Employee Benefits Agreement

EMPLOYEE BENEFITS AGREEMENT


BETWEEN


ALLEGHENY TELEDYNE INCORPORATED


AND


WATER PIK TECHNOLOGIES, INC.


DATED AS OF NOVEMBER 29, 1999


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INDEX
PAGE
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ARTICLE I DEFINITIONS ........................................................1


ARTICLE II GENERAL PRINCIPLES.................................................5


2.1 ASSUMPTION OF LIABILITIES........................................5
2.2 ESTABLISHMENT OF WATER PIK PLANS.................................6
2.3 TERMS OF PARTICIPATION BY WATER PIK INDIVIDUALS IN WATER PIK
PLANS.........................................................6


ARTICLE III DEFINED BENEFIT PLANS.............................................7


3.1 FREEZING OF PENSION PLAN BENEFITS................................7
3.2 CREDITING SERVICE UNDER ATI'S PENSION PLAN.......................7


ARTICLE IV DEFINED CONTRIBUTION PLANS.........................................8


4.1 401(k) PLAN......................................................8
4.2 ASSUMPTION OF JANDY INDUSTRIES, INC. EMPLOYEE SAVINGS PLAN.......9


ARTICLE V HEALTH AND WELFARE PLANS............................................9


5.1 ASSUMPTION OF HEALTH AND WELFARE PLAN LIABILITIES................9
5.2 VENDOR CONTRACTS................................................10
5.3 PROCEDURES FOR AMENDMENTS TO PLANS, PLAN DESIGNS,
ADMINISTRATIVE PRACTICES, AND VENDOR CONTRACTS...............12
5.4 ATI SICKNESS AND ACCIDENT, LONG TERM DISABILITY AND PENSION
DISABILITY BENEFITS..........................................13
5.5 POST-RETIREMENT HEALTH AND LIFE INSURANCE BENEFITS..............13
5.6 COBRA AND DIRECT PAY............................................13
5.7 POST-DISTRIBUTION TRANSITIONAL ARRANGEMENTS.....................13
5.8 APPLICATION OF ARTICLE V TO WATER PIK ENTITIES..................15


ARTICLE VI EXECUTIVE BENEFITS AND NON-EMPLOYEE DIRECTOR BENEFITS.............15


6.1 ASSUMPTION OF OBLIGATIONS.......................................15
6.2 CONSENTS AND NOTIFICATIONS......................................15
6.3 ATI 1999 BONUS PLAN.............................................16
6.4 ATI INCENTIVE PLANS.............................................16
6.5 ATI NONQUALIFIED DEFERRED COMPENSATION PROGRAMS.................18
6.6 NON-EMPLOYEE DIRECTOR BENEFITS..................................19
6.7 CONFIDENTIALITY AND PROPRIETARY INFORMATION.....................19


ARTICLE VII GENERAL AND ADMINISTRATIVE.......................................19


7.1 INTERIM SERVICES AGREEMENT......................................19


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7.2 PAYMENT OF LIABILITIES, PLAN EXPENSES AND RELATED MATTERS........19
7.3 SHARING OF PARTICIPANT INFORMATION...............................20
7.4 REPORTING AND DISCLOSURE AND COMMUNICATIONS TO
PARTICIPANTS..................................................20
7.5 NON-TERMINATION OF EMPLOYMENT; NO THIRD-PARTY
BENEFICIARIES.................................................20
7.6 BENEFICIARY DESIGNATIONS.........................................21
7.7 REQUESTS FOR IRS RULINGS AND DOL OPINIONS........................21
7.8 FIDUCIARY MATTERS................................................21
7.9 COLLECTIVE BARGAINING............................................21
7.10 CONSENT OF THIRD PARTIES........................................21
7.11 INDEMNIFICATION OF ATI..........................................21


