respect thereto;
(c) not, in his or her capacity as a shareholder of the Company (it
being understood that nothing in this Shareholder Agreement shall restrict
or affect Shareholder in any other capacity, including as a director or
officer, as applicable, of the Company) and he or she shall direct and use
his or her best efforts to cause his or her agents and representatives not
to, initiate, solicit or encourage, directly or indirectly, any inquiries
or the making or implementation of any Acquisition Proposal or engage in
any negotiations concerning, or provide any confidential information or
data to, or have any discussions with, any person relating to an
Acquisition Proposal, or otherwise facilitate any effort or attempt to make
or implement an Acquisition Proposal. The Shareholder shall immediately
cease and cause to be terminated any existing activities, including
discussions or negotiations with any parties, conducted heretofore with
respect to any of the foregoing and will take the necessary steps to inform
his or her agents and representatives of the obligations undertaken in this
Section 2(c). The Shareholder shall notify TI immediately if any such
inquiries or proposals are received by, any such information is requested
from, or any such negotiations or discussions are sought to be initiated or
continued with, him or her; and
(d) not take any action whatsoever that, based on advice from TI's or
the Company's independent auditors would or could prevent the Combination
from qualifying for "pooling of interests" accounting treatment.
Section 3. COVENANTS OF TI. TI covenants and agrees for the benefit
of the Shareholder that (a) immediately upon execution of this Agreement, TI
shall enter into the Combination Agreement, and (b) until the Expiration Date,
it shall use all reasonable efforts to take, or cause to be taken, all action,
and do, or cause to be done, all things necessary or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
and the Combination Agreement, consistent with the terms and conditions of each
such agreement;
- 3 -
<PAGE>
PROVIDED, HOWEVER, that nothing in this Section 3, Section 12 or any other
provision of this Agreement is intended, nor shall it be construed, to limit or
in any way restrict TI's right or ability to exercise any of its rights under
the Combination Agreement.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
Shareholder represents and warrants to TI that: (a) the execution, delivery and
performance by the Shareholder of this Agreement will not conflict with, require
a consent, waiver or approval under, or result in a breach of or default under,
any of the terms of any contract, commitment or other obligation (written or
oral) to which the Shareholder is bound; (b) this Agreement has been duly
executed and delivered by the Shareholder and constitutes a legal, valid and
binding obligation of the Shareholder, enforceable against the Shareholder in
accordance with its terms; (c) the Shareholder is the sole owner of or has the
sole right to vote the Shares and the Shares represent all shares of Common
Stock which the Shareholder is the sole owner of or has the sole right to vote
at the date hereof, and the Shareholder does not have any right to acquire, nor
is he the "beneficial owner" (as such term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of, any other shares of any class
of capital stock of the Company or any securities convertible into or
exchangeable or exercisable for any shares of any class of capital stock of the
Company (other than shares subject to options or other rights granted by the
Company); (d) the Shareholder has full right, power and authority to execute and
deliver this Agreement and to perform his or her obligations hereunder; and (e)
the Shareholder owns the Shares free and clear of all liens, claims, pledges,
charges, proxies, restrictions, encumbrances, proxies, voting trusts and voting
agreements of any nature whatsoever other than as provided by this Agreement.
The representations and warranties contained herein shall be made as of the date
hereof and as of each day from the date hereof through and including the
Effective Time (as defined in the Combination Agreement).
Section 5. ADJUSTMENTS; ADDITIONAL SHARES. In the event (a) of any
stock dividend, stock split, merger (other than the Combination),
recapitalization, reclassification, combination, exchange of shares or the like
of the capital stock of the Company on, of or affecting the Shares or (b) that
the Shareholder shall become the beneficial owner of any additional shares of
Common Stock or other securities entitling the holder thereof to vote or give
consent with respect to the matters set forth in Section 1, then the terms of
this Agreement shall apply to the shares of capital stock or other instruments
or documents held by the Shareholder immediately following the effectiveness of
the events described in clause (a) or the Shareholder
- 4 -
<PAGE>
becoming the beneficial owner thereof as described in clause (b), as though, in
either case, they were Shares hereunder.
