EXHIBIT 2.1
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SHARE PURCHASE AGREEMENT
BY AND AMONG
RAYOVAC CORPORATION,
ROV HOLDINGS, INC.
AND
THE SHAREHOLDERS OF
MICROLITE S.A.
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FEBRUARY 21, 2004
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TABLE OF CONTENTS
Page
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ARTICLE I. SALE AND PURCHASE OF THE SHARES........................................................................1
Section 1.1 Transfer of the Shares.................................................................1
Section 1.2 Purchase Price.........................................................................2
Section 1.3 Earn Out...............................................................................2
Section 1.4 Dispute Resolution.....................................................................3
Section 1.5 Rayovac Guaranty.......................................................................4
ARTICLE II. CLOSING...............................................................................................5
Section 2.1 Time and Place.........................................................................5
Section 2.2 Delivery...............................................................................5
Section 2.3 Payment of Purchase Price..............................................................5
ARTICLE III. REPRESENTATIONS AND WARRANTIES BY THE SELLING SHAREHOLDERS...........................................6
Section 3.1 Organization and Qualification.........................................................6
Section 3.2 Capitalization and Ownership of the Shares, Etc........................................6
Section 3.3 Authorization..........................................................................7
Section 3.4 No Consents Required...................................................................7
Section 3.5 Absence of Violations or Conflicts.....................................................8
Section 3.6 Financial Statements...................................................................8
Section 3.7 Absence of Certain Changes or Events...................................................8
Section 3.8 No Claims Against the Company..........................................................9
Section 3.9 Absence of Undisclosed Liabilities.....................................................9
Section 3.10 Legal Proceedings......................................................................9
Section 3.11 Environmental Matters..................................................................9
Section 3.12 Governmental Authorization and Compliance with Laws...................................11
Section 3.13 Intellectual Property.................................................................12
Section 3.14 Employee Plans........................................................................13
Section 3.15 Tax Matters...........................................................................13
Section 3.16 Title to Properties; Adequacy.........................................................14
Section 3.17 Contracts.............................................................................14
Section 3.18 Accounts Receivable...................................................................15
Section 3.19 Insider Interests.....................................................................15
Section 3.20 Insurance.............................................................................15
Section 3.21 Corporate Records.....................................................................15
Section 3.22 Brokers, Finders and Investment Bankers...............................................16
Section 3.23 Accuracy of Disclosure Letter, Certificates and Documents.............................16
Section 3.24 List of Top Twenty Customers..........................................................16
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER..........................................................16
Section 4.1 Organization..........................................................................16
Section 4.2 Authority.............................................................................16
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Section 4.3 No Consents Required..................................................................17
Section 4.4 Absence of Violations or Conflicts....................................................17
Section 4.5 Brokers, Finders and Investment Bankers...............................................17
Section 4.6 Accuracy of Purchaser Disclosure Letter, Certificates and Documents...................17
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF GUARANTOR...........................................................17
Section 5.1 Organization..........................................................................17
Section 5.2 Authority.............................................................................18
Section 5.3 No Consents Required..................................................................18
Section 5.4 Absence of Violations or Conflicts....................................................18
ARTICLE VI. ADDITIONAL COVENANTS AND AGREEMENTS..................................................................18
Section 6.1 Conduct of Business Pending the Closing...............................................18
Section 6.2 Commercially Reasonable Efforts; Further Assurances; Cooperation......................21
Section 6.3 Expenses..............................................................................21
Section 6.4 No Solicitation of Transactions.......................................................22
Section 6.5 Public Announcements..................................................................22
Section 6.6 Noncompetition; Nondisclosure.........................................................22
Section 6.7 Additional Financial Statements.......................................................25
Section 6.8 No Transfers..........................................................................25
Section 6.9 Release of Company....................................................................25
Section 6.10 Access to Books and Records...........................................................25
Section 6.11 Trademark and Tradename Release.......................................................25
Section 6.12 Antitrust Authority Approval..........................................................25
Section 6.13 Confidentiality.......................................................................26
Section 6.14 Micropar..............................................................................26
Section 6.15 Shareholder Agreements................................................................27
Section 6.16 Investigation of Environmental Conditions at the Jaboatao Facility....................27
Section 6.17 Customer Investigation................................................................27
Section 6.18 Disclosure Letter.....................................................................27
Section 6.19 Foreign Currency......................................................................27
Section 6.20 Release of Comfort Letters............................................................27
ARTICLE VII. CONDITIONS PRECEDENT TO THE CLOSING.................................................................28
Section 7.1 Conditions to Obligations of Purchaser................................................28
Section 7.2 Conditions to Obligations of the Selling Shareholders.................................29
ARTICLE VIII. ITEMS TO BE DELIVERED AT CLOSING...................................................................30
Section 8.1 To be Delivered by the Selling Shareholders...........................................30
Section 8.2 To be Delivered by Purchaser to the Selling Shareholders..............................31
Section 8.3 To be Delivered by Guarantor to the Selling Shareholders..............................32
Section 8.4 To be Delivered by Purchaser to the Escrow Agent......................................32
ARTICLE IX. INDEMNIFICATION......................................................................................33
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Section 9.1 Indemnification by the Selling Shareholders...........................................33
Section 9.2 Indemnification by Purchaser..........................................................33
Section 9.3 Certificates..........................................................................33
Section 9.4 Claims for Indemnification............................................................33
Section 9.5 Defense of Claims by Third Parties....................................................34
Section 9.6 Third Party Claim Assistance..........................................................35
Section 9.7 Satisfaction of Certain Indemnification Obligations by the Selling
Shareholders; Escrow..................................................................35
Section 9.8 Satisfaction of Indemnification Obligations by Purchaser..............................36
Section 9.9 Arbitration...........................................................................36
Section 9.10 Indemnification as Exclusive Remedy...................................................37
Section 9.11 Certain Limitations...................................................................37
Section 9.12 Indemnified Persons...................................................................38
ARTICLE X. TERMINATION AND ABANDONMENT...........................................................................38
Section 10.1 Termination and Abandonment...........................................................38
Section 10.2 Specific Performance; Remedies Cumulative.............................................39
Section 10.3 Rights and Obligations upon Termination...............................................39
Section 10.4 Effect of Termination.................................................................39
ARTICLE XI. GENERAL PROVISIONS...................................................................................39
Section 11.1 Notices...............................................................................39
Section 11.2 Table of Contents; Headings; Rules of Construction....................................41
Section 11.3 Amendment.............................................................................42
Section 11.4 Severability..........................................................................42
Section 11.5 Waiver................................................................................42
Section 11.6 No Third Party Beneficiaries; Assignment..............................................42
Section 11.7 Time of the Essence; Computation of Time..............................................42
Section 11.8 Currency..............................................................................42
Section 11.9 Counterparts..........................................................................43
Section 11.10 Governing Law.........................................................................43
Section 11.11 No Strict Construction................................................................43
Section 11.12 Entire Agreement......................................................................43
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DEFINED TERMS
2003 Audited Financial Statements................................................................................31
Acquisition Proposal.............................................................................................22
Affiliate.........................................................................................................5
Agreement.........................................................................................................1
Authorizations....................................................................................................7
Baratas...........................................................................................................1
Brazilian GAAP....................................................................................................8
Brazilian Laws...................................................................................................11
Business.........................................................................................................22
Business day.....................................................................................................41
XXXX.............................................................................................................26
Clean-Up..........................................................................................................9
Closing...........................................................................................................5
Closing Date......................................................................................................5
Common Shares.....................................................................................................6
Company...........................................................................................................1
Company Contracts................................................................................................15
Company Financial Statements......................................................................................8
Company Intellectual Property Rights.............................................................................12
Company Licenses.................................................................................................11
Company Third Party Intellectual Property Rights.................................................................12
Confidential Information.........................................................................................24
control...........................................................................................................5
controlled........................................................................................................5
controlling.......................................................................................................5
Customer.........................................................................................................23
Determination Date...............................................................................................37
Disclosure Letter.................................................................................................6
Disclosure Notice................................................................................................27
Disputed Amounts..................................................................................................3
Earn Out..........................................................................................................2
Earn Out Period...................................................................................................2
EBITDA............................................................................................................2
Employee Benefit Plans...........................................................................................13
Environmental Claim..............................................................................................10
Environmental Law................................................................................................10
Environmental Permit.............................................................................................10
Escrow...........................................................................................................35
Escrow Agent.....................................................................................................35
Escrow Agreement.................................................................................................35
Governmental Entity...............................................................................................8
Guarantor Delivered Agreements...................................................................................18
Guaranty..........................................................................................................4
Hazardous Material...............................................................................................10
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herein...........................................................................................................41
hereof...........................................................................................................41
hereto...........................................................................................................41
ICC..............................................................................................................36
Include..........................................................................................................41
including........................................................................................................41
Indemnified Party................................................................................................33
Indemnifying Party...............................................................................................34
Independent Accountants...........................................................................................4
Interelectrica....................................................................................................1
Jaboatao Acceptance Date.........................................................................................27
Jaboatao Facility Environmental Conditions.......................................................................27
Laws.............................................................................................................11
Leases...........................................................................................................14
Liabilities.......................................................................................................9
Liens.............................................................................................................1
Losses...........................................................................................................33
Major Customers..................................................................................................16
Micropar.........................................................................................................26
Noncompete Period................................................................................................23
Notice of Claim..................................................................................................34
Notice of Defense................................................................................................34
Option............................................................................................................1
Owned Real Property..............................................................................................14
Parties...........................................................................................................1
Party.............................................................................................................1
Person............................................................................................................9
Preferred Shares..................................................................................................6
Properties.......................................................................................................14
Purchaser.........................................................................................................1
Purchaser Delivered Agreements...................................................................................16
Purchaser Disclosure Letter......................................................................................17
Rayovac...........................................................................................................1
Receiving Party..................................................................................................26
Relative Ownership Percentages...................................................................................33
Release..........................................................................................................10
Remaining Shares..................................................................................................1
Remedial Action..................................................................................................10
SEC..............................................................................................................21
Second Transfer Date..............................................................................................1
Selling Shareholders..............................................................................................1
Shareholder Delivered Agreements..................................................................................7
Shares............................................................................................................1
Subsidiary........................................................................................................6
Tabriza...........................................................................................................1
Tabriza Initial Consideration.....................................................................................2
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Tabriza Ownership Percentage......................................................................................2
Tabriza Shares....................................................................................................2
Tax Returns......................................................................................................13
Taxes............................................................................................................13
Territory........................................................................................................22
Third Party Claim................................................................................................34
Trade Secret.....................................................................................................23
US$..............................................................................................................42
VARTA.............................................................................................................1
VARTA Purchase Price..............................................................................................2
VARTA Selling Shareholders........................................................................................2
VARTA Shares......................................................................................................2
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EXHIBITS
A - Shareholders List
B - Definition of EBITDA
C - Earn Out Rules
D - Consumer Batteries Definition
viii
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "Agreement") is made February 21,
2004, by and among Rayovac Corporation, a Wisconsin corporation ("Rayovac"), ROV
Holdings, Inc., a Delaware corporation and a wholly-owned subsidiary of Rayovac
("Purchaser"), and VARTA AG, a corporation formed under the laws of Germany
("VARTA"), Interelectrica Administracao e Participacoes Ltda., a company formed
under the laws of Brazil and a wholly-owned subsidiary of VARTA
("Interelectrica"), and Tabriza Brasil Empreendimentos Ltda., a company formed
under the laws of Brazil ("Tabriza "), all of which are shareholders of
Microlite S.A., a company formed under the laws of Brazil (the "Company"), and
are collectively referred to as the "Selling Shareholders." The foregoing
parties to this Agreement are each a "Party" and collectively the "Parties."
BACKGROUND STATEMENT
Each of the Selling Shareholders owns the number and classes of shares
in the capital of the Company set forth next to its name on Exhibit A hereto
(all of the shares reflected on Exhibit A collectively, the "Shares"). Tabriza
owns a purchase option over the Shares owned by the Baratas (the "Option"). In
order to acquire the Company, Purchaser wishes to purchase, and the Selling
Shareholders wish to sell, all of the Shares owned by them, each upon the terms
and conditions set forth in this Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, the Parties hereto agree
as follows:
ARTICLE I.
SALE AND PURCHASE OF THE SHARES
SECTION 1.1 TRANSFER OF THE SHARES. On the terms and subject to the
conditions set forth herein, the Selling Shareholders shall sell, assign,
transfer and deliver to Purchaser and Purchaser shall purchase and accept at the
Closing the Shares (other than an amount of Preferred Shares held by the Xxxxxx
and Xxxxxxxx Xxxxxx, individuals residing in Brazil (the "Baratas") equal to
9.9% of the Shares (the "Remaining Shares")) free and clear of all liens,
claims, options, rights of first refusal, proxies, charges, pledges, security
interests, mortgages, adverse claims and other encumbrances and similar rights
and other transfer restrictions of any nature whatsoever, including any arising
from any pending or threatened litigation (collectively, "Liens"). Upon the date
of determination (pursuant to Section 1.3 and 1.4 hereof) of the amount of the
Earn Out payment under Section 1.3(a)(ii), if any (the "Second Transfer Date""),
for no additional consideration, Tabriza shall cause the Remaining Shares to be
sold, assigned, transferred and delivered to Purchaser and Purchaser shall
purchase and accept the Remaining Shares, free and clear of all Liens; provided,
however, that notwithstanding any other provision of this Agreement, the payment
of any Earn Out pursuant to Section 1.3(a)(ii) shall be conditioned on the
transfer of the Remaining Shares to Purchaser, free and clear of all Liens.
SECTION 1.2 PURCHASE PRICE.
(a) The purchase price for the Shares (collectively, the
"VARTA Shares") owned by VARTA and Interelectrica (collectively, the "VARTA
Selling Shareholders") shall be US$ 16,900,000 (the "VARTA Purchase Price"),
US$15,600,000 of which shall be allocated to VARTA and US$1,300,000 of which
shall be allocated to Interelectrica.
(b) The purchase price for the Shares (collectively, the
"Tabriza Shares") owned by Tabriza and the Baratas at the Closing shall be (i)
US$3,900,000 (the "Tabriza Initial Consideration") and (ii) the Earn Out, all of
which shall be paid to Tabriza.
SECTION 1.3 EARN OUT.
(a) CALCULATION OF EARN OUT. Tabriza may be entitled to
receive possible additional consideration (the "Earn Out") based on the
performance of the Company during 2004 and the first half of 2005 (the "Earn Out
Period"), in amounts determined as follows:
(i) Tabriza shall be entitled to a payment in
Brazilian currency equal to (A) seven (7), multiplied by (B) the
Company's EBITDA for the year ended December 31, 2004, if any, less
US$7,000,000, multiplied by (C) the Tabriza Ownership Percentage;
provided, however, that no Earn Out shall be owed under this Section
1.3(a)(i) if the Company's EBITDA for the year ended December 31, 2004
is a negative number.
(ii) Tabriza shall be entitled to a payment in
Brazilian currency equal to (A) seven (7), multiplied by (B) the amount
by which the Company's EBITDA for the first six months of 2005, if any,
exceeds the Company's EBITDA for the first six months of 2004,
multiplied by (C) the Tabriza Ownership Percentage; provided, however,
that no Earn Out shall be owed under this Section 1.3(a)(ii) if the
Company's EBITDA for the first six months of 2005 is a negative number.
(iii) Notwithstanding the foregoing, if the amount
calculated under Section 1.3(a)(ii) is negative, then Tabriza shall pay
Purchaser an amount equal to the lesser of (A) the absolute value of
such negative amount and (B) the amount paid to the Selling
Shareholders under Section 1.3(a)(i).
(iv) The Company's "EBITDA" shall have the
meaning attributed to it in Exhibit B hereto.
(v) Notwithstanding the other provisions related
to the payments of the Earn Out, the first US$2,000,000 of Earn Out
payments that would be payable to Tabriza pursuant to this Section 1.3
or Section 1.4 shall be paid to the Escrow Agent pursuant to Section
9.7.
(vi) The Tabriza Ownership Percentage means a
fraction the numerator of which is the number of Tabriza Shares and the
denominator of which is the total number of Shares (the "Tabriza
Ownership Percentage").
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(b) CERTAIN RULES. In calculating the Earn Out, the rules
set forth on Exhibit C hereto shall apply during the Earn Out Period:
(c) PAYMENT OF EARN OUT. Within thirty (30) days of the
completion of the unaudited financial statements of the Company and the
Subsidiaries for the year ended December 31, 2004 and for the six-month period
ended June 30, 2005, but in no case later than forty-five (45) days after such
dates, Purchaser shall deliver to Tabriza a notice setting forth Purchaser's
calculation of the Earn Out for such completed period, if any. Purchaser shall
concurrently pay the amount of the Earn Out for such completed period as so
determined to Tabriza. If within thirty (30) days following delivery by
Purchaser of such notice, Tabriza has not given Purchaser a notice of objection
to Purchaser's calculation of the Earn Out for such completed period (such
notice must contain a statement of the basis of the objection, providing with
reasonable specificity the reasons for the objection and identifying the amounts
in dispute), then Purchaser's calculation of the Earn Out for such completed
period will be final, binding and conclusive on the Parties. If Tabriza gives a
notice of objection within the thirty (30) day period, then such dispute shall
be resolved pursuant to the provisions of Section 1.4.
