EXHIBIT 10.7
STANDSTILL AGREEMENT
THIS STANDSTILL AGREEMENT (this "AGREEMENT") is entered into as of
February 7, 2005 (the "EFFECTIVE Date") by and between XXXXXX X. XXX
EQUITY FUND IV, L.P., a Delaware limited partnership ("EQUITY FUND"), THL
EQUITY ADVISORS IV, LLC, a Delaware limited liability company ("EQUITY
ADVISORS"), XXXXXX X. XXX PARTNERS, L.P., a Delaware limited partnership
("PARTNERS"), XXXXXX X. XXX ADVISORS, L.L.C., a Delaware limited liability
company ("XXX"; together with Equity Fund, Equity Advisors and Partners,
the "RESTRICTED PARTIES"), and RAYOVAC CORPORATION, a Wisconsin corporation
(the "COMPANY"). The foregoing parties to this Agreement are each a "PARTY"
and collectively the "PARTIES". Capitalized terms not defined herein shall
have the meanings ascribed to such terms in the Merger Agreement (as
defined below).
BACKGROUND STATEMENT
Pursuant to that certain Agreement and Plan of Merger (the "MERGER
AGREEMENT") dated January 3, 2005 by and among the Company, Lindbergh
Corporation and United Industries Corporation, some or all of the
Restricted Parties will receive shares of the Company's $0.01 par value
common stock (the "COMMON STOCK"). The Company has required, as a material
inducement to its consummation of the transactions contemplated by the
Merger Agreement, that the Restricted Parties enter into this Agreement,
whereby the Restricted Parties agree to limit their future acquisitions of
the capital stock of the Company.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the Parties agree
as follows:
SECTION 1.
DEFINED TERMS
1.1 Defined Terms. As used in this Agreement the following terms shall
have the following meanings:
"AFFILIATE" means with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by, or is under common Control with, such Person.
Notwithstanding anything herein to the contrary, the term "Affiliate" shall
not be deemed to include any portfolio company of any Restricted Party or
Xxxxxx Investments, Inc.
"COMPANY VOTING SECURITIES" means, collectively, the Common Stock,
any other class of capital stock of the Company issued and outstanding, and
any other securities, warrants or
1
options or rights of any nature (whether or not issued by the Company)
that are convertible into, exchangeable for, or exercisable for the purchase
of, or otherwise give the holder thereof any rights in respect of any class or
series of Company securities that is entitled to vote generally for the
election of directors.
"CONTROL" means, with respect to any Person, the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"PERMITTED OWNERSHIP PERCENTAGE" means twenty-eight percent (28%)
of the Company Voting Securities on a fully-diluted basis, including no
more than twenty-eight percent (28%) of the shares of any class of such
Company Voting Securities on a fully-diluted basis.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"TRANSFER" means, as a noun, any transfer, sale, assignment,
exchange, charge, pledge, gift, hypothecation, conveyance, encumbrance or
other disposition whether direct or indirect, voluntary or involuntary, by
operation of Law or otherwise and, as a verb, directly or indirectly,
voluntarily or involuntarily, by operation of Law or otherwise, to
transfer, sell, assign, exchange, charge, pledge, give, hypothecate,
convey, encumber or otherwise dispose of.
SECTION 2.
REPRESENTATIONS AND WARRANTIES
Each of the Parties hereby represents and warrants with respect to
itself only that:
(a) it has the corporate or other organizational power and
authority to enter into this Agreement and to perform its obligations
hereunder;
(b) this Agreement constitutes its valid and legally binding
obligation, enforceable in accordance with the terms hereof except to
the extent that such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other Laws and court
decisions relating to or affecting the enforceability of creditor's
rights generally (including statutory or other Laws regarding
fraudulent transfers), and is subject to general principles of equity;
(c) neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby by it,
will (i) violate any Law, Governmental Order or other restriction of
any Governmental Entity, to which it is subject or any provision of
its articles of incorporation or formation, bylaws or other
2
organizational documents or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of,
create in any party thereto the right to accelerate, terminate,
modify, or cancel, or require any notice under any material agreement,
contract, lease, license, instrument or other material arrangement to
which it is a party or by which it is bound or to which any of its
material assets is subject (or result in the imposition of any lien,
security interest or other encumbrance upon any of its assets);
(d) it need not give any notice to, make any filing with, or
obtain any Authorization of any Person not already been obtained in
order to consummate the transactions contemplated by this Agreement;
and
(e) in the case of each of the Restricted Parties, except for
agreements expressly contemplated in, or entered into for the purpose
of consummating the transactions contemplated in, the Merger
Agreement, neither such Restricted Party nor any of its Affiliates has
any agreement, arrangement or understanding with any other Person or
group who is not an Affiliate of such Restricted Party with respect to
acquiring, holding, voting or disposing of Company Voting Securities.
SECTION 3.
