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Exhibit 10.12
QUOTAHOLDERS' AGREEMENT
AMONG
XXXXXX XXXXXXXX
XXXXXX XX XXXXXXXXX XXXXX
STONERIDGE, INC.
AND
PST INDUSTRIA ELETRONICA DA AMAZONIA LTDA.
DATED OCTOBER 29, 1997
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TABLE OF CONTENTS
Page
ARTICLE I MANAGEMENT AND OPERATIONS OF THE COMPANY 2
ARTICLE II RESTRICTIONS ON ASSIGNMENT AND TRANSFERS
OF QUOTAS 7
ARTICLE III TERM AND TERMINATION 13
ARTICLE IV [INTENTIONALLY OMITTED] 15
ARTICLE V ADDITIONAL COVENANTS 15
ARTICLE VI MISCELLANEOUS 17
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QUOTAHOLDERS' AGREEMENT
THIS QUOTAHOLDERS' AGREEMENT (this "Agreement"), is made and
entered into as of the 29TH day of October, 1997, by and among XXXXXX XXXXXXXX,
Brazilian citizen , married, electrical engineer, resident and domiciled at Xxx
Xxxxx Xxxxxx xx Xxxxx, Xx. 00-Xx. 1, apt. 41, Jardim Santa Genebra, Campinas,
State of Sao Paulo, holder of identification card RG/SP No. 13.602.771,
Individual Taxpayers Registration No. 000.000.000-00 ("Ferretti"), XXXXXX XX
XXXXXXXXX XXXXX, Brazilian citizen, married, businessman, resident and domiciled
at Xxx Xxxxxxx Xxxxxx, 000, xxx. 00 - Xxxxxx, Xxxxxxxx, State of Sao Paulo,
holder of identification card RG/SP No. 15.307.343, Individual Taxpayers
Registration No. 000.000.000-00("Xxxxx"), STONERIDGE, INC., an Ohio corporation,
with head office at 0000 Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxx, Xxxxxx Xxxxxx of
America, in this act represented by its attorney in fact, Coaraci Nogueira do
Vale, Brazilian citizen, married, attorney-at-law and consultant, resident and
domiciled in the Capital City of the State of Sao Paulo, at Xxx Xxxxxxx, 000 -
0xx xxxxx, suite 96, holder of Identification Card No. 2.676.014-SSP/SP and
Individual Taxpayers' Registration No. 000.000.000-00;. ("Stoneridge"), and
P.S.T. Industria Eletronica da Amazonia Ltda., a Brazilian limited liability
commercial company with head office at the city of Manaus, the state capital of
the State of Amazonas, at Xxx Xxx Xxxxxxxx, 00-X xxx 000, Xxxxxx, Xxxxxxx
Taxpayers' Registration No. 84.496.066/0001-04, with its Company Agreement
recorded at the Commercial Registry of the State of Amazonas, under Nbr.
13200.277.643 on August 27, 1993, and subsequent amendments (the "Company").
Unless otherwise defined herein, capitalized terms used herein are defined in
Section 6 hereof.
W I T N E S S E T H :
WHEREAS, collectively the Quotaholders own 100% (one hundred
percent) of the quotas of the Company (the "Quotas," and each a "Quota").
WHEREAS, the Quotaholders wish to promote the business of
manufacturing and selling automotive keyless entry systems and other goods and
to expand the present business through a joint venture in the form of the
Company; and
WHEREAS, the Quotaholders understand and acknowledge the importance
of mutual trust and the strong spirit of partnership between them in conducting
a joint venture such as the one contemplated herein; and accordingly, the
Quotaholders agree to endeavor to make all material decisions with respect to
the operation of such company in the spirit of partnership and mutual trust.
NOW, THEREFORE, the Quotaholders hereto agree as follows:
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ARTICLE I
MANAGEMENT AND OPERATIONS OF THE COMPANY
1.1 PURPOSE. The purpose of the Company is to continue the conduct
of the present business of the Company in the territory of South America and to
expand the Company's business to include products to be agreed upon by the
Quotaholders by entering into agreements with divisions and Affiliates of
Stoneridge or otherwise, on terms to be agreed upon by the parties. It is also
contemplated that the Company will license to Stoneridge existing and future
technologies of the Company for applications outside of South America; provided
that Stoneridge will not compete worldwide with current Company technology and
products. The parties acknowledge that Stoneridge has purchased Quotas on the
basis that the Company will expand the business in this way and that all
Quotaholders will support and agree to such expansion.
1.2 THE MANAGEMENT; BUSINESS PLAN.
(a) The Management of the Company (the "Management") shall
consist of [four] directors and one President. The directors shall be
responsible for the following areas, pursuant to what is described currently in
the organizational chart of the Company: Commercial, Engineering, Industrial and
Financial and Administrative. The President, with the consent of the
Quotaholders, may accumulate the management of one of the areas. Initially, it
is defined that Xxxxx shall be the president of the company. Each Quotaholder
holding at least 25% of the Company's equity interest shall be entitled to
appoint a manager for each 25% interest held by such Quotaholder. A manager
appointed by a Quotaholder may be at any time the Quotaholder himself that
appointed such manager. A Quotaholder shall have the right to fill a vacancy
created by the death, resignation or removal of a manager appointed by such
Quotaholder. The eventual non-appointment of a manager by any of the
Quotaholders who has the right to appoint said manager shall not prejudice
his/its right to appoint a manager pursuant to this Clause. Stoneridge shall
have the right to appoint a director who shall serve as the Administrative and
Chief Financial Officer of the Company, as well as a director for the industrial
area. The Quotaholders and the Company shall promptly take all corporate actions
which may be reasonably necessary to carry out the terms of this Section 1.2.
(b) The Quotaholders shall work together to establish a business
plan for the Company, which shall be supplemented and modified not less
frequently than annually and shall include a budget for capital investment for
expansion, a budget for capital and operating expenses in connection with
existing projects, and revenue projections. The Company's affairs shall be
conducted in a manner consistent with the highest standards of fair trade, fair
competition and
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business ethics. The Company shall conduct its business and otherwise act in
compliance with all applicable laws and regulations.