Section 6. SPECIFIC PERFORMANCE. The Shareholder acknowledges that
the agreements contained in this Agreement are an integral part of the
transactions contemplated by the Combination Agreement, and that, without these
agreements, TI would not enter into the Combination Agreement, and acknowledges
that damages would be an inadequate remedy for any breach by him or her of the
provisions of this Agreement. Accordingly, the Shareholder and TI each agree
that the obligations of the parties hereunder shall be specifically enforceable
and neither party shall take any action to impede the other from seeking to
enforce such right of specific performance.
Section 7. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be effective upon receipt (or refusal of
receipt), shall be in writing and shall be delivered in person, by telecopy or
telefacsimile, by telegram, by next-day courier service, or by mail (registered
or certified mail, postage prepaid, return receipt requested) to the Shareholder
at the address listed on the signature page hereof, and to TI at 2049 Century
Park East, Los Angeles, California 90067-3101 Attention: Secretary, telecopy
number 310-551-4366, or to such other address or telecopy number as any party
may have furnished to the other in writing in accordance herewith.
Section 8. BINDING EFFECT; SURVIVAL. Upon execution and delivery of
this Agreement by TI, this Agreement shall become effective as to the
Shareholder at the time the Shareholder executes and delivers this Agreement.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective heirs, personal representatives, successors and
assigns.
Section 9. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
applicable to agreements made and to be performed entirely within such
Commonwealth.
Section 10. COUNTERPARTS. This Agreement may be executed in two
counterparts, both of which shall be an original and both of which together
shall constitute one and the same agreement.
- 5 -
<PAGE>
Section 11. EFFECT OF HEADINGS. The Section headings herein are for
convenience of reference only and shall not affect the construction hereof.
Section 12. ADDITIONAL AGREEMENTS; FURTHER ASSURANCE. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to use
all reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement. The Shareholder
will provide TI with all documents which may reasonably be requested by TI and
will take reasonable steps to enable TI to obtain all rights and benefits
provided it hereunder.
Section 13. AMENDMENT; WAIVER. No amendment or waiver of any
provision of this Agreement or consent to departure therefrom shall be effective
unless in writing and signed by TI and the Shareholder, in the case of an
amendment, or by the party which is the beneficiary of any such provision, in
the case of a waiver or a consent to depart therefrom.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- 6 -
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto all as of the day and year first above written.
Teledyne, Inc.
By ___________________________
Name:
Title:
_______________________
Shareholder
Address:
Number of Shares:
- 7 -
<PAGE>
ANNEX A
[Form of Proxy]
IRREVOCABLE PROXY
In order to secure the performance of the duties of the undersigned
pursuant to the Shareholder Agreement, dated as of April 1, 1996 (the
"Shareholder Agreement"), between the undersigned and Teledyne, Inc., a Delaware
corporation, a copy of such agreement being attached hereto and incorporated by
reference herein, the undersigned hereby irrevocably appoint(s) ______________
and ________________, and each of them, the attorneys, agents and proxies, with
full power of substitution in each of them, for the undersigned and in the name,
place and stead of the undersigned, in respect of any of the matters set forth
in clauses (i) and (ii) of Section 1 of the Shareholder Agreement, to vote or,
if applicable, to give written consent, in accordance with the provisions of
said Section 1 and otherwise act (consistent with the terms of the Shareholder
Agreement) with respect to all shares of Common Stock, par value $0.10 per share
(the "Shares"), of Allegheny Ludlum Corporation, a Pennsylvania corporation (the
"Company"), whether now owned or hereafter acquired, which the undersigned is or
may be entitled to vote at any meeting of the Company held after the date
hereof, whether annual or special and whether or not an adjourned meeting, or,
if applicable, to give written consent with respect thereto. This Proxy is
coupled with an interest, shall be irrevocable and binding on any successor in
interest of the undersigned and shall not be terminated by operation of law upon
the occurrence of any event, including, without limitation, the death or
incapacity of the undersigned. This Proxy shall operate to revoke any prior
proxy as to the Shares heretofore granted by the undersigned. This Proxy shall
terminate on September 30, 1996. This Proxy has been executed in accordance
with Section 1759(d) of the Pennsylvania Business Corporation Law.
