EXHIBIT INDEX
RAYOVAC CORPORATION
Registration Statement on Form S-8
for the Rayovac Corporation 1997 Stock Option Plan
Exhibit
Number Description
------- -----------
4.1 Restated Articles of Incorporation of the
Company (Incorporated by reference to Ex-
hibit 3.1 to the Company's Registration
Statement on Form S-1 (Registration No.
333-17895) filed with the Securities and
Exchange Commission on December 13, 1996).
4.2 Restated By-Laws of the Company (Incorpo-
rated by reference to Exhibit 3.2 to the
Company's Registration Statement on Form S-
1 (Registration No. 333-17895) filed with
the Securities and Exchange Commission on
December 13, 1996).
4.3 Shareholders Agreement dated as of Septem-
ber 12, 1996 by and among the Company and
the shareholders of the Company referred to
therein, together with form of an Amend-
ment.
5 Opinion of James A. Broderick, Esq.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of James A. Broderick, Esq. (con-
tained in the opinion filed as Exhibit 5 to
this Registration Statement).
24 Power of Attorney (included on the signa-
ture page of this Registration Statement).
9
RAYOVAC CORPORATION
SHAREHOLDERS AGREEMENT
Dated as of September 12, 1996
RAYOVAC CORPORATION
SHAREHOLDERS AGREEMENT
TABLE OF CONTENTS
Page
----
PREAMBLE................................................................... 1
ARTICLE I Definitions..................................... 2
ARTICLE II Covenants and Conditions........................ 7
Section 2.1 Restrictions on Transfers....................... 7
Section 2.2 Call by the Company............................. 10
Section 2.3 Come Along...................................... 13
Section 2.4 Take Along...................................... 15
Section 2.5 Preemptive Rights............................... 16
Section 2.6 Restrictions on Other
Agreements...................................... 18
Section 2.7 Synthetic Sales................................. 18
ARTICLE III Registration Rights............................. 18
Section 3.1 General......................................... 18
Section 3.2 Demand Registrations............................ 18
Section 3.3 Piggyback Registration.......................... 19
Section 3.4 Obligations of the Company...................... 20
Section 3.5 Furnish Information............................. 24
Section 3.6 Expenses of Registration........................ 24
Section 3.7 Underwriting Requirements....................... 25
Section 3.8 Indemnification................................. 25
Section 3.9 Lock-Up Agreement............................... 28
Section 3.10 No Inconsistent Agreements...................... 29
Section 3.11 Stock Split and Reverse
Stock Split..................................... 29
ARTICLE IV Miscellaneous................................... 30
Section 4.1 Remedies........................................ 30
Section 4.2 Entire Agreement; Amendment; Waiver............. 30
Section 4.3 Severability.................................... 31
Section 4.4 Notices......................................... 31
Section 4.5 Binding Effect; Assignment...................... 32
Section 4.6 Governing Law................................... 32
i
Section 4.7 Termination..................................... 32
Section 4.8 Recapitalization, Exchanges, Etc................ 33
Section 4.9 Lee Group Shareholder Representative............ 33
Section 4.10 Action Necessary to Effec-
tuate the Agreement............................. 34
Section 4.11 Purchase for Investment;
Legend on Certificate........................... 34
Section 4.12 Effectiveness of Transfers...................... 34
Section 4.13 Additional Shareholders......................... 35
Section 4.14 No Waiver....................................... 35
Section 4.15 Financial Statements............................ 36
Section 4.16 Counterpart..................................... 36
Section 4.17 Headings........................................ 36
Section 4.18 Number; Gender.................................. 36
EXHIBIT A Schedule of Shareholders
ii
SHAREHOLDERS AGREEMENT
This Shareholders Agreement (this "Agreement") is entered into as of the
12th day of September, 1996, by and among Rayovac Corporation, a Wisconsin
corporation (the "Company"), those persons listed as Lee Group Shareholders on
the signature pages hereof, including Thomas H. Lee Equity Fund III, L.P., a
Delaware limited partnership ("Equity Fund") (collectively, the "Lee Group
Shareholders"), those persons listed as Management Shareholders on the
signatures pages hereof (the "Management Shareholders") and those persons listed
as Non-Management Shareholders on the signatures pages hereof (the "Non-
Management Shareholders"). The Management Shareholders and the Non-Management
Shareholders are sometimes collectively referred to herein as the "Existing
Shareholders". The Lee Group Shareholders and the Existing Shareholders are
sometimes collectively referred to herein as the "Shareholders".
WHEREAS, upon consummation of the transactions (including a 5 for 1 stock
split) contemplated by that certain Stock Purchase and Redemption Agreement
dated as of September 12, 1996 (the "Stock Purchase and Redemption Agreement"),
by and among the Company, the Existing Shareholders and the Lee Group
Shareholders, the Shareholders will own the number of shares of Common Stock set
forth opposite their respective names on Exhibit A hereto; and
WHEREAS, each of the Shareholders desires to enter into this Agreement for
the purpose of regulating certain aspects of the Shareholders' relationships
with regard to the Company and certain restrictions on, and rights and
obligations with respect to, the Common Stock owned by the Shareholders.
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement, and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
Definitions
-----------
For the purposes of this Agreement, the following terms shall be defined as
follows:
1933 Act. The "1933 Act" shall mean the Securities Act of 1933, as
amended.
1934 Act. The "1934 Act" shall mean the Securities Exchange Act of 1934,
as amended.
Affiliate. An "Affiliate" of a specified person, corporation or other
entity shall mean a person, corporation or other entity which, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, the corporation or other entity specified and,
when used with respect to the Company or any Subsidiary of the Company, shall
include any holder of at least 5% of the capital stock, or any officer or
director, of the Company.
Anniversary Date. "Anniversary Date" shall mean September 12, 1997.
Associate. "Associate," (a) when used to indicate a relationship with any
Person shall mean, (i) any corporation or organization of which such Person is
an officer or partner or is, directly or indirectly, the beneficial owner of ten
percent (10%) or more of any class of equity securities, (ii) any trust or other
estate in which such Person has a substantial beneficial interest or as to which
such Person serves as a trustee or in a similar fiduciary capacity and (iii) any
relative of such Person who has the same home as such Person, is a parent, aunt
or uncle, sibling, spouse, in-law, child, niece or nephew or grandchild of such
Person, or the spouse of any of them, or (b) when used to indicate a
relationship with the Company, shall also mean a director or officer of the
Company or any Subsidiary. Neither the Company nor any of its Subsidiaries shall
be deemed an Associate of any Shareholder.
2
Board. The "Board" shall mean the Board of Directors of the Company as the
same shall be constituted from time to time.
Cause. "Cause" shall mean (a) the commission of any fraud, embezzlement or
other material act of dishonesty with respect to the Company or any of its
Affiliates (including the unauthorized disclosure of confidential or proprietary
information of the Company or any of its Affiliates or Subsidiaries), (b) a
conviction of, or plea of guilty or nolo contendere to, a felony or other crime
involving moral turpitude, (c) willful misconduct or (d) willful failure or
refusal to perform one's duties and responsibilities to the Company or any of
its Affiliates which failure or refusal to perform is not remedied within thirty
(30) days after receipt of a written notice from the Company detailing such
failure or refusal to perform.
Common Stock. "Common Stock" shall mean the Company's common stock, $.01
par value, that the Company may be authorized to issue from time to time, any
other securities of the Company into which such Common Stock may hereafter be
changed or for which such Common Stock may be exchanged after giving effect to
the terms of such change or exchange (by way of reorganization, recapital-
ization, merger, consolidation or otherwise) and shall also include any common
stock of the Company hereafter authorized and any capital stock of the Company
of any other class hereafter authorized which is not preferred as to dividends
or distribution of assets in liquidation over any other class of capital stock
of the Company and which has ordinary voting power for the election of directors
of the Company.
The Company. The "Company" shall mean Rayovac Corporation, a Wisconsin
corporation, and its successors and assigns.
Lee Group Shareholder Representative. "Lee Group Shareholder
Representative" shall have the meaning set forth in Section 4.9 hereof.
Permitted Transfer. A "Permitted Transfer" shall mean:
3
(a) a Transfer of Shares by any Shareholder who is a natural person to
such Shareholder's spouse, children, grandchildren, parents or siblings or a
trust for the benefit of any of them;
(b) a bona fide pledge of Shares by a Shareholder to a bank, financial
institution or other lender;
(c) a Transfer of Shares between any Shareholder who is a natural person
and such Shareholder's guardian or conservator;
(d) a bona fide gift of Shares by a Shareholder to a charitable institution
as defined in Section 501(c) of the Internal Revenue Code of 1986, as amended,
provided such Transfer is reasonably acceptable to the Company;
(e) a Transfer of Shares from any Shareholder which is a partnership to
its partners, provided such Transfer is reasonably acceptable to the Company;
(f) a Transfer of Shares from any Shareholder which is a corporation or
partnership to any Affiliate of such Shareholder, provided such Transfer is
reasonably acceptable to the Company; or
(g) a Transfer of Shares by a Lee Group Shareholder to another Lee Group
Shareholder or other employee of Thomas H. Lee Company, or by a Non-Management
Shareholder to another Non-Management Shareholder.
No Permitted Transfer shall be effective unless and until the transferee of
the Shares so transferred, if such transferee is not already a party to this
Agreement, executes and delivers to the Company an executed counterpart of this
Agreement in accordance with the terms of Section 4.13 hereof. No Permitted
Transfer shall conflict with or result in any violation of a judgment, order,
decree, statute, law, ordinance, rule or regulation.
Permitted Transferee. A "Permitted Transferee" shall mean any Person who
shall have acquired and who shall hold Shares pursuant to a Permitted Transfer
described above.
4
Person. "Person" shall mean an individual, corporation, partnership, trust,
or unincorporated association, or a government or any agency or political
subdivision thereof.
Prior Shareholders Agreement. "Prior Shareholders Agreement" shall mean,
collectively, the Amended and Restated Shareholder's Agreements, dated as of
December 1991, entered into by the Company, Thomas F. Pyle and certain
shareholders of the Company.
Public Offering. A "Public Offering" shall mean the completion of a sale of
Common Stock, resulting in gross cash proceeds of not less than $20 million,
pursuant to a registration statement which has become effective under the 1933
Act, excluding registration statements on Form S-4, S-8 or similar limited
purpose forms and also excluding the registration of any equity security issued
to non-Affiliates of the Company as part of a bona fide debt offering of units
comprised of such equity security and a debt security of the Company.
Registrable Securities. "Registrable Securities" shall mean all shares of
Common Stock held from time to time by any party hereto and any other securities
of the Company or any of its Subsidiaries issued in exchange for, upon a
reclassification of, or in a distribution with respect to, such Common Stock. As
to any particular Registrable Securities, such securities shall cease to be
Registrable Securities when (a) a registration statement with respect to the
sale of such securities shall have become effective under the 1933 Act and such
securities shall have been disposed of in accordance with such registration
statement, (b) such securities shall have been sold under a Rule 144 Transaction
or (c) such securities shall have ceased to be outstanding.
Rule 144 Transaction. "Rule 144 Transaction" shall mean a transfer of
Shares (a) complying with Rule 144 under the 1933 Act as such Rule or a
successor thereto is in effect on the date of such transfer (but only a sale
pursuant to a "brokers transaction" as defined in clauses (i) and (ii) of
paragraph (g) of Rule 144 as in effect on the date hereof) and (b) occurring at
a time when Shares are registered pursuant to Section 12 of the 1934 Act.
5
Schedule. "Schedule" shall refer to the Schedule of Shareholders attached
hereto as Exhibit A.
Shares. "Shares" shall mean (a) all shares of Common Stock held by
Shareholders from time to time, (b) all shares of Common Stock subsequently held
by Permitted Transferees who acquire them in one or more Permitted Transfers and
(c) securities of the Company issued in exchange for, upon reclassification of,
or as a distribution in respect of, any of the foregoing.
Shareholder. "Shareholder" shall have the meaning set forth in the first
paragraph of this Agreement.
Stock Purchase and Redemption Agreement. "Stock Purchase and Redemption
Agreement" shall have the meaning set forth in the recitals set forth on the
first page of this Agreement.
Subsidiary. "Subsidiary," with respect to any entity (the "parent"), shall
mean any corporation, firm, association or trust of which such parent, at the
time in respect of which such term is used, (a) owns directly or indirectly more
than fifty percent (50%) of the equity or beneficial interest, on a consolidated
basis, and (b) owns directly or controls with power to vote, indirectly through
one or more Subsidiaries, shares of capital stock or beneficial interest having
the power to cast a majority of the votes entitled to be cast for the election
of directors, trustees, managers or other officials having powers analogous to
that of directors of a corporation. Unless otherwise specifically indicated,
when used herein the term Subsidiary shall refer to a direct or indirect
Subsidiary of the Company.
Synthetic Sale. "Synthetic Sale" shall mean any hedge, sale or purchase of
any derivative security or other action (other than Transfers expressly
permitted by the terms hereof) having the effect of reducing a Shareholder's
economic interest in Shares or reducing a Shareholder's exposure to a decrease
in fair market value of Shares.
Third Party. "Third Party" shall mean any Person other than the Company.
6
Transaction Price. "Transaction Price" shall mean $4.39 per Share (as
equitably adjusted for stock dividends, stock splits, reverse stock splits and
other similar reclassifications), which is the price originally paid for each
Share by the Lee Group Shareholders at the time of initial purchase thereof and
giving effect to the 5 for 1 stock split referred to in the first preamble to
this Agreement.
Transfer. "Transfer" shall mean to transfer, sell, assign, pledge,
hypothecate, give, create a security interest in or lien on, place in trust
(voting or otherwise), assign or in any other way encumber or dispose of,
directly or indirectly and whether or not by operation of law or for value, any
Shares.
ARTICLE II
Covenants and Conditions
Section 2.1 Restrictions on Transfers. No Shareholder may Transfer all or
any part of the Shares owned by such Shareholder other than a Transfer of Shares
which is (i) a Permitted Transfer, (ii) pursuant to a Public Offering, (iii) for
any Lee Group Shareholder or Management Shareholder, made after a Public
Offering, pursuant to a Rule 144 Transaction; provided that no Management
Shareholder shall Transfer, pursuant to any Rule 144 Transaction, an aggregate
number of Shares that, together with all prior Transfers by such Management
Shareholder pursuant to one or more Rule 144 Transactions and Public Offerings,
represents more than (A) the aggregate number of Shares Transferred by the Lee
Group Shareholders other than pursuant to a Permitted Transfer multiplied by
(B) such Management Shareholders' Proportionate Equity Interest, (iv) for any
Non-Management Shareholder, made after a Public Offering, (v) a Transfer by a
Management Shareholder to another Management Shareholder (a "Management
Transfer"); provided that each Management Transfer shall be made in accordance
with the procedures set forth in Sections 2.1(a)-(f), or (vi) pursuant to
another section of this Article II. For purposes of this Section 2.1,
"Proportionate Equity Interest" shall mean the number of Shares set forth on
the Schedule opposite the Management Shareholder's name plus the number of
Shares underlying options granted to such Management Shareholder on the date
hereof (to the extent
7
exercisable) divided by the aggregate number of Shares set forth on the Schedule
opposite the names of the Lee Group Shareholders, in each case as equitably
adjusted to account for stock dividends, stock splits, reverse stock splits or
other similar reclassifications.
(a) If, at any time after the Anniversary Date, a Management Shareholder
(each, an "Offeror") desires to Transfer Shares to another Management
Shareholder, such Offeror shall give notice of such offer (the "Transfer
Notice") to the Company. The Transfer Notice shall state the terms and
conditions of such offer, including the name of the prospective purchaser, the
proposed purchase price per share of such Shares (the "Offer Price"), payment
terms (including a description of any proposed non-cash consideration), the type
of disposition and the number of such Shares to be transferred ("Offered
Shares"). The Transfer Notice shall further state (i) that the Company may
acquire, in accordance with the provisions of this Agreement, any of the Offered
Shares for the price and upon the other terms and conditions, including deferred
payment (if applicable), set forth therein, and (ii) that the Company may not
purchase any of such Offered Shares unless the Company purchases all of such
Offered Shares.
(b) For a period of thirty (30) business days after receipt of the Transfer
Notice (the "Option Period"), the Company may, by notice in writing to the
Offeror delivering such Transfer Notice, elect in writing to purchase all, but
not less than all, of the Offered Shares at the Offer Price. The closing of the
purchase of Offered Shares pursuant to Section 2.1(b) or Section 2.1(c), as the
case may be, shall take place at the principal office of the Company on the
tenth (10th) day after the expiration of the Option Period. At such Closing, the
Company shall deliver to the Offeror, against delivery of certificates duly
endorsed and stock powers representing the Offered Shares being acquired by the
Company, the Offer Price, on the same terms as set forth in the Transfer Notice
(including any non-cash consideration described therein), payable in respect of
the Offered Shares being purchased by the Company. All of the foregoing
deliveries will be deemed to be made simultaneously, and none shall be deemed
completed until all have been completed.
8
(c) Notwithstanding anything set forth in this Section 2.1 to the contrary,
prior to the termination of the Option Period, the Board of Directors of the
Company (the "Board") may, in its sole discretion, elect to assign the Company's
right to purchase all, but not less than all, of the Offered Shares pursuant to
this Section 2.1 to the Lee Group Shareholders. If the Board so elects, the
Company shall give notice of such assignment to each Lee Group Shareholder (the
"Assignment Notice"), indicating the number of Shares each Lee Group Shareholder
is entitled to purchase (including the right to over-allotment of Offered
Shares, if any), the Offer Price of such Shares, and any other relevant payment
terms. Within five (5) business days of the Assignment Notice, those Lee Group
Shareholders who intend to purchase the Offered Shares pursuant to this Section
2.1(c) (the "Offered Shares Electing Shareholders") shall notify the Company in
writing of such intention, indicating the number of Offered Shares (including
over-allotments, if any) they intend to purchase. The right to purchase such
Offered Shares shall be allocated to the Lee Group Shareholders pro rata (based
on the number of Shares each Lee Group Shareholder (together with each such Lee
Group Shareholder's Permitted Transferees) owns in relation to the total number
of Shares owned by all of the Lee Group Shareholders); provided, however, that
if any Lee Group Shareholder does not elect to purchase the number of Offered
Shares which such Lee Group Shareholder (and its Permitted Transferees) may
purchase pursuant to this Section 2.1(c), then the Offered Shares Electing
Shareholders (and their Permitted Transferees) may elect to purchase the
remaining Offered Shares. The right to purchase the remaining Offered Shares
shall be allocated to the Offered Shares Electing Shareholders pro rata (based
on the number of Shares each Offered Shares Electing Shareholder (together with
their Permitted Transferees) owns in relation to the total number of Shares
owned by all of the Offered Shares Electing Shareholders).
(d) If the Company or the Lee Group Shareholders, as the case may be, do
not elect to purchase all of the Offered Shares, all, but not less than all, of
the Offered Shares may be Transferred, but only in accordance with Sections
2.1(e) and 2.1(f) and the terms of the Transfer Notice, within sixty (60) days
after expiration of the Option Period, after which, if
9
the Offered Shares have not been Transferred, all restrictions contained herein
shall again be in full force and effect.
(e) Five (5) days prior to the closing of the purchase of any Offered
Shares pursuant to Section 2.1(d) hereof (the "Closing"), the Offeror shall
notify the Company of the disposition of the Offered Shares, including the name
of each purchaser and the number of Shares bought by each purchaser. The Closing
shall take place no later than sixty (60) days after the expiration of the
Option Period. At such Closing, each purchaser of Offered Shares shall deliver
to the Offeror, against delivery of certificates duly endorsed and stock powers
representing the Offered Shares being acquired by such purchaser, the Offer
Price, on the same terms as set forth in the Transfer Notice (including any
non-cash consideration described therein), payable in respect of the Offered
Shares being purchased by such purchaser. All of the foregoing deliveries will
be deemed to be made simultaneously, and none shall be deemed completed until
all have been completed.
(f) Any Transfer of Shares pursuant to this Section 2.1 (other than
pursuant to Sections 2.1 (ii), (iii) and (iv)) shall remain subject to the
Transfer restrictions of this Agreement, and each intended transferee pursuant
to this Section shall execute and deliver to the Company a counterpart of this
Agreement, which shall evidence such transferee's agreement that the Shares
intended to be Transferred shall continue to be subject to this Agreement and
that as to such Shares the transferee shall be bound by the restrictions of this
Agreement as a Shareholder hereunder.
Section 2.2 Call by the Company.
(a) If the employment of a Management Shareholder by the Company or any of
its Subsidiaries shall terminate (a "Call Event") prior to the completion of the
Company's initial Public Offering, the Company shall have the right to purchase
(the "Call Option"), by delivery of a written notice (the "Call Notice") to such
terminated Management Shareholder no later than ninety (90) days after the date
of such Call Event, and such Management Shareholder and such Management
Shareholder's
10
Permitted Transferees (the "Call Group") shall be required to sell all (but not
less than all) of the Shares which are owned by the members of the Call Group on
the date of such Call Event (collectively, the "Call Securities") at a price per
share equal to the Call Price (as defined in Section 2.2(c) below) applicable to
such Shares.
(b) Notwithstanding anything set forth in this Section 2.2 to the contrary,
prior to the exercise of the Call Option by the Company, the Board may, in its
sole discretion, elect to assign the Company's right to exercise the Call Option
to purchase all, but not less than all, of the Call Securities to the Lee Group
Shareholders. If the Board so elects, the Company shall give notice of such
assignment to each Lee Group Shareholder (the "Call Assignment Notice"),
indicating the number of Call Securities each Lee Group Shareholder is entitled
to purchase (including the right to over-allotment of Call Securities, if any),
the Call Price applicable to such Shares and the date of the closing of such
purchase under this Section 2.2. Within five (5) business days of the Call
Assignment Notice, those Lee Group Shareholders who intend to purchase Call
Securities pursuant to this Section 2.2(b) (the "Call Securities Electing
Shareholders") shall notify the Company in writing of such intention, indicating
the number of Call Securities (including over-allotments, if any) they intend to
purchase; provided that, with respect to any Call Assignment Notice given by the
Company to the Lee Group Shareholders on or prior to the Anniversary Date, the
Lee Group Shareholders shall notify the Company of such intention to purchase
Call Securities no later than five (5) business days after the Anniversary Date.
The right to purchase such Call Securities shall be allocated to the Lee Group
Shareholders pro rata (based on the number of Shares each Lee Group Shareholder
(together with each such Lee Group Shareholder's Permitted Transferees) owns in
relation to the total number of Shares owned by all of the Lee Group
Shareholders); provided, however, that if any Lee Group Shareholder does not
elect to purchase the number of Call Securities which such Lee Group Shareholder
(and its Permitted Transferees) may purchase pursuant to this Section 2.2(b),
then the Call Securities Electing Shareholders (and their Permitted Transferees)
may elect to purchase the remaining Call Securities. The right to purchase the
remaining Call Securities shall be allocated
11
to the Call Securities Electing Shareholders pro rata (based on the number of
Shares each Call Securities Electing Shareholder (together with their Permitted
Transferees) owns in relation to the total number of Shares owned by all of the
Call Securities Electing
Shareholders).
(c) For purposes of this Section 2.2, the term "Call Price" shall mean (i)
if the employment of the Management Shareholder is terminated for Cause (A)
within one (1) year of the date of this Agreement, the Transaction Price, and
(B) subsequent to the date which is one (1) year from the date of this
Agreement, the lower of the Transaction Price and the fair market value (as
determined by the Board) of each Share; and (ii) if the employment of the
Management Shareholder is terminated other than for Cause or the Management
Shareholder voluntarily terminates his or her employment with the Company or one
of its Subsidiaries (A) within one (1) year of the date of this Agreement, the
Transaction Price, and (B) subsequent to the date which is one (1) year from the
date of this Agreement, the fair market value (as determined by the Board) of
each Share. Notwithstanding the foregoing, in the event that a Management
Shareholder who owns at least 91,116 Shares on the date hereof is entitled to
receive the Call Price for his Shares pursuant to clause (i)(B) or (ii)(B) of
this Section 2.2(c) and such Management Shareholder disputes the Board's
determination of fair market value, such Management Shareholder shall be
entitled to have the fair market value of such Shares determined by an
independent appraiser selected by the Company and reasonably acceptable to such
Management Shareholder. Fair market value of Shares shall be determined in each
case without deduction for the fact that the Shares represent a minority
interest in the Company. All costs of any appraisal under this Section 2.2(c)
shall be paid equally by the Company and such Management Shareholder.
(d) The closing of any purchase of Call Securities pursuant to Section
2.2(a) or 2.2(b) shall take place at the principal office of the Company (i)
with respect to purchases by the Company or a Designated Employee (as defined
below), on the tenth (10th) business day after the date of the Call Notice and
(ii) with respect to any Lee Group Shareholder, on the tenth (10th) business day
after notifying the Company in writing of
12
its intention to exercise its right to purchase pursuant to Section 2.2(b). At
such closing, the Company, the Lee Group Shareholders or the Designated
Employee, as the case may be, shall deliver to the Call Group, against delivery
of certificates duly endorsed and stock powers representing the Call Securities,
a certified check or checks payable to the Management Shareholder and/or the
Permitted Transferees, as the case may be, in an amount equal to the aggregate
Call Price payable in respect of such Call Securities. All of the foregoing
deliveries will be deemed to be made simultaneously and none shall be deemed
completed until all have been completed.
(e) Notwithstanding anything set forth in this Section 2.2 to the contrary,
prior to the exercise by the Company of its Call Option to purchase Call
Securities pursuant to this Section 2.2, one or more new or existing employees
of the Company or any of its Subsidiaries may, in the sole discretion of the
Board, be designated by the Board (individually a "Designated Employee" and
collectively, "Designated Employees") who shall have the right, but not the
obligation, to exercise the Call Option and to acquire, in lieu of the Company,
some or all (as determined by the Company) of the Call Securities that the
Company is entitled to purchase from the Call Group hereunder, for cash and on
the same terms and conditions as set forth in Section 2.2(d) which apply to the
repurchase of Call Securities by the Company. Concurrently with any such
purchase of Call Securities by any such Designated Employee, such Designated
Employee who is not already a Management Shareholder shall execute a counterpart
of this Agreement whereupon such Designated Employee shall be deemed a
"Management Shareholder" and shall have the same rights and be bound by the same
obligations as a Management Shareholder hereunder.
(f) Subject to Section 2.2(b), if neither the Company nor any Designated
Employee elect to exercise the Call Option and deliver a Call Notice within
ninety (90) days of a Call Event, then the Call Option provided in this Section
2.2 shall terminate, but the Management Shareholder or his Permitted Transferees
shall continue to hold such Call Securities pursuant to all of the other
provisions of this Agreement.
Section 2.3 Come Along. Except as provided in Section 2.3(c) hereof, the
Lee Group Shareholders shall
13
not Transfer Shares to a Third Party who is not a Permitted Transferee without
complying with the terms and conditions set forth in Sections 2.3(a) and 2.3(b)
below.
(a) Any Lee Group Shareholder, when desiring to Transfer Shares (the
"Transferor"), shall give not less than seven (7) days prior written notice of
such intended Transfer to each other Shareholder and to the Company. Such notice
(the "Participation Notice") shall set forth the terms and conditions of such
proposed Transfer, including the name of the prospective transferee, the
number of Shares proposed to be transferred (the "Participation Securities") by
the Transferor, the purchase price per Share proposed to be paid therefor and
the payment terms and type of transfer to be effectuated. Within five (5) days
following the delivery of the Participation Notice by the Transferor to each
other Shareholder and to the Company, each Shareholder desiring to participate
in such proposed Transfer (each, a "Participating Offeree") shall, by notice in
writing to the Transferor and to the Company, have the opportunity and right to
sell to the purchasers in such proposed Transfer (upon the same terms and
conditions as the Transferor) up to that number of Shares owned by such
Participating Offeree as shall equal the product of (i) a fraction, the
numerator of which is the number of Shares owned by such Participating Offeree
as of the date of such proposed Transfer and the denominator of which is the
aggregate number of Shares actually owned as of the date of such Participation
Notice by the Transferor and by all Participating Offerees, multiplied by (ii)
the number of Participation Securities. The amount of Participation Securities
to be sold by the Transferor shall be reduced to the extent necessary to provide
for such sales of Shares by Participating Offerees.
(b) At the closing of any proposed Transfer in respect of which a
Participation Notice has been delivered, the Transferor, together with all
Participating Offerees, shall deliver to the proposed transferee certificates
evidencing the Shares to be sold thereto duly endorsed with stock powers and
shall receive in exchange therefor the consideration to be paid or delivered by
the proposed transferee in respect of such Shares as described in the
Participation Notice.
14
(c) The provisions of this Section 2.3 shall not apply to (i) any Permitted
Transfer, (ii) any Transfer pursuant to or following a Public Offering or (iii)
any Transfer pursuant to Section 2.2 or 2.4.
(d) The provisions of this Section 2.3 shall be construed in accordance
with Section 14(e) of the Warrant Agreement dated as of the date hereof among
the Company, RC Funding, Inc. and Bank of America National Trust and Savings
Association (the "Warrant Agreement").
Section 2.4 Take Along.
(a) If a Lee Group Shareholder or group of Lee Group Shareholders holding
more than 50% of the then outstanding Shares (the "Take Along Group") determine
to sell or exchange (in a business combination or otherwise), in one or a series
of bona fide arms-length transactions to a Third Party who is not an Affiliate
of the Take Along Group, 50% or more of the aggregate number of Shares owned by
the Lee Group Shareholders on the date hereof (as equitably adjusted to account
for stock dividends, stock splits, reverse stock splits or other similar
reclassifications), then, upon five (5) days written notice by the Take Along
Group to each other Shareholder, which notice shall include reasonable details
of the proposed sale or exchange including the proposed time and place of
closing and the consideration to be received by the Take Along Group (such
notice being referred to as the "Sale Request"), each other Shareholder (each, a
"Seller") shall be obligated to, and shall sell, transfer and deliver, or cause
to be sold, transferred and delivered, to such Third Party on the same terms as
the Take Along Group, that number of Shares owned by such Seller as shall equal
the product of (A) a fraction, the numerator of which is the number of Shares
proposed to be transferred by the Take Along Group as of the date of such Sale
Request and the denominator of which is the aggregate number of Shares actually
owned as of the date of such Sale Request by the Take Along Group, multiplied by
(B) the number of Shares actually owned as of the date of such Sale Request by
such Seller. Each Seller shall (i) deliver certificates for all of its Shares at
the closing of the proposed Transfer, free and clear of all claims, liens and
encumbrances and (ii) if shareholder
15
approval of the transaction is required, vote his or its Shares in favor
thereof.
(b) The provisions of this Section 2.4 shall not apply to (i) any Transfer
pursuant to or following a Public Offering or (ii) a Permitted Transfer.
(c) The provisions of this Section 2.4 shall be construed in accordance
with Section 14(f) of the Warrant Agreement.
Section 2.5 Preemptive Rights.
(a) Preemptive Rights. The Company hereby grants to each Shareholder so
long as it shall own any Shares or, if sooner, until a Public Offering, the
right to purchase up to a pro rata portion of New Securities (as defined in
paragraph (b) below) which the Company, from time to time, proposes to sell or
issue following the date hereof. A Shareholder's pro rata portion, for purposes
of this Section 2.5, is the product of (i) a fraction, the numerator of which is
the number of outstanding Shares which such Shareholder then owns and the
denominator of which is the total number of Shares of Common Stock then actually
outstanding on a fully diluted basis after giving effect to the exercise of all
options, warrants and the like and the conversion of all securities convertible
into or exchangeable for Common Stock, multiplied by (ii) the number of New
Securities the Company proposes to sell or issue.
(b) Definition of New Securities. "New Securities" shall mean any Common
Stock of the Company, whether now authorized or not, any rights, options or
warrants to purchase Common Stock and any indebtedness or preferred stock of the
Company which is convertible into Common Stock (or which is convertible into a
security which is, in turn, convertible into Common Stock); provided that the
term "New Securities" does not include (i) indebtedness of the Company; (ii)
Common Stock issued as a stock dividend to all holders of Common Stock pro rata
or upon any subdivision or combination of shares of Common Stock; (iii) the
issuance and sale of securities of the Company pursuant to a Public Offering or
merger, consolidation or similar share exchange; (iv) any director, officer,
employee or consultant stock options approved by the Board of Directors of the
Company; (v) the
16
issuance of any Common Stock upon the exercise or conversion of any rights,
options or warrants to purchase Common Stock; (vi) the issuance and sale of up
to an aggregate of 227,791 shares of Common Stock (as equitably adjusted for
stock dividends, stock splits, reverse stock splits and other similar
reclassifications) on or prior to the Anniversary Date to newly hired officers
(but not the chief executive officer) or employees of the Company for a per
share price no less than the Transaction Price; provided that such officers or
employees shall execute a counterpart of this Agreement as Management
Shareholders; or (vii) the issuance of any equity security issued to
non-Affiliates of the Company as part of a bona fide debt offering of investment
units comprised of such equity security and a debt security of the Company or
the issuance of Common Stock upon the conversion of such equity security
pursuant to its terms.
(c) Notice from the Company. In the event the Company proposes to issue New
Securities, the Company shall give each Shareholder who has a preemptive right
under this Section 2.5 written notice of such proposal, describing the type of
New Securities and the price and the terms upon which the Company proposes to
issue the same. For a period of five (5) days following the delivery of such
notice by the Company, the Company shall be deemed to have irrevocably offered
to sell to each Shareholder its pro rata share of such New Securities for the
price and upon the terms specified in the notice. Each Shareholder may exercise
its preemptive rights hereunder by giving written notice to the Company and
stating therein the quantity of New Securities to be purchased.
(d) Sale by the Company. In the event any Shareholder who has a preemptive
right under this Section 2.5 fails to exercise in full its preemptive right
within said five (5) day period, the Company shall have one (1) year thereafter
to sell the New Securities with respect to which the preemptive right was not
exercised, at a price and upon terms no more favorable to the purchasers thereof
than specified in the Company's notice given pursuant to Section 2.5(c).
(e) Closing. The closing for any such issuance shall take place as proposed
by the Company with respect to the Shares to be issued, at which closing the
17
Company shall deliver certificates for the shares in the respective names of the
purchasing Shareholders against receipt of payment therefor.
Section 2.6 Restrictions on Other Agreements. Until the completion of a
Public Offering by the Company, no Shareholder shall grant any proxy or enter
into or agree to be bound by any voting trust with respect to the Shares, nor
shall any Shareholder enter into any shareholders agreements or arrangements of
any kind with any person with respect to the Shares on terms which conflict with
the provisions of this Agreement (whether or not such agreements and
arrangements are with other Shareholders), including, but not limited to,
agreements or arrangements with respect to the acquisition, disposition or
voting of Shares inconsistent herewith.
Section 2.7 Synthetic Sales. Any Synthetic Sales by a Management
Shareholder then employed by the Company or any of its Subsidiaries shall
require the prior written approval of the Board.
ARTICLE III
Registration Rights
Section 3.1 General. For purposes of Article III: (a) the terms "register",
"registered" and "registration" refer to a registration effected by preparing
and filing a registration statement in compliance with the 1933 Act and the
declaration or ordering of effectiveness of such registration statement; and (b)
the term "Holder" means any Shareholder or Permitted Transferee thereof.
Section 3.2 Demand Registrations.
(a) If the Company shall receive a written request (specifying that it is
being made pursuant to this Section 3.2) from the Lee Group Shareholders, made
at a time when the Lee Group Shareholders and their Permitted Transferees own in
the aggregate at least 10% of the Purchased Shares (as that term is defined in
the Stock Purchase and Redemption Agreement), that the Company file a
registration statement under the 1933 Act, or a similar document pursuant to any
other statute then in effect corresponding to the 1933 Act, covering the regis-
18
tration of Common Stock, then the Company shall, not later than ninety (90) days
after receipt by the Company of a written request for a demand registration
pursuant to this Section 3.2, file a registration statement with the Securities
and Exchange Commission (the "SEC") relating to such Registrable Securities as
to which such request for a demand registration relates (the "Requested
Shares"), and the Company shall use its best efforts to cause the offering of
such Requested Shares to be registered under the 1933 Act. The Company shall be
obligated to effect only three (3) registrations of Registrable Securities
pursuant to this Section 3.2; provided, however, that if the Lee Group
Shareholders and their Permitted Transferees own at least 10%, but not more than
25%, of the Purchased Shares, then the Company shall be obligated to effect only
one (1) such registration of Registrable Securities.
(b) If, pursuant to Section 3.3, the total amount of securities that all
Holders and all other holders of securities which have applicable registration
rights request to be included in an offering made pursuant to this Section 3.2
exceeds the amount of securities that the underwriters reasonably believe
compatible with the success of the offering, then the Company will include in
such registration only the number of securities which, in the good faith opinion
of such underwriters, can be sold, selected from the securities requested to be
included by all Holders and such other holders pro rata based on the number of
securities which each of them owns.
Section 3.3 Piggyback Registration. If, at any time, the Company determines
to register, whether for its own account or pursuant to a request by the Lee
Group Shareholders pursuant to Section 3.2, any of its equity securities
(including securities convertible into equity securities, but excluding equity
securities being registered pursuant to a registration statement on Form S-8 and
equity securities issued in connection with mezzanine debt or senior bank
financing of the Company, whether pursuant to the Stock Purchase and Redemption
Agreement or placed or sold in the future, or equity securities issued upon
conversion or exchange thereof), for its own account or for the account of
others under the 1933 Act in connection with the public offering of such
securities (other than the first Public Offering), the Company
19
shall, at each such time, promptly give each Holder written notice of such
determination no later than ten (10) days before the effective date of any such
registration. Upon the written request of any Holder received by the Company
within five (5) days after the giving of any such notice by the Company, the
Company shall use its best efforts to cause to be registered under the 1933 Act
all of the Registrable Shares of each Holder that such Holder has requested be
registered. If the total amount of securities that are to be included by either
the Company (or other person (including any Shareholder) for whose account the
registration is made) for its own account and at the request of Holders pursuant
to this Section 3.3 and all other holders of securities which have applicable
registration rights exceeds the amount of securities that the underwriters
reasonably believe compