Exhibit 2
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INVESTMENT AGREEMENT
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BETWEEN
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
XXXXX AGRI INTERNATIONAL POLAND SPOLKA Z O.O.
and
XXXXXX XXXXXXX
XXXXXXXX XXXXXX
XXXXX XXXXXX
Investment Agreement
Signed on the 22 of April 2002 between:
1. Xxxxx Agri International Poland Sp. z o.o. ("Xxxxx Agri") whose
registered seat is at xx. Xxxxxxxxx 00X, 00-000 Xxxxxx, Xxxxxx,
represented by Xxxxxxx X. Xxxxx,
2. Central European Distribution Corporation ("CEDC") whose registered
seat is at 0000 Xxxx Xxxxxx, #000, Xxxxxxxx, Xxxxxxx 00000 XXX,
represented by Xxxxxxx X. Xxxxx,
(jointly referred to as the "Buyers")
and
3. Xxxxxx Xxxxxxx whose domicile is at xx. Xxxxxxx 0X, 00-000 Xxxxxx,
Xxxxxx ("MC")
4. Xxxxxxxx Xxxxxx whose domicile is Dabrowki 194a, 37-100 Lancut, Poland
("BB")
5. Xxxxx Xxxxxx whose domicile is Dabrowki 000x, 00-000 Xxxxxx, Xxxxxx
("XX"), represented on the ground of the power of attorney by Xxxxxxxx
Xxxxxx. Copy of the power of attorney is attached as Schedule 9 to
this agreement.
(jointly referred to as the "Sellers")
RECITALS
A. MC, BB, IB - the Sellers own 100 percent of the share capital
("Shares") of Damianex S.A. ("Company") whose registered seat is at
xx. Xxxxxxxxxxx 0, Xxxxxx, Xxxxxx, registered with the National Court
Register of the District Court in Rzeszow under KRS number 0000108201.
B. According to the Letter of Intent concluded on 8 March 2002 the
Sellers have agreed to sell to the Buyers all the shares in the
Company.
It is hereby agreed as follows:
1. DEFINITIONS
In this Agreement the following expressions shall be taken to mean as
follows:
"Company" shall mean Damianex S.A.
"Shares" shall mean the Company registered shares, constituting
the entire share capital of the Company, including the
number of shares issued in connection with converting
of the Company's reserves (resulting from undistributed
income for the past years until 2001) into the share
capital.
"Price" shall mean the purchase price of 100% of the Shares in
the Company, as defined in clause 3.1.
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"Funds" shall mean a part of the Price, as defined in clause
3.6, to be transferred to the escrow account.
"Completion Date" shall mean the day of signing the Investment Agreement
and its Schedules as defined in clause 4.
"Closing Date" shall mean the day the MSWiA permit is presented to
the Escrow Agent in order to release the Funds and the
share certificates from the escrow account.
"CEDC Stock" shall mean the share certificates of Central European
Distribution Corporation, as defined in clause 3.7.
"Prepayment" shall mean a part of the Price, as defined in clause
3.5, to be paid on the Completion Date.
"Real Estate" shall mean all pieces of real estate owned by the
Company.
"Escrow Agent" shall mean the escrow agent as defined in the Escrow
Agreement being Schedule No. 3 to this Agreement.
"Bonus Scheme" shall mean the bonus scheme defined in clause 11 of the
Letter of Intent dated 8 January 2002.
2. SALE AND PURCHASE, CONDITION PRECEDENT
2.1. Upon the terms and subject to the conditions contained in this
Agreement the Sellers agree to sell and the Buyers agree to buy and
acquire the Shares free of any liens, encumbrances and third party
rights.
2.2. Xxxxx Agri shall purchase 60% (i.e. 50.809) of the Company Shares and
CEDC shall purchase 40% (i.e. 33.872) of the Company Shares.
2.3. The sale and purchase shall take place on condition of obtaining a
permit of the Ministry of Internal Affairs and Administration for the
purchase of Shares ("MSWIA Permit").
2.4. The Conditional Share Purchase Agreement ("SPA") constitutes Schedule
No. 1 to this Agreement.
3. PURCHASE PRICE
3.1. The purchase price for the Shares shall be PLN 35,339,075.00
("Price").
3.2. PLN 28,839,075.00 shall be paid in cash.
3.3. PLN 6,500,000 shall be paid in CEDC Stock. CEDC is listed on NASDAQ in
the United States.
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3.4. The Buyers shall make the cash payment mentioned in clause 3.2 to the
Sellers in accordance with the table below:
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Xxxxx Agri
International CEDC Total
Poland Sp. z o.o.
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MC 51.00% 10,371,772 4,386,000 14,757,772
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BB 48.97% 9,858,361 4,214,000 14,072,361
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IB 0.03% 8,942 8,942
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Total 20,239,075 8,600,000 28,839,075
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3.5. PLN 15,000,000.00 shall be paid to the Sellers in the form of a
Prepayment on the Completion Date.
3.6. PLN 13,839,075.00 shall be transferred to an agreed escrow account.
3.7. The Buyers shall make the payment mentioned in clause 3.3 to the
Sellers in accordance with the following principles:
3.7.1. 44,150 of the CEDC Stock to be received by MC and BB, with the
value of PLN 2,000,000 shall be calculated at price of USD
10.9569 per share according to the NBP USD exchange rate
published on the 26th of March 2002 being USD 1=PLN 4,1343.
3.7.2. 108.846 of the CEDC Stock to be received by MC and BB, with the
value of PLN 4,500,000 shall be calculated at price of USD
10.00 per share and according to the NBP USD exchange rate
published on the 26th of March 2002 being USD 1=PLN 4,1343.
3.7.3. The share certificates for 22,075 shares mentioned in clause
3.7.1 with the value of PLN 1,000,000 and 54.423 shares
mentioned in clause 3.7.2 with the value of PLN 2,250,000 shall
be issued by CEDC in the name of MC with a year's lock up
period and delivered within 30 days of the Closing Date.
3.7.4. The share certificates for 22,075 shares mentioned in clause
3.7.1 with the value of PLN 1,000,000 and 54.423 shares
mentioned in clause 3.7.2. with the value of PLN 2,250,000
shall be issued by CEDC in the name of BB with a year's lock up
period and delivered within 30 days of the Closing Date.
3.8. The Price includes the reduction of the amounts of PLN 160,925 for
receivables being overdue on 26/th/ March 2002 more than 90 days. A
full specification of the receivables reducing the Price valued at PLN
160,925 has been attached to this agreement as Schedule No. 7.
3.8.1. The Sellers shall pay back to the Buyers an equivalent of all
receivables, other then specified in the Schedule 7, which
after the lapse of the 90th day from signing the Investment
Agreement become overdue more than 90 days.
3.8.2. All receivables referred in Schedule 7 shall be paid back to
the Sellers, if paid after the 26/th/ March 2002 to the
Company's account.
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4. COMPLETION
The Completion Date shall be the day of signing this Agreement. On the
Completion Date, the parties shall take the following actions.
4.1. On the Completion Date, the Buyers and the Sellers shall conclude the
SPA.
4.2. On the Completion Date, the Sellers provide the Buyers with the
Company's Management Board consent for sale of the Shares.
4.3. On the Completion Date, the Buyers and the Sellers shall conclude an
agreement for the pledge on the Company Shares ("Pledge Agreement"),
which, inter alia, transfers the right of vote at the Company's
Shareholders' Meeting to the Buyers. The Pledge Agreement has been
attached as Schedule No. 2 to this Agreement.
4.4. On the Completion Date, the Sellers shall cause the Company's
Management Board to enter, into the Company's Book of Shares,
information on the pledge on Shares and rights of the Buyers to vote
at the Company's Shareholders' Meeting. A copy of this entry
authorised by the Management Board as well as a copy of the Sellers'
consent for this entry shall be handed over to the Buyers.
4.5. On the Completion Date, the Buyers and the Sellers shall conclude an
escrow account agreement ("Escrow Agreement"). According to the Escrow
Agreement the Buyers shall transfer the Funds to the escrow account
and the Sellers shall deposit share certificates at the escrow
account. The Escrow Agreement has been attached as Schedule No. 3 to
this Agreement.
4.6. On the Completion Date, the Prepayment mentioned in clause 3.5 shall
be paid by the Buyers to the Sellers according to the table below:
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Xxxxx Agri
International Poland
Sp. Z o.o.
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MC 51,00% 7.650.000
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BB 48,97% 7.345.000
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IB 0,03% 4.500
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Total 15 000 000
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onto the following bank accounts:
MichalCiapala:
PEKAO S.A. I O/Rzeszow nr 12401792 - 8123866 - 2700 -211112- 001,
Xxxxxxxx Xxxxxx and Xxxxx Xxxxxx:
PEKAO S.A. I O / Rzeszow nr 12401792 - 8123912 - 2700 - 211112 - 001
4.7. On the Completion Date, the Sellers shall provide the Buyers with the
Lock-up Letters ("Lock-up Letters"). The Lock-up Letters have been
attached as Schedule No. 4 to this Agreement.
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4.8. On the Completion Date, the Buyers shall cause that the Company, MC
and BB shall execute employment contracts in the form set out in
Schedule No. 6 to this Agreement.
4.9. On the Completion Date, the Sellers shall appoint members of the new
Management Board and the new Supervisory Board of the Company. The
Management Board members shall be as follows:
- Xx Xxxxxx Xxxxxxx as President of the Management Board
- Xx Xxxxxxxx Xxxxxx as Vice President of the Management Board
- Xx Xxxxxxxxx Xxxxxxxxx as Member of the Management Board
- Xx Xxxxxxxx Xxxxxxxxxxxx as Member of the Management Board
- Xxx Xxxxx Xxxxxxxx as Member of the Management Board
The Supervisory Board members shall be as follows:
- Xx Xxxxxxx X. Xxxxx
- Xx Xxxx Xxxxx
- Xx Xxxxxxx Xxxxx
4.10. The Minutes of the Company's Shareholders' Meeting regarding the
appointment of members of the new Management Board and the new
Supervisory Board have been attached as Schedule No. 5 to this
Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers hereby jointly and severally represent and warrant to the
Buyers that each of the following representations and warranties is true
and accurate:
5.1. The Company has been duly organised and validly exists under the laws
of the Republic of Poland.
5.2. The Shares have been duly created and are free and clear of any and
all liens, encumbrances, pledges and third party rights.
5.3. The transfer of the Shares to the Buyers shall not give a legal
reason to any third party to terminate or modify any agreements to
which the Company is a party. As of the date of signing this
Agreement the Sellers are unaware of any intent by suppliers or
customers to stop co-operation with the Company.
5.4. The execution of this Agreement and the performance of the
obligations set forth herein have been duly authorised by the Sellers
and will not result in violation of any law, decree or regulation,
any contract to which either of the Sellers is a party, or by which
it or its property may be bound, any judgement of any court, or any
permit or approval of any governmental agency;
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5.5. This Agreement constitutes a valid and legally binding obligation of
the Sellers, enforceable in accordance with its terms.
The Sellers acknowledge that the Buyers enter into this transaction based
on the assumption of full truth and accuracy of the above statements.
6. REPRESENTATIONS AND WARRANTIES OF THE BUYERS
The Buyers hereby represent and warrant to the Sellers as follows:
6.1. CEDC has been duly organised and is validly existing under the laws
of the State of Delaware and has the power and authority to execute
the transaction contemplated herein;
6.2. Xxxxx Agri has been duly organised and is validly existing under the
laws of Poland and has the power and authority to execute the
transaction contemplated herein;
6.3. The execution of this Agreement and the performance of the
obligations set forth herein have been duly authorised by the Buyers
and will not result in violation of any law, decree or regulation,
any contract to which either of the Buyers is a party, or by which it
or its property may be bound, any judgement of any court, or any
permit or approval of any governmental agency;
6.4. This Agreement constitutes a valid and legally binding obligation of
the Buyers, enforceable in accordance with its terms.
7. ADDITIONAL OBLIGATION OF THE SELLERS
7.1. The Sellers shall for unlimited period of time assume the liability
and shall indemnify the Company and/or the Buyers for any payment of
tax or debts resulting from any tax control or legal proceedings
concerning the Company's activity before the Completion Date.
7.2. The Sellers shall be informed by the Buyers about any tax control and
legal proceedings concerning the Company's activity before the
Completion Date.
8. CLOSING
The Closing Date shall be the day the MSWIA Permit is presented to the
Escrow Agent in order to release the Funds and the Share certificates from
the escrow account. On the Closing Date, the parties shall take the
following actions.
8.1. On the Closing Date, the Escrow Agent shall transfer the Funds to the
Sellers.
8.2. On the Closing Date, the Escrow Agent shall transfer the Share
certificates to the Buyers. The Share certificates shall be endorsed
by the Sellers to the Buyers.
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8.3. On the Closing Date, the Management Board of the Company shall enter
the Buyers into the Company's Book of Shares. A copy of this entry
authorised by the Management Board as well as a copy of the Sellers'
consent for such entry shall be handed over to the Buyers.
9. ACTIONS AFTER THE CLOSING
9.1. Within 30 days from the Closing the Buyers shall provide MC and BB
with the CEDC Stocks mentioned in clause 3.7 of this Agreement.
9.2. Within 3 months from the Closing the parties shall agree a Bonus
Scheme for the Sellers based on their performance under the CEDC
bonus scheme. The principles used for calculation of the performance
bonus shall be attached in the form of Schedule No. 8 to this
Agreement.
10. PUT OPTION
10.1. The Buyers hereby grants to the Sellers an option to sell CEDC Stocks
("Put Option"). In consideration of the granting of such an Option,
the Buyers shall pay to the Sellers the purchase price as described
in clause 10.4 hereunder. The Sellers accepts the Put Option but
without any undertaking to sell. The CEDC Stocks will be sold with
the right to dividends from the first day of the financial year
during which the Put Option is exercised.