1.3 DAY-TO-DAY MANAGEMENT. The day-to-day management of the Company
shall be the responsibility of the Management.
1.4 INSURANCE. The Company shall maintain at all times during the
term of this Agreement comprehensive general liability insurance in amounts
consistent with good business practices in Brazil [and naming each Quotaholder
as additional insureds]. Each policy of insurance purchased by the Company
pursuant to the preceding sentence shall be placed with a reputable insurance
company acceptable to the Quotaholders. The Quotaholders will work together in
good faith to coordinate insurance coverage for the Company and the respective
interests of the Quotaholders.
1.5 MEETINGS OF THE QUOTAHOLDERS. The Quotaholders shall hold at
least one meeting every three months. At least one of such meetings each year
shall be held at an office of Stoneridge in the United States or Mexico and at
least three of such meetings each year shall be held at the head office of the
Company in Brazil, or at such other locations as the Quotaholders may agree. The
expenses of such meetings, including the travel and other out-of-pocket expenses
of the Quotaholders, shall be borne by the Company. Unless otherwise agreed in
writing by all managers in respect of any Quotaholders' meeting, all
Quotaholders shall be given not less than 21 days notice of a Quotaholders
meeting, such notice to be in the Portuguese and English languages sent to each
Quotaholder together with an agenda of matters to be discussed or considered at
that Quotaholders' meeting.
1.6 ACTIONS REQUIRING AGREEMENT OF THE QUOTAHOLDERS.
(a) Notwithstanding the foregoing provisions of this Article
neither the Company nor any subsidiary of the Company shall take, or refrain
from taking, any of the following actions (x) without complying with all
applicable requirements of Brazilian law, and (y) without the prior consent of
all Quotaholders;
(i) deviate from the business of the Company;
(ii) sell, encumber or otherwise dispose of any real estate
owned by the Company or any subsidiary (or grant any option or
undertake any corresponding commitment); sell, encumber or otherwise
dispose of fixed assets of the Company or of any subsidiary (or grant
any option or undertake any corresponding commitment), with an
aggregate value higher than R$ 10.000,00 (ten thousand reais), said
amount monetarily corrected by the IGPM;
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(iii) incur any indebtedness of the Company for borrowed
money in excess of R$ 100.000,00 (one hundred thousand reais) in
aggregate principal amount at any one time outstanding, said amount
monetarily corrected by the IGPM, except (A) as otherwise contemplated
by the annual budget and capital plan, (B) working capital needs, (C)
discount of accounts receivable and (D) import financing;
(iv) make any loan or advance to, or guarantee for the
benefit of, any person or entity, except for loans or advances in the
ordinary course of business;
(v) enter into, amend or grant a waiver with respect to any
arrangement between the Company, on the one hand, and any Quotaholder
or their respective Affiliates, directors, officers, employees and
other principals (or individuals related by blood or marriage to any
such person) or any entity in which any of the foregoing own equity
interests, on the other hand;
(vi) make any amendment to the Company Agreement;
(vii) liquidate, dissolve or effect a recapitalization of
the Company or any subsidiary in any form of transaction;
(viii) file a voluntary petition for bankruptcy;
(ix) merge, split or consolidate the Company or any
subsidiary with or into any other entity;
(x) incur any Lien upon any property, revenues or assets,
whether now owned or hereafter acquired of the Company, in an amount
in excess of R$ 10.000,00 (ten thousand reais), said amount monetarily
corrected by the IGPM, except for (a) Liens for taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings
for which adequate reserves have been established, or (b) any
statutory Lien arising in the ordinary course of business by operation
of law with respect to a liability that is not yet due or delinquent;
(xi) enter into any material contract outside the ordinary
course of the Company's business;
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(xii) purchase fixed assets with an individual value higher
than R$ 50.000,00 (fifty thousand reais), said amount monetarily
corrected by the IGPM, in any fiscal year;
(xiii) form any subsidiary;
(xiv) acquire equity securities, or securities exchangeable
for or exercisable into, equity securities or notes, obligations,
instruments, stock or other securities of another entity or options or
commitments therefor, other than short-term investments of retained
earnings;
(xv) adopt or modify any annual budget and capital plan or
establish annual policies with respect to operational aspects of the
Company and its subsidiaries;
(xvi) establish or modify the compensation and benefits
packages for the key management personnel of the Company and its
subsidiaries;
(xvii) adopt, amend or terminate any employee compensation
and benefit plans or other material personnel practices or policies of
the Company or any subsidiary, except those arising from collective
bargaining;
(xviii) acquire another Person or assets outside the
ordinary course of business by the Company if the cost of such
acquisition or the effect thereof on the Company exceeds R$ 10.000,00
(ten thousand reais), said amount monetarily corrected by the IGPM; or
(xix) require or request any capital contribution or loan
from any Quotaholder.
(b) The Quotaholders acknowledge that certain Company actions
require the consent or approval of all Quotaholders represented in this
Agreement. In case of the death of one of the Quotaholders, the consent or
approval of quotaholders shall be determined by the remaining quotaholders. To
the extent the Company determines to take any such action, in accordance with
this Agreement and at all times subject to Section 1.6, the Quotaholders shall
take, and shall cause their nominee representatives to take, the respective
actions which may be required of Quotaholders to implement these actions.
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1.7 EARNINGS POLICY ON DISTRIBUTION OF EARNINGS.
The Quotaholders intend that a substantial portion of the earnings
of the Company be used to fund the growth and capital needs of the Company.
Accordingly, any distribution of earnings by the Company must be consented to in
writing by Quotaholders who hold the total Company capital; provided that the
Company will distribute a minimum of 25% of its annual earnings to the
Quotaholders.
1.8 ADDITIONAL FINANCING. The Company shall be financed through
capital increase by deliberation of all Quotaholders who represent the total
Company capital. The Company may also be financed through indebtedness pursuant
to provisions in item 1.6.
1.9 LICENSING. The Quotaholders intend for Stoneridge and the
Company to interchange certain intellectual property, technology and technical
assistance that may enhance the operations of each party, if all of the
Quotaholders can agree on the terms and conditions of the licensing
arrangements. All such arrangements shall be documented with appropriate written
license agreements containing compensation and other terms to be agreed upon by
the parties and to be duly approved by, and recorded at, the Industrial Property
National Institute ("INPI").
1.10 REPORTS. The Company will send to each Quotaholder full
information regarding the operations of the Company, providing, among others,
the following documents:
(a) Annually, by 60 days prior to the close of the corporate
year, the annual budget and capital plan for the succeeding year;
(b) Annually, by 90 days after the close of the corporate year,
the audited balance sheet of the Company and the related statements of income
and quotaholders' equity for the fiscal year then ended, accompanied by
explanatory notes, the report of the Management, and the Opinion of the
Independent Auditors;
(c) Revisions of the annual budget and capital plan, with notes
explanatory of the alterations occurring, when issued; and
(d) Monthly, by 15 days after the close of the prior calendar
month, the preliminary balance sheet and operating statement with a report
comparing actual financial and operating information to planned financial and
operating information. Other reports may be defined pursuant to the need of any
Quotaholder and shall be the object of approval by the Directors.
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ARTICLE II
RESTRICTIONS ON ASSIGNMENT AND TRANSFERS OF QUOTAS
2.1 GENERAL PROHIBITION. No Quotaholder will pledge, mortgage, or
otherwise encumber, or sell, transfer, assign, or otherwise dispose of (each, a
"Transfer") any Quotas or any interest in any Quotas except with the written
consent of all Quotaholders, pursuant to an Exempt Transfer (as defined in
Section 2.2) or in accordance with the provisions of this Article II. Any
Transfer or series of related Transfers of Quotas by one or more Persons, the
effect of which is to directly or indirectly violate the restrictions contained
in this Agreement, or any transaction the primary purpose of which is to avoid
the restrictions contained in this Agreement, shall be deemed void and of no
force or effect.
2.2 EXEMPT TRANSFERS. The restrictions contained in Section 2.1
shall not apply to any Transfer (i) to which all Quotaholders have agreed in
writing, (ii) by a Quotaholder to its Affiliate, permitted by this Section 2.2
is referred to herein as an "Exempt Transfer."
2.3 RIGHT OF FIRST REFUSAL.
(a) INTENTION TO SELL. If a Quotaholder wishes to sell all or
any portion of the Quotas owned by such Quotaholder to a third party (other than
pursuant to an Exempt Transfer), a transferring Quotaholder (a "Selling
Quotaholder"), will deliver a written notice (the "Notice of Intention to Sell")
to the Company and all other Quotaholders. The Notice of Intention to Sell will
disclose in reasonable detail the specified purchaser, the number of Quotas
proposed to be transferred (as applicable, the "Offered Quotas"), the proposed
selling price per Quota (the "Offer Price"), the proposed purchaser(s), the
proposed sale, and the other principal terms and conditions of sale. Such Notice
of Intention to Sell will constitute an irrevocable offer to sell to the Company
and the other Quotaholders the Offered Quotas for the Offer Price and on the
other terms and conditions set forth in the Notice of Intention to Sell, subject
to the provisions of this Article II. Xxxxx shall have the right of preference
to purchase the Quotas of Ferretti or his spouse or legal heirs, as well as
Ferretti shall have the right of preference to purchase the Quotas of Xxxxx or
his spouse or legal heirs. The intent to purchase shall be effected in writing
by the preferential purchaser within 1 (one) week from the date of said
notification of the intention to sell. After the preferential quotaholder
expenses his contention, in case there is no interest in said purchase, the
Quotas shall be available for the Company and the other quotaholders for the
eventual purchase.
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(b) ACCEPTANCE PERIOD. Upon receipt of a Notice of Intention to
Sell and for 20 business days from and after the date of such receipt (the
"Acceptance Period"), the Company, reciprocal preferential rights for the
purchase and sale of Quotas between Messrs. Xxxxx and Ferretti foreseen in item
2.3(a) being observed, will have the right and option to elect to purchase all
of such Offered Quotas at the purchase price and on the terms stated in the
Notice of Intention to Sell. On or before the expiration of the Acceptance
Period, the Company reciprocal preferential rights for the purchase and sale of
quotas between Messrs. Xxxxx and Xxxxxxxx foreseen in item 2.3(a) being
observed, may give the Selling Quotaholder written notice of the Company's
intention to exercise its rights to purchase Offered Quotas, subject to the
existence of free reserves.
(c) FAILURE OF COMPANY TO EXERCISE ITS OPTION TO PURCHASE. If
the Company fails to elect to purchase all of the Offered Quotas in accordance
with the provisions of Sections 2.3(a) and 2.3(b), the Company shall promptly,
and in any event within three days after the end of the Acceptance Period,
deliver to each Quotaholder other than the Selling Quotaholder (an "Eligible
Quotaholder") a copy of the Notice of Intention to Sell and a statement
indicating the number of Offered Quotas available for purchase by the other
Quotaholders, whereupon each Quotaholder shall have the right and option to
elect to purchase its Pro Rata Share of all such Offered Quotas, at the purchase
price and on the terms stated in the Notice of Intention to Sell, such election
to be made by giving written notice to the Company and the Selling Quotaholder
within 45 business days from the date of receipt by an Eligible Quotaholder of
the Notice of Intention to Sell (the "Eligible Quotaholder Acceptance Period").
(d) NOTICE OF ELECTION TO PURCHASE. If any Eligible Quotaholder
fails to elect to purchase on a timely basis, or elects in writing not to
purchase, all of such Quotaholder's Pro Rata Share of the Offered Quotas
pursuant to Section 2.3(c), then, within three business days after the earlier
to occur of (A) the expiration of the Eligible Quotaholder Acceptance Period and
(B) receipt by the Company of either written notices of election or non-election
from each Eligible Quotaholder, the Company shall give written notice to those
Eligible Quotaholders, if any, that have accepted such offer with respect to all
of their Pro Rata Share of such Offered Quotas, setting forth the number of
Offered Quotas available for purchase pursuant to the Notice of Intention to
Sell, and each such Eligible Quotaholder will then have the right and option to,
within five business days after receiving notice from the Company, elect to
purchase (i) all of such Offered Quotas so available (if there is only one
electing Eligible Quotaholder) or (ii) up to its Pro Rata Share of such Offered
Quotas so available (if there is more than one electing Eligible Quotaholder)
(provided, however, that in determining each such electing Eligible
Quotaholder's Pro Rata Share for this provision, the denominator of the Pro Rata
Share ratio described in the definition of Pro Rata
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Share includes only Quotas held by Eligible Quotaholders electing to purchase
their full Pro Rata Share of the Offered Quotas under Section 2.3(c)) or (iii)
such Offered Quotas so available in such other proportions as such Eligible
Quotaholders may mutually agree, at the purchase price and on the terms stated
in the Notice of Intention to Sell. The Company promptly shall notify the
Selling Quotaholder in writing of each notice of election received from Eligible
Quotaholders.
(e) SELLING QUOTAHOLDER'S RIGHTS UPON FAILURE TO EXERCISE RIGHT
TO PURCHASE ALL OFFERED QUOTAS. If acceptances have not been received by the
Selling Quotaholder with respect to all of the Offered Quotas under Sections
2.3(a), 2.3(b), 2.3(c), and 2.3(d), then the Selling Quotaholder may sell all
(but not less than all) of the Offered Quotas to the purchaser specified in the
Notice of Intention to Sell at the price and upon the terms set forth in the
Notice of Intention to Sell, at any time within 20 business days after the last
date on which any Eligible Quotaholder shall be entitled to make any election
pursuant to the provisions of this Section 2.3. The purchaser(s) specified in
the Notice of Intention to Sell must, prior to purchasing the Offered Quotas,
agree in writing to become a party to, and to be bound by the provisions of,
this Agreement, and the Company will not recognize any Transfer to such
purchaser of Offered Quotas until such agreement has been executed and delivered
to the Company. If the Offered Quotas are not sold by the Selling Quotaholder
during 180 business-days , the right of the Selling Quotaholder to sell such
Offered Quotas will expire and such remaining Offered Quotas again will be
subject to the restrictions contained in this Agreement and will not thereafter
be Transferred except in compliance with this Agreement.
(f) PAYMENT FOR SELLING QUOTAHOLDER'S OFFERED QUOTAS. Payment by
the Company or the Eligible Quotaholders for the Selling Quotaholder's Offered
Quotas will be made in a manner that is in accordance with Brazilian law and
that is determined by the Selling Quotaholder, against delivery to the party
purchasing such Offered Quotas of (i) a signed Purchase and Sale of Quotas
Agreement with the obligation for signing a Company Agreement Amendment
effecting the assignment and transfer of said quotas, including the granting of
irrevocable powers through proper instruments, for the purchasing party or
its/his representative to represent the Selling Quotaholder in said Company
Agreement Amendment (ii) written representations and warranties of the
transferor to the effect that: (A) such Person is the record and beneficial
owner of the Quotas being purchased and sold, has good and marketable title
thereto and the absolute right to transfer the same to the purchaser, and the
same, upon transfer to the purchaser, will be free and clear of all claims,
liens, pledges, restrictions (other than restrictions imposed by this Agreement
and restrictions under applicable laws) or encumbrances of any nature
whatsoever; (B) such Person has full power and capacity to perform the terms of
this Agreement relating to such purchase and sale; and (C) any consent or
approval of any governmental
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authority, court or third person necessary to permit the Transfer of the Quotas
has been obtained.
(g) CLOSING DATE. The closing of the sale and assignment and
transfer of Offered Quotas being purchased and sold pursuant to this Section 2.3
to the Company or the Eligible Quotaholders, and payment for such Offered
Quotas, will be held at a time and place designated by the selling party as
follows:
(i) If the Company has elected to purchase all of the
Offered Quotas, on the tenth business day after the date on which the
Selling Quotaholder receives notification of the Company's intention
to so purchase; or
(ii) In all other cases, on the tenth business day after the
last day upon which Eligible Quotaholders can elect to purchase
Offered Quotas pursuant to this Section 2.3.
(h) NON-CASH CONSIDERATION. In the case of a Transfer for
consideration consisting in whole or in part of a form other than cash, the
Company or any Quotaholder who would be entitled to the rights in Section 2.3
may demand that the Appraised Value (as defined in the following sentence) of
the consideration be determined, whereupon the passage of time for acceptance of
an offer shall be suspended until the Appraised Value has been determined and
reported. "Appraised Value" shall be determined by agreement of the Selling
Quotaholder and the parties demanding the appraisal, or, if they are unable to
agree within ten days following the demand, such persons shall select an
appraiser by unanimous agreement, which appraiser shall determine such Appraised
Value within 30 (thirty) business days. If such parties are unable to agree upon
an appraiser, the Selling Quotaholder, on the one hand, and the parties
demanding appraisal, on the other hand, shall each select an appraiser, and the
two appraisers so selected shall select a third appraiser whose determination of
Appraised Value shall be final and binding on all parties. The reasonable costs
of this procedure shall be borne by the Company.
(i) RESTRICTIONS. Notwithstanding the foregoing provisions of
this Section 2.3 to the contrary, no Quotaholder has the right to sell any
Offered Quotas pursuant to a Notice of Intention to Sell if such Quotaholder did
not at the time of giving such Notice of Intention to Sell have a good faith
belief that the specified purchaser would purchase all of the Offered Quotas, at
the price and on the terms contained in the Notice of Intention to Sell.
(j) PRO RATA SHARE. For purposes of this Article II, a
Quotaholder's "Pro Rata Share" of Offered Quotas or of an Eligible Offering (as
defined in Section 2.3(c)), will be the proportion that the number of Quotas
held by
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such Quotaholder represents of the aggregate of all Quotas held by all
Quotaholders, electing to purchase Offered Quotas or to participate in the
Eligible Offering at that time.
2.4 DEATH/BANKRUPTCY OF QUOTAHOLDER.
(a) In the event of the death or dissolution of a Quotaholder,
or if a Quotaholder shall be judicially declared bankrupt or insolvent, make an
assignment for the benefit of, or enter into a compromise with, its creditors,
initiate bankruptcy or insolvency proceedings of any kind or proceedings for the
appointment of a receiver, manager, judicial manager or similar official with
respect to it or any of its assets or become a party to dissolution proceedings
(or have any such proceeding instituted against it which is not dismissed within
90 days of the filing thereof) (a "Triggering Event"), then such Quotaholder or
the representative of his estate (the "Withdrawn Quotaholder"), shall withdraw
from the Company and shall deliver a written notice (the "Death/Bankruptcy
Notice") to the Company and the other Quotaholders notifying them of such event.
The Company may elect to purchase all or any portion of the Quotas held by the
Withdrawn Quotaholder or his estate (the "Relinquished Quotas") for Fair Market
Value by delivering a written notice (an "Acceptance Notice") of such election
to the Withdrawn Quotaholder and each other Quotaholder within 15 business days
after the delivery of the Death/Bankruptcy Notice. Xxxxx shall have the right of
preference in the purchase of Quotas held by Ferretti or his spouse or legal
heirs, as well as Ferretti shall have the right of preference in the purchase of
Quotas held by Xxxxx or his spouse or legal heirs. For purposes of exercising
the preference established in this Section 2.4(a), in the circumstance of death,
the intention to purchase shall be effected in writing by the preferential buyer
within 1 (one) week counting from the knowledge of the intention to sell. After
a statement by the preferential buyer, in case there is no interest, the Quotas
shall be available for the Company and other Quotaholders for the eventual
purchase. The Relinquished Quotas the Company does not elect to purchase, if any
(the "First Remaining Relinquished Quotas"), will, as soon as possible after the
above 15 business-day period, be offered to the Quotaholders, who may elect to
purchase all or less than all of their Pro Rata Share of the First Remaining
Relinquished Quotas for Fair Market Value by delivering an Acceptance Notice of
such election to the Withdrawn Quotaholder within 30 business days after receipt
of the Death/Bankruptcy Notice.
(b) If any Quotaholder does not elect to purchase all of its Pro
Rata Share of the First Remaining Relinquished Quotas, such remaining
Relinquished Quotas (collectively, the "Second Remaining Relinquished Quotas")
will, as soon as possible after the 30 business-day period referred to in
Section 2.4(a), be offered to those Quotaholders that elected to purchase their
entire respective Pro Rata Share of the First Remaining Relinquished Quotas for
Fair
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Market Value. Such Quotaholders may elect to purchase all or less than all of
their entire Pro Rata Share of the Second Remaining Relinquished Quotas, and any
remaining portion thereof will be reoffered to Quotaholders that continue to
elect to purchase their entire Pro Rata Share of the remaining Relinquished
Quotas until no such Quotaholder elects to purchase any additional Relinquished
Quotas; provided that a Quotaholder must elect to purchase Second Remaining
Relinquished Quotas by delivering an Acceptance Notice of such election within
45 business days after the delivery of the Death/Bankruptcy Notice.
(c) Any of the Relinquished Quotas that the Quotaholders do not
elect to purchase pursuant to clauses (a) and (b) of Section 2.4 will be
reoffered to the Company. The Company may elect to purchase such Relinquished
Quotas at Fair Market Value by delivering an Acceptance Notice of such election
to the Withdrawn Quotaholder within 65 business days after the delivery of the
Death/Bankruptcy Notice.
(d) If Acceptance Notices with respect to all Relinquished
Quotas are given within the time periods described above, the Death/Bankruptcy
Notice, together with the Acceptance Notice(s) related thereto, will constitute
a binding agreement between the parties thereto to buy and to sell the
Relinquished Quotas for Fair Market Value, the provisions established in Section
2.4(a) being observed at all times. All Transfers of Offered Quotas pursuant to
the foregoing provisions of this Article II will be consummated as soon as
practicable, but in any event within 75 business days after delivery of the
Death/Bankruptcy Notice; provided, however, that such 75 business-day period
shall be extended to the extent necessary to obtain as promptly as practicable
any governmental and/or other approvals required in connection with such
Transfer.
(e) If Acceptance Notices with respect to all Relinquished
Quotas are not given within the time periods described above, the Withdrawn
Quotaholder may, subject to Section 2.6, Transfer any number of the Relinquished
Quotas to one or more third parties.
2.5 COSTS. Except as otherwise provided in this Agreement, the
Quotaholder effecting a Transfer shall pay, or reimburse the Company for, all
reasonable costs incurred by the Company in connection with the Transfer
(including, without limitation, any legal fees incurred in connection with the
consideration of the implications thereof under applicable laws).
2.6 ADDITIONAL RESTRICTIONS. In addition to all other applicable
provisions of this Agreement, it shall be forbidden for any purported Transfer
to be made (i) within two years from the date of this Agreement, except pursuant
to Section 2.4 or Section 3.3, or (ii) unless and until the Company has received
a document executed by both the Quotaholder effecting the Transfer and the party
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to which the Quotas are transferred containing the transferee's agreement to be
bound by this Agreement in respect of the Quotas being obtained.
ARTICLE III
TERM AND TERMINATION
3.1 TERM. This Agreement shall be deemed effective as of the date
hereof and, unless earlier terminated pursuant to Section 3.2, shall remain in
effect so long as the Company remains in existence.
