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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20649
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 16(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
MARCH 11, 1997
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Date of Report
(Date of earliest event reported)
CASCADE CORPORATION
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(Exact name of registrant as specified in its charter)
OREGON 2-23666 93-0136592
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(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification No.)
incorporation)
2020 S.W. 4th
Portland, Oregon 97201
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(Address of principal executive offices, including zip code)
(503) 227-0024
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(Registrant's telephone number, including area code)
Exhibit Index on Page 4
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Cascade Corporation: Form 8-K
Item 2. Acquisition or Disposition of Assets.
On March 11, 1997, Cascade (Canada) Holdings, Inc. ("Cascade Canada"), an
Ontario corporation wholly owned by Cascade Corporation ("Cascade") acquired
Kenhar Corporation ("Kenhar"), a leading manufacturer of lift truck forks
headquartered in Guelph, Ontario. Kenhar has manufacturing facilities in
Canada, the United Kingdom, France, Italy, Korea and the U.S. The acquisition
was accomplished through Cascade Canada's purchase of all of the outstanding
capital stock of Kenhar pursuant to a Share Purchase Agreement dated March 11,
1997 (the "Agreement"), among Cascade, Cascade Canada and the shareholders of
Kenhar.
The purchase price paid for the capital stock of Kenhar was $73,090,000
(US) payable as follows: (i) $57,450,000 (US) in cash, and (ii) 1,100,000
exchangeable preference shares (the "Exchangeable Preference Shares") of Cascade
Canada stock exchangeable share for share into 1,100,000 shares of Cascade
common stock. The consideration paid for the outstanding capital stock of
Kenhar was determined pursuant to arms-length negotiations and took into account
various factors concerning the valuation of the business of Kenhar. Cascade
intends that Kenhar will continue to utilize its assets in the manner they were
used by Kenhar prior to the acquisition. The source of the funds used to pay
the purchase price was a credit line provided by Bank of America National Trust
and Savings Association, as agent, and other banks from time to time parties to
the credit line.
In connection with the Kenhar acquisition, Cascade entered into several
agreements with William J. Harrison and Couphar Ltd., an Ontario corporation
controlled by him. Until the date of acquisition, Mr. Harrison was the General
Chairman and Chief Executive Officer of Kenhar. On the acquisition date, Mr.
Harrison became an Executive Vice President of Cascade and President and Chief
Executive Officer of Kenhar. Cascade has agreed to nominate Mr. Harrison for
election as Director of Cascade at appropriate meetings of shareholders during
the three-year period ending March 10, 2000, while he is an employee.
On March 11, 1997, Cascade and Mr. Harrison entered into an employment
agreement. Pursuant to the terms of the employment agreement, Mr. Harrison will
be employed as Executive Vice President of Cascade and President and Chief
Executive Officer of Kenhar for a period of three years at an annual base salary
of $200,000, and a bonus under a formula to be determined by Cascade's Board of
Directors which is to be comparable to that applicable to other Executive Vice
Presidents of Cascade. Cascade has also agreed to provide health insurance,
pension coverage, and certain other benefits.
On March 11, 1997, Cascade entered into a Registration Rights Agreement
with Couphar Ltd. Pursuant to the terms of the Registration Rights Agreement,
Cascade agreed to provide registration under the Securities Act of 1933 for
Cascade common stock
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in exchange for the Exchangeable Preference Shares. While Mr. Harrison is a
Cascade employee, the registration rights granted by the Registration Rights
Agreement applies specifically to instances in which Rule 144 would not
provide a safe harbor for sales of such common stock. In such cases,
registration rights are limited to numbers of shares consistent with volume
limitations which Rule 144 would impose if applicable. The Registration
Rights Agreement also provides Couphar Ltd. an opportunity to offer Cascade
common shares in connection with Cascade underwritten offerings of common
stock, and provides that Cascade will assist in one registered underwriting
of common stock owned by Couphar Ltd. in the event of Mr. Harrison's death or
the termination of his employment with Cascade.
On March 11, 1997, Cascade, Harrison and Couphar Ltd. entered into a
Refusal Agreement giving Cascade a right of first refusal applicable to certain
sales by Couphar Ltd. of Cascade common stock in excess of 110,000 shares in any
30-day period.
On March 11, 1997, the trustees of the Robert C. and Nani S. Warren
Revocable Trust (the "Trust"), owner of 1,654,492 shares Cascade common stock,
and Couphar Ltd. entered into a Shareholder Agreement. Pursuant to the terms of
such agreement, Couphar Ltd. agreed to vote Cascade preferred shares and common
stock it holds in favor of any slate of directors presented for a shareholder
vote by Cascade management through March 10, 2000, and the Trust agreed to vote
Common Stock it holds in favor of any slate of directors presented for a
shareholder vote by Cascade management through March 10, 2000, which includes
Mr. Harrison as a candidate for election as director. The Trust further agreed
to vote its Cascade common stock in favor of an amendment to the Articles of
Incorporation of Cascade to be presented to shareholders at Cascade's May 13,
1997, annual meeting, intended to provide the 1,100,000 Exchangeable Preference
Shares with voting rights equivalent to those of Cascade common stock. The
Exchangeable Preference Shares are not entitled to vote at present.
The above description of agreements is qualified by reference to the
complete text of such agreements, together with the exhibits and schedules
attached thereto.
Item 7.
(a) Financial Statements of Business Acquired. The Financial Information
required to be filed pursuant to this Item 7(a) of Form 8-K was not available at
the time of filing of this Current Report on Form 8-K and will be filed on a
Form 8-K/A as soon as practicable, but in no event later than 60 days after the
date this Form 8-K is required to be filed.
(b) Pro Forma Financial Information. The Pro Forma Financial Information
required to be filed pursuant to this Item 7(b) of Form 8-K was not available at
the time of filing of this Current Report on Form 8-K and will be filed on a
Form 8-K/A as soon as practicable, but in no event later than 60 days after the
date this Form 8-K is required to be filed.
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(c) Exhibits.
2.1 Share Purchase Agreement, dated March 11, 1997, among the Company,
Cascade (Canada) Holdings, Inc., and the shareholders of Kenhar
Corporation. The following schedules are omitted (unless otherwise
indicated) and will be provided to the Commission upon request:
Schedule Description
Schedule 1.1.1 Employment Agreement (attached at 10.1 below)
Schedule 1.1.2 Exchange Agreement
Schedule 1.1.3 Exchangeable Share Provisions
Schedule 1.1.4 Non-Competition and Non-Solicitation Agreement
Schedule 1.1.5 Refusal Agreement (attached at 10.2 below)
Schedule 1.1.6 Registration Rights Agreement (attached at 10.3 below)
Schedule 1.1.7 Shareholders' Agreement (attached at 10.4 below)
Schedule 1.1.8 Voting Trust Agreement
Schedule 3.4 Escrow Agreement
Schedule 3.5 Allocation
Schedule 4.1 Corporations, Jurisdictions and Capitalization
Schedule 4.2 Conflicting Agreements
Schedule 4.4 Ownership of Purchased Shares
Schedule 4.9 Financial Statements and Interim Financial Statements
Schedule 4.10(a) Permitted Encumbrances
Schedule 4.10(b) Owned Real Property
Schedule 4.10(c) Leased Real Property
Schedule 4.10(d) Real Property Disclosure Items
Schedule 4.11 Permitted Transactions
Schedule 4.14 Intellectual Property
Schedule 4.15 Undisclosed Liabilities
Schedule 4.17 Guarantees
Schedule 4.19 Tax Matters
Schedule 4.20(a) Litigation
Schedule 4.20(b) Product Liability
Schedule 4.20(d) Environmental Matters
Schedule 4.21 Government Authorizations
Schedule 4.22(a) Transaction Steps
Schedule 4.22(b) Proposed Acquisitions
Schedule 4.23 Customers
Schedule 4.24 Capital Expenditures
Schedule 4.25(a) Employees
Schedule 4.25(b) Employment Contracts
Schedule 4.25(c) Employment Policies and Plans
Schedule 4.25(d) Collective Agreements
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Schedule 4.26 Benefit Plans
Schedule 4.27 Distributions
Schedule 4.28 Real Property Transactions
Schedule 4.30 Insurance
Schedule 4.31 Recent Transactions
Schedule 4.32 Compliance
Schedule 4.33 Bank Accounts
Schedule 4.40 Key Employees
Schedule 7.4 Opinion of Vendors' Counsel
Schedule 7.10 Release
Schedule 8.3 Opinions of Purchaser's Counsel to Vendors other
than Couphar
Schedule 8A.5 Opinions of Purchaser's Counsel to Couphar
10.1 Employment Agreement dated March 11, 1997, among Cascade
Corporation, Kenhar Corporation, and William J. Harrison.
10.2 Refusal Agreement dated March 11, 1997, among Cascade Corporation,
Couphar Ltd., and William J. Harrison.
10.3 Registration Rights Agreement dated March 11, 1997, between Cascade
Corporation and Couphar Ltd.
10.4 Shareholders' Agreement dated March 11, 1997, between the trustees of
Robert C. and Nani S. Warren Revocable Trust and Couphar Ltd.
99.1 Press Release, dated January 16, 1997
99.2 Press Release, dated March 12, 1997
99.3 Press Release, dated March 18, 1997
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COUPHAR LTD.
BALYROBE LTD.
879185 ONTARIO INC.
568745 ONTARIO INC.
JAMES E. BRITTON (in trust)
PENFUND PARTNERS AND COMPANY
BANTOR COMPANY
W.J. HARRISON
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CASCADE (CANADA) HOLDINGS INC.
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CASCADE CORPORATION
SHARE PURCHASE AGREEMENT
March 11, 1997
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THIS SHARE PURCHASE AGREEMENT is made the 11th day of March, 1997
AMONG:
COUPHAR LTD., a corporation governed by the laws of the
Province of Ontario ("Couphar")
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BALYROBE LTD., a corporation governed by the laws of the
Province of Ontario ("Balyrobe")
- and -
879185 ONTARIO INC., a corporation governed by the laws of
the Province of Ontario ("879")
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568745 ONTARIO INC., a corporation governed by the laws of
the Province of Ontario ("568")
- and -
JAMES E. BRITTON (in trust), an individual resident in the
Province of Ontario ("Britton")
- and -
PENFUND PARTNERS AND COMPANY, LIMITED PARTNERSHIP a limited
partnership formed under the laws of the Province of Quebec
("Penfund") by its general partner PENFUND PARTNERS INC.
- and -
BANTOR COMPANY, a partnership formed under the laws of the
Province of Ontario ("Bantor")
- and -
W.J. HARRISON of the Township of Puslinch
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- and -
CASCADE (CANADA) HOLDINGS INC., a corporation
governed by the laws of the Province of Ontario (the
"Purchaser")
- and -
CASCADE CORPORATION, a corporation governed by the
laws of the State of Oregon ("Cascade")
RECITALS:
Couphar, Balyrobe, 879, 568, Britton, Penfund and Bantor (collectively, the
"Vendors") are the registered owners of all the issued and outstanding shares of
Kenhar Corporation, a corporation governed by the laws of the Province of
Ontario ("Kenhar" or the "Company").
The Vendors have agreed to sell to the Purchaser and the Purchaser has
agreed to purchase from the Vendors all of the issued and outstanding shares of
Kenhar upon and subject to the terms and conditions of this Agreement.
NOW THEREFORE, the parties agree as follows:
ARTICLE
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
Definitions - Whenever used in this Agreement, unless there is something
inconsistent in the subject matter or context, the following words and terms
shall have the meanings set out below:
"Accounts Payable" means all amounts due and owing by a Corporation to
traders, suppliers and other Persons in the ordinary course of business;
"Accounts Receivable" means any and all accounts receivable, bills
receivable, trade accounts, book debts and insurance claims recorded as
receivable in the Books and Records and any other amount due to a
Corporation including any refunds and rebates, and the benefit of all
security (including cash deposits), guarantees and other collateral held by
a Corporation;
"Accrued Liabilities" means any and all accrued liabilities of a
Corporation incurred in the ordinary course of business, including without
limitation, accruals for vacation pay, customer rebates and allowances for
product returns;
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"Affiliate" has the meaning ascribed thereto in the Business Corporations
Act (Ontario), as amended from time to time;
"Agreement" means this Share Purchase Agreement, including all schedules,
and all instruments supplementing or amending or confirming this Agreement
and references to "Article" or "Section" mean and refer to the specified
Article or Section of this Agreement;
"Applicable Laws" means all applicable statutes, laws, by-laws, rules,
decrees, regulations, orders, ordinances, policies, legally binding
protocols, notices, directions and judgments or other requirements of any
Governmental Authority in effect on or prior to the Closing Date;
"arm's length" means arm's length as defined in the Tax Act;
"Auditor" means KPMG Peat Marwick Thorne, Chartered Accountants and its
predecessor firms;
"Benefit Plans" means all plans, arrangements, agreements, programs,
policies or practices, including Pension Plans and U.S. Plans, whether oral
or written, formal or informal, funded or unfunded, insured or uninsured,
to which any of the Corporations is a party or bound by or in which their
Employees participate or under which any of the Corporations have any
liability or contingent liability, relating to any bonus, profit sharing,
deferred compensation, incentive compensation, loans, savings, stock
option, stock purchase, hospitalization, health, dental, welfare,
disability, group insurance, supplementary unemployment insurance, vacation
pay, severance pay, club memberships, company cars, company awards,
education or other benefit plan with respect to any of their Employees or
former Employees excluding statutory plans which any of the Corporations
are required to comply with, including, without limitation, plans
administered pursuant to applicable provincial health tax, workers'
compensation and unemployment insurance legislation;
"Books and Records" means all books and records of a Corporation, including
financial, corporate, operating and sales books, records, books of account,
sales and purchase records, lists of suppliers and customers, formulae,
business reports, plans and projections and all other documents, files,
records, correspondence, and other data and information, financial or
otherwise, including without limitation, all data and information stored on
computer and computer-related media;
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"Business" means the business of developing, manufacturing, modifying,
selling, distributing and servicing forks, basebands, fabricated wheels,
carriage bars, carriage assemblies and parts for the preceding items;
"Business Day" means a day, other than a Saturday or Sunday, on which the
principal commercial banks located at Toronto, Ontario are open for
business during normal banking hours;
"Cascade" means Cascade Corporation, a corporation governed by the laws of
the State of Oregon;
"Claims" means any claim, demand, action, cause of action, damage, loss,
costs, liability or expense, including, without limitation, reasonable
professional fees and all costs incurred in investigating or pursuing any
of the foregoing or any proceeding relating to any of the foregoing;
"Closing" means the completion of the sale to and purchase by the Purchaser
of the Purchased Shares under this Agreement;
"Closing Date" means March 11, 1997 provided that, if Hart-Scott-Rodino
Approval or the approval of The Toronto-Dominion Bank shall not have been
obtained by such date, the Closing Date shall be the third Business Day
following receipt of Hart-Scott-Rodino Approval and the approval of The
Toronto-Dominion Bank provided such Business Day occurs on or before March
31, 1997, or such other date as the Parties may agree in writing as the
date upon which the Closing shall take place;
"Closing Time" or "Time of Closing" means 2 o'clock p.m. Eastern Standard
Time on the Closing Date or such other time on such date as the Parties may
agree in writing as the time at which the Closing shall take place;
"Company" or "Kenhar" means Kenhar Corporation, a corporation incorporated
pursuant to the laws of the Province of Ontario;
"Contaminant" has the meaning ascribed thereto in Section 4.20;
"Contracts" means all contracts, licences, leases, agreements, commitments,
entitlements and engagements of the Company and includes all quotations,
orders or tenders for contracts which remain open for acceptance and any
manufacturers' or suppliers' warranty, guarantee or commitment (express or
implied);
"control" has the meaning ascribed thereto in the Business Corporations Act
(Ontario);
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"Corporations" means Kenhar and all the Subsidiaries of Kenhar, including
the corporations listed in Column 1 of Schedule 4.1 hereto and
"Corporation" means any of them;
"Employees" means all individuals employed part-time or full-time by any of
the Corporations, individuals working on contract with any of the
Corporations or other individuals providing services to any of the
Corporations of a kind normally provided by employees;
"Employment Agreement" means an employment agreement to be entered into as
of the Closing Date between W.J. Harrison, the Company and Cascade in the
form of the agreement set out in Schedule 1.1.1;
"Encumbrances" means any security interest, pledge, lien, charge, security
agreement, lease, title retention agreement, mortgage, encumbrance, option
or adverse claim, of any kind or character whatsoever;
"Environment" has the meaning ascribed thereto in Section 4.20;
"Environmental Approvals" has the meaning ascribed thereto in Section 4.20;
"Environmental Laws" has the meaning ascribed thereto in Section 4.20;
"Environmental Lien" has the meaning ascribed thereto in Section 4.20;
"Escrow Agreement" has the meaning ascribed thereto in Section 3.4;
"Equipment Contracts" means all motor vehicle leases, equipment leases,
conditional sales contracts, title retention agreements and other similar
agreements relating to equipment used by a Corporation;
"Escrow Agent" means TD Trust Company or such other escrow agent acceptable
to the Purchaser and the Vendors acting reasonably which shall be a
Canadian chartered bank or trust company;
"Exchange Agreement" means the exchange agreement to be entered into as of
the Closing Date between Cascade and Couphar in the form of Schedule 1.1.2;
"Exchangeable Shares" means the exchangeable preference shares in the
capital of the Purchaser of which shall have the rights, privileges,
restrictions and conditions set forth in Schedule 1.1.3;
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"Financial Statements" means the consolidated balance sheets of the Company
as at April 30, in each of the years 1994 to 1996, inclusive, and the
related consolidated statements of income, retained earnings and
changes in financial position for the fiscal years then ended and the
notes thereto showing all of the assets and liabilities of the
Company, together with an unqualified opinion of the Auditor to the
effect that the Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied and
present fairly in all material respects the assets, liabilities and
financial position of the Company at the respective dates of such
statements;
"Fixed Assets" means the fixed assets, machinery, equipment, fixtures,
furniture, furnishings, vehicles, material handling equipment, implements,
parts, tools, jigs, discs, molds, patterns and tooling, spare parts owned
or used or held by a Corporation, including, without limitation, any which
are in storage or in transit, and other tangible property and facilities
used by a Corporation whether located in or on the premises of such
Corporation or elsewhere as reflected on the Interim Balance Sheet and such
other Fixed Assets which have been acquired or disposed of since October
31, 1996 and which are listed and described in Schedule 4.24;
"Goodwill" means the goodwill of a Corporation, and information and
documents relevant thereto including, without limitation, lists of
customers and suppliers, credit information, research materials and
research and development files;
"Governmental Authorities" means any government, regulatory authority,
governmental department, agency, commission, board, tribunal, crown
corporation, or court or other law, rule or regulation-making entity having
or purporting to have jurisdiction on behalf of any nation, or province or
state or other subdivision thereof or any municipality, district or other
subdivision thereof;
"Governmental Authorization" means all authorizations, approvals, including
Environmental Approvals, licences or permits issued to any Corporation by
any Governmental Authorities;
"Hart-Scott-Rodino Approval" means all requisite approvals or waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, shall have been obtained or satisfied or the waiting period shall
have expired or terminated to permit the purchase of the Purchased Shares
by the Purchaser under this Agreement;
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"Hazardous Substance" means any pollutant, contaminant, waste of any
nature, hazardous substance, hazardous material, toxic substance, dangerous
substance or dangerous good as defined, judicially interpreted or
identified in any Environmental Law;
"Intellectual Property" means all patents, copyrights, registered and
unregistered trade-marks, service marks, trade-names, logos, commercial
symbols, industrial designs, (including applications for all of the
foregoing and renewals, divisions, extensions and reissues, where
applicable, relating thereto), inventions, licences, trade secrets,
patterns, drawings, computer software, formulae, technical information,
research data, concepts, methods, procedures, designs, know-how, and all
other intellectual property owned by, licensed to or used by a Corporation;
"Interim Balance Sheet" means the consolidated balance sheet of the Company
as at October 31, 1996 and the notes thereto, forming part of the Interim
Financial Statements;
"Interim Financial Statements" means the unaudited consolidated financial
statements of the Company for the 6 month fiscal period ended October 31,
1996, consisting of the consolidated balance sheet and the notes thereto
and the related consolidated statements of income, retained earnings and
changes in financial position, a copy of which are attached hereto as
Schedule 4.9;
"Inventories" means all inventories of every kind and nature and
wheresoever situate owned by a Corporation including, without limitation,
all inventories of raw materials, work-in-progress, finished goods,
operating supplies and packaging materials;
"Key Employees" means those Employees listed in Schedule 7.9;
"Leased Premises" means the premises which are the subject of the Real
Property Leases;
"Material Contract" means any Contract involving aggregate payments to or
by a Corporation in excess of $50,000, or any commitment to or by a
Corporation that may reasonably extend beyond 1 year and which does not or
cannot be terminated without penalty on less than 3 months notice or which
is outside the ordinary course of business, not including intercompany
transactions, contracts in respect of goods manufactured by or supplied to
any Corporation and all services and employment agreements entered into in
the ordinary course of business;
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"Non-Competition and Non-Solicitation Agreement" means a non-competition
agreement to be entered into as of the Closing Date between W.J. Harrison,
the Company, the Purchaser and Cascade in the form of Schedule 1.1.4;
"Notice" shall have the meaning given in Section 11.3;
"Parties" means the Vendors and the Purchaser collectively, and "Party"
means any one of them;
"Pension Plans" means all plans, arrangements, agreements, programs,
policies or practices, whether oral or written, formal or informal, funded
or unfunded, registered or non-registered, which any of the Corporations is
a party to or is bound by or in which their Employees participate or under
which any of the Corporations has any liability or contingent liability,
relating to retirement savings or pensions, including, without limitation,
any defined benefit pension plan, defined contribution pension plan, group
registered retirement savings plan, supplemental pension or retirement
plan, and where applicable U.S. Plans which are "employee pension benefit"
plans as defined in Section 3 of the Employee Retirement Income Security
Act of 1974, as amended excluding statutory plans which any of the
Corporations are required to comply with under the laws of any other
jurisdiction;
"Permitted Encumbrances" means the Encumbrances listed in Schedule 4.10;
"Person" means any individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate, Governmental Authority, and a natural
person in such person's capacity as trustee, executor, administrator or
other legal representative;
"Proportionate Share" means in respect of any Vendor a fraction the
numerator of which is the number of Purchased Shares registered in the name
of such Vendor and the denominator of which is the aggregate number of
Purchased Shares.
"Proposed Acquisitions" means the proposed acquisitions by Kenhar of shares
of its Korean and Scandinavian Subsidiaries and of the assets of certain
businesses in China and Italy;
"Purchase Price" shall have the meaning ascribed thereto in Section 3.1;
"Purchased Shares" means all of the shares of the Company owned by the
Vendors being all of the issued and outstanding shares in the capital of
Kenhar on the date hereof and on the Closing Date;
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"Real Property" means all lands owned, or purported to be owned, by a
Corporation and all plants, buildings, structures, erections, improvements,
appurtenances and fixtures situate on or forming part of such lands;
"Real Property Leases" means those leases and subleases of real property
relating to real property used or occupied by a Corporation;
"Refusal Agreement" means the agreement to be entered into as of the
Closing Date between W.J. Harrison, Couphar and Cascade in the form of
Schedule 1.1.5;
"Registration Rights Agreement" means the registration rights agreement to
be entered into as of the Closing Date between W.J. Harrison, Couphar and
Cascade in the form of Schedule 1.1.6;
"Release" has the meaning ascribed thereto in Section 4.20;
"Remedial Action" has the meaning ascribed thereto in Section 4.20;
"Remedial Order" has the meaning ascribed thereto in Section 4.20;
"Shareholders Agreement" means the shareholders agreement to be entered
into as of the Closing Date between W.J. Harrison, Couphar and certain
Cascade shareholders in the form of Schedule 1.1.7;
"Subsidiary" means, with respect to Kenhar, any corporation of which
shares to which are attached more than 50% of the voting rights ordinarily
exercisable at meetings of the shareholders of such corporation are
beneficially owned, directly or indirectly, by Kenhar;
"Tax Act" means the Income Tax Act (Canada);
"Tax Returns" includes, without limitation, all returns, reports,
declarations, elections, notices, filings, information returns and
statements filed in respect of Taxes;
"Taxes" includes, without limitation, all taxes, duties, fees, premiums,
assessments, imposts, levies and other charges of any kind whatsoever
imposed by any Governmental Authority, together with all interest,
penalties, fines, additions to tax or other additional amounts imposed in
respect thereof, including, without limitation, those levied on, or
measured by, or referred to as income, gross receipts, profits, capital,
transfer, land transfer, sales, goods and services, use, value-added,
excise, stamp, withholding, business, franchising, property, payroll,
employment, health, social services, education and social
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security taxes, all surtaxes, all customs duties and import and export
taxes, all license, franchise and registration fees and all unemployment
insurance, health insurance, workers' compensation and Canada, Quebec and
other government pension plan premiums;
"U.S. Plans" means any "employee benefit plan" as defined in Section 3 of
the Employee Retirement Income Security Act of 1974, as amended;
"Vendor's Shares" means, with respect to each Vendor, the shares in the
capital of the Company owned by such Vendor as set forth in Schedule 3.6;
"Voting Trust Agreement" means the voting trust agreement to be entered
into as of the Closing Date between Cascade, the Purchaser and TD Trust
Company in the form of Schedule 1.1.8; and
"1996 Balance Sheet" means the consolidated balance sheet (including notes
thereto) as at April 30, 1996 included in the Financial Statements.
Certain Rules of Interpretation - In this Agreement and the Schedules:
Time - time is of the essence in the performance of the Parties'
respective obligations;
Currency - unless otherwise specified, all references to money amounts
are to Canadian currency;
Headings - the descriptive headings of Articles and Sections are
inserted solely for convenience of reference and are not intended as
complete or accurate descriptions of the content of such Articles or
Sections;
Singular, etc. - the use of words in the singular or plural, or with a
particular gender, shall not limit the scope or exclude the application of
any provision of this Agreement to such person or persons or circumstances
as the context otherwise permits;
Consent - whenever a provision of this Agreement requires an approval
or consent by a Party to this Agreement and notification of such approval
or consent is not delivered within the applicable time limit, then, unless
otherwise specified, the Party whose consent or approval is required shall
be conclusively deemed to have withheld its approval or consent;
Calculation of Time - unless otherwise specified, time periods within
or following which any payment is to be made or act is to be done shall be
calculated by excluding the day on which the period commences and including
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the day on which the period ends and by extending the period to the next
Business Day following if the last day of the period is not a Business Day;
Business Day - whenever any payment is to be made or action to be
taken under this Agreement is required to be made or taken on a day other
than a Business Day, such payment shall be made or action taken on the next
Business Day following such day.