Dated:
________ ______________ ____
Dated:
________ ______________ _____
A-1
<PAGE>
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT, dated as of April 1, 1996, by and between
Allegheny Ludlum Corporation, a Pennsylvania corporation ("ALC"), and the
stockholder listed on the signature page hereof (such stockholder and (with
respect to Shares owned jointly with his or her spouse) together with his or her
spouse, being referred to herein as the "Stockholder");
WITNESSETH:
WHEREAS, the Stockholder, as of the date hereof, is the owner of or
has the sole right to vote the number of shares of Common Stock, par value $1.00
per share (the "Common Stock"), of Teledyne, Inc., a Delaware corporation (the
"Company"), set forth below the name of the Stockholder on the signature page
hereof (the "Shares"); and
WHEREAS, in reliance upon the execution and delivery of this
Agreement, ALC will enter into an Agreement and Plan of Merger and Combination,
dated as of the date hereof (the "Combination Agreement"), with New Corporation
and the Company which provides, among other things, that upon the terms and
subject to the conditions thereof ALC and the Company will each become a wholly
owned subsidiary of New Corporation (the "Combination"); and
WHEREAS, to induce ALC to enter into the Combination Agreement and to
incur the obligations set forth therein, the Stockholder is entering into this
Agreement pursuant to which the Stockholder agrees to vote in favor of the
Combination and certain other matters as set forth herein, and to make certain
agreements with respect to the Shares upon the terms and conditions set forth
herein;
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
Section 1. VOTING OF SHARES; PROXY. (a) The Stockholder agrees that
until the earlier of (i) the Effective Time (as defined in the Combination
Agreement) or (ii) the date on which the Combination Agreement is terminated
(the earliest thereof being hereinafter referred to as the "Expiration Date"),
the Stockholder shall vote all Shares owned by the Stockholder at any meeting of
the Company's stockholders (whether annual or
<PAGE>
special and whether or not an adjourned meeting), or, if applicable, take
action by written consent (i) for adoption and approval of the Combination
Agreement and in favor of the TI Merger (as defined in the Combination
Agreement) and otherwise in favor of the Combination and any other
transaction contemplated by the Combination Agreement as such Combination
Agreement may be modified or amended from time to time and (ii) against any
action, omission or agreement which would or could impede or interfere with,
or have the effect of discouraging, the Combination, including, without
limitation, any Acquisition Proposal (as defined in the Combination
Agreement) other than the Combination. Any such vote shall be cast or
consent shall be given in accordance with such procedures relating thereto as
shall ensure that it is duly counted for purposes of determining that a
quorum is present and for purposes of recording the results of such vote or
consent.
(b) At the request of ALC, the Stockholder, in furtherance of the
transactions contemplated hereby and by the Combination Agreement, and in order
to secure the performance by the Stockholder of his or her duties under this
Agreement, shall promptly execute, in accordance with the provisions of
Section 212(e) of the Delaware General Corporation Law, and deliver to ALC, an
irrevocable proxy, substantially in the form of Annex A hereto, and irrevocably
appoint ALC or its designees, with full power of substitution, his or her
attorney and proxy to vote, or, if applicable, to give consent with respect to,
all of the Shares owned by the Stockholder in respect of any of the matters set
forth in, and in accordance with the provisions of, clauses (i) and (ii) above
of Section 1(a). The Stockholder acknowledges that the proxy executed and
delivered by him or her shall be coupled with an interest, shall constitute,
among other things, an inducement for ALC to enter into the Combination
Agreement, shall be irrevocable and shall not be terminated by operation of law
upon the occurrence of any event, including, without limitation, the death or
incapacity of the Stockholder. Notwithstanding any provision contained in such
proxy, such proxy shall terminate upon the Expiration Date.
Section 2. COVENANTS OF THE STOCKHOLDER. The Stockholder covenants
and agrees for the benefit of ALC that, until the Expiration Date, he will:
(a) not sell, transfer, pledge, hypothecate, encumber, assign, tender
or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer, pledge,
hypothecation, encumbrance, assignment, tender or other disposition of, any
of the Shares owned by him or her or any interest therein (provided, that
the foregoing shall not prevent the Stockholder from transferring the
Shares to an entity for estate planning purposes, provided that the
Stockholder retains sole voting rights over the Shares or
-2-
<PAGE>
the estate planning entity executes a joinder agreeing to be bound by the terms
of this Agreement;
(b) other than as expressly contemplated by this Agreement, not grant
any powers of attorney or proxies or consents in respect of any of the
Shares owned by him or her, deposit any of the Shares owned by him or her
into a voting trust, enter into a voting agreement with respect to any of
the Shares owned by him or her or otherwise restrict the ability of the
holder of any of the Shares owned by him or her freely to exercise all
voting rights with respect thereto;
(c) not, in his or her capacity as a shareholder of the Company (it
being understood that nothing in this Stockholder Agreement shall restrict
or affect Stockholder in any other capacity, including as a director or
officer, as applicable, of the Company) and he or she shall direct and use
his or her best efforts to cause his or her agents and representatives not
to, initiate, solicit or encourage, directly or indirectly, any inquiries
or the making or implementation of any Acquisition Proposal or engage in
any negotiations concerning, or provide any confidential information or
data to, or have any discussions with, any person relating to an
Acquisition Proposal, or otherwise facilitate any effort or attempt to make
or implement an Acquisition Proposal. The Stockholder shall immediately
cease and cause to be terminated any existing activities, including
discussions or negotiations with any parties, conducted heretofore with
respect to any of the foregoing and will take the necessary steps to inform
his or her agents and representatives of the obligations undertaken in this
Section 2(c). The Stockholder shall notify ALC immediately if any such
inquiries or proposals are received by, any such information is requested
from, or any such negotiations or discussions are sought to be initiated or
continued with, him or her; and
(d) not take any action whatsoever that, based on advice from ALC's
or the Company's independent auditors would or could prevent the
Combination from qualifying for "pooling of interests" accounting
treatment.
Section 3. COVENANTS OF ALC. ALC covenants and agrees for the
benefit of the Stockholder that (a) immediately upon execution of this
Agreement, ALC shall enter into the Combination Agreement, and (b) until the
Expiration Date, it shall use all reasonable efforts to take, or cause to be
taken, all action, and do, or cause to be done, all things necessary or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement and the Combination Agreement, consistent with
the terms and conditions of each such agreement; PROVIDED, HOWEVER, that nothing
in this Section 3,
-3-
<PAGE>
Section 12 or any other provision of this Agreement is intended, nor shall it be
construed, to limit or in any way restrict ALC's right or ability to exercise
any of its rights under the Combination Agreement.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder represents and warrants to ALC that: (a) the execution, delivery
and performance by the Stockholder of this Agreement will not conflict with,
require a consent, waiver or approval under, or result in a breach of or default
under, any of the terms of any contract, commitment or other obligation (written
or oral) to which the Stockholder is bound; (b) this Agreement has been duly
executed and delivered by the Stockholder and constitutes a legal, valid and
binding obligation of the Stockholder, enforceable against the Stockholder in
accordance with its terms; (c) the Stockholder is the sole owner of or has the
sole right to vote the Shares and the Shares represent all shares of Common
Stock which the Stockholder is the sole owner of or has the sole right to vote
at the date hereof, and the Stockholder does not have any right to acquire, nor
is he the "beneficial owner" (as such term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of, any other shares of any class
of capital stock of the Company or any securities convertible into or
exchangeable or exercisable for any shares of any class of capital stock of the
Company (other than shares subject to options or other rights granted by the
Company); (d) the Stockholder has full right, power and authority to execute and
deliver this Agreement and to perform his or her obligations hereunder; and (e)
the Stockholder owns the Shares free and clear of all liens, claims, pledges,
charges, proxies, restrictions, encumbrances, proxies, voting trusts and voting
agreements of any nature whatsoever other than as provided by this Agreement.
The representations and warranties contained herein shall be made as of the date
hereof and as of each day from the date hereof through and including the
Effective Time (as defined in the Combination Agreement).