3.2 TERMINATION.
(a) This Agreement may be terminated by Stoneridge, subject to
Section 3.6, or by Ferretti and Xxxxx acting collectively, by giving written
notice to the other Quotaholder(s) within 30 days of the applicable event, if:
(i) the Alternate Quotaholder is in breach of this Agreement
(which breach, if not cured, would have a material adverse effect in
excess of R$ 100.000,00 (one hundred thousand reais), said amount
monetarily corrected by the IGPM, on the operations, property or
financial condition of a non-breaching Quotaholder or the Company) (a
"Material Breach"), and such breach is not cured within 60 days of
receiving written notice from a Quotaholder giving reasonable
particulars of such breach or, if such default cannot reasonably be
cured within such 60-day period, (A) the Quotaholder in breach fails
promptly to take and continue to take all reasonable steps to cure the
breach as promptly as practicable after receipt of such notice or (B)
at the end of such 60-day period it appears that the breaching
Quotaholder will not be able to cure the breach within a commercially
reasonable time (not to exceed an additional 60 days); or
(ii) a Triggering Event (as defined in Section 2.4(a))
occurs with respect to the Alternate Quotaholder
(b) This Agreement shall automatically be terminated upon:
(i) the written consent of all Quotaholders;
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(ii) the consummation of the purchase and sale of Quotas
pursuant to Article IV.
3.3 BUYOUT RIGHTS. If Stoneridge, Ferretti or Xxxxx desire to
terminate this Agreement pursuant to Section 3.2(a), the party entitled to
terminate this Agreement (the "Terminating Party") shall have the right (the
"Buy-out Right"), in addition to any other remedy that may be available, to
acquire all of the Quotas then owned by the Alternate Quotaholder (the "Called
Interest") for a cash price equal to (i) 95% of the Fair Market Value of the
Called Interest if this Agreement is terminated pursuant to Section 3.2(a)(i),
or (ii) 100% of the Fair Market Value of the Called Interest if this Agreement
is terminated pursuant to Section 3.2(a)(ii). The Buy-out Right may only be
exercised by the giving of written notice (the "Buy-out Notice") by the
Terminating Party to the Alternate Quotaholder within ten days after the end of
the cure period referred to in Section 3.2(a)(i). Delivery of the Buy-out Notice
shall constitute an irrevocable election by the Terminating Party to exercise
the Buy-out Right. The purchase and sale of the Called Interest shall be
consummated as soon as practicable following the determination of the Fair
Market Value of the Called Interest, but in no event more than 30 days
thereafter (subject to any extension necessary to comply with any applicable
regulatory requirement). In determining Fair Market Value for purposes of this
Section 3.3 following a Material Breach (as defined in Section 3.2), the effect,
if any, of the Material Breach on the Company shall be taken into account.
3.4 DISSOLUTION AND LIQUIDATION. Upon the termination of this
Agreement, unless one Quotaholder acquires all of the Quotas held by all other
Quotaholders and the other Quotaholders' Affiliates, the Quotaholders shall
cause the Company to be dissolved and liquidated in accordance with applicable
law and shall cooperate in good faith with each other for such purpose. Upon the
dissolution of the Company, for whatever reason, (i) the Quotaholders shall use
their reasonable best efforts to fulfill any customer requirements that remain
at such time, and (ii) all of the parties hereto shall receive a world-wide,
non-exclusive, paid-up, royalty free, license to use all technology owned by the
Company for any purpose (it being understood that technology licensed to the
Company will remain the property of the licensor).
3.5 EFFECT OF TERMINATION; SURVIVAL. The termination of this
Agreement for any reason shall not release any Quotaholder from its liability to
the Company or the other Quotaholders for accrued obligations and liabilities,
and the provisions of Sections 5.1 and 5.2 and Article VI shall survive such
termination.
3.6 PREEMPTION OF RIGHTS. If either of the events described in
Section 3.2(a) (i) or (ii) occurs with respect to either Ferretti or Xxxxx (the
"Exiting Quotaholder") but not both, then the other individual Quotaholder shall
have the right to purchase the Quotas of the Exiting Quotaholder on the terms
set forth in
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Section 3.3 and if such Quotas are so purchased Stoneridge shall not have the
right to terminate this Agreement as provided in Section 3.2.
ARTICLE IV
[Intentionally omitted.]
ARTICLE V
ADDITIONAL COVENANTS
5.1 PROTECTION OF BUSINESS.
(a) Subject to the provisions of Section 5.1(f), for the period
commencing on the date hereof and ending, with respect to each Quotaholder, on
the date on which such Quotaholder ceases to own Quotas or on which this
Agreement is terminated, whichever is earlier, such party shall not in South
America directly or indirectly, whether for its own account or as Quotaholder,
partner, joint venturer, director, employee, consultant, agent or otherwise,
engage in the automotive security entry system business other than through the
Company.
(b) In the event that during the term of this Agreement
Stoneridge determines to conduct the automotive security entry system business
outside of South America, it will endeavor to use the technology of the Company
in this business, on terms that are mutually agreeable to all Quotaholders.
(c) If a Quotaholder sells all of his or its Quotas, such
Quotaholder agrees not to engage in the automotive security entry system
business in South America for two years from the date of such sale.
(d) If this Agreement is terminated, unless Stoneridge acquires
all of the outstanding Quotas, Stoneridge will not engage in the automotive
security entry system business in South America for two years from the date of
termination, except to service then current customers.
(e) License agreements to be entered into between the Company
and the Quotaholders will govern additional businesses of the Company and the
rights the parties will have to engage in these businesses if the Company is
dissolved or if this Agreement is terminated.
(f) The provisions of this Section 5.1 are not intended, and
shall
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not be deemed, to derogate from the obligations of the Quotaholder under or
referred to in Section 5.2.
5.2 CONFIDENTIALITY. License agreements relating to intellectual
property, technology and technology assistance shall contain appropriate
confidentiality provisions to which the parties thereto and all Quotaholders
shall agree.