(d) NO TRANSFER OF EARN OUT. Tabriza's right to receive
the Earn Out, if any, is personal to Tabriza and shall not be sold, transferred,
assigned or pledged or encumbered or have Liens created upon it; provided,
however, that Tabriza may transfer such right, in whole or in part, to an
Affiliate.
(e) FORFEITURE OF INCENTIVE PAYMENTS. Notwithstanding
anything herein to the contrary, in addition to any other available remedies, if
Tabriza materially breaches or violates any of the covenants set forth in
Section 6.6 and does not remedy such breach within thirty (30) days after
written notice thereof from Purchaser, then at Purchaser's option it may
terminate all of Tabriza's future rights under this Agreement to the Earn Out.
(f) INFORMATION RIGHTS. During the Earn Out Period,
Purchaser shall provide Tabriza with reasonably requested information and
reasonable visitation rights in connection with the Company and its business and
at or prior to the Closing, Purchaser and Tabriza will enter into a written
agreement with respect thereto.
(g) DEDUCTION OF ADVANCE. Because Tabriza has received an
advance against the Earn Out in the amount of US$7,000,000 pursuant to Section
2.3, only that portion of the Earn Out otherwise earned pursuant to Section 1.3
or Section 1.4 that is in excess of US$7,000,000 shall be paid to Tabriza.
SECTION 1.4 DISPUTE RESOLUTION. If Tabriza gives the notice of
objection described in Section 1.3(c), then the Parties will attempt to resolve
any disagreements; provided, however, that if such objection is in relation to
only a portion of the Earn Out calculation, Purchaser shall promptly pay the
undisputed amount, and the negotiations and dispute resolution process, if any,
shall be limited to the disputed amount. If any such disagreements are not
resolved by the Parties within thirty (30) days following the receipt by
Purchaser of Tabriza's objection, then either Purchaser or Tabriza may submit
the issues in dispute (the "Disputed Amounts") to the Sao Paulo office of
PricewaterhouseCoopers for determination (or if said firm shall be unwilling to
act thereunder, such other independent public accountants of nationally
recognized standing
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reasonably satisfactory to Purchaser and Tabriza, with the selection of such
accountants to be made by Purchaser and Tabriza in a timely manner) (the
"Independent Accountants"), and instruct the Independent Accountants to promptly
review this Agreement, Purchaser's calculation of the Earn Out and any other
documents necessary to make such determination. In making such determination,
the Independent Accountants shall act as experts and not arbitrators and shall
consider only the Disputed Amounts, solely in accordance with the terms of this
Agreement. The Independent Accountants shall deliver to Purchaser and Tabriza,
as promptly as practicable and in any event no later than ninety (90) days after
their engagement, a report setting forth such determination. Such report shall
be final and binding upon Purchaser and Tabriza. The Independent Accountants'
fees and expenses shall be paid as follows: Purchaser shall pay that percentage
of such fees and expenses that equals the percentage of the Disputed Amounts
that is awarded to Tabriza by the Independent Accountants, and Tabriza shall pay
the balance of such fees and expenses. If a final determination thereunder
results in an additional amount payable to Tabriza, such amount shall be paid by
the Purchaser to Tabriza in the manner described above within three (3) business
days of the final determination, together with interest at the rate for federal
securities of the Sistema Especial de Liquidacao e Custodia - SELIC from the
date on which such amount should have been paid to the date of payment.
SECTION 1.5 RAYOVAC GUARANTY.
(a) Rayovac hereby unconditionally and irrevocably
guarantees jointly and severally with Purchaser the punctual payment when due,
of all payment obligations of Purchaser now or hereafter existing under this
Agreement, whether for principal, fees, expenses, interest, and performance of
all of Purchaser's obligations under this Agreement (the "Guaranty").
(b) Rayovac hereby waives promptness, diligence, notice
of acceptance and any other notice with respect to any of the guaranteed
obligations and this guaranty and any requirement that the Selling Shareholders
protest, secure, perfect or ensure any Lien or any property subject thereto or
exhaust any right or take any action against Purchaser or any other Person or
any collector.
(c) An action or actions may be brought and prosecuted
against Rayovac to enforce the Guaranty, irrespective of whether any action is
brought against Purchaser or whether Purchaser is joined in any such action or
actions. The liability of Rayovac under the Guaranty shall be irrevocable,
absolute and unconditional irrespective of, and Rayovac hereby irrevocably
waives any surety defenses it may now or hereafter have, including such surety
defenses related to the following: (i) any lack of validity or enforceability of
this Agreement, of any Purchaser Delivered Agreements or any Guarantor Delivered
Agreements; (ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the guaranteed obligations or any amendment or
waiver of or any consent to departure from this Agreement or any Purchaser
Delivered Documents; (iii) any taking, exchange, release or non-perfection of
any collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all of or any of the guaranteed
obligations; or (iv) any change, restructuring or termination of the corporate
structure or existence of the Purchaser, but in each case specifically excluding
any defenses available to Purchaser.
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(d) The Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
guaranteed obligations is rescinded or must otherwise be returned by the Selling
Shareholders upon the insolvency, bankruptcy or reorganization of Purchaser or
otherwise, all as though such payment has not been made.
(e) Rayovac also commits to cause the Company to remain
its Affiliate until the payment of the Earn Out or a determination pursuant to
Section 1.3 or 1.4 that no further Earn Out is owed. For purposes of this
Agreement, the term "Affiliate" means, with respect to any Person, any other
Person who directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such Person, and the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "controlled" and "controlling" have meanings correlative thereto.
ARTICLE II.
CLOSING
SECTION 2.1 TIME AND PLACE. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place (a) at the
offices of Xxxxxxx, Mussnich & Aragao, Rio de Janeiro, Brazil at 10:00 a.m.,
local time on April 29, 2004 or, if later, the third (3rd) business day after
the conditions set forth in Article VII are satisfied or waived by the Party or
Parties entitled to waive them, or (b) at such other place and time as Purchaser
and the Selling Shareholders may agree (the "Closing Date").
SECTION 2.2 DELIVERY. To effect the transfer of the Shares (other than
the Remaining Shares) referred to in Section 1.1, at the Closing (a) each of the
Selling Shareholders and Purchaser shall execute the corresponding share
transfer instruments (Termos de Transferencia de Acoes) in the Company's
registered share transfer register book (Livro de Registro de Transferencia de
Acoes) and cause the ownership of the Shares (other than the Remaining Shares)
by Purchaser to be entered in the Company's registered share register book
(Livro de Registro de Acoes), and (b) the Parties shall execute and deliver the
agreements and other documents referred to in Article VIII. To effect the
transfer of the Remaining Shares on the Second Transfer Date, (a) Tabriza shall,
or shall cause the Baratas to, execute the corresponding share transfer
instruments (Termos de Transferencia de Acoes) in the Company's registered share
transfer register book (Livro de Registro de Transferencia de Acoes) to Tabriza
and immediately thereafter cause the ownership of the Remaining Shares to be
registered under the name of Purchaser in the Company's registered share
register book (Livro de Registro de Acoes)
SECTION 2.3 PAYMENT OF PURCHASE PRICE. At the Closing, Purchaser shall
wire transfer (a) US$13,900,000 to the VARTA Selling Shareholders, (b) the
Tabriza Initial Consideration plus a US$7,000,000 advance against future Earn
Out payments (pursuant to Section 1.3 and 1.4) to Tabriza and (c) US$3,000,000
(together with any amounts paid to the Escrow Agent pursuant to Section
1.3(a)(v), the "Escrow Fund") to the Escrow Agent pursuant to Section 9.7.
Unless otherwise directed by the VARTA Selling Shareholders, payments to the
VARTA Selling Shareholders shall be divided among the VARTA Selling Shareholders
in accordance with
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Section 1.2(a). The Escrow Fund to be provided by the VARTA Selling Shareholders
shall be taken solely from the payment allocated to VARTA pursuant to Section
1.2(a).
ARTICLE III.
REPRESENTATIONS AND WARRANTIES BY THE SELLING SHAREHOLDERS
Each Selling Shareholder represents and warrants to Purchaser
separately and not jointly as follows, except as set forth in the letter
delivered by the Selling Shareholders to Purchaser on the date hereof, which
contains certain exceptions to the representations and warranties of the Selling
Shareholders in this Agreement (the "Disclosure Letter"):
SECTION 3.1 ORGANIZATION AND QUALIFICATION. The Company is a sociedade
anonima organized under the laws of Federative Republic of Brazil and has the
power and authority to own all of its properties and assets that are material to
carry on its business as it is now being conducted. The copies of the Company's
bylaws, as amended to date, which have been delivered to Purchaser, are complete
and correct, and such bylaws, as so amended, are in full force and effect. As
used in this Agreement, the term "Subsidiary" means, with respect to the
Company, any corporation or other organization, whether incorporated or
unincorporated, of which at least a majority of the securities or interests
having by the terms thereof voting power to elect a majority of the board of
directors or others performing similar functions with respect to such
corporation or other organization is at that time directly or indirectly owned
or controlled by the Company. The Subsidiaries are listed on Section 3.1 of the
Disclosure Letter. Each of the Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of organization and has the power and authority to own all of its
properties and assets that are material to carry on its business as it is now
being conducted. The Company and each of the Subsidiaries is duly qualified and
is in good standing in all jurisdictions in which it is required to be
qualified.
SECTION 3.2 CAPITALIZATION AND OWNERSHIP OF THE SHARES, ETC.
(a) THE COMPANY. The subscribed capital of the Company is
Brazilian reais 32,918,554, represented by 732,508,192 Common Shares (the
"Common Shares") and 1,367,408,361 Preferred Shares (the "Preferred Shares").
All of the issued and outstanding Common Shares and Preferred Shares are duly
authorized, validly issued, fully paid and nonassessable, and were not issued in
violation of any preemptive rights. The Shares represent all of the issued and
outstanding capital stock of the Company, and no shares in the capital of the
Company are held by the Company as treasury shares. Except for the Option, there
are no subscriptions, options, convertible securities, calls, rights, warrants
or other agreements, claims or commitments of any nature whatsoever obligating
the Company to issue, transfer, register with any securities commission or other
authority, deliver or sell or cause to be issued, transferred, so registered,
delivered or sold, additional shares in the capital of the Company or other
securities of the Company or obligating the Company to grant, extend or enter
into any such agreement or commitment. Except as set forth in Section 3.2(a) of
the Disclosure Letter, there are no shareholders' agreements or similar
agreements with respect to the Shares.
(b) SUBSIDIARIES. All of the issued and outstanding
shares in the capital of each Subsidiary are duly authorized, validly issued,
fully paid and nonassessable, and were not
6
issued in violation of any preemptive rights. There are no subscriptions,
options, convertible securities, calls, rights, warrants or other agreements,
claims or commitments of any nature whatsoever obligating any Subsidiary to
issue, transfer, register with any securities commission or other authority,
deliver or sell or cause to be issued, transferred, so registered, delivered or
sold, additional shares in the capital of any Subsidiary or other securities of
any Subsidiary or obligating any Subsidiary to grant, extend or enter into any
such agreement or commitment. Except as disclosed in Section 3.2(b) of the
Disclosure Letter, the Company owns all right, title and interest in and to all
of the outstanding shares in the capital of each of the Subsidiaries, free and
clear of all Liens. There are no shareholders' agreements with respect to the
shares in the capital of any of the Subsidiaries. The Company has the right to
elect all of the directors of each Subsidiary and the power to control the
business and affairs of each Subsidiary.
(c) OWNERSHIP OF SHARES. Each Selling Shareholder owns
all right, title and interest in and to the Shares set forth next to such
Selling Shareholder's name on Exhibit A, free and clear of all Liens. At the
Closing, Tabriza shall own and transfer to Purchaser all right, title and
interest in and to the Shares set forth next to the Baratas' name on Exhibit A
other than the Remaining Shares. On the Second Transfer Date, Tabriza shall own
and transfer (or cause the Baratas to transfer) to Purchaser all right, title
and interest in and to the Remaining Shares. Upon consummation of the
transactions contemplated by this Agreement, Purchaser shall own all of the
capital stock of the Company, free and clear of all Liens. All issuances,
transfers and repurchases of shares of the Company and the Subsidiaries have
been made in accordance with applicable Law.
SECTION 3.3 AUTHORIZATION. With respect to this Agreement and any other
agreements, instruments and documents executed and delivered by the Selling
Shareholders pursuant to this Agreement (this Agreement and such other
agreements, instruments and documents are collectively referred to as the
"Shareholder Delivered Agreements"): (a) each Selling Shareholder has the right,
power and authority to enter into the Shareholder Delivered Agreements executed
and delivered by it and to consummate the transactions contemplated by, and
otherwise to comply with and perform its obligations under, them; (b) the
execution and delivery by each Selling Shareholder of the Shareholder Delivered
Agreements and the consummation by each Selling Shareholder of the transactions
contemplated on its part thereby have been duly authorized by the Board of
Directors or other applicable governing body of such Selling Shareholder; (c) no
other action on the part of any Selling Shareholder is necessary to authorize
the execution and delivery of the Shareholder Delivered Agreements by such
Selling Shareholder or the consummation by such Selling Shareholder of the
transactions contemplated thereby; and (d) the Shareholder Delivered Agreements
will, when executed and delivered by the Selling Shareholders, constitute each
Selling Shareholder's valid and binding obligations enforceable against such
Selling Shareholder in accordance with their terms, except (i) as such
enforcement may be limited by bankruptcy, reorganization, insolvency or other
Laws and court decisions relating to or affecting the enforcement of creditors'
rights generally (including statutory or other Laws regarding fraudulent
transfers), and (ii) as to the availability of specific performance or other
equitable remedies.
SECTION 3.4 NO CONSENTS REQUIRED. Except for XXXX approval and as
disclosed in Section 3.4 of the Disclosure Letter, no consent, authorization,
clearance, order or approval, or filing or registration (collectively,
"Authorizations") of or with any executive, judicial or other
7
public authority, agency, department, bureau, division, unit or court or other
public Person (collectively, a "Governmental Entity") or any other Authorization
of or with any other third party, is required in connection with the execution
and delivery of the Shareholder Delivered Agreements and the consummation by
each Selling Shareholder of the transactions contemplated by, or other
compliance with or performance under, the Shareholder Delivered Agreements.
SECTION 3.5 ABSENCE OF VIOLATIONS OR CONFLICTS. The execution and
delivery of the Shareholder Delivered Agreements and the consummation by each
Selling Shareholder of the transactions contemplated by, or other compliance
with or performance under, them do not and will not with the passing of time or
giving of notice or both: (a) constitute a violation of, be in conflict with,
constitute a default or require any payment under, permit a termination of, or
result in the creation or imposition of any Lien upon any assets of the Company
or the Subsidiaries under (i) any contract, agreement, commitment, undertaking
or understanding (including rights of refusal or similar rights or other
transfer restrictions), (ii) any judgment, decree or order of any Governmental
Entity, (iii) any applicable Brazilian Laws or (iv) the bylaws or other
governing documents of the Company or any of the Subsidiaries; or (b) create, or
cause the acceleration of the maturity of, any debt, obligation or liability of
the Company or the Subsidiaries.
SECTION 3.6 FINANCIAL STATEMENTS. The Selling Shareholders have
previously provided to Purchaser true and complete copies of the audited
consolidated balance sheets of the Company and the Subsidiaries as of December
31, 2001 and December 31, 2002 and the related consolidated statements of
operations, shareholders' equity and cash flows for the years then ended,
including the notes thereto, together with the unqualified audit report thereon
of the Company's independent certified public accountants, and a true and
complete copy of the unaudited consolidated balance sheet of the Company and the
Subsidiaries as of December 31, 2003 and the related consolidated statement of
operations, shareholders' equity and cash flow for the year then ended,
including the notes thereto (together with any other financial statements
required to be delivered pursuant to Section 6.7, collectively, the "Company
Financial Statements"). The Company Financial Statements have been prepared
from, and are in accordance with, the books and records of the Company and the
Subsidiaries and present fairly the financial position and results of operations
of the Company and the Subsidiaries as of the dates and for the periods
indicated in conformity with Brazilian generally accepted accounting principles
("Brazilian GAAP") applied on a consistent basis throughout the periods covered
by such statements, except as otherwise stated in the Company Financial
Statements, and, except as disclosed in Section 3.6 of the Disclosure Letter,
include all adjustments (consisting only of normal recurring accruals) that are
necessary for the fair presentation of the financial position of the Company and
the Subsidiaries and the results of operations and cash flows, except as
otherwise stated in the Company Financial Statements.