ARTICLE VIII MISCELLANEOUS....................................................22


8.1 FOREIGN PLANS....................................................22
8.2 EFFECT IF DISTRIBUTION DOES NOT OCCUR............................22
8.3 RELATIONSHIP OF PARTIES..........................................22
8.4 AFFILIATES.......................................................22
8.5 COUNTERPARTS; ENTIRE AGREEMENT; CORPORATE POWER..................22
8.6 GOVERNING LAW; CONSENT TO JURISDICTION...........................23
8.7 ASSIGNABILITY....................................................23
8.8 THIRD PARTY BENEFICIARIES........................................24
8.9 NOTICES..........................................................24
8.10 SEVERABILITY....................................................24
8.11 HEADINGS........................................................24
8.12 WAIVERS OF DEFAULT..............................................24
8.13 AMENDMENTS......................................................24
8.14 INTERPRETATION..................................................25
8.15 DISPUTES........................................................25


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EMPLOYEE BENEFITS AGREEMENT


November 29 , 1999


The parties to this Employee Benefits Agreement, dated as of the date written above, are Allegheny Teledyne Incorporated, a Delaware corporation ("ATI"), and Water Pik Technologies, Inc., a Delaware corporation ("Water Pik"). Capitalized terms used herein (other than the formal names of ATI Plans (as defined below) and related trusts of ATI) and not otherwise defined shall have the respective meanings assigned to them in Article I hereof or as assigned to them in the Separation and Distribution Agreement (as defined below).


WHEREAS, the Board of Directors of ATI has determined that it is in the best interests of ATI and its stockholders to separate ATI's consumer products businesses into an independent business entity;


WHEREAS, in furtherance of the foregoing, ATI and Water Pik have entered into a Separation and Distribution Agreement, dated as of the date hereof (the "Separation and Distribution Agreement"), and certain other agreements that will govern certain matters relating to the Separation, the Distribution and the relationship of ATI and Water Pik, and their respective Subsidiaries following the Distribution; and


WHEREAS, pursuant to the Separation and Distribution Agreement, ATI and Water Pik have agreed to enter into this agreement allocating assets, liabilities and responsibilities with respect to certain employee compensation and benefit plans and programs between them.


NOW, THEREFORE, the parties, intending to be legally bound, agree as follows:


ARTICLE I
DEFINITIONS


For purposes of this Agreement the following terms shall have the following meanings:


1.1 Agreement means this Employee Benefits Agreement, including all the Schedules and Exhibits hereto.


1.2 ASO Contract is defined in Section 5.2(a)(i).


1.3 ATI Entity means any entity that is, at the relevant time, an Affiliate of ATI, except that, for periods beginning Immediately After the Distribution Date, the term "ATI Entity" shall not include Water Pik or a Water Pik Entity.


1.4 ATI Executive means an employee or former employee of ATI, an ATI Entity, Water Pik or a Water Pik Entity, who immediately before the Close of the Distribution Date is eligible to participate in or receive a benefit under any ATI Executive Benefit Plan.


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1.5 ATI Master Pension Trust means the master trust under which the assets of the ATI Pension Plan are held.


1.6 ATI Pension Plan means the Allegheny Teledyne Incorporated Pension Plan.


1.7 ATI Stock Value means the closing price per share of ATI Common Stock (regular way) on the NYSE on November 22, 1999.


1.8 Award means an award under the Incentive Plan, including Performance Awards and SARP Awards. When immediately preceded by "ATI," the term Award (including the term Performance Award or SARP Award) means an award under the ATI Incentive Plan. When immediately preceded by "Water Pik," the term Award (including the term Performance Award or SARP Award) means an award under the Water Pik Incentive Plan.


1.9 Benefit Liabilities means any Liabilities (as defined in the Separation and Distribution Agreement) relating to any contributions, compensation or other benefits accrued or payable under any profit sharing, pension, savings, deferred compensation, fringe benefit, insurance, medical, medical reimbursement, life, disability, accident, post-retirement health or welfare benefit, stock option, stock purchase, sick pay, vacation, employment, severance, termination or other compensation or benefit plan, agreement, contract, policy, trust fund or arrangement.


1.10 Change is defined in Section 5.3(b)(i).


1.11 Close of the Distribution Date means 5:00 P.M., Eastern Standard Time or Eastern Daylight Time (whichever shall then be in effect), on the Distribution Date.


1.12 COBRA means the continuation coverage requirements for "group health plans" under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and as codified in Code Section 4980B and ERISA Sections 601 through 608.


1.13 Code means the Internal Revenue Code of 1986, as amended. Reference to a specific Code provision also includes any proposed, temporary, or final regulation in force under that provision.


1.14 Corporate-Owned Life Insurance Policies means the life insurance policies owned by ATI insuring the lives of certain ATI Executives and certain other highly compensated employees of ATI or an ATI Entity.


1.15 DOL means the United States Department of Labor.


1.16 ERISA means the Employee Retirement Income Security Act of 1974, as amended. Reference to a specific provision of ERISA also includes any proposed, temporary, or final regulation in force under that provision.


1.17 Executive Benefit Plans, when immediately preceded by "ATI," means the executive benefit plans, programs, and arrangements established, maintained, agreed upon, or


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assumed by ATI or an ATI Entity for the benefit of employees and former employees of ATI or an ATI Entity before the Close of the Distribution Date as listed in Schedule 1.17. When immediately preceded by "Water Pik," Executive Benefit Plans means the executive benefit plans and programs to be established by Water Pik pursuant to Section 2.2 that correspond to the respective ATI Executive Benefit Plans.


1.18 Foreign Plan means a Plan maintained by ATI, an ATI Entity, Water Pik, or a Water Pik Entity for the benefit of employees outside the U.S.


1.19 Group Insurance Policies is defined in Section 5.2(b)(i).


1.20 HCRA Plan, when immediately preceded by "ATI," means the ATI Health Care Reimbursement Account Plan. When immediately preceded by "Water Pik," HCRA Plan means the Health Care Reimbursement Account Plan to be established by Water Pik pursuant to Section 2.2.


1.21 Health and Welfare Plans, when immediately preceded by "ATI," means the health and welfare plans listed on Schedule 1.21 established and maintained by ATI for the benefit of employees and retirees of ATI and certain ATI Entities, and such other welfare plans or programs as may apply to such employees and retirees of ATI or an ATI Entity before the Close of the Distribution Date. When immediately preceded by "Water Pik," Health and Welfare Plans means the health and welfare plans to be established by Water Pik pursuant to Section 2.2 that correspond to the respective ATI Health and Welfare Plans.


1.22 HMO means a health maintenance organization that provides benefits under one or more of the ATI Health and Welfare Plans or the Water Pik Health and Welfare Plans.


1.23 HMO Agreements is defined in Section 5.2(c)(i).


1.24 Immediately After the Distribution Date means 5:01 P.M., Eastern Standard Time or Eastern Daylight Time (whichever shall then be in effect), on the Distribution Date.


1.25 Incentive Plan, when immediately preceded by "ATI," means any of the Allegheny Teledyne Incorporated 1996 Incentive Plan, any predecessor Incentive Plan thereto and any other stock-based incentive plans assumed by ATI by reason of merger, combination, acquisition or otherwise. When immediately preceded by "Water Pik," Incentive Plan means the Incentive Plan to be established by Water Pik pursuant to Section 2.2.


1.26 IRS means the Internal Revenue Service.


1.27 Material Feature means any feature of a Plan that could reasonably be expected to be of material importance to the sponsoring employer or the participants and beneficiaries of the Plan, which could include, depending on the type and purpose of the particular Plan, the class or classes of employees eligible to participate in such Plan, the nature, type, form, source, and level of benefits provided by the employer under such Plan and the amount or level of contributions, if any, required to be made by participants (or their dependents or beneficiaries) to or under such Plan.


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1.28 Non-Employee Director, when immediately preceded by "ATI," means a member of ATI's Board of Directors who is not an employee of ATI or an ATI Entity. When immediately preceded by "Water Pik," Non-Employee Director means a member of Water Pik's Board of Directors who is not an employee of ATI, an ATI Entity, Water Pik or a Water Pik Entity.


1.29 Non-Employee Director Plans, when immediately preceded by "ATI," means the Allegheny Teledyne Incorporated 1996 Non-Employee Director Stock Compensation Plan and the Allegheny Teledyne Incorporated Fee Continuation Plan for Non-Employee Directors. When immediately preceded by "Water Pik," Non-Employee Director Plans means the plans and programs to be established by Water Pik pursuant to Section 2.2 that correspond to the ATI Non-Employee Director Plans.


1.30 Nonqualified Deferred Compensation Programs, when immediately preceded by "ATI," means the Allegheny Teledyne Incorporated Executive Deferred Compensation Plan, the Allegheny Teledyne Incorporated Supplemental Pension Plan and the Teledyne, Inc. Pension Equalization Plan. When immediately preceded by "Water Pik," Deferral Plan means the Executive Deferred Compensation Plan to be established by Water Pik pursuant to Section 2.2.


1.31 Option, when immediately preceded by "ATI," means an option to purchase ATI Common Stock and, when immediately preceded by "Water Pik," Option means an option to purchase Water Pik Common Stock, in each case pursuant to an Incentive Plan.


1.32 PBGC means the Pension Benefit Guaranty Corporation.


1.33 Performance Award means any Award granted pursuant to the terms of the Performance Share Program.


1.34 Performance Share Program means the Allegheny Teledyne Incorporated Performance Share Program adopted pursuant to Administrative Rules under the ATI Incentive Plan.


1.35 Plan, when immediately preceded by "ATI" or "Water Pik," means any plan, policy, program, payroll practice, on-going arrangement, contract, trust, insurance policy or other agreement or funding vehicle providing benefits to employees, former employees or Non-Employee Directors of ATI or an ATI Entity, or Water Pik or a Water Pik Entity, as applicable.


1.36 Ratio means the amount obtained by dividing the ATI Stock Value by the Water Pik Stock Value.


1.37 Reasonable Efforts means such acts or actions that, in the reasonable good faith opinion of the party taking such acts or actions, are calculated to achieve, or otherwise further, the applicable provisions to which the term applies; provided, however, to the extent any costs, fees or other expenditures (the "Expenses") occur as a result of a party's use of Reasonable Efforts and such expenses are not expressly allocated under the terms of this Agreement or any Ancillary Agreement, such Expenses shall be borne by the party for whose benefit such Expenses are incurred and such party shall indemnify and hold harmless the other party with respect to such Expenses.


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1.38 SARP, when immediately preceded by "ATI," means the Allegheny Teledyne Incorporated Stock Acquisition and Retention Program.


1.39 SARP Award means any Award granted pursuant to the terms of the SARP.


1.40 Separation and Distribution Agreement is defined in the third paragraph of the preamble of this Agreement.


1.41 Stock Purchase Plan, when immediately preceded by "ATI," means the Allegheny Teledyne Incorporated Employee Stock Purchase Plan. When immediately preceded by "Water Pik," Stock Purchase Plan means the employee stock purchase plan to be established by Water Pik pursuant to Section 2.2.


1.42 Teledyne means Teledyne, Inc., a Delaware corporation, or its successors and assigns.


1.43 Teledyne 401(k) Plan means the Teledyne, Inc. 401(k) Plan.


1.44 Water Pik Entity means any Person that is, at the relevant time, a Subsidiary of Water Pik or is otherwise controlled, directly or indirectly, by Water Pik.


1.45 Water Pik 401(k) Plan means the 401(k) plan established by Water Pik effective no later than April 1, 2000 pursuant to Section 2.2.


1.46 Water Pik Individual means any individual who, Immediately After the Distribution Date is an active hourly or salaried employee of Water Pik or a Water Pik Entity.


1.47 Water Pik Stock Value means the opening price per share of Water Pik Common Stock on the day following the Distribution Date.


ARTICLE II
GENERAL PRINCIPLES


2.1 ASSUMPTION OF LIABILITIES. Except as otherwise expressly provided in Section 3.1 or Article VI, Water Pik hereby assumes and agrees to pay, perform, fulfill and discharge, in accordance with their respective terms, all of the following (regardless of when or where such Benefit Liabilities arose or arise or were or are incurred): (i) all Benefit Liabilities to or relating to Water Pik Individuals, and their respective dependents and beneficiaries, in each case relating to, arising out of or resulting from employment by ATI or an ATI Entity before the Distribution Date (including Benefit Liabilities under ATI Plans and Water Pik Plans); (ii) all other Benefit Liabilities to or relating to Water Pik Individuals and other employees of Water Pik or a Water Pik Entity, and their dependents and beneficiaries, to the extent relating to, arising out of or resulting from future, present or former employment with Water Pik or a Water Pik Entity (including Benefit Liabilities under ATI Plans and Water Pik Plans); (iii) all Benefit Liabilities relating to, arising out of or resulting from any other actual or alleged employment relationship with Water Pik or a Water Pik Entity; (iv) all Benefit Liabilities relating to, arising out of or


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resulting from the imposition of withdrawal liability under Subtitle E of Title IV of ERISA as a result of a complete or partial withdrawal of any ATI Entity from a "multiemployer plan" within the meaning of ERISA Section 4021 which occurs solely as a result of the Separation or the Distribution; and (v) all other Benefit Liabilities relating to, arising out of or resulting from obligations, liabilities and responsibilities expressly assumed or retained by Water Pik, a Water Pik Entity, or a Water Pik Plan pursuant to this Agreement. Notwithstanding the generality of the foregoing, Water Pik does not assume or agree to pay, perform, fulfill or discharge any Benefit Liabilities relating to, arising out of or resulting from the Teledyne Savings and Retirement Supplement Plan.


2.2 ESTABLISHMENT OF WATER PIK PLANS. Effective prior to or within a reasonable time after the Distribution Date, Water Pik shall adopt, or cause to be adopted, the amended Teledyne 401(k) Plan for the period between the Distribution Date and April 1, 2000, the Water Pik Stock Purchase Plan, the Water Pik Health and Welfare Plans, and the Water Pik Executive Benefit Plans for the benefit of the Water Pik Individuals and other current and future employees of Water Pik and the Water Pik Entities; provided, however, that Water Pik may, in its sole discretion, elect not to adopt or establish the Plan or Plans listed in Schedule 2.2(a). Subject to the provisions of Section 4.1 regarding the Water Pik 401(k) Plan, or as otherwise may be set forth in Schedule 2.2(b), the foregoing Water Pik Plans shall be substantially identical in all Material Features to the corresponding ATI Plans as in effect as of the Close of the Distribution Date. Effective prior to or within a reasonable time after the Distribution Date, Water Pik shall adopt, or cause to be adopted, the Water Pik Non-Employee Director Plans, for the benefit of Water Pik Non-Employee Directors. The Water Pik Non-Employee Director Plans shall be substantially similar in all Material Features to the corresponding ATI Non-Employee Director Plans as in effect on the Distribution Date. No later than April 1, 2000, Water Pik shall adopt the Water Pik 401(k) Plan and its related trust, which Water Pik 401(k) Plan shall provide for employer contributions, independent of employee contributions and expressed as a rate of participant compensation, determined appropriate by Water Pik in its sole discretion in light of Water Pik's choice not to sponsor a defined benefit plan.


2.3 TERMS OF PARTICIPATION BY WATER PIK INDIVIDUALS IN WATER PIK PLANS. The Water Pik Plans shall be, with respect to Water Pik Individuals, in all respects the successors in interest to, and shall not provide benefits that duplicate benefits provided by, the corresponding ATI Plans. ATI and Water Pik shall agree on methods and procedures, including amending the respective Plan documents and/or requesting approvals or consents of Water Pik Individuals where the parties deem appropriate, to prevent Water Pik Individuals from receiving duplicative benefits from the ATI Plans and the Water Pik Plans. With respect to Water Pik Individuals, each Water Pik Plan shall provide that all service, all compensation and all other benefit-affecting determinations that, as of the Close of the Distribution Date, were recognized under the corresponding ATI Plan shall, as of Immediately After the Distribution Date, receive full recognition, credit, and validity and be taken into account under such Water Pik Plan to the same extent as if such items occurred under such Water Pik Plan, except to the extent that duplication of benefits would result. The provisions of this Agreement for the transfer of assets from certain trusts relating to ATI Plans (including Foreign Plans) to the corresponding trusts relating to Water Pik Plans (including Foreign Plans) are based upon the understanding of the parties that each such Water Pik Plan will assume all Benefit Liabilities of the corresponding ATI