5.3 COMPLIANCE with Foreign Corrupt Practices Act; Sensitive
Payments. The Company and its principals and agents will comply with the United
States Foreign Corrupt Practices Act ("FCPA") and shall adopt, if requested by
Stoneridge, any FCPA compliance program recommended by Stoneridge. Each
Quotaholder (the "Representing Quotaholder") represents and covenants to the
other Quotaholders that no Affiliate, employee, agent or other representative of
the Representing Quotaholder or of any Affiliate of the Representing Quotaholder
has given or received or shall give or receive any commission, fee, rebate,
gift, entertainment or other payment or remuneration of significant cost or
value to or from (i) the other Quotaholders, their respective Affiliates,
employees, agents or representatives or (ii) the government of Brazil or any
agency, political party or official thereof, in connection with the transactions
contemplated hereby, which would constitute an illegal act under applicable
Brazilian or United States law. Each Quotaholder (the "Notifying Quotaholder")
agrees to notify the other Quotaholders promptly in the event of any violation
of the foregoing by any Affiliate, employee, agent or representative of the
Notifying Quotaholder or any Affiliate thereof. In addition, each Quotaholder,
its Affiliates, employees, agents and representatives shall indemnify and hold
the other Quotaholders harmless from and against any and all costs, expenses,
fines, penalties and other sanctions imposed by any governmental entity as a
result of the inaccuracy of the foregoing representation or the breach of any of
the foregoing covenants.
5.4 COMPLIANCE WITH LAWS BY THE COMPANY. The Company shall conduct
its business and otherwise act in compliance with all applicable laws and
regulations.
5.5 PERFORMANCE BY THE COMPANY. The Quotaholders shall take all
reasonable steps to facilitate the implementation of the transactions
contemplated by this Agreement and to cause the Company to acknowledge and
perform the obligations on the Company's part to be performed by it hereunder.
5.6 ADDITIONAL COOPERATION. In the event that any Quotaholder
exercises any right under this Agreement to buy or sell, or to cause another
party to buy or sell, Quotas or assets of the Company (including, without
limitation, pursuant to Articles II or IV), each of the Quotaholders shall use
its reasonable best efforts to obtain all necessary approvals of the applicable
transaction.
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ARTICLE VI
MISCELLANEOUS
6.1 CERTAIN TERMS AND DEFINITIONS. For the purpose of this
Agreement, the following terms shall have the following meanings:
"Affiliate" of another person shall mean any person directly or
indirectly controlling, controlled by, or under common control with, such other
person, or any officer or director of any such person or Affiliate thereof.
"Alternate Quotaholder" means, with respect to Stoneridge, either
Ferretti or Xxxxx; and with respect to Ferretti and Xxxxx, acting collectively,
Stoneridge.
"Fair Market Value" shall mean, with respect to Quotas, the
product of (i) the percentage of the equity of the Company represented by such
Quotas and
(ii) the Fair Market Value of the Company. The Fair Market Value of the Company
shall be the cash price that an unrelated party would pay for all of the
outstanding quotas of capital of the Company, in light of all relevant factors
in an arm's length transaction in which neither party is compelled to buy or
sell. The applicable Fair Market Value shall be determined pursuant to the
procedure set forth in the balance of this paragraph. The parties buying and
selling Quotas shall negotiate in good faith to determine the Fair Market Value
for a 30-day period beginning on the date of the occurrence of the event which
triggers the valuation. If the parties cannot agree on the Fair Market Value
within such 30-day period, the party or parties buying Quotas, on one hand, and
the party or parties selling Quotas, on the other hand, shall each appoint,
within ten days after the end of such period, an investment banking firm or
other firm with significant experience in the valuation of businesses, having
substantial experience in the valuation of Brazilian enterprises similar in size
and structure to the Company, other than the accountants or auditors of the
Company, of recognized standing, which firms shall be independent of the
Quotaholders (each such firm, an "Appraiser"). If either of the parties fails to
select an Appraiser within the 30-day period, the Fair Market Value shall be the
amount determined by the Appraiser selected by the other party. Each of the
Appraisers selected by the parties shall determine the Fair Market Value within
a period of 30 days from the date of their selection. In the event of a
difference of 10% or less between the Fair Market Value determined by each
Appraiser, the Fair Market Value shall be the average of the Fair Market Values
determined by the two Appraisers. In the event of a difference of more than 10%
between the
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Fair Market Values determined by each Appraiser, then a third Appraiser shall be
selected by the Appraisers selected by each of the parties. Upon its selection,
the third Appraiser shall, within a period of 60 days from the date of its
selection, make its determination of the Fair Market Value, and the Fair Market
Value shall be the average of the Fair Market Values as determined by the three
appraisers. The Quotaholders shall share equally the costs of compensating all
of the foregoing Appraisers. The Company shall disclose and make available to
the Appraisers all of the information regarding the operations and financial
condition of the Company as may be reasonably requested by the Appraisers in
order to conduct and conclude their appraisals within the time periods set forth
herein.
"AIGPM" shall mean General Price Index-Market, published by the
Xxxxxxx Xxxxxx Foundation.
"Quotaholder" shall mean a party to this Agreement and
"Quotaholders" shall mean the Quotaholders collectively.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof), any sale of receivables with recourse against the Company or any
subsidiary, any filing or agreement to file a financing or other statement as
debtor under the [Uniform Commercial Code] or any similar statute other than to
reflect ownership by a third party of property leased to the Company or any
subsidiary under a lease which is not in the nature of a conditional sale or
title retention agreement, or any subordination arrangement in favor of another
Person (other than any subordination arising in the ordinary course of
business).
"Person" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
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6.2 REFORMATION; SEVERABILITY.
(a) Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is finally determined by a court of
competent jurisdiction to be unenforceable or invalid under applicable law, such
provision will be effective only to the extent of its enforceability or
validity, without affecting the enforceability or validity of the remainder of
this Agreement, and the Quotaholders agree that such court shall have
jurisdiction to reform this Agreement to the maximum extent permitted by law,
and the Quotaholders agree to abide by the court's determination. In the event
that any such provision of this Agreement cannot be reformed, such provision
will be deemed severed from this Agreement, but every other provision of this
Agreement shall remain in full force and effect.
(b) Without limiting the generality of the foregoing, if for any
reason any portion of the restrictions contained herein are held to be
unreasonable, arbitrary, or against public policy, then the restrictions shall
be considered divisible, both as to the time and to the geographical area, with
each month of the specified period being deemed a separate period of time and
each radius mile of the restricted territory being deemed a separate
geographical area, so that the lesser period of time or geographical area shall
remain effective so long as the same is not unreasonable, arbitrary, or against
public policy. The Quotaholders hereto agree that in the event any court of
competent jurisdiction determines the specified period or the specified
geographical area of the restricted territory to be unreasonable, arbitrary, or
against public policy, a court of competent jurisdiction shall construe and
interpret or reform such provision so that a lesser time period or geographical
area which is determined to be reasonable, non arbitrary, and not against public
policy may be enforced against the Quotaholders and the Company.
6.3 COUNTERPARTS; GOVERNING LAW, ARBITRATION AND LANGUAGE.
(a) This Agreement is simultaneously executed in English and
Portuguese; in case of discrepancy between such languages, the Portuguese
language shall prevail. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original but all of which shall constitute one
and the same agreement.
(b) This Agreement shall be governed by the laws of Brazil. The
Courts sitting in the City of Sao Paulo, State of Sao Paulo, shall have
exclusive jurisdiction over any questions regarding the construction and
interpretation or any controversy or claim arising out of or relating to this
Agreement, or the breach thereof or relationship created thereby.
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6.4 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be delivered
in two of the following mediums: personally delivered, sent by certified mail
(return receipt requested) or sent by facsimile (confirmation of receipt
requested) to the respective parties as follows:
if to Stoneridge:
Stoneridge, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxx, XXX 00000
Attention: Xx. Xxxxx X. Xxxxxxx
with a copy to:
Xxxxx & Xxxxxxxxx LLP
3200 National City Center
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx, XXX 00000-0000
Telecopier: (000) 000-0000
Attention: Xx. Xxxxx X. Xxxxx
if to Xxxxxx Xxxxxxxx:
Xxx Xxxxx Xxxxxx xx Xxxxx, Xx. 00
Bl. 1, apt. 41, Jardim Santa Genebra
01380-570 Campinas, SP
Brasil
with a copy to:
Xxxxxxx Xxxxxxx de Xxxxxxx
Xxxxx & Xxxxx
Condominio Sao Xxxx - xxxxx I - 7 degrees. andar
Av. Pres. Xxxxxxxxx Xxxxxxxxxx, 1830
04543-900 Sao Paulo, SP
Brasil
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if to Xxxxxx xx Xxxxxxxxx Xxxxx:
Xxx Xxxxxxx Xxxxxx, Xx. 000
Xxx.00 - Xxxxxx
00000-000 Campinas, SP
Brasil
with a copy to:
Xxxxxxx Xxxxxxx de Xxxxxxx
Xxxxx & Xxxxx
Condominio Sao Xxxx - xxxxx I - 7 degrees. andar
Av. Pres. Xxxxxxxxx Xxxxxxxxxx, 1830
04543-900 Sao Paulo, SP
Brasil
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt of notice of the change). Notices will be deemed to have been given
hereunder when delivered personally, 15 business days after deposit in the mail,
or when confirmation of receipt is received; provided, however, that delivery of
a notice will be deemed to occur only when the later of the two deliveries is
deemed to have been given.
6.5 SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon all of the Quotaholders and their respective permitted successors
and assigns, but, except as otherwise provided herein, neither the rights nor
the obligations of any Quotaholder hereunder may be voluntarily assigned, in
whole or in part, without the prior written consent of all of the other
Quotaholders, which consent may be withheld at such Quotaholders' sole
discretion.
6.6 WAIVERS AND AMENDMENTS; PRESERVATION OF REMEDIES. This
Agreement may be amended, modified, superseded, canceled, renewed or extended,
and the terms and conditions hereof may be waived only by a written instrument
signed by the Quotaholders or, in the case of a waiver, the Quotaholder waiving
compliance. No delay on the part of any Quotaholder in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
waiver on the part of any Quotaholder of any right, power or privilege
hereunder, nor any single or partial exercise of any right, power or privilege
hereunder, preclude any other exercise thereof hereunder. The rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies which any Quotaholder may otherwise have at law or in equity. The
rights and remedies of
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any Quotaholder arising out of or otherwise in respect of any inaccuracy in or
breach of any material representation, warranty, covenant or agreement contained
in this Agreement shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claims of such inaccuracy or
breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement contained in this Agreement (or in any other
agreement between the Quotaholders) as to which there is no inaccuracy or
breach.
6.7 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the Quotaholders with respect to the subject matter hereof and
supersedes all prior agreements, understandings and negotiations, both oral and
written, between the Quotaholders hereto with respect to the subject matter
hereof.
6.8 HEADINGS. Descriptive headings in this Agreement are for
convenience only and shall not control or affect the meaning or construction of
any of the provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
/s/ XXXXXX XXXXXXXX
----------------------------------
XXXXXX XXXXXXXX
/s/ XXXXXX XX XXXXXXXXX XXXXX
---------------------------------------
XXXXXX XX XXXXXXXXX XXXXX
STONERIDGE, INC.
By: /s/ COARACI NOGUEIRA DO VALE
--------------------------------------
Name: Coaraci Nogueira do Vale
Title: Attorney in fact
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P.S.T. INDUSTRIA ELETRONICA DA AMAZONIA LTDA.
/s/ MARRCOS FERRETTI /s/ XXXXXX XX XXXXXXXXX XXXXX
--------------------------------------------------------
Xxxxxx Xxxxxxxx Xxxxxx xx Xxxxxxxxx Xxxxx
WITNESSES:
---------------------------------------
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