EXHIBIT 2.4
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") dated April 4, 1997,
1997, among EMCON, a California corporation ("Seller" or "EMCON"), COLUMBIA
ANALYTICAL SERVICES, INC., a Washington corporation ("CAS"), the members of the
senior management employee group of CAS listed on the signature page hereto
("Management Purchasers") and NORTHWESTERN TRUST, as the trustee (the "Trustee")
of the COLUMBIA ANALYTICAL SERVICES, INC., EMPLOYEE STOCK OWNERSHIP TRUST ("ESOT
Purchaser").
R E C I T A L S:
Pursuant to a Plan of Recapitalization ("Recapitalization") under
Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended ("Code"),
a copy of which is attached hereto as Exhibit A, the Seller owns the following
shares of stock in CAS: 1,250,000 shares of Class A Common Stock ("Common
Stock"), 4,000,000 shares of Class A Super Common Stock ("Super Common Stock"),
and 500,000 shares of Class A Preferred Stock ("Preferred Stock"). The Seller
desires to sell to ESOT Purchaser and CAS certain of these shares in accordance
with the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereby agree as follows:
ARTICLE 1.
Purchase and Sale of Stock
1.1 Purchase by ESOT Purchaser. Subject to the terms and conditions of this
Agreement, at the Closing, the Seller shall sell to the ESOT Purchaser, and the
ESOT Purchaser shall purchase from the Seller, 4,000,000 shares of Super Common
Stock ("Super Common Shares") for a total purchase price of $5,000,000.
1.2 Purchase by CAS. Subject to the terms and conditions of this Agreement,
at the Closing, the Seller shall sell to CAS, and CAS shall purchase from the
Seller, 1,250,000 shares of Common Stock ("Common Shares") for a total purchase
price of $500,000.
1.3 Stock Retained by Seller. Seller shall retain the 500,000 shares of
Preferred Stock.
1.4 Sale of Stock By CAS. Subject to the terms and conditions of this
Agreement, within five (5) business days following Closing, CAS shall sell to
the Management Purchasers, and the Management Purchasers shall purchase from CAS
a total of 461,538 shares of Common Stock for a total purchase price of
$300,000. The shares of Common Stock shall be distributed among the Management
Purchasers as shown on Schedule 1.4.
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1.5 Options to Management Purchasers. At Closing, CAS shall grant options
to the Management Purchasers to purchase the number of shares of Common Stock
shown on Schedule 1.5 hereof. The Stock Option shall be in the form attached
hereto as Exhibit 1.5.
ARTICLE 2.
ESOT Purchaser Financing
The obligation of the ESOT Purchaser to purchase the shares of Seller
as provided in Section 1.1 is conditioned upon ESOT Purchaser obtaining the
necessary financing. ESOT Purchaser intends such financing to be as follows:
2.1 Bank Financing. CAS will undertake to obtain a $3,500,000 loan from a
financial institution. Upon receipt of the proceeds of that loan, CAS will then
loan $3,500,000 to ESOT Purchaser upon the same terms and conditions as the loan
from the financial institution and which shall be in the form of the ESOT Loan
and Pledge Agreement attached as Exhibit 2.1. The ESOT Purchaser shall use the
loan proceeds to pay part of the purchase price referred to in Section 1.1.
2.2 Seller Financing. Seller agrees to loan to CAS the sum of $1,500,000
upon the terms and conditions of the Subordinated Promissory Note attached
hereto as Exhibit 2.2. CAS agrees to loan to the ESOT the sum of $1,500,000
which shall be in the form of the ESOT Loan and Pledge Agreement attached as
Exhibit 2.1. The ESOT Purchaser shall use the loan proceeds to pay part of the
purchase price referred to in Section 1.1.
2.3 Contributions. CAS shall make cash contributions to the ESOT Purchaser
in such amounts and at such times which, together with any cash dividends that
may be declared by CAS with respect to the Class A Super Common Shares, will
enable the ESOT Purchaser to pay when due all amounts owing by the ESOT
Purchaser under the Notes to CAS described in Section 2.1 and 2.2, whether for
principal or interest. A contribution or dividend by the CAS to the ESOT
Purchaser to enable the ESOT Purchaser to make any given payment shall be made
sufficiently prior to the date such payment is due to provide for timely
payment.
ARTICLE 3.
Closing
3.1 Time and Place. The exchange of items described in Section 3.2 below
("xxx Xxxxxxx") shall be held at the offices of CAS, located at 0000 Xxxxx 00xx
Xxxxxx, Xxxxx, Xxxxxxxxxx, at 10 a.m., local time, on April 4, 1997, or at such
other time and place as shall be mutually agreed upon by the parties. The date
of the Closing is sometimes referred to herein as the "Closing Date."
3.2 Deliveries. On the Closing Date (a) CAS and the ESOT Purchaser shall
execute and exchange counterparts of the ESOT Loan and Pledge Agreement in the
form attached hereto as Exhibit 2.1; (b) the ESOT Purchaser and CAS shall
deliver to the Seller payment by federal wire transfer or cashier's checks
representing the purchase price in accordance with Section 1.1 and 1.2 above;
(c) the Seller shall deliver to the ESOT Purchaser and CAS certificates
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representing the Super Common Shares and Common Shares, respectively, duly
endorsed to the ESOT Purchaser and CAS or accompanied by duly executed stock
powers, in transferable form with all requisite stock transfer stamps attached;
and (d) the parties shall deliver all other documents or agreements required by
this Agreement.
ARTICLE 4.
Other Transactions at Closing
4.1 Subordinated Promissory Note. CAS and Seller acknowledge that CAS
currently owes to Seller the sum of $1,718,615.64. As a condition to the
purchase of the shares by the ESOT Purchaser, Seller has agreed that this debt
shall be represented by a Subordinated Promissory Note from CAS in the form
attached hereto as Exhibit 4.1.
4.2 Terms of Subordination. The two Subordinated Promissory Notes referred
to in Section 2.2 and 4.1 ("EMCON Notes") shall be subordinated to the bank
financing referred to in Section 2.1 and an operating line of credit for CAS not
to exceed $1,200,000. The operating line of credit may increase, with the
approval of Seller, in its sole discretion, at the rate of $1.00 for every $2.00
in principal reduction under the EMCON Notes.
4.3 Security for EMCON Notes. The obligations of CAS under the EMCON Notes
shall be secured by an assignment by CAS of the Stock Pledge Agreement between
CAS and the ESOT. The form of assignment is attached hereto as Exhibit 4.3.
4.4 Purchase of Seller's Shares. At Closing, Seller will pay to CAS, via
wire transfer, a total of Two Hundred Six Thousand Four Hundred Fifty-six
Dollars and Forty-three cents ($206,456.43). Four Hundred Eighty-seven Dollars
and Forty-three cents ($487.43) of such sum represents reimbursement of the cost
incurred by CAS pursuant to Section 4.6 below for the policy of title insurance
on the property. CAS will promptly distribute the balance of such monies (net of
applicable withholding) to those persons and in the amounts listed on Schedule
4.4 in final satisfaction of Seller's agreements to (a) cancel its Salary
Continuation Agreements with Xxxxx Xxxxxxx; (b) buy back shares of EMCON
restricted stock held by CAS employees; and (c) cash out options to purchase
EMCON common stock held by CAS employees. Following the Closing, CAS shall be
responsible for the payment of all income tax, withholding, and other
payroll-related taxes on all the payments described in this Section 4.4.
4.5 State/Federal Taxes. The following amounts shall be treated as
additional contributions to capital to CAS by Seller: (a) All intercompany
payable amounts owed by Seller to Purchaser for past years accrued local, state,
and/or federal income taxes up through April 4, 1997; and (b) all debt owed by
CAS to Seller relating to Columbia Aquatics. Seller agrees to be solely
responsible for the payment of these liabilities.
4.6 Kelso Property. The land and real property improvements for the Kelso,
Washington, real estate legally described on Schedule 4.6 hereof ("Property")
shall be distributed to Seller by CAS as a dividend. At the Closing, CAS shall
convey to Seller by warranty deed ("Deed") the fee title to the Property. The
form of the Deed shall be subject to the reasonable approval of Seller and CAS.