SECTION 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in Section 3.7 of the Disclosure Letter, since December 31, 2003, there has not
been: (a) any material adverse change in the assets, liabilities, business,
financial condition or results of operations of the Company and the
Subsidiaries; (b) any material damage, destruction, loss or casualty to property
or assets of the Company or the Subsidiaries, whether or not covered by
insurance; (c) any strike, work stoppage or slowdown or other labor trouble
involving the Company or any of the Subsidiaries; (d) any declaration, setting
aside or payment of any dividend or distribution (whether in cash, capital
shares or property) with respect to the shares in the capital of the
8
Company; (e) any redemption or other acquisition by the Company or any of the
Subsidiaries of any of the shares in the capital of the Company or any of the
Subsidiaries; (f) any split, combination, reclassification or other similar
change in the outstanding shares in the capital of the Company or any of the
Subsidiaries; (g) any transaction entered into by the Company or any of the
Subsidiaries other than in the ordinary course of business; or (h) any agreement
by the Company to do any of the foregoing.
SECTION 3.8 NO CLAIMS AGAINST THE COMPANY. The Selling Shareholders
have no claims against the Company or any of the Subsidiaries, except as
disclosed in Section 3.8 of the Disclosure Letter.
SECTION 3.9 ABSENCE OF UNDISCLOSED LIABILITIES. For purposes of this
Agreement, the term "Liabilities" shall include any of the Company's or any of
the Subsidiaries' debts, liabilities or obligations of any kind whatsoever,
whether accrued, absolute, contingent, changing, known, unknown, determinable,
indeterminable, liquidated, unliquidated or otherwise and whether due or to
become due in the future (collectively, "Liabilities"). Except as set forth in
the Company Financial Statements or disclosed in any section of the Disclosure
Letter or in the documents contained in the data room relating to the Company in
Sao Paulo, Brazil in March 2002 or in the data room relating to the Company in
Sao Paulo, Brazil in December 2003, each of the Company and the Subsidiaries (a)
did not have, as of December 31, 2003, any Liabilities, and (b) has not incurred
since December 31, 2003, any Liabilities (other than liabilities or obligations
incurred in the ordinary and usual course of business after December 31, 2003,
which in the aggregate are not material).
SECTION 3.10 LEGAL PROCEEDINGS. Except as disclosed in Section 3.10 of
the Disclosure Letter, (i) there is no claim, action, suit or proceeding pending
or, to the knowledge of the Company or such Selling Shareholder, threatened
against the Company or any of the Subsidiaries or any of its properties or
assets (or any of its officers or directors in connection with the business of
the Company or the Subsidiaries) or any of the Selling Shareholders before any
arbitrator or Governmental Entity, nor has the Company or any of the
Subsidiaries received notice of any investigation by any Governmental Entity or
other individual, sole proprietorship, partnership, joint venture, corporation,
estate, trust, unincorporated organization, association, limited liability
company, institution or other entity (collectively, a "Person") against the
Company or any of the Subsidiaries which would have such effect; and (ii)
neither the Company nor any of the Subsidiaries is a party to or bound by any
judgment, decree, injunction, ruling or order of any Governmental Entity,
arbitrator or any other Person against the Company or any of the Subsidiaries
that adversely affects the assets, liabilities, financial condition, results of
operations, business or prospects of the Company or any of the Subsidiaries.
SECTION 3.11 ENVIRONMENTAL MATTERS.
(a) When used in this Section 3.11:
(i) "Clean-Up" means all actions required under
applicable Environmental Law to: (A) contain, clean-up, remove, treat
or remediate Hazardous Materials so that they do not migrate or
endanger human health or the environment; (B) perform post-remedial
monitoring and care; or (C) respond to any request by any
9
Governmental Entity for information or documents in any way relating to
containment, clean-up, removal, treatment or remediation or potential
containment, clean-up, removal, treatment or remediation of Hazardous
Material.
(ii) "Environmental Claim" means any claim,
action, cause of action, investigation or written notice by any Person
against the Company or the Subsidiaries alleging potential liability
(including potential liability for investigatory costs, Clean-Up costs,
Remedial Action, governmental response costs, natural resources
damages, property damages, personal injuries or penalties) under any
Environmental Law arising out of, based on or resulting from (A) the
presence, or Release, of any Hazardous Material on the real property
now or previously owned or leased by the Company or the Subsidiaries,
or (B) circumstances forming the basis of any violation, or alleged
violation, by the Company or the Subsidiaries under any Environmental
Law or Environmental Permit.
(iii) "Environmental Law" means all applicable
Brazilian Laws relating to pollution or protection of the environment.
Without limiting the generality of the foregoing, Environmental Law
includes Brazilian Laws relating to Releases or threatened Releases of
Hazardous Material or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, Release, disposal,
transport or handling of Hazardous Material and all Brazilian Laws with
regard to record keeping, notification, disclosure and reporting
requirements respecting Hazardous Material.
(iv) "Environmental Permit" means each permit,
approval, identification number, license, certificate and other
authorization which is required under any applicable Environmental Law.
(v) "Hazardous Material" means any substance,
chemical, compound, product, solid, gas, liquid, waste, byproduct,
pollutant, contaminant or material which is classified or regulated as
"hazardous" or "toxic" pursuant to Environmental Law, and includes
friable asbestos-containing material, polychlorinated biphenyls and
petroleum products.
(vi) "Release" means any release, spill,
emission, discharge, leaking, pumping, injection, deposit, disposal,
dispersal, leaching or migration into the environment (including
ambient air, surface water, groundwater and surface or subsurface
strata), or into or out of any property, including the movement of
Hazardous Material through or in the air, soil, surface water,
groundwater or property.
(vii) "Remedial Action" means any action or
proceeding to (A) cause the removal of any Hazardous Material, (B)
correct or prevent an environmental problem resulting from the prior
treatment, storage or disposal of Hazardous Material or to recover the
cost of either by a Governmental Entity or other Person, or (C) cause
the removal of any fill or implement any remediation, restoration or
mitigation that may be required in connection with any dredging,
filling or disturbance activities in any wetlands.
10
(b) Except as set forth in Section 3.11(b) of the
Disclosure Letter: (i) the Company and the Subsidiaries are and have been in
compliance in all material respects with all applicable Environmental Laws
(which compliance includes the possession of all Environmental Permits, and
compliance with the terms and conditions thereof) and (ii) within the past five
(5) years, neither the Company nor the Subsidiaries has received any material
written communication from any Governmental Entity or other Person alleging that
the Company or the Subsidiaries is not in such compliance.
(c) Except as set forth in Section 3.11(c) of the
Disclosure Letter or in compliance in all material respects with Environmental
Laws, the Company and the Subsidiaries have not (i) except for immaterial
events, used, treated, stored, disposed of, or caused a Release of any Hazardous
Material on, under, at, from or in any way affecting any real property now or
previously owned or leased by the Company or the Subsidiaries, or (ii) shipped
any Hazardous Material generated on any real property owned or leased by the
Company or the Subsidiaries to any other place for use, treatment, storage,
treatment or disposal.
(d) Except as set forth in Section 3.11(d) of the
Disclosure Letter, there is no Environmental Claim pending or, to the knowledge
of the Company or such Selling Shareholder, threatened against the Company or
the Subsidiaries or any of their assets or business.
(e) Except as set forth in Section 3.11(e) of the
Disclosure Letter, to the knowledge of the Company or such Selling Shareholder,
no other Person has placed, stored, deposited, discharged, buried, dumped or
disposed or caused the Release of Hazardous Material or any other wastes
produced by, or resulting from, any business, commercial or industrial
activities, operations or processes, on, beneath or adjacent to any real
property now or previously owned or leased by the Company or the Subsidiaries,
the presence of which would give rise to an Environmental Claim or constitute a
violation of an Environmental Law.
(f) Without in any way limiting the generality of the
foregoing, except as set forth in Section 3.11(f) of the Disclosure Letter, to
the knowledge of the Company or such Selling Shareholder, the real property now
or previously owned or leased by the Company and the Subsidiaries does not
contain any underground storage tanks, friable asbestos, polychlorinated
biphenyls, underground injection xxxxx, radioactive material, septic tanks or
waste disposal areas or sites in which process wastewater or any Hazardous
Material has been discharged or disposed of.
SECTION 3.12 GOVERNMENTAL AUTHORIZATION AND COMPLIANCE WITH LAWS. Each
of the Company and the Subsidiaries has been and is in material compliance with
all material laws, ordinances, regulations, policies, orders and rules
(collectively, "Laws") of Brazil (collectively, "Brazilian Laws") of all
Governmental Entities applicable to the Company and the Subsidiaries or their
business, properties or assets. Each of the Company and the Subsidiaries holds
all material licenses, permits, certificates, franchises, registrations,
consents, Authorizations or other rights filed with, or granted, issued or
entered by any Governmental Entity that are required for the conduct of its
business as now being conducted (collectively, "Company Licenses") except to the
extent that the lack of such Company Licenses would not materially affect the
conduct of business of the Company and the Subsidiaries. All of the material
Company Licenses are listed in Section 3.12 of the Disclosure Letter. All of the
Company Licenses are valid and in full force
11
and effect, and the terms of the Company Licenses are not subject to any
restrictions or conditions that limit or would limit the operations of the
business of the Company or the Subsidiaries as presently conducted, other than
restrictions or conditions generally applicable to licenses of that type. There
are no proceedings pending or, to the knowledge of the Company or such Selling
Shareholder, complaints or petitions by others, or threatened proceedings,
before any Governmental Entity relating to the Company Licenses.
SECTION 3.13 INTELLECTUAL PROPERTY.
(a) Each of the Company and the Subsidiaries owns, or is
validly licensed or otherwise possesses legally enforceable and, except for
limitations arising under licenses or similar contracts governing the Company's
and the Subsidiaries' rights therein, unencumbered rights to use, all patents,
trademarks, trade names, service marks, domain names and copyrights, any
applications for and registrations of such patents, trademarks, trade names,
service marks, domain names and copyrights, and all database rights, net lists,
processes, formulae, methods, schematics, technology, know-how, computer
software programs and applications and tangible or intangible proprietary
information and material that are necessary to conduct its business, or
necessary with respect to the production, marketing and sale of products
currently under development by the Company or any of the Subsidiaries
(collectively, the "Company Intellectual Property Rights"). Section 3.13 of the
Disclosure Letter lists all of the material Company Intellectual Property
Rights. Each of the Company and the Subsidiaries has taken all action reasonably
necessary to protect the Company Intellectual Property Rights, including use of
reasonable secrecy measures to protect any Trade Secrets included in the Company
Intellectual Property Rights.
(b) Except as set forth in Section 3.13(b) of the
Disclosure Letter, the execution and delivery of this Agreement and consummation
of the transactions contemplated hereby will not result in the breach of, or
create on behalf of any Person the right to terminate or modify, any material
license, sublicense or other contract or agreement relating to the Company
Intellectual Property Rights, or any material licenses, sublicenses or other
contracts or agreements as to which the Company is a party and pursuant to which
the Company or any of the Subsidiaries is authorized to use any third party
patents, trademarks, copyrights or trade secrets ("Company Third Party
Intellectual Property Rights").
(c) All patents, registered trademarks, service marks,
domain names and copyrights contained within the Company Intellectual Property
Rights are valid and subsisting. Neither the Company nor any of the Subsidiaries
has, since January 1, 2000, been involved in any claim, action, suit or
proceeding, or received in writing any claim or notice, which involves a claim
of infringement or misappropriation of any patents, trademarks, service marks,
domain names, copyrights or violation of any trade secret or other proprietary
right of any Person (nor is there any claim, action, suit or proceeding that
arose prior to such date that remains outstanding and unresolved). To the
knowledge of the Company or such Selling Shareholder, the manufacturing,
marketing, or sale of the products of the Company and the Subsidiaries do not
infringe upon, misappropriate or otherwise come into conflict with any patent,
trademark, service xxxx, copyright, trade secret or other proprietary right of
any Person. To the knowledge of the Company or such Selling Shareholder, no
other Person has interfered with or infringed upon any
12
Company Intellectual Property Rights or other proprietary information of the
Company or any Subsidiary.
(d) Except as disclosed in Section 3.13(d) of the
Disclosure Letter, each employee, agent, consultant or contractor of the Company
and the Subsidiaries who has materially contributed to or participated in the
creation or development of any copyrightable, patentable or Trade Secret
material on behalf of the Company or any of the Subsidiaries either: (i) is a
party to a contract under which the Company or one of the Subsidiaries is deemed
to be the original owner/author of all property rights therein; or (ii) has
executed an assignment or an agreement to assign in favor of the Company or one
of the Subsidiaries all right, title and interest in such material.
SECTION 3.14 EMPLOYEE PLANS. Section 3.14 of the Disclosure Letter
lists all plans or arrangements (including any retirement, health, life, shares,
bonus, compensation, incentive or fringe benefit plans) whether formal or
informal, (i) providing benefits for, or the welfare of, any or all of the
current or former employees, agents or directors of the Company and the
Subsidiaries (or the beneficiaries or dependents thereof), (ii) maintained by
the Company or any of its Subsidiaries, or (iii) to which the Company or any of
the Subsidiaries contributes or under which it has any liability (collectively,
"Employee Benefit Plans"). Except as set forth in Section 3.14 of the Disclosure
Letter, each Employee Benefit Plan fully complies and has fully complied with
the requirements of all material Brazilian Laws and all documents evidencing the
terms in intent of such Employee Benefit Plan both in form and in operation.
With respect to each Employee Benefit Plan, all required payments, premiums,
contributions, distributions, or reimbursements have been made or properly
accrued under applicable Brazilian Laws and the terms of such Employee Benefit
Plan. With respect to each Employee Benefit Plan, the Company has delivered or
made available to Purchaser, to the extent applicable, correct and complete
copies of the plan and trust documents and summary plan descriptions, all
filings required under any applicable Brazilian Law with respect to such
Employee Benefit Plan, and any correspondence between the Company or a
Subsidiary and any Governmental Entity with respect to such Employee Benefit
Plan. There is no liability to the Company or the Subsidiaries under any
severance, change of control or similar agreements or arrangements.
SECTION 3.15 TAX MATTERS. Except as disclosed in Section 3.15 of the
Disclosure Letter, all taxes arising under any Brazilian or other applicable
Law, including any income, profits, employment, sales, use, occupation, excise,
real property, personal property and ad valorem tax or any license or franchise
fee or similar tax or fee and all penalties and interest related thereto
(collectively, "Taxes"), due and payable by the Company or the Subsidiaries have
been paid or provided for in the Company Financial Statements and are not
delinquent. All Taxes not yet due have been fully accrued on the books of the
Company and the Subsidiaries and set forth in the Company Financial Statements
in accordance with Brazilian GAAP and adequate reserves have been established
therefor. Except as disclosed in Section 3.15 of the Disclosure Letter, there
are no pending claims asserted for Taxes against the Company or the Subsidiaries
or outstanding agreements or waivers extending the statutory period of
limitation applicable to any Tax Return of the Company or the Subsidiaries for
any period. Each of the Company and the Subsidiaries has duly and timely filed
all domestic and foreign Tax returns, reports and all other filings required to
be filed with respect to Taxes (collectively, "Tax Returns"), taking into
account any extensions for the filing thereof.
13
SECTION 3.16 TITLE TO PROPERTIES; ADEQUACY.
(a) Section 3.16 of the Disclosure Letter lists all of
the material real property owned by the Company or any of the Subsidiaries (the
"Owned Real Property") and all of the material leases (the "Leases") for real
property to which the Company or any of the Subsidiaries is a party. Each Lease
is in full force and effect. The Company has provided to Purchaser true and
complete copies of all of the Leases.
(b) The Company or one of the Subsidiaries has good and
marketable title to or valid leasehold interests, in all properties and assets
reflected in the Company Financial Statements (or acquired after the date of the
Company Financial Statements by the Company or the Subsidiaries), or not
reflected on the Company Financial Statements but used by the Company or the
Subsidiaries, including the Owned Real Property (collectively, the
"Properties"), free and clear of any title defects or Liens, except (i) Liens
securing debt reflected as liabilities on the December 31, 2003 balance sheet
included in the Company Financial Statements, (ii) Liens for current Taxes and
assessments not in default, (iii) mechanics', carriers', workers', repair
persons', statutory or common law Liens either not delinquent or being contested
in good faith and (iv) Liens, covenants, rights-of-way, building or use
restrictions, easements, exceptions, variances, reservations and other matters
or limitations of any kind, if any, which do not have an adverse effect on the
Company's or the Subsidiaries' use of the real property affected for the
purposes currently used.
(c) No Person other than the Company or the Subsidiaries
is currently entitled to possession of any of the properties of the Company or
the Subsidiaries, whether owned or leased by the Company or the Subsidiaries.
The buildings, structures and improvements owned or leased by the Company or the
Subsidiaries conform in all material respects to all applicable Brazilian Laws,
including zoning regulations, none of which would upon consummation of the
transactions contemplated hereby adversely interfere with the use of such
properties, buildings, structures or improvements for the purposes for which
they are now utilized. Except as set forth in Section 3.16 of the Disclosure
Letter, (i) each of the Properties is structurally and mechanically sound and in
good repair and operating condition, normal wear and tear excepted, and (ii) the
Properties constitute all of the properties that the Company and the
Subsidiaries need in connection with the operation of its business.
