EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made and entered into this
30th day of June, 1998, by and between
(a) CUMBERLAND DO BRASIL LTDA., a Brazilian company with head-office at Xxx
Xxxxxxxxxx, xxxxxxxxx xxxxxxxx - Xxxxxxx, Xx 119, without number, Nova Odessa,
State of Sao Paulo, enrolled in the taxpayers' list (CGC/MF) under Nr.
01.770.039/0001-50, represented herein pursuant to its Articles of Association
by its managing quotaholder Mr. Joao Xxxxxxx Xxxxxxx xx Xxxxxxxx (the "Buyer");
and
(b) XXXXXXXX SEGATT, Brazilian citizen, married, industrial, resident and
domiciled at Xx. Xxxxxxxxxx Xxxxxx, 000, apt. 302, in the City of Marau, State
of Rio Grande do Sul, bearer of identity card ("RG") Nr. 2021837899 and enrolled
in the Individual Taxpayer's List ("CPF/MF") under Nr. 374.013.430-52 ("LS");
(c) NEURI SEGATT, Brazilian citizen, married, industrial, resident and
domiciled at Xx. Xxxxxxxxxx Xxxxxx, 000, apt. 301, in the City of Marau, State
of Rio Grande do Sul, bearer of identity card ("RG") Nr. 2011708068 and enrolled
in the Individual Taxpayer's List ("CPF/MF") under Nr. 000.000.000-00 ("NS");
(d) EDEMAR SEGATT, Brazilian citizen, married, industrial, resident and
domiciled at Xxx Xxxxxxx Xxxxxxx, 000 - xxx. 000, in the City of Marau, State of
Rio Grande do Sul, bearer of identity card ("RG") Nr. 1013896971 and enrolled in
the Individual Taxpayer's List ("CPF/MF") under Nr. 000.000.000-00 ("ES");
(e) MARI SALETE SEGATT RACTZ, Brazilian citizen, married, industrial, resident
and domiciled at Xxx Xxxxx Xxxxxxxxxx, 0000, in the City of Marau, State of Rio
Grande do Sul, bearer of identity card ("RG") Nr. 5010799343 and enrolled in the
Individual Taxpayer's List ("CPF/MF") under Nr. 366.011.350-00 ("MS");
(f) VANDERLEI SEGATT, Brazilian citizen, married, industrial, resident and
domiciled at Rua Xxxxx Xxxxxxxx, apto. 01, in the City of Marau, State of Rio
Grande do Sul, bearer of identity card ("RG") Nr. 1009220946 and enrolled in the
Individual
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Taxpayer's List ("CPF/MF") under Nr. 000.000.000-00 ("VS"), and, together with
LS, NS, ES and MS, the "Sellers");
and, as intervening party;
(g) AVEMARAU EQUIPAMENTOS AGRICOLAS LTDA., a Brazilian company with head-office
at Xxxxxxx XX 000, Xx 00, in the City of Marau, State of Rio Grande do Sul,
enrolled in the taxpayers' list (CGC/MF) under Nr. 89.763.312/0001-60,
represented herein pursuant to its Articles of Association by its Managing
Quotaholder Mr. Edemar Segatt, qualified above ("Avemarau")
WITNESSETH:
WHEREAS, Avemarau is engaged, among other activities, in the business of
manufacture and sale of poultry confinement equipment (excluding incubation
equipment) and swine confinement equipment in Brazil (the "Business").
WHEREAS, pursuant to the terms and conditions set forth herein, the Purchaser
desires to acquire from the Sellers 100% of the Stock of Avemarau (as defined
herein).
WHEREAS, each of the Sellers owns 20% of the Stock of Avemarau and, therefore,
hold in the aggregate 100% of such Stock.
NOW, THEREFORE, in consideration for the promises and covenants contained
herein, the parties hereof agree as follows, executing the Letter of Intent
signed by The GSI Group, Inc., Sellers and Avemarau on April 20, 1998:
ARTICLE 1 DEFINITIONS
1.1 Definitions. The following terms are used in this Agreement with the
meaning set forth in this Section, as follows:
Assets Defined in Section 3.7
Lease Assets Defined in Section 3.7
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Pledge Agreement Defined in Section 6.4
Main Costumers Defined in Section 3.2
Payment Date Any of the Closing Date and the date in which each
instalment of the Purchase Price established in Section
2.3(b) and each of the instalments of the Earnout
Amount Payment shall be made.
Closing Date June 30th, 1998 or any other date agreed to by the
parties
Business Day Business day is any day in which the financial
institutions are open and operating in Brazil and in
New York, New York
Closing Closing means the performance of the necessary acts to
the execution of the sale of the Quotas and the payment
of the instalments of the Purchase Price defined in
Section 2.3(a)
Net Profit Defined in article 191 of Brazilian Corporate Law (Law
number 6.404/76) before deductions for purposes of
corporate income tax and social contribution on profit.