Knowledge - Any reference to the "knowledge of" a Vendor or a Corporation
or any similar phrase shall mean to the best of the knowledge, information and
belief of such Vendor after reviewing all relevant records and making due
inquiries regarding the relevant matter of all relevant officers, directors,
employees, consultants or advisors of such Vendor or the Corporations, as the
case may be, and shall include knowledge, information and beliefs that each
Vendor reasonably ought to have had or known on the basis of the review and
inquiries made or required to have been made hereunder by such Vendor and, in
any case shall be to the best of the knowledge, information and belief of
Messrs. Harrison, Hoy, Spinelli and Ostmeier.
Entire Agreement - This Agreement and the Deposit Agreement together with
the agreements and other documents to be delivered pursuant to this Agreement,
constitute the entire agreement between the Parties pertaining to the subject
matter of this Agreement and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the Parties and there
are no warranties, representations or other agreements between the Parties in
connection with the subject matter of this Agreement except as specifically set
forth in this Agreement and any document delivered pursuant to this Agreement.
No supplement, modification or waiver or termination of this Agreement shall be
binding unless executed in writing by the Party to be bound thereby.
Applicable Law - This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein and shall be treated, in all respects, as an Ontario
contract. The Parties shall attorn to the non-exclusive jurisdiction of the
Courts of Ontario.
Accounting Principles - All reference to generally accepted accounting
principles means to principles recommended, from time to time, in the Handbook
of the Canadian Institute of Chartered Accountants and all accounting terms not
otherwise defined in this Agreement have the meanings assigned to them in
accordance with Canadian generally accepted accounting principles.
Schedules - The schedules to this Agreement, as listed below, form part of
and are an integral part of this Agreement:
Schedule Description
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Schedule 1.1.1 Employment Agreement
Schedule 1.1.2 Exchange Agreement
Schedule 1.1.3 Exchangeable Share Provisions
Schedule 1.1.4 Non-Competition and Non-
Solicitation Agreement
Schedule 1.1.5 Refusal Agreement
Schedule 1.1.6 Registration Rights Agreement
Schedule 1.1.7 Shareholders Agreement
Schedule 1.1.8 Voting Trust Agreement
Schedule 3.4 Escrow Agreement
Schedule 3.5 Allocation
Schedule 4.1 Corporations, Jurisdictions and
Capitalization
Schedule 4.2 Conflicting Agreements
Schedule 4.4 Ownership of Purchased Shares
Schedule 4.9 Financial Statements and Interim Financial
Statements
Schedule 4.10(a) Permitted Encumbrances
Schedule 4.10(b) Owned Real Property
Schedule 4.10(c) Leased Real Property
Schedule 4.10(d) Real Property Disclosure Items
Schedule 4.11 Permitted Transactions
Schedule 4.14 Intellectual Property
Schedule 4.15 Undisclosed Liabilities
Schedule 4.17 Guarantees
Schedule 4.19 Tax Matters
Schedule 4.20(a) Litigation
Schedule 4.20(b) Product Liability
Schedule 4.20(d) Environmental Matters
Schedule 4.21 Government Authorizations
Schedule 4.22(a) Transaction Steps
Schedule 4.22(b) Proposed Acquisitions
Schedule 4.23 Customers
Schedule 4.24 Capital Expenditures
Schedule 4.25(a) Employees
Schedule 4.25(b) Employment Contracts
Schedule 4.25(c) Employment Policies and Plans
Schedule 4.25(d) Collective Agreements
Schedule 4.26 Benefit Plans
Schedule 4.27 Distributions
Schedule 4.28 Real Property Transactions
Schedule 4.30 Insurance
Schedule 4.31 Recent Transactions
Schedule 4.32 Compliance
Schedule 4.33 Bank Accounts
Schedule 4.40 Key Employees
<PAGE>
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Schedule 7.4 Opinion of Vendors' Counsel
Schedule 7.10 Release
Schedule 8.3 Opinions of Purchaser's Counsel to Vendors other
than Couphar
Schedule 8A.5 Opinions of Purchaser's Counsel to
Couphar
ARTICLE
PURCHASE AND SALE
Action by Vendors and Purchaser - At the Closing Time:
Purchase and Sale of Purchased Shares - Each Vendor shall sell and the
Purchaser shall purchase the Vendor's Shares of such Vendor for that
Vendor's Proportionate Share of the Purchase Price to be paid and satisfied
as provided for in this Agreement;
Payment of Purchase Price - The Purchaser shall deliver to the Vendors
the Purchase Price as provided in Section 3.3;
Transfer and Delivery of the Purchased Shares - Each Vendor shall
transfer and deliver to the Purchaser the share certificates representing
the Vendor's Shares of such Vendor duly endorsed in blank for transfer, or
accompanied by irrevocable security transfer powers of attorney duly
executed in blank, in either case by the holders of record, and shall take
such steps as shall be necessary to cause the Company to enter the
Purchaser or its nominee(s) upon the books of the Company as the holder of
the Vendor's Shares of such Vendor and to issue one or more share
certificates to the Purchaser or its nominee(s) representing the Vendor's
Shares of such Vendor.
Other Documents - The Vendors and Purchaser shall deliver such other
documents as may be necessary to complete the transactions and as provided
for herein.
Place of Closing - The Closing shall take place at the Closing Time at the
offices of Osler, Hoskin & Harcourt located at the 66th Floor, 1 First Canadian
Place, Toronto, Ontario, Canada, or at such other place as may be agreed upon by
the Vendors and the Purchaser.
Tender - Any tender of documents or money under this Agreement may be made
upon the Parties or their respective counsel and money may be tendered by
official bank draft drawn upon a Canadian chartered bank or by negotiable cheque
payable in Canadian funds and certified by a Canadian chartered bank or trust
company or, with the consent of the Party entitled to payment, by wire transfer
of immediately available funds to the account specified by that Party.
<PAGE>
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ARTICLE
PURCHASE PRICE
Purchase Price - The amount payable by the Purchaser for the Purchased
Shares shall be the amount of $93,596,220, minus the sum of (i) any shareholder
distributions including without limitation the amount of any dividends declared
or paid on, any proceeds of redemption, retraction or purchase for cancellation
of any shares of the Company (except "safe income" dividends and returns of
capital not exceeding $30,000,000 in the aggregate which were paid on May 7,
1996 as described on Schedule 4.22 and the stock dividends declared and paid on
March 10, 1997 as described on Schedule 4.11) and (ii) the cost, on an after tax
basis, of any benefits paid or agreed or committed to be paid to any Key
Employee (other than Harrison) prior to Closing, in each case after April 30,
1996 (the "Purchase Price").
Intentionally deleted
Satisfaction of Purchase Price - At the Closing Time, the Purchase Price
shall be satisfied as follows:
by the issuance by the Purchaser to Couphar of 1,100,000 Exchangeable
Shares in satisfaction of $18,333,333 of Couphar's Proportionate Share of
the Purchase Price;
by the delivery to the Escrow Agent by the Purchaser of the amount of
$10,000,000 to be held subject to the Escrow Agreement referred to in
Section 3.4; and
by payment to the Vendors by the Purchaser of the balance of the
Purchase Price, by wire transfer of immediately available funds to accounts
designated by the Vendors or by the delivery to the Vendors of certified
cheques or bank drafts made payable in lawful money of Canada in accordance
with a direction to the Purchaser executed by the Vendors.
Escrow Agreement - As security for the representations, warranties,
covenants and other obligations of the Vendors pursuant to this Agreement or in
any agreement, certificate or other document delivered or given pursuant to this
Agreement, the Vendors shall, at the Closing Time, execute and deliver in favour
of the Purchaser an escrow agreement in the form attached hereto as Schedule
3.4.
Allocation of Purchase Price - The Purchase Price shall be allocated
amongst the Vendors and amongst the common and preferred shares of Kenhar owned
by the Vendors in accordance with the provisions of Schedule 3.5. Each Vendor
and the Purchaser agree to report the purchase and sale of the Vendor's Shares
of such Vendor
<PAGE>
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in any returns required to be filed under the Tax Act and other taxation
statutes in accordance with the provisions of Schedule 3.5.
ARTICLE
REPRESENTATIONS AND WARRANTIES OF THE VENDORS
Each of the Vendors hereby covenants, represents and warrants with and to
the Purchaser on a several, and not a joint basis, the matters set out below.
Due Incorporation and Capacity to Carry on Business - Each Corporation is
a corporation duly incorporated or continued, organized and validly subsisting
in good standing under the laws of the jurisdiction of its incorporation as
shown in Schedule 4.1. Each Corporation has the corporate power, authority and
capacity to own its property and assets and to carry on its business as now
being conducted by it and is registered, licensed or otherwise qualified in its
jurisdiction of incorporation and is registered, licensed or otherwise qualified
as a foreign or extra-provincial corporation in each jurisdiction in which it
carries on business and in which such registration, licence or other
qualification is required and is in good standing in respect of each such
registration, licence or qualification. Schedule 4.1 sets out each jurisdiction
in which each Corporation is registered as a foreign corporation or licensed.
No Corporation carries on business or owns assets except inventories and
accounts receivable in any jurisdiction except those set opposite its name in
such Schedule. Except as disclosed in Schedule 4.11, none of the Corporations
has amended its instrument of incorporation, by-laws or other like constating
documents since October 31, 1996.
Absence of Conflicting Agreements or Required Consents, Enforceability -
Except as set out in Schedule 4.2, the execution, delivery and performance of
this Agreement by the Vendors does not: (a) require notification to or the
consent of any Person; (b) violate any provision of any Corporation's charter,
by-laws or equivalent constitutional documents; (c) violate any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling of any
Governmental Authority to which any Corporation is subject; (d) either alone or
with the giving of notice or the passage of time or both, conflict with,
constitute grounds for termination of, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any authorization,
agreement, instrument, license or permit to which any Corporation is now a party
or is otherwise subject; or (e) result in the creation of any debt, lien,
security, interest, mortgage, trust, claim or other liability or Encumbrance
whatsoever on any of the assets of any Corporation. This Agreement constitutes
a valid and binding obligation of each of the Vendors enforceable against such
Vendor in accordance with its terms, subject, however, to limitations with
respect to enforcement imposed by law in connection with bankruptcy or similar
proceedings and to the extent that equitable remedies such as specific
performance and injunction are in the discretion of the court from which they
are sought.
<PAGE>
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Issued Capital; Other Rights of Purchase - Schedule 4.1 sets out the
authorized and issued share capital of each Corporation and the registered and
beneficial owners thereof. No Corporation has authorized or agreed and no
Person has any written or oral agreement, option, understanding or commitment,
or any right or privilege capable of becoming an agreement (including
convertible or exchangeable securities, warrants or convertible obligations of
any kind),
for the purchase or other acquisition from any Corporation of any
of its undertaking, property and assets other than in the ordinary
course of the routine daily affairs of the Business, or
for the issue or sale by any Corporation of any of its previously
unissued shares of any class or of any shares held in treasury or of
any other securities of any Corporation.
Existence; Due Authorization; Ownership of Purchased Shares -
Existence. Such Vendor, if a corporation or partnership, is duly
incorporated or created, is subsisting and in good standing under the laws
governing its creation and has the corporate power and authority to execute
and deliver this Agreement and to complete the transactions contemplated
hereby and to perform all of its obligations under this Agreement and the
Deposit Agreement.
Due Authorization. The transactions contemplated hereby have been
duly authorized by all necessary corporate action (in the case of a Vendor
which is a corporation) by such Vendor and this Agreement and the Deposit
Agreement have been duly executed and delivered by such Vendor and
constitute valid and binding obligations of such Vendor enforceable in
accordance with their respective terms.
No Conflicting Agreement. Such Vendor has the exclusive right to
dispose of its Purchased Shares as provided in this Agreement and such
dispositions will not violate, contravene, breach or offend against or
result in any default under any indenture, mortgage, lease, agreement,
obligation, instrument, charter or by-law provision (in the case of a
Vendor which is a corporation), statute, regulation, order, judgement,
decree, licence, permit or law to which the Vendor is a party or subject or
by which the Vendor is bound or affected.
Ownership of Purchased Shares. Except for the Purchaser hereunder, no
Person has any written or oral agreement, option, understanding or
commitment, or any right or privilege capable of becoming an agreement
(including convertible or exchangeable securities, warrants or convertible
obligations of any kind) for the purchase from such Vendor of any
outstanding
<PAGE>
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shares of Kenhar and such Vendor is the registered and
beneficial owner free and clear of all Encumbrances of the number of
Purchased Shares set opposite its name in Schedule 4.4 hereto.
Issued Share Capital - The Purchased Shares are the only issued shares in
the capital of Kenhar. All of the Purchased Shares are listed in Schedule 4.4
and have been duly and validly issued and are outstanding as fully paid and
non-assessable shares of Kenhar.
Subsidiaries and Investments - Except as disclosed in Schedule 4.1, since
October 31, 1996, none of the Corporations has owned directly or indirectly or
had any obligation to acquire any debt obligations of or shares in the capital
of or interests in any corporation or other Person, or to acquire or lease any
other business operations or any interest therein except for shares and debt
obligations of others of the Corporations. None of the Corporations has
conducted business in partnership with any other Person. Schedule 4.1 contains
the name of every direct or indirect Subsidiary of Kenhar and the name of every
corporation, partnership, joint venture or other Person in which a Corporation
has an interest.
Minute Books and Corporation Records - The corporate records and minute
books of each Corporation contain complete and accurate resolutions or minutes
of all meetings of the directors (including all committees thereof) and
shareholders of such Corporation held since its incorporation (all of which
resolutions or meetings were duly passed or called and held, as the case may be)
and the share certificate books, register of shareholders, register of transfers
and register of directors of each Corporation are and shall be complete and
accurate and all exigible security transfer taxes payable in connection with the
transfer of any securities of such Corporation have been duly paid. All of the
corporate records and minute books of the Corporations have been delivered or
made available to the Purchaser.
Accuracy of Books and Records - The Books and Records of each Corporation
fairly and correctly set out and disclose in all material respects the basis for
the financial position of each Corporation reflected in the Financial Statements
and all financial transactions of each such Corporation have been accurately
recorded in such Books and Records.
Financial Statements - The Financial Statements and the Interim Financial
Statements attached hereto as Schedule 4.9, have been prepared in accordance
with Canadian generally accepted accounting principles as at April 30, 1994 to
1996 inclusively and as at October 31, 1996, respectively, applied on a basis
consistent with those of previous years and present fairly (A) the assets and
liabilities (whether accrued, absolute, contingent or otherwise) and the
financial position of the Corporations as at the respective dates thereof, and
(B) the sales, earnings and results of the operations of the Corporations for
the fiscal years and period then ended subject in the case of the
<PAGE>
-19-
Interim Financial Statements to minor or immaterial year end adjustments
normal and usual in the Business and to the fact that income tax provisions
are estimated. Since the date of the most recent Financial Statements, there
has been no material adverse change to the Business or the operations, assets
or condition (financial or otherwise) of the Corporations taken as a whole.
Title to Assets -
Except as disclosed in Schedule 4.10, the Corporations own, possess
and have good title to and are the sole registered owner (where the
interests are registerable) of all of the undertaking, property and assets
in respect of which any amount was included on the Interim Balance Sheet
free and clear of all Encumbrances and those in favour of Kenhar or any
wholly-owned Corporation and except for inventory and equipment sold and
accounts receivable collected thereafter in the ordinary course of the
routine daily affairs of the Business and there has been no assignment,
subletting or granting of any licence (of occupation or otherwise) of or in
respect of the assets of any Corporation. All of the Fixed Assets of the
Corporations are located on Owned Real Property or Leased Premises;
Schedule 4.10(b) contains a legal description of all real and
immoveable property owned by any of the Corporations or leased by any of
them for an original term exceeding 50 years and the name of the owner
thereof ("Owned Real Property");
Schedule 4.10(c) contains the municipal address of all real and
immoveable property leased by any of the Corporations ("Leased Premises")
and the name of the lessor thereof;
Except as disclosed on Schedule 4.10(d):
Each Corporation or the indicated owner in the case of leased
property which is Owned Real Property has good and marketable title to
the Owned Real Property, indicated to be owned by it in Schedule
4.10(a) free and clear of all Encumbrances;
The buildings upon Owned Real Property were constructed and
located in substantial compliance with the provisions of all
applicable statutes, regulations, by-laws and restrictions;
The buildings are entirely located within the boundaries of such
properties and are not subject to any encroachment, unregistered
easement, right-of-way or restriction affecting them;
<PAGE>
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There are no agreements, undertakings or other documents which
affect or relate to the title to, or ownership of any Owned Real
Property;
Each Corporation has such rights of entry and exit to and from
the Owned Real Property as are reasonably necessary to carry on its
business upon the Owned Real Property;
No Person, other than the Purchaser as provided for in this
Agreement, has any right to purchase any of the Owned Real Property,
and no Person other than a Corporation is using or has any right to
use, as tenant, or is in possession or occupancy of, any part of such
Owned Real Property;
No Corporation has entered into any agreement to sell, transfer,
encumber, or otherwise dispose of or impair such Corporation's right,
title and interest in and to the Owned Real Property or the air,
density and easement rights relating to the Owned Real Property;
No Corporation has received any notification of and none of the
Vendors has knowledge of, any outstanding or incomplete work orders in
respect of any of the buildings, improvements or other structures
constructed on the Owned Real Property or of any current
non-compliance with applicable statutes and regulations or building
and zoning by-laws and regulations;
All accounts for work and services performed or materials placed
or furnished upon or in respect of the construction and completion of
any of the buildings, improvements or other structures constructed on
the Owned Real Property or Leased Premises which are currently payable
have been fully paid and no one has registered a lien under the
Construction Lien Act (Ontario) or other similar legislation for such
work performed by or on behalf of a Corporation;
No Corporation has made application for a rezoning of any of the
Owned Real Property and, the Vendors have no knowledge of any proposed
or pending change to any zoning affecting the Owned Real Property that
would adversely affect its current use or the Business;
The Vendors have no knowledge of any expropriation or
condemnation or similar proceeding pending or threatened against the
Owned Real Property or any part of the Owned Real Property; and
There are no matters affecting the right, title and interest of a
Corporation in and to the Owned Real Property, which in the aggregate,
<PAGE>
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would materially and adversely affect the ability of such Corporation
to carry on its business upon the Owned Real Property; and
The Corporations are entitled to enjoy peaceful and undisturbed
possession, as lessees, under all leases for Leased Premises necessary for
the operation of the Business and all such leases are valid and subsisting
and in full force and effect and no default on the part of any of the
Corporations or the lessors of the Leased Premises exists thereunder. The
Corporations are not a party to any real property leases as lessor.
No Payment of Dividends or Other Distributions - Except as disclosed in
Schedule 4.11, since the date of the most recent Financial Statements, no
Corporation:
has declared or paid any dividends or any other distribution on any of
its shares of any class except distributions deducted in computing the
Purchase Price and has not, directly or indirectly, redeemed, purchased or
otherwise acquired any of its shares or made any commitment to do so except
dividends payable by one Corporation to another or made any loan or advance
to any employee, officer, director, Vendor or any Person who does not deal
at arm's length with any of the foregoing except for advances on account of
expenses made in the ordinary course of the routine daily affairs of the
Business;
transferred, assigned, sold or otherwise disposed of any of the assets
shown or reflected in the Financial Statements or cancelled any debts or
entitlements except, in each case, in the ordinary and usual course of
business consistent with past practice;
incurred or assumed any obligation or liability (fixed or
contingent), except unsecured current obligations and liabilities incurred
in the ordinary and usual course of business consistent with past practice;
discharged or satisfied any lien or encumbrance, or paid any
obligation or liability (fixed or contingent) other than liabilities
included in the Financial Statements and liabilities incurred since the
date of the Financial Statements in the ordinary and usual course of
business and consistent with past practice;
suffered an operating loss or any extraordinary loss, waived or
omitted to take any action in respect of any rights of substantial value,
or entered into any commitment or transaction not in the ordinary and usual
course of business where such loss, rights, commitment or transaction is or
would be material in relation to the Corporations taken as a whole;
granted any bonuses, whether monetary or otherwise, or made any
general wage or salary increases in respect of its Employees, other than as
<PAGE>
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provided for in any collective bargaining agreements or changed the terms
of employment for any Employee except in the ordinary course of business
and consistent with past practice except only for such payments which shall
be deducted in computing the Purchase Price as provided for in Section 3.1
hereof;
hired or dismissed any senior Employees other than the anticipated
hiring of one senior employee to replace a retiring senior employee, the
particulars of which have been disclosed to the Purchaser;
mortgaged, pledged, subjected to lien (other than unregistered
construction liens arising in the ordinary course of business), granted a
security interest in or otherwise encumbered any of its assets or property,
whether tangible or intangible; or
authorized, agreed or otherwise become committed to do any of the
foregoing.
Condition of Equipment and Inventory; Transfer Pricing -
All buildings, plant, machinery and equipment currently in use or
reasonably required for use by the Corporations in connection with the
Business are in good operating condition and proper working order, have
been properly used and maintained having regard to their age and the nature
of their use.
The Corporations' finished goods Inventory meets design and
manufacturing specifications, is merchantable and complies with any and all
warranties customarily given by the Corporations to their customers. The
Corporations' raw materials, work-in-progress, semi-finished work,
attachments and supplies Inventory are not obsolete, are in commercially
saleable quantities and are all capable of being processed at ordinary
costs and by ordinary procedures into finished goods that will be in good
and merchantable condition except for obsolete or imperfect inventory with
an initial value of not in excess of $100,000 which has been written-down
appropriately and reflected accurately in the Books and Records and
Financial Statements. All Inventories are valued on the books of the
Corporations at the lower of cost, using the first in, first out method, or
net realizable value.
Accounts Receivable - Subject to an allowance for doubtful accounts
determined by examining each individual account and not exceeding $150,000 in
respect of such Accounts Receivable included in the Interim Financial
Statements, all Accounts Receivable recorded on the books of the Corporations
are bona fide and, except as provided in Section 4.20(c), good and collectible
at the aggregate recorded amounts thereof and are not, except as provided in
Section 4.20(c), subject to any defence, set off or counter-claim.
<PAGE>
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Intellectual Property - Schedule 4.14(a) contains a list of all trademarks,
service marks and patents, tradenames, copyrights, industrial designs and
applications therefor (including registration details) and trademark
applications of each of the Corporations owned by, used in or required for and
which are material to the operation of the Business (collectively "Intellectual
Property"). Schedule 4.14(b) contains a list of such similar property which is
not material to the Business or a Corporation and which is owned by or used in
connection with the Business. Each of the Corporations has the sole and
exclusive right to use and is the sole and exclusive owner of all right, title
and interest in all patents, trademarks, service marks, trade names and
copyrights, technology, industrial designs, know-how and processes, and all
rights with respect to the foregoing, which constitute the Intellectual Property
without, to the knowledge of the Corporations, any material conflict with the
rights of others and all licences are in full force and effect amended as of the
date hereof. The Intellectual Property owned by the Corporation is in full
force and effect and has not been used or enforced or failed to be used or
enforced in a manner that would result in the abandonment, cancellation or
unenforceability of any of the Intellectual Property. None of the Intellectual
Property has been licensed to any Person except the Corporations. No product of
the Corporations infringes on any patent, trademark, service mark, trade name,
copyright, license or other right owned by any other Person. No claim or
litigation is pending or threatened against or affecting any Corporation
contesting its right to sell or use any product or material. The Corporations
have no knowledge of any claim of adverse ownership, invalidity or other
opposition to or conflict with any Intellectual Property nor of any pending or
threatened suit, proceeding, claim, demand, action or investigation of any
nature or kind against a Corporation relating to the Intellectual Property. To
the knowledge of the Corporations, there is no violation by any Person of any
right of any Corporation with respect to any patent, trademark, trade name or
service mark owned by any Corporation, the consequence of which, in the
aggregate, adversely affect or in the future may (so far as the Corporations can
now foresee) adversely affect the business, operations, affairs, conditions
(financial or otherwise), properties or prospects of the Corporation, taken as a
whole. The Vendors have no knowledge that a Corporation, any activity in which
a Corporation is engaged or any product which a Corporation manufactures, uses
or sells or any process, method, packaging, advertising, or material that a
Corporation employs in the manufacture, marketing or sale of any such product,
or the use of any of the Intellectual Property breaches, violates, infringes or
interferes with any intellectual property rights of any third party or requires
payment for the use of any patent, trade-name, trade secret, trade-mark,
copyright or other intellectual property right or technology of another.
No Undisclosed Liabilities - Except with respect to the environmental
matters which are the subject matter of the representations and warranties
contained in Section 4.20(d) hereof as to which this representation and warranty
does not speak, there are no liabilities (contingent or otherwise), of any of
the Corporations of any kind whatsoever, whether or not accrued and whether or
not determined or determinable, other than:
<PAGE>
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liabilities disclosed on, reflected in or provided for in the Interim
Balance Sheet;
liabilities disclosed in Schedule 4.15; and
liabilities incurred in the ordinary course of the routine daily
affairs of the Business and attributable to the period since October 31,
1996, which are not in the aggregate materially adverse to the nature of
the Business or the results of operations, assets, financial condition or
manner of conducting the Business and which have been generally disclosed
to the Purchaser.
Vacation Pay - All vacation pay, bonuses, commissions and other emoluments
of Employees of the Corporations accrued to April 30, 1996 are reflected in the
1996 Balance Sheet.
Outstanding Guarantees - Except as disclosed in Schedule 4.17, none of the
Corporations is a party to or bound by or has agreed to give any agreement of
guarantee, indemnification, assumption or endorsement or any other like
commitment for the obligations, liabilities (contingent or otherwise) or
indebtedness of any other Person except for guarantees given by one or more of
the Corporations for obligations of Kenhar or wholly-owned Corporations.
Outstanding Long-term Indebtedness - Except as disclosed in the Interim
Balance Sheet and Schedule 4.15, none of the Corporations has any bonds,
debentures, mortgages, notes or other indebtedness maturing more than one year
after the date of their creation or issuance or is under any agreement to create
or issue any bonds, debentures, mortgages, notes or other indebtedness maturing
more than one year after the date of their creation or issuance.