SECTION 3.17 CONTRACTS. Section 3.17 of the Disclosure Letter sets
forth an accurate and complete list of each written or oral agreement, contract,
obligation, promise, or undertaking (including any and all amendments thereto)
to which the Company or any of the Subsidiaries is a party or by which the
Company or any of the Subsidiaries is bound which (a) relates to the borrowing
of money or the guaranty of any obligation to borrow money; (b) involves
revenues or expenditures in excess of US$100,000 per annum (excluding sale
orders entered into in the ordinary course of business consistent with past
practice, contracts terminable with ninety (90) days' notice or less without
penalty, and such distribution, supplier and customer contracts as the Selling
Shareholders shall deliver to Purchaser after the Jaboatao Acceptance Date, but
at least ten (10) days prior to the Closing which contracts shall then
constitute Company Contracts); (c) is a collective bargaining agreement; (d)
obligates the Company or any of the Subsidiaries not to compete with any
business or which otherwise restrains or prevents the Company or any of the
Subsidiaries from carrying on any lawful business (excluding customary
restrictive covenants
14
contained in agreements identified pursuant to clause (b) above); (e) relates to
employment, compensation, severance, consulting or indemnification between the
Company or any of the Subsidiaries and any of their respective officers,
directors, employees or consultants who are entitled to compensation thereunder;
(f) relates to a Company Third Party Intellectual Property Right; or (g) is
otherwise material to the assets, business, operations or financial condition of
the Company and the Subsidiaries taken as a whole (collectively, the "Company
Contracts"). All of the Company Contracts are enforceable in all material
respects by the Company or the Subsidiary which is a party thereto in accordance
with their terms except to the extent that such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar Brazilian
Laws relating to creditors' rights generally, and is subject to general
principles of equity. Except as set forth in Section 3.17 of the Disclosure
Letter, neither the Company nor any of the Subsidiaries is in breach or default
under (and no event has occurred which with notice or the passage of time or
both would constitute a breach or default under) any Company Contract nor, to
the knowledge of the Company or such Selling Shareholder, is any other party to
any of the Company Contracts in default thereunder (and to the knowledge of the
Company or such Selling Shareholder, no event has occurred which with notice or
the passage of time or both would constitute a breach or default thereunder).
The Company has provided, or in the case of contracts delivered after the
Jaboatao Acceptance Date will provide, to Purchaser the material terms of all of
the Company Contracts.
SECTION 3.18 ACCOUNTS RECEIVABLE. The Company's and the Subsidiaries'
accounts receivable, including all accounts receivable that are "vendor"
financing guaranteed by the Company and all advances on export contracts: (a)
are valid and existing and collectable in the ordinary course of business
(subject to the bad debt reserves shown in the Company Financial Statements);
(b) represent monies due for goods sold and delivered or services rendered in
the ordinary course of business; and (c) are subject to no refunds or other
adjustments (except discounts for prompt payment given in the ordinary course of
business that are described Section 3.18 of the Disclosure Letter) or to any
defenses, rights of set-off, assignments, restrictions, security interests,
encumbrances or conditions enforceable by third parties on or affecting any of
them. The bad debt reserves in the Company Financial Statements are adequate and
calculated consistent with past practice.
SECTION 3.19 INSIDER INTERESTS. Except as set forth in Section 3.19 of
the Disclosure Letter, no Affiliate, officer, director, shareholder, member or
manager of the Company or any of the Subsidiaries (a) has any agreement with the
Company or any of the Subsidiaries or any interest in any property, real or
personal, tangible or intangible, including trade names or trademarks used in or
pertaining to its business, except for the normal rights as a shareholder or
member or (b) has any claim or cause of action against the Company or any of the
Subsidiaries, except for accrued compensation and benefits, expenses and similar
obligations incurred in the ordinary course of business with respect to
employees of the Company or any of the Subsidiaries.
SECTION 3.20 INSURANCE. The Company and each of the Subsidiaries
maintains the amount and scope of all insurance policies or contracts providing
coverage as summarized on Section 3.20 of the Disclosure Letter.
SECTION 3.21 CORPORATE RECORDS. The corporate record books (including
the registered share transfer register book and registered share register book)
of the Company and each of the
15
Subsidiaries are complete, accurate and up to date in all material respects with
all necessary signatures and set forth all meetings and actions taken by the
shareholders and directors (or members and managers, as applicable) of the
Company and each of the Subsidiaries and all transactions involving shares or
other equity units of the Company and each of the Subsidiaries (and contain all
canceled certificates).
SECTION 3.22 BROKERS, FINDERS AND INVESTMENT BANKERS. None of the
Company, any of the Subsidiaries, any Selling Shareholder or any of their
officers, directors or employees has employed any broker, finder or investment
banker or incurred any liability for any investment banking fees, financial
advisory fees, brokerage fees or finders' or similar fees in connection with the
transactions contemplated by this Agreement that would result in liability to
the Company or the Subsidiaries.
SECTION 3.23 ACCURACY OF DISCLOSURE LETTER, CERTIFICATES AND DOCUMENTS.
To the knowledge of the Company and such Selling Shareholder, all information
concerning the Company and the Subsidiaries contained in this Agreement, in any
certificate furnished to Purchaser pursuant hereto and in the Disclosure Letter
is both complete (in that, except as otherwise stated therein, it represents all
the information called for and does not omit to state any material fact
necessary to make the statements contained therein not misleading) and accurate
in all material respects; and all documents furnished to Purchaser pursuant to
this Agreement as being documents described in this Agreement or in the
Disclosure Letter are true and correct copies of the documents which they
purport to represent.
SECTION 3.24 LIST OF TOP TWENTY CUSTOMERS. Section 3.24 of the
Disclosure Letter sets forth (a) the name of each customer of the Company and
the Subsidiaries which was among the twenty customers which generated the
greatest amount of revenue during the year ended December 31, 2003 (the "Major
Customers").
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Selling Shareholders as
follows:
SECTION 4.1 ORGANIZATION. Purchaser is a corporation duly organized,
validly existing and in good standing under the Brazilian Laws and has the
corporate power and authority to own all of its properties and assets and to
carry on its business as it is now being conducted, and is duly qualified to do
business and is in good standing in all jurisdictions in which it is required to
be qualified and in which the failure to be so qualified would materially and
adversely affect the financial condition, business or results of operations of
Purchaser.
SECTION 4.2 AUTHORITY. Purchaser has the corporate power and authority
to execute and deliver this Agreement and any other agreements, instruments and
documents executed and delivered by Purchaser pursuant to this Agreement (this
Agreement and such other agreements, instruments and documents are collectively
referred to as the "Purchaser Delivered Agreements") and to consummate the
transactions contemplated on the part of Purchaser thereby. The execution and
delivery by Purchaser of the Purchaser Delivered Agreements and the consummation
by Purchaser of the transactions contemplated on its part thereby have been duly
authorized by its Board of Directors. No other corporate action on the part of
Purchaser is
16
necessary to authorize the execution and delivery of the Purchaser Delivered
Agreements by Purchaser or the consummation by Purchaser of the transactions
contemplated thereby. The Purchaser Delivered Agreements will, when executed and
delivered by Purchaser, constitute Purchaser's valid and binding obligations
enforceable against Purchaser in accordance with their terms, except (a) as such
enforcement may be limited by bankruptcy, reorganization, insolvency or other
Laws and court decisions relating to or affecting the enforcement of creditors'
rights generally (including statutory or other Laws regarding fraudulent
transfers), and (b) as to the availability of specific performance or other
equitable remedies.
SECTION 4.3 NO CONSENTS REQUIRED. Except as disclosed in Section 4.3 of
the disclosure letter delivered by Purchaser to the Selling Shareholder on the
date hereof (the "Purchaser Disclosure Letter"), no Authorization of or with any
Governmental Entity is required in connection with the execution and delivery of
the Purchaser Delivered Agreements by Purchaser or the consummation by Purchaser
of the transactions contemplated by, or other compliance with or performance
under, the Purchaser Delivered Agreements.
SECTION 4.4 ABSENCE OF VIOLATIONS OR CONFLICTS. The execution and
delivery of the Purchaser Delivered Agreements by Purchaser do not and the
consummation by Purchaser of the transactions contemplated thereby does not and
will not (a) violate or conflict with any provision of the Articles of
Incorporation or Bylaws of Purchaser or (b) violate or conflict with, or result
(with the giving of notice or the lapse of time or both) in a violation of or
constitute a default under, any injunction, judgment, decree or order of any
Government Entity to which Purchaser is a party or by which Purchaser or its
assets or properties is bound or any applicable Laws.
SECTION 4.5 BROKERS, FINDERS AND INVESTMENT BANKERS. Neither Rayovac,
Purchaser nor any of their officers, directors or employees has employed any
broker, finder or investment banker or incurred any liability for any investment
banking fees, financial advisory fees, brokerage fees or finders' or similar
fees in connection with the transactions contemplated by this Agreement.
SECTION 4.6 ACCURACY OF PURCHASER DISCLOSURE LETTER, CERTIFICATES AND
DOCUMENTS. All information concerning Purchaser contained in this Agreement, in
any certificate furnished to the Selling Shareholders pursuant hereto and in the
Purchaser Disclosure Letter is both complete (in that, except as otherwise
stated therein, it represents all the information called for and does not omit
to state any material fact necessary to make the statements contained therein
not misleading) and accurate; and all documents furnished to the Selling
Shareholders pursuant to this Agreement as being documents described in this
Agreement or in the Purchaser Disclosure Letter are true and correct copies of
the documents which they purport to represent.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF GUARANTOR
Guarantor represents and warrants to the Selling Shareholders as
follows:
SECTION 5.1 ORGANIZATION. Guarantor is a corporation duly organized,
validly existing and in good standing under the laws of the State of Wisconsin
and has the corporate power and authority to own all of its properties and
assets and to carry on its business as it is now being
17
conducted, and is duly qualified to do business and is in good standing in all
jurisdictions in which it is required to be qualified and in which the failure
to be so qualified would materially and adversely affect the financial
condition, business or results of operations of Guarantor.
SECTION 5.2 AUTHORITY. Guarantor has the corporate power and authority
to execute and deliver this Agreement and any other agreements, instruments and
documents executed and delivered by Guarantor pursuant to this Agreement (this
Agreement and such other agreements, instruments and documents are collectively
referred to as the "Guarantor Delivered Agreements") and to consummate the
transactions contemplated on the part of Guarantor thereby. The execution and
delivery by Guarantor of the Guarantor Delivered Agreements and the consummation
by Guarantor of the transactions contemplated on its part thereby have been duly
authorized by its Board of Directors. No other corporate action on the part of
Guarantor is necessary to authorize the execution and delivery of the Guarantor
Delivered Agreements by Guarantor or the consummation by Guarantor of the
transactions contemplated thereby. The Guarantor Delivered Agreements will, when
executed and delivered by Guarantor, constitute Guarantor's valid and binding
obligations enforceable against Guarantor in accordance with their terms, except
(a) as such enforcement may be limited by bankruptcy, reorganization, insolvency
or other Laws and court decisions relating to or affecting the enforcement of
creditors' rights generally (including statutory or other Laws regarding
fraudulent transfers), and (b) as to the availability of specific performance or
other equitable remedies.
SECTION 5.3 NO CONSENTS REQUIRED. No Authorization of or with any
Governmental Entity is required in connection with the execution and delivery of
the Guarantor Delivered Agreements by Guarantor or the consummation by Guarantor
of the transactions contemplated by, or other compliance with or performance
under, the Guarantor Delivered Agreements.
SECTION 5.4 ABSENCE OF VIOLATIONS OR CONFLICTS. The execution and
delivery of the Guarantor Delivered Agreements by Guarantor do not and the
consummation by Guarantor of the transactions contemplated thereby does not and
will not (a) violate or conflict with any provision of the Articles of
Incorporation or Bylaws of Guarantor or (b) violate or conflict with, or result
(with the giving of notice or the lapse of time or both) in a violation of or
constitute a default under, any injunction, judgment, decree or order of any
Government Entity to which Guarantor is a party or by which Guarantor or its
assets or properties is bound or any applicable Laws.
ARTICLE VI.
ADDITIONAL COVENANTS AND AGREEMENTS
SECTION 6.1 CONDUCT OF BUSINESS PENDING THE CLOSING. During the period
from the date hereof to the Closing Date (except as required by Law or as
contemplated by this Agreement):
(a) OPERATION OF THE COMPANY IN THE ORDINARY COURSE OF
BUSINESS. The Selling Shareholders shall cause each of the Company and the
Subsidiaries to operate its business in the ordinary and usual course in
substantially the same manner as heretofore conducted and to preserve intact its
business organization, to keep its properties adequately insured, to keep
available the services of its officers and employees and to maintain
satisfactory
18
relationships with suppliers, distributors, customers and others having business
relationships with it. The Selling Shareholders shall cause each of the Company
and the Subsidiaries to prepare and file all Tax Returns and amendments thereto
required to be filed by it during the period from the date of this Agreement
until the Closing, and shall allow Purchaser, at its request, to review all such
Tax Returns prior to the filing thereof, which review shall not interfere with
the timely filing thereof.
(b) FORBEARANCES BY THE COMPANY. Without limiting the
generality of Section 6.1(a), without the prior written consent of Purchaser,
which consent shall not be unreasonably withheld, the Selling Shareholders shall
not allow the Company or any of the Subsidiaries to:
(i) incur any Liability other than current
Liabilities incurred in the ordinary and usual course of business, or
fail to pay any Liability when due or take or fail to take any action,
the taking of which, or the failure to take of which, would permit any
Liability to be accelerated;
(ii) assume, guarantee, endorse or otherwise
become responsible for the obligations of any other Person other than
endorsements of negotiable instruments in the ordinary course of
business, or make any loans or advances to any Person;
(iii) declare, set aside or pay any dividend in
cash or property with respect to its capital shares or declare or make
any distribution in cash or property on, redeem, or purchase or
otherwise acquire any Shares, or split, combine or otherwise similarly
change the outstanding Shares, or authorize the creation or issuance of
or issue or sell any capital shares or any securities or obligations
convertible into or exchangeable for, or giving any Person any right to
acquire from it, any of its capital shares, or agree to take any such
action;
(iv) mortgage, pledge or otherwise encumber any
property or asset, except in the ordinary and usual course of business;
(v) sell, lease, transfer or dispose of any of
its properties or assets, waive or release any rights or cancel,
compromise, release or assign any indebtedness owed to it or any claims
held by it, except for sales of products in the ordinary and usual
course of business and except as contemplated by this Agreement;
(vi) make any investments of a capital nature
either by purchase of shares or securities, contributions to capital,
property transfers or otherwise, or by the purchase of any property or
assets of any other Person except in the ordinary and usual course of
business;
(vii) fail to perform its material obligations
under material contracts (except those being contested in good faith)
or enter into, assume or amend in any material respect any material
contract or commitment other than contracts to purchase or sell goods
or provide services entered into in the ordinary and usual course of
business;
19
(viii) except for regularly scheduled increases in
accordance, both as to timing and amount, with normal prior practice
and with applicable Law, increase in any manner the compensation or
fringe benefits of any of its officers or employees or pay or agree to
pay any pension or retirement allowance not required by any existing
plan or agreement to any such officers or employees, or commit itself
to or enter into any employment agreement or any incentive
compensation, deferred compensation, profit sharing, stock option,
share purchase, savings, consulting, retirement, pension or other
"fringe benefit" plan, award or arrangement with or for the benefit of
any officer, employee or other Person;
(ix) permit any insurance policy naming it as a
beneficiary or a loss payable payee to be canceled or terminated or any
of the coverage thereunder to lapse, unless it makes reasonable efforts
to obtain simultaneously with such termination or cancellation
replacement policies providing substantially the same coverage on
commercially reasonable terms and, if so available, such policies are
in full force and effect;
(x) amend its Bylaws or other governing
documents;
(xi) enter into any union, collective bargaining
or similar agreement;
(xii) except for trade accounts payable disputed
in good faith, fail to pay any trade accounts payable or other amount
due to its suppliers and trade creditors as they become due in
accordance with their terms;
(xiii) sell any inventory other than in the
ordinary course of business;
(xiv) borrow any money against accounts receivable
or otherwise factor any accounts receivable other than pursuant to
contracts or agreements entered into by it prior to October 1, 2003;
(xv) fail to cause the amount of working capital
of the Company on the Closing Date (as determined in accordance with
Brazilian GAAP) to be at least as much as the amount of working capital
of the Company on December 31, 2002;
(xvi) consolidate or merge with any corporation or
other entity; or
(xvii) enter into an agreement to take any of the
actions described in clauses (i) through (xvi).
In connection with the continued operation of the business of the Company and
the Subsidiaries between the date of this Agreement and the Closing Date, the
Selling Shareholders shall confer in good faith on a regular basis with one or
more representatives of Purchaser designated in writing to receive reports on
operational matters of materiality and the general status of ongoing operations.
The Selling Shareholders acknowledge that Purchaser does not waive any rights it
may have under this Agreement as a result of this covenant to engage in
consultations.
20
(c) INVESTIGATION. After the date of this Agreement, the
Selling Shareholders shall cause the Company and the Subsidiaries to permit
Purchaser to make or cause to be made such investigation of the business and
properties of the Company and the Subsidiaries and their financial and legal
condition as Purchaser deems necessary or advisable to familiarize itself
therewith, provided that such investigations shall not unreasonably interfere
with normal operations of the Company or the Subsidiaries and that certain
distribution, supplier and customer contracts shall not be investigated until
delivered pursuant to Section 3.17. The Selling Shareholders shall cause the
Company and the Subsidiaries to permit Purchaser and its authorized
representatives to have full access to the premises, books and records of the
Company and the Subsidiaries with reasonable prior notice and at reasonable
hours, and to cause the Company to furnish Purchaser with such financial and
operating data and other information with respect to the Company and the
Subsidiaries as Purchaser may from time to time reasonably request. Except as
set forth in Section 3.9, no investigation by Purchaser heretofore or hereafter
made shall affect the representations and warranties of the Selling
Shareholders, and each such representation and warranty shall survive any such
investigation subject to Article IX.
SECTION 6.2 COMMERCIALLY REASONABLE EFFORTS; FURTHER ASSURANCES;
COOPERATION. Subject to the other provisions of this Agreement, the Parties
hereto shall in good faith perform their obligations under this Agreement and
shall each use their commercially reasonable efforts to do, or cause to be done,
all things necessary, proper or advisable under applicable Law to obtain all
Authorizations and satisfy all conditions to the obligations of the Parties
under this Agreement and to cause the transactions contemplated by this
Agreement to be carried out promptly in accordance with the terms hereof and
shall cooperate fully with each other and their respective officers, directors,
employees, agents, counsel, accountants and other designees in connection with
any steps required to be taken as part of their respective obligations under
this Agreement. Upon the execution of this Agreement and thereafter, each Party
shall take such actions and execute and deliver such documents as may be
reasonably requested by the other Parties hereto in order to consummate more
effectively the transactions contemplated by this Agreement. Without limiting
the foregoing, the Selling Shareholders shall cause the Company and the
Subsidiaries and their accountants to cooperate with Purchaser in the
preparation of and filing, in accordance with applicable Law, with the United
States Securities and Exchange Commission (the "SEC") and other Governmental
Entities of required reports of Purchaser with respect to such financial
statements and historical pro forma financial information of the Company and the
Subsidiaries as may be required pursuant to the requirements of the SEC for
filing under Form 8-K.
SECTION 6.3 EXPENSES. Except as otherwise provided in this Agreement,
whether or not the transactions contemplated hereby are consummated, all costs
and expenses (including any brokerage commissions or any finder's or investment
banker's fees and including attorneys' and accountants' fees) incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the Party incurring such expenses, and each of the Selling Shareholders
acknowledges and agrees that all fees and expenses of its advisors in connection
with this Agreement and the transactions contemplated hereby, even if such fees
and expenses relate to the Company or the Subsidiaries or corporate action, are
the expenses of such Selling Shareholder, and not of the Company or the
Subsidiaries.
21
SECTION 6.4 NO SOLICITATION OF TRANSACTIONS. Prior to the termination
and abandonment of this Agreement, none of the Selling Shareholders will, and
each of the Selling Shareholders shall cause the Company and its and their
Affiliates that they control, officers, directors and representatives not to:
(a) solicit, initiate or encourage submission of proposals or offers from any
Person other than Purchaser relating to any acquisition or purchase of all or a
material part of the stock or assets of, or any merger, consolidation, share
exchange or business combination with, or any recapitalization, restructuring or
issuance or offering of debt or equity securities of, the Company or any of the
Subsidiaries (an "Acquisition Proposal"); or (b) participate in any discussions
or negotiations regarding, or furnish to any Person other than Purchaser and its
representatives, any information with respect to, or otherwise cooperate in any
way or assist, facilitate or encourage, any Acquisition Proposal by any Person
other than Purchaser. The Selling Shareholders will immediately cease and cause
to be terminated any existing activity, discussions or negotiations with any
Person other than Purchaser and its representatives conducted prior to the
execution and delivery of this Agreement with respect to any Acquisition
Proposal. If, notwithstanding the foregoing, any of the Selling Shareholders or
any of their Affiliates or representatives or the Company or any Subsidiary
should receive any Acquisition Proposal or any inquiry regarding any such
proposal from a third party, then the recipient shall promptly inform Purchaser.
SECTION 6.5 PUBLIC ANNOUNCEMENTS. The timing and content of all public
announcements regarding any aspect of this Agreement to the financial community,
Governmental Entities, employees or the general public by any Party hereto shall
be subject to the other Parties' prior approval; provided, however, that nothing
herein shall prohibit the Parties from complying with any order or decree of any
court of competent jurisdiction or Governmental Entity and to make any mandatory
announcements and disclosure in accordance and to the extent determined by
applicable Law.
SECTION 6.6 NONCOMPETITION; NONDISCLOSURE.
(a) SCOPE AND REASONABLENESS OF RESTRICTIONS. Each of the
Selling Shareholders acknowledges that the Company and the Subsidiaries are
engaged in the business of designing, developing, manufacturing and selling
Consumer Batteries (as defined in Exhibit D) (the "Business") and that the
Company conducts this Business throughout Brazil (the "Territory") and that
Purchaser would not purchase the Shares without the assurance that each of the
Selling Shareholders will not engage in the activities prohibited by this
Section 6.6 for the periods set forth herein, and to induce Purchaser to
consummate the purchase of the Shares, each of the Selling Shareholders agrees
to restrict its actions and those of its Affiliates under its control throughout
the Territory and otherwise as provided in this Section 6.6. Each of the Selling
Shareholders acknowledges that such restrictions are reasonable in light of the
business of Purchaser and the benefits of the transactions contemplated by this
Agreement to the Selling Shareholders.
(b) USE OF NAMES. Each of the Selling Shareholders agrees
that from and after the Closing neither such Selling Shareholder nor any of its
Affiliates under its control will, either individually or jointly, manage,
operate, join, control or participate in the ownership, management or control of
any business under the name or style of the Company, or any name or
22
style incorporating any such name or style or any name or style confusingly
similar to such name or style.
(c) NONCOMPETITION. During the period commencing on the
Closing Date and terminating on the third (3rd) anniversary thereof (the
"Noncompete Period"), none of the Selling Shareholders nor any of their
Affiliates under their control shall either engage directly in the Business
within the Territory, or act as consultant, advisor, independent contractor,
officer, manager, employee, principal, agent, trustee of any Person, or directly
or indirectly own more than twenty percent (20%) of the outstanding capital
stock of any corporation, or be a member or employee of any partnership or any
owner or employee of any other business, any of which is engaged in the Business
in the Territory.
(d) NO INTERFERENCE WITH CUSTOMERS. During the Noncompete
Period, none of the Selling Shareholders nor any of their Affiliates under their
control shall induce a Customer: (i) to patronize any Person engaged in the
Business in the Territory (other than Purchaser or an Affiliate thereof); or
(ii) to withdraw, curtail or cancel such Customer's business with Purchaser or
the Company or a Subsidiary. As used in this Section 6.6, "Customer" means any
actual customer of Purchaser, the Company or the Subsidiaries, or any potential
customer of Purchaser or the Company or a Subsidiary, served or actually
solicited by the Company or a Subsidiary within the 12-month period prior to the
Closing Date.
(e) NO INTERFERENCE WITH EMPLOYEES. Each Selling
Shareholder agrees that, during the Noncompete Period, none of the Selling
Shareholders nor any of their Affiliates under their control will directly or
indirectly request or induce any employee to terminate his employment with
Purchaser or its Affiliates and accept employment with another Person engaged in
the Business in the Territory or hire during the Noncompete Period, any employee
within twelve (12) months after termination of such Person's employment with
Purchaser or any of its Affiliates.
(f) TRADE SECRETS; CONFIDENTIAL INFORMATION.
(i) Each of the Selling Shareholders recognizes
and acknowledges that each has had access to certain highly sensitive,
special, unique information of the Company and the Subsidiaries that is
confidential or proprietary. Each of the Selling Shareholders hereby
covenants and agrees that each Selling Shareholder and its Affiliates
under its control shall not (A) as to Trade Secrets, as long as they
remain Trade Secrets, and (B) as to Confidential Information, during
the Noncompete Period, use or disclose any Trade Secrets or
Confidential Information, except for disclosures to authorized
representatives of the Company or Purchaser; provided, however, that
the foregoing restrictions shall not apply to items that have entered
the public domain other than by an unauthorized disclosure by any
Selling Shareholder or their Affiliates under their control, any items
required to be disclosed by a Governmental Entity or under applicable
Laws, or Confidential Information received subsequently from third
parties and not subject to confidentiality restrictions.
(ii) For purposes of this Agreement, (A) "Trade
Secret" means any information, including, but not limited to, technical
or non-technical data, a formula, a
23
pattern, a compilation, a program, a device, a method, a technique, a
set of guidelines, a procedure, a drawing, a process, financial data,
financial plans, product plans, or a list of actual or potential
customers or suppliers of the Company or the Subsidiaries, whether
currently existing or hereafter developed or acquired by the Company or
the Subsidiaries, that derives economic value, actual or potential,
from not being generally known to and not being readily ascertainable
by proper means by other Persons who can obtain economic value from its
disclosure or use and is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy or otherwise
constitutes a trade secret under applicable Law; and (B) "Confidential
Information" is any data or information of the Company or any of the
Subsidiaries other than Trade Secrets, whether currently existing or
hereafter developed or acquired, which is competitively sensitive and
not generally known to the public.
(iii) Each Selling Shareholder acknowledges that
all Trade Secrets and Confidential Information are and shall remain the
sole, exclusive and valuable property of the Company or a Subsidiary or
Purchaser, and that each Selling Shareholder and its Affiliates under
its control do not have and shall acquire no right, title or interest
therein. Any and all printed, typed, written or other material that any
Selling Shareholder or its Affiliates under its control may have or
obtain with respect to Trade Secrets or Confidential Information
(including all copyrights therein) shall be and remain the exclusive
property of the Company or a Subsidiary or Purchaser, and any and all
such material (including any copies) shall, upon request of Purchaser,
be promptly delivered by such Selling Shareholder or its Affiliates
under its control to the Company or Purchaser.
(g) REMEDIES. Each of the Selling Shareholders
acknowledges that any violation of the provisions of this Section 6.6 may cause
irreparable harm to Purchaser and that damages are not an adequate remedy. Each
Selling Shareholder therefore agrees that the Company and Purchaser shall be
entitled to an injunction by an appropriate court in the appropriate
jurisdiction, enjoining, prohibiting and restraining any Selling Shareholder or
its Affiliates under its control from the continuance of any such violation, in
addition to any monetary damages that might occur by reason of the violation of
this Section 6.6. The remedies provided in this Section 6.6 are cumulative and
shall not exclude any other remedies to which any Party to this Agreement may be
entitled under this Agreement or applicable Law, and the exercise of a remedy
shall not be deemed an election excluding any other remedy other than punitive
damages (any such claim by any other Party to this Agreement being hereby
waived).
(h) MODIFICATION. The Parties agree that should any
portion, provision or clause of this Section 6.6 be deemed too broad to permit
enforcement to its full extent, then it shall be enforced to the maximum extent
permitted by Law, and each Selling Shareholder hereby consents and agrees that
such scope may be judicially modified accordingly in any proceeding brought to
enforce such restriction.
(i) COVENANTS INDEPENDENT. The covenants and agreements
set forth in this Section 6.6 shall be deemed and shall be construed as separate
and independent covenants and agreements, and, should any portion of such
covenants and agreements be held invalid, void or unenforceable by any court of
competent jurisdiction, such invalidity, voidness, or
24
unenforceability shall in no way render invalid, void or unenforceable any other
portion thereof or any separate covenant not declared invalid, void or
unenforceable; and this Section 6.6 shall in that case be construed as if the
void, invalid or unenforceable portions were omitted.
SECTION 6.7 ADDITIONAL FINANCIAL STATEMENTS. As soon as reasonably
practicable after the end of every month and prior to the Closing Date (but in
no event later than the twentieth (20th) day of the following month) beginning
with the month in which this Agreement is signed, the Selling Shareholders shall
deliver or shall cause the Company to deliver to Purchaser an unaudited
consolidated balance sheet of the Company and the Subsidiaries as of the
applicable scheduled end of such month, and a related combined or consolidated
statement of operations for such month, which meet the standard for financial
statements set forth in Section 3.6.
SECTION 6.8 NO TRANSFERS. After the date of this Agreement, none of the
Selling Shareholders shall sell, pledge, encumber or otherwise transfer any or
all of their Shares or any interest therein.
SECTION 6.9 RELEASE OF COMPANY. Effective as of the Closing Date, each
of the Selling Shareholders does hereby unconditionally and irrevocably forever
release and discharge the Company and the Subsidiaries from all obligations and
liabilities to the Selling Shareholders, all agreements (including the Microlite
S.A. Shareholders' Agreement dated December 23, 1996) and understandings
involving the Selling Shareholders other than the Shareholder Delivered
Agreements, and all claims and causes of action (whether at law or in equity) of
the Selling Shareholders against the Company and the Subsidiaries arising prior
to the Closing Date.
SECTION 6.10 ACCESS TO BOOKS AND RECORDS. After the Closing Date, and
until the later of the seventh (7th) anniversary of the Closing Date or the day
on which the last pending tax assessment or administrative proceeding regarding
periods prior to the Closing Date is terminated, each Party will permit the
others to have access to the books and records relating to the Company's and the
Subsidiaries' business in its possession and to make copies of them upon the
following conditions: (a) the requesting Party providing notice to the other
representing that it has a valid business reason for the request for access and
(b) the access being at such times and on such other reasonable conditions
appropriate to avoid any material interference with the other Party's business
operations.
SECTION 6.11 TRADEMARK AND TRADENAME RELEASE. All Parties to this
Agreement other than Rayovac and Purchaser hereby, effective as of the Closing
Date, unconditionally and irrevocably forever waive and release all rights to
use all "Rayovac" trade names and trademarks and disclaim any ownership thereof.
SECTION 6.12 ANTITRUST AUTHORITY APPROVAL.
(a) Purchaser shall be responsible for timely submitting
the transactions contemplated by this Agreement to the approval of the Conselho
Administrativo de Defesa Economica - XXXX, Secretaria de Direito Economico do
Ministerio da Justica - SDE and Secretaria de Acompanhamento Economico do
Ministerio da Fazenda - SEAE (jointly referred
25
to as "XXXX"). The Selling Shareholders shall cooperate with and provide
assistance to Purchaser in obtaining the XXXX approval.
(b) The Parties agree to consult and cooperate with and
provide assistance to each other in obtaining the XXXX approval and giving all
necessary notices to and making all necessary filings with and applications and
submissions to, or filing with XXXX as soon as reasonably practicable after the
date of this Agreement. Purchaser shall bear all risks and any and all costs,
including but not limited to filing costs associated with obtaining XXXX
approval and performing any obligations and restrictions imposed by it. The
Purchaser agrees to comply at its sole expense with all terms established by
XXXX as a condition to granting such approval. The Parties agree that securing
XXXX approval is not a condition to the Purchaser's obligation to effect the
Closing.
SECTION 6.13 CONFIDENTIALITY. In addition to the obligations of the
Selling shareholders under Section 6.6(f), until the third (3rd) anniversary of
the date hereof, each of Rayovac and Purchaser, on the one hand, and the Selling
Shareholders on the other, shall and shall cause its Affiliates under its
control and its and their representatives and advisors to keep secret and
confidential and to not use or disclose (except for the specific purpose of
evaluating the transactions contemplated by this Agreement) all non-public
information regarding the Company and the other Parties (except that, if the
Closing occurs, such restrictions shall not apply to Rayovac's or Purchaser's
use or disclosure of information regarding the Company or the Subsidiaries) that
is acquired by or disclosed to it or its Affiliates in connection with the
evaluation or negotiation of the transactions contemplated by this Agreement.
These restrictions shall not apply to any information that (a) was, is now, or
becomes generally available to the public (but not as a result of a breach of
any duty of confidentiality by which the Party receiving such information (the
"Receiving Party") and its representatives and advisors are bound); (b) is
disclosed to the Receiving Party by a third party not subject to any duty of
confidentiality with respect to such information; (c) the Receiving Party
demonstrates is developed independently by it without the use of the any such
non-public information; or (d) is required by applicable Law to be disclosed,
but then only (i) to the extent disclosure is required and (ii) after giving the
Party disclosing such information notice of such obligation so that it may seek
a protective order or other similar or appropriate relief. If this Agreement is
terminated prior to the Closing, each Receiving Party and their Affiliates under
their control and their representatives and advisors will promptly return to the
other Parties or destroy all such data, information and other written material
(including all copies thereof) obtained by such Receiving Party, and such
Receiving Party will make no further use whatsoever of any of such or the
information and knowledge contained therein or derived therefrom.
SECTION 6.14 MICROPAR. The Selling Shareholders will cause Micropar
Ltda. ("Micropar") to perform all of its obligations and pay all of its debts
and liabilities in accordance with their terms, subject to the limitations
contained in Article IX (including the cap in Section 9.11(b)). Prior to the
Closing, the Selling Shareholders will cause the assets and non-Tax liabilities
of the Company and the Subsidiaries relating to Micropar to be eliminated from
the consolidated balance sheet of the Company and the Subsidiaries at no cost to
the Company or the Subsidiaries and shall use best efforts to have the tax
liabilities so eliminated.
26
SECTION 6.15 SHAREHOLDER AGREEMENTS. As of the Closing, all agreements
among any shareholders or among any shareholders and the Company related to the
Shares (including the Option) are hereby terminated at no cost to the Company.
SECTION 6.16 INVESTIGATION OF ENVIRONMENTAL CONDITIONS AT THE JABOATAO
FACILITY. The Parties will jointly conduct an investigation of the environmental
condition of the groundwater at the Jaboatao facility (other than such
environmental conditions that will be included on the Disclosure Letter that
were taken into account in determining the consideration hereunder as indicated
theron) ("Jaboatao Facility Environmental Conditions"). Each Party may hire and
pay for its own environmental consultant for this purpose. Through such
investigation, the Parties will estimate whether the "expected probable case"
liabilities to the Company and the Subsidiaries related to the Jaboatao Facility
Environmental Conditions will exceed US$5,000,000. As soon as practicable, the
Parties shall obtain such estimates and notify the other Parties as to whether
such Party believes that the estimate exceeds US$5,000,000 and whether such
Party elects to terminate this Agreement. Any Party terminating this Agreement
pursuant to the foregoing sentence must reasonably believe that such estimate
exceeds US$5,000,000. If no Party elects to terminate this Agreement, the date
on which the last of such notices is delivered shall be known as the "Jaboatao
Acceptance Date". If this Agreement has not been terminated by the Jaboatao
Acceptance Date, then, if the other conditions to the Closing (other than
Closing date items) are satisfied, then the Company will thereafter notify the
appropriate Governmental Entities of any discovered Jaboatao Facility
Environmental Conditions, if appropriate.
SECTION 6.17 CUSTOMER INVESTIGATION. After Jaboatao Acceptance Date,
the Company and the Selling Shareholders shall allow Purchaser reasonable access
to the Major Customers for the purpose of making a due diligence investigation.
SECTION 6.18 DISCLOSURE LETTER. As of the date of this Agreement, the
Disclosure Letter referenced throughout Article III of this Agreement has not
been delivered. Within 14 days following the date of this Agreement, the Company
and the Selling Shareholders shall deliver such Disclosure Letter to Purchaser.
If Purchaser is not reasonably satisfied with the form and content of such
Disclosure Letter, then Purchaser shall give Tabriza and VARTA written notice of
such dissatisfaction (the "Disclosure Notice") within 10 days of Purchaser's
receipt of the draft Disclosure Letter from the Selling Shareholders and
Purchaser may, within 10 days thereafter, terminate this Agreement.
SECTION 6.19 FOREIGN CURRENCY. After the date of this Agreement,
Tabriza and Purchaser will work together using reasonable best efforts to
develop an approach to optimize the foreign currency impact on the business of
the Company and the Subsidiaries.
SECTION 6.20 RELEASE OF COMFORT LETTERS. As soon as practicable after
the Closing, but in no event later than one hundred twenty (120) days following
the Closing, Purchaser will cause the comfort letters issued by VARTA or its
Affiliates to financial institutions on behalf of the Company and the
Subsidiaries to be released, and VARTA will cooperate with Purchaser to minimize
any disruption related thereto.
27
ARTICLE VII.
CONDITIONS PRECEDENT TO THE CLOSING
SECTION 7.1 CONDITIONS TO OBLIGATIONS OF PURCHASER. Purchaser's
obligation to consummate the purchase of the Shares as provided for by this
Agreement and the other transactions contemplated hereby is subject to the
fulfillment, prior to or at the Closing, of each of the following conditions
(any or all of which may be waived by Purchaser):
(a) CONSENTS, AUTHORIZATIONS, ETC. Except for the
approval of XXXX, the Authorizations of or with any Governmental Entity and the
Authorizations of any nongovernmental third party which are required for, or in
connection with, the execution and delivery of this Agreement by the Selling
Shareholders and the consummation by the Selling Shareholders of the
transactions contemplated hereby shall have been obtained or made.
(b) INJUNCTION, ETC. The consummation of the transactions
contemplated hereby will not violate the provisions of any injunction, judgment,
decree, order or Law applicable or effective with respect to Purchaser or
Guarantor or its officers and directors. No suit or proceeding shall have been
instituted by any Person, or, to the knowledge of Purchaser, shall have been
threatened by any Governmental Entity, which has not been withdrawn, dismissed
or otherwise eliminated, and which seeks (i) to prohibit, restrict or delay
consummation of the transactions contemplated hereby or to limit in any material
respect the right of Purchaser to control the business of the Company and the
Subsidiaries after the Closing Date, or (ii) to subject Purchaser or Guarantor
or its directors or officers to material liability on the ground that it or they
have violated any Law or otherwise acted improperly in relation to the
transactions contemplated by this Agreement.
(c) REPRESENTATIONS AND WARRANTIES; COVENANTS AND
AGREEMENTS. The representations and warranties of the Selling Shareholders
contained in this Agreement shall have been true and correct at the date hereof
and, except for changes contemplated in this Agreement, shall also be true and
correct at and as of the Closing Date in all material respects, with the same
force and effect as if made at and as of the Closing Date, except that
representations and warranties that are confined to a specified date shall speak
only as of such date, and each Selling Shareholder shall have performed or
complied (or cured any noncompliance) with all agreements and covenants required
by this Agreement to be performed or complied with by such Selling Shareholder
at or prior to the Closing Date.
(d) CERTIFICATE. Each of the Selling Shareholders shall
have delivered to Purchaser a certificate, dated as of the Closing Date,
executed on its behalf by an authorized officer, to the effect that the
conditions specified in Section 7.1(c) have been satisfied.
(e) NO MATERIAL ADVERSE CHANGE. Since December 31, 2003,
there shall not have been any change, development, event or condition that has
resulted in, or could be reasonably expected to result in, a material adverse
effect on the operations, financial condition, or business of the Company and
the Subsidiaries, taken as a whole.
(f) ALL SHARES TRANSFERRED, ETC.. It shall be a condition
to Purchaser's obligation to purchase any of the Shares that all of the Shares
(other than the Remaining Shares)
28
are purchased by Purchaser at the Closing, and Purchaser shall be satisfied in
Purchaser's sole discretion that (i) the holder or holders of the of the
Remaining Shares shall have no rights to dividends or distributions, and no
voting rights or other rights to participate in or influence the conduct of the
business of the Company, and (ii) Purchaser will be able to obtain the Remaining
Shares in accordance with this Agreement (which may require Tabriza to obtain an
agreement between Purchaser and the Baratas).
(g) OPERATION OF THE COMPANY. During the period from
December 31, 2003 to the Closing Date, the Company and the Subsidiaries shall
have acted in accordance with Section 6.1(a) and shall not have taken any action
described in Section 6.1(b).
(h) DELIVERIES. The Selling Shareholders shall have
delivered or caused to be delivered all of the documents described in Section
8.1.
(i) MAJOR CUSTOMERS. Purchaser shall be reasonably
satisfied from its due diligence investigation of the Major Customers pursuant
to Section 6.17 that such Major Customers do not intend to either terminate
relationships with the Company and the Subsidiaries or reduce purchases from the
Company and the Subsidiaries which, in the aggregate, would be reasonably likely
to result in a material impact on the business of the Company and the
Subsidiaries.
(j) COMPANY CONTRACTS. Purchaser shall not have notified
the Selling Shareholders of its dissatisfaction with the Company Contracts being
delivered at such later time as referenced in Section 3.17 within 5 days of
receipt thereof.
(k) 2003 AUDITED FINANCIAL STATEMENTS. The debt and
EBITDA of the Company and the Subsidiaries reflected in the 2003 Audited
Financial Statements shall be materially the same as the debt and the EBITDA
reflected in the Company Financial Statements for the year ended December 31,
2003.
SECTION 7.2 CONDITIONS TO OBLIGATIONS OF THE SELLING SHAREHOLDERS. The
obligation of the Selling Shareholders to consummate the sale of the Shares as
provided for by this Agreement and the other transactions contemplated hereby is
subject to the fulfillment, prior to or at the Closing, of each of the following
conditions (any or all of which may be waived by the Selling Shareholders):
(a) CONSENTS, AUTHORIZATIONS, ETC. The Authorizations of
or with any Governmental Entity and the Authorizations of any nongovernmental
third party which are required for, or in connection with, the execution and
delivery of this Agreement by Purchaser and the consummation by Purchaser of the
transactions contemplated hereby shall have been obtained or made, except where
the failure to obtain such Authorization would not have a material adverse
effect on the ability of Purchaser to consummate the transactions contemplated
by this Agreement.
(b) INJUNCTION, ETC. The consummation of the transactions
contemplated hereby will not violate the provisions of any injunction, judgment,
decree, order or Law applicable or effective with respect to the Selling
Shareholders or their officers and directors. No suit or proceeding shall have
been instituted by any Person, or, to the knowledge of any of the
29
Selling Shareholders, shall have been threatened by any Governmental Entity
which has not been withdrawn, dismissed or otherwise eliminated, and which seeks
(i) to prohibit, restrict or delay consummation of the transactions contemplated
hereby or (ii) to subject the Selling Shareholders or their directors or
officers to material liability on the ground that they have violated any Law or
otherwise acted improperly in relation to the transactions contemplated by this
Agreement.
(c) REPRESENTATIONS AND WARRANTIES; COVENANTS AND
AGREEMENTS. The representations and warranties of Purchaser and Guarantor
contained in this Agreement shall have been true and correct at the date hereof
and, except for changes contemplated in this Agreement, shall also be true and
correct at and as of the Closing Date, with the same force and effect as if made
at and as of the Closing Date, except that representations and warranties that
are confined to a specified date shall speak only as of such date, and Purchaser
and Guarantor shall have performed or complied (or cured any noncompliance) with
all agreements and covenants required by this Agreement to be performed or
complied with by it at or prior to the Closing Date.
(d) CERTIFICATE. Purchaser and Guarantor shall have
delivered to the Selling Shareholders a certificate, dated as of the Closing
Date, executed on behalf of Purchaser and Guarantor by an authorized officer of
Purchaser and Guarantor, respectively, to the effect that the conditions
specified in Section 7.2(c) have been satisfied.
(e) DELIVERIES. Purchaser shall have delivered or caused
to be delivered all of the documents described in Section 8.2 and 8.3.
ARTICLE VIII.
ITEMS TO BE DELIVERED AT CLOSING
SECTION 8.1 TO BE DELIVERED BY THE SELLING SHAREHOLDERS. At the
Closing, the Selling Shareholders shall deliver, or cause to be delivered, to
Purchaser the following:
(a) The certificate referred to in Section 7.1(d).
(b) Letters of resignation and release in forms
reasonably satisfactory to Purchaser, effective as of the Closing Date, from
each of the officers and directors of the Company and the Subsidiaries listed in
Section 8.1(b) of the Disclosure Letter.
(c) Evidence of the transfer of record ownership of the
Shares (other than the Remaining Shares) and a new certificate or certificates
for such Shares.
(d) Evidence of the transfer of record ownership of the
four (4) Shares owned by the members of the Conselho de Administracao as set
forth on Exhibit A to the person or persons designated by Purchaser.
(e) The Escrow Agreement.
(f) Opinions from Linklaters SCDE or Xxxxxxx Penteado,
Xxxxxxxxx e Lefosse Advogados, counsel to VARTA, and Xxxxxxx, Mussnich & Aragao,
counsel to Tabriza, dated as of the Closing Date, each in a form reasonably
satisfactory to Purchaser, as to the authority of the
30
Selling Shareholders to enter into and perform the Shareholder Delivered
Agreements, the validity and enforceability of the Shareholder Delivered
Agreements (assuming the application of the laws of the respective countries of
organization of the Selling Shareholders) and the transfer of the Shares
pursuant to this Agreement, and such other matters as Purchaser may reasonably
request.
(g) A copy of the resolutions of the board of directors
or other applicable governing body of each Selling Shareholder, and if
necessary, its stockholders, authorizing the execution, delivery and performance
of the Shareholder Delivered Documents, certified by the Secretary of such
Selling Shareholder or other officer responsible for the books and records of
such Selling Shareholder, as being true and correct copies of the originals
which have not been modified or amended and which are in effect at the Closing
or other appropriate evidence of the authorization.
(h) A certificate of the Secretary of each Selling
Shareholder or other officer responsible for the books and records of such
Selling Shareholder certifying as of the Closing as to the incumbency of the
officers of each Selling Shareholder and as to the signatures of such officers
who have executed documents delivered at the Closing on behalf of such Selling
Shareholder or other appropriate evidence of same.
(i) Certificates, dated within five (5) days of the
Closing, of the applicable Governmental Entity establishing that the Company and
each Selling Shareholder is in existence.
(j) An audited consolidated balance sheet of the Company
and the Subsidiaries as of December 31, 2003 and the related consolidated
statement of operations, shareholders' equity and cash flow for the year then
ended, including the notes thereto, together with the unqualified audit report
thereon of the Company's independent certified public accountants (the "2003
Audited Financial Statements").
(k) Such other documents as Purchaser may reasonably
request within a reasonable period of time.
SECTION 8.2 TO BE DELIVERED BY PURCHASER TO THE SELLING SHAREHOLDERS.
At the Closing, Purchaser shall deliver to the Selling Shareholders the
following:
(a) The VARTA Purchase Price and the Tabriza Initial
Consideration less the Escrow Funds.
(b) The certificate referred to in Section 7.2(d).
(c) Opinions from Xxxxxxxx Xxxx-Advogados, counsel to
Purchaser, dated as of the Closing Date, each in a form reasonably satisfactory
to Selling Shareholders, as to the authority of the Purchaser to enter into and
perform the Purchaser Delivered Agreements and its obligations pursuant to this
Agreement, the validity and enforceability of the Shareholder Delivered
Agreements, and such other matters as the Selling Shareholders may reasonably
request.
(d) The Escrow Agreement.
31
(e) A copy of the resolutions of the board of directors
of Purchaser, authorizing the execution, delivery and performance of the
Purchaser Delivered Documents, certified by the Secretary or Assistant Secretary
of Purchaser, as being true and correct copies of the originals which have not
been modified or amended and which are in effect at the Closing.
(f) A certificate of the Secretary or Assistant Secretary
of Purchaser certifying as of the Closing as to the incumbency of the officers
of Purchaser and as to the signatures of such officers who have executed
documents delivered at the Closing on behalf of Purchaser.
(g) Certificates, dated within five (5) days of the
Closing, of the applicable Governmental Entity establishing that Purchaser is in
existence and otherwise is in good standing to transact business.
(h) Such other documents as the Selling Shareholders may
reasonably request within a reasonable period of time.
SECTION 8.3 TO BE DELIVERED BY GUARANTOR TO THE SELLING SHAREHOLDERS.
At the Closing, Guarantor shall deliver to the Selling Shareholders the
following:
(a) The certificate referred to in Section 7.2(d).
(b) Opinions from Xxxxx X. Xxxxx, General Counsel to
Guarantor, dated as of the Closing Date, each in a form reasonably satisfactory
to Selling Shareholders, as to the authority of the Guarantor to enter into and
perform the Guarantor Delivered Agreements and its obligations pursuant to this
Agreement, validity and enforceability of the Guarantor Delivered Agreements,
and such other matters as the Selling Shareholders may reasonably request.
(c) A copy of the resolutions of the board of directors
of Guarantor, authorizing the execution, delivery and performance of the
Guarantor Delivered Documents, certified by the Secretary or Assistant Secretary
of Guarantor, as being true and correct copies of the originals which have not
been modified or amended and which are in effect at the Closing.
(d) A certificate of the Secretary or Assistant Secretary
of Guarantor certifying as of the Closing as to the incumbency of the officers
of Guarantor and as to the signatures of such officers who have executed
documents delivered at the Closing on behalf of Guarantor.
(e) Certificates, dated within five (5) days of the
Closing, of the applicable Governmental Entity establishing that Guarantor is in
existence and otherwise is in good standing to transact business.
(f) Such other documents as the Selling Shareholders may
reasonably request within a reasonable period of time.
SECTION 8.4 TO BE DELIVERED BY PURCHASER TO THE ESCROW AGENT. At the
Closing, Purchaser shall deliver the Escrow Funds to the Escrow Agent.
32
ARTICLE IX.
INDEMNIFICATION
SECTION 9.1 INDEMNIFICATION BY THE SELLING SHAREHOLDERS. Subject to
the limitations in Section 9.11, the Selling Shareholders (other than
Interelectrica) shall defend, indemnify and hold harmless Purchaser and the
Company with respect to any and all claims, losses, damages, liabilities,
demands, assessments, judgments, costs and expenses (including, without
limitation, settlement costs and any reasonable legal or other expenses
reasonably incurred in connection with investigating, bringing or defending any
actions or threatened actions) (collectively, "Losses") suffered by Purchaser or
the Company resulting from (a) any breach of any representation, warranty,
covenant or agreement made by the Selling Shareholders under any Shareholder
Delivered Agreement; (b) the Jaboatao Facility Environmental Conditions;
provided, however, that indemnification pursuant to this Section 9.1(b) shall be
limited to 80% of such Losses; or (c) any environmental liability related to the
prior ownership by the Company or the Subsidiaries of the facility in the
Municipality of Guarulhos, State of Sao Paulo; provided, however, that for
purposes of calculating the liability of the Selling Shareholders for Losses
under this Article IX, all "material" or "all material respects" or similar
materiality qualifiers (other than those in Sections 3.7, 3.9, 3.13(b) and 3.17)
in Article III or in the certificate delivered at Closing pursuant to Section
6.1(d) shall be disregarded. Liability of the Selling Shareholders for breaches
of representations and warranties shall be divided among them in accordance with
their relative ownership percentages as set forth on Exhibit A (the relative
percentage ownership of Tabriza being the combined relative percentage ownership
of Tabriza and the Baratas and the relative percentage ownership of VARTA being
the combined relative percentage ownership of VARTA and Interelectrica
(collectively, the "Relative Ownership Percentages")); provided, however, that
each Selling Shareholder shall be fully liable for Losses resulting from its own
breaches of representations and warranties in Sections 3.2(c) or 3.3 and for its
own breaches of covenants and agreements and for breaches of representations and
warranties qualified by knowledge where the other Selling Shareholders do not
have such knowledge; provided, further, however, that VARTA shall be fully
responsible for any breaches of Interelectrica under this Agreement. The
Purchaser shall cause the Company to use reasonable efforts to mitigate any
Loss.
SECTION 9.2 INDEMNIFICATION BY PURCHASER. Purchaser shall defend,
indemnify and hold harmless the Selling Shareholders with respect to any and all
Losses suffered by the Selling Shareholders resulting from any breach of any
representation, warranty, covenant or agreement made by Purchaser under any
Purchaser Delivered Agreement. The Selling Shareholders shall use reasonable
efforts to mitigate any Loss.
SECTION 9.3 CERTIFICATES. Any claim based, in whole or in part, upon
any untrue or incorrect statement set forth in the certificate delivered
pursuant to Section 7.1(d) or Section 7.2(d) shall be deemed to be a claim for
breach of representation, warranty, covenant or agreement under this Agreement.
SECTION 9.4 CLAIMS FOR INDEMNIFICATION. The representations,
warranties, covenants and agreements in this Agreement shall survive the Closing
subject to the limitations set forth herein and shall not be affected by any
investigation made by the Parties hereto prior to the date hereof or the Closing
Date. The Party seeking indemnification (the "Indemnified Party") shall
33
give each Party from whom indemnification is sought (the "Indemnifying Party") a
written notice ("Notice of Claim") within sixty (60) days of the discovery of
any Loss with respect to which the right to indemnification contained in this
Article IX may be claimed; provided, however, that the failure to give such
notice within such sixty (60) day period shall not result in the waiver or loss
of any right to bring such claim hereunder after such period unless, and only to
the extent that, the Indemnifying Party is actually prejudiced by such failure.
Any Notice of Claim shall set forth a reasonable description of the alleged
basis for the claim and the amount of Loss asserted or anticipated to be
asserted by reason of the claim.
SECTION 9.5 DEFENSE OF CLAIMS BY THIRD PARTIES.
(a) GENERALLY. If a claim or demand for indemnification
is based upon an asserted liability or obligation to a third party (a "Third
Party Claim"), then the Indemnified Party shall undertake in good faith to give
prompt notice of any such Third Party Claim to the Indemnifying Party; provided,
however, that a failure to provide such notice of a Third Party Claim in a
reasonable time to allow the Indemnifying party time to prepare an effective
defense shall result in the waiver or loss of any right to indemnification. The
Indemnifying Party shall defend such Third Party Claims at its expense with
counsel chosen and paid by it and shall give written notice (the "Notice of
Defense") to the Indemnified Party within thirty (30) days after the date such
notice of a Third Party Claim is deemed received that acknowledges that it is
defending the Third Party Claim and that identifies the lawyers retained for the
defense.
(b) CONTROL OF DEFENSE; EXCEPTIONS, ETC. Notwithstanding
anything to the contrary in this Section 9.5: (i) the Indemnified Party shall be
entitled to participate in the defense of such Third Party Claim and to employ
lawyers of its choice for such purpose at its own expense; and (ii) the
Indemnified Party shall be entitled to assume control of the defense of such
Third Party Claim, and the Indemnifying Party shall pay the reasonable fees and
expenses of lawyers retained by the Indemnified Party (excluding the fees and
expenses of the Indemnified Party's lawyers prior to the date of such assumption
of the defense), if: (1) the Indemnified Party reasonably believes that there
exists or could arise a conflict of interest that, under applicable principles
of legal ethics, could prohibit a single legal counsel from representing both
the Indemnified Party and the Indemnifying Party in such Third Party Claim, and
such conflict has not been timely waived, (2) the Indemnifying Party either
failed to give a Notice of Defense or has failed or is failing to prosecute or
defend vigorously such Third Party Claim, or (3) criminal penalties could be
imposed on the Indemnified Party in connection with such Third Party Claim. The
Party assuming control of the defense shall use reasonable commercial efforts to
mitigate the Loss.
(c) SETTLEMENT. The Indemnifying Party may not settle any
Third Party Claim without the consent of the Indemnified Party, which consent
shall not be unreasonably withheld or delayed; provided, however, that if the
Indemnifying Party submits to the Indemnified Party a bona fide settlement offer
from the third party claimant of any Third Party Claim (which settlement offer
shall include as an unconditional term of it the release by the claimant or the
plaintiff of the Indemnified Party from all liability in respect of such Third
Party Claim and the terms of such offer shall not otherwise have any adverse
effect on the Indemnified Party or its assets or business) and the Indemnified
Party refuses to consent to such settlement, then thereafter the Indemnifying
Party's liability to the Indemnified Party with respect to such Third
34
Party Claim shall not exceed the settlement amount included in such bona fide
settlement offer, and the Indemnified Party shall either assume the defense of
such Third Party Claim or pay the Indemnifying Party's attorney's fees and other
out-of-pocket costs incurred thereafter in continuing the defense of such Third
Party Claim.
SECTION 9.6 THIRD PARTY CLAIM ASSISTANCE. From time to time after the
Closing, Purchaser and the Selling Shareholders shall provide or cause their
appropriate employees or representatives to provide each other with information
in connection with the handling and defense of any Third Party Claim (including
counterclaims) in respect to which a Party may be required to indemnify another
Party under this Agreement.
SECTION 9.7 SATISFACTION OF CERTAIN INDEMNIFICATION OBLIGATIONS BY THE
SELLING SHAREHOLDERS; ESCROW.
(a) GENERALLY. Subject to the limitations set forth in
Section 9.11(b), the Selling Shareholders' liability for indemnified Losses for
breaches of representations and warranties pursuant to this Article IX shall be
satisfied as follows: except in the case of fraud or an intentional breach of a
representation or warranty or for its own breaches of Sections 3.2(c) and 3.3,
(i) the liability of each of the VARTA Selling Shareholders for breaches of
representations and warranties shall be satisfied first out of the VARTA Selling
Shareholders' portion of the Escrow Funds as set forth on Exhibit A and (ii) the
liability of Tabriza for breaches of representations and warranties shall be
satisfied first out of the Tabriza's portion of the Escrow Funds as set forth on
Exhibit A and second by offsetting against any payment due by Purchaser to
Tabriza under Section 1.3.
(b) CREATION OF ESCROW. On the Closing Date and again at
such time as specified in Section 1.3, the Escrow Funds shall be wired by
Purchaser to such financial institution as may be agreed upon by the Selling
Shareholders and Purchaser (the "Escrow Agent"). The Escrow Funds (and any other
property into which the Escrow Funds are converted) shall be maintained by the
Escrow Agent, as an escrow (the "Escrow") available to satisfy the
indemnification rights of Purchaser set forth in this Article IX, pursuant to
the terms of an escrow agreement (the "Escrow Agreement") in a form mutually
satisfactory to the Parties hereto and the Escrow Agent..
(c) DISBURSEMENT FOR CLAIMS. If Purchaser gives a Notice
of Claim pursuant to Section 9.4, then the Selling Shareholders, within thirty
(30) days following receipt of such Notice of Claim, shall either (i) give
Purchaser and, if appropriate, the Escrow Agent a counternotice with respect to
such Notice of Claim (in which case the Selling Shareholders shall be under no
obligation to make an indemnification payment until the Determination Date as
provided in Section 9.9), or (ii) if appropriate, pay or instruct the Escrow
Agent to deliver to Purchaser Escrow Funds equal to the amount of the Notice of
Claim from the Escrow or, if less, the maximum amount payable from the Escrow;
provided, however, that if a counternotice given by the Selling Shareholders
alleges that a Notice of Claim is only partially invalid, the Selling
Shareholders, within thirty (30) days of receipt of such Notice of Claim, shall
pay or instruct the Escrow Agent to deliver to Purchaser Escrow Funds equal to
that portion of the amount specified in the Notice of Claim as to which no
objection is made or, if less, the maximum amount payable from the Escrow. All
payments made by the Selling Shareholders or the Escrow Agent
35
hereunder shall be by wire transfer to an account designated by Purchaser.
(d) TERMINATION OF ESCROW. The Escrow established
pursuant to this Article VIII shall terminate three (3) years after the Closing
Date; provided, however, that the Escrow shall continue beyond such period to
the extent that Purchaser has given the Selling Shareholders a Notice of Claim
prior to such time, and the indemnification claims asserted therein remain
unsatisfied or unresolved; provided, further, however, if at any time following
the date that is eighteen (18) months after the Closing, Purchaser, in
Purchaser's sole discretion, is satisfied that there is no longer material
liability associated with the indemnification provided by Sections 9.1(b) and
9.1(c), Purchaser shall notify the Escrow Agent to terminate the Escrow. Upon
termination of the Escrow, the remaining Escrow Funds and any other property in
the Escrow shall be delivered by the Escrow Agent to the appropriate Selling
Shareholders.
SECTION 9.8 SATISFACTION OF INDEMNIFICATION OBLIGATIONS BY PURCHASER.
If the Selling Shareholders give a Notice of Claim pursuant to Section 9.4, then
Purchaser, within thirty (30) days following receipt of such Notice of Claim,
shall either (a) give the Selling Shareholders a counternotice with respect to
such Notice of Claim (in which case Purchaser shall be under no obligation to
make an indemnification payment until the Determination Date as provided in
Section 9.9) or (b) pay the amount of the Notice of Claim; provided, however,
that if a counternotice given by Purchaser alleges that a Notice of Claim is
only partially invalid, Purchaser, within thirty (30) days of receipt of such
Notice of Claim, shall pay that portion of the amount specified in the Notice of
Claim as to which no objection is made. All payments made by Purchaser hereunder
shall be by wire transfer to accounts designated by the Selling Shareholders.
SECTION 9.9 ARBITRATION. After the Closing, any controversy or claim
arising out of or relating to this Agreement, including the indemnification
provisions of this Article IX, shall be settled by arbitration in accordance
with the following provisions:
(a) The forum for the arbitration shall be New York, New
York, United States (or any place upon which the Selling Shareholders, Purchaser
and the arbitrators may agree).
(b) There shall be three arbitrators, unless the Parties
are able to agree on a single arbitrator.
(c) The arbitration shall be administered by the
International Chamber of Commerce ("ICC"). The rules of arbitration shall be the
Rules of Arbitration of the ICC, as amended from time to time, as modified by
any other instructions that the Parties may agree upon at the time.
(d) The arbitrators shall be bound by and shall strictly
enforce the terms of this Agreement in accordance with the governing law
specified in Section 11.10.
(e) Each Party shall bear its own fees and expenses with
respect to the arbitration and any proceeding relating thereto and the Parties
shall share equally the fees and expenses of the ICC and the arbitrators.
36
(f) The award rendered by arbitration shall be final and
binding upon the Parties, and judgment upon the award may be entered in any
court of competent jurisdiction. The date the award rendered by arbitration
becomes final and binding or the date a claim otherwise becomes payable pursuant
to this Article IX is the "Determination Date."
(g) Notwithstanding the foregoing, any Party may seek an
injunction or other equitable relief from a court of competent jurisdiction
without complying with this Section 9.9.
SECTION 9.10 INDEMNIFICATION AS EXCLUSIVE REMEDY. Except in the case
of fraud or an intentional breach of a representation, warranty, covenant or
agreement in this Agreement, if the Closing occurs, indemnification pursuant to
the provisions of this Article IX (specifically excluding any punitive damages)
shall be the sole and exclusive remedy of the Parties for any breach of any
representation, warranty, covenant or agreement contained in this Agreement.
SECTION 9.11 CERTAIN LIMITATIONS. Except in the case of fraud or an
intentional breach of a representation, warranty, covenant or agreement in this
Agreement, the foregoing indemnification obligations are subject to the
following:
(a) DEDUCTIBLE. The Selling Shareholders shall not have
any liability for indemnification for breaches of representations and warranties
under any Shareholder Delivered Agreements for any individual claim (or a series
of claims arising from substantially the same facts or circumstances) unless and
until, and only to the extent that, the total Losses for which the Selling
Shareholders would otherwise be liable (disregarding this Section 9.11(a)) with
respect to such claim (or series of claims) exceeds US$10,000; provided,
however, that the foregoing shall not apply to any Losses with respect to a
breach of a representation or warranty in Sections 3.1, 3.2 or 3.3. The Selling
Shareholders shall not have any liability for indemnification for breaches of
representations and warranties under any Shareholder Delivered Agreements for
claims in the aggregate unless and until, and only to the extent that, the total
Losses for which the Selling Shareholders would otherwise be liable
(disregarding this Section 9.11(a)) exceeds US$300,000 in the aggregate;
provided, however, that the foregoing shall not apply to any Losses with respect
to a breach of a representation or warranty in Sections 3.1, 3.2 or 3.3.
(b) CAP. The liability of each Selling Shareholder for
indemnification for breaches of representations and warranties pursuant Section
9.1(a) shall not exceed the product of US$3,000,000 and its Relative Ownership
Percentage; provided, however, that the foregoing shall not apply to any Losses
with respect to a breach of a representation or warranty in Sections 3.1, 3.2 or
3.3. The sum of the liability of the Selling Shareholders for indemnification
for breaches of representations and warranties pursuant Section 9.1(a) and the
liability of the Selling Shareholders for indemnification pursuant to Section
9.1(b) and Section 9.1(c), collectively, shall not exceed the product of
US$10,000,000 and its Relative Ownership Percentage; provided, however, that the
foregoing shall not apply to any Losses with respect to a breach of a
representation or warranty in Sections 3.1, 3.2 or 3.3. The liability of
Purchaser for indemnification for breaches of representations and warranties
pursuant to this Article IX shall not exceed US$3,000,000; provided, however,
that the foregoing shall not apply to any Losses with respect to a breach of a
representation or warranty in Sections 4.1, 4.2 and 4.3.
37
(c) TIME LIMIT. No indemnification by the Purchaser or
the Selling Shareholders for breaches of representations and warranties shall be
required under this Article IX unless the Selling Shareholders or Purchaser
gives a Notice of Claim within eighteen (18) months of Closing. No
indemnification by the Selling Shareholders pursuant to Section 9.1(b) or
Section 9.1(c) shall be required under this Article IX unless the Purchaser
gives a Notice of Claim within three (3) years of the Closing.
(d) EXCLUDED LIABILITIES. The Selling Shareholders shall
not be liable for (i) any Losses pursuant to Section 9.1 to the extent such
Losses are paid from available insurance proceeds or (ii) Losses arising from a
breach of a representation and warranty to the extent such matter is disclosed
as an exception to such representation and warranty in the Disclosure Letter.
SECTION 9.12 INDEMNIFIED PERSONS. The indemnification obligations in
this Article IX are for the benefit of the stated indemnified Persons in
Sections 9.1 and 9.2 and their permitted successors and permitted assigns and
their officers, directors, employees, agents and Affiliates, and thus, among
other things, includes any Loss incurred by a successor owner of the Company.
ARTICLE X.
TERMINATION AND ABANDONMENT
SECTION 10.1 TERMINATION AND ABANDONMENT. This Agreement may be
terminated and abandoned at any time prior to the Closing Date:
(a) By mutual written consent of the Selling Shareholders
and Purchaser;
(b) By Purchaser:
(i) if any event shall have occurred as a result
of which any condition set forth in Section 7.1 is no longer capable of
being satisfied;
(ii) if there has been a material breach by the
Selling Shareholders of any representation or warranty contained in
this Agreement or of any of the covenants or agreements set forth in
this Agreement, in each case which breach is not curable, or, if
curable, is not cured within ten (10) business days after written
notice of such breach is given by Purchaser to the Selling
Shareholders;
(iii) pursuant to Section 6.16; or
(iv) pursuant to Section 6.18
(c) By the Selling Shareholders:
(i) if any event shall have occurred as a result
of which any condition set forth in Section 7.2 is no longer capable of
being satisfied;
(ii) if there has been a material breach by
Purchaser of any representation or warranty contained in this Agreement
or of any of the covenants or agreements set forth in this Agreement,
in each case which breach is not curable or, if
38
curable, is not cured within ten (10) business days after written
notice of such breach is given by the Selling Shareholders to
Purchaser; or
(iii) pursuant to Section 6.16; or
(d) By Purchaser or the Selling Shareholders if the Closing shall
not have occurred on or before June 3, 2004, provided that a Party whose breach
of this Agreement has resulted in the Closing not having occurred on or before
said date shall not have the right to terminate this Agreement pursuant to this
Section 10.1(d).
SECTION 10.2 SPECIFIC PERFORMANCE; REMEDIES CUMULATIVE. The Parties
acknowledge that the rights of each Party to consummate the transactions
contemplated hereby are special, unique, and of extraordinary character, and
that, in the event that any Party violates or fails and refuses to perform any
covenant made by it herein, the other Party or Parties will be without adequate
remedy at law. Each Party agrees, therefore, that, in the event that it
violates, fails or refuses to perform any covenant made by it herein, the other
Party or Parties may, in addition to any remedies at Law, institute and
prosecute an action in a court of competent jurisdiction to enforce specific
performance of such covenant or seek any other equitable relief. No exercise of
a remedy available to a Party shall be deemed an election excluding any other
remedy available to such Party (any such claim by any other Party being hereby
waived).
SECTION 10.3 RIGHTS AND OBLIGATIONS UPON TERMINATION. If this
Agreement is not consummated for any reason, each Party will redeliver all
documents, work papers, and other materials of any Party relating to the
transactions contemplated hereby, whether obtained before or after the execution
hereof, to the Party furnishing the same, except to the extent previously
delivered to third parties in connection with the transactions contemplated
hereby, and all information received by any Party hereto with respect to the
business of any other Party shall not at any time be used for the advantage of,
or disclosed to third parties by, such Party to the detriment of the Party
furnishing such information; provided, however, that this Section 10.3 shall not
apply to any documents, work papers, material or information which is a matter
of public knowledge or which heretofore has been or hereafter is published in
any publication for public distribution or filed as public information with any
Governmental Entity.
SECTION 10.4 EFFECT OF TERMINATION. Except for the provisions of
Sections 6.3, 6.5, 6.13, 10.3 and 10.4 and Article XI, which shall survive any
termination of this Agreement, in the event of the termination and abandonment
of this Agreement pursuant to Article X, this Agreement shall forthwith become
void and have no further effect, without any liability on the part of any Party
hereto or its respective officers, directors or stockholders; provided, however,
that nothing in this Section 10.4 shall relieve any Party from liability for the
intentional breach of its representations, warranties, covenants or agreements
set forth in this Agreement occurring prior to such termination.
ARTICLE XI.
GENERAL PROVISIONS
SECTION 11.1 Notices. All notices and other communications under this
Agreement shall be in writing and may be given by any of the following methods:
(a) personal delivery; (b)
39
facsimile transmission; (c) registered or certified mail (airmail if to an
address in a country other than the country in which the sender is located),
postage prepaid, return receipt requested; or (d) delivery service requiring
acknowledgment of receipt. Any such notice or communication shall be sent to the
appropriate Party at its address or facsimile number given below (or at such
other address or facsimile number for such Party as shall be specified by notice
given hereunder):
If to Purchaser or Rayovac, to:
Rayovac Corporation
000 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxx, President
with a copy to:
Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxxx
If to Tabriza:
Tabriza Brasil Empreendimentos Ltda.
Av. Eng. Xxxx Xxxxxx Xxxxxxx, 1700, 4(0).
andar
Sao Paulo, SP 04571-000
Fax: (00 00) 0000 0000
Attn: Xxxxxxx Xxxxxx xx Xxxxxxx Cavalcanti
and Helektra Karnakis
with a copy to:
Xxxxxxx, Mussnich & Xxxxxx
Xx. Xxxxxxxxx, Xxxxxxxxxx, 00 - 0x. andar
Sao Paulo, SP 04543-000
Fax: (00 00) 0000 0000
Attn: Xxxxx Xxxxx Xxxxxx
00
If to Varta and/or Interelectrica:
Varta Aktiengesellschaft
Am Xxxxxxxxx 00
X-00000 Xxxxxxxx
Xxxxxxx
Fax: 00-00-0000000000
Attn: Dr. Uwe X.X. Xxxxxx
with a copy to:
Linklaters SCDE
Xxx Xxxxxxx Xxxxxxx xx Xxxxxxxxxx, 00
Xxx Xxxxx, XX 00000-000
Fax: (00 00) 0000 0000
Attn: Xx. Xxxxxxxxx Xxxxxxxxx
All such notices and communications shall be deemed received upon (a) actual
receipt thereof by the addressee, (b) actual delivery thereof to the appropriate
address as evidenced by an acknowledged receipt, or (c) in the case of a
facsimile transmission, upon transmission thereof by the sender and confirmation
of receipt. In the case of notices or communications sent by facsimile
transmission, the sender shall contemporaneously mail a copy of the notice or
communication to the addressee at the address provided for above. However, such
mailing shall in no way alter the time at which the facsimile notice or
communication is deemed received.
SECTION 11.2 TABLE OF CONTENTS; HEADINGS; RULES OF CONSTRUCTION.
(a) The Table of Contents and headings contained herein
are for convenience of reference only, do not constitute a part of this
Agreement, and shall not be deemed to limit or affect any of the provisions
hereof.
(b) "Include," and "including," and similar expressions
are not expressions of limitation and shall be construed as if followed by the
words "without limitation."
(c) "Business day" means any day other than Saturday,
Sunday, any day which is a legal holiday under the Laws of the State of New
York, the City or the State of Sao Paulo and the City of Frankfurt, Germany, or
any day on which banking institutions in the State of New York, the City or the
State of Sao Paulo and the City of Frankfurt, Germany, or are authorized or
required by Law to close.
(d) The words, "herein," "hereto," "hereof" and words of
similar import refer to this Agreement as a whole and not to any particular
Section or paragraph hereof.
(e) Words importing the singular will also include the
plural, and vice versa.
(f) The words "knowledge of such Selling Shareholder"
with respect to the VARTA Selling Shareholders shall mean the knowledge of Dr.
Uwe X.X. Xxxxxx, Xxxxxxx Xxxxx or Dr. Georg Prilhofer and with respect to
Tabriza shall mean the knowledge of Xxxxxxxx
00
Xxxxxxxx or Xxxxxx Xxxxxxxxxx, the words "knowledge of the Company" or
"knowledge of the Company and the Subsidiaries" shall mean the knowledge of any
of the officers (diretores) of the Company or the Subsidiaries.
SECTION 11.3 AMENDMENT. No amendment, modification or discharge of
this Agreement shall be valid or binding unless set forth in writing and
executed by each of the Parties hereto.
SECTION 11.4 SEVERABILITY. If any provision of this Agreement is
invalid, illegal or incapable of being enforced by any Law or public policy, all
other provisions of this Agreement will nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any Party hereto.
Upon any such determination that any 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 transactions contemplated
by this Agreement are consummated to the extent possible.
SECTION 11.5 Waiver. The failure of any Party hereto at any time or
times to require performance of any provision hereof shall in no manner affect
the right to enforce the same. No waiver by any Party of any condition, or the
breach of any provision contained in the Shareholder or Purchaser Delivered
Agreements, or whether by conduct or otherwise, in any one or more instances
shall be deemed or construed as a further or continuing waiver of any such
condition or breach or a waiver of any other condition or of the breach of any
other provision herein or therein.
SECTION 11.6 NO THIRD PARTY BENEFICIARIES; ASSIGNMENT. This Agreement
shall be binding on the Parties and their respective successors and assigns and
shall inure to the benefit of the Parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any Person. Except for (a) any assignment
to a wholly-owned subsidiary of Purchaser or Rayovac, in which event Purchaser
shall remain liable for the performance of this Agreement, and (b) any transfer
or assignment after the Closing by Purchaser or Rayovac in connection with the
sale or transfer of all or substantially all the business or assets of Rayovac,
whether by sale of stock, sale of assets, merger or otherwise, no transfer or
assignment of this Agreement or of any rights or obligations under this
Agreement may be made by any Party without the prior written consent of the
other Parties (which consent shall not be withheld unreasonably) and any
attempted transfer or assignment without that required consent shall be void.
SECTION 11.7 TIME OF THE ESSENCE; COMPUTATION OF TIME. Time is of the
essence of each and every provision of this Agreement. Whenever the last day for
the exercise of any right or the discharge of any duty under this Agreement
shall fall upon Saturday, Sunday or a public or legal holiday, the Party having
such right or duty shall have until 6:00 p.m. New York time on the next
succeeding regular business day to exercise such right or to discharge such
duty.
SECTION 11.8 CURRENCY. All currency references in this Agreement to
"US$" are references to United States dollars. Although stated in terms of
United States dollars, the payments to be made to Tabriza, pursuant to Sections
1.2, 1.3, 1.4 and 2.3 shall be made in
42
Brazilian reais, converted based on the average buy exchange rate for the day
immediately preceding the date of payment, as disclosed by the Central Bank of
Brazil through the SISBACEN System, Transaction PTAX-800, Option 5 - L - Taxas
para Contabilidade.
SECTION 11.9 COUNTERPARTS. This Agreement may be executed by each
Party upon a separate copy, and in such case one counterpart of this Agreement
shall consist of enough of such copies to reflect the signatures of all of the
Parties. This Agreement may be executed in two (2) or more counterparts, each of
which shall be an original, and each of which shall constitute one and the same
agreement. Any Party may deliver an executed copy of this Agreement and of any
documents contemplated hereby by facsimile transmission to another Party and
such delivery shall have the same force and effect as any other delivery of a
manually signed copy of this Agreement or of such other documents.
SECTION 11.10 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 the conflicts of law principles thereof.
SECTION 11.11 NO STRICT CONSTRUCTION. The Parties have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises under any provision of
this Agreement, this Agreement shall be construed as if drafted jointly by the
Parties, and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement.
SECTION 11.12 ENTIRE AGREEMENT. This Agreement (with its Exhibits, the
Disclosure Letter, the Purchaser Disclosure Letter and the Escrow Agreement),
contains, and is intended as, a complete statement of all the terms of the
arrangements among the Parties with respect to the matters provided for, and
supersedes any previous agreements and understandings among the Parties with
respect to those matters.
[signatures on next page]
43
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed as of the date first above written.
RAYOVAC:
RAYOVAC CORPORATION
By: /s/Xxxx X. Xxxxxx
Name:
--------------------------------------
Title:
--------------------------------------
PURCHASER:
ROV HOLDINGS, INC.
By: /s/Xxxx X. Xxxxxx
Name:
--------------------------------------
Title:
--------------------------------------
SELLING SHAREHOLDERS:
VARTA AG
By: /s/Uwe X.X. Xxxxxx
---------------------------------------
Name: Dr. Uwe X.X. Xxxxxx
---------------------------------------
Title: CEO
---------------------------------------
INTERELECTRICA ADMINISTRACAO E PARTICIPACOES
LTDA.
By: /s/Xxxxxx X. X. Xxxxxxx
-----------------------------------------
Name: Xxxxxx X. X. Xxxxxxx
-----------------------------------------
Title: Gerente Delegado (Manager)
-----------------------------------------
TABRIZA BRASIL EMPREENDIMENTOS LTDA.
By: /s/Xxxxxx Xxxxxxxxxx
Name:
-----------------------------------------
Title:
-----------------------------------------
44
EXHIBIT A
SHARES AND CLOSING DATE
CONSIDERATION
Shareholder Common Shares Preferred Shares Total Shares Relative
Ownership
Percentage
Interelectrica 59,984,000 89,999,998 149,983,998 7.142%
Administracao e
Participacocs Ltda.
306,270,096 813,551,994 1,119,822,090 53.327%
VARTA AG
Tabriza Brasil 366,254,096 16,030,877 382,284,973 18.205%
Empreendimentos Ltda.
Xxxxxx Xxxxxx and 0 447,825,488 447,825,488 21.326%
Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxxxx 0 0 0
Xxx X.X. Xxxxxx 0 1 1
Xxxxxxx Xxxxxx de 0 1 1
Andrade Cavalcanti
Helektra Karnakis 0 1 1
732,508,192 1,367,408,361 2,099,916,553
EXHIBIT B
DEFINITION OF EBITDA
The Company's "EBITDA" means, for any period, earnings of the Company
and the Subsidiaries before: interest expense with respect to indebtedness for
borrowed money (including capitalized leases and purchase money financing),
interest income, and taxes with respect to income, depreciation and
amortization, all of which shall be calculated in accordance with Brazilian GAAP
expressed in Brazilian reais, subject to the following:
(i) extraordinary items, as determined under Brazilian
GAAP, including any non-recurring or one-time restructuring charges or
non-recurring tax credits, shall be excluded from the calculation of
EBITDA;
(ii) any aggregate net gain or loss arising from the sale,
exchange or other disposition of capital assets or write-offs for
accounting purposes of fixed assets (such term to include all fixed
assets, whether tangible or intangible, all inventory sold in
conjunction with the disposition of fixed assets, all real estate and
all securities), shall be excluded from the calculation of EBITDA;
(iii) recurring IPI tax credits shall be included in the
calculation of EBITDA;
(iv) all intercompany charges rendered by Rayovac or its
Affiliates whereby Rayovac does not incur (or will not incur)
out-of-pocket cost shall be excluded from the calculation of EBITDA;
and
(v) operational bank charges, tariffs, discounts,
write-offs, severance, legal fees, bad debts, operating gains or losses
due to currency exchange and fluctuation of foreign-exchange rates, and
other recurring items shall be included in the calculation of EBITDA.
EXHIBIT C
EARN OUT RIGHTS
(i) In the event that Purchaser fundamentally changes the
business of the Company and the Subsidiaries or transfers or assigns
all or substantially all the business or assets of the Company and the
Subsidiaries to an entity other than an Affiliate of Purchaser (whether
by sale of stock, sale of assets, merger or otherwise) (an "Acquiror")
or adopt any changes in transfer price policy with Affiliates other
than in the normal course of business, in a manner that materially and
adversely affects Tabriza with respect to the earning or computation of
the Earn Out, for purposes of Section 1.3, Purchaser will (A) in the
case of a fundamental change to the Company's and the Subsidiaries'
business, continue to compute the Company's EBITDA during the remainder
of the Earn Out Period in such a manner as to enable Tabriza to be
eligible to earn the Earn Out as though no such change in the business
of the Company and the Subsidiaries had occurred, and (B) in the case
of such a transfer or assignment, cause the Acquiror to assume
liability for payment of the Earn Out pursuant to this Agreement (with
Purchaser remaining liable if and to the extent that the Acquiror does
not make such payment).
(ii) If Purchaser implements or causes the Company or
the Subsidiaries to implement any operating changes that benefit
Purchaser and disadvantage the Company and the Subsidiaries, then an
appropriate adjustment to the Company's and the Subsidiaries' EBITDA
shall be made.
(iii) If Purchaser causes the Company and the Subsidiaries
to cancel any contracts with any of Purchaser's direct competitors and
does not replace such contracts with a like amount of export volume to
other Affiliates of Purchaser at similar prices and terms, then an
appropriate adjustment to the Company's and the Subsidiaries' EBITDA
shall be made.
(iv) Purchaser agrees to use reasonable best efforts to
optimize the foreign currency impact on the business of the Company and
the Subsidiaries.
EXHIBIT D
CONSUMER BATTERIES DEFINITION
"Consumer Batteries" means:
products and services for electric accumulators, batteries, cells and
related products (including torches, bulbs and chargers), but limited
to
(i) those products with a cell height over 25 mm,
(ii) those products with a cell height over 11 mm, but not more than 25
mm, provided that the height/diameter ratio is greater than 1.
"Consumer Batteries" do not include:
irrespective of the cells' size, lithium round cells of bobbin
construction (primary and rechargeable), zinc-air batteries (up to 1
Ah), rechargeable lithium ion polymer cells, primary lithium polymer
cells, oxygen cells, micro fuel cells, hearing aid battery applications
and gas hydrogen cells, provided, however, that "Consumer Batteries" do
include products and services for electric accumulators, batteries,
cells and related products (including torches, bulbs and chargers), if
and when any such technology is used in a standard IEC size for
(i) those products with a cell height over 25 mm, or
(ii) those products with a cell height over 11 mm, but not more than 25
mm, provided that the height/diameter ratio is greater than 1.
"Consumer Batteries" do include:
multiple cell primary alkaline batteries with a size over 25 mm and for
battery packs consisting of cells with a height over 25 mm.