Grain Bins Business Defined in Section 2.4 (c)
Loss Defined in Section 8.1
Claim Defined in Section 8.3 (b)
Purchase Price Purchase price is the purchase price for the Quotas, as
defined in Section 2.2
Additional Price Defined in Section 8.1
Claim Defined in Section 8.3
Quotas Quotas representing 100% of the capital stock of
Avemarau as of the Closing Date
Real The currency of the Federative Republic of Brazil
ARTICLE 2 PURCHASE OF QUOTAS OF AVEMARAU
2.1 Purchase of Quotas of Avemarau. On the Closing Date, subject to the
conditions set out in this Agreement, Buyer agrees to buy and Sellers agree to
sell,
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transfer, assign and deliver to Buyer 41,000,000 (forty one million) quotas,
representing 100% of the total capital of Avemarau (the "Quotas"), with its
rights, including but not limited to dividends, bonds and subscription right,
which shall be free and clear of all liens, pledges, encumbrances, options,
rights of first refusal and other claims of any kind whatsoever.
2.2 On the Closing Date, Buyer shall pay to the Sellers the amount
indicated in Section 2.3 (a) and the Sellers shall sign together with the Buyer
the amendment to the Articles of Association of Avemarau through which the
Quotas will be transferred to the Buyer and to whom the Buyer indicates.
2.3 Price of Quotas: The Purchase Price for the Quotas is R$ 14,250,000.00
(fourteen million two hundred and fifty thousand reais) to be paid by the Buyer
to the Sellers as follows:
(a) the amount of R$ 6,250,000.00 (six million two hundred and fifty
thousand reais) shall be paid by the Buyer to Sellers on the Closing Date,
adjusted as defined in Clause 9.7;
(b) the amount of R$ 8,000,000.00 (eight million reais) shall be paid in
four yearly equal and consecutive portions of R$ 2,000,000.00 (two million
reais) each, with maturity date at December 30, 1998, December 30, 1999,
December 30, 2000 and December 30, 2001. All these amounts shall be readjusted
on the IGP-M index calculated and published by Fundacao Xxxxxxx Xxxxxx, as
defined in Section 9.7.
2.4 Earnout Amount: Sellers may be entitled to receive an Earnout Amount
("Earnout Amount") for the sales of the Quotas, as defined in this Section 2.4,
provided that the calculated value in accordance with item (a) below be
positive:
(a) 10 (ten) days after the completion of the auditing of the financial
statements of Avemarau, for each of the years ending that shall occur in the
term counted from the ending of the year, by the the auditors indicated as
definied in Clause 7.5, respectively, on December 30, 1998, December 30, 1999,
December 30, 2000 and December 30, 2001, respectively, Buyer shall pay the
Sellers an amount equivalent to (i) the Net Profit of Avemarau with respect to
preceding year from which shall be deducted (ii) R$4,246,000.00 (four million
two hundred and forty-six thousand reais), as adjusted as specified in Section
9.7; multiplied by 1.25 (one point twenty
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five), and from the result of such calculation shall be deducted the amount paid
by the Buyer to the Sellers on December 30 of the immediately preceding year, in
accordance with Section 2.3(b) above. The result of the calculations provided in
this Section 2.4 is the Earnout Amount for the Quotas (the "Earnout Amount"),
which is subject to the limit set forth in Section 2.4 (b). For purpose of
clarification Annex A contains examples of methodology of calculating the
Earnout Amount.
(b) The maximum amount to be paid by the Buyer to the Sellers as Earnout
Amount calculated on a cumulative basis and adjusted as specified in Section 9.7
shall not exceed the amount of R$ 7,000,000.00 (seven million reais).
(c) For determination of the Net Profit, it will not be considered the
results from the manufacture and/or sales of the grain bins, equipment for
movement and drier of grains and other equipment related to them (except from
those used in the feed of pigs and poultry) developed by Avemarau or its
successor ("Grain Bins Business"), the Sellers are allowed to permanently
maintain an employee to follow the business and its accounting. In case the
Buyer mergers the Company, the determination of the Net Profit shall not be
affected by conduction of the Grain Bins Business by the Buyer. The parties
shall establish the accounting criterions to segregate the activities developed
by the Buyer in order to determinate the Net Profit, on a 60 (sixty) days term
counted from the present date. In case there is no understanding between the
parties relating to such subject, they shall request to a renown auditing
company among: (i) Bocinhas, (ii) Bianchesi & Bianchesi ou (c) Price Waterhouse
chosen by the Sellers, which shall establish the criterions in view of the
purposes of the present agreement. The parties will share the incurred costs.
2.5 Payments. On any Payment Date Buyer shall pay the applicable portion
of the Purchase Price, as set forth in Sections 2.3 and 2.4 above, to Sellers by
means of certified checks or wire transfer to the bank account in Brazil
designated in writing by Sellers to Buyer five business days prior to any
Payment Date.
2.6 Closing Place. The closing of the transactions provided for in this
Agreement as well as the signature of the ancillary agreements shall occur at
the city of Marau, State of Rio Grande do Sul, at Avemarau's headquarters.
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2.7 Deliveries et Closing. At the Closing, each of the Sellers and the
Buyer shall deliver to the other all of the documents and instruments required
to be delivered by it pursuant to this Agreement.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers represent and warrant to Buyer, under the penalties of the law, as
follows:
3.1 Capitalization. As of the Closing, Avemarau capital stock is
represented by 41,000,000 quotas, all of which are owned by the Sellers. The
Quotas were duly subscribed and paid by their respective holders. As of the
Closing, there shall be no outstanding options, warrants, rights commitments or
agreement obligating Avemarau or the Sellers to subscribe, deliver, sell or at
any other manner transfer the quotas of Avemarau's capital stock, and such
quotas shall be, at any time, free and clear of all liens, pledges,
encumbrances, options, rights of first refusal and other claims of any kind
whatsoever.
