UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
PURO WATER GROUP, INC.
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(Name of Issuer)
Common Stock, par value $.0063 per share
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(Title of Class of Securities)
746371 10 3
-------------
(CUSIP Number)
Damian C. Georgino, Senior Vice President, General Counsel and
Corporate Secretary
United States Filter Corporation
40-004 Cook Street, Palm Desert, CA 92211 (760) 340-0098
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 10, 1997
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act.
Page 1 of 12 Pages
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1. NAME OF REPORTING PERSON UNITED STATES FILTER CORPORATION
--------------------------------
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 33-0266015
----------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS OO (see Item 3)
---------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
[ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
--------
NUMBER OF 7. SOLE VOTING POWER 0
SHARES
BENEFICIALLY 8. SHARED VOTING POWER 2,139,256
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER 0
REPORTING
PERSON WITH 10. SHARED DISPOSITIVE POWER 2,139,256
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,139,256
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 61.5%
14. TYPE OF REPORTING PERSON CO
--
Page 2 of 12 Pages
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This Schedule 13D is being filed in connection with the Agreement and Plan of
Merger, dated as of October 8, 1997 (the "Merger Agreement"), by and among
United States Filter Corporation, a Delaware corporation ("USF"), USF/PW
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of
USF ("Sub"), and Puro Water Group, Inc., a Delaware corporation (the "Company"),
which provides, among other things, that upon the terms and subject to the
conditions thereof Sub will be merged with and into the Company and the Company
will become a wholly owned subsidiary of USF (the "Merger"). In connection with
the execution of the Merger Agreement, each of Peter T. Dixon, the Trusts Under
Article 16 of the Will of W. Palmer Dixon for the Benefit of Peter T. and Palmer
Dixon (the "Dixon Trusts"), Jack C. West, Scott Levy, Beth Levy and Edberg
Associates Limited Partnership (each, a "Stockholder"), who beneficially own in
the aggregate 2,139,256 shares of Common Stock of the Company, has entered into
a Stockholder Agreement dated as of October 8, 1997 with USF (together, the
"Stockholder Agreements"), pursuant to which each stockholder has individually
agreed to vote such stockholder's shares of Company Common Stock for the
approval and adoption of the Merger Agreement and in favor of the Merger and to
grant to USF, upon USF's request, such stockholder's irrevocable proxy to vote
such shares.
Copies of the Merger Agreement and of the form of Stockholder Agreement are
filed as Exhibits 1 and 2 hereto, respectively, and are incorporated herein by
reference. The descriptions of such agreements in this Schedule 13D are
qualified in their entirety by reference to the complete text of such exhibits.
ITEM 1. SECURITY AND ISSUER
The title of the class of equity security to which this Schedule 13D relates is
Common Stock, par value $.0063 per share ("Company Common Stock"), and the name
of the issuer of such securities is Puro Water Group, Inc. The principal
executive offices of the Company are located at 56-24 58th Street, Maspeth, New
York 11378.
ITEM 2. IDENTITY AND BACKGROUND
This Schedule 13D is being filed by United States Filter Corporation, a Delaware
corporation. The principal executive offices of USF are located at 40-004 Cook
Street, Palm Desert, California 92211. USF is a leading global provider of
industrial and municipal water and wastewater treatment systems, products and
services.
Annex I attached hereto and incorporated herein by reference sets forth the
following information with respect to each director and executive officer of
USF: (a) name; (b) residence or business address; and (c) present principal
occupation or employment and
Page 3 of 12 Pages
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the name, principal business and address of any corporation or other
organization in which such employment is conducted. All of the directors and
executive officers of USF are United States citizens.
During the last five years, neither USF nor, to the knowledge of USF, any of the
persons named in Annex I has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
During the last five years, neither USF nor, to the knowledge of USF, any of the
persons named in Annex I has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Pursuant to each Stockholder Agreement, the consideration given by USF in
connection with the execution and performance thereof was its agreement to enter
into the Merger Agreement and to incur the obligations set forth therein.
ITEM 4. PURPOSE OF TRANSACTION
Pursuant to the Merger Agreement, at the "Effective Time" (as defined in the
Merger Agreement), Sub will merge with and into the Company and the Company will
become a wholly owned subsidiary of USF. By virtue of the Merger, each issued
and outstanding share of Company Common Stock (other than shares issued and held
in the treasury of the Company or owned of record by USF or a subsidiary
thereof) will be converted into such fraction of a share of Common Stock, par
value $.01 per share, of USF ("USF Common Stock"), as shall be determined by
dividing $7.20 by the average market price of a share of USF Common Stock set
forth in Section 2.01(b) of the Merger Agreement. Any share of Company Common
Stock held in the treasury of the Company or owned of record by USF or any
subsidiary thereof will be canceled and retired.
Upon consummation of the Merger, the Company Common Stock will be removed from
listing on the American Stock Exchange and withdrawn from registration under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Among the
conditions to the obligation of each party to the Merger Agreement to effect the
Merger is the approval of the shares of USF Common Stock to be issued in the
Merger for listing on the New York Stock Exchange upon official notice of
issuance. Consummation of the Merger is
Page 4 of 12 Pages
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conditioned upon approval by the stockholders of the Company, as well as other
conditions set forth in the Merger Agreement.
In connection with the Merger Agreement, each of Peter T. Dixon, the Dixon
Trusts, Jack C. West, Scott Levy, Beth Levy and Edberg Associates Limited
Partnership has entered into a Stockholder Agreement with USF pursuant to which
such Stockholder has individually agreed that, until the earlier of the
Effective Time or the date on which the Merger Agreement is terminated in
accordance with its terms (the earlier of such dates being referred to therein
as the "Expiration Date"), such Stockholder will vote, or take action by written
consent with respect to, all of such Stockholder's shares of Company Common
Stock for the adoption and approval of the Merger Agreement and in favor of the
Merger and any other transaction contemplated by the Merger Agreement as the
Merger Agreement may be modified or amended from time to time, and against any
action, omission or agreement which would or could impede or interfere with, or
have the effect of discouraging, the Merger, including, without limitation, any
Acquisition Transaction (as defined in the Merger Agreement) other than the
Merger. At the request of USF, each Stockholder is also required to execute
promptly, in accordance with Section 212 of the Delaware General Corporate Law,
and deliver to USF an irrevocable proxy and irrevocably appoint USF or its
designees such Stockholder's attorney and proxy to vote or give consent with
respect to all of such stockholder's shares of Company Common Stock for the
purposes set forth above. Any such proxy will terminate on the Expiration Date.
Each Stockholder has also agreed, among other things, that such stockholder will
not sell or otherwise dispose of any of such shares until the Expiration Date.
Each Stockholder warrants, in such Stockholder's respective Stockholder
Agreement, that the Stockholder's execution of and performance under such
Stockholder's Agreement shall not conflict with any duty to which the
Stockholder is bound by either statute or contract.
Except as set forth above or as provided in the Merger Agreement or the
Stockholder Agreements, neither USF nor any of the persons listed in Item 2
hereof has any plans or proposals which relate to or would result in any of the
matters described in Paragraphs (a) through (j), inclusive, of Item 4 of
Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
By virtue of the Stockholder Agreements, pursuant to which the Stockholders have
agreed with USF that they will vote, or grant to USF, at USF's request, a proxy
with respect to, the 2,139,256 shares of Company Common Stock owned by them in
the aggregate, USF may be deemed to have shared power to vote such shares. By
virtue of the Stockholder Agreements, pursuant to which the Stockholders have
agreed with USF that they will not dispose of such shares, USF may be deemed to
have shared power to dispose of
Page 5 of 12 Pages
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such shares. Such shares represent approximately 61.5% of the shares of Company
Common Stock outstanding on October 10, 1997.
Neither USF nor any of the persons listed in Item 2 hereof has effected any
transactions relating to Company Common Stock within the past 60 days. The
Company has been advised that Jack C. West has pledged the shares of Company
Common Stock that he owns beneficially. Except as has been reported in this
Schedule 13D or in filings made by any of the Stockholders under Section 13(d)
or 13(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), no person other than the Stockholders is known to have the right to
receive or the power to direct the dividends from, or the proceeds from the sale
of, the shares described in the preceding paragraph.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Other than as set forth in the Merger Agreement and the Stockholder Agreements
with respect to the voting and disposition of shares of Company Common Stock,
neither USF nor any of the persons named in Item 2 hereof has any contracts,
arrangements, understandings or relationships (legal or otherwise) with respect
to any securities of the Company, including but not limited to transfer or
voting of any of the securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or loss,
or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
EXHIBIT NO. DESCRIPTION AND METHOD OF FILING
1. Agreement and Plan of Merger, dated as of October 8, 1997, by and among
United States Filter Corporation, USF/PW Acquisition Corporation and
Puro Water Group, Inc. (filed herewith)
2. Form of Stockholder Agreement, dated as of October 8, 1997, by and between
United States Filter Corporation and each of the Stockholders (filed
herewith)
NOTE: In accordance with Rule 12b-31 under the Exchange Act, copies of the
individual Stockholder Agreements dated as of October 8, 1997 between United
States Filter Corporation and each of Peter T. Dixon, the Dixon Trusts, Jack C.
West, Scott Levy, Beth Levy and Edberg Associates Limited Partnership are not
filed herewith. The following schedule sets forth the material details
(consisting only of the name of the Stockholder and the number of shares of
Company Common Stock listed on the signature page
Page 6 of 12 Pages
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thereof) in which such documents differ from Exhibit 2 filed herewith:
NUMBER OF SHARES OF
NAME OF STOCKHOLDER COMPANY COMMON STOCK
------------------- --------------------
Peter T. Dixon 357,991
Dixon Trusts 932,145
Jack C. West 359,505
Scott Levy & Beth Levy 391,047
Edberg Associates 98,568
Limited Partnership
Page 7 of 12 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
UNITED STATES FILTER CORPORATION
By: /s/ Damian C. Georgino
--------------------------------
Damian C. Georgino
Senior Vice President, General
Counsel and Corporate Secretary
Date: October 20, 1997
Page 8 of 12 Pages
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ANNEX I
DIRECTORS AND EXECUTIVE OFFICERS OF
UNITED STATES FILTER CORPORATION
NAME; PRESENT PRINCIPAL ADDRESS AND PRINCIPAL BUSINESS OF
OCCUPATION ORGANIZATION IN WHICH EMPLOYED
Richard J. Heckmann United States Filter Corporation
Chairman of the Board of 40-004 Cook Street
Directors, Chief Executive Palm Desert, CA 92211
Officer and President Provider of water and wastewater
treatment systems and services
Michael J. Reardon United States Filter Corporation
Executive Vice President 40-004 Cook Street
Palm Desert, CA 92211
Provider of water and wastewater
treatment systems and services
Nicholas C. Memmo United States Filter Corporation
Executive Vice President - 40-004 Cook Street
Process Water Group Palm Desert, CA 92211
Provider of water and wastewater
treatment systems and services
Thierry Reyners United States Filter Corporation
Executive Vice President - 40-004 Cook Street
European Group Palm Desert, CA 92211
Provider of water and wastewater
treatment systems and services
Andrew D. Seidel United States Filter Corporation
Executive Vice President - 40-004 Cook Street
Wastewater Group Palm Desert, CA 92211
Provider of water and wastewater
treatment systems and services
Harry K. Hornish, Jr. United States Filter Corporation
Executive Vice President - 40-004 Cook Street
Distribution Group Palm Desert, CA 92211
Provider of water and wastewater
treatment systems and services
Kevin L. Spence United States Filter Corporation
Senior Vice President and Chief 40-004 Cook Street
Financial Officer Palm Desert, CA 92211
Provider of water and wastewater
treatment systems and services
Page 9 of 12 Pages
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Tim L. Traff United States Filter Corporation
Senior Vice President 40-004 Cook Street
Palm Desert, CA 92211
Provider of water and wastewater
treatment systems and services
Damian C. Georgino United States Filter Corporation
Senior Vice President, 40-004 Cook Street
General Counsel and Palm Desert, CA 92211
Corporate Secretary Provider of water and wastewater
treatment systems and services
John S. Swartley United States Filter Corporation
Senior Vice President - 40-004 Cook Street
Corporate Development Palm Desert, CA 92211
Provider of water and wastewater
treatment systems and services
James W. Dierker United States Filter Corporation
Vice President, Controller 40-004 Cook Street
and Treasurer Palm Desert, CA 92211
Provider of water and wastewater
treatment systems and services
Michael E. Hulme, Jr. United States Filter Corporation
Assistant General Counsel 40-004 Cook Street
and Assistant Secretary Palm Desert, CA 92211
Provider of water and wastewater
treatment systems and services
Robert S. Hillas E. M. Warburg, Pincus & Co., Inc.
Managing Director 466 Lexington Avenue
New York, NY 10017-3147
Private investment firm
John L. Diederich Aluminum Company of America
Executive Vice President- 1501 Alcoa Building
Chairman's Counsel Pittsburgh, PA 15219
Producer of aluminum and alumina
C. Howard Wilkins, Jr. Maverick Restaurant Corp.
Chairman of the Board 302 N. Rock Road
Suite 200
Wichita, KS 67206
Owns and operates restaurants
under franchise agreements
J. Danforth Quayle 10550 Hussey Lane
Author and Chairman Carmel, IN 46032
of Campaign America
Page 10 of 12 Pages
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Arthur B. Laffer A.B. Laffer, V.A. Canto
Chairman and Chief Executive & Associates
Officer 5405 Morehouse Drive
Suite 340
San Diego, CA 92121
Economic research and financial
firm
Alfred E. Osborne, Jr. John E. Anderson Graduate School of
Director of the Harold Management at UCLA
Price Center for 110 Westwood Plaza
Entrepreneurial Studies Box 951481
and Associate Professor Los Angeles, CA 90095-1481
Graduate School
James E. Clark 24-412 Park Grenada
Consultant and Private Calabasas, CA 91302
Investor
Ardon Moore Lee M. Bass, Inc.
