CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
dated as of October 31, 1997
among
ALLEGHENY TELEDYNE INCORPORATED,
SEA MERGER INC.
and
OREGON METALLURGICAL CORPORATION
TABLE OF CONTENTS
(Continued)
TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER.....................................................................................1
Section 1.1 The Merger.....................................................................................1
Section 1.2 Effective Time.................................................................................2
Section 1.3 Closing........................................................................................2
Section 1.4 Articles of Incorporation of the Surviving Corporation.........................................2
Section 1.5 Directors of the Surviving Corporation.........................................................2
Section 1.6 Officers of the Surviving Corporation..........................................................3
ARTICLE II CONVERSION OF SECURITIES.......................................................................3
Section 2.1 Conversion of Capital Stock....................................................................3
Section 2.2 Company Stock Options and Rights...............................................................4
Section 2.3 Exchange of Certificates.......................................................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................4
Section 3.1 Organization of the Company....................................................................4
Section 3.2 Capitalization of the Company..................................................................5
Section 3.3 Subsidiaries...................................................................................6
Section 3.4 Authority......................................................................................7
Section 3.5 Governmental Filings; No Violations............................................................8
Section 3.6 SEC Filings; Financial Statements..............................................................9
Section 3.7 Absence of Undisclosed Liabilities............................................................10
Section 3.8 Absence of Certain Changes....................................................................10
Section 3.9 Compliance with Law; Regulatory Compliance....................................................10
Section 3.10 Environmental Matters.........................................................................12
Section 3.11 Tax Matters...................................................................................13
Section 3.12 Certain Transactions..........................................................................15
Section 3.13 Litigation....................................................................................15
Section 3.14 Labor Matters.................................................................................15
Section 3.15 Title to Assets...............................................................................16
Section 3.16 Intellectual Property.........................................................................17
Section 3.17 Insurance.....................................................................................17
Section 3.18 Employment Agreements.........................................................................18
Section 3.19 Benefit Plans; ERISA..........................................................................18
Section 3.20 Agreements, Contracts and Commitments.........................................................23
Section 3.21 Information in Disclosure Documents...........................................................23
Section 3.22 Restrictions on Business Activities...........................................................24
Section 3.23 Tax and Accounting Matters....................................................................24
Section 3.24 Brokers and Finders...........................................................................24
Section 3.25 No Existing Discussions.......................................................................24
Section 3.26 Opinion of Financial Advisor..................................................................24
i
TABLE OF CONTENTS
(Continued)
Page
----
Section 3.27 Certain Provisions of the OBCA Not Applicable.................................................25
Section 3.28 Company Rights Agreement......................................................................25
Section 3.29 Disclosure....................................................................................25
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ATI.........................................................26
Section 4.1 Organization of ATI...........................................................................26
Section 4.2 Capitalization of ATI.........................................................................26
Section 4.3 Authority; No Conflict; Required Filings and Consents.........................................27
Section 4.4 SEC Filings; Financial Statements.............................................................28
Section 4.5 Absence of Undisclosed Liabilities............................................................28
Section 4.6 Absence of Certain Changes....................................................................29
Section 4.7 Information in Disclosure Documents...........................................................29
Section 4.8 Interim Operations of Sub.....................................................................29
Section 4.9 Compliance with Law; Regulatory Compliance....................................................30
Section 4.10 Litigation....................................................................................31
Section 4.11 Agreements, Contracts and Commitments.........................................................31
Section 4.12 Restrictions on Business Activities...........................................................31
Section 4.13 Disclosure....................................................................................31
ARTICLE V CONDUCT OF BUSINESS OF THE COMPANY............................................................32
Section 5.1 Covenants of the Company......................................................................32
Section 5.2 Consultation..................................................................................34
ARTICLE VI ADDITIONAL AGREEMENTS.........................................................................34
Section 6.1 Acquisition Proposals.........................................................................34
Section 6.2 Proxy Statement/Prospectus; Registration
Statement.....................................................................................36
Section 6.3 Letter of the Company's Accountants...........................................................37
Section 6.4 Access to Information.........................................................................37
Section 6.5 Company Shareholders Meeting..................................................................38
Section 6.6 Legal Conditions to the Merger................................................................38
Section 6.7 Public Disclosure.............................................................................38
Section 6.8 Tax-Free Transaction..........................................................................39
Section 6.9 Pooling Accounting............................................................................39
Section 6.10 Affiliate Agreements..........................................................................39
Section 6.11 NYSE Listing..................................................................................39
Section 6.12 Company Stock Options and Rights..............................................................40
Section 6.13 Indemnification...............................................................................42
Section 6.14 Additional Agreements; Reasonable Efforts.....................................................43
ARTICLE VII CONDITIONS TO THE MERGER......................................................................44
Section 7.1 Conditions to Each Party's Obligation to
ii
TABLE OF CONTENTS
(Continued)
Page
----
Effect the Merger.............................................................................44
Section 7.2 Additional Conditions to Obligations of ATI and Sub...........................................45
Section 7.3 Additional Conditions to Obligations of the Company...........................................47
ARTICLE VIII TERMINATION AND AMENDMENT.....................................................................48
Section 8.1 Termination...................................................................................48
Section 8.2 Effect of Termination.........................................................................49
Section 8.3 Fees and Expenses.............................................................................49
Section 8.4 Amendment.....................................................................................51
Section 8.5 Extension; Waiver.............................................................................51
ARTICLE IX MISCELLANEOUS.................................................................................52
Section 9.1 Nonsurvival of Representations, Warranties and Agreements.....................................52
Section 9.2 Notices.......................................................................................52
Section 9.3 Certain Definitions; Interpretation...........................................................53
Section 9.4 Knowledge.....................................................................................54
Section 9.5 Counterparts..................................................................................55
Section 9.6 Entire Agreement; No Third Party
Beneficiaries.................................................................................55
Section 9.7 Governing Law.................................................................................55
Section 9.8 Assignment....................................................................................55
Section 9.9 Severability..................................................................................55
Section 9.10 Failure or Indulgence Not Waiver; Remedies
Cumulative....................................................................................56
Annexes
Annex I -- Exchange Procedures
Annex II -- Form of Amendment to Company Rights Agreement
Annex III -- Form of Company Affiliate Agreement
iii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of
October 31, 1997, by and among ALLEGHENY TELEDYNE INCORPORATED, a Delaware
corporation ("ATI"), SEA MERGER INC., an Oregon corporation and a wholly owned
subsidiary of ATI ("Sub"), and OREGON METALLURGICAL CORPORATION, an Oregon
corporation (the "Company");
WHEREAS, the Boards of Directors of ATI and the Company deem
it advisable and in the best interests of their respective corporations and
stockholders that the business of the Company be combined with that of ATI in
order to advance the long-term business interests of ATI and the Company; and
WHEREAS, the combination of the business of the Company with
that of ATI will be effected pursuant to the terms of this Agreement through a
transaction in which Sub will merge with and into the Company (the "Merger"),
whereupon the Company will become a wholly owned subsidiary of ATI and the
shareholders of the Company will become stockholders of ATI; and
WHEREAS, for financial accounting purposes, it is intended
that the Merger be accounted for as a pooling of interests; and
WHEREAS, for federal income tax purposes, it is intended that
the Merger qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
below, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger
----------. Upon the terms and subject to
the conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.2), Sub will be merged with and into the Company and the separate
corporate existence of Sub will thereupon cease. The Company, as the surviving
corporation of the Merger (sometimes hereinafter referred to as the "Surviving
Corporation"), will continue to be governed by the laws of the State of Oregon.
The Merger will have the effects specified in the Oregon Business Corporation
Act (the "OBCA"). Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all of the properties, rights, privileges, powers, franchises, debts,
liabilities, obligations and duties of the Company will continue in the
Surviving Corporation unaffected by the Merger.
Section 1.2 Effective Time
--------------. As soon as practicable
following the satisfaction of the conditions set forth in Article VII, the
parties will file articles of merger (the "Articles of Merger") with the
Secretary of State of Oregon, executed in accordance with the relevant
provisions of the OBCA, and will make all other filings or recordings required
under the OBCA to consummate the Merger. The Merger will become effective upon
the filing of the Articles of Merger with the Secretary of State of Oregon or at
such other time as the parties hereto may agree and as may be specified in the
Articles of Merger in accordance with applicable law. The date and time when the
Merger becomes effective is herein referred to as the "Effective Time."
Section 1.3 Closing
-------. The Closing of the Merger (the
"Closing") will take place (i) at the principal executive offices of ATI
beginning at 12:00 noon, Eastern time, on the first business day on which all of
the conditions set forth in Article VII (other than those that are waived by the
party or parties for whose benefit such conditions exist) are satisfied or (ii)
at such other place, date and/or time as the parties hereto may agree. The date
upon which the Closing occurs is herein referred to as the "Closing Date."
Section 1.4 Articles of Incorporation of the Surviving
------------------------------------------
Corporation
-----------. At the Effective Time, in accordance with the OBCA, the Restated
Articles of Incorporation, as amended, of the Company as in effect immediately
prior to the Effective Time will be amended and restated to become substantially
identical (except as to the name of the Surviving Corporation, which shall
continue to be "Oregon Metallurgical Corporation", and except for Article VIII
thereof) to the Articles of Incorporation of Sub, and be the Articles of
Incorporation of the Surviving Corporation until amended in accordance with the
terms thereof and applicable law.
Section 1.5 Directors of the Surviving Corporation
--------------------------------------. At
the Effective Time, the directors of Sub then in office will become the
directors of the Surviving Corporation until the earlier of their resignation or
removal or until their respective successors are duly elected and qualified, as
the case may be.
2
Section 1.6 Officers of the Surviving Corporation
-------------------------------------. At
the Effective Time, the officers of Sub will become the officers of the
Surviving Corporation until the earlier of their resignation or removal or until
their respective successors are duly elected and qualified, as the case may be.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock
---------------------------. As of the
Effective Time, by virtue of the Merger and without any action on the part of
the holder of any shares of capital stock of the Company or the holder of any
shares of capital stock of Sub:
(a) The issued and outstanding shares of capital stock of Sub
shall be converted into and become such number of fully paid and nonassessable
shares of Common Stock, par value $.01 per share, of the Surviving Corporation
as shall be provided for in the Articles of Merger.
(b) All shares of Company Common Stock that are owned by the
Company as treasury stock and any shares of capital stock of the Company owned
by ATI, Sub or any other wholly owned Subsidiary of ATI shall be canceled and
retired and shall cease to exist and no stock of ATI or other consideration
shall be delivered in exchange therefor. All shares of Common Stock, par value
$.10 per share, of ATI ("ATI Common Stock") owned by the Company or any
Subsidiary of the Company shall remain unaffected by the Merger.
(c) Each issued and outstanding share of Company Common Stock
(other than shares to be canceled in accordance with Section 2.1(b)) shall be
converted into the right to receive 1.296 (the "Conversion Number") fully paid
and nonassessable shares of ATI Common Stock. All such shares of Company Common
Stock, when so converted, shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares shall cease to have any rights with
respect thereto except the right to receive the foregoing shares of ATI Common
Stock and any cash in lieu of fractional shares of ATI Common Stock to be issued
or paid in consideration therefor upon the surrender of such certificate in
accordance with Section 2.3, without interest.
3
Section 2.2 Company Stock Options and Rights
--------------------------------. All then
outstanding (i) options to purchase Company Common Stock under the Company's
1996 Employee Stock Option Plan, 1997 Employee Stock Option Plan and
Nontransferable Stock Option Agreement (the "Company Option Plans") and (ii)
warrants to purchase up to 120,000 shares of Company Common Stock under the
Warrant Agreement, dated September 19, 1994, between the Company and Xxxxx X.
Xxxxxxx (the "Warrant Agreement"), together with the obligation to issue shares
of ATI Common Stock pursuant to the Company's Amended and Restated Excess
Benefit Plan (the "Excess Benefit Plan") and the Stock Compensation Plans (as
defined in Section 3.2 and as amended or clarified pursuant to Section 6.12(c)),
will be assumed by ATI in accordance with Section 6.12.
Section 2.3 Exchange of Certificates
------------------------. The procedures for
exchanging outstanding shares of Company Common Stock for ATI Common Stock
pursuant to the Merger are set forth in Annex I hereto, which is deemed to be a
part of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to ATI and Sub that,
except as specifically set forth and described in the Disclosure Letter (the
"Company Disclosure Letter") delivered by the Company to ATI prior to the
execution and delivery of this Agreement, the statements set forth below in this
Article III are true and correct. The Company Disclosure Letter is arranged in
paragraphs corresponding to the numbered and lettered Sections and paragraphs
contained in this Article III.
Section 3.1 Organization of the Company
---------------------------. The Company is
a corporation duly organized and validly existing under the laws of the State of
Oregon. The Company has all requisite corporate power and authority to own or
lease and operate its properties and assets and to carry on its business as it
is now being conducted. The Company is duly qualified and validly existing (and
in good standing where appropriate) in each jurisdiction in which the failure to
be so qualified, validly existing or in good standing would have a Material
Adverse Effect on the Company. Set forth in the Company Disclosure Letter is a
complete list of the jurisdictions in which the Company is qualified or licensed
to do business as a foreign corporation.
Section 3.2 Capitalization of the Company
-----------------------------. The
authorized capital stock of the Company consists of 80,000,000
4
shares of Company Common Stock, of which 16,445,346 shares are issued and
outstanding and no shares are held in the Company's treasury as of the date
hereof. As of the date hereof, there are outstanding options to acquire an
aggregate of 286,900 shares of Company Common Stock, all of which were granted
under the Company Option Plans, and outstanding warrants (the "Warrants") issued
under the Warrant Agreement to acquire 120,000 shares of Company Common Stock at
an exercise price of $6.375 per share. The Company has no shares of Company
Common Stock reserved for issuance, other than (i) 322,000 shares of Company
Common Stock reserved for issuance pursuant to the Company Option Plans, (ii)
120,000 shares of Company Common Stock reserved for issuance upon exercise of
the Warrants, (iii) 736,584 shares of Company Common Stock reserved for issuance
pursuant to the Company's Stock Compensation Plan - Salaried Employees, the
Company's Stock Compensation Plan - Union Employees and the Savings Plan (the
"Stock Compensation Plans"), (iv) 14,476 shares reserved for issuance under the
Excess Benefit Plan and (v) 20,000,000 shares of Company Common Stock reserved
for issuance pursuant to the Rights Agreement, dated as of December 12, 1996,
between the Company and ChaseMellon Shareholder Services, LLC, as Rights Agent,
as amended (the "Company Rights Agreement"). Except for 296,289 shares of
Company Common Stock issued pursuant to the Stock Compensation Plans, 16,114
shares of Company Common Stock issued pursuant to the Excess Benefit Plan and
6,200 shares of Company Common Stock issued to directors as a retainer, no
shares of Company Common Stock have been issued since December 31, 1996. Except
for options to acquire an aggregate of 49,400 shares of Company Common Stock
granted pursuant to the Company Option Plans (details of which are included as
part of the Company Disclosure Letter), shares issuable under the Stock
Compensation Plans and 1300 shares issuable to directors as a retainer, no
option, warrant or other right to acquire Company Common Stock or other capital
stock of the Company has been granted by the Company since December 31, 1996.
All of the shares of Company Common Stock outstanding are, and all such shares
reserved for issuance, upon such issuance and upon receipt by the Company of the
consideration for such issuance, will be, duly authorized and validly issued,
fully paid and nonassessable. Except as set forth in this Agreement, there are
no options, warrants, rights, calls, subscriptions, stock appreciation rights,
commitments, understandings or agreements of any character obligating the
Company or any Subsidiary of the Company to issue any shares of capital stock or
voting securities or any security representing the right to purchase or
otherwise receive any such shares or securities.
5
The Company has outstanding no bonds, debentures, notes or other obligations or
securities the holders of which have the right to vote (or are convertible into
or exchangeable or exercisable for securities (other than Company Common Stock)
having the right to vote) with the shareholders of the Company on any matter.
There are no existing restrictions on transfer, voting trusts, shareholder
agreements or registration covenants known to the Company relating to any
outstanding shares of capital stock of the Company or any Subsidiary of the
Company. None of the outstanding shares of Company Common Stock was issued in
violation of the preemptive rights of any present or former shareholder and the
Company's shareholders are not entitled to preemptive rights. There are no
outstanding agreements of the Company or any Subsidiary of the Company to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company. The Company's Employee Stock Ownership Plan holds less than 10% of the
outstanding shares of Company Common Stock.
Section 3.3 Subsidiaries
------------. The Company Disclosure Letter
sets forth a complete and accurate list of each of the direct and indirect
Subsidiaries of the Company, together with the jurisdiction of incorporation and
the equity capitalization thereof and a complete list of the jurisdictions where
it is qualified or licensed to do business as a foreign corporation. All
outstanding shares of capital stock of each Subsidiary of the Company are owned
of record and beneficially by the Company or by another Subsidiary of the
Company, free and clear of all mortgages, deeds of trust, pledges, liens,
leases, security interests, security agreements, conditional sales agreements,
notes, easements, restrictions, encroachments and other charges or encumbrances
of any kind whatsoever ("Liens"), other than any restrictions under applicable
federal and state securities laws, and are validly issued, fully paid and
nonassessable. There are no voting trusts or other agreements or understandings
with respect to the voting of the capital stock of any Subsidiary of the
Company; and there are no existing options, warrants, calls, commitments or
agreements of any character obligating any Subsidiary of the Company to issue
shares of its capital stock or obligating the Company or any Subsidiary to
acquire or to transfer any outstanding shares of capital stock of any Subsidiary
of the Company. Each Subsidiary of the Company is an entity duly organized and
validly existing (and in good standing where appropriate) under the laws of the
jurisdiction of its organization, has all requisite corporate or company power
and authority to own or lease and operate its properties and to carry on its
business as it is now being conducted and is duly qualified and validly existing
(and in good standing where
6
appropriate) to do business in each jurisdiction in which the failure to be so
qualified, validly existing or to be in good standing would have a Material
Adverse Effect on the Company. Except for the capital stock of the Subsidiaries
of the Company, the Company and its Subsidiaries do not own any equity
securities of or other equity interests in any corporation, partnership, joint
venture, business trust or other legal entity (together with individuals and
governmental bodies, a "Person"). The Company has provided ATI with true and
correct copies of the articles or certificates of incorporation and bylaws or
other comparable governing documents of each Subsidiary of the Company.
Section 3.4 Authority
---------. The Company 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 ("Ancillary Document") to be executed or delivered by it pursuant
hereto or thereto, and, subject only to approval of this Agreement by at least a
majority of all votes cast by the holders of Company Common Stock outstanding on
the record date for the meeting of the Company's shareholders to be called and
held to consider the approval of this Agreement and the Merger (the "Company
Shareholders Meeting"), to consummate the transactions contemplated hereby and
thereby. The Board of Directors of the Company has determined that the Merger is
in the best interests of the Company and its shareholders, has approved this
Agreement and the Merger, has directed that this Agreement be submitted to the
shareholders of the Company for approval in accordance with applicable law and
the Restated Articles of Incorporation and Bylaws of the Company, each as
amended, and, subject to Section 6.1, has recommended that the shareholders of
the Company approve this Agreement and the Merger. Each of this Agreement and
the Ancillary Documents is a valid and binding agreement, certificate or
instrument, as the case may be, of it enforceable against it in accordance with
its terms.
Section 3.5 Governmental Filings; No Violations
-----------------------------------. (a)
Other than the filings provided for in Section 1.2, and filings required under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and other than as contemplated by Section 3.5(c), no notices, reports or other
filings are required to be made by the Company or any Subsidiary of the Company
with, nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by the Company or any Subsidiary of the Company from,
any governmental or regulatory authority, agency, court,
7
commission or other similar entity, domestic or foreign ("Governmental Entity"),
in connection with the execution and delivery of this Agreement 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
with respect to the Company.
(b) The execution and delivery of this Agreement and each
Ancillary Document by the Company does not, and the consummation by it of any of
the transactions contemplated hereby or thereby will not, constitute or result
in (i) a breach or violation of, or a default (or an event which with notice or
lapse of time or both would become a default) under, its Restated Articles of
Incorporation or its Bylaws, each as amended, or the comparable governing
documents of any Subsidiary of the Company, (ii) a breach or violation of, a
default (or an event which with notice or lapse of time or both would become a
default) under, the creation of any payment or other material obligation
pursuant to, or a right to terminate, amend or cancel, or accelerate vesting
under, any of its existing Benefit Plans referred to in Section 3.19 or any
grant or award made thereunder, (iii) a breach or violation of, a default (or an
event which with notice or lapse of time or both would become a default) under,
a right to terminate, amend, cancel or accelerate, or the creation of a Lien on
any assets of the Company or any of its Subsidiaries (with or without the giving
of notice or the lapse of time) pursuant to, any provision of any agreement,
lease, contract, note, mortgage, indenture, arrangement or other obligation of
the Company or any of its Subsidiaries ("Company Agreements") or any law,
statute, rule, ordinance or regulation or judgment, decree, order, award,
injunction or governmental or non-governmental permit or license to which the
Company or any of its Subsidiaries is subject or by which the Company or any of
its Subsidiaries or any of their property is bound or affected, or (iv) any
change in the rights or obligations of any party under any of the Company
Agreements except, in the case of clauses (iii) or (iv) above, for such
breaches, violations, defaults, accelerations or changes that would not
constitute a Material Adverse Effect with respect to the Company.
(c) The Company Disclosure Letter sets forth a true and
complete list of all notices, permits, approvals, consents, qualifications,
waivers or other actions of third parties under any material Company Agreement,
any Labor Agreement, any Employment Agreement or any material Company Approval,
each as defined in this Agreement, or under any other material third-party
franchise, license or permit, which the Company or any Subsidiary
8
of the Company is required to give or obtain in connection with the execution
and delivery of this Agreement by the Company or the consummation by the Company
of any of the transactions contemplated hereby or thereby.
Section 3.6 SEC Filings; Financial Statements
---------------------------------. (a) The
Company has filed and made available to ATI all forms, reports and documents
required to be filed by the Company with the Securities and Exchange Commission
(the "SEC") since January 1, 1995 (collectively, the "Company SEC Reports"). The
Company SEC Reports (i) at the time filed, complied in all material respects
with the applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act, as the case may be, and (ii) did not at
the time they were filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in such Company SEC Reports or necessary in order to make the statements
in such Company SEC Reports, in the light of the circumstances under which they
were made, not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any related notes and schedules) of the Company contained in the
Company SEC Reports complied as to form in all material respects with the
applicable published rules and regulations of the SEC with respect thereto, was
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes to such financial statements or, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) and fairly presented the
consolidated financial position of the Company and its Subsidiaries as at the
respective dates and the consolidated results of its operations and cash flows
for the periods indicated. The balance sheet of the Company (including any
related notes) as of September 28, 1997 is referred to herein as the "Company
Balance Sheet."
Section 3.7 Absence of Undisclosed Liabilities
----------------------------------. Except
to the extent set forth or provided for in the Company Balance Sheet, as of
September 28, 1997 neither the Company nor any Subsidiary of the Company had any
liabilities of any kind whatsoever, whether absolute or contingent, direct or
indirect, accrued or unaccrued, matured or unmatured, liquidated or
unliquidated, joint or several, which, individually or in the aggregate, were
material to the business, properties, results of operations, financial condition
or prospects of the Company and
9
its Subsidiaries taken as a whole. Since September 28, 1997, except for normal
or recurring liabilities incurred in the ordinary course of business of the
Company consistent with past practice, neither the Company nor any of the
Subsidiaries of the Company has incurred any liabilities of any nature, whether
accrued, contingent or otherwise, which, individually or in the aggregate, are
material to the business, properties, results of operations, financial condition
or prospects of the Company and its Subsidiaries taken as a whole.
Section 3.8 Absence of Certain Changes
--------------------------. Since September
28, 1997, the Company and its Subsidiaries have conducted their businesses in
the ordinary course and in a manner consistent with past practice and, since
such date, (i) no event or change has occurred that constitutes a Material
Adverse Effect with respect to the Company, and no fact or condition exists or
is contemplated or threatened which is reasonably likely to constitute a
Material Adverse Effect with respect to the Company in the future, (ii) no
dividend or other distribution has been declared or paid with respect to any
capital stock of the Company, and (iii) there has been no change by the Company
in its accounting methods, principles or practices except as required by
concurrent changes in generally accepted accounting principles.
Section 3.9 Compliance with Law; Regulatory Compliance
------------------------------------------.
(a) Except as described in the Company SEC Reports filed prior to the date
hereof and except as otherwise provided in Sections 3.10, 3.14 and 3.19 of this
Agreement, to the knowledge of the Company, neither the Company nor any
Subsidiary of the Company (i) is or has been in violation of any applicable
federal, state, local or foreign law, statute, regulation, ordinance or other
requirement of any Governmental Entity relating to it or to its securities,
property, operations or business, except for possible violations which,
individually or in the aggregate, do not constitute a Material Adverse Effect
with respect to the Company; or (ii) has engaged in any activity or omitted to
take any action as a result of which it is in violation of any applicable order,
injunction or decree of any Governmental Entity affecting the Company or any
Subsidiary of the Company, except for such violations, individually or in the
aggregate, that do not constitute a Material Adverse Effect with respect to the
Company. Except as described in the Company SEC Reports filed prior to the date
hereof and except as otherwise provided in Sections 3.10, 3.14 and 3.19 of this
Agreement, as of the date of this Agreement, there is no outstanding order,
writ, judgment, stipulation, injunction, decree, determination, award
10
or other order of any Governmental Entity affecting the Company or any
Subsidiary of the Company in any material respect.
(b) Except as otherwise provided in Sections 3.10, 3.14 and
3.19 of this Agreement, the Company and each Subsidiary of the Company possess,
or has made timely application for, all permits, licenses, approvals,
authorizations of and registrations with all Governmental Entities under all
federal, state, local and foreign laws that are or will be required for the
Company or any of its Subsidiaries to carry on any substantial part of their
respective businesses as presently conducted ("Company Approvals"), the absence
of which would not constitute a Material Adverse Effect with respect to the
Company. The Company Disclosure Letter sets forth a list of all material Company
Approvals, indicating the holder, the issuer and the nature thereof. Except as
otherwise provided in Sections 3.10, 3.14 and 3.19 of this Agreement, all
material Company Approvals are in full force and effect and, to the knowledge of
the Company, neither the Company nor any Subsidiary of the Company is in
violation of any Company Approval or any other permit, license, approval,
authorization or registration applicable to it or to the operation of its
business which violations, individually or in the aggregate, constitute a
Material Adverse Effect with respect to the Company. Except as otherwise
provided in Sections 3.10, 3.14 and 3.19 of this Agreement, the Company has no
reason to believe that any pending application for a Company Approval will not
be timely granted and no proceeding is pending or, to the knowledge of the
Company, threatened, to revoke, suspend or materially modify any Company
Approval or deny any renewal thereof.
Section 3.10 Environmental Matters
---------------------. (a) The Company and
each of its Subsidiaries has applied for and has in effect all federal, state,
local and foreign 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 a Governmental Entity 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 violation under any such Environmental
Permit, except for the lack of Environmental Permits and for violations under
Environmental Permits that, individually or in the aggregate, do not constitute
a Material Adverse Effect with respect to the Company.
11
(b) Except as disclosed in the Company SEC Reports filed prior
to the date hereof, to the knowledge of the Company, the Company and each of its
Subsidiaries is, and has been, in compliance with applicable Environmental Laws
except for instances of possible noncompliance which, individually or in the
aggregate, do not constitute a Material Adverse Effect with respect to the
Company.
(c) Except as disclosed in the Company SEC Reports filed prior
to the date hereof, there is no suit, action, formal proceeding or formal
inquiry pending or, to the Company's knowledge, threatened before any
Governmental Entity in which the Company or any of its Subsidiaries has been or,
with respect to threatened suits, actions and proceedings, may be named as a
defendant (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) 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 the Company or any of its Subsidiaries, or (iii) 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
(iv) any claim, potential claim or express reservation of responsibility for
damages to natural resources, except in the cases of clauses (i) through (iv)
above for any such suits, actions, proceedings and inquiries that, individually
or in the aggregate, do not constitute a Material Adverse Effect with respect to
the Company.
(d) Except as disclosed in the Company SEC Reports filed prior
to the date hereof and to the knowledge of the Company, during the period of
ownership or operation by the Company 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 the Company's knowledge, any surrounding site except for those that,
individually or in the aggregate, do not constitute a Material Adverse Effect
with respect to the Company. Except as disclosed in the Company SEC Reports
filed prior to the date hereof, prior to the period of ownership or operation by
the Company or its current or former Subsidiaries of any of their respective
current or formerly owned properties, to the Company's knowledge, there were no
releases of Hazardous Material or asbestos,
12
polychlorinated biphenyls or oil or other petroleum products in, on, under or
affecting any such property or any surrounding site in such quantities or
otherwise under such circumstances that violate an Environmental Law, except for
those that, individually or in the aggregate, do not constitute a Material
Adverse Effect with respect to the Company. "Hazardous Material" means any
pollutant, contaminant, or hazardous substance within the meaning of the
Comprehensive Environmental Response, Compensation and Liability Act or other
Environmental Laws.
(e) The Company will provide ATI with access to all written
information in its possession or control pertaining to the matters set forth in
paragraphs (a) through (d) of this Section 3.10, including all documents
pertaining to environmental audits or assessments prepared by or for the
Company, any Subsidiary of the Company or any Governmental Entity.
Section 3.11 Tax Matters
-----------. (a) The Company and each
Subsidiary of the Company has timely filed or requests for extension have been
timely filed with respect to all federal, state, local and foreign income tax
returns and all other tax returns required to be filed by it ("Tax Returns"),
other than those returns with respect to which failure to timely file or failure
to request an extension of time for filing would not constitute a Material
Adverse Effect with respect to the Company.
(b) Each such Tax Return was true, correct and complete in all
material respects on the respective date on which it was filed and, to the
knowledge of the Company, no event has since occurred requiring any amendment
thereto, which amendment has not been made in a manner such that each such Tax
Return remains true, correct and complete in all material respects.
(c) The Company and each of its Subsidiaries (as the case may
be) has paid or adequate provision on the Company Balance Sheet has been made
for the full payment or discharge of all federal, state, local and foreign
taxes, including any interest, penalties, or other additions to tax thereon,
except where such failure to pay or discharge local or foreign taxes would not
constitute a Material Adverse Effect with respect to the Company.
(d) No issues are currently pending with any taxing authority
in connection with any Tax Returns of the Company or any of its Subsidiaries
that, if determined adversely to the Company and its Subsidiaries (whether
individually or in the aggregate), would constitute a Material Adverse Effect
with
13
respect to the Company. No waivers of statutes of limitation with respect to
such Tax Returns have been given by or requested from the Company or any of its
Subsidiaries. The Company Disclosure Letter sets forth with respect to federal
income taxation (i) the taxable years of the Company and its Subsidiaries as to
which the respective statutes of limitations with respect to taxes have not
expired, and (ii) with respect to the taxable years of the Company and its
Subsidiaries, those years for which examinations have been completed, those
years for which examinations have not been initiated, and those years for which
required Tax Returns have not been filed. Information with respect to state and
material local and foreign income and other taxation to which the Company or any
of its Subsidiaries is subject equivalent to that referred to in the preceding
sentence shall be provided to ATI by the Company on or before November 30, 1997.
Except to the extent set forth in the Company Disclosure Letter, all
deficiencies asserted or assessments made as a result of any examinations have
been fully paid, or are fully reflected as a liability in the Company Balance
Sheet, or are being contested and an adequate reserve therefor has been
established and is fully reflected in the Company Balance Sheet.
(e) Neither the Company nor any of its Subsidiaries nor, to
the knowledge of the Company, any of its predecessors has, with regard to any
asset or property held or acquired, filed a consent, election or agreement under
Section 341(f) of the Code, or predecessors of such Section.
Section 3.12 Certain Transactions
--------------------. Except as disclosed in
the Company SEC Reports filed prior to the date hereof, none of the officers or
directors of the Company or of any of its Subsidiaries nor any affiliate (as
defined in Rule 12b-2 under the Exchange Act) of the Company, and, to the
knowledge of the Company, none of the key employees of the Company or of any
Subsidiary of the Company is currently a party to any transaction with the
Company or any Subsidiary of the Company (other than for services as an
employee, officer or director), including, without limitation, any contract,
agreement or other arrangement (a) providing for the furnishing of services to
or by, (b) providing for rental of real or personal property to or from, or (c)
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 or which is an
affiliate of such officer, director or key employee.
14
Section 3.13 Litigation
----------. Except as disclosed in the
Company SEC Reports filed prior to the date hereof, there are no suits,
litigations, investigations, actions or proceedings of any kind pending or, to
the knowledge of the Company, threatened, against the Company or any Subsidiary
of the Company, nor to the knowledge of the Company is any such matter pending
or threatened against any other Person, which, if determined adversely to the
Company, would constitute a Material Adverse Effect with respect to the Company.
The Company Disclosure Letter sets forth a list of all pending litigation to
which the Company or any Subsidiary of the Company is a party or to which it or
any of its properties is subject as of the date of this Agreement.
Section 3.14 Labor Matters
-------------. The Company Disclosure Letter
sets forth a true and complete list of all labor and collective bargaining
agreements to which the Company or any Subsidiary of the Company is a party or
by which the Company or any Subsidiary of the Company is bound (collectively,
the "Labor Agreements"). The Company has previously furnished to ATI true and
complete copies of all Labor Agreements, together with all amendments thereto.
There are no strikes or other work stoppages involving any employees of the
Company or any Subsidiary of the Company and there are no material labor
disputes by any labor organization in progress or pending or, to the knowledge
of the Company, threatened against the Company or any Subsidiary of the Company,
that would constitute a Material Adverse Effect with respect to the Company. To
the knowledge of the Company, the Company 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
with respect to the Company. There are no charges of unfair labor practices
pending before any Governmental Entity involving or affecting the Company or any
Subsidiary of the Company that, if adversely determined, would constitute a
Material Adverse Effect with respect to the Company. The Company has not been
notified that any customer of or supplier to the Company or any Subsidiary of
the Company 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 that has had or could reasonably be
expected to have a Material Adverse Effect on the Company.
Section 3.15 Title to Assets
---------------. The Company and each of its
Subsidiaries has good and marketable title to its
15
properties and assets (other than property as to which it is a lessee) except
for such (i) defects in title that, individually or in the aggregate, would not
constitute a Material Adverse Effect with respect to the Company and (ii) Liens
and encumbrances for obligations incurred in the ordinary course of business and
reflected in the Company Balance Sheet or incurred thereafter in the ordinary
course of business consistent with past practice. The Company Disclosure Letter
sets forth a true and complete list of all real property owned by the Company or
its Subsidiaries and all leases ("Leases") of real property by the Company or
its Subsidiaries including, in the case of Leases, the name of the lessor, the
date of the Lease and each amendment to the Lease and the aggregate annual
rental or other amounts payable under each Lease. All such Leases are in good
standing, valid and effective in accordance with their respective terms, and no
default exists thereunder, except where the lack of such good standing, validity
and effectiveness or the existence of such default, individually or in the
aggregate, does not constitute a Material Adverse Effect with respect to the
Company.
Section 3.16 Intellectual Property
---------------------. The Company and its
Subsidiaries either own or, to the Company's 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 the Company or its Subsidiaries, without any conflict with the
rights of others, except for such conflicts that, individually or in the
aggregate, do not constitute a Material Adverse Effect with respect to the
Company. Neither the Company 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 the Company 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 the Company or any of its
Subsidiaries, except with respect to rights the loss of which, individually or
in the aggregate, do not constitute a Material Adverse Effect with respect to
the Company. To the Company's knowledge, none of the Company's 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 the Company or its Subsidiaries or any
other party that, individually
16
or in the aggregate, constitute a Material Adverse Effect with respect to the
Company.
Section 3.17 Insurance
---------. The Company 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 the Company 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
the Company and its Subsidiaries. During the past five years, all insurance
policies covering products liability and general liability maintained by or for
the benefit of the Company or its Subsidiaries have been "occurrence" policies
and not "claims made" policies.
Section 3.18 Employment Agreements
---------------------. The Company
Disclosure Letter sets forth a true and complete list of all agreements (except
collective bargaining agreements and Company and its Subsidiaries employment
manuals) with any officer, director or key employee of the Company to which the
Company or any Subsidiary of the Company is a party, providing for the terms of
his or her employment with the Company or any Subsidiary of the Company and/or
the terms of his or her severance or other payments upon termination of or
change in such employment or any change of control of the Company (the
"Employment Agreements"). The Company has previously furnished to ATI true and
complete copies of all Employment Agreements, together with all amendments
thereto (if any). Since December 31, 1996, neither the Company nor any
Subsidiary of the Company has (i) effected any increase in salary, wage or other
compensation of any kind, whether current or deferred, to any officer, director
or key employee, other than routine increases in the ordinary course of
business, (ii) entered into any Employment Agreement, (iii) adopted, amended or
modified any Benefit Plan, or (iv) made any contribution to any trust or plan
for the benefit of employees except as required by the terms of Benefit Plans as
in effect as of such date.
Section 3.19 Benefit Plans; ERISA
--------------------. (a) The Company
Disclosure Letter sets forth an accurate and complete list of all written and
unwritten employee benefit plans, programs, policies, agreements, all deferred
compensation plans, programs or arrangements, all stock option, restricted stock
or other compensation plans, (including, without limitation, plans described in
Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA")
and multiemployer plans as defined
17
in Sections 4001(a)(3) and (3)(37)(A) of ERISA and any labor agreements relating
to any of the foregoing) (i) under which the Company or any Subsidiary of the
Company has liability material to the Company and its Subsidiaries taken as a
whole or which is maintained, sponsored, contributed to or (ii) required to be
contributed to during the five-year period ending on the date of this Agreement
by the Company or any Subsidiary of the Company on behalf of any current or
former employee or director of the Company or any Subsidiary of the Company or
any former Subsidiary of the Company or other Person formerly controlled by the
Company ("Benefit Plans"); provided that the information referred to in the
foregoing clause (ii) may be provided to ATI by the Company on or prior to
November 30, 1997 in lieu of being provided in the Company Disclosure Letter.
(b) With respect to each Benefit Plan currently in effect, the
Company has delivered to ATI accurate and complete copies of each of the
following, to the extent applicable: (i) all current plan texts and agreements
(and all amendments, supplements and modifications thereto), including all trust
agreements and other agreements related to custody or investment of plan assets,
or, in the case of unwritten arrangements, written summaries thereof, (ii) the
most recent summary plan description and summary of material modifications
delivered to employees, (iii) the three most recent annual reports (IRS Form
5500 series), including all schedules and attachments thereto, (iv) the three
most recent annual and periodic accountings of plan assets, (v) the most recent
determination letter received from the Internal Revenue Service, and (vi) the
three most recent actuarial valuation reports. The Company will also provide to
ATI copies of all employee manuals, handbooks, policy statements and other
written materials given to employees relating to any Benefit Plans.
(c) Except for such incidents of actual or possible
noncompliance which would not constitute a Material Adverse Effect on the
Company, and to the knowledge of the Company, with respect to each Benefit Plan:
(i) each such plan currently in effect is legally valid and binding, benefits
under such plan are as represented in the documents provided pursuant to
paragraph (b) above, the Company and its Subsidiaries have no announced plan or
commitment to modify or amend any such plan, except for required amendments
described in clause (ii) below, or to increase benefits payable thereunder and,
except for Benefit Plans listed on the Company Disclosure Letter as having been
terminated, each such plan has been maintained in full force and effect through
the Effective Time; (ii) if intended to qualify
18
under Section 401(a) or 403(a) of the Code, (A) the Company Disclosure Letter so
identifies each such Benefit Plan, (B) such Benefit Plan so qualifies in both
form and operation, and (C) its trust is exempt from taxation under Section
501(a) of the Code (except insofar as such qualification or exemption is
dependent upon the adoption of amendments required as a result of recent
legislation, the remedial amendment period for which has not yet expired); (iii)
such Benefit Plan has been administered and enforced in substantial compliance
with the applicable provisions of the Code and ERISA and the terms of such
Benefit Plan and any related collective bargaining agreement, except to the
extent the terms of such Benefit Plan are inconsistent with the legislation
referred to in clause (ii) above, in which case such Benefit Plan has been
administered and enforced in substantial compliance with such legislation; (iv)
there are no actions, suits or claims pending against such Benefit Plan or
affecting any fiduciary thereof other than claims for benefits made in the
ordinary course; (v) there are presently no outstanding judgments, decrees or
orders of any court or any governmental or administrative agency against or
affecting the Benefit Plans, any fiduciaries thereof or the assets of any trust
or insurance contract thereunder, (vi) no reportable event (within the meaning
of Section 4043(b) of ERISA and the regulations thereunder) has occurred during
the five-year period ending on the date of this Agreement (vii) all material
reports and material disclosures relating to the Benefit Plans required to be
filed with or furnished to Governmental Entities, participants or beneficiaries
on or prior to the Effective Time have been or will be filed or furnished in a
timely manner and in accordance with applicable law, (viii) all required
contributions have been made on a timely basis; (ix) all contributions made or
required to be made under such Benefit Plan and intended to be deductible under
the Code meet the requirements for deductibility under the Code; (x) with
respect to each Benefit Plan subject to either Section 412 of the Code or
Section 302 of ERISA (A) the Company Disclosure Letter identifies each such
Benefit Plan, (B) such Benefit Plan uses a funding method permissible under
ERISA and the actuarial assumptions used in connection therewith are reasonable,
(C) such Benefit Plan has not incurred an accumulated funding deficiency during
the five-year period ending on the date of this Agreement, whether or not
waived, nor does any liability or obligation exist with respect to any
accumulated funding deficiency for any time prior to such period and (D) the
fair market value of the assets of such Benefit Plan equals or exceeds the
present value of all "benefit liabilities" within the meaning of Section
4001(a)(16) of ERISA; and (xi) future compliance with the requirements of
19
ERISA or the Code as in effect at the Effective Time or with any collective
bargaining agreements to which the Company or any Subsidiary of the Company is a
party at the Effective Time will not result in any increase in the rate of
benefit accrual or the liabilities of the Company or any Subsidiary under the
Benefit Plan (except as such increase may result from changes in applicable
law). No event has occurred in connection with which the Company or any
Subsidiary of the Company could be subject to any material liability under
Section 406, 409, 502(i) or 502(1) of ERISA, or Section 4975 of the Code, or
under any agreement or other instrument pursuant to which the Company or any
Subsidiary of the Company has agreed or is required to indemnify any Person
against any such material liability.
(d) To the knowledge of the Company, no amount is due or owing
by the Company or any Subsidiary of the Company to the Pension Benefit Guaranty
Corporation ("PBGC") under Title IV of ERISA in respect of any Benefit Plan for
any reason (other than the payment of premiums in the ordinary course, all of
which have been paid when due). No Benefit Plan has been terminated nor has any
filing been made with the PBGC for the termination of any Benefit Plan subject
to the provisions of Title IV of ERISA in a manner which has resulted or could
reasonably be expected to result in any material liability of the Company or any
Subsidiary of the Company to the PBGC. The PBGC has not taken any action
relating to the termination of or the appointment of a trustee to administer any
Benefit Plan nor do conditions currently exist which could give rise to a
termination proceeding brought by the PBGC with regard to any such Benefit Plan.
(e) The Company Disclosure Letter identifies each Benefit Plan
that is a multiemployer plan as defined in Section 3(37) or 4001(a)(3) of ERISA
(a "Multiemployer Plan"). In the case of each Multiemployer Plan, the Company
Disclosure Letter sets forth the contributions made to each such Multiemployer
Plan by the Company or the Subsidiaries for the twelve months ended on the last
day of the most recent fiscal year of each such Multiemployer Plan. With respect
to each Multiemployer Plan, to the knowledge of the Company: (A) each such
Multiemployer Plan that is intended to qualify under Section 401(a) of the Code
is so qualified in form and operation and has received a favorable determination
letter from the Internal Revenue Service that such Multiemployer Plan is
qualified under such section, its related trust has been determined to be exempt
from taxation under Section 501(a) of the Code and, nothing has occurred since
the date of the most recent determination letter that has affected adversely or
could reasonably be expected to affect adversely
20
such qualification or exemption; (B) each such Multiemployer Plan is in
compliance in all material respects with its terms and all governing documents
as well as with the requirements prescribed by all applicable statutes, orders
and governmental rules and regulations, including without limitation, ERISA and
the Code; (C) there are no actions or proceedings (other than routine claims for
benefits) pending, threatened or anticipated; and (D) no such Multiemployer Plan
is under audit or investigation by either the Internal Revenue Service, U. S.
Department of Labor, PBGC or other Governmental Entity and no such completed
audit, if any, has resulted in the imposition of any tax, fine or penalty. The
Company Disclosure Letter also identifies each Multiemployer Plan which is
subject to Title IV of ERISA (a "Multiemployer Pension Plan"). With respect to
each Multiemployer Pension Plan: (A) none of the Company or any of its
Subsidiaries has received a notice that increased contributions may be required
to avoid a reduction in plan benefits or the imposition of any excise tax or
that any such plan is or may become "insolvent" (within the meaning of Section
4245 of ERISA); (B) none of the Company or any of its Subsidiaries has withdrawn
therefrom in a complete withdrawal (within the meaning of Section 4203 of ERISA)
or a partial withdrawal (within the meaning of Section 4205 of ERISA) or
received any notice of any claim or demand in respect thereof; and (C) to the
knowledge of the Company, no withdrawal liability to any Multiemployer Pension
Plan has been or is expected to be incurred with respect to any Multiemployer
Pension Plan.
(f) During the five year period ending at the Effective Time,
none of the Company or any of its Subsidiaries has transferred a defined benefit
plan (as defined in Section 3(35) of ERISA) to a corporation that was (at the
time of transfer) a member of a different controlled group of corporations
(within the meaning of Section 4001(a)(14) of ERISA) than the transferor.
Neither the Company nor any Subsidiary of the Company has ever sponsored,
maintained, contributed to, or had any obligation to contribute to, a
single-employer plan which has two or more contributing sponsors at least two of
whom are not under common control.
(g) With respect to each Benefit Plan which is a "welfare
plan" (as defined in Section 3(1) of ERISA): (i) no such plan provides medical
or death benefits with respect to current or former employees of the Company or
any Subsidiary of the Company beyond their termination of employment (other than
coverage mandated by law), (ii) there are no reserves, assets, surplus or
prepaid premiums under any such plan reflected on the Company Balance Sheet,
except for accrued vacation pay, and
21
(iii) to the knowledge of the Company, each such plan has, to the extent
applicable, been administered in substantial compliance with Sections 601-609 of
ERISA and Section 4980B(f) of the Code. The Company Disclosure Letter sets forth
the aggregate liability of the Company and the Company Subsidiaries, which has
been estimated by the Company's actuary on a present value basis as at December
31, 1996 using the assumptions, including trends affecting future medical care
costs and interest rates, identified in the Company Disclosure Letter, for
post-retirement health and life insurance benefits to be provided to their
current and former employees, along with the components of the projected annual
costs for such benefits used in such calculation. The Company is not aware of
any factor which would cause the projected annual costs used in the calculation
of such present value to be inaccurate in any material respect. The costs to the
Company to provide such benefits for each year during the three-year period
ended December 31, 1996 are set forth in the Company Disclosure Letter.
(h) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any individual to severance pay, (ii) increase
the amount or accelerate the time of payment or vesting of compensation due or
of benefits payable under any Benefit Plan with respect to, any individual,
(iii) cause any amount to be treated as an "excess parachute payment" under
Section 280G of the Code or (iv) result in any liability of the Company or any
Subsidiary of the Company under Title IV of ERISA or any multiemployer pension
or welfare benefit plan.
Section 3.20 Agreements, Contracts and Commitments
-------------------------------------.
Neither the Company 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) a breach of which, individually or in the aggregate,
would constitute a Material Adverse Effect with respect to the Company. 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 by any party obligated thereunder of which the Company has knowledge.
Section 3.21 Information in Disclosure Documents
-----------------------------------. None of
the information supplied or to be supplied by the Company for inclusion or
incorporation by reference in (i) the registration statement on Form S-4 to be
filed with the SEC by ATI under the Securities Act in connection with the
issuance of shares of ATI Common Stock in the Merger (including the Proxy
22
Statement/ Prospectus forming a part thereof, the "Registration Statement")
will, at the time the Registration Statement is filed with the SEC and at the
time it and any amendment thereto 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,
at the time and in light of the circumstances under which they are made, not
misleading, and (ii) the Proxy Statement/Prospectus relating to the Company
Shareholders Meeting (the "Proxy Statement/Prospectus") will, at the date mailed
to shareholders of the Company and at the time of the Company Shareholders
Meeting, 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.
Section 3.22 Restrictions on Business Activities
-----------------------------------. Except
for this Agreement, there is no agreement, judgment, injunction, order or decree
binding upon the Company 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, the acquisition of any material property by, or the conduct of the
respective businesses (as currently conducted) of, the Company and its
Subsidiaries taken as whole.
Section 3.23 Tax and Accounting Matters
--------------------------. Neither the
Company nor any of its Subsidiaries or affiliates has taken or agreed to take
any action that would prevent the Merger from being treated as a reorganization
within the meaning of Section 368(a) of the Code or would prevent ATI from
accounting for the Merger as a pooling of interests.
Section 3.24 Brokers and Finders
-------------------. Neither the Company nor
any of its officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby, except that the Company
has retained Salomon Brothers Inc as its financial advisor, the arrangements
with which have been disclosed in writing to ATI prior to the date hereof.
Section 3.25 No Existing Discussions
-----------------------. As of the execution
and delivery hereof, the Company 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 6.1).
23
Section 3.26 Opinion of Financial Advisor
----------------------------. The Company's
financial advisor, Salomon Brothers Inc, has delivered to the Company its
opinion dated the date of this Agreement to the effect that the Conversion
Number is fair from a financial point of view to the shareholders of the
Company.
Section 3.27 Certain Provisions of the OBCA Not
----------------------------------
Applicable
----------. The Board of Directors of the Company has approved the execution and
delivery of this Agreement and the transactions contemplated hereby and by
virtue of such approval and the provisions of the Bylaws of the Company,
Sections 60.801 through 60.816 and Sections 60.825 through 60.845 of the OBCA do
not apply to, or affect the benefits and obligations under, this Agreement.
Section 3.28 Company Rights Agreement
------------------------. The Company Rights
Agreement has been duly amended only to effect the changes thereto contemplated
by the form of amendment attached hereto as Annex II, and, as a result thereof,
the rights provided thereunder are inapplicable to this Agreement and the
Merger.
Section 3.29 Disclosure
----------. None of this Agreement, the
Company Disclosure Letter, any Annex or certificate attached hereto or delivered
in accordance with the terms hereof or any document or statement in writing
which has been supplied to ATI or its representatives by or on behalf of the
Company or any of its Subsidiaries in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits any material fact necessary in order to make the statements contained
herein and/or therein not misleading. There is no fact known to the Company
which materially adversely affects the financial condition, properties,
business, results of operations or prospects of the Company which has not been
set forth in this Agreement, the Company SEC Reports, the Company Disclosure
Letter, any Annex or certificate attached hereto or delivered in accordance with
the terms hereof or any document or statement in writing which has been supplied
to ATI or its representatives by or on behalf of the Company in connection with
the transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ATI
ATI represents and warrants to the Company that, except as
specifically set forth and described in the Disclosure Letter (the "ATI
Disclosure Letter") delivered by ATI to the Company
24
prior to the execution and delivery of this Agreement, the statements set forth
below in this Article IV are true and correct. The ATI Disclosure Letter shall
be arranged in paragraphs corresponding to the numbered and lettered Sections
and paragraphs contained in this Article IV.
Section 4.1 Organization of ATI
-------------------. ATI and each Subsidiary
of ATI is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, has all requisite
corporate power to own, lease and operate its property and to carry on its
business as now being conducted and as proposed to be conducted, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the failure to be so qualified or be in good standing
would have a Material Adverse Effect on ATI.
Section 4.2 Capitalization of ATI
---------------------. The authorized
capital stock of ATI consists of 600,000,000 shares of ATI Common Stock and
50,000,000 shares of Preferred Stock, par value $.10 per share ("ATI Preferred
Stock"). As of October 27, 1997, 174,359,192 shares of ATI Common Stock were
issued and outstanding, all of which are validly issued, fully paid and
nonassessable, 1,987,528 shares of ATI Common Stock were held in the treasury of
ATI or by Subsidiaries of ATI, 14,456,649 shares of ATI Common Stock were
reserved for future issuance pursuant to options or other rights outstanding to
acquire ATI Common Stock, and 4,812,500 shares of ATI Common Stock were reserved
for issuance under an Employee Stock Purchase Plan (the "ESPP"). As of the date
of this Agreement, no shares of ATI Preferred Stock are issued and outstanding.
All outstanding shares of ATI Common Stock are and all shares of ATI Common
Stock subject to issuance as specified above, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. Except as
set forth in this Section 4.2 or as reserved for future grants of options under
the ATI stock option plans or the ESPP, there are no equity securities of any
class of ATI or any of its Subsidiaries, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding.
Section 4.3 Authority; No Conflict; Required Filings and
--------------------------------------------
Consents
--------. (a) ATI and Sub have all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement and the
consummation of
25
the transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of ATI and Sub. This Agreement has been
duly executed and delivered by ATI and Sub and constitutes the valid and binding
obligation of ATI and Sub, enforceable in accordance with its terms.
(b) The execution and delivery of this Agreement by ATI does
not, and the consummation of the transactions contemplated by this Agreement
will not, (i) conflict with, or result in any violation or breach of any
provision of the Restated Certificate of Incorporation or the Amended and
Restated Bylaws of ATI or the Articles of Incorporation or Bylaws of Sub, (ii)
result in any violation or breach of, or constitute (with or without notice or
lapse of time, or both) a default (or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any material benefit)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, contract or other agreement, instrument or obligation to which
ATI or any of its Subsidiaries is a party or by which any of them or any of
their properties or assets may be bound, or (iii) violate any permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to ATI or any of its Subsidiaries or
any of its or their properties or assets, except in the case of clauses (ii) and
(iii) for any such conflicts, violations, defaults, terminations, cancellations
or accelerations which would not constitute a Material Adverse Effect with
respect to ATI.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to ATI or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) required filings under the HSR Act, (ii) the
filing of the Registration Statement with the SEC in accordance with the
Securities Act, (iii) the filing of the Articles of Merger with the Secretary of
State of Oregon, and (iv) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not constitute
a Material Adverse Effect with respect to ATI.
Section 4.4 SEC Filings; Financial Statements
---------------------------------. (a) ATI
has filed all forms, reports and documents required to be filed by ATI with the
SEC since August 15, 1996 (collectively, the "ATI SEC Reports"). The ATI SEC
Reports (i) at the time filed, complied in all material respects with the
applicable
26
requirements of the Securities Act and the Exchange Act, as the case may be, and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated in such ATI SEC Reports or necessary in order to make the
statements in such ATI SEC Reports, in the light of the circumstances under
which they were made, not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any related notes) contained in the ATI SEC Reports complied as to
form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) and fairly presented the consolidated financial position
of ATI and its Subsidiaries as at the respective dates and the consolidated
results of its operations and cash flows for the periods indicated. The balance
sheet of ATI as of September 30, 1997 is referred to herein as the "ATI Balance
Sheet."
Section 4.5 Absence of Undisclosed Liabilities
----------------------------------. Except
to the extent set forth or provided for in the ATI Balance Sheet, as of
September 30, 1997 neither ATI nor any Subsidiary of ATI had any liabilities of
any kind whatsoever, whether absolute or contingent, direct or indirect,
accrued or unaccrued, matured or unmatured, liquidated or unliquidated, joint or
several, which, individually or in the aggregate, were material to the business,
properties, results of operations, financial condition or prospects of ATI.
Since September 30, 1997, except for normal or recurring liabilities incurred in
the ordinary course of business of ATI consistent with past practice, neither
ATI nor any of the Subsidiaries of ATI has incurred any liabilities of any
nature, whether accrued, contingent or otherwise, which, individually or in the
aggregate, are material to the business, properties, results of operations,
financial condition or prospects of ATI.
Section 4.6 Absence of Certain Changes
--------------------------. Since September
30, 1997, (i) ATI and its Subsidiaries have conducted their businesses in the
ordinary course and in a manner consistent with past practice and have made no
acquisition of any business not complementary to those conducted by ATI and its
27
Subsidiaries as of the date hereof and have effected no disposition of any
business other than those with characteristics that ATI has disclosed prior to
the date hereof which render it a candidate for disposition, (ii) no event or
change has occurred constituting a Material Adverse Effect with respect to ATI,
and no fact or condition exists or is contemplated or threatened which is
reasonably likely to constitute a Material Adverse Effect with respect to ATI in
the future, and (iii) there has been no change by ATI in its accounting methods,
principles or practices except as required by concurrent changes in generally
accepted accounting principles.