10.2. The Put Option may be exercised from 23 April 2003 to 29 April 2003
("Put Option Period"), being the first seven days after the lock-up
period, as defined in the Lock-up Letters.
10.3. The Sellers shall exercise the Put Option by sending a notice to the
Buyers within the Put Option Period. The Put Option may be exercised
on one occasion only and for all the CEDC Stocks that the Sellers
will own at the Put Option Period.
10.4. The purchase price of the CEDC Stocks shall be equal to USD 12 per
one CEDS Stock and will be calculated on the basis of the number of
CEDC Stocks owned by the Sellers.
11. ALTERNATIVE ACQUISITION
In case that the Ministry of Internal Affairs and Administration refuses to
issue the MSWIA Permit the parties shall take the following actions.
11.1. The Parties agree to cause the separation of the Real Estate from the
Company and sell it to the mutually agreed third party for mutually
agreed price. The Buyers and the Sellers are aware that the market
price for Real Estate could be lower than its book value. The Buyers
declare that they will not present any claims against the Sellers in
connection with the above mentioned price difference.
11.2. The Parties agree to cause the third party, as a new owner of the
Real Estate, to conclude a lease agreement for three to five years
with the Company or the Buyers. The rent under the lease agreement
shall not exceed the market price applicable in the region.
11.3. The Buyers and the Sellers shall conclude a new, unconditional Share
Purchase Agreement on the same terms as specified in the SPA.
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11.4. The actions mentioned in clauses 11.1 to 11.3 shall be made within
six months from the day the Ministry of Internal Affairs and
Administration informed the parties on its refusal.
11.5. If the above mentioned actions are not finalised within the time
limits specified above, the Sellers shall be obliged to pay the
amount of the Prepayment mentioned in clause 3.5 back to the Buyers
alongside of 50% of the interests earned on the Prepayment. The
parties agree that for these purposes the interest rate is calculated
as 6%.
11.6. If the Sellers paid the Prepayment back to the Buyers, the Escrow
Agent shall release the Funds and the Shares from escrow account as
well as the Pledge Agreement shall expire.
12. NON-COMPETITION COVENANT
During three years from the Closing Date, the Sellers should not be
involved in any business which competes with that of the Company, or, in
particular, participate in competitive partnerships and companies as a
partner, a shareholder or a member of their governing bodies. In the case
of a breach of this obligation by any of the Sellers, the employment
contracts of BB and MC may be terminated with immediate effect, and BB and
MC shall pay to the Buyers a contractual penalty equal to their annual
gross salary referred to in their employment contract.
13. NOTIFICATIONS
All notices and communications required or permitted under this Agreement
shall be sufficiently given if personally delivered with acknowledgement of
receipt or by registered letter or by telex with answerback:
To the Buyers:
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Xxxxx Agri International Poland Sp. z o.o.
xx. Xxxxxxxxx00X,
00-000 Xxxxxxxx,Xxxxxx,
for the attention of Xxxxxxx X. Xxxxx.
To the Sellers:
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Xxxxxx Xxxxxxx, xx. Xxxxxxx 0X, 00-000 Xxxxxx, Xxxxxx
Xxxxxxxx i Xxxxx Xxxxxx, Dabrowki 194a, 37-100 Lancut, Polska
or to any other address which may be notified in writing by either party to
the other in the above form.
14. MISCELLANEOUS
14.1. Any legal, financial and consulting expenses of the Sellers in
relation to the transaction must be borne solely by the Sellers. The
Buyers shall be responsible for their own expenses.
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14.2. The Buyers shall pay the tax on civil law transactions related with
the sale of the Shares.
14.3. This Agreement shall be governed by and construed in accordance with
the laws of the Republic of Poland.
14.4. Any and all disputes arising in connection with this Agreement shall
be settled by the Court proper for the Company's registered seat.
14.5. This Agreement has been executed in two counterparts in English and
four counterparts in Polish. The Polish language version shall
prevail where there is any difference between the English and Polish
language versions
Signed by: /s/ Xxxxxxx X. Xxxxx
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For the Buyers
Signed by: /s/ Xxxxxx Xxxxxxx /s/ Xxxxxxxx Xxxxxx /s/ Xxxxx Xxxxxx
-------------------- ------------------- ----------------
For the Sellers
Schedules:
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1. The Conditional Share Purchase Agreement
2. The Pledge Agreement
3. The Escrow Agreement
4. The Lock-up Letters
5. The Minutes of the Company's Shareholders' Meeting
6. The Employment Contracts
7. The specification of the receivables
8. The principles for calculation of Bonus Scheme
9. Copy of power of attorney for Xxxxxxxx Xxxxxx.
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