Section 5. ADJUSTMENTS; ADDITIONAL SHARES. In the event (a) of any
stock dividend, stock split, merger (other than the Combination)
recapitalization, reclassification, combination, exchange of shares or the like
of the capital stock of the Company on, of or affecting the Shares or (b) that
the Stockholder shall become the beneficial owner of any additional shares of
Common Stock or other securities entitling the holder thereof to vote or give
consent with respect to the matters set forth in Section 1, then the terms of
this Agreement shall apply to the shares of capital stock or other instruments
or documents held by the Stockholder immediately following the effectiveness of
the events described in clause (a) or the Stockholder becoming the beneficial
owner thereof as described in clause (b), as though, in either case, they were
Shares hereunder.
-4-
<PAGE>
Section 6. SPECIFIC PERFORMANCE. The Stockholder acknowledges that
the agreements contained in this Agreement are an integral part of the
transactions contemplated by the Combination Agreement, and that, without these
agreements, ALC would not enter into the Combination Agreement, and acknowledges
that damages would be an inadequate remedy for any breach by him or her of the
provisions of this Agreement. Accordingly, the Stockholder and ALC each agree
that the obligations of the parties hereunder shall be specifically enforceable
and neither party shall take any action to impede the other from seeking to
enforce such right of specific performance.
Section 7. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be effective upon receipt (or refusal of
receipt), shall be in writing and shall be delivered in person, by telecopy or
telefacsimile, by telegram, by next-day courier service, or by mail (registered
or certified mail, postage prepaid, return receipt requested) to the Stockholder
at the address listed on the signature page hereof, and to ALC at 1000 Six PPG
Place, Pittsburgh, Pennsylvania 15222, Attention: Secretary, telecopy number
412-394-3010, or to such other address or telecopy number as any party may have
furnished to the other in writing in accordance herewith.
Section 8. BINDING EFFECT; SURVIVAL. Upon execution and delivery of
this Agreement by ALC, this Agreement shall become effective as to the
Stockholder at the time the Stockholder executes and delivers this Agreement.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective heirs, personal representatives, successors and
assigns.
Section 9. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such State.
Section 10. COUNTERPARTS. This Agreement may be executed in two
counterparts, both of which shall be an original and both of which together
shall constitute one and the same agreement.
Section 11. EFFECT OF HEADINGS. The Section headings herein are for
convenience of reference only and shall not affect the construction hereof.
-5-
<PAGE>
Section 12. ADDITIONAL AGREEMENTS; FURTHER ASSURANCE. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to use
all reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement. The Stockholder
will provide ALC with all documents which may reasonably be requested by ALC and
will take reasonable steps to enable ALC to obtain all rights and benefits
provided it hereunder.
Section 13. AMENDMENT; WAIVER. No amendment or waiver of any
provision of this Agreement or consent to departure therefrom shall be effective
unless in writing and signed by ALC and the Stockholder, in the case of an
amendment, or by the party which is the beneficiary of any such provision, in
the case of a waiver or a consent to depart therefrom.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-6-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto all as of the day and year first above written.
ALLEGHENY LUDLUM CORPORATION
By___________________________
Name:______________________
Title:_____________________
_________________________
Stockholder
_________________________
Spouse
Address:
Number of Shares:
-7-
<PAGE>
ANNEX A
[Form of Proxy]
IRREVOCABLE PROXY
In order to secure the performance of the duties of the undersigned
pursuant to the Stockholder Agreement, dated as of April 1, 1996 (the
"Stockholder Agreement"), between the undersigned and Allegheny Ludlum
Corporation., a Pennsylvania corporation, a copy of such agreement being
attached hereto and incorporated by reference herein, the undersigned hereby
irrevocably appoints ________________ and ___________________, and each of them,
the attorneys, agents and proxies, with full power of substitution in each of
them, for the undersigned and in the name, place and stead of the undersigned,
in respect of any of the matters set forth in clauses (i) and (ii) of Section 1
of the Stockholder Agreement, to vote or, if applicable, to give written
consent, in accordance with the provisions of said Section 1 and otherwise act
(consistent with the terms of the Stockholder Agreement) with respect to all
shares of Common Stock, par value $1.00 per share (the "Shares"), of Teledyne,
Inc., a Delaware corporation (the "Company"), whether now owned or hereafter
acquired, which the undersigned is or may be entitled to vote at any meeting of
the Company held after the date hereof, whether annual or special and whether or
not an adjourned meeting, or, if applicable, to give written consent with
respect thereto. This Proxy is coupled with an interest, shall be irrevocable
and binding on any successor in interest of the undersigned and shall not be
terminated by operation of law upon the occurrence of any event, including,
without limitation, the death or incapacity of the undersigned. This Proxy
shall operate to revoke any prior proxy as to the Shares heretofore granted by
the undersigned. This Proxy shall terminate on September 30, 1996. This Proxy
has been executed in accordance with Section 212(e) of the Delaware General
Corporation Law.