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The Property shall be conveyed to Seller subject only to non-delinquent real
property taxes and assessments and those certain exceptions to title set forth
in that certain preliminary report issued as order No. 111643 by Cowlitz County
Title Company (the "Title Company") and dated March 3, 1997 (collectively, the
"Approved Exceptions to Title"). At the Closing, the Title Company shall issue a
standard ALTA Owner's Policy of Title Insurance to EMCON in the amount of
$300,000, subject only to the Approved Exceptions to Title. At the Closing, CAS
and Seller shall also execute a Lease Agreement in the form attached hereto as
Exhibit 4.6 (the "Lease Agreement"), pursuant to which CAS shall lease the
Property from Seller for a period of ten (10) years. Subject to reimbursement by
Seller pursuant to Section 4.4 above, CAS shall pay for the policy of title
insurance issued in connection with the foregoing. CAS shall pay for all
transfer taxes, escrow fees, and other closing charges in connection therewith.
Prior to Closing, CAS will deposit the duly executed and notarized Deed
into escrow for recordation at the Closing upon telephone confirmation by both
parties that the Closing has occurred with respect to the transfer of the Super
Common Shares and the Common Shares. Both parties shall deposit with the Title
Company their respective portions of the closing costs hereunder, escrow
instructions sufficient to close escrow and cause issuance of the Title Policy
at the Closing, and such other documents as may be reasonably necessary to close
the escrow.
ARTICLE 5.
Seller's Representations and Warranties
Subject to the limitations set forth in Article 10, the Seller represents
and warrants to the ESOT Purchaser, as follows, and, subject to the limitations
set forth in Article 10 hereof, Seller represents and warrants to CAS the
statements set forth in Sections 5.1, 5.2, 5.3, 5.5, 5.6, 5.7, 5.8, 5.9, and
5.10:
5.1 Title to Stock. The Seller is the record and beneficial owners of the
Shares, which, as of closing, shall be free and clear of any security interest,
claim, lien, pledge, option, encumbrance or restriction (on transferability or
otherwise) whatsoever in law or in equity. The delivery to CAS and the ESOT
Purchaser on the Closing Date of certificates for the Common Shares and Super
Common Shares will convey to CAS and the ESOT Purchaser respectively lawful and
valid title thereto, free and clear of any security interest, claim, lien,
pledge, option, encumbrance or restriction whatsoever, except those created by
the ESOT Loan Agreement and the EMCON Notes.
5.2 Necessary Authority; Enforceability. The Seller has the legal
competence and full power to enter into, deliver and perform this Agreement and
to consummate the transactions contemplated herein. This Agreement has been duly
executed and delivered by the Seller, and constitutes the legal, valid and
binding obligations of the Seller enforceable against the Seller in accordance
with its terms, except as the same may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally now or hereafter in effect, and subject to the availability of
equitable remedies.
5.3 No Conflicts. Except for the consents listed on Schedule 5.3, all of
which consents have been or are being delivered concurrently herewith, the
execution, delivery and performance of this Agreement by the Seller and the
Seller's consummation of the transactions contemplated hereby, do not and will
not (i) require the consent, approval, authorization, order, filing,
registration or qualification of or with any court, governmental authority or
third person, (ii) conflict with or result in any material violation of or
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default under any provision of any mortgage, indenture, lease, agreement or
other instrument, permit, concession, grant, franchise or license to which the
Seller is party or by which it may be bound, (iii) conflict with or result in
any violation of or default under any provision of the Articles of Incorporation
or the By-Laws of the Seller, (iv) violate any law, ordinance, rule, regulation,
judgment, order or decree applicable to the Seller, or (v) result in the
creation of any security interest, claim, lien, charge or encumbrance upon any
of the Common Shares and Super Common Shares except as set forth in the ESOT
Loan Agreement and the EMCON Notes.
5.4 Authorized and Outstanding Stock
(a) Prior to implementation of the Recapitalization, the authorized
stock of CAS consisted of 100,000 shares of common stock, of which 10,000 shares
were issued and outstanding in the name of Seller. After the Recapitalization,
the capitalization of CAS is as follows: 3,500,000 authorized shares of Class A
Common Stock, of which 1,250,000 shares are issued and outstanding; 10,000,000
authorized shares of Class A Super Common Stock, of which 4,000,000 shares are
issued and outstanding; and 500,000 authorized shares of Class A Preferred
Stock, of which 500,000 shares are issued and outstanding. All of the foregoing
outstanding shares are owned by Seller. To Seller's knowledge, all outstanding
shares have been duly authorized and are validly issued, fully paid,
nonassessable and issued in full compliance with the preemptive rights of any
existing shareholders and in full compliance with all applicable federal and
state securities laws. Except as set forth in Schedule 5.4, to Seller's
knowledge, no shares of the capital stock of CAS have been reserved for issuance
for any purposes, and there are no outstanding rights, subscriptions, warrants,
options, conversion rights, commitments or agreements of any kind outstanding to
purchase or otherwise acquire from CAS, or to cause CAS to issue or sell any
shares of its authorized stock or securities or obligations of any kind
convertible into, exchangeable for or evidencing the right to acquire any shares
of its authorized stock.
(b) To Seller's actual knowledge, there are no other shares or classes
of shares of authorized or outstanding capital stock of CAS. Notwithstanding the
fact that Xxxxxxx Xxxxxxx or any other executive officer of CAS may have been
deemed to be an executive officer of Seller under the Securities Exchange Act of
1934 or any other law or regulation. Seller shall not be deemed to have
possessed knowledge of any facts or circumstances solely by virtue of Xx.
Xxxxxxx'x or such other executive officer's knowledge of such facts or
circumstances for the purposes of the representation set forth in this Section
5.4(b).
5.5 Taxes. Seller has duly filed all consolidated federal, state, local and
foreign income tax returns necessary to be filed by it (all such returns being
true and correct in all material respects) and Seller has duly paid or made
provisions for the payment of all taxes (including any interest or penalties)
which are due or payable pursuant to such returns or pursuant to any assessment
with respect to federal, state, and local income taxes, whether or not in
conjunction with such returns, through the date of Closing.
Except as set forth on Schedule 5.5 attached hereto, to Seller's knowledge,
there are no pending or threatened examinations or audits of the returns and
reports of Seller for CAS's operations or any claims asserted for taxes or
assessments of Seller for CAS operations nor are there outstanding agreements or
waivers extending the statutory period of limitations applicable to any
consolidated income tax return of Seller for any period. Seller has not prepared
and filed a consolidated income tax return for the year ending December 31,
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1996. Taxes will be due on account of the filing of said returns. Seller has and
will have obligations to pay all local, state and federal income taxes for CAS
operations with respect to periods up to April 4, 1997.
5.6 Undisclosed Liabilities. Except as set forth on Schedule 5.6 attached
hereto, Seller has not obligated CAS nor caused CAS to incur any liabilities,
whether absolute, accrued, contingent or otherwise, whether due or to become due
other than such liabilities Seller shall continue to be solely responsible for.
5.7 Benefit Plan. Except as set forth on Schedule 5.7, Seller has no plans
of the following types which may result in any liability to CAS or its officers
or directors: pension, profit-sharing, stock bonus, or other plan which is
"qualified," or is intended to be "qualified" under Section 401(a) of the Code,
or any bonus, deferred compensation, hospitalization or other medical stock
purchase, life or other insurance, golden parachute agreements or other employee
benefit plan or arrangement.
5.8 Financial Statements. Attached hereto as Schedule 5.8 are true and
complete copies of Seller's auditors workpapers showing the balance sheets of
CAS at December 31, 1994, December 31, 1995, and the related statements of
income, stockholders' equity and cash flows for the fiscal years then ended
(collectively, the "Annual Financial Statements"), and an audited balance sheet
and related statement of income of EMCON for the year ended December 31, 1996
(collectively, the Balance Sheet and the Statements may hereinafter be referred
to as the "Financial Statements").
(a) To Seller's knowledge, the Annual Financial Statements (including
the notes thereto) present fairly the financial condition and results of
operations of CAS at and for the periods indicated, and have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis.
(b) To Seller's knowledge, CAS has no liabilities, commitments or
obligations of any nature, whether absolute, accrued, contingent, known or
unknown, due or to become due or otherwise, which, in accordance with generally
accepted accounting principles are required to be set forth on a balance sheet,
except (i) as reflected in its December 31, 1996, balance sheet included as part
of the Financial Statements and not heretofore discharged, (ii) as incurred as a
result of the normal and ordinary course of its business since the date of such
balance sheet, none of which is materially adverse.
5.9 No Liens and Encumbrances. Except as set forth on Schedule 5.9, or as
otherwise contemplated by this Agreement, Seller has not placed or caused to be
placed any lien, security interest, or other encumbrance upon the personal
property of CAS.
5.10 Representations Complete. None of the representations and warranties
made by the Seller herein, nor any statement made in any Schedule, Exhibit or
certificate furnished pursuant to this Agreement, contains or will contain any
untrue statement of a material fact, or omit to state any material fact required
to be stated therein, or necessary in order to make the statements made, not
misleading.
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ARTICLE 6.
Sellers' and Management Purchasers' Representations and Warranties
The Management Purchasers jointly and severally represent and warrant to
the ESOT Purchaser as follows, and, subject to the limitations set forth in
Article 10 hereof, the Seller represents and warrants to the ESOT Purchaser, to
Seller's knowledge, as follows:
6.1 Subsidiaries. Schedule 6.1 attached hereto lists all subsidiaries,
partnerships and other entities which CAS has organized or in which it has owned
an interest (other than publicly traded corporations or entities in which it has
held a de minimis interest for investment purposes) and the status of CAS's
ownership in such entitles on the date hereof. Except as disclosed in Schedule
6.1, immediately after the Closing, there will be no corporation which is a
member of the same "controlled group of corporations" as CAS, as determined
under Section 1563(a) of the Code.
6.2 Litigation and Contracts. Schedule 6.2 attached hereto contains a true
and complete list of all actions, suits, proceedings, arbitrations or
investigations pending or threatened against CAS (or any of its respective
officers or directors in connection with the business or affairs of CAS or the
transactions contemplated hereby), before any court or governmental body, United
States or foreign ("Proceeding" or "Proceedings"). The status of each Proceeding
is set forth on Schedule 6.2. As of the date hereof, except as described in
Schedule 6.2, the claims which are the subject of each Proceeding and the
defense thereof is covered by insurance as described on Schedule 6.2 or a
sufficient cash reserve has been set aside by CAS with the result that the
Proceedings, in the aggregate, will not require any currently unfunded material
payments by CAS or any other commitments, other than the time expended by
officers and employees in connection with testimony or other participation in
the defense of the Proceedings. CAS is not in default in any material respect on
any of its contracts, agreements or evidences of indebtedness, and no party to
any contract or agreement with CAS which is material to the conduct of CAS's
business, is in default in any material respect under any such contract or
agreement.
ARTICLE 7.
CAS and Management Purchasers Representations and Warranties
CAS and the Management Purchasers jointly and severally represent and
warrant to Seller and the ESOT Purchaser as follows:
7.1 Necessary Power and Authority; Enforceability. CAS has all requisite
power and authority to enter into, deliver and perform this Agreement and to
consummate the transactions contemplated herein. The execution, delivery and
performance of the Agreement and the consummation of the transactions
contemplated herein, have been duly authorized by all necessary action on the
part of CAS's Board of Directors and shareholders. This Agreement has been duly
executed and delivered on behalf of CAS by the authorized corporate officers and
constitutes CAS's valid and legally binding obligation, enforceable against CAS
in accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors'
rights generally now or hereafter in effect, and subject to the availability of
equitable remedies.
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7.2 No Conflicts. Except for the consents listed on Schedule 7.2, all of
which consents have been or are being delivered concurrently herewith, the
execution, delivery and performance of this Agreement by CAS and CAS's
consummation of the transactions contemplated hereby, do not and will not (i)
require the consent, approval, authorization, order, filing, registration or
qualification of or with any court, governmental authority or third person, (ii)
conflict with or result in any violation of or default under any provision of
any mortgage, indenture, lease, agreement or other instrument, permit,
concession, grant, franchise or license to which CAS is party or by which any of
its outstanding Shares are or may be bound, (iii) conflict with or result in any
violation of or default under any provision of the Articles of Incorporation or
the By-Laws of CAS, (iv) violate any law, ordinance, rule, regulation, judgment,
order or decree applicable to CAS, or (v) result in the creation of any security
interest, claim, lien, charge or encumbrance upon any of the outstanding Shares
of CAS, except as set forth in the ESOT Loan Agreement and EMCON Notes.
Authorized and Outstanding Stock. Prior to implementation of the
Recapitalization, the authorized stock of CAS consisted of 100,000 shares of
common stock, of which 10,000 shares were issued and outstanding in the name of
Seller. After the Recapitalization, the capitalization of CAS is as follows:
3,500,000 authorized shares of Class A Common Stock, of which 1,250,000 shares
are issued and outstanding; 10,000,000 authorized shares of Class A Super Common
Stock, of which 4,000,000 shares are issued and outstanding; and 500,000
authorized shares of Class A Preferred Stock of CAS, of which 500,000 shares are
issued and outstanding. All of the foregoing outstanding shares are owned by
Seller. There are no other shares or classes of shares of authorized or
outstanding capital stock of CAS. All outstanding shares have been duly
authorized and are validly issued, fully paid, nonassessable and issued in full
compliance with the preemptive rights of any existing shareholders and in full
compliance with all applicable federal and state securities laws.
Except as set forth in Schedule 7.3, no shares of the capital stock of
CAS have been reserved for issuance for any purposes, and there are no
outstanding rights, subscriptions, warrants, options, conversion rights,
commitments or agreements of any kind outstanding to purchase or otherwise
acquire from CAS, or to cause CAS to issue or purchase, any shares of its
authorized stock or securities or obligations of any kind convertible into,
exchangeable for or evidencing the right to acquire any shares of authorized
stock.
7.4 Litigation and Contracts. Schedule 7.4 attached hereto contains a true
and complete list of all actions, suits, proceedings, arbitrations or
investigations pending or threatened against CAS (or any of its respective
officers or directors in connection with the business or affairs of CAS or the
transactions contemplated herewith), before any court or governmental body,
United States or foreign ("Proceeding" or "Proceedings"). The status of each
Proceeding is set forth on Schedule 7.4. As of the date hereof, except as
described in Schedule 7.4, the claims which are the subject of each Proceeding
and the defense thereof is covered by insurance as described on Schedule 7.4 or
a sufficient cash reserve has been set aside by CAS with the result that the
Proceedings, in the aggregate, will not require any currently unfunded material
payments by CAS or any other commitments, other than the time expended by
officers and employees in connection with testimony or other participation in
the defense of the Proceedings. CAS is not in default in any material respect on
any of its contracts, agreements or evidences of indebtedness, and no party to
any contract or agreement with CAS which is material to the conduct of CAS's
business, is in default in any material respect under any such contract or
agreement.
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7.5 Corporate Organization and Good Standing of CAS. CAS is a corporation
duly incorporated and organized, validly existing and in good standing under the
laws of the State of Washington and has all requisite power and authority
(corporate and other) to own, operate and lease its properties and to carry on
its business as such business is now being conducted. CAS is duly qualified or
licensed to transact business as a foreign corporation and is in good standing
in all jurisdictions where its present activities require it to be so qualified,
licensed or in good standing. Schedule 7.5 attached hereto contains a list of
all jurisdictions in which CAS is qualified or licensed to transact business as
a foreign corporation. CAS has not received any written notice or assertion
within the last three years from the Secretary of State or comparable official
of any jurisdiction to the effect that CAS is required to be qualified or
otherwise authorized to do business therein, in which CAS has not qualified or
obtained such authorization.
7.6 Employee Benefit Plans. Except as set forth on Schedule 7.6 attached
hereto, CAS maintains no pension, profit-sharing, stock bonus or other plan
which is "qualified," or is intended to be "qualified" under Section 401(a) of
the Code. Schedule 7.6 contains an accurate and complete list of each bonus,
deferred compensation, hospitalization or other medical, stock purchase, life or
other insurance, and each other employee benefit plan or arrangement of CAS
(collectively, the "Plans"). CAS has heretofore delivered to the ESOT Purchaser
true and complete copies of the documents governing all such Plans as in effect
on the date hereof. Each of the Plans has been administered in material
compliance with its terms and all filing, reporting, disclosure and other
requirements of the Employee Retirement Income Security Act of 1974, as amended
"ERISA"). CAS has no plan or commitment, whether formal or informal and whether
legally binding or not, to create any additional such Plan or modify or change
any existing plan or arrangement. The trustee has been duly appointed.
7.7 Personnel.
(a) Schedule 7.7 attached hereto lists the names and current salaries of
all directors and officers of CAS and the amount of all bonuses accrued and to
be paid by CAS to all directors and officers of CAS for services rendered to CAS
through December 31, 1996.
(b) Except as contained on Schedule 7.7 attached hereto, CAS is not, or
will not be, by reason of anything done hereafter in connection with the
execution of this Agreement or the consummation of the transactions contemplated
hereby, liable to any employees of CAS for any amount of severance pay or for
any other similar payments.
(c) There is no unfair labor practice pending against CAS before the
National Labor Relations Board. There is no labor strike, slowdown or stoppage,
or any union organizing campaign, actually pending or to the knowledge of CAS of
the Management Purchasers, threatened against or involving CAS. No collective
bargaining agreement is currently being negotiated by CAS.
(d) Except as set forth on Schedule 7.7, CAS has not entered into any
employment agreements or similar arrangements related to the compensation of its
officers.
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7.8 Sales and Use Taxes. CAS has duly filed all sales and use tax returns
necessary to be filed by it, and CAS has duly paid or made provisions for the
payment of all such taxes, (including any interest or penalties) which are due
and payable to such returns or pursuant to any assessments with respect to all
such taxes, whether or not in conjunction with such returns, through the date of
closing.
Except as set forth on Schedule 7.8 attached hereto, there are no
pending or threatened examinations or audits of the returns or reports of CAS,
or claims asserted for sales or use taxes or assessments (other than as listed
by CAS on Schedule 7.8 attached hereto) for CAS operations, nor are there
outstanding waivers or agreements extending the statutory period of limitations
applicable to any tax return or report for any period.
7.9 Corporate Documents. Complete and correct copies of the Articles of
Incorporation of CAS ("Articles") and all amendments thereto, certified by the
Secretary of State of Washington, and of the By-Laws of CAS, as amended,
certified by the Secretary of CAS, have been furnished to the ESOT Purchaser and
no amendments to the Articles or the By-Laws have been adopted subsequent to
said furnishing. CAS is not in default in the performance, observation or
fulfillment of its Articles or By-Laws.
7.10 Liabilities. There are no material transactions in which CAS has been
involved or in which CAS has participated in the last five years or which
represents a current or contingent commitment or liability which are not
reflected on Schedule 7.10 attached hereto, in the Annual Financial Statements
(defined in Section 6.8) or in resolutions, or minutes, certified copies of
which have been delivered to all parties.
7.11 Environmental Matters. Except as set forth on Schedule 7.11 attached
hereto, to the best of Management Purchasers' knowledge, no condition exists at
any facility of, or real property owned by, CAS with respect to the storage or
discharge into the earth or its atmosphere of effluents, waste or other
materials, solid, liquid or gaseous, nor has any waste been disposed of in any
way or manner, in violation of law. CAS has not received any notice from any
governmental body claiming any material violation of any zoning, building,
health or safety law or ordinance, or requiring any material work, repairs,
construction, alterations, noise reduction, cleanup or installation which has
not been fully complied with.
7.12 No Violation. Except as disclosed on Schedule 7.12 attached hereto,
CAS is not in violation of, or is under investigation with respect to, or has
been charged with or given notice of any violation of, any applicable law,
statute, order, rule, regulation, policy or guideline promulgated, or judgment
entered, by any federal, state, local or foreign court or governmental authority
relating to or affecting CAS, or any of its properties, where such violation
could have a material adverse effect on CAS. Neither CAS nor any director,
officer, agent, employee or other person associated with or acting on behalf of
any of them in connection with the business of CAS, has (i) used any corporate
funds for unlawful contributions, payments, gifts or entertainment or made any
unlawful expenditures relating to political activity, or made any direct or
indirect unlawful payments to government officials or others, or (ii) accepted
or received any unlawful contributions, payments, gifts or expenditures.
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7.13 Licenses, Patents, Trademarks. Schedule 7.13 attached hereto contains
a list and xxxx description of all domestic and foreign letters patent, patents,
patent applications, patent and know-how licenses, trade names, trademark
registrations and applications, common law trademarks, and copyright
registrations and applications (collectively, the "Intangibles"), owned by CAS.
The business of CAS is being carried on without conflict with registered
patents, licenses, trademarks, copyrights, and trade names or other proprietary
rights of others. CAS has not received notice that it infringed or is infringing
on any Intangible, invention, technology, process, design, computer program,
know-how or formulae of another. Except as described in Schedule 7.13, CAS has
not assigned any rights in, or granted any security interest in, any of its
trade secrets, trademarks or copyrights and no current or previous key employees
or consultants of CAS have any rights in any inventions, software programs or
designs or other proprietary concepts, whether or not patentable or
copyrightable, which relate in any material respect to the business of CAS.
7.14 Title to and Condition of Assets. Schedule 7.14 attached hereto
contains a list and brief description of each parcel of real property owned by
CAS or under which CAS is a lessee, true copies of any applicable leases
(including all amendments thereof and modifications thereto) having been
delivered to the ESOT Purchaser prior to the date hereof.
(a) Except as set forth on Schedule 7.14, CAS has good and valid title
to all of its personal property and leasehold interests, including but not
limited to the property and assets reflected on its balance sheet as of December
31, 1996, included in the Financial Statements (other than property and assets
disposed of in the ordinary course of business since such date) free and clear
of all material title defects and all liens, pledges, claims, charges, security
interests, and other encumbrances. Except as set forth in Schedule 7.14, CAS has
not received notice of any existing claims adverse or challenges to the title or
ownership of any personal property of CAS.
(b) All personal property material to the condition (financial or
otherwise), operations, business or prospects of CAS, and all buildings,
structures and fixtures used by CAS in the conduct of its business are,
considering their ages and uses, in satisfactory operating condition (subject to
normal maintenance and repair). CAS has not received notice of any violation
(which has not been cured) of any building, zoning or other law, ordinance or
regulation in respect of any notice that it has failed to comply in any respect
with such obligations.
7.15 No Material Change. Since December 31, 1996, except as disclosed in
Schedule 7.15 attached hereto, there has not been: (i) any materially adverse
change (whether or not in the ordinary and usual course of business) in the
financial condition, net worth, assets, liabilities, personnel, business, or
results of operations of CAS, (ii) any damage, destruction or loss (whether or
not covered by insurance) materially affecting the business of CAS, (iii) any
material increase in the compensation payable or to become payable by CAS to its
officers or key employees, pursuant to any agreement, bonus, insurance, pension
or other beneficial plan or arrangement made to or for the benefit of any such
officers or key employees, other than in a manner consistent with historical
practice, (iv) any loans to or borrowing by CAS, any mortgage or pledge with
respect to any of their properties or assets or any assumption, guarantee,
endorsement or other agreement to become liable (directly, contingently or
otherwise) for any loans to any other person or entity, (v) any sale or
disposition (or agreement to sell or dispose) of any assets, tangible or
28
intangible, of CAS, except in the ordinary course of business, (vi) any
cancellation (or agreement to cancel) of more than $10,000 in the aggregate of
any debts owed to or claims of CAS, except in the ordinary course of business or
(vii) any amendment or termination of any material contract, agreement or
license to which CAS is a party, (viii) any amendment to the Articles or By-Laws
of, or any merger or consolidation of, CAS.
7.16 Accounts Receivable. Schedule 7.16 attached hereto sets forth an
accurate, correct and complete aging of all outstanding accounts and notes
receivable as of December 31, 1996. All outstanding accounts and notes
receivable reflected on the Financial Statements delivered to the ESOT Purchaser
are due and valid claims against account debtors for goods or services delivered
or rendered. All receivables arose in the ordinary course of business. No
receivables are subject to prior assignment, claim, lien or security interest.
7.17 Contracts. Schedule 7.17 attached hereto sets forth a complete and
accurate list of all outstanding contracts to which CAS is a party, other than
purchase orders and any contract which involves an aggregate expenditure after
the date of this Agreement of not more than $10,000 and which is not already
reflected in the Annual or Interim Financial Statements. Schedule 7.17
identifies all contracts of CAS with its officers, directors, shareholders or
any other person, firm or corporation affiliated with such persons.
7.18 Insurance. Schedule 7.18 attached hereto sets forth an accurate,
correct and complete list and summary description (including the name of the
insurer, coverage, premium and expiration date) of all binders, policies of
insurance, sell insurance programs or fidelity bonds ("Insurance") maintained by
CAS or in which CAS is a named insured. Except as set forth on Schedule 7.18,
since December 31, 1996, there have been no claims or events which could form
the basis of a claim against any Insurance as to which any insurer has denied
liability, and there are no claims filed after December 31, 1996, under any
Insurance that have been disallowed or improperly filed. No notice of
cancellation or non-renewal with respect to any insurance has been received by
CAS.
ARTICLE 8.
Representations and Warranties Concerning the Property
In connection with the conveyance of the Property to Seller, CAS represents
and warrants to Seller as follows:
8.1 Compliance. To the best of CAS's actual knowledge, and except as
otherwise disclosed to Seller by CAS, CAS has not received any written notice
that the current use and operation of the Property is not in compliance with
actual building codes, local, state, and federal laws and regulations.
8.2 Procedures. CAS has not received any notice of any condemnation,
environmental, zoning, or any other land use regulations or proceedings either
instituted or, to CAS's actual knowledge, threatened or planned to be instituted
which would materially affect the use and operation of the Property.
8.3 Litigation. There is no litigation pending, or, to CAS's actual
knowledge, threatened against CAS arising out of the ownership or use of the
Property.
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8.4 Ownership. CAS is the sole owner of the Property and has the full
right, power, and authority to convey the Property to Seller.
8.5 Hazardous Materials. To CAS's knowledge, except to the extent set forth
in this Agreement, CAS has not received any written notice from any governmental
agency and has no actual knowledge that there exists any hazardous materials in
or under the Property in violation of applicable laws, rules, regulations,
ordinances, or orders.
For purposes of this Section 8.5, the term "hazardous material" shall
include any substance, chemical, compound, or mixture which is (or which
contains any substance, chemical compound, or mixture which is:
(a) a "Hazardous Substance," "Hazardous Material," "Hazardous Waste," or
"Toxic Substance" under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. ss. 9601, et seq., the Hazardous Material
Transportation Act, 49 U.S.C. ss. 1801, et seq., or the Resource Conservation
and Recovery Act, 42 U.S.C. ss. 6901, et seq.;
(b) an "Extremely Hazardous Waste," a "Hazardous Waste," or a
"Restricted Hazardous Waste," under Section 25115, 25117, or 25112.7 of the
California Health and Safety Code, or is listed pursuant to Section 25140 of the
California Health and Safety Code;
(c) a "Hazardous Material," "Hazardous Substance," or "Hazardous Waste"
under Section 25281, 25316, or 25501 of the California Health and Safety Code;
(d) "Oil" or a "Hazardous Substance" under Section 311 of the Federal
Water Pollution Control Act, 33 U.S.C. ss. 1321 as well as any other
hydrocarbonic substance or by-product.
(e) listed under any law, rules, or regulations of the State of
Washington as hazardous or toxic;
(f) a material which, due to its characteristics or interaction with one
or more other substances, chemical compounds, or mixtures, damages or threatens
to damage health, safety, or the environment, or is required by any law or
public agency to be remediated, including remediation which such law or public
agency requires in order for the property to be put to any lawful purpose; or
(g) any material the presence of which would require remediation
pursuant to the guidelines set forth in the State of California Leaking
Underground Fuel Tank Field Manual, whether or not the presence of such material
resulted from a leaking underground fuel tank.
8.6 No Encumbrances. The Property is free and clear of liens and
encumbrances other than as described or referenced in Section 4.6 hereof.
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8.7 Condition of Structures. To CAS's knowledge, (i) no building on the
Property is in need of repairs to any structural components, including but not
limited to the foundation, floor slabs, load-bearing walls, roof structure, and
roof membrane; and (ii) the parking areas and related paved areas within the
Property are in good condition and are not in need of repair or repaving.
ARTICLE 9.
Representations and Warranties of the ESOT Purchaser
The Trustee, in its capacity as such and on behalf of the ESOT
Purchaser, represents and warrants to the Seller and the CAS as follows:
9.1 Necessary Authority. The Trustee has full power and authority under the
ESOT to execute and deliver this Agreement on behalf of the ESOT Purchaser and
to consummate the transactions contemplated hereby. This Agreement has been duly
authorized, executed and delivered by the Trustee on behalf of the ESOT
Purchaser and constitutes the legal, valid and binding obligation of the ESOT
Purchaser, enforceable against the ESOT Purchaser in accordance with its terms,
except as the same may be limited by ERISA, bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally now or hereafter in effect, and subject to the availability of
equitable remedies.
9.2 No Conflicts. The execution, delivery and performance of this Agreement
by the Trustee, in its capacity as such and on behalf of the ESOT Purchaser and
the consummation of the transactions contemplated herein do not (a) require the
consent or approval of, or filing with, any person or public authority; (b)
constitute or result in the breach of any provision of, or constitute a default
under, the Columbia Analytical Services, Inc., Employee Stock Ownership Plan
("ESOP"), the ESOT Loan and Pledge Agreement, or any agreement, indenture or
other instrument known to the Trustee to which the Trustee, in its capacity as
such, or the ESOT Purchaser is a party or by which it or its assets may be
bound; or (c) violate any law, regulation, judgment or order binding upon the
Trustee, in its capacity as such, or the ESOT Purchaser or give rise to any
liability to the ESOT Purchaser under Title I of ERISA or Section 4975 of the
Code.
9.3 Qualification. The ESOP is, in form, an "employee stock ownership plan"
within the meaning of Section 4975(e)(7) of the Code and, in form, qualifies
under Section 401(a) of the Code. The ESOT Purchaser has been duly constituted
in accordance with valid and binding trust instruments, is validly existing and,
in form, qualifies under Section 501(a) of the Code.
ARTICLE 10.
Seller and Management Purchasers Obligations to Indemnify
10.1 Seller. Subject to Section 10.10, Seller shall indemnify and hold
harmless CAS, Management Purchasers, the ESOT Purchaser, and the ESOT
Purchaser's authorized agents and representatives, against any and all costs,
losses, claims (including claims by third parties), liabilities, fines,
penalties, damages, and expenses (including interest which may be imposed in
connection therewith, court costs and reasonable fees and disbursements of
counsel) suffered by any of them in connection with: (a) any inaccuracy in or
breach of any representations or warranties of the Seller made in Articles 5 and
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6 hereof or in any document, certificate, or exhibit delivered by the Seller in
accordance with the provisions of this Agreement; (b) any breach by the Seller
of this Agreement; or (c) all past and present liabilities relative to Seller's
operations, excluding any operations related to the operations of CAS and for
all of Seller's other operations, including any such operations no longer in
existence.
10.2 Management Purchasers. Subject to Section 10.10, Management
Purchasers, jointly and severally, shall indemnify and hold harmless CAS, the
ESOT Purchaser and the ESOT Purchaser's authorized agents and representatives,
against any and all costs, losses, claims (including claims by third parties),
liabilities, fines, penalties, damages and expenses (including interest which
may be imposed in connection therewith, court costs and reasonable fees and
disbursements of counsel) suffered by any of them in connection with any
inaccuracy in or breach of any representations or warranties of the Management
Purchasers set forth in Article 6 hereof.
10.3 CAS and Management Purchasers. CAS and the Management Purchasers,
jointly and severally, shall indemnify and hold harmless Seller, the ESOT
Purchaser and the ESOT Purchaser's authorized agents and representatives,
against any and all costs, losses, claims (including claims by third parties),
liabilities, fines, penalties, damages and expenses (including interest which
may be imposed in connection therewith, court costs and reasonable fees and
disbursements of counsel) suffered by any of them in connection with any
inaccuracy in or breach of any representations or warranties of CAS and
Management Purchasers set forth in Article 7 hereof.
10.4 CAS. CAS will indemnify and hold harmless Seller from and against any
and all costs, losses, claims (including claims by third parties), liabilities,
fines, penalties, damages and expenses (including interest which may be imposed
in connection therewith, court costs, and reasonable fees and disbursements of
counsel) suffered by Seller in connection with (a) any inaccuracy in or breach
of any representation or warranties of CAS herein or in any document,
certificate, or exhibit delivered by CAS or any officer of CAS pursuant to this
Agreement; and (b) relative to CAS's past, present, and future operations.
10.5 Environmental Indemnity. From and after the Closing, CAS agrees to
indemnify, defend, and hold Seller harmless from and against any and all
Environmental Claims (as defined below) that may arise in connection with or in
any way related to the handling, storage, existence, or release of Hazardous
Materials (as defined in Section 8.5 hereof) at, beneath, to, from, or above (a)
the Property, (b) in connection with any CAS operations conducted at the
Bothell, Washington facility occupied by CAS ("Bothell Facility") during CAS's
occupation of such facility, or (c) in connection with CAS's operations
conducted at the laboratory facility on Ringwood Avenue in San Jose, California
during CAS's occupation of such facility. CAS shall defend Seller in connection
with the foregoing indemnity obligations with legal counsel reasonably
acceptable to Seller. As used herein, the term "Environmental Claims" means any
and all actual, threatened, or potential claims, proceedings, suits, actions,
causes of actions, demands, losses, obligations, orders, requirements,
restrictions, or directives of any governmental agency or entity, liens,
penalties, fines, charges, deaths, damages, costs, and expenses of every kind
and nature whether now known or unknown, whether foreseeable or unforeseeable,
32
whether under any foreign, federal, or state or local law (both statutory and
nonstatutory) and whether asserted or demanded by a third party against Seller
or incurred directly or indirectly by Seller. The provisions of this indemnity
shall survive the Closing and recordation of the warranty deed and shall run to
the benefit of Seller's successors and assigns.
10.6 Limitation of Seller's Liability; Offset of Notes.
(a) Seller's liability under Section 10.1 shall be limited to the
aggregate amount of Six Million Dollars ($6,000,000.00).
(b) Should Seller become obligated to indemnify CAS or the ESOT
Purchaser prior to such time as the Notes have been repaid in full, Seller shall
be entitled to offset any portion of its liability against the amounts owed to
Seller under the Notes, regardless whether such amounts have become due and
payable.
10.7 Survival. All representations, warranties, indemnities, covenants, and
agreements made by the Seller, Management Purchasers, and CAS herein or in any
other document executed by Seller, Management Purchasers, or CAS in connection
herewith shall survive the Closing.
10.8 Limitations. Notwithstanding the foregoing or anything else in this
Agreement to the contrary, an indemnitee shall not be entitled to
indemnification for losses arising out of matters referred to in this Article
10, unless each such entity shall have given written notice to the indemnitor
and, each other, setting forth its claim for indemnification in reasonable
detail.
10.9 Defense. Indemnitee shall promptly give written notice to the
indemnitor and each other after such entity has knowledge that any legal
proceeding has been brought or any claim has been asserted in respect of which
indemnification may be sought under the provisions of this Article 10. If the
indemnitor, within 10 days after such notice has been given (or within such
shorter period of time as an answer or other responsive motion may be required),
shall have acknowledged in writing the indemnitor's obligation to indemnify,
then the indemnitor shall have the right to control the defense of such claim or
proceeding, and the indemnitee shall not settle or compromise such claim or
proceeding without the written consent of the indemnitor, which consent shall
not unreasonably be withheld or delayed. The indemnitee may in any event
participate in any such defense with its own counsel and at its own expense.
10.10 Seller's Reliance on CAS Management
(a) The Management Purchasers, CAS and the ESOT Purchaser acknowledge
that, in making the representations and warranties set forth in paragraph (a) of
Section 5.4, paragraphs (a) and (b) of Section 5.8, and Article 6 hereof, Seller
has relied exclusively upon (i) the truthfulness of statements made by
management of CAS from time to time and the statements set forth in a
certificate of Xxxxxxx X. Xxxxxxx in the form attached hereto as Exhibit "10.10"
(the "CAS Officer's Certificate"); (ii) the opinion letter of Xxxx X. Xxxxxxxx
delivered at the Closing pursuant to Section 11.3(f) hereof (the "Opinion
Letter"); and (iii) the assumption that, during such time as CAS has been a
subsidiary of Seller, CAS's Board of Directors and management have at all times
acted in the best interests of CAS and Seller. Seller has made no independent
investigation of the matters discussed in such representations and warranties.
Seller shall have no liability to the Management Purchasers, CAS or the ESOT
33
Purchaser in connection with any breach of such representations and warranties
to the extend such breach is related to any of the following facts or
circumstances, unless such facts or circumstances were known to Seller prior to
the Closing:
(1) any facts or circumstances that are inaccurately or incompletely
described in the CAS Officer's Certificate;
(2) any inaccurate legal opinion contained in the Opinion Letter, or
any inaccurate statement of fact upon which the Opinion Letter has relied;
(3) a breach by CAS's Board of Directors, or any of its officers of
his/her or its fiduciary duties to CAS or Seller; and
(4) a failure of CAS's Board of Directors to follow the instructions
of Seller, or the failure of CAS's management to follow the instructions of
Seller or the Board of Directors of CAS.
(b) Notwithstanding the fact that Xxxxxxx Xxxxxxx or any other executive
officer of CAS may have been deemed to be an executive officer of Seller under
the Securities Exchange Act of 1934 or any other law or regulation, Seller shall
not be deemed to have possessed knowledge of any facts or circumstances solely
by virtue of Xx. Xxxxxxx'x or such other executive officer's knowledge of such
facts or circumstances.
ARTICLE 11.
Conditions to Closing
11.1 Conditions to Each Party's Obligations at the Closing. The respective
obligations of each party to this Agreement to effect the purchase and sale of
the Common Shares and the Super Common Shares shall be subject to the
satisfaction at or prior to the Closing of the following conditions:
(a) At the time of the Closing, the purchase of the Common Shares
hereunder by CAS, the purchase of the Super Common Shares hereunder by the ESOT
Purchaser, and the purchase of the shares of Common Stock by the Management
Purchasers from CAS shall be legally permitted by all laws and regulations to
which CAS and the Seller are subject.
(b) All third party consents required in connection with the purchase
and sale of the Common Shares and the Super Common Shares hereunder and the
conveyance of the Property shall have been obtained.
(c) No temporary restraining order, preliminary or permanent injunction,
or other order issued by any court of competent jurisdiction or other legal or
regulatory restraint of prohibition preventing the consummation of the purchase
and sale of the Common Shares or the Super Common Shares or the conveyance of
Property shall have been issued, nor shall any proceeding brought by any
governmental agency seeking any of the foregoing be pending; nor shall there, by
34
any action taken, or any statute, rule, regulation, or order enacted, entered,
enforced, or deemed applicable to the purchase and sale of the Common Shares or
the Super Common Shares or the conveyance of the Property which makes the
consummation of any of such transactions illegal.
(d) The Recapitalization shall have been completed.
11.2 Additional Conditions to Obligations of CAS and the ESOT Purchaser.
In addition to the conditions set forth in Section 11.1, the obligations of CAS
and the ESOT Purchaser to purchase the Common Shares and Super Common Shares,
respectively, and to convey the Property to Seller shall be subject to the
satisfaction at or prior to the Closing of the following conditions:
(a) All of the representations and warranties made by Seller herein
shall be true and correct in all material respects as of the Closing Date with
the same force and effect as if such representations and warranties had been
made as of the Closing Date, except as expressly contemplated herein and CAS and
the ESOT Purchaser shall have received a certificate to such effect signed on
behalf of Seller by the Chief Executive Officer or Chief Financial Officer of
Seller.
(b) Seller shall have performed in all material respects all obligations
required to be performed by it under this Agreement on or prior to the Closing
Date and CAS and the ESOT Purchaser shall have received a certificate to such
effect signed on behalf of Seller by the Chief Executive Officer or Chief
Financial Officer of Seller.
(c) CAS shall have obtained financing for the ESOT Loan from a qualified
financial institution and shall have loaned such amount to ESOT Purchaser.
(d) The ESOT Purchaser shall have received a fairness opinion from its
financial advisor to the effect that the portion of the Purchase Price payable
by the ESOT does not exceed the fair market value of the Super Common Shares and
that the purchase of the Super Common Shares is fair to the ESOT from a
financial point of view.
(e) Seller shall have executed and delivered a Master Services Agreement
in substantially the form attached as Exhibit 11.2(e) hereto (the "MSA").
(f) Seller shall have executed and delivered the Lease Agreement and a
sublease for the Bothell Facility in the form of Exhibit 11.2(f) attached hereto
(the "Sublease").
(g) EMCON shall have executed and delivered a Right of First Refusal and
Stock Option Agreement in the form attached hereto as Exhibit 11.2(g);
(h) The ESOT Purchaser and CAS shall have received a legal opinion from
R. Xxxxxxx Xxxxxxxxx, Chief Financial Officer and Vice-President-Legal of
Seller, in substantially the form of Exhibit 11.2(h) attached hereto.
(i) The ESOT Purchaser shall have received a legal opinion from Xxxx
Xxxxxxxx, counsel to CAS, in substantially the form of Exhibit 11.2(i) attached
hereto.
35
(j) All other agreements and documents required to be executed or
delivered by Seller or Management Purchasers shall have been executed and
delivered by them as contemplated hereby.
11.3 Additional Conditions to Seller's Obligations. In addition to the
conditions set forth in Section 11.1, Seller's obligations to sell the Common
Shares and the Super Common Shares to CAS and the ESOT Purchaser, respectively,
shall be subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) All of the representations and warranties made by the ESOT
Purchaser, Management Purchasers, and CAS herein shall be true and correct in
all material respects as of the Closing Date with the same force and effect as
if such representations and warranties had been made as of the Closing Date,
except as expressly contemplated herein, and Seller shall have received
certificates to such effect signed by the Trustee on behalf of the ESOT
Purchaser and signed by Xxxxxxx X. Xxxxxxx, as Chief Executive Officer of CAS
and on behalf of the Management Purchasers, each of whom hereby appoints Xx.
Xxxxxxx to act as his or her representative for such purpose.
(b) The ESOT Purchasers, CAS, and Management Purchaser shall have
performed in all material respects all obligations required to be performed by
them under this Agreement on or prior to the Closing Date, and Seller shall have
received certificates to such effect signed by the Trustee on behalf of the ESOT
Purchaser and signed by Xxxxxxx X. Xxxxxxx, as Chief Executive Officer of CAS
and on behalf of the Management Purchasers, each of whom hereby appoints Xx.
Xxxxxxx to act as his or her representative for such purpose.
(c) CAS shall have executed and delivered the EMCON Notes and Assignment
of Stock Pledge Agreement.
(d) CAS shall have executed and delivered the MSA.
(e) CAS shall have executed and delivered the Lease Agreement and the
Sublease.
(f) Seller shall have received a legal opinion from Xxxx Xxxxxxxx,
counsel to CAS, in substantially the form of Exhibit 11.3(f) attached hereto.
(g) Seller shall have received a legal opinion from XxXxxxxxx, Will &
Xxxxx, counsel to the ESOT, in substantially the form of Exhibit 11.3(g)
attached hereto.
(h) The CAS Officer's Certificate shall be executed and delivered to
Seller.
(i) Seller shall have received a letter from Houlihan, Lokey, Xxxxxx,
and Zukin ("Xxxxxxxx") stating in substance that, in its opinion, the approach
taken by Williamette Management Associates, Inc. with respect to the evaluation
of CAS, and its conclusion regarding the purchase price paid by the ESOT
Purchaser for the Super Common Shares are reasonable based on the information
reviewed by Xxxxxxxx in connection with its engagement by Seller.
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(j) All other agreements or documents required to be executed or
delivered by CAS, the ESOT Purchaser, or Management Purchaser shall have been
executed and delivered by them as contemplated hereby.
11.4 Additional Conditions to Obligations of Management Purchasers. In
addition to the conditions set forth in Section 11.1, the Management Purchasers'
obligations to purchase the shares of Common Stock from CAS shall be subject to
the satisfaction of all the conditions set forth in Sections 11.2 and the
additional condition that CAS shall have executed and delivered employment
agreements with members of senior management listed on Schedule 11.4 hereto in
the form attached hereto as Exhibit 11.4
ARTICLE 12.
Pre-Closing and Post-Closing Covenants of the Parties
12.1 Plan Operation. CAS shall submit the Columbia Analytical Services,
Inc., Employee Stock Ownership Plan ("ESOP") to the Internal Revenue Service
("IRS") for a favorable determination letter within the remedial amendment
period set forth in Section 401(b) of the Code and shall make such changes to
the ESOP as the IRS requires as a condition to the issuance of such
determination letter. Further, CAS shall cause the ESOP to be operated and
administered as a qualified plan under Sections 401(a) and 4975(e)(7) of the
Code and in material compliance with all applicable requirements of ERISA and
regulations thereunder as from time to time in effect and applicable to the
ESOP.
12.2 401(k) Plan Rollover. Seller shall provide pre- and post-closing
assistance to CAS in the transfer of CAS Employees' 401(k) Plan accounts,
including converting 401(k) loan assets to a new 401(k) plan administrator. All
CAS employees participating in the Seller's 401(k) Plan shall be deemed fully
vested in such plan as of Closing and entitled to rollover of their vested and
unvested account balances conditioned upon satisfaction of all remaining ERISA
requirements.
12.3 Purchase of Stock by Management Purchasers. Following Closing, the
Management Purchasers shall purchase the stock from CAS as contemplated by
Section 1.4.
12.4 Reimbursement of Long Distance. Seller currently has a contract with
MCI for long distance service. Seller and CAS agree that CAS will continue to
use MCI under the terms of this contract until such time as the parties mutually
agree otherwise. Seller shall invoice CAS monthly for its actual charges under
the MCI contract and CAS shall timely pay such invoice as is customary in the
industry.
12.5 Expenses. CAS shall pay its expenses and the expenses of the ESOT
Purchaser, incurred in connection with the authorization, preparation, execution
and performance of this Agreement.
12.6 Further Assurance. Consistent with the terms and conditions hereof,
each party hereto shall execute and deliver such instruments and take such other
action as the other parties hereto may reasonably require in order to carry out
this Agreement and the transactions contemplated hereby.
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12.7 Confidentiality. All written and unwritten information made available
to the ESOT Purchaser and its representatives and all copies, excerpts and
summaries thereof shall be treated and held by them in confidence, excepting
only that such data may be disclosed in confidence to advisors and agents of the
ESOT Purchaser and potential lenders for the sole purpose of carrying out the
terms of this Agreement.
12.8 Cooperation in Financial Reporting and Tax. After the Closing CAS and
the Management Purchasers agree to cooperate, and to cause CAS's accountants to
cooperate, with Seller and its accountants in:
(a) the preparation or auditing of any consolidated financial statements
of Seller and any reports required to be filed by Seller with the Securities and
Exchange Commission;
(b) the preparation of any tax return or compliance with any tax audit;
or
(c) any matter of a similar nature; with respect to any period during
which CAS was a subsidiary of Seller.
12.9 Continued Coverage Under Seller Group Plans. From the Closing Date
through April 30, 1997, Seller agrees to maintain coverage under its standard
life, accidental death and dismemberment, long-term disability, and supplemental
life insurance plans for the benefit of each person who was an employee of CAS
on the Closing Date to the same extent as any such employee would have been
eligible for coverage under such plans were CAS to remain a wholly-owned
subsidiary of Seller. CAS agrees to reimburse Seller for all premiums paid by
Seller on behalf of such employees for coverage on or after the Closing Date, as
well as any additional costs incurred by Seller in connection with such
coverage.
12.10 Issuances of Additional Equity Security. After the date hereof, until
such time as the ESOT Notes have been repaid in full, CAS shall not issue any
equity securities (including instruments or securities exercisable for or
convertible into equity securities) without the written consent of EMCON and the
ESOT Purchaser, other than:
(i) the shares of Common Stock to be purchased by the Management
Purchasers pursuant to Section 1.4 hereof; and
(ii) the options granted to the Management Purchasers pursuant to
Section 1.5 hereof and up to 1,516,666 shares of Common Stock issued upon
exercise of such options.
ARTICLE 13.
General
13.1 Execution of Counterparts. For the convenience of the parties, this
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
document.
38
13.2 Notices. All notices which are required or may be given pursuant to
the terms of this Agreement shall be in writing and shall be sufficient in all
respects if delivered personally, by registered or certified mail, postage
prepaid, overnight courier, or by facsimile, as follows:
If to the Seller:
EMCON
Attention: R. Xxxxxxx Xxxxxxxxx, CFO
000 Xxxxx Xx Xxxxxx Xxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000-0000
Facsimile: (000) 000-0000
If to the Management Purchasers:
Columbia Analytical Services, Inc.
Attention: Xxxxxxx X. Xxxxxxx
0000 X. 00xx Xxx.
X.X. Xxx 000
Xxxxx, XX 00000
Facsimile: (000) 000-0000
If to the ESOT Purchaser:
CAS Employee Stock Ownership Trust.
c/o Columbia Analytical Services, Inc.
0000 X. 00xx Xxx.
X.X. Xxx 000
Xxxxx, XX 00000
Facsimile: (000) 000-0000
If to CAS to:
Columbia Analytical Services, Inc.
Attention: Xxxxxxx X. Xxxxxxx, President
0000 X. 00xx Xxx.
X.X. Xxx 000
Xxxxx, XX 00000
Facsimile: (000) 000-0000
or to such other address or facsimile number as shall be furnished in like
manner by any party to the others. Any such notice shall be deemed to have been
given, received and become effective for all purposes at the time it shall have
been (a) delivered to the addressee as indicated by the return receipt (if
transmitted by mail) or the affidavit of the messenger (if transmitted by
personal delivery) or the confirmation of receipt (if transmitted via
facsimile); or (b) presented for delivery to the addressee as so indicated
during normal business hours, if such delivery shall have been refused for any
reason.
13.3 Assignment, Successors and. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. No party shall assign any of its rights or obligations hereunder
39
without the prior written consent of the other parties other than to a party
that acquired substantially all of the transferor's assets through a merger or
asset purchase.
13.4 Governing Law. This Agreement shall be governed by, and interpreted in
accordance with, the substantive laws of the State of Washington, except as
preempted by ERISA or required by the Code. Venue and jurisdiction for any suit
or proceeding with respect to the interpretation or enforcement of any provision
hereof shall be in the County of Cowlitz, State of Washington.
13.5 Entire Agreement. This Agreement, together with the schedules and
exhibits attached hereto, constitutes the entire agreement among the parties
hereto, and no party hereto shall be bound by any communications between them on
the subject matter hereof unless such communications are in writing and bear a
date contemporaneous with or subsequent to the date hereof. Any prior written
agreements or letters of intent among the parties shall, upon the execution of
this Agreement, be null and void.
13.6 Headings. The headings in the sections of this Agreement are inserted
for convenience only and shall not constitute a part hereof or affect the
meaning or interpretation hereof.
13.7 Representations as to Compliance with Law. Whenever a representation
or warranty is made herein with respect to compliance with any law, that
representation means the applicable subject matter is in compliance with
applicable statutes, regulations and ordinances as in existence on the date
hereof and on the Closing Date and does not extend to any amendments or
revisions of such laws adopted subsequent to such dates.
13.8 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision hereunder.
13.9 Facsimile Signatures. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile shall be effective as delivery of
a manually executed counterpart of this Agreement.
13.10 ERISA Construction. Whenever possible, each provision of this
Agreement shall be construed and interpreted in such manner as to be effective
and valid under ERISA and the Code, and regulations issued thereunder, but if
any provision of this Agreement shall be prohibited by, or invalid or
unenforceable under, such statutes or regulations, such provision shall be
ineffective and unenforceable to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
13.11 Waiver, Discharge, etc. This Agreement may not be released,
discharged or modified except by an instrument in writing signed on behalf of
each of the parties hereto. The failure of a party to enforce any provision of
this Agreement shall not be deemed a waiver by such party of any other provision
or subsequent breach of the same or any other obligation hereunder.
13.12 Action Taken as Trustee. This document was executed by the Trustee,
not in its individual or corporate capacity, but solely as Trustee of the Trust.
The performance of this Agreement by the Trustee and any and all duties,
40
obligations and liabilities of the Trustee hereunder shall be effected by it
only as Trustee. The Trustee does not undertake nor shall it have any individual
or corporate liability or obligation of any nature whatsoever by virtue of the
execution and delivery of this Agreement, or the representations, covenants or
warranties contained herein.
13.13 Consents or Waivers by Management Purchasers. The holders of a
majority of the shares of Common Stock sold to the Management Purchasers
pursuant to paragraph 1.4 hereof shall have the power and authority to execute
any waiver, consent, or amendment of or pursuant to this Agreement on behalf of
all of the Management Purchasers; provided, however, that any such instrument
that materially and adversely affects the rights of any Management Purchaser
relative to the rights of the other Management Purchasers shall not be effective
against such Management Purchaser unless signed by him/her.
IN WITNESS WHEREOF, the parties have signed this Agreement the day and year
first above written.
EMCON, a California corporation __/s/________________________________
XXXXXXX X XXXXXXX
By /s/R. Xxxxxxx Xxxxxxxxx _/s/_________________________________
------------------------------------ XXXX XXXXXXX
Its CFO & VP Legal
--------------------------
"Seller"
COLUMBIA ANALYTICAL SERVICES, INC.,
a Washington corporation ____/s/______________________________
XXXXX X. XXXXXXX, XX.
By /s/Xxxxxxx X. Xxxxxxx
------------------------------------
Its President _______/s/___________________________
-------------------------- XXXX XXXXXXXXX
"CAS"
NORTHWESTERN TRUST, Trustee of the
COLUMBIA ANALYTICAL SERVICES, INC.,
EMPLOYEE STOCK OWNERSHIP TRUST _____/s/_____________________________
XXXXX X. XXXXXXX
By /s/Xxxxxxx X. Xxxxxxx
-----------------------------------
Its President
-------------------------------
"ESOT Purchaser" ___/s/_______________________________
XXXX X. XXX
___/s/_______________________________
XXXX X. XXXXXXXXXX
By____/s/____________________________
XXXXXXX X. XXXXXXX, Attorney-in-Fact
41
_____/s/_____________________________
XXXXXXX XXXXXXX
By_______/s/_________________________
XXXXXXX X. XXXXXXX, Attorney-in-Fact
"Management Purchasers"
42