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Plan to or relating to Water Pik Individuals, as provided for herein. If any such Benefit Liabilities are not effectively assumed by the appropriate Water Pik Plan, then the amount of assets transferred to the trust relating to such Water Pik Plan from the trust relating to the corresponding ATI Plan shall be recomputed as set forth below, but taking into account the retention of such Benefit Liabilities by such ATI Plan, and assets shall be transferred by the trust relating to such Water Pik Plan to the trust relating to such ATI Plan so as to place each such trust in the position it would have been in, had the initial asset transfer been made in accordance with such recomputed amount of assets.


ARTICLE III
DEFINED BENEFIT PLANS


3.1 FREEZING OF PENSION PLAN BENEFITS. Effective upon the applicable of the dates under Section 3.2, the accrued benefits with respect to Water Pik Individuals who, as of the Distribution Date, were participants under the ATI Pension Plan shall be frozen and such Individuals shall not accrue any additional benefits from and after the Distribution Date under the ATI Pension Plan. The assets and Benefit Liabilities with respect to such Individuals, determined as of the Distribution Date, shall be retained by the ATI Pension Plan and its related trust and paid therefrom when due under the terms of the ATI Pension Plan.


3.2 CREDITING SERVICE UNDER ATI'S PENSION PLAN.


(a) VESTING. Water Pik Individuals who, as of the Distribution Date, were participants in the ATI Pension Plan will continue to receive service credit for vesting and retirement benefit eligibility purposes under the ATI Pension Plan for service actually rendered to Water Pik during the period commencing on the Distribution Date and ending April 1, 2000.


(b) BENEFIT ACCRUAL. Water Pik Individuals who, as of the Distribution Date, were participants in the ATI Pension Plan will continue to receive service credit for benefit accrual purposes under the ATI Pension Plan for service actually rendered to Water Pik during the period commencing on the Distribution Date and ending April 2, 2000. Benefits accrued with respect to service credited pursuant to this Section 3.2 shall be paid by the ATI Pension Plan at the same times and under the same terms and conditions as applicable to benefits accrued under the ATI Pension Plan.


(c) DISTRIBUTION OF BENEFITS FROM ATI PENSION PLAN TO WATER PIK INDIVIDUALS. For purposes of the ATI Pension Plan, the date which is the earlier of the applicable of (i) a Water Pik's Individual's actual separation from service with Water Pik or (ii) April 1, 2000 shall be for each Water Pik Individual a separation from service with the employer and Water Pik Individuals who are eligible to commence receipt of benefits under the ATI Pension Plan may, in their respective discretion, apply at any time after the applicable date described above to commence benefits to the extent then payable and subject to the terms and conditions of the ATI Pension Plan. The Distribution Date does not, however, constitute and shall not be treated under the ATI Pension Plan as a sale or otherwise as an event permitting Water Pik Individuals to elect to receive a lump sum form of distribution under the ATI Pension Plan.


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ARTICLE IV
DEFINED CONTRIBUTION PLANS


4.1 401(k) PLAN.


(a) ADOPTION BY WATER PIK OF TELEDYNE 401(k) PLAN AMENDED TO BE A MULTIPLE EMPLOYER PLAN. On or before the Distribution Date, the Teledyne 401(k) Plan will be amended by Teledyne to be and become a multiple employer plan under which Water Pik may elect to be a contributing sponsor and to provide participation to Water Pik Individuals under the terms and conditions set forth in the Teledyne 401(k) Plan for a period ending on the earlier of (i) adoption by Water Pik of the Water Pik 401(k) Plan or (ii) April 1, 2000. The right to amend the Teledyne 401(k) Plan in any respect shall be exclusively within the power of Teledyne at all relevant times. As amended, the Tel ...