<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
April 29, 1999
----------------
Date of Report
(Date of earliest event reported)
CASCADE CORPORATION
---------------------------------------------------
(Exact name of registrant as specified in its charter)
OREGON 1-12557 93-0136592
- ---------------------- ---------------------- ------------------
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification No.)
incorporation)
2201 N.E. 201st Ave.
Fairview, Oregon 97024-9711
----------------------------------------------------------------
(Address of principal executive offices, including zip code)
(503) 669-6300
-------------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
Cascade Corporation: Form 8-K
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
On April 29, 1999, Cascade Corporation ("Cascade") completed the sale of assets
and assumption of certain liabilities of its Industrial Tire Division and the
wheel and baseband manufacturing operations of its Kenhar Division in Guelph,
Ontario to Maine Rubber Company. The parties consummated the sale in accordance
with the terms of an Asset Purchase Agreement dated April 6, 1999, among
Cascade, Cascade (Canada) Ltd., an Ontario corporation and wholly owned
subsidiary of Cascade, Cascade (Ontario) Inc., an Ontario corporation and
wholly owned subsidiary of Cascade, and ITL Industrial Tires, Inc., a
Delaware corporation and wholly owned subsidiary of Cascade, as sellers, and
Maine Rubber Company, an Indiana corporation, as purchaser. At the closing of
the sale, Maine Rubber Company merged with and into Maine Industrial Tires
Limited, an Indiana corporation.
The purchase price for the assets was $39,607,673 (US). Of this, Maine Rubber
Company paid (i) $26,890,230 (US) in cash, and (ii) $8,794,586 (US) in the
form of a junior subordinated note to be paid over four years, and assumed
$3,922,857 in liabilities. The note bears interest at the rate of 8% per
annum and is unsecured. The purchase price will be adjusted following the
closing to reflect any difference between estimated working capital and
actual working capital as of the closing date.
The consideration paid for the assets was determined pursuant to arms-length
negotiations between the parties.
The above description of the transaction and 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. Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION. The unaudited pro forma financial
information is filed as part of this Current Report to reflect the
registrant's disposition of its Industrial Tire Division and the
wheel and baseband manufacturing operations of its Kenhar Division.
(c) EXHIBITS.
2.1 Asset Purchase Agreement dated April 6, 1999, among Cascade
Corporation, Cascade (Canada) Ltd., Cascade (Ontario) Inc., ITL
Industrial Tires, Inc., and Maine Rubber Company. The following
schedules are omitted (unless otherwise indicated) and will be
provided to the Commission upon request:
<TABLE>
<CAPTION>
SCHEDULE DESCRIPTION
-------- -----------
<S> <C>
Exhibit A Assumed Liabilities of Industrial Tires Business
Exhibit B Assumed Liabilities of Baseband and Wheel Business
Exhibit C Form of Note
Exhibit D List of Computer Equipment
Exhibit E Territory
Exhibit F Transition Services
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Schedule 2.1 Certain Industrial Tires Assets
Schedule 2.3 Certain Baseband and Wheel Business Assets
Schedule 4.1 Corporation; Organization
Schedule 4.2 Authority
Schedule 5.1 Financial Statements
Schedule 5.3 Inventory
Schedule 5.4 Absence of Certain Changes or Events
Schedule 5.5 Debt for Borrowed Money
Schedule 5.8 Industrial Tires Real Estate; Industrial Tires
Leased Real Estate
Schedule 5.9 Personal Property and Assumed Industrial Tires Leases
Schedule 5.10 Assumed Industrial Tires Contracts
Schedule 5.11 Status of Assumed Industrial Tires Leases and
Assumed Industrial Tires Contracts
Schedule 5.12 Compliance with Laws
Schedule 5.13 Environmental Laws and Regulations
Schedule 5.14 No Violation, Litigation or Regulatory Action
Schedule 5.15 Industrial Tires Proprietary Rights
Schedule 5.16 Intercompany/Affiliate Transactions
Schedule 5.17 Permits
Schedule 5.18 Employment
Schedule 5.19 Insurance
Schedule 5.21 Customers
Schedule 5.22 Year 2000 Compliant
Schedule 5.23 Warranties
Schedule 6.1 Financial Statements
Schedule 6.3 Inventory
Schedule 6.4 Absence of Certain Changes or Events
Schedule 6.5 Debt for Borrowed Money
Schedule 6.8 CCL Leased Real Estate
Schedule 6.9 Personal Property and Assumed CCL Leases
Schedule 6.10 Assumed CCL Contracts
Schedule 6.11 Status of Assumed CCL Leases and Assumed CCL
Contracts
Schedule 6.12 Compliance with Laws
Schedule 6.13 Environmental Laws and Regulations
Schedule 6.14 No Violation, Litigation or Regulatory Action
Schedule 6.15 CCL Proprietary Rights
Schedule 6.16 Intercompany/Affiliate Transactions
Schedule 6.17 Permits
Schedule 6.18 Employment
Schedule 6.19 Insurance
Schedule 6.21 Customers
Schedule 6.22 Year 2000 Compliant
Schedule 6.23 Warranties
</TABLE>
2.2 First Amendment to Asset Purchase Agreement dated April 29, 1999,
among Cascade Corporation, Cascade (Canada) Ltd., Cascade (Ontario)
Inc., ITL Industrial Tires, Inc., and Maine Rubber Company. The
following schedules are omitted (unless otherwise indicated) and will
be provided to the Commission upon request:
<TABLE>
<CAPTION>
SCHEDULE DESCRIPTION
-------- -----------
<S> <C>
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Exhibit A Amended Junior Subordinated Note (attached at 10.1
below)
Exhibit B Assumption of Employment Agreement
Exhibit C Outstanding Closing Conditions
</TABLE>
<TABLE>
<S> <C>
10.1 Junior Subordinated Note dated April 29, 1999 made by Maine Industrial
Tires Limited in favor of ITL Industrial Tires, Inc.
99.1 Press Release, dated April 4, 1999.
99.2 Press Release, dated April 29, 1999.
</TABLE>
<PAGE>
CASCADE CORPORATION
COMBINED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
WHEELS AND CASCADE
CASCADE BASEBAND CORPORATION
CORPORATION ITL DIVISION ADJUSTMENTS PRO FORMA
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 407,930 $ 38,661 $ 6,467 $ - $ 362,802
---------------------------------------------------------------------------------------------
Operating expenses:
Cost of goods sold 281,195 28,756 5,244 - 247,195
Depreciation and
amortization 21,550 1,921 166 - 19,463
Selling and
administrative expenses 68,500 6,486 132 - 61,882
---------------------------------------------------------------------------------------------
Total operating expenses 371,245 37,163 5,542 - 328,540
---------------------------------------------------------------------------------------------
Operating income 36,685 1,498 925 - 34,262
Interest expense 10,940 46 - (1,396) (d) 9,498
Interest income (755) (597) (b) (1,352)
Other (income) expenses, net (4,755) (154) 3 2,767 (a) (1,837)
---------------------------------------------------------------------------------------------
Income (loss) before income
taxes 31,255 1,606 922 (774) 27,953
Income taxes 9,885 311 292 (829) (C) 8,453
---------------------------------------------------------------------------------------------
Net income (loss) 21,370 1,295 630 (774) 19,500
---------------------------------------------------------------------------------------------
Dividends paid on preferred
shares of subsidiaries 530 - - - 530
Income applicable to
common shareholders $ 20,840 $ 1,295 $ 630 $ 55 $ 18,970
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Basic earnings per share $ 1.77 $ 1.61
-------------- --------------
-------------- --------------
Diluted earnings per share $ 1.63 $ 1.48
-------------- --------------
-------------- --------------
Weighted average shares
outstanding:
Basic 11,748 11,748
-------------- --------------
-------------- --------------
Diluted 13,148 13,148
-------------- --------------
-------------- --------------
</TABLE>
<PAGE>
CASCADE CORPORATION
COMBINED PRO FORMA BALANCE SHEET (NOTE 1)
JANUARY 31, 1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(in thousands)
WHEELS AND CASCADE
CASCADE BASEBAND CORPORATION
CORPORATION ITL DIVISION ADJUSTMENTS PRO FORMA
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivanlents $ 11,460 $ - $ - $ $ 11.460
Accounts receivable 72,354 6,435 763 65,156
Inventories 62,015 9,086 490 52,439
Deferred income taxes 254 - 254
Prepaid expenses 7,640 142 11 7,487
--------------------------------------------------------------------------------------
Total current assets 153,723 15,663 1,264 136,796
Property, plant and equipment 100,075 10,848 464 88,763
Deferred income tax 3,370 - 4,500 (5) 7,870
Goodwill 86,462 12,135 1 74,326
Other assets 4,227 - 7,458 (2) 11,685
--------------------------------------------------------------------------------------
Total assets $ 347,857 $ 38,646 $ 1,729 $ 11,958 $ 319,440
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Current liabilities:
Notes payable to bank $ 9,817 $ - $ - $ - $ 9,817
Current portion of long-term debt 6,510 - 6,510
Accounts payable 26,789 7,473 455 4,626 (4) 23,487
Accrued payroll and taxes 6,954 - 31 6,923
Other accrued expenses 9,105 - 5,500 (5) 14,605
--------------------------------------------------------------------------------------
Total current liabilities 59,175 7,473 486 10,126 61,343
Long-term debt 142,783 - (26,890) (1) 115,893
Accrued environmental expenditures 7,228 - 7,228
Other liabilities 3,228 2,459 769
--------------------------------------------------------------------------------------
Total liabilities 212,414 9,932 486 (16,764) 185,232
--------------------------------------------------------------------------------------
Mandatorily redeemable convertible
preferred stock 15,949 15,949
--------------------------------------------------------------------------------------
Shareholder's equity:
Preferred stock - -
Common stock 5,858 5,858
Additional paid-in-capital -
Retained earnings 125,065 28,787 1,243 28,722 (3) 123,757
Cumlative translation adjustment (11,200) (73) (11,127)
Treasury stock (229) - (229)
--------------------------------------------------------------------------------------
Total shareholders' equity 119,494 28,714 1,243 28,722 118,259
--------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity $ 347,857 $ 38,646 $ 1,729 $ 11,958 $ 319,440
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CASCADE CORPORATION
NOTES TO PRO FORMA FINANCIAL INFORMATION
The pro forma combined balance sheet and statement of operations present the
audited balances of Cascade Corporation as of and for the year ended January
31, 1999 and the unaudited balances of the Industrial Tire and the wheel and
baseband divisions. The pro forma combined balances are not necessarily
indicative of balances which would have resulted had the sale actually
occurred on the dates indicated. These pro forma statements should be read in
conjunction with the historical financial statements and the accompanying
notes of Cascade Corporation.
NOTE 1
The combined pro forma balance sheet has been prepared to reflect the sale of
assets and assumptions of certain liabilities of Cascade Corporation's
Industrial Tire Division (ITL) and the wheel and baseband manufacturing
operations as if such sale occurred January 31, 1999. The aggregate sale
price was approximately $37.7 million based upon working capital at January
31, 1999.
The following adjustments are reflected in the combined pro forma balance
sheet as of January 31, 1999 (in thousands):
(1) The application of cash receipt of $26,890 from Maine Rubber Company
applied against the Company's long term debt.
(2) Amount of the Note Receivable of $7,458 for the sale of the assets of
Industrial Tire and the wheel and baseband divisions.
(3) Elimination of net assets in ITL and the wheel and baseband divisions of
$28,787 and $1,243 respectively and the reduction in equity for the
estimated loss.
(4) Adjustment of $4,626 for accounts payable not assumed by Maine Rubber
Company.
(5) Income tax effect relating to foregoing adjustments.
NOTE 2
The following adjustments are reflected in the combined pro forma statement
of operations for the year ended January 31, 1999 as if the sale occurred
February 1, 1998 (in thousand):
(a) Reduction in income of $2,767 due to loss from the sale of assets of ITL
and the wheel and baseband divisions of Cascade Corporation.
<PAGE>
CASCADE CORPORATION
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(b) Additional interest income of $597 resulting from the Notes Receivable
relative to the disposition of assets at 8% interest.
(c) Reduction of federal income taxes relating to foregoing adjustments.
(d) Related interest expense reduction assuming that the cash received from
Maine Rubber Company was applied to the Company's long term debt.
NOTE 3
The after tax loss will be adjusted based upon actual financial data at the sale
date of April 29, 1999.
<PAGE>
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
entered into by and among
Maine Rubber Company,
an Indiana corporation,
Cascade Corporation,
an Oregon corporation,
Cascade (Canada) Ltd.,
an Ontario corporation,
Cascade (Ontario) Inc.,
an Ontario corporation,
and
ITL Industrial Tires, Inc.,
a Delaware corporation,
Dated as of the 6th day of April, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 PURCHASE AND SALE OF ASSETS. . . . . . . . . . . . . . . . . . . . 8
2.1 Purchase and Sale of Industrial Tires Assets . . . . . . . . . . . 8
2.2 Excluded Industrial Tires Assets . . . . . . . . . . . . . . . . . 9
2.3 Purchase and Sale of CCL Assets. . . . . . . . . . . . . . . . . .10
2.4 Excluded CCL Assets. . . . . . . . . . . . . . . . . . . . . . . .11
2.5 Assumption of Liabilities. . . . . . . . . . . . . . . . . . . . .12
2.6 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . .15
2.7 Payment of Purchase Price; Post-Closing Reconciliation . . . . . .16
2.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . .17
2.9 Change in Corporate Name . . . . . . . . . . . . . . . . . . . . .17
2.10 Sale of Computer Equipment . . . . . . . . . . . . . . . . . . . .17
ARTICLE 3 CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
3.1 The Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . .18
3.2 Deliveries by the Sellers. . . . . . . . . . . . . . . . . . . . .18
3.3 Deliveries by Purchaser. . . . . . . . . . . . . . . . . . . . . .19
3.4 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . .20
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE SELLERS. . . . . . . . . . .20
4.1 Corporation; Organization. . . . . . . . . . . . . . . . . . . . .20
4.2 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
4.3 Residency. . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PARENT, COI AND ITL. . . . . . .22
5.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . .22
5.2 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . .22
5.3 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
5.4 Absence of Certain Changes or Events . . . . . . . . . . . . . . .22
5.5 Debt for Borrowed Money. . . . . . . . . . . . . . . . . . . . . .23
5.6 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
5.7 Marketability and Condition of Industrial Tires Assets . . . . . .23
5.8 Real Estate; Assumed Real Estate Leases. . . . . . . . . . . . . .24
5.9 Personal Property and Personal Property Assumed Leases . . . . . .24
5.10 Assumed Contracts. . . . . . . . . . . . . . . . . . . . . . . . .24
5.11 Status of Assumed Industrial Tires Leases and Assumed
Industrial Tires Contracts . . . . . . . . . . . . . . . . . . .25
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<PAGE>
5.12 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . .25
5.13 Environmental Laws and Regulations.. . . . . . . . . . . . . . . .25
5.14 No Violation, Litigation or Regulatory Action. . . . . . . . . . .26
5.15 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . .26
5.16 Intercompany/Affiliate Transactions. . . . . . . . . . . . . . . .27
5.17 Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
5.18 Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
5.19 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
5.20 Suppliers. . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
5.21 Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
5.22 Year 2000 Compliant. . . . . . . . . . . . . . . . . . . . . . . .31
5.23 Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
5.24 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PARENT AND CCL . . . . . . . . .31
6.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . .31
6.2 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . .32
6.3 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
6.4 Absence of Certain Changes or Events . . . . . . . . . . . . . . .32
6.5 Debt for Borrowed Money. . . . . . . . . . . . . . . . . . . . . .32
6.6 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
6.7 Marketability and Condition of CCL Assets. . . . . . . . . . . . .33
6.8 Real Property Interests; Assumed Real Estate Leases. . . . . . . .33
6.9 Personal Property and Personal Property Assumed Leases . . . . . .33
6.10 Assumed Contracts. . . . . . . . . . . . . . . . . . . . . . . . .34
6.11 Status of Assumed CCL Leases and Assumed CCL Contracts . . . . . .34
6.12 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . .34
6.13 Environmental Laws and Regulations . . . . . . . . . . . . . . . .34
6.14 No Violation, Litigation or Regulatory Action. . . . . . . . . . .35
6.15 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . .35
6.16 Intercompany/Affiliate Transactions. . . . . . . . . . . . . . . .36
6.17 Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
6.18 Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
6.19 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
6.20 Suppliers. . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
6.21 Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
6.22 Year 2000 Compliant. . . . . . . . . . . . . . . . . . . . . . . .39
6.23 Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
6.24 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF PURCHASER. . . . . . . . . . . .40
7.1 Corporation; Organization. . . . . . . . . . . . . . . . . . . . .40
7.2 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
7.3 Investment Canada Act. . . . . . . . . . . . . . . . . . . . . . .41
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<PAGE>
7.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
ARTICLE 8 COVENANTS PENDING CLOSING. . . . . . . . . . . . . . . . . . . . .41
8.1 Covenants Relating to the Business . . . . . . . . . . . . . . . .41
8.2 Approvals and Consents . . . . . . . . . . . . . . . . . . . . . .42
8.3 Full Access. . . . . . . . . . . . . . . . . . . . . . . . . . . .42
8.4 Advice of Change . . . . . . . . . . . . . . . . . . . . . . . . .42
8.5 Environmental Site Assessment. . . . . . . . . . . . . . . . . . .42
8.6 Survey and Title Opinion for any Owned Parcels of Real Property. .42
8.7 GST Registration . . . . . . . . . . . . . . . . . . . . . . . . .43
ARTICLE 9 CONDITIONS TO THE OBLIGATIONS OF PURCHASER . . . . . . . . . . . .43
9.1 Performance by the Sellers . . . . . . . . . . . . . . . . . . . .43
9.2 Certificate of Performance . . . . . . . . . . . . . . . . . . . .43
9.3 Certificates of Secretary of the Sellers . . . . . . . . . . . . .43
9.4 HSR Waiting Period . . . . . . . . . . . . . . . . . . . . . . . .43
9.5 Required Consents. . . . . . . . . . . . . . . . . . . . . . . . .43
9.6 Due Diligence. . . . . . . . . . . . . . . . . . . . . . . . . . .44
9.7 No Material Adverse Change . . . . . . . . . . . . . . . . . . . .44
9.8 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
9.9 No Injunction. . . . . . . . . . . . . . . . . . . . . . . . . . .44
9.10 Retail Sales Tax Act . . . . . . . . . . . . . . . . . . . . . . .44
9.11 Guelph Facility. . . . . . . . . . . . . . . . . . . . . . . . . .44
9.12 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . .44
ARTICLE 10 CONDITIONS TO THE OBLIGATIONS OF THE SELLERS . . . . . . . . . . .44
10.1 Performance by Purchaser . . . . . . . . . . . . . . . . . . . . .44
10.2 Certificate of Performance of Purchaser. . . . . . . . . . . . . .45
10.3 Certificate of Secretary of Purchaser. . . . . . . . . . . . . . .45
10.4 No Injunction. . . . . . . . . . . . . . . . . . . . . . . . . . .45
10.5 HSR Waiting Period . . . . . . . . . . . . . . . . . . . . . . . .45
10.6 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . .45
ARTICLE 11 POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . .45
11.1 Restrictive Covenants of CCL and COI . . . . . . . . . . . . . . .45
11.2 Restrictive Covenants of Parent and ITL. . . . . . . . . . . . . .48
11.3 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . .50
11.4 Use of Stationery and Signage. . . . . . . . . . . . . . . . . . .50
11.5 Transition Services. . . . . . . . . . . . . . . . . . . . . . . .50
11.6 Employment Matters Relating Solely to Transferred Employees. . . .51
11.7 Employment Matters Relating Solely to U.S. Employees of ITL. . . .53
11.8 Post-Closing Environmental Covenant. . . . . . . . . . . . . . . .54
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<PAGE>
ARTICLE 12 INDEMNIFICATION AGREEMENT/SURVIVAL PERIOD. . . . . . . . . . . . .55
12.1 Indemnification by Sellers . . . . . . . . . . . . . . . . . . . .55
12.2 Indemnification by Purchaser . . . . . . . . . . . . . . . . . . .58
12.3 Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . .58
12.4 Survival Period. . . . . . . . . . . . . . . . . . . . . . . . . .59
ARTICLE 13 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . .59
13.1 Confidential Nature of Information . . . . . . . . . . . . . . . .59
13.2 Public Announcement. . . . . . . . . . . . . . . . . . . . . . . .60
13.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
13.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
13.5 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . .62
13.6 Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . . .62
13.7 Access to Records. . . . . . . . . . . . . . . . . . . . . . . . .62
13.8 Assignment; Right of Purchaser to have Transactions
Consummated By Another Entity. . . . . . . . . . . . . . . . . .62
13.9 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . .63
13.10 Execution in Counterparts. . . . . . . . . . . . . . . . . . . . .63
13.11 Titles and Headings; Rules of Construction . . . . . . . . . . . .63
13.12 Entire Agreement; Amendments and Waivers . . . . . . . . . . . . .63
13.13 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . .63
13.14 Brokers' and Finders' Fees . . . . . . . . . . . . . . . . . . . .63
13.15 Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . . .63
13.16 Good Faith . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
13.17 Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . .64
13.18 Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
</TABLE>
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<PAGE>
EXHIBITS
<TABLE>
<S> <C>
Exhibit A Assumed Liabilities of Industrial Tires Business
Exhibit B Assumed Liabilities of Baseband and Wheel Business
Exhibit C Form of Note
Exhibit D List of Computer Equipment
Exhibit E Territory
Exhibit F Transition Services
</TABLE>
SCHEDULES
<TABLE>
<S> <C>
Schedule 2.1 Certain Industrial Tires Assets
Schedule 2.3 Certain Baseband and Wheel Business Assets
</TABLE>
SELLERS SCHEDULES
<TABLE>
<S> <C>
Schedule 4.1 Corporation; Organization
Schedule 4.2 Authority
</TABLE>
COI AND ITL SCHEDULES
<TABLE>
<S> <C>
Schedule 5.1 Financial Statements
Schedule 5.3 Inventory
Schedule 5.4 Absence of Certain Changes or Events
Schedule 5.5 Debt for Borrowed Money
Schedule 5.8 Industrial Tires Real Estate; Industrial Tires Leased Real
Estate
Schedule 5.9 Personal Property and Assumed Industrial Tires Leases
Schedule 5.10 Assumed Industrial Tires Contracts
Schedule 5.11 Status of Assumed Industrial Tires Leases and Assumed
Industrial Tires Contracts
Schedule 5.12 Compliance with Laws
Schedule 5.13 Environmental Laws and Regulations
Schedule 5.14 No Violation, Litigation or Regulatory action
Schedule 5.15 Industrial Tires Proprietary Rights
Schedule 5.16 Intercompany/Affiliate Transactions
Schedule 5.17 Permits
Schedule 5.18 Employment
Schedule 5.19 Insurance
Schedule 5.21 Customers
Schedule 5.22 Year 2000 Compliant
Schedule 5.23 Warranties
</TABLE>
-v-
<PAGE>
CCL SCHEDULES
<TABLE>
<S> <C>
Schedule 6.1 Financial Statements
Schedule 6.3 Inventory
Schedule 6.4 Absence of Certain Changes or Events
Schedule 6.5 Debt for Borrowed Money
Schedule 6.8 CCL Leased Real Estate
Schedule 6.9 Personal Property and Assumed CCL Leases
Schedule 6.10 Assumed CCL Contracts
Schedule 6.11 Status of Assumed CCL Leases and Assumed CCL Contracts
Schedule 6.12 Compliance with Laws
Schedule 6.13 Environmental Laws and Regulations
Schedule 6.14 No Violation, Litigation or Regulatory action
Schedule 6.15 CCL Proprietary Rights
Schedule 6.16 Intercompany/Affiliate Transactions
Schedule 6.17 Permits
Schedule 6.18 Employment
Schedule 6.19 Insurance
Schedule 6.21 Customers
Schedule 6.22 Year 2000 Compliant
Schedule 6.23 Warranties
</TABLE>
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<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of the 6th
day of April, 1999, is entered into by and among Maine Rubber Company, an
Indiana corporation ("Purchaser"), Cascade Corporation, an Oregon corporation
("Parent"), Cascade (Canada) Ltd., an Ontario corporation and wholly-owned by
Parent ("CCL"), Cascade (Ontario) Inc., an Ontario corporation and wholly
owned by CCL ("COI"), ITL Industrial Tires, Inc., a Delaware corporation and
wholly owned by Parent ("ITL") (collectively, Parent, CCL, COI and ITL
hereafter sometimes referred to as the "Sellers," and individually, as a
"Seller").
RECITALS
Purchaser, on its own behalf or through Maine Rubber International, a
Maine corporation and wholly-owned by Purchaser or through an entity or
entities to be formed before Closing (as hereinafter defined), desires to
purchase, and Sellers desire to sell, substantially all of the assets
utilized in the Business (as hereinafter defined) for an aggregate purchase
price of Thirty-Eight Million Nine Hundred Thousand Dollars ($38,900,000),
subject to adjustment, plus the amount of certain liabilities related to the
Business, and subject to the other terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of these premises, the mutual
representations, warranties and covenants contained herein and each act done
pursuant hereto, the parties agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
herein specified, unless the context otherwise requires:
1.1 "ADJUSTED WORKING CAPITAL" shall mean the amount of the current
assets of COI, ITL and CCL included within the Assets being sold to
Purchaser, MINUS the sum of the amount of the CCL Payables and the COI/ITL
Payables, converted from Canadian dollars to U.S. dollars at an exchange rate
of 0.6618.
1.2 "AFFILIATE" shall mean as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person and, if such Person is an individual, any member
of the immediate family (including parents, spouse, children and
grandchildren) of such individual and any trust whose principal beneficiary
is such individual or one or more members of such immediate family and any
Person who is controlled by any such member or trust. As used in this
definition, "CONTROL" (including, with its correlative meanings, "CONTROLLED
BY" and "UNDER COMMON CONTROL WITH") shall mean possession, directly or
indirectly, of power to direct or influence the direction of the management
or policies (whether as a director, officer or employee, through the
ownership of securities or other ownership interests, by contract or
otherwise).
<PAGE>
1.3 "AGREEMENT" shall mean this Asset Purchase Agreement, together
with all EXHIBITS and SCHEDULES referred to herein, as the same may be
amended or supplemented at any time and from time to time after the date
hereof.
1.4 "APPLICABLE CCL REAL ESTATE" shall mean the CCL Leased Real
Estate currently leased by CCL.
1.5 "APPLICABLE INDUSTRIAL TIRES REAL ESTATE" shall mean the
Industrial Tires Real Estate and the Industrial Tires Leased Real Estate
currently leased by ITL or COI.
1.6 "ASSETS" shall refer collectively to the CCL Assets and the
Industrial Tires Assets.
1.7 "ASSUMED CCL CONTRACTS" shall have the meaning given such term in
Sections 2.3(c) and 2.4(f) of this Agreement.
1.8 "ASSUMED CCL LEASES" shall have the meaning given such term in
Sections 2.3(b) and 2.4(f) of this Agreement.
1.9 "ASSUMED INDUSTRIAL TIRES CONTRACTS" shall have the meaning given
such term in Sections 2.1(d) and 2.2(f) of this Agreement.
1.10 "ASSUMED INDUSTRIAL TIRES LEASES" shall have the meaning given
such term in Sections 2.1(b) and 2.2(f) of this Agreement.
1.11 "ASSUMED LIABILITIES" shall have the meaning given such term in
Section 2.5(a) of this Agreement.
1.12 "BASEBAND AND WHEEL BUSINESS" shall mean the business of
fabricating steel basebands and steel wheels for the industrial tire industry
and the material handling and off-the-road markets operated by CCL as its
baseband and wheel divisions.
1.13 "BUSINESS" shall mean collectively the Baseband and Wheel
Business and the Industrial Tires Business.
1.14 "CCL ASSETS" shall have the meaning given such term in Section
2.3 of this Agreement.
1.15 "CCL FINANCIAL STATEMENTS" shall mean the balance sheets as of
October 31, 1998 and January 31, 1999 and the related statements of income
for the periods then ended, relating solely to the Baseband and Wheel
Business prepared by CCL and delivered to Purchaser.
1.16 "CCL INTERIM BALANCE SHEET" shall mean the balance sheet as of
October 31, 1998, included within the CCL Financial Statements.
1.17 "CCL LEASED REAL ESTATE" shall have the meaning given such term
in Section 6.8 of this Agreement.
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<PAGE>
1.18 "CCL PAYABLES" shall mean the Assumed Liabilities referenced in
Section 2.5(a)(iii) to be assumed by Purchaser.
1.19 "CCL PERMITS" shall have the meaning given such term in Section
6.17 of this Agreement.
1.20 "CCL PROPRIETARY RIGHTS" shall have the meaning given such term
in Section 6.15(a) of this Agreement.
1.21 "CASH ADJUSTMENT" shall have the meaning given such term in
Section 2.6(b)(i) of this Agreement.
1.22 "CLOSING" shall have the meaning given such term in Section 3.1
of this Agreement.
1.23 "CLOSING DATE" shall mean the date on which the Closing occurs.
1.24 "COI/ITL PAYABLES" shall mean the Assumed Liabilities referenced
in Section 2.5(a)(i) to be assumed by Purchaser.
1.25 "COMPUTER EQUIPMENT" shall have the meaning given such term in
Section 2.10 of this Agreement.
1.26 "DEDUCTIBLE AMOUNT" shall mean (a) with respect to the
obligations of all Sellers set forth in Section 12.1, Indemnifiable Losses in
the aggregate amount of Three Hundred Thousand Dollars ($300,000), which
amount shall include all unreimbursed sums incurred by Purchaser in excess of
the Warranty Deductible Amount in accordance with the terms and provisions of
Section 12.1(g), and (b) with respect to obligations of Purchaser set forth
in Section 12.2(a)(ii), Indemnifiable Losses in the aggregate amount of One
Hundred Fifty Thousand Dollars ($150,000).
1.27 "EMPLOYEE BENEFIT PLAN" shall mean an employee welfare benefit
plan or an employee pension benefit plan, or a plan which is both, with
respect to employees located in the United States, as those terms are defined
in Section 3 of ERISA, and any and all employee benefit plans or employee
pension plans with respect to employees located in Canada.
1.28 "ENVIRONMENTAL CLAIM" shall mean any and all claims, demands,
causes of actions, suits, proceedings, administrative proceedings, losses,
judgments, decrees, debts, damages, liabilities, court costs, reasonable
attorneys' fees and any other expenses incurred, assessed or sustained by or
against Parent, COI, CCL or ITL, as applicable, relating to environmental
matters.
1.29 "ENVIRONMENTAL LAW(S)" shall mean any applicable federal,
provincial, state or local law, rule, or regulation or common law, and
regulations, or under any code, order, decree, judgment or injunction
applicable to them or any notice, or request for information issued,
promulgated, approved or entered thereunder, or under the common law, or any
tort, nuisance or absolute liability theory, relating to public health or
safety, worker health or safety, or pollution, damage to or protection of the
environment including, without limitation, to the extent applicable, laws
relating to emissions, discharges, releases or threatened releases of
Hazardous Materials into the environment
-3-
<PAGE>
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, generation, disposal, transport or
handling of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes. For greater certainty, "Environmental
Law(s)" includes, without limitation, to the extent applicable, the
Environmental Protection Act (Ontario), the Ontario Water Resources Act
(Ontario), the Fisheries Act (Canada), the Energy Act (Ontario), the
Occupational Health and Safety Act (Ontario), the Dangerous Goods
Transportation Act (Ontario) and the Gasoline Handling Act (Ontario).
1.30 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.31 "EXCLUDED ASSETS" shall mean collectively, the Excluded CCL
Assets and the Excluded Industrial Tires Assets.
1.32 "EXCLUDED CCL ASSETS" shall have the meaning given such term in
Section 2.4 of this Agreement.
1.33 "EXCLUDED INDUSTRIAL TIRES ASSETS" shall have the meaning given
such term in Section 2.2 of this Agreement.
1.34 "GAAP" shall mean generally accepted accounting principles in the
United States consistently applied.
1.35 "GOVERNMENT" shall mean (or in the case of "GOVERNMENTAL" shall
refer to):
(a) the government of the United States, the government of
Canada or any of its provinces or territories or any other foreign country;
(b) the government of any state, province, county,
municipality, city, town or district of the United States, Canada or any
other foreign country; and any multi-county district; and
(c) any ministry, agency, department, authority, commission,
administration, corporation, bank, court, magistrate, tribunal, arbitrator,
instrumentality or political subdivision of, or within the geographical
jurisdiction of, any government described in the foregoing clauses (a) and
(b).
1.36 "HAZARDOUS MATERIALS" AND "HAZARDOUS MATERIAL" shall mean any
"hazardous substance" as defined pursuant to (a) the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections
9601-9657 and any amendments thereto ("CERCLA"); (b) any material defined as
"hazardous waste" pursuant to 40 C.F.R. Part 261 or in any Canadian or
Ontario Environmental Laws; (c) any petroleum, including crude oil and any
fraction thereof; (d) any "hazardous chemical" as defined pursuant to 29
C.F.R. Part 1910 or in any Canadian or Ontario Environmental Laws; (e) any
asbestos, polychlorinated biphenyl (PCB), or isomer of dioxin, or any
material or thing containing or composed of such substance or substances;
(f) any contaminants, pollutants, controlled substances, dangerous
substances, noxious substances, toxic substances,
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<PAGE>
hazardous substances, liquid wastes, industrial wastes, hazardous wastes,
hauled liquid wastes, flammable or explosive or radioactive material or
hazardous materials, including, without limitation, those defined, regulated
or declared to be such in or pursuant to any Environmental Law, and includes,
in any event, "UFFI" and (g) any other substance, regardless of physical
form, that is subject to any past or present federal, state, local or
provincial governmental statute, requirement, rule of liability or standard
of conduct relating to the protection of human health, plant life, animal
life, natural resources or property from the presence in the environment of
any solid, liquid, gas, odor or any form of energy, from whatever source.
1.37 "HSR" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
1.38 "INDEMNIFIABLE LOSSES" AND "INDEMNIFIABLE LOSS" shall have the
meaning given such terms in Section 12.1(a) of this Agreement.
1.39 "INDUSTRIAL TIRES ASSETS" shall have the meaning given such term
in Section 2.1 of this Agreement.
1.40 "INDUSTRIAL TIRES BUSINESS" shall mean (a) the business of
manufacturing industrial tires conducted by COI, and (b) the business of
marketing and distributing industrial tires conducted by ITL in the United
States and Canada.
1.41 "INDUSTRIAL TIRES FINANCIAL STATEMENTS" shall mean the balance
sheets representing the Industrial Tires Business as of October 31, 1998 and
January 31, 1999 and the related statements of income and cash flows, for the
periods then ended relating to the Industrial Tires Business prepared by COI
and ITL and delivered to Purchaser.
1.42 "INDUSTRIAL TIRES INTERIM BALANCE SHEET" shall mean the balance
sheet as of October 31, 1998 included within the Industrial Tires Financial
Statements.
1.43 "INDUSTRIAL TIRES LEASED REAL ESTATE" shall have the meaning
given such term in Section 5.8 of this Agreement.
1.44 "INDUSTRIAL TIRES PERMITS" shall have the meaning given such term
in Section 5.17 of this Agreement.
1.45 "INDUSTRIAL TIRES PROPRIETARY RIGHTS" shall have the meaning
given such term in Section 5.15(a) of this Agreement.
1.46 "INDUSTRIAL TIRES REAL ESTATE" shall have the meaning given such
term in Section 5.8 of this Agreement.
1.47 "JANUARY 31, 1999 CCL BALANCE SHEET" shall mean the balance sheet
as of January 31, 1999 included within the CCL Financial Statements.
-5-
<PAGE>
1.48 "JANUARY 31, 1999 INDUSTRIAL TIRES BALANCE SHEET" shall mean the
balance sheet as of January 31, 1999 included within the Industrial Tires
Financial Statements.
1.49 "KNOWLEDGE," "KNOWN" OR "KNOW(S)" when modifying any
representation or warranty or other provision of this Agreement shall be
interpreted in accordance with the following: (a) the Knowledge of Parent
means the Knowledge of all Sellers; (b) the Knowledge of Parent means the
knowledge of Robert C. Warren, Jr., Kurt G. Wollenberg and James P. Miller;
(c) the Knowledge of COI means the Knowledge of the following individuals:
Terry Mark, Don Driver and Bevin Goordat; (d) the Knowledge of ITL means the
Knowledge of the following individuals: Terry Mark, Don Driver and Bevin
Goordat; and (e) the Knowledge of CCL means the Knowledge of the following
individuals: Anthony Spinelli, David Hartig and Mohammed Bhatti.
An individual will be deemed to have "Knowledge" or "Know" or have "Known" of
a particular fact or other matter if (i) such individual is actually aware of
such fact or other matter, or (ii) a prudent individual would be reasonably
expected to discover or otherwise become aware of such fact or other matter
in the course of discharging the individual's business responsibilities.
1.50 "LAW" shall mean any of the following of, or issued by, any
Government, in effect on or prior to the date hereof, including any
amendment, modification or supplementation of any of the following from time
to time subsequent to the original enactment, adoption, issuance,
announcement, promulgation or granting thereof and prior to the date hereof:
any statute, law, act, ordinance, code, rule, or regulation or any writ,
injunction, award, decree, judgment or order of any Government.
1.51 "LEASE BUY-OUT PURCHASE PRICE" shall have the meaning given such
term in Section 2.10 of this Agreement.
1.52 "LEASED REAL ESTATE" shall mean collectively, the Industrial
Tires Leased Real Estate and the CCL Leased Real Estate.
1.53 "LIEN" OR "LIENS" shall mean any lien, encroachment, easement,
encumbrance, mortgage, hypothecation, pledge, conditional sales contract,
equity charge, or other similar conflicting ownership or security interest in
favor of any party.
1.54 "MAIN PENSION PLAN" shall mean the pension plan designated as
"Pension Plan for Employees of Industrial Tires Limited" having an effective
date of January 1, 1984, as amended and restated effective May 1, 1995 and
excluding Pension Plan B and Pension Plan C.
1.55 "MATERIAL AGREEMENTS" shall mean the following leases and
contracts: (a) lease of premises located at 3221 Wharton Way N.,
Mississauga, Ontario; (b) lease of premises located at 1885 Harlem Road,
Cheektowaga, New York; (c) sublease of premises located at 1810 Brittmoore
Road #106, Houston, Texas; (d) lease of premises located at 1810 Brittmoore
Road #100, Houston, Texas; (e) deed of lease of premises located at 645
Meloche Avenue, Dorval, Quebec; (f) lease of premises located at 1 Airpark
Place, Guelph, Ontario; (g) supply agreement between Mitsubishi Caterpillar
Forklift America, Inc. and ITL; (h) all agreements existing between Yantai
China Strategic Rubber Co. Ltd. and COI; (i) General Terms Agreement between
Genie Industries and COI
-6-
<PAGE>
as successor in interest to Industrial Tires Limited; and (j) supply
agreement between Mitsubishi Caterpillar Forklift America, Inc. and CCL as
successor in interest to Kenhar Products, Inc.
1.56 "NOTE" OR "NOTES" shall have the meaning given such terms in
Section 2.7(a)(ii) of this Agreement.
1.57 "NOTICE" shall include any written directive, order, claim,
litigation, investigation, proceeding, judgment, letter or other
communication, written or oral, actual or threatened, from any Person,
including any Government agency.
1.58 "PENSION PLANS" shall have the meaning given such term in Section
5.18(c) of this Agreement.
1.59 "PENSION PLAN B" shall mean the pension plan designated as
Pension Plan B for Designated Employees of Industrial Tires Limited having an
effective date of October 1, 1986, as amended and restated effective May 1,
1995.
1.60 "PENSION PLAN C" shall mean the pension plan designated as
Pension Plan C for Designated Employees of Industrial Tires Limited having an
effective date of October 1, 1986, as amended and restated effective May 1,
1995.
1.61 "PENSION UNDERFUNDING PAYMENT" shall mean the sum of One Hundred
Twenty-Two Thousand Four Hundred Thirty-Three Dollars ($122,433) (or One
Hundred Eighty-Five Thousand Dollars Canadian (Cdn 185,000), representing
COI's contribution toward the current funding deficiency of the Main Pension
Plan and the Pension Plan C.
1.62 "PERMITTED LIENS" shall mean (a) Liens for Taxes or utilities not
yet delinquent or the validity of which are being contested in good faith by
appropriate actions and which are described in SCHEDULE 5.6 or SCHEDULE 6.6,
(b) the rights of the lessors under the Leased Real Estate leases and
tangible personal property leases, excluding, however, the rights of lessors
to terminate such leases or exercise any right or remedy by reason of the
assignment or subletting by any Seller without consent or parting with
possession without consent, and (c) all easements, covenants, restrictions
and other encumbrances of record which do not destroy marketability of title,
materially detract from the value or materially interfere with the present
use of any Industrial Tires Real Estate.
1.63 "PERSON" shall mean any corporation, partnership, limited
liability company, limited liability partnership, joint venture, trust,
unincorporated association or organization, business, enterprise, or other
entity; any individual; and any Government.
1.64 "PRINCIPAL ADJUSTMENT" shall have the meaning given such term in
Section 2.6(b)(ii) of this Agreement.
1.65 "PROPRIETARY RIGHTS" shall mean collectively, the CCL Proprietary
Rights and the Industrial Tires Proprietary Rights.
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<PAGE>
1.66 "PURCHASER PARTY" OR "PURCHASER PARTIES" shall have the meaning
given such terms in Section 12.1(a) of this Agreement.
1.67 "PURCHASE PRICE" shall have the meaning given such term in
Section 2.6(a) of this Agreement.
1.68 "PURCHASE PRICE ALLOCATION SCHEDULE" shall have the meaning given
such term in Section 2.6(c) of this Agreement.
1.69 "SITE ASSESSMENT" shall have the meaning given such term in
Section 8.5 of this Agreement.
1.70 "SURVEY" shall have the meaning given such term in Section 8.6 of
this Agreement.
1.71 "TAX" OR "TAXES" shall mean all taxes, interest, penalties,
assessments or deficiencies imposed by or due to any Governmental taxing
authority.
1.72 "TAX CODE" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder and the Income
Tax Act (Canada) as amended and the regulations made thereunder.
1.73 "TITLE OPINION" shall have the meaning given such term in Section
8.6 of this Agreement.
1.74 "TRANSFERRED EMPLOYEES" shall have the meaning given such term in
Section 11.6(a) of this Agreement.
1.75 "WARRANTY DEDUCTIBLE AMOUNT" shall have the meaning given such
term in Section 12.1(g) of this Agreement.
1.76 "YEAR 2000 COMPLIANT" means, with respect to any Person, all
software, embedded microchips and other processing capabilities utilized by
and material to the business operations or financial condition of such Person
are able to interpret and manipulate data on or involving all calendar dates
correctly and without causing any abnormal ending scenario, including in
relation to dates in and after the year 2000.
1.77 "YEAR 2000 PROBLEM" means the risk that computer applications
used by, or operated within the custody or control of a Person may be unable
to recognize or properly perform date-sensitive functions involving certain
dates prior to, and any date after, December 31, 1999.
ARTICLE 2
PURCHASE AND SALE OF ASSETS
2.1 PURCHASE AND SALE OF INDUSTRIAL TIRES ASSETS. On the terms and
subject to the conditions set forth in this Agreement, COI and ITL hereby
agree to sell, assign, convey, transfer
-8-
<PAGE>
and deliver to Purchaser, and Purchaser hereby agrees to purchase from COI
and ITL, on a going concern basis, free and clear of all Liens (other than
the Permitted Liens) as of the Closing, all of the assets, properties and
business (excepting only Excluded Industrial Tires Assets) of every kind and
description, wherever located, real, personal or mixed, tangible or
intangible, owned or held by COI or ITL and used or held for use in the
Industrial Tires Business (collectively, the "Industrial Tires Assets"),
including, without limitation, all right, title and interest of COI and ITL
in, to and under:
(a) all inventory (including raw materials, work in process
and finished goods), accounts receivable (including, without limitation,
accounts receivable from Hyco-Cascade Pty. Ltd. and other related parties),
prepaid expenses and deposits, machinery and equipment, vehicles, furniture
and fixtures listed in SCHEDULE 2.1;
(b) all of the right, title and interest as tenant in and to
the real estate leases listed or described on SCHEDULE 5.8 and the personal
property leases listed or described in SCHEDULE 5.9 (collectively the
"Assumed Industrial Tires Leases");
(c) the Industrial Tires Real Estate listed or described in
SCHEDULE 5.8;
(d) the contracts, agreements or understandings listed or
described in SCHEDULE 5.10 (collectively the "Assumed Industrial Tires
Contracts");
(e) the patents, patent rights, patents pending, trademarks,
industrial designs, trade names, servicemarks and copyrights (and all
goodwill associated therewith) registered or unregistered related to the
Industrial Tires Business, and the applications for registration thereof and
licenses related to the foregoing listed in SCHEDULE 5.15 and all other
intellectual property of whatsoever nature and kind which is used or useful
in the Industrial Tires Business;
(f) the permits listed in SCHEDULE 5.17;
(g) all customer lists, processes, trade secrets, compound
rubber formulae, know-how and other proprietary or confidential information
used in or related to the Industrial Tires Business;
(h) all of the right, title and interest of COI or ITL to the
ownership and use of the name "ITL Industrial Tires, Inc.," "Industrial
Tires," "Industrial Tires Limited" or any variation thereof and the goodwill
associated with the Industrial Tires Business;
(i) all books and records (including all computer programs
and data) of COI or ITL relating to the assets, properties, business and
operations of the Industrial Tires Business and the computer programs listed
in SCHEDULE 5.10; and
(j) all of the rights, claims or causes of action of COI or
ITL against third parties related to the assets, properties, business or
operations of the Industrial Tires Business arising out of transactions
occurring prior to the Closing Date, other than any rights, claims or causes
of action any Seller may have (a) under that certain Share Purchase Agreement
dated November 11, 1996 relating to the acquisition of Industrial Tires
Limited, (b) under policies of insurance covering
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<PAGE>
damage to persons or property or product liability, (c) in regard to refunds
or credits of taxes of any kind covering periods prior to Closing or (d) for
indemnification or reimbursement against third parties for any amounts paid
pursuant to Article 12 of this Agreement.
2.2 EXCLUDED INDUSTRIAL TIRES ASSETS. Notwithstanding the foregoing,
the Industrial Tires Assets shall not include the following (herein referred
to as the "Excluded Industrial Tires Assets"):
(a) cash and cash equivalents of COI or ITL as of the Closing
Date;
(b) any of COI's or ITL's franchise as a corporation, minute
books, stock transfer records and similar records relating or COI's and ITL's
organization, existence or capitalization;
(c) any of COI's or ITL's rights, claims or causes of action
against third parties relating to the assets, properties, business or
operations of the Industrial Tires Business which may arise in connection
with the discharge by COI or ITL of the liabilities and obligations of the
Industrial Tires Business which are not expressly assumed by Purchaser
pursuant to Section 2.5(a) below;
(d) account balances (other than accounts receivable in the
ordinary course of business) due to related parties, including, without
limitation, between any Seller or between a Seller and an Affiliate;
(e) any agreements with Thomas A. Buckley;
(f) any contracts and leases of COI or ITL not described in
the Schedules hereto, except for contracts or leases entered into in ordinary
course of business by COI or ITL after the date of this Agreement and before
Closing and shall be deemed Assumed Industrial Tires Contracts or Assumed
Industrial Tires Leases under this Agreement PROVIDED THAT (A) descriptions
and copies of such contracts or leases have been delivered to Purchaser in
writing before Closing if disclosure would have been required under Section
5.10, and (B) Purchaser determines such new contracts or leases have been
entered into the ordinary course of business and relate to the Industrial
Tires Business;
(g) any securities owned or held by COI or ITL, including any
shares of a subsidiary;
(h) all COI assets not utilized in the Industrial Tires
Business, including, without limitation, assets used in COI's lift truck
attachment remanufacturing and sales business;
(i) the operating leases related to the Computer Equipment;
and
(j) all patents, patent rights, patents pending, trademarks,
industrial designs, tradenames, servicemarks and copyrights, registered or
unregistered and the applications for registration thereof and licenses owned
by COI which are not listed on SCHEDULE 5.15 and are utilized in businesses
operated by COI other than the Industrial Tires Business.
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2.3 PURCHASE AND SALE OF CCL ASSETS. On the terms and subject to the
conditions set forth in this Agreement, CCL hereby agrees to sell, assign,
convey, transfer and deliver to Purchaser, and Purchaser hereby agrees to
purchase from CCL, on a going concern basis, free and clear of all Liens
(other than the Permitted Liens) as of the Closing, all of the assets,
properties and business (excepting only Excluded CCL Assets) of every kind
and description, wherever located, personal or mixed, tangible or intangible,
owned or held by CCL and used or held for use in the Baseband and Wheel
Business (collectively, the "CCL Assets"), including, without limitation, all
right, title and interest of CCL in, to and under:
(a) all inventory (including raw materials, work in process
and finished goods), accounts receivable (including, without limitation,
accounts receivable from Hyco-Cascade Pty. Ltd. and other related parties),
prepaid expenses and deposits, machinery and equipment, vehicles, furniture
and fixtures listed in SCHEDULE 2.3;
(b) all of the right, title and interest as tenant in and to
the real estate leases listed or described in SCHEDULE 6.8 and the personal
property leases listed or described in SCHEDULE 6.9 (collectively the
"Assumed CCL Leases");
(c) the contracts, agreements or understandings listed or
described in SCHEDULE 6.10 (collectively the "Assumed CCL Contracts");
(d) the patents, patent rights, trademarks, industrial
designs, trade names, servicemarks and copyrights (and all goodwill
associated therewith) registered or unregistered, and the applications for
registration thereof and licenses related to the foregoing listed in SCHEDULE
6.15 and all other intellectual property of whatsoever nature and kind which
is used or useful in the Baseband and Wheel Business;
(e) the permits listed in SCHEDULE 6.17;
(f) all customer lists, processes, trade secrets, know-how
and other proprietary or confidential information used in or related to the
Baseband and Wheel Business;
(g) the goodwill associated with the Baseband and Wheel
Business;
(h) all books and records (including all computer programs
and data) of CCL relating to the assets, properties, business and operations
of the Baseband and Wheel Business and the computer programs listed in
SCHEDULE 6.10; and
(i) all of CCL's rights, claims or causes of action against
third parties related to the assets, properties, business or operations of
the Baseband and Wheel Business arising out of transactions occurring prior
to the Closing Date.
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2.4 EXCLUDED CCL ASSETS. Notwithstanding the foregoing, the CCL
Assets shall not include the following (herein referred to as the "Excluded
CCL Assets"):
(a) cash and cash equivalents of CCL as of the Closing Date;
(b) any of CCL's franchise as a corporation, its minute
books, stock transfer records and similar records relating to CCL's
organization, existence or capitalization;
(c) any of CCL's rights, claims or causes of action against
third parties relating to the assets, properties, business or operations of
the Baseband and Wheel Business which may arise in connection with the
discharge by CCL of the liabilities and obligations of the Baseband and Wheel
Business which are not expressly assumed by Purchaser pursuant to Section
2.5(a) below; other than any rights, claims or causes of action CCL may have
(a) under that certain Share Purchase Agreement dated March 11, 1997 relating
to the acquisition of Kenhar Corporation, (b) under policies of insurance
covering damage to persons or property or product liability, (c) in regard to
refunds or credits of taxes of any kind covering periods prior to Closing, or
(d) for indemnification or reimbursement against third parties for any
amounts paid pursuant to Article 12 of this Agreement;
(d) any of CCL's assets or property not used in the Baseband
and Wheel Business or used by CCL in any divisions other than its baseband
and wheel divisions;
(e) account balances (other than accounts receivable in the
ordinary course of business) due to related parties including, without
limitation, between any Seller and an Affiliate;
(f) any contracts and leases of CCL not described in the
Schedules hereto, except for contracts or leases entered into in the ordinary
course of business by CCL after the date of this Agreement and before Closing
and shall be deemed Assumed CCL Contracts or Assumed CCL Leases under this
Agreement PROVIDED THAT (A) descriptions and copies of such contracts or
leases have been delivered to Purchaser in writing before Closing if
disclosure would have been required under Section 6.10, and (B) Purchaser
determines such new contracts or leases have been entered into the ordinary
course of business and relate to the Baseband and Wheel Business;
(g) all of CCL's right, title and interest to the ownership
and use of the name "Kenhar" or any variation thereof;
(h) any securities owned or held by CCL, including any shares
of a subsidiary;
(i) all CCL assets not utilized in the Baseband and Wheel
Business including, without limitation, assets used in CCL's fork
manufacturing business;
(j) the operating leases related to the Computer Equipment;
and
(k) all patents, parent rights, trademarks, industrial
designs, tradenames, servicemarks, and copyrights, registered or
unregistered, and applications for registration thereof and
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licenses owned by CCL which are not listed on SCHEDULE 6.15 and are utilized
in businesses operated by CCL other than the Baseband and Wheel Business.
2.5 ASSUMPTION OF LIABILITIES.
(a) On the terms and subject to the conditions set forth in
this Agreement, upon the Closing of this transaction, Purchaser agrees to
assume and discharge from and after the Closing Date:
(i) the liabilities for trade accounts payable,
accrued charges and expenses, accrued payroll and payroll and sales taxes of
COI or of ITL related to the Industrial Tires Business set forth on the
January 31, 1999 Industrial Tires Balance Sheet, BUT ONLY to the extent
specifically listed or described in EXHIBIT A, which have not been paid prior
to Closing and any trade accounts payable, accrued charges and expenses,
accrued payroll and payroll and sales taxes of the Industrial Tires Business
which are initially incurred by COI or ITL after January 31, 1999 but prior
to Closing, PROVIDED THAT (A) descriptions of such liabilities are delivered
to Purchaser in writing before Closing, and (B) Purchaser determines such new
liabilities have been entered into in the ordinary course of business and
relate to the Industrial Tires Business (collectively, the "COI/ITL
Payables");
(ii) the liabilities and obligations of COI or of ITL
arising after the Closing Date (other than any liability or obligation for
breach or default which occurred prior to Closing) under the Assumed
Industrial Tires Leases or the Assumed Industrial Tires Contracts;
(iii) the liabilities for trade accounts payable,
accrued charges and expenses, accrued payroll and payroll and sales taxes of
CCL related to the Baseband and Wheel Business set forth on the January 31,
1999 CCL Balance Sheet, BUT ONLY to the extent specifically listed or
described in EXHIBIT B, which have not been paid prior to Closing and any
trade accounts payable, accrued charges and expenses, accrued payroll and
payroll and sales taxes of the Baseband and Wheel Business which are
initially incurred by CCL after January 31, 1999 but prior to Closing,
PROVIDED THAT (A) descriptions of such liabilities are delivered to Purchaser
in writing before Closing, and (B) Purchaser determines such new liabilities
have been entered in the ordinary course of business and relate to the
Baseband and Wheel Business (collectively, the "CCL Payables");
(iv) the liabilities and obligations of CCL arising
after the Closing Date (other than any liability or obligation for breach or
default which occurred prior to Closing) under the Assumed CCL Contracts or
the Assumed CCL Leases;
(v) the liabilities of COI under the seven (7) capital
leases listed in SCHEDULE 5.5 for forklift trucks and certain other office
equipment;
(vi) the liabilities and obligations of COI under the
Main Pension Plan and under the Pension Plan C;
(vii) the contingent liabilities of COI and CCL for
notice of termination, pay in lieu of notice and severance obligations for
all Transferred Employees; and
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(viii) the liabilities or obligations of COI and of CCL
for warranty claims for parts and labor arising under or with respect to the
express or implied warranties listed in SCHEDULE 5.23 OR 6.23 to this
Agreement from products manufactured, sold or distributed by COI or by CCL
prior to the Closing up to the Warranty Deductible Amount for each of COI and
CCL set forth in Section 12.1(g).
All of the foregoing liabilities and obligations
of COI, ITL and CCL to be assumed by Purchaser pursuant to this Section
2.5(a) are referred to collectively as the "Assumed Liabilities."
(b) Purchaser expressly does not assume and does not agree to
assume any liability or obligation of any Seller, direct or indirect, known
or unknown, absolute or contingent, not expressly assumed by Purchaser
pursuant to Section 2.5(a) and, notwithstanding anything to the contrary in
Section 2.5(a), none of the following shall be "Assumed Liabilities" for
purposes of this Agreement:
(i) except as provided in Section 2.5(a)(i) or (iii),
any Government Taxes, duties, levies, assessments or other charges of any
Seller including without limitation penalties, interest and/or fines with
respect thereto, any Taxes in respect of or measured by the sale, consumption
or performance by any Seller of any product or service prior to Closing, any
Tax related to employment, and any Tax pursuant to the Employers Health Tax
Act (Ontario) and any equivalent law under the Province of Quebec;
(ii) any indebtedness for borrowed money or funded debt
of any Seller;
(iii) any liability or obligation of any Seller which
relate to any Excluded Asset(s);
(iv) any claim or liability in respect of the lawsuits,
claims, suits, proceedings or investigations described in SCHEDULES 5.14 or
6.14;
(v) any costs and expenses incurred by any Seller
incident to its negotiation and preparation of this Agreement and the
consummation of the transactions contemplated herein;
(vi) any liability arising prior to Closing for breach
of contract, wrongful termination, employment discrimination, any claim under
applicable Americans with disabilities, family leave, occupational, safety
and health and worker's compensation laws, unfair labor practice or tort;
(vii) any liability or obligation for product liability,
property damage, personal injury or death arising from products manufactured,
sold or distributed by any Seller prior to the Closing Date;
(viii) any liability or obligation under or with respect
to express or implied warranties other than those assumed under Section
2.5(a)(viii);
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(ix) any liability under any insurance, pension,
deferred compensation, 401(k) plan or any other employee benefit plan
including any claim or liability to make any contribution to any such plan
(including, without limitation, any liability (whether on a going concern,
solvency or wind-up basis) under, with respect to, or in connection with
Pension Plan B), except for any liability for the benefit of a Transferred
Employee which has been expressly assumed by Purchaser pursuant to Section
2.5(a)(i), (iii) or (vii) or pursuant to Section 11.6 with respect to the
Main Pension Plan or the Pension Plan C;
(x) any Tax liability of any Seller resulting from the
transactions contemplated herein, including, without limitation, any
recapture by any Seller of investment tax credit or depreciation, recapture
of capital cost allowance under the Income Tax Act (Canada) or so-called
"goods and services tax " under the Excise Tax Act (Canada);
(xi) any liability under any benefit or obligation to
current employees or employees retired prior to the Closing which accrued
prior to the Closing (including, without limitation, obligations for
severance pay or continuation of benefits required by an agreement or
applicable law), except any liability for the benefit of a Transferred
Employee which has been expressly assumed by Purchaser pursuant to Section
2.5(a)(i), (iii) or (vii);
(xii) any liability or obligation due to Thomas A.
Buckley;
(xiii) any liability or obligation for account balances
due to related parties, including, without limitation, between any Seller or
between a Seller and an Affiliate except for any liability expressly assumed
by Purchaser pursuant to Section 2.5(a)(i) or 2.5(a)(iii);
(xiv) all liabilities for claims for injury, disability,
death or worker's compensation arising from or related to employment in the
Industrial Tires Business and Baseband and Wheel Business on or prior to the
Closing Date; and
(xv) all severance payments, damages for wrongful
dismissal and all related costs in respect of the termination by any Seller
of the employment of any employee of the Industrial Tires Business and/or the
Baseband and Wheel Business who does not accept employment with the Purchaser
provided Purchaser has offered employment to such individual pursuant to this
Agreement.
2.6 PURCHASE PRICE.
(a) The aggregate purchase price (the "Purchase Price") for
the Assets and the Business shall be (i) subject to the adjustment set forth
in Section 2.6(b), Thirty-Eight Million Nine Hundred Thousand Dollars
($38,900,000), allocated among cash, notes and the assumption and payment of
the CCL Payables and the COI/ITL Payables, PLUS (ii) the amount of the other
Assumed Liabilities.
(b) The Purchase Price shall be adjusted, on a
dollar-for-dollar basis, based upon the difference in the Adjusted Working
Capital from January 31, 1999 to the Closing Date as follows:
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(i) in the event that $13,833,623 exceeds the Adjusted
Working Capital as of the Closing Date, then the cash payable at the Closing
shall be decreased by the amount of such excess (the "Cash Adjustment"); and
(ii) in the event that the Adjusted Working Capital as
of the Closing Date exceeds $13,833,623, then the aggregate principal balance
of the Notes to be issued at the Closing shall be increased by the amount of
such excess (the "Principal Adjustment").
For the avoidance of doubt, the parties hereby acknowledge that at January
31, 1999 (based upon the January 31, 1999 Industrial Tires Balance Sheet and
the January 31, 1999 CCL Balance Sheet), (x) the Adjusted Working Capital was
$13,833,628, (y) the current assets, exclusive of cash of COI, ITL and CCL
was $17,784,721, and (z) the amount of the CCL Payables and the COI/ITL
Payables was $3,951,093.
(c) The Purchase Price shall be allocated among the Assets as
set forth in a schedule to be delivered by the Sellers and Purchaser at
Closing (the "Purchase Price Allocation Schedule"). Each of the parties
hereto agrees to report this transaction for Canadian and United States tax
purposes and to file all tax returns in accordance with such allocation of
the Purchase Price.
2.7 PAYMENT OF PURCHASE PRICE; POST-CLOSING RECONCILIATION.
(a) Three (3) business days prior to the Closing Date, Parent
shall provide Purchaser with an estimate of the Adjusted Working Capital as
of Closing, together with a detailed accounting and an estimate of any
proposed Cash Adjustment (the "Estimated Cash Adjustment") or an estimate of
any proposed Principal Adjustment (the "Estimated Principal Adjustment"), as
applicable. Within one (1) business day of Closing, Parent and Purchaser
shall mutually agree upon the adjustments to be made to the Purchase Price.
At Closing, Purchaser shall deliver to COI, ITL and CCL, as appropriate, the
Purchase Price as follows:
(i) the sum of Twenty-Seven Million Dollars
($27,000,000), LESS (A) the Estimated Cash Adjustment, if any, and (B) the
Pension Underfunding Payment, in immediately available funds;
(ii) the subordinated promissory notes of Purchaser, or
its successors and assigns, in the aggregate principal amount equal to Eleven
Million Nine Hundred Thousand Dollars ($11,900,000), (A) LESS the sum of the
amount of the CCL Payables and the COI/ITL Payables stated in U.S. Dollars
and using the simple average of the New York foreign exchange mid-range rates
for the Canadian dollar against the U.S. dollar, as quoted in the WALL STREET
JOURNAL, for each of the five (5) business days immediately preceding the
business day which is two (2) business days prior to the Closing Date, and
(B) PLUS the amount of the Estimated Principal Adjustment, if any, each in
the form of EXHIBIT C attached to this Agreement (the "Notes"); and
(iii) the assumption and payment when due of the Assumed
Liabilities.
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The allocation of cash and Notes under the foregoing subsection (i) and (ii)
among COI, ITL and CCL shall be made as agreed to between Purchaser and
Parent at Closing consistent with the Purchase Price Allocation Schedule.
(b) Within ten (10) calendar days after the Closing Date,
Parent shall provide to Purchaser a detailed accounting of the actual
Adjusted Working Capital as of the Closing and a reconciliation of the Cash
Adjustment or the Principal Adjustment which should have been made on the
Closing Date. Parent and Purchaser shall cooperate in good faith and reach
an agreement on the Adjusted Working Capital as of Closing and any
corresponding adjustments to the Purchase Price as contemplated by Section
2.6(b). Any difference between the Cash Adjustment and the Estimated Cash
Adjustment shall be paid by Parent or refunded by Purchaser within three (3)
business days of the determination in immediately available funds. Any
difference between the Principal Adjustment and the Estimated Principal
Adjustment shall be paid by the issuance of replacement notes (in the same
form as the Notes but reflecting the adjusted principal amounts) immediately
upon receipt by Purchaser for cancellation of the Notes delivered to Sellers
at the Closing.
2.8 FURTHER ASSURANCES.
(a) From time to time after the Closing, the parties shall
execute and deliver to each other such other instruments of conveyance and
transfer and such other documents as may reasonably be requested or as may be
otherwise necessary to effect the transactions contemplated by this
Agreement. Each Seller shall execute and deliver to Purchaser such other
documents as Purchaser may reasonably request to more effectively convey and
transfer to, and vest in, Purchaser and to put Purchaser in possession of,
the Assets and each part thereof. In the case of licenses, certificates,
approvals, authorizations, agreements, contracts, leases, easements and other
commitments included in the Assets which cannot be transferred or assigned
effectively without the consent of third parties and which consent has not
been obtained prior to the Closing Date each Seller shall cooperate with
Purchaser, at Purchaser's request, in endeavoring to obtain such consent
promptly, and if any such consent is not obtained, to use its commercially
reasonable efforts to secure to Purchaser the benefits thereof in some other
manner.
(b) The Sellers, jointly and severally, hereby agree to
indemnify and hold the Purchaser Parties harmless from and against all
damages, claims, causes of action, losses and expenses, including, without
limitation, all reasonable attorneys' fees and expenses, incurred as a result
of the failure of the Sellers to obtain any necessary consent or approval to
the assignment of any Assumed Industrial Tires Contract, Assumed CCL
Contract, Assumed Industrial Tires Lease or Assumed CCL Lease, except for (i)
any personal property lease listed on SCHEDULE 5.9 or SCHEDULE 6.9, (ii) any
Assumed Industrial Tires Contract not required to be listed on SCHEDULE 5.10,
and (iii) any Assumed CCL Contract not required to be listed on SCHEDULE
6.10. The indemnification provisions of this Section shall be in addition to
the provisions of Article 12 and Article 12 shall not affect the Sellers'
obligations hereunder, but are subject to the limitations set forth in
Sections 12.1(f) and 12.4.
2.9 CHANGE IN CORPORATE NAME. ITL shall promptly after the Closing
Date (and in any event within ten (10) calendar days) change its corporate
name to a name which does not include
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"Industrial Tires" or similar words. COI shall promptly after the Closing
Date (and in any event within ten (10) calendar days) cease using any name
which includes the words "Industrial Tires" or similar words.
2.10 SALE OF COMPUTER EQUIPMENT. Parent is a lessee of certain
computer equipment pursuant to certain leases, all as more fully described on
EXHIBIT D attached to this Agreement (collectively, the "Computer
Equipment"). At the Closing, the leases for the Computer Equipment shall not
be assigned to Purchaser and in lieu thereof Parent hereby agrees to exercise
its rights to purchase and shall sell, convey, transfer and assign to
Purchaser, and Purchaser hereby agrees to purchase from Parent all of its
right, title and interest in the Computer Equipment, free and clear of any
Liens, for an amount equal to the lease buy-out price of such equipment as of
Closing (the "Lease Buy-Out Purchase Price"). The Lease Buy-Out Purchase
Price shall not exceed Fourteen Thousand Nine Hundred Twenty-Nine Dollars and
89/100 ($14,929.89).
ARTICLE 3
CLOSING
3.1 THE CLOSING. The purchase and sale of assets contemplated hereby
(the "Closing") shall take place on April 27, 1999, or within two (2)
business days after all conditions set forth in Article 9 have been satisfied
or duly waived by Purchaser and all conditions set forth in Article 10 have
been satisfied or duly waived by the Sellers, or such other date as shall be
mutually agreed upon in writing by the parties hereto, at the law offices of
counsel for Purchaser's lender or such other place as shall be mutually
agreed upon by the parties hereto.
3.2 DELIVERIES BY THE SELLERS. At or prior to the Closing, each
applicable Seller shall deliver, or cause to be delivered, to Purchaser the
following:
(a) with respect to each parcel of Industrial Tires Real
Estate, a deed/transfer of land in registerable form and such other
instruments or agreements of transfer, duly executed by the appropriate
Seller and each in form reasonably satisfactory to Purchaser;
(b) a Bill of Sale and Assignment and such other instruments
or agreements of transfer with respect to the Assets, duly executed by the
appropriate Seller and in form reasonably satisfactory to Purchaser;
(c) an assignment for each registered Proprietary Right, duly
executed by the appropriate Seller and in form reasonably satisfactory to
Purchaser;
(d) the certificate of performance of the Sellers required by
Section 9.2;
(e) the certificate of the Secretary or Assistant Secretary
of each Seller required by Section 9.3;
(f) an opinion of Newcomb, Sabin, Schwartz & Landsverk, LLP,
and Osler, Hoskin and Harcourt, counsel for the Sellers, dated the Closing
Date, addressed to Purchaser and in
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form and substance reasonably satisfactory to counsel for Purchaser covering
matters customarily given in transactions of the type contemplated by this
Agreement;
(g) a certificate of status, good standing or valid
existence, dated no more than ten (10) days prior to the Closing Date, for
each Seller issued by the appropriate office in each jurisdiction of its
incorporation;
(h) written descriptions, and where applicable, copies of
contracts, leases and liabilities entered into in the ordinary course of
business as contemplated by Sections 2.2(f), 2.4(f), 2.5(a)(i) and
2.5(a)(iii) of this Agreement;
(i) all other previously undelivered items required to be
delivered by the Sellers at or prior to Closing pursuant to this Agreement or
otherwise required in connection herewith unless waived in writing by
Purchaser;
(j) ownership certificates and currently dated safety
standard certificates for all registered vehicles;
(k) agreements related to the assignment of the Main Pension
Plan and Pension Plan C of COI;
(l) a counterpart to the Purchase Price Allocation Schedule
to be delivered pursuant to Section 2.6(c) of this Agreement;
(m) a counterpart to certain agreements which may be
requested by Purchaser's lender, including, without limitation, a landlord
waiver and consent, estoppel certificate, collateral assignment of lease,
mortgagee waiver (only as to the Leased Real Estate identified in Section
9.11), non-disturbance agreement or leasehold mortgage in a form reasonably
acceptable to Purchaser and Purchaser's lender, duly executed by any lessor
or mortgagee of any Leased Real Estate on which assets of the Business are
located;
(n) instruments or agreements, each duly executed by the
appropriate party and in form reasonably satisfactory to Purchaser, in
connection with the purchase and sale of the Computer Equipment to Purchaser,
including, without limitation, a payoff letter or letters from the lessor or
lessors of the Computer Equipment and a Bill of Sale and Assignment; and
(o) a certificate, duly executed by Parent and Purchaser,
evidencing their computation of the Purchase Price to be paid at Closing as
contemplated by Section 2.7(a).
3.3 DELIVERIES BY PURCHASER. At or prior to the Closing, Purchaser
shall deliver, or cause to be delivered, to the Sellers, the following:
(a) the cash portion of the Purchase Price as contemplated by
Section 2.7(a)(i) PLUS the amount of the Lease Buy-Out Purchase Price, in
immediately available funds, by wire transfer to such accounts as the Sellers
shall designate in writing to Purchaser at least two (2) days prior to the
Closing Date;
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(b) the Notes required to be delivered by Purchaser to
Sellers as required by Section 2.7(a)(ii);
(c) the certificate of performance of Purchaser required by
Section 10.2;
(d) the certificate of the Secretary or Assistant Secretary
of Purchaser required by Section 10.3;
(e) an opinion of Sommer & Barnard, PC and Canadian counsel
for Purchaser, dated the Closing Date, addressed to the Sellers and in form
and substance reasonably satisfactory to counsel for the Sellers covering
matters customarily given in transactions of the type contemplated by this
Agreement;
(f) a certificate of valid existence of Purchaser, dated no
more than ten (10) days prior to the Closing Date, issued by the Indiana
Secretary of State;
(g) all other previously undelivered items required to be
delivered by Purchaser at or prior to the Closing pursuant to this Agreement
or otherwise required in connection herewith unless waived in writing by the
Sellers;
(h) a counterpart to the Purchase Price Allocation Schedule
to be delivered pursuant to Section 2.6(c) of this Agreement;
(i) a certificate, duly executed by Parent and Purchaser,
evidencing their computation of the Purchase Price to be paid at Closing as
contemplated by Section 2.7(a);
(j) agreements related to the assignment of the Main Pension
Plan and Pension Plan C of COI; and
(k) a certificate, duly executed by Purchaser, as to the
absence, to Purchaser's best knowledge, of any third party requirements or
Government action in connection with the Mississauga Real Estate as
contemplated by Section 11.8 of this Agreement.
3.4 APPOINTMENT. Each of COI, ITL and CCL hereby appoints Parent its
attorney-in-fact, with full power and authority, acting in the name of and
for and on behalf of each such Seller, to amend or waive any provision of
this Agreement, to provide any consent required from Sellers under this
Agreement, to terminate this Agreement pursuant to the provisions of Section
13.13 and to do all other things and to take all other actions under or
related to this Agreement, which, in its discretion, it may consider
necessary or proper to facilitate the purchase and sale transaction
contemplated by this Agreement and to resolve any dispute with Purchaser over
any aspect of this Agreement, and on behalf of such Seller to enter into any
agreement to conclude any of the foregoing, which shall have the effect of
binding such Seller as if it had personally entered into such an agreement.
This appointment and power of attorney shall be deemed to be coupled with an
interest, and all authority conferred hereby shall be irrevocable and shall
not be subject to termination by operation of law, whether by liquidation or
dissolution of any Seller or the occurrence of any other event or events.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Sellers, jointly and
severally, represent and warrant to Purchaser, and Purchaser in agreeing to
pay the Purchase Price and to otherwise consummate the transactions
contemplated by this Agreement has relied upon such representations and
warranties, that, except as set forth in certain "SCHEDULES" which are
referred to herein and which have previously been delivered by Sellers to
Purchaser:
4.1 CORPORATION; ORGANIZATION. Each of the Sellers is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and is duly qualified to transact business
as a foreign corporation and possesses all required governmental
authorizations and is in good standing in the jurisdictions listed in
SCHEDULE 4.1, which are the only jurisdictions in which the ownership or
leasing of its properties or the conduct of its business requires such
qualification or authorization other than jurisdictions wherein the failure
to so qualify would not have a material adverse effect, upon any portion of
the Business, and no other jurisdiction has demanded, requested or otherwise
indicated that it is required so to qualify or to obtain such authorization.
4.2 AUTHORITY.
(a) Each Seller has full right, capacity, corporate power and
authority to execute and deliver this Agreement, to consummate the
transactions contemplated thereby and to comply with and perform the terms,
conditions and provisions thereof. The execution, delivery and performance
of this Agreement by each Seller have been duly authorized and approved by
its Board of Directors and its shareholders, if appropriate, and do not
require any further authorization or consent.
(b) The execution, delivery and performance of this Agreement
by each Seller, the consummation of the transactions contemplated thereby and
the compliance with or fulfillment of the terms and provisions thereof or of
any other agreement or instrument contemplated thereby, do not and will not
(i) conflict with or result in a breach of any of the provisions of the
Articles of Incorporation or the By-Laws of any Seller, (ii) contravene any
Law which affects or binds any Seller or its properties, (iii) except as set
forth in SCHEDULE 4.2, conflict with, result in a breach of, constitute a
default under, or give rise to a right of termination or acceleration under
any contract, agreement, note, deed of trust, mortgage, trust, lease,
Governmental or other license, permit or other authorization, or any other
instrument or restriction to which any Seller is a party or by which any of
its properties may be affected or bound, or (iv) except for the filing of the
notification required by the HSR which has been made and as set forth in
SCHEDULE 4.2, require any Seller to obtain the approval, consent or
authorization of, or to make any declaration, filing or registration with,
any third party or any Governmental authority which has not been obtained in
writing prior to the date of this Agreement.
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(c) This Agreement is the legal, valid and binding agreement
of each Seller and is enforceable against each of them in accordance with its
terms, subject to (i) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other laws or equitable principles relating to
or affecting the enforcement of creditors' rights generally, (ii) the effect
of the general principles of equity, including, without limitation, concepts
of materiality, reasonableness, good faith and fair dealing (regardless of
whether considered in a proceeding in equity or at law), (iii) the fact that
the granting of specific performance and the issuance of other rulings or
enforcement are subject to the discretion of a court of equity and to the
application of general principles of equity, and (iv) emergency and other
powers which may be exercised by governmental bodies or entities with
jurisdiction.
4.3 RESIDENCY. Neither COI nor CCL is a non-resident of Canada
within the meaning of Section 116 of the Income Tax Act (Canada). Parent and
ITL are each non-residents of Canada within the meaning of Section 116 of the
Income Tax Act (Canada).
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT, COI AND ITL
As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Parent, COI and ITL, jointly
and severally, represent and warrant to Purchaser, and Purchaser in agreeing
to pay the Purchase Price and to otherwise consummate the transactions
contemplated by this Agreement has relied upon such representations and
warranties, that, except as set forth in certain "SCHEDULES" which are
referred to herein and which have previously been delivered by Parent, COI
and ITL to Purchaser:
5.1 FINANCIAL STATEMENTS. COI and ITL have furnished Purchaser with
complete and accurate copies of the Industrial Tires Financial Statements.
The Industrial Tires Financial Statements present fairly in all material
respects the financial position and results of operations of the Industrial
Tires Business, as of the statement dates and for the periods indicated and
have been prepared in accordance with GAAP consistently applied throughout
and among the periods indicated. All properties utilized in the operation of
the Industrial Tires Business have been reflected on the Industrial Tires
Financial Statements in the manner and the extent required by GAAP. Except
as set forth in SCHEDULE 5.1, the income statements included within the
Industrial Tires Financial Statements do not reflect any items of special or
nonrecurring income or any other item of income not earned in the ordinary
course of the Industrial Tires Business.
5.2 ACCOUNTS RECEIVABLE. The accounts receivable of COI and ITL as
set forth on the Industrial Tires Interim Balance Sheet or arising since the
date thereof are (a) collectible, valid, have arisen solely out of bona fide
sales and deliveries of goods, performance of services and other business
transactions in the ordinary course of the Industrial Tires Business
consistent with the past practices of COI and ITL, and (b) not subject to
valid defenses, set-offs or counterclaims. To the Knowledge of Parent, COI
and ITL, the allowance for collection losses recorded on the Industrial Tires
Interim Balance Sheet has been determined in accordance with GAAP consistent
with the past practices of COI and ITL.
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5.3 INVENTORY. All inventory of COI and ITL reflected in the
Industrial Tires Interim Balance Sheet or acquired since October 31, 1998 was
acquired and has been maintained in the ordinary course of the Industrial
Tires Business, is of good and merchantable quality, and consists of a
quality, quantity and condition usable, leasable or saleable in the ordinary
course of the Industrial Tires Business except for inventory in an amount
equal to or less than the reserves for obsolescence set forth on the Interim
Balance Sheet. Except as set forth in SCHEDULE 5.3, neither COI nor ITL is
under any liability or obligation with respect to the return of inventory in
the possession of wholesalers, retailers or other customers. All inventory
of COI and ITL used in the Industrial Tires Business is located at the
locations set forth in SCHEDULE 5.3 and at no other location.
5.4 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
SCHEDULE 5.4 or as otherwise expressly set forth in this Agreement, since
October 31, 1998, there has not been any (a) material change in the condition
(financial or otherwise), operations (present or prospective), business
(present or prospective), properties, assets or liabilities of the Industrial
Tires Business other than reasonable changes incurred in the ordinary course
of business, and such reasonable changes in the ordinary course of business
have not materially and adversely affected the Industrial Tires Business; (b)
transaction by COI or ITL related to the Industrial Tires Business other than
in the ordinary course of business as conducted on that date; (c)
destruction, damage to or loss of any Industrial Tires Asset (whether or not
covered by insurance) that materially and adversely affects the financial
condition, business or prospects of the Industrial Tires Business; (d) change
in accounting methods, principles or practices (including, without
limitation, any change in depreciation or amortization policies or rates) of
COI or ITL; (e) amendment or termination of any Assumed Industrial Tires
Contract or Assumed Industrial Tires Lease other than in the ordinary course
of business; (f) labor trouble or any impending or threatened labor trouble
Known to Parent, COI or ITL affecting or which might materially and adversely
affect the operations of the Industrial Tires Business; or (g) other change
in the assets, property, prospects, business or financial condition of COI or
ITL which would have a material adverse effect on the value of the Industrial
Tires Business.
5.5 DEBT FOR BORROWED MONEY. Except as set forth in SCHEDULE 5.5,
there are no (a) contracts, agreements or instruments pursuant to which COI
or ITL is indebted or liable to any Person for borrowed money or for the
deferred purchase price of any Industrial Tires Asset in excess of $25,000,
(b) capitalized leases pursuant to which COI or ITL leases personal property
related to or utilized by the Industrial Tires Business which provides for
annual payments in excess of $20,000, (c) capitalized leases to be assumed by
Purchaser pursuant to Section 2.5(a)(v), or (d) mortgages, security
agreements or pledge agreements to which COI or ITL is a party or by which
they or any of their properties is subject or encumbered related to or
utilized by the Industrial Tires Business. True and complete copies of all
contracts, agreements and instruments set forth in SCHEDULE 5.5 have been
delivered to Purchaser.
5.6 TAXES. All separate and/or consolidated, unitary and combined
federal, provincial, state, county, local and foreign income, excise,
withholding, property, sales, use, franchise and other tax returns and
related information (including, without limitation, information returns)
required to be filed on or before the date hereof by or on behalf of COI or
ITL have been prepared and filed in accordance with the applicable Law and
all Taxes thereon which are due or may hereafter become due pursuant to such
returns or pursuant to any assessment which has or will become payable or
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otherwise, subject to any extension granted for the filing of any return or
for the payment of any tax, interest, penalty, assessment or deficiency, have
been paid in full or an adequate reserve has been established therefor. All
monies required to be collected or withheld by COI or ITL for income taxes,
social security and other payroll taxes and statutory withholdings have been
collected or withheld, and either paid to the appropriate Governmental
agencies, set aside in accounts for such purpose, or accrued, reserved
against and entered upon the books of COI and ITL.
5.7 MARKETABILITY AND CONDITION OF INDUSTRIAL TIRES ASSETS.
(a) COI and ITL have or will have at the Closing, legal and
beneficial ownership and good and marketable title to the Industrial Tires
Assets and the Computer Equipment owned by each one of them, free and clear
of any and all Liens other than the Permitted Liens and are exclusively
entitled to possess and dispose of the Industrial Tire Assets and the
Computer Equipment. None of the Industrial Tires Assets are owned by any
subsidiary of COI or ITL.
(b) The Industrial Tires Assets and the leased property set
forth in SCHEDULES 5.8 AND 5.9 constitute all of the assets used in the
Industrial Tires Business and constitute all of the assets used by COI and
ITL to operate the Industrial Tires Business through Closing as it has been
conducted prior to the date of this Agreement. All of the tangible
Industrial Tires Assets material to the Industrial Tires Business and the
Computer Equipment are in good and (where applicable) operable condition,
normal wear and tear excepted.
5.8 REAL ESTATE; ASSUMED REAL ESTATE LEASES. All real property
(including, without limitation, all interests in and rights to real property)
and improvements located thereon which are owned (the "Industrial Tires Real
Estate") or leased by COI or ITL (the "Industrial Tires Leased Real Estate")
held for or used in the Industrial Tires Business are identified in SCHEDULE
5.8. A true and complete copy of each lease for the Industrial Tires Leased
Real Estate has been previously delivered to Purchaser. ITL owns no real
estate. To the Knowledge of Parent, COI and ITL, there are no building,
zoning or use violations existing with respect to any Industrial Tires Real
Estate or Industrial Tires Leased Real Estate on the date hereof that would
have a material adverse affect on the operations of the Industrial Tires
Business. There does not exist on the date hereof any pending or, to the
Knowledge of Parent, COI or ITL, proposed (a) condemnation, expropriation of
all or any part of the Industrial Tires Real Estate or the Industrial Tires
Leased Real Estate; (b) special assessment for work relating to all or any
part of the Industrial Tires Real Estate or the Industrial Tires Leased Real
Estate or (c) conduct or activity which will interfere with the use of or
access to the Industrial Tires Real Estate or Industrial Tires Leased Real
Estate. To the Knowledge of Parent, COI and ITL, the buildings and any other
improvements located on the Industrial Tires Real Estate or, the Industrial
Tires Leased Real Estate are all in good and operable condition in all
material respects, normal, wear and tear excepted. COI and ITL have the right
to quiet enjoyment of the Industrial Tires Leased Real Estate.
5.9 PERSONAL PROPERTY AND PERSONAL PROPERTY ASSUMED LEASES. All of
the personal property owned or leased by COI and ITL and used in the
Industrial Tires Business is located at the locations set forth in SCHEDULE
5.3 and at no other location. Except as set forth in SCHEDULE 5.9, there are
no operating leases or agreements under which COI or ITL (a) is lessee of, or
(b) holds or
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operates, any personal property owned by any third party and used in the
Industrial Tires Business. A true and complete copy of each such lease and
agreement which is an Assumed Liability has been previously delivered to
Purchaser.
5.10 ASSUMED CONTRACTS. SCHEDULE 5.10 contains a list and brief
description of each contract, agreement and understanding of any type or
kind, oral or written, of which COI or ITL is a party and which relate to the
Industrial Tires Business which obligates COI or ITL to make payments in
excess of $40,000, and in any event also lists any contract with respect to
the following: (a) consignment, maintenance or any agreement relating to the
possession of inventory, tooling or any other Industrial Tires Asset by a
third party, (b) manufacturer's representative, sales, agency or advertising
contract which is not terminable on thirty (30) days (or less) notice without
penalty; (c) guaranty of any obligations of customers or others; (d)
contract, understanding or agreement for the future purchase of materials,
supplies, merchandise or equipment continuing for a period of more than three
(3) months or involving payments of more than $40,000 over its remaining term
(including periods covered by any option to renew by either party); (e)
agreement which limits or restricts COI or ITL to compete or otherwise to
conduct the Industrial Tires Business in any geographical area in any
material matter; and (f) agreement providing for a rebate or a discount.
5.11 STATUS OF ASSUMED INDUSTRIAL TIRES LEASES AND ASSUMED INDUSTRIAL
TIRES CONTRACTS. Except as set forth in SCHEDULE 5.11, each Assumed
Industrial Tires Lease and Assumed Industrial Tires Contract will continue in
full force and effect after the Closing as contemplated hereby, in each case
without breaching the terms thereof or resulting in the forfeiture or
impairment of any rights thereunder and without the consent, approval or act
of, or the making of any filing with, any other party. COI and ITL have
fulfilled and performed their obligations under each such lease and other
contract, and are not in breach or default under, and are not alleged to be
in breach or default under, nor, to the Knowledge of Parent, COI and ITL, is
there or is there alleged to be any basis for termination of, any of such
leases or contracts and no other party to any of such leases or contracts has
breached or defaulted thereunder, and no event has occurred which with the
passage of time or the giving of notice or both would constitute such a
default or breach by COI or ITL, or to the Knowledge of Parent, COI or ITL,
by any such other party.
5.12 COMPLIANCE WITH LAWS. Except as set forth in SCHEDULE 5.12, to
the Knowledge of Parent, COI and ITL each of COI and ITL has complied with
and is in compliance in all material respects with all Laws applicable to the
Industrial Tires Business, and neither COI nor ITL has received any Notice of
any alleged breach of such Laws.
5.13 ENVIRONMENTAL LAWS AND REGULATIONS.
(a) Except as described in SCHEDULE 5.13, to the Knowledge of
Parent, COI and ITL, COI and ITL have used, stored, generated, transported or
disposed of any Hazardous Materials at the Applicable Industrial Tires Real
Estate in compliance in all material respects with applicable Environmental
Laws. Except as described in SCHEDULE 5.13, to the Knowledge of Parent, COI
and ITL, the Applicable Industrial Tires Real Estate has been operated and
used in compliance in all material respects with all applicable Environmental
Laws relating to product registration, pollution control and environmental
contamination including, without limitation, all Laws governing the
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generation, use, collection, discharge, or disposal of Hazardous Materials
and all Laws with regard to record keeping, notification, registration and
reporting requirements respecting Hazardous Materials. There are no facts or
circumstances Known to Parent, COI or ITL which could reasonably be expected
to form the basis for the assertion of any Environmental Claim against COI or
ITL with respect to the Applicable Industrial Tires Real Estate. None of the
Applicable Industrial Tires Real Estate is (A) listed or proposed for listing
on the National Priority List (as defined in 40 C.F.R. 300.5) or, is (B)
listed on the Comprehensive Environmental Response, Compensation, Liability
Information System List promulgated pursuant to CERCLA, or any comparable
list maintained by any foreign, state or local Government authority.
(b) Except as disclosed in SCHEDULE 5.13, to the Knowledge of
Parent, COI and ITL, (i) there are no underground storage tanks on the
Applicable Industrial Tires Real Estate or polychlorinated biphenyls in or at
the Applicable Industrial Tires Real Estate and (ii) the facilities on each
Applicable Industrial Tires Real Estate comply with the Environmental Laws
including, without limitation, the Occupational Safety and Health Act or
Occupational Health and Safety Act (Ontario) regulations with respect to
ambient air exposure to asbestos or lead-based paint. COI and ITL have
delivered to Purchaser true and complete copies or results of any reports,
studies, analyses, tests or monitoring in the possession of or initiated by
COI and ITL pertaining to the Industrial Tires Business or to the existence
of Hazardous Materials or any other environmental concerns relating to any of
the Applicable Industrial Tires Real Estate concerning compliance with or
liability under the Environmental Laws.
(c) Except as disclosed in SCHEDULE 5.13: (i) Parent, COI
and ITL, the Industrial Tires Business (including, without limitation, all
processes, operations, assets and undertakings) have at all times been and
are in material compliance with all Environmental Laws, (ii) Parent, COI and
ITL have received no written Notice of non-compliance, and do not Know, nor
have they reasonable grounds to Know, of any facts which would give rise to a
Notice of non-compliance, with any Environmental Law, and (iii) without
limiting the generality of the foregoing, Parent, COI and ITL have received
no written Notice as a result of the release or the threatened release of any
Hazardous Materials, or respecting any remedial, control or preventative
action, direction or order, or of any investigation or evaluation respecting
any release or the threatened release of any Hazardous Materials.
5.14 NO VIOLATION, LITIGATION OR REGULATORY ACTION. Except as set
forth in SCHEDULE 5.14:
(a) There are no lawsuits, charges, claims, suits,
proceedings, grievances, arbitrations or investigations pending or, to the
Knowledge of Parent, COI or ITL threatened against or affecting COI or ITL
relating to the Industrial Tires Assets or the Industrial Tires Business,
which threatened lawsuits, charges, claims, suits, proceedings, grievances,
arbitrations or investigations if adversely determined would materially and
adversely affect the business or operation of the Industrial Tires Business;
and
(b) There is no action, suit or proceeding pending or, to the
Knowledge of Parent, COI or ITL, threatened to restrain or prohibit or
otherwise challenge the legality or validity of the transactions contemplated
hereby.
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5.15 PROPRIETARY RIGHTS.
(a) SCHEDULE 5.15 contains a list and a description of all
(i) patents, patent rights or applications for patents relating to the
Industrial Tires Business; (ii) United States or Canadian, provincial, state
or foreign trademarks, servicemarks, industrial designs, trade names or
copyrights for which registrations have been issued or applied for, or other
United States or Canadian, provincial, state or foreign trademarks,
servicemarks, trade names or copyrights owned by COI or ITL in which COI or
ITL holds any right, license or interest used in or relating to the
Industrial Tires Business; (iii) agreements, commitments, contracts,
understandings, licenses, assignments or indemnities relating or pertaining
to any asset, property or right of the character described in the preceding
clause to which COI or ITL is a party; and (iv) licenses or agreements
pertaining to mailing lists, know-how, trade secrets, inventions, disclosures
or uses of ideas used in or relating to the Industrial Tires Business to
which COI or ITL is a party (collectively, the "Industrial Tires Proprietary
Rights").
(b) All of the patents, patent rights, registrations for
trade names, trademarks, industrial designs, servicemarks, copyrights and
licenses listed in SCHEDULE 5.15 as being owned, controlled or used by COI or
ITL are valid and in full force and effect and all applications for such
registrations are pending and in good standing, all without challenge of any
kind and COI or ITL, as applicable, owns or has the right to use the entire
right, title and interest in and to all such patents, patent rights, trade
names, trademarks, servicemarks, design marks, copyrights and licenses so
listed, as well as the registrations and applications for registration
therefor, without qualification, limitation, burden or encumbrance of any
kind. The Industrial Tires Proprietary Rights are assignable to Purchaser
without the consent or approval of any third party except as set forth on
SCHEDULE 5.15. Parent has all rights with respect to the J.D. Edwards
software which are necessary in order for Parent to perform its covenants set
forth in Section 11.5 and no consents or approvals which have not been
obtained as of the date hereof are required in order for Parent to perform
those covenants. True and correct copies of all Industrial Tires Proprietary
Rights have been previously delivered to Purchaser.
(c) Except as expressly disclosed in SCHEDULE 5.15, (i) to
the Knowledge of the Parent, COI and ITL, no infringement of any patent,
patent right, trademark, servicemark, design marks, trade name or copyright
or registration thereof has occurred or results in any way from the
operations of COI or ITL or the Industrial Tires Business, (ii) no claim or
threat of any such infringement has been made or implied in respect of any of
the foregoing, and (iii) no proceedings are pending or, to the Knowledge of
Parent, COI and ITL, threatened against COI or ITL which challenge the
validity or ownership of any Industrial Tires Proprietary Rights. Neither
Parent, COI or ITL has received a notice of, nor do Parent, COI or ITL have
Knowledge of, any basis for a claim against COI or ITL that the operations,
activities, products, equipment, machinery or processes of the Industrial
Tires Business infringe the patents, trademarks, servicemarks, trade names,
copyrights or other property rights of others.
5.16 INTERCOMPANY/AFFILIATE TRANSACTIONS. SCHEDULE 5.16 sets forth
(a) a list of each oral or written contract or agreement between COI or ITL,
on the one hand, and any Affiliate of COI or ITL, shareholder, officer or
director of COI or ITL on the other hand, and relating to the Industrial
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Tires Assets or the Industrial Tires Business; and (b) a general description
of all such transactions since January 13, 1997.
5.17 PERMITS. COI and ITL own, hold or possess all franchises,
permits, licenses, certificates, registrations, privileges, immunities,
approvals and other authorizations materially necessary to own or lease,
operate and use the Industrial Tires Assets and to carry on and conduct the
Industrial Tires Business as now conducted (collectively, the "Industrial
Tires Permits"). SCHEDULE 5.17 contains a complete list of the material
Industrial Tires Permits. Except as set forth in SCHEDULE 5.17, each of the
Industrial Tires Permits is valid, subsisting and in full force and effect
and will continue in full force and effect after the Closing, in each case
without (a) the occurrence of any breach, default or forfeiture of rights
thereunder, or (b) the consent, approval, or act of, or the making of any
filing with, any Governmental body or other Person. True and complete copies
of all of the Industrial Tires Permits listed in SCHEDULE 5.17 have been
previously delivered to Purchaser.
5.18 EMPLOYMENT.
(a) Except as set forth in SCHEDULE 5.18, COI and ITL are
not, with respect to any employee of the Industrial Tires Business, a party
to or bound by any (i) oral or written employment agreement (other than oral
agreements terminable by COI or ITL on the giving of reasonable notice in
accordance with applicable law), consulting agreement, deferred compensation
agreement, confidentiality agreement or covenant not to compete, or (ii)
employees' pension, profit sharing, stock option, bonus, incentive, stock
purchase, welfare, life insurance, hospital or medical benefit plan or any
other Employee Benefit Plan.
(b) COI and/or ITL are not a party, either directly,
indirectly or by operation of law, to any collective agreement, letters of
intent or other written or oral communication with any trade union, employees
association or other association which may qualify as a trade union which
cover any of their employees or any dependent contractors of COI or ITL.
There are no labor unions or other organizations representing or, to the
Knowledge of Parent, COI or ITL attempting to represent, any employees of the
Industrial Tires Business and no agreements, plans, programs, documents or
letters of understanding currently in effect between COI or ITL with respect
to employees of the Industrial Tires Business and any union or other employee
organization affecting wages, hours or other terms and conditions of
employment. Except as set forth in SCHEDULE 5.18, Parent, COI and ITL do not
Know of any current attempts to organize or establish any labor union or
employee association in connection with the Industrial Tires Business.
SCHEDULE 5.18 sets forth an accurate summary of all attempts to organize the
employees of COI and/or ITL since January 1, 1997.
(c) Except as set forth in SCHEDULE 5.18, neither COI nor ITL
has any obligation to provide or contribute to the cost of life insurance,
health insurance, Medicare supplement insurance, or any other non-pension
benefit to or on behalf of retirees or former employees of the Industrial
Tires Business. None of the Industrial Tires Assets are subject to any lien
or security interest under Section 302(f), 306(a), 307(a) or 4068 of ERISA or
Section 401(a)(29) or 412(m) of the Tax Code. The pension plan of CCL, the
Main Pension Plan, and Pension Plan C included within
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the Employee Benefit Plans of Sellers (the "Pension Plans") and all
amendments made thereto set forth in SCHEDULE 5.18 with respect to COI have
been accepted for registration under the Income Tax Act (Canada) and the
applicable provincial pension legislation and the Pension Plans have been
administered in compliance in all material respects with all Governmental
statutory and regulatory requirements. All contributions required to be made
to the Pension Plans to the date hereof in order for the Pension Plans to
comply with the minimum funding standards imposed by applicable Governmental
legislation and the regulatory requirements prescribed thereunder have been
made and shall be made until Closing. To the Knowledge of Parent and COI,
except as set forth in SCHEDULE 5.18, the Pension Plans of COI are fully
funded on a "going-concern" and on a "winding-up" basis, as determined in
accordance with the actuarial methods and assumptions used in the most recent
actuarial report accepted for filing by the applicable regulatory authority.
All employee contributions to the Pension Plans to the date hereof have been
and shall to the Closing be properly withheld from the remuneration of the
employees by COI and have been timely remitted to the funding agent for the
Pension Plans. There has not been any withdrawal by COI of assets held under
the Pension Plans and any application by COI of surplus assets held under the
Pension Plans to offset contributions otherwise required to be made thereto
by COI has been permitted under the terms of the Pension Plans and the
funding agreement maintained in connection therewith, and under all
applicable legislation. No improvements to the Pension Plans have been
promised or proposed to the Transferred Employees, other than those which may
be reflected in the current terms of the Pension Plans. SCHEDULE 5.18
contains a listing of all documents related to the Pension Plans of COI, true
and complete copies of which have been delivered to Purchaser prior to the
date hereof:
(i) the most current text of the Pension Plans,
including without limitation all amendments made thereto;
(ii) all employee communications, plan summaries,
booklets and personnel manuals relating to the Pension Plans since January
13, 1997, whether or not such communications have been filed with any
applicable regulatory authority;
(iii) the trust or other funding agreement maintained in
connection with the Pension Plans, including all amendments made thereto and
the latest financial statements thereof;
(iv) the annual information return filed in respect of
the Pension Plans with any applicable regulatory authority for the most
recent completed plan year;
(v) the two (2) most recently completed actuarial
reports filed in respect of the Pension Plans with any applicable regulatory
authority; and
(vi) all statements of investment policies and goals
prepared in respect of the Pension Plans, including all amendments made
thereto, whether or not such statement has been filed with any applicable
regulatory authority.
The only persons who are participants in the Main Pension Plan are the COI
employees who report for work for COI at its manufacturing facility, 3161 and
3199 Wharton Way, Mississauga, Ontario. The only person who is a participant
in Pension Plan C is Terry Mark.
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(d) ITL is the Plan Administrator of the ITL Industrial Tires
Incorporated 401(k) and Profit Sharing Plan ("401(k) Plan"). The 401(k) Plan
satisfies the requirements of Internal Revenue Code Section 401(a), and there
is no plan provision or operation of the 401(k) Plan Known to Parent or ITL
which would result in disqualification of the 401(k) Plan. SCHEDULE 5.18
includes the most recent IRS Determination Letter for the 401(k) Plan.
(e) There are no pending, or to the Knowledge of the Parent,
COI or ITL, threatened charges, complaints, claims, settlement agreements or
citations against COI or ITL with respect to the Industrial Tires Business,
nor, to the Knowledge of the Parent, COI or ITL, is there any reasonable
basis for the same, under or before (i) the Occupational Safety and Health
Act of 1970, as amended; (ii) the National Labor Relations Act of 1935, as
amended; (iii) Civil Rights Act of 1964, as amended; (iv) the Immigration
Reform and Control Act of 1986, as amended; (v) the Age Discrimination in
Employment Act of 1967, as amended; (vi) the Fair Labor Standards Act, as
amended, (vii) the Americans with Disabilities Act, as amended; (viii) the
Family and Medical Leave Act, as amended; (ix) the Occupational Health and
Safety Act (Ontario), the Employment Standards Act (Ontario), the Human
Rights Code (Ontario), the Labour Relations Act, 1995, Pay Equity Act
(Ontario), the Workplace Safety and Insurance Act, 1997 (Ontario); (x) any
other similar Laws; or (xi) any employment standards branch or tribunal or
human rights tribunal. There are no outstanding decisions or settlements or
pending settlements under employment standards or similar laws which place
any obligation upon COI and/or ITL relating to the Industrial Tires Business
to do or refrain from doing any act.
(f) Except as set forth in SCHEDULE 5.18, there are no
worker's compensation claims involving employees of COI or ITL with respect
to the Industrial Tires Business either being paid on a continuing basis or
being controverted in litigation. SCHEDULE 5.18 sets forth the worker's
compensation claims experience of COI and ITL since January 13, 1997.
(g) The Industrial Tires Business has been and will until
Closing be operated in full compliance with all Laws relating to employees,
employment standards, occupational health and safety, pay equity and
employment equity. COI has complied with and posted plans as required under
the Pay Equity Act (Ontario). There are no pending, or to the Knowledge of
the Parent, COI or ITL, threatened charges, complaints, claims, settlement
agreements or citations, against COI or ITL in respect of such Laws.
(h) SCHEDULE 5.18 sets forth a complete and accurate list of
all employees (including those on maternity, sick leave and/or lay-off) of
COI and ITL performing services for the Industrial Tires Business, showing
for each name, hire date, age, current job title or description, current
salary, wages or hourly or other rates of pay, any bonus or deferred
compensation arrangements whether monetary or otherwise paid or payable.
Except as disclosed in SCHEDULE 5.18, no employee is on short or long term
disability leave, extended absence or receiving benefits pursuant to any
worker's compensation legislation or plan including under the Workplace
Safety and Insurance Act (Ontario).
5.19 INSURANCE. SCHEDULE 5.19 sets forth a list and brief description
(including insurer, policy number, nature of coverage, limits, premiums and
expiration dates) of each policy of
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insurance maintained, owned or held by COI or ITL with respect to the
Industrial Tires Business as of the date of this Agreement. COI and ITL have
each complied with each of the insurance policies listed on such SCHEDULE
5.19 and have not failed to give notice or present any material claim
thereunder in a due and timely manner. Neither Parent, COI nor ITL has
received any notice of cancellation or non-renewal with respect to any of the
insurance policies of COI or ITL. Each of COI and ITL have provided
Purchaser with a copy of all inspection reports in their possession.
5.20 SUPPLIERS. To the Knowledge of Parent, COI and ITL (a) there are
no suppliers of products or services to COI or ITL which are material to the
Industrial Tires Business with respect to which practical alternative sources
of supply are not generally available on comparable terms and conditions in
the marketplace and (b) COI and ITL enjoy satisfactory relations with all of
their suppliers.
5.21 CUSTOMERS. Except as specifically set forth in SCHEDULE 5.21,
during the twelve (12) month period ending October 31, 1998, no one customer
purchased ten percent (10%) or more of the sales volume of COI or ITL with
respect to the Industrial Tires Business for that time period.
5.22 YEAR 2000 COMPLIANT. SCHEDULE 5.22 sets forth all actions taken
by COI and ITL as of the date of this Agreement and all actions remaining to
be taken to become Year 2000 Compliant on or prior to January 1, 2000 in all
material computer-based systems (including all software, embedded microchips
and other processing capabilities) used by or operated within the custody or
control of COI and ITL and included in the Industrial Tires Assets and the
Industrial Tires Business to be sold hereunder. COI and ITL make no
representation or warranty that any of the actions taken and listed in
SCHEDULE 5.22 will actually achieve a solution to any Year 2000 Problem.
5.23 WARRANTIES. Except as set forth in SCHEDULE 5.23, neither COI
nor ITL has made any express product warranty with respect to any product
that it manufactures or sells or service that it renders. Neither COI nor
ITL (a) has received any notice of any material claim based on any express or
implied warranty, or (b) Knows of any material claim (actual or threatened)
based on any express or implied warranty.
5.24 DISCLOSURE. None of the representations or warranties of Parent,
COI or ITL contained in Article 5 of this Agreement, none of the information
contained in the SCHEDULES referred to in this Article 5, and none of the
other information or documents furnished or to be furnished to Purchaser or
any of its respective representatives by Parent, COI or ITL, or any of their
respective representatives in connection with this Agreement and the
transactions contemplated hereby, is false or misleading in any material
respect or omits to state a fact herein or therein necessary to make the
statements made herein or therein not misleading in any material respect.
There is no information or Knowledge of any facts not generally known to the
public or Purchaser relating to Parent, COI and ITL or the Industrial Tire
Business which, if known to Purchaser, might reasonably be expected to deter
Purchaser from completing the transactions contemplated herein.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT AND CCL
As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Parent and CCL, jointly and
severally, represent and warrant to Purchaser, and Purchaser in agreeing to
pay the Purchase Price and to otherwise consummate the transactions
contemplated by this Agreement has relied upon such representations and
warranties, that, except as set forth in certain "SCHEDULES" which are
referred to herein and which have previously been delivered by Parent and CCL
to Purchaser:
6.1 FINANCIAL STATEMENTS. CCL has furnished Purchaser with complete
and accurate copies of the CCL Financial Statements which present fairly in
all material respects the financial position and results of operations of the
Baseband and Wheel Business as of the statement dates and for the periods
indicated, and have been prepared in accordance with GAAP consistently
applied throughout and among the periods indicated. All properties utilized
in the operation of the Baseband and Wheel Business have been reflected on
the CCL Financial Statements in the manner and the extent required by GAAP.
Except as set forth in SCHEDULE 6.1, the income statements included within
the CCL Financial Statements do not reflect any items of special or
nonrecurring income or any other item of income not earned in the ordinary
course of the Baseband and Wheel Business.
6.2 ACCOUNTS RECEIVABLE. The accounts receivable of CCL relating to
the Baseband and Wheel Business as set forth on the CCL Interim Balance Sheet
or arising since the date thereof are (a) collectible, valid, have arisen
solely out of bona fide sales and deliveries of goods, performance of
services and other business transactions in the ordinary course of the
Baseband and Wheel Business consistent with the past practices of CCL, and
(b) not subject to valid defenses, set-offs or counterclaims. To the
Knowledge of Parent and CCL, the allowance for collection losses recorded on
the CCL Interim Balance Sheet has been determined in accordance with GAAP
consistent with the past practices of CCL.
6.3 INVENTORY. All inventory of CCL reflected in the CCL Interim
Balance Sheet or acquired since October 31, 1998 was acquired and has been
maintained in the ordinary course of the Baseband and Wheel Business, is of
good and merchantable quality, and consists of a quality, quantity and
condition usable, leasable or saleable in the ordinary course of the Baseband
and Wheel Business except for inventory in an amount equal to or less than
the reserves for obsolescence set forth on the CCL Interim Balance Sheet.
Except as set forth in SCHEDULE 6.3, CCL is not under any liability or
obligation with respect to the return of inventory in the possession of
wholesalers, retailers or other customers. All inventory of CCL used in the
Baseband and Wheel Business is located at the locations set forth in SCHEDULE
6.3 and at no other location.
6.4 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
SCHEDULE 6.4 or as otherwise expressly set forth in this Agreement, since
October 31, 1998, there has not been any (a) material change in the condition
(financial or otherwise), operations (present or prospective), business
(present or prospective), properties, assets or liabilities of the Baseband
and Wheel Business other than reasonable changes incurred in the ordinary
course of business, and such reasonable changes in the ordinary course of
business have not materially and adversely affected the Baseband
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and Wheel Business; (b) transaction by CCL relating to the Baseband and Wheel
Business other than in the ordinary course of business as conducted on that
date; (c) destruction, damage to or loss of any CCL Asset (whether or not
covered by insurance) that materially and adversely affects the financial
condition, business or prospects of the Baseband and Wheel Business; (d)
change in accounting methods, principles or practices (including, without
limitation, any change in depreciation or amortization policies or rates) of
CCL; (e) amendment or termination of any Assumed CCL Contract or Assumed CCL
Lease other than in the ordinary course of business; (f) labor trouble or any
impending or threatened labor trouble Known to Parent or CCL affecting or
which might materially and adversely affect the operations of the Baseband
and Wheel Business; or (g) other change in the assets, property, prospects,
business or financial condition of CCL which would have a material adverse
effect on the value of the Baseband and Wheel Business.
6.5 DEBT FOR BORROWED MONEY. Except as set forth in SCHEDULE 6.5,
there are no (a) contracts, agreements or instruments pursuant to which CCL
is indebted or liable to any Person for borrowed money for any CCL Asset or
for the deferred purchase price of any CCL Asset in excess of $15,000, (b)
capitalized leases pursuant to which CCL leases real or personal property
related to or utilized by the Baseband and Wheel Business which provide for
annual payments in excess of $10,000, or (c) mortgages, security agreements
or pledge agreements to which CCL is a party or by which it or any of its
properties is subject or encumbered, related to or utilized by the Baseband
and Wheel Business. True and complete copies of all contracts, agreements
and instruments set forth in SCHEDULE 6.5 have been delivered to Purchaser.
6.6 TAXES. All separate and/or consolidated, unitary and combined
federal, provincial, state, county, local and foreign income, excise,
withholding, property, sales, use, franchise and other tax returns and
related information (including, without limitation, information returns)
required to be filed on or before the date hereof by or on behalf of CCL have
been prepared and filed in accordance with the applicable Law and all Taxes
thereon which are due or may hereafter become due pursuant to such returns or
pursuant to any assessment which has or will become payable or otherwise,
subject to any extension granted for the filing of any return or for the
payment of any tax, interest, penalty, assessment or deficiency, have been
paid in full or an adequate reserve has been established therefor. All
monies required to be collected or withheld by CCL for income taxes, social
security and other payroll Taxes and statutory withholdings have been
collected or withheld, and either paid to the appropriate Governmental
agencies, set aside in accounts for such purpose, or accrued, reserved
against and entered upon the books of CCL.
6.7 MARKETABILITY AND CONDITION OF CCL ASSETS.
(a) CCL has or will have at the Closing, legal and beneficial
ownership and good and marketable title to all the CCL Assets and the
Computer Equipment free and clear of any and all Liens other than the
Permitted Liens and is exclusively entitled to possess and dispose of the CCL
Assets and the Computer Equipment. None of the CCL Assets are owned by any
subsidiary of CCL.
(b) The CCL Assets and the leased property set forth in
SCHEDULES 6.8 AND 6.9 constitute all of the assets used in the Baseband and
Wheel Business and constitute all of the assets used by CCL to operate the
Baseband and Wheel Business through Closing as it has been conducted
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prior to the date of this Agreement. All of the tangible CCL Assets and the
Computer Equipment are in good and (where applicable) operable condition,
normal wear and tear excepted.
6.8 REAL PROPERTY INTERESTS; ASSUMED REAL ESTATE LEASES. CCL owns no
real estate. All real property (including, without limitation, all interests
in and rights to real property) and improvements located thereon which are
leased by CCL (the "CCL Leased Real Estate") held for or used in the Baseband
and Wheel Business are identified in SCHEDULE 6.8. A true and complete copy
of each lease for the CCL Leased Real Estate has been previously delivered to
Purchaser. To the Knowledge of Parent and CCL, there are no building, zoning
or use violations existing with respect to any CCL Leased Real Estate on the
date hereof that would have a material adverse effect on the operations of
the Baseband and Wheel Business. There does not exist on the date hereof any
pending or, to the Knowledge Parent or CCL, proposed (a) condemnation of all
or any part of the CCL Leased Real Estate; (b) special assessment for work
relating to all or any part of the CCL Leased Real Estate or (c) conduct or
activity which will interfere with the use of or access to CCL Leased Real
Estate. To the Knowledge of Parent and CCL, the buildings and any other
improvements located on CCL Leased Real Estate are all in good and operable
condition, normal, wear and tear excepted. CCL has the right to quiet
enjoyment of the CCL Leased Real Estate.
6.9 PERSONAL PROPERTY AND PERSONAL PROPERTY ASSUMED LEASES. All of
the personal property owned or leased by CCL and used in the Baseband and
Wheel Business is located at the locations set forth in SCHEDULE 6.3 and at
no other location. Except as set forth in SCHEDULE 6.9, there are no
operating leases or agreements under which CCL (a) is lessee of, or (b) holds
or operates, any personal property owned by any third party and used in the
Baseband and Wheel Business. A true and complete copy of each such lease and
agreement which is an Assumed Liability, has been previously delivered to
Purchaser.
6.10 ASSUMED CONTRACTS. SCHEDULE 6.10 contains a list and brief
description of each contract, agreement and understanding of any type or
kind, oral or written, of which CCL is a party and relating to the Baseband
and Wheel Business which obligates CCL to make payments in excess of $20,000,
and in any event also lists any contract with respect to the following: (a)
consignment, maintenance or any agreement relating to the possession of
inventory, tooling or any other CCL Asset by a third party, (b)
manufacturer's representative, sales, agency or advertising contract which is
not terminable on thirty (30) days (or less) notice without penalty; (c)
guaranty of any obligations of customers or others; (d) contract,
understanding or agreement for the future purchase of materials, supplies,
merchandise or equipment continuing for a period of more than three (3)
months or involving payments of more than $20,000 over its remaining term
(including periods covered by any option to review by either party); (e)
agreement which limits or restricts CCL to compete or otherwise to conduct
the Baseband and Wheel Business in any geographical area in any material
matter; and (f) agreement providing for a rebate or a discount.
6.11 STATUS OF ASSUMED CCL LEASES AND ASSUMED CCL CONTRACTS. Except
as set forth in SCHEDULE 6.11, each Assumed CCL Lease and Assumed CCL
Contract will continue in full force and effect after the Closing as
contemplated hereby, in each case without breaching the terms thereof or
resulting in the forfeiture or impairment of any rights thereunder and
without the consent, approval or act of, or the making of any filing with,
any other party. CCL has fulfilled and performed its
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obligations under each such lease and other contract, and is not in breach or
default under, and is not alleged to be in breach or default under, nor, to
the Knowledge of Parent and CCL is there or is there alleged to be any basis
for termination of, any of such leases or contracts and no other party to any
of such leases or contracts has breached or defaulted thereunder, and no
event has occurred which with the passage of time or the giving of notice or
both would constitute such a default or breach by CCL, or to the Knowledge of
Parent and CCL, by any such other party.
6.12 COMPLIANCE WITH LAWS. Except as set forth in SCHEDULE 6.12, to
the Knowledge of Parent and CCL, CCL has complied with and is in compliance
in all material respects with all Laws applicable to the Baseband and Wheel
Business, and CCL has not received any Notice of any alleged breach of such
Laws.
6.13 ENVIRONMENTAL LAWS AND REGULATIONS.
(a) Except as set forth in SCHEDULE 6.13, to the Knowledge of
Parent and CCL, CCL has used, stored, generated, transported or disposed of
any Hazardous Materials at the Applicable CCL Real Estate in compliance in
all material respects with applicable Environmental Laws. Except as set
forth in SCHEDULE 6.13, to the Knowledge of Parent and CCL, the Applicable
CCL Real Estate has been operated and used in compliance in all material
respects with all applicable Environmental Laws relating to product
registration, pollution control and environmental contamination including,
without limitation, all Laws governing the generation, use, collection,
discharge, or disposal of Hazardous Materials and all Laws with regard to
record keeping, notification, registration and reporting requirements
respecting Hazardous Materials. There are no facts or circumstances Known to
Parent or CCL which could reasonably be expected to form the basis for the
assertion of any Environmental Claim against CCL with respect to the
Applicable CCL Real Estate. None of the Applicable CCL Real Estate is (A)
listed or proposed for listing on the National Priority List (as defined in
40 C.F.R. 300.5) or a similar list in Canada or, is (B) listed on the
Comprehensive Environmental Response, Compensation, Liability Information
System List promulgated pursuant to CERCLA, or any comparable list maintained
by any foreign, state or local Government authority.
(b) Except as disclosed in SCHEDULE 6.13, to the Knowledge of
Parent and CCL, (i) there are no underground storage tanks on the Applicable
CCL Real Estate or, polychlorinated biphenyls in or at the Applicable CCL
Real Estate and (ii) the facilities on each Applicable CCL Real Estate comply
with the Environmental Laws including, without limitation, the Occupational
Safety and Health Act or Occupational Health and Safety Act (Ontario)
regulations with respect to ambient air exposure to asbestos or lead-based
paint. CCL has delivered to Purchaser true and complete copies or results of
any reports, studies, analyses, tests or monitoring in the possession of or
initiated by CCL pertaining to the Baseband and Wheel Business or to the
existence of Hazardous Materials or any other environmental concerns relating
to any of the Applicable CCL Real Estate concerning compliance with or
liability under the Environmental Laws.
(c) Except as disclosed in SCHEDULE 6.13: (i) Parent and CCL,
the Baseband and Wheel Business (including, without limitation, all
processes, operations, assets and undertakings) have at all times been and
are in material compliance with all Environmental Laws, (ii) Parent and
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CCL have received no written Notice of non-compliance, and do not Know, nor
have they reasonable grounds to Know, of any facts which would give rise to a
Notice of non-compliance, with any Environmental Law, and (iii) without
limiting the generality of the foregoing, Parent and CCL have received no
written Notice as a result of the release or the threatened release of any
Hazardous Materials, or respecting any remedial, control or preventative
action, direction or order, or of any investigation or evaluation respecting
any release or the threatened release of any Hazardous Materials.
6.14 NO VIOLATION, LITIGATION OR REGULATORY ACTION. Except as set
forth in SCHEDULE 6.14:
(a) There are no lawsuits, charges, claims, suits,
proceedings, grievances, arbitrations or investigations pending or, to the
Knowledge of Parent and CCL threatened against or affecting CCL relating to
the CCL Assets or the Baseband and Wheel Business, which threatened lawsuits,
charges, claims, suits, proceedings, grievances, arbitrations or
investigations if adversely determined would materially and adversely affect
the business or operation of the Baseband and Wheel Business; and
(b) There is no action, suit or proceeding pending or, to the
Knowledge of the Parent and CCL, threatened to restrain or prohibit or
otherwise challenge the legality or validity of the transactions contemplated
hereby.
6.15 PROPRIETARY RIGHTS.
(a) SCHEDULE 6.15 contains a list and a description of all
(i) patents, patent rights or applications for patents relating to the
Baseband and Wheel Business; (ii) United States or Canadian, provincial,
state or foreign trademarks, servicemarks, industrial designs, trade names or
copyrights for which registrations have been issued or applied for, or other
United States or Canadian, provincial, state or foreign trademarks,
servicemarks, trade names or copyrights owned by CCL in which CCL holds any
right, license or interest used in or relating to the Baseband and Wheel
Business; (iii) agreements, commitments, contracts, understandings, licenses,
assignments or indemnities relating or pertaining to any asset, property or
right of the character described in the preceding clause to which CCL is a
party; and (iv) licenses or agreements pertaining to mailing lists, know-how,
trade secrets, inventions, disclosures or uses of ideas used in or relating
to the Baseband and Wheel Business to which CCL is a party (collectively, the
"CCL Proprietary Rights").
(b) All of the patents, patent rights, registrations for
trade names, trademarks, industrial designs, servicemarks, copyrights and
licenses listed in SCHEDULE 6.15 as being owned, controlled or used by CCL in
the Baseband and Wheel Business are valid and in full force and effect and
all applications for such registrations are pending and in good standing, all
without challenge of any kind and CCL owns or has the right to use the entire
right, title and interest in and to all such patents, patent rights, trade
names, trademarks, servicemarks, design marks, copyrights and licenses so
listed, as well as the registrations and applications for registration
therefor, without qualification, limitation, burden or encumbrance of any
kind. The CCL Proprietary Rights are assignable to Purchaser without the
consent or approval of any third party except as set forth in SCHEDULE 6.15.
True and correct copies of all CCL Proprietary Rights have been previously
delivered to Purchaser.
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(c) Except as expressly disclosed in SCHEDULE 6.15, (i) to
the Knowledge of Parent and CCL, no infringement of any patent, patent right,
trademark, servicemark, design marks, trade name or copyright or registration
thereof has occurred or results in any way from the operations of CCL or the
Baseband and Wheel Business, (ii) no claim or threat of any such infringement
has been made or implied in respect of any of the foregoing, and (iii) no
proceedings are pending or, to the Knowledge of Parent and CCL, threatened
against CCL which challenge the validity or ownership of any CCL Proprietary
Rights. CCL has not received a notice of, nor do the Parent or CCL have
Knowledge of, any basis for a claim against CCL that the operations,
activities, products, equipment, machinery or processes of the Baseband and
Wheel Business infringe the patents, trademarks, servicemarks, trade names,
copyrights or other property rights of others.
6.16 INTERCOMPANY/AFFILIATE TRANSACTIONS. SCHEDULE 6.16 sets forth
(a) a list of each oral or written contract or agreement between CCL, on the
one hand, and any Affiliate of CCL, shareholder, officer or director of CCL
on the other hand, and relating to the CCL Assets or the Baseband and Wheel
Business; and (b) a general description of all such transactions during the
last three years.
6.17 PERMITS. CCL owns, holds or possesses all franchises, permits,
licenses, certificates, registrations, privileges, immunities, approvals and
other authorizations materially necessary to own or lease, operate and use
the CCL Assets and to carry on and conduct the Baseband and Wheel Business as
now conducted (collectively, the "CCL Permits"). SCHEDULE 6.17 contains a
complete list of the material CCL Permits. Each of the CCL Permits is valid,
subsisting and in full force and effect and will continue in full force and
effect after the Closing, in each case without (a) the occurrence of any
breach, default or forfeiture of rights thereunder, or (b) the consent,
approval, or act of, or the making of any filing with, any Governmental body
or other Person. True and complete copies of all of the CCL Permits listed
in SCHEDULE 6.17 have been previously delivered to Purchaser.
6.18 EMPLOYMENT.
(a) Except as set forth in SCHEDULE 6.18, CCL is not, with
respect to any employee of the Baseband and Wheel Business, a party to or
bound by any (i) oral or written employment agreement (other than oral
agreements terminable by CCI on the giving of reasonable notice in accordance
with applicable law), consulting agreement, deferred compensation agreement,
confidentiality agreement or covenant not to compete, or (ii) employees'
pension, profit sharing, stock option, bonus, incentive, stock purchase,
welfare, life insurance, hospital or medical benefit plan or any other
Employee Benefit Plan.
(b) CCI is not a party, either directly, indirectly or by
operation of law, to any collective agreement, letters of intent or other
written or oral communication with any trade union, employees association or
other association which may qualify as a trade union which cover any of their
employees or any dependent contractors of CCL. There are no labor unions or
other organizations representing or, to the Knowledge of Parent, COI or ITL
attempting to represent, any employees of the Baseband and Wheel Business and
no agreements, plans, programs, documents or letters of understanding
currently in effect between CCL with respect to employees of the Baseband and
Wheel Business and any union or other employee organization affecting wages,
hours or other
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terms and conditions of employment. Except as set forth in SCHEDULE 6.18,
Parent and CCL do not Know of any current attempts to organize or establish
any labor union or employee association in connection with the Baseband and
Wheel Business. SCHEDULE 6.18 sets forth an accurate summary of all attempts
to organize the employees of CCL since January 1, 1997.
(c) Except as set forth in SCHEDULE 6.18, CCL has no
obligation to provide or contribute to the cost of life insurance, health
insurance, Medicare supplement insurance, or any other non-pension benefit to
or on behalf of retirees or former employees of the Baseband and Wheel
Business. None of the CCL Assets are subject to any lien or security
interest under Section 302(f), 306(a), 307(a) or 4068 of ERISA or Section
401(a)(29) or 412(m) of the Tax Code. The Pension Plans and all amendments
made thereto set forth in SCHEDULE 6.18 with respect to CCL are registered
under the Income Tax Act (Canada) and do not require registration under any
provincial pension legislation and the Pension Plans have been administered
in compliance in all material respects with all Governmental statutory and
regulatory requirements. No contributions are required to be made to the
Pension Plans by CCL or any other Seller under any document, agreement or
understanding with any present or former employees of CCL or in order for the
Pension Plans to comply with the minimum funding standards imposed by
applicable Governmental legislation and the regulatory requirements
prescribed thereunder have been made and shall be made until Closing. All
employee contributions to the Pension Plans to the date hereof have been and
shall to the Closing be properly withheld from the remuneration of the
employees by CCL and have been remitted to the trustee of the Pension Plans.
SCHEDULE 6.18 contains a listing of the following documents related to the
Pension Plans of CCL, true and complete copies of which have been delivered
to Purchaser prior to the date hereof:
(i) the most current text of the Pension Plans
including without limitation all amendments made thereto;
(ii) all employee communications relating to the
Pension Plans since March 11, 1997, whether or not such communications have
been filed with any applicable regulatory authority; and
(iii) the trust or other funding agreement maintained in
connection with the Pension Plans, including all amendments made thereto and
the latest financial statements thereof;
(d) There are no pending, or to the Knowledge of the Parent,
CCL, threatened or unasserted charges, complaints, claims, settlement
agreements or citations, directly or indirectly involving or affecting CCL
with respect to the Baseband and Wheel Business, nor, to the Knowledge of the
Parent or CCL, is there any reasonable basis for the same, under or before
(i) the Occupational Safety and Health Act of 1970, as amended; (ii) the
National Labor Relations Act of 1935, as amended; (iii) Civil Rights Act of
1964, as amended; (iv) the Immigration Reform and Control Act of 1986, as
amended; (v) the Age Discrimination in Employment Act of 1967, as amended;
(vi) the Fair Labor Standards Act, as amended, (vii) the Americans with
Disabilities Act, as amended; (viii) the Family and Medical Leave Act, as
amended; (ix) the Occupational Health and Safety Act (Ontario), the
Employment Standards Act (Ontario), the Human Rights Code (Ontario), the
Labour Relations Act, 1995, Pay Equity Act (Ontario), the Workplace Safety
and Insurance Act, 1997
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(Ontario); (x) any other similar Laws; or (xi) any employment standards
branch or tribunal or human rights tribunal. There are no outstanding
decisions or settlements or pending settlements under employment standards or
similar laws which place any obligation upon CCL relating to the Baseband and
Wheel Business to do or refrain from doing any act.
(e) Except as set forth in SCHEDULE 6.18, there are no
worker's compensation claims involving employees of CCL with respect to the
Baseband and Wheel Business either being paid on a continuing basis or being
controverted in litigation. SCHEDULE 6.18 sets forth the worker's
compensation claims experience of CCL since March 11, 1997.
(f) The Baseband and Wheel Business has been and will until
Closing be operated in full compliance with all Laws relating to employees,
employment standards, occupational health and safety, pay equity and
employment equity. COI has complied with and posted plans as required under
the Pay Equity Act (Ontario). There are no pending, or to the Knowledge of
the Parent or CCL, threatened charges, complaints, claims, settlement
agreements or citations, against CCL in respect of such Laws.
(g) SCHEDULE 6.18 sets forth a complete and accurate list of
all employees (including those on maternity, sick leave and/or lay-off) of
CCL performing services for the Baseband and Wheel Business, showing for each
name, hire date, age, current job title or description, current salary, wages
or hourly or other rates of pay, any bonus or deferred compensation
arrangements whether monetary or otherwise paid or payable. Except as
disclosed in SCHEDULE 6.18, no employee is on short or long term disability
leave, extended absence or receiving benefits pursuant to any worker's
compensation legislation or plan including under the Workplace Safety and
Insurance Act (Ontario).
6.19 INSURANCE. SCHEDULE 6.19 sets forth a list and brief description
(including insurer, policy number, nature of coverage, limits, premiums and
expiration dates) of each policy of insurance maintained, owned or held by
CCL with respect to the Baseband and Wheel Business as of the date of this
Agreement. CCL has complied with each of the insurance policies listed on
such SCHEDULE 6.19 and has not failed to give notice or present any material
claim thereunder in a due and timely manner. Neither Parent nor CCL has
received any notice of cancellation or non-renewal with respect to any of the
insurance policies of CCL relating to the CCL Assets or the Baseband and
Wheel Business. CCL has provided Purchaser with a copy of all inspection
reports in its possession.
6.20 SUPPLIERS. To the Knowledge of Parent and CCL, there are no
suppliers of products or services to CCL which are material to the Baseband
and Wheel Business with respect to which practical alternative sources of
supply are not generally available on comparable terms and conditions in the
marketplace. CCL enjoys excellent relations with all of its suppliers.
6.21 CUSTOMERS. Except as specifically set forth in SCHEDULE 6.21,
during the twelve (12) month period ending October 31, 1998, no one customer
purchased ten percent (10%) or more of the sales volume of the Baseband and
Wheel Business for that time period.
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6.22 YEAR 2000 COMPLIANT. SCHEDULE 6.22 sets forth all actions taken
by CCL as of the date of this Agreement and all actions remaining to be taken
to become Year 2000 Compliant with respect to the Baseband and Wheel Business
on or prior to January 1, 2000 in all material computer-based systems
(including all software, embedded microchips and other processing
capabilities) used by or operated within the custody or control of CCL and
included in the CCL Assets or the Baseband and Wheel Business to be sold
hereunder. CCL makes no representation or warranty that any of the actions
taken and listed in SCHEDULE 6.22 will actually achieve a solution to any
Year 2000 Problem.
6.23 WARRANTIES. Except as set forth in SCHEDULE 6.23, CCL has not
made any express product warranty with respect to any product that it
manufactures or sells or service that it renders. CCL (a) has not received
any notice of any material claim based on any express or implied warranty, or
(b) Knows of any material claim (actual or threatened) based on any express
or implied warranty.
6.24 DISCLOSURE. None of the representations or warranties of Parent
or CCL contained in Article 6 of this Agreement, none of the information
contained in the SCHEDULES referred to in this Article 6, and none of the
other information or documents furnished or to be furnished to Purchaser or
any of its respective representatives by Parent or CCL, or any of their
respective representatives in connection with this Agreement and the
transactions contemplated hereby, is false or misleading in any material
respect or omits to state a fact herein or therein necessary to make the
statements made herein or therein not misleading in any material respect.
There is no information or Knowledge of any facts not generally known to the
public or Purchaser relating to Parent or COL or the Baseband and Wheel
Business which, if known to Purchaser, might reasonably be expected to deter
Purchaser from completing the transactions contemplated herein.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to the Sellers to enter into this Agreement and to
consummate the transactions contemplated hereby, Purchaser represents and
warrants to the Sellers and the Sellers in agreeing to consummate the
transactions contemplated by this Agreement have each relied upon such
representations and warranties, that except as set forth in certain
"SCHEDULES" which are referred to herein and which have previously been
delivered by Purchaser to Sellers:
7.1 CORPORATION; ORGANIZATION. Purchaser is a corporation duly
organized and validly existing under the laws of the State of Indiana and has
the requisite power and authority to carry on its business as currently
conducted and to own the properties and assets it now owns.
7.2 AUTHORITY.
(a) Purchaser has full right, capacity, corporate power and
authority to execute and deliver this Agreement and the Note, to consummate
the transactions contemplated hereby and to comply with the terms, conditions
and provisions hereof and thereof. The execution, delivery and performance
of this Agreement and the Notes have been duly authorized and approved by its
Board of Directors and does not require any further authorization or consent.
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(b) The execution, delivery and performance of this Agreement
by Purchaser, the consummation of the transactions contemplated hereby and
the compliance with or fulfillment of the terms and provisions hereof or of
any other agreement or instrument contemplated hereby, do not and will not
(i) conflict with or result in a breach of any of the provisions of the
Articles of Incorporation or the By-Laws of Purchaser, (ii) contravene any
Law which affects or binds Purchaser or any of its respective properties,
(iii) conflict with, result in a breach of, constitute a default under, or
give rise to a right of termination or acceleration under any contract,
agreement, note, deed of trust, mortgage, trust, lease, Governmental or other
license, permit or other authorization, or any other instrument or
restriction to which Purchaser is a party or by which any of its properties
may be affected or bound, or (iv) except for the filing of the notification
required by the HSR which has been made, require Purchaser to obtain the
approval, consent or authorization of, or to make any declaration, filing or
registration with, any third party or any Governmental authority which has
not been obtained in writing prior to the date of this Agreement.
(c) This Agreement is, and the Note when issued will be, the
legal, valid and binding agreement of Purchaser and is enforceable against it
in accordance with its terms, subject to (i) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other laws or equitable
principles relating to or affecting the enforcement of creditors' rights
generally, (ii) the effect of the general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith and
fair dealing (regardless of whether considered in a proceeding in equity or
at law), (iii) the fact that the granting of specific performance and the
issuance of other rulings of enforcement are subject to the discretion of a
court of equity and to the application of general principles of equity, and
(iv) emergency and other powers which may be exercised by governmental bodies
or entities with jurisdiction.
7.3 INVESTMENT CANADA ACT. The Purchaser is a WTO Investor within
the meaning of the Investment Canada Act (Canada).
7.4 LITIGATION. There is no action, suit or proceeding pending or,
to the knowledge of Purchaser, threatened to retain or prohibit or otherwise
challenge the legality or validity of the transactions contemplated hereby.
ARTICLE 8
COVENANTS PENDING CLOSING
8.1 COVENANTS RELATING TO THE BUSINESS. Pending the Closing and
except as otherwise expressly permitted by this Agreement or as consented to
by Purchaser in writing, each Seller, as applicable, shall:
(a) carry on its respective portion of the Business in the
ordinary course and in good faith on an arm's-length basis and substantially
in the same manner as heretofore;
(b) perform in all material respects all obligations under
all contracts and leases relating to the Business;
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(c) maintain and keep the Assets in at least as good order
and condition as presently existing, ordinary wear and tear excepted, subject
to changes as determined by the management of COI, ITL and CCL in their
reasonable business judgment, as applicable;
(d) use their commercially reasonable efforts to preserve the
Business and good will of the customers, suppliers, distributors, licensors
and others having a business relationship with COI, ITL or CCL in their
respective portion of the Business in accordance with the reasonable business
judgment of the management of COI, ITL and CCL, as applicable;
(e) inform Purchaser regarding all material developments,
transactions and proposals relating to any portion of the Business;
(f) not permit COI or ITL to make any capital expenditures,
or commitment with respect thereto relating to the Industrial Tires Business
in an aggregate amount in excess of $50,000;
(g) not permit CCL to make any capital expenditures, or
commitment with respect thereto relating to the Baseband and Wheel Business
in an aggregate amount in excess of $5,000;
(h) deliver, as soon as prepared by COI, ITL or CCL, the
unaudited consolidated balance sheet of COI and ITL for the Industrial Tires
Business and of CCL for the Baseband and Wheel Business as of February 28,
1999, and as of the end of any subsequent month thereafter until Closing,
together with the related statements of income for the periods then ended;
(i) not permit or make any distribution or dividend, in cash,
property or otherwise, to the Parent, except in the ordinary course of
business in accordance with past practices and upon prior written notice to
Purchaser; and
(j) not make any change in any method of accounting
principles or practices.
8.2 APPROVALS AND CONSENTS. Prior to the Closing, each Seller shall
make good faith best efforts to obtain any and all permits, approvals,
consents and other authorizations of, and shall make all filings with, all
Governmental agencies and other Persons which, in the opinion of counsel for
Purchaser, are required to be obtained or made by the Sellers for the
consummation of the transactions contemplated by this Agreement. Purchaser
shall cooperate with Sellers to obtain any necessary permits, approvals,
consents or other authorizations and, to the extent any permit is
nontransferable, it shall utilize its best efforts to timely secure all
permits in its own name.
8.3 FULL ACCESS. During the period from the date of this Agreement
until the Closing, Purchaser and its authorized representatives (including
accountants, engineers, appraisers, lenders, attorneys and other outside
professional firms) shall have full access during normal business hours to
all properties, assets, contracts, documents, tax returns and other books and
records in the possession or under the control of any Seller or any of its
representatives (including accountants, engineers, appraisers, lenders,
attorneys and other outside professional firms) which may be reasonably
requested relating to the Assets and/or the Business. Each Seller shall
permit Purchaser and its representatives to make such copies of such books
and records as may be necessary to allow a complete examination and
investigation. Any such examination and inspection shall be done upon
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reasonable notice, at reasonable times, at the expense of the party
requesting the information, and in such a manner as not to interfere
unreasonably with business operations. Subject to obtaining the specific
prior written approval of a Seller, which may be withheld in the Seller's
reasonable discretion, on a case by case basis, Purchaser may contact
customers, suppliers and others having business relations with a Seller
relating to any portion of the Assets and/or the Business.
8.4 ADVICE OF CHANGE. From the date of this Agreement to the
Closing, the Sellers shall promptly advise Purchaser of (a) any event that
occurs prior to Closing that would have required disclosure in this Agreement
or in a Schedule to this Agreement by the Sellers if it had occurred prior to
the date of this Agreement, and (b) any change that is materially adverse to
the Business. No such writing shall be deemed to amend, modify or supplement
the Schedules or have any effect for the purposes of determining satisfaction
of the conditions set forth in Section 9.1.
8.5 ENVIRONMENTAL SITE ASSESSMENT. Each of COI, ITL and CCL shall
permit an environmental consulting firm acceptable to Purchaser to perform a
full environmental phase I or phase II site assessment or other environmental
study of any Industrial Tires Real Estate or of any Leased Real Estate as may
be determined by Purchaser or its lenders, in its sole discretion to be
advisable (a "Site Assessment"). Such Site Assessment shall only be
conducted on reasonable prior notice to Parent and Purchaser shall minimize
to the maximum extent possible any disruption to the business conducted at
the relevant site. Purchaser shall provide Parent with copies of all test
results, reports or other materials (including any draft reports), without
warranty of any completeness or accuracy, relating to the Site Assessment as
soon as practicable upon receipt. Purchaser shall pay the expense of any Site
Assessment.
8.6 SURVEY AND TITLE OPINION FOR ANY OWNED PARCELS OF REAL PROPERTY.
Purchaser shall obtain a current survey (the "Survey") and a title opinion
from Shibley Righton ("Title Opinion") for each parcel of Industrial Tires
Real Estate in form and substance reasonably acceptable to Purchaser. The
cost and expense for such Survey and Title Opinion shall be borne by
Purchaser.
8.7 GST REGISTRATION. Purchaser shall take all actions necessary to
become a registrant for purposes of the Excise Tax Act (Canada).
ARTICLE 9
CONDITIONS TO THE OBLIGATIONS OF PURCHASER
The obligation of Purchaser to effect the transactions contemplated by
this Agreement is subject to the fulfillment at or prior to the Closing of
each of the following conditions, except to the extent any such condition is
waived in writing by Purchaser:
9.1 PERFORMANCE BY THE SELLERS. The Sellers shall have performed and
complied with all of the terms, provisions and conditions of this Agreement
to be performed and complied with by each of them at or prior to the Closing,
and the representations and warranties of the Sellers contained in this
Agreement shall be true as of the date of this Agreement and, in all material
respects, as of the Closing (except as expressly contemplated or permitted by
this Agreement).
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9.2 CERTIFICATE OF PERFORMANCE. Purchaser shall have received a
certificate from the Sellers, dated the Closing Date, reasonably satisfactory
in form and substance to Purchaser, certifying that each of them has
performed and complied with all of the terms, provisions and conditions of
this Agreement to be performed and complied with by each one of them at or
prior to the Closing, and that each of their respective representations and
warranties contained in this Agreement are true as of the date of this
Agreement and, in all material respects, as of the Closing (except as
expressly contemplated or permitted by this Agreement).
9.3 CERTIFICATES OF SECRETARY OF THE SELLERS. Purchaser shall have
received a certificate from the Secretary or the Assistant Secretary of each
Seller dated the Closing Date, which certifies (a) the resolutions duly
adopted by the Board of Directors and shareholders, if appropriate,
authorizing and approving the execution, delivery and performance of this
Agreement and the transactions contemplated thereby and hereby; and (b) that
such resolutions have not been rescinded or modified and remain in full force
and effect as of the Closing Date.
9.4 HSR WAITING PERIOD. No supplemental filings shall be required
under the HSR to the filings made by Parent and by Purchaser on December 18,
1998, or, if required, any additional waiting periods applicable to this
Agreement and the transactions contemplated hereby under the HSR shall have
expired.
9.5 REQUIRED CONSENTS. All consents or approvals under the Material
Agreements and under all real estate leases, and all Governmental consents,
approvals, permits and other authorizations required to consummate the
transactions contemplated by this Agreement shall have been obtained and such
consents, approvals, permits, and other authorizations shall not have been
revoked, terminated or otherwise rendered ineffective.
9.6 DUE DILIGENCE. Purchaser shall be satisfied with the results of
the legal, real estate and environmental due diligence investigation of the
Assets and the Business performed by its attorneys, engineers, environmental
consultants and representatives, including, without limitation, the results
of each Site Assessment, Survey and Title Opinion.
9.7 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse changes or any discovery of a condition or the occurrence of any
event which would result in such a change in the financial condition,
operations or business prospects of any portion of the Business.
9.8 ASSETS. There shall be no Liens on the Assets other than
Permitted Liens. The Purchaser shall have received the Title Opinion
reflecting that COI has good and marketable title to the Industrial Tires
Real Estate, free and clear of any Liens other than the Permitted Liens.
9.9 NO INJUNCTION. No injunction, restraining order, judgment or
decree of any court or governmental authority shall be existing against any
of the parties to this Agreement, or any of their officers, directors, or
representatives, which restrains, prevents or materially alters the
transactions contemplated thereby or hereby.
9.10 RETAIL SALES TAX ACT. At the time of Closing, the Sellers shall
have obtained a Certificate from the Minister of Finance pursuant to Section
6 (1) of the Retail Sales Tax Act
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(Ontario) that all taxes collectible or payable by the Sellers with respect
to the Industrial Tires Business and the Baseband and Wheel Business have
been paid and the Sellers shall deliver to the Purchaser a duplicate copy of
such Certificate.
9.11 GUELPH FACILITY. Landlord shall have accepted an assignment of
the existing lease for the real property currently leased by CCL located at 1
Airpark Place, RR 2, Guelph, Ontario Canada on terms acceptable to Purchaser,
which existing lease shall be subject to the sublease dated January 18, 1999
by and between CCL and Lift Technologies, Inc., a true and complete copy of
which has been delivered to Purchaser.
9.12 CLOSING DELIVERIES. Purchaser shall have received the other
items to be delivered pursuant to Section 3.2.
ARTICLE 10
CONDITIONS TO THE OBLIGATIONS OF THE SELLERS
The obligation of the Sellers to effect the transactions contemplated by
this Agreement is subject to the fulfillment at or prior to the Closing of
each of the following conditions, except to the extent any such condition is
waived in writing by the Sellers:
10.1 PERFORMANCE BY PURCHASER. Purchaser shall have performed and
complied with all of the terms, provisions and conditions of this Agreement
to be performed and complied with by Purchaser at or prior to the Closing,
and the representations and warranties of Purchaser contained in this
Agreement shall be true as of the date of this Agreement and, in all material
respects, as of the Closing (except as expressly contemplated or permitted by
this Agreement).
10.2 CERTIFICATE OF PERFORMANCE OF PURCHASER. The Sellers shall have
received a certificate of a duly authorized officer of Purchaser, dated the
Closing Date, reasonably satisfactory in form and substance to them,
certifying that Purchaser has performed and complied with all of the terms,
provisions and conditions of this Agreement to be performed and complied with
by Purchaser at or prior to the Closing, and that each of its representations
and warranties contained herein are true as of the date of this Agreement
and, in all material respects, at and as of the Closing (except as expressly
contemplated or permitted by this Agreement).
10.3 CERTIFICATE OF SECRETARY OF PURCHASER. The Sellers shall have
received a certificate of the Secretary or the Assistant Secretary of
Purchaser, dated the Closing Date which certifies (a) the resolutions duly
adopted by its Board of Directors authorizing and approving the execution,
delivery and performance of this Agreement and the transactions contemplated
thereby and hereby; and (b) that such resolutions have not been rescinded or
modified and remain in full force and effect as of the Closing Date.
10.4 NO INJUNCTION. No injunction, restraining order, judgment or
decree of any court or Governmental authority shall be existing against any
of the parties to this Agreement, or any of their officers, directors, or
representatives, which restrains, prevents or materially alters the
transactions contemplated thereby or hereby.
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10.5 HSR WAITING PERIOD. No supplemental filings shall be required
under the HSR to the filings made by Parent and by Purchaser on December 18,
1998, or, if required, any additional waiting periods applicable to this
Agreement and the transactions contemplated hereby under the HSR shall have
expired.
10.6 CLOSING DELIVERIES. The Sellers shall have received the other
items to be delivered pursuant to Section 3.3.
ARTICLE 11
POST-CLOSING COVENANTS
11.1 RESTRICTIVE COVENANTS OF CCL AND COI.
(a) In furtherance of the sale of the Assets and the Business
and in order to protect the value of the portion of the Business located in
or operated from Canada and the United States, each of CCL and COI
(hereinafter referred to as "Canadian Seller") on its own behalf and on
behalf of each of its Affiliates (whether now existing or hereafter acquired
or created), hereby acknowledges and agrees that the covenants given in this
Section 11.1 are in consideration of the execution of this Agreement, and
that it will benefit from the consideration paid to it under this Agreement.
Each Canadian Seller hereby agrees that during the Restricted Period (as
hereinafter defined), it and each of its Affiliates (whether now existing or
hereafter acquired or created) will not directly or indirectly, individually
or on behalf of any third party, as an employer, proprietor, partner,
stockholder, investor, director, consultant, agent or otherwise own, manage,
operate, develop, participate in, perform services for, provide financial
assistance to or otherwise in any manner whatsoever carry on any Competitive
Business (as hereinafter defined) in the Territory (as hereinafter defined).
Notwithstanding the provisions of this Section 11.1(a), the ownership of any
Person traded on any national securities exchange or market representing not
more than five percent (5%) of the issued and outstanding amount of such
securities shall not constitute a breach of this Section.
(b) In furtherance of the sale of the Assets and the Business
and in order to protect the value of the portion of the Business located in
or operated from Canada and the United States, each Canadian Seller hereby
also agrees that during the Restricted Period, it and each of its Affiliates
(whether now existing or hereafter acquired or created) will not, directly or
indirectly, solicit, induce or influence any customer, supplier, lessor or
any other person which has a business relationship with the Canadian Seller,
or which had on the date of this Agreement or during the Restricted Period, a
business relationship with Purchaser or its Affiliates in the Territory, to
discontinue or reduce the extent of such relationship with Purchaser or its
Affiliates.
(c) In furtherance of the sale of the Assets and the Business
and in order to protect the value of the portion of the Business located in
or operated from Canada and the United States, each Canadian Seller hereby
also agrees that during the Restricted Period, it and each of its Affiliates
(whether now existing or hereafter acquired or created) will not: (i)
directly or indirectly, recruit, solicit or otherwise induce or influence any
employee or sales agent of the Industrial Tires Business
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or the Baseband and Wheel Business to discontinue such employment, agency or
other relationship, or (ii) employ or seek to employ, or cause any
Competitive Business to employ or seek to employ as an employee for any
Competitive Business in the Territory, any person who is then (or was at any
time within six (6) months prior to the date he or the Competitive Business
employs or seeks to employ such person) employed by any Canadian Seller or
Purchaser or its Affiliates.
(d) Without limiting the right of Purchaser to pursue all
other legal and equitable rights available to it for any violation of this
Section 11.1 and to recover its legal fees and expenses, the parties agree
that monetary damages cannot fully compensate for such a violation and that
Purchaser shall be entitled to injunctive relief to prevent violation or
continuing violation thereof and that no bond or other security shall be
required in connection therewith. It is the intent and understanding of each
party hereto that if, in any action before any court or agency legally
empowered to enforce this Section 11.1, any term, restriction, covenant or
promise is found to be unreasonable and for that reason unenforceable, then
such term, restriction, covenant or promise shall be deemed modified to the
minimum extent necessary to make it enforceable by such court or agency.
Nothing herein shall be construed as prohibiting either such party from
pursuing any other remedies at law or in equity which it may have.
(e) Each Canadian Seller hereby: (i) acknowledges and agrees
that prior to the Closing, it has had access to trade secrets and has
demonstrated knowledge, skill and expertise which is valuable to the
operation of the Business, (ii) understands the necessity of keeping trade
secrets relating to the Business confidential and secret and of securing its
agreement in the manner set forth in subsections 11.1(a), (b) and (c) above,
and (iii) understands that the foregoing restrictive covenants are a material
inducement to Purchaser to enter into this Agreement. Each Canadian Seller
specifically acknowledges that Purchaser has protectible interests and that
the restrictive covenants set forth in this Section 11.1 are in every respect
fair and reasonable.
(f) As used in this Section 11.1, the following terms shall
have the following meanings:
(i) "Restricted Period" shall mean the following
periods of time:
(A) the period commencing on the Closing Date
and expiring five (5) years after the Closing Date; and
(B) in the event that a court of competent
jurisdiction determines that the period of five (5) years referred to in
Section 11.1 (f)(i)(A) above is unreasonable, illegal, void, voidable or
otherwise unenforceable, then it is agreed that the said period shall be the
period commencing on the Closing Date and expiring three (3) years after the
Closing Date.
(ii) "Competitive Business" shall mean any activity,
person or entity which manufactures, markets, sells, distributes or develops
or is planning to manufacture, market, sell, distribute or develop any
product or product family that is or can be used in competition with (A) as
to COI, the Industrial Tires Business and (B) as to CCL, the Baseband and
Wheel Business, or with any portion of the Combined Business (as hereinafter
defined), however, nothing in this
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Section shall prohibit any Canadian Seller from carrying on the businesses
not being sold under this Agreement as presently conducted, or from
manufacturing and distributing products of the types presently manufactured
and distributed by such remaining businesses;
(iii) "Combined Business" shall mean cumulatively, (A)
as to COI, the Industrial Tires Business, (B) as to CCL, the Baseband and
Wheel Business, and (C) the business of manufacturing, marketing and
distributing industrial tires and basebands conducted by Purchaser and its
Affiliates; and
(iv) "Territory" shall mean the following geographical
areas:
(A) Canada and the United States of America;
(B) in the event that a court of competent
jurisdiction rules that the geographical area comprising Canada and the
United States referred to in Section 11.1(f)(iv)(A) above is unreasonable,
illegal, void, voidable or otherwise unenforceable, then it is agreed that
the said geographical area shall be Canada;
(C) in the event that a court of competent
jurisdiction rules that the geographical area comprising Canada referred to
in Section 11.1(f)(iv)(B) above is unreasonable, illegal, void, voidable or
otherwise unenforceable, then it is agreed that the said geographical area
shall be the Provinces of Ontario, Quebec and British Columbia; and
(D) in the event that a court of competent
jurisdiction rules that the geographical area comprising the Provinces of
Ontario, Quebec and British Columbia referred to in Section 11.1(f)(iv)(C)
above is unreasonable, illegal, void, voidable or otherwise unenforceable,
then it is agreed that the said geographical area shall be the cities,
counties, states or countries (A) where each Canadian Seller conducts its
portion of the Business and (B) where Purchaser currently does business, as
listed on EXHIBIT E to this Agreement, or is planning to do business, and (C)
those geographic areas that are a natural outgrowth of such areas comprised
by Sections (A) and (B) or within a 50-mile radius of such areas.
(g) Notwithstanding the provisions of Section 13.5 hereof,
this Section 11.1 and the provisions of this Agreement incorporated by
reference in Section 11.1 shall be governed by and be 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 hereto expressly agree that any legal suit, arbitration, action or
proceeding arising out of or relating to this Section 11.1 and the provisions
of this Agreement incorporated by reference therein or any action or
proceeding to execute or enforce any judgment obtained against any of the
parties thereto, may be instituted in the courts of the Province of Ontario
or in the state or federal courts of Indiana, and the parties hereto hereby
accept and irrevocably submit to the jurisdiction of the said courts and
acknowledge their confidence and agree to be bound by any judgment thereof,
provided always that suit may also be brought against any of the parties
hereto in the courts of any other jurisdiction in which such party or its
assets may be found. For greater certainty, the parties hereto hereby
irrevocably waive any objection which they may raise to the venue of any such
suit instituted in
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Ontario or in the state or federal courts of Indiana, whether related to
Ontario or Indiana being an inconvenient forum or otherwise. Each Canadian
Seller hereby waives, to the extent permitted by law, the benefit of any law,
rule or regulation which may require any Purchaser to post security for costs
in respect of any actions commenced in respect of this Agreement.
11.2 RESTRICTIVE COVENANTS OF PARENT AND ITL.
(a) In furtherance of the sale of the Assets and the Business
and in order to protect the value of the portion of the Business located in
or operated from Canada and the United States, each of Parent and ITL
(hereinafter, an "American Seller") on its own behalf and on behalf of each
of its Affiliates (whether now existing or hereafter acquired or created),
hereby acknowledges and agrees that the covenants given in this Section 11.2
are in consideration of the execution of this Agreement, and that it will
benefit from the consideration paid to it under this Agreement. Each
American Seller hereby agrees that during the Restricted Period (as
hereinafter defined), it and each of its Affiliates (whether now existing or
hereafter acquired or created) will not directly or indirectly, individually
or on behalf of any third party, as an employer, proprietor, partner,
stockholder, investor, director, consultant, agent or otherwise own, manage,
operate, develop, participate in, perform services for, provide financial
assistance to or otherwise in any manner whatsoever carry on any Competitive
Business (as hereinafter defined) in the Territory (as hereinafter defined).
Notwithstanding the provisions of this Section 11.2(a), the ownership of any
Person traded on any national securities exchange or market representing not
more than five percent (5%) of the issued and outstanding amount of such
securities shall not constitute a breach of this Section.
(b) In furtherance of the sale of the Assets and the Business
and in order to protect the value of the portion of the Business located in
or operated from Canada and the United States, each American Seller hereby
also agrees that during the Restricted Period, it and each of its Affiliates
(whether now existing or hereafter acquired or created) will not, directly or
indirectly, solicit, induce or influence any customer, supplier, lessor or
any other person which has a business relationship with the American Seller,
or which had on the date of this Agreement or during the Restricted Period, a
business relationship with Purchaser or its Affiliates in the Territory, to
discontinue or reduce the extent of such relationship with Purchaser or its
Affiliates.
(c) In furtherance of the sale of the Assets and the Business
and in order to protect the value of the portion of the Business located in
or operated from Canada and the United States, each American Seller hereby
also agrees that during the Restricted Period, it and each of its Affiliates
(whether now existing or hereafter acquired or created) will not: (i)
directly or indirectly, recruit, solicit or otherwise induce or influence any
employee or sales agent of the Industrial Tires Business or the Baseband
Wheel Business to discontinue such employment, agency or other relationship,
or (ii) employ or seek to employ, or cause any Competitive Business to employ
or seek to employ as an employee for any Competitive Business in the
Territory, any person who is then (or was at any time within six (6) months
prior to the date he or the Competitive Business employs or seeks to employ
such person) employed by any American Seller or Purchaser or its Affiliates.
(d) Without limiting the right of Purchaser to pursue all
other legal and equitable rights available to it for any violation of this
Section 11.2 and to recover its legal fees and expenses,
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the parties agree that monetary damages cannot fully compensate for such a
violation and that Purchaser shall be entitled to injunctive relief to
prevent violation or continuing violation thereof and that no bond or other
security shall be required in connection therewith. It is the intent and
understanding of each party hereto that if, in any action before any court or
agency legally empowered to enforce this Section 11.2, any term, restriction,
covenant or promise is found to be unreasonable and for that reason
unenforceable, then such term, restriction, covenant or promise shall be
deemed modified to the minimum extent necessary to make it enforceable by
such court or agency. Nothing herein shall be construed as prohibiting
either such party from pursuing any other remedies at law or in equity which
it may have.
(e) Each American Seller hereby: (i) acknowledges and agrees
that prior to the Closing, it has had access to trade secrets and has
demonstrated knowledge, skill and expertise which is valuable to the
operation of the Business, (ii) understands the necessity of keeping trade
secrets relating to the Business confidential and secret and of securing its
agreement in the manner set forth in subsections 11.2(a), (b) and (c) above,
and (iii) understands that the foregoing restrictive covenants are a material
inducement to Purchaser to enter into this Agreement. Each American Seller
specifically acknowledges that Purchaser has protectible interests and that
the restrictive covenants set forth in this Section 11.2 are in every respect
fair and reasonable.
(f) As used in this Section 11.2, the following terms shall
have the following meanings:
(i) "Restricted Period" shall mean the period
commencing on the Closing Date and expiring five (5) years after the Closing
Date;
(ii) "Competitive Business" shall mean any activity,
person or entity which manufactures, markets, sells, distributes or develops
or is planning to manufacture, market, sell, distribute or develop any
product or product family that is or can be used in competition with (A) as
to ITL, the Industrial Tires Business and (B) as to Parent, the Industrial
Tires Business and the Baseband and Wheel Business, or with any portion of
the Combined Business (as hereinafter defined); however, nothing in this
Section shall prohibit any American Seller from carrying on the businesses
not being sold under this Agreement as presently conducted, or from
manufacturing and distributing products of the types presently manufactured
and distributed by such remaining businesses;
(iii) "Combined Business" shall mean cumulatively, (A)
the Competitive Business and (B) the business of manufacturing, marketing
and distributing industrial tires and basebands conducted by Purchaser and
its Affiliates; and
(iv) "Territory" shall mean the cities, counties,
states or countries (A) where each American Seller, COI and CCL conducts its
portion of the Business and (B) where Purchaser currently does business, as
listed on EXHIBIT E to this Agreement, or is planning to do business, and (C)
those geographic areas that are a natural outgrowth of such areas comprised
by Sections (A) and (B) or within a 50-mile radius of such areas comprised by
Sections (A) and (B).
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(g) Notwithstanding the provisions of Section 13.5 hereof,
this Section 11.2 and the provisions of this Agreement incorporated by
reference in Section 11.2 shall be governed by and be construed in accordance
with the laws of Indiana and shall be treated in all respects as an Indiana
contract. The parties hereto expressly agree that any legal suit,
arbitration, action or proceeding arising out of or relating to this Section
11.2 and the provisions of this Agreement incorporated by reference therein
or any action or proceeding to execute or enforce any judgment obtained
against any of the parties thereto, may be instituted in the federal or state
courts of Indiana, and the parties hereto hereby accept and irrevocably
submit to the jurisdiction of the Indiana state or federal courts and
acknowledge their confidence and agree to be bound by any judgment thereof,
provided always that suit may also be brought against any of the parties
hereto in the courts of any other jurisdiction in which such party or its
assets may be found. For greater certainty, the parties hereto hereby
irrevocably waive any objection which they may raise to the venue of any such
suit instituted in Indiana, whether related to Indiana being an inconvenient
forum or otherwise. Each American Seller hereby waives, to the extent
permitted by law, the benefit of any law, rule or regulation which may
require any Purchaser to post security for costs in respect of any actions
commenced in respect of this Agreement.
11.3 TAX MATTERS. The parties agree to report this transaction, for
tax purposes, as contemplated by Section 2.6(c) of this Agreement.
11.4 USE OF STATIONERY AND SIGNAGE. From and after the Closing Date,
Purchaser shall be entitled to use all existing stationery and business card
supplies, and the signage, of the Business (exclusive of those portions which
include the name "Kenhar" or the corporate name of any Seller other than "ITL
Industrial Tires, Inc.") until Purchaser is able to acquire new supplies of
stationery and business cards and signage, but not to exceed sixty (60) days
from the Closing Date.
11.5 TRANSITION SERVICES. Parent shall provide Purchaser with the
technical support services for operation of the J.D. Edwards software
utilized in the operation of the Industrial Tires Business upon the terms and
provisions and for the cost set forth on EXHIBIT F for a period not to exceed
one (1) year from the Closing Date. Technical support services provided by
Parent pursuant to the foregoing sentence shall be of a nature and quality
comparable to those utilized by Parent in the operation of the J.D. Edwards
software for its own purposes. Parent or CCL shall (a) provide Purchaser
with all necessary technical support services for operation of the accounting
and other processes of the Baseband and Wheel Business until transition of
such processes to Purchaser, but not to exceed sixty (60) days from the
Closing Date, at a rate of $7,200 Canadian Dollars per month (prorated for
any partial month), and (b) cooperate with Purchaser in making such
transition. EXHIBIT F also sets forth a description of the technical support
services to be provided by Parent or CCL. Parent provides no implied
warranties with respect to such technical support services, and in no event
shall Parent be liable for special, loss of profit, indirect or consequential
damages arising out of such technical support services, other than for
damages incurred as a result of Parent's willful misconduct in connection
with its performance of technical support services.
11.6 EMPLOYMENT MATTERS RELATING SOLELY TO TRANSFERRED EMPLOYEES.
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(a) Promptly upon the execution and delivery hereof but
subject to Section 13.2, Purchaser shall offer to employ on the Closing Date,
conditioned upon Closing, all the employees of COI and CCL engaged in the
Business on terms and conditions of employment, including salary, hours of
work, vacation and benefits, which are in the aggregate as to each employee
at least as favorable as those in effect on the date hereof (the "Employment
Offer"). Except as otherwise provided for in Section 11.6(b), Purchaser shall
recognize each employee's seniority and prior service with COI and CCL. The
Employment Offer shall state that the employee has ten (10) calendar days
within which to accept and that failure to affirmatively respond in writing
within that period will be considered a rejection of the Employment Offer. A
list of the Employees who accept the Employment Offer in writing
(collectively, "Transferred Employees") shall be provided to COI and CCL
within ten (10) calendar days of the expiration of the Employment Offer.
(b) Purchaser shall recognize seniority and prior service
with COI and CCL to the extent that such seniority and prior service was
recognized by such Seller under its own plans and arrangements for the
purpose of calculating all statutory and common law requirements, notice of
termination, pay in lieu of notice and severance obligations for Transferred
Employees. Purchaser shall be responsible for all statutory and common law
requirements, notice of termination, pay in lieu of notice, and severance
obligations, if any, due at any time to Transferred Employees arising out of
their termination from employment with Purchaser for any reason whatsoever
after the Closing Date. For greater certainty all statutory and common law
requirements, notice of termination, pay in lieu of notice, and severance
obligations accrued to the Closing Date to employees who do not accept the
Employment Offer shall be the sole responsibility of the Sellers. Following
the Closing Date, Purchaser shall recognize and give credit for all accrued
and unused vacation entitlement of all Transferred Employees. Each of COI
and CCL shall be responsible for all statutory and common law requirements,
notice of termination, pay in lieu of notice, and severance obligations, if
any, due to its respective employees, other than Transferred Employees that
accept the Employment Offer.
(c) [Left Intentionally Blank.]
(d) Effective as of the Effective Time (as defined below) on
the Closing Date, the Transferred Employees who participate in an Employee
Benefit Plan of COI or CCL shall cease to participate in and accrue benefits
under such plans and shall commence participation in the pension and employee
benefits plans to be established and maintained by Purchaser, at its sole and
absolute discretion and its sole cost and expense (the "Purchaser Benefit
Plans"). The Purchaser Benefit Plans shall form part of the Employment Offer
and Purchaser shall ensure that the Purchaser Benefit Plans comply with the
requirements of Section 11.6(a) with respect to each Employment Offer.
Except as provided in Section 11.6(e), each such Seller shall retain
responsibility under its Employee Benefit Plans for all amounts payable by
reason of or in connection with any and all claims incurred by the
Transferred Employees of such Seller on or prior to 12:01 a.m. (the
"Effective Time") on the Closing Date in accordance with the terms of such
plans. Purchaser shall be responsible for any and all claims of such
Transferred Employees under Purchaser Benefit Plans in accordance with the
terms thereof and incurred after the Effective Time on the Closing Date.
(e) With respect to the Main Pension Plan and Pension Plan C
(collectively sometimes hereinafter, the "Assigned Plans"):
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(i) On the Closing Date, COI agrees to deliver an
assignment and transfer to Purchaser effective as of the Closing Date of all
of COI's rights, obligations and liabilities under and in relation to the
Assigned Plans and their respective related trusts thereunder, as plan
sponsor and administrator of the Assigned Plans. Such assignment and
transfer shall be effected pursuant to documentation in form and substance
reasonably acceptable to Purchaser. Effective on the Closing Date, and
subject to the transfer of related assets (the "Transferred Plan Assets") and
Purchaser's receipt of the Pension Underfunding Payment at Closing, Purchaser
agrees to accept such assignment and transfer and to assume all rights,
obligations and responsibilities of COI as the successor plan sponsor and
administrator thereunder. The assets, obligations and liabilities assigned
by COI to Purchaser with respect to the Assigned Plans and related trusts as
of the Closing Date shall be determined in accordance with this subsection
11.6(e).
(ii) COI and Purchaser shall take, or cause to be
taken, all such action as are necessary or appropriate in order to establish
Purchaser as successor to COI under the Assigned Plans and related trusts and
to ensure the continued registration of such plans by the applicable
regulatory authorities.
(iii) Purchaser shall enter into an appropriate funding
agreement with an insurance company or trust company, as its funding agent,
as soon as practicable after the date hereof, with respect to the Assigned
Plans.
(iv) Pursuant to applicable pension Laws, COI and
Purchaser shall file with the applicable regulatory authorities, as soon as
practicable after the Closing Date, the following:
(A) all plan amendments and such other
documents as may be required to effect the transfer of the Assigned Plans; and
(B) a request for approval of the transfer of
plan sponsorship of the Assigned Plans from COI to the Purchaser. Each party
shall transmit such notices and provide such disclosure to plan members as
may be required by applicable pension Laws. Each party shall have the right
and shall be afforded the reasonable opportunity to review, prior to its
filing or transmittal, the documentation to be filed or transmitted by the
other party to the applicable regulatory authorities or plan members.
(f) There shall be no transfer of assets or liabilities with
respect to Pension Plan B under this Agreement. COI will retain all
liabilities and responsibilities accrued under Pension Plan B. Transferred
Employees shall cease to accrue further benefits, if any, under Pension Plan
B as at the Closing Date.
(g) Purchaser shall be responsible for such annual filings
and disclosures for the 1998 plan year and 1999 plan year in respect of the
Assigned Plans as may be required by applicable pension Laws.
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11.7 EMPLOYMENT MATTERS RELATING SOLELY TO U.S. EMPLOYEES OF ITL.
(a) Purchaser shall offer employment at and from the Closing
Date to all employees of ITL who as of the Closing Date are actually and
actively working for ITL (the "ITL Employees"); PROVIDED, HOWEVER, THAT it is
understood and agreed that all such employees are and will remain
employees-at-will and Purchaser shall not be obligated to retain any such ITL
Employees in the employment of Purchaser for any specified period of time
from and after the Closing Date. Purchaser shall offer employment to ITL
Employees at levels of wages or salary and under terms and conditions
comparable to the wages or salaries and terms and conditions existing on the
Closing Date; PROVIDED, HOWEVER, THAT, all fringe benefits shall be in the
reasonable discretion of Purchaser.
(b) After the Closing Date, except as provided in Section
11.7(c), the ITL Employees shall receive the welfare and pension benefits
which are provided to employees of Purchaser. Purchaser shall not assume any
of the welfare or pension benefits of ITL. Purchaser shall recognize each
ITL Employee's prior service with ITL for purposes of eligibility, vesting
and accrual in its welfare and pension benefits. ITL shall be responsible
for all severance obligations due to the ITL Employees, if any, resulting
from the sale transaction contemplated by this Agreement.
(c) After the Closing Date, the ITL Employees will carry over
to their employment with the Purchaser the vacation days which they have
accrued and not used under the ITL vacation policy ("ITL Vacation Days").
ITL Vacation Days not used on or before June 30, 1999 will be forfeited on
July 1, 1999. Effective July 1, 1999, and for the twelve (12) month period
ending on June 30, 2000, the ITL Employees will be credited with the vacation
to which they would have been entitled under the ITL vacation policy based
upon their service with ITL and Purchaser and subject to the same vacation
policy rules in effect at ITL just prior to the Closing Date.
On the Closing Date, the ITL Employees will forfeit any unused
sick or personal days accrued under the ITL sick/personal day policy, and
non-exempt ITL Employees will be credited with the sick/personal hours given
to Purchaser's non-exempt employees on January 1, 1999, based upon their
service with ITL. There will be no reduction in the sick/personal hours given
to non-exempt employees because those hours are being given on the Closing
Date rather than on January 1, 1999. Exempt ITL Employees will not receive
sick or personal days after the Closing Date except under Purchaser's
salaried continuation plan for exempt employees.
11.8 POST-CLOSING ENVIRONMENTAL COVENANT.
(a) Purchaser and Parent recognize and agree that Purchaser's
environmental consultant, Golder Associates, Ltd. has conducted a subsurface
investigation ("Phase II Report") on the Industrial Tires Real Estate located
at 3161 and 3199 Wharton Way, Mississauga, Ontario (the "Mississauga Real
Estate") as a result of certain environmental concerns identified in its
Phase I Environmental Site Assessment dated January, 1999 (the "Phase I
Report"), more specifically identified in the Phase I Environmental Site
Assessment Recommendations dated January 21, 1999 (the "Recommendations").
Purchaser has provided Parent with a copy of the Phase I Report, the
Recommendations and the Phase II Report.
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(b) Parent shall indemnify the Purchaser Parties and hold
each of them harmless from and against all damages, claims, causes of action,
penalties, fines, losses and expenses, including reasonable attorneys' fees
and expenses (collectively, the "Environmental Losses") in connection with
any exceedances of the Table B industrial/commercial criteria under the
Guidelines for Use at Contaminated Sites in Ontario, dated February, 1997,
published by the Ontario Ministry of the Environment, in the soil or
groundwater at the Mississauga Real Estate specifically identified in the
Phase II Report, to the extent attributable to activities at the Mississauga
Real Estate prior to Closing, incurred or arising in connection with or
arising as a result of (i) reasonable requirements of any third party lender,
purchaser or material real estate lessee in connection with any material
transaction undertaken by Purchaser (or its assigns), or (ii) any
Governmental action taken, or any other action required by any Governmental
authority, with respect to the Mississauga Real Estate in connection with any
Environmental Law (including, without limitation, any clean up, remedial,
removal or restoration work required by any federal, provincial or local
governmental agency or political subdivision). As of the date of this
Agreement, Purchaser represents that it is not aware of any such third party
requirements or Government action in connection with the Mississauga Real
Estate. Purchaser hereby agrees to recertify the foregoing representation to
Parent at the Closing. All clean up remedial, removal or restoration work
shall be governed by and performed in compliance with the Guideline for Use
at Contaminated Sites in Ontario, dated February, 1997, published by the
Ontario Ministry of the Environment, PROVIDED THAT indemnification shall
apply only for the reasonable cost of remediating the Mississauga Real Estate
to Table B Criteria for Industrial Commercial Sites, and FURTHER PROVIDED
THAT, where reasonable and cost effective, the Purchaser Parties shall, if
permitted under the Guideline, use Site Specified Risk Assessment to meet any
such requirements or actions.
(c) As a condition to indemnification under this Section
11.8, Purchaser Parties shall, prior to taking any activities which may lead
to a claim for indemnification under this Section 11.8, provide Parent with
material information leading to Purchaser's consideration of such activities,
and will consult with Parent concerning the reasonableness of the need for,
extent of, projected cost of, and cost effectiveness of, such activities.
Once Parent has incurred an indemnification obligation under this Section
11.8 in connection with activities undertaken for a reason described in
Section 11.8(b)(i) or Section 11.8(b)(ii), Parent shall not be obligated
under this Section 11.8 to indemnify Purchaser in connection with further or
different activities of the types described in Section 11.8 concerning the
Mississauga Real Estate.
(d) Parent's liability for indemnification for Environmental
Losses under this Section shall be further limited as follows: (i) with
respect to the first Three Hundred Thousand Dollars ($300,000) of
Environmental Losses, Parent shall bear fifty percent (50%) of such Losses
and Purchaser shall bear fifty percent (50%) of such Losses, (ii) any amounts
due and payable by Parent for Environmental Losses shall be paid one-half in
cash by immediately available funds and, to the extent that the Notes are
outstanding, one-half as an offset by Purchaser against the next installment
of interest or principal then due under the Notes, and (iii) Environmental
Losses suffered by Purchaser shall not be considered Indemnifiable Losses for
purposes of determining whether the Deductible Amount has been satisfied in
connection with the indemnification provisions set forth in Article 12. The
provisions of this Section shall be in addition to the provisions of Article
12 and
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Article 12 shall not otherwise affect the parties' obligations hereunder with
the exception of Sections 12.1(f), 12.3 (if applicable) and 12.4.
(e) This section does not confer rights upon any party other
than the parties to this Agreement, their affiliates and permitted successors
and assigns.
ARTICLE 12
INDEMNIFICATION AGREEMENT/SURVIVAL PERIOD
12.1 INDEMNIFICATION BY SELLERS.
(a) Parent shall indemnify Purchaser, and any assignees of
Purchaser contemplated by Section 13.8, their officers, directors, employees
and agents, and their respective successors and assigns (individually, a
"Purchaser Party," collectively, the "Purchaser Parties") and hold each of
them harmless from and against all damages, (exclusive of consequential
damages which would not be reasonably foreseeable), claims, causes of action,
losses and expenses, including reasonable attorneys' fees and expenses
(collectively, "Indemnifiable Losses"), incurred in connection with or
arising from any one or more of the following: (i) any nonfulfillment or
breach by any Seller of any of its agreements or covenants in this Agreement
(including, without limitation, the covenants set forth in Sections 2.7(b)
and 2.8(b)); (ii) any breach of any warranty or the inaccuracy of any
representation or warranty of any Seller contained in this Agreement or any
certificate or Schedule delivered by or on behalf of any Seller; (iii) any
obligation or liability which is not one of the Assumed Liabilities; (iv) any
treatment, storage or disposal of any Hazardous Materials, or the arranging
therefor, by any Seller which occurred prior to the Closing; (v) the presence
on, or any discharge into the environment of any Hazardous Material from any
Industrial Tires Real Estate or Leased Real Estate which occurred prior to
Closing; (vi) the failure by any Seller and Purchaser to comply with any
applicable bulk sales statutes; or (vii) the operation of the Business on or
prior to the Closing Date; PROVIDED, HOWEVER, THAT except as provided in
Section 12.1(g), (A) a Purchaser Party shall not be entitled to make a claim
for indemnification under this Section 12.1(a) until Indemnifiable Losses in
the aggregate equal or exceed the Deductible Amount (other than for
Indemnifiable Losses resulting from (1) a breach of a warranty or inaccuracy
of a representation set forth in Section 5.7(a) or 6.7(a), or (2) any of the
matters covered by Section 12.1(a)(i), but only to the extent any such matter
relates to any of the covenants contained in Section 2.7(b) or Sections 11.1
through and including 11.7 of this Agreement, or (3) any of the matters
covered by Section 12.1(a)(iii), but only to the extent any such matter
relates to any Tax matters referred to in Section 2.5(b)(i) or (x), as to
which the Deductible Amount shall not apply) and (B) once satisfied, Parent
shall indemnify a Purchaser Party only for Indemnifiable Losses in excess of
the Deductible Amount.
(b) COI and ITL shall, jointly and severally, indemnify the
Purchaser Parties and hold each of them harmless from and against all
Indemnifiable Losses incurred in connection with or arising from any one or
more of the following: (i) any nonfulfillment or breach by COI or ITL of any
of their agreements or covenants in this Agreement (including, without
limitation, the covenant set forth in Section 2.8(b)); (ii) any breach of any
warranty or the inaccuracy of any representation
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or warranty of COI or ITL; (iii) any obligation or liability of the
Industrial Tires Business which is not one of the Assumed Liabilities
pursuant to Sections 2.5(a)(i), (ii), (v), (vi), (vii), or (viii); (iv) any
treatment, storage or disposal of any Hazardous Materials, or the arranging
therefor, by COI or ITL which occurred prior to the Closing; (v) the presence
of, or any discharge into the environment of any Hazardous Material from any
Industrial Tires Applicable Real Estate which occurred prior to Closing; (vi)
the failure by COI or ITL and Purchaser to comply with any applicable bulk
sales statute; or (vii) the operation of the Industrial Tires Business on or
prior to the Closing Date; PROVIDED, HOWEVER, that except as provided in
Section 12.1(g), (A) a Purchaser Party shall not be entitled to make a claim
for indemnification under this Section 12.1(b) until Indemnifiable Losses in
the aggregate equal or exceed the Deductible Amount (other than for
Indemnifiable Losses resulting from (1) a breach of a warranty or inaccuracy
of a representation set forth in Section 5.7(a), or (2) any of the matters
covered by Section 12.1(b)(i), but only to the extent any such matter relates
to any of the covenants contained in Sections 11.1 through and including 11.7
of this Agreement, or (3) any of the matters covered by Section 12.1(b)(iii),
but only to the extent any such matter relates to any Tax matters referred to
in Section 2.5(b)(i) or (x), as to which the Deductible Amount shall not
apply) and (B) once satisfied, COI and ITL shall indemnify a Purchaser Party
only for Indemnifiable Losses in excess of the Deductible Amount.
(c) CCL shall indemnify the Purchaser Parties and hold each
of them harmless from and against all Indemnifiable Losses incurred in
connection with or arising from any one or more of the following: (i) any
nonfulfillment or breach by CCL of any of its agreements or covenants in this
Agreement (including, without limitation, the covenant set forth in Section
2.8(b)); (ii) any breach of any warranty or the inaccuracy of any
representation or warranty of CCL contained in this Agreement or any
certificate or schedule delivered by or on behalf of CCL; (iii) any
obligation or liability of the Baseband and Wheel Business which is not one
of the Assumed Liabilities pursuant to Sections 2.5(a)(iii), (iv), (vii) or
(viii); (iv) any treatment, storage or disposal of any Hazardous Materials,
or the arranging therefor, by CCL which occurred prior to the Closing; (v)
the presence of, or any discharge into the environment of any Hazardous
Material from any CCL Applicable Real Estate which occurred prior to Closing;
(vi) the failure by CCL and Purchaser to comply with any applicable bulk
sales statutes; or (vii) the operation of the Baseband and Wheel Business on
or prior to the Closing Date; PROVIDED, HOWEVER, that except as provided in
Section 12.1(g), (A) a Purchaser Party shall not be entitled to make a claim
for indemnification under this Section 12.1(c) until Indemnifiable Losses in
the aggregate equal or exceed the Deductible Amount (other than for
Indemnifiable Losses resulting from (1) a breach of a warranty or inaccuracy
of a representation set forth in Section 6.7(a), or (2) the matters covered
by Section 12.1(c)(i), but only to the extent any such matter relates to any
of the covenants contained in Sections 11.1 through 11.7 of this Agreement;
or (3) any of the matters covered by Section 12.1(c)(iii), but only to the
extent such matter relates to any Tax matters referred to in Section
2.5(b)(i) or (x), as to which the Deductible Amount shall not apply)and (B)
once satisfied, CCL shall indemnify a Purchaser Party only for Indemnifiable
Losses in excess of the Deductible Amount.
(d) If any Purchaser Party determines that it has suffered or
incurred any Indemnifiable Loss, such Purchaser Party shall so notify the
applicable Seller within sixty (60) days in writing; PROVIDED, HOWEVER, THAT
the failure to so notify a Seller within such specified time period shall not
relieve a Seller from any liability which such Seller may have unless such
failure prejudices
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such Seller in fulfilling its obligations hereunder. If any action at law or
suit in equity is instituted by a third party against any Purchaser Party
with respect to which such Purchaser Party intends to claim any Indemnifiable
Loss under this Article 12, Purchaser shall notify the Sellers of such action
or suit in accordance with Section 12.3 of this Agreement.
(e) In addition to any other remedies a Purchaser Party may
have in seeking to enforce its right to indemnification against any Seller
pursuant to this Section, Purchaser shall first offset the full amount of any
monetary Indemnifiable Loss incurred against the next installment payment or
payments of interest or principal it is obligated to make in connection with
the Notes delivered to the Sellers pursuant to Section 2.7 of this Agreement.
Parent and a Purchaser Party shall negotiate and attempt to resolve in good
faith promptly any dispute which may arise relating to a claim for
indemnification under Section 12.1(a), (b) or (c). If Parent and a Purchaser
Party are unable to agree upon the existence or the amount of the
Indemnifiable Losses which Purchaser is entitled to offset from the Notes,
the controverted claim shall be determined by arbitration or a court of law
having jurisdiction of the case, as applicable. The arbitrator's or the
court's findings regarding the claim for indemnification for Indemnifiable
Losses shall be binding on the parties. To the extent a Purchaser Party is
the prevailing party in any arbitration or court proceeding, the applicable
Seller shall also pay interest on the amount of the Indemnifiable Losses due
to a Purchaser Party at the rate of ten percent (10%) per annum commencing on
the date a Purchaser Party gave notice to the applicable Seller of an
indemnification claim pursuant to this Agreement until such Indemnifiable
Losses are satisfied in full.
(f) In no event shall Sellers' aggregate indemnification
obligations for Indemnifiable Losses under Sections 12.1(a), (b) and/or (c)
exceed the amount of the Purchase Price.
(g) Pursuant to the terms and provisions of Section
2.5(a)(viii), Purchaser (and any assignees of Purchaser contemplated by
Section 13.8) has agreed to assume and discharge after Closing certain
warranty claims of COI (the "COI Warranty Claims") and of CCL (the "CCL
Warranty Claims") specifically described therein. Notwithstanding that a
Purchaser Party shall have no rights to indemnification under Section
12.1(a), (b) or (c) for Indemnifiable Losses until the Deductible Amount is
satisfied, the Sellers shall, jointly and severally, immediately indemnify
the Purchaser Parties under this Section and hold each one of them harmless
from and against all Indemnifiable Losses, (i) with respect to the COI
Warranty Claims, for all such losses after they equal or exceed in the
aggregate Thirty Thousand Dollars ($30,000) and (ii) with respect to the CCL
Warranty Claims, for all such losses after they equal or exceed in the
aggregate Fifteen Thousand Dollars ($15,000) (each individually and
collectively, as the context requires, the "Warranty Deductible Amount").
All unreimbursed Indemnifiable Losses attributable to COI Warranty Claims and
to CCL Warranty Claims incurred by Purchaser in excess of the applicable
Warranty Deductible Amount shall be included in the calculations to determine
whether the Deductible Amount has been satisfied for purposes of Section
12.1. Parent shall pay Purchaser for all sums incurred in excess of the
Warranty Deductible Amount within thirty (30) days of receipt of Purchaser's
written documentation supporting its Indemnifiable Losses.
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12.2 INDEMNIFICATION BY PURCHASER.
(a) Purchaser shall indemnify the Sellers and hold each one
of them harmless from and against any Indemnifiable Loss incurred in
connection with or arising from any one or more of the following: (i) any
nonfulfillment or breach by Purchaser of any of its agreements or covenants
in this Agreement; (ii) any breach of any warranty or the inaccuracy of any
representation of Purchaser contained in this Agreement or any certificate or
delivered by or on behalf of Purchaser pursuant to this Agreement; (iii) any
obligation or liability which is one of the Assumed Liabilities; or (iv) the
operation of the Business after the Closing Date; PROVIDED, HOWEVER, THAT (A)
a Seller shall not be entitled to make a claim for indemnification under this
Section for Indemnifiable Losses under Section 12.2(a)(ii) [other than for
Losses incurred due to a breach of the representation made in Section 11.8(b)]
until such losses in the aggregate equal or exceed the Deductible Amount
and (B) once satisfied, Purchaser shall indemnify Sellers only for
Indemnifiable Losses in excess of the Deductible Amount.
(b) If any Seller determines that it has suffered or incurred
any Indemnifiable Loss, such Seller shall so notify Purchaser within sixty
(60) days in writing; PROVIDED, HOWEVER, THAT the failure to so notify
Purchaser within such specified time period shall not relieve Purchaser from
any liability which it may have unless such failure prejudices it in
fulfilling its obligations hereunder. If any action at law or suit in equity
is instituted by a third party against any Seller with respect to which such
Seller intends to claim any Indemnifiable Loss under this Article 12, it
shall notify Purchaser of any such action or suit in accordance with Section
12.3 of this Agreement.
12.3 THIRD PARTY CLAIMS. If a party (the "Indemnitee") receives
notice of any claim or the commencement of any action or proceeding with
respect to which the other party is obligated to provide indemnification (the
"Indemnitor") pursuant to either Section 12.1 or Section 12.2 of this
Agreement, Indemnitee shall give Indemnitor notice thereof within thirty (30)
days after receiving written notice of such claim, or within fifteen (15)
days prior to the date on which an answer or reply, if any, to such claim is
due, whichever is earlier. The failure to provide notice as provided in this
Section 12.3 shall not excuse Indemnitor from its continuing obligations
hereunder, however Indemnitee's claim shall be reduced by the damage, if any,
to Indemnitor resulting from Indemnitee's delay or failure to provide the
notice described in this Section. Subject to the other terms of this Section
12.3, if Indemnitor acknowledges to Indemnitee in writing Indemnitor's
obligation fully to indemnify Indemnitee with respect thereto, Indemnitor may
compromise or defend, at Indemnitor's own expense and by Indemnitor's own
counsel, any such matter involving the asserted liability of Indemnitee. In
connection therewith: (a) Indemnitee agrees to consent to any compromise or
settlement proposed by Indemnitor where (i) the compromise or settlement
involves only monetary damages and (ii) Indemnitor agrees to pay the full
amount of such monetary damages and reasonably demonstrates that it has the
ability to pay such amount; and (b) Indemnitor agrees to consent to any
compromise or settlement proposed by Indemnitee where either (i) the
compromise or settlement results in no Indemnifiable Losses to Indemnitee
that are required to be indemnified by Indemnitor or (ii) Indemnitee agrees
to bear any and all Indemnifiable Losses. In any event, both parties shall
cooperate in the compromise of, or defense against, any such asserted
liability, and each of them may participate in the defense of such asserted
liability. Indemnitee may not settle or compromise any claim over the
objection of Indemnitor if Indemnitor has acknowledged
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to Indemnitee, in writing, Indemnitor's obligation fully to indemnify
Indemnitee with respect to such claim, except that Indemnitee may settle any
claim with respect to which it waives its indemnification rights under this
Agreement. Indemnitor may not settle or compromise any claim over the
objection of Indemnitee if such settlement or compromise would impose any
liability or obligation (including, but not limited to, the requirement to
take or refrain from taking any action) on such Indemnitee or any of its
officers, directors, employees or Affiliates. If Indemnitor chooses to defend
any claim, Indemnitee shall make available to Indemnitor, at Indemnitor's
expense, any books, records or other documents or personnel within its
control that are necessary or appropriate for such defense.
12.4 SURVIVAL PERIOD. The representations, warranties and
indemnification contained in this Agreement and in any Schedules or
certificates delivered pursuant hereto shall survive the consummation of the
transactions contemplated by this Agreement and shall remain in full force
and effect, regardless of any investigation made by or on behalf of any party
hereto, and shall continue for a period of three (3) years after the Closing
Date, at which time all of such representations, warranties and
indemnification obligations shall terminate, except for any representation,
warranty or indemnification obligation relating to (a) all Tax matters set
forth in Sections 5.6 and 6.6, which shall continue in full force and effect
until the expiration of the applicable statute of limitations for assessment
of Taxes (including any waiver or extension thereof) and (b) the matters set
forth in Section 12.1(a)(i), 12.1(b)(i), 12.1(c)(i) or 12.2(a)(i) in each
instance only to the extent relating to any of the covenants contained in
Sections 11.1 through and including 11.7 of this Agreement which shall
continue in full force and effect for a period of five (5) years after the
Closing Date. Notwithstanding anything contained in this Section to the
contrary, any claim for indemnification as to which proper notice from the
party seeking indemnification has been given prior to the expiration of the
applicable survival period contemplated hereby to the party against whom
indemnification is sought shall survive until such claim has been resolved.
ARTICLE 13
GENERAL PROVISIONS
13.1 CONFIDENTIAL NATURE OF INFORMATION. Each party shall treat in
confidence, and not disclose without the prior consent of the other party,
all documents, materials and other information which it shall have obtained
regarding the other party during the course of the negotiations leading to
the consummation of the transactions contemplated hereby (whether obtained
before or after the date of this Agreement), the investigation provided for
herein and the preparation of this Agreement and other related documents.
The obligation of each party to treat such documents, materials and other
information in confidence shall not apply to any information which (a) such
party can demonstrate was already lawfully in its possession prior to the
disclosure thereof by the other party, (b) is known to the public and did not
become so known through any violation of a legal obligation, (c) became known
to the public through no fault of such party, or (d) after the Closing, in
the case of the confidentiality obligations of Purchaser, relates to the
Business. The obligations imposed by the foregoing provisions of this
Section shall survive the Closing and any termination of this Agreement and
are in addition to the obligations contained in the confidentiality agreement
referenced in Section 13.12 of this Agreement. Upon a termination of this
Agreement in accordance
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with Section 13.13, each party shall promptly return to each other party all
of the confidential documents, materials and other information it has
obtained from such other party. The obligations imposed by the immediately
preceding sentence shall survive any termination of this Agreement pursuant
to Section 13.13.
13.2 PUBLIC ANNOUNCEMENT. No party shall make any public announcement
of the transactions contemplated hereby prior to the Closing without the
prior written consent of each other party hereto. Parent hereby consents to
Purchaser's disclosure to prospective lenders, investors, shareholders and
other third parties of "Confidential Information" (as defined in the July 8,
1998 Confidentiality Agreement) in connection with the consideration and
consummation of the transaction contemplated by this Agreement; PROVIDED that
such parties shall be bound by the same confidentiality provisions of the
July 8, 1998 Confidentiality Agreement in accordance with the terms and
provisions set forth therein.
13.3 NOTICES. All notices, requests, consents and other
communications hereunder ("Agreement Notice") shall be in writing and shall
be deemed to have been given (a) if mailed, the date of receipt of such
Agreement Notice when sent via first class United States registered mail,
return receipt requested, postage prepaid to the address listed below for the
party to whom the Agreement Notice is being sent ("Notice Party"); (b) if
hand delivered or delivered by courier, upon actual delivery of such
Agreement Notice to the Notice Party at the address listed below for such
Notice Party; or (c) if sent by facsimile, on the first business day after
the date of the sender's receipt of a confirmed transmission of such
Agreement Notice to the Notice Party at the facsimile number, if any, listed
below for such Notice Party provided the party giving such Agreement Notice
mails a copy of such notice within two days after the transmission of such
Agreement Notice by facsimile to the Notice Party. The addresses and
facsimile numbers for each party to this Agreement, as of the date hereof,
are:
If to Purchaser: Maine Rubber Company
Attn: Stuart A. Brown, President
21 Saco Street
Westbrook, ME 09092
Facsimile No.: 207/854-3430
With a copy to: Sommer & Barnard
Attorneys At Law, PC
Attn: Julianne S. Lis-Milam
4000 Bank One Tower
111 Monument Circle
Indianapolis, IN 46204
Facsimile No.: 317/236-9802
If to the Sellers: Cascade Corporation
Attn: Robert C. Warren, Jr., President & CEO
2201 N.E. 201st Avenue
Fairview, OR 97024-9718
Facsimile No.: 503/669-6716
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With a copy to: Newcomb, Sabin, Schwartz & Landsverk, LLP
Attn: Jack B. Schwartz
Suite 4040
111 S.W. 5th Avenue
Portland, OR 97204
Facsimile No.: 503/228-5472
Any party may change his or its address or facsimile number by providing
written notice, in accordance with the foregoing provisions of this Section
13.3, to each other party of such change.
13.4 EXPENSES.
(a) Except as otherwise provided in this Agreement, each
party hereto will pay all costs, fees and expenses incident to its
negotiation and preparation of this Agreement and to its performance and
compliance with all agreements contained herein on its part to be performed,
including the fees, expenses and disbursements of its respective brokers,
counsel and accountants; PROVIDED, HOWEVER, THAT all costs, fees and expenses
incurred by COI, ITL or CCL shall be paid by Parent.
(b) Except as provided in Sections (c) and (d) below and
except for the Ontario land transfer tax to be paid by Purchaser in
connection with the transfer of the Industrial Tires Real Estate, Sellers
shall bear the costs associated with the transfer of Assets, such as any
applicable sales or transfer taxes and recording or registration fees and
expenses.
(c) Each party shall pay direct to the appropriate taxing
authorities all sales and transfer taxes, registration charges and transfer
fees other than the goods and services tax ("GST") imposed under Part IX of
the Excise Tax Act (Canada) payable by it, applicable in respect of the
purchase and sale of the Assets under this Agreement and, upon the reasonable
request of each party, the other party shall furnish proof of such payment.
(d) Sellers and Purchaser shall jointly elect under
subsection 167(1) of Part IX of the Excise Tax Act (Canada) and any
provincial legislation imposing a similar value added or multi-staged tax,
that no tax be payable with respect to the sale and purchase of the Assets
pursuant to this Agreement. Sellers and Purchaser shall make such election in
the prescribed form containing prescribed information pursuant to the Excise
Tax Act and any provincial legislation imposing a similar value added or
multi-staged tax, and Purchaser shall file the joint election in compliance
with the requirements of the Excise Tax Act and any provincial legislation
imposing a similar value added or multi-staged tax.
(e) In any legal action between the parties arising out of or
related to this Agreement, the prevailing party shall be entitled to recover
its costs and expenses, including reasonable accounting and legal fees.
(f) The costs and charges for filings under HSR shall be paid
by Purchaser.
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13.5 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Indiana, without regard to such
jurisdiction's conflict of laws principles.
13.6 PARTIAL INVALIDITY. In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, but this Agreement
shall be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein.
13.7 ACCESS TO RECORDS. For a period of six (6) years after the date
hereof, the Sellers and their representatives shall have reasonable access to
all of the books and records relating to the Assets and Business to the
extent that such access may reasonably be required by the Sellers in
connection with matters relating to or affected by the operations of the
Business and the Assets prior to Closing (collectively, "Accessible
Records"); PROVIDED, HOWEVER, (a) a Sellers shall have reasonable access to
any Accessible Records which relate to an indemnity claim made by a Purchaser
Party against a Sellers pursuant to this Agreement for so long as such claim
is unresolved, and (b) Sellers shall have reasonable access to any Accessible
Records which related to any Tax obligation of Sellers for so long as the
applicable statute of limitations (including any waiver or extension thereof)
with respect to such Tax obligation has not expired. Such access shall be
afforded by Purchaser upon receipt of reasonable advance notice and during
normal business hours. The Sellers shall exercise their rights under this
Section 13.7 in such a manner as to avoid undue disruption of the business
and affairs of Purchaser. Each Seller shall be solely responsible for any
costs or expenses incurred pursuant to this Section 13.7. If Purchaser shall
desire to dispose of any material tax or accounting books and records prior
to the expiration of such six-year period, or thereafter with respect to
Accessible Records pertaining to Tax obligations, Purchaser shall, prior to
such disposition, give the Sellers a reasonable opportunity, at their
expense, to segregate and remove such books and records as they may select.
13.8 ASSIGNMENT; RIGHT OF PURCHASER TO HAVE TRANSACTIONS CONSUMMATED
BY ANOTHER ENTITY. Neither this Agreement nor any right hereunder shall be
assigned by any party without the written consent of the other party;
PROVIDED, HOWEVER, THAT Purchaser shall have the right to have the
transactions contemplated by this Agreement consummated by Maine Rubber
International and/or by an entity or entities to be formed before Closing
(collectively, "Newco"); PROVIDED, FURTHER, THAT Purchaser and/or Newco shall
each have the right to collaterally assign its rights hereunder as security
for loans made to consummate the transactions contemplated by this Agreement.
The exercise of any assignment rights by Purchaser as permitted by this
Section shall not relieve Purchaser of its obligations under this Agreement.
All references to "Purchaser" in this Agreement shall mean and include Newco,
as its assignees (I.E. all entities to whom Purchaser assigns its rights to
purchase and/or an entity contemplated to be the surviving corporation of a
merger transaction with a Purchaser on the Closing Date).
13.9 SUCCESSORS AND ASSIGNS. Subject to the provisions of Section
13.8 above, this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their permitted respective successors and assigns.
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13.10 EXECUTION IN COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be considered an original
counterpart, and all of which shall be considered to be but one agreement and
shall become a binding agreement when each party shall have executed one
counterpart and delivered it to the other parties hereto. This agreement may
be delivered by fax or other form of electronic means of recorded
communication.
13.11 TITLES AND HEADINGS; RULES OF CONSTRUCTION. Titles and headings
to sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement. Whenever the context so requires the use of or reference to any
gender includes the masculine, feminine and neuter genders; and all terms
used in the singular shall have comparable meanings when used in the plural
and vice versa.
13.12 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement and the
Confidentiality Agreement dated July 8, 1998, executed and delivered on
behalf of Purchaser in favor of Parent, contain the entire understanding of
the parties hereto with regard to the subject matter contained in this
Agreement and supersede all prior agreements or understandings of the parties
or their respective agents, accountants or attorneys, including, without
limitation, the Letter of Intent dated September 21, 1998, as amended and
restated by letter dated March 3, 1999. The parties, by mutual agreement in
writing, may amend, modify and supplement this Agreement. The failure of any
party to this Agreement to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right
of such party thereafter to enforce each and every such provision. No waiver
of any breach of this Agreement shall be held to constitute a waiver of any
other or subsequent breach. All rights and remedies existing under this
Agreement are cumulative to and not exclusive of any rights or remedies
otherwise available under applicable Law.
13.13 TERMINATION. This Agreement shall terminate and shall be of no
further force or effect (a) upon mutual written agreement of the parties, or
(b) upon notice given by any party to each other party, in the event the
Closing has not occurred on or before April 30, 1999. No termination of this
Agreement shall release, or be construed as releasing, any party from any
liability to any other party which may have arisen for any reason. A party's
right to terminate this Agreement is in addition to, and not in lieu of, any
other legal or equitable rights or remedies which such party may have.
13.14 BROKERS' AND FINDERS' FEES. Each party represents that it has
not incurred, and shall not incur any liability for brokers' or finders' fees
or agents' commissions in connection with this Agreement or the transactions
contemplated hereby.
13.15 THIRD PARTY BENEFICIARIES. Except as provided in Article 13 and
Section 13.8 to the extent that a party is obligated thereunder, the parties
hereto intend that this Agreement shall not benefit or create any right or
cause of action in or on behalf of any Person other than the parties hereto.
13.16 GOOD FAITH. The parties hereto agree to exercise good faith in
connection with the execution, delivery and performance of this Agreement.
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13.17 NEGOTIATIONS. This Agreement has been fully negotiated between
the parties, and in interpreting this Agreement, there shall be no
presumption that either party drafted the language but rather the parties
shall be deemed to have shared equally in the drafting of this Agreement.
13.18 CURRENCY. Any reference herein to money or any currency shall be
deemed to be valued in currency of the United States of America.
[Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Asset Purchase Agreement as of the day and year first above written.
Maine Rubber Company Cascade Corporation
By: By:
-------------------------------- --------------------------------
- ------------------------------------ ------------------------------------
Printed Name, Title Printed Name, Title
Cascade (Canada) Ltd.
By:
--------------------------------
------------------------------------
Printed Name, Title
Cascade (Ontario) Inc.
By:
--------------------------------
------------------------------------
Printed Name, Title
ITL Industrial Tires, Inc.
By:
--------------------------------
------------------------------------
Printed Name, Title
<PAGE>
EXHIBIT 2.2
FIRST AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (this "Amendment"),
made and entered into on this 29 day of April, 1999, by and among Maine
Rubber Company, an Indiana corporation, Cascade Corporation, an Oregon
corporation, Cascade (Canada) Ltd., an Ontario corporation, Cascade (Ontario)
Inc., an Ontario corporation, and ITL Industrial Tires, Inc., a Delaware
corporation,
WITNESSETH THAT:
WHEREAS, the parties hereto entered into an Asset Purchase Agreement
(the "Agreement") dated as of April 6, 1999 pursuant to which Purchaser
agreed to acquire substantially all of the assets of the Business (all
initially capitalized terms used herein shall have the meanings ascribed to
them in the Agreement); and
WHEREAS, the parties to the Agreement desire to amend the Agreement on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Exhibit C to the Agreement be and hereby is amended in its entirety
so that the form of Junior Subordinated Note to be delivered pursuant to
Section 2.7 (a) (ii) of the Agreement shall be as set forth in EXHIBIT A to
this Amendment.
2. Schedule 5.17 to the Agreement be and hereby is amended to include
the following language in subpart A thereof:
"Ministry of Environment Certificate of Air Approval 8-3256-90-916
Ministry of Environment Certificate of Air Approval 8-3254-90-916"
3. The Agreement be and hereby is amended to provide that in addition
to Purchaser's obligation to assume the liabilities described in Section 2.5
of the Agreement, upon the Closing, Purchaser shall also assume the
obligations of Sellers under the agreement relating to the employment of
Henno Plaggenbord, a copy of which is attached hereto as EXHIBIT B, as if the
same were specifically described as an assumed obligation in Section 2.5 of
the Agreement.
4. Notwithstanding the failure of the Sellers to fulfill certain of
the conditions precedent to Closing set forth in Article 9 of the Agreement,
as more fully described in EXHIBIT C hereto (the "Outstanding Conditions"),
Purchaser and the Sellers (and each of them) hereby agree to consummate the
Closing; PROVIDED, HOWEVER, THAT the Sellers shall fulfill each of the
Outstanding Conditions as soon after Closing Date as is practicable;
PROVIDED, FURTHER, THAT Purchaser's consummation of the Closing
notwithstanding the Seller's failure to fulfill the Outstanding
<PAGE>
Conditions at or prior to Closing shall not be deemed a waiver of the
Outstanding Conditions; PROVIDED, FURTHER, THAT the Sellers (and each of
them) shall fully and completely indemnify and hold Purchaser harmless from
all costs and losses relating to such failure as if such failure were an
Indemnifiable Loss (as defined in the Agreement), except that indemnification
for Indemnifiable Losses arising out of the Outstanding Conditions shall not
be subject to the Deductible Amount or to the limitations set forth in
Section 12.1 (f) of the Agreement and Purchaser shall not be required to
first offset any such Indemnifiable Losses against any payments it is
obligated to make under the Note; PROVIDED, FURTHER, THAT the foregoing
indemnity provision shall not apply with respect to any matter which is
subject to indemnification pursuant to Section 2.8(b) of the Agreement.
5. All other terms, conditions and provisions of the Agreement not
herein amended shall remain in full force and effect as provided in the
Agreement.
IN WITNESS WHEREOF, Parent, on its behalf and on behalf of each of the
other Sellers pursuant to Section 3.4 of the Agreement, has caused this
Amendment to be executed on the day and year first above written.
Maine Rubber Company Cascade Corporation, for itself and
as attorney-in-fact for each of the
other Sellers
By: By:
-------------------------------- --------------------------------
Stuart A. Brown, President
------------------------------------
Printed Name, Title
2
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THIS JUNIOR SUBORDINATED NOTE ("NOTE") WAS ACQUIRED FOR INVESTMENT ONLY AND NOT
FOR RESALE. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAW. THIS NOTE MAY NOT BE SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS FIRST REGISTERED UNDER SUCH LAWS, OR UNLESS THE
COMPANY (AS HEREINAFTER DEFINED) HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED. THIS NOTE IS
SUBORDINATE AND JUNIOR TO ALL SENIOR DEBT AS PROVIDED HEREIN.
MAINE INDUSTRIAL TIRES LIMITED
JUNIOR SUBORDINATED NOTE
$8,794,586.00 April 29, 1999
1. PAYMENT. MAINE INDUSTRIAL TIRES LIMITED, an Indiana corporation and
successor by merger to Maine Rubber Company, an Indiana corporation (the
"Company"), for value received, hereby promises to pay to ITL Industrial Tires,
Inc., a Delaware corporation, the principal sum of Eight Million Seven Hundred
Ninety-Four Thousand Five Hundred Eighty-Six and no/100 Dollars ($
8,794,586.00), together with interest, accruing commencing on the date of this
Note, on said principal sum at the rate of eight percent (8%) per annum (based
on a 360-day year).
Principal and interest shall be due and payable, subject to the
limitations and restrictions hereinafter set forth, as follows, time is of the
essence:
(a) All accrued but unpaid interest shall be payable quarterly on
the last day of each calendar quarter, commencing on June 30,
1999, and on the date the final principal payment is made.
(b) Principal shall be paid as follows:
(i) One payment of principal in the amount of One Million
Dollars ($1,000,000) shall be paid on April 29, 2002.
(ii) One payment of principal in the amount of Two Million
Five Hundred Ninety-Eight Thousand One Hundred
Ninety-Five and 33/100 Dollars ($2,598,195.33) shall
be paid on April 29, 2003.
(iii) Payment of the entire remaining unpaid principal
balance shall be paid on April 29, 2004.
The ability of the Company to pay principal and interest under this
Note is dependent upon the ability of its subsidiaries to pay dividends or make
other distributions to the Company in amounts equal to or greater than the
principal and interest due on the Junior Subordinated Notes (as hereafter
defined). Notwithstanding anything to the contrary contained herein, no payment
of principal or interest shall be due hereunder during any period to the extent
the Company and/or its subsidiaries are not able or permitted under any of the
loan agreements, guaranties and other
<PAGE>
financing arrangements (collectively, the "Senior Debt Documents") among or
between the Company and/or any of its subsidiaries and the holders of the Senior
Debt (defined below) to pay to the Company's subordinated lenders principal and
interest due on the Junior Subordinated Notes, PROVIDED, HOWEVER, THAT such
payment, together with interest accrued on such payment, shall become due as
soon as, and to the extent that, payment would be permitted under the Senior
Debt Documents. "Junior Subordinated Notes" shall mean this Note, all of the
other junior subordinated notes of even date herewith issued by the Company, and
any replacement notes thereof. "Subordinated Holder" shall mean the holder of
this Junior Subordinated Note.
2. PREPAYMENT. Subject to the Company's obligations in its Senior Debt
Documents, the principal and/or accrued interest due hereunder may be prepaid in
whole or in part, at the sole discretion of the Company, at any time without
penalty. Any such prepayment shall be first applied to accrued but unpaid
interest, and any balance shall be applied to reduce the unpaid principal as
described by the Company in writing to the payee, and if no such direction is
given, to the reduction of the principal with the earliest maturity date.
3. PLACE OF PAYMENT. Payments of principal and interest shall be made
in lawful money of the United States of America at the address of the
Subordinated Holder set forth at the end of this Note or, at the option of the
Subordinated Holder, at such other place in the United States of America as the
Subordinated Holder shall have designated to the Company in writing. Any
principal or interest payment not made on a date specified in Section 1 shall
bear interest at the rate specified in such Section PLUS two percent (2%)
commencing on the date payment was due until paid.
4. SUBORDINATION.
(a) Notwithstanding anything to the contrary contained in this
Note, including, without limitation, the obligation of the Company to
make the principal and interest payments set forth in Section 1 herein,
the indebtedness evidenced by this Note is subordinate and junior to
the prior payment in full of all Senior Debt. "Senior Debt" as used
herein shall mean the principal of and premium, if any, fees, expenses
and interest and other amounts payable, including all fees, expenses
and interest accruing after commencement of any case, proceeding or
action relating to the bankruptcy, insolvency or reorganization of the
Company (whether or not such interest is deemed an allowed claim), on
indebtedness or other obligations (including, without limitation,
guaranties) of the Company or any of its subsidiaries (i) created
pursuant to that certain (A) Loan Agreement dated as of April 29, 1999
among National Bank of Canada, Maine Rubber International ("MRI"),
Monarch Industrial Tires, Inc. ("Monarch"), Precision Products Limited
("PPL") and Industrial Tires Limited ("ITL") and the Canadian Loan
Agreement dated as of April 29, 1999 among National Bank of Canada,
MRI, Monarch, PPL and ITL (collectively, the "Loan Agreement") and the
notes issued pursuant to the Loan Agreement (collectively, the "Senior
Notes"); and (B) Note Agreement (the "Note Agreements"), dated as of
April 29, 1999, among the Company, MRI and each of the purchasers
identified on the signature pages thereto and the 12.00% Senior
Subordinated Secured Notes due April 30, 2009 issued
2
<PAGE>
pursuant to the Note Agreement (collectively, the "Secured Subordinated
Notes"), and (ii) constituting renewals, modifications, extensions, or
refinancing of the indebtedness or other obligations of the kinds
described in the preceding clause (i) provided the restrictions against
the payment of the indebtedness evidenced by this Note contained in any
future renewals, modification, extension or refinancing shall not be
materially more restrictive than the restrictions set forth in the Loan
Agreement and in the Note Agreements, and provided further, that the
aggregate amount of the principal payments under any renewals,
modifications, extensions or refinancings referred to in clause (ii) to
which the indebtedness evidenced by this Note is subordinate and junior
shall be limited to an amount equal to (A) the maximum commitment under
the Senior Notes LESS the scheduled amortization principal payments
which have been made on the term loan facility at the time of such
renewal, modification, extension or refinancing (the "Specified Time"),
PLUS (B) the aggregate outstanding principal balance of the Secured
Subordinated Notes at the Specified Time.
(b) In the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization, or other similar proceedings involving the
Company or its property, the holders of Senior Debt shall be entitled
to receive payment in full, in cash, of all Senior Debt (whether for
principal, interest, premium or fees) before the Subordinated Holder is
entitled to receive payment on account of principal of or premium, if
any, or interest on this Note.
(c) In the event that this Note is declared due and payable
before its expressed maturity under circumstances other than those
described in Section 4(b), the holders of Senior Debt then outstanding
shall be entitled to receive payment in full, in cash, of all principal
of and premium, if any, fees, expenses and interest, including all
fees, expenses and interest accruing after commencement of any case,
proceeding or action relating to the bankruptcy, insolvency or
reorganization of the Company (whether or not such interest is deemed
an allowed claim), on all Senior Debt before the Subordinated Holder is
entitled to receive any payment on account of the principal of or
premium, if any, or interest on this Note. The Subordinated Holder
shall be entitled to interest subject to the terms hereof whether or
not such interest is deemed an allowed claim.
(d) During the continuance of any default in the payment of
principal of and premium, if any, or interest on any Senior Debt or any
other default on any Senior Debt which gives its holders the right to
accelerate the maturity of such Senior Debt, no payment of principal of
or premium, if any, or interest shall be made on or with respect to the
indebtedness evidenced by this Note or any renewal or extensions
thereof, if written or telegraphic notice of such default has been
given to the Company by any holder or holders of any Senior Debt. If
the holders of any Senior Debt have the right to accelerate the
maturity of such Senior Debt as a result of a default under any of the
Senior Debt Documents, the Subordinated Holder shall have no right to
accelerate the maturity of this Note or take any action against the
Company or any of its subsidiaries or affiliates to collect the debt
evidenced hereby.
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(e) This Section 4 shall constitute a continuing offer to all
parties who, in reliance upon such provisions, become holders of, or
continue to hold, Senior Debt; such provisions are made for the benefit
of the holders of Senior Debt; and such holders are made obligees
hereunder and they or each of them may enforce such provisions.
(f) Until the Senior Debt is paid in full in cash, any
distribution to which the Subordinated Holder would be entitled shall
be subject to the restrictions set forth in any agreement by the
Company with respect to the Senior Debt, which agreement or agreements
may provide that any distribution to which Subordinated Holder would be
entitled shall be made to the holders of the Senior Debt.
(g) In the event that notwithstanding the provisions of this
Section 4, the Subordinated Holder shall receive any payments in
violation of this Section 4, then, unless and until such violation
shall have been cured or waived in writing or shall have ceased to
exist, such payment shall be held in trust by such holder for the
benefit of the holders of the Senior Debt and shall be paid forthwith
over and delivered forthwith to the holders of the Senior Debt for
application to the payment of all Senior Debt remaining unpaid to the
extent necessary to pay all Senior Debt in full in cash in accordance
with its terms, after giving effect to any concurrent payment or
distribution or provisions therefor to or for the holders of the Senior
Debt; PROVIDED, HOWEVER, the Subordinated Holder shall have no
obligation to pay over to the holders of the Senior Debt any payment
received for which no notice of violation is received within three (3)
years of such payment.
(h) Except as specifically provided herein, the rights under
these subordination provisions of the holders of the Senior Debt as
against the Subordinated Holder shall remain in full force and effect
without regard to, shall not be impaired or affected by, and, with the
exception of subsection (i) below, the Subordinated Holder hereby
consents to:
(i) any act or failure to act on the part of the
Company under the terms of this Note (including, without
limitation, any amendments of the terms of this Note); or
(ii) any extension or indulgence in respect of any
payment or prepayment of any Senior Debt or any part thereof
or in respect of any other amount payable to any holder of the
Senior Debt; or
(iii) any amendment, modification or waiver of, or
addition or supplement to, or deletion from, or compromise,
release, consent or other action in respect of, any of the
terms of any Senior Debt or any agreement (in each case, to
the extent consistent with Section 4(a) of this Note) which
may be made relating to any Senior Debt; or
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(iv) any exercise or nonexercise by holder of the
Senior Debt of any right, power, privilege or remedy under or
in respect of any Senior Debt or these subordination
provisions or any waiver of any such right, power, privilege
or remedy or of any default in respect of the Senior Debt or
these subordination provisions, or any receipt by any holder
of the Senior Debt of any security, or any failure by any
holder of the Senior Debt to perfect a security interest in,
or any release by any holder of the Senior Debt of any
security or guaranty for the payment of the Senior Debt; or
(v) the sale, exchange, release, or failure to
perfect or otherwise deal with any property pledged, assigned
or mortgaged to secure, or otherwise securing, Senior Debt; or
(vi) the application of any sums from time to time
received to the payment of Senior Debt.
(i) This Section 4 shall continue to be effective, or be
reinstated, as the case may be, if any time any payment in respect of
any Senior Debt, or any other payment to any holder of any Senior Debt,
is rescinded or must otherwise be restored or returned by the holders
of such Senior Debt upon the occurrence of any event described in
Section 4(b) hereof, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer
for, the Company or any substantial part of its property, or otherwise,
all as though such payment had not been made.
(j) The holders of the Senior Debt shall have no obligation to
preserve the rights of the Subordinated Holder against any prior
parties or to marshal any of the assets or properties of the Company
for the benefit of the Subordinated Holder.
(k) The provisions of this Section 4 shall continue in full
force and effect, notwithstanding the commencement of a case under
Title 11 of the United States Code, as amended and/or superseded by or
against the Company or any of its property. In furtherance of the
foregoing, if the Subordinated Holder receives, directly or indirectly,
by set-off, redemption, purchase or in any other manner, any property
of, or payments from, the Company after the commencement of such a case
on account of a claim which is subordinated by the terms of this
Agreement (whether as "adequate protection" payments or otherwise), the
Subordinated Holder shall immediately turn such property or payments
over to the holders of the Senior Debt in accordance with the
applicable provisions of this Section 4.
(l) In the event that the Subordinated Holder does not file,
within thirty (30) days before the expiration of the time for such
filing, a proof of claim or other appropriate proof of debt in any
insolvency or bankruptcy case or proceeding involving the Company, the
holders of at least fifty-one percent (51%) in aggregate outstanding
principal amount of the Senior Debt are hereby irrevocably authorized
and empowered to file such proof of claim for
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or on behalf of the Subordinated Holder and to take any necessary
action to collect any amounts due in respect of such claim in such case
or proceeding. The holders of Senior Debt shall have the right, at
their option, to vote any claim or claims in respect to this Note in
connection with any insolvency or bankruptcy case or proceedings
involving the Company.
(m) The Subordinated Holder, by its acceptance hereof, shall
be conclusively presumed to have agreed that:
(i) all holders of Senior Debt, in determining to
acquire and retain Senior Debt, have relied upon the
subordination of this Note to Senior Debt; and
(ii) promptly upon request of any holder of Senior
Debt, the Subordinated Holder shall execute and deliver to
such holder of Senior Debt a written instrument by which such
Subordinated Holder confirms and agrees that this Note is
subordinate and junior in right of payment to such Senior Debt
on the terms and conditions provided herein and take such
other action as may be reasonably requested to protect the
rights of the holders of Senior Debt.
(n) For the avoidance of doubt, any payment on or in respect
to the Senior Debt other than in cash recovered or received by any
holder of Senior Debt shall be treated as having not been paid until
reduced to cash for the purposes of this Note.
5. EXCHANGE OF NOTE. Subject to compliance with applicable federal and
state securities laws, upon surrender for exchange of this Note (in negotiable
form, if not surrendered by the holder named on the face thereof) to the Company
at its principal office, the Company, at its expense, will issue and deliver a
new Note or Notes in the same aggregate principal amount, in the denomination or
denominations requested, to or on the order of such holder upon payment by such
holder of any applicable transfer taxes.
6. ASSET PURCHASE AGREEMENT. This Note is being delivered by the
Company to the Subordinated Holder pursuant and subject to an asset acquisition
described in the Asset Purchase Agreement dated as of the 6th day of April,
1999, by and among the Company, Cascade Corporation, an Oregon corporation
("Parent"), Cascade (Canada) Ltd. ("CCL"), an Ontario corporation and
wholly-owned by the Parent, Cascade (Ontario), Inc., an Ontario corporation and
wholly-owned by CCL, and ITL Industrial Tires, Inc., a Delaware corporation and
wholly-owned by the Parent, as amended through the date hereof (the
"Agreement"), the terms and conditions of which are incorporated herein by
reference. Unless otherwise defined herein, terms defined in the Agreement are
used herein as therein defined. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING
AND IN ADDITION TO ANY OTHER REMEDY THE COMPANY MAY HAVE TO ENFORCE ITS RIGHTS
UNDER THE AGREEMENT, THE COMPANY SHALL FIRST OFFSET THE FULL AMOUNT OF ANY
INDEMNIFIABLE LOSS FOR WHICH IT OR ANY OTHER PURCHASER PARTY IS ENTITLED TO
INDEMNIFICATION AGAINST ANY INTEREST AND/OR PRINCIPAL PAYMENTS TO BE MADE UNDER
THIS NOTE IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE AGREEMENT. SUCH
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OFFSETS SHALL NOT BE CONSIDERED PAYMENTS FOR PURPOSES OF SECTION 4 OF THIS NOTE.
7. NOTICES. All notices and other communications from the Company to
the Subordinated Holder shall be mailed by first-class registered or certified
mail, postage prepaid, to the address furnished to the Company in writing by the
last Subordinated Holder who has furnished an address to the Company in writing.
8. CHANGE; WAIVER. Neither this Note nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the Company, the Subordinated Holder and each of the holders
of the Senior Debt then outstanding.
9. HEADINGS. The headings in this Note are for purposes of convenience
of reference only, and shall not be deemed to constitute a part hereof.
10. GOVERNING LAW. This Note shall be construed in accordance with and
governed by the laws of the State of Indiana, without regard to its conflicts of
law principles.
11. FINANCIAL INFORMATION. So long as any principal or interest is due
under the terms of this Note, the Company shall provide to the Subordinated
Holder of this Note quarterly unaudited consolidated financial statements,
certified as true and correct by the Company's Chief Financial Officer, within
45 days of the end of each calendar quarter; PROVIDED, HOWEVER with respect to
the last quarter of the Company's fiscal year, the Company shall provide the
Subordinated Holder audit financial statements of the Company on a consolidated
basis within 90 days after such fiscal year.
12. ACCELERATION. Following the acceleration of all Senior Debt
pursuant to the Senior Debt Documents, all amounts due under this Note will
mature subject to the provisions of Section 4 of this Note.
13. FINAL PAYMENT. Notwithstanding the provisions set forth in Section
4 of this Note, all amounts under this Note then outstanding will be due and
payable on September 30, 2009.
14. COSTS AND EXPENSES. In any legal action between the Subordinated
Holder and the Company to enforce or interpret this Note, the prevailing party
shall be entitled to recover its costs and expenses, including reasonable
accounting and legal fees.
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IN WITNESS WHEREOF, MAINE INDUSTRIAL TIRES LIMITED has caused this Note
to be duly and executed by its officer thereunto duly authorized as of the first
date set forth above.
MAINE INDUSTRIAL TIRES LIMITED
By:
------------------------------
Stuart A. Brown, President
Name and Address of Initial Holder:
ITL Industrial Tires, Inc.
c/o Kurt Wollenberg
P.O. Box 20187
Portland, OR 97294-0187
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Exhibit 99.1
PRESS RELEASE
Portland - OR
04/29/99
CASCADE ANNOUNCES SALE OF INDUSTRIAL TIRES LIMITED BUSINESS UNIT
Robert C. Warren, Jr., President and Chief Executive Officer of Cascade
Corporation (NYSE: CAE) reported that the previously announced sale of the
company's Industrial Tires Limited Business Unit to Maine Rubber Company
has been completed.
Cascade Corporation, headquartered in Portland, Oregon is a leading
international manufacturer of lift truck attachments, forks, and accessories.
James P. Miller - (503) 669-6300
Gerald A. Parsons - (503) 228-2909
<PAGE>
Exhibit 99.2
PRESS RELEASE
Portland - OR
04/07/99
CASCADE AGREES TO SELL INDUSTRIAL TIRES LIMITED BUSINESS UNIT
Robert C. Warren, Jr., President and Chief Executive Officer of Cascade
Corporation (NYSE: CAE) reported that an agreement has been signed to sell
the assets of its Industrial Tire Division ("ITL") to Maine Rubber Company.
The agreement provides for Maine Rubber Company to purchase all the assets and
assume certain liabilities of ITL's solid tire manufacturing operations in
Canada as well, as the wheel and baseband manufacturing operations of
Cascade's Kenhar division in Guelph, Ontario. Closing of the transaction,
valued in the high-$30 million range, is anticipated by the end of April.
"We believe that our efforts and investment can be better directed to our
attachment and fork businesses," said Warren. "ITL" is a fine company which
was making significant progress toward our goals, but it is in the best
interest of our shareholders to take the opportunity to sell the company to
Maine."
Cascade purchased Industrial Tires Limited, based in Mississauga, Ontario in
January 1997, and it has grown in annual revenues from $28,000,000 to
approximately $42,000,000 in the year ended January 31, 1999.
Cascade Corporation, headquartered in Portland, Oregon is a leading
international manufacturer of lift truck attachments, forks, and accessories.
James P. Miller (503) 669-6300
Gerald A. Parsons (503) 228-2909