Taxes - Except as disclosed in Schedule 4.19:
each of the Corporations has duly and timely filed all Tax Returns
required to be filed by it to the date hereof and will have duly and timely
filed all Tax Returns required to be filed by it to the Closing Date and
each of the Corporations has paid all Taxes which are due and payable
including all instalments on account of Taxes to the date hereof and will
have paid all Taxes due and payable, including all instalments on account
of Taxes to the Closing Date;
Part I of Schedule 4.19 sets out opposite the name of each Corporation
the year up to and including which the income or profit Tax liability of
each of the Corporations has been reviewed by the Governmental Authority
having jurisdiction over such Corporation;
<PAGE>
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adequate provision has been made and reflected in the Interim
Financial Statements and in the books of account and accounting records of
the Corporations for Taxes payable for the current period for which Tax
Returns are not yet required to be filed;
there are no agreements, waivers and other arrangements providing for
an extension of time with respect to the filing of any Tax Return by, or
the payment of any Tax payable by any of the Corporations;
there are no actions, suits, proceedings, investigations or claims now
threatened or pending against any of the Corporations in respect of Taxes,
or any matters under discussion with any Governmental Authority relating to
Taxes;
Each Corporation has withheld from each payment made to any of its
shareholders, officers, directors, former directors, non-resident creditors
and employees the amount of all Taxes, including but not limited to income
tax, and other deductions required to be withheld therefrom and has paid
the same to the proper tax or other receiving officers within the time
required under any applicable legislation;
no Person or group of Persons has ever acquired or had the right to
acquire control of Kenhar for purposes of the Tax Act or any applicable
provincial or municipal taxing statute;
The transfer pricing practices of the Company have not been the
subject of a review or audit by any Governmental Authority and there are no
agreements, waivers or other agreements providing for an extension of time
with respect to the assessment or collection of any Taxes against the
Company with respect to any matter relating to transfer pricing issues or
the transfer pricing practices of the Company. There are no suits or
similar proceedings now pending or threatened against the Company with
respect to any transfer pricing issue or transfer pricing practice of the
Company. There are currently no matters under discussion with any
Governmental Authority relating to any transfer pricing issue, transfer
pricing practices of the Company or any advance pricing agreement or
similar process or agreement concerning transfer pricing practices and
issues of the Company;
There are no circumstances existing which could result in the
application to the Company of either Section 78 or Section 80 of the Tax
Act;
All reserves taken or required to be taken by the Company for purposes
of the Tax Act are listed in Schedule 4.19; and
<PAGE>
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All Corporations incorporated other than pursuant to the laws of
Canada or a province thereof are non-residents of Canada for the purposes
of the Tax Act.
Litigation; Product Liability; Environmental Matters -
Litigation. Except as disclosed in Schedule 4.20(a) and 4.20(b),
there are no actions, suits, litigation, investigations, claims,
complaints, grievances or proceedings (whether or not purportedly on behalf
of any of the Corporations), including appeals and applications for review,
in progress, pending or threatened against or affecting any of the
Corporations at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which would, if decided
adversely to the Corporations:
involve the possibility of any judgment against or liability of
any of the Corporations for an amount in excess of $100,000 in the
aggregate;
enjoin, restrict or prohibit the transfer of all or any part of
the Purchased Shares as contemplated by this Agreement; or
prevent any Vendor or Kenhar from fulfilling all of its
obligations set out in this Agreement or arising from this Agreement.
Except with respect to environmental matters which are the subject matter
of the representations and warranties contained in Section 4.20(d) hereof,
as to which this sentence does not speak, and except as disclosed in
Schedule 4.20(a), there is no existing ground on which any such action,
suit or proceeding might be commenced against any of the Corporations with
any reasonable likelihood of success in whole or in part. Except as
disclosed in Schedule 4.20(a), there is not presently outstanding against a
Corporation any judgment, decree, injunction, rule or order of any court,
Governmental Authority, commission, board, bureau, agency or arbitrator.
Product Liability - Injury and Death. Schedule 4.20(b) discloses:
(A) the insurance policies maintained by the Corporations in respect of
third party liability, liability for personal injury including death and
product liability (excluding product liability claims referred to in
subsection 4.20(c)) caused by the products of the Corporations; and (B) all
claims made against any of the Corporations since April 30, 1992 in
relation to the matters which are within the general description of the
coverage of such policies (whether or not within the exclusions related
thereto) and the disposition of such claims;
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Product Liability to Customers. Since April 30, 1992, the
Corporations have settled all disputes with customers regarding allegedly
defective product by replacing product or issuing credit notes to such
customers in the amount equal to the customer's claim as accepted by the
Corporations. The aggregate of the cost to the Corporations of such
replacement product for and the aggregate amount of such credit notes
issued in, each fiscal year commencing after April 30, 1992, did not exceed
$250,000 and the aggregate cost to the Corporations (whether for
replacement of product or the issue of credit notes) which would be issued
if all claims pending at October 31, 1996 were settled for the full amount
of each customer's claim will not exceed $125,000. To the knowledge of the
Vendors, the aggregate cost to the Corporations (whether for replacement of
product or the issue of credit notes) for the year ending April 30, 1997,
will not exceed $250,000.
Environmental Matters. For purposes of this clause and for Section
6.3, the following expressions have the following meanings:
Contaminant: any substance, liquid or other matter which is or is
deemed to be, alone or in any combination, hazardous, toxic,
radioactive, a pollutant, a deleterious substance, a dangerous
substance or good, a contaminant or a source of contamination under
any Environmental Law, whether or not such substance, liquid or other
matter is defined as hazardous under such Environmental Law.
Environment: the environment or natural environment as defined in any
Environmental Laws including, without limitation, air, surface water,
groundwater, land surface, soil, subsurface strata, a sewer system and
the environment in the workplace.
Environmental Approvals: all permits, certificates, licences,
authorizations, consents, instructions, registrations, directions or
approvals issued or required by any Governmental Authority pursuant to
Environmental Laws or in relation to health and safety matters with
respect to the operation of the Corporations or their assets
including, without limitation, any sewer surcharge agreement.
Environmental Laws: all statutes, statutory instruments, codes,
protocols, notices, directions, ordinances, decrees, rules,
regulations, municipal by-laws, judicial, arbitral, administrative,
ministerial, departmental or regulatory judgments, orders, decisions,
rulings, awards, policies, voluntary restraints or guidelines,
including without limitation general principles of common and civil
law and equity relating in whole or in part to the Environment,
product liability, health and safety matters or conditions,
Contaminants, including, without limitation, the storage,
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generation, use, handling, manufacture, processing, labelling,
advertising, sale, display, transportation, treatment, Release and
disposal of Contaminants, pollution or the protection of the
Environment.
Environmental Lien: a lien in favour of any Governmental Authority
for (i) any liability under Environmental Laws or (ii) damages arising
from, or costs incurred by such Governmental Authority in response to
a Release or threatened Release of a Contaminant into the Environment.
Release: has the meaning prescribed in any Environmental Law and
includes, without limitation, release, spill, emission, leaking,
pumping, pouring, emptying, dumping, injection, deposit, disposal,
seepage, placement, spraying, abandonment, incineration, discharge,
dispersal, escape, leaching or migration into the Environment,
including, without limitation, the movement of Contaminants through or
in the air, soil, surface water, groundwater or property of any
Corporation in contravention of any Environmental Law.
Remedial Action: actions required pursuant to any Environmental Law
including, without limitation, actions to (a) clean up, remove, treat
or in any other way address Contaminants in the Environment; (b)
prevent or minimize the Release or threat of Release of Contaminants
so they do not migrate or endanger or threaten to endanger public
health or welfare or the Environment; and (c) perform pre-remedial
studies and investigations and post-remedial monitoring and care.
Remedial Order: any administrative complaint, direction, order or
sanction issued, filed or imposed by any Governmental Authority
pursuant to any Environmental Laws including, without limitation, any
order requiring any remediation, Remedial Action or clean-up of any
Contaminant, or requiring that any Release or any other activity be
reduced, modified or eliminated.
The following representations and warranties shall be interpreted so
as to cover and include the former Kenhar Dyson Chicago property.
Except as disclosed in Schedule 4.20(d):
the operations of and the Owned Real Property comply and, to
the knowledge of the Corporations, have always complied with all
Environmental Laws and with any future Environmental Laws that,
to the knowledge of the Corporations, are presently planned or
proposed by any Governmental Authorities, and no Remedial Action
is being taken, nor are there grounds which would give rise to
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any Remedial Action having to be taken, as a condition of
continued compliance with applicable Environmental Laws;
each of the Corporations has obtained all Environmental
Approvals, which are listed in Schedule 4.20(d), necessary for
their respective operations, all such Environmental Approvals are
in good standing and are valid and in full force and effect, each
of the Corporations is and has been in compliance with all terms
and conditions of such Environmental Approvals and no Remedial
Action is being taken, nor are there grounds which would give
rise to any Remedial Action having to be taken, as a condition of
continued compliance with such Environmental Approval and there
have been and are no proceedings commenced or threatened to
revoke or amend any such Environmental Approvals;
none of the Corporations has received any notice of, nor to
their knowledge is there threatened nor is there any basis for
nor has any investigation or evaluation commenced regarding the
need for any claim, notice, request for information, judgment,
order or agreement from or with any Governmental Authority or
private party or any judicial or administrative proceeding or
investigations respecting any breach of any Environmental Laws,
any contravention of any Environmental Approvals, any
noncompliance with any Remedial Action or Remedial Orders of any
liabilities, obligations or costs arising from the Release or
threatened Release of a Contaminant into the Environment with
respect to their present properties or operations or, to their
knowledge, with respect to any past properties or operations as
to which any of the Corporations has liability;
neither the Corporations nor any of their operations have
been or are now subject to any Remedial Order, nor do the
Corporations have any knowledge of any investigation or
evaluation commenced as to whether any such Remedial Order is
necessary nor has any threat of any such Remedial Order been made
nor are there any circumstances relating to the operations of the
Business or the Owned Real Property which could result in the
issuance of any such Remedial Order;
none of the Corporations has never been prosecuted for or
convicted of any offence under Environmental Laws nor has any
Corporation been found liable in any proceeding to pay any fine
or judgment to any Person as a result of any Release or
threatened Release of any Contaminant into the Environment or the
breach of
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any Environmental Law and to the knowledge of the
Corporations, there is no basis for any such proceeding;
all environmental data and studies, including, without
limitation, the results of any environmental audit relating to
the Corporations or to any real property or assets associated
with the Corporations have been delivered or made available to
the Purchaser;
other than in compliance with Environmental Laws, there has
been no Release by the Corporations of any Contaminant which is
now present in, on or under any real property or assets
associated with the Corporations (including underlying soil and
substrata, surface water and groundwater);
the Corporations have no knowledge of any Contaminant in, on
or under any real property associated with the Corporations or
any other assets of the Corporations which is not in compliance
with Environmental Laws;
the Corporations have no knowledge of any Contaminant
originating from any neighbouring or adjoining properties which
has migrated onto, or has migrating towards any real properties
associated with the Corporations or any other assets of the
Corporations which results in a contravention of Environmental
Laws;
none of the Corporations has been required to file or has
filed any notice required under any of the Environmental Laws
indicating past or present treatment, storage or disposal of a
Contaminant;
none of the Corporations has been required to file or has
filed any notice required under applicable Environmental Laws
reporting a Release of a Contaminant into the Environment and any
Release by any Corporation of any Contaminant into the
Environment complied and complies with all Environmental Laws;
there is not now, nor has there ever been, on, from or in
the property owned, leased or used by, or under the charge,
management or control of, and of the Corporations (A) a landfill
or any generation, treatment, handling, transport, recycling,
storage or off-site or on-site disposal of any Contaminant or any
other substance which in either case has violated or could
reasonably be
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expected to violate or result in liability under
any Environmental Law applicable in respect thereof to any of the
Corporations or (B) any underground storage tanks or surface
impoundments;
there is not now on any property owned, leased or used by,
or under the charge, management or control of, any of the
Corporations (A) any friable asbestos-containing materials, or
(B) any poly-chlorinated bipheyls ("PCB's") or any equipment,
waste or other material containing PCB's;
none of the Corporations has received any notice or claim,
nor to the knowledge of any Corporation is there threatened any
notice or claim, that any of them is or may be liable to any
Person as a result of the Release or threatened Release of a
Contaminant into the Environment, or as a result of exposure to a
Contaminant;
no Environmental Lien has attached to any property
associated with any of the Corporations, nor are there any facts
or circumstances currently known to any of the Corporations that
may reasonably be expected to give rise to the attachment of such
an Environmental Lien;
there are no facts, circumstances, conditions or occurrences
respecting any of the Corporations, their operations or any real
property owned, used or leased by them, or under their charge,
management or control, or, to the knowledge of any of the
Corporations, on any property adjoining or in the vicinity of any
such real property that could reasonably be expected (I) to form
the basis of claims against the Corporations or with respect to
any such real property owned, used or leased by them that
individually or in the aggregate could reasonably be expected to
have a material adverse affect on the Corporations, or (II) to
cause any of such real property to be subject to any restrictions
on ownership (in respect of Owned Real Property), occupancy, use
or transferability (in respect of Owned Real Property), other
than restrictions associated with any change in use from the
current use thereof;
no work, repair, construction or capital expenditure is
required or planned pursuant to or to comply with any
Environmental Law; and
copies of all Phase 1 or equivalent and all other
environmental studies conducted by or for or in respect of the
Corporations have been provided to the Purchaser.
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Compliance with Law -
Except with respect to environmental matters which are the subject
matter of the representations and warranties contained in Section 4.20(d)
hereof as to which this paragraph does not speak, each Corporation is
conducting and has conducted its business in compliance with all applicable
laws, rules and regulations of each jurisdiction in which its business is
carried on or has been carried on and is not in breach, and has not
received any notification alleging that it is in breach of any such laws,
rules or regulations;
The authorizations, approvals, excluding Environmental Approvals,
licences or permits issued to Corporations by any Governmental Authority
listed in Schedule 4.21 are all such Governmental Authorizations required
by the Corporations to enable each of them to carry on its business in the
relevant jurisdictions in compliance with applicable laws (except for
licences and permits, the absence of which would not have an adverse effect
on the operation of the Business or the properties of the Corporations).
Such Governmental Authorizations are in full force and effect in accordance
with their terms, and there have been no violations thereof and no
proceedings are pending or, to the knowledge of the Corporations,
threatened, which could result in their revocation or limitation;
None of the Corporations is in default in any respect with respect to
any judgment, order, injunction or decree of any court, administrative
agency or other Governmental Authority;
Except with respect to environmental matters which are the subject
matter of the representations and warranties contained in section 4.20(d)
hereof as to which this paragraph does not speak, the uses to which the
Owned Real Property of each Corporation has been put are not in breach of
any applicable statute, by-law, ordinance, regulation, covenant,
restriction or official plan and each Corporation has not received any
notification alleging any such breach; and
There are no outstanding work or compliance orders relating to the
facilities of each Corporation from or required by any police or fire
department, sanitation, health or factory authorities or from any other
federal, state or municipal authority.
Nature and Conduct of the Business - Since April 30, 1994, the only
business carried on by the Corporations has been the Business. Since April 30,
1996, the Corporations have carried on business in the ordinary and normal
course of the routine daily affairs of the Business consistent with past
practice. Since April 30, 1996, there has not been:
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any material change in the financial condition, operations or
prospects of the Corporations other than changes in the ordinary and usual
course of business, none of which has been materially adverse;
any damage, destruction, loss, labour trouble or other event,
development or condition of any character (whether or not covered by
insurance) materially and adversely affecting the business, assets,
properties or future prospects of the Corporations; or
any material change in the level of Inventories or Fixed Assets of the
Corporations
except for:
the acquisition by the Corporations of 60% of the
issued shares of Nuova SAR s.r.l. and 80% of the issued shares of
Kenhar Iron Works Inc.;
the borrowing by the Corporations of an aggregate of
$30,000,000 and the application thereof by Kenhar to the payment
of a dividend and reduction of capital in accordance with the
transaction steps set forth on Schedule 4.22(a);
the stock dividends declared and paid on March 10, 1997 as set
forth in Schedule 4.11; and
borrowings to effect the Proposed Acquisitions not in excess of
an aggregate of $8,135,000 as described in Schedule 4.22(b).
Customers of the Business - Schedule 4.23 is a list of each of the
customers of the Corporations to which the aggregate sales of the Corporations
exceed $500,000 for the 12-month period ended April 30, 1996 and the sales to
each such customer during the such year. The Corporations do not have any
agreement expiring later than 12 months from the date hereof with any of their
customers as to the price to be paid by such customer for products. Since April
30, 1996 no customer of the Corporations to which its sales exceed $500,000
during the year ended April 30, 1996 has ceased doing or materially decreased
the amount of or indicated that it intends to cease doing or materially
decreased the amount of business with the Corporations except as shown on
Schedule 4.23. All discounts, allowances, volume rebates or other preferential
terms including marketing and pricing policies and promotions and trade
allowances are consistent with and conform to industry standards.
<PAGE>
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Capital Expenditures - Schedule 4.24 discloses capital expenditures in
excess of $10,000 which have been authorized or committed by, but not invoiced
before November 1, 1996 to, any of the Corporations.
Employment Matters -
Schedule 4.25(a) sets forth a complete list of the number of Employees
currently employed in each jurisdiction where Kenhar and its Subsidiaries
carry on business together with the nature of their employment. Except as
disclosed, no Employee is on long-term disability leave, extended absence
or receiving workers' compensation.
Except for those written employment contracts with salaried Employees
identified in Schedule 4.25(b), there are no written contracts of
employment entered into with any Employees or any oral contracts of
employment which are not terminable on the giving of reasonable notice in
accordance with Applicable Law.
Except as set out in Schedule 4.25(c) there are no employment policies
or plans, including policies or plans regarding incentive compensation,
stock options, severance pay or other terms or conditions of employment or
terms or conditions upon which Employees may be terminated, which are
binding upon the Company.
Each of the Corporations has been and is being operated in full
compliance with all laws relating to employees, including employment
standards, occupational health and safety, pay equity and employment
equity. The Corporations have complied with and posted plans as required
under the Ontario Pay Equity Act. There have been no complaints under such
laws against the Corporations.
There are no complaints nor, to the knowledge of the Vendors, are
there any threatened complaints, against the Corporations, before any
employment standards branch or tribunal or human rights tribunal. There is
not now nor has there in the past been any complaint against the
Corporations, under any human rights legislation or employment standards
legislation. There are no outstanding decisions or settlements or pending
settlements under the employment standards legislation which place any
obligation upon the Corporations, to do or refrain from doing any act.
All current assessments under the Workers' Compensation Act (Ontario)
in relation to the Company have been paid or accrued and the Company has
not been subject to any special or penalty assessment under such
legislation which has not been paid.
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Except as set out in Schedule 4.25(d), none of the Corporations is a
party, either directly or by operation of law, to any collective agreement,
letters of understanding, letters of intent or other written communication
with any trade union or association which may qualify as a trade union,
which would cover any of its Employees or any dependent contractors of the
Corporations.
To the knowledge of the Vendors there are no outstanding labour
tribunal proceedings of any kind, including any proceedings which could
result in certification of a trade union as bargaining agent for Employees
or dependent contractors of the Corporations, and there have not been any
such proceedings within the last two years.
To the knowledge of the Vendors there are no threatened or apparent
union organizing activities involving the Employees or dependent
contractors of the Corporations.
The Company does not have any serious labour problems that might
materially affect the value of the Company on a consolidated basis or lead
to an interruption of its operations at any location.
Benefit Plans -
In this Section 4.26, the following expressions have the following
meanings:
Definitions.
Code: the Internal Revenue Code of 1986 as
amended.
ERISA: the Employee Retirement Income Security
Act of 1974, as amended from time to time.
Except as otherwise disclosed in Schedule 4.25(c) and 4.27, Schedule
4.26 sets forth a complete list of all Benefit Plans. Except as disclosed
in Schedule 4.26:
Each Benefit Plan is, and has been, established, administered,
and to the extent applicable, registered, qualified and invested, in
compliance with (i) the terms thereof, (ii) all Applicable Laws and
(iii) any collective agreement.
All obligations under the Benefit Plans as of the Closing Date
(whether pursuant to the terms thereof or any Applicable Laws) have
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been satisfied or have been provided for in the Interim Balance Sheet
and there are no unfunded liabilities with respect to Benefit Plans
which have not been reflected and disclosed in the Interim Financial
Statements, and there are no outstanding defaults or violations
thereunder by any of the Corporations and, to the Vendors' knowledge,
there has not been any default or material violation by any other
party to any Benefit Plan.
There has been no increase or promised increase in benefits or
improvements under any of the Benefit Plans since April 30, 1996.
Any and all contributions, premiums or remittances required to be
paid in respect of each Benefit Plan (employee and employer) have been
paid in a timely fashion in accordance with the terms thereof and all
Applicable Laws, and no Taxes, penalties or fees are owing or exigible
under any Benefit Plan.
There is no proceeding, action, suit or claim (other than routine
claims for benefits) pending or, to the knowledge of the Vendors,
threatened involving any Benefit Plan, any insurance contract relating
to any Benefit Plan, or the assets held in the funding media for any
Benefit Plan.
None of the Benefit Plans (other than Pension Plans) provide
benefits to former Employees or to their beneficiaries or dependents,
except as may be required by law.
None of the Benefit Plans require or permit a retroactive
increase in premiums or payments, and the level of insurance reserves,
if any, under any insured Benefit Plan is reasonable and sufficient to
provide for all incurred but unreported claims.
None of the Benefit Plans is a multi-employer plan as
defined under Applicable Laws.
As of the date of the last completed actuarial valuation, no
Pension Plan had any unfunded liability on a "going concern" basis as
determined in accordance with all Applicable Laws and using
assumptions and methods that are appropriate in the circumstances and
in accordance with generally accepted actuarial principles. No
material changes have occurred in respect of any Pension Plan since
the date of the most recent actuarial report issued in connection with
such Pension Plan, which could reasonably be expected to adversely
affect the report by rendering it misleading in any material respect.
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All contributions, including any special payments to amortize any
unfunded liabilities required to be made prior to the Closing in
accordance with all Applicable Laws and the terms of each Pension Plan
have been made or are provided for on the Interim Balance Sheet.
No event has occurred and no condition exists with respect to any
Pension Plan that has resulted or is reasonably likely to result in
any Pension Plan being ordered or required to be wound up in whole or
in part pursuant to any Applicable Laws or having its registration
revoked or refused for the purposes of any Applicable Laws or being
placed under the administration of any relevant pension benefits
regulatory authority or in any Corporation or such Pension Plan being
required to pay any Taxes or penalties under any Applicable Laws.
No event has occurred and no condition exists which has resulted
or could reasonably be expected to result in any Corporation being
required to pay, repay or refund any amount (other than contributions
required to be made or benefits or expenses required to be paid in the
ordinary course) to or on account of any Pension Plan or a current or
former member thereof.
No event has occurred and no condition exists that has resulted
or could reasonably be expected to result in a payment being made out
of a guarantee fund established under any Applicable Laws in respect
of a Pension Plan. No order has been made and no notice has been
given pursuant to any Applicable Laws in respect of any Pension Plan
requiring (or proposing to require) any Person to take or refrain from
taking any action in respect thereof and, to the best of the knowledge
of each of the Corporations, there has been no contravention of any
such Applicable Laws and there are no circumstances that indicate that
there has been such a contravention.
Compliance with ERISA and the Code -
None of the Corporations with Employees reporting to work in
the United States of America (the "U.S. Corporations") has
breached the fiduciary rules of ERISA or engaged in any
non-exempt prohibited transaction, which could reasonably be
expected to result in any direct or indirect material liability
(including, without limitation, as a result of any
indemnification obligation) to any of the Corporations in
connection with a suit for damages or pursuant to Section 409,
502(i) or 502(1) of ERISA or Section 4975 of the Code, which
liability, either individually or in the aggregate, has had or
could reasonably be expected to have a material adverse
<PAGE>
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effect on the financial condition of the Corporations taken as
a whole.
Other than for premiums payable in the normal course that
are not past due, none of the U.S. Corporations has incurred any
direct or indirect material liability (including, without
limitation, as a result of an indemnification obligation) under
or pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to any U.S. Plans and no
event, transaction or condition has occurred or exists or, to any
of such Corporations' knowledge, is reasonably expected to occur
or exist with respect to any U.S. Plans that could result in any
such liability to any of the Corporations which liability, either
individually or in the aggregate, has had or could reasonably be
expected to have a material adverse affect on the financial
condition of the Corporations, taken as a whole.
Full timely payment has been made of all amounts which any
of the U.S. Corporations is required to have paid as
contributions to each such U.S. Plans under Applicable Law, the
terms of each U.S. Plan or any collective bargaining agreement.
No U.S. Plan is subject to either the minimum funding
requirements of ERISA Section 302 or code Section 412. Except as
disclosed in Schedule 4.26, no U.S. Plan is a Multiemployer Plan
or a "multiple employer" plan (within the meaning of Section 4063
or 4064 of ERISA).
Except as disclosed on Schedule 4.26, no U.S. Corporation
sponsors or maintains any plan, fund program or arrangement to
provide any benefit to any Employee following termination of
employment which plan, fund program or arrangement is not
terminable by the employer at will. Except as required under
ERISA Sections 601 et seq. and Code Section 4980B, no U.S.
Corporation sponsors or maintains any plan, fund program or
arrangement to provide life or health benefits to retirees,
former Employees or their dependents.
There are outstanding current Internal Revenue Service
determination letters stating that, to the extent applicable,
each U.S. Plan is qualified under the Code.
Payments - Except as disclosed in Schedule 4.27 and except for payments
made or benefits conferred by Kenhar or any wholly-owned Corporation to or on
another of them, since April 30, 1996:
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none of the Corporations has made any payment to or conferred or
authorized to be conferred and will not confer or authorize to be
conferred any benefit upon any of its officers, directors, former
directors, shareholders, or Employees or on any Person or company not
dealing at arm's length with any of the foregoing except in the
ordinary course of the routine daily affairs of the Business
consistent with past practice and at the regular rates payable to them
of salary, Benefit Plans, rents or other remuneration of any nature
and relocation expenses and reimbursements; and
there has not been any increase in the rates of salary, Benefit
Plans, bonus, rents or other remuneration or relocation expenses or
reimbursements payable to any such Person including under any Benefit
Plan except (i) increases in accordance with written agreements
existing as at April 30, 1996 and (ii) increases approved by the
Purchaser in writing.
Except as disclosed on the 1996 Balance Sheet, since April 30, 1996, none
of the Corporations has had any amount receivable from or had any indebtedness
outstanding to any of its directors, former directors, officers, shareholders,
or Employees or to any other Person not dealing at arm's length with any of the
foregoing except travel advances of less than $10,000 made in the ordinary
course of the routine daily affairs of the Business consistent with past
practice.
Real Property - Except as disclosed on Schedule 4.28, since April 30, 1996:
none of the Corporations has owned or acquired any real property or
has been under any obligation to acquire real property;
none of the Corporations has been a party to any lease of real
property or agreement in the nature of a lease of real property, whether as
lessor or lessee, or agreement to enter into such a lease.
Conditional Sales Contracts and Leases of Personal Property - No
Corporation is a party, as purchaser, lessee or in other like capacity, under
any conditional sales, hire purchase, security or other title retention
agreement ("Personalty Contracts") related to personal property except for:
those which (i) are capital leases under Canadian generally accepted
accounting principles and the liability under which is fully included in
the consolidated balance sheet included in the Financial Statements; and
(ii) in respect of which the expense from April 30, 1995 to April 30, 1996
has been fully included in preparing the consolidated statement of earnings
included in the
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Financial Statements and the liability under which for the next 4 fiscal
years of Kenhar has been disclosed in the notes thereto; and
those entered into since April 30, 1996 in the ordinary course of the
routine daily affairs of the Business consistent with past practice
(collectively "Excepted Contracts"). All of the personal property covered by
the Excepted Contracts is available to the Corporations on normal commercial
terms from other sources.
Insurance - The Corporations maintain and have maintained such policies of
insurance, issued by responsible insurers, as are appropriate to its operations,
property and assets, in such amounts and against such risks as are customarily
carried and insured against by owners of comparable businesses, properties and
assets since the commencement of its operations. The policies of insurance
relating to product liability are sufficient to satisfy all third party or
employee claims (including defence costs) resulting from injury or death. All
such policies of insurance are in full force and effect and the Corporations are
not in default, as to the payment of premium or otherwise, under the terms of
any such policy. Schedule 4.30 sets forth a complete list of all policies of
insurance which the Corporations maintain and the particulars of such policies,
including the name of the insurer, the risk insured against, the amount of
coverage and the amount of any deductible.
Other Agreements - Since April 30, 1996, none of the Corporations has been
or is a party to any Contract (including employment agreements for other than
indefinite hiring), whether written or oral, of any nature or kind whatsoever,
except (i) Contracts in the ordinary course of the routine daily affairs of the
Business consistent with past practice which can be terminated by such
Corporation, without further liability arising from such termination, on not
more than 180 days notice to the other parties thereto, (ii) prepaid service
Contracts on office equipment, (iii) Contracts where the aggregate annual
financial obligations thereunder of the Corporations are minor or immaterial to
the Business, (iv) the Contracts listed or described in the Schedules hereto,
including Schedule 4.31, and (v) Contracts to which the only parties are two or
more of Kenhar and the wholly-owned Corporations.
Compliance with Contracts - Except as disclosed in Schedule 4.32, none of
the Corporations is in default or breach under any Contract, written or oral,
indenture or other instrument to which it is a party and there exists no state
of facts which after notice or lapse of time or both would constitute such a
default and all such Contracts, indentures or other instruments are in good
standing and each of the Corporations is entitled to all benefits thereunder.
To the knowledge of the Corporations, each Corporation has the capacity,
including the necessary personnel, equipment and supplies, to perform all its
obligations under the foregoing.
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Bank Accounts and Powers of Attorney - Annexed hereto as Schedule 4.33 is a
true and complete list showing:
the name of each bank, trust company or similar institution in which
any of the Corporations has accounts or safe deposit boxes, the
identification numbers of each such account or safe deposit box and the
names of all Persons authorized to draw thereon or to have access thereto;
and
the name of each Person, firm or corporation or business organization
holding a general or special power of attorney from any of the Corporations
and a summary of the terms thereof.
Residence - The Vendors are not non-residents of Canada for purposes of
Section 116 of the Income Tax Act (Canada).
Regulatory Approvals - No governmental or regulatory authorization,
approval, order, consent or filing is required other than Hart Scott Rodino
Approval and consents or assignments to the Government Authorizations on the
part of any Vendor or Kenhar, in connection with the execution, delivery and
performance of this Agreement or any other documents and agreements to be
delivered under this Agreement or the performance of the Vendors' obligations
under this Agreement or any other documents and agreements to be delivered under
this Agreement.
Reserves and Accruals - The reserves and accrued liabilities disclosed on
or reflected in the Financial Statements and the Books and Records, are
sufficient in all respects to provide for the liabilities in respect of which
they have been established.
No Joint Venture Interests, etc. - No Corporation is a partner,
beneficiary, trustee, co-tenant, joint venturer or otherwise a participant in
any partnership, trust, joint venture, co-tenancy or other similar jointly owned
business undertaking or arrangement and no Corporation has other significant
investment interests in any business owned or controlled by any third party.
Restrictive Covenants - No Corporation is a party to or bound or affected
by any commitment, agreement or document containing any covenant expressly
limiting the freedom of the Corporation to compete in any line of business,
transfer or move any of its assets or operations or which materially or
adversely affects the business practices, operations or conditions of the
Corporation or the continued operation of the Business after the Closing.
Management Recommendation Letters - The Purchaser has been provided with
copies of all management recommendation letters received by any Corporation or
its board of directors from its auditor, or any previous auditor of any
Corporation.
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Key Employees - No Key Employee listed in Schedule 4.40 has notified any of
the Vendors that it is his current intention to terminate his existing
employment arrangement with any Corporation as a result of the entering into or
consummating of the transactions contemplated hereby.
Full Disclosure - Such Vendor has made available to the Purchaser, all
information, including the financial, marketing, sales and operational
information on a historical basis relating to each Corporation which would be
material to a purchaser of the Corporations on a consolidated basis. Without
limiting the generality of the foregoing, such Vendor has not failed to disclose
to the Purchaser, any fact or information which would be material to a purchaser
of the Corporations on a consolidated basis.
No Broker - Except as disclosed in writing to the Purchaser by Kenhar,
which is to receive its fees and reimbursement of its expenses directly from the
Vendors, the Vendors have carried on all negotiations relating to this Agreement
and the transactions contemplated in this Agreement directly and without
intervention on its behalf of any other party in such manner as to give rise to
any valid claim for a brokerage commission, finder's fee or other like payment.
Representations Correct at Closing Date - Each of the Vendors covenants,
represents and warrants with and to the Purchaser that each of the covenants,
representations and warranties made in Sections 4.1 to 4.42, inclusive, hereof
shall be fulfilled and true at the Time of Closing as if made at such time.
Reliance - Each Vendor acknowledges that the Purchaser is relying on the
covenants, representations and warranties of such Vendor contained in this
Agreement and in any certificates or other documents delivered pursuant hereto
in connection with its purchase of the Purchased Shares.
ARTICLE
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to each of the Vendors the
matters set out below.
Incorporation - The Purchaser is a corporation duly incorporated and
validly existing under the laws of the Province of Ontario.
Due Authorization - The Purchaser has all necessary corporate power,
authority and capacity to enter into this Agreement and to carry out its
obligations under this Agreement. The execution and delivery of this Agreement
and the consummation of the transaction contemplated under this Agreement have
been duly authorized by all necessary corporate action of the Purchaser.
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Enforceability of Obligations - This Agreement constitutes a valid and
binding obligation of the Purchaser enforceable against it in accordance with
the terms of this Agreement, subject, however, to limitations with respect to
enforcement imposed by law in connection with bankruptcy or similar proceedings
and to the extent that equitable remedies such as specific performance and
injunction are in the discretion of the court from which they are sought.
Absence of Conflicting Agreements - The Purchaser is not a party to, bound
or affected by or subject to any indenture, mortgage, lease, agreement,
obligation, instrument, charter or by-law provision, statute, regulation, order,
judgment, decree, license, permit or law which would be violated, contravened or
breached by, or under which any default would occur or a lien, claim,
restriction or encumbrance would be created as a result of the execution and
delivery by it of this Agreement or the performance by it of any of the terms of
this Agreement.
Investment Canada - The Purchaser is a WTO Investor within the meaning of
the Investment Canada Act (Canada).
Status - The Purchaser is a taxable Canadian corporation within the meaning
of the Tax Act.
ARTICLE 5A
REPRESENTATIONS AND WARRANTIES OF CASCADE
Cascade hereby represents and warrants to Couphar the matters set out
below.
5A.1 Incorporation - Cascade is a corporation duly incorporated and validly
existing under the laws of the State of Oregon.
5A.2 Due Authorization - Unless otherwise specifically provided herein or
in any agreement or document delivered hereunder or pursuant hereto, Cascade
has all necessary corporate power, authority and capacity to enter into this
Agreement and to carry out its obligations under this Agreement and the
execution and delivery of this Agreement and the consummation of the
transaction contemplated under this Agreement have been duly authorized by
all necessary corporate action of Cascade.
5A.3 Enforceability of Obligations - This Agreement constitutes a valid and
binding obligation of Cascade enforceable against it in accordance with the
terms of this Agreement, subject, however, to limitations with respect to
enforcement imposed by law in connection with bankruptcy or similar proceedings
and to the extent that equitable remedies such as specific performance and
injunction are in the discretion of the court from which they are sought.
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5A.4 Absence of Conflicting Agreements - Cascade is not a party to, bound or
affected by or subject to any indenture, mortgage, lease, agreement, obligation,
instrument, charter or by-law provision, statute, regulation, order, judgment,
decree, license, permit or law which would be violated, contravened or breached
by, or under which any default would occur or a lien, claim, restriction or
encumbrance would be created as a result of the execution and delivery by it of
this Agreement or the performance by it of any of the terms of this Agreement.
5A.5 Share Capital - As of the date hereof, the authorized share capital
of the Purchaser consists of an unlimited number of common shares, an
unlimited number of preferred shares and an unlimited number of Exchangeable
Shares of which 1,001 common shares are issued and outstanding and the
authorized share capital of Cascade consists of 20,000,000 common shares and
200,000 preferred shares of which approximately 11,666,704 common shares and
no preferred shares are issued and outstanding. Cascade beneficially owns
all of the issued and outstanding common shares of the Purchaser and no
Person has any right to acquire from the Purchaser any of its shares (other
than Cascade and Couphar).
5A.6 Listing - The shares of common stock of Cascade are listed on The
New York Stock Exchange.
5A.7 SEC Reports - Since January 31, 1996, Cascade has filed with the
U.S. Securities and Exchange Commission (the "SEC") all forms, reports,
financial statements, exhibits, schedules and other documents required to be
filed by it under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, as the case may be, and the rules and
regulations promulgated by the SEC thereunder. As of their respective dates,
none of Cascade's Form 10-K dated April 12, 1996 and Form 10-Q dated December
12, 1996 (including all financial statements, exhibits and schedules thereto
and documents incorporated by reference therein) contained any untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. Such
documents complied when filed in all material respects with the then
applicable requirements of the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, as the case may be, and the
rules and regulations promulgated by the SEC thereunder.
5A.8 Financial Statements - The financial statements of Cascade for the year
ended January 31, 1996 complied as to form in all material respects with the
then applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, were prepared in accordance with U.S. generally
accepted accounting principles (except as may have been indicated in the notes
thereto) and fairly presented the financial position of Cascade on a
consolidated basis as at such date and the results of operations on a
consolidated basis for the year then ended.
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ARTICLE
NON-WAIVER; SURVIVAL
Non-Waiver - No investigations made by or on behalf of the Purchaser at any
time shall have the effect of waiving, diminishing the scope or otherwise
affecting any representation or warranty made by any of the Vendors in or
pursuant to this Agreement. No waiver of any condition or other provisions, in
whole or in part, shall constitute a waiver of any other condition or provision
(whether or not similar) nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
Nature and Survival -
Subject to subsection (b), all representations, warranties and
covenants contained in this Agreement on the part of each of the Parties
shall survive the Closing, the execution and delivery under this Agreement
of any share or security transfer instruments or other documents of title
to any of the Purchased Shares and the payment of the consideration for the
Purchased Shares.
Representations and warranties concerning the matters set out in
Section 4.19 shall survive for a period of sixty days after the relevant
Governmental Authority shall no longer be entitled to assess liability for
Taxes against the Corporations relating to the incorrectness in or breach
of any such representations and warranties. All other representations and
warranties shall survive for a period of 18 months from the Closing Date.
The representations and warranties provided in Section 4.20(d) shall be
subject to the limitations and restrictions set forth in Section 6.3. If
no written claim or written demand shall have been made under this
Agreement against a Party for any incorrectness in or breach of any
representation or warranty made in this Agreement prior to the expiry of
these survival periods, such Party shall have no further liability under
this Agreement with respect to such representation or warranty.
Notwithstanding the limitations set out in subsection (b) any Claim
which is based on title to the Purchased Shares, intentional
misrepresentation or fraud may be brought at any time.
Covenants, etc., of Vendors - The remedy in respect of Claims against
the Vendors arising out of, in connection with or in respect of any matter
referred to in Section 4.20(d) in respect of which the Purchaser is or would be
entitled to indemnification hereunder shall be limited to the aggregate of: (i)
payment by the Vendors of the cost of all remedial work required to restore the
property and any adjoining properties to compliance with Environmental Laws and
the use for which the property was intended in the Business, (ii) any fines,
penalties and damages incurred, sustained by or awarded against a Corporation,
the Purchaser or Cascade in favour of
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third parties (other than consequential damages suffered by the Corporations,
the Purchaser or Cascade) relating directly or indirectly to the work
referred to in clause (i), and (iii) all out of pocket expenses (including
legal, consulting and advisory fees) of any Corporation, the Purchaser and
Cascade relating directly or indirectly to the subject matter of such Claims.
Notice - Without prejudice to the rights and obligations of the
Parties hereunder, the Purchaser shall inform the Vendors prior to Closing if as
a result of its due diligence investigations the Purchaser is aware of any
matter or circumstance which may give rise to one or more Claims which in the
aggregate would total in excess of $500,000.
ARTICLE
PURCHASER'S CONDITIONS PRECEDENT
The obligation of the Purchaser to complete the purchase of all, but not
less than all, of the Purchased Shares under this Agreement shall be subject to
the satisfaction of, or compliance with, at or before the Closing Time, each of
the following conditions precedent (each of which is acknowledged to be inserted
for the exclusive benefit of the Purchaser and may be waived by it in whole or
in part).
Truth and Accuracy of Representations of Vendors at the Closing Time - All
of the representations and warranties of the Vendors made in or pursuant to this
Agreement shall be true and correct as at the Closing Time in all material
respects and with the same effect as if made at and as of the Closing Time
(except as such representations and warranties may be affected by the occurrence
of events or transactions expressly contemplated and permitted by this
Agreement) and the Purchaser shall have received a certificate from each Vendor
confirming the truth and correctness of the representations and warranties of
the Vendors.
Performance of Obligations - The Vendors and Harrison shall have performed
or complied with, in all respects, all their obligations, covenants and
agreements under this Agreement including without limitation with respect to the
Purchaser's due diligence investigation as set forth in section 9.3.
Receipt of Closing Documentation - All documentation relating to the due
authorization and completion of the sale and purchase of the Purchased Shares
under this Agreement and all actions and proceedings taken on or prior to the
Closing in connection with the performance by the Vendors of their obligations
under this Agreement shall be satisfactory to the Purchaser and the Purchaser
shall have received copies of all such documentation or other evidence as it may
reasonably request in order to establish the consummation of the transactions
contemplated hereby and the taking of all corporate proceedings in connection
therewith in compliance with these
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conditions, in form (as to certification and otherwise) and substance
satisfactory to the Purchaser.
Opinion of Counsel for the Vendors - The Purchaser shall have received an
opinion dated the Closing Date from counsel for the Vendors, Messrs. Aird &
Berlis, substantially in the form of Schedule 7.4.
Consents, Authorizations and Registrations - All consents, approvals,
orders and authorizations of any Person or Governmental Authority (or
registrations, declarations, filings or recordings with any such authorities),
required in connection with the completion of any of the transactions
contemplated by this Agreement, the execution of this Agreement, the Closing or
the performance of any of the terms and conditions of this Agreement, including
the approval of The Toronto-Dominion Bank pursuant to the provisions of a letter
agreement dated April 29, 1996 and the ISDA Master Agreement dated April 29,
1996, in form and substance satisfactory to the Purchaser and Hart-Scott-Rodino
Approval shall have been obtained, at or before the Closing Time. There shall
be no injunction or restraining order issued preventing, and no pending or
threatened claim, action, litigation or proceeding, judicial or administrative
or investigation against any Party by any Governmental Authority, for the
purpose of enjoining or preventing the consummation of the transactions
contemplated in this Agreement or otherwise claiming that this Agreement or the
consummation thereof is improper or would give rise to proceedings under any
statute or rule of law.
Material Adverse Change - No material adverse change in the business of the
Corporations taken as a whole (other than as a result of general industry
conditions) shall have occurred prior to the Closing Time.
No Laws - No Laws shall have been enacted, introduced or announced which
may materially and adversely affect the Corporations or the Business.
Harrison Contracts - W.J. Harrison shall have executed and delivered the
Employment Agreement and the Non-Competition and Non-Solicitation Agreement.
Resignation of Auditors - The Company shall have received the resignation
of its current auditor, in form and substance satisfactory to the Purchaser.
Directors and Officers - There shall have been delivered to the Purchaser
on or before the Closing Time the resignations of all individuals who are
presently directors of Kenhar (except W.J. Harrison) and duly executed
comprehensive releases in the form of Schedule 7.10 from each such individual
and from the Vendors of all their claims respectively, against the Corporations
except for any claims for current unpaid remuneration.
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Execution of Other Agreements - On or prior to the Closing Time:
Couphar and W.J. Harrison shall have executed and delivered the
Exchange Agreement;
the Vendors, W.J. Harrison and the Escrow Agent shall have
executed and delivered the Escrow Agreement; and
TD Trust Company shall have executed and delivered the
Voting Trust Agreement.
For the purposes of a determination of materiality with respect to the
conditions contained in sections 7.1, 7.6 and 7.7, any change, fact, omission,
occurrence or information will be considered to be material if it would have or
result in or would reasonably be expected to have or result in a significant
adverse impact on or change to the value of the Business or the Corporations
taken as a whole.
If any of the foregoing conditions in this Article has not been fulfilled by
Closing, the Purchaser may terminate this Agreement by notice in writing to the
Vendors, in which event the Purchaser is and shall be released from all
obligations under this Agreement. However, the Purchaser may waive compliance
with any condition in whole or in part if it sees fit to do so, without
prejudice to its rights of termination in the event of non-fulfilment of any
other condition, in whole or in part, or to its rights to recover damages for
the breach of any representation, warranty, covenant or condition contained in
this Agreement.
ARTICLE
VENDORS' CONDITIONS PRECEDENT
The obligations of the Vendors other than Couphar to complete the sale of
their Vendor's Shares under this Agreement shall be subject to the satisfaction
of or compliance with, at or before the Closing Time, each of the following
conditions precedent (each of which is acknowledged to be inserted for the
exclusive benefit of such Vendors and may be waived by them in whole or in
part).
Truth and Accuracy of Representations of the Purchaser at Closing Time -
All of the representations and warranties of the Purchaser made in or pursuant
to this Agreement (other than the representations and warranties of the
Purchaser contained in Article 5A) shall be true and correct as at the Closing
Time in all material respects and with the same effect as if made at and as of
the Closing Time (except as such representations and warranties may be affected
by the occurrence of events or transactions expressly contemplated and permitted
by this Agreement) and such Vendors shall have received a certificate from an
authorized officer of the Purchaser confirming the truth and correctness of such
representations and warranties.
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Performance of Obligations - The Purchaser shall have performed or complied
with, in all respects, all its obligations, covenants and agreements under this
Agreement.
Opinion of Counsel - Such Vendors shall have received opinions dated the
Closing Date from Canadian and United States counsel to the Purchaser and
Cascade substantially in the forms thereof in Schedule 8.3.
If any of the foregoing conditions in this Article has not been fulfilled
by Closing, such Vendors may terminate this Agreement by notice in writing to
the Purchaser, in which event such Vendors are released from all obligations
under this Agreement. However, all, but not less than all, of such Vendors may
waive compliance with any condition in whole or in part if they see fit to do
so, without prejudice to their rights of termination in the event of
non-fulfilment of any other condition in whole or in part or to their rights to
recover damages for the breach of any representation, warranty, covenant or
condition contained in this Agreement.
ARTICLE 8A
COUPHAR'S CONDITIONS PRECEDENT
The obligations of Couphar to complete the sale of its Vendor's Shares
under this Agreement shall be subject to the satisfaction of or compliance
with, at or before the Closing Time, each of the following conditions
precedent (each of which is acknowledged to be inserted for the exclusive
benefit of Couphar and may be waived by it in whole or in part).
8A.1 Truth and Accuracy of Representations of the Purchaser at Closing
Time -All of the representations and warranties of each of the Purchaser and
Cascade made in or pursuant to this Agreement shall be true and correct as at
the Closing Time in all material respects and with the same effect as if made
at and as of the Closing Time (except as such representations and warranties
may be affected by the occurrence of events or transactions expressly
contemplated and permitted by this Agreement) and Couphar shall have received
a certificate from an authorized officer of each of the Purchaser and Cascade
confirming the truth and correctness of such representations and warranties.
8A.2 Performance of Obligations - The Purchaser and Cascade shall have
performed or complied with, in all respects, all its obligations, covenants
and agreements under this Agreement.
8A.3 Agreements - Each of the Employment Agreement, Exchange Agreement,
Registration Rights Agreement, Refusal Agreement and Shareholders Agreement
shall
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have been executed and delivered by the parties thereto (other than W.J.
Harrison, Couphar and any of the Corporations or the Vendors).
8A.4 Allotment of Cascade Shares - Cascade shall have allotted to Couphar
and shall have reserved for issuance out its unissued shares of common stock,
sufficient shares to provide for the exchange in full of all of the
Exchangeable Shares and such shares of Cascade common stock shall have been
conditionally approved for listing on the New York Stock Exchange.
8A.5 Opinion of Counsel - Couphar shall have received opinions dated the
Closing Date from Canadian and United States counsel to the Purchaser and
Cascade substantially in the forms thereof in Schedule 8A.5.
If any of the foregoing conditions in this Article has not been fulfilled
by Closing, Couphar may terminate this Agreement by notice in writing to the
Purchaser, in which event Couphar shall be released from all obligations
under this Agreement. However, Couphar may waive compliance with any
condition in whole or in part if it sees fit to do so, without prejudice to
its rights of termination in the event of non-fulfilment of any other
condition in whole or in part or to its rights to recover damages for the
breach of any representation, warranty, covenant or condition contained in
this Agreement.
ARTICLE
OTHER COVENANTS OF THE PARTIES
Conduct of Business Prior to Closing - During the period from the date of
this Agreement to the Closing Time, the Vendors will cause each Corporation to
do the following:
Conduct Business in the Ordinary Course - Except as otherwise
contemplated or permitted by this Agreement, conduct its business in the
ordinary and normal course, consistent with past practice and regular
customer service and business policies and not, without the prior written
consent of the Purchaser, enter into any transaction which, if effected
before the date of this Agreement, would constitute a breach of the
representations, warranties or agreements of the Vendors contained in this
Agreement.
Continue Insurance - Continue in force all policies of insurance
maintained by it or by any Vendor for its benefit and give all notices and
present claims under all insurance policies in a timely fashion.
Perform Obligations - Comply with all Applicable Laws affecting its
operations.
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Not to Cause Certain Changes - Not, other than with respect to the
Proposed Acquisitions, without the prior written consent of the Purchaser,
take any of the actions, do any of the things or perform any of the acts
described in Sections 4.11, 4.15 and 4.22.
Approvals - Co-operate with the Purchaser and use all commercially
reasonable efforts and diligently pursue obtaining approval of The
Toronto-Dominion Bank and Hart-Scott-Rodino Approval.
Proposed Acquisitions - The terms of the Proposed Acquisitions shall be
settled by the appropriate Corporations in consultation with the Purchaser and
the Vendors shall cause the Corporations to provide the Purchaser with such
information and documentation with respect thereto as the Purchaser may
reasonably request.
Access for Investigation - The Vendors shall permit the Purchaser and its
representatives, between the date of this Agreement and the Closing Time, to
have free and unrestricted access during normal business hours to the
premises and to all the Books and Records and to the properties and assets of
the Corporations and to furnish the Purchaser with such financial and
operating data and other information as the Purchaser shall from time to time
reasonably request in respect of the Purchaser's due diligence investigation
and the confirmation of the matters represented and warranted herein.
Without limiting the generality of the foregoing, it is agreed that the
accounting representatives of the Purchaser shall be afforded ample
opportunity to make a full investigation of all aspects of the financial
affairs of the Corporations.
Elections - Couphar and the Purchaser shall elect in prescribed form and
manner to have the provisions of subsection 85(1) of the Tax Act apply to the
transfer of Couphar's Vendor's Shares and Couphar shall deliver to and file
the same with Revenue Canada, Customs, Excise and Taxation within the time
prescribed in accordance with the Act. Couphar shall pay any late filing
fees or penalties and shall provide the Purchaser with a copy of such forms
as filed. For this purpose the parties shall elect amounts in respect of such
Shares equal to an amount to be determined by Couphar in accordance with the
limits set out in the Tax Act. Couphar and the Purchaser shall file all
necessary elections or filings under all corresponding provincial legislation
to make the transfer effective on the same basis as contemplated under the
Tax Act.
Confidentiality - At all times, each of the Vendors, the Purchaser and
Cascade shall keep confidential all information disclosed to it, or to a
third party in connection with this transaction, by or on behalf of the other
Party relating to the other Party, except information which is or becomes
generally available to the public, it received from an independent third
party, who had obtained the information lawfully and was under no obligation
of secrecy or confidentiality, or it can show was in its possession before
receipt of such information from the other Party.
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Actions to Satisfy Closing Conditions - Each of the Parties agrees to take
all such actions as are within its power to control, and to use its best efforts
to cause other actions to be taken which are not within its power to control, so
as to ensure compliance with each of the conditions and covenants set forth in
Articles 7, 8, 8A or 9 which are for the benefit of any other Party. W.J.
Harrison hereby agrees to execute and deliver to the Purchaser and Cascade all
agreements to which he is a party and which are conditions to closing in favour
of the Purchaser hereunder.
Stub Period Returns - The Purchaser shall cause to be prepared and filed on
a timely basis, all Tax Returns for the Company for any period which ends on or
before the Closing Date and for which Tax Returns have not been filed as of such
date. The Purchaser shall also cause to be prepared and filed on a timely
basis, all Tax Returns for each of the Company for periods beginning before and
ending after the Closing Date. The Vendors and the Purchaser shall cooperate
fully with each other and make available to each other in a timely fashion such
data and other information as may reasonably be required for the preparation of
any Tax Return of the Company for a period ending on, prior to or including the
Closing Date and shall preserve such date and other information until the
expiration of any applicable limitation period under any applicable law with
respect to Taxes.
Waiver and Termination - Each Vendor hereby waives compliance with all of
the provisions of the Kenhar shareholders agreement made as of September 10,
1991 (the "Kenhar Shareholders Agreement") between the Vendors and Kenhar in
respect of all of the transactions, agreements, covenants and obligations
contemplated and created by this Agreement and the Kenhar Shareholders Agreement
is hereby terminated and each of the Vendors hereby confirms and agrees that it
has no rights thereunder in respect of this Agreement.
Key Employees - Conditional upon the Closing occurring, Cascade shall
determine whether the cash and bonus compensation of the Key Employees should be
adjusted upward by Kenhar in order to ensure that the Key Employees are entitled
to such cash and bonus compensation as is equivalent to Cascade personnel with
comparable duties. To this end, the Vendors shall cause Kenhar to provide the
Purchaser and Cascade with the terms of employment of the Key Employees
including compensation and the particulars of their duties.
Conditional upon the Closing occurring and subject to Applicable Laws and stock
exchange rules, the Key Employees will be granted options to purchase shares of
common stock of Cascade on such dates as and at levels, exercise prices and
other terms comparable to Cascade personnel having comparable duties. For the
purposes of such grants of options, prior service with Kenhar shall be treated
as service with Cascade under Cascade's stock option plan.
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Shareholders' Meeting - Cascade covenants and agrees with Harrison to
present to its shareholders for approval at its next meeting to be held on May
13, 1997 (the "Meeting"), subject to the timing requirements of Applicable Law
and any review by the SEC, a proposal to amend its articles of incorporation to
provide for the creation of a class of shares, in respect of which one will be
issued upon such approval being obtained to a voting trustee who will agree to
vote such share in accordance with the instructions of the holder of the
Exchangeable Shares, to which will be attached the right to the number of votes
at meetings of shareholders of Cascade equal to the number of votes which would
be attached to the shares of common stock into which the Exchangeable Shares
then issued and outstanding (other than such shares held by Cascade or any
subsidiary thereof) are exchangeable from time to time.
In connection with the preparation of proxy materials and any information
circular for the Meeting, the Vendors shall cause the Corporations to cooperate
with Cascade and provide in a timely manner such information (financial or
otherwise) as Cascade may request in connection with the preparation of such
materials for the Meeting.
Cascade Covenant - Cascade hereby covenants and agrees with the Vendors
that it shall cause the Purchaser to perform its obligations hereunder or cause
the obligations of the Purchaser hereunder to be performed, including without
limitation all payment obligations provided for herein.
Harrison Covenant - W.J. Harrison hereby covenants and agrees with the
Purchaser and Cascade that he shall cause Couphar to perform its obligations
hereunder or cause the obligations of Couphar hereunder to be performed,
including without limitation all payment obligations provided for herein.
Purchaser's Covenant - The Purchaser shall not, without Couphar's prior
written consent, make any further acquisitions of assets or businesses from
arm's length third parties, it being understood and agreed that the Purchaser
may acquire and own the shares of Cascade (Canada) Inc. and its subsidiary
Industrial Tires Limited and its subsidiaries. In the event that the SEC "no
action" letter contemplated in the Registration Rights Agreement is obtained in
accordance with the terms thereof, then the obligations of the Purchaser under
this section 9.13 shall terminate and no longer apply and Couphar shall consent
to or vote in favour of an amendment to the articles of the Purchaser which will
have the effect deleting the voting rights attaching to the Exchangeable Shares.
Couphar Covenants - Couphar is and shall at all times while Couphar owns
any Exchangeable Shares be controlled by W.J. Harrison. For the purposes of
ascertaining the control of Couphar, Couphar shall provide the Purchaser with
access to such corporate records with respect thereto on reasonable written
notice to Couphar by the Purchaser. Couphar shall not transfer or otherwise
dispose of any Exchangeable Shares to anyone other than a Member of the
Immediate Family (as defined in the Refusal
<PAGE>
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Agreement) who has executed and delivered to Cascade and the Purchaser all
such documentation as may be requested by either of them in order to preserve
and protect the rights and benefits of the agreements to which Couphar will
be a party hereunder with respect to the Exchangeable Shares.
Opinions - Immediately following Closing the Vendors are hereby authorized
to and shall instruct legal counsel in the United States, France, Italy and the
UK to deliver such opinions with respect to the relevant Kenhar Subsidiaries as
the Purchaser may reasonably request.
ARTICLE
INDEMNIFICATION
Mutual Indemnifications for Breaches of Covenants and Warranty, etc. - Each
of the Vendors hereby covenants and agrees with the Purchaser, and the Purchaser
covenants and agrees with each of the Vendors (the Party or Parties so
covenanting and agreeing to indemnify another Party being referred to in this
Section as the "Indemnifying Party" and the Party so to be indemnified being
called the "Indemnified Party") to indemnify and save harmless the Indemnified
Party, on an after-tax basis, effective as and from the Closing Time, from and
against all Claims which may be made or brought against the Indemnified Party or
which it may suffer or incur, directly or indirectly, as a result of, arising
out of or in connection with any non-fulfilment of any covenant or agreement on
the part of the Indemnifying Party under this Agreement or any incorrectness in
or breach of any representation or warranty of the Indemnifying Party contained
in this Agreement or in any certificate or other document furnished by the
Indemnifying Party pursuant to this Agreement. The foregoing obligation of
indemnification in respect of such Claims shall be subject to:
the limitation mentioned in Section 6.2 respecting the survival of the
representations and warranties of the Parties;
the requirement that the Indemnifying Party shall, in respect of any
Claim made by any third person, be afforded an opportunity at its sole
expense to resist, defend and compromise such Claim; and
the limitations that:
for Claims made in connection with any representation
or warranty, the Indemnifying Party (for purposes of this paragraph,
Indemnifying Party shall mean the Purchaser or all of the Vendors
collectively and Vendor shall include the Vendor's successors and
assigns) shall not be required to pay any such amount until the
aggregate of such Claims exceeds $500,000 and upon the aggregate of
such Claims exceeding $500,000 the Indemnifying Party shall be
required to pay the entire amount owing in respect of all of such
Claims;
<PAGE>
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the liability of each Vendor for a Claim made by the
Purchaser shall be limited to such Vendor's Proportionate Share of
such Claim;
the first $10,000,000 of Claims against the Vendors hereunder
shall be satisfied and paid out from the amounts escrowed under the
Escrow Agreement;
the liability of each Vendor to the Purchaser shall be
limited to an amount equal to that portion of the Purchase Price
allocated to such Vendor; and
the liability of the Vendors shall, in the aggregate,
be limited to an amount equal to the Purchase Price.
Objection to Claim by Indemnifying Party -
Delivery of Objection Notice - In the event that the Indemnifying
Party objects in good faith to any Claim made by the Indemnified Party, the
Indemnifying Party shall so advise the Indemnified Party by delivery to the
Indemnified Party of a written notice (the "Objection Notice") within 30
days after the delivery to the Indemnified Party of the Claim. The
Objection Notice shall set out the reasons for the Indemnifying Party's
objection as well as the amount under dispute and reasonable details of the
calculation of such amount.
Agreement of Parties - In the event that the Parties agree on a
resolution of the dispute set out in the Objection Notice, the Parties
shall confirm this resolution in writing and shall thereafter be bound by
such resolution.
Arbitration - In the event that the Parties are unable to settle any
dispute with respect to the Claim within 30 days after the delivery by the
Indemnifying Party to the Indemnified Party of the Objection Notice, the
dispute shall forthwith, and in any event within 60 days after the delivery
by the Indemnifying Party to the Indemnified Party of the Objection Notice,
be referred to arbitration by a single arbitrator, if the Parties can agree
upon one arbitrator, or otherwise by three arbitrators, of whom one shall
be appointed by the Indemnified Party and one shall be appointed by a
representative of the Indemnifying Party and the third shall be chosen by
the first two named arbitrators. The arbitration and the appointment of
the arbitrator shall, except to the extent provided for in this Section, be
conducted in Toronto, Ontario in accordance with the Arbitrations Act
(Ontario). The Indemnified Party and the Indemnifying Party shall
cooperate in completing any arbitration as expeditiously as possible and
the arbitrators may hire such experts as may
<PAGE>
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appear to be appropriate. If a single arbitrator is used, all of the
costs and expenses of the arbitration shall be borne equally by the
Parties or in such other manner as the arbitrator may determine to be
appropriate. If three arbitrators are used the costs and expenses of the
third arbitrator and of any experts engaged by such arbitrator shall be
borne equally by the Parties and each Party shall pay the costs and
expenses of the arbitrator appointed by it. Arbitration under this
Section shall be in substitution for and precludes the bringing of any
action in any court in connection with any objection made by the
Indemnified Party pursuant to this Section unless otherwise agreed to by
the Parties, it being understood that the Parties may agree to mediation
or to resort to the courts.
Determination of Arbitrator - The determination of the arbitrator(s)
shall be made within 30 days after the date on which the dispute was
referred to them and the determination of the arbitrator(s) shall be final
and binding on all Parties unless otherwise agreed to by the Parties.
Payment in Accordance with Determination - Within 5 days after
resolution, by agreement of the Parties, of the dispute which was the
subject of the Objection Notice or, failing such resolution, within 5 days
after the final determination of the arbitration, the Indemnifying Party
shall pay to the Indemnified Party by wire transfer, certified cheque or
bank draft the amount of the Claim determined as a result of such
resolution or final determination, it being understood that the first
$10,000,000 shall be paid out of the amounts escrowed under the Escrow
Agreement in respect of which payment the Vendors shall execute and deliver
the appropriate direction thereunder to give effect hereto and thereto.
Indemnification Procedures for Third Party Claims -
In the case of claims or demands or other actions taken or made by a
third party with respect to which indemnification is sought, the Party
seeking indemnification shall give prompt written notice, and in any event
within 20 days, to the other Party of any such claims or demands made upon
it, provided that in the event of a failure to give such notice, such
failure shall not preclude the Party seeking indemnification to obtain such
indemnification but its right to indemnification may be reduced to the
extent that such delay prejudiced the defense of the claim or demand or
increased the amount of liability or cost of defense and provided that,
notwithstanding anything else herein contained, no claim for indemnity in
respect of the breach of any representation or warranty contained herein
may be made unless notice of such claim has been given prior to the expiry
of the survival period applicable to such representation and warranty
pursuant to Section 6.2.
<PAGE>
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The Indemnifying Party shall have the right, by notice to the
Indemnified Party given not later than 30 days after receipt of the notice
described in subsection (a) to assume the control of the defense,
compromise or settlement of the claim or demand, provided that such
assumption shall, by its terms, be without cost to the Indemnified Party
and provided the Indemnifying Party acknowledges in writing its obligation
to indemnify the Indemnified Party in accordance with the terms contained
in this Section in respect of that claim or demand.
Upon the assumption of control of any claim or demand by the
Indemnifying Party as set out in subsection (b), the Indemnifying Party
shall diligently proceed with the defence, compromise or settlement of the
claim or demand at its sole expense, including, if necessary, employment of
counsel reasonably satisfactory to the Indemnified Party and, in connection
therewith, the Indemnified Party shall cooperate fully, but at the expense
of the Indemnifying Party with respect to any out-of-pocket expenses
incurred, to make available to the Indemnifying Party all pertinent
information and witnesses under the Indemnified Party's control, make such
assignments and take such other steps as in the opinion of counsel for the
Indemnifying Party are reasonably necessary to enable the Indemnifying
Party to conduct such defence. The Indemnified Party shall also have the
right to participate in the negotiation, settlement or defence of any claim
or demand at its own expense.
Should the Indemnifying Party fail to give notice to the Indemnified
Party as provided in subsection (b), the Indemnified Party shall be
entitled to make such settlement of the claim or demand as in its sole
discretion may appear advisable, and such settlement or any other final
determination of the claim or demand shall be binding upon the Indemnifying
Party.
ARTICLE
GENERAL
Public Notices - All public notices to third parties and all other
publicity concerning the transactions contemplated by this Agreement shall be
jointly planned and coordinated by the Vendors and the Purchaser and no Party
shall act unilaterally in this regard without the prior approval of the other
Party, such approval not to be unreasonably withheld, except where required to
do so by law or by the applicable regulations or policies of any provincial,
state or federal or other regulatory agency of competent jurisdiction or any
stock exchange in circumstances where prior consultation with the other Party is
not practicable.
Expenses - Each of the Parties shall pay their respective legal,
accounting, and other professional advisory fees, costs and expenses incurred in
connection with the purchase and sale of the Purchased Shares and the
preparation, execution and delivery of this Agreement and all documents and
instruments executed pursuant to this
<PAGE>
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Agreement and any other costs and expenses incurred. In particular, the
Vendors shall be responsible for any fees and expenses of any broker or
investment advisor retained in connection with the sale of the Purchased
Shares and such fees and expenses shall not constitute an obligation of the
Company or the Purchaser. The Purchaser on the one hand and the Vendors on
the other shall equally share the fees and expenses of the Deposit Agent and
the Escrow Agent.
Notices - Any notice or other writing required or permitted to be given
under this Agreement or for the purposes of this Agreement (in this Section
referred to as a "Notice") shall be in writing and shall be sufficiently given
if delivered, or if sent by prepaid registered mail or if transmitted by
facsimile or other form of recorded communication tested prior to transmission
to such Party:
in the case of a Notice to the Vendors or W.J. Harrison or any of them
at:
prior to Closing:
c/o Kenhar Corporation
P.O. Box 1508
Guelph, Ontario
N1H 6N9
Telecopier: (519) 763-4714
after Closing:
Couphar Ltd.
c/o W. J. Harrison
Kenhar Corporation
P.O. Box 1508
Guelph, Ontario N1H 6N9
Telecopier: (519) 763-4714
Balyrobe Ltd.
c/o S. R. Snyder
R. R. #6
Guelph, Ontario N1H 6J3
Telecopier: c/o Kenhar Corporation
(519) 763-4714
879185 Ontario Inc.
c/o G. M. Tatham
<PAGE>
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53 Lynwood Drive
Guelph, Ontario N1G 2V8
Telecopier: (519) 821-6288
568745 Ontario Inc.
c/o S. F. Rea
34 Waverley Drive
Guelph, Ontario N1E 6C8
Telecopier: (519) 763-0183
James E. Britton
Private & Confidential
218 Speedvale Avenue E.
Guelph, Ontario N1E 1M7
Telecopier: (519) 824-7119
Advise Sharon at (519) 824-7110 if confidential
Penfund Partners and Company, Limited Partnership
145 King Street West
Toronto, Ontario M5H 1J8
Attention: G.M. McGrath
Telecopier: (416) 364-4149
Bantor Company
TD Capital Group Limited
20th Floor, Ernst & Young Tower
222 Bay Street, P.O.Box 1
Toronto, Ontario M5K 1A2
Attention: Mr. Stephen Dent
Telecopier: (416) 982-5045
with a copy to:
Aird & Berlis
BCE Place, 181 Bay Street
<PAGE>
-60-
Suite 1800
Toronto, Ontario
M5K 1E7
Attention: J.P. Dawson
Fax: (416) 364-4916
in the case of a Notice to the Purchaser or Cascade at:
c/o Cascade Corporation
2020 SW 4th Avenue
Suite 600
Portland, Oregon
U.S.A. 97201
Attention: Executive Vice President
Fax: (503) 274-1705
with a copy to:
Osler, Hoskin & Harcourt
Suite 6600
1 First Canadian Place
Toronto, ON M5X 1B8
Attention: Andrew W. Aziz
Fax: (416) 862-6666
or at such other address as the Party to whom such Notice is to be given shall
have last notified the Party giving the same in the manner provided in this
Section. Any Notice delivered to the Party to whom it is addressed as provided
above shall be deemed to have been given and received on the day it is so
delivered at such address, provided that if such day is not a Business Day then
the Notice shall be deemed to have been given and received on the next Business
Day. Any Notice sent by prepaid registered mail shall be deemed to have been
given and received on the fifth Business Day following the date of its mailing.
Any Notice transmitted by facsimile or other form of recorded communication
shall be deemed given and received on the first Business Day after its
transmission.
Assignment - The Purchaser shall be entitled, upon giving written notice to
the Vendors at any time not less than 10 days prior to the Closing Time, to
assign all or a
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portion of its rights and obligations under this Agreement to any Affiliate
of the Purchaser. In such case, such assignee shall have and may exercise
all the rights, and shall assume all of the obligations, of the Purchaser
under this Agreement, and any reference to the Purchaser in this Agreement
shall be deemed to refer to such assignee. In the event of such an
assignment, the Vendors and such assignee shall execute an agreement
confirming such assignment and such assumption of obligations shall be on the
basis that no such assignment shall release the Purchaser from liability for
its obligations as purchaser of the Purchased Shares under this Agreement.
Except as hereinbefore provided, neither this Agreement nor any benefits or
burdens under this Agreement shall be assignable by any Party without the
prior written consent of each of the other Parties. Subject to the
foregoing, this Agreement shall enure to the benefit of and be binding upon
the Parties and their respective heirs, successors (including any successor
by reason of amalgamation of any Party) and permitted assigns.
Further Assurances - The Parties shall, with reasonable diligence, do all
such things and provide all such reasonable assurances as may be required to
consummate the transactions contemplated by this Agreement, and each Party shall
provide such further documents or instruments required by any other Party as may
be reasonably necessary or desirable to effect the purpose of this Agreement and
carry out its provisions, whether before or after the Closing.
Language - The Parties confirm that it is their wish that this Agreement,
as well as any other documents relating to this Agreement, including notices,
schedules and authorizations, have been and shall be drawn up in the English
language only. Les parties aux presentes confirment leur volonte que cette
convention, de meme que tous les documents, y compris tous avis, cedules et
autorisations s'y rattachant, soient rediges en anglais seulement.
<PAGE>
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Counterparts - This Agreement may be executed by the Parties in separate
counterparts each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF the Parties have duly executed this Agreement.
COUPHAR LTD.
By:
BALYROBE LTD.
By:
879185 ONTARIO INC.
By:
568745 ONTARIO INC.
By:
JAMES E. BRITTON (in trust)
By:
PENFUND PARTNERS AND COMPANY,
LIMITED PARTNERSHIP by its general
partner PENFUND PARTNERS INC.
By:
<PAGE>
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<PAGE>
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BANTOR COMPANY
By:
)
)
)
Witness ) W.J. HARRISON
KENHAR CORPORATION
By:
CASCADE (CANADA) HOLDINGS INC.
By:
By:
CASCADE CORPORATION
By:
By:
<PAGE>
SCHEDULE 1.1.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT made the 11th day of March, 1997
BETWEEN:
KENHAR CORPORATION
(hereinafter referred to as "Kenhar")
OF THE FIRST PART
-and-
CASCADE CORPORATION
(hereinafter referred to as "CASCADE")
OF THE SECOND PART
-and-
WILLIAM J. HARRISON
(hereinafter referred to as the "Executive")
OF THE THIRD PART
(hereinafter collectively referred to as the "Parties")
WHEREAS Harrison is the President and Chief Executive Officer of Kenhar;
AND WHEREAS a wholly-owned subsidiary of Cascade has today completed
the purchase of all of the issued and outstanding shares of Kenhar;
<PAGE>
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AND WHEREAS Kenhar wishes to continue to retain the services of the
Executive and the Executive wishes to continue to be retained by Kenhar upon
and subject to the terms and conditions specified herein;
AND WHEREAS Kenhar and the Executive desire to enter into a written
agreement which contains the agreed-upon terms and conditions of the
Executive's continued employment;
AND WHEREAS Cascade wishes to nominate the Executive and the
Executive wishes to be elected to the Board of Directors and Cascade wishes
to appoint the Executive and the Executive wishes to be appointed to an
Executive Committee of Cascade to be formed;
AND WHEREAS Cascade and the Executive desire to enter into a written
agreement with respect to his nomination to the Board of Directors and his
appointment to the Executive Committee of Cascade;
NOW THEREFORE for the good and valuable consideration of Ten Dollars
($10.00) and the mutual covenants and agreements hereinafter contained, the
receipt and sufficiency of which is expressly acknowledged, the Parties
mutually covenant and agree as follows:
1 Position, Duties and Responsibilities
1.1 Kenhar hereby agrees to employ the Executive in the position of
President and Chief Executive Officer ("President") and the Executive hereby
accepts such employment. During the continuation of his employment
hereunder and as part thereof, Cascade shall cause the Executive to be
appointed a director of Kenhar, and,
<PAGE>
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in accordance with the provisions of section 7.2 hereof, an Executive
Vice-President and a member of the Executive Committee of Cascade.
1.2 The Executive shall serve Kenhar in the capacity of President and
Chief Executive Officer to perform such duties and exercise such powers as
may be reasonably required of him or be vested in him by the Board of
Directors of Kenhar. The Executive acknowledges that he is employed in a
fiduciary capacity and agrees to devote his full time and attention and
exert his best professional efforts, knowledge, skill and energy to the
diligent, faithful, efficient and competent performance of his duties and
responsibilities hereunder and will not, without the prior written consent
of Cascade or the Board of Directors of Kenhar, assume other employment or
engage in any other business provided that the foregoing (but subject always
to the provisions of paragraphs 9 and 10 hereof) shall not be construed to
prevent the Executive from serving as a director or officer of any
non-profit organization or trade association or as a director of any
business corporation, provided that in each such case the prior consent of
Cascade, which shall not be unreasonably withheld, shall have been obtained
by the Executive.
1.3 Excluding business travel (including, without limitation, any travel
necessary to fulfil the Executive's duties and responsibilities as President
and a director of Kenhar and as a director and member of the Executive
Committee of Cascade), the Executive will not be required to report
regularly for work outside the environs of Guelph, Ontario.
2 Term of Employment
2.1 The term of the Executive's employment shall be for a minimum period
of at least three (3) years from the date hereof, unless terminated earlier
in accordance with the provisions of this Agreement.
<PAGE>
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3 Compensation
3.1 Base Salary - The Executive shall receive an annual base salary of
$200,000 (U.S. Funds), less required statutory and other deductions
authorized by the Executive, which base salary shall be paid in accordance
with Kenhar's normal payroll practices.
3.2 Bonus - The Executive shall be entitled to receive an annual bonus
payable by Kenhar which shall be calculated on a formula basis comparable to
the bonus, if any, determined payable by the Board of Directors of Cascade
pursuant to Cascade's bonus plan to the other Executive Vice President(s) of
Cascade.
3.3 Stock Options - As an employee of Kenhar and officer of Cascade,
the Executive is eligible to participate in the Cascade stock option plan, a
copy of which has been provided to the Executive, subject to applicable
legislation and stock exchange rules. The Executive acknowledges that stock
options are granted in the discretion of the Board of Directors of Cascade.
However, subject to the provisions of Cascade's stock option plan, it is
understood and agreed that the Executive shall be entitled to participate at
such times as and at the level, exercise price and other terms comparable to
Cascade personnel having comparable duties and shall be entitled to
participation in such plan in respect of options to be allocated thereunder
during the year ending January 31, 1998. For the sole purpose of the
Executive's entitlement under Cascade's stock option plan, the Executive's
previous employment with Kenhar will be treated as Cascade employment. In
no other case will the Executive's employment with Kenhar be treated as
employment with Cascade.
<PAGE>
-5-
4 Benefits and Vacation
4.1 While employed by Kenhar, the Executive shall be eligible to
participate in the Kenhar employee benefits program which it makes available
to other employees of Kenhar from time to time. The current benefits are
listed on the attached Schedule "A". Nothing contained in this Agreement
limits or restricts Kenhar's ability to change such benefits (i) in
accordance with the terms of the plans which govern such benefits or (ii) to
conform to the new or modified terms of Cascade's plans applicable to its
executives in Canada provided that as a result of any such changes none of
the benefits currently available to the Executive shall be reduced without
his consent.
4.2 In addition to the benefits available under the employee benefits
program, the Executive shall receive a retirement allowance of $2,000 (Cdn.
Funds) per year for each calendar year of service with Kenhar and its
predecessors (which currently totals 23 such years) payable on any
termination for whatever reason of the Executive's employment hereunder.
4.3 In addition, the Executive will be eligible to a supplementary
pension benefit as described on the attached Schedule "B".
4.4 While employed by Kenhar:
(a) the Executive shall be entitled to six weeks' vacation per
year, to be scheduled at the mutual convenience of the Parties;
and
(b) the Executive shall be entitled to the regular holidays
schedule recognized and observed by Kenhar.
<PAGE>
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5 Other Executive Benefits
5.1 The Executive shall be entitled to other executive benefits provided
to key executives at a level commensurate with the Executive's position, in
accordance with the current Kenhar arrangements which are listed on the
attached Schedule "C".
6 Reimbursement of Expenses
6.1 The Executive shall be reimbursed for all expenses incurred by him
in compliance with Kenhar's expense policies, as may be modified from time
to time.
7 Cascade Covenants
7.1 During the Executive's employment with Kenhar under this Agreement,
Cascade will maintain a three (3) member Executive Committee (the
"Committee"), one member of which will be the Executive (it being understood
by the Executive that this is an entitlement personal to the Executive and
that the Executive shall have no entitlement to appoint a nominee or proxy
at any time). The other two members shall be Messrs. Warren and Miller for
so long as they desire and are capable or for so long as the Board of
Directors of Cascade considers appropriate. The mandate of the Committee
will be contained in a by-law of Cascade the provisions of which are as set
out in the attached Schedule "D".
7.2 The Executive will be nominated as a director and is hereby
appointed an officer of Cascade, holding the office of Executive
Vice-President, during his term of employment with Kenhar, and in addition
to his duties and responsibilities hereunder to and in respect of Kenhar,
will have such other duties and responsibilities as may from time to time be
assigned to him.
<PAGE>
-7-
7.3 In his capacity as a director and member of the Executive Committee
of Cascade, the Executive shall receive such fees, if any, to which the
other directors who are employees, and members of the Executive Committee
are entitled and as shall be determined by the Board of Directors of Cascade.
7.4 Subject to the overall direction and control of the Board of
Directors of Cascade, Kenhar and its subsidiaries' business activities will
continue to be conducted as a distinct business unit under the
administration of Kenhar. It is agreed by the Parties that Messrs. Hoy,
Ostmeier and Spinelli shall continue to report directly to the President and
Chief Executive Officer of Kenhar, in accordance with their employment
arrangements.
7.5 Cascade will assist the Executive and his spouse in obtaining such
approvals and consents as may be required from the United States Immigration
and Naturalization Service as may be necessary and appropriate in the
circumstances in order to enable the Executive to perform his
responsibilities hereunder.
7.6 Except as expressly set forth in this Agreement, Cascade shall have
no other obligations to the Executive during the course of the Executive's
employment with Kenhar. The Executive will have no cause of action or claim
against Cascade with respect to his employment with Kenhar or the
termination thereof.
8 Termination
8.1 In the event the Executive's employment with Kenhar is terminated
(a) by reason of the Executive's death,
<PAGE>
-8-
(b) by reason of resignation or retirement,
(c) by Kenhar upon the Executive becoming Permanently Disabled
(as hereinafter defined) or,
(d) by Kenhar for Cause (as hereinafter defined),
then, the Executive shall not be entitled to any notice, severance, bonus,
salary or options by reason of such termination except for obligations
accrued to the date of termination including, without limiting the
generality of the foregoing, the payments provided under paragraphs 4.1,
4.2, 4.3 and 4.4 hereof.
8.2 If the Executive's employment with Kenhar is terminated prior to the
end of the initial three (3) year term for any reason other than provided in
paragraph 8.1 above, the Executive shall be entitled to (a) a lump sum
payment including his base salary and any bonus which would have been paid
if he were employed for the balance of the three (3) term ending on the
third anniversary of the date hereof and (b) to have the benefits and
payments provided by paragraphs 4.1, 4.2, 4.3 and 5.1 continued for the
balance of such term as if such employment had not been terminated, it being
understood that the determination and payment of the amount of any bonus
will be subject to and made after the approval by the Cascade Board of
Directors of its financial results.
8.3 If the Executive's employment with Kenhar is terminated after the
third anniversary of the date hereof for any reason other than provided in
paragraph 8.1 above, the Executive shall be entitled to reasonable notice of
termination. Compensation for such reasonable notice shall be (a) a lump sum
calculated based on the Executive's base salary and any amounts for bonus
payments during the reasonable notice period and (b) continuation for such
notice period, unless
<PAGE>
-9-
prevented under the terms of the relevant plans or arrangements, of the
benefits and payments provided by paragraphs 4.1, 4.2, 4.3 and 5.1 as if
such employment continued throughout such notice period.
9 Non-Disclosure of Confidential Information
9.1 The Executive acknowledges that Kenhar and its subsidiaries have,
during his prior employment by Kenhar, disclosed and will continue, during
the course of his employment hereunder, to disclose and that Cascade and its
other subsidiaries may disclose, Confidential Information to the Executive
during the continuation of his employment hereunder. Kenhar and Cascade and
their subsidiaries are collectively referred to herein as the "Companies".
The Executive shall not, without the prior written consent of the Companies,
during the continuation of his employment hereunder or at any time
thereafter, disclose or permit to be disclosed to any third party by any
method whatsoever any of the Confidential Information of the Companies nor
use or permit to be used any Confidential Information other than to further
the Companies' business interests. When the Executive's employment
terminates, he will return to the Companies all documents, books, records,
data compilations, and other written or recorded materials obtained during
the course of his employment, and all copies thereof, including electronic
or other media containing Confidential Information.
For purposes of this Agreement, "Confidential Information" shall include,
but not be limited to any and all confidential and proprietary information
in any form concerning the property, business or financial affairs of the
Companies, including without limitation trade secrets, technical and
non-technical business knowledge, business methods, plans, systems, customer
lists and customer relations, vendor lists and vendor relations, cost and
pricing information, distribution and logistical
<PAGE>
-10-
information, computer programs and other information relating to the
business of one or more of the Companies.
9.2 The Executive agrees that the Confidential Information is and shall
remain the property of the Companies. No less than once a year during the
continuation of his employment hereunder, on request by Kenhar or Cascade,
and at or prior to the termination of his employment, the Executive will
disclose to Kenhar and Cascade all ideas, inventions and business plans
developed in whole or in part by the Executive which relate directly or
indirectly to the Companies' business or operations including without
limitation those giving rise to rights under patent or copyright laws. The
Executive agrees that such ideas, inventions, and business plans will be
Kenhar and Cascade's property and that he will, at their request and
expense, take whatever steps are necessary to secure all rights (including
moral rights) for Kenhar and Cascade or their assignees.
9.3 The covenants set forth in this paragraph which are made by the
Executive are in consideration of the employment, or continuing employment
of, and the compensation paid to, the Executive during his employment by
Kenhar.
10 Non-Competition
10.1 The Executive shall not,
(a) while employed by Kenhar, and
(b) for a period of two (2) years following the date on which the
Executive's employment with Kenhar has been terminated without
Cause, and
<PAGE>
-11-
(c) for a period of five (5) years following the date on which the
Executive's employment with Kenhar has been terminated for any
other reason,
either alone or in conjunction with any individual, partnership, firm,
corporation, association or other entity, whether as principal, agent,
shareholder, consultant or in any other capacity whatsoever, directly or
indirectly within any market where any of the Companies conduct any aspect
of their business or proposed business at the time of the termination of the
Executive's employment hereunder:
(i) undertake, carry on, be engaged in, be concerned with, have a
financial interest in, advise, consult in, lend money to, guarantee the
debts or obligations of, or permit the Executive's name or any part thereof
to be used or employed by, or associated with, any person, firm,
association, syndicate, company or corporation engaged in or concerned with
or interested in directly or indirectly, an undertaking or business which
is competitive with any of the principal businesses or proposed business of
or any part thereof or carried on or to be carried on by the Companies;
(ii) manufacture, sell, distribute (wholesale or retail), promote or
market any product manufactured, sold, distributed (wholesale or retail),
promoted or marketed by any of the Companies or the products of any
business or proposed business (collectively the "Products") or provide any
service in respect of the foregoing;
(iii) solicit or attempt to solicit any client or customer of the Companies
for the purpose of selling any Product or any service associated therewith;
<PAGE>
-12-
(iv) persuade or attempt to persuade any client, customer or supplier to
cease purchasing any product or service from or from doing business with
the Companies or to reduce the amount of business which any such client has
historically done or contemplates doing with the Companies; or
(v) solicit for employment or hire any employee of the Companies or
induce or attempt to induce any of them to leave their employment
with any of the Companies.
In this Agreement, "proposed business" means any business that can
reasonably be regarded as a business in which it is probable that any of the
Companies would invest.
Clauses (i) and (ii) of this paragraph 10 shall not apply to prevent (A) the
ownership by the Executive, by way of passive investment only, of not more
than 2 percent of any class of listed and issued shares of any corporation
where such shares are listed on a recognized stock exchange in North America
or (B) the Executive from being an officer or director of any non-profit
organization or trade association or from serving as a director of any
corporation provided that, and so long as, the business, operations and
activities of such corporation which are within the scope of the clauses (i)
and (ii) of this section 10 are not material to such corporation.
11 Additional Remedies
11.1 Enforcement - The Executive specifically acknowledges that the
Companies have relied on the Executive's covenants of non-competition and
non-solicitation as set forth in this Agreement and that irreparable harm
will be suffered by the Companies and their businesses and properties in the
event of any breach or threatened breach by the Executive of any of the
provisions of paragraphs 9 and 10 of
<PAGE>
-13-
this Agreement or either of them, and that the Executive's continued
employment is predicated on the commitments undertaken by him pursuant to
such paragraphs. In the event of any breach or threatened breach of any of
the Executive's commitments pursuant to paragraphs 9 and 10 or either of
them, the Companies shall be entitled, in addition to any other remedies and
damages available, to injunctive relief or other equitable relief upon
application to a court of competent jurisdiction without requirement to
prove the inadequacy of available remedies, to restrain the violation of
such commitments by the Executive or by any person or persons acting for or
with the Executive in any capacity whatsoever. The Executive agrees not to
plead sufficiency of damages as a defence in any proceeding for injunctive
or other equitable relief brought by the Companies to enforce the provisions
of this Agreement. Furthermore, the existence of any claim or cause of
action which the Executive may have against the Companies shall not
constitute a defence or bar to entitlement of any provision of this
Agreement and shall be pursued by separate action by the Executive.
11.2 Restriction Reasonable - The Parties to this Agreement acknowledge
that the time, scope, geographic area and other provisions of this Agreement
have been specifically negotiated by fully informed parties with independent
legal advice and that all such provisions are reasonable in the
circumstances of this Agreement and are given as an integral and essential
part of this Agreement. The Executive acknowledges that the restrictive
covenants above are necessary in order to protect and maintain the business
of and the goodwill associated with the Companies.
12 Severability
12.1 If any provision of this Agreement as applied to any Party or to any
circumstance shall be adjudged by a court of competent jurisdiction to be
invalid or unenforceable, the same shall in no way affect any other
provision of this
<PAGE>
-14-
Agreement, the application of such provision in any other circumstances, or
the validity or enforceability of this Agreement.
13 Non-Assignment
13.1 This Agreement is personal to Executive and shall not be assigned by
him. The Executive shall not hypothecate, delegate, encumber, alienate,
transfer or otherwise dispose of his rights and duties hereunder. Kenhar
may assign its rights under paragraphs 9 and 10 hereof without Executive's
consent to any other entity who, in connection with such assignment,
acquires all or substantially all of Kenhar's assets or into or with which
Kenhar is merged or consolidated.
14. Non-Waiver
14.1 The waiver by the Kenhar or Cascade, as the case may be, of a
breach by Executive of any provision of this Agreement shall not be
construed as a waiver of any subsequent breach by Executive.
15.4. Benefit
15.1 The provisions of this Agreement shall inure to the benefit of the
Companies, their successors and assigns, and shall be binding upon the
Companies and Executive, its and his heirs, personal representatives and
successors, including without limitation, the Executive's estate and the
executors, administrators, or trustees of such estate.
<PAGE>
-15-
16 Further Assurances
16.1 The Parties hereto shall do such things and sign such documents as
may be necessary and desirable to give full effect and force to this
Agreement.
17. Relevant Law
17.1 This Agreement shall be governed by and construed and enforced in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein and shall be treated in all respects as an Ontario
contract and the Parties shall attorn to the laws of Ontario and the
exclusive jurisdiction of the Ontario courts and agree not to dispute the
competence or jurisdiction of such courts.
18 Notice
18.1 All notices, requests, demands and other communications in
connection with this Agreement shall be made in writing and shall be deemed
to have been given when delivered by hand, one day after transmission by
facsimile, or 72 hours after mailing at any general or branch United States
or Canadian Post Office, by registered or certified mail, postage prepaid,
addressed as follows, or to such other address as shall have been designated
in writing by the addressee:
(a) If to Kenhar:
P.O. Box 1508
Guelph, Ontario
N1H 6N9
Telecopier: (519) 763-4714
<PAGE>
-16-
(b) If to Cascade:
2020 SW 4th Avenue
Suite 600
Portland, Oregon
97201
Telecopier: (503) 274-1705
(c) If to the Executive:
27 Fox Run Drive
R.R. #3
Guelph, Ontario
N1H 6H9
Telecopier: (519) 823-2856
19 Entire Agreement
19.1 The Parties hereto agree that this Agreement contains the entire
agreement and understanding of the Parties relating to the subject matter
hereof and supersedes and replaces all oral or written contracts or
representations. This Agreement cannot be amended, modified or supplemented
in any respect except by subsequent written agreement signed by the Parties
hereto. The Executive acknowledges that paragraphs 9 and 10 of this
Agreement are in addition to the non-competition, non-solicitation and
confidentiality agreement of even date herewith executed and delivered by
the Executive in favour of Kenhar and Cascade in respect of the completion
by a wholly-owned subsidiary of Cascade of the purchase of all of the issued
and outstanding shares of Kenhar.
<PAGE>
-17-
20 Survival
20.1 Paragraphs 9, 10, 11, 12, 13, 15, 16, 17, 18 and 19 shall survive
the termination of the Executive's employment hereunder for any reason
whatsoever and shall continue in full force and effect in accordance with
the terms of such obligations.
21 Definitions
For the purposes of this Agreement,
21.1 "Cause" shall include and be deemed to exist if:
(a) the Executive willfully refuses to perform his duties hereunder;
(b) the Executive breaches paragraph 9 or paragraph 10 of this
Agreement;
(c) the Executive engages in acts of dishonesty or fraud; or
(d) the Executive engages in other serious misconduct of such a nature
that the continued employment of the Executive may reasonably be
expected to adversely affect the business or properties of the
Companies or any of them.
21.2 "Permanently Disabled" means that the Executive, by reason of
illness, disease, mental or physical disability or similar cause as
determined by a qualified medical practitioner mutually agreed to by the
Executive, Kenhar and Cascade ("Disability"), is permanently disabled so as
to be unable to fulfil the Executive's duties, responsibilities and
obligations hereunder and such Disability shall continue
<PAGE>
-18-
for any consecutive 365-day period or for any period of 365 days (whether or
not consecutive) in any consecutive 24-month period.
IN WITNESS WHEREOF the Parties hereto have executed this Agreement
on the day and year first above written.
SIGNED, SEALED AND DELIVERED )
In the presence of: )
/s/ illegible ) /s/ William J. Harrison
________________________ ) _______________________ l/s
Witness ) William J. Harrison
KENHAR CORPORATION
By: /s/ illegible c/s
______________________
By: /s/ illegible c/s
______________________
CASCADE CORPORATION
By: /s/ illegible c/s
____________________
By: /s/ illegible c/s
______________________
<PAGE>
SCHEDULE "A"
CURRENT KENHAR BENEFITS
The Executive will be entitled to the benefits provided by Kenhar's current
employee benefits plans as disclosed in Kenhar's current employment benefit
book attached hereto.
<PAGE>
REFUSAL AGREEMENT
CASCADE CORPORATION (Cascade) and WILLIAM J. HARRISON (Harrison) and
COUPHAR LTD. (together referred to as Couphar) agree as follows:
1. Interpretation
(a) Definitions
For purposes of this Agreement:
"business day" means a day other than a Saturday, Sunday or a statutory holiday
in Oregon;
"Common Shares" means shares of common stock of Cascade or any successor
corporation;
"Couphar Common Shares" means at any time the number of Common Shares which
Couphar would hold if all Exchangeable Shares were exchanged for Common Shares
prior to such time;
"Current Market Price" means, in respect of a Common Share on any date, the
average of the closing prices (or, if there is no closing price on such date,
the average of the closing bid and ask prices) of Common Shares on the New York
Stock Exchange (the "NYSE") on each of the ten (10) consecutive trading days
before such date, or, if the Common Shares are not then listed on the NYSE, on
such other stock exchange or automated quotation system on which the Common
Shares are listed or quoted, as the case may be, as may be selected by the Board
of Directors of Cascade for such purpose; provided, however, that if there is no
public distribution or trading activity of Common Shares during such period,
then the Current Market Price of a Common Share shall be determined by the Board
of Directors of Cascade which determination by the Board of Directors of Cascade
shall be conclusive and binding;
"Exchangeable Shares" means at any time the Exchangeable Shares of the Purchaser
held by Couphar at such time;
"Excluded Shares" means shares of a corporation which either:
(a) are excluded from participation in gains and losses (including
distributions) on the Exchangeable Shares and Common Shares arising on
exchange thereof, or
(b) have been issued only for the purpose of enabling a Member of the
Immediate Family to make tax effective charitable donations provided
that such shares are retired reasonably promptly after their issue.
"Member of the Immediate Family" means any one of:
(i) Harrison and his personal representatives;
(ii) the spouse of Harrison;
<PAGE>
2
(iii) any issue of Harrison or a spouse of Harrison or the issue
of Harrison's deceased brother;
(iv) any trust of which all of the beneficiaries are any one or
more of the persons named in (i), (ii) and (iii) above;
(v) any corporation all of the issued shares (except Excluded
Shares) of which at any time and from time to time are
beneficially owned by one or more persons named in clauses
(i), (ii) and (iii) above or held by the person named in
clause (iv) above provided that Harrison or his personal
representatives control (as that term is defined in the
Business Corporations Act (Ontario)) such corporation at all
times;
"open market" includes a stock exchange, a dealer quotation system and off-floor
block trading activities;
"Purchaser" means Cascade (Canada) Holdings Inc. and its successors;
"Registration Rights Agreement" means an agreement dated the date hereof between
Cascade and Couphar Ltd. providing for registration rights to Couphar in certain
circumstances; and
"Shareholders Agreement" means an agreement of even date herewith between the
Trustees of the Robert C. Warren and Nani Swigert Warren Revocable Trust and
Couphar.
For purposes of this agreement, Couphar shall be deemed to own all
Exchangeable Shares owned by any Member of the Immediate Family to which Couphar
has transferred such shares and any Common Shares resulting from the exchange of
such Exchangeable Shares.
2. Purpose
Cascade is at this date acquiring all outstanding shares of Kenhar
Corporation. Payment made by Cascade includes issuance to Couphar of 1,100,000
Exchangeable Preferred Shares of Purchaser. Each Exchangeable Share may be
exchanged for one share of Cascade common stock pursuant to the provisions of
such Exchangeable Shares and agreements related thereto. Common Shares are
presently publicly traded and are listed on the New York Stock Exchange. This
Agreement is intended to set forth certain obligations of Couphar with respect
to the sale of Exchangeable Shares and Common Shares received upon exchange of
Exchangeable Shares and certain rights of Cascade with respect to such Common
Shares.
3. Permitted Transfers of Shares
(a) Harrison covenants and agrees with Cascade that:
<PAGE>
3
(i) Couphar will not sell, assign or transfer any of the
Exchangeable Shares except to a Member of the Immediate
Family, Cascade or the Purchaser and except for pledges to
secure bona fide borrowings provided that: (A) the pledgee
is not entitled to take title to the Exchangeable Shares or
exercise any of the rights, except the right of retraction
but including rights under the Registration Rights
Agreement, of Couphar in relation thereto and (B) shares
received on retraction will be subject to all restrictions
which would apply to Couphar under agreements or statute;
(ii) Couphar will always be controlled by Harrison or, after his
death, by his personal representatives or Members of the
Immediate Family;
(iii) If Exchangeable Shares are transferred to a Member of the
Immediate Family which is a corporation or a trust, Harrison
will cause such transferee to continue to be a Member of the
Immediate Family for so long as such transferee holds such
shares or Common Shares arising on exchange thereof; and
(iv) Couphar shall not sell any Common Shares acquired in
exchange for the Exchangeable Shares except for:
(A) shares which have first been offered to, and not
purchased by Cascade, pursuant to clause 3(b) or
3(c)(i) below which are either
(i) sold in the open market through a member firm of the
National Association of Securities Dealers during the
90 days following the effective date of the
registration statement to which the RR Notice referred
to in such clause relates or
(ii) sold to an underwriter during the 90 days following the
effective date of the registration statement to which
the RR Notice referred to in such clause relates
provided that if (I) the underwriter has required that
the price thereunder be at least 25% below the price at
which such shares were offered to Cascade pursuant to
clause 3(b) below and (II) Couphar has decided to
complete such sale at such price, then Cascade
<PAGE>
4
shall be entitled, within 24 hours of being so notified
in writing, to agree in writing with Couphar to
purchase all such shares at such price as reduced and
to pay all fees and commissions which would have been
payable to such underwriter.
(B) shares which have first been offered to, and not
purchased by, Cascade pursuant to clause 3(c) below
which are sold pursuant to the provisions of paragraph
4 or 5 of the Shareholders Agreement or are sold during
the 90 days following such offer to Cascade either
(i) in the open market through a member firm of the
National Associatioin of Securities Dealers if such
shares are purchasable by Cascade at Current Market
Price or
(ii) to the buyer identified pursuant to clause 3(c) below
with such buyer purchasing all of the shares so offered
at a price not less than the price so identified.
(C) total sales by or for the benefit of Couphar or Members
of the Immediate Family in the open market through a
member of the National Association of Securities
Dealers of not more than 110,000 Common Shares (as
presently constituted) in the aggregate during any
period of 30 consecutive days, provided that this
exception may not be relied on if after giving effect
to sales effected pursuant to clause 3(b) below more
than 110,000 Common Shares (as presently constituted)
in the aggregate would have been sold by such persons
or entities in the immediately preceding 30 days;
(D) sales pursuant to a tender offer made by any person
(except Cascade) for all Common Shares (except those
held by Cascade) or made by Cascade or a consolidation,
merger or reorganization of Cascade or any of its
subsidiaries, which, in each such case, provides to all
holders (assuming exchange of the Exchangeable Shares)
of Common Shares resident in Canada and the U.S.A. the
same terms and conditions and the same consideration
per Common Share; and
<PAGE>
5
(E) sales pursuant to a tender offer made by a person
(except Cascade) to which clause (D) would apply except
that such offer is for less than all Common Shares
where the Couphar Common Shares to be tendered into
such offer have first been offered to, and not
purchased by, Cascade pursuant to clause 3(c) below.
(b) Couphar agrees that any notice (an "RR Notice") given by Couphar on
its own behalf or on behalf of a Member of the Immediate Family
pursuant to the Registration Rights Agreement shall be deemed to be an
offer (the "Offer") by each such person giving such notice to sell all
but not less than all of the Common Shares referred to in such notice
at a price per share equal to the Current Market Price at the date of
the Offer. Such Offer shall be open for acceptance by Cascade for 5
business days following the date of giving of the RR Notice by Cascade
giving written notice ("Acceptance Notice") to Couphar. The Offer may
only be accepted in respect of all shares referred to in such RR
Notice.
(c) Couphar may at any time by written notice (an "Offer") offer to sell
to Cascade a number of Common Shares set out in such notice ("Offered
Shares") either (i) at a price per share equal to the Current Market
Price at the time of giving of such notice with the provisions of this
clause applying to any sale proposed pursuant to paragraph 4 of the
Shareholders Agreement or (ii) if such Offer identifies a buyer and is
accompanied by a bona fide offer from a person dealing at arms length
from Couphar, at the cash price per share set out in such Offer or
(iii) if such Offer results from a notice given under paragraph 5 of
the Shareholders Agreement and is accompanied by a copy of such
notice, at the proposed selling price in such notice. Cascade may
accept the Offer but only as to all but not less than all of the
Common Shares referred to therein and only by giving written notice
(an "Acceptance") to Couphar within 5 business days (in the case of a
proposed sale to which clause 3(a)(iv)(E) or 3(c)(iii) applies) or 10
days (in any other case) after the making of the Offer.
(d) The contract resulting under clause 3(a)(iv)(A)(ii)(II) or from the
giving of an Acceptance Notice pursuant to clause 3(b) above or an
Acceptance pursuant to clause 3(c) above, as the case may be, shall be
completed at the address for notice of Cascade referred to in
paragraph 4 hereof at 10:00 a.m. local time on the fifth business day
following Cascade's agreement, the giving of the Acceptance Notice or
the Acceptance, as the case may be, by delivery of share certificates
duly endorsed with all signatures guaranteed for the common shares of
Cascade subject thereto against payment by bank draft, bank cashier's
cheque, certified cheque or
<PAGE>
6
another form of immediately available funds acceptable to the sellers.
If Cascade has failed to cause to be delivered certificates for Common
Shares required to be delivered by it on exchange of Exchangeable
Shares, it shall accept in lieu of certificates for Common Shares,
appropriately endorsed certificates for Exchangeable Shares
representing the right to receive the Common Shares to be purchased
by Cascade.
4. Notices
All notices and other communications between the parties pursuant to this
Agreement shall be in writing and shall be delivered personally or by confirmed
facsimile to the parties at the following addresses (or at such other address
for such party as shall be specified in like notice):
(a) if to Cascade at:
2020 S.W. Fourth Avenue, Suite 600
Portland, Oregon 97201-4998
Attention: Executive Vice President
Facsimile: (503) 274-1705
with a copy, which shall not be notice, to:
Newcomb, Sabin, Schwartz & Landsverk
111 S.W. Fifth Avenue, Suite 4040
Portland, Oregon 97204
Facsimile: (503) 228-5472
(b) If to Harrison or Couphar at:
27 Fox Run Drive
R.R. #3
Guelph, Ontario N1H 6H9
Attention: William J. Harrison
Facsimile: (519) 823-2856
with a copy, which shall not be notice, to:
Aird & Berlis
Suite 1800, 181 Bay Street
Toronto, Ontario M5J 2T9
Attention: J. P. Dawson
Facsimile: (416) 863-1515
<PAGE>
7
Any notice or other communication delivered personally shall be deemed to
have been given and received upon delivery thereof and if given by facsimile
shall be deemed to have been given and received on the date of confirmed receipt
thereof unless such day is not a business day in which case it shall be deemed
to have been given and received upon the immediately following business day.
5. Cascade Covenant
Cascade shall include Couphar and its permitted transferees in any offer
made generally to all other holders of Common Shares to repurchase any Common
Shares.
6. Choice of Law
This Agreement shall be governed by, and interpreted and applied in
accordance with, the laws of the United States and the State of Oregon.
7. Termination
This Agreement shall terminate and be of no further application after the
first time when Couphar owns less than 250,000 Couphar Common Shares (as
adjusted for stock dividends, splits and similar events affecting all Common
Shares).
8. Integration and Modification
This Agreement represents the parties' entire agreement on the subject
matter covered, and supersedes all prior agreements and understandings.
Provisions of this Agreement may be amended or its observance waived generally
or in particular only by a written instrument duly executed by each of the
parties (or, in the case of a waiver, the waiving party).
<PAGE>
8
DATED this 11th day of March, 1997.
CASCADE CORPORATION COUPHAR LTD.
By By
---------------------- ----------------------
Its Its
----------------- ----------------
- ---------------------------------------------------
William J. Harrison
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (hereinafter
"Agreement") is made and entered into, as of the date below written, by and
between CASCADE CORPORATION, a Oregon corporation with its
principal offices located at 2020 S.W. Fourth Avenue, Suite 600, Portland
Oregon 97201-4998, facsimile number (503) 274-1705 (hereinafter
"Company"); and COUPHAR LTD., an Ontario corporation with its
principal offices located at 27 Fox Run Drive, R.R. #3, Guelph, Ontario N1H
6H9, facsimile number (519) 823-2856 (hereinafter "Recipient").
R E C I T A L S
WHEREAS, Couphar Ltd., Balyrobe Ltd., 879185 Ontario Inc.,
James E. Britton in trust, Penfund Partners and Company, Limited
Partnership, Bantor & Company, W.J. Harrison Holdings, Ltd. and W.J.
Harrison have entered into a Share Purchase Agreement, dated of even date
herewith, with Cascade (Canada) Holdings, Inc. (hereinafter "Cascade
Canada") and the Company, pursuant to which the former have agreed to sell
to Cascade Canada, and Cascade Canada has agreed to purchase, all of the
issued and outstanding shares of Kenhar Corporation (hereinafter "Share
Purchase Agreement");
WHEREAS, pursuant to the Share Purchase Agreement, the
Recipient has received One Million One Hundred Thousand (1,100,000)
Exchangeable Shares in the share capital of Cascade Canada, as partial
consideration for the Recipient's sale of its shares of Kenhar Corporation;
WHEREAS, pursuant to an agreement by and between the
Company, Cascade Canada and the Recipient, dated of even date herewith
(hereinafter "Exchange Agreement"), the Recipient has the right to exchange
the Exchangeable Shares for share of common stock of the Company and, in
certain circumstances, to receive additional shares of such common stock; and
WHEREAS, pursuant to the Share Purchase Agreement, it is a
condition precedent to the obligations of the Recipient to sell to its shares of
Kenhar Corporation that the parties hereto execute and deliver this
Agreement, pursuant to which the Company provides certain registration
rights with respect to the common stock of the Company issued or issuable
upon exchange of the Exchangeable Shares, as that term is defined in the
Share Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties and conditions set forth in this Agreement, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Definitions and References. For purposes of this
Agreement, in addition to the definitions set forth above and elsewhere herein,
the following terms shall have the following meanings:
a. The term "Affiliate" shall have the meaning
specified in Rule 144(a)(1) under the Securities Act.
b. The term "Commission" shall mean the U.S.
Securities and Exchange Commission and any successor agency.
<PAGE>
-2-
c. The term "Common Stock" shall mean the common
stock of the Company.
d. The term "Couphar" shall mean the Recipient and
any Permitted Transferee collectively; provided, however, that the Recipient or
such Permitted Transferee shall then own Registrable Stock.
e. The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
f. The term "Executive Officer" shall have the
meaning specified in Rule 3b-7 under the Exchange Act.
g. The term "Harrison" shall mean Mr. W.J. Harrison.
h. The term "No-Action Letter" shall mean a letter
issued by the Commission, in form and substance reasonably acceptable to
counsel for Couphar, permitting Couphar to tack, in whole or in part, the
holding period for its Exchangeable Shares to that of its shares of Common
Stock received or to be received upon exchange of the Exchangeable Shares,
for purposes of determining the holding period required by Rule 144(d) under
the Securities Act.
i. The term "Permitted Transferee" shall mean any
Person to whom the Exchangeable Shares may be transferred pursuant to the
provisions of the Refusal Agreement of even date herewith by and between the
Recipient and the Company.
j. The term "Permitted Underwriter" shall mean the
underwriter or underwriters selected by Couphar pursuant to Section 3(b)
herein.
k. The term "Person" shall mean an individual,
corporation, partnership, limited liability company, trust, unincorporated
organization or association or other entity, including any governmental entity.
l. The terms "register," "registered" and "registration"
shall refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act and the
declaration or ordering of effectiveness of such registration statement or
document.
m. The term "Registrable Stock" shall mean (i) any Common
Stock issued or issuable upon exchange of the Exchangeable Shares, (ii) any
equity securities issued as (or issuable upon the conversion or exercise of
any warrant, right, option or other convertible security which is issued as)
a dividend or other distribution with respect to, or in exchange for, or in
replacement of, such Common Stock referred to in clause (i) above, and (iii)
any equity securities issued by way of any stock split of, recapitalization,
reorganization or similar event with respect to any Common Stock or equity
securities referred to in clauses (i) or (ii) above. For purposes of this
Agreement, any Registrable Stock shall cease to be Registrable Stock when (A)
a registration statement covering such Registrable Stock
<PAGE>
-3-
has been declared effective and such Registrable Stock has been disposed of
pursuant to such effective registration statement, (B) such Registrable Stock
is sold pursuant to Rule 144 under the Securities Act, (C) such Registrable
Stock has been otherwise transferred, no stop transfer order affecting such
stock is in effect and the Company has delivered new certificates or other
evidences of ownership for such Registrable Stock not bearing any legend
indicating that such shares have not been registered under the Securities
Act, or (D) such Registrable Stock is sold by a Person in a transaction in
which the rights under the provisions of this Agreement are not assignable or
are not assigned.
n. The number of shares of "Registrable Stock then
outstanding" as of any time shall be equal to (i) the number of shares of
Common Stock then outstanding which are Registrable Stock, plus (ii) the
number of shares of Registrable Stock issuable upon exchange of the
Exchangeable Shares then outstanding, plus (iii) the number of shares of
Registrable Stock issuable pursuant to the then exercisable or convertible
warrants, rights, options or convertible securities referred to in clauses
(ii) and (iii) of Section 1(l) herein.
o. The term "Securities Act" shall mean the Securities
Act of 1933, as amended.
References in this Agreement to any rules, regulations or forms promulgated
by the Commission shall include rules, regulations and forms succeeding to the
functions thereof, whether or not bearing the same designation.
2. No-Action Letter. After May 13, 1997, the Company
shall promptly, and at its own expense, prepare and file with the Commission,
on its own behalf an on behalf of the Recipient, a request (and any
amendment or supplement thereto requested by the Commission) that the
Commission issue the No-Action Letter. The Company shall use its best
efforts to effect such issuance. The Recipient shall cooperate with the
Company with respect thereto and shall use its best efforts to assist the
Company in obtaining the No-Action Letter, including (if so required by the
Commission) restructuring its equity ownership in Cascade Canada to
eliminate any voting rights that it might have therein, but excluding
undertaking any action that might accelerate the recognition of income or gain
for Canadian capital gains tax purposes with respect to or in connection with
the Exchangeable Shares or the Registrable Stock.
3. Demand Registration. Subject to the limitations
contained in Section 5 herein:
a. At any time, and from time to time, on or after the
eight (8) month anniversary date of the date of execution of this Agreement,
and until otherwise terminated pursuant to this Agreement, Couphar shall
have the right to make a written request to the Company (specifying that it is
being made pursuant to this Section 3) that the Company file a registration
statement under the Securities Act covering the registration of Registrable
Stock; provided, however, that:
i. The distribution of the Registerable Stock covered
by such request shall be effected pursuant to Rule 415 under the Securities
Act (i.e., a shelf registration), unless the distribution is effected by
means of an underwritten offering in accordance with, and
<PAGE>
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subject to the limitations of, Section 3(b) herein in which case the
registration may be, at Couphar's reasonable election, effected pursuant to
Rule 415 but is not to required to be so effected;
ii. If the distribution of the Registrable Stock
covered by such request is to be effected pursuant to Rule 415 under the
Securities Act, then the total number of shares of Registrable Stock covered by
such request shall not exceed an amount that Couphar, at the time that the
registration statement becomes effective, reasonably expects to offer and sell
within two (2) years from the initial effective date of the registration;
iii. The distribution of the Registrable Stock
covered by such request shall not be effected by means of an underwritten
offering, except as otherwise provided in Section 3(b) herein; and
iv. If both (A) Harrison is an Affiliate of the
Company at the time that the registration statement becomes effective, and
(B) the distribution of the Registrable Stock covered by such request is not
being effected by means of an underwritten offering, then the distribution of
the Registrable Stock covered by such request shall comply with the volume
limitations of Rule 144(e) under the Securities Act.
Upon receipt of such request, the Company shall use its best efforts to cause
to be registered under the Securities Act, within sixty (60) days after the
Company has received such request, all Registrable Stock that Couphar has
requested to be registered, subject to the above-described limitations.
b. In the event that Harrison were to cease to be an
Affiliate of the Company, Couphar shall thereafter have the right to have the
Registrable Stock covered by a request described in Section 3(a) herein
distributed by means of an underwritten offering; provided, however, that the
Company is required to effect no more than one (1) registration by means of
an underwritten offering. If pursuant thereto Couphar intends to so distribute
the Registrable Stock covered by such a request by means of an underwritten
offering, it shall so advise the Company as a part of the request pursuant to
Section 3(a) herein. In such event, a Permitted Transferee's right to include
its Registrable Stock in such registration shall be conditioned upon such
Permitted Transferee's participation in such underwritten offering and the
inclusion of its Registrable Stock in the underwritten offering to the extent
provided in this Section 3. Furthermore, in such event, Couphar shall enter
into an underwriting agreement in customary form with the Permitted
Underwriter. Such Permitted Underwriter shall be selected by Couphar and
shall be subject to the written approval of the Company, which approval shall
not be unreasonably withheld; provided, however, that all of the
representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such Permitted Underwriter shall also
be made to and for the benefit of Couphar and that any or all of the
conditions precedent to the obligations of such Permitted Underwriter under
such underwriting agreement shall be conditions precedent to the obligations
of Couphar; and provided further that Couphar shall not be required to make
any representations or warranties to or agreements with the Company or any
Permitted Underwriter other than representations, warranties or agreements
regarding Couphar, the Registrable Stock and Couphar's intended method of
distribution and any other representation required by law or reasonably
required by any Permitted Underwriter.
<PAGE>
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c. Notwithstanding any other provision of this Agreement to
the contrary, the Company shall not be required to effect a registration
pursuant to this Section 3 during the period starting with the fourteenth
(14th) day immediately preceding the date of anticipated filing by the
Company of, and ending on a date ninety (90) days following the effective
date of, a registration statement pertaining to a public offering of
securities for the account of the Company; provided, however, that the
Company shall actively employ in good faith all reasonable efforts to cause
such registration statement to become effective; and provided further that
the Company's estimate of the date of filing such registration statement
shall be made in good faith.
d. Except as otherwise provided in this Agreement, the
Company shall be obligated to effect an unlimited number of registrations
pursuant to this Section 3; provided, however, that:
i. The Company shall not be required to effect
more than one (1) registration statement pursuant to this Section 3 within any
twelve (12) month period;
ii. The Company shall not be required to effect
more than one (1) registration statement distributing the Registrable Stock by
means of an underwritten public offering, as further described in Section 3(b)
herein;
iii. A registration requested pursuant to this Section 3
shall not be deemed to have been effected by the Company for purposes of
Section 3(b) or Section 3(d) herein unless (A) it has been declared
effective by the Commission, (B) it has remained effective for the period set
forth in Section 6(a)(ii) herein, (C) the offering of Registrable Stock
pursuant to such registration is not subject to any stop order, injunction or
other order or requirement of the Commission (other than any such action
prompted by any act or omission of Couphar), and (D) no limitation of the
number of shares of Registrable Stock to be underwritten has been required in
good faith in writing by the Permitted Underwriter due to marketing factors,
provided that in the case of any such limitation, Couphar shall so advise the
Company (including the delivery to the Company of said written opinion of the
Permitted Underwriter) and shall have the right to have the Company effect
one (1) additional underwritten registration pursuant to Section 3(b) herein
solely with regard to the number of shares of Registrable Stock so limited;
and
iv. In the event that the No-Action Letter has
been issued, (A) the Company shall not be obligated to effect any further
registrations pursuant to this Section 3 subsequent to the later of (I) the date
of such issuance, or (II) the one (1) year anniversary date of the
commencement of Couphar's holding period for the Exchangeable Shares that
may be tacked to that of its shares of Common Stock received or to be
received upon exchange of the Exchangeable Shares, for purposes of
determining the holding period required by Rule 144(d) under the Securities
Act; and (B) subsequent to the later of said dates, the Company shall remove
from registration (by means of a post-effective amendment or otherwise) any
unsold Registrable Stock covered by any then pending registration statement
effected pursuant to this Section 3.
4. Piggy-Back Registration. Subject to the limitations
contained in Section 5 herein, if at any time the Company determines that it
shall file a registration statement under the Securities Act (other than a
registration statement on a Form S-4 or S-8 or filed in connection with
<PAGE>
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an exchange offer or an offering of securities solely to the Company's
existing stockholders) on any form that would also permit the registration of
the Registrable Stock and such filing is to be on its behalf and/or on behalf
of selling holders of its securities for the general registration of its
common stock to be sold for cash, the Company shall each such time promptly
give Couphar written notice of such determination setting forth the date on
which the Company proposes to file such registration statement, which date
shall be no earlier than forty (40) days from the date of such notice, and
advising Couphar of its right to have Registrable Stock included in such
registration. Upon the written request of Couphar received by the Company no
later than twenty (20) days after the date of the Company's notice, the
Company shall use its best efforts to cause to be registered under the
Securities Act all of the Registrable Stock that Couphar has so requested to
be registered. If, in the written opinion of the managing underwriter or
underwriters (or, in the case of a non-underwritten offering, in the written
opinion of the placement agent, or if there is none, the Company), the total
amount of such securities to be so registered, including such Registrable
Stock, shall exceed the maximum amount of the Company's securities that can
be marketed (a) at a price reasonably related to the then current market
value of such securities, or (b) without otherwise materially and adversely
affecting the entire offering, then the amount of Registrable Stock to be
offered for the accounts of Couphar shall be reduced pro rata to the extent
necessary to reduce the total amount of securities to be included in such
offering to the recommended amount; provided, however, that if securities are
being offered for the account of other Persons as well as the Company, such
reduction shall not represent a greater fraction of the number of securities
intended to be offered by Couphar than the fraction of similar reductions
imposed on such other Persons other than the Company over the amount of
securities they intended to offer.
5. Limitations on Registration Rights. Notwithstanding any
other provision of this Agreement to the contrary:
a. The Company shall not be obligated to register any
Registrable Stock pursuant to Section 3 or Section 4 herein if, in the opinion
of counsel for the Company reasonably satisfactory to counsel for Couphar,
the sale or other disposition, in the manner proposed by Couphar, may be
effected without registering such Registrable Stock under the Securities Act;
b. The Company shall not be required to register any
Registrable Stock pursuant to Section 3 or Section 4 herein that are not
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act; and
c. The Company shall not be required to effect the
registration, pursuant to Section 3 or 4 herein, of any Registrable Stock whose
distribution would be in breach of the Refusal Agreement by and between the
Company and the Recipient, dated of even date herewith.
6. Obligations of the Parties.
a. Company. Whenever required under Section 3 herein to use
its best efforts to effect the registration of any Registrable Stock, the
Company shall promptly:
<PAGE>
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i. Prepare and file with the Commission, not
later than sixty (60) days after receipt of a request to file a registration
statement with respect to such Registrable Stock, a registration statement on
any form for which the Company then qualifies or which counsel for the
Company shall deem appropriate and which form shall be available for the sale
of such issue of Registrable Stock in accordance with the intended method of
distribution thereof, and use such best efforts to cause such registration
statement to become effective as promptly as reasonably practicable thereafter;
provided, however, that before filing a registration statement or prospectus or
any amendments or supplements thereto, the Company shall (A) furnish to
one counsel selected by Couphar copies of all such documents proposed to be
filed, and (B) notify Couphar of any stop order issued or threatened by the
Commission and take all reasonable actions required to prevent the entry of
such stop order or to remove it if entered;
ii. Prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period commencing on the effective date
of such registration statement and continuing until the earliest to occur of (A)
such registration shall have become effective under the Securities Act and all
of the Registrable Stock covered thereby shall have been disposed of pursuant
to such registration statement, (B) all of the Registrable Stock covered by such
Registration Statement shall have been distributed or be eligible for
distribution without any restrictions under the Securities Act (including any
volume restrictions imposed upon Affiliates under Rule 144 or the Securities
Act); or (C) all of the Registrable Stock covered by such registration statement
shall have ceased to be outstanding; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement;
iii. Furnish to Couphar and any Permitted
Underwriter copies of such registration statement as filed and each
amendment and supplement thereto (in each case including all exhibits
thereto), the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as Couphar may
reasonably request in order to facilitate the disposition of the Registrable
Stock owned by thereby.
iv. Use its best efforts to register or qualify such
Registrable Stock under such other securities or blue sky laws of such
jurisdictions within the United States as Couphar or any Permitted
Underwriter reasonably requests, and do any and all other acts which may be
reasonably necessary or advisable to enable Couphar to consummate the
disposition in such jurisdictions within the United States of the Registrable
Stock owned thereby; provided, however, that the Company shall not be
required to (A) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subsection (iv), (B)
subject itself to taxation in any such jurisdiction, or (C) consent to general
service of process in any such jurisdiction;
v. Use its best efforts to cause the Registrable
Stock covered by such registration statement to be registered with or approved
by such other governmental agencies or other authorities within the United
States as may be necessary by virtue of the business and
<PAGE>
-8-
operations of the Company to enable Couphar to consummate the disposition of
such Registrable Stock;
vi. Notify Couphar and any Permitted Underwriter, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act (even if such time is after the period referred to in Section
6(a)(ii) herein), of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue
statement of a material fact or omits to state any material fact required to
be stated therein or necessary to make the statements therein in light of the
circumstances being made not misleading, and prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Stock, such prospectus shall not contain an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances being made not misleading;
vii. Make available for inspection by Couphar,
any Permitted Underwriter and any attorney, accountant or other agent
retained by Couphar or any Permitted Underwriter (hereinafter collectively
"Inspectors") all financial and other records, pertinent corporate documents
and properties of the Company (hereinafter collectively "Records"), and cause
the Company's officers, directors and employees to supply all information
reasonably requested by any such Inspector, as shall be reasonably necessary to
enable them to exercise their due diligence responsibility in connection with
such registration statement. The disclosure of Records or other information
that the Company determines, in good faith, to be confidential shall be
conditioned upon the Inspectors entering into a reasonably satisfactory written
agreement that such Records or other information shall not be disclosed by the
Inspectors unless (A) the disclosure of such Records or other information is
necessary in the opinion of counsel for the Company to avoid or correct a
misstatement or omission in the registration statement, or (B) the release of
such Records or other information is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction. Couphar shall, upon learning
that disclosure of such Records or other information is sought in a court of
competent jurisdiction, give notice to the Company and allow the Company,
at the Company's expense, to undertake appropriate action to prevent
disclosure of the Records or other information deemed confidential;
viii. Furnish at the request of Couphar upon a
requested registration of Registerable Stock pursuant to Section 3 herein, on
the date that such shares of Registrable Stock are delivered to any Permitted
Underwriter for sale pursuant to such registration or, if such Registrable Stock
is not being sold through underwriters, on the date that the registration
statement with respect to such shares of Registrable Stock becomes effective,
(A) a signed opinion, dated such date, of the independent legal counsel
representing the Company for the purposes of such registration, addressed to
the Permitted Underwriter, if any, and if such Registrable Stock is not being
sold through underwriters, then to Couphar, as to such matters as such
Permitted Underwriter or Couphar, as the case may be, may reasonably
request and as would be customary in such a transaction; and (B) a letter,
dated such date, from the independent certified public accountants of the
Company, addressed to the Permitted Underwriter, if any, and if such
Registrable Stock is not being sold through underwriters, then to Couphar
and, if such accountants refuse to deliver such letter to Couphar, then to the
Company (I) stating that they are independent certified public accountants
within the meaning of the Securities Act and that, in the opinion of such
accountants,
<PAGE>
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the financial statements and other financial data of the Company included in
the registration statement or the prospectus, or any amendment or supplement
thereto, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and (II) covering such other
financial matters (including information as to the period ending not more
than five (5) business days prior to the date of such letter) with respect to
the registration in respect of which such letter is being given as Couphar or
any Permitted Underwriter may reasonably request and as would be customary in
such a transaction;
ix. Enter into customary agreements (including,
if the method of distribution is by a Permitted Underwriter, an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of the Registrable
Stock to be so included in the registration statement;
x. Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, but not later than
eighteen (18) months after the effective date of the registration statement,
an earnings statement covering the period of at least twelve (12) months
beginning with the first full month after the effective date of such
registration statement, which earnings statements shall satisfy the
provisions of Section 11(a) of the Securities Act; and
xi. Use its best efforts to cause all such
Registrable Stock to be listed on the New York Stock Exchange and/or any
other securities exchange on which similar securities issued by the Company
are then listed, or traded on the National Association of Securities Dealers
Automated Quotations System, if such listing or trading is then permitted
under the rules of such exchange or system, respectively.
b. Couphar.
i. The Company may require Couphar as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such Registrable Stock as the
Company may from time to time reasonably request in writing.
ii. Couphar agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described
in Section 6(a) (vi) herein, Couphar shall forthwith discontinue disposition of
Registrable Stock pursuant to the registration statement covering such
Registrable Stock until Couphar's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 6(a)(vi) herein, and, if so
directed by the Company, Couphar shall deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in
Couphar's possession, of the prospectus covering such Registrable Stock
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the Company shall extend the period during which such
registration statement shall be maintained effective pursuant to this
Agreement (including the period referred to in Section 6(a)(ii) herein) by the
number of days during the period from and including the date of the giving of
such notice pursuant to Section 6(a)(vi) herein to and including the date when
Couphar shall have received the copies of the supplemented or amended
prospectus contemplated by Section 6(a)(vi) herein.
<PAGE>
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7. Holdback Agreement.
a. Restrictions on Public Sale by Couphar. To the extent
not inconsistent with applicable law, Couphar agrees not to effect any public
sale or distribution of the issue being registered or a similar security of
the Company, or any securities convertible into or exchangeable or
exercisable for such securities, including a sale pursuant to Rule 144 under
the Securities Act, during the fourteen (14) days prior to, and during the
ninety (90) day period beginning on, the effective date of such registration
statement (except as part of the registration), if and to the extent
requested by the Company in the case of a non-underwritten public offering or
if and to the extent requested by the managing underwriter or underwriters in
the case of an underwritten public offering.
b. Restrictions on Public Sale by the Company and Others.
In the event that Couphar distributes the Registrable Stock by means of an
underwritten offer pursuant to Section 3(b) herein, the Company agrees (i)
not to effect any public sale or distribution of any securities similar to
those being registered, or any securities convertible into or exchangeable or
exercisable for such securities, during the fourteen (14) days prior to, and
during the ninety (90) day period beginning on, the effective date of any
registration statement in which Couphar is so participating (except as part
of such registration), if and to the extent requested by the Permitted
Underwriter; and (ii) that any agreement entered into after the date of this
Agreement pursuant to which the Company issues or agrees to issue any
securities similar to the Registrable Stock, or any securities convertible
into or exchangeable or exercisable for such securities (other than pursuant
to an effective registration statement), shall contain a provision under
which holders of such securities agree not to effect any public sale or
distribution of any such securities during the periods described in clause
(i) above, in each case including a sale pursuant to Rule 144 under the
Securities Act.
8. Expenses of Registration.
a. The Company shall bear and pay all expenses incurred in
connection with each registration pursuant to Section 3 herein, including
without limitation all registration, filing and qualification fees, word
processing, duplicating, printers' and accounting fees (including the
expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance), exchange listing fees or
National Association of Securities Dealers fees, messenger and delivery
expenses, all fees and expenses of complying with securities or blue sky laws
and fees and disbursements of counsel for the Company; provided, however,
that Couphar shall bear and pay all Permitted Underwriter's, placement
agents' and brokerage discounts, fees and selling commissions, stock transfer
taxes, fees and disbursements for Couphar's counsel and fees and
disbursements for any Permitted Underwriter's, placement agent's or broker's
counsel applicable to the Registrable Stock offered for Couphar's account in
connection with any registrations, filings and qualifications made pursuant
to Section 3 herein.
b. The Company shall bear and pay all expenses incurred in
connection with each registration pursuant to Section 4 herein, including
without limitation all registration, filing and qualification fees, word
processing, duplicating, printers' and accounting fees (including the
expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance), exchange listing fees or
National Association of Securities Dealers
<PAGE>
-11-
fees, messenger and delivery expenses, all fees and expenses of complying
with securities or blue sky laws and fees and disbursements of counsel for
the Company; provided, however, that Couphar shall bear and pay all placement
agent's and brokerage fees, discounts and selling commissions, stock transfer
taxes, fees and disbursements for Couphar's counsel and fees and
disbursements for any placement agent's broker's counsel applicable to the
Registrable Stock offered for its account in connection with any
registrations, filings and qualifications made pursuant to Section 4 herein.
9. Indemnification and Contribution.
a. Indemnification by the Company.
i. The Company shall indemnify Couphar and each of its
officers, directors, shareholders and partners, its legal counsel and
independent accountants, if any, each Person controlling any such Persons
within the meaning of Section 15 of the Securities Act, and the Permitted
Underwriter, if any, and each Person who controls any Permitted Underwriter
within the meaning of Section 15 of the Securities Act, against all expenses,
claims, losses, damages and liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other document, or any amendment
or supplement thereof, incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by the Company of any
rule or regulation promulgated under the Securities Act or any state
securities laws applicable to the Company and relating to action or inaction
by the Company in connection with any such registration, qualification or
compliance, and shall reimburse Couphar and each of its officers, directors,
shareholders and partners, its legal counsel and independent accountants, and
each Person controlling any such Persons, and any such Permitted Underwriter,
and each Person who controls any such Permitted Underwriter, for any legal
and any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action (and
in enforcing this indemnity).
ii. Notwithstanding anything to the contrary in Section
9(a)(i) herein, the Company shall not be liable (A) in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of
or is based on any untrue statement or omission or alleged untrue statement
or omission, made in reliance upon and in conformity with written information
furnished to the Company by Couphar or any Permitted Underwriter and
expressly intended for use in such registration statement, prospectus,
offering circular or other document, or any amendment or supplement thereof;
(B) if at the time of the statement, omission or violation with respect to
which indemnification is sought, Harrison was an Executive Officer, director
or Affiliate of the Company; or (C) if Harrison had actual knowledge that
such statement was untrue or that such omission was misleading or of such
violation.
b. Indemnification by Couphar. Couphar shall
indemnify the Company and each of its officers, directors and shareholders,
its legal counsel and independent accountants, each Person controlling any
such Persons within the meaning of Section 15 of the Securities Act, and each
underwriter, if any, of the Company's securities covered by such a registration
statement,
<PAGE>
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and each Person who controls any such underwriter within the meaning of
Section 15 of the Securities Act, against all expenses, claims, losses,
damages and liabilities (or actions in respect thereof), including any of the
foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in any registration statement, prospectus,
offering circular or other document, or any amendment or supplement thereof,
incident to any such registration, qualification or compliance, or based on
any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse the Company and each of its officers,
directors and shareholders, its legal counsel and independent accountants,
and each Person controlling any such Persons, and each underwriter, if any,
of the Company's securities covered by such a registration statement, and
each Person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action (and in enforcing
this indemnity), in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering
circular, other document or amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by Couphar and
expressly intended for use in such registration statement, prospectus,
offering circular or other document, or any amendment or supplement thereof;
provided, however, that the obligations of Couphar hereunder shall be limited
to an amount equal to the proceeds to Couphar of Registrable Stock sold as
contemplated herein.
c. Conduct of Indemnification Proceedings. Each party
entitled to indemnification under this Section 9 (hereinafter "Indemnified
Party") shall give notice to the party required to provide indemnification
(hereinafter "Indemnifying Party") promptly after such Indemnified Party has
actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld). The Indemnified Party may participate in such defense at such
party's expense; provided, however, that the Indemnifying Party shall bear
the expense of such defense of the Indemnified Party if representation of
both parties by the same counsel would be inappropriate due to actual or
potential conflicts of interest. The failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement, unless such failure is prejudicial to
the ability of the Indemnifying Party to defend the action. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement that does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect of such claim or litigation. If the
Indemnifying Party is not entitled to, or elects not to, assume the defense
of a claim, it will not be obligated to pay the fees and expenses of more
than one counsel with respect to such claim, unless in the reasonable
judgment of any Indemnified Party a conflict of interest may exist between
such Indemnified Party and any other such Indemnified Parties with respect to
such claim, in which event the Indemnifying Party shall be obligated to pay
the fees and expenses of such additional counsel or counsels.
<PAGE>
-13-
d. Contribution.
i. If for any reason the indemnity provided for in this
Section 9 is unavailable to, or is insufficient to hold harmless, an
Indemnified Party, then the Indemnifying Party shall contribute to the amount
paid or payable by the Indemnified Party as a result of such losses, claims,
damages, liabilities or expenses (A) in such proportion as is appropriate to
reflect the relative benefits received by the Indemnifying Party on the one
hand and the Indemnified Party on the other, or (B) if the allocation
provided by clause (A) above is not permitted by applicable law, or provides
a lesser sum to the Indemnified Party than the amount hereinafter calculated,
in such proportion as is appropriate to reflect not only the relative
benefits received by the Indemnifying Party on the one hand and the
Indemnified Party on the other but also the relative fault of the
Indemnifying Party and the Indemnified Party as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Parties; and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed
to include, subject to the limitations set forth in Section 9(c) herein, any
legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
ii. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 9(d) were determined
by pro rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to in Section 9(d)(i)
herein. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution
from any Person who was not guilty of such fraudulent misrepresentation.
e. Relative Fault. If indemnification is available under
this Section 9, the Indemnifying Parties shall indemnify each Indemnified
Party to the full extent provided in Section 9(a) and Section 9(b) herein
without regard to the relative fault of said Indemnifying Party or
Indemnified Party or any other equitable consideration provided for in this
Section 9.
10. Rule 144. With a view to making available the benefits of
certain rules and regulations of the Commission that at any time permit the
sale of securities of the Company to the public without registration, the
Company agrees to:
a. Make, file and keep public information available as those
terms are understood and defined in Rule 144 under the Securities Act;
b. File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act; and
c. Furnish to Couphar forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements
of said Rule 144 and the Exchange
<PAGE>
-14-
Act, a copy of the most recent annual or quarterly report of the Company, and
such other reports and documents of the Company as Couphar may reasonably
request in availing itself of any rule or regulation of the Commission
allowing Couphar to sell any such securities without registration.
11. Transfer of Registration Rights.
a. The registration rights of Couphar under this
Agreement with respect to any Registerable Stock may be transferred or
assigned to any Permitted Transferee of such Registrable Stock; provided,
however, that such transfer may otherwise be effected in accordance with
applicable securities laws; and provided further that Couphar shall give the
Company written notice at or prior to the time of such transfer stating the
name and address of the Permitted Transferee and identifying the securities
with respect to which the rights under this Agreement are being transferred.
Except as set forth in this Section 11, no transfer of Registrable Stock shall
cause such Registrable Stock to lose such status.
b. Each Permitted Transferee shall be entitled to all
the benefits of and shall, as a condition of transfer, agree to be bound by the
provisions of this Agreement.
c. Any notice required to be given to or by the
Recipient or any Permitted Transferee need only be given to or by the
Recipient, and all actions taken by the Recipient in connection with this
Agreement shall be effective and binding on all such Permitted Transferees as
if made by them respectively.
12. Termination of Rights. Unless earlier terminated as
otherwise provided in this Agreement, Couphar's rights under this Agreement
shall terminate upon the earliest of:
a. Such time as the number of shares of Registrable
Stock outstanding is less than Two Hundred and Fifty Thousand (250,000)
(such number to be adjusted for stock splits and similar events in the manner
set forth in the provisions of the Exchangeable Shares); provided, however,
that such number shall be increased by the number of shares for which
registration therefor had been previously requested pursuant to Section 3 or 4
herein but for which registration was denied due to marketing factors pursuant
to Section 3(d)(iii)(D) or Section 4 herein;
b. Such time as Cascade is no longer subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act as a result
of a sale, merger, exchange agreement, stock repurchase, recapitalization or
other transaction or transactions in which Couphar had the opportunity to
participate on a pro rata basis or more favorable basis as Cascade's other
holders of Common Stock, as if the Exchangeable Shares had been exchanged
for Common Stock;
c. The second (2nd) annual anniversary date of the
date of Harrison's death; or
d. The tenth (10th) annual anniversary date of the
date of execution of this Agreement.
<PAGE>
-15-
13. Miscellaneous.
a. No Inconsistent Agreements. The Company shall
not hereafter enter into any agreement with respect to its securities that would
materially adversely affect the rights granted to Couphar in this Agreement.
Except as otherwise disclosed to the Recipient in writing prior to the date of
execution of this Agreement, the Company has not previously entered into any
agreement with respect to any of its securities granting any registration rights
to any Person, other than agreements which by reason of lapse of time do not
require the Company as a practical matter to register any securities for any
Person.
b. Successors and Assigns. Except as otherwise expressly
provided herein, the terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective successors and assigns of
the parties hereto. Nothing in this Agreement, express or implied, is
intended to confer upon any Person other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
c. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Oregon
applicable to contracts made and to be performed wholly within that state,
without regard to the conflict of law rules thereof.
d. Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, the successful party shall be
entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
e. Notices. Any notice required or permitted under this
Agreement shall be given in writing and shall be delivered in person or by
facsimile or by air courier guaranteeing no later than second (2nd) business
day delivery, directed (i) to the Company at the address set forth above
(with a copy, which shall not constitute notice, to Newcomb, Sabin, Schwartz
& Landsverk, 111 S.W. Fifth Avenue, Portland, Oregon 97204, facsimile number
(503) 228-5472, attention: Jack B. Schwartz, Esq.), or (ii) to Couphar at the
address of the Recipient as set forth above (with a copy, which shall not
constitute notice, to Aird & Berlis, BCE Place, Suite 1800, P.O. Box 754, 181
Bay Street, Toronto, Ontario, Canada M5J 2T9, facsimile number (416)
863-1515, attention: J. Philip Dawson, Esq.), as applicable. Any party may
change its address for notice by giving ten (10) days advance written notice
to the other parties. Every notice or other communication hereunder shall be
deemed to have been duly given or served on the date on which personally
delivered, or on the date actually received if sent by overnight courier
service with receipt acknowledged, or on the date of confirmed delivery if
sent by facsimile; provided, however, that in each such case, if said date is
not a business day in the jurisdiction of receipt, then the next immediately
following business day. No party shall be required to provide more than one
(1) notice to the other party with respect to any action or event for which
notice is required or permitted.
f. Entire Agreement. This Agreement is intended by the
parties as a final, complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, warranties or
<PAGE>
-16-
undertakings other than those set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
g. Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless
executed in writing by both the Company and Couphar.
h. Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions contained herein shall not be in
any way impaired thereby, it being intended that all of the rights and
privileges of Couphar shall be enforceable to the fullest extent permitted by
law.
i. Headings. The headings in this Agreement are used
for convenience of reference only and are not to be considered in construing or
interpreting this Agreement.
j. 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 constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly
executed and delivered by the duly authorized officers of the Recipient and the
Company as of the date below written.
RECIPIENT: COMPANY:
COUPHAR LTD. CASCADE CORPORATION
By: /s/ W.J. Harrison By: /s/ Robert C. Warren Jr.
Name: W.J. Harrison Name: Robert C. Warren Jr.
Title: President Title: President
Date: March 11/97 Date: March 11, 1997
<PAGE>
SHAREHOLDERS' AGREEMENT
The Trustees ( Warren Trustees) of the Robert C. Warren and Nani Swigert
Warren Revocable Trust (Trust) and Couphar Ltd. (Couphar) agree as follows:
1. Purpose
Trust owns 1,654,592 shares of common stock of Cascade Corporation
(Cascade). In connection with its acquisition of shares of Kenhar Corporation,
Cascade has provided Couphar 1,100,000 Exchangeable Preferred shares of Cascade
(Canada) Holdings, Inc., a corporation organized under the laws of the Province
of Ontario (the Exchangeable Shares). Each Exchangeable Share may be exchanged
for one share of Cascade common stock, pursuant to the provisions of such
Exchangeable Shares. Cascade has agreed to present to its shareholders an
amendment to its Articles of Incorporation permitting issuance to TD Trust
Company, as trustee for Couphar (Couphar Trustee), of a Cascade preferred share
which would grant the Couphar Trustee the right to cast votes equal to the
number of Exchangeable Shares held by Couphar (on the record date for
determining common shareholders eligible to vote) on matters presented to
Cascade common shareholders for decision (the Special Voting Stock). This
Agreement is intended to set forth the parties' understandings as to certain
rights of the parties with respect to voting on certain matters presented to
Cascade common shareholders, and as to certain sales of Cascade common shares by
Warren Trustees.
2. Definitions
For purposes of this Agreement,
(a) "Common Shares" means shares of common stock of Cascade or any
successor corporation;
(b) "Couphar Common Shares" means at any time the number of Common Shares
which Couphar would hold if all Exchangeable Shares were then
exchanged for Common Shares (not including Common Shares acquired
other than those acquired directly or indirectly through exchange of
Exchangeable Shares or as a result of application of the provisions
attached to the Exchangeable Shares in connection with Cascade's
acquisition of the outstanding stock of Kenhar Corporation).
(c) "Refusal Agreement" means an agreement of even date between Cascade
and Couphar providing Cascade a right of first refusal in the event of
certain
<PAGE>
Couphar sales of Common Shares.
(d) "Trust Shares" means at any time the number of Common Shares held by
Warren Trustees as at such time.
3. Voting of Shares
(a) Warren Trustees will vote all Common Shares owned by the Trust in
favor of any proposal included on a proxy submitted to shareholders by Cascade
management prior to Cascade's May, 1997, Annual Meeting of Shareholders to amend
Cascade's Articles of Incorporation to permit issuance of Special Voting Stock
to Couphar Trustee.
(b) Warren Trustees (i) will vote all Common Shares owned by the Trust in
favor of any slate of candidates for election or re-election as directors
included on a proxy submitted by Cascade management prior to any meeting of
shareholders which includes William J. Harrison as a candidate, (ii) will not
withhold the Trust's votes from William J. Harrison's candidacy, and (iii) in
the event the proxy submitted to shareholders by Cascade management includes
William J. Harrison individually as a candidate for election as a director, will
vote all Common Shares owned by the Trust in favor of his election.
(c) Couphar will, and will cause Couphar Trustee (i) to cast all votes
Couphar or Couphar Trustee may be entitled to cast in favor of any slate of
candidates for election or re-election as directors on a proxy submitted to
shareholders by Cascade management prior to any meeting of shareholders, and
(ii) to take all steps necessary to assure that such votes are not withheld from
any such candidate.
4. Underwritten Offering
(a) Should Warren Trustees determine to offer Common Shares for public sale
through an underwritten secondary offering, they shall provide Couphar written
notice of such determination (which notice shall include the number of Common
Shares proposed to be sold) and, if within 20 days following receipt of such
notice, Couphar so requests in writing, shall include in such underwritten
offering the number of Common Shares set forth in Couphar's request, subject
to such limitations and restrictions as a lead underwriter or syndicate manager
engaged by Warren Trustees may determine are necessary for orderly public
distribution or to assure that inclusion of shares owned by Couphar will not be
detrimental to the planned offering (in the event the total number of shares to
be offered is reduced due to such limitation, the parties, respectively, shall
bear such reduction in proportion to the total number of Common Shares and, in
Couphar's case, Couphar Common Shares, owned by each. In the event there are
other sellers, each seller shall bear such reduction in proportion to the total
number of Common Shares and Couphar Common Shares owned by each.
<PAGE>
(b) Couphar shall pay, and shall indemnify Warren Trustees for, the same
proportion of expenses applicable to registration and sale of Common Shares
under this Paragraph 4, including but not limited to filing fees; commissions;
and legal, accounting, and underwriting fees and costs, as the number of shares
offered by Couphar bears to the total number of shares being offered; however,
if the registration is withdrawn or abandoned solely because of actions of
Warren Trustees, Couphar shall not be liable for payment of expenses.
(c) This Paragraph 4 shall not apply to offerings which include unissued or
treasury shares being offered by Cascade.
5. Private Placement
(a) Should Warren Trustees determine to sell Trust Shares in a transaction
involving neither an underwritten offering nor a sale through a recognized
securities exchange, they shall provide written notice to Couphar stating (i)
the number of Trust Shares; (ii) the number of Trust Shares proposed to be sold;
(iii) the proposed selling price, and (iv) the proposed method and terms of
sale. Couphar may, upon written request delivered within 14 business days of
such notice, require that Couphar Common Shares be included in such placement;
however, the number of Couphar Common Shares to be included shall not exceed (as
a proportion of the total Couphar Common Shares) the number of Trust Shares the
notice by the Warren Trustees indicated the Trust intended to sell as a
proportion of the total Trust Shares).
(b) Any such sale shall be on price and other terms negotiated by the
Warren Trustees, and with due regard for applicable legal obligations of the
parties or either of them to holders of Common Shares as a group.
(c) Legal and other expenses incurred by the Trust in connection with such
negotiation shall be borne by the parties in proportion to proceeds received as
a result of the sale.
(d) Warren Trustees shall not complete a sale of Trust Shares under this
paragraph unless the Common Shares which Couphar provided notice it wished to
sell, has a right to sell, and tenders for sale hereunder, are purchased as a
part of the sale.
(e) Warren Trustees shall give Couphar notice of sales under this paragraph
sufficient to enable Couphar to take the steps necessary to exchange
Exchangeable Shares and obtain Common Shares to be included in such sale.
6. Inapplicability and Termination
(a) This Agreement shall terminate and be of no further application at the
earlier of (i) three years from the date hereof or (ii) the date on which either
Couphar or Warren Trustees own less than 250,000 Common Shares and Couphar
Common Shares (as adjusted for stock dividends, splits, and similar events
affecting all Common Shares); however, termination shall not affect obligations
to complete transactions arising under Paragraph 4 or Paragraph 5 prior to
termination.
(b) This Agreement shall not apply to sales or transfers of shares in
response to tender offers, consolidations, mergers, reorganizations or similar
transactions in which all holders of Common Shares are provided the pro rata
opportunity to sell or transfer shares on identical terms and conditions.
7. Notices
All notices and other communications between the parties pursuant to the
Agreement shall be in writing and shall be deemed to have been given if
delivered personally or by confirmed facsimile to the parties at the following
addresses or at such other address as such party may specify by like notice:
(a) if to Warren Trustees at:
2020 S.W. Fourth Avenue, Suite 600
Portland, Oregon 97201-4998
Attention: Robert C. Warren, Jr.
Facsimile: (503) 274-1705
with a copy (which shall not be notice) to:
Newcomb, Sabin, Schwartz & Landsverk
111 S.W. Fifth Avenue, Suite 4040
Portland, Oregon 97204
Facsimile: (503) 228-5472
(b) If to Couphar at:
27 Fox Run Drive, RR #3
Guelph, Ontario
N1H 6N9
with a copy (which shall not be notice) to:
J.P. Dawson
Aird & Berlis
<PAGE>
BCE Place
Suite 1800, Box 754
181 Bay Street
Toronto, Canada M5J 2T9
Any notice or other communication delivered personally shall be deemed to
have been given and received upon delivery thereof and if given by facsimile
shall be deemed to have been given and received on the date of confirmation of
transmission unless such day is not a business day in the nation in which
received, in which case it shall be deemed to have been given and received upon
the immediately following business day.
8. Assignment
(a) Couphar's rights and obligations hereunder shall extend to transferees
or assignees of transfers permitted under the Refusal Agreement of even date
between Couphar, William J. Harrison and Cascade. Such transferees or assignees
shall agree in writing to be bound by this Agreement as a condition of transfer
or assignment. Common Shares or Couphar Common Shares owned by all such
transferees shall be aggregated for purposes of this Agreement.
(b) Warren Trustees shall not transfer Common Shares to any Trust
beneficiary unless and until such beneficiary shall agree in writing to assume
the obligations of Warren Trustees hereunder as to such Common Shares. Common
shares owned by all such transferees shall be aggregated for purposes of this
Agreement.
9. Choice of Law
This Agreement shall be governed by, and interpreted and applied in
accordance with, the laws of the United States and the State of Oregon.
10. Integration and Modification
This Agreement represents the parties' entire agreement on the subject
matter covered, and supersedes all prior agreements and understandings.
Provisions of this
///////
///////
//////
<PAGE>
//////
Agreement may be amended or its observance waived generally or in particular
only by a written instrument duly executed by each of the parties (or, in the
case of a waiver, the waiving party).
DATED this 11th day of March, 1997.
THE ROBERT C. WARREN AND COUPHAR LTD
NANI SWIGERT WARREN
REVOCABLE TRUST
By /s/ Nani Swigert Warren By /s/ W.J. Harrison
------------------------ ------------------
Its
---------------
/s/ C.C. Knudsen
-------------------------
/s/ Jack B. Schwartz
-------------------------
/s/ Robert C. Warren, Jr.
--------------------------
Warren Trustees
In consideration of the Robert C. and Nani S. Warren Revocable Trust
entering into the above Agreement, the undersigned sole shareholder of
Couphar Ltd. hereby guarantees full performance by Couphar of its
obligations hereunder.
/s/ W.J. Harrison
-----------------------
William J. Harrison
<PAGE>
[Letterhead]
Portland, Oregon
January 16, 1997
[PR Newswire: For Northwest Regional and Analyst Wires]
FOR IMMEDIATE RELEASE
Cascade Corporation to Acquire Kenhar Corporation
Robert C. Warren, Jr., President and Chief Executive Officer of Cascade
Corporation (NYSE: CAE) and William J. Harrison, Executive Chairman and Chief
Executive Officer of Kenhar Corporation reported that the companies have signed
a letter of intent providing that Cascade will acquire all of the outstanding
shares of Kenhar for cash of USD56,500,000 and securities (to be held by
Harrison) exchangeable into 1,100,000 Cascade common shares. The transaction is
expected to be completed in March, 1997, subject to completion of a definitive
agreement, due diligence, and regulatory approvals.
Kenhar, based in Guelph, Ontario, Canada, is the leading international
manufacturer and marketer of forks for use on fork lift trucks and construction
equipment. The company had revenues of approximately USD90,000,000 last year.
Warren noted that the acquisition of Kenhar is a central part of Cascade's
strategy of expansion in the fork lift truck industry beyond its traditional
line of attachments. "This completes our current expansion plan. Kenhar is a
premier company with excellent relations with its customers. We are thrilled to
join with this fine company and to welcome Bill Harrison and all Kenhar
employees to our team," Warren said.
Harrison said the transaction meets the long term goals of Kenhar shareholders.
"The companies are being brought together to create a larger and more
substantial group which will strategically position itself to meet the present
and future needs of all its customers, especially in the era of global
outsourcing," noted Harrison, who will become an Executive Vice President of
Cascade and will be a member of an executive committee consisting of Warren and
the other Executive Vice President of Cascade. He will continue as CEO of
Kenhar and it is anticipated that he will join Cascade's Board of Directors.
Harrison said, "With Kenhar being operated as a distinct business unit, our
customers will continue to receive the highest level of attention, as they have
in the past, from existing Kenhar staff members with whom they are familiar."
Cascade Corporation, headquartered in Portland, Oregon is a leading
international manufacturer of lift truck attachments, masts, tires, hydraulic
cylinders and accessories.
CONTACT: Cascade Corporation - Portland, Oregon
James P. Miller - (503)227-0024
Gerald A. Parsons - (503)228-2909
Kenhar Corporation - Guelph, Ontario, Canada
William J. Harrison or Jim Hoy - (519)-763-3675
<PAGE>
[Letterhead]
Portland, Oregon
March 12, 1997
[PR Newswire: For Northwest Regional and Analyst Wires]
FOR IMMEDIATE RELEASE MARCH 12, 1997
Cascade Corporation Acquires Kenhar Corporation
Robert C. Warren, Jr., President and Chief Executive Officer of Cascade
Corporation (NYSE: CAE) announced today completion of the previously disclosed
acquisition of Kenhar Corporation of Guelph, Ontario, Canada. Kenhar is the
leading international manufacturer and marketer of forks for use on lift trucks
and construction equipment.
William J. Harrison, Executive Chairman and CEO of Kenhar, has been appointed an
Executive Vice President of Cascade and will be a nominee to join its Board of
Directors. Harrison will remain responsible for operations of Kenhar, now a
wholly-owned subsidiary of Cascade Holdings (Canada) Ltd., a subsidiary of
Cascade Corporation.
Cascade Corporation, headquartered in Portland, Oregon is the world's leading
manufacturer of lift truck attachments and forks and a leading manufacturer of
industrial tires and accessories for lift trucks.
--30--
CONTACT: Cascade Corporation - Portland, Oregon
James P. Miller - (503)227-0024
Gerald A. Parsons - (503)228-2909
Kenhar Corporation - Guelph, Ontario, Canada
William J. Harrison or Jim Hoy - (519)-763-3675
<PAGE>
[Letterhead]
Portland, Oregon
March 18, 1997
[PR Newswire: For Northwest Regional and Analyst Wires]
FOR IMMEDIATE RELEASE
Cascade Announces Sales and Earnings for the Fourth Quarter and the Year Ended
January 31, 1997
Robert C. Warren, Jr., President and Chief Executive Officer of Cascade
Corporation (NYSE:CAE) reported slightly lower sales but increased net income
for the year ended January 31, 1997.
Consolidated net sales of $218,485,000 for fiscal 1996 represents a decrease of
6.6% from 1995's record sales of $234,030,000. Fourth quarter sales of $51,800,
000 were 13% less than those in the prior year fourth quarter.
Net income for the year of $17,420,000 ($1.48 per share) was 5.1% lower than the
$18,350,000 ($1.53 per share) for the year ended January 31, 1996 prior to a
$12,000,000 ($7,800,000 or $.65 per share after tax) special charge for future
environmental expenses. After the special charge, net income for 1996 was 65%
higher than the $10,550,000 reported for the year ended January 31, 1996.
Fourth quarter net income of $4,330,000 ($.37 per share) compared to $4,775,000
($.40 per share) in 1995 prior to the special charge, which was taken in the
fourth quarter last year.
Warren noted that industry lift truck bookings were down for the year from
1995's record levels, but improved late in 1996 with the favorable trend
continuing into the first calendar quarter of 1997. He also said that a slow
recovery in European markets is underway.
Cascade Corporation, headquartered in Portland, Oregon is a leading
international manufacturer of lift truck attachments, forks, tires and
accessories.
CONTACT: Cascade Corporation - Portland, Oregon
James P. Miller - (503)227-0024 or Gerald A. Parsons (503)228-2909
--more--
Page 1 of 2
<PAGE>
Cascade Corporation Unaudited Consolidated Financial Information (in thousands
except per share data)
INCOME SUMMARY Quarter Ended Jan. 31 Year Ended Jan. 31
--------------------- ---------------------
1997 1996 1997 1996
Net Sales $ 51,800 $ 59,750 $218,485 $ 234,030
--------- --------- -------- ---------
Operating Expenses:
Cost of Goods Sold 34,260 38,875 143,080 153,345
Depreciation 2,565 2,180 10,280 9,540
Selling and
Administrative Expenses 10,590 10,870 40,275 39,935
Environmental Expenses 13,480 14,795
-------- --------- -------- ---------
47,415 65,405 193,635 217,615
-------- --------- -------- ---------
Operating Income 4,385 (5,655) 24,850 16,415
Interest Expense 256 220 876 1,085
Interest Income (426) (350) (1,076) (1,045)
Other Expense (Income) Net (880) (820) 65 315
Income Before Income Taxes 5,435 (4,705) 24,985 16,060
Income Taxes 1,105 (1,680) 7,565 5,510
-------- --------- -------- ---------
Net Income $ 4,330 $ (3,025) $ 17,420 $ 10,550
-------- --------- -------- ---------
-------- --------- -------- ---------
Net Income Per Share $ 0.37 $ (0.25) $ 1.48 $ .88
-------- --------- -------- ---------
-------- --------- -------- ---------
CONDENSED BALANCE SHEET AS OF JANUARY 31, 1997
Assets Liabilities and Shareholders' Equity
Current Assets:
Cash $ 15,642 Current Liabilities $ 65,879
Receivables 43,469 Long Term Liabilities:
Inventories 36,002 Long Term Debt 12,810
Prepaid Expenses 3,516 Accrued Environmental Expenses 8,913
---------
Total Current Assets 98,629 Other Liabilities 8,184
--------
Property, Plant & Equipment 81,393 Total Liabilities 95,786
Goodwill 18,332 Mandatorily Redeemable Convertible 4,950
Preferred Stock
Other Assets 1,139 Shareholders' Equity 98,757
--------- --------
Total Assets $199,493 Total Liabilities & $199,493
--------- Shareholders' Equity --------
--------- --------
--end--
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