Vice President 201 Main Street
Suite 3200
Fort Worth, TX 76102
Owner and operator of
oil and gas properties
Page 11 of 12 Pages
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EXHIBIT INDEX
Exhibit
No. Description
1. Agreement and Plan of Merger, dated as of
October 8, 1997, by and among United States Filter
Corporation, USF/PW Acquisition Corporation
and Puro Water Group, Inc.
2. Form of Stockholder Agreement, dated as of October 8, 1997, by and
between United States Filter Corporation and the Stockholders
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
dated as of October 8, 1997
among
UNITED STATES FILTER CORPORATION,
USF/PW ACQUISITION CORPORATION
and
PURO WATER GROUP, INC.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER 2
Section 1.01 Effective Time of the Merger 2
Section 1.02 Closing 2
Section 1.03 Effects of the Merger 2
ARTICLE II CONVERSION OF SECURITIES 3
Section 2.01 Conversion of Capital Stock 3
Section 2.02 Exchange of Certificates 3
Section 2.03 No Further Transfers 5
Section 2.04 No Fractional Shares 6
Section 2.05 Anti-Dilution Provisions 6
Section 2.06 Stock Legends; Agreements by
Certain Stockholders 6
Section 2.07 Company Stock Option Plans 6
Section 2.08 Options 7
Section 2.09 Underwriter's Warrant 7
Section 2.10 Convertible Notes 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
THE COMPANY 8
Section 3.01 Organization 8
Section 3.02 Capitalization 8
Section 3.03 Charter Documents 9
Section 3.04 Subsidiaries 9
Section 3.05 Authority; No Conflict; Required
Filings and Consents 10
Section 3.06 SEC Filings; Financial Statements 11
Section 3.07 Indebtedness; Absence of 12
Undisclosed Liabilities
Section 3.08 Absence of Certain Changes or Events 13
Section 3.09 Tax Matters 13
Section 3.10 Certain Transactions 14
Section 3.11 Required Authorizations 14
Section 3.12 Litigation 14
Section 3.13 Compliance with Law; Regulatory
Compliance 15
Section 3.14 Contracts 15
Section 3.15 Real Property 16
Section 3.16 Personal Property 17
Section 3.17 Intellectual Property Rights 17
Section 3.18 Environmental Matters 18
Section 3.19 Products Liability 19
Section 3.20 Insurance 19
Section 3.21 Employment and Change in Control
i
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Agreements 19
Section 3.22 Labor Relations 20
Section 3.23 Employee Benefit Plans 20
Section 3.24 Pooling of Interests 22
Section 3.25 Registration Statement; Proxy
Statement/Prospectus 22
Section 3.26 Certain Fees 23
Section 3.27 Section 203 of the DGCL Not
Applicable 23
Section 3.28 Disclosure 23
ARTICLE IV REPRESENTATIONS AND WARRANTIES 23
OF USE AND SUB
Section 4.01 Organization of USF and Sub 23
Section 4.02 Capitalization of USF and Sub 24
Section 4.03 Authority; No Conflict; Required
Filings and Consents 24
Section 4.04 SEC Filings; Financial Statements 25
Section 4.05 Absence of Certain Changes or Events 26
Section 4.06 Litigation 26
Section 4.07 Registration Statement; Proxy
Statement/Prospectus 26
Section 4.08 Interim Operations of Sub 27
ARTICLE V COVENANTS 27
Section 5.01 No Solicitation 27
Section 5.02 Stockholder Approval 28
Section 5.03 Conduct of the Business of the
Company 29
Section 5.04 Access to Information 32
Section 5.05 Required Authorizations 32
Section 5.06 Financial Statements of The Company 33
Section 5.07 Public Announcements 34
Section 5.08 Benefit Plans 34
Section 5.09 Tax-Free Reorganization 34
Section 5.10 Pooling Accounting 35
Section 5.11 Affiliate Agreements 35
Section 5.12 Representations, Covenants and
Conditions; Further Assurances 35
ARTICLE VI CONDITIONS TO MERGER 36
Section 6.01 Conditions to Each Party's
Obligation To Effect the Merger 36
Section 6.02 Additional Conditions to Obligations
of USF and Sub 36
Section 6.03 Additional Conditions to Obligations
of The Company 38
ii
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ARTICLE VII TERMINATION AND AMENDMENT 39
Section 7.01 Termination 39
Section 7.02 Effect of Termination 40
Section 7.03 Fees and Expenses 40
Section 7.04 Amendment 41
Section 7.05 Extension; Waiver 41
ARTICLE VIII MISCELLANEOUS 41
Section 8.01 Nonsurvival of Representations,
Warranties and Agreements 41
Section 8.02 Notices 42
Section 8.03 Interpretation 43
Section 8.04 Knowledge 43
Section 8.05 Counterparts 43
Section 8.06 Entire Agreement; No Third Party
Beneficiaries 43
Section 8.07 Governing Law 43
Section 8.08 Assignment 44
iii
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of October 8, 1997,
by and among United States Filter Corporation, a Delaware corporation ("USF"),
USF/PW Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of USF ("Sub"), and Puro Water Group, Inc., a Delaware corporation
(the "Company"). The Company and Sub are the only parties to the merger hereby
contemplated and are sometimes referred to herein as the "Constituent
Corporations", and the Company is sometimes referred to herein as the
"Continuing Corporation".
WHEREAS, the respective Boards of Directors of the Constituent
Corporations have approved this Agreement and deem it advisable and in the best
interests of their respective corporations and stockholders that Sub merge with
and into the Company on the terms and conditions herein set forth, whereby the
Company will become a wholly owned subsidiary of USF and the stockholders of the
Company will become stockholders of USF (the "Merger");
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to USF's willingness to enter into this
Agreement, Peter T. Dixon, The Trusts Under Article 16 of the Will of W. Palmer
Dixon for the Benefit of Peter T. and Palmer Dixon (the "Dixon Trusts"), Beth
Levy, Scott Levy, Jack C. West and Edberg Associates Limited Partnership, each
of whom is a stockholder of the Company ("Stockholders"), have entered into
Stockholder Agreements (the "Stockholder Agreements") with USF pursuant to which
the Stockholders have agreed to vote their shares of Common Stock, $.0063 par
value, of the Company ("Company Common Stock") in favor of the Merger;
WHEREAS, for United States federal income tax purposes, it is intended
that the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for financial accounting purposes, it is intended that the Merger
shall be accounted for as a pooling of interests.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
1
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ARTICLE I
THE MERGER
Section 1.01 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement, a certificate of merger (the "Certificate of Merger") in such
form as is required by the relevant provisions of the Delaware General
Corporation Law ("DGCL") shall be duly prepared, executed and acknowledged by
the Continuing Corporation and thereafter delivered to the Secretary of State of
the State of Delaware, for filing, as provided in the DGCL, as soon as
practicable on or after the Closing Date. The Merger shall become effective upon
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware or at such time thereafter as is provided in the Certificate of
Merger (the "Effective Time").
Section 1.02 CLOSING The closing of the Merger (the "Closing") will take
place at 10:00 a.m., prevailing time, on a date to be specified by USF and the
Company, which shall be as soon as practicable after all of the conditions to
the Merger set forth in Article VI have been satisfied or waived, subject to the
rights of termination and abandonment hereinafter set forth (the "Closing
Date"), at a place mutually agreed to in writing by USF and the Company.
Section 1.03 EFFECTS OF THE MERGER.
(a) At the Effective Time (i) the separate existence of Sub shall cease
and Sub shall be merged with and into the Company, (ii) the Certificate of
Incorporation of the Continuing Corporation shall be amended to read in its
entirety as set forth in Exhibit A, (iii) the Bylaws of the Company as in effect
immediately prior to the Effective Time shall be the Bylaws of the Continuing
Corporation, and (iv) the directors of Sub at the Effective Time shall be the
directors of the Continuing Corporation and hold office as provided in the
Bylaws of the Continuing Corporation.
(b) The Merger will have the effects specified in the DGCL. 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 Constituent Corporations will
continue in the Surviving Corporation unaffected by the Merger.
2
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ARTICLE II
CONVERSION OF SECURITIES
Section 2.01 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 Company Common Stock or capital stock of Sub:
(a) Each issued and outstanding share of the capital stock of Sub shall be
converted into and become one fully paid and nonassessable share of Common
Stock, par value $.01 per share, of the Continuing Corporation.
(b) Subject to Section 2.01(c) hereof, each issued and outstanding share
of Company Common Stock, but other than shares of Company Common Stock issued
and held in the treasury of the Company or owned of record by USF, Sub or any
direct or indirect subsidiary thereof, shall be converted into and shall become,
by virtue of the Merger and without any further action by the holder thereof
that certain fraction of a share of Common Stock of USF, par value $.01 per
share ("USF Common Stock") (subject to adjustment as provided in Section
2.01(c)) as shall be determined by dividing $7.20 (the "Per Share Purchase
Price") by the "average market price" of the USF Common Stock during the 10
consecutive trading day period beginning on the 16th trading day prior to the
Stockholders' Meeting (rounding the result to two decimal places). The "average
market price" of a share of USF Common Stock shall be calculated by (x)
averaging the high and low per share sale prices for each trading day during
such period on which there were any trades in USF Common Stock, (y) adding such
daily averages together, and (z) dividing the sum by 10 (reduced by the number
of such trading days during which there were no trades). In such "average market
price" calculations, numbers shall be carried to four decimal places. The daily
high and low per share sale prices shall be those on the New York Stock Exchange
Composite Tape.
(c) Each share of Company Common Stock issued and held in the treasury of
the Company or owned of record by USF, Sub or any direct or indirect subsidiary
thereof immediately prior to the Effective Time shall automatically be canceled
and retired without any conversion thereof, and no cash shall be exchangeable
therefor.
Section 2.02 EXCHANGE OF CERTIFICATES.
(a) After the Effective Time, each holder of a certificate formerly
evidencing shares of Company Common Stock which have been converted pursuant to
Section 2.01(b), upon surrender of the same to American Stock Transfer & Trust
Company or another exchange
3
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agent selected by USF and reasonably satisfactory to the Company (the "Exchange
Agent") as provided in Section 2.02(b) hereof, shall be entitled to receive in
exchange therefor (i) a certificate or certificates representing the number of
whole shares of USF Common Stock into which such shares of Company Common Stock
shall have been converted as provided in this Article II and (ii) as provided in
Section 2.04, cash in lieu of any fractional share of USF Common Stock into
which such shares of Company Common Stock would have otherwise been converted,
without any interest thereon. Until so surrendered, each certificate formerly
evidencing shares of Company Common Stock which have been so converted will be
deemed for all corporate purposes of USF to evidence ownership of the number of
whole shares of USF Common Stock for which the shares of Company Common Stock
formerly represented thereby were exchanged and the right to receive cash as
herein provided, without any interest thereon; PROVIDED, HOWEVER, that until
such certificate is so surrendered, no dividend payable to holders of record of
USF Common Stock as of any date subsequent to the Effective Time shall be paid
to the holder of such certificate in respect of the shares of USF Common Stock
evidenced thereby and such holder shall not be entitled to vote such shares of
USF Common Stock. Upon surrender of a certificate formerly evidencing shares of
Company Common Stock which have been so converted, there shall be paid to the
record holder of the certificates of USF Common Stock issued in exchange
therefor (i) at the time of such surrender, the amount of dividends and any
other distributions with a record date after the Effective Time and theretofore
paid with respect to such shares of USF Common Stock to the extent the same has
not yet been paid to a public official pursuant to abandoned property, escheat
or similar laws and (ii) at the appropriate payment date, the amount of
dividends and any other distributions with a record date after the Effective
Time but prior to surrender and a payment date subsequent to surrender payable
with respect to such shares of USF Common Stock. No interest shall be payable
with respect to the payment of such dividends or distributions.
(b) As soon as practicable after the Effective Time, the Exchange Agent
shall send a notice and a transmittal form to each holder of certificates
formerly evidencing shares of Company Common Stock (other than certificates
formerly representing shares of Company Common Stock to be canceled pursuant to
Section 2.01(c)) advising such holder of the effectiveness of the Merger and the
procedure for surrendering to the Exchange Agent (who may appoint forwarding
agents with the approval of USF) such certificates for exchange into
certificates evidencing
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USF Common Stock (including cash in lieu of any fractional share). Each holder
of certificates theretofore evidencing shares of Company Common Stock, upon
proper surrender thereof to the Exchange Agent together and in accordance with
such transmittal form, shall be entitled to receive in exchange therefor
certificates evidencing USF Common Stock (including cash in lieu of any
fractional share) deliverable in respect of the shares of Company Common Stock
theretofore evidenced by the certificates so surrendered. Notwithstanding the
foregoing, neither the Exchange Agent nor any party hereto shall be liable to a
holder of certificates theretofore representing shares of Company Common Stock
for any amount which may be required to be paid to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(c) If any certificate evidencing shares of USF Common Stock is to be
delivered to a person other than the person in whose name the certificates
surrendered in exchange therefor are registered, it shall be a condition to the
issuance of such certificate evidencing shares of USF Common Stock that the
certificates so surrendered shall be properly endorsed or accompanied by
appropriate stock powers and otherwise in proper form for transfer, that such
transfer otherwise be proper and that the person requesting such transfer pay to
the Exchange Agent any transfer or other taxes payable by reason of the
foregoing or establish to the satisfaction of the Exchange Agent that such taxes
have been paid or are not required to be paid.
(d) In the event any certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such certificate to be lost, stolen or destroyed, the Continuing Corporation
will issue in exchange for such lost, stolen or destroyed certificate the
certificate evidencing shares of USF Common Stock deliverable in respect
thereof, as determined in accordance with this Article II. When authorizing such
issue of the certificate of shares of USF Common Stock in exchange therefor, the
Board of Directors of the Continuing Corporation may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate to give the Continuing Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Continuing Corporation with respect to the certificate alleged to
have been lost, stolen or destroyed.
(e) Adoption of this Agreement by the stockholders of the Company shall
constitute, as an integral part of the Merger, ratification of the appointment
of, and the reappointment of, said Exchange Agent.
Section 2.03 NO FURTHER TRANSFERS. After the Effective Time, there shall
be no registration of transfers of shares on the stock transfer books of the
Company of the shares of Company Common Stock that were outstanding immediately
prior to the Effective Time.
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Section 2.04 NO FRACTIONAL SHARES. Neither certificates nor scrip for
fractional shares of USF Common Stock will be issued, but in lieu thereof each
holder of Company Common Stock otherwise entitled to a fraction of a share of
USF Common Stock shall receive from USF an amount in cash equal to the average
of the high and low per share sale prices of a share of USF Common Stock on the
New York Stock Exchange Composite Tape for the day of the Effective Time,
multiplied by the fraction of a share of USF Common Stock to which such
stockholder would be otherwise entitled. No USF stock split or dividend shall
relate to any fractional share interest, and no such fractional share interest
shall entitle the owner thereof to vote or to any rights of a stockholder of
USF.
Section 2.05 ANTI-DILUTION PROVISIONS. In the event USF changes the number
of shares of USF Common Stock issued and outstanding prior to the Effective Time
as a result of a stock split, stock dividend or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
capitalization for which a record date is not established) shall be prior to the
Effective Time, the Per Share Purchase Price shall be proportionately adjusted
to reflect such stock split, stock dividend or other recapitalization.
Section 2.06 STOCK LEGENDS; AGREEMENTS BY CERTAIN STOCKHOLDERS.
Certificates representing shares of USF Common Stock issued to persons deemed to
be affiliates of the Company (as that term is used for purposes of Rule 145
under the United States Securities Act of 1933, as amended (the "Securities
Act")) on the date of the Stockholders' Meeting shall bear the legend set forth
in paragraph E of Exhibit B hereto.
Section 2.07 COMPANY STOCK OPTION PLANS.
(a) At the Effective Time, each outstanding option to purchase shares of
Company Common Stock (an "Employee Stock Option") under the Company 1996 Stock
Option Plan (the "Employee Stock Option Plan"), whether or not exercisable,
shall be deemed to constitute an option to acquire, on the same terms and
conditions as were applicable under such Employee Stock Option, the same number
of shares of USF Common Stock as the holder of such Employee Stock Option would
have been entitled to receive pursuant to the Merger had such holder exercised
such option in full immediately prior to the Effective Time, at a price per
share equal to (y) the aggregate exercise price for the shares of Company Common
Stock deemed otherwise purchasable pursuant to such Employee Stock Option
divided by (z) the number of full shares of USF Common Stock deemed purchasable
pursuant to such Employee Stock Option; PROVIDED, HOWEVER, that, in the case of
any Employee Stock Option to which Section 421 of the Code applies by reason of
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its qualification under any of Sections 422-424 of the Code ("qualified stock
options"), the option price, the number of shares purchasable pursuant to such
option and the terms and conditions of exercise of such option shall be
determined in order to comply with Section 425(a) of the Code.
(b) At the Effective Time, each outstanding option to purchase shares of
Company Common Stock (a "Director Stock Option") under the Director Stock Option
Plan (the "Director Stock Option Plan"), whether or not exercisable, shall be
deemed to constitute an option to acquire, on the same terms and conditions as
were applicable under such Director Stock Option, the same number of shares of
USF Common Stock as the holder of such Director Stock Option would have been
entitled to receive pursuant to the Merger had such holder exercised such option
in full immediately prior to the Effective Time, at a price per share equal to
(y) the aggregate exercise price for the shares of Company Common Stock deemed
otherwise purchasable pursuant to such Director Stock Option divided by (z) the
number of full shares of USF Common Stock deemed purchasable pursuant to such
Director Stock Option.
Section 2.08 OPTIONS. At the Effective Time, each outstanding option to
purchase Company Common Stock listed on Schedule 2.08 ("Non-Employee Options"),
whether or not exercisable, shall be deemed to constitute an option to acquire,
on the same terms and conditions as were applicable under each respective
Non-Employee Option, the same number of shares of USF Common Stock as the holder
of such Non-Employee Option would have been entitled to receive pursuant to the
Merger had such holder exercised such option in full immediately prior to the
Effective Time, at a price per share equal to (y) the aggregate exercise price
for the shares of Company Common Stock deemed otherwise purchasable pursuant to
such Non-Employee Option divided by (z) the number of full shares of USF Common
Stock deemed purchasable pursuant to such Non-Employee Stock Option.
Section 2.09 UNDERWRITER'S WARRANT. At the Effective Time, the
Underwriter's Common Stock Purchase Warrant dated as of February 7, 1997 (the
"Underwriter's Warrant") shall be deemed to constitute the right to acquire, on
the same terms and conditions as were applicable under such Underwriter's
Warrant, the same number of shares of USF Common Stock as the holder of such
Underwriter's Warrant would have been entitled to receive pursuant to the Merger
had such holder exercised such Underwriter's Warrant in full immediately prior
to the Effective Time, at an exercise price per share equal to (y) the aggregate
exercise price for the shares of Company Common Stock deemed otherwise
purchasable pursuant to such Underwriter's Warrant divided by (z) the number of
full shares of USF Common Stock deemed purchasable pursuant to such
Underwriter's Warrant.
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Section 2.10 CONVERTIBLE NOTES. At the Effective Time, the Notes of the
Company listed on Schedule 2.10 (the "Convertible Notes") shall be deemed to be
convertible, on the same terms and conditions as were applicable under each
respective Convertible Note, into the same number of shares of USF Common Stock
as the holders of each such Convertible Note would have been entitled to receive
pursuant to the Merger had such holders converted such Convertible Notes in full
immediately prior to the Effective Time, at a conversion price per share equal
to (y) the conversion price for the shares of Company Common Stock deemed
otherwise purchasable pursuant to each respective Convertible Note divided by
(z) the number of full shares of USF Common Stock deemed purchasable pursuant to
each such Convertible Note.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to USF and Sub as follows:
Section 3.01 ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
has all requisite corporate power to own, lease and operate its property and to
carry on its business as now being 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 would have a material adverse effect on
the business, assets (including intangible assets), condition (financial or
otherwise), results of operations or prospects ("Material Adverse Effect") of
the Company.
Section 3.02 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 10,000,000
shares of Common Stock, $.0063 par value per share. As of August 31, 1997, (i)
3,476,789 shares of Company Common Stock were issued and outstanding, all of
which are validly issued, fully paid and nonassessable, (ii) no shares of
Company Common Stock were held in the treasury of the Company, (iii) 400,000
shares of Company Common Stock were reserved for issuance pursuant to stock
options granted and outstanding under the Employee Stock Option Plan, (iv)
30,000 shares of Company Common Stock were reserved for issuance pursuant to
stock options granted and outstanding under the Director Stock Option Plan, (v)
121,068 shares of Company Common Stock were reserved for issuance pursuant to
the Non-Employee Options, (vi) 135,000 shares of Company Common Stock were
reserved for issuance pursuant to the Underwriter's
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Warrant, (vii) 80,165 shares of Company Common Stock were reserved for issuance
pursuant to the Convertible Notes and (viii) 32,000 shares of Company Common
Stock were reserved for issuance pursuant to the Savoy Asset Purchase Agreement.
All shares of Company 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.
(b) There are no obligations, contingent or otherwise, of the Company to
repurchase, redeem or otherwise acquire any shares of Company Common Stock or to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any other entity.
(c) Except for restrictions on transfer arising under the Federal
securities laws, included in the Stockholders Agreements or as described in
Schedule 3.02, there are no existing restrictions on transfer, voting trusts,
stockholder agreements or registration covenants known to the Company relating
to any outstanding shares of capital stock 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 stockholder and the Company's
stockholders are not entitled to preemptive rights.
(d) Except as set forth in this Section 3.02, there are no equity
securities of any class of the Company, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding. Except as set forth in this Section 3.02 or in Schedule 3.02, there
are no options, warrants, equity securities, calls, rights, commitments or
agreements of any character to which the Company is a party or by which it is
bound obligating the Company to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of the Company or
obligating the Company to grant, extend, accelerate the vesting of or enter into
any such option, warrant, equity security, call, right, commitment or agreement.
Except for the Stockholder Agreements, there are no voting trusts, proxies or
other agreements or understandings with respect to the shares of capital stock
of the Company.
Section 3.03 CHARTER DOCUMENTS. The copies of the Certificate of
Incorporation of the Company, as amended, and Amended and Restated Bylaws of
the Company as currently in effect, are complete and correct.
Section 3.04 SUBSIDIARIES. Except as set forth on Schedule 3.04, the
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable for, any
corporation, partnership, joint venture or other business association or entity.
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Section 3.05 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The Company has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of the Company, subject only (in the
case of this Agreement) to the approval of this Agreement and the Merger by the
Company's stockholders under the DGCL. The Board of Directors of the Company
(the "Company Board") has directed that this Agreement and the Merger be
submitted to the stockholders for adoption, in accordance with the law of the
State of Delaware and the Company's Certificate of Incorporation, as amended,
and Amended and Restated Bylaws, and has recommended that the stockholders of
the Company approve and adopt this Agreement and the Merger. This Agreement has
been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by USF and Sub, constitute the valid and
binding obligations of the Company, enforceable in accordance with their
respective terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to creditors rights generally and (ii) the availability of
injunctive relief and other equitable remedies.
(b) The execution and delivery of this Agreement by the Company does not,
and the consummation of the transactions contemplated hereby and thereby will
not, (i) conflict with, or result in any violation or breach of any provision of
the Certificate of Incorporation, as amended or Amended and Restated Bylaws of
the Company, (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 the Company is a party or pursuant to which it or any of its
properties or assets may be bound, or (iii) subject to obtaining the approval of
the Company's stockholders of the Merger and compliance with the requirements
set forth in Section 3.05(c) below, conflict with or violate any permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its properties
or assets, except in the case of (ii) and (iii) for any such conflicts,
violations, defaults, terminations, cancellations or accelerations which would
not have a Material Adverse Effect on the Company.
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(c) No consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Authority is required by or with
respect to the Company in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby and
thereby, except for (i) the filing of the Certificate of Merger with the
Delaware Secretary of State, (ii) the filing of the Proxy Statement with the
United States Securities and Exchange Commission ("SEC") in accordance with the
United States Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and (iii) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable state securities
laws and the laws of any country.
Section 3.06 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and documents required to be
filed by the Company with the SEC and has previously furnished to USF a true and
complete copy of each of (i) its Prospectus dated February 7, 1997, (ii) its
Annual Report on Form 10-KSB for the year ended December 31, 1996 (iii) its
Quarterly Reports on Form 10-QSB for the periods ended March 31, 1997 and June
30, 1997, and (iv) all other reports or other correspondence filed by it with
the SEC pursuant to the Exchange Act, since January 1, 1997, in each case as
filed with the SEC (collectively, together with any forms, reports and documents
filed by the Company with the SEC after the date hereof until the Closing, the
"Company SEC Reports"). Each such report, when filed, complied in all material
respects with the requirements of the Exchange Act and the applicable rules and
regulations thereunder and, as of their respective dates, none of such reports
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(b) Each of the financial statements (including, in each case, any related
notes) contained in the Company SEC Reports complied as to form in all material
respects with the applicable 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) and fairly
presented the financial position of the Company as at the respective dates and
the results of its operations and cash flows for the periods indicated, except
that the unaudited interim financial statements (i) were or are subject to
normal year-end adjustments which were not or are not expected to be material in
amount, and (ii) do not contain footnote disclosure. The unaudited balance sheet
of the Company as of June 30, 1997 is referred to herein as the "Company Balance
Sheet."
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Section 3.07 INDEBTEDNESS; ABSENCE OF UNDISCLOSED LIABILITIES.
(a) Schedule 3.07 sets forth a list of each instrument which evidences
Indebtedness of the Company, and the aggregate principal amount thereof
outstanding as of the date hereof, and indicates each such instrument that
contains a restriction, limitation or encumbrance, of any kind, on the ability
of the Company to pay dividends on its respective capital stock. The total
aggregate principal amount outstanding as of the date hereof of all such
Indebtedness is $3,671,955.22, which includes $850,000 in face amount of
outstanding letters of credit. Except as set forth in Schedule 3.07, all of such
instruments are in full force and effect and the Company is not in default
thereunder, nor, to the knowledge of the Company, is any other party to any such
instrument in default thereunder, nor, to the knowledge of the Company, does any
condition exist that, with the giving of notice or lapse of time or both, would
constitute a default thereunder, which default could reasonably be expected to
give rise to a right on the part of some party thereto to terminate such
instrument, accelerate the obligations thereunder or claim damages in a material
amount thereunder, except such default (i) as to which requisite waivers or
consents have been obtained or (ii) which is curable and is cured within the
applicable period for cure permitted under such instruments. Schedule 3.07 also
sets forth a list of each other instrument or agreement that contains a
restriction, limitation or encumbrance, of any kind, on the ability of the
Company to pay dividends on its capital stock.
(b) Schedule 3.07 also sets forth all contracts and other agreements and
arrangements pursuant to which the Company has agreed to indemnify or exonerate
any officer, director or employee of the Company with respect to any matter.
Except as described on Schedule 3.07, there are no circumstances which might
give rise to any obligation or liability on the part of the Company so to
indemnify any such officer, director or employee.
(c) Except as disclosed in writing by the Company or as disclosed in the
Company SEC Reports, the Company does not have any liabilities as of the date
hereof, either accrued or contingent (whether or not required to be reflected in
financial statements in accordance with generally accepted accounting
principles), and whether due or to become due, other than (i) liabilities
reflected or reserved against in the Company Balance Sheet, (ii) liabilities
specifically described in this Agreement, or in the Schedules to this Agreement,
and (iii) normal or recurring liabilities incurred since June 30, 1997 in the
ordinary course of business consistent with past practices and which are not,
individually or in the aggregate, material to the business, results, operations,
financial condition or prospects of the
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Company, and none of which is a liability for breach of contract or warranty or
has arisen out of tort, infringement of any intellectual property rights, or
violation of law or is claimed in any pending or threatened legal proceeding.
Section 3.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the
Company Balance Sheet, except as disclosed on Schedule 3.08, the Company has
conducted its business only in the ordinary course and in a manner consistent
with past practice and, since such date, there has not been (i) any Material
Adverse Effect with respect to the Company, and no fact or condition exists or
is contemplated or threatened which is reasonably likely to cause a Material
Adverse Effect with respect to the Company in the future, (ii) any material
change by the Company in its accounting methods, principles or practices except
as required by concurrent changes in generally accepted accounting principles;
or (iii) except as disclosed in the Schedules to this Agreement, any other
action or event that would have required the consent of USF pursuant to Section
5.01 of this Agreement had such action or event occurred after the date of this
Agreement.
Section 3.09 TAX MATTERS.
(a) The Company has prepared and timely filed, and will file on a timely
basis, all material United States federal, state, local and international
returns, estimates, information statements and reports ("Returns") relating to
any and all Taxes concerning or attributable to the Company or its operations
and required to be filed on or prior to the Effective Time.
(b) Each such Return was true, correct and complete 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 Return remains true, correct and complete.
(c) The Company as of the Effective Time: (A) will have paid all Taxes it
is required to pay prior to the Effective Time and (B) will have withheld with
respect to its employees all United States federal and state income taxes, FICA,
FUTA and other Taxes required to be withheld.
(d) The accounts shown on the Company Balance Sheet (excluding amounts
classified thereon as deferred) are sufficient for the discharge of all Taxes
attributable or with respect to all periods, or portions thereof, prior to the
date of the Company Balance Sheet remaining unpaid as of such date, except as
set forth in Schedule 3.09. There is no Tax deficiency outstanding or assessed,
or to the Company's knowledge proposed, against the Company that is not
reflected as a liability on the Company Balance Sheet nor has the Company
executed any waiver of any
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statute of limitations on or extending the period for the assessment or
collection of any Tax. No tax audit or examination is now pending or currently
in progress with respect to the Company.
(e) The Company has not filed a consent under Section 341(f) of the Code
concerning collapsible corporations. The Company has not made any payment, nor
is it obligated to make any payment, nor is it a party to any agreement that
under certain circumstances could obligate it to make any payment, that will not
be deductible under Sections 280G or 162(m) of the Code. The Company has not
been (nor does it have any liability for unpaid Taxes because it once was) a
member of an affiliated group during any part of any consolidated return year
within any part of which consolidated return year any other corporation was also
a member of such group. The Company is not and has not been during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code a United
States real property holding corporation as defined in Section 897(c)(1) of the
Code. The Company does not have any losses subject to the limitations of Section
382 of the Code.
Section 3.10 CERTAIN TRANSACTIONS. Except as set forth in Schedule 3.10,
none of the officers or directors of the Company nor any Affiliate of the
Company, and, to the knowledge of the Company, none of the employees of the
Company is currently a party to any transaction with 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 employee, any member of the family of any such officer,
director or employee or any corporation, partnership, trust or other entity in
which any such officer, director or employee has a substantial interest or which
is an Affiliate of such officer, director or employee.
Section 3.11 REQUIRED AUTHORIZATIONS. Schedule 3.11 sets forth a true and
complete list of all Required Authorizations which the Company must give or
obtain for the execution and delivery of this Agreement by the Company or the
consummation by the Company of any of the transactions contemplated hereby or in
order to enable all the issued and outstanding capital stock of the Company to
be converted as contemplated by Article II.
Section 3.12 LITIGATION. Except as set forth in Schedule 3.12 or as
indicated in any of the Company SEC Reports, there are no suits, litigations,
investigations, actions or proceedings of any kind pending or, to the knowledge
of the Company, threatened against the Company, nor, to the knowledge of the
Company, is any such matter pending or threatened against any other person,
which,
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if adversely determined, would have a Material Adverse Effect with respect to
the Company.
Section 3.13 COMPLIANCE WITH LAW; REGULATORY COMPLIANCE.
(a) Except as set forth in Schedule 3.13, the Company is not and has not
been in violation of any applicable United States federal, state, provincial,
local or international law, regulation, ordinance or other requirement of any
Governmental Authority relating to it or to its securities, property, operations
or business, and no event has occurred or condition or state of facts exists
that could give rise to any such violation, the existence of which would have a
Material Adverse Effect. Except as set forth in Schedule 3.13, as of the date of
this Agreement, there is no outstanding order, writ, judgment, stipulation,
injunction, decree, determination, award or other order of any court or
governmental agency or instrumentality, domestic or international, against or
affecting the Company or any of the assets of the Company.
(b) The Company possesses or has made timely application for, all
Governmental Approvals with and under all United States federal, state,
provincial, local and international laws and Governmental Authorities, required
by the Company to carry on any substantial part of its respective business as
presently conducted and to use and operate any of its property and assets.
Schedule 3.13 sets forth a list of all such Governmental Approvals, identifying
each such Governmental Approval by number and indicating the holder, the issuer
and the nature thereof. All such Governmental Approvals are in full force and
effect and the Company is not in violation of any such Governmental Approval or
any other permit, license, approval, authorization or registration applicable to
it or to the operation of its business, and no event or condition or state of
facts exists (or would exist upon the giving of notice or lapse of time or both)
that could result in such a violation. Except as disclosed in Schedule 3.13, the
Company has no reason to believe that any pending application for an
Governmental 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 Governmental Approval possessed by the Company or deny any renewal
thereof.
(c) Except as disclosed in Schedule 3.13, the Company has made all
Governmental Filings required to be made with any Governmental Authority with
respect to the operation of its business and the use and operation of its
property and assets.
Section 3.14 CONTRACTS. Set forth in Schedule 3.14 is a list of (a) all
contracts, agreements, commitments, undertakings or obligations to which the
Company is a party or by which it or
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its assets or properties are bound or subject relating to the purchase of raw
materials, the sale of finished products or the furnishing of services which
involve the payment by or to the Company of more than $50,000 under any one of
such contracts, and (b) all other contracts, agreements, commitments,
undertakings or obligations to which the Company is a party or by which it or
its assets or properties are bound or subject (other than Real Property Leases,
Personal Property Leases, Employment Agreements and Benefit Plans) (i) which
involve the payment by or to the Company of more than $50,000 under any one of
such contracts (measured by the remaining portion to be paid thereunder) and
which have a remaining term of more than 120 days (taking into account the
effect of any renewal options) and are not cancelable without penalties by the
Company on 30 days' or less notice, (ii) which if terminated or lost would have
a Material Adverse Effect with respect to the Company, or (iii) was not entered
into in the ordinary course (collectively, the "Contracts"). There have been
made available to USF true and complete copies of all such Contracts that are in
writing (including all amendments thereto, if any). Except as set forth in
Schedule 3.14, all of the Contracts are in full force and effect and the Company
is not in default thereunder, nor, to the knowledge of the Company, is any other
party to any Contract in default thereunder, nor, to the best of the Company's
knowledge, does any condition exist that, with the giving of notice or lapse of
time or both, would constitute a default thereunder, which default would give
rise to a right on the part of some party thereto to terminate such Contract or
claim damages thereunder, except such default (i) as to which requisite waivers
or consents have been obtained or (ii) which is curable and is cured within the
applicable period for cure permitted under such Contract. Except as set forth in
Schedule 3.11, no approval or consent of any person is needed in order for the
Contracts to continue in full force and effect under the same terms and
conditions currently in effect following the consummation of the transactions
contemplated by this Agreement.
Section 3.15 REAL PROPERTY. Schedule 3.15 sets forth a list (by lessee)
and summary description of all Real Property Leases. The Company has a valid
leasehold interest in each Real Property Lease held by it as of the date of this
Agreement, in each case free and clear of all Liens, except for those Liens
arising under the Credit Facility. The use and operation of the real property
subject to the Real Property Leases conform to all restrictive covenants and
restrictions and conditions. The Company has made available to USF a true and
complete copy of each Real Property Lease which is in writing. The Company is
not a party to nor does it hold property subject to any Real Property Lease
which is not in writing. The Real Property Leases are in full force and effect
and the Company has not received any notice of default thereunder which has not
been remedied or waived nor is it aware of any event or circumstance which with
the giving of
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notice or passage of time or both would constitute a default thereunder. Each
Real Property Lease was negotiated on an arm's length basis. The Company has not
received any notice nor does it have any knowledge of any pending, threatened or
contemplated condemnation proceeding or assessment for public improvements
affecting any real property leased pursuant to a Real Property Lease or any part
thereof or of any sale or other disposition thereof in lieu of condemnation.
Section 3.16 PERSONAL PROPERTY. The Company owns all Personal Property
owned by it as of the date of this Agreement, whether or not reflected in the
Company Balance Sheet, in each case free and clear of all Liens, except for
those Liens arising under the Credit Facility or under any purchase money
security arrangement with respect to which the monthly rental payments are less
than $1,500 or the aggregate rental payments are less than $10,000. Schedule
3.16 also sets forth a list (by lessee or licensee) and a summary description of
all Personal Property Leases. The Company has a valid leasehold interest in each
Personal Property Lease held by it as of the date of this Agreement, in each
case free and clear of all Liens except for those Liens arising under the Credit
Facility. All of the Personal Property owned or leased by, and currently used or
necessary for or in the operations of the Company, is in good operating
condition and repair, is suitable for the purposes in which it is used and
includes all personal property necessary for operation of the businesses
conducted by the Company.
Section 3.17 INTELLECTUAL PROPERTY RIGHTS. Schedule 3.17 discloses all of
the trademark and service mark rights, applications and registrations, trade
names, fictitious names, service marks, logos and brand names, copyrights,
copyright applications, letters patent, patent applications and licenses of any
of the foregoing owned or used by or registered in the name of the Company. The
Company has the entire right, title and interest in and to, or has the exclusive
perpetual royalty-free right to use, the intellectual property rights disclosed
on Schedule 3.17 and all other customer lists, processes, know-how, show-how,
formulae, trade secrets, inventions, discoveries, improvements, blueprints,
specifications, drawings, designs, and other proprietary rights necessary or
applicable to or advisable for use in the businesses conducted by the Company
("Intellectual Property"), free and clear of all Liens. Schedule 3.17 separately
discloses all Intellectual Property under license or in which the Company
otherwise has rights. The Intellectual Property is valid and not the subject of
any interference, opposition, reexamination or cancellation. To the knowledge of
the Company, no person is infringing upon nor has any person misappropriated any
Intellectual Property, nor is the Company infringing upon the intellectual
property rights of any other person.
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Section 3.18 ENVIRONMENTAL MATTERS. (a) The Company has applied for and
has in effect all United States federal, state and local and international
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 Authority with
jurisdiction over pollution or protection of the environment (collectively,
"Environmental Laws") necessary for it to carry on its business as now
conducted, and there has occurred no default under any such Environmental
Permit, except for the lack of Environmental Permits and for defaults under
Environmental Permits that, individually or in the aggregate, do not constitute
a Material Adverse Effect with respect to the Company.
(b) The Company 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) There is no suit, action, proceeding or inquiry pending or, to
the Company's knowledge, threatened before any Governmental Authority in which
the Company 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
(iii) any site or location for which it has been designated as a potentially
responsible party under any United States federal, state, local or international
superfund law, or (iv) any claim, potential claim or express reservation or
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) To the best of the Company's knowledge, during the period of
ownership or operation by the Company of any of its 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. Prior to the period of ownership or
operation by the Company of any of its respective current or formerly owned
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properties, to the Company's knowledge, there were no releases of Hazardous
Material or asbestos, polychlorinated biphenyls or oil or other petroleum
products in, on, under or affecting any such property or any surrounding site,
except 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 has provided USF with copies of all written
information in its possession or control pertaining to the matters set forth in
paragraphs (a) through (d) of this Section 3.18, including all documents
pertaining to environmental audits or assessments prepared by or for the Company
or any Governmental Authority.
Section 3.19 PRODUCTS LIABILITY. Schedule 3.19 discloses all claims
made against the Company or its Predecessors during the past five years for
personal injury due to contamination of water.
Section 3.20 INSURANCE. The Company has in effect valid and effective
policies of insurance, issued by companies believed by the Company to be sound
and reputable, insuring the Company 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. The Company will not have any liability after the
Effective Time for retrospective or retroactive premium adjustments. Schedule
3.20 sets forth a list (by holder) of all insurance policies held by the
Company, indicating the type of coverage, the amount of coverage and the
insuring entity with respect to each such policy. Schedule 3.20 also discloses
the manner in which the Company provides coverage for workers' compensation
claims.
Section 3.21 EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS.
(a) Schedule 3.21 sets forth a true and complete list of all agreements
with any officer, director or employee of the Company to which the Company is a
party, providing for the terms of his or her employment with the Company and the
terms of his or her severance or other payments upon termination of such
employment (the "Employment Agreements"). The Company has previously furnished
to USF true and complete copies of all Employment Agreements, together with all
amendments thereto (if any). Since the date of the Company Balance Sheet, the
Company has not (i) effected any increase in salary, wage or other compensation
of any kind, whether current or deferred, to any officer, director, employee,
agent, broker or consultant or (ii) made any contribution to any trust or plan
for the benefit of
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employees except as required by the terms thereof as now in effect.
(b) Except as set forth in Schedule 3.21 or as disclosed in Company SEC
Reports filed prior to the date of this Agreement, and except as provided for in
this Agreement, the Company is not a party to any oral or written (i) agreement
with any officer or other key employee of the Company (A) the benefits of which
are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company of the nature contemplated by
this Agreement or (B) providing for compensation payments that would not be
deductible by the Company for United States federal income tax purposes, (ii)
agreement with any officer or other key employee of the Company providing any
compensation guarantee, or (iii) agreement or Benefit Plan, any of the benefits
of which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement.
Section 3.22 LABOR RELATIONS. The relations of the Company with its
employees are good. Except as disclosed on Schedule 3.22, no employee of the
Company is represented by any union or other labor organization. No
representation election, arbitration proceeding, grievance, labor strike,
dispute, slowdown, stoppage or other labor trouble is pending or, to the
knowledge of the Company, threatened, against, involving, affecting or
potentially affecting the Company. No complaint against the Company is pending
or, to the knowledge of the Company, threatened before the National Labor
Relations Board, the Equal Employment Opportunity Commission or any similar
state or local agency, by or on behalf of any employee of the Company.
Section 3.23 EMPLOYEE BENEFIT PLANS.
(a) The Company has set forth on Schedule 3.23 all employee benefit plans
(as defined in Section 3(3) of ERISA) and all bonus, stock option, stock
purchase, fringe benefits, incentive, deferred compensation, supplemental
retirement, post-retirement health or welfare plan severance and other employee
benefit plans and arrangements, written or otherwise, maintained by the Company
or any trade or business (whether or not incorporated) which is a member or
which is under common control with the Company (an "ERISA Affiliate") within the
meaning of Section 414 of the Code, for the benefit of, or relating to, any
current or former employee of the Company or an ERISA Affiliate (together, the
"Company Group") or with respect to which the Company or an ERISA Affiliate may
have liability (together, the "Benefit Plans").
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(b) With respect to each Benefit Plan, the Company has made available to
USF a true and correct copy of (i) the most recent annual report (Form 5500)
filed with the Internal Revenue Service ("IRS"), (ii) such Benefit Plan (or in
the case of an unwritten Benefit Plan, a written summary thereof), (iii) each
trust agreement and group annuity contract, if any, relating to such Benefit
Plan and (iv) the most recent actuarial report or valuation relating to a
Benefit Plan subject to Title IV of ERISA.
(c) Each of the Benefit Plans and all related trusts, insurance contracts
and funds have been created, maintained, funded and administered in all respects
in compliance with all applicable laws and in compliance with the plan document,
trust agreement, insurance policy or other writing creating the same or
applicable thereto. No Benefit Plan is or is proposed to be under audit or
investigation, and no completed audit of any Benefit Plan has resulted in the
imposition of any tax, fine or penalty.
(d) No prohibited transaction (within the meaning of Section 406 of ERISA
and Section 4975 of the Code) with respect to any Benefit Plan exists or has
occurred that could subject any member of the Company Group to any liability or
tax under Part 5 of Title I of ERISA or Section 4975 of the Code. No member of
the Company Group, nor any administrator or fiduciary of any Benefit Plan, nor
any agent of any of the foregoing, has engaged in any transaction or acted or
failed to act in a manner that will subject any member of the Company Group to
any liability for a breach of fiduciary or other duty under ERISA or any other
applicable law. With the exception of the requirements of Section 4980B of the
Code, no post-retirement benefits are provided under any Benefit Plan that is a
welfare benefit plan as described in ERISA Section 3(1).
(e) Schedule 3.23 discloses each Benefit Plan that purports to be a
qualified plan under Section 401(a) of the Code and exempt from United States
federal income tax under Section 501(a) of the Code (a "Qualified Plan"). With
respect to each Qualified Plan, a determination letter (or opinion or
notification letter, if applicable) has been received from the IRS that such
plan is qualified under Section 401(a) of the Code and exempt from United States
federal income tax under Section 501(a) of the Code. No Qualified Plan has been
amended since the date of the most recent such letter applicable to such
Qualified Plan. No member of the Company Group, nor any fiduciary of any
Qualified Plan, nor any agent of any of the foregoing, has taken any action that
would adversely affect the qualified status of a Qualified Plan or the qualified
status of any related trust.
(f) No Benefit Plan is a defined benefit plan within the meaning of
Section 3(35) of ERISA (a "Defined Benefit Plan"). No Defined Benefit Plan
sponsored or maintained by any member of the
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Company Group has been terminated or partially terminated except as set forth on
Schedule 3.23. Each Defined Benefit Plan identified as terminated on Schedule
3.23 has met the requirement for standard termination of single-employer plans
contained in Section 4041(b) of ERISA. During the five-year period ending at the
Effective Time, no member of the Company Group has transferred a Defined Benefit
Plan to a corporation that was not, at the time of transfer, related to the
transferor as described in Section 414 of the Code.
(g) No Benefit Plan is a multiemployer plan within the meaning of Section
3(37) or Section 4001(a)(3) of ERISA (a "Multiemployer Plan"). No member of the
Company Group has withdrawn from any Multiemployer Plan or incurred any
withdrawal liability to or under any Multiemployer Plan. No Benefit Plan covers
any employees of any member of the Company Group in any other country or
territory.
(h) With respect to the Benefit Plans, individually and in the aggregate,
no event has occurred, and to the knowledge of the Company, there exists no
condition or set of circumstances in connection with which the Company could be
subject to any liability, that is reasonably likely to have a Material Adverse
Effect on the Company, under ERISA, the Code or any other applicable law.
(i) With respect to the Benefit Plans, individually and in the aggregate,
there are no funded benefit obligations for which contributions have not been
made or properly accrued and there are no unfunded benefit obligations which
have not been accounted for by reserves, or otherwise properly footnoted in
accordance with generally accepted accounting principles, on the financial
statements of the Company.
Section 3.24 POOLING OF INTERESTS. To its knowledge, neither the Company
nor any of its Rule 145 Affiliates has taken or agreed to take any action which
would prevent the Merger from being accounted for as a pooling of interests.
Section 3.25 REGISTRATION STATEMENT; PROXY STATEMENT/ PROSPECTUS. The
information supplied by the Company for inclusion in the registration statement
on Form S-4 pursuant to which shares of USF Common Stock issued in the Merger
will be registered with the SEC (the "Registration Statement"), shall not at the
time the Registration Statement is declared effective by the SEC contain any
untrue statement of a material fact or omit to state any material fact required
to be stated in the Registration Statement or necessary in order to make the
statements in the Registration Statement, in light of the circumstances under
which they were made, not misleading. The information supplied by the Company
for inclusion in the proxy statement/prospectus to be sent to the
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stockholders of the Company in connection with the meeting of the Company's
stockholders (the "Stockholders' Meeting") to consider this Agreement and the
Merger (the "Proxy Statement") shall not, on the date the Proxy Statement is
first mailed to stockholders of the Company, at the time of the Stockholders'
Meeting and at the Effective Time, contain any statement which, at such time and
in light of the circumstances under which it shall be made, is false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements made in the Proxy Statement not false
or misleading; or omit to state any material fact necessary to correct any
statement with respect to the Company in any earlier communication with respect
to the solicitation of proxies for the Stockholders' Meeting which has become
false or misleading. If at any time prior to the Effective Time any event
relating to the Company or any of its Affiliates, officers or directors should
become known to the Company which should be set forth in an amendment or
supplement to the Registration Statement or a supplement to the Proxy Statement,
the Company shall promptly inform USF.
Section 3.26 CERTAIN FEES. Neither the Company nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fee, commission or finders' fee in connection with
any of the transactions contemplated hereby.
Section 3.27 SECTION 203 OF THE DGCL NOT APPLICABLE. Section 203 of the
DGCL applicable to an "interested stockholder" or a "business combination" (as
defined in Section 203) will not apply to the execution, delivery or performance
of this Agreement or the Stockholder Agreements or the consummation of the
Merger or the other transactions contemplated by this Agreement or by the
Stockholder Agreements.
Section 3.28 DISCLOSURE. No representation or warranty of the Company in
this Agreement or any certificate, schedule, statement, document or instrument
furnished or to be furnished to USF pursuant hereto or in connection herewith,
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact required to be stated herein or therein or
necessary to make any statement herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF USF AND SUB
Each of USF and Sub represents and warrants to the Company as follows:
Section 4.01 ORGANIZATION OF USF AND SUB.
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(a) USF is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, has all requisite corporate
power to own, lease and operate its property and to carry on its business as now
being 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 would have a Material Adverse Effect on USF and its Subsidiaries,
taken as a whole.
(b) Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, has all requisite corporate
power to own, lease and operate its property and to carry on its business as now
being 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 would have a Material Adverse Effect on USF and its Subsidiaries,
taken as a whole.
Section 4.02 CAPITALIZATION OF USF AND SUB.
(a) The authorized capital stock of USF consists of 300,000,000 shares of
Common Stock, $.01 par value, and 3,000,000 shares of Preferred Stock, $.10 par
value. As of August 31, 1997, (i) 82,824,608 shares of USF Common Stock were
issued and outstanding, all of which are validly issued, fully paid and
nonassessable, and (ii) no shares of Preferred Stock were issued and
outstanding. Any share of USF Common Stock, when issued in accordance with
Article II hereof, will be duly authorized and validly issued, and will be fully
paid and nonassessable.
(b) The authorized capital stock of Sub consists of 1,000 shares of common
stock, par value $.01 per share, of which 1,000 shares are issued and
outstanding, all of which are duly authorized and validly issued and are fully
paid and nonassessable, and owned, beneficially and of record, by USF.
Section 4.03 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) USF 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
the transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of USF and Sub. This Agreement has been
duly executed and delivered by USF and Sub and, assuming the due authorization,
execution and delivery by the Company, constitutes the valid and binding
obligation of USF and Sub, enforceable in accordance with its terms, except as
such enforceability may be limited by (i)
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bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to creditors' rights generally and (ii) the availability
of injunctive relief and other equitable remedies.
(b) The execution and delivery of this Agreement by USF and Sub 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 Certificate of Incorporation, as amended, or the Amended and Restated Bylaws
of USF, or the Certificate 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 USF or Sub is a
party or by which either of them or either of their properties or assets may be
bound, or (iii) conflict with or violate any permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to USF or Sub or any of its or their properties or assets, except in
the case of (ii) and (iii) for any such conflicts, violations, defaults,
terminations, cancellations or accelerations which would not have a Material
Adverse Effect on USF and its Subsidiaries, taken as a whole.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Authority, is required by or with
respect to USF 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) the filing of the Certificate of Merger with the Delaware
Secretary of State, (ii) the filing of a Form S-4 Registration Statement with
the SEC in accordance with the Securities Act, (iii) the filing of the Proxy
Statement with the SEC in accordance with the Exchange Act, and (iv) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state securities laws and the laws
of any other country.
Section 4.04 SEC FILINGS; FINANCIAL STATEMENTS.
(a) USF has filed all forms, reports and documents required to be filed by
USF with the SEC and has previously furnished to the Company a true and complete
copy of (i) its Annual Report on Form 10-K for the year ended March 31, 1997,
(ii) its Quarterly Report on Form 10-Q for the quarter ended June 30, 1997,
(iii) its definitive proxy statement with respect to its 1997 annual meeting of
stockholders, and (iv) all other reports or other
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correspondence filed by it with the SEC pursuant to the Exchange Act since April
1, 1997, in each case as filed with the SEC (collectively, together with any
forms, reports and documents filed by USF with the SEC after the date hereof
until the Closing, the "USF SEC Reports"). Each such report, when filed,
complied in all material respects with the requirements of the Exchange Act and
the applicable rules and regulations thereunder and, as of their respective
dates, none of such reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in 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 USF 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)
and fairly presented the consolidated financial position of USF and its
Subsidiaries as at the respective dates and the consolidated results of their
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements (i) were or are subject to normal year-end
adjustments which were not or are not expected to be material in amount, and
(ii) do not contain footnote disclosure. The unaudited balance sheet of USF as
of June 30, 1997 is referred to herein as the "USF Balance Sheet."
Section 4.05 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the
USF Balance Sheet, there has not been any Material Adverse Effect with respect
to USF and its Subsidiaries, taken as a whole, and no fact or condition exists
or is contemplated which is reasonably likely to cause a Material Adverse Effect
with respect to USF and its Subsidiaries, taken as a whole, in the future.
Section 4.06 LITIGATION. Except as set forth in Schedule 4.06 or as
indicated in any of the USF SEC Reports, there are no suits, litigations,
investigations, actions or proceedings of any kind pending or (to the knowledge
of USF) threatened against USF or any Subsidiary, nor (to the knowledge of USF)
is any such matter pending or threatened against any other person, which, if
adversely determined, would have a Material Adverse Effect with respect to USF.
Section 4.07 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The
information supplied by USF for inclusion in the Registration Statement shall
not at the time the Registration Statement is declared effective by the SEC
contain
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any untrue statement of a material fact or omit to state any material fact
required to be stated in the Registration Statement or necessary in order to
make the statements in the Registration Statement, in light of the circumstances
under which they were made, not misleading. The information supplied by USF for
inclusion in the Proxy Statement shall not, on the date the Proxy Statement is
first mailed to stockholders of the Company, at the time of the Stockholders'
Meeting and at the Effective Time, contain any statement which, at such time and
in light of the circumstances under which it shall be made, is false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements made in the Proxy Statement not false
or misleading; or omit to state any material fact necessary to correct any
statement with respect to USF and its Subsidiaries in any earlier communication
with respect to the solicitation of proxies for the Stockholders' Meeting which
has become false or misleading. If at any time prior to the Effective Time any
event relating to USF or any of its Affiliates, officers or directors should
become known to USF which should be set forth in an amendment or supplement to
the Registration Statement or a supplement to the Proxy Statement, USF shall
promptly inform the Company.
Section 4.08 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.
ARTICLE V
COVENANTS
Section 5.01 NO SOLICITATION From and after the date hereof until the
earlier of the termination of this Agreement in accordance with Article VII and
the Effective Time:
(a) The Company shall not, directly or indirectly, through any officer,
director, employee, representative or agent of the Company, (i) solicit,
initiate, or encourage any inquiries or proposals that constitute, or could
reasonably be expected to lead to, a proposal or offer for a merger,
consolidation, business combination, sale of substantial assets, sale of shares
of capital stock (including without limitation by way of a tender offer) or
similar transactions involving the Company, other than the transactions
contemplated by this Agreement (any of the foregoing inquiries or proposals
being referred to in this Agreement as an "Acquisition Proposal"), (ii) engage
in negotiations or discussions concerning, or provide any non-public information
to any person or entity relating to, any Acquisition Proposal, or
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(iii) agree to, approve or recommend any Acquisition Proposal; PROVIDED,
HOWEVER, that nothing contained in this Agreement shall prevent the Company or
the Company Board from (A) furnishing non-public information to, or entering
into discussions or negotiations with, any person or entity in connection with
an unsolicited bona fide written Acquisition Proposal by such person or entity
or recommending an unsolicited bona fide written Acquisition Proposal to the
stockholders of the Company, if and only to the extent that (1) the Company
Board believes in good faith (after consultation with its financial advisor, and
based upon the written opinion of such financial advisor) that such Acquisition
Proposal would, if consummated, result in a transaction (an "Acquisition
Transaction") more favorable to the Company's stockholders from a financial
point of view than the transaction contemplated by this Agreement (any such more
favorable Acquisition Transaction being referred to in this Agreement as a
"Superior Proposal") and the Company Board determines in good faith, based on
written advice of outside legal counsel, that such action is necessary for the
Company to comply with its fiduciary duties to stockholders under applicable law
and (2) prior to furnishing such non-public information to, or entering into
discussions or negotiations with, such person or entity, the Company Board
receives from such person or entity an executed confidentiality agreement with
terms no more favorable to such party than those contained in the
Confidentiality Agreement dated July 30, 1997 between USF and the Company (the
"Confidentiality Agreement"); or (B) taking any position with regard to an
Acquisition Proposal pursuant to Rules 14d-9 and 14e-2 under the Exchange Act
which is consistent with the advice of counsel concerning the Company Board's
fiduciary duties under applicable law with respect to a tender offer commenced
by a third party (other than by public announcement alone).
(b) The Company shall notify USF as soon as practicable upon receipt by
the Company (or its advisors) of any Acquisition Proposal or any request for
non-public information in connection with an Acquisition Proposal or for access
to the properties, books or records of the Company by any person or entity. Such
notice shall be made orally and in writing and shall indicate in reasonable
detail the identity of the offeror and the terms and conditions of such
proposal, inquiry or contact.
Section 5.02 STOCKHOLDER APPROVAL.
(a) As promptly as practicable following the execution and delivery of
this Agreement, unless this Agreement shall have been previously terminated in
accordance with Article VII, the Company shall submit this Agreement and the
Merger to its stockholders for approval and adoption at a meeting of its
stockholders called by the Company for such purpose. Unless this Agreement shall
have been previously terminated in accordance with Article VII and
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subject to Section 5.01, the Company Board shall recommend that the stockholders
of the Company vote to approve and adopt this Agreement and the Merger and the
other matters to be submitted to the Company's stockholders in connection
therewith and shall use its best efforts to solicit and secure from its
stockholders their approval and adoption of this Agreement and the Merger.
(b) Unless this Agreement shall have been previously terminated in
accordance with Article VII, USF, as the sole stockholder of Sub, shall, prior
to the Effective Time, consent in writing to the approval and adoption of this
Agreement and the Merger.
Section 5.03 CONDUCT OF THE BUSINESS OF THE COMPANY. During the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement in accordance with Article VII and the Effective
Time, the Company agrees (except to the extent that USF shall otherwise consent
in writing), to carry on its business in the usual, regular and ordinary course
in substantially the same manner as heretofore conducted, to pay its debts and
taxes when due subject to good faith disputes over such debts or taxes, to pay
or perform its other obligations when due, in each case consistent with past
practices and policies and, to use all reasonable efforts consistent with past
practices and policies to preserve intact its present business organization,
keep available the services of its present officers and key employees and
preserve its relationships with customers, suppliers, distributors, licensors,
licensees, and others having business dealings with it, to the end that its
goodwill and ongoing business be substantially unimpaired at the Effective Time.
The Company shall promptly notify USF of any event or occurrence not in the
ordinary course of business of the Company. Except as expressly contemplated by
this Agreement, and not in limitation of the foregoing, during the aforesaid
period the Company shall:
(a) preserve and maintain its corporate existence and all of its rights,
privileges and franchises reasonably necessary or desirable in the normal
conduct of its business, except to the extent contemplated by any transactions
specifically permitted by this Agreement;
(b) except as disclosed on Schedule 3.08, not acquire any stock or other
interest in, nor (except in the ordinary course of business) purchase any assets
of, any corporation, partnership, association or other business organization or
entity or any division thereof (except any stock or assets distributed to the
Company as part of any bankruptcy or other creditor settlement or pursuant to a
plan of reorganization), nor agree to do any of the foregoing;
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(c) not sell, lease, assign, transfer or otherwise dispose of any of its
assets (including, without limitation, patents, trade secrets or licenses), nor
suffer to exist or create any Lien on any of its assets, except as permitted by
this Agreement or in the ordinary course of business and except that the Company
may sell or otherwise dispose of any assets which are obsolete;
(d) not incur any Indebtedness, other than as a result of borrowings or
drawdowns, the issuance of letters of credit for the account of the Company and
the incurrence of interest, letter of credit reimbursement obligations and other
obligations under the terms of the Credit Facility as currently in effect, which
Indebtedness shall be incurred only for working capital purposes or acquisitions
permitted under subsection (b) above;
(e) not (i) alter, amend or repeal any provision of its Certificate of
Incorporation, as amended, or Amended and Restated Bylaws or its certificate of
incorporation or by-laws (as the case may be), (ii) change the number of its
directors (other than as a result of the death, retirement or resignation of a
director), (iii) form or acquire any subsidiaries not existing as of the date of
this Agreement, (iv) except in the ordinary course conduct of its business,
enter into, modify or terminate any Contracts or agree to do so, (v) modify or
terminate any Employment Agreement, or (vi) declare, pay, commit to or incur any
obligation of any kind for the payment of any bonus, additional salary or
compensation or retirement, termination, welfare or severance benefits payable
or to become payable to any of its employees or such other persons, except for
such matters as are required pursuant to the terms of any existing Employment
Agreement or Benefit Plan;
(f) maintain its books, accounts and records in the usual, ordinary and
regular manner and in material compliance with all applicable laws;
(g) pay and discharge all Taxes imposed upon it or upon its income or
profits, or upon any property belonging to it, prior to the date on which
penalties attach thereto, except to the extent that the Company is currently
contesting, in good faith and by proper proceedings, the payment of such Taxes
and the Company maintains appropriate reserves with respect thereto;
(h) not settle any tax claim against the Company or any litigation (net of
applicable insurance proceeds) in excess of $10,000 in the aggregate;
(i) use its best efforts to meet its obligations under all Contracts, and
not become in default thereunder;
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(j) maintain its business and assets in working repair, order and
condition, reasonable wear and tear excepted, and maintain insurance upon such
business and assets at least comparable in amount and kind to that in effect on
the date hereof;
(k) use its best efforts to maintain its present relationships and
goodwill with suppliers, brokers, manufacturers, representatives, distributors,
customers and others having business relations with it (provided that it may
pursue overdue accounts and otherwise exercise lawful remedies in its customary
fashion);
(l) carry on and operate its business in, and only in, the usual, regular
and ordinary course in substantially the same manner as heretofore conducted and
use its best efforts to cause the representations and warranties of the Company
set forth in this Agreement to be true and correct, in all material respects, on
and as of the Effective Time, subject only to changes in the ordinary course of
business;
(m) not declare, set aside, make or pay any dividends or other
distributions with respect to its capital stock, including, without limitation,
the Company Common Stock, or purchase or redeem any shares of its capital stock,
including, without limitation, the Company Common Stock, or agree to take any
such action;
(n) except as permitted in subsection (b) above, not authorize or make any
capital expenditure if the aggregate of the amount of such capital expenditure
together with the amounts of all other capital expenditures since the date of
this Agreement shall exceed $50,000;
(o) use its best efforts not to violate any law or regulation applicable
to it nor violate any order, injunction or decree applicable to the conduct of
its business; and
(p) not increase the number of shares authorized or issued and outstanding
of its capital stock, including, without limitation, the Company Common Stock,
nor grant or make any pledge, option, warrant, call, commitment, right or
agreement of any character relating to its capital stock, including, without
limitation, the Company Common Stock, nor issue or sell any shares of its
capital stock, including, without limitation, the Company Common Stock, or
securities convertible into such capital stock, or any bonds, promissory notes,
debentures or other corporate securities or become obligated so to sell or issue
any such securities or obligations, except, in any case, issuance of shares of
the Company Common Stock (i) pursuant to the exercise of options, warrants or
other rights outstanding as of the date
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hereof and referred to in Section 3.02 and (ii) pursuant to the terms of the
Convertible Notes.
Section 5.04 ACCESS TO INFORMATION. Upon reasonable notice, the Company
shall (i) afford to the officers, employees, accountants, counsel and other
representatives of USF, access, during normal business hours during the period
prior to the earlier of the termination of this Agreement and the Effective
Time, to all its properties, books, contracts, commitments, records, officers,
employees, accountants, accountants' work papers, correspondence and affairs,
and (ii) cause its officers and employees to furnish, to USF, Sub and their
authorized representatives, any and all financial, technical and operating data
and other information pertaining to the businesses of the Company as USF or Sub
shall from time to time reasonably request. In addition, without limiting the
generality of the foregoing, the Company will make available to USF and Sub for
examination true and complete copies of all Returns filed by the Company,
together with all available revenue agents' reports, all other reports, notices
and correspondence concerning tax audits or examinations and analyses of all
provisions for reserves or accruals of taxes, including deferred taxes.
Section 5.05 REQUIRED AUTHORIZATIONS.
(a) USF, Sub and the Company shall each, as promptly as practicable, take
all reasonable actions necessary to obtain all Required Authorizations (if any)
required to be given or obtained by it, respectively, to permit USF and Sub, on
the one hand, and the Company, on the other, to consummate the transactions
contemplated by this Agreement and to realize the respective benefits to each
party contemplated hereby; PROVIDED that USF 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 Authority that would (i) prohibit or restrict the
ownership or operation by USF of any portion of the business or assets of USF
(or any of its Subsidiaries) or the Company, (ii) compel USF (or any of its
Subsidiaries) or the Company 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 USF, the Company or the Surviving Corporation or any of their
respective affiliates or Subsidiaries to own or operate the business and
operations of the Company, and PROVIDED FURTHER THAT the Company shall not incur
fees and expenses in excess of $5,000 in the aggregate in order to obtain any
such Required Authorizations described in clause (ii) of the definition thereof
without the prior written consent of USF.
(b) Without limiting the generality of the foregoing, USF, Sub and the
Company shall each cooperate with the others in filing in a timely manner any
applications, requests, reports,
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registrations or other documents, including, without limitation, all reports and
documents required to be filed by or under the Securities Act or the Exchange
Act (including, without limitation, the Registration Statement and the Proxy
Statement), with any Governmental Authority having jurisdiction with respect to
the transactions contemplated hereby and in consulting with and seeking
favorable action from any Governmental Authority.
(c) Without limiting the generality of the foregoing, the Company shall
use its best efforts to obtain all approvals or consents of any person needed in
order that the Contracts continue in full force and effect under the same terms
and conditions currently in effect following the consummation of the
transactions contemplated by the Agreement.
(d) Without limiting the generality of the foregoing, USF shall use its
best efforts to obtain, prior to the Effective Time, the approval for the
listing, subject to official notice of issuance, on the New York Stock Exchange
of the shares of USF Common Stock to be issued pursuant to Article II.
Section 5.06 FINANCIAL STATEMENTS OF THE COMPANY.
(a) As soon as practicable but in any event within 45 days after the end
of each calendar month commencing with August 1997, through the Effective Time
or earlier termination of this Agreement in accordance with Article VII, the
Company will deliver to USF unaudited balance sheets of the Company as at the
end of such calendar month and as at the end of the comparative month of the
preceding year, together with unaudited summaries of earnings of the Company for
such calendar month and the comparative calendar month of the preceding year. As
soon as practicable but in any event within 45 days after the end of each fiscal
quarter of the Company, commencing with September 30, 1997, and within 60 days
after the end of the fiscal year ended December 31, 1997, as the case may be,
through the Effective Time or earlier termination of this Agreement in
accordance with Article VII, the Company will deliver to USF unaudited balance
sheets of the Company as at the end of such fiscal quarter and as at the end of
the comparative fiscal quarter of the preceding year, together with the related
unaudited statements of income and cash flows for the fiscal quarters then
ended. All such financial statements of the Company shall present fairly, in all
material respects, the financial position, results of operations and cash flows
of the Company, as at or for the periods indicated (and, in the case of all such
financial statements which are interim financial statements, shall contain all
adjustments necessary so to present fairly) and shall be prepared in accordance
with generally accepted accounting principles (other than to omit certain
footnotes which might be required thereby and subject, in the case of interim
financial statements, to normal year-end adjustments) consistent with past
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practice, except as otherwise indicated in such statements. All such financial
statements of the Company shall be certified, on behalf of the Company, by the
President and Chief Financial Officer of the Company.
(b) The Company will deliver to USF financial statements (including
related notes thereto) at December 31, 1997 and for the year then ended,
prepared in accordance with generally accepted accounting principles applied on
a consistent basis with prior periods, together with the report thereon of
Arthur Andersen LLP (the "1997 Financial Statements"), within 10 days of their
availability. USF shall have 10 days to notify the Company in writing of any
disagreement with the 1997 Financial Statements, which notice shall state with
reasonable specificity the reasons for any disagreement and identify the items
and amounts in dispute. If any disagreement concerning the 1997 Financial
Statements is not resolved by USF and the Company within 10 days following the
receipt by USF of the 1997 Financial Statements, USF and the Company shall
promptly engage the New York office of Coopers & Lybrand LLP on standard terms
and conditions for a matter of such nature. The engagement agreement with the
independent accountants shall require the independent accountants to make their
determination with respect to the items in dispute within 10 days following the
receipt by USF of the 1997 Financial Statements. The resolution by the
independent accountants of any dispute concerning the 1997 Financial Statements
shall be final, binding and conclusive upon the parties.
Section 5.07 PUBLIC ANNOUNCEMENTS. Neither USF, Sub nor the Company shall
make any press release or other written public statement concerning the matters
covered by this Agreement without the approval of the other parties hereto,
except as required by law or applicable regulation, and each shall in all events
use its best efforts to permit such other parties an opportunity to review and
comment upon any such release or statement prior to dissemination.
Section 5.08 BENEFIT PLANS. Except as required by law or the terms of any
Benefit Plan, from the date hereof until the Effective Time or the earlier
termination of this Agreement in accordance with Article VII, no award or grant
under the Benefit Plans shall be made without the consent of USF; it being
understood that no options, warrants or other rights to acquire securities of
the Company shall be granted by the Company. Except as required by law, no
amendment to (other than revisions required to comply with the Code or ERISA),
or termination of, any of the Benefit Plans shall be made without the consent of
USF.
Section 5.09 TAX-FREE REORGANIZATION. USF and the Company shall
each use its best efforts to cause the Merger to be treated
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as a reorganization within the meaning of Section 368(a) of the Code.
Section 5.10 POOLING ACCOUNTING. USF and the Company shall each 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 Rule 145 Affiliates not to take any action that would
adversely affect the ability of USF to account for the business combination to
be effected by the Merger as a pooling of interests.
Section 5.11 AFFILIATE AGREEMENTS. Within two weeks following the date of
this Agreement, the Company will provide USF with a list of those persons who
are, in the Company's reasonable judgment, "affiliates" of it within the meaning
of Rule 145 promulgated under the Securities Act ("Rule 145") (each such person
who is an "affiliate" within the meaning of Rule 145 is referred to as a "Rule
145 Affiliate"). The Company shall provide USF with such information and
documents as USF shall reasonably request for purposes of reviewing such list
and the Company shall notify USF in writing regarding any change in the identity
of its Rule 145 Affiliates prior to the Closing Date. The Company shall use its
best efforts to deliver or cause to be delivered to USF prior to the Effective
Time from each of its Rule 145 Affiliates, an executed Affiliate Agreement, in
substantially the form attached hereto as Exhibit B (each an "Affiliate
Agreement"). USF shall be entitled to place appropriate legends on the
certificates evidencing any USF Common Stock to be received by such Rule 145
Affiliates pursuant to the terms of this Agreement, and to issue appropriate
stop transfer instructions to the transfer agent for the USF Common Stock,
consistent with the terms of the Affiliate Agreements.
Section 5.12 REPRESENTATIONS, COVENANTS AND CONDITIONS; FURTHER
ASSURANCES. 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 USF 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 Authority that would (i) prohibit or
restrict the ownership or operation by USF of any portion of the business or
assets of USF (or any of its Subsidiaries) or the Company, (ii) compel USF (or
any of its Subsidiaries) or the Company 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 USF or the Surviving Corporation or any of their
respective affiliates or Subsidiaries to own or operate the business and
operations of the Company, and FURTHER PROVIDED THAT the Company shall not incur
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fees and expenses in excess of $5,000 in the aggregate in order to take any such
action or do any such thing without the prior written consent of USF. 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 VI
CONDITIONS TO MERGER
Section 6.01 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) STOCKHOLDER APPROVAL. This Agreement and the Merger shall have been
approved and adopted by the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock.
(b) REQUIRED AUTHORIZATIONS. All Required Authorizations shall have been
obtained.
(c) 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.
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of the Merger or limiting or restricting the
Company's or USF'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.
(e) NYSE. The shares of USF Common Stock to be issued in the Merger shall
have been listed on the New York Stock Exchange.
Section 6.02 ADDITIONAL CONDITIONS TO OBLIGATIONS OF USF AND SUB. The
obligations of USF and Sub to effect the Merger are subject to the satisfaction
of each of the following additional
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conditions, any of which may be waived in writing exclusively by USF and Sub:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties are made as of an earlier date, which
representations and warranties shall be true and correct in all material
respects at and as of such date) as of the Closing Date as though made on and as
of the Closing Date, in each case except for changes contemplated by this
Agreement, and USF 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 USF 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.
(c) TAX OPINION. USF shall have received a written opinion from
Kirkpatrick & Lockhart LLP, counsel to USF, 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, counsel
may rely upon representations and certificates of USF, Sub and the Company.
(d) OPINION OF COUNSEL TO THE COMPANY. USF shall have been furnished an
opinion of Lev, Berlin & Dale, P.C., counsel to the Company, dated the date of
the Effective Time, in form satisfactory to USF.
(e) POOLING LETTER. USF shall be satisfied that the business combination
to be effected by the Merger will qualify as a pooling of interests transaction
under generally accepted accounting principles.
(f) AFFILIATE AGREEMENTS. USF shall have received from each of the
Company's Rule 145 Affiliates an executed copy of an Affiliate Agreement
substantially in the form of Exhibit B hereto.
(g) OPTION HOLDER AGREEMENTS. USF shall have received from each holder of
an Employee or Director Stock Option an agreement consenting to the conversion
of such options into options to purchase USF Common Stock as prescribed in
Section 2.07.
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(h) CONVERTIBLE NOTES. USF shall have received from each holder of a
Convertible Note an agreement consenting to the amendment thereof to the effect
provided in Section 2.10.
(i) SAVOY ASSET PURCHASE AGREEMENT. The Savoy Asset Purchase Agreement
shall have been amended to provide that if the 32,000 shares of Company Common
Stock reserved for issuance pursuant thereto shall not have been issued prior to
the Closing Date, the right to receive such shares shall be converted into the
right to receive that number of shares of USF Common Stock that would have been
issued in the Merger in respect of such shares of Company Common Stock had such
shares been issued prior to the Closing Date..
(j) NO RIGHTS TO OPTIONS. USF shall be satisfied that no rights are
outstanding requiring the issuance to Mr. Lou Betti of options to purchase or
otherwise acquire Company Common Stock.
(k) EMPLOYMENT AGREEMENTS. Messrs. Levy and West shall have entered into
employment agreements in a form satisfactory to USF.
(l) RESIGNATION OF DIRECTORS. USF shall have received letters of
resignation, effective as of the Effective Time, executed and tendered by each
of the existing directors of the Company, or, to the extent such resignations
are not obtained, such other evidence, satisfactory to USF, that such directors
shall have been duly and lawfully removed (without cost or other liability to
the Company other than pursuant to any agreement or other arrangements with such
directors existing and in effect as of the date hereof) effective as of the
Effective Time.
Section 6.03 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 additional conditions, any of which may be waived, in
writing, exclusively by the Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
USF and Sub set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties are made as of an earlier date, which
representations and warranties shall be true and correct in all material
respects at and as of such date) as of the Closing Date as though made on and as
of the Closing Date, in each case except for changes contemplated by this
Agreement, and the Company shall have received a certificate signed on behalf of
USF by the chief executive officer and the chief financial officer of the
Company to such effect.
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(b) PERFORMANCE OF OBLIGATIONS OF USF AND SUB. USF 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 USF by the chief executive
officer and the chief financial officer of USF to such effect.
(c) TAX OPINION. The Company shall have received the opinion of
Kirkpatrick & Lockhart LLP, counsel to USF, 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, counsel
may rely upon representations and certificates of USF, Sub and the Company.
ARTICLE VII
TERMINATION AND AMENDMENT
Section 7.01 TERMINATION. This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time, whether before or after
approval by the stockholders of the Company, by written notice by the
terminating party to the other party under the circumstances set forth below:
(a) by mutual written consent of USF and the Company; or
(b) by either USF 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 7.01(b) shall not be available to any party whose
failure to fulfill any material obligation under this Agreement has been a cause
of or has resulted in the failure of the Merger to occur on or before such
date); or
(c) by USF or the Company, if (i) the other party has breached any
representation or warranty contained in this Agreement (except where such breach
would not have a Material Adverse Effect on the party having made such
representation or warranty and its Subsidiaries taken as a whole and would not
have a material adverse effect upon the transactions contemplated by this
Agreement), or (ii) there has been a breach of a covenant or agreement set forth
in this Agreement on the part of the other party, which shall not have been
cured within ten business days following receipt by the breaching party of
written notice of such breach from the other party (other than those set forth
in Section 5.01, as to which there shall be no cure period); or
(d) by either USF or the Company if a court of competent jurisdiction or
other Governmental Authority shall have issued a
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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
(e) by either USF or the Company, if, at the Stockholders' Meeting
(including any adjournment or postponement), the requisite vote of the
stockholders of the Company in favor of this Agreement and the Merger shall not
have been obtained; or
(f) by USF, if, after the date hereof, (i) the Company shall provide
information to or engage in negotiations regarding any Acquisition Proposal with
any person other than USF or its Affiliates, (ii) the Company Board shall have
withdrawn or modified its recommendation of this Agreement or the Merger or
shall have resolved to do any of the foregoing; (iii) the Company Board shall
have recommended to the stockholders of the Company an Acquisition Transaction
other than one made by USF or an Affiliate of USF; or (iv) a tender offer or
exchange offer for 50% or more of the outstanding shares of Company Common Stock
is commenced other than by USF or an Affiliate of USF.
Section 7.02 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 7.01, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of USF, the
Company, Sub or their respective officers, directors, stockholders or
Affiliates, except as set forth in Section 7.03 and further except that nothing
herein shall relieve any party from liability for any willful breach of this
Agreement.
Section 7.03 FEES AND EXPENSES.
(a) Except as set forth in this Section 7.03, 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 USF and the Company shall share
equally all fees and expenses, other than attorneys' fees, incurred in relation
to the printing and filing of the Proxy Statement (including any related
preliminary materials) and the Registration Statement (including financial
statements and exhibits) and any amendments or supplements.
(b) The Company shall reimburse USF for out-of-pocket expenses incurred by
USF relating to the transactions contemplated by this Agreement prior to
termination (including, but not limited to, fees and expenses of USF's counsel,
accountants and financial advisors), upon the termination of this Agreement by
USF pursuant to Section 7.01(c) or Section 7.01(f), or by USF or the Company
pursuant to Section 7.01(e), and USF shall reimburse the Company for
out-of-pocket expenses incurred by the Company relating to the
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transactions contemplated by this Agreement prior to termination (including, but
not limited to, fees and expenses of the Company's counsel, accountants and
financial advisors), upon the termination of this Agreement by the Company
pursuant to Section 7.01(c).
(c) (i) The Company shall pay USF a termination fee of $1,250,000 upon the
earliest to occur of the termination of this Agreement by USF or the Company
pursuant to Section 7.01(e) or by USF pursuant to Section 7.01(f)(ii), (iii) or
(iv).
(ii) The Company shall pay USF a termination fee of $750,000 upon
the termination of this Agreement by USF pursuant to Section 7.01(f)(i).
(d) The expenses and fees, if applicable, payable pursuant to Section
7.03(b) and 7.03(c) shall be paid within one business day after the first to
occur of any of the events described in Section 7.03(b) or 7.03(c).
Section 7.04 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of the Company, but, after any such approval, no
amendment shall be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of all of the parties
hereto.
Section 7.05 EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto by the other parties hereto
and (iii) waive compliance with any of the agreements or conditions contained
herein for their benefit. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 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,
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except for the agreements contained in Article II, Sections 7.02, 7.03, the last
sentence of Section 7.04 and Article VIII, and the agreements of the Affiliates
of the Company delivered pursuant to Section 5.12. The Confidentiality Agreement
shall survive the execution and delivery of this Agreement.
Section 8.02 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 USF, to:
United States Filter Corporation
40-004 Cook Street
Palm Desert, CA 92211
Attention: Chairman
Fax: (760) 346-4024
with a copy to:
United States Filter Corporation
40-004 Cook Street
Palm Desert, CA 92211
Attention: Damian C. Georgino, Esq.
Fax: (760) 346-4024
(b) if to Sub, to:
U.S. Filter/Consumer Products, Inc.
225 Second Street, S.E.
Cedar Rapids, Iowa 52401
Attention: Randall C. Easton
Fax: (319) 298-1148
with a copy to:
U.S. Filter/Consumer Products, Inc.
225 Second Street, S.E.
Cedar Rapids, Iowa 52401
Attention: Caroline D. Giddings, Esq.
Fax: (319) 298-1148
(c) if to the Company, to:
Puro Water Group, Inc.
56-24 58th Street
Maspeth, New York 11378
42
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Attention: Jack C. West, President
Fax: (718) 894-8357
with a copy to:
Lev, Berlin & Dale, P.C.
535 Connecticut Avenue
Norwalk, CT 06854-1700
Attention: Eric J. Dale, Esq.
Fax: (203) 854-1652
Section 8.03 INTERPRETATION. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrases "the date of this
Agreement", "the date hereof," and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to October 8, 1997.
Section 8.04 KNOWLEDGE. All references in this Agreement or any
certificate to knowledge of any person shall mean the knowledge of any officer
or officers of such person (but only the officer executing any such certificate,
in the case of a certificate) and shall reflect due inquiry by such officer or
officers in connection specifically with respect to the statement made to such
knowledge.
Section 8.05 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 8.06 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement (including the documents and the instruments referred to herein)
constitutes the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and are not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
Section 8.07 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.
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Section 8.08 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
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IN WITNESS WHEREOF, USF, Sub and the Company have caused this Agreement to
be signed by their respective officers thereunto, duly authorized as of the date
first written above.
PURO WATER GROUP, INC.
By: /s/ Jack C. West
-------------------------------
Title: President
-----------------------------
UNITED STATES FILTER CORPORATION
By: /s/ Randall C. Easton
-------------------------------
Title: Senior Vice President
----------------------------
USF/PW ACQUISITION CORPORATION
By: /s/ Randall C. Easton
-------------------------------
Title: Vice President
----------------------------
45
EXHIBIT 2
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT, dated as of October 8, 1997, by and between UNITED
STATES FILTER CORPORATION, a Delaware corporation ("USF"), and the stockholder
listed on the signature page hereof (the "Stockholder");
WITNESSETH:
WHEREAS, the Stockholder, as of the date hereof, is the owner of the
number of shares of Common Stock, par value $.0063 per share (the "Common
Stock"), of PURO WATER GROUP, INC., a Delaware corporation (the "Company"), set
forth below the name of the Stockholder on the signature page hereof (the
"Shares");
WHEREAS, in reliance upon the execution and delivery of this
Agreement, USF and a wholly-owned subsidiary of USF ("Sub") will enter into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), with the Company which provides, among other things, that upon the
terms and subject to the conditions thereof, Sub will be merged with and into
the Company, and the Company will become a wholly-owned subsidiary of USF (the
"Merger") and that upon consummation of the Merger, each issued and outstanding
share of the Common Stock of the Company will be converted into a fraction of a
share of Common Stock of USF as shall be determined by dividing $7.20 by the
average market price of the Common Stock of USF as defined in the Merger
Agreement; and
WHEREAS, to induce USF to enter into the Merger Agreement and to
incur the obligations set forth therein, the Stockholder is entering into this
Agreement pursuant to which the Stockholder agrees to vote in favor of the
Merger and certain other matters as set forth herein, and to make certain
agreements with respect to the Shares upon the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
Section 1. VOTING OF SHARES; PROXY. The Stockholder agrees that
until the earlier of the Effective Time (as defined in the Merger Agreement) and
the date on which the Merger Agreement is terminated in accordance with Article
VII thereof (the earliest thereof being hereinafter referred to as the
"Expiration Date"), the Stockholder shall vote all Shares owned by the
Stockholder at any meeting of the Company's stockholders (whether annual or
special and whether or not an adjourned meeting), or, if
<PAGE>
applicable, take action by written consent (i) for adoption and approval of the
Merger Agreement and in favor of the Merger and any other transaction
contemplated by the Merger Agreement as such Merger Agreement may be modified or
amended from time to time and (ii) against any action, omission or agreement
which would or could impede or interfere with, or have the effect of
discouraging, the Merger, including, without limitation, any Acquisition
Transaction (as defined in the Merger Agreement) other than the Merger. Any such
vote shall be cast or consent shall be given in accordance with such procedures
relating thereto as shall ensure that it is duly counted for purposes of
determining that a quorum is present and for purposes of recording the results
of such vote or consent.
At the request of USF, the Stockholder, in furtherance of the
transactions contemplated hereby and by the Merger Agreement, and in order to
secure the performance by the Stockholder of his or her duties under this
Agreement, shall promptly execute, in accordance with the provisions of Section
212 of the Delaware General Corporation Law, and deliver to USF, an irrevocable
proxy, substantially in the form of Annex A hereto, and irrevocably appoint USF
or its designees, with full power of substitution, his attorney and proxy to
vote, or, if applicable, to give consent with respect to, all of the Shares
owned by the Stockholder in respect of any of the matters set forth in, and in
accordance with the provisions of, clauses (i) and (ii) above of Section 1(a).
The Stockholder acknowledges that the proxy executed and delivered by him or her
shall be coupled with an interest, shall constitute, among other things, an
inducement for USF to enter into the Merger Agreement, shall be irrevocable and
shall not be terminated by operation of law upon the occurrence of any event,
including, without limitation, the death or incapacity of the Stockholder.
Notwithstanding any provision contained in such proxy, such proxy shall
terminate upon the Expiration Date.
Section 2. COVENANTS OF THE STOCKHOLDER. The Stockholder covenants
and agrees for the benefit of USF that, until the Expiration Date, he or she
will:
(a) not sell, transfer, pledge, hypothecate, encumber, assign,
tender or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer, pledge,
hypothecation, encumbrance, assignment, tender or other disposition of, any
of the Shares owned by him or her or any interest therein;
(b) other than as expressly contemplated by this Agreement, not
grant any powers of attorney or proxies or consents in respect of any of the
Shares owned by him or her, deposit any of the Shares owned by him or her
into a voting trust, enter into a voting agreement with respect to any of the
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<PAGE>
Shares owned by him or her or otherwise restrict the ability of the holder of
any of the Shares owned by him or her freely to exercise all voting rights
with respect thereto;
(c) not, and he or she shall direct and use his best efforts to
cause his or her agents and representatives not to, initiate, solicit or
encourage, directly or indirectly, any inquiries or the making or
implementation of any Acquisition Proposal or engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal. The Stockholder shall immediately cease and cause to be
terminated any existing activities, including discussions or negotiations
with any parties, conducted heretofore with respect to any of the foregoing
and will take the necessary steps to inform his or her agents and
representatives of the obligations undertaken in this Section 2(c). The
Stockholder shall notify USF immediately if any such inquiries or proposals
are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with, him
or her;
(d) not take any action whatsoever that, based on advice from USF's
or the Company's independent auditors would or could prevent the Merger from
qualifying for "pooling of interests" accounting treatment; and
(e) use his or her best efforts to take, or cause to be taken, all
action, and do, or cause to be done, all things necessary or advisable in
order to consummate and make effective the transactions contemplated by this
Agreement and the Merger Agreement, including, without limitation, to enter
into an affiliate's letter agreement substantially in the form of Exhibit B
to the Merger Agreement.
3
<PAGE>
Section 3. COVENANTS OF USF. USF covenants and agrees for the
benefit of the Stockholder that (a) immediately upon execution of this
Agreement, USF shall enter into the Merger Agreement, and (b) until the
Expiration Date, it shall use all reasonable efforts to take, or cause to be
taken, all action, and do, or cause to be done, all things necessary or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement and the Merger Agreement, consistent with the
terms and conditions of each such agreement; PROVIDED, HOWEVER, that nothing in
this Section 3 or any other provision of this Agreement is intended, nor shall
it be construed, to limit or in any way restrict USF's right or ability to
exercise any of its rights under the Merger Agreement.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder represents and warrants to USF that: (a) the execution, delivery and
performance by the Stockholder of this Agreement will not conflict with, require
a consent, waiver or approval under, or result in a breach of or default under,
any of the terms of any contract, commitment or other obligation (written or
oral) to which the Stockholder is bound; (b) this Agreement has been duly
executed and delivered by the Stockholder and constitutes a legal, valid and
binding obligation of the Stockholder, enforceable against the Stockholder in
accordance with its terms; (c) the Stockholder is the sole owner of the Shares
and the Shares represent all shares of Common Stock owned by the Stockholder at
the date hereof, and the Stockholder does not have any right to acquire, nor is
he or she the "beneficial owner" (as such term is defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) of, any other shares of any
class of capital stock of the Company or any securities convertible into or
exchangeable or exercisable for any shares of any class of capital stock of the
Company (other than shares subject to options granted by the Company); (d) the
Stockholder has full right, power and authority to execute and deliver this
Agreement and to perform his or her obligations hereunder, subject only to any
interest which the spouse of the Stockholder may have in the Shares owned by the
Stockholder, such spouse having executed a Stockholder Agreement in his or her
own right; and (e) the Stockholder owns the Shares free and clear of all liens,
claims, pledges, charges, proxies, restrictions, encumbrances, voting trusts and
voting agreements of any nature whatsoever other than as provided by this
Agreement. The representations and warranties contained herein shall be made as
of the date hereof and as of each day from the date hereof through and including
the Effective Time (as defined in the Merger Agreement).
Section 5. ADJUSTMENTS; ADDITIONAL SHARES. In the event (a) of any
stock dividend, stock split, merger (other than the Merger), recapitalization,
reclassification, combination, exchange of shares or the like of the capital
stock of the Company on, of or affecting the Shares or (b) that the Stockholder
shall become the beneficial owner of any additional shares of Common Stock or
other securities entitling the holder thereof to vote or give consent with
respect to the matters set forth in Section 1, then the terms of this Agreement
shall apply to the shares of capital stock or other instruments or documents
held by the Stockholder immediately following the effectiveness of the events
described in clause (a) or the Stockholder becoming the beneficial owner thereof
as described in clause (b), as though, in either case, they were Shares
hereunder.
Section 6. LEGEND. Concurrently with the execution of this
Agreement, the Stockholder is surrendering to the Company the certificates
representing the Shares, and is hereby requesting
4
<PAGE>
that the following legend be placed on the certificates representing such Shares
and shall request that such legend remain thereon until the Expiration Date:
"The shares of capital stock represented by this certificate are subject
to a Stockholder Agreement, dated as of October 8, 1997, between
_____________ and United States Filter Corporation, which, among other
things, restricts the sale or transfer of such shares except in accordance
therewith and contains certain voting restrictions to which such shares are
subject."
In the event that the Stockholder shall become the beneficial owner of any
additional shares of Common Stock or other securities entitling the holder
thereof to vote or give consent with respect to the matters set forth in Section
1, the Stockholder shall, upon acquiring such beneficial ownership, surrender to
the Company the certificates representing such shares or securities and request
that the foregoing legend be placed on such certificates and remain thereon
until the Expiration Date. In the event that USF requests that an irrevocable
proxy be executed and delivered by the Stockholder to it pursuant to Section 1,
the Stockholder shall promptly surrender to the Company the certificates
representing the Shares covered by such proxy and cause the foregoing legend to
be revised to replace at the end of such legend the words "and contains certain
voting restrictions to which such shares are subject" with the following:
", and such shares are also subject to an irrevocable proxy provided under
Section 212 of the Delaware General Corporation Law "
The Stockholder shall provide USF with satisfactory evidence of his or her
compliance with this Section 6 on or prior to the date five business days after
the execution hereof or of the request relating to the Stockholder's proxy, as
the case may be.
Section 7. SPECIFIC PERFORMANCE. The Stockholder acknowledges that
the agreements contained in this Agreement are an integral part of the
transactions contemplated by the Merger Agreement, and that, without these
agreements, USF would not enter into the Merger Agreement, and acknowledges that
damages would be an inadequate remedy for any breach by him or her of the
provisions of this Agreement. Accordingly, the Stockholder and USF each agree
that the obligations of the parties hereunder shall be specifically enforceable
and neither party shall take any action to impede the other from seeking to
enforce such right of specific performance.
Section 8. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be effective upon
5
<PAGE>
receipt (or refusal of receipt), shall be in writing and shall be delivered in
person, by telecopy or telefacsimile, by telegram, by next-day courier service,
or by mail (registered or certified mail, postage prepaid, return receipt
requested) to the Stockholder at the address listed on the signature page
hereof, and to USF c/o U.S. Filter/Consumer Products, Inc., 225 Second Street,
S.E., Cedar Rapids, Iowa 52401, Attention: Caroline D. Giddings, (319) 298-1154,
or to such other address or telecopy number as any party may have furnished to
the other in writing in accordance herewith.
Section 9. BINDING EFFECT; SURVIVAL. Upon execution and delivery of
this Agreement by USF, this Agreement shall become effective as to the
Stockholder at the time the Stockholder executes and delivers this Agreement.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective heirs, personal representatives, successors and
assigns.
Section 10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such State.
Section 11. COUNTERPARTS. This Agreement may be executed in two
counterparts, both of which shall be an original and both of which together
shall constitute one and the same agreement.
Section 12. EFFECT OF HEADINGS. The section headings herein are
for convenience of reference only and shall not affect the construction
hereof.
Section 13. ADDITIONAL AGREEMENTS; FURTHER ASSURANCE. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to use
all reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement. The Stockholder
will provide USF with all documents which may reasonably be requested by USF and
will take reasonable steps to enable USF to obtain all rights and benefits
provided it hereunder.
Section 14. AMENDMENT; WAIVER. No amendment or waiver of any
provision of this Agreement or consent to departure therefrom shall be effective
unless in writing and signed by USF and the Stockholder, in the case of an
amendment, or by the party which is the beneficiary of any such provision, in
the case of a waiver or a consent to depart therefrom.
6
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto all as of the day and year first above written.
UNITED STATES FILTER CORPORATION
By: /s/ Randall C. Easton
-------------------------------
Name: Randall C. Easton
Title: Senior Vice President
STOCKHOLDER
- ----------------------------------
Name:
Address:
Number of Shares:
7
