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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 2, 1998
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SCHWEITZER-MAUDUIT INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-13948 62-1612879
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
100 NORTH POINT CENTER EAST, SUITE 600
ALPHARETTA, GEORGIA 30022-8246
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): 1-800-514-0186
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Not Applicable
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(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(i) The information in the registrant's press release dated February 2, 1998
attached as Exhibit 99.1 incorporated in this Item 2 by reference. Souza
Cruz S.A. is a subsidiary of British American Tobacco Company
("B.A.T."). B.A.T. and its subsidiaries are, together, an important
existing customer of the Company and its subsidiaries. As part of the
purchase agreement, Companhia Industrial de Papel Pirahy and Souza Cruz
S.A. executed supply agreements pursuant to which Souza Cruz S.A. will
continue to purchase from Companhia Industrial de Papel Pirahy its
requirements of tobacco-related and certain other papers.
(ii) The information in the registrant's press release dated February 11, 1998
attached as Exhibit 99.2 incorporated in this Item 2 by reference.
Ingefico was formerly a privately held company owned by several
individuals and certain corporate shareholders unrelated to the Company,
its executive officers and directors, and its employees.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired.
No financial statements were required to be filed as a part of this
report.
(b) Pro forma financial information.
No pro forma financial information was required to be filed as a part
of this report.
(c) Exhibits.
See the Index to Exhibits that appears at the end of this document and
which is incorporated by reference herein.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SCHWEITZER-MAUDUIT INTERNATIONAL, INC.
(Registrant)
By: /s/ WILLIAM J. SHARKEY
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William J. Sharkey
General Counsel and Secretary
February 17, 1998
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SCHWEITZER-MAUDUIT INTERNATIONAL, INC.
CURRENT REPORT ON FORM 8-K
DATED FEBRUARY 2, 1998
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<S> <C>
2.1 Stock Purchase Agreement dated December 16, 1997, by and
between Schweitzer-Mauduit International, Inc. (the "Buyer")
and Souza Cruz S.A. (the "Seller") and Contab Participacoes
Ltda. (holder of 75% of the issued outstanding shares of the
capital stock of the Seller, and consequently holder of
preemptive rights to acquire from the Seller at least 75% of
the shares of Companhia Industrial de Papel Pirahy).
99.1 Press Release of Schweitzer-Mauduit International, Inc. issued
February 2, 1998.
99.2 Press Release of Schweitzer-Mauduit International, Inc. issued
February 11, 1998.
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT ("Agreement") is made this 16 day of December,
1997, by and between, on one side:
Schweitzer-Mauduit International, Inc., organized and existing under the
laws of Delaware, U.S.A. ("Buyer")
and, on the other side
Souza Cruz S.A., a company with its head-office at Rua da Candelaria, 66,
in the City of Rio de Janeiro, State of Rio de Janeiro, Brazil, registered
with the Federal Taxpayers' Registry under CGC No. 33.009.911/0001-39
("Seller"); and
Contab Participacoes Ltda., a company with its head-office at Rua da
Candelaria, 66, in the City of Rio de Janeiro, State of Rio de Janeiro,
Brazil, registered with the Federal Taxpayers' Registry under CGC No.
42.591.685/0001-38 ("Contab").
RECITALS
A. The Seller is presently the sole owner of all of the issued and outstanding
capital stock of Companhia Industrial de Papel Pirahy, a company with its
head-office at Santanesia, in the City of Pirai, State of Rio de Janeiro,
Brazil, registered with the Federal Taypayers' Registry under CGC No.
33.073.008/0001-37;
B. Companhia Industrial de Papel Pirahy is engaged in the business of
manufacturing cigarette related papers and other kinds of paper;
C. The Buyer desires to acquire and the Seller desires to sell, transfer and
convey to the Buyer, upon the terms and conditions set forth in this
Agreement, all the shares of the capital stock of Companhia Industrial de
Papel Pirahy.
D. The Seller is a publicly held company with shares traded in the stock
market and, under Brazilian law, the Seller's shareholders have preemptive
rights to acquire shares of Companhia Industrial de Papel Pirahy offered
for sale, in proportion to their holdings in the capital of the Seller,
with a further right to acquire additional shares offered for sale for
which no other shareholder of the Seller has exercised preemptive rights.
E. Contab holds no less than 75% of the issued outstanding shares of the
capital stock of the Seller and consequently has itself preemptive rights
to acquire from the Seller at least 75% of the shares of Companhia
Industrial de Papel Pirahy.
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F. Contab agrees to sell to the Buyer any shares of the capital stock of
Companhia Industrial de Papel Pirahy acquired by it by virtue of the
operation of the preemptive rights referred to in Recital D above.
G. If, by virtue of the operation of the preemptive rights, the Seller is not
able to sell to the Buyer all of the issued and outstanding shares of the
capital of Companhia Industrial de Papel Pirahy, the Buyer agrees to
acquire all the shares of Companhia Industrial de Papel Pirahy owned by the
Seller or Contab at Closing provided such shares represent at least 75% of
all the issued and outstanding share capital.
Accordingly, the parties, in consideration of the foregoing and of the mutual
agreements set forth herein, agree as follows:
1. DEFINITIONS
The following terms shall have the respective meanings specified:
1.1 "Assets" means all right, title and interest in and to all of the
assets, both tangible and intangible, of the Company.
1.2 "Art Coated Supply Agreement" means the Agreement between the Seller
and the Company to be entered into on or prior to Closing in form set out in
Schedule 8.
1.3 "CADE" means the "Conselho Administrativo de Defesa Economica", an
independent administrative body created by Law 4.137/62, as modified.
1.4 "Claims Assignment Agreement" means the Agreement in the form set out
in Schedule 7 evidencing the assignment by the Company to the Seller of (i) the
legal claims and (ii) the credits regarding refunds requested or to be applied
for through an administrative procedure referred to in Schedule 4;
1.5 "Closing Date" means the date of completion of the sale of the Sale
Shares as referred to in Clause 8.1
1.6 "Company" means Companhia Industrial de Papel Pirahy.
1.7 "Confidentiality Agreement" means the agreement dated July 18, 1997
between the Seller and the Buyer relating to keeping the information about the
Company confidential.
1.8 "Contaminant" means any hazardous waste, hazardous substance or other
substance which requires remediation under Environmental Law.
1.9 "Continuing Directors" shall mean Messrs. Paulo Monnerat and Waldyr
Ribeiro.
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1.10 "Data Room" means the room containing information about the Company
located at the office of the Seller's solicitors.
1.11 "Disclosure Letter" means the letter dated with the same date as this
Agreement from the Seller and or Contab to the Buyer setting out the matters
disclosed against the Warranties. The Disclosure Letter is an integral part of
this Agreement and shall be deemed incorporated by reference into the terms of
this Agreement.
1.12 "Environmental Laws" means any applicable federal, state and local law
and the rules and regulations promulgated thereunder in effect on the Closing
Date and pertaining to the protection of human health and air, water or land,
and a final order or decree pursuant thereto or a final and binding settlement
agreement respecting the Company under such law, rules and regulations.
1.13 "Financial Statements" means the audited balance sheets and related
statements of income and expense of the Company dated December 31, 1996.
1.14 "Hotel" means the hotel located on the premises of the Company and on
the lots registered with the Real Estate Registry under nos.
05.01.004.0199.001-9, 05.01.004.0159.001-4 and 05.01.004.0146.001-7.
1.15 "Hotel Dividend" means a dividend to be paid by the Company to the
Seller representing the sale proceeds paid by the Seller on the purchase of the
Hotel, in an amount equal to the book value of the hotel.
1.16 "Intellectual Property Rights" means (a) all inventions (whether
patentable or unpatentable), and all patents, patent applications and patent
disclosures (b) all trademarks, service marks, trade dress, logos, trade names
and corporate names, and all applications, registrations and renewals in
connection therewith, (c) all trade secrets, including non-patented inventions,
discoveries, processes, improvements, know-how and confidential business
information; (d) all copyrights including rights in computer software (including
data and related documentation); (e) all other proprietary rights, (f) all
contracts, agreements and licenses related to (a) to (e) above; (g) all
intangible and intellectual property rights used by the Company in conducting
its business, including all permits, grants or licensees running to or from the
Company in connection with (a) to (f) above, and (h) all copies and tangible
embodiments thereof (in whatever form or medium).
1.17 "Ordinary Course of Business" means the ordinary and usual course of
business consistent with lawful past custom and practice (including with respect
to quantity and frequency).
1.18 "Party" means any party to this Agreement and "Parties" shall be
construed accordingly.
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1.19 "PURCHASE PRICE" means the amount paid by Buyer to Seller or Contab,
as the case may be, for the Sale Shares pursuant to Clause 3.
1.20 "PURCHASING SUBSIDIARY" means any direct or indirect subsidiary of the
Buyer in which the Buyer owns a majority of the voting equity.
1.21 "PRE-SALE DIVIDEND" means the cash dividend to be paid by the
Company to the Seller before the Closing in such sum so that the cash balance
of the Company on the Closing Date will be no less than the Reais equivalent
(at the US$/Real commercial sell rate published in the Gazeta Mercantil on the
Closing Date) of US$ 1,500,000;
1.22 "RELEVANT CLAIM" means any claim by the Buyer involving or relating
to a breach of a Warranty, undertaking, covenant or agreement contained in this
Agreement.
1.23 "SECURITY INTEREST(S)" means any mortgage, pledge, lien, encumbrance,
title retention, charge or other security interest of any kind whatsoever.
1.24 "SALE SHARES" means the Shares which the Seller or Contab will hold,
after the shareholders of the Seller have exercised their preemptive rights to
acquire the Shares from the Seller, pursuant to Clause 6, but in no event shall
Sale Shares be less than 75% of the Shares.
1.25 "SHARES" means all the shares of the issued and outstanding capital
of the Company.
1.26 "SISAL CONTRACT" means the supply agreement entered into between the
Company and Lwarcel Celulose Ltda. for the supply of cellulose fiber made of
sisal dated of April 1st, 1997.
1.27 "SOFTWARE SHARING AGREEMENTS" means the agreements entered into
between the Company, the Seller and Oracle and Sispro respectively, to be
entered into at Closing in substantially the form set out in Schedule 1.
1.28 "TRANSITIONAL SERVICES AGREEMENT" means the agreement between the
Company and the Seller to be entered into at Closing in the form set out in
Schedule 2.
1.29 "SUPPLY AGREEMENT" means the agreement between the Seller and the
Company to be entered into at Closing in the form set out in Schedule 3.
1.30 "TAX(ES)" means any and all "tributos" imposed under Article 145 of
the 1988 Brazilian Federal Constitution, as well as any and all "contribuicoes"
imposed under Article 195 of that Constitution, together with any interest
thereon, any monetary indexation or correction thereof, any penalties, and any
additional amounts with respect thereto, whether disputed or not.
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1.31 "TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment or amendment thereto, filed or required to be filed with
any tax authority.
1.32 "WARRANTY" means any representation or warranty given by the
Seller to the Buyer as set out in Clause 4 or given by Buyer to Seller as set
out in Clause 4 or given by Buyer to Seller as set out in Clause 5 and
"WARRANTIES" shall be construed accordingly.
1.33 References to "Clauses" and to "Schedules" shall mean schedules
to and clauses of this Agreement.
2. PURCHASE AND SALE
On the terms and subject to the conditions set forth in this Agreement, the
Seller or, if applicable, Contab, hereby agrees to sell, assign and transfer to
the Buyer or to a Purchasing Subsidiary all the Sale Shares and the Buyer
hereby agrees to purchase or to procure that a Purchasing Subsidiary purchases
from the Seller or, if applicable, from Contab on the Closing Date all the Sale
Shares provided the Sale Shares comprise no less than 75% of the total issued
share capital of the Company.
3. PURCHASE PRICE AND PAYMENT
3.1 PURCHASE PRICE. The purchase price for the Sale Shares shall be
that percentage of US$ 62,000,000 which is equal to the percentage which the
Sale Shares comprise of the Shares, being approximately US$ 0.2028 per share.
3.2 METHOD OF PAYMENT. Payment of the Purchase Price shall be made
by the Buyer or the Purchasing Subsidiary to the Seller or Contab on the Closing
Date, in proportion to the Seller's or Contab's holdings in the capital of the
Company on such date, by electronic transfer of immediately available funds to
the bank accounts specified in Clause 8.2, provided all conditions herein have
been fully satisfied.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND CONTAB
The Seller and Contab jointly and severally hereby make the following
representations and warranties to the Buyer:
4.1 CORPORATE STATUS. The Company is duly organized and validly
existing and in good standing under the laws of Brazil, and has the corporate
power to own its Assets and carry on its business as now being conducted.
4.2 SUBSIDIARIES AND OTHER AFFILIATES. The Company does not own
directly or indirectly any interest in any other person or entity, except for
non-material equity interests represented by shares acquired with fiscal
incentives.
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4.3 CAPITALIZATION.
4.3.1 The capital of the Company consists of 305,690,100 shares of
issued and outstanding common stock all which are presently owned by the Seller
free and clear of any and all Security Interests, agreements or claims of any
kind whatsoever. Such shares are duly authorized, validly issued, fully paid
and non-assessable.
4.3.2 Except for the preemptive rights described hereinabove, there
are no outstanding or authorized options, warrants, purchase rights, conversion
rights, exchange rights, or other contracts or commitments that could require
the Company to issue, sell, transfer, or otherwise dispose of any of the Shares.
4.3.3 On the Closing Date, the Seller or Contab will own all the Sale
Shares free and clear of any and all Security Interests, agreements or claims
of any kind whatsoever and the Sale Shares will represent no less than seventy
five percent (75%) of the Shares.
4.4 CORPORATE AUTHORITY.
4.4.1 The Seller and Contab have the legal right, power and authority
to enter into this Agreement and to transfer, assign and deliver the Sale Shares
as provided in this Agreement, subject to the terms hereof.
4.4.2 The execution and delivery of this Agreement, and other
agreements and documents to be executed and delivered by Seller at the Closing,
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate or other action of the Seller, Contab and
the Company (as relevant), and constitute the legal, valid and binding
obligation of the Seller, Contab and the Company (as relevant), enforceable
against the Seller, Contab and the Company (as relevant) in accordance with
their terms.
4.4.3 Entry in the Books of Transfer of Registered Shares and in the
Book of Register Nominative Shares of the Company will convey to Buyer good and
marketable title to the Sale Shares, free and clear of any and all Security
Interests, agreements or claims of any kind whatsoever.
4.5 RESTRICTIONS. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will conflict with or
result in a breach of, or give rise to a right of termination of, or accelerate
the performance required by, any terms of any court order, consent decree,
license, contract or other agreement or permit to which the Company is subject
or a party, or constitute a default thereunder, or result in the creation of
any Security Interest upon any of the Sale Shares or the Assets, or violate
any of the provisions of the Bylaws of the Company.
4.6 FINANCIAL STATEMENTS. The Financial Statements are consistent
with the books and records of the Company and present fairly the financial
position of the Company as of the date of the balance sheet and the results of
its operations for the periods stated, in accordance
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with accounting practices emanating from Brazilian corporate law and applicable
professional accounting standards, and applied on a consistent basis throughout
the referenced periods.
4.7 Actions Since the date of the Financial Statements. Since the date
of the Financial Statements, the business of the Company has been conducted in
the Ordinary Course of Business and the Company has not:
(a) entered into any transaction or engaged in borrowing from or lending
to any third party in any case other than in the Ordinary Course of
Business or offered to enter into any transaction with a third party
other than in the Ordinary Course of Business;
(b) other than as set out in Section C "Litigation" of the Disclosure
Letter, satisfied and discharged any claim of any kind, or any lien,
or paid any loan, obligation or liability other than current
liabilities incurred since that date in the Ordinary Course of
Business;
(c) other than as set forth in the Collective Bargaining Agreement dated
May 21, 1997, made or agreed to make any general wage or salary
increase or any increase in compensation payable or to become payable
to any officers or management employees, including pension benefits;
(d) mortgaged, pledged, charged or subjected to lien or other encumbrance
any of its Assets other than vendor financing in the Ordinary Course
of Business;
(e) other than as set out in Section C "Bad Debt Reserve" of the
Disclosure Letter, sold or transferred any of its Assets or prepaid,
made a reserve for possible lack of payment or canceled any debts or
claims, in either case having a value in excess of US$100,000 except
in each case in the Ordinary Course of Business;
(f) other than as set out in Section C "Intellectual Property" of the
Disclosure Letter, sold, assigned or granted rights under
Intellectual Property Rights of the Company or allowed any
Intellectual Property Right to expire or lapse;
(g) issued or agreed to issue any share or loan capital;
(h) acquired any other business or entered into any licensing arrangement
or joint venture;
(i) become involved or threatened with any labor dispute which has had or
could have a material adverse effect on the Company or its financial
condition;
(j) suffered any damage or destruction of the Assets, whether or not
covered by insurance, materially and adversely affecting the
financial performance or business operations of the Company;
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(k) other than as set out in Section C "Dividends" of the Disclosure
Letter, declared or paid any dividend or paid any interest as
remuneration upon capital;
(l) other than agreeing to a consignment arrangement with the Seller
for an inventory of products manufactured by the Company, as set
out in Section C "Conditions of Sale" of the Disclosure Letter,
materially changed the terms and conditions applicable to the
sale of its products;
(m) made any capital expenditure other than in the Ordinary Course of
Business;
(n) failed to maintain the books and records of the Company in the
Ordinary Course of Business and consistent with the Financial
Statements;
(o) other than as set out in Section C "Material Adverse Change" of
the Disclosure Letter, suffered any material adverse change in
respect to its business operations or financial condition taken
as a whole and so far as the Seller is aware there are no facts
or events which might give rise to such change.
4.8 Intellectual Property. The Company is the absolute owner of or
has a contractual right to use all the Intellectual Property Rights used by the
Company in its business and operations and necessary to conduct its business and
operations as currently conducted.
4.9 Real Property and Leases. The Disclosure Letter contains a list
of all real property owned, leased, utilized or intended to be utilized in the
conduct of the Company's business (the "Real Property"). The Company holds the
Real Property free and clear with no defects of title whatsoever. The Company
has all easements and rights of ingress and egress necessary for utilities and
services and for all easements and rights of ingress and egress necessary for
utilities and services and for all operations conducted on the Real Property.
Seller and Contab have no knowledge of and have not received any notice of (i)
intended public improvement which would involve any charge being levied or
assessed or which would result in the creation of any lien upon the Real
Property or (ii) any intended or proposed federal, state or local statue,
ordinance or requirement (including, but not limited to zoning changes) which
would adversely affect the use of the Real Property as currently used. Seller,
Contab and the Company are not the lessees of any Real Property. There is no
condemnation pending and Seller and Contab do not have any knowledge of any
threatened or contemplated condemnation proceeding affecting the Real Property
or any part thereof or of any sale or other disposition of the Real Property or
any part thereof in lieu of condemnation.
4.10 Company Assets
4.10.1 For the purpose of this Warranty 4.10 "Assets" shall not include
Real Property. Set forth in Exhibit 9 of the Disclosure Letter is a list of
tangible Assets of the Company.
4.10.2 Other than as set out in Exhibit 9 of the Disclosure Letter all
of the Assets are
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such policies (including the payment of all premiums due). Arrangements have
already been made to cancel all such policies, effective upon notice to be
issued in conjunction with the Closing.
4.13 Litigation
4.13.1 Other than as set out in Section C "Litigation" of the Disclosure
Letter, except as plaintiff in the collection of debts arising in the Ordinary
Course of Business, the Company is not a plaintiff or defendant in or otherwise
a party to any litigation, arbitration or administrative proceedings which are
in progress or pending by or against or concerning the Company or any of its
Assets.
4.13.2 No governmental or official investigation or inquiry concerning
the Company is in progress or pending, other than as set out in Section C
"CADE's Administrative Proceeding" of the Disclosure Letter.
4.13.3 So far as the Seller and Contab or the Company are aware there
are no circumstances which are likely to give rise to any governmental or
official proceeding, investigation or inquiry.
4.14 Compliance with Laws.
4.14.1 The Company has conducted its business and corporate affairs in
accordance with its statutory documents and, in all material respects, with all
applicable laws, regulations and permits.
4.14.2 The Company is not in default of any order, decree or judgment of
any court or any governmental or regulatory authority.
4.14.3 The Company has obtained all licenses, permissions,
authorizations and consents required for carrying on its business effectively in
the places and in the manner in which such business is now carried on.
4.14.4 So far as the Seller, Contab and the Company are aware there are
no circumstances which indicate that any of the licenses, permissions
authorizations or consents referred to in Warranty 4.14.3 will be revoked or not
renewed in whole or in part in the ordinary course of events.
4.14.5 Except for the filing with CADE for approval of the transactions
contemplated by this Agreement and the Supply Agreement, the execution and
delivery by the Seller and Contab of this Agreement and the performance by the
Seller and Contab of their obligations hereunder do not require Seller and
Contab to obtain any consent, approval or action of, or make any filing with or
give any notice to, any court or governmental or regulatory body or, with
respect to the Company's contracts, any other person.
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4.14.6 None of the officers, directors or executive employees
of the Company, Seller or Contab, nor any entity in which such
officers, directors or executive employees has any equity interest (i)
owns, directly or indirectly, in whole or in part, any tangible or
intangible property or any of the Assets or Real Property that the
Company uses in the conduct of its business, or (ii) has an interest
in any contract or agreement pertaining to the Company, or (iii) owes
any money to the Company (other than travel advances made in the
Ordinary Course of Business), or to Seller's knowledge, has any cause
of action against the Company, or (iv) has purchased products or
services from the Company or provided products or services to the
Company.
4.15 Trade Union Activity. Except as set out in Section C
"Trade Union Activities" of the Disclosure Letter, there has not been
during the last five years, nor is there any dispute between the
Company and a material number of employees of the Company or involving
any trade union representing such employees and, so far as the Seller,
Contab and the Company are aware, there are no present circumstances
which are likely to give rise to any such dispute.
4.15.1 Except for the Collective Bargaining Agreement dated
May 21, 1997 and the two profit sharing plans dated January and May
1997, respectively, the Company, Seller and Contab are not parties to
nor in any way bound by any union or collective bargaining contract
relating to the employees of the Company.
4.16 Employees; Employee Benefits.
4.16.1 Section C "Employees" of the Disclosure Letter
contains a full list of employees of the Company showing by reference
to Exhibit 9 the appropriate grades or categories the remuneration
payable and other principal benefits which the Company is bound to
provide.
4.16.2 Other than as reserved in the Financial Statements,
the Company has no liability for breach or termination of any
employment contract, any severance payment, protective award or
compensation for wrongful dismissal or unfair dismissal.
4.16.3 Other than the litigation described in Section C
"Litigation" of the Disclosure Letter, there are not pending or
threatened any written charges or written complaints of discrimination
before any court or local agency with respect to the Company.
4.17 Taxes.
4.17.1 Since the date of the Financial Statements, the
Company has not entered into or been a party to any transaction which
will or may give rise to a liability for Taxes (other than profits,
turnover and other taxes arising in the Ordinary Course of Business).
4.17.2 The Company has filed with the appropriate
governmental agencies all Tax Returns required to be filed. All such
Tax Returns have been prepared in accordance with
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applicable tax legislation rules and regulations, and all Taxes shown or claimed
to be due thereon have been paid on the due dates.
4.18 Pensions and Other Benefits
4.18.1 The sole pension and retirement benefits payable to the
employees of the Company beyond mandatory Brazilian statutory or regulatory
obligations are the benefits payable under the pension plan sponsored by the
Company and Seller and operated by FASC.
4.18.2 There is set out in the Disclosure Letter a list of all
employees eligible to participate in the pension benefits referred to in
Warranty 4.18.1 above.
4.18.3 The Company will incur no liability arising from the
termination of the sponsorship by the Company of the pension plan operated by
FASC as of the Closing Date. Upon termination of its sponsorship of the pension
plan operated by FASC, the Company will have no obligation to provide employees
with any supplemental retirement benefits.
4.19 Environmental Matters
4.19.1 Other than as set out in Section C "Environmental Matters" of
the Disclosure Letter, the Company has obtained from the relevant Brazilian
environmental authorities all the necessary permits and clearances to run and
operate its factory in the way it is currently being run and operated.
4.19.2 The Company has not during the five years ending on the date of
this Agreement been involved in a civil, criminal, arbitration, administrative
or other proceeding concerned with the pollution or protection of the
environment, including air, water and land, or harm to or the protection of the
health of humans, animals or plants in any jurisdiction.
4.19.3 Other than set out in Section C "Environmental Matters" of the
Disclosure Letter, there is and has been no governmental or other
investigation, inquiry, complaint, administrative action or disciplinary
proceeding relating to the pollution or protection of the environment,
including air, water and land, or harm to or the protection of the health of
humans, animals or plants concerning the Company, and as far as the Seller,
Contab and Company are aware none is pending or threatened.
4.19.4 The Company has no obligation to make good, repair, reinstate
or clean up land or any other asset on or before the date of this Agreement
owned occupied possessed or used by the Company and, as far as the Seller,
Contab and the Company are aware, none is pending or threatened.
4.19.5 Other than set out in Section C "Environmental Matters" of the
Disclosure Letter, no Contaminant is present on, in, under, about or above the
Real Property or any facilities operated by the Company in an amount that would
individually or in the aggregate have a material adverse effect on the
financial condition or business of the Company, taken as
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a whole.
4.19.6 The Company is not in breach of any Environmental Laws.
4.20 Insolvency. No order has been made, petition presented or meeting
convened for the purpose of considering a resolution for the winding up of the
Company or for the appointment of a liquidator. No receiver has been appointed
in respect of the whole or any part of any of the property assets or
undertaking of the Company.
4.21 Software. The Company shall have the right to use all software
used by it in operating its business, including software referred to in the
Software Sharing Agreements for a period of 12 (twelve) months after Closing
with no fee or penalty.
4.22 Vendor Financing. The financing contract between the Company and
Banco Itau providing for financing for the sale of the Company's products is in
full force and effect. There are no existing liabilities of the Company with
respect to such financing.
4.23 Working Capital. The level of working capital (defined as the
difference between current assets and current liabilities, net of cash) of the
Company as of the Closing Date will be adequate and appropriate in relation to
the current trading requirements of the Company. Inventories and accounts
payable as of the Closing Date shall be at levels which are in the Ordinary
Course of Business.
4.24 Sisal Contract. The Company has no potential or existing
liability in respect to the termination of the Sisal Contract.
4.25 The Warranties of Seller and Contab contained in this Agreement
shall be true and complete in all material respects when made and on and as of
the Closing Date as though such warranties were made at and as of such date.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties to
Seller and Contab on behalf of itself and any Purchasing Subsidiary which
purchases the Shares at Closing.
5.1 Authority. The Buyer has the legal right, power and authority to
enter into this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the necessary corporate action of Buyer and/or Purchasing Subsidiary, and
this Agreement constitutes the legal and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms.
5.2 Restrictions.
5.2.1 Neither the execution of this Agreement nor the consummation of
the
<PAGE> 13
14
transactions contemplated hereby will conflict with or result in a breach of,
or give rise to a right of termination of, or accelerate the performance
required by, any terms of any court order, consent decree, agreement or permit
to which Buyer and/or Purchasing Subsidiary are subject or a party, or
constitute a default thereunder, or result in the creation of any Security
Interest upon any of Buyer's and/or Purchasing Subsidiary's assets, or violate
any of the provisions of the By-Laws or other statutory documents of Buyer
and/or Purchasing Subsidiary.
5.2.2 There is no lawsuit, proceeding or investigation pending or, to
the knowledge of Buyer and Purchasing Subsidiary, threatened against Buyer
and/or Purchasing Subsidiary which might prevent the consummation of any of the
transactions contemplated by this Agreement.
6. PRE-CLOSING UNDERTAKINGS
6.1 Offer to the Sellers' shareholders
6.1.1 In preparation for the sale of the Shares to the Buyer, the
Seller shall, immediately following the signing of this Agreement, cause the
Board of Directors of the Seller to call a meeting of the Sellers' shareholders
and extend to such shareholders the opportunity to acquire shares in the
Company in proportion to their respective holdings in the capital of the Seller
at a price of US$ 0.2028 per share. Seller shall obtain Buyer's prior written
approval of all information to be disclosed to Seller's shareholders in
connection with Seller's actions under this Clause, except for disclosures
required by applicable law or demanded by any governmental authority, which
will be communicated to Buyer before disclosure.
6.1.2 On the first business day following such meeting of the
shareholders of the Seller, the Board of Directors of the Seller will publish a
summary of the meeting confirming the offer to sell the Shares to shareholders
of the Seller. This offer will be valid for a term of 30 days.
6.1.3 The Seller shall be responsible for selling directly to its own
stockholders the Shares of the Company that they may be entitled to acquire by
virtue of their preemptive rights. Such sale shall occur immediately following
the closing of the offer referred to in Clause 6.1.2.
6.1.4 Contab undertakes that, to the extent any of the shareholders of
the Seller express their intention to purchase Shares in addition to their
proportional entitlement it will exercise its own pre-emptive rights to acquire
its proportionate entitlement and as many Shares in excess of its proportionate
entitlement as it is legally able. In such case, Contab shall become the record
owner of the Sale Shares and shall sell the Sale Shares to Buyer.
6.1.5 If no shareholder of Seller exercises pre-emptive rights, Contab
shall not
<PAGE> 14
15
exercise its pre-emptive rights and Seller shall sell 100% of the Sale Shares
to Buyer.
6.2 Conduct of the Business Pending the Closing
6.2.1 Pending the Closing the Seller and/or Contab shall ensure
that, unless otherwise agreed by the Buyer in writing:
(a) the Company shall carry on its business in the Ordinary Course
of Business consistent with past practice and shall not make (or agree
to make) any payment other than routine payments in the Ordinary
Course of Business;
(b) the Company shall take all reasonable steps to preserve and
protect its Assets and Seller and/or Contab shall notify Buyer
promptly of any material damage to or destruction of the Assets;
(c) no dividend or other distribution shall be declared paid or
made by the Company, other than the Hotel Dividend and the Pre-Sale
Dividend;
(d) no share or loan capital shall be allotted or issued or
agreed to be issued by the Company;
(e) the Company shall not satisfy or discharge any lien, or pay
any loan, obligation or other liability other than current liabilities
incurred in the Ordinary Course of Business;
(f) the Company shall not make any general wage or salary
increase or increase in the compensation payable or to become payable
to any officers, management or employees including pension benefits;
(g) the Company shall not mortgage, pledge, charge or subject to
lien or encumbrance any of its Assets;
(h) the Company shall not sell or transfer any of its Assets or
pre pay or cancel any debts or claims in either case having a value in
excess of US$ 100,000 except, in each case, in the Ordinary Course of
Business;
(i) the Company shall not sell, assign or grant any Intellectual
Property Rights to any person or entity;
(j) the Company shall not acquire any other business, any assets
for an amount in excess of $100,000 or enter into any licensing
arrangements or joint venture;
(k) the Company shall not materially change the terms and
conditions applicable to the sale of its products, other than in the
Ordinary Course of Business, provided that the Company shall promptly
notify Buyer of such change;
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16
(l) the Company shall not borrow or lend any money of the Company
other than in the Ordinary Course of Business and there shall be no
third party debt (other than debts arising in the ordinary course of
trading) on the balance sheet of the Company as of the Closing Date;
and
(m) the Company shall not breach any material contracts;
6.2.2. Seller and Contab undertake that the Buyer's representatives
shall be allowed, upon reasonable notice and during normal business hours,
access to the premises, books and records of the Company, together with the
right to take copies.
6.2.3 Seller undertakes to ensure that the Company has certificates
showing ownership of all Real Property in effect as of December 1st, 1997.
6.2.4 The Seller agrees to procure that an audit of the financial
statements of the Company in respect of the year ended 31 December 1997 by the
Seller's public accounting firm shall occur in the normal course of events.
7 CONDITIONS PRECEDENT TO CLOSING
7.1 Conditions to the Obligation of Seller or Contab to Close.
The obligations of the Seller or Contab to perform their obligations
under this Agreement on the Closing Date shall be conditional upon the
following conditions having been met or waived on or before the Closing Date:
(a) the completion of the offer of the Shares to the shareholders
of the Seller as set out in Clause 6.1;
(b) the purchase by the Seller from the Company of the Hotel and
the payment by the Company of the Hotel Dividend.
(c) the payment of the Pre Sale Dividend;
(d) the settlement of the inter-company accounts between the
Company and the Seller;
(e) the execution by the Seller and the Company of the Claims
Assignment Agreement;
(f) the payment to the Company by the Seller of R$ 4,848,960 in
respect of the assignment of the claims and credits referred
to in the Claims Assignment Agreement;
<PAGE> 16
17
(g) the execution of the documents and carrying out of the actions
referred to in clauses (i) to (vii) of Schedule 5 in order to
effect the separation of the Company from the system of
private social security conducted by the Seller;
(h) execution of notices cancelling all the insurance policies
taken out by the Seller on behalf of the Company; and
(i) there having been no breach of the Warranties of Buyer and/or
Purchasing Subsidiary which would have a material adverse
effect on the ability of the relevant company to complete the
purchase of the Shares.
7.2 Conditions to the Obligation of Buyer to Close.
The obligation of Buyer to perform its obligations under this
Agreement on the Closing Date shall be conditional upon the following
conditions having been met or waived on or before the Closing Date:
(a) the completion of the offer of the Shares at Closing to the
Shareholders of the Seller as set forth in Clause 6.1;
(b) delivery by the Company to the Buyer of bank statements
showing that the cash balance of the Company on the Closing
Date will be no less than the Reais equivalent (at the
US$/Real commercial sell rate published in the Gazeta
Mercantil on the Closing Date) of US$ 1,500,000;
(c) delivery to the Buyer by the Seller or Contab of a schedule
in the form set out in Schedule 6 spelling out the changes in
the holding of the capital of the Company which occurred as a
consequence of the actions referred under Clause 6.1 and a
complete list of all the then current Shareholders of the
Company;
(d) adjustment of the balance sheet of the Company for the
following items: (i) revaluation of finished goods
inventories to the lesser of cost or net realizable value for
all products sold below total cost; (ii) the write-off of the
net book value of spare parts, machinery and equipment
associated with the number 1 paper machine and number 1
coater; (iii) revaluation of the asset for fiscal incentive
deposits to a net realizable value of not more than R$32,000
Reais; (iv) increase in the asset for deferred taxes to fully
reflect 1997 tax losses generated; (v) write-off of deferred
software costs; and (vi) increased provision for employee
severance litigation claims of at least $300,000 Reais;
(e) as soon as practicable following the execution of this
Agreement, delivery by the Seller of all documents referenced
in Disclosure Letter and its Exhibit 1 certified by the
Seller as being the documents referenced in the Disclosure
Letter and that the same documents were either available to
Buyer in the Data
<PAGE> 17
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Room during Buyer's due diligence review or were subsequently made
available to Buyer;
(f) the Buyer shall have entered into agreements with the Continuing
Directors of the Company to be employed by the Company after the
Closing;
(g) there have been no breach of any of the Warranties of Seller which
would have, individually or in the aggregate, a material adverse
effect on the business and operations of the Company taken as a
whole;
(h) Seller and Contab shall have performed and complied in all
material respects with all covenants, undertakings and agreements
(except for the Warranties) required by this Agreement to be
performed or complied with by Seller and Contab on or prior to the
Closing Date;
(i) Seller shall pay all real property transfer taxes due and any
other transaction expenses or other taxes incurred in connection
with the sale of the Hotel to the Seller by the Company;
(j) Buyer shall have received the opinion of Seller's or Contab's
legal counsel dated the date of the Closing, addressed to Buyer,
in form and substance reasonably acceptable to Buyer;
(k) between the date hereof and the Closing Date, there shall have
been no material damage or loss to or destruction of the Assets.
(l) between the date hereof and the Closing Date there shall have been
material adverse change in the financial condition or the business
operations of the Company taken as a whole directly attributable
to the manner in which the Company is run between execution of
this Agreement and the Closing Date;
7.3 Termination. This Agreement may be terminated at any time prior
to the Closing by mutual consent of Seller and Buyer.
7.4 If any of the conditions precedent referred to above have not been
fulfilled (or waived in the case of conditions contained in Clause 7.1 by the
Seller, and in the case of conditions contained in Clause 7.2, by the Buyer) on
or before June 30, 1998 then this Agreement (other than Clause 12.5) shall
automatically terminate and none of the Parties shall have any claim of any
nature whatsoever against the others under this Agreement, save in respect to
any rights of a non-breaching Party arising from any breach of any Warranty,
convenant undertakings or agreement of the breaching Party under this Agreement.
8. CLOSING DATE AND PLACE
8.1 Closing. The completion of the sale of the Sale Shares hereunder
shall take
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19
place at the offices of the law firm of Trench, Rossie e Watanabe, in Rio de
Janeiro, Brazil, within five business days after the satisfaction or waiver of
the conditions precedent set out in Clause 7 or such other date as the Parties
may agree, but in no event later than June 30, 1998.
8.2 Action at Closing. At the Closing the following events shall take
place:
(a) the Seller shall execute and shall procure that the Company executes
(and in the case of the Software Sharing Agreements shall procure the Sispro and
Oracle execute) the following documents:
(i) the Supply Agreement;
(ii) the Art Coated Supply Agreement;
(iii) the Transitional Services Agreement;
(iv) the Software Sharing Agreement; and
(b) The Buyer or its authorized agent shall deliver to the Seller or to
Contab the confirmation of the wire transfer of funds in the amount of the
Purchase Price to the accounts of Seller or Contab at Banco Chase Manhattan
S.A., Sao Paulo, Brazil, Account No. 001-1-116605 with Chase Manhattan Bank
N.A., New York in favor of Souza Cruz S/A, whichever is relevant.
(c) At the Closing, the Seller and / or Contab as the case may be shall
deliver to the Buyer the Book of Transfer of Registered Shares and the Book of
Register of Nominative Shares of the Company with the respective entries
assigning and transferring the Sale Shares to the Buyer or to the Purchasing
Subsidiary;
9. ACTIONS SUBSEQUENT TO CLOSING
9.1 Submission to CADE. On or immediately following the date of this
Agreement the Parties shall jointly submit to CADE the necessary documents so
that CADE may approve the transactions contemplated by this Agreement.
9.2 Co-Operation Between The Parties. The Parties acknowledge their
mutual interest to ensure that the transactions contemplated by this Agreement
are approved by CADE as soon as possible, following the execution of this
Agreement and consequently Buyer and Seller agree to co-operate and take all
such actions as are necessary to obtain such approval. In connection therewith,
it is hereby agreed that any form of written communication or other furnishing
of information to be given to CADE for the purpose of obtaining its approval be
jointly prepared and agreed by both the Buyer and the Seller and that any
contact, consultation, meeting, request, solicitation or other form of
communication with CADE be made jointly by Buyer and Seller unless otherwise
agreed by them.
<PAGE> 19
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9.3 Financial Statement Preparation as of the Closing Date. Seller
will have undertaken the activities associated with a normal year-end closing of
the financial books and records of the Company for the purposes of preparing a
complete set of financial statements to include Balance Sheet, Income and Cash
Flow statements as of the Closing Date within five Business Days after the
Closing Date. Such normal activities will be completed using past accounting
practices consistently applied. Adjustments shall be made to the Company's
Closing balance sheet for the following items: collection of any accounts
receivable and payment of any accounts payable between the Company and the
Seller, transfer of the tax refunds and recoverable taxes described in Schedule
4 and recording of the Hotel Dividend and Pre-sale Dividend.
10. THE SELLER'S INDEMNIFICATION
10.1 Indemnification. Subject to Clauses 7.4 and 11 hereunder the
Seller and Contab, jointly and severally, agree to indemnify and hold the Buyer
harmless from any loss, claim, damage, attorney fees, or other cost or expense
(referred to herein as "Loss") incurred by the Company or the Buyer for any
breach by the Seller or Contab of the Warranties, undertakings, covenants and
agreements contained herein.
10.2 Survival of Representations, Warranties and Undertakings.
Notwithstanding the closing of the transactions contemplated by this Agreement
the Warranties, covenants, undertakings and agreements required by this
Agreement shall, subject to Clause 11.2, survive the Closing Date.
11. LIMITATION ON WARRANTY CLAIMS
11.1 Disclosure. The Buyer shall not be entitled to make a claim for
breach of Warranty to the extent that with respect to each Warranty in Clause 4
Seller and/or Contab has stated an exception to each such Warranty and has
adequately described the nature and extent of such exception or the matter
giving rise to such breach has been fully and properly disclosed in the
Disclosure Letter.
11.2 Limitations
11.2.1 The Seller shall not be liable for any Relevant Claim:
(I) unless the Seller receives from the Buyer written notice
containing details of the Relevant Claim, including the Buyer's estimate
of the amount of such Relevant Claim on or before the expiry of three
months following completion of the audit of the financial statements of
the Company for the financial year ended 31 December, 1998 except for
Relevant Claims relating to Clauses 4.17 and 4.19 which must be received
by Seller prior to the fifth anniversary of the Closing Date, and
relating to Clause 4.16, which must be received by Seller prior to the
second anniversary of the Closing Date;
(II) unless the aggregate amount of the liability of the Seller for all
Relevant
<PAGE> 20
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Claims exceeds US$ 500,000 (in which event the Seller shall only be
liable for any amount above such threshold figure).
11.2.2 The aggregate amount of the liability of the Seller for all
Relevant Claims shall not exceed US$ 62,000,000.
11.2.3 Any Relevant Claim notified in accordance with Clause 11.2.1 and
not satisfied, settled or withdrawn on expiry of the period of 6 months starting
on the day of notification of the Relevant Claim is unenforceable against the
Seller unless Buyer has requested or otherwise initiated arbitration proceedings
in respect of the Relevant Claim pursuant to Clause 12.6.
11.2.4 The Seller and Contab are not liable in respect of a Relevant
Claim:
(a) to the extent that matter giving rise to the Relevant Claim would
not have arisen but for:
(i) any event, act, transaction or omission undertaken by the
Buyer or the Company (or a direct employee or agent of the Buyer or of
the Company) after the Closing Date; or
(ii) the passing of or a change in any law, rule or regulation
after the Closing Date;
(b) to the extent that the matter giving rise to the Relevant Claim is
an amount for which the Company has a full right of recovery against or
an indemnity from a person other than the Seller or Contab whether under
a provision of applicable law, insurance policy or otherwise except that
Seller's and Contab's indemnification obligation respecting such Relevant
Claim shall not expire and shall be extended for one year beyond the date
on which Buyer has given Seller or Contab notice of its lack of success
in obtaining a full recovery from such third party;
(c) to the extent that the matter giving rise to the Relevant Claim
was properly reserved against in the Financial Statements;
11.2.5. Subject to Clause 11.2.1, if the Buyer becomes aware of any
matter which might give rise to a Relevant Claim:
(a) The Buyer shall promptly give written notice to the Seller of the
matter and shall consult with the Seller in respect of such matter;
(b) The Buyer shall provide the Seller or Contab and their advisors
with reasonable access to premises and personnel and to relevant assets,
documents and records within the Buyer's possession or control for the
purpose of investigating the matter and enabling the Seller to take the
action referred to in Clause 11.2.5 (d);
<PAGE> 21
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(c) The Seller (at its cost) may take copies of the documents and
records and photograph the premises or assets referred to in Clause
11.2.5 (b);
(d) The Buyer shall:
(i) take such action and institute such proceedings and give
such information and assistance, as the Seller may reasonably request, to
dispute, resist, appeal, compromise, defend, remedy or mitigate the
matter;
(ii) if the Seller or Contab requests, allow the Seller or
Contab the exclusive conduct of any proceedings in connection with a
Relevant Claim and in each case on the basis that the Seller or Contab
shall fully indemnify the Buyer for any Loss incurred as a result of any
such request or nomination by the Seller or Contab.
11.2.6 The Buyer shall not admit liability in respect of or compromise
or settle any matter the subject of a Relevant Claim without the prior written
consent of the Seller (not to be unreasonably withheld or delayed).
11.2.7 If the Seller pays to the Buyer any amount in respect of a
Relevant Claim and the Buyer subsequently recovers from any other person an
amount which constitutes a recovery attributable to the subject matter of the
Relevant Claim:
(a) if the amount paid by the Seller or Contab in respect of the
Relevant Claim is more than the amount recovered from a third party the
Buyer shall immediately pay to the Seller the amount recovered from such
third party; or
(b) if the amount paid by the Seller in respect of the Relevant Claim
is less than the sum received from a third party the Buyer shall
immediately repay to the Seller an amount equal to that amount paid by
the Seller.
11.2.8 Nothing in this Agreement shall restrict or limit the Buyer's
general obligation at law to mitigate any loss or damage which may occur in
consequence of a matter giving rise to a Relevant Claim.
12. GENERAL PROVISIONS
12.1 Further Assurances. The Parties each agree to execute such
other documents or agreements as may be necessary or desirable for the
implementation of this Agreement and the consummation of the transactions
contemplated hereby.
12.2 Notices. Any notice required to be given under this Agreement
must be given in writing and will be effective on receipt when delivered by
registered mail or by facsimile confirmed by the sending of the original by
registered mail to the Party at the address stated herein or to such other
address as such party may designate by written notice in accordance
<PAGE> 22
23
with the provisions of this Clause.
to Buyer: Wayne H. Deitrich
Chairman and Chief Executive Officer
Schweitzer-Mauduit International, Inc.
100 North Point Center East
Suite 600
Alpharetta, Georgia 30022-8246
Fax No.: (770) 569-4275
with copy to: William J. Sharkey, Esq.
General Counsel
Schweitzer-Mauduit International, Inc.
100 North Point Center East
Suite 600
Alpharetta, Georgia 30022-8246
Fax No.: (770) 569-4275
to the Seller and Contab:
Marcio Fernandes
Director of Legal Services
Souza Cruz S.A.
Rua da Candelaria, 66
20092-900 - Rio de Janeiro - RJ
Fax No.: (021) 276-9886
12.3 Entire Agreement. This Agreement, together with all attachments,
schedules and the Disclosure Letter, with its exhibits referenced herein and the
Confidentiality Agreement is the Parties' entire agreement. It supersedes all
prior or contemporaneous oral or written communications, proposals and
representations with respect to its subject matter and prevails over any
conflicting or additional terms of any quote, order, acknowledgement or similar
communications between the Parties during the term of this Agreement. No
modification to this Agreement will be binding, unless in writing and signed by
a duly authorized representative of each party.
12.4 Successors. This Agreement shall be binding upon and shall inure
to the benefit of the Parties hereto and their respective successors and
assigns; provided, however, that this Agreement and all rights and obligations
hereunder may not be assigned or transferred by an Party without the prior
written consent of the other Party hereto; provided, however, that the Buyer
may, without the consent of the Seller (i) grant a security interest in its
rights under this Agreement to a lender financing Buyer's purchase of the Sale
Shares as security for Buyer's obligation to such lender and (ii) assigns its
rights hereunder to one or more subsidiaries of Buyer, but no such grant of
security interest or assignment shall release
<PAGE> 23
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the Buyer from its obligations hereunder.
12.5 Confidentiality. Each Party shall hold confidential all information
obtained in connection with the proposed transaction with respect to the other
Parties except for information which is otherwise public knowledge,
independently known or developed, received from a third party not subject to an
obligation of confidentiality or in the public domain through no fault of the
receiving party. Each Party hereto shall keep confidential the terms and
conditions of this Agreement, including, without limitation, the consideration
to be paid hereunder, except to the extent that disclosure of such information
is necessary or desirable for consummation of this Agreement, including without
limitation the information to be supplied to the Seller's minority shareholders
in connection with the steps referred to in Clause 6.1, disclosures required by
applicable law in Brazil or in the United States or demanded by any governmental
authority, or with the consent of all other Parties. Neither Seller, Contab,
Buyer or Purchasing Subsidiary shall make any publicity, release or announcement
concerning this Agreement or the transactions contemplated hereby without the
approval of the other party hereto, except as may be required by law.
12.6 Applicable Law and Arbitration. This Agreement shall be governed by
and construed and enforced in accordance with the laws of Brazil. Any claim or
dispute that arises out of this Agreement, or any subject of this Agreement (any
such claim or dispute being hereinafter called a "Dispute") shall be resolved by
binding arbitration in accordance with the Commercial Arbitration Convention
Rules of the Inter-American Commercial Arbitration Convention ("IACAC") and
shall occur at Miami, Florida, before one neutral arbitrator who shall be a
lawyer with at least fifteen years experience in commercial law and who shall be
fluent in English. The arbitration shall be conducted in the English language
only. All documents relevant to the dispute shall be made available to the other
party for review and copying no later than 60 days after the demand for
arbitration is served. The arbitrator may grant injunctive relief, but may not
award punitive damages. The award shall be enforceable under IACAC rules and
Brazilian law, and judgement upon the award rendered by the arbitrator may be
entered in any court having jurisdiction. Notwithstanding the above, a party may
bring court proceedings against any other party to obtain preliminary injunctive
relief pending completion of the arbitration, or as part of litigation commenced
by a third party.
12.7 Expenses. Seller and Buyer shall each bear the cost of their
respective legal counsel, advisors, consultants, brokers and the like incurred
in the preparation and negotiation of the Agreement, and none of the Parties
shall be liable to the other for any costs, expenses or claims related thereto,
except for those expenses or claims resulting from any breach of Warranties and
representations hereunder.
12.8 Severability. If at any time subsequent to the date hereof, any
provisions of this Agreement shall be held by any court of competent
jurisdiction to be illegal, void or unenforceable, such provision shall be of no
effect upon and shall not impair the enforceability of any other provision of
this Agreement.
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12.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
12.10 Joint and Several Liability. All obligations and liabilities of
Seller and Contab under this Agreement are joint and several. Buyer undertakes
to procure that Purchasing Subsidiary complies with all its obligations under
this Agreement jointly and severally with the Buyer.
12.11 Headings. All headings in this Agreement are for convenience
only and shall have no effect on the interpretation or construction hereof.
12.12 The Schedules and the Disclosure Letter with its exhibits
referred to in this Agreement are incorporated herein and constitute a part of
this Agreement.
IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement
as of the day and year first above written.
Rio de Janeiro, Brazil.
SOUZA CRUZ S.A.
/s/ Milton de Carvalho Cabral
------------------------------
Milton de Carvalho Cabral
CONTAB PARTICIPACOES LTDA.
/s/ Milton de Carvalho Cabral
------------------------------
Milton de Carvalho Cabral
SCHWEITZER-MAUDUIT INTERNATIONAL, INC.
/s/ Wayne H. Dietrich
------------------------------
Witnesses:
/s/
- ------------------------------
/s/
- ------------------------------
<PAGE> 25
Index of Schedules
to the Stock Purchase Agreement
Schedule 1 Software Sharing Agreements
Schedule 2 Transitional Services Agreement
Schedule 3 Supply Agreement
Schedule 4 Credits to be Assigned by the Company to the Seller
Schedule 5 Pension Funds
Schedule 6 Capital of the Company - Changes
Schedule 7 Claims Assignment Agreement
Schedule 8 Art Coated Supply Agreement
[All Schedules Intentionally Omitted;
will be furnished supplementally to the
Commission upon request.]
<PAGE> 1
EXHIBIT 99.1
PRESS RELEASE Contact: Bill Foust
770-569-4203
Paul Roberts
770-569-4277
SCHWEITZER-MAUDUIT ACQUIRES BRAZILIAN PAPER COMPANY
Alpharetta, GA, February 2, 1998. Schweitzer-Mauduit International, Inc.
(NYSE:SWM) today announced it has acquired a controlling interest in Companhia
Industrial de Papel Pirahy ("Pirahy"), a specialty paper manufacturer located in
Santanesia, near Rio de Janeiro, Brazil. Pirahy was previously a wholly owned
subsidiary of Souza Cruz S.A.
Schweitzer-Mauduit paid US$61,984,476 for ownership of 99.97 percent of the
shares of Pirahy. The remaining .03 percent of the Pirahy shares were acquired
by certain minority shareholders of Souza Cruz who exercised their preemptive
rights to acquire Pirahy shares. The acquisition was funded through a
combination of existing cash and loans with Schweitzer-Mauduit's current banking
group.
With 1997 sales of approximately $75 million, Pirahy is the largest supplier of
tobacco-related papers to South America. It also produces printing and writing
papers as well as papers for packaging and labeling applications.
Wayne H. Deitrich, Chairman of the Board and Chief Executive Officer of
Schweitzer-Mauduit commented that, "The acquisition of Pirahy with its five
paper machines and coater provides approximately 63,000 metric tons of annual
paper capacity and is an important strategic step for Schweitzer-Mauduit. It
will increase our market share in South America of tobacco-related papers to
approximately 51 percent. During 1998, we plan to improve the manufacturing
capabilities of Pirahy to support the growing demand for high quality
tobacco-related papers in the region. Also, the acquisition is not expected to
have a material impact on Schweitzer-Mauduit's 1998 net income."
Mr. Deitrich also announced that Luiz Jose de Saboia e Silva has joined
Schweitzer-Mauduit as President of Brazilian Operations. The other directors of
Pirahy are Jose Carlos de Araujo Pedrosa-Finance, Paulo Monnerat do
Valle-Commercial and Waldyr Ribeiro-Production.
Schweitzer-Mauduit International, Inc. is a diversified producer of premium
specialty papers and the world's largest supplier of fine papers to the tobacco
industry. It also manufactures specialty papers for use in alkaline batteries,
vacuum cleaner bags, business forms, and printing and packaging applications.
Schweitzer-Mauduit and its subsidiaries conduct business in over 80 countries
and employ 3,200 people worldwide, with operations in the United States, France,
Brazil and Canada
###
<PAGE> 1
EXHIBIT 99.2
PRESS RELEASE Contact: Bill Foust
770-569-4203
Paul Roberts
770-569-4277
SCHWEITZER-MAUDUIT COMPLETES ACQUISITION OF FRENCH SPECIALTY PAPER MANUFACTURER
Alpharetta, GA, February 11, 1998. Schweitzer-Mauduit International, Inc.
(NYSE:SWM) today announced it has acquired a controlling interest in Ingefico,
S.A. and its pulp and specialty paper manufacturing subsidiaries, Groupe SAPAM
and Papeteries de la Moulasse, located in St. Girons in the southwestern part
of France.
Schweitzer-Mauduit paid 37.2 million French francs, approximately US$6.1 million
for ownership of 97.1 percent of Ingefico's pulp and paper operations. The
acquisition was funded through a combination of existing cash and loans with
Schweitzer-Mauduit's current banking group. Total net debt of 35.5 million
French francs, approximately US$5.8 million, was also retained by the acquired
companies.
With 1997 sales of approximately $35 million, the St. Girons facility has been
a supplier of tobacco-related papers since approximately 1900 and is one of the
oldest specialty paper mills in Europe. It markets its products under the "Job
Cigarette Paper" brand, which Schweitzer-Mauduit plans to retain.
The facility includes a pulp mill for producing principally flax pulp, three
fine paper machines and associated converting equipment. The mill has annual
production capacities of approximately 14,000 metric tons of paper and
approximately 6,000 metric tons of pulp, most of which is used internally. It
principally produces fine paper for the tobacco industry and also manufactures
market pulp and other specialty papers. The mill employs approximately 250
people.
The St. Girons mill is Schweitzer-Mauduit's fourth production location in
France. It will provide capacity needed to support anticipated growth in
Schweitzer-Mauduit's sales of tobacco-related papers. The acquisition is not
expected to have a material impact on Schweitzer-Mauduit's 1998 net income.
Schweitzer-Mauduit International, Inc. is a diversified producer of premium
specialty papers and the world's largest supplier of fine papers to the tobacco
industry. It also manufactures specialty papers for use in alkaline batteries,
vacuum cleaner bags, business forms, and printing and packaging applications.
Schweitzer-Mauduit and its subsidiaries conduct business in over 80 countries
and employ approximately 3,550 people worldwide, with operations in the United
States, France, Brazil and Canada.
###