Dated:____________________ ______________________
Dated:____________________ ______________________
A-1
<PAGE>
CONTACT: Bert Delano
Allegheny Ludlum Corporation
412/394-2813
Rosanne O'Brien
Teledyne, Inc.
310/551-4265
Fred Spar/Adam Weiner
Kekst and Company
212/593-2655
FOR IMMEDIATE RELEASE
ALLEGHENY LUDLUM AND TELEDYNE AGREE TO
STRATEGIC COMBINATION VALUED AT $3.2 BILLION
COMBINATION TO BE ACCRETIVE TO BOTH COMPANIES'
EARNINGS AND CASH FLOW
BUSINESS, FINANCIAL SYNERGIES TOTAL
MORE THAN $85 MILLION ANNUALLY
PITTSBURGH, PA. and LOS ANGELES, CALIF., April 1, 1996 -- Allegheny Ludlum
Corporation (NYSE:ALS) and Teledyne, Inc. (NYSE:TDY) today announced a strategic
merger to maximize shareholder value. The new company will be called Allegheny
Teledyne Incorporated. The combined company, with $4 billion in annual sales,
will be a world-class producer in specialty metals and will maintain strong
market positions in aviation and electronics, industrial, and consumer products
businesses.
Under the terms of the definitive agreement approved today by the Boards of
Directors of both companies, Allegheny Ludlum shareholders will receive one
share of Allegheny Teledyne common stock for each share of Allegheny Ludlum
common stock they own, and Teledyne shareholders will receive 1.925 shares of
common stock in the new entity for each of their Teledyne shares. The terms of
the transaction provide Teledyne shareholders with a 27% premium based on the
close-of-market stock prices for both companies on March 29, 1996. The
transaction is expected to be tax-free to shareholders and accounted for as a
pooling of interests.
Teledyne's strong earnings growth, together with Allegheny Ludlum's long
history of consistent profitability, is expected to result in accretive earnings
and cash flow to Allegheny Ludlum shareholders as soon as the combination
occurs. When the significant business and financial synergies resulting from the
merger are considered, the transaction is expected to be accretive to the
earnings and cash flow of both companies in the first full year of combined
operations. It is anticipated that the cash flow of this new combination will
comfortably allow Allegheny Teledyne to pay an annual cash dividend of $.64 per
share, a 23% increase for Allegheny Ludlum shareholders.
Richard P. Simmons, Chairman of Allegheny Ludlum, stated, "The combination
of Allegheny Ludlum with Teledyne is an excellent strategic fit both
operationally and financially. Our Board strongly believes that this transaction
enhances Allegheny Ludlum's long-term competitiveness in a manner that serves
the best interests of Allegheny Ludlum shareholders."
Arthur H. Aronson, Allegheny Ludlum's President and Chief Executive Officer,
added, "In specialty metals Teledyne's high-quality products, production
capabilities and strong distribution system provide immediate cross-marketing
opportunities worldwide, while its engineering and technological expertise
presents exciting possibilities for new product development. Teledyne's strong
aviation and electronics, industrial, and consumer products businesses provide
Allegheny Ludlum opportunities in attractive markets we do not currently serve,
while balancing the cyclicality of the metals business.
1
<PAGE>
"We expect the combination to produce synergies of at least $85 million per
year in pretax earnings and $50 million of after-tax cash flow. These amounts
include the utilization of Teledyne's pension surplus to fund Allegheny Ludlum's
pension and retiree medical expenses."
William P. Rutledge, Teledyne's Chairman and Chief Executive Officer,
stated, "We are extremely pleased to join forces with Allegheny Ludlum. Our
Board's efforts over the past year have focused on finding a strategic option
which would provide our shareholders an immediate increase in value while
preserving longer-term growth opportunities. This combination does exactly that.
Not only does it provide Teledyne shareholders with an immediate premium to the
market value of Teledyne shares, but through business and financial synergies it
establishes an even stronger basis for earnings and cash flow accretion over the
long term.
"In addition, this transaction utilizes Teledyne's surplus pension assets
efficiently and ratifies the progress of our business plans. It strengthens the
prospects for long-term ProfitableGrowth for our shareholders."
Donald B. Rice, President and Chief Operating Officer of Teledyne, stated,
"With Allegheny Teledyne, Teledyne shareholders will gain increased
opportunities in specialty metals and will participate in a new entity featuring
strong earnings, cash flow and capital structure. Shareholders will have a
continued stake in the operating improvements and earnings momentum being
generated by our business plans, and will receive even greater benefit from new
opportunities to share interrelated technologies and skills across Allegheny
Teledyne's businesses."
Following is a table showing combined 1995 revenues by continuing business
segments:
<TABLE>
<CAPTION>
AMOUNT PERCENTAGE
(MILLIONS)
---------- ----------
<S> <C> <C>
Specialty Metals........................ $2,362 58.3
Aviation & Electronics.................. 1,015 25.0
Industrial.............................. 347 8.6
Consumer................................ 327 8.1
---------- -----
$4,051 100.0
</TABLE>
The combined 1995 net income of the two companies was $274 million, and the
combined net debt-to-market capitalization ratio was approximately 14% at
year-end. Based on 1995 sales, the defense industry component of the combined
company was approximately 15%. Based on close-of-market prices on March 29,
1996, Allegheny Teledyne would have a combined market capitalization of
approximately $3.2 billion.
Allegheny Teledyne will be a holding company headquartered in Pittsburgh,
Pa. Its specialty metals operations will be headquartered in Pittsburgh, Pa.,
and its diversified technology operations will be headquartered in Los Angeles,
Calif.
Under the definitive agreement, the Board of Directors of Allegheny Teledyne
will consist of Richard P. Simmons as Chairman of the Board and Chairman of the
Executive Committee and 14 additional members, half of whom will be named by
Allegheny Ludlum and half by Teledyne. William P. Rutledge will be Allegheny
Teledyne's President and Chief Executive Officer. Arthur H. Aronson, Allegheny
Ludlum's President and Chief Executive Officer, and Donald B. Rice, Teledyne's
President and Chief Operating Officer, will become Executive Vice Presidents of
Allegheny Teledyne. In addition, Mr. Aronson will remain President and Chief
Executive Officer of Allegheny Teledyne's Allegheny Ludlum subsidiary, while Dr.
Rice will remain President and will become Chief Executive Officer of the
Teledyne subsidiary.
In connection with the respective approvals of the definitive combination
agreement, the Board of Directors of Allegheny Ludlum received advice from
Salomon Brothers, and the Board of Directors of Teledyne was advised by Goldman,
Sachs & Co.
2
<PAGE>
The transaction is conditioned on approval by the respective companies'
shareholders, as well as customary regulatory and closing conditions. Allegheny
Ludlum will schedule and hold a special shareholders' meeting to consider the
combination. Teledyne's annual shareholders' meeting, scheduled for April 24,
1996, has been postponed.
Teledyne, Inc. is a federation of technology-based businesses serving
worldwide customers with commercial and government-related aviation and
electronics products; high-value specialty metals for consumer, industrial and
aviation applications; and industrial and consumer products.
Allegheny Ludlum Corporation is a leading producer of a wide range of
specialty materials including stainless steels, tool steels, high technology
alloys and grain-oriented silicon steel.
# # #
3