3.2 Corporate Records of Avemarau. The Articles of Association of Avemarau
and all its Amendments represent all corporate documents of Avemarau as foreseen
in Annex 3.2.
3.3 Organization and Good Standing. Avemarau is a limited liability
company duly organized, validly existing and in good standing under the laws of
Brazil, and duly qualified to conduct business as currently carried on.
Additionally, Avemarau has full condition to own the assets currently owned by
Avemarau.
3.4 Power and Authorization. The Sellers have full power and capacity to
enter into this Agreement, to perform their obligations hereunder and to
consummate the transactions contemplated hereby.
3.5 Binding Effect. This Agreement constitutes the legal, valid and
binding obligation of the Sellers and enforceable in accordance with its terms.
3.6 No Violation and Consents. Neither the execution of this Agreement by
the Sellers nor the performance by the Sellers of any of their obligations
hereunder will:
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(a) violate or conflict with any provision of the Articles of Association
of Avemarau;
(b) violate, breach or otherwise constitute or give rise to a default
under any material contract, commitment or other obligation to or by which the
Sellers or Avemarau is a party or is bound;
(c) violate or conflict with any statute, ordinance, law, rule,
regulation, judgement or order of any court or other governmental or regulatory
authority to which the Sellers or Avemarau is subject; or
(d) except as set forth on Schedule 3.6 (d), require any consent,
approval or authorization of, notice to, or filing or registration with any
person, entity, court or governmental or regulatory authority.
3.7 Assets. Schedule 3.7-1 describes all of the assets, goods and rights
of Avemarau ("Assets") in a manner sufficient to permit Buyer to identify and
locate such Assets. The Assets constitute and include all of the assets which
are used or employed in connection with the operation of the Business, which are
in condition of being properly used in accordance with its purposes and
constitute the required and sufficient assets to operate the Business of
Avemarau in a manner consistent with past operations conducted by Avemarau,
which the Buyer checked and agreed with. As of the date hereof Avemarau has
good, valid and transferable title to all of the Business Assets (other than the
Leased Assets as hereinafter defined), free and clear of all liens, charges,
security interests and other encumbrances, except from those which encumbrance
is declared in the correspondent Schedule. Schedule 3.7-2 identifies all of the
Business Assets which are leased by Avemarau from any person or entity
(collectively, the "Leased Assets"). As of the date hereof Avemarau has the
right to use all of the Leased Assets to the operation of the Business pursuant
to valid and enforceable lease agreements. All of the Business Assets are in
good operating condition (normal wear and tear excepted).
3.8 Real Property. Schedule 3.8 set forth a complete and correct list of
all real property used in connection with the operation of the Business of
Avemarau, which are free and clear of all liens, claims, disputes, security
interests and other encumbrances, except for those described in the mentioned
Schedule.
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3.9 Intellectual Property. Schedule 3.9 contains a complete list of all
licenses contracts, patents, standard forms of utilities, industrial draw,
marks, commercial names, author rights and pending or delayed requests that
Avemarau is a party or has title ("Intellectual Property") used by the Business
in, or necessary to, the operation of the Business. As of the date hereof,
Avemarau owns or holds a valid license to use all rights, title and interest in
and to all such Intellectual Property.
3.10 Inventories. The Business inventory made as of reflected in the
balance sheet provided to Buyer during the due diligence process, represented
the actual inventory of the raw material, semi-finished and finished products
and other items connected with the Business as of the day of such balance sheet
was issued. Such inventory consisted of items of a quality and quantity usable
and saleable in the ordinary course of the Business, and the values of obsolete
materials, excess materials and materials below standard quality have been
written down on Avemarau's books and records on a consistent basis to realizable
market value, or adequate reserves have been provided thereof.
3.11 Contracts and Commitments. Schedule 3.11 contains a list which
identifies and briefly describes all written and oral contracts and agreements,
verbal or in written of Avemarau, including but not limited to leases,
guaranties or commitments relating to the Business to which Avemarau is a party
or by which Avemarau may be bound: (i) involving the payment by or to the
Business of more than R$100,000 (one hundred thousand reais) in any twelve (12)
month period; (ii) which may not be terminated by the Business on less than
ninety (90) days' prior notice; or (iii) which is otherwise material to the
operation of the Business of Avemarau. Each such contract, agreement, guaranty
or commitment was entered into in the ordinary course of the Business, is in
full force and effect, is valid and enforceable in accordance with its terms,
constitutes a legal and binding obligation of the respective parties thereto,
and is not the subject of any notice of default, termination or partial
termination. Avemarau has complied in all material respects with the provisions
of each such contract, agreement, guaranty and commitment.
3.12 Product Liabilities. Avemarau does not have any liability (a
"Liability"), arising out of any injury material or individual, suffered by any
individual as a result of the use of any product manufactured by Avemarau.
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3.13 Litigation. Except as set forth on Schedule 3.13, Sellers has no
knowledge of any lawsuit, legal or regulatory proceeding, arbitration or
governmental investigation pending or, threatened by or against Avemarau or the
Sellers which may result in any liability to Avemarau, or which otherwise
affects the Business Assets, the Business, or Avemarau's or the Sellers' ability
to perform its obligations under this Agreement.
3.14 Permits and Licenses. Avemarau holds all required permits, licenses,
approvals and authorizations from all governmental or regulatory authorities
which are necessary to conduct the Business, except to the extent that the
failure to hold any such permit, license, approval or authorization does not
have a material adverse effect on the Business. As of the date hereof, all of
such permits, licenses, approvals and authorizations are in full force and
effect. All of such permits, licenses, approvals and authorizations are listed
on Schedule 3.14.
3.15 Legal Compliance. Avemarau has complied with all laws, statutes,
rules, regulations, orders, decrees and ordinances applicable to it or the
operation of the Business, including, without limitation, all trade regulations,
orders, decrees and ordinances relating to environmental, trade regulation,
labor, benefits and employment matters.
3.16 Insurance. Schedule 3.16 contains a complete description (including
the expiration date, premium amount and coverage thereunder) of all policies of
insurance and bonds presently maintained by, or providing coverage for, Avemarau
or any of its officers relating to the Business, all of which are in full force
and effect, together with a complete list of all pending claims under any of
such policies or bonds. All material terms, obligations and provisions of each
of such policies and bonds have been complied with, all premiums due thereon
have been paid, and no notice of cancellation with respect thereto has been
received. Such policies and bonds provide adequate coverage to insure the
Business Assets and the Business and the activities of its officers against such
risks and in such amounts as are prudent and customary. Avemarau has delivered
to the Buyer a true, correct and complete copy of each such insurance policy and
bond (or a summary thereof).
3.17 Taxes. Avemarau has paid all Taxes required to be paid by it with and
no such amounts are past due or in delay as of the date hereof. Except as set
forth on Schedule 3.17, Avemarau is not a party or subject to any, collection or
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pending action, proceeding or claim which in any way may result in any liability
to Avemarau. For purposes of this Agreement, "Taxes" shall mean any taxes, fees,
levies, duties, charges or similar assessments (including interest, penalties
and additions) imposed by or payable to any governmental or other taxing
authority, whether federal, state, local or otherwise, including, without
limitation, income, withholding, ad valorem, value added, social security,
social contribution, financial, real and personal property, sales, use,
employment, services and other taxes of any kind or nature.
3.18 Environmental Matters. Except as disclosed on Schedule 3.18 and
except for any acts, conditions, omissions or circumstances of the sort
described below in this Section 3.18 that could not have a material adverse
effect to Avemarau:
(i) the conduct of the Business is in compliance with all Environmental
Laws in effect as of the date hereof, and no condition exists or event has
occurred which would constitute a violation of or give rise to any lien or
encumbrance under any Environmental Law;
(ii) as of the date hereof, Avemarau has not received any written notice
from any Governmental Body or any other person that any aspect of the operation
of Avemarau is in violation of any Environmental Law or Environmental Permit, or
that one of them is responsible for the cleanup or remediation of any substance
at any location;
(iii) Avemarau is not the subject of any litigation or proceedings in any
forum, judicial or administrative, involving a demand for damages, injunctive
relief, penalties, or other potential liability with respect to violations of
any Environmental Law in connection with the operations of the Business or the
Business Assets;
For purposes of this Agreement, "Environmental Law" shall mean any law,
regulation, judgement or governmental requirement enacted, entered into or
imposed by any Brazilian governmental authority which relates to or otherwise
imposes liability or standards of conduct concerning the manufacturing activity
performed by Avemarau referred to odors or any pollutants, contaminants, or
hazardous or toxic wastes, substance or materials, whether as material or
energy, into ambient air, water, or land, or otherwise relating to the
manufacture, processing, generation, distribution, use, treatment, storage,
disposal, cleanup, transport or handling of pollutants, contaminants or
hazardous or toxic wastes, substances or materials.
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3.19 Labor Related Matters. Each employee of Avemarau is regularly
registered as such in the proper registry books, together with his corresponding
salary, all in compliance with applicable laws and regulations. Avemarau has
obtained all registrations and filings and have taken all necessary actions
required under all applicable social security and labor laws and regulations
with respect to such employees. Except as set forth on Schedule 3.19-1, Avemarau
is not a party to any collective bargaining agreement or agreement of any kind
with any union or labor organization relating to the Business. Other than as set
forth on Schedule 3.19-2, Avemarau is not a party to any labor dispute which may
create a liability or which otherwise affects the Business Assets.
3.20 Main Customers. Schedule 3.20 contains a list of the twenty largest
customers by sales (the "Main Customers") of Avemarau for the year of 1997,
showing the amounts purchased by each Main Customer, by geography respect to
each line of products manufactured or sold in connection with the operation of
the Business. Avemarau has not received any notice from any such Main Customer
that it intends to terminate, decrease or otherwise adversely alter its
relationship with the Business or its successor which would materially and
adversely affect the Business (individually or in the aggregate).