Section 4.7 Information in Disclosure Documents
-----------------------------------. None of
the information supplied or to be supplied by ATI for inclusion or incorporation
by reference in (i) the Registration Statement will, at the time the
Registration Statement and any amendment thereto 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, at the time and in light of the circumstances under which
they are made, not misleading, and (ii) the Proxy Statement/Prospectus will, at
the date first mailed to shareholders of the Company and at the time of the
Company Shareholders Meeting, 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.
Section 4.8 Interim Operations of Sub
-------------------------. Sub was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement, has engaged in no other business activities and has conducted its
operations only as contemplated by this Agreement.
Section 4.9 Compliance with Law; Regulatory Compliance
------------------------------------------.
(a) Except as described in the ATI SEC Reports filed prior to the date hereof,
to the knowledge of ATI, neither ATI nor any Subsidiary of ATI (i) is or has
been in violation of any applicable federal, state, local or foreign law,
statute, regulation, ordinance or other requirement of any Governmental Entity
relating to it or to its securities, property, operations or business, except
for possible violations which, individually or in the aggregate, do not
constitute a Material Adverse Effect with respect to ATI; or (ii) has engaged in
any activity or omitted to take any action as a result of which it is in
violation of any applicable order, injunction or decree of any
28
Governmental Entity affecting ATI or any Subsidiary of ATI, except for such
violations, individually or in the aggregate, that do not constitute a Material
Adverse Effect with respect to ATI. Except as described in the ATI SEC Reports
filed prior to the date hereof, as of the date of this Agreement, there is no
outstanding order, writ, judgment, stipulation, injunction, decree,
determination, award or other order of any Governmental Entity affecting ATI or
any Subsidiary of ATI in any material respect.
(b) ATI and each Subsidiary of ATI possess, or has made timely
application for, all permits, licenses, approvals, authorizations of and
registrations with all Governmental Entities under all federal, state, local and
foreign laws that are or will be required for ATI or any of its Subsidiaries to
carry on any substantial part of their respective businesses as presently
conducted ("ATI Approvals"), the absence of which would not constitute a
Material Adverse Effect with respect to ATI. All material ATI Approvals are in
full force and effect and, to the knowledge of ATI, neither ATI nor any
Subsidiary of ATI is in violation of any ATI Approval or any other permit,
license, approval, authorization or registration applicable to it or to the
operation of its business which violations, individually or in the aggregate,
constitute a Material Adverse Effect with respect to ATI. ATI has no reason to
believe that any pending application for an ATI Approval will not be timely
granted and no proceeding is pending or, to the knowledge of ATI, threatened, to
revoke, suspend or materially modify any ATI Approval or deny any renewal
thereof.
Section 4.10 Litigation
----------. Except as disclosed in the ATI
SEC Reports filed prior to the date hereof, there are no suits, litigations,
investigations, actions or proceedings of any kind pending or, to the knowledge
of ATI, threatened, against ATI or any Subsidiary of ATI, nor to the knowledge
of ATI is any such matter pending or threatened against any other Person, which,
if determined adversely to ATI, would constitute a Material Adverse Effect with
respect to ATI.
Section 4.11 Agreements, Contracts and Commitments
-------------------------------------.
Neither ATI 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) a breach of which, individually or in the aggregate,
would constitute a Material Adverse Effect with respect to ATI. Each such
agreement, contract and commitment that has not expired
29
or been terminated is in full force and effect and is not subject to any
material default thereunder by any party obligated thereunder of which ATI has
knowledge.
Section 4.12 Restrictions on Business Activities
-----------------------------------. There
is no agreement, judgment, injunction, order or decree binding upon ATI 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, the acquisition
of any material property by, or the conduct of the respective businesses (as
currently conducted) of, ATI and its Subsidiaries taken as whole.
Section 4.13 Disclosure
----------. None of this Agreement, the ATI
Disclosure Letter, any Annex or certificate attached hereto or delivered in
accordance with the terms hereof or any document or statement in writing which
has been supplied to the Company or its representatives by or on behalf of ATI
or any of its Subsidiaries in connection with the transactions contemplated by
this Agreement contains any untrue statement of a material fact or omits any
material fact necessary in order to make the statements contained herein and/or
therein not misleading.
ARTICLE V
CONDUCT OF BUSINESS OF THE COMPANY
Section 5.1 Covenants of the Company
------------------------. During the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement and the Effective Time, the Company agrees as to
itself and its Subsidiaries (except to the extent that ATI shall otherwise
consent in writing) and except to the extent provided in the Company Disclosure
Letter, to carry on its business in the usual, regular and ordinary course in
substantially the same manner as previously conducted, to pay its debts and
taxes when due subject to good faith disputes over such debts or taxes, to pay
or perform 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 businesses be substantially unimpaired
at the Effective Time. The Company shall promptly notify ATI of any event or
occurrence not in the ordinary course of business of the Company. Except as
expressly
30
contemplated by this Agreement and the Company Disclosure Letter, the Company
shall not (and shall not permit any of its Subsidiaries to), without the prior
written consent of ATI:
(a) Accelerate, amend or change the period of exercisability
of outstanding options or warrants to acquire Company Common Stock or authorize
cash payments in exchange for any such options except as required by the terms
of a Benefit Plan or any related agreements as in effect as of the date of this
Agreement;
(b) Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, or split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, or purchase or otherwise
acquire, directly or indirectly, any shares of its capital stock;
(c) Issue, deliver or sell or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or securities
convertible into shares of its capital stock, or subscriptions, rights, warrants
or options to acquire, or other agreements or commitments of any character
obligating it to issue any such shares or other convertible securities, other
than shares of Company Common Stock issuable pursuant to options granted under
the Company Option Plans that are outstanding on the date hereof or shares of
Company Common Stock issuable upon exercise of the Warrants or shares of Company
Common Stock issuable under the Stock Compensation Plans or the Excess Benefit
Plan;
(d) Acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division, or
otherwise acquire or agree to acquire any assets otherwise than in the ordinary
course of business;
(e) Directly or indirectly sell, lease, license or otherwise
dispose of any of its properties or assets except in the ordinary course of
business;
(f) (i) Increase or agree to increase the compensation payable
or to become payable to its officers or employees, except for routine increases
in salary or wages of employees of the
31
Company in accordance with past practice, (ii) increase or agree to increase the
compensation payable or to become payable to officers or grant any additional
severance or termination pay to or enter into or amend or modify any Employment
Agreement with, any such officers, (iii) grant any additional severance or
termination pay to or enter into any Employment Agreement with any employee,
(iv) enter into any collective bargaining agreement, or (v) establish, adopt,
enter into or amend any bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees; provided,
however, that the Company may take such action as is required to comply with
applicable laws;
(g) Revalue any of its assets, including writing down the
value of inventory or writing off notes or accounts receivable other than in the
ordinary course of business;
(h) Incur any indebtedness or issue or sell any debt
securities or warrants or rights to acquire any debt securities or guarantee any
debt securities of others, other than indebtedness incurred in the ordinary
course of business in such amounts and pursuant to such terms as are consistent
with past practice;
(i) Amend or propose to amend its Restated Articles of
Incorporation or its Bylaws, each as amended;
(j) Authorize or make any capital expenditure otherwise than
in the ordinary course of business; and
(k) Take, or agree in writing or otherwise to take, any of the
actions described in Sections (a) through (j) above, or any action which is
reasonably likely to make any of its representations or warranties contained in
this Agreement untrue or incorrect on the date made (to the extent so limited)
or as of the Effective Time.
Section 5.2 Consultation
------------. Subject to compliance with
applicable law, from the date hereof until the Effective Time, the Company shall
confer on a regular and frequent basis with one or more representatives of ATI
to report upon operational or financial matters and the general status of
ongoing operations, and shall continuously confer and consult with
representatives of ATI with respect to the matters referred to in Section
6.12(c). All information disclosed in connection
32
with this Section shall be considered confidential under the Confidentiality
Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Acquisition Proposals
---------------------. From and after the
date hereof until the earlier of the termination of this Agreement or the
Effective Time:
(a) The Company will, and will cause its directors, officers,
employees, representatives and agents to, immediately cease any discussions or
negotiations with any parties that may be ongoing with respect to an Acquisition
Proposal (as defined below). The Company will not, nor will it permit any of its
Subsidiaries to, nor will it authorize or permit any of its directors, officers
or employees or any investment banker, financial advisor, attorney, accountant
or other representative retained by it or any of its Subsidiaries to, directly
or indirectly, (i) solicit, initiate or encourage (including by way of
furnishing confidential information), or take any other action to facilitate,
any inquiries or the making of any proposal which constitutes, or may reasonably
be expected to lead to, any Acquisition Proposal or (ii) participate in any
discussions or negotiations regarding any Acquisition Proposal; PROVIDED,
HOWEVER, that if the Board of Directors of the Company determines in good faith,
after consultation with and based upon the advice of outside counsel to the
Company, that it is necessary to do so in order to comply with its fiduciary
duties to the Company's shareholders under applicable law, the Company may, in
response to an Acquisition Proposal that was not solicited or initiated by the
Company, and subject to compliance with Section 6.1(c), (x) furnish information
to any person pursuant to a confidentiality agreement with terms no less
favorable to the Company than the Confidentiality Agreement, dated February 3,
1997, as supplemented on August 9, 1997, between the Company and ATI (as so
supplemented, the "Confidentiality Agreement") and (y) participate in
discussions or negotiations regarding such Acquisition Proposal. "Acquisition
Proposal" means any proposal or offer (other than the transactions contemplated
by this Agreement) from any person with respect to a merger, acquisition,
consolidation or similar transaction involving, or any purchase of, all or
substantially all of the assets or more than 20% of the voting securities of the
Company.
33
(b) Except as set forth in this Section 6.1, neither the Board
of Directors of the Company nor any committee thereof will (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to ATI,
the approval or recommendation by such Board of Directors or such committee of
the Merger or this Agreement, (ii) approve or recommend, or propose publicly to
approve or recommend, any Acquisition Proposal or (iii) cause the Company to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement (each, an "Acquisition Agreement") related to any
Acquisition Proposal. Notwithstanding the foregoing, in the event that the Board
of Directors of the Company determines in good faith, after consultation with
and based upon the advice of outside counsel to the Company, that it is
necessary to do so in order to comply with its fiduciary duties to the Company's
shareholders under applicable law, the Board of Directors of the Company may (x)
withdraw or modify its approval or recommendation of the Merger and this
Agreement or (y) approve or recommend a Superior Proposal (as defined below) or
(z) terminate this Agreement (and concurrently with or after such termination,
if it so chooses, cause the Company to enter into any Acquisition Agreement with
respect to any Superior Proposal), but in each case only at a time that is not
less than two business days following ATI's receipt of written notice advising
ATI that the Board of Directors of the Company has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal and
identifying the person making such Superior Proposal. For purposes of this
Agreement, a "Superior Proposal" means any bona fide written Acquisition
Proposal made by a third party the terms of which the Board of Directors of the
Company determines in its good faith judgment (based on the advice of a
financial advisor to the Company of nationally recognized reputation) to be more
favorable to the Company's shareholders from a financial point of view than the
Merger and the other transactions contemplated hereby and for which any required
financing is committed or which, in the good faith judgment of the Board of
Directors of the Company (based on the advice of a financial advisor to the
Company of nationally recognized reputation), is reasonably capable of being
financed by such third party.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.1, the Company will promptly advise ATI
orally and in writing of any request for confidential information in connection
with an Acquisition Proposal or of any Acquisition Proposal, the material terms
and
34
conditions of such request or Acquisition Proposal and the identity of the
person making such request or Acquisition Proposal.
(d) Nothing contained in this Section 6.1 will prohibit the
Company from making any disclosure to the Company's shareholders if, in the good
faith judgment of the Board of Directors of the Company, after consultation with
outside counsel, failure so to disclose would violate applicable law, including
Rule 14e-2 promulgated under the Exchange Act; provided, however, neither the
Company nor its Board of Directors nor any committee thereof shall, except as
permitted by Section 6.1(b), withdraw or modify, or propose publicly to withdraw
or modify, its position with respect to this Agreement or the Merger or approve
or recommend, or propose publicly to approve or recommend, an Acquisition
Proposal.
Section 6.2 Proxy Statement/Prospectus; Registration
----------------------------------------
Statement
---------. (a) As promptly as practicable after the execution of this Agreement,
ATI and the Company shall prepare and file with the SEC the Proxy
Statement/Prospectus, and ATI shall prepare and file with the SEC the
Registration Statement, in which the Proxy Statement/Prospectus will be included
as a prospectus. ATI and the Company shall use all reasonable efforts to cause
the Registration Statement to become effective as soon after such filing as
practicable. Subject to Section 6.1, the Proxy Statement/Prospectus shall
include the recommendation of the Board of Directors of the Company that Company
shareholders vote in favor of approval and adoption of this Agreement and the
Merger.
(b) ATI and the Company shall make all necessary filings with
respect to the Merger under the Securities Act and the Exchange Act and the
rules and regulations thereunder.
Section 6.3 Letter of the Company's Accountants
-----------------------------------. The
Company shall cause to be delivered to ATI a letter addressed to ATI of Coopers
& Xxxxxxx LLP, the Company's independent auditors, dated a date within two
business days before the date on which the Registration Statement becomes
effective, in form customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
Section 6.4 Access to Information
---------------------. Upon reasonable
notice, each of the Company and ATI shall (and shall cause its Subsidiaries to)
afford to the officers, employees, accountants,
35
counsel and other representatives of the other access 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 cause its
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 such
party shall from time to time reasonably request. Each party will hold any such
information which is non-public in confidence in accordance with the
Confidentiality Agreement. No information or knowledge obtained in any
investigation pursuant to this Section 6.4 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 Merger.
Section 6.5 Company Shareholders Meeting
----------------------------. The Company
shall call the Company Shareholders Meeting to be held as promptly as
practicable after the date on which the Registration Statement is declared
effective by the SEC for the purpose of considering and voting upon a proposal
to approve and adopt this Agreement and the Merger. The Company shall use its
best efforts to solicit from its shareholders proxies to facilitate voting at
the Company Shareholders Meeting.
Section 6.6 Legal Conditions to the Merger
------------------------------. Each of ATI
and the Company will take all reasonable actions necessary to comply promptly
with all legal requirements which may be imposed on itself with respect to the
Merger (which actions shall include, without limitation, furnishing all
information required under the HSR Act and in connection with approvals of or
filings with any other Governmental Entity) and will promptly cooperate with and
furnish information to each other in connection with any such requirements
imposed upon any of them or any of their Subsidiaries in connection with the
Merger; provided that ATI shall not be required to take any action to comply
with any legal requirement or agree to the imposition of any order of any
Governmental Entity that would (i) prohibit or restrict the ownership or
operation by ATI of any portion of the business or assets of ATI or the Company
(or any of their respective Subsidiaries), (ii) compel ATI or the Company (or
any of their respective Subsidiaries) to dispose of (other than those which were
previously designated as a candidate for disposition) or hold separate any
portion of ATI's or the Company's business or assets, or (iii) impose any
limitation on the ability of ATI or the Surviving Corporation or any of their
respective affiliates
36
or Subsidiaries to own or operate the business and operations of the Company and
its Subsidiaries.
Section 6.7 Public Disclosure
-----------------. Neither the Company nor
ATI shall issue 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 the other with an opportunity to review and comment upon any such release
or statement prior to dissemination.
Section 6.8 Tax-Free Transaction
--------------------. ATI and the Company
shall each use its best efforts to cause the Merger to be treated as a
reorganization within the meaning of Section 368(a) of the Code.
Section 6.9 Pooling Accounting
------------------. Each of ATI and the
Company shall use its best efforts to cause the business combination to be
effected by the Merger to be accounted for as a pooling of interests. The
Company shall use its best efforts to cause its Affiliates (as defined in
Section 6.10) not to take any action that would adversely affect the ability of
ATI to account for the Merger as a pooling of interests.
Section 6.10 Affiliate Agreements
--------------------. Within two weeks
following the date of this Agreement, the Company will provide ATI with a list
of those persons who are, in the Company's reasonable judgment, "affiliates" of
the Company within the meaning of Rule 145 promulgated under the Securities Act
("Rule 145") (each such person who is an "affiliate" of the Company within the
meaning of Rule 145 is hereafter referred to as an "Affiliate"). The Company
shall provide ATI with such information and documents as ATI shall reasonably
request for purposes of reviewing such list and the Company shall notify ATI in
writing regarding any change in the identity of its Affiliates prior to the
Closing Date. The Company shall use its best efforts to deliver or cause to be
delivered to ATI prior to the Effective Time from each of its Affiliates an
executed Affiliate Agreement in substantially the form attached hereto as Annex
III (each an "Affiliate Agreement"). ATI shall be entitled to place appropriate
legends on the certificates evidencing any ATI Common Stock to be received by
such Affiliates of the Company pursuant to the terms of this Agreement, and to
issue appropriate stop transfer instructions to the transfer agent for the ATI
Common Stock, consistent with the terms of the Affiliate Agreements.
37
Section 6.11 NYSE Listing
------------. ATI shall use its best efforts
to cause the shares of ATI Common Stock to be issued in the Merger to be
approved for listing on the New York Stock Exchange.
Section 6.12 Company Stock Options and Rights
--------------------------------. (a) Prior
to the Effective Time, the Company shall take such actions as may be necessary
such that at the Effective Time each option ("Option") to acquire Company Common
Stock outstanding after the Effective Time under the Company Option Plans and
each Warrant outstanding after the Effective Time under the Warrant Agreement,
whether or not then exercisable, shall be converted into and become a right with
respect to ATI Common Stock. From and after the Effective Time, (i) each Option
or Warrant assumed by ATI may be exercised solely for ATI Common Stock, (ii) the
number of shares of ATI Common Stock subject to each Option or Warrant shall be
equal to the product of (A) the number of shares of Company Common Stock
previously subject to such Option or Warrant and (B) the Conversion Number, and
(iii) the per share exercise price for each Option or Warrant shall be equal to
(y) the exercise price per share for the shares of Company Common Stock
previously purchasable or subject to such Option or Warrant divided by (z) the
Conversion Number, rounded to the nearest cent. At or prior to the Effective
Time, the Company shall make all necessary arrangements with respect to the
Company Option Plans and the Warrant Agreement and the Options and Warrants to
permit the assumption of unexercised Options and Warrants by ATI pursuant to
this Section 6.12; provided, however, that such arrangements shall not include
any change in the terms of the applicable plans if such change would, in the
opinion of the Company's or ATI's independent public accountants, have an
adverse effect on ATI's ability to account for the Merger as a pooling of
interests for financial reporting purposes.
(b) Prior to the Effective Time, the Company shall take such
actions as are satisfactory to ATI and as may be necessary such that at the
Effective Time each stock appreciation right ("SAR") outstanding after the
Effective Time under the Company's Long Term Incentive Compensation Stock
Appreciation Rights Plan (the "SAR Plan"), whether or not then exercisable,
shall be converted into and become a right with respect to ATI Common Stock, and
each right to receive shares of Company Common Stock under the Excess Benefit
Plan will become a right with respect to ATI Common Stock. From and after the
Effective Time, each outstanding Unit (as defined in the SAR Plan) shall become
1.296 Units, the Fair Market Value of a Share (in each case as defined in the
SAR Plan) upon exercise of a Unit shall be
38
determined by reference to the fair market value of a share of ATI Common Stock,
and the "Fair Market Value on the Grant Date" (as defined in the SAR Plan)
shall be equal to the Fair Market Value of the Company Common Stock on the Grant
Date divided by the Conversion Number, rounded to the nearest cent. Each right
to receive a share of Company Common Stock under the Excess Benefit Plan shall
be converted into the right to receive 1.296 shares of ATI Common Stock.
(c) The Company shall as soon as practicable after the date
hereof take such actions as may be necessary to amend or clarify the Stock
Compensation Plans in a manner satisfactory to ATI such that at the Effective
Time, all rights ("Rights") thereunder to acquire Company Common Stock after the
Effective Time shall become rights with respect to ATI Common Stock; provided,
however, that such actions shall not include any change in the terms of the
Stock Compensation Plans if such change would, in the opinion of ATI's
independent public accountants, have an adverse effect on ATI's ability to
account for the Merger as a pooling of interests for financial reporting
purposes.
(d) Effective as of the Effective Time, ATI shall assume each
Option and Warrant in accordance with the terms of the Company Option Plans, the
Warrant Agreement and any agreement by which they are evidenced, and shall
assume the obligation to issue shares of ATI Common Stock under the Excess
Benefit Plan and the Stock Compensation Plans (as amended or clarified pursuant
to Section 6.12(c)). At or prior to the Effective Time, ATI shall take all
corporate action necessary to reserve for issuance a sufficient number of shares
of ATI Common Stock for delivery upon exercise of all Options and Warrants
assumed by it and for delivery under the Excess Benefit Plan and the Stock
Compensation Plans (as amended or clarified pursuant to Section 6.12(c)) in
accordance with this Section 6.12. As soon as practicable after the Effective
Time, ATI shall file one or more registration statements on Form S-8 or any
successor or other appropriate form with respect to the shares of ATI Common
Stock subject to the Options and the Warrants, the SARs and the shares of ATI
Common Stock issuable under the Excess Benefit Plan and the Stock Compensation
Plans (as amended or clarified pursuant to Section 6.12(c)). ATI shall use all
reasonable efforts to maintain the effectiveness of such registration statements
(and maintain the current status of the prospectus or prospectuses contained
therein) for so long as such Options, Warrants or SARs remain outstanding or
shares of ATI Common Stock are issuable under the Excess Benefit Plan and the
Stock Compensation Plans (as amended or clarified under Section 6.12(c)).
39
Section 6.13 Indemnification
---------------. (a) The Company shall and,
from and after the Effective Time, the Surviving Corporation shall, to the
fullest extent permitted by applicable law, 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 or director of
the Company or any of its Subsidiaries (the "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
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 or officer of the Company or any of its
Subsidiaries or is or was a plan fiduciary serving at the request of the Company
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 ("Indemnified Liabilities") to the
full extent the Company would have been permitted to do so under the Company's
Restated Articles of Incorporation, its Bylaws, any indemnity agreements with
the Company and under Oregon law (and the indemnifying party shall advance
expenses prior to the final disposition of any such action or proceeding to each
Indemnified Party to the full extent permitted by Oregon law upon receipt of any
undertaking required by applicable Oregon law) or (ii) all 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. Without limiting the
foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Party (whether arising before
or after the Effective Time), (i) the Company (or the Surviving Corporation
after the Effective Time) may retain counsel satisfactory to it and the
Indemnified Parties, and shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties, and (ii) the Company (or after the
Effective Time, the Surviving Corporation) will use all reasonable efforts to
assist in the vigorous defense of any such matter, provided that neither the
Company nor the Surviving Corporation shall be liable for any settlement of any
claim effected without its written consent, which consent, however, shall not be
unreasonably withheld. Any Indemnified Party wishing to claim indemnification
under this Section 6.13, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify the Company or the Surviving
Corporation (but the failure so to notify shall not relieve the Company or the
Surviving Corporation from any
40
liability which it may have under this Section 6.13(a) except to the extent such
failure prejudices such party), and shall deliver to the Company (or after the
Effective Time the Surviving Corporation) the affirmation and undertaking
contemplated by Section 60.397 of the OBCA. The Indemnified Parties as a group
shall only be entitled to be represented by one law firm to represent them as a
group 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 Indemnified Parties.
(b) For a period of at least five years after the Effective
Time, ATI or the Surviving Company shall cause to be maintained in effect
standard policies of directors' and officers' liability insurance of at least
the same coverage and containing terms that are no less advantageous with
respect to matters occurring at or prior to the Effective Time as such policies
maintained by the Company as of the date hereof; provided, that in no event
shall ATI or the Surviving Company be required to expend, in order to maintain
or procure insurance coverage pursuant to this Section 6.13(b), any amount per
annum in excess of 200 percent of the per annum amounts paid by the Company as
of the date hereof; provided further, that if such insurance cannot be so
maintained or obtained at such cost, ATI or the Surviving Corporation shall
maintain or obtain a policy providing the best coverage available for such
premium cost.
(c) The provisions of this Section 6.13 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives.
Section 6.14 Additional Agreements; Reasonable Efforts
-----------------------------------------.
Subject to the terms and conditions of this Agreement, each of the parties
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 under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement; provided that ATI shall not be
required to take any action to comply with any legal requirement or agree to the
imposition of any order of any Governmental Entity that would (i) prohibit or
restrict the ownership or operation by ATI of any portion of the business or
assets of ATI or the Company (or any of their respective Subsidiaries), (ii)
compel ATI or the Company (or any of their respective Subsidiaries) to dispose
of or hold separate any portion of its or the Company's business or assets, or
(iii) impose any limitation on the ability of ATI or the Surviving Corporation
or
41
any of their respective affiliates or Subsidiaries to own or operate the
business and operations of the Company and its Subsidiaries. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation with
full title to all properties, assets, rights, approvals, immunities and
franchises of the Company, the proper officers and directors of each party to
this Agreement shall take all such necessary action to effectuate the same.
ARTICLE VII
CONDITIONS TO THE MERGER
Section 7.1 Conditions to Each Party's Obligation to
----------------------------------------
Effect the Merger
-----------------. The respective obligations of each party to this Agreement to
effect the Merger shall be subject to the satisfaction prior to the Closing Date
of the following conditions:
(a) Shareholder Approval. This Agreement and the Merger shall
have been approved and adopted by the requisite vote of the shareholders of the
Company.
(b) HSR Act. The waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated.
(c) Other Required Authorizations. All required authorizations
necessary for the consummation of the transactions contemplated by this
Agreement shall have been obtained and, other than the filing provided for by
Section 1.1, all other authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
Governmental Entity, the failure to obtain which would have a Material Adverse
Effect on ATI or the Company, shall have been filed, occurred or been obtained.
(d) Registration Statement. The Registration Statement shall
have become effective under the Securities Act and shall not be the subject of
any stop order or proceedings seeking a stop order.
(e) 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
42
consummation of the Merger or limiting or restricting ATI's conduct or operation
of the business of the Company after the Merger shall have been issued, nor
shall there be any statute, rule, regulation or order enacted, entered, enforced
or deemed applicable to the Merger which makes the consummation of the Merger
illegal.
(f) Listing. The shares of ATI Common Stock to be issued in
the Merger shall have been approved for listing on the New York Stock Exchange
subject to official notice of issuance.
(g) Consents. Each of the Company and ATI shall have obtained
all consents required to consummate the transactions contemplated by this
Agreement, including the Merger, and all other consents in connection with the
Merger and the other transactions contemplated hereby, the failure to obtain
which would have a Material Adverse Effect on ATI or the Company.
Section 7.2 Additional Conditions to Obligations of ATI
-------------------------------------------
and Sub
-------. The obligations of ATI and Sub to effect the Merger are subject to the
satisfaction of each of the following conditions, any of which may be waived in
writing exclusively by ATI and Sub:
(a) Representations and Warranties of the Company. The
representations and warranties of the Company set forth in this Agreement (i)
that are qualified as to materiality or as to a Material Adverse Effect with
respect to the Company shall be true and correct and (ii) that are not so
qualified shall be true and correct in all material respects, in each case as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date (except (A) that the accuracy of representations and
warranties that by their terms speak as of the date of this Agreement or some
other date will be determined as of such date and (B) for changes contemplated
by this Agreement) and ATI shall have received a certificate signed on behalf of
the Company by the chief executive officer and the chief financial officer of
the Company to such effect.
(b) Performance of Obligations of the Company. The Company
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 ATI
shall have received a certificate signed on behalf of the Company by the chief
executive officer and the chief financial officer of the Company to such effect.
43
(c) Tax Opinion. ATI shall have received a written opinion
from Xxxxxxxxxxx & Xxxxxxxx LLP, counsel to ATI, to the effect that the Merger
will be treated for federal income tax purposes as a tax-free reorganization
within the meaning of Section 368(a) of the Code. In rendering such opinion,
such counsel may rely upon representations and certificates of ATI, Sub and the
Company.
(d) Company Rights Agreement. The Company Rights Agreement
shall have been amended or terminated immediately prior to the Effective Time
and the holders of Company Common Stock shall have no rights under the Company
Rights Agreement as a result of the consummation of the transactions
contemplated by this Agreement or otherwise.
(e) Letter of Accountants. ATI shall have received a letter of
Coopers & Xxxxxxx LLP, the Company's independent auditors, dated the Closing
Date, updating the letter referred to in Section 6.3.
(f) Pooling Letters. ATI shall have received letters from
Coopers & Xxxxxxx LLP, the Company's independent auditors, and Ernst & Young
LLP, ATI's independent auditors, each dated the date of the Proxy
Statement/Prospectus, which letters shall be confirmed in writing at the
Effective Time, stating that the business combination to be effected by the
Merger will qualify as a pooling of interests under generally accepted
accounting principles.
(g) Affiliate Agreements. ATI shall have received from each of
the Company's Affiliates an executed copy of an Affiliate Agreement
substantially in the form of Annex III hereto.
(h) Resignation of Company Directors. All of the members of
the Board of Directors of the Company shall have submitted their written
resignations as directors of the Company effective as of the Effective Time.
(i) No 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 the Company and its Subsidiaries that, individually or taken
together, constitute a Material Adverse Effect with respect to the Company.
44
Section 7.3 Additional Conditions to Obligations of the
-------------------------------------------
Company
-------. The obligation of the Company to effect the Merger is subject to the
satisfaction of each of the following conditions, any of which may be waived, in
writing, exclusively by the Company:
(a) Representations and Warranties of ATI and Sub. The
representations and warranties of ATI and Sub set forth in this Agreement (i)
that are qualified as to materiality or as to a Material Adverse Effect with
respect to ATI shall be true and correct and (ii) that are not so qualified
shall be true and correct in all material respects, in each case as of the date
of this Agreement and as of the Closing Date as though made on and as of the
Closing Date (except (A) that the accuracy of representations and warranties
that by their terms speak as of the date of this Agreement or some other date
will be determined as of such date and (B) for changes contemplated by this
Agreement) and the Company shall have received a certificate signed on behalf of
ATI by the chief executive officer and the chief financial officer of ATI to
such effect.
(b) Performance Of Obligations of ATI and Sub. ATI and Sub
shall have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and the
Company shall have received a certificate signed on behalf of ATI by the chief
executive officer and the chief financial officer of ATI to such effect.
(c) Tax Opinion. The Company shall have received the opinion
of Xxxxxxx, Xxxxxxxxxx & Xxxxx, P.C., counsel to the Company, to the effect that
the Merger will be treated for federal income tax purposes as a tax-free
reorganization within the meaning of Section 368(a) of the Code. In rendering
such opinion, such counsel may rely upon representations and certificates of
ATI, Sub and the Company.
(d) No 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 ATI and its Subsidiaries that, individually or taken together,
constitute a Material Adverse Effect with respect to ATI.
45
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.1 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 ATI and the Company; or
(b) by either ATI or the Company if the Merger shall not have
been consummated by March 31, 1998 (provided that the right to terminate this
Agreement under this Section 8.1(b) shall not be available to any party whose
failure to perform or fulfill any material obligation under this Agreement has
been a cause of, or has resulted in, the failure of the Merger to occur on or
before such date); or
(c) by either ATI or the Company 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
Merger; or
(d) by either ATI or the Company, if, at the Company
Shareholders Meeting (including any adjournment or postponement thereof), the
requisite vote of the shareholders of the Company in favor of approval and
adoption of this Agreement and approval of the Merger shall not have been
obtained; or
(e) by ATI, if the Board of Directors of the Company shall
have exercised any of its rights set forth in the second sentence of Section
6.1(b); or
(f) by ATI, if any of the covenants or agreements of the
Company set forth in Section 6.1 shall have been breached; or
(g) by ATI, if for any reason the Company fails to call and
hold the Company Shareholders Meeting by March 31, 1998, unless such failure is
due to the fact that (A) the Registration Statement was not declared effective
sufficiently in advance of such date to enable the Company to hold the Company
Shareholders Meeting by such date or (B) a court has enjoined or temporarily
restrained the Merger, and any such occurrence or omission has not resulted from
any breach of this Agreement by the Company; or
46
(h) by ATI or the Company, if (i) the other party 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 would not have a material adverse effect upon 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
party (other than the covenants or agreements of the Company set forth in
Section 6.1), which shall not have been cured within three days following
receipt by the breaching party of written notice of such breach from the other
party; or
(i) by the Company pursuant to Section 6.1(b).
Section 8.2 Effect of Termination
---------------------. In the event of
termination of this Agreement as provided in Section 8.1, this Agreement shall
immediately become void and there shall be no liability or obligation on the
part of ATI, the Company, Sub or their respective officers, directors,
stockholders or Affiliates except as set forth in the Confidentiality Agreement
referred to in Section 6.1(a) and as set forth in Section 8.3 and further except
to the extent that such termination results from the willful breach by a party
of any of its representations, warranties or covenants set forth in this
Agreement or as provided for in the Confidentiality Agreement; provided that,
the provisions of Section 8.3 of this Agreement and the Confidentiality
Agreement shall remain in full force and effect and survive any termination of
this Agreement.
Section 8.3 Fees and Expenses
-----------------. (a) Except as set forth
in this Section 8.3, 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 Merger is consummated; provided,
however, that ATI and the Company shall share equally all fees and expenses,
other than attorneys' and accounting fees and expenses, incurred in relation to
the printing and filing of the Proxy Statement/Prospectus (including any related
preliminary materials) and the Registration Statement (including financial
statements and exhibits) and any amendments or supplements thereto.
(b) The Company shall reimburse ATI for all reasonable
out-of-pocket expenses incurred by ATI relating to the transactions contemplated
by this Agreement prior to termination
47
(including, but not limited to, reasonable fees and expenses of ATI's outside
counsel, accountants and financial advisors) in an amount not to exceed $2.0
million (i) upon the termination of this Agreement by ATI pursuant to Section
8.1(g), (ii) upon termination of this Agreement by ATI pursuant to Section
8.1(h) as a result of a willful breach of any representation, warranty, covenant
or agreement of the Company contained herein, or (iii) in the event a
termination fee is payable in accordance with Section 8.3(c) or Section 8.3(d),
and ATI shall reimburse the Company for reasonable out-of-pocket expenses
incurred by the Company relating to the transactions contemplated by this
Agreement prior to termination (including, but not limited to, reasonable fees
and expenses of the Company's outside counsel, accountants and financial
advisors), in an amount not to exceed $2.0 million upon the termination of this
Agreement by the Company pursuant to Section 8.1(h) as a result of a willful
breach of any representation, warranty, covenant or agreement of ATI contained
herein.
(c) The Company shall pay ATI a termination fee of $11.0
million (less the amount of any expenses of ATI reimbursed by the Company
pursuant to Section 8.3(b)) upon the termination of this Agreement by ATI or the
Company pursuant to Section 8.1(d), and if prior to such termination an
Acquisition Proposal with respect to the Company was commenced, publicly
proposed or publicly disclosed and, shall pay ATI an additional $11.0 million,
if within 12 months after such termination the Company shall have entered into
an Acquisition Agreement relating to an Acquisition Proposal or any Acquisition
Proposal shall have been consummated.
(d) The Company shall pay ATI a termination fee of $22.0
million (less the amount of expenses of ATI reimbursed by the Company pursuant
to Section 8.3(b)) upon the earliest to occur of the following events:
(i) the termination of this Agreement by ATI pursuant to
Section 8.1(e) or Section 8.1(f); or
(ii) the termination of this Agreement by ATI pursuant to
Section 8.1(h) as a result of a willful breach of any representation,
warranty, covenant or agreement of the Company contained herein; or
(iii) the termination of this Agreement by ATI pursuant to
Section 8.1(g) if prior to such termination an Acquisition Proposal
with respect to the Company was
48
commenced, publicly proposed or publicly disclosed or communicated to
the Board of Directors of the Company (or the willingness of any person
to make such an Acquisition Proposal was publicly disclosed or was
communicated to the Board of Directors of the Company) and within 12
months after such termination the Company shall have entered into an
Acquisition Agreement relating to an Acquisition Proposal or any
Acquisition Proposal shall have been consummated; or
(iv) the termination of this Agreement by the Company pursuant
to Section 8.1(i).
(e) The expenses and fee, if applicable, payable pursuant to
Sections 8.3(b), 8.3(c) and 8.3(d) shall be paid (in same-day funds) within five
business days after the first to occur of any of the events described in Section
8.3(b), 8.3(c) or 8.3(d); provided, however, that in no event shall the Company
or ATI, as the case may be, be required to pay such expenses and fee to the
other if, immediately prior to the termination of this Agreement, the party to
receive such expenses and fee was in material breach of its obligations under
this Agreement.
Section 8.4 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 this Agreement and the Merger
by the shareholders of the Company, but, after any such approval, no amendment
shall be made which by law requires further approval by such shareholders
without such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 8.5 Extension; Waiver
-----------------. At any time prior to the
Effective Time, the parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent legally allowed, (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein. 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.
49
ARTICLE IX
MISCELLANEOUS
Section 9.1 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 Sections 2.1,
2.2, 2.3, 6.12, 6.13, 6.14, 8.2, 8.3, the last sentence of Section 8.4 and
Article IX, and the agreements of the Affiliates of the Company delivered
pursuant to Section 6.10. The Confidentiality Agreement shall survive the
execution and delivery of this Agreement.
Section 9.2 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 ATI or Sub, to:
Xxxxxxx X. Xxxxxxx
Chairman of the Board, President
& Chief Executive Officer
Allegheny Teledyne Incorporated
0000 Xxx XXX Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxx X. Xxxxxx
Senior Vice President - General Counsel
& Secretary
Allegheny Teledyne Incorporated
0000 Xxx XXX Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
50
and to:
Xxxxxx X. Xxxx
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
(b) if to the Company, to:
Xxxxxx X. Xxxxxxx
Chairman of the Board, President
& Chief Executive Officer
Oregon Metallurgical Corporation
000 Xxxxxxxxx 00xx Xxxxxx
P. X. Xxx 000
Xxxxxx, Xxxxxx 00000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxxxxx
Xxxxxxx Xxxxxxxxxx & Xxxxx P.C.
Pacwest Center, Suites 1600-1950
0000 Xxxxxxxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000-0000
Facsimile: (000) 000-0000
Section 9.3 Certain Definitions; Interpretation
-----------------------------------. As used
in this Agreement, (i) any reference to the Company refers to the Company and
its Subsidiaries taken as a whole, (ii) any reference to ATI refers to ATI and
its Subsidiaries taken as a whole, (ii) the term "Subsidiary" means, with
respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which (a) such party or any other Subsidiary
of such party is a general partner (excluding partnerships, the general
partnership interests of which held by such party or any Subsidiary of such
party do not have a majority of the voting interest in such partnership) or (b)
at least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries taken as a whole, and (iii) any reference to any state of facts,
event, change or effect having a "Material Adverse Effect" on or with respect to
any entity (or group of
51
entities taken as a whole) means such state of facts, event, change or effect as
has had, or could reasonably be expected to have, a material adverse effect on
the business, assets, results of operations, financial condition or prospects of
such entity (or, if with respect thereto, of such group of entities taken as a
whole), on the ability of such entity (or group of entities) to conduct its (or
their) respective business or businesses after the Effective Time substantially
as such business or businesses are being conducted as of the date hereof or on
the ability of such entity (or group of entities) to consummate the transactions
contemplated hereby or to perform its obligations hereunder; provided, however,
as used in this Agreement, a Material Adverse Effect with respect to the Company
or ATI, as the case may be, shall be so construed as to mean the Company or ATI
and its respective Subsidiaries taken as whole. 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. 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 October 31, 1997.
Section 9.4 Knowledge
---------. All references in this Agreement
or any certificate to the knowledge of a party shall mean the knowledge of any
officer or officers of such party (but only the officer executing any such
certificate, in the case of a certificate) and shall reflect reasonable inquiry
by such officer or officers specifically with respect to the statement made
subject to such knowledge.
Section 9.5 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 9.6 Entire Agreement; No Third Party
--------------------------------
Beneficiaries
-------------. This Agreement (including the Confidentiality Agreement and the
other documents and the instruments referred to
52
herein) (a) constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 6.13, is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
Section 9.7 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 9.8 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, except that Sub may assign its rights and
interests hereunder to ATI and ATI may assume the obligations hereunder of Sub.
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 9.9 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 the transactions contemplated hereby are fulfilled to the extent
possible.
Section 9.10 Failure or Indulgence Not Waiver; Remedies
------------------------------------------
Cumulative
----------. No failure or delay on the part of any party hereto in the exercise
of any right hereunder shall impair such right or be construed to be a waiver
of, or acquiescence in, any breach of any representation, warranty or agreement
herein, nor shall any single or partial exercise of any such right preclude
other or further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
53
IN WITNESS WHEREOF, ATI, Sub and the Company have caused this
Agreement to be signed by their respective officers, thereunto duly authorized,
as of the date first set forth above.
ALLEGHENY TELEDYNE INCORPORATED OREGON METALLURGICAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx By:/s/ Xxxxxx X. Xxxxxxx
----------------------------- ------------------------------------
Title: Chairman of the Board, Title: Chairman of the Board,
President and Chief President and Chief
Executive Officer Executive Officer
SEA MERGER, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Title: President
54
ANNEX I
(a) Exchange Agent
--------------. As of the Effective Time, ATI shall make
available, or shall cause to be made available, to ChaseMellon Shareholder
Services, LLC, or such other exchange agent selected by ATI and reasonably
acceptable to the Company (the "Exchange Agent"), for the benefit of the holders
of shares of Company Common Stock, for exchange in accordance with Article II,
certificates representing the shares of ATI Common Stock issuable pursuant to
Article II. ATI will provide to the Exchange Agent on a timely basis funds
necessary to pay any cash payable in lieu of fractional shares of ATI Common
Stock pursuant to paragraph (c) below and funds or other property necessary to
pay or make any dividend or distribution with respect to ATI Common Stock
pursuant to paragraph (d) below.
(b) Exchange Procedures
-------------------. Promptly after the Effective Time,
ATI shall cause the Exchange Agent to mail to each person who was, at the
Effective Time, a holder of record of a certificate formerly representing shares
of Company Common Stock (a "Certificate") (i) a letter of transmittal which
shall specify that delivery shall be effected, and risk of loss and title to a
Certificate shall pass, upon (and only upon) delivery of that Certificate to the
Exchange Agent, and which shall be in such form and have such other provisions
as ATI may specify, and (ii) instructions for use in effecting the surrender of
a Certificate in exchange for a certificate or certificates representing shares
of ATI Common Stock. Upon surrender to the Exchange Agent of a Certificate
together with such a letter of transmittal, duly executed and completed in
accordance with the instructions thereto, the holder of such Certificate shall
be entitled to receive in exchange therefor a certificate representing the
number of whole shares of ATI Common Stock which such holder has the right to
receive in respect of such Certificate pursuant to the provisions of Article II,
a check in the amount of any cash which such holder has the right to receive (i)
in lieu of fractional shares of ATI Common Stock pursuant to paragraph (c) below
and (ii) with respect to any dividends or distribution with respect to ATI
Common Stock pursuant to paragraph (d) below, and the Certificate so surrendered
shall forthwith be canceled. No interest will accrue or be payable on any amount
payable upon surrender of a Certificate. Until so surrendered as contemplated
hereby each Certificate will be deemed at any time after the Effective Time to
represent only the right to receive, upon surrender of such Certificate, a
certificate representing ATI Common Stock, cash in lieu of fractional shares of
ATI Common Stock and any dividends or
1
distribution with respect to shares of ATI Common Stock as aforesaid. In the
event of a transfer of ownership of Company Common Stock that is not registered
on the transfer records of the Company, certificates representing the proper
number of shares of ATI Common Stock and any cash in lieu of fractional shares
and any dividends or distributions as aforesaid may be issued to a person other
than the person in whose name the Certificate so surrendered is registered, if
such Certificate is properly endorsed or otherwise in proper form for transfer
and the person requesting such issuance pays any transfer or other taxes
required by reason of the issuance of shares of ATI Common Stock and any cash in
lieu of fractional shares and any dividends or distributions as aforesaid to a
person other than the registered holder of such Certificate or establish to the
satisfaction of ATI that such tax has been paid or is not applicable.
Certificates surrendered for exchange by any person designated as an Affiliate
of the Company (as defined in Section 6.10) shall not be exchanged until ATI has
received a written Affiliate Agreement from such person as provided in Section
6.10.
(c) Fractional Shares
-----------------. Notwithstanding the foregoing or any
other provision of Article II, no fractional shares of ATI Common Stock will be
issued hereunder and any holder of Company Common Stock entitled hereunder to
receive a fraction of a share of ATI Common Stock but for this provision will be
entitled hereunder to receive a cash payment in lieu thereof, without interest,
in an amount, less the amount of any withholding taxes which may be required
thereon, equal to the product of (i) the fraction of a share to which such
holder would otherwise have been entitled multiplied by (ii) the average of the
high and low sales prices per share of ATI Common Stock as reported on the New
York Stock Exchange Composite Transactions Tape on the date of the Company
Shareholders Meeting if within 5 days of the Effective Time, otherwise the
trading day immediately preceding the date of the Effective Time. For purposes
of paying such cash in lieu of fractional shares, all Certificates representing
shares of Company Common Stock surrendered for exchange by a Company shareholder
on the same letter of transmittal shall be aggregated, and no such Company
shareholder will receive cash in lieu of fractional shares in an amount equal to
or greater than the value of one full share of ATI Common Stock with respect to
such Certificates surrendered.
(d) Distributions with Respect to Unexchanged Shares; Voting
--------------------------------------------------------
Rights
------. Notwithstanding any other provision of this Agreement, no dividends or
other distributions on shares of ATI Common Stock shall be paid to any person
holding an unexchanged
2
Certificate representing the right to receive shares of ATI Common Stock with
respect to such shares of ATI Common Stock nor shall any such shares of ATI
Common Stock be deemed to be outstanding and represent the right to vote or
give or express consent for any purpose until such Certificate is surrendered
for exchange as provided herein. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the holder
of the certificates representing shares of ATI Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore payable with respect to such shares of ATI Common Stock and not
paid, less the amount of any withholding taxes which may be required thereon,
and (ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
thereof and a payment date subsequent to surrender thereof payable with respect
to such shares of ATI Common Stock, less the amount of any withholding taxes
which may be required thereon.
(e) Transfers
---------. From and after the Effective Time, there shall
be no transfers on the stock transfer books of the Company of shares of Company
Common Stock which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to ATI, they shall be
canceled and exchanged for certificates for shares of ATI Common Stock, cash in
lieu of fractional shares and dividends or distributions with respect to shares
of ATI Common Stock, if any, in accordance with the procedures set forth herein.
(f) Termination of Exchange Fund
----------------------------. Any portion of the
certificate for shares of ATI Common Stock issuable pursuant to Article II and
cash or other property deposited with the Exchange Agent that has not been
claimed by the former shareholders of the Company within six months following
the Effective Time shall be delivered to ATI at the end of such period. Any
former shareholder of the Company who has not complied with the foregoing
provisions by the end of such period shall thereafter look only to ATI for
delivery of the shares of ATI Common Stock and as a general creditor for payment
of unpaid cash in lieu of fractional shares or dividends and distributions on
such shares of ATI Common Stock pursuant to the provisions hereof deliverable in
respect of each share of Company Common Stock such shareholder previously held,
as determined pursuant to this Agreement, in each case without any interest
thereon.
3
(g) No Liability
------------. (i) Notwithstanding any other provision of
this Agreement, none of ATI, the Exchange Agent, the Company or any other person
shall be liable to any person for any amount properly delivered to a public
official upon such request pursuant to applicable abandoned property, escheat or
similar laws.
(ii) 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 and the posting
by such person of a bond in such amount as ATI may direct as indemnity against
any claim that may be made against it or the Exchange Agent with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate a certificate representing shares of ATI Common Stock,
unpaid dividends and distributions on those shares of ATI Common Stock and cash
in lieu of any fractional share of ATI Common Stock, all as deliverable in
respect thereof pursuant to this Agreement.
(h) Withholding Rights
------------------. ATI will be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of Company Common Stock such amounts as may be required to be
deducted and withheld with respect to the making of such payment under the Code,
or under any provisions of state, local or foreign tax law. To the extent that
amounts are so withheld and paid over to the appropriate taxing authority, such
withheld amounts will be treated for all purposes of this Agreement as having
been paid to the holder of Company Common Stock in respect of which such
deduction and withholding was made.
4
ANNEX II
AMENDMENT TO RIGHTS AGREEMENT
This Amendment to Rights Agreement (this "Amendment") is
entered into as of October 31, 1997 between OREGON METALLURGICAL CORPORATION, an
Oregon corporation (the "Company"), and CHASEMELLON SHAREHOLDER SERVICES, LLC
(the "Rights Agent").
WHEREAS, upon the terms and subject to the conditions of that
certain Rights Agreement dated as of December 12, 1996 and as amended as of July
24, 1997 (the "Rights Agreement"), between the Company and the Rights Agent, the
Board of Directors of the Company has authorized the issuance of Rights; and
WHEREAS, the Board of Directors of the Company has determined
that it is in the best interests of the Company and its shareholders to amend
the Rights Agreement as set forth herein immediately prior to and in connection
with the execution and delivery of that certain Agreement and Plan of Merger,
dated as of October 31, 1997, as the same may be from time to time amended,
among Allegheny Teledyne Incorporated, a Delaware corporation, Sea Merger Inc.,
an Oregon corporation and a wholly-owned subsidiary of ATI, and the Company; and
WHEREAS, there has been delivered to the Rights Agent a
certificate from a duly authorized officer of the Company stating that this
Amendment is in compliance with the terms of Section 26 of the Rights Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Section 1(s) of the Rights Agreement is hereby amended to
read in its entirety as follows:
"(s) "Expiration Date" shall mean the earlier of (i) December
11, 2006 and (ii) the time immediately prior to the Effective
Time (as defined in the Agreement and Plan of Merger, dated as
of October 31, 1997, as the same may be from time to time
amended (the "Merger Agreement"), among Allegheny Teledyne
Incorporated, a Delaware corporation ("ATI"), Sea Merger,
Inc., an Oregon corporation and a wholly-owned subsidiary of
ATI, and the Company)."
2. The Rights Agreement is hereby amended by adding Section 35
as follows:
1
"SECTION 35. ATI TRANSACTIONS.
Notwithstanding anything contained in this Rights
Agreement to the contrary, no Distribution Date, Share
Acquisition Date or Triggering Event shall be deemed to have
occurred, neither ATI nor any Affiliate or Associate of ATI
shall be deemed to have become an Adverse Person, Acquiring
Person or Interested Shareholder and no holder of Rights shall
be entitled to exercise such Rights under or be entitled to
any rights under this Rights Agreement, including pursuant to
Section 7, 11 or 13 of this Rights Agreement, by reason of (x)
the approval, execution, delivery or effectiveness of the
Merger Agreement or (y) the consummation of any of the
transactions contemplated by the Merger Agreement in
accordance with the terms thereof or the taking of any action
by any party thereto or any Affiliate or Associate thereof to
facilitate the consummation of any such transactions."
3. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Rights Agreement.
4. This Amendment shall be deemed effective as of October 31,
1997, as if executed by both parties on such date. Except as amended hereby, the
Rights Agreement shall remain unchanged and shall remain in full force and
effect.
5. This Amendment may be executed in two counterparts, each of
which shall be an original, but both of which together shall constitute one
instrument.
6. All exhibits to the Rights Agreement have been amended to
conform with this Amendment to Rights Agreement.
2
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective duly authorized representatives as
of the date first above written.
ATTEST: OREGON METALLURGICAL CORPORATION
By: By:
---------------------------------- ---------------------------------
Name: Name:
-------------------------------- -------------------------------
Title: Title:
------------------------------- ------------------------------
CHASEMELLON SHAREHOLDER
SERVICES, LLC
By: By:
---------------------------------- ---------------------------------
Name: Name:
-------------------------------- -------------------------------
Title: Title:
------------------------------- ------------------------------
3
ANNEX III
[Form of Company Affiliate Agreement]
, 199_
Allegheny Teledyne Incorporated
0000 Xxx XXX Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Ladies and Gentlemen:
The undersigned has been advised that as of the date hereof
the undersigned may be deemed to be an "affiliate" of Oregon Metallurgical
Corporation, an Oregon corporation (the "Company"), as the term "affiliate" is
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"). Pursuant to the terms of the Agreement and Plan of Merger, dated as of
October 31, 1997 (the "Agreement"), among Allegheny Teledyne Incorporated, a
Delaware corporation ("ATI"), Sea Merger Inc., an Oregon corporation and a
wholly owned subsidiary of ATI ("Sub"), and the Company at the Effective Time
(as defined in the Agreement) Sub will be merged with and into the Company (the
"Merger"), and the Company will become a wholly owned subsidiary of ATI.
As a result of the Merger, the undersigned may receive shares
of Common Stock, par value $.10 per share ("ATI Common Stock"), of ATI in
exchange for shares of Common Stock, par value $1.00 per share, of the Company
owned by the undersigned.
The undersigned hereby represents and warrants to, and
covenants with, ATI that in the event the undersigned receives any ATI Common
Stock in the Merger:
(A) The undersigned shall not make any sale, transfer or
other disposition of the ATI Common Stock in
violation of the Act or the Rules and Regulations.
(B) The undersigned has carefully read this letter and
discussed its requirements and other applicable
limitations upon the undersigned's ability to sell,
transfer or otherwise dispose of the ATI Common
Stock, to the extent the undersigned has felt it
necessary, with the undersigned's counsel or counsel
for the Company.
(C) The undersigned has been advised that the issuance
of shares of ATI Common Stock to the undersigned in
the Merger 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 submission of the Agreement and the
Merger for a vote of the shareholders of the Company
the undersigned may be deemed an affiliate of the
Company and (ii) the distribution by the undersigned
of ATI Common Stock has not been registered under the
Act, the undersigned may not sell, transfer or
otherwise dispose of ATI Common Stock issued to the
undersigned in the Merger 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 limitations imposed by Rule 145 under the Act,
or (c) in the opinion of counsel reasonably
acceptable to ATI, such sale, transfer or other
disposition is otherwise exempt from registration
under the Act.
(D) The undersigned understands that ATI will be under no
obligation to register the sale, transfer or other
disposition of the ATI Common Stock by the
undersigned or on the undersigned's behalf under the
Act or to take any other action necessary in order to
make compliance with an exemption from such
registration available.
(E) The undersigned understands that stop transfer
instructions will be given to ATI's transfer agent
with respect to the ATI Common Stock owned by the
undersigned and that there may be placed on the
certificates for the ATI Common Stock issued to the
undersigned, or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate were
issued in a transaction to which Rule 145 under the
Securities Act of 1933 applies. The shares
represented by this may only be transferred in
accordance the terms of a letter agreement dated
___________, 199_, a copy of which agreement is on
file at the principal offices of Allegheny Teledyne
Incorporated."
(F) The undersigned also understands that unless the
transfer by the undersigned of the undersigned's ATI
Common Stock has been registered under the Act
or is a sale made in conformity with the provisions
of Rule 145 under the Act, the Company reserves the
right, in its sole discretion, to place the following
legend on the certificates issued to any transferee
of shares from the undersigned:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and
were acquired from a person who received such shares
in a transaction to which Rule 145 under the
Securities Act of 1933 applies. The shares have been
acquired by the holder not with a view to, or for
resale in connection with, any distribution thereof
within the meaning of the Securities Act of 1933 and
may not be offered, sold, pledged or otherwise
transferred except in accordance with an exemption
from the registration requirements of the Securities
Act of 1933."
It is understood and agreed that the legend set forth in
paragraph E or F above shall be removed by delivery of substitute certificates
without such legend if the undersigned shall have delivered to ATI (i) a copy of
a letter from the staff of the Commission, or an opinion of counsel, in form and
substance reasonably satisfactory to ATI to the effect that such legend is not
required for purposes of the Act or (ii) reasonably satisfactory evidence or
representations that the shares represented by such certificates are being or
have been transferred in a transaction made in conformity with the provisions of
Rule 145.
The undersigned further represents and warrants to, and
covenants with, ATI that the undersigned did not, within the 30 days prior to
the Effective Time (as defined in the Agreement), sell, transfer or otherwise
dispose of any shares of Company Common Stock or ATI Common Stock held by the
undersigned, and that the undersigned will not sell, transfer or otherwise
dispose
of the ATI Common Stock received by the undersigned in the Merger until after
such time as results covering at least 30 days of combined operations of ATI and
the Company have been published by ATI within the meaning of Section 201.01 of
the Commission's Codification of Financial Reporting Policies.
Very truly yours,
Acknowledged this ____ day of
_______________, 199_.
ALLEGHENY TELEDYNE INCORPORATED
By:___________________________
Name:
Title:
