Final Form
EXHIBIT 2
CONFIDENTIAL
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
UNITED STATES FILTER CORPORATION
AND
PALL CORPORATION
dated
February 14, 2002
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; CONSTRUCTION.........................................1
1.1 Definitions.....................................................1
1.2 Construction....................................................8
ARTICLE II THE TRANSACTION..................................................9
2.1 Sale and Purchase of USFCA Shares...............................9
2.2 Purchase Price..................................................9
2.3 Purchase Price Adjustment.......................................9
2.4 Procedures for Calculating and Paying the Purchase
Price Adjustment...............................................10
2.5 Closing........................................................11
2.6 Payment........................................................11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF USF..........................11
3.1 Organization and Authority.....................................12
3.2 Authorization; Enforceability..................................12
3.3 Shares; Capitalization.........................................12
3.4 No Violation of Laws or Agreements; Consents...................13
3.5 Financial Statements...........................................14
3.6 No Changes.....................................................14
3.7 Taxes..........................................................15
3.8 Owned and Leased Property......................................16
3.9 No Pending Litigation..........................................18
3.10 Compliance With Law; Permits...................................18
3.11 Labor Matters..................................................18
3.12 Intellectual Property Rights...................................19
3.13 Employees; Employee Related Agreements and Plans; ERISA........21
3.14 Environmental Matters..........................................24
3.15 Bank Accounts..................................................25
3.16 Material Contracts.............................................26
3.17 Brokers, Finders, Etc..........................................26
3.18 Insurance......................................................26
3.19 Absence of Undisclosed Liabilities.............................27
3.20 Disclaimer of Warranties.......................................27
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER.........................27
4.1 Organization...................................................27
4.2 Authorization; Enforceability..................................27
4.3 No Violation of Laws; Consents.................................28
4.4 No Pending Litigation or Proceedings...........................28
4.5 Brokers, Finders, Etc..........................................28
4.6 Investment.....................................................28
4.7 Financial Ability..............................................28
i
ARTICLE V ACTIONS PRIOR TO CLOSING DATE....................................28
5.1 Access to Group Information....................................29
5.2 Notifications..................................................29
5.3 Consents of Third Parties......................................29
5.4 Filings Under the HSR Act and Laws of Foreign Jurisdictions....30
5.5 Operations Prior to Closing Date...............................31
5.6 Negotiations...................................................32
5.7 Guaranty and Surety Obligations................................32
5.8 Alternative Structures.........................................32
5.9 Directors' Shares..............................................32
5.10 Removal of Certain Liens.......................................32
ARTICLE VI ADDITIONAL AGREEMENTS...........................................33
6.1 Use of Names; Transfer of Intellectual Property Assets.........33
6.2 Tax Matters....................................................34
6.3 Employees and Employee Benefit Plans...........................41
6.4 Insurance......................................................44
6.5 Securities Law Compliance and Legends..........................44
6.6 No Public Announcement.........................................45
6.7 Expenses.......................................................45
6.8 Environmental Access...........................................45
6.9 Employees......................................................45
6.10 Assignment.....................................................46
6.11 Shared Facilities..............................................46
6.12 Agreements with USF and Affiliates.............................46
6.13 Legal Opinion of USF...........................................46
6.14 Legal Opinion of Buyer.........................................46
6.15 Noncompetition.................................................46
6.16 Patent Licenses................................................49
ARTICLE VII CONDITIONS TO CLOSING; TERMINATION.............................49
7.1 Conditions Precedent to Obligation of Buyer....................49
7.2 Conditions Precedent to Obligation of USF......................51
7.3 Termination....................................................52
ARTICLE VIII INDEMNIFICATION...............................................52
8.1 Survival of Representations, Warranties, Covenants and
Agreements.....................................................52
8.2 General Indemnification........................................53
8.3 Procedures.....................................................54
8.4 Consequential Damages..........................................55
8.5 Sole Remedy....................................................55
ARTICLE IX MISCELLANEOUS...................................................55
9.1 Books and Records..............................................55
9.2 Further Assurances.............................................56
9.3 Notices........................................................56
9.4 Assignment; Governing Law......................................57
9.5 Amendment and Waiver; Cumulative Effect........................59
9.6 Entire Agreement; No Third Party Beneficiaries.................59
9.7 Severability...................................................59
9.8 Counterparts...................................................59
ii
LIST OF SCHEDULES AND EXHIBITS
Schedule A-1 - U.S. Members
Schedule A-2 - Foreign Members
Schedule A-3 - Joint Venture Entities
Schedule 1.1P - Permitted Encumbrances
Schedule 1.1S - Sensor Technology Business Patents
Schedule 2.3 - Purchase Price Adjustments
Schedule 3.1 - Organization
Schedule 3.5 - Financial Statements
Schedule 3.6 - Absence of Changes
Schedule 3.7 - Taxes
Schedule 3.8(a) - Owned Real Property
Schedule 3.8(b) - Leases of Real Property
Schedule 3.8(d) - Shared Facilities
Schedule 3.8(e) - Sufficiency of the Assets
Schedule 3.9 - Litigation
Schedule 3.10 - Compliance With Law; Permits
Schedule 3.11 - Labor Matters
Schedule 3.12(b) - Intellectual Property Agreements
Schedule 3.12(c)(i) - Rights in Intellectual Property
Schedule 3.12(c)(ii) - Patents
Schedule 3.12(c)(iii) - Marks
Schedule 3.13(a) - Employee Benefit Plans
Schedule 3.13(b) - Status of Plans
Schedule 3.13(c) - Liabilities under Employee Benefit Plans
Schedule 3.13(d) - Contributions
Schedule 3.13(h) - Employees
Schedule 3.13(i) - Agreements and Plans
Schedule 3.14 - Environmental Matters
Schedule 3.15 - Bank Accounts
Schedule 3.16 - Material Contracts
Schedule 3.17 - Brokers, Finders of USF
Schedule 3.18 - Insurance
Schedule 4.5 - Brokers, Finders of Buyer
Schedule 5.3 - Material Consents
Schedule 5.4 - Antitrust Laws
Schedule 5.5 - Operations Prior to Closing Date
Schedule 5.7 - Guaranty and Surety Obligations
Schedule 6.4 - Workers Compensation Claims
Schedule 6.15 - Noncompetition
iii
Exhibit 1 - Form of Opinion of USF General Counsel
Exhibit 2 - Opinions of Buyer's General Counsel
Exhibit 3 - Guaranty of Vivendi Water ▇.▇.
▇▇
LIST OF APPENDICES
Appendix I - Financial Statements
Appendix II - Patents
Appendix III - Marks
Appendix IV - Bank Accounts
Appendix V - Insurance Policies
Appendix VI - Insurance Claims (Non-Workers' Compensation)
Appendix VII - Insurance Claims (Workers' Compensation)
v
Stock Purchase
Agreement (the
"Agreement"),
dated the 14th day
of February, 2002,
by and between
UNITED STATES
FILTER
CORPORATION, a
Delaware
corporation
("USF"), and PALL
CORPORATION, a New
York corporation
("Buyer").
WITNESSETH
A. USF directly owns all of the issued and outstanding capital stock of
USFC Acquisition, Inc. ("USFCA"), a Delaware corporation (the "USFCA
Shares").
B. USFCA owns directly or indirectly all of the issued and outstanding
capital stock (the "Subsidiary Shares" and together with the USFCA
Shares the "Shares") of the entities listed on Schedule A-1 [US] and
Schedule A-2 [Foreign].
C. USFCA indirectly owns a majority of the issued and outstanding capital
stock of the entities listed on Schedule A-3.
D. On the terms and subject to the conditions set forth in this Agreement,
USF desires to sell to Buyer, and Buyer desires to purchase from USF,
the USFCA Shares.
NOW, THEREFORE, in consideration of the representations, warranties, covenants
and agreements contained herein, USF and Buyer, each intending to be legally
bound hereby, agree as set forth below.
ARTICLE I
DEFINITIONS; CONSTRUCTION
1.1 Definitions. As used in this Agreement, the following terms have
the meanings specified in this Section 1.1.
"AAA Arbitration" has the meaning given that term in Section 2.4.
"Account Transfer Date" has the meaning given that term in Section 6.3.
"Accounting Mediator" has the meaning given that term in Section 2.4.
"Acquired Business" has the meaning given that term in Section 6.15.
"Affected Employees" has the meaning given that term in Section 6.3.
1
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with such Person.
"Affiliated Group" has the meaning given that term in Section 3.7.
"Agreement" means this Stock Purchase Agreement, as it may be amended
from time to time.
"Antitrust Division" means the Antitrust Division of the United States
Department of Justice.
"Antitrust Law" has the meaning given that term in Section 5.4.
"Balance Sheet" has the meaning given that term in Section 3.5.
"Balance Sheet Date" has the meaning given that term in Section 3.5.
"Business" means the business of the Group as conducted on the date
hereof, which consists of the design, manufacture and sale of filtration
products for the separation and purification of liquids and gasses, but which
excludes the Memcor Business and the Sensor Technology Business.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"Buyer" means Pall Corporation, a New York corporation.
"Buyer Benefit Programs" has the meaning given that term in Section
6.3.
"Buyer's 401(k) Plan" has the meaning given that term in Section 6.3.
"CERCLA" has the meaning given that term in the definition of
"Environmental Law".
"Closing" has the meaning given that term in Section 2.5.
"Closing Date" has the meaning given that term in Section 2.5.
"Closing Date Adjusted Net Assets" means total assets of the Group less
total liabilities of the Group, as of the Closing Date, determined (i) in
accordance with GAAP (applied on a basis consistent with USF's past practice
relating to the Group) except as set forth in the last paragraph of Schedule
3.5, (ii) subject to the same type of adjustments set forth on Schedule 2.3, and
(iii) pursuant to the procedures set forth in Section 2.4.
"COBRA" has the meaning given that term in Section 3.13.
"Code" means the United States Internal Revenue Code of 1986, as
amended from time to time, and the applicable rulings and regulations
thereunder.
2
"Contract" and "Contracts" means any written agreement, note, letter of
credit, indenture, financial instrument, lease or license to which any Member is
a party (other than with another Member) or by which it is bound.
"Debt Obligations" shall mean any Contract evidencing an obligation for
borrowed money by any Member (except intra-Group indebtedness), any capitalized
lease obligation of any Member, any obligation properly classified as
indebtedness or debt under GAAP, or any guarantee of any Member in respect of
any indebtedness or obligation for borrowed money of any Person (other than in
respect of the obligations of another Member and other than the endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business).
"Differences" has the meaning given that term in Section 2.4.
"Directors' Shares" means the Shares identified as such on Schedule
A-2.
"Encumbrance" means any mortgage, deed of trust, pledge, security
interest, claim, easement, lien, charge, option, restriction on transfer,
conditional sale or other title retention agreement, defect in title or other
restriction of a similar kind.
"Environmental Laws" means all Laws relating to (a) the control of any
pollutant or the protection or restoration of the environment (including air,
water and land), workplace safety, human health or natural resources; (b) the
generation, manufacture, processing, use, handling, treatment, storage,
disposal, release, distribution and transportation of solid, gaseous or liquid
wastes, including Laws relating to releases or threatened releases of Hazardous
Materials (including releases to ambient air, surface water, groundwater and
land) including the Clean Air Act ("CAA"), 42 U.S.C. ss.7401 et seq., the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss.6901 et seq., the
Federal Water Pollution Control Act, as amended by the Clean Water Act ("CWA"),
33 U.S.C. ss.1251 et seq., the Comprehensive Environmental Response,
Compensation, and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act ("CERCLA"), 42 U.S.C. ss.9601 et seq., the Toxic Substances
Control Act ("TSCA"), 15 U.S.C. ss.2601 et seq., the Oil Pollution Act of 1990
("OPA"), 33 U.S.C. ss.2701 et. seq., the Emergency Planning and Community Right
to Know Act ("EPCRA"), 42 U.S.C. ss.1101 et seq., and the Hazardous Materials
Transportation Act ("HMTA"), 49 U.S.C. ss.1501 et seq., as each may be amended
from time to time.
"ERISA" means the United States Employee Retirement Income Security Act
of 1974, as amended, and the applicable rulings and regulations thereunder.
"Excess Section 338 Tax Liability" has the meaning given that term in
Section 6.2.
"Expenses" means any and all reasonable expenses incurred in connection
with defending any claim, action, suit or proceeding incident to any matter
indemnified against hereunder (including court filing fees, court costs,
arbitration fees or costs, witness fees and reasonable fees and disbursements of
legal counsel, investigators, expert witnesses, accountants and other
professionals).
"Final Payment Date" has the meaning given that term in Section 2.4.
3
"Financial Statements" has the meaning given that term in Section 3.5.
"Foreign Jurisdiction" means any Governmental Body having lawful
jurisdiction in a place outside the United States of America in which any Member
carries on the Business.
"Foreign Member" means each of the Members listed on Schedule A-2 and
Schedule A-3.
"Foreign Member Retirement Plan" means any written plan established,
maintained, sponsored or contributed to by any Foreign Member that provides
retirement or pension benefits to non-U.S. employees of such Foreign Member,
excluding any plans maintained or required by applicable Law or any Governmental
Body.
"FTC" means the United States Federal Trade Commission.
"GAAP" means United States generally accepted accounting principles in
effect for the relevant time period.
"Gas Filtration" has the meaning given that term in Section 6.15.
"Governing Documents" means, with respect to any Person who is not a
natural Person, the certificate or articles of incorporation, bylaws, deed of
trust, formation or governing agreement and other charter documents or
organizational or governing documents or instruments of such Person.
"Governmental Body" means any court or government (federal, state,
local, foreign or provincial) or any political subdivision thereof, including
without limitation, any department, commission, board, bureau, agency or other
regulatory, administrative or governmental authority or instrumentality.
"Group" means all of the Members.
"Group Names" has the meaning given that term in Section 6.1.
"Hazardous Materials" means (a) any radioactive materials, asbestos in
any form that is friable, and transformers that contain dielectric fluid
containing levels of polychlorinated biphenyls; and (b) any chemicals, materials
or substances classified as "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
substances," or "toxic substances" under any applicable Environmental Law.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Income Tax" (and, with correlative meaning, "Income Taxes") means any
Tax on net or gross income, profits or receipts, together with any interest or
penalties, imposed by any Governmental Body.
"Indemnified Party" has the meaning given that term in Section 8.2.
4
"Indemnifying Party" has the meaning given that term in Section 8.2.
"In-Process Liquid Filtration" has the meaning given that term in
Section 6.15.
"Intellectual Property Assets" has the meaning given that term in
Section 3.12.
"IP" has the meaning given that term in Section 3.8.
"IRS" means the United States Internal Revenue Service.
"Joint Venture Entities" means the entities listed on Schedule A-3.
"Law" means any applicable statute, law, ordinance, rule, regulation,
order, judgment or decree enacted, adopted, issued or promulgated by any
Governmental Body.
"Licensed Buyer Patents" has the meaning given that term in Section
6.16.
"Licensed USF Patents" has the meaning given that term in Section 6.16.
"Litigation" means any action, suit, arbitration or proceeding of any
nature or kind whatsoever, whether civil, criminal or administrative, at law or
in equity, by or before any Governmental Body or arbitrator.
"Losses" means, without duplication, any and all losses, costs,
obligations, liabilities, settlement payments, fines, penalties, damages,
Expenses or other charges.
"Marks" has the meaning given that term in Section 3.12.
"Material Adverse Effect" means a material adverse effect on the
results of operations or financial condition of the Group, taken as a whole,
other than changes (i) relating to generally applicable economic conditions or
the industry in which the Group operates in general or (ii) resulting from the
announcement by USF of its intention to sell the Group.
"Member" means each of the U.S. Members and each of the Foreign
Members.
"Memcor Business" means the manufacture, sale and distribution of water
and wastewater treatment systems and equipment based on a backwashable hollow
membrane fiber filtration technology.
"Multiemployer Plan" means a multiemployer plan within the meaning of
Section 4001 of ERISA.
"Non-Compete Period" has the meaning given that term in Section 6.15.
"Operative Period" has the meaning given that term in the first
paragraph of Article III.
"Owned Real Property" has the meaning given that term in Section 3.8.
"Party" means each of USF and Buyer.
5
"Patents" has the meaning given that term in Section 3.12.
"Permits" has the meaning given that term in Section 3.10.
"Permitted Encumbrances" means (a) liens for Taxes and other
governmental charges and assessments that are not yet due and payable, (b) liens
of landlords and liens of carriers, warehousemen, mechanics, materialmen and
repairmen and other similar liens arising in the ordinary course of business for
sums not yet due and payable, (c) liens reflected in the Financial Statements,
(d) purchase money security interests, (e) other liens on, or imperfections of
title with respect to, property that are not material in amount and do not
materially detract from the value of or materially impair the existing use of
the property affected by such lien or imperfection and (f) Encumbrances set
forth on Schedule 1.1P.
"Person" means and includes a natural person, a corporation, an
association, a partnership, a limited liability company, a trust, a joint
venture, an unincorporated organization or a Governmental Body.
"Plymouth Businesses" has the meaning given that term in Section 6.15.
"Policies" has the meaning given that term in Section 3.18.
"Pre-Closing Period" has the meaning given that term in Section 3.7.
"Proceedings" has the meaning given that term in Section 8.2.
"Prohibited Activity" has the meaning given that term in Section 6.15.
"Purchase Price" has the meaning given that term in Section 2.2.
"Purchase Price Adjustment" has the meaning given that term in Section
2.3.
"Recoverable Loss" means any Losses arising out of any single act,
omission, event or circumstance (or series of related acts, omissions, events or
circumstances) if such Losses exceed $25,000 (and, if such Losses are incurred,
the entire amount of such Losses shall be a Recoverable Loss).
"Reference Rate" means the U.S. prime rate published in the Wall Street
Journal on the Closing Date, plus 125 basis points.
"Related Party" means (i) any Affiliate of a Party or (ii) any officer
or director of a Party or of any Person identified in clause (i) preceding.
"Reserved Names" has the meaning given that term in Section 6.1(a).
"Section 338 Elections" has the meaning given that term in Section 6.2.
"Section 338(h)(10) Elections" has the meaning given that term in
Section 6.2.
"Securities Act" has the meaning given that term in Section 4.6.
6
"Sensor Technology Business" means the operations and business
conducted by certain Members relating to the development and exploitation of the
U.S. and foreign patents identified in Schedule 1.1S.
"Shares" has the meaning given that term in the recitals of this
Agreement.
"Stamp Duty Clawback" means a stamp duty that becomes due on or after
the Closing Date arising from the intragroup transfer of a Member prior to the
Closing Date for which there was a stamp duty holiday.
"Straddle Period" has the meaning given that term in Section 3.7.
"Subsidiary" means any corporation, partnership, joint venture or other
entity of which any Person owns, directly or indirectly, more than 50% of the
outstanding voting securities or equity interests.
"Tax" (and, with correlative meaning, "Taxes" and "Taxable") means
taxes of any kind, levies or other like assessments, customs, duties, imposts,
charges or fees, including income, gross receipts, ad valorem, value added,
excise, real or personal property, asset, sales, use, license, payroll,
transaction, capital, net worth and franchise taxes, estimated taxes,
withholding, employment, social security, workers compensation, utility,
severance, production, unemployment compensation, occupation, premium, windfall
profits, transfer and gains taxes or other governmental taxes imposed by or
payable to any Governmental Body.
"Tax Matters" has the meaning given that term in Section 6.2.
"Tax Return" means any return, declaration, form, report, claim for
refund, or information return or statement relating to any Tax, including any
schedule or attachment thereto, and including any amendment thereof.
"Territory" has the meaning given that term in Section 6.15.
"Transferred Assets" has the meaning given that term in Section 6.3.
"USFCA Share Transfer" has the meaning given that term in Section 2.1.
"USFCA Shares" has the meaning given that term in the recitals of this
Agreement.
"U.S. Company Employees" has the meaning given that term in Section
6.3.
"U.S. Members" means the entities listed on Schedule A-1, including
USFCA.
"USF" has the meaning given that term in the introductory paragraph of
this Agreement.
"USF 401(k) Plan" means the United States Filter Corporation Retirement
Savings Plan.
"USF Employee Benefit Plan" means any (i) "employee benefit plan,"
within the meaning of Section 3(3) of ERISA or (ii) stock option, stock
purchase, restricted stock, VEBA, profit sharing, pension, retirement, deferred
compensation, medical, life, disability, accident, salary continuation, sick
pay, sick leave, supplemental retirement and unemployment benefit plans or
programs (whether or not insured), that has been established, maintained,
sponsored or contributed to by USF or any United States Subsidiary of USF for
the benefit of any active, retired or former employee or director of any Member;
provided, that "USF Employee Benefit Plan" shall not include any Foreign Member
Retirement Plan, any Vivendi Employee Benefit Plan or any Multiemployer Plan.
7
"USF's Knowledge" means the present actual knowledge of ▇▇▇▇▇▇ ▇▇▇▇▇
(as to all matters), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (as to all matters), ▇▇▇▇▇▇ ▇▇▇▇ (as to
all matters), ▇▇▇▇▇▇ Denver (as to all matters), ▇▇▇ ▇▇▇▇▇▇▇ (as to the matters
which are the subject of the representations and warranties in Section 3.13
only), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (as to the matters which are the subject of the
representations and warranties in Section 3.7 only), ▇▇▇▇ ▇▇▇▇▇ (as to the
matters which are the subject of the representations and warranties in Section
3.12 only) and ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (as to the matters which
are the subject of the representations and warranties in Section 3.14 only),
after reviewing this Agreement (including the representations and warranties
made herein) with each of the following persons: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, Dr.
Erbil Turgay, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (together, for
purposes of this definition, the "Management Group"). All matters disclosed to
the persons listed above in this paragraph (other than the Management Group) by
the Management Group in reviewing and discussing this Agreement (and the
representations and warranties made herein) shall be deemed within the present
actual knowledge of such persons. If USF, any Member, or any of their employees,
agents, directors or officers has disclosed information to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or
▇▇▇▇▇▇ ▇▇▇▇ that would be relevant to a determination of or could constitute
USF's Knowledge, USF will waive any attorney-client privilege it may have
pertaining to such information and with respect to periods prior to the Closing
Date cause all Members to waive any attorney-client privilege they may have
pertaining to such information.
"USF MDCP" has the meaning given that term in Section 6.3.
"USF Licensed Field" has the meaning given that term in Section 6.16.
"Vivendi Employee Benefit Plan" means any of the plans identified as
such on Schedule 3.13(a).
"VNAO" means Vivendi North America Operations, Inc., a Delaware
corporation and the sole stockholder of USF.
"WARN Act" means the Federal Workers' Adjustment and Retraining
Notification Act.
"Water or Wastewater Filtration Applications" has the meaning given
that term in Section 6.15.
1.2 Construction. (a) Unless the context otherwise requires, as used in
this Agreement: (i) an accounting term not otherwise defined herein has the
meaning ascribed to it in accordance with GAAP; (ii) "or" is not exclusive;
(iii) "including" and its variants mean "including, without limitation" and its
variants; (iv) words defined in the singular have the parallel meaning in the
plural and vice versa; (v) references to "written" or "in writing" include in
electronic form; (vi) words applicable to one gender shall be construed to apply
to each gender; (vii) the terms "hereof", "herein", "hereby", "hereto", and
derivative or similar words refer to this entire Agreement, including the
Schedules hereto; and (viii) the terms "Article", "Section" and "Schedule" refer
to the specified Article, Section, or Schedule of or to this Agreement.
8
(b) A reference to any Person includes such Person's successors
and permitted assigns.
(c) Any reference to "days" means calendar days unless Business
Days are expressly specified.
(d) The Schedules, Appendices and Exhibits to this Agreement are
incorporated herein by reference and made a part hereof for all purposes.
(e) Any references to "dollars" or "$" means dollars of the United
States of America unless expressly specified otherwise. Except as otherwise
noted, any reference to an amount in dollars in Article III or Article IV means
such amount or the equivalent amount in the applicable foreign currency,
assuming exchange rates as of September 30, 2001.
(f) USF and Buyer, each represented by legal counsel, have each
participated in the negotiation and drafting of this Agreement. If an ambiguity
or question of intent or interpretation should arise, this Agreement shall be
construed as if drafted jointly by the Parties, and no presumption or burden of
proof shall arise favoring or burdening either Party by virtue of the authorship
of any of the provisions of this Agreement.
ARTICLE II
THE TRANSACTION
2.1 Sale and Purchase of USFCA Shares. Upon the terms and subject to
the conditions of this Agreement and in consideration of the Purchase Price, at
the Closing, USF shall sell, assign, transfer and deliver to Buyer (such sale,
assignment, transfer and delivery, the "USFCA Share Transfer"), and Buyer shall
purchase and take delivery of the USFCA Shares, free and clear of all
Encumbrances except those arising under federal, state or foreign securities
Laws. The certificates representing the USFCA Shares shall be registered in the
name of Buyer or as Buyer may direct.
2.2 Purchase Price. The aggregate purchase price for the USFCA Shares
shall be $360,000,000 (the "Purchase
Price"), as such price may be adjusted in accordance with the
provisions of Section 2.3. and Section7.1(h).
2.3 Purchase Price Adjustment. After the Closing, the Purchase Price
shall be adjusted by an amount (the "Purchase Price Adjustment") determined by
USF and Buyer in accordance with this Section 2.3 and Section 2.4. If the amount
of Closing Date Adjusted Net Assets exceeds $208,452,000, the Purchase Price set
forth in Section 2.2 shall be increased by the amount of such excess (a Positive
Purchase Price Adjustment). If the amount of Closing Date Adjusted Net Assets is
less than $208,452,000 the Purchase Price set forth in Section 2.2 shall be
reduced by the amount by which Closing Date Adjusted Net Assets is less than
$208,452,000 (a Negative Purchase Price Adjustment). The amount of $208,452,000
in the preceding sentence has been arrived at by making the adjustments to the
Balance Sheet shown in Schedule 2.3.
9
2.4 Procedures for Calculating and Paying the Purchase Price
Adjustment.
(a) Calculation. As soon as practicable after the Closing Date but
in no event later than the 120th day after the Closing Date, Buyer shall prepare
or cause to be prepared, and shall deliver to USF a schedule setting forth
Buyer's calculation of the Purchase Price Adjustment, including a worksheet
setting forth its calculation of Closing Date Adjusted Net Assets, and Buyer
shall thereafter provide to USF such supporting work papers or other supporting
information as may be reasonably requested by USF. The Purchase Price Adjustment
shall be calculated using the same foreign exchange rates as were used in the
preparation of the Balance Sheet. If USF shall have any objections to Buyer's
calculation of the Purchase Price Adjustment, USF shall so notify Buyer no later
than ten (10) Business Days after delivery of the schedule, and Buyer and USF
shall endeavor in good faith for a period not to exceed 10 Business Days from
the date of delivery of such notice to resolve their differences (the
"Differences"). If at the end of the 10 Business Day period the parties are
unable to resolve any of their Differences, USF and Buyer shall submit the
calculation and resolution of such Differences to an independent public
accounting firm of recognized national standing in the United States that they
agree on in writing. If Buyer and USF have not agreed on an independent public
accounting firm by the end of the 10 Business Day period referred to above, such
firm shall be selected by lot from those independent public accounting firms of
recognized national standing in the United States that are willing to act and,
if there are no such independent public accounting firms, from the willing
independent public accounting firms of recognized regional standing in one or
more regions of the United States in which a Member has offices (the independent
public accounting firm selected pursuant to the foregoing procedures, the
"Accounting Mediator"). The Accounting Mediator shall be instructed to resolve
such Differences and such resolution shall be (i) set forth in writing and
signed by the Accounting Mediator, (ii) delivered to Buyer and USF as soon as
practicable after the Differences are submitted to the Accounting Mediator but
not later than the 30th day after such submission, (iii) made in accordance with
this Agreement and (iv) conclusive and binding on the Parties on the date of
delivery of such resolution. The Accounting Mediator shall only be authorized on
any one issue to decide in favor of and choose the position of either of the
Parties or to decide upon a compromise position between the ranges presented by
the Parties to such Accounting Mediator. The Accounting Mediator shall base its
decision solely upon the presentations of the Parties to the Accounting Mediator
at a hearing held before the Accounting Mediator and upon any materials made
available by either Party and not upon independent review. If the foregoing
procedure does not result in the selection of an Accounting Mediator or if the
Accounting Mediator does not or is unwilling to resolve all of the Differences
on or before the expiration of 30 days from the date of submission of the
Differences, either Party shall be entitled for a period of 10 additional
Business Days to apply for arbitration of the unresolved Differences to the
American Arbitration Association ("AAA Arbitration") and, if a Party so applies,
the Parties shall submit the matter to AAA Arbitration in the City of
Wilmington, Delaware, which shall be binding upon the Parties. If neither Party
shall apply for AAA Arbitration of the unresolved Differences, the Purchase
Price Adjustment shall be deemed to be the amount provided by Buyer to USF
pursuant to this subsection, adjusted to reflect those Differences that were
theretofore resolved, if any, by the Parties or, if applicable, by the
Accounting Mediator. The fees and expenses of the Accounting Mediator or AAA
Arbitration, or both, if any, shall be borne equally by Buyer and USF.
10
(b Amount. If the Purchase Price Adjustment as finally determined
(whether by agreement of the Parties, lapse of time or resolution of the
Differences) is positive, Buyer shall pay to USF the amount of the Purchase
Price Adjustment plus interest from the Closing Date to the date of payment,
inclusive of each such date, at the Reference Rate. If the Purchase Price
Adjustment as so finally determined is negative, USF shall pay to Buyer the
amount of the Purchase Price Adjustment plus interest for the period and at the
rate described in the preceding sentence.
(c) Payment. Payment of the Purchase Price Adjustment plus accrued
interest shall be made by Buyer or USF, as the case may be, to the other Party
in United States Dollars by wire transfer of immediately available funds to the
wire transfer address of such other Party on the 5th Business Day following the
date on which the procedures for resolution of the Differences in this Section
2.4 have been completed (the "Final Payment Date"), which wire transfer address
shall be designated by Buyer or USF, as the case may be, by notice to the other
on or before the 2nd Business Day prior to the Final Payment Date.
2.5 Closing. Unless this Agreement shall have been terminated and the
transactions contemplated hereby shall have been abandoned pursuant to Section
7.3, and subject to the satisfaction or waiver of all of the conditions set
forth in Article VII, the closing of the USFCA Share Transfer (the "Closing")
shall take place at 10:00 A.M. at the offices of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, as soon as practicable,
but in any event within three (3) Business Days after the last of the conditions
set forth in Article VII hereof is satisfied or waived, other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver of those conditions, or at such other date, time or
place as the Parties shall agree in writing. Such date is herein referred to as
the "Closing Date."
2.6 Payment. Upon the terms and subject to the conditions of this
Agreement, at the Closing, Buyer shall pay the Purchase Price by wire transfer
of immediately available funds to an account designated by USF.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF USF
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, USF represents and warrants to
Buyer as follows (provided, however, that all representations and warranties of
USF in this Article III are made only with respect to the period from and after
the date which is the later of (i) December 9, 1997 (being the date on which USF
acquired Memtec, Ltd., the predecessor of the Group), (ii) to the extent any
such representation or warranty relates to any Member acquired by USF or any of
its Affiliates after December 9, 1997, the date upon which such Member was
acquired by USF or any of its Affiliates, and (iii) any date specifically
referred to in such representation or warranty (any such period, the "Operative
Period")):
11
3.1 Organization and Authority. USF is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Delaware.
USF has all corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. Each of the Members is duly organized,
validly existing and in good standing under the Laws of its jurisdiction of
organization (in those jurisdictions in which the concept of good standing is
applicable) and has all corporate power and authority to own, operate or lease
its properties and carry on its business as now conducted. Each of the Members
is duly qualified to do business and is in good standing (in those jurisdictions
in which the concept of good standing is applicable) in each jurisdiction in
which the character of the properties owned, operated or leased by it or the
nature of the activities conducted by it make such qualification and good
standing necessary, except where the failure to be so qualified or in good
standing could not reasonably be expected to have a Material Adverse Effect.
Schedule 3.1 sets forth a list of all jurisdictions where the character of the
properties owned, operated or leased by a U.S. Member or the nature of the
activities conducted by such U.S. Member make such qualification and good
standing necessary, and a list of all Foreign Jurisdictions (other than the
respective jurisdiction of formation or incorporation) where any Member owns
material physical assets.
3.2 Authorization; Enforceability. This Agreement has been duly
executed and delivered by and constitutes the legal, valid and binding
obligation of USF, enforceable against it in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other Laws of general
application relating to or affecting creditors' rights and to general equity
principles. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate proceedings on the part of USF and by the other Members
of the Group if and to the extent required by Law or Governing Documents.
3.3 Shares; Capitalization.
(a) Members. Other than the Directors' Shares, the Shares
constitute all of the issued and outstanding shares of capital stock of the
Members. The authorized capital stock of each Member (other than the Joint
Venture Entities) and the number of shares of capital stock issued, outstanding
and held in treasury are listed on Schedule A-1 and Schedule A-2, respectively.
All of the USFCA Shares are owned of record and beneficially by USF and are free
and clear of any and all Encumbrances, except those created by or on behalf of
Buyer and those arising under federal, state or foreign securities Laws. All of
the Member Shares (other than the Shares of the Joint Venture Entities and the
USFCA Shares) are owned of record and beneficially by direct or indirect
wholly-owned Subsidiaries of USFCA and are free and clear of all Encumbrances,
except those created by or on behalf of Buyer and those arising under federal,
state or foreign securities Laws. All of such outstanding shares of capital
stock have been duly authorized and validly issued and are fully paid and
nonassessable. None of the Members has any outstanding options, warrants, rights
or subscriptions, or has entered into or incurred any other binding commitment
or obligation which remains enforceable to issue or sell any shares of its
capital stock, or any securities or obligations convertible into or exchangeable
for any shares of its capital stock, or has granted to any Person any right
which remains enforceable to subscribe for or acquire from it any shares of its
capital stock, and no such securities, obligations or rights are outstanding.
12
(b) Joint Venture Entities. Schedule A-3 contains a list of each
Member that is not directly or indirectly wholly owned by USFCA and sets forth
the authorized and outstanding capital stock of each such Joint Venture Entity.
The number of the outstanding shares of capital stock of each such Joint Venture
Entity as shown on such Schedule are owned of record and beneficially by direct
or indirect wholly-owned Subsidiaries of USFCA, as indicated on such Schedule,
free and clear of any and all Encumbrances, except those created by or on behalf
of the Buyer and Permitted Encumbrances. The outstanding shares of capital stock
of such Joint Venture Entities which are indirectly owned by USFCA have been
duly authorized and validly issued, and are fully paid and nonassessable. None
of such Joint Venture Entities has any outstanding options, warrants, rights or
subscriptions, or has entered into or incurred any other binding commitment or
obligation which remains enforceable to issue or sell any shares of its capital
stock, or any securities or obligations convertible into or exchangeable for any
shares of its capital stock, or has granted to any Person any right which
remains enforceable to subscribe for or acquire from it any shares of its
capital stock, and no such securities, obligations or rights are outstanding.
(c) Transfer of Title. Upon delivery of the USFCA Shares
hereunder, Buyer will acquire title thereto, free and clear of any and all
Encumbrances except those arising under federal, state or foreign securities
Laws.
3.4 No Violation of Laws or Agreements; Consents.
(a) No Violation of Laws or Agreements. Except as set forth on
Schedule 5.3, neither the execution and delivery by USF of this Agreement, the
consummation of the transactions contemplated hereby, nor the compliance with or
fulfillment of the terms, conditions or provisions hereof by USF:
(i) violates any provision of the Governing Documents of USF
or any of the Members;
(ii) conflicts with, breaches, constitutes a default or an
event of default under any of the terms of, results in the termination of,
accelerates the maturity of or creates any Encumbrance on the USFCA Shares or
any asset or property of any of the Members or under any lease, license,
indenture, mortgage or any other contract, agreement or instrument to which any
Member is a party or by which any of its assets may be bound or affected, the
result of which would have a Material Adverse Effect; or
(iii) violates any Law to which any Member is subject or by
which any asset of the Members is bound or affected, the result of which would
have a Material Adverse Effect.
(b) Consents. Other than filings required in compliance with the
provisions of the HSR Act and other Antitrust Laws as set forth on Schedule 5.4,
and such consents, approvals, authorizations, registrations or filings the
failure of which to obtain or make would not have a Material Adverse Effect, and
except as set forth on Schedule 5.3, no consent, approval or authorization of,
or registration or filing with, any Person is required in connection with the
execution or delivery by USF of this Agreement or the consummation by USF of the
transactions contemplated hereby.
13
3.5 Financial Statements. The audited combined balance sheets as of
December 31, 1999 and 2000 and the audited combined income statements and
statements of cash flows for the Group for the two-year period ended December
31, 2000 and the unaudited consolidated balance sheet and income statement for
the Group as of December 31, 2001 and for the year then ended (collectively, the
"Financial Statements") have been delivered to Buyer and are attached hereto as
Schedule 3.5. The Financial Statements (i) have been prepared in accordance with
GAAP on a consistent basis throughout the indicated period, except as set forth
on Schedule 3.5, and (ii) present fairly in all material respects the financial
condition and results of operation of the Group at the dates and for the
relevant periods indicated. The unaudited consolidated balance sheet of the
Group as of December 31, 2001 included in the Financial Statements shall be
referred to herein as the "Balance Sheet," and December 31, 2001 shall be
referred to herein as the "Balance Sheet Date." The amounts set forth in
Schedule 2.3 followed by reference to footnote (3), which footnote reads,
"Transfer of Sensor related assets and liabilities to Parent Company
Investment," set forth truly and correctly in all material respects the assets
and liabilities attributable to the Sensor Technology Business as of the Balance
Sheet Date.
3.6 No Changes. Except as set forth on Schedule 3.6 or as contemplated
by this Agreement, since the Balance Sheet Date the Group has conducted the
Business only in the ordinary course and there has not been:
(i) any change in the financial condition or assets of the Group
which has had, individually or in the aggregate with other such changes, a
Material Adverse Effect;
(ii) any damage or destruction to or loss of any asset of the
Group, whether or not covered by insurance, that has had, individually or in the
aggregate with other such damages, destruction or losses, a Material Adverse
Effect;
(iii) any material increase in the salary, wage or bonus payable
by any Member to any managerial employee of the Group whose cash compensation as
of the Balance Sheet Date exceeded $150,000 annually, except in the ordinary
course of business and consistent with past business practices;
(iv) any material change in any method of accounting, other than
as required by GAAP;
(v) any sale, lease or other disposition of any material assets of
the Group (other than inventory in the ordinary course of business) other than
for fair value, or any condemnation or expropriation or other taking of any
assets of the Group by any Governmental Body;
(vi) any issuance, sale or disposition of capital stock or any
other securities or grant of any options, warrants or other rights to subscribe
for or purchase any capital stock or any other securities of any Member;
14
(vii) any declaration or payment of any dividend or distribution
with respect to the capital stock of any Member or any redemption, purchase or
acquisition of the capital stock of any Member other than dividends or
distributions to other Members;
(viii) any write-offs, write-downs or write-ups of the value of
any of the inventory or other assets of the Group outside the ordinary course of
business;
(ix) any mortgage or pledge of any material assets of the Group,
except for Permitted Encumbrances arising in the ordinary course of business;
(x) any creation or assumption of any Debt Obligation for borrowed
money, except for Debt Obligations incurred in the ordinary course of business
or pursuant to Contracts disclosed on Schedule 3.16 or entered into in the
ordinary course of business;
(xi) any guarantee of any liability (whether directly,
contingently or otherwise) for the obligations of any other Person (other than
another Member) except in the ordinary course of business and except for the
endorsement of negotiable instruments by any Member in the ordinary course of
business; or
(xii) any agreement or commitment to do any of the foregoing.
3.7 Taxes.
(a) Affiliated Group. The U.S. Members are members of an
"affiliated group" (the "Affiliated Group") within the meaning of Section
1504(a) of the Code, and VNAO is the "common parent" of the Affiliated Group.
(b) Liabilities. Except as set forth in Schedule 3.7, each of the
Members or USF or VNAO, on such Member's behalf, has:
(i) duly and timely filed with the appropriate federal, state,
local or other taxing authorities all material Tax Returns required to be filed
by or on behalf of such Member, and
(ii) duly and timely paid all Taxes shown to be due on such
Tax Returns with respect to the Member. Any Tax Return or Taxes for which an
extension to file or pay has been obtained will be deemed to be timely if filed
and paid by the date provided by any such extension.
(c) Tax Payments. Except as set forth on Schedule 3.7 and except
for Income Taxes, all Taxes and Tax liabilities of the Members (x) for all Tax
periods ending on or prior to the Closing Date or (y) with respect to any
taxable year or period beginning before and ending after the Closing Date (a
"Straddle Period"), the portion of such Straddle Period ending on and including
the Closing Date (each such year or period or portion thereof ending on or
before the Closing Date, a "Pre-Closing Period") to the extent due and payable
have been paid.
(d) Audits; Examinations. Except as set forth on Schedule 3.7:
15
(i) (A) no audit or other examination of Taxes is currently
pending with respect to any of the Members, which audit or examination would
materially adversely affect the Tax liability of any of such Members; and (B) no
such audit or examination has been conducted with respect to which there is any
outstanding Tax liability;
(ii) no Member is in receipt of any written notice of any
federal, state, local or foreign income Tax deficiency outstanding, proposed or
assessed against or allocable to it, which has not been finally resolved; and
(iii) as of the Closing Date, no statute of limitations will
remain open as a result of its having been waived or extended with respect to
the assessment, payment or collection of Taxes of any Member.
(e) Agreements. There are no Tax sharing, allocation,
indemnification or similar agreements in effect as between any of the Members
and any other Person (except for customary agreements to indemnify lenders or
security holders in respect of Taxes and except for provisions in agreements for
the divestiture of subsidiaries, assets or business lines of any of the Members
that require such Member(s) to indemnify a purchaser for amounts of Taxes of any
of the Members in the nature of sales or similar Taxes incurred as a consequence
of any such divestiture transactions).
(f) Consolidated Returns; Transferee Liability. Except with
respect to the Affiliated Group or as set forth on Schedule 3.7, none of the
Members has been included in any "consolidated," "unitary" or "combined" Tax
Return provided for under any Law with respect to Taxes for which any Member may
be liable for any taxable period for which the statute of limitations has not
expired, and none of the Members has any liability for the Taxes of any
non-Member as a transferee or successor.
(g) General. None of the Members has filed a consent under
Code ss.341(f) concerning collapsible corporations. None of the Members has made
any payments, is obligated to make any payments, or is a party to any agreement
that under certain circumstances could obligate it to make any payments that
will not be deductible under Code ss.280G. None of the Members has been a United
States real property holding corporation within the meaning of Code ss.897(c)(2)
during the applicable period specified in Code ss.897(c)(1)(A)(ii). Except for
U.S. Filtration Pty Ltd., Presian Pty Limited and Vessel S.r.l., all Members are
classified for U.S. Tax purposes according to their default classification as
prescribed in Treas. Reg. ss.301.7701-3.
3.8 Owned and Leased Property.
(a) Owned Real Property. Schedule 3.8(a) sets forth a complete and
accurate list of all real property owned as of the date hereof by each Member
(the "Owned Real Property"). Except as set forth on Schedule 3.8(a), the
relevant Member has good and marketable title to its Owned Real Property, free
and clear of all Encumbrances, except for Permitted Encumbrances. Except as
disclosed in any of the Schedules to this Agreement and except for exceptions
from the representations and warranties in the following subparagraphs (i)
through (v) which do not have a Material Adverse Effect:
16
(i) (condemnation) there are no pending or, to USF's
Knowledge, threatened, condemnation proceedings relating to the Owned Real
Property;
(ii) (right of occupants) there are no leases, subleases,
licenses or other agreements, granting to any party other than a Member the
right of use or occupancy of any portion of any Owned Real Property;
(iii) (options) there are no outstanding options or rights of
first refusal to purchase any parcel of Owned Real Property, or any portion
thereof or interest therein;
(iv) (possession) there is no party (other than a Member) in
possession of any parcel of Owned Real Property except as a tenant under a
written lease agreement with a Member in possession of space to which it is
entitled;
(v) (utilities) all facilities located on Owned Real Property
are supplied with utilities and other services necessary for the operation of
such facilities, including gas, electricity, water, telephone, sanitary sewer,
and storm sewer; and
(vi) (access) each parcel of Owned Real Property abuts on and
has vehicular access to a public road, or has access to a public road via an
appurtenant easement benefiting such parcel of Owned Real Property.
(b) Leases of Real Property. Schedule 3.8(b) sets forth a complete
and accurate list of all leases of real property to which any of the Members is
a party on the date hereof or by which any of them is presently bound (whether
as lessee or lessor) and which provides for annual lease payments in excess of
$150,000. Except as set forth on Schedule 3.8(b), the Member lessee under each
lease set forth on Schedule 3.8(b) is in possession of the real property covered
thereby. Except as disclosed in any of the Schedules to this Agreement and
except for exceptions from the representations and warranties in the following
subparagraphs (i) through (iv), which do not have a Material Adverse Effect:
(i) (enforceability) each such lease or sublease of a Member
is a legal, valid, binding and enforceable obligation of the Member and, to
USF's Knowledge, of the other party thereto, and is in full force and effect;
(ii) (no default) no Member is in breach or default under such
a lease, and to USF's Knowledge, no other party is in breach or default of such
a lease;
(iii) (encumbrances) no Member has assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
leasehold;
(iv) (approvals) for all real property currently leased to a
Member, such Member has obtained all approvals of Governmental Bodies required
of such Member as a lessee or in connection with such Member's operations
therein; and
(v) (utilities) all facilities leased thereunder are supplied
with utilities and other services necessary for the operation of said
facilities.
17
(c) Personal Property. Each Member owns or holds under valid
leases all material plant, machinery, equipment and other tangible personal
property used for the conduct of its Business, subject to no Encumbrances other
than Permitted Encumbrances.
(d) Shared Facilities. There is no office or other facility shared
by any of the Members with USF or any of USF's Affiliates (other than another
Member), except as set forth on Schedule 3.8(d).
(e) Rights in the Assets. Except as set forth on Schedule 3.8(e)
or in Section 6.1, the Members own or control or have valid contractual rights
to use all of the assets required to enable them to collectively operate the
Business after the Closing Date in substantially the same manner as the Business
is presently conducted (including trademarks and service marks; corporate names,
including the corporate name of each of the Members, fictional business names
and trading names currently used by the Members; patents, patent applications
and invention disclosures; copyrights in both published works and unpublished
works; websites and Internet domain names; and know-how, trade secrets,
confidential information, customer lists, software, technical information, data,
process technology, plans, drawings and blueprints, required to enable the
Members to collectively operate the Business after the Closing Date in
substantially the same manner as the Business is presently conducted,
collectively, "IP"); provided, however, USF makes no representation as to the
adequacy of the working capital of the Group which is delivered at Closing.
3.9 No Pending Litigation. Except as set forth on Schedule 3.9, no
Litigation is pending or, to USF's Knowledge, threatened against any Member,
with respect to which there is a reasonable likelihood of a Loss not covered by
insurance, which would, individually or in the aggregate, have a Material
Adverse Effect.
3.10 Compliance With Law; Permits.
(a) Compliance With Law. Except as set forth on Schedule 3.10, to
USF's Knowledge each of the Members is in compliance with all applicable Laws
except to the extent that any noncompliance would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) Permits. Each of the Members owns, holds or possesses all
governmental licenses and permits (collectively, "Permits") that are required
under applicable Laws to entitle it to own or lease, operate and use its assets
and to carry on and conduct the Business as currently conducted by it, except
for any Permit the absence of which would not have a Material Adverse Effect,
and all such Permits are valid and in full force and effect, except for those
the failure of which to be in full force and effect would not have a Material
Adverse Effect.
3.11 Labor Matters. To USF's Knowledge, each of the Members is in
material compliance with all Laws applicable to it respecting employment and
employment practices, terms and conditions of employment and wages and hours,
except where the failure to be in compliance would not have a Material Adverse
Effect. Except as set forth on Schedule 3.11, there is no collective bargaining
agreement which is binding on any of the Members, and to USF's Knowledge, there
is no union organizing effort underway, pending or threatened with respect to
the employees of any of the Members. There are no strikes, slowdowns or work
stoppages pending between any of the Members and any of their respective
employees that would reasonably be expected to have a Material Adverse Effect,
and no U.S. Member has experienced any such event in the past five (5) years. No
Member has engaged in any unfair labor practices as defined in the National
Labor Relations Act and there is no unfair labor practice charge or complaint
against any Member pending or, to USF's knowledge, threatened before the
National Relations Board or any similar state or foreign agency.
18
3.12 Intellectual Property Rights.
(a) Intellectual Property Assets. For purposes of this Section
3.12, "Intellectual Property Assets" means:
(i) all domestic and foreign trademarks and service marks
which are registered or have applications to register pending and unregistered
trademarks and service marks of the Members and all such trademarks and service
marks of USF and its Subsidiaries other than Members which are used in the
conduct of the Business (collectively, "Marks") and, subject to the provisions
of Section 6.1, the corporate name of each of the Members and all fictional
business names and trade names currently used by the Members;
(ii) all domestic and foreign issued patents and patent
applications or invention disclosures of the Members and all such patents and
patent applications or invention disclosures of USF and its Subsidiaries other
than Members which are used in the conduct of the Business (collectively,
"Patents");
(iii) all copyrights of the Members in both published works
and unpublished works including any registrations and applications appurtenant
thereto;
(iv) all websites and Internet domain names used in the
Business, other than any websites of USF and its Affiliates that contain
hyperlinks or references to any websites of the Members or the Group or provide
support to any websites of the Members or the Group; and
(v) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process technology,
plans, drawings and blue prints of the Members.
(b) Intellectual Property Agreements. Schedule 3.12(b) sets forth
a complete and accurate list of all material agreements relating to the
Intellectual Property Assets to which any of the Members is a party on the date
hereof or by which any of the Members is bound on the date hereof, except for
(i) any license implied by the sale of a product and (ii) perpetual, paid-up
licenses for software programs with an individual value of less than $10,000 per
license under which any of the Members is the licensee. There are no outstanding
or, to USF's Knowledge, threatened disputes with respect to any such agreement.
(c) Rights in Intellectual Property.
19
(i) In General. Except as set forth on Schedule 3.12(c)(i),
neither USF nor any of its Subsidiaries (other than any of the Members), nor, to
USF's Knowledge, any other Person, including any Affiliate of USF, owns or
controls any IP material to the operation of the Business as presently conducted
by the Group.
A. Except as set forth on Schedule 3.12(c)(i), a Member is
the owner of all right, title and interest in, or the licensee of, or otherwise
has the right to use, without payment to a third party, the Intellectual
Property Assets, free and clear of all Encumbrances, except as provided in the
relevant licenses identified in the Schedules hereto.
B. Except as set forth on Schedule 3.12(c)(i), to USF's
Knowledge, neither USF nor its Subsidiaries (including the Members) have
received any demand, claim or notice from any Person in respect of the
Intellectual Property Assets which challenges the validity, right to use or
ownership of any material Intellectual Property Asset.
C. All statutory fees, payments and annuities related to the
Intellectual Property Assets, including those required to maintain the
registration of such assets in good standing have been paid when and as they
became due, and USF agrees to cause the Members to timely pay all such fees,
payments and annuities that become due prior to the Closing.
(ii) Patents.
A. Schedule 3.12(c)(ii) sets forth a complete and accurate
list of all Patents.
B. Except as set forth on Schedule 3.12(c)(ii), no Patent
has been or is now involved in any interference, reissue or reexamination
proceeding.
C. Except as set forth on Schedule 3.12(c)(ii), to USF's
Knowledge, no Patent is infringed or threatened to be infringed.
(iii) Marks.
A. Schedule 3.12(c)(iii) sets forth a complete and accurate
list of all Marks.
B. All Marks that have been registered with the United
States Patent and Trademark Office or other foreign equivalent are currently in
compliance with all formal legal requirements (including the timely
post-registration filing of affidavits of use and renewal applications).
C. Except as set forth on Schedule 3.12(c)(iii) no ▇▇▇▇ has
been or is now involved in any opposition or cancellation proceeding, and, to
USF's Knowledge, no such action is threatened with the respect to any of the
Marks.
D. Except as set forth on Schedule 3.12(c)(iii), to USF's
Knowledge, no ▇▇▇▇ is infringed or threatened to be infringed. To USF's
Knowledge, none of the Marks used by any of the Members infringes or is alleged
to infringe any trade name, trademark, or service ▇▇▇▇ of any third party.
20
3.13 Employees; Employee Related Agreements and Plans; ERISA.
(a) List of Plans. Set forth on Schedule 3.13(a) is an accurate
and complete list of all USF Employee Benefit Plans, all Vivendi Employee
Benefit Plans and all Foreign Member Retirement Plans.
(b) Status of Plans.
(i) Each USF Employee Benefit Plan (including any related
trust) complies in form and has been maintained and operated in accordance with
the requirements of all applicable Laws, including ERISA and the Code, and each
USF Employee Benefit Plan (in each case, including any related trust) has been
maintained and operated in substantial compliance with its terms. Except as set
forth on Schedule 3.13(b), no complete or partial termination (described in
Section 411(d)(3) of the Code) of any USF Employee Benefit Plan has occurred or
is expected to occur. No USF Employee Benefit Plan is a plan described in
Section 4063(a) of ERISA.
(ii) Except as disclosed on Schedule 3.13(b), the Vivendi
Employee Benefit Plans are the only plans maintained by Vivendi Environnement
S.A. or Vivendi Universal S.A. which benefit employees of the Members and none
of such plans is subject to ERISA. Except for payroll tax obligations which may
arise upon exercise of outstanding stock options granted under Vivendi Employee
Benefit Plans, none of the Members has any obligations in respect of, or any
unfunded liabilities pursuant to, any Vivendi Employee Benefit Plan.
(iii) Except as set forth on Schedule 3.13(b), each of the
Foreign Member Retirement Plans and all related trusts, insurance contracts and
funds have been created, maintained, funded and administered in all respects in
material compliance with all applicable Laws, including Tax Laws regarding
reserves, and the governing document, trust agreement, insurance policy or other
writing creating the same or applicable thereto.
(c) Liabilities.
(i) No USF Employee Benefit Plan is subject to Title IV of
ERISA or Section 412 of the Code.
(ii) Each USF Employee Benefit Plan which is a "group health
plan" (as such term is defined in Section 5000(b)(1) of the Code or Section
607(1) of ERISA) has been administered and operated in substantial compliance
with the applicable requirements of Part 6 of Subtitle B of Title I of ERISA and
Section 4980B of the Code ("COBRA"), and no Member is subject to any liability,
including additional contributions, fines, taxes, penalties or loss of tax
deduction as a result of the administration and operation of any such USF
Employee Benefit Plan. No USF Employee Benefit Plan which is such a group health
plan is a "multiple employer welfare arrangement," within the meaning of Section
3(40) of ERISA. Each USF Employee Benefit Plan that is intended to meet the
requirements of Section 125 of the Code meets such requirements in all material
respects, and each program of benefits for which employee contributions are
provided pursuant to elections under any USF Employee Benefit Plan meets the
requirements of the Code applicable thereto.
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(iii) No USF Employee Benefit Plan (whether qualified or
non-qualified under Section 401(a) of the Code) provides for post-employment or
retiree health, life insurance and/or other welfare benefits, and no Member has
any obligation under any USF Employee Benefit Plan to provide any such benefits
to any retired or former employees or active employees following such employees'
retirement or termination of service except as required by COBRA or any similar
state law. No Member has any unfunded liabilities pursuant to any USF Employee
Benefit Plan that is not intended to be qualified under Section 401(a) of the
Code.
(iv) No Member has incurred any liability or civil penalty
under Section 409, 502(i) or 502(l) of ERISA or liability for any tax or excise
tax arising under Chapter 43 or Section 6652 of the Code with respect to any USF
Employee Benefit Plan and no event has occurred and no condition or circumstance
exists that could reasonably be expected to give rise to any such liability with
respect to any USF Employee Benefit Plan.
(v) There are no actions, suits or claims pending or, to USF's
Knowledge, threatened against or with respect to any USF Employee Benefit Plan
or the assets of any such plan (other than routine claims for benefits and
appeals of denied routine claims). No civil or criminal action brought pursuant
to the provisions of Title I, Subtitle B, Part 5 of ERISA is pending or, to
USF's Knowledge, threatened against any Member or, to USF's Knowledge, any
fiduciary of any USF Employee Benefit Plan with respect to any USF Employee
Benefit Plan. USF has not received any written notice that any USF Employee
Benefit Plan or any fiduciary thereof is presently the direct or indirect
subject of an audit, investigation or examination by any governmental or
quasi-governmental agency.
(vi) Except as shown on Schedule 3.13(c), no Member has any
liabilities (actual or contingent) with respect to any USF Employee Benefit
Plan.
(d) Contributions. Except as set forth on Schedule 3.13(d), each
Member has made full and timely payment of all amounts required to be paid by it
as contributions or premiums to any USF Employee Benefit Plan.
(e) Tax Qualification. Each USF Employee Benefit Plan intended to
be qualified under Section 401(a) of the Code, as currently in effect, is the
subject of a favorable determination letter issued by the IRS and the remedial
amendment period described in Section 401(b) of the Code applicable to any
amendment of any such USF Employee Benefit Plan adopted after the date of such
letter has not expired. Each trust established in connection with any USF
Employee Benefit Plan which is intended to be exempt from federal income
taxation under Section 501(a) of the Code, as currently in effect, is the
subject of a favorable determination letter issued by the IRS and the remedial
amendment period described in Section 401(b) of the Code applicable to any
amendment of any such USF Employee Benefit Plan adopted after the date of such
letter has not expired. Since the date of each most recent determination letter
referred to in this paragraph (e), no event has occurred and no condition or
circumstance exists that has resulted or is reasonably likely to result in the
revocation of any such determination letter or that is reasonably likely to
adversely affect the qualified status of any such USF Employee Benefit Plan or
the exempt status of any such trust.
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(f) Transactions. No Member nor any of the directors, officers or
employees of any Member or, to USF's Knowledge, other Persons who participate in
the operation of any USF Employee Benefit Plan or related trust or funding
vehicle, has engaged in any transaction with respect to any USF Employee Benefit
Plan, or breached any applicable fiduciary responsibilities or obligations under
Title I of ERISA that would subject any of them to a tax, penalty or liability
for prohibited transactions or breach of any obligations under ERISA or the Code
or would result in any claim being made under, by or on behalf of any such USF
Employee Benefit Plan by any party with standing to make such claim.
(g) Documents. USF has delivered or caused to be delivered to
Buyer and/or its counsel true and complete copies of the United States Filter
Corporation Retirement Savings Plan; all amendments to such plan, the most
recent IRS determination letter, if any, obtained with respect to such plan, the
trust agreement applicable to such plan, the most recent annual report on Form
5500 for such plan, and the United States Filter Corporation Section 125
Flexible Benefit Plan. USF has made available to Buyer and its counsel a listing
and description of each Foreign Member Retirement Plan.
(h) Employees.
(i) To USF's Knowledge, Schedule 3.13(h) sets forth a list of
all employees of any of the Members with annual base cash compensation in excess
of $150,000 as of the Balance Sheet Date, their annual base salaries and their
job titles.
(ii) During the last four years, no U.S. Member has
effectuated (A) a "plant closing" (as defined in the WARN Act) affecting any
site of employment or one or more facilities or operating units within any site
of employment or facility of a U.S. Member; or (B) a "mass layoff" (as defined
in the WARN Act) affecting any site of employment or facility of a U.S. Member
and no U.S. Member has been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state or local law. Except as and to the extent set forth on Schedule
3.13(h), none of the employees of the U.S. Members have suffered an "employment
loss" (as defined in the WARN Act) during the past six months.
(i) Agreements and Plans. Except as described in Schedule 3.13(a)
or Schedule 3.13(i), no Member is, with respect to the employees of the Member
or otherwise directly relating to the Business, a party to or bound by any
written:
(i) plan or agreement with any such employee that cannot be
unilaterally terminated with notice of 90 or fewer days without liability to the
Member or that entitles the employee to receive any salary continuation or
severance payment (in excess of USF's or the Member's standard severance policy)
or retain any specified position with the Member;
23
(ii) agreement with any officer or director (other than
employment agreements disclosed in response to clause (i) or excluded from the
scope of clause (i)) of the Member;
(iii) stock option, stock purchase, bonus or other incentive
plan or agreement;
(iv) agreement which requires any Member to make any payment
to any officer, director or employee of any Member as a result of the
transactions contemplated by this Agreement, including any "change in control"
provisions or agreements; or
(v) no Member has agreed in any collective bargaining
agreement upon future increases in benefit levels or wages, and no such
increases are currently the subject of collective bargaining agreement
negotiations.
(j) No Multiemployer Plans. No Member contributes, or is obligated
to contribute, to any Multiemployer Plan and no Member has contributed, or had
an obligation to contribute, to any such plan during the six-year period ending
on the Closing Date.
(k) No Controlled Group Liabilities. No Member has incurred any,
and no transaction contemplated by this Agreement will result in any,
liabilities (actual or contingent) to the Pension Benefit Guaranty Corporation
under Section 302(c)(11), Section 4062, Section 4063, Section 4064, Section 4069
of ERISA with respect to any defined benefit pension plan that is subject to
Part 3 of Title I of ERISA, Title IV of ERISA or Section 412 of the Code. No
Member has any liability (actual or contingent) under Section 4980B(e) of the
Code with respect to any "group health plan," as defined in (c)(ii) hereof,
other than a USF Employee Benefit Plan.
3.14 Environmental Matters. Except as provided on Schedule 3.14:
(a) Compliance. The Group has operated the Business in compliance
with all applicable Environmental Laws, except where the failure to so operate
in such compliance would not have a Material Adverse Effect. To USF's Knowledge,
there is no material obligation or liability existing under any Environmental
Laws relating to or arising from the operation or activities of the Business
prior to the Operative Period.
(b) Claims. There are no pending or, to USF's Knowledge,
threatened actions, suits, claims or proceedings by or before any Governmental
Body directed against the Group or any Member that pertain to (i) any
obligations or liabilities under any applicable Environmental Law; or (ii)
violations of any Environmental Law. The Balance Sheet does not reflect any
reserves for any amounts expected to be spent in connection with violations of
Environmental Laws.
(c) Permits. All Permits required to be obtained or filed by a
Member under all applicable Environmental Laws in connection with the Business
have been duly obtained or filed and are in full force and effect and will
remain in full force and effect following the transfer of the USFCA Shares to
Buyer, except where the failure to possess such Permits or the failure of such
Permits to be or remain in full force and effect following the transfer of the
Shares would not have a Material Adverse Effect.
24
(d) Notice. No Member (i) has received written notice that any
existing Permit that was obtained under any Environmental Law is to be revoked
or suspended by any Governmental Body; or (ii) is currently operating or
required to be operating under, or subject to any outstanding compliance order,
decree or agreement, any consent decree, order or agreement, or corrective
action decree, order or agreement issued or entered into under, or pertaining to
matters regulated by, any Environmental Law.
(e) Storage Tanks. None of the Members own or operate any
underground storage tanks that are in material violation of any Environmental
Law.
(f) Listed Properties. Except as set forth on Schedule 3.14, none
of the Owned Real Property nor, to USF's Knowledge, any of the real property
currently leased to a Member, is listed on the National Priorities List pursuant
to CERCLA, or on an equivalent state or, to USF's Knowledge, foreign, list of
sites required to be investigated or cleaned up or suspected of contamination
under an Environmental Law.
(g) Hazardous Materials. To USF's Knowledge, no Person has
treated, stored, disposed of, transported to, or released any Hazardous
Materials on or under any Owned Real Property or any of the real property
currently leased to a Member, except in material compliance with applicable
Environmental Laws or except as would not otherwise have a Material Adverse
Effect.
(h) Required Notice or Consent. No notice or other filing, consent
or approval is required under any Environmental Law as a prerequisite to the
transfer of the Shares to Buyer.
(i) Summary Overview Matrix. To USF's Knowledge, the information
set forth in the document delivered to Buyer by USF entitled "FSG Sites of
Interest and Environmental Audit Due Diligence Reports" is true and correct and
includes a complete list of the current major manufacturing sites of the Group.
(j) Asbestos Materials. There is no asbestos or
asbestos-containing material in or on any facility on which any Member operates,
any Owned Real Property, or any real property that is currently leased to any
Member that is friable. For purposes of this Section 3.14(j), "friable" shall be
defined as capable of being crumbled, pulverized or reduced to powder by hand
pressure, when dry. No action to remove asbestos or asbestos-containing material
is required at any facility at which any Member operates, any Owned Real
Property, or any real property that is currently leased to any Member.
(k) Asbestos Claims. No claims have been made against any Member,
or to USF's Knowledge, for which any Member could have financial responsibility,
for injury, disability or death of any present or former employee of any Member
related to or allegedly caused by asbestos.
3.15 Bank Accounts. Schedule 3.15 lists all bank, money market, savings
and similar accounts and safe deposit boxes of each Member, specifying the
account numbers and the authorized signatories or persons having access to such
accounts or safe deposit boxes.
25
3.16 Material Contracts. Schedule 3.16 sets forth a list of all
currently active Contracts of the Members in the following categories: (a) each
partnership, limited liability company or joint venture agreement; (b) each
Contract (or group of related Contracts) (i) under which any Member has created,
incurred, assumed or guaranteed Debt Obligations (other than a guaranty given in
respect of the Debt Obligations of another Member) or (ii) whereby any Member
has an obligation to make an investment in or loan to any Person other than to
another Member; (c) each Contract (or group of related Contracts) for the
purchase by any Member of goods and/or services involving total annual payments
in excess of $500,000; (d) each Contract (or group of related Contracts) for the
sale by any Member of goods and/or services involving total annual revenues in
excess of $500,000; (e) each Contract (or group of related Contracts), other
than sales agency or distributor agreements which grant the agent or distributor
territorial rights, and confidentiality agreements in respect of business
combination or acquisition inquiries, containing covenants materially
restricting or limiting the freedom of any Member to engage in any line of
business; or (f) each Contract between a Member and USF and/or an Affiliate who
is not a Member (other than Contracts providing for the supply of bottled water)
which provide for terms less favorable to the Member than what would have been
available to the Member from an unaffiliated third party and which cannot be
terminated upon six months' or less notice, it being agreed that Buyer shall
have the right to terminate any Contract required to have been disclosed on
Schedule 3.16 pursuant to this clause (f) that was not so disclosed. Except as
set forth on Schedule 3.16, (1) each such Contract is (A) a valid and binding
obligation of the Member which is party to such Contract and (B) to USF's
Knowledge, a valid and binding obligation of each other party thereto, and
(2)(A) the Member which is party to such Contract is not in material breach
thereof or material default thereunder (and to USF's Knowledge no event or
circumstance has occurred that with notice or lapse of time or both, would
constitute an event of default) and (B) to USF's Knowledge, no other party to
any such Contract is in material breach thereof or material default thereunder.
3.17 Brokers, Finders, Etc. Except as set forth on Schedule 3.17,
neither USF nor any Affiliate has employed, nor is any of them subject to any
valid claim of liability or obligation to, any broker, finder, consultant or
other intermediary in connection with the transactions contemplated by this
Agreement who might be entitled to a fee or commission in connection therewith.
USF is solely responsible for any payment, fee or commission that may be due to
the parties listed on Schedule 3.17 in connection with the transactions
contemplated hereby.
3.18 Insurance.
(a) Policies. Schedule 3.18 sets forth a list of the policies of
insurance currently maintained by USF or any Member with respect to the
products, properties, assets, operations and Business of the Members (including
any policies of insurance maintained for purposes of providing benefits such as
workers' compensation and employers' liability coverage) (collectively, the
"Policies"). All such Policies are in full force and effect. All premiums due on
such Policies have been paid and no notice of cancellation or termination or
intent to cancel has been received by USF or any Member with respect to such
Policies.
(b) Claims. Schedule 3.18 sets forth a list of all pending claims
(including with respect to insurance obtained but not currently maintained) and
the claims history for each of the U.S. Members during the Operative Period
(including with respect to insurance obtained but not currently maintained) and
all claims asserted in foreign jurisdictions during the Operative Period for
which the relevant insurance carrier has reserved $50,000 or more in respect of
such claim.
26
3.19 Absence of Undisclosed Liabilities. There exist no material
liabilities, whether absolute or contingent, of the Group which would be
required to be reflected, reserved for or disclosed in a consolidated balance
sheet of the Group prepared as of the date of this Agreement in accordance with
GAAP and consistent with the Balance Sheet, other than (i) liabilities that are
reflected, reserved for or disclosed in the Financial Statements, (ii)
liabilities incurred in the ordinary course of business since the Balance Sheet
Date, (iii) liabilities, the incurrence of which is not proscribed by Section
5.5 or which are reflected in Schedule 5.5, incurred from the date of this
Agreement until the Closing Date or (iv) liabilities for Income Taxes which are
the responsibility of USF pursuant to Section 6.2.
3.20 Disclaimer of Warranties.
(a) Disclaimer. EXCEPT AS TO THOSE MATTERS EXPRESSLY COVERED BY
THE REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT, USF DISCLAIMS ALL OTHER
WARRANTIES, REPRESENTATIONS AND GUARANTIES WHETHER EXPRESS OR IMPLIED.
(b) No Additional Representations. Buyer acknowledges that (i)
neither USF nor any of its Affiliates has made any representation or warranty,
express or implied, beyond those expressly given in this Agreement, as to the
accuracy or completeness of any memoranda, charts, summaries or schedules
relating to the Group or the Business and previously made available to Buyer or
any of its Affiliates by USF or any of its Affiliates or any other information
(including the Confidential Information Memorandum dated October 2001 prepared
with respect to the Group) which is not included in this Agreement or the
Schedules hereto and (ii) neither USF nor any of its Affiliates will have or be
subject to any liability to Buyer or any of its Affiliates resulting from the
distribution of any such information to, or use of any such information by,
Buyer or any of its Affiliates.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to USF to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer represents and warrants to USF, as
follows:
4.1 Organization. Buyer is a corporation validly existing and in good
standing under the Laws of its state of incorporation, and has the corporate
power and authority to own, operate or lease its properties, carry on its
business, enter into this Agreement and to perform its obligations hereunder.
4.2 Authorization; Enforceability. This Agreement has been duly and
validly authorized by all necessary corporate and other actions by Buyer and
constitutes the legal, valid and binding obligations of Buyer enforceable
against it in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and other Laws of general application relating to or
affecting creditors' rights and to general equity principles.
27
4.3 No Violation of Laws; Consents. Neither the execution and delivery
of this Agreement, the consummation of the transactions contemplated hereby nor
the compliance with or fulfillment of the terms, conditions or provisions hereof
by Buyer will: (i) violate any provision of the Governing Documents of Buyer, or
(ii) violate any Law to which Buyer is subject or by which any of its assets may
be bound or affected the result of which would have a material adverse effect on
the financial condition, operation or business of the Buyer. Except for the
expiration of any applicable waiting periods under the HSR Act and other
Antitrust Laws, no consent, approval or authorization of, or registration or
filing with, any Person is required in connection with the execution or delivery
by Buyer of this Agreement or the consummation by Buyer of the transactions
contemplated hereby.
4.4 No Pending Litigation or Proceedings. No Litigation is pending
against or affecting or, to the knowledge of Buyer, threatened against Buyer in
connection with any of the transactions contemplated by this Agreement. There is
presently no outstanding judgment, decree or order of any Governmental Body
against or affecting Buyer in connection with the transactions contemplated by
this Agreement.
4.5 Brokers, Finders, Etc. Except as set forth on Schedule 4.5, neither
Buyer nor any of its Affiliates has employed, nor is any of them subject to any
valid claim of liability or obligation to, any broker, finder, consultant or
other intermediary in connection with the transactions contemplated by this
Agreement who might be entitled to a fee or commission in connection therewith.
Buyer is solely responsible for any payment, fee or commission that may be due
to the parties listed on Schedule 4.5 in connection with the transactions
contemplated hereby.
4.6 Investment. Buyer is purchasing the USFCA Shares for investment for
its own account, and not with a view to, or for the offer or sale in connection
with, any distribution thereof. Buyer acknowledges that the USFCA Shares have
not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities Laws, and that the USFCA Shares may
not be transferred or sold except pursuant to the registration provisions of the
Securities Act and any applicable state securities Laws or pursuant to an
applicable exemption therefrom.
4.7 Financial Ability. Buyer has the financial ability to consummate
the transactions contemplated by this Agreement without any delay or restriction
which would adversely impact the certainty of Buyer's ability to so consummate.
Buyer has furnished to USF all documentation or other evidence of such financial
ability that has been requested by USF.
ARTICLE V
ACTIONS PRIOR TO CLOSING DATE
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The Parties covenant and agree to take the following actions between
the date hereof and the Closing Date:
5.1 Access to Group Information.
(a) Access by Buyer. USF shall permit the officers, employees and
authorized representatives of Buyer (including investment bankers, independent
public accountants and attorneys) to have reasonable access during normal
business hours, upon reasonable advance notice to the offices, properties and
senior managers of the Group, and the business and financial records of the
Group (to the extent that they are not trade secrets or otherwise competitively
sensitive and, in the case of the Joint Venture Entities, to the extent that USF
or the Members have a right of access), to the extent Buyer shall reasonably
deem necessary or desirable in connection with the transactions contemplated
hereby, and shall furnish to Buyer or its authorized representatives such
additional information concerning the Group as shall be reasonably requested;
provided, however, that:
(i) USF shall not be required to violate any obligation of
confidentiality to which it or any Member is subject in discharging its
obligations pursuant to this Section 5.1; provided, however, that USF shall not
have the right, by virtue of this paragraph or otherwise, to withhold any
significant information relating to customers, suppliers or regulatory
authorities and, if USF is withholding any information based on an obligation of
confidentiality, USF shall so advise Buyer specifically of that fact in each
instance and shall use its commercially reasonable good faith efforts to obtain
a waiver from the party to whom the obligation of confidentiality is owed to
allow disclosure to Buyer of such information as is provided for in Section
5.1(a); and
(ii) Such investigation shall be conducted in such a manner as
not to interfere unreasonably with the operations of USF or any of its
Subsidiaries.
(b) Notice of Breach. If in the course of any investigation, Buyer
discovers any breach of any representation or warranty contained in this
Agreement, or any circumstance or condition that upon Closing would constitute a
breach of a representation, warranty or covenant, Buyer covenants that it will
promptly inform USF in writing of the nature of such breach.
5.2 Notifications. Each Party shall promptly notify the other Party of
any action, suit, proceeding or investigation that shall be instituted or
threatened against such Party to restrain, prohibit or otherwise challenge the
legality of any transaction contemplated by this Agreement. Each Party shall
promptly notify the other of any action, suit, proceeding or investigation that
may be threatened or asserted in writing, brought or commenced against any
Member, USF or Buyer, as the case may be, that would have been listed in
Schedule 3.9 or disclosed under Section 4.4 as the case may be, if such action,
suit, proceeding or investigation had arisen prior to the date hereof.
5.3 Consents of Third Parties. Each Party shall use commercially
reasonable efforts to secure, before the Closing Date, in form and substance
reasonably satisfactory to the other Party, any consent, approval or waiver
required to be obtained from any Person with respect to any Contract to which a
Member is a party and which the Parties have identified on Schedule 5.3 as those
for which the failure to obtain such consent, approval or waiver would have a
Material Adverse Effect. If such consent, approval or waiver cannot be obtained,
USF shall cooperate in any commercially reasonable arrangement designed to
obtain for the Buyer the material benefits, privileges and obligations of the
applicable Contract; provided, however, that no Party shall have any obligation
to offer or pay any consideration in order to obtain any such consent, approval
or waiver. In addition, if and to the extent (and in the manner) required by
French law, USF shall give notice of the change in control which will result
upon the Closing hereunder to any Workers' Councils having jurisdiction over any
Member which is incorporated in France or by reason of its operations in France
is subject to the jurisdiction of any such Workers' Council or Councils.
29
5.4 Filings Under the HSR Act and Laws of Foreign Jurisdictions.
(a) General. USF and Buyer acknowledge that the transactions
contemplated by this Agreement require filings with the FTC and the Antitrust
Division under the HSR Act and with certain Foreign Jurisdictions under
applicable foreign Laws as set forth on Schedule 5.4 (each, an "Antitrust Law").
(b) Consents; Approvals. USF and Buyer shall each use its
reasonable best efforts to obtain and to cooperate with each other in order to
obtain all consents, waivers, approvals, authorizations or orders and to make
all filings (including, without limitation, the filings under the HSR Act and
other Antitrust Laws and all other filings with United States and non-United
States Governmental Bodies) lawfully required to be obtained from or filed with
all applicable Governmental Bodies in connection with the authorization,
execution and delivery of this Agreement by USF and Buyer and the consummation
by them of the transactions contemplated hereby. Each Party shall (i) file or
cause to be filed, as promptly as practicable but in no event later than the
fifth Business Day after the execution and delivery of this Agreement, with the
FTC and the Antitrust Division, all reports and other documents required to be
filed by such Party under the HSR Act concerning the transactions contemplated
hereby and (ii) promptly comply with or cause to be complied with any requests
by the FTC and the Antitrust Division for additional information concerning such
transactions, in each case so that the waiting period applicable to this
Agreement and the transactions contemplated hereby shall expire as soon as
practicable after the execution and delivery of this Agreement. USF and Buyer
shall each furnish to the other Party all information about such Party or its
Affiliates required to be included in any application or other filing to be made
by such other Party pursuant to the rules and regulations of any United States
or non-United States Governmental Body in connection with the transactions
contemplated by this Agreement. In furtherance and not in limitation of the
agreements of the Parties contained in this Section 5.4, each Party shall use
its reasonable best efforts to resolve such objections if any, as may be
asserted by a Governmental Body or other Person with respect to the transactions
contemplated hereby under any Antitrust Law. In connection with the foregoing,
if any administrative or judicial action or proceeding, including any proceeding
by a private party, is instituted (or threatened to be instituted) challenging
any transaction contemplated by this Agreement as violative of any Antitrust
Law, each Party shall cooperate in all respects with the other and use its
respective reasonable best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement.
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5.5 Operations Prior to Closing Date.
(a) Prohibitions. Except (x) as set forth on Schedule 5.5, (y) as
otherwise contemplated by this Agreement or (z) with the consent of Buyer (which
consent will not be unreasonably withheld or delayed), USF shall comply and
shall cause each Member to comply, from and after the date of this Agreement
until the Closing Date, with the following:
(i) operate the Business in the ordinary course in accordance
with past practices and in material compliance with all Laws;
(ii) not grant any bonus to any employee or implement any
material increase in the rates of salaries or compensation of the employees of
the Group, except in accordance with any Contracts in effect on the date hereof
or regularly scheduled periodic increases and bonuses consistent with prior
practices;
(iii) not institute any material increase in any
profit-sharing, bonus, incentive, deferred compensation, insurance, pension,
retirement, medical, hospital, disability, welfare or other employee benefit
plan with respect to the employees of the Group, except as may be required to
comply with Law or Contracts in effect on the date hereof and except in
connection with modifications made to any USF Employee Benefit Plan or Vivendi
Employee Benefit Plan;
(iv) not amend the Governing Documents of any Member or enter
into any merger, consolidation, restructuring, recapitalization, reorganization
or share exchange agreement or adopt resolutions providing therefor;
(v) not sell, pledge, dispose of or encumber any assets of any
of the Members (except for (A) sales of assets in the ordinary course of
business and in a manner consistent with past practices, (B) dispositions of
obsolete or worthless assets, and (C) sales of immaterial assets not in excess
of $1,000,000 in the aggregate);
(vi) not (A) issue, sell, split, combine, reclassify, pledge,
dispose of or encumber, or authorize the issuance, sale, pledge, disposition or
encumbrance of, any shares of capital stock of any class, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of capital stock, or any other ownership interest in any of the Members;
(B) repurchase, redeem or otherwise acquire any securities of any Member; (C)
adopt a plan of complete or partial liquidation or resolutions providing for or
authorizing a liquidation or dissolution of any Member; or (D) declare or pay
any dividend or distribution with respect to the capital stock of any Member,
other than dividends or distributions to other Members and dividends or
distributions necessary or appropriate to eliminate intercompany balances among
the Members or between any of the Members and USF or any Affiliate, as indicated
on Schedule 2.3;
(vii) not take any action to change accounting policies or
procedures (including procedures with respect to revenue recognition, payments
of accounts payable and collection of accounts receivable) except as required by
a change in GAAP occurring after the date hereof;
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(viii) not pay, discharge or satisfy any claims or liabilities
(absolute, accrued, asserted or unasserted, contingent or otherwise) of the
Group in excess of $1,000,000 in the aggregate, other than the payment,
discharge or satisfaction of liabilities in the ordinary course of business and
consistent with past practices; and
(ix) not expend or agree to make capital expenditures in
excess of $2,000,000 per month.
(b) No Agreements. Neither USF nor any Member shall enter into any
agreement to do any of the actions prohibited by Sections 5.5(a)(i) through
5.5(a)(ix).
5.6 Negotiations. Until the Closing or until this Agreement is
terminated, USF shall not, and USF shall cause each of the Members not to,
solicit or enter into any discussions or negotiations with, or furnish or cause
to be furnished any information concerning the Business to, any Person (other
than Buyer and its employees and agents) in connection with any proposed
acquisition of the Business by any Person other than Buyer.
5.7 Guaranty and Surety Obligations. Schedule 5.7 sets forth a list of
all guaranties, letters of credit and surety bonds outstanding as of the date of
this Agreement issued for the benefit of any Member under which USF or any of
its Affiliates (other than the Members) may bear the ultimate responsibility to
make payments. Such Schedule will be supplemented as required from time to time
prior to the Closing Date if and as required in the ordinary course of business
of the Group. Buyer shall, on or prior to the Closing Date, obtain at its own
cost and expense the release of any and all such surety bonds, guaranties or
letters of credit which are listed on Schedule 5.7 at least ten (10) Business
Days prior to the Closing Date and shall, as soon as practicable after the
Closing Date, obtain at its own cost and expense the release of any and all such
surety bonds, guaranties or letters of credits added to Schedule 5.7 less than
ten (10) Business Days prior to the Closing Date.
5.8 Alternative Structures. USF agrees to consider in good faith one or
more alternative structures under which Buyer (and/or one or more of its
Affiliates) would acquire the Members, and/or all of the Members' assets and
liabilities, in a manner that would be superior from Buyer's Tax perspective and
neutral or superior in all respects to USF, as compared to the structure
otherwise contemplated by this Agreement.
5.9 Directors' Shares. With respect to all Shares of Members
outstanding and owned by directors on the date of this Agreement, USF shall
cause such Directors' Shares to be transferred, at the Closing, to Buyer or
Persons designated by Buyer so that all of the capital stock of Members
outstanding at the conclusion of the Closing will be owned either by Buyer or
Persons designated by Buyer.
5.10 Removal of Certain Liens. Schedule 3.8(a) discloses liens on two
properties of SeitzSchenk Filtersystems GmbH in Bad Kreuznach, Germany with a
footnote indicating that such liens secure underlying debt obligations that have
been terminated. Prior to the Closing Date, USF shall use all commercially
reasonable best efforts to cause such liens to be removed of record and, if they
have not been so removed, USF at its expense shall cause such liens to be
removed as promptly as practicable after the Closing.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Use of Names; Transfer of Intellectual Property Assets.
(a) Notwithstanding any provision of Section 3.12 to the contrary,
except to the limited extent and for the limited time periods in subparagraphs
(b) and (c) of this Section 6.1 USF is not conveying to Buyer any ownership
rights for, or licensing Buyer to use, any of the following names: "USF," "U.S.
Filter," "US Filter," "USFilter," "United States Filter Corp.," "United States
Filter Corporation" or any derivation or variation thereof (collectively, the
"Reserved Names"). With respect to all corporate names of Members, Marks,
fictional business names and trade names currently used by a Member or Members
or the Group and Internet domain names that include or consist in part of a
Reserved Name (collectively, "Group Names"): (i) Buyer shall be permitted and
entitled to use, and shall have the sole rights to, all Group Names exclusive of
any Reserved Name included in or forming a part thereof, and (ii) USF and its
Affiliates shall, after the Closing, have no right to use all or part of any
Group Name other than the Reserved Name included in or forming a part thereof.
(b) After the Closing Buyer shall:
(i) promptly (but in no event later than 120 days after the
Closing) destroy all stocks of written, printed or other graphic materials in
its possession or control that use or embody any names or marks of USF or any of
its Affiliates (other than the Members) including the Reserved Names or modify
such materials to remove or cover over any such names or marks; and
(ii) promptly (but in no event later than 30 days after the
Closing) remove or cause to be removed any links from any of the Member's
websites on the World Wide Web to any website maintained by or on behalf of USF
or its Affiliates (other than the Members) and cease the use of any metatags
utilizing any Reserved Name or any confusingly similar word or phrase to direct
traffic to a website not owned by the owner of the Reserved Names.
(c) After the Closing, USF shall and shall cause its Affiliates
to:
(i) promptly (but in no event later than 120 days after the
Closing) destroy all stocks of written, printed or other graphic materials in
its possession or control that use or embody any names or marks of the Members
including the Member names or modify such materials to remove or cover over any
such names or marks and cease all use of a Member name or a name confusingly
similar to a Member name;
(ii) promptly (but in no event later than 30 days after the
Closing) remove, disable or eliminate or cause to be removed, disabled or
eliminated from any website of USF and its Affiliates any links or other
references to any websites of the Members or the Group and cease the use of any
metatags utilizing any Member name or any confusingly similar word or phrase to
direct traffic to a website not owned by USF or its Affiliates.
33
(d) Anything elsewhere herein to the contrary notwithstanding but
subject to the other provisions of this Section 6.1 regarding the use of the
Reserved Names, any Intellectual Property Assets which are owned by or licensed
to USF or any of its Subsidiaries other than Members and which are used in the
conduct of the Business shall, at the Closing, by appropriate instruments,
either be transferred to Buyer or Buyer shall be granted a permanent irrevocable
royalty-free license to use the same in the conduct of the Business after the
Closing.
(e) It is expressly understood and agreed by the Parties that
Buyer shall not cause the Members to undertake any business using, or otherwise
act in, the Reserved Names following the Closing Date, and that Buyer shall
cause the Members to, on the Closing Date, assign all rights to use the Reserved
Names pursuant to an assignment agreement in form and substance reasonably
satisfactory to the Parties to be delivered at Closing, and shall thereafter
cause the Members to change their legal names, if necessary to remove references
to the Reserved Names, by filing the necessary documents with the applicable
Governmental Bodies within thirty (30) days following the Closing Date. If Buyer
fails to make the filings required by the preceding sentence, USF shall be
entitled, beginning 31 days following the Closing Date, to file with the
applicable Governmental Bodies, at Buyer's expense, such amendments to the
Members' Governing Documents as are necessary to effect such name changes,
pursuant to a power of attorney granting such power to USF placed in escrow on
the Closing Date with ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP pursuant to an escrow
letter. Said power of attorney and escrow letter shall be in forms reasonably
agreed upon by ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP and ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇.
(f) If either party violates any of its obligations under this
Section 6.1, the other party may proceed against it in law or in equity for such
damages or other relief as a court may deem appropriate. Each party acknowledges
that a violation of this Section 6.1 may cause the other party irreparable harm
which may not be adequately compensated for by money damages. Each party
therefore agrees that in the event of any actual or threatened violation of this
Section 6.1, the other party and its Affiliates shall be entitled, in addition
to other remedies that they may have, to a temporary restraining order and to
preliminary and final injunctive relief against the breaching party to prevent
any violations of this Section 6.1.
6.2 Tax Matters.
(a) Liability for Taxes.
(i) USF shall be liable for and, pursuant to Article VIII, USF
shall indemnify and hold harmless Buyer and the Members against all Taxes
(whether assessed or unassessed) (A) applicable to any Member (1) attributable
to a Pre-Closing Period, (2) pursuant to Treas. Reg. ss.1.1502-6 (or any
comparable provision under state, local or foreign law or regulation imposing
several liability upon members of a consolidated, combined, affiliated or
unitary group) for any Pre-Closing Period, (3) under any agreement entered into
on or prior to the Closing Date pursuant to which any Member is liable for the
Taxes of any other Person (except for customary agreements to indemnify lenders
or security holders in respect of Taxes), (4) as a result of any Member having
become liable, in a transaction prior to the Closing, as transferee or successor
for Taxes of any other Person, or (5) which would have been attributable to a
Pre-Closing Period but for (x) Code ss. 481 (or any corresponding or similar
provision of state, local or foreign income Tax law) as a result of a change in
method of accounting for a Pre-Closing Period, or (y) a "closing agreement" as
described in Code ss. 7121 (or any corresponding or similar provision of state,
local or foreign income Tax law) executed on or prior to the Closing Date; or
(z) Treasury Regulations under Code ss.1502 (or any corresponding or similar
provision of state, local or foreign Tax law) as a result of a deferred
intercompany transaction, excess loss account or similar event which arose in a
Pre-Closing Period, or (B) attributable to any Stamp Duty Clawbacks; provided,
however, (I) in the case of Taxes imposed on a Joint Venture Entity USF shall be
liable to the Buyer for the product of such Taxes and the percentage ownership
of the Group in such Joint Venture Entity as set forth opposite the name of such
entity on Schedule A-3; (II) USF shall not be liable for any Taxes (other than
Income Taxes) to the extent accrued on the books and records of the relevant
Member and reflected in the Closing Date Adjusted Net Assets; (III) any Taxes
imposed on any Member as a result of transactions occurring on the Closing Date
that are properly allocable (based on, among other relevant factors, factors set
forth in Treas. Reg. ss. 1.1502-76(b)(1)(ii)(B)) to the portion of the Closing
Date after the Closing shall not be considered attributable to a Pre-Closing
Period; and (IV) USF shall not be liable for any interest or penalties
attributable to the negligence or bad faith of Buyer or its Affiliates. USF
shall be entitled to any refund of (or credit for) Taxes allocable to any
Pre-Closing Period unless such refund (or credit) is reflected in Closing Date
Adjusted Net Assets. Buyer or the appropriate Member shall pay over to USF any
such refund or the amount of any credit within fifteen (15) days after receipt
or crediting.
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(ii) Except as provided in Section 6.2(a)(i), Buyer shall be
liable for and, pursuant to Article VIII, Buyer shall indemnify and hold
harmless USF and its Related Parties against all Taxes (whether assessed or
unassessed) applicable to any Member (A) attributable to (1) taxable years or
periods beginning after the Closing Date, (2) transactions occurring on the
Closing Date that are properly allocable (based on, among other relevant
factors, factors set forth in Treas. Reg. ss. 1.1502-76(b)(1)(ii)(B)) to the
portion of the Closing Date after the Closing, and (3) with respect to any
Straddle Period, the portion of such Straddle Period beginning after the Closing
Date or (B) to the extent such Taxes (other than Income Taxes) are accrued on
the books and records of the relevant Member and reflected in the Closing Date
Adjusted Net Assets. Except as otherwise provided herein, Buyer shall be
entitled to any refund of (or credit for) Taxes allocable to any taxable year or
period that begins after the Closing Date and, with respect to any Straddle
Period, the portion of such Straddle Period beginning after the Closing Date.
(iii) For purposes of Section 6.2(a)(i) and Section
6.2(a)(ii), whenever it is necessary to determine the liability for Taxes for a
Straddle Period, the determination of the Taxes for the portion of the Straddle
Period ending on and including, and the portion of the Straddle Period beginning
after, the Closing Date shall be determined by assuming that the Straddle Period
consisted of two taxable years or periods, one which ended at the close of the
Closing Date and the other of which began at the beginning of the day following
the Closing Date, and items of income, gain, deduction, loss or credit for the
Straddle Period shall be allocated between such two taxable years or periods on
a "closing of the books basis" by assuming that the relevant books including the
relevant books and records of any Joint Venture Entity (whether or not taxed on
a flow-through basis) were closed at the close of the Closing Date; provided,
however, that (A) transactions occurring on the Closing Date that are properly
allocable (based on, among other relevant factors, factors set forth in Treas.
Reg. ss. 1.1502-76(b)(1)(ii)(B)) to the portion of the Closing Date after the
Closing shall be allocated to the taxable year or period that is deemed to begin
at the beginning of the day following the Closing Date, and (B) exemptions,
allowances or deductions that are calculated on an annual basis, such as the
deduction for depreciation, shall be apportioned between such two taxable years
or periods on a daily basis and Taxes that are computed on a periodic basis,
such as property Taxes, shall also be so apportioned on a daily basis.
Notwithstanding the foregoing provisions of this paragraph (iii), if the
transactions contemplated by this Agreement result in the reassessment of the
value of any property owned by any Member for property Tax purposes, or the
imposition of any property Taxes at a rate which is different than the rate that
would have been imposed if such transactions had not occurred, then (x) the
portion of such property Taxes for the portion of the Straddle Period ending on
and including the Closing Date shall be determined on a daily basis, using the
assessed value and Tax rate that would have applied had such transactions not
occurred, and (y) the portion of such property Taxes for the portion of such
Straddle Period beginning after the Closing Date shall be the total property
Taxes for the Straddle Period minus the amount described in clause (x) of this
sentence. Sales and use Taxes (and their foreign equivalents, including VAT)
shall be deemed to accrue in accordance with GAAP.
35
(iv) USF or Buyer, as the case may be, shall provide
reimbursement for any Tax paid by one Party all or a portion of which is the
responsibility of the other Party in accordance with the terms of this Section
6.2(a). Within a reasonable time prior to the payment of any such Tax, the Party
paying such Tax shall give written notice to the other Party of the Tax payable
and the portion which is the liability of each Party, although failure to do so
will not relieve the other Party from its liability hereunder.
(v) If, as a result of any action, suit, investigation, audit,
claim, assessment or amended Tax Return, there is any change after the Closing
Date in an item of income, gain, loss, deduction, credit or amount of Tax that
results in an increase in Tax liability for which USF would otherwise be liable
pursuant to this Section 6.2(a), and such change results in a net decrease in
the Tax liability of Buyer for taxable years or periods beginning after the
Closing Date (including the portion of any Straddle Period beginning after the
Closing Date), USF shall be liable only for the net amount of such increase
after taking into account such decrease in accordance with the provisions of
this Section 6.2(a) (and, to the extent such increase in Tax liability is paid
to a taxing authority by USF or any Affiliate thereof, Buyer shall pay USF an
amount equal to such decrease).
(vi) Notwithstanding anything to the contrary in this
Agreement, nothing in Section 3.7 shall cause USF to be liable to Buyer for any
amounts relating to any Taxes for which USF is not expressly liable pursuant to
this Section 6.2.
(b) Tax Returns.
36
(i) USF shall have the exclusive authority and obligation on
behalf of the U.S. Members to prepare, execute and timely file, or cause to be
prepared, executed and timely filed, all federal and state income Tax Returns of
the U.S. Members that are due with respect to any taxable period ending prior to
or ending on and including the Closing Date, provided, however, that any Tax
Return prepared by USF shall be prepared by treating items on such Tax Return in
a manner consistent with the prior Tax Returns of the relevant Member. USF will
take no position on any such Tax Return that would adversely affect a Member
after the Closing Date unless such position is clearly proper and would be
reasonable in the case of a Person that owned the Member both before and after
the Closing Date.
(ii) Except as provided in Section 6.2(b)(i), Buyer shall have
the exclusive authority and obligation to prepare and timely file, or cause to
be prepared and timely filed, all Tax Returns of the Members. Any Tax Return
prepared by Buyer with respect to a Pre-Closing Period shall be prepared by
treating items on such Tax Return in a manner consistent with the prior
practices and positions of the relevant Member(s) unless such treatment is not
permitted by applicable Law. With respect to any such Tax Return which includes
a Pre-Closing Period for which USF may be required to indemnify Buyer under
Article VIII, Buyer shall provide USF with draft copies of such Tax Returns and
an opportunity to review and comment on such Tax Returns at least thirty (30)
days prior to the date for filing such Tax Returns. Buyer shall in good faith
take into account such comments in its preparation of such Tax Returns.
(c) Tax Audits.
(i) Buyer shall promptly notify USF in writing upon receipt by
Buyer or any of its Affiliates of notice of any pending or threatened federal,
state, local or foreign Tax audits, examinations, notices of deficiency or other
adjustments, assessments or redeterminations ("Tax Matters") relating to a
Pre-Closing Period for which USF may be liable to indemnify Buyer under Article
VIII.
(ii) USF shall have the sole right to control, contest,
resolve and defend against any Tax Matters or initiate any claim for refund or
amend any Tax Return relating to the Income Taxes (and, after Buyer's
Recoverable Losses have reached the threshold set forth in Section 8.2(a), the
Taxes) of any Member for Pre-Closing Periods other than Straddle Periods, in
each case provided USF is obligated to indemnify Buyer for such Taxes under
Article VIII, and to employ counsel of its choice at its own expense; provided,
however, that (A) USF shall keep Buyer informed with respect to the
commencement, status and nature of any such Tax Matter, (B) USF shall conduct
such Tax Matter in a manner that would be reasonable in the case of a Person
that continued to own the Member, (C) neither USF nor the ultimate U.S. parent
entity filing the consolidated return that is the subject of such Tax Matter nor
any of their respective Affiliates shall enter into any settlement of or
otherwise compromise any such Tax Matter which adversely affects or may
adversely affect the Tax liability of Buyer, any of the Members or any Affiliate
of the foregoing (to the extent Buyer, any of the Members or any Affiliate of
the foregoing may be required to make any payment for such Tax liability that is
not fully indemnified by USF pursuant to the terms hereof) without the prior
written consent of Buyer, which consent shall not be unreasonably withheld or
delayed, and (D) USF may decline to control any Tax Matters by providing Buyer
with written notice of such decision.
37
(iii) Except as otherwise provided in Section 6.2(c)(ii),
Buyer shall have the sole right to control any Tax Matters relating to any
Member, and to employ counsel of its choice; provided, however, that (A) Buyer
shall keep USF informed with respect to the commencement, status and nature of
any Tax Matter for which USF may be liable pursuant to Article VIII, and (B)
neither Buyer nor any of its Affiliates shall enter into any settlement of or
otherwise compromise any Tax Matter for which USF is required to indemnify Buyer
hereunder without the prior written consent of USF, which consent shall not be
unreasonably withheld or delayed. USF shall indemnify and hold harmless the
Buyer and the Members against any costs or expenses reasonably incurred by them
in contesting their liability for Taxes for which USF is liable under Section
6.2(a)(i).
(iv) In the event that Buyer fails to notify USF with respect
to a Tax Matter in accordance with the provisions of Section 6.2(c)(i), USF
shall not be obligated to indemnify Buyer under Article VIII of this Agreement
with respect to such Tax Matter to the extent that such failure to notify USF
adversely affects USF's ability to adequately defend against such Tax Matter
under Section 6.2(c)(ii).
(v) Neither the Buyer nor any Member may extend any statutory
period of limitations for Taxes for a Pre-Closing Period (other than a Straddle
Period) by giving any waiver or agreeing to any extension thereof without the
express prior written consent of USF, such consent not to be unreasonably
withheld.
(d) Assistance and Cooperation. After the Closing Date, each of
USF and Buyer shall (and shall cause their respective Affiliates, including each
of the Members, to):
(i) assist the other Party in preparing any Tax Returns which
such other Party is responsible for preparing and filing in accordance with
Section 6.2(b);
(ii) upon reasonable notice and without undue interruption to
the business of such Party or the Members, provide access during normal business
hours to the books and records of such Party relating to the Taxes of the
Members prior to the Closing Date;
(iii) furnish the other with copies of all correspondence
received from any taxing authority in connection with any Tax Matter or
information request with respect to any taxable period for which the other may
have a liability under this Section 6.2;
(iv) timely provide to the other powers of attorney or similar
authorizations reasonably necessary to carry out the purposes of this Section
6.2; and
(v) assist in a timely manner in the preparation of tax
related aspects (including the calculation under GAAP of Income Tax accounts as
of the Closing Date) of the initial financial statements prepared by the other
Party following the Closing Date.
(e) Prior Tax Agreements. USF and the Members shall terminate or
cause to be terminated any and all Tax sharing agreements in effect on the
Closing Date as between USF or any Affiliate thereof (other than the Members),
on the one hand, and any of the Members, on the other hand, for all Taxes
imposed by any government or taxing authority, regardless of the period in which
such Taxes are imposed, and there shall be no continuing obligation to make any
payments under any such agreements after the Closing Date.
38
(f) Disputes. If the Parties disagree as to the calculation of any
amount relating to Taxes governed by this Section 6.2, the Parties shall
promptly consult with each other in an effort to resolve the disagreement. If
any such disagreement is not resolved within 30 days after either Party gives
the other written notice that it cannot be resolved, the Parties shall jointly
select a firm of nationally recognized independent accountants (or, if they
cannot agree on the selection of such a firm within that 30-day period, the
default firm specified in Section 2.4) to resolve the disagreement. Such firm's
determination shall be final, binding and conclusive on the Parties, and any
expenses relating to the engagement of such firm shall be shared equally by the
Parties.
(g) Purchase Price Adjustment. Any payment by Buyer or USF to or
on behalf of the other under this Section 6.2 will be an adjustment to the
Purchase Price even though such payment may be made after the period specified
in Section 2.4(a).
(h) Carrybacks. USF will promptly pay to Buyer any Tax refund (or
reduction in Tax liability) resulting from a carryback of a post-acquisition Tax
attribute of any Member to a Tax Return of the Affiliated Group, when such
refund or reduction is realized by the Affiliated Group. USF will cooperate with
Buyer in obtaining such refunds (or reductions in Tax liability), including
through the filing of amended Tax Returns or refund claims. Buyer agrees to
indemnify USF for any Taxes resulting from the disallowance of such
post-acquisition Tax attribute on audit or otherwise.
(i) Section 338 Elections.
(i) Subject to the provisions of this Section 6.2(i), at
Buyer's option, USF will, and will cause any required Affiliate to, join with
Buyer in making one or more timely elections under Section 338(h)(10) of the
Code (and/or corresponding elections under any state or local Law relating to
Taxes) with respect to the direct or indirect acquisition of any Member
hereunder (collectively "Section 338(h)(10) Elections"). Buyer shall in its sole
discretion be entitled to make one or more elections under Section 338(g) of the
Code for any Member (all such elections together with all Section 338(h)(10)
Elections, hereafter the "Section 338 Elections").
39
(ii) In the event that Buyer considers making one or more
Section 338 Elections, Buyer shall provide to USF all information reasonably
required by USF (and not otherwise in its possession) to compute the Excess
Section 338 Tax Liability (as defined below), including, with respect to a
Section 338(h)(10) Election, the allocation among the assets of the relevant
Member of the portion of the grossed-up Purchase Price attributable to such
Member in accordance with the regulations under Section 338 of the Code, an
allocation among the states in which such assets are physically located, and a
schedule setting forth any and all transfer, sales and use, registration,
documentary, stamp and similar Taxes resulting from the Section 338(h)(10)
Election. Buyer shall also provide to USF written notice of any election made
under Section 338(g) for a Member, and shall provide USF all information
reasonably required by USF to report the transactions resulting from such
election, including information with respect to items of such Member arising
during the portion of USF's taxable year which is after the Closing Date. USF
shall use its commercially reasonable best efforts to assist Buyer in obtaining
in a timely manner any information Buyer may deem relevant in determining
whether to make one or more Section 338 Elections, provided that Buyer shall
reimburse USF for any related out-of-pocket costs incurred by USF in obtaining
or calculating such information. USF agrees that Buyer may select and instruct
any third party retained to obtain or calculate information as contemplated in
the preceding sentences. Within forty-five (45) days following receipt by USF of
the information required by USF and not otherwise in its possession, USF shall
provide Buyer with an estimate of the combined net amount of federal, state,
local and foreign Taxes (including all transfer, sales and use, value added,
registration, documentary, stamp and similar Taxes and taking into account all
Tax benefits) related to the transactions contemplated by this Agreement (A) for
which USF or its Affiliates would be liable if such Section 338 Elections were
made and (B) for which USF and its Affiliates would be liable if the Section 338
Elections were not made (the amount of the excess of (A) over (B), if any, shall
be hereinafter referred to as the "Excess Section 338 Tax Liability"), and USF
shall provide Buyer with calculations supporting USF's estimate of the Excess
Section 338 Tax Liability, including information with respect to the tax basis
of the stock (and, in the case of any Section 338(h)(10) Election, the tax basis
of the assets) of the Members with respect to which the Section 338 Elections
are proposed to be made. USF and Buyer agree to use good faith efforts to
resolve any disagreement with respect to the computation of the Excess Section
338 Tax Liability. For purposes of computing the Excess Section 338 Tax
Liability, a net operating loss or capital loss which is attributable to a
Member shall be taken into account; however, a net operating loss or capital
loss which is attributable to an entity other than a Member shall be taken into
account in computing the Tax liability resulting under the Section 338 Elections
only to the extent of the amount of such loss which is taken into account in
determining the Taxes for which USF and its Affiliates would be liable on the
sale of the USFCA Shares if the Section 338 Elections were not made.
(iii) At any time following the calculation of the Excess
Section 338 Tax Liability, Buyer may notify USF of its intention to make a
Section 338 Election and USF shall, or shall cause any required Affiliate to,
join in any Section 338(h)(10) Election pursuant to the provisions of Section
6.2(i)(i). Buyer shall, prepare all such Section 338 Election forms and
attachments in accordance with applicable Tax Laws, at its own expense and with
the assistance and cooperation of USF. With respect to a Section 338(h)(10)
Election, Buyer shall provide USF with draft copies of such forms and
attachments and an opportunity to review and comment with respect thereto at
least ten (10) days prior to the filing due date thereof. Buyer shall in good
faith take into account USF's comments in its preparation of such forms and
attachments.
(iv) If Section 338 Elections are made, then not later than
thirty (30) days after Buyer makes such Section 338 Elections, Buyer shall pay
to USF in immediately available funds to an account designated by USF an amount
equal to the net Excess Section 338 Tax Liability related to all such Section
338 Elections plus (z) all interest accrued on such Excess Section 338 Tax
Liability to the date of payment and (zz) all penalties imposed on USF to the
date of payment as a result of the late payment of such Excess Section 338 Tax
Liability, calculated on an "after-tax basis," which shall mean an amount which
is sufficient to fully compensate USF for the Excess Section 338 Tax Liability
plus interest and penalties, determined after taking into account the net
increase in Taxes payable by USF or its Affiliates as a result of the payment
pursuant to this Section 6.2(i)(iv), such that USF and its Affiliates are placed
in the same position on an after tax basis that they would have been in had the
Section 338 Elections not been made. USF shall have no obligation to pay any of
the Excess Section 338 Tax Liability to the relevant taxing authority prior to
receipt of payment under this Section 6.2(i)(iv). USF shall provide Buyer with
reasonably detailed evidence of payment made to the relevant taxing authorities
with respect to the Excess Section 338 Tax Liability, penalties and interest
within ten (10) days of USF or its Affiliates making such payment.
40
(v) If at any time an allocation of the Purchase Price
prepared by Buyer pursuant to Section 6.2(i)(ii) is redetermined by any taxing
authority and as a result of such redetermination the amount of the Excess
Section 338 Tax Liability is greater than or less than the original estimate of
such amount, Buyer shall promptly pay to USF (if the amount of the Excess
Section 338 Tax Liability is greater than the original estimate of such amount)
or USF shall promptly reimburse to Buyer (if the amount of the Excess Section
338 Tax Liability is less than the original estimate of such amount), in each
case on an "after-tax basis," the difference between such original estimate and
the amount of the Excess Section 338 Tax Liability after taking into account
such redetermination. USF shall notify Buyer of, and agrees to use and to cause
its Affiliates to use reasonable good faith efforts in contesting, any claim by
a taxing authority that would result in an increase in the amount of the Excess
Section 338 Tax Liability as a result of such redetermination; provided that to
the extent Buyer requests that USF or its Affiliates contest any such claim,
Buyer reserves the right to control and direct such contest of any such claim
and shall reimburse USF or its Affiliates, as applicable, for reasonable
out-of-pocket costs incurred in connection with any such contest which is within
the scope of Buyer's request. Notwithstanding the foregoing, USF or Buyer, as
the case may be, shall not have any liability to the other Party under this
Section 6.2(i)(v) unless and until the aggregate amount of the liability of USF
or Buyer pursuant to this Section 6.2(i)(v) exceeds $100,000, in which event the
entire amount of such liability shall be recoverable.
(vi) The valuations and allocations prepared by Buyer pursuant
to Section 6.2(i)(ii) and used to compute the Excess Section 338 Tax Liability
shall be used for purposes of all relevant Tax Returns, reports and filings made
by USF, Buyer and their respective Affiliates, unless it would be unreasonable
to do so.
6.3 Employees and Employee Benefit Plans.
(a) Notice to Employees. Subject to the provisions of this Section
6.3, on or prior to the Closing Date, Buyer and USF shall jointly give notice to
all employees who are then employed by one of the Members (the "Affected
Employees") that all benefits previously provided to the Affected Employees
under the USF Employee Benefit Plans are discontinued on the Closing Date with
respect to such Affected Employees and will be replaced by the employee benefit
plans of the Buyer (the "Buyer Benefit Programs"). Such notice shall also inform
the Affected Employees of the effect of the transaction contemplated by this
Agreement on the Vivendi Employment Benefit Plans. Subject to the provisions of
this Section 6.3, Buyer may amend or terminate the Buyer Benefit Programs at any
time for any reason.
41
(b) Credit for Prior Service. Buyer agrees that the Affected
Employees shall be credited with their length of service with the Members and
USF and its Affiliates under the policies of the Buyer and for all purposes
under the Buyer Benefit Programs (other than for purposes of benefit accrual
under a pension plan as defined in Section 3(2) of ERISA and early retirement
subsidies under a defined benefit plan as defined in Section 3(35) of ERISA)
after the Closing.
(c) Vacation; Sick Leave. Buyer shall take responsibility for and
cause to be paid in the normal course of business the vacation pay of all
Affected Employees for all days of vacation to which each such employee was
entitled under USF's or the applicable Member's vacation pay policy as of the
Closing Date. For purposes of computing eligibility for and the amount of
vacation or holiday pay of Affected Employees to be accrued after the Closing,
employment of such employees by any of the Members or USF or any of its
Affiliates prior to Closing shall be taken into account to the same extent as if
it had been employment by the Members or Buyer. Buyer shall credit all Affected
Employees with all days of accrued sick leave to which such employees were
entitled as of the Closing Date under USF's or the applicable Member's sick
leave policy as of the Closing Date.
(d) Existing Claims. USF shall retain the responsibility for
payment of all covered medical and dental claims or expenses actually incurred
by any employee (or covered dependent of any employee) of any U.S. Member (i)
prior to the Closing Date and (ii) during a continuous period of hospitalization
which commences on or before the Closing Date and ends after the Closing Date,
and in each such case Buyer shall not assume nor shall Buyer or any U.S. Member
be responsible for any liability with respect to such claims or expenses.
(e) COBRA. USF shall be responsible for providing any employee of
any U.S. Member whose "qualifying event" within the meaning of COBRA occurs
prior to the Closing Date (and such employees' "qualified beneficiaries" within
the meaning of COBRA) and for providing any "qualified beneficiaries" of any
employee of any U.S. Member whose "qualifying event" occurs prior to the Closing
Date with COBRA continuation coverage, and, if the Closing occurs, Buyer shall
be responsible for providing such COBRA continuation coverage to the extent
required by Law for any U.S. Member employee whose qualifying event occurs on or
after the Closing Date.
(f) Disability. If the Closing occurs, Buyer and the Members
shall be responsible for short-term disability benefits and long-term disability
benefits for those Affected Employees of any U.S. Member who became disabled
prior to or after the Closing Date; provided, however, that USF shall retain
responsibility for any long-term disability benefits for any employee of any
U.S. Member who had qualified for long-term disability benefits as of the
Closing Date and for any long-term disability benefits for any employee of any
U.S. Member who had qualified for short-term disability benefits as of the
Closing Date and who subsequently qualifies for long-term disability benefits as
a consequence of the same injury or disability.
(g) WARN Act. Buyer shall be responsible for all liabilities
or obligations under the WARN Act resulting from Buyer's or any of the Member's
actions following the Closing.
42
(h) Transfer from the USF 401(k) Plan. As of a date (the
"Account Transfer Date") as soon as practicable after the Closing Date, USF
shall cause to be transferred from the USF 401(k) Plan to the 401(k) plan
sponsored by the Buyer (the "Buyer's 401(k) Plan") cash or property acceptable
to Buyer in an amount equal to the aggregate balances of all participants in the
USF 401(k) Plan as of such Account Transfer Date who, as of the Closing, are
employed by any U.S. Member ("U.S. Company Employees"), including actual
investment earnings or losses through the Account Transfer Date, except that all
promissory notes reflecting participant loans to U.S. Company Employees
outstanding as of such Account Transfer Date shall be transferred in kind and
except for any amounts as to which withdrawal requests have been duly submitted
prior to such transfer and which shall be paid by the USF 401(k) Plan to U.S.
Company Employees in accordance with ERISA and the Code and the terms of the USF
401(k) Plan (the "Transferred Assets"). As of the Account Transfer Date, Buyer
shall assume all liabilities applicable to U.S. Company Employees under the USF
401(k) Plan to pay benefits, consistent with the terms of the USF 401(k) Plan,
equal to the amount transferred. In the event any U.S. Company Employee has a
qualified domestic relations order pending or approved in the USF 401(k) Plan at
the time of transfer, all documentation concerning such qualified domestic
relations order shall be assigned to the Buyer's 401(k) Plan. USF and the Buyer
agree to cooperate fully with respect to any governmental filings, including but
not limited to the filing of any Internal Revenue Service Form 5310A reporting
obligations, information and procedures necessary to effect the transactions
contemplated by this Section 6.3(h). Pending the transfer of the Transferred
Assets, the accounts of the U.S. Company Employees shall remain in the trust
fund for the USF 401(k) Plan and USF shall cause the trustee of the USF 401(k)
Plan to pay any current benefits or make any distributions to U.S. Company
Employees, including, without limitation, such benefits as may be payable to
U.S. Company Employees on account of termination of employment with the U.S.
Members, as they become due. USF and Buyer agree to provide each other with such
records and information as they may reasonably request relating to their
respective obligations under this Section 6.3 or the administration of the USF
401(k) Plan or the Buyer 401(k) Plan. As of the Closing Date, Buyer agrees to
cause any U.S. Member to remit to the trustee of the USF 401(k) Plan all
matching contributions for periods on or before the Closing Date due to the USF
401(k) Plan from any U.S. Member which have not been paid as of the Closing
Date. USF agrees to amend the USF 401(k) Plan pursuant to Treasury Regulation
Section 1.411(d)-4 (Q&A2(e)) to eliminate as of or prior to the Account Transfer
Date any and all non-lump sum and in-kind optional forms of benefit and to
provide notice to affected participants in the USF 401(k) Plan in accordance
with such regulation at least 90 days prior to the Account Transfer Date and
deliver a copy of such notice to Buyer before the Account Transfer Date.
(i) USF Flexible Benefit Plan. After the Closing Date, Buyer
shall adopt a cafeteria plan under Section 125 of the Code and under such plan
shall honor claims by U.S. Company Employees with respect to deferrals made by
such U.S. Company Employees during calendar 2002 under the United States Filter
Corporation Section 125 Flexible Benefit Plan; provided, however, that at the
Closing, USF shall transfer to Buyer all amounts that USF has received in
respect of such deferrals, net of any amounts previously paid out by USF to U.S.
Company Employees in respect of eligible medical and dependent care expenses
incurred in 2002.
43
(j) USF Management Deferred Compensation Plan. As soon as
practicable following the Closing Date, Buyer agrees to cause each of the U.S.
Members to remit to the trustee of the United States Filter Corporation
Management Deferred Compensation Plan (the "USF MDCP") all amounts required to
be withheld from employees' pay as described on Schedule 3.13(d), in respect of
U.S. Company Employees participating in the USF MDCP.
6.4 Insurance.
(a) Termination by USF. Effective as of the Closing Date, USF
will cause the termination of all coverage relating to the Members, the Business
or any of the Member's assets and current or former employees and directors
under policies of insurance that cover USF or any of its Subsidiaries as well as
Members. USF will not take any action that would affect the coverage of one or
more Members under any policies of insurance maintained solely by or on behalf
of any Member.
(b) Information. To the extent that after the Closing either
Party requires any information from the other Party regarding claim data,
payroll or other information in order to make filings with insurance carriers or
self insurance regulators, the other Party will promptly supply such
information.
(c) Workers Compensation. USF shall retain responsibility to
administer and pay all workers compensation claims made by U.S. Company
Employees prior to March 1, 2001. If the Closing occurs, Buyer shall be
responsible to administer and pay all workers compensation claims made by U.S.
Company Employees on or after March 1, 2001 but prior to the Closing Date up to
a stop-loss amount of $250,000 per individual claim; provided, however, that
Buyer shall not be responsible for any such claims which have as of the Closing
Date been settled or paid by a Member, USF or its Affiliates and shall not be
obligated to reimburse USF or its Affiliates for any amounts paid by USF, its
Affiliates or a Member prior to the Closing pursuant to a claim that has not
been settled as of the Closing Date. USF shall be responsible for any amounts in
excess of the stop-loss amount with respect to claims made on or after March 1,
2001 that relate to the period prior to the Closing; provided, that Buyer
notifies USF of any such claims that are filed after Closing in accordance with
procedures established by USF and communicated to Buyer in writing at the time
of the Closing. Schedule 6.4 contains a list of pending workers compensation
claims indicating the date of incident. USF and Buyer will cooperate with one
another after the Closing Date and will provide access to claims data, medical
history and employment records as may be reasonably required to effect the
cost-efficient resolution of such outstanding claims. The amounts payable by USF
pursuant to this paragraph shall not be deemed indemnification payments for
purposes of Article VIII and, accordingly, shall not be subject to any of the
limitations or other provisions of that Article.
6.5 Securities Law Compliance and Legends. Buyer agrees and understands
that the USFCA Shares have not been, and will not be, registered under the
Securities Act or the securities laws of any state. Accordingly, Buyer will not
sell or otherwise dispose of the USFCA Shares except in one or more transactions
registered under the Securities Act and applicable state securities laws or as
to which an exemption from the registration requirements of the Securities Act
and applicable state securities laws is available.
44
6.6 No Public Announcement. Neither Buyer, USF nor their respective
Affiliates shall, without the written approval of the other Party, make any
press release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that any such Person
shall be so obligated by Law, in which case the other Party to this Agreement
shall be advised and the Parties shall use their best efforts to cause a
mutually agreeable release or announcement to be issued; provided, however, that
the foregoing shall not preclude communications or disclosures necessary to
implement the provisions of this Agreement or to comply with applicable
accounting and disclosure obligations of any Governmental Body or the rules of
any stock exchange.
6.7 Expenses. Except as otherwise specifically provided in this
Agreement, each Party will pay all costs and expenses incident to its
negotiation and preparation of this Agreement and to its performance and
compliance with all agreements and conditions contained herein on its part to be
performed or complied with, including the fees, expenses and disbursements of
its counsel, investment banker and independent public accountants and the filing
fees payable in connection with each Party's respective filing required by the
HSR Act and any similar filing with any non-United States Governmental Body.
6.8 Environmental Access. USF shall grant access to Buyer and its
employees, agents and representatives to the facilities of the Group for such
non-invasive environmental inspections as Buyer reasonably deems necessary or
desirable, will make available for interviews employees with managerial
responsibility for environmental matters at the Group's facilities, and will
authorize Buyer and its employees, agents and representatives to gain access to
governmental records concerning environmental matters that relate to or affect
facilities of the Group.
6.9 Employees. (a) For a period of two (2) years following the Closing,
neither USF nor any of its Subsidiaries shall induce or seek to induce any
salaried employee of any Member to leave the employ of such Member. For a period
of one (1) year following the Closing, neither USF nor any of its Subsidiaries
shall employ or otherwise engage as an employee, independent contractor or
otherwise, any salaried employee of any Member unless such person's employment
has been terminated by Buyer or a Member for reasons other than cause (in which
case such person could be employed by USF immediately following such
termination). USF and its Subsidiaries shall use commercially reasonable efforts
to comply with the requirements of the preceding sentence. In the event that
either USF or its Subsidiaries employ a person in violation of this provision,
the Buyer's sole remedy shall be to require USF or the applicable Subsidiary to
terminate such person's employment promptly upon providing USF with notice of
such violation. Buyer shall provide USF with written notice at the time of
termination of each salaried employee of any Member during the one year
following the Closing and upon request by USF, Buyer shall advise USF as to
whether a particular employee whose employment was terminated by Buyer or a
Member is deemed by Buyer to have been terminated "for cause" for purposes of
this paragraph. Notwithstanding the terms of this Section 6.9(a) to the
contrary, (i) Buyer agrees that, should Buyer inform USF in writing at any time
on or after the Closing Date that it or the Members will not continue to employ
Andy Denver and/or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or should Buyer or a Member at any time after
the Closing terminate the employment of either of them without giving such
notice, then immediately following the date of such notice or such termination
USF may offer employment to and hire the individual or individuals as to whom
such notice or termination applies, and (ii) USF agrees that (x) should Buyer or
the Members desire to continue Andy Denver's employment following the Closing
Date, USF shall assign its rights under its employment agreement with Andy
Denver to Buyer or one of the Members, and (y) if Buyer or the Members terminate
at any time following the Closing Date Andy Denver's and/or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇'▇
employment with Buyer or the Members and USF hires such person(s) pursuant to
the terms of (i) above, USF shall use its good faith efforts to cause such
employees to make themselves reasonably available, for up to two years following
the Closing Date, to Buyer and the Members, during normal business hours, on a
limited basis (in such a manner as will not interfere with their normal job
duties) to answer any questions related to the operations of the Members prior
to Closing.
45
(b) Buyer also agrees that for a period of one (1) year following
the Closing, Buyer shall use its good faith efforts not to directly solicit
(other than by way of generalized or mass media advertising) or hire any
employee of USF or its Subsidiaries known to be working in research and
development.
6.10 Assignment. Buyer shall have the right to assign this Agreement to
an Affiliate of Buyer provided that Pall Corporation shall remain the primary
obligor as to all of the obligations of Buyer under this Agreement until the
Closing.
6.11 Shared Facilities. Between the date of this Agreement and the
Closing Date, Buyer and USF shall use commercially reasonable good faith efforts
to, effective as of the Closing Date, enter into mutually acceptable agreements
with respect to, or terminate all occupancy arrangements relating to, the Shared
Facilities (all of which are identified on Schedule 3.8(d)). In the absence of
an agreement regarding such arrangements as of the Closing Date, all occupancy
arrangements relating to the Shared Facilities shall continue for a period not
to exceed six months following the Closing Date, on terms at least as favorable
to the applicable Member as are in effect as of the date hereof, provided,
however, that the parties agree to use their commercially reasonable good faith
efforts to reach a mutually acceptable arrangement regarding such Shared
Facilities prior to the six month anniversary of the Closing Date.
6.12 Agreements with USF and Affiliates. USF shall notify Buyer and
provide Buyer with all of the material terms of and copies of any agreements
proposed to be entered into between any Member and USF and/or any Affiliate of
USF at any time between the date of this Agreement and the Closing Date. The
Members shall not enter into any such agreements unless and until Buyer shall
consent to such agreements.
6.13 Legal Opinion of USF. At the Closing, USF shall cause to be
delivered to Buyer an opinion of its Executive Vice President and General
Counsel, in the form attached hereto as Exhibit 1.
6.14 Legal Opinion of Buyer. At the Closing, Buyer shall cause to be
delivered to USF an opinion of its Senior Vice President and General Counsel as
to the matters set forth in Exhibit 2 attached hereto.
6.15 Noncompetition.
46
(a) Agreement Not to Compete. Except as provided in Section
6.15(c), USF agrees that during the Non-Compete Period, it shall not, and shall
cause each of its Subsidiaries (so long as they remain Subsidiaries of USF) not
to, engage in a Prohibited Activity anywhere in the Territory.
(b) Definitions. For purposes of this Section 6.15 and Section
6.16, the following terms shall have the meaning set forth below:
"In-Process Liquid Filtration" means filtration, separation and
purification of liquid streams by means of materials, products and
systems specifically designed, marketed and used for such
purposes.
"Gas Filtration" means filtration, separation and purification of
gas streams by means of materials, products and systems
specifically designed, marketed and used for such purposes.
"Non-Compete Period" means the period from the Closing Date until
the second anniversary of the Closing Date.
"Plymouth Businesses" means those businesses of the USF Consumer &
Commercial Group, which, among other things, manufacture and
compound media and incorporate such media into (i) filter and
adsorber housings, filter and adsorber cartridges (including
without limitation carbon cartridges), specialty cartridges, bag
housings, bag filters, and other products that filter or adsorb
contaminants in water and/or other fluids; (ii) reverse osmosis
systems; and (iii) water softeners and related accessories and
systems; all of which may be used for In-Process Liquid Filtration
or Gas Filtration within the served market segments shown in
Column III of Schedule 6.15.
"Prohibited Activity" means the combination of:
(1) manufacturing a filtration, separation or
purification material listed in Column I of Schedule
6.15; and
(2) incorporating such manufacturing materials into a
product configuration listed in the corresponding
section of Column II of Schedule 6.15 for use in Gas
Filtration or In-Process Liquid Filtration; and
(3) selling such product to end users or distributors
for intended use in any of the served market
segments listed in Column III of Schedule 6.15.
"Territory" means the entire world.
"Water or Wastewater Filtration Applications" includes, without
limitation, water, wastewater or ▇▇▇▇ water filtration, separation
and purification, water recycling, dewatering, and resource
recovery involving the removal of water from aqueous cleaning
solutions, hydrocarbons or metals, and similar applications.
47
(c) Permitted Activities. Notwithstanding any other provision of
this Section 6.15 to the contrary, the Parties agree that USF and each
Subsidiary may at any time engage in any or all of the following activities
anywhere in the Territory:
(i) the design, manufacture, production and/or sale of any
filtration product, including any product described above in the definition of
Prohibited Activity, for use in Water or Wastewater Filtration Applications;
(ii) directly or indirectly acquire, including by way of a
purchase of assets or securities or by way of merger or consolidation, any
Person or business (such Person or business, an "Acquired Business") engaged in
any Prohibited Activity, if less than twenty-five (25%) of the consolidated
gross revenues of such Acquired Business during the last completed fiscal year
of such Acquired Business prior to such acquisition were derived from any
Prohibited Activity. USF or any Subsidiary may conduct such Prohibited Activity
through such Acquired Business without limitation or restriction and without
regard to the provisions of this Agreement;
(iii) directly or indirectly acquire, including by way of a
purchase of assets or securities or by way of merger or consolidation, any
Acquired Business even if twenty-five (25%) or more of the consolidated gross
revenues of such Acquired Business during the last completed fiscal year of such
Acquired Business prior to such acquisition were derived from any Prohibited
Activity; provided that, in such event, USF shall use (or cause the Subsidiary
of USF that acquired such Acquired Business to use) its commercially reasonable
efforts to dispose (in whole or in part) of all or some business units of such
Acquired Business that is then engaged in such Prohibited Activity as soon as
practicable after the consummation of such acquisition, so that less than
twenty-five (25%) of the consolidated gross revenues of such Acquired Business
during the fiscal year of such Acquired Business in which such acquisition
occurred and thereafter during the Non-Compete Period will be derived from such
Prohibited Activity;
(iv) form, join, enter into or participate in any
partnerships, joint ventures, consortia and other relationships (including,
without limitation, as a subcontractor to, or pursuant to a subcontract with, a
provider engaged in any Prohibited Activity) which engage in any Prohibited
Activity, so long as the goods or services contributed by USF or any of its
Subsidiaries to any such partnership, joint venture, consortium or other
relationship do not require USF or any such Subsidiary to directly engage in
such Prohibited Activity;
(v) perform under the terms of any contract or bid proposal
entered into or made in the ordinary course of business by USF or its
Subsidiaries (other than the Members) on or prior to the date of this Agreement;
(vi) operate, conduct and develop the Plymouth Businesses in
the ordinary course; and
(vii) provide replacement hollow fiber membrane products for
use in filtration equipment and systems sold by USF or its Subsidiaries prior to
the date of this Agreement.
(d) If USF or any of its Subsidiaries violates any of their
obligations under this Section 6.15, Buyer and any of its Affiliates (which for
purposes of this Section 6.15(b) with respect to Buyer shall include the Members
of the Group following the Closing hereunder) may proceed against any of them in
law or in equity for such damages or other relief as a court may deem
appropriate. USF acknowledges that a violation of this Section 6.15 may cause
Buyer or any of its Affiliates irreparable harm which may not be adequately
compensated for by money damages. USF therefore agrees that in the event of any
actual or threatened violation of this Section 6.15, Buyer and any of its
Affiliates shall be entitled, in addition to other remedies that they may have,
to a temporary restraining order and to preliminary and final injunctive relief
against USF and any of its Subsidiaries to prevent any violations of this
Section 6.15.
48
6.16 Patent Licenses.
(a) At the Closing, USF shall, and shall cause its Subsidiaries
to, license to Buyer the patents and patent applications listed in Schedule
6.16(a), and any continuations, divisionals, re-examinations, re-issues, foreign
patents, or other patents and patent applications claiming priority therefrom,
that issue and are derived from or correspond to said patents and patent
applications (collectively, the "Licensed USF Patents"), on a royalty-free basis
in the Territory, according to the terms of the Patent License Agreement in
Schedule 6.16.
(b) At the Closing, Buyer shall, and shall cause the Members to,
license to USF the patents and patent applications listed in Schedule 6.16(b),
and any continuations, divisionals, re-examinations, re-issues, foreign patents,
or other patents and patent applications claiming priority therefrom, that issue
and are derived from or correspond to said patents and patent applications
(collectively, the "Licensed Buyer Patents"), on a royalty-free basis in the
Territory, in the field of Permitted Activities as defined and described in
Sections 6.15(b) and 6.15(c)(i), 6.15(c)(v), 6.15(c)(vi), and 6.15(c)(vii)
(collectively, the "USF Licensed Field"), according to the Terms of the Patent
License Agreement in Schedule 6.16.
ARTICLE VII
CONDITIONS TO CLOSING; TERMINATION
7.1 Conditions Precedent to Obligation of Buyer. The obligation of
Buyer to proceed with the Closing under this Agreement is subject to the
fulfillment prior to or at the Closing of the following conditions, any one or
more of which may be waived in whole or in part by Buyer:
(a) Bringdown of Representations and Warranties; Covenants. Each
of the representations and warranties of USF contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date,
except to the extent that any representation and warranty relates to an earlier
date, in which case such representation and warranty shall be true and correct
as of such earlier date. USF shall have performed in all material respects all
of the covenants and complied in all material respects with all of the
provisions required by this Agreement to be performed or complied with by it at
or before the Closing, except where such nonperformance or noncompliance would
not have a Material Adverse Effect.
(b) Orders; Litigation. No statute, regulation or order of any
Governmental Body shall be in effect that restrains or prohibits the
transactions contemplated hereby, and no proceeding shall have been commenced
that restrains or prohibits the consummation of all or any portion of the
transactions contemplated hereby.
49
(c) Consents. USF or Buyer shall have received the consents or
other approvals referred to in Section 5.3.
(d) Antitrust. All waiting periods applicable to the consummation
of the USFCA Share Transfer under the HSR Act and other Antitrust Laws shall
have expired or been terminated, and all clearances and approvals required to be
obtained in respect of the USFCA Share Transfer prior to the Closing shall have
been obtained.
(e) Share Certificates and Instruments of Transfer. USF shall have
delivered to Buyer stock certificates representing all of the USFCA Shares and
shall have executed, acknowledged and delivered to Buyer such instruments of
transfer of the USFCA Shares as shall be reasonably requested by Buyer to vest
in Buyer all right, title and interest in and to the USFCA Shares.
(f) Documentation. USF shall have delivered to Buyer the following
documentation and such other documentation as Buyer may reasonably request:
A. The current by-laws of each of USF and USFCA.
B. Certificate of the Corporate Secretary of USF stating
that no corporate action has been taken by the board of
directors or the stockholders of USF providing for,
relating to or contemplating the dissolution of USF.
C. Certificate of the Corporate Secretary of USFCA stating
that no corporate action has been taken by the board of
directors or the stockholders of USFCA providing for,
relating to or contemplating the dissolution of USFCA.
D. Copies, certified by the Corporate Secretaries of USF
and USFCA, of all board and stockholder resolutions of
USF and USFCA relating to the execution and delivery of
the Stock Purchase Agreement and the completion of the
transactions contemplated thereby.
E. Certificate of the Corporate Secretary of USFCA
confirming that the total authorized capital stock of
USFCA consists of 1,000 authorized shares of common
stock, all of which are issued and outstanding and none
of which are held as treasury stock.
F. Certificate of the Corporate Secretary of USFCA setting
forth all USFCA board resolutions authorizing or
otherwise relating to the issuance of all outstanding
USFCA shares and describing the consideration paid for
such shares.
G. The originals of all certificates evidencing the 1,000
outstanding shares of USFCA common stock, with evidence
of the cancellation and retirement thereof.
H. USFCA stock register, certified by its Corporate
Secretary.
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(g) FIRPTA Certificate. USF shall have delivered to Buyer pursuant
to Code ss.1445(b)(2) and in conformity with Treas. Reg.
ss.1.1445-2(b)(2)(iii)(B), a duly executed certification of non-foreign status.
(h) Material Adverse Effect Breaches. If Losses arising from
breaches of more than one representation and warranty and/or covenant of USF
contained in this Agreement (whether a representation and warranty or covenant
has been breached shall, for purposes of this Section only, be determined for
representations including references to Material Adverse Effect as if such
representations did not include a reference to Material Adverse Effect) exceed
$20 million USF shall have agreed to reduce the Purchase Price by the amount of
such Losses in excess of .5% of the Purchase Price. If the Purchase Price is
reduced in that amount, the 1% Purchase Price limitation on Buyer's recovery of
Recoverable Losses under Section 8.2 shall be deemed to have been exceeded and
the deductible of .5% of the Purchase Price in said Section 8.2 shall be deemed
to have been satisfied. If such Losses exceed $20 million and USF does not agree
to such reduction of the Purchase Price, Buyer may either (x) exercise its right
not to close by reason of non-fulfillment of a Closing condition or (y) waive
such condition, in which event (assuming fulfillment of all other Closing
conditions) the Closing shall take place and Buyer shall have the right to seek
recovery of such Losses pursuant to Article VIII hereof.
(i) Guaranty. Vivendi Water S.A., a French corporation, shall have
executed and delivered a Guaranty of this Agreement in the form of Exhibit 3
attached hereto.
7.2 Conditions Precedent to Obligation of USF. The obligation of USF to
proceed with the Closing under this Agreement is subject to the fulfillment
prior to or at Closing of the following conditions, any one or more of which may
be waived in whole or in part by USF:
(a) Bringdown of Representations and Warranties; Covenants. Each
of the representations and warranties of Buyer contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date,
except to the extent that any representation and warranty relates to an earlier
date, in which case such representation and warranty shall be true and correct
in all material respects as of such earlier date. Buyer shall have performed in
all material respects all of the covenants and complied in all material respects
with all of the provisions required by this Agreement to be performed or
complied with by it at or before the Closing, except where such nonperformance
or noncompliance would not have a Material Adverse Effect.
(b) Orders; Litigation. No statute, regulation or order of any
Governmental Body shall be in effect that restrains or prohibits the
transactions contemplated hereby, and no proceeding shall have been commenced
that restrains or prohibits the consummation of all or any portion of the
transactions contemplated hereby.
(c) Antitrust. All waiting periods applicable to the consummation
of the USFCA Share Transfer under the HSR Act and other Antitrust Laws shall
have expired or been terminated, and all clearances and approvals required to be
obtained in respect of the USFCA Share Transfer prior to the Closing shall have
been obtained.
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7.3 Termination.
(a) Termination of Agreement. This Agreement may be terminated at
any time prior to the Closing by: (i) mutual consent of Buyer and USF; (ii)
Buyer, if any of the conditions specified in Section 7.1 hereof shall not have
been fulfilled by August 1, 2002 and shall not have been waived by Buyer; (iii)
USF, if any of the conditions specified in Section 7.2 hereof shall not have
been fulfilled by August 1, 2002 and shall not have been waived by USF; or (iv)
by either USF or Buyer if a Governmental Body shall have issued a nonappealable
final order, decree or ruling or taken any other nonappealable final action
having the effect of permanently restraining, enjoining or otherwise prohibiting
the USFCA Share Transfer.
(b) Remedies. In the event of termination of this Agreement by
either Buyer or USF pursuant to clause (ii) or (iii) of the preceding Section
7.3(a), Buyer, on the one hand, and USF, on the other hand, shall be liable to
the other for any breach hereof by such Party, which breach led to such
termination. Buyer and USF shall be entitled to seek any remedy to which such
Party may be entitled at law or in equity in the event of such termination,
which remedies shall include injunctive relief and specific performance.
(c) Limitations. Notwithstanding the foregoing, in the event
that this Agreement is terminated by one Party pursuant to clause (ii) or (iii)
of the first sentence of subsection (a) solely as a result of a failure by the
other Party to satisfy the conditions set forth in Article VII which failure
could not have been reasonably anticipated by such other Party and was beyond
the reasonable control of such other Party, then the remedy of the Party
terminating this Agreement shall be limited solely to recovery of all of such
Party's reasonable costs and expenses incurred in connection herewith.
ARTICLE VIII
INDEMNIFICATION
8.1 Survival of Representations, Warranties, Covenants and Agreements.
Subject to the provisions of this Article VIII, the representations and
warranties of USF contained in Article III and those of the Buyer contained in
Article IV and the covenants and agreements of the Parties contained in this
Agreement shall survive the Closing (and any investigation by the Parties with
respect to such representations and warranties) but shall terminate and be of no
further force or effect on the second anniversary of the Closing Date and no
claims shall be made by any Indemnified Party (as hereinafter defined) under
this Section 8.1 thereafter. Notwithstanding the foregoing, (a) any such
representation or warranty as to which a claim relating thereto is asserted in
writing (which states with specificity the basis therefor) in accordance with
Section 8.3 during such survival period shall, with respect only to such claim,
continue in force and effect beyond such survival period pending resolution of
such claim, (b) the representations and warranties of USF set forth in Section
3.3(c) shall survive forever, (c) the representations and warranties of USF set
forth in Section 3.7, Section 3.13(k) and the covenants of USF and Buyer set
forth in Section 6.2 shall survive until the expiration of the relevant
statutory period of limitations applicable to the underlying claims, (d) the
covenants and agreements in this Article VIII shall survive the Closing and
shall remain in full force and effect for such period as is necessary to resolve
any claim made with respect to any representation, warranty, covenant or
agreement contained in this Agreement during the survival period thereof, and
(e) the remaining covenants and agreements of the Parties contained in Article
VI of this Agreement shall survive the Closing without any contractual
limitation on the period of survival.
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8.2 General Indemnification. If the transactions contemplated hereby
occur at the Closing, subject to the provisions of Section 8.1:
(a) Indemnification by USF and Buyer. Each of the Buyer and USF
hereby agrees (in such capacity, an "Indemnifying Party"), from and after the
Closing, to indemnify and hold harmless the other Party and its Related Parties
(in such capacity, an "Indemnified Party") against any Losses that such
Indemnified Party shall actually incur, to the extent that such Losses (or
claims, actions, suits or proceedings in respect thereof and any appeals
therefrom ("Proceedings")):
(i) arise out of any breach of any representation or warranty
made herein in Article III (or out of any matter that would have been such a
breach but for the fact that it did not itself constitute a Material Adverse
Effect) (other than Section 3.7, for which the remedies are specified in Section
6.2) for the benefit of the Buyer or in Article IV for the benefit of USF; or
(ii) arise out of any failure to perform any covenant made
herein by the Indemnifying Party for the benefit of the Indemnified Party.
Notwithstanding the foregoing, the Indemnifying Party shall
not have any liability to the Indemnified Party under this Section 8.2(a) unless
and until the aggregate amount of all Recoverable Losses exceeds 1% of the
Purchase Price, in which event only the amount of Recoverable Losses in excess
of .5% of the Purchase Price shall be recoverable; and the liability of the
Indemnifying Party under this Section 8.2(a) shall not exceed 50% of the
Purchase Price in the aggregate; provided, however, that the limitations set
forth in this sentence shall not apply with respect to USF's liability to Buyer
(x) for Income Taxes of any Member for Pre-Closing Periods as set forth in
Section 6.2(a)(i)(A)(1), (2) and (5) and related costs and expenses pursuant to
the last sentence of Section 6.2(c)(iii), (y) for any applicable Stamp Duty
Clawback or (z) arising out of breaches of Section 3.3(c) or Section 3.17. All
indemnity payments made under this Article VIII shall be treated as adjustments
to the Purchase Price, even though such payments may be made after the period
specified in Section 2.4(c). For the purposes of determining the amount of
Losses incurred by an Indemnified Party in accordance with this Article VIII,
such Losses shall be offset by (i) the proceeds of any insurance received by the
Indemnified Party with respect thereto and (ii) the amount of any Income Tax
benefit actually realized by the Indemnified Party with respect thereto.
(b) Limitations. USF shall not be liable for any Losses resulting
from a breach of any of the representations, warranties and covenants set forth
in Article III of this Agreement or any of the covenants set forth in Article VI
of this Agreement to the extent that:
(i) the liability for such breach occurs or is increased as a
result of the adoption or imposition of any Law not in force at the date of this
Agreement or as a result of any increase in rates of taxation after the date of
this Agreement; or
53
(ii) the Losses would not have arisen but for a change in
accounting policy or practice of the Buyer or any Member after the Closing.
(c) Waiver of Conditions. Notwithstanding anything to the contrary
in this Agreement, to the extent that USF or the Buyer waives in writing
satisfaction of one or more of the conditions set forth in Section 7.1 or
Section 7.2, which conditions were not satisfied due to the occurrence of one or
more events, conditions or circumstances that was specifically disclosed in
writing (including by inclusion on a Schedule hereto) to USF or the Buyer,
respectively, prior to the Closing, the disclosing Party shall not be liable for
any Losses resulting from such matter or matters to the extent so disclosed.
(d) Indemnification by Buyer. To the fullest extent permitted by
Law, the Buyer hereby agrees, from and after the Closing, to indemnify and hold
harmless USF and its Related Parties against any Losses incurred by such Person
to the extent that such Losses (i) arise out of or are based upon the ownership
and operation of the Group from and after the Closing Date, (ii) relate to Taxes
which are the obligation of the Buyer or the Members in accordance with the
provisions of Section 6.2, or (iii) arise out of a breach of Section 4.5. This
indemnification shall be in addition to (but not in duplication of) the
indemnification provided under Section 8.2(a) and shall not be subject to the
thresholds, deductibles and other limitations on amount set forth in Section
8.2(a).
8.3 Procedures.
(a) Notice of Claim. Promptly after receipt by the Indemnified
Party under Section 8.2 of notice of a Recoverable Loss or the commencement of
any Proceeding with respect to which it believes it is entitled to be
indemnified under this Agreement, the Indemnified Party shall, if a claim in
respect thereto is to be made against the Indemnifying Party under this Article,
notify the Indemnifying Party in writing of the commencement thereof; provided,
however, that the omission to notify the Indemnifying Party shall not relieve it
from any liability that it may have to the Indemnified Party to the extent that
the Indemnifying Party is not prejudiced by such omission.
(b) Settlement; Compromise. An Indemnifying Party will not,
without the prior written consent of the Indemnified Party (which consent shall
not be unreasonably withheld), settle or compromise or consent to the entry of
any judgment with respect to any pending or threatened Proceeding unless such
settlement, compromise or consent includes an unconditional release of the
Indemnified Party from all liability arising out of such Proceeding. An
Indemnified Party will not, without the prior written consent of the
Indemnifying Party, settle or compromise or consent to the entry of any judgment
with respect to any pending or threatened Proceeding.
(c) Procedure. If a Proceeding shall be brought against an
Indemnified Party and it shall notify the Indemnifying Party thereof in
accordance with subsection (a) of this Section 8.3, the Indemnifying Party shall
be entitled to assume the legal defense thereof. The Indemnified Party shall
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of the Indemnified Party unless (i) the employment of such counsel shall
have been specifically authorized in writing by the Indemnifying Party, (ii) the
Indemnifying Party shall have failed to assume the defense of such action or
(iii) the named parties to any such Proceeding (including any impleaded parties)
include both the Indemnified Party and the Indemnifying Party, and the
Indemnified Party shall have been advised by such counsel that there is a
conflict for counsel in representing both the Indemnifying Party and the
Indemnified Party. In any such case, the Indemnifying Party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for the Indemnified Party.
Except as aforesaid, after notice from the Indemnifying Party to the Indemnified
Party of its election to assume the defense of such claim or such action, the
Indemnifying Party shall not be liable to the Indemnified Party under this
Section for any attorneys' fees or other expenses (except reasonable costs of
investigation) subsequently incurred by the Indemnified Party in connection with
the defense thereof. To the extent of any inconsistency between the provisions
of this Section 8.3(c) and Section 6.2(c), the provisions of Section 6.2(c)
shall control.
54
(d) Resolution of Disputes. In the case of an alleged Recoverable
Loss which is disputed by the Indemnifying Party, the Parties shall attempt in
good faith to resolve their differences for a period of 60 days and, if the
Parties are unable to resolve their differences within such period, the
Indemnified Party or Parties may submit the matter to judicial proceedings
(unless an alternate dispute resolution procedure is specified in this
Agreement).
8.4 Consequential Damages. Neither Party shall be liable to any other
Party for claims for punitive, special, exemplary or consequential damages,
including damages for loss of profits, loss of use or revenue or losses by
reason of cost of capital, arising out of or relating to this Agreement or the
transactions contemplated hereby, regardless of whether a claim is based on
contract, tort (INCLUDING NEGLIGENCE), strict liability, violation of any
applicable deceptive trade practices act or similar Law or any other legal or
equitable principle, and each Party releases the other from liability for any
such damages. No Party shall be entitled to rescission of this Agreement as a
result of breach of any other Party's representations, warranties, covenants or
agreements, or for any other matter.
8.5 Sole Remedy. Except as provided in Section 6.1(c), from and after
the Closing the provisions of this Article VIII shall be the sole and exclusive
remedy of each Party for (i) any breach of a Party's representations or
warranties contained in this Agreement, (ii) any breach of a Party's covenants
or other agreements contained in this Agreement, or (iii) any other matters
relating to this Agreement other than claims for fraud. The Buyer and USF and
their respective Related Parties are the only Persons entitled to exercise any
remedy provided by this Article VIII.
ARTICLE IX
MISCELLANEOUS
9.1 Books and Records. (a) From and after the Closing Date, Buyer shall
cause the Members to maintain copies of all books and records in the possession
of the Members at the time of the Closing and shall prevent the Members from
destroying any of such books and records for a period of five (5) years
following the Closing Date or such longer period as may be required by
applicable law without first allowing USF, at USF's expense, to make copies of
the same. During that period, Buyer shall cause the Members (i) to grant to USF
and its representatives reasonable cooperation, access and staff assistance at
all reasonable times and upon reasonable notice to all of such books and records
relating to the period prior to the Closing (including workpapers and
correspondence with taxing authorities) that are not otherwise protected by
legal privilege, (ii) to afford USF and its representatives the right, at USF's
expense, to take extracts therefrom and to make copies thereof, and (iii) to
have access to the employees of the Members, all to the extent reasonably
necessary for the preparation of Tax Returns and the handling of Tax audits,
disputes and litigation; provided, however, that such requested cooperation,
access and assistance shall not unreasonably interfere with the normal
operations of Buyer or the Members.
55
(b) Litigation Assistance. Each of USF and Buyer shall, upon
request by the other Party, use all commercially reasonable efforts to assist
the requesting Party in the evaluation, defense or resolution of any litigation
or other claim (other than litigation or claims relating to this Agreement
brought by a Member or the parties to this Agreement) concerning the Group or
any Member that exists as of the Closing or is initiated after the Closing and
is based on events occurring prior to the Closing (including making available
all personnel (including directors, officers and employees) whose assistance or
testimony is necessary to assist the requesting Party in the evaluation, defense
or resolution of such litigation or claim and making available for review and
copying copies of all books and records and other reasonably requested
information (including financial information) to the extent reasonably relevant
to such litigation or claim and to the extent not protected by legal privilege,
not competitively sensitive and not proprietary in nature. The requesting Party
shall reimburse the other Party for all reasonable expenses of such Party or
such Party's personnel related to providing such assistance.
9.2 Further Assurances. USF shall, at any time and from time to time on
and after the Closing Date, upon request by Buyer and without further
consideration, take or cause to be taken such actions and execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, such
instruments, documents, transfers and conveyances as may be required for the
better conveying, transferring, assigning and delivering of the USFCA Shares to
Buyer.
9.3 Notices. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given or made (i) the second Business Day after the date of mailing, if
delivered by registered or certified mail, postage prepaid; (ii) upon delivery,
if sent by hand delivery; (iii) upon delivery, if sent by prepaid courier, with
a record of receipt; or (iv) the next day after the date of dispatch, if sent by
facsimile, telecopy or e-mail (with a copy simultaneously sent by registered or
certified mail, postage prepaid, return receipt requested or by prepaid
courier), to the Parties at the following addresses:
(i) if to Buyer, to:
Pall Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇-Surry, President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇_▇▇▇▇▇▇▇-▇▇▇▇▇@▇▇▇▇.▇▇▇
56
with a required copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇@▇▇▇.▇▇▇
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Senior Vice President and General Counsel
Pall Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇_▇▇▇▇▇▇@▇▇▇▇.▇▇▇
(ii) if to USF, to:
United States Filter Corporation
▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
With a required copy to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
Either Party may change the address to which notice to it, or copies
thereof, shall be addressed by giving notice thereof to the other Party in
conformity with the foregoing.
9.4 Assignment; Governing Law.
57
(a) Assignment. This Agreement and all the rights and powers
granted hereby shall bind and inure to the benefit of the Parties and their
respective permitted successors and assigns. This Agreement and the rights,
interests and obligations hereunder may not be assigned by either Party without
the written consent of the other Party.
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware without regard to
its conflict of laws doctrines, except that for purposes of determining
compliance with or the existence of liabilities under Environmental Laws, the
Environmental Laws of the Governmental Body with jurisdiction over the real
property, personal property, facility or activity involved shall govern.
(c) Consent to Jurisdiction; Service of Process. Each of the
Parties hereby irrevocably acknowledges and consents that any legal action or
proceeding brought with respect to any of the obligations arising under or
relating to this Agreement shall be brought in the courts of the State of
Delaware, or if it has or can acquire jurisdiction, in the United States
District Court for the District of Delaware, as the Party bringing such action
or proceeding may elect, and each of the Parties hereby irrevocably submits to
and accepts with regard to any such action or proceeding, for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each Party hereby further irrevocably waives any claim that
any such courts lack jurisdiction over such Party, and agrees not to plead or
claim, in any legal action or proceeding with respect to this Agreement or the
transactions contemplated hereby brought in any of the aforesaid courts, that
any such court lacks jurisdiction over such Party. Each Party irrevocably
consents to the service of process in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such Party, at its address for notices set forth in Section 9.3 of this
Agreement, such service to become effective ten (10) days after such mailing.
Each Party hereby irrevocably waives any objection to such service of process
and further irrevocably waives and agrees not to plead or claim in any action or
proceeding commenced hereunder or under any other documents contemplated hereby
that service of process was in any way invalid or ineffective. Subject to
Section 9.4(d) of this Agreement, the foregoing shall not limit the rights of
either Party to serve process in any other manner permitted by law. The
foregoing consents to jurisdiction shall not constitute general consents to
service of process for any purpose except as provided above and shall not be
deemed to confer rights on any Person other than the Parties to this Agreement.
(d) Waivers. Each of the Parties hereby waives any right it may
have under the laws of any jurisdiction to commence by publication any legal
action or proceeding with respect to this Agreement. To the fullest extent
permitted by applicable Law, each of the Parties hereby irrevocably waives the
objection which it may now or hereafter have to the laying of the venue of any
suit, action or proceeding arising out of or relating to this Agreement in any
of the courts referred to in Section 9.4(c) of this Agreement and hereby further
irrevocably waives and agrees not to plead or claim that any such court is not a
convenient forum for any such suit, action or proceeding.
(e) Enforcement. The Parties agree that any judgment obtained by
either Party or its permitted successors or assigns in any action, suit or
proceeding referred to above may, in the discretion of such Party (or its
permitted successors or assigns), be enforced in any jurisdiction, to the extent
permitted by applicable Law.
58
(f) Deemed Acceptance. Each Related Party of Buyer or USF, as the
case may be, seeking the benefit of Article VIII of this Agreement shall be
deemed to have accepted and agreed to the provisions of this Section 9.4 as a
condition to obtaining any benefits under Article VIII as if such Person was one
of the Parties named herein.
9.5 Amendment and Waiver; Cumulative Effect. To be effective, any
amendment or waiver under this Agreement must be in writing and be signed by the
Party against whom enforcement of the same is sought. Neither the failure of
either Party to exercise any right, power or remedy provided under this
Agreement or to insist upon compliance by the other Party with its obligations
hereunder, nor any custom or practice of the Parties at variance with the terms
hereof shall constitute a waiver by such Party of its right to exercise any such
right, power or remedy or to demand such compliance. The rights and remedies of
the Parties are cumulative and not exclusive of the rights and remedies that
they otherwise might have now or hereafter, at law, in equity, by statute or
otherwise.
9.6 Entire Agreement; No Third Party Beneficiaries. This Agreement, the
confidentiality agreement entered into by the Parties in connection with the
transactions contemplated hereby, and the Schedules set forth all of the
promises, covenants, agreements, conditions and undertakings between the Parties
with respect to the subject matter hereof, and supersede all prior or
contemporaneous agreements and understandings, negotiations, inducements or
conditions, express or implied, oral or written. This Agreement is not intended
to confer upon any Person other than the Parties any rights or remedies
hereunder, except the provisions of Article VIII to the extent they relate to
Related Parties of USF or the Buyer.
9.7 Severability. If any term or other provision of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal or incapable of
being enforced under any rule of Law in any particular respect or under any
particular circumstances, such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to either Party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the Parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
9.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall be deemed one and the same instrument.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first above written.
PALL CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman & Chief Executive Officer
UNITED STATES FILTER CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President
60