STANDSTILL
3.1 Standstill Period. During the period commencing on the date
hereof and ending on the fifth (5th) anniversary of the Effective Date (the
"STANDSTILL PERIOD"), except as specifically approved in writing in advance
by the Board of Directors of the Company, the Restricted Parties shall not,
and shall cause any Affiliates to not, in any manner, directly or
indirectly, either individually or together with any Person or Persons
acting in concert of beneficial ownership (within the meaning of Rule 13d-3
of the Exchange Act):
(a) acquire, or offer or agree to acquire, or become the
beneficial owner of or obtain any rights in respect of any Company
Voting Securities such that, following the consummation of such
transaction, the Restricted Parties and their Affiliates taken
together would beneficially own, in the aggregate, Company Voting
Securities in excess of the Permitted Ownership Percentage;
provided, however that the foregoing limitation on acquisition
shall not prohibit the acquisition of Company Voting Securities
issued as dividends or as a result of stock splits and similar
reclassifications or received in a consolidation, merger or other
business combination in respect of, in exchange for or upon
conversion of Company Voting Securities validly acquired under
this Section 3 and held by the Restricted Parties or any of their
Affiliates at the time of such dividend, split or
reclassification, consolidation or merger or business combination;
(b) solicit proxies or consents or become a "participant" in
a "solicitation" (as such terms are defined or used in Regulation 14A
under the Exchange Act) of proxies or consents with respect to any
Company Voting Securities or initiate or become a participant in any
shareholder proposal or "election contest" (as such term is defined or
used in Rule 14a-11 under the Exchange Act) with respect to the
Company or any of its successors or induce others to initiate the
same, or otherwise seek to advise or influence
3
any Person with respect to the voting of any voting securities of the
Company or any of its successors;
(c) publicly or privately propose, encourage, solicit or
participate in the solicitation of any Person to acquire, offer to
acquire or agree to acquire, by merger, tender offer, purchase or
otherwise, the Company or a substantial portion of its assets or
more than 5% of the outstanding capital stock (except in
connection with the registration of securities pursuant to the
Registration Rights Agreement); or
(d) directly or indirectly join in or in any way participate
in a pooling agreement, syndicate, voting trust or other similar
arrangement with respect to the Company's voting securities or
otherwise act in concert with any other Person (other than Affiliates
of such Restricted Parties), for the purpose of acquiring, holding,
voting or disposing of the Company Voting Securities.
3.2 Limitation. Notwithstanding anything herein to the contrary,
the Restricted Parties will not be deemed to be in violation of this
Agreement if the Restricted Parties and their Affiliates taken together own
Company Voting Securities in excess of the Permitted Ownership Percentage
as a result or arising out of any action taken by the Company to reduce the
number of issued and outstanding shares of Company Voting Securities.
SECTION 4.
MISCELLANEOUS
4.1 Remedies. Each of the Parties acknowledges and agrees that (a)
the provisions of this Agreement are reasonable and necessary to protect
the proper and legitimate interests of the Parties and (b) the Parties
would be irreparably damaged in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that each of the Parties
shall be entitled to preliminary and permanent injunctive relief to prevent
breaches of the provisions of this Agreement by any other Party without the
necessity of proving actual damages or of posting any bond, and to enforce
specifically the terms and provisions hereof and thereof in any court of
the United States or any state thereof having jurisdiction, which rights
shall be cumulative and in addition to any other remedy to which the
Parties may be entitled hereunder or at law or equity.
4.2 No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties, their
respective successors and permitted transferees and assigns.
4.3 Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties with
respect to the subject matter hereof and supersedes any prior
understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they relate in any way to the subject matter
hereof.
4.4 Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective
successors and permitted transferees and assigns. No
4
Party may assign either this Agreement or any of its rights, interests or
obligations hereunder without the prior written approval of the other
Parties; provided, however that the Company may assign its rights and
obligations under this Agreement to any successor or acquiring entity in
connection with any business combination transaction, reorganization or
sale of substantially all the assets of the Company.
4.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
4.6 Governing Law. This agreement shall be governed by and construed
in accordance with the Laws of the State of New York, without giving effect to
any Laws of such State that would make such choice of Laws ineffective.
4.7 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by each
of the Parties. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
4.8 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. Upon any such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
Parties hereto will negotiate in good faith to modify this Agreement so as to
effect the original intent of the Parties as closely as possible in an
acceptable manner to the end that the obligations and restrictions contemplated
by this Agreement are consummated to the extent possible.
4.9 Termination. This Agreement shall automatically terminate as of
the fifth (5th) anniversary of the Effective Date.
[signatures on next page]
5
IN WITNESS WHEREOF, each of the Parties has executed this Agreement as
of the date first written above.
RAYOVAC CORPORATION
By: /s/ Xxxx X. Xxxxxx
----------------------------
Name: Xxxx X. Xxxxxx
Title: President and Chief
Operating Officer
XXXXXX X. XXX EQUITY FUND IV, L.P.
By: THL Equity Advisors IV, LLC,
its General Partner
By: Xxxxxx X. Xxx Partners, L.P.,
its Managing Member
By: Xxxxxx X. Xxx Advisors, LLC,
its General Partner
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Director
THL EQUITY ADVISORS IV, LLC
By: Xxxxxx X. Xxx Partners, L.P.,
its Managing Member
By: Xxxxxx X. Xxx Advisors, LLC,
its General Partner
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Director
XXXXXX X. XXX PARTNERS, L.P.
By: Xxxxxx X. Xxx Advisors L.L.C.,
its General Partner
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Director
XXXXXX X. XXX ADVISORS, L.L.C.
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Director
6