3.21 Compensation Structure. Schedule 3.21 contains a true and complete
list of the names, titles and compensation arrangements of each employee of the
Business (including, without limitation, all salary wages, bonuses, accrued
vacation, and other fringe benefits). No such employee has informed or advised
Avemarau (or is Avemarau otherwise aware) that he does not intend to continue
his employment with the Business after the date hereof. Avemarau has hereto
provided Buyer with copies of all written agreements, correspondence, memoranda
and other written materials currently in effect which have been provided to such
employees relating to their current compensation. A list of such agreements is
set forth on Schedule 3.21.
3.22 Material Adverse Change. No fact, circumstance, or event which would
cause or generate a material adverse change on the Business, or the assets of
the Business has occurred or has not been disclosed and accepted by Buyer in
writing since December 31, 1997.
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3.23 Accurate Representations and Warranties. No material fact,
circumstance, or event has occurred or has not been disclosed and accepted by
Avemarau which is necessary in order to make the representations and warranties
made herein not untrue or not misleading. Such representations and warranties do
not contain any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements herein, in the light of
the circumstances under which they were made, not misleading.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer hereby represents and warrants as follows:
4.1 Organization and Good Standing. The Buyer is a limited liability
company duly organized, validly existing and in good standing under the laws of
Brazil.
4.2 Power and Authorization. Buyer has full corporate power and capacity
to enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. People who represent the Buyer
equally have powers to represent it and declarations rendered are true and the
undersigned are responsible for them
4.3 Binding Effect. This Agreement constitutes the legal, valid and
binding obligation of Buyer enforceable in accordance with its terms.
4.4 No Violation, Consents. Neither the execution and delivery of this
Agreement by the Buyer nor the performance by the Buyer of its obligations
hereunder will:
(a) violate or conflict with any provision of the Bylaws of Buyer;
(b) violate, breach or otherwise constitute or give rise to a default
under any material contract, commitment or other obligation to or by which Buyer
is a party or is bound;
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(c) violate or conflict with any statute, ordinance, law, rule,
regulation, judgement or order of any court or other governmental or regulatory
authority to which Buyer is subject; or
(d) except as set forth on Schedule 3.6(d), require any consent, approval
or authorization of, notice to, or filing or registration with any third party,
court or governmental or regulatory authority.
4.5. Sellers' guarantees: Buyer shall progressively replace the security
bonds made to third parties by the Sellers for the benefit of Avemarau as the
portions of the Purchase Price are paid.
ARTICLE 5 CONDITIONS TO OBLIGATIONS OF BUYER FOR CLOSING
All of the obligations of Buyer under this Agreement were subject to
the fulfilment prior to or at the Closing of each of the following conditions:
5.1 Regulatory Approvals. Except for the XXXX approval, as provided for in
Section 7.2 of this Agreement, Avemarau and the Sellers shall have received from
any and all governmental authorities, bodies or agencies having jurisdiction
over the transactions contemplated by this Agreement such consents,
authorizations and approvals as are necessary for the consummation thereof, if
any.
5.2 Consents, Warranties. All consents and authorizations contemplated in
Section 3 shall be truth and precise at the Closing Date as they have been given
at this date.
5.3 Consents and Approvals of Third Parties. All consents and
authorizations and approvals to the transactions contemplated by this Agreement
that are required pursuant to the terms of any material agreement or arrangement
relating to the Business to which Avemarau is a party or by which Avemarau is
bound or in order to preserve any right, license or franchise held or owned by
Avemarau relating to the Business shall have been duly obtained.
5.4 No Injunctions. No preliminary or permanent injunction or other order
by any federal or state court which prevents the consummation of the
transactions contemplated by
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this Agreement shall have been issued and remain in effect, and no action to
obtain any such injunction or order shall have been filed and remain pending.
ARTICLE 6 CONDITIONS TO OBLIGATIONS OF SELLERS FOR CLOSING
All of the obligations of Sellers under this Agreement are subject to
the fulfilment prior to or at the Closing of each of the following conditions:
6.1 Approvals. Except as provided for in Section 7.2, any and all
governmental authorities, bodies or agencies having jurisdiction over the
transactions contemplated by this Agreement shall have granted such consents,
authorizations and approvals as are necessary for the consummation thereof.
6.2 Consents, Warranties. All consents and authorizations of the Buyer
contemplated in Section 4 shall be truth and precise at the Closing Date as they
have been given at this date.
6.3 No Injunctions. No preliminary or permanent injunction or other order
by any federal state court which prevents the consummation of the transactions
contemplated by this Agreement shall have been issued and remain in effect, and
no action to obtain any such injunction or order shall have been filed and
remain pending.
6.4 Pledge Agreement. Buyer and Sellers shall have executed a Pledge
Agreement as defined at Schedule 6.4. ("Pledge Agreement").
ARTICLE 7 OTHER AGREEMENTS OF THE PARTIES
7.1 Brokers, Expenses. Each party hereto hereby represents and warrants to
the other party hereto that it has not retained any financial advisers or
intermediaries in connection with the transactions contemplated by this
Agreement. Each party hereto shall pay its own fees and expenses (including the
fees and expenses of its attorneys, accountants, financial advisors and other
professionals) incurred in connection with this Agreement and all transactions
contemplated hereby.
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7.2 XXXX Approval. The parties agree that, if required by applicable law,
the Sellers and the Buyer shall submit the transaction contemplated herein to
the approval of the Conselho de Defesa Economica of the Ministerio da Justica
("XXXX"), bearing the costs of the procedure, consequences of which shall not
affect this transaction.
7.3 Best Efforts. Further Assurances. Subject to the terms and conditions
contained herein, each of the parties hereto agrees to use its best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things reasonably necessary or advisable under applicable laws to consummate and
make effective the transactions contemplated by this Agreement.
7.4 Publicity. From and after the date of this Agreement each party hereto
agrees to obtain the approval of the other party prior to issuing any press
release, written public statement or announcement with respect to the
transactions contemplated by this Agreement; provided, however, that the
provisions of this Section 7.4 shall not prohibit either party hereto from
making any such release, statement or announcement if, upon advice of counsel,
such party believes that it is required to do so under any applicable law or
regulation, and such party shall use reasonable efforts to notify the other
party thereof prior to making such release, statement or announcement.
7.5 Financial Statements. The annual financial statements of Avemarau with
respect to years 1998, 1999, 2000, and 2001 shall be audited by nationally
recognized accounting firm which shall be accepted by the parties to this
Agreement up to the end of the Purchase Price payment, that shall do its job
within a 60 (sixty) days term counted from the ending of each year.
7.6 Ongoing Activity of Avemarau After Closing. The Buyer agrees to invest
at Avemarau, by capital increase, at least R$2,000,000.00 (two million reais)
during the period of twelve months from Closing Date, and to invest also by
capital increase in Avemarau at least R$6,000,000.00 (six million reais),
including the R$2,000,000.00 used during the first twelve months, by December
31, 2001. Additionally, the Buyer shall concentrate all its Brazilian activity
of manufacturing and selling poultry confinement equipment and swine confinement
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equipment in Avemarau, provided, however, that Buyer shall not be required to
manufacture bulk feed tanks at Avemarau.
7.7 Participation of Sellers in Management after Closing. Until the date
of payment of the total amount of the Purchase Price, at least one of the
Sellers shall continue as a member of the management of Avemarau, provided,
however that Avemarau shall not be restricted by this provision from withdrawing
any such Seller from a position with Avemarau if a good cause (xxxxx xxxxx)
characterized under Brazilian labor law.
7.7.1 If any of the Sellers is withdrawn from the management of Avemarau
with no good cause (xxxxx xxxxx), then the Buyer agrees to pay in advance and in
the proportion relative to its Quotas the balance of the Purchase price as set
forth in Section 2.3(b) to such Seller, provided that any such anticipated
payment shall be deducted from future payments under this Agreement.
7.8 Guaranty given by the Buyer. Buyer shall give to the Sellers, as
guarantee of Purchase Price, 51% (fifty one per cent) of the acquired Quotas, in
accordance with the Pledge Agreement.
ARTICLE 8 INDEMNIFICATION
8.1 Indemnification by the Sellers. Subject to the limits of Section 8.4,
as the case may be, the Sellers hereby agree to joint and severally indemnify
and to promptly defend and hold Buyer and/or Avemarau harmless against the full
amount of any and all claims, losses, costs, penalties, fines, damages, expenses
or liabilities of any kind or nature, suffered or incurred, or payment made, by
Buyer or Avemarau (including interest, penalties, monetary correction, legal
fees and legal court expenses) (each hereinafter referred to as a "Loss"),
always granting the defense right to the Sellers in the terms of Clause 8.3,
arising out of:
(a) any inaccuracy in, or the breach of, any representation or warranty
made by Sellers herein or in any Schedule, document or agreement executed by
Sellers (with respect to itself or Avemarau) and delivered to Buyer pursuant
hereto;
16
(b) any breach of any covenant or agreement of Sellers contained herein or
in any Schedule, document or agreement executed by Seller (with respect to
itself or Avemarau) and delivered to Buyer or Avemarau pursuant hereto;
(c) the existence of any contingencies or liabilities of Avemarau,
including any tax, labor, social security, FGTS, social contribution, other
fiscal and tax-related, civil and commercial contingencies or claims of any kind
or nature resulting from actions, omissions, facts or transactions occurred
prior to Closing Date;
(d) the non-confirmation of the good, firm and valuable existence, the
proper legalisation and execution of all Business Assets;
8.2. Indemnification by Buyer. Buyer hereby agrees to indemnify Sellers
and to promptly defend and hold Buyer and/or Avemarau harmless against from and
against any and all Losses incurred by Sellers resulting from to any of the
following:
(a) any inaccuracy in, or breach of, any representation or warranty made
by Buyer herein or in any Schedule, document or agreement executed by Buyer and
delivered to Sellers pursuant hereto;
(b) any breach of any covenant or agreement of Buyer contained herein or
any Schedule, document or agreement executed by Buyer and delivered to Sellers
pursuant hereto.
8.3. Administration of Claims.
(a) Upon the determination at any time a Loss, Buyer shall deliver written
notice to Sellers to the effect that Sellers shall pay such debt to Buyer within
ten (1O) days as of receipt of such notice, in observance of the provisions of
item (b) below;
(b) (i) In the case debts or obligations required to be paid to third parties
that constitutes or may in the future constitute a Loss ("Claim"), Buyer shall
deliver written notice thereof to Sellers within a period limited to one-third
of that for presenting defense or contesting the Claim. The payment of such debt
or obligation shall be required by the Buyer just when the Sellers defend the
Buyer or Avemarau against such debt or obligation if such debt or obligation
become definitely
17
debt, specially with relation to the subjects mentioned in Section 8.1 (c);
(ii) Sellers shall deliver written notice to Buyer up to the end of half
of the period for presenting defense or contesting the Claim if they so wish to
do and in such case shall, together with the notice indicate Xx. Xxxxxx Xxxxxx
Xxxxxxx that will represent Avemarau or Buyer;
(iii) In the event Sellers inform Buyer that they do not intend to present
defense or contest the Claim, or if they fail to make any declaration within the
period stated in item (ii) above, Buyer shall have the option to either make or
arrange for Avemarau to pay the amount of the Claim or to present defense or
contest the Claim, or to arrange for Avemarau to so do. If Buyer decides to make
said payment, Sellers shall deliver to Buyer or to Avemarau the funds necessary
to settle such claim, in which case Sellers shall have the option to claim or
negotiate a reduction of the debt with the creditor, provided this occurs
strictly within the settlement period;
(iv) In any of the cases mentioned in this Section 8.3(b) all expenses
and costs due or incurred shall be paid by the Sellers, at any instance, with
the defense or contest of any Claim including but not limited to attorneys fees,
judicial costs and judicial deposits. In the event the defense or the contest
was filed by Buyer or by Avemarau, Sellers are obliged to deliver the necessary
amount to cover all expenses and costs when demanded by Buyer or by Avemarau,
under the penalties of Section 8.6. Buyer shall present to Sellers a budget
given by 3 (three) lawyers and Sellers shall choose one of such lawyers within 3
(three) days as from the receiving of the names;
(v) The Buyer compromises to collaborate, rightly or through Avemarau,
with the Sellers in such a way that they will have the conditions to contest or
impugn the Claim, such collaboration includes but is not limited to the delivery
of copies of the necessary documents which may be in their property and allowing
the employees of Avemarau to render their deposition and testimony in court
whenever necessary. The Buyer also compromises that Avemarau will continue to
render assistance to the Sellers in the defence of any fiscal claim in course
against the Sellers which will be done without any cost or expense to Avemarau,
such costs and expenses shall run exclusively on Sellers' expenses.
8.4 Indemnification Limits. The indemnification paid by Sellers in
accordance with Section 8 shall be made only to the extent that the aggregate
amount of Losses incurred by Buyer or Avemarau exceeds R$150,000.00 (one hundred
and
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fifty thousand reais) and then only for the amount exceeding, in the aggregate
and not on an individual basis, R$150,000.00 (one hundred and fifty thousand
reais).
8.5 Survival of Obligations. The obligations of Sellers to indemnify the
Buyer or Avemarau, as the case may be, pursuant to this Section 8 shall survive
the consummation of the transactions contemplated by this Agreement, subject
however to the right of defense by the Sellers, if this is the case.
8.6 Payment or Reimbursement. The Sellers agree, jointly and severally,
to reimburse and/or to pay to Buyer or Avemarau on demand, the full amount of
any Loss incurred by Buyer or Avemarau in accordance with Section 8.1. Sellers
agree that any amount claimed by Buyer or Avemarau with respect to any such Loss
will be subject to monetary correction based on the IGP-M of the Fundacao
Xxxxxxx Xxxxxx if such amount is not paid within thirty (30) days from the due
date, plus interest at the annual rate of 12%.
8.6.1 With no limitation to any other rights provided in this Agreement
the Sellers agree that Buyer may withhold, without specific prior authorization,
from each and any Purchase Price (including the Additional Price) (i) any amount
necessary for the payment of Losses incurred by Buyer or Avemarau prior to such
payments, and (ii) any amount necessary for the guarantee of the payment claimed
in any dispute since the proceeding established in Section 8.1 and 8.3 above is
observed.
ARTICLE 9 MISCELLANEOUS
9.1. Notices.
(a) All notices, consents, requests and other communications herein shall
be in writing and shall be sent by hand delivery, by certified or registered
mail (return-receipt requested), or by recognised national overnight courier
service as set forth below:
if to Sellers:
x/x Xx. Xxxxxxxx Xxxxxx,
00
Mr. Neuri Segatt
Mr. Edemar Segatt
Xx. Xxxxxxxxx Segatt and
Mrs. Mari Xxxxxx Xxxxx Ractz
[at the above mentioned addresses on their
qualification]
and to:
Xx. Xxxxxx Xxxxxx Marques
If to Buyer
Cumberland do Brasil Ltda.
A/c: Sr. Joao Xxxxxxx Xxxxxxx xx Xxxxxxxx
Via Anhanguera, sentido interior-capital, Xx 000,
x/x/x/
00.000-000 - Xxxx Xxxxxx - Xxx Xxxxx
with copy to:
a/c GSI Group, Inc.
0000 X. Xxxxxxxx Xx.
X.X Xxx 00
Assumption, Illinois 62510
United States of America
with copy to:
Xxxx Xxxxxxx Xxxxx
Machado, Meyer, Sendacz e Opice Advogados
Xxx xx Xxxxxxxxxx, 000 - 0/x/ andar
Sao Paulo, SP 01301-903
if to Avemarau:
Avemarau Equipamentos Agricolas Ltda.
Xxxxxxx XX 000 Xx 00
00.000-000, Xxxxx, XX - Xxxxxx
(x) Notices delivered pursuant to Section 9.1(a) shall be deemed given: (i)
at the time delivered, if personally delivered; (ii) at the time received, if
mailed; and (iii) 2 (two) Business Days after timely delivery to the courier, if
by courier service.
(c) Any party hereto may change the address to which notice is to be sent
by written notice to the other parties hereto in accordance with this Section
9.1.
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9.2 Dispute Resolution. All disputes arising out of or in connection with
the interpretation, application or enforcement of this Agreement shall be
settled by final and binding arbitration or, when it is not possible, by
judicial procedure in the region of Porto Alegre, State of Rio Grande do Sul.
9.3 Entire Agreement. This Agreement, including all Schedules hereto (all
of which are incorporated herein by this reference) and the Pledge Agreement,
contains the entire agreement and understanding concerning the subject matter
hereof between the parties hereto and specifically supersedes that Letter of
Intent, dated April 20, 1998, signed by The GSI Group, Inc., Avemarau and
Sellers.
9.4 Waiver, Amendment. No waiver, termination or discharge of this
Agreement, or any of the terms or provisions hereof, shall be binding upon
either party hereto unless confirmed in writing. No waiver by either party
hereto of any term or provision of this Agreement or of any default hereunder
shall affect such party's rights thereafter to enforce such term or provision or
to exercise any right or remedy in the event of any other default, whether or
not similar. This Agreement may not be modified or amended except by a writing
executed by both parties hereto.
9.5 Severability. If any provision of this Agreement shall be held void,
voidable, invalid or inoperative, no other provision of this Agreement shall be
affected as a result thereof, and, accordingly, the remaining provisions of this
Agreement shall remain in full force and effect as though such void, voidable,
invalid or inoperative provision had not been contained herein.
9.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Federative Republic of Brazil.
9.7 Adjustment of Amounts in Reais by Inflation. The parties agree that,
for the purposes of determination of any amount in Reais set forth in this
Agreement that references this Section 9.7, including amounts used in certain
calculations, such amounts shall be adjusted by the IGP-M published by Fundacao
Xxxxxxx Xxxxxx (or, if such index is not calculated or
21
published by the Fundacao Xxxxxxx Xxxxxx, by an index mutually acceptable by the
parties). Such adjustment shall be applicable from April 20, 1998 until the
Closing Date or until the date such amount is used in any calculation.
9.8 Assignment. Neither party hereto may assign this Agreement, in whole or
in part, without the prior written consent of the other party. Buyer may,
however, without any prior consent from Sellers, assign all or any part of its
rights and obligations under this agreement to a subsidiary, affiliate or
controlled party. The Buyer may reorganize Avemarau through incorporation, spin-
off or merger or by any other manner that Buyer judges adequate, subject to the
maintenance of the Seller's rights foreseen in the Pledge Agreement and to the
criterions for the calculation of the Earnout Amount foreseen in Section 2.4 in
order not to represent any decrease in the results for the determination of the
Net Profit.
9.9 Representation of Sellers. Each of the Sellers hereby appoints Mr.
Edemar Segatt as its attorney-in-fact with full powers to receive any notice
given in accordance with this Agreement and to represent the Sellers with
respect to any acts to be taken under this Agreement, including, without
limitation, designation of bank accounts under Section 2.5, acceptance of
auditors under Section 7.5, and others, and to take any decisions required under
this Agreement on behalf of the Sellers, and the Sellers hereby expressly
authorize the Buyer to rely on any communication or notice received from him as
a communication or notice sent by the Sellers.
9.10 Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
9.11 Language. This Agreement is signed in both a Portuguese language and
an English language version. If there is any conflict between such versions, the
Portuguese language shall prevail.
IN WITNESS WHEREOF, the undersigned have caused their respective duly authorized
representatives to execute this Agreement as of the day and year first above
written.
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Buyer:
CUMBERLANDO DO BRASIL LTDA.
/s/ Joao Xxxxxxx Xxxxxxx xx Xxxxxxxx
------------------------------------------
Name: Joao Xxxxxxx Xxxxxxx xx Xxxxxxxx
Title: Manager
Sellers:
XXXXXXXX SEGATT
/s/ Xxxxxxxx Segatt
------------------------------------------
NEURI SEGATT
/s/ Neuri Segatt
------------------------------------------
EDEMAR SEGATT
/s/ Edemar Segatt
------------------------------------------
MARI SALETE SEGATT RACTZ
/s/ Mari Salete Segatt Ractz
------------------------------------------
VANDERLEI SEGATT
/s/ Vanderlei Segatt
------------------------------------------
AVEMARAU EQUIPAMENTOS AGRICOLAS LTDA.
/s/ Edermar Segatt
------------------------------------------
Name: Edermar Segatt
Title:
Witnesses:
1. /s/ Xxxxxx Xxxxxxx Xxxxxxxx
----------------------------
2. /s/ Xxxxxx Xxxx Xxxxx
----------------------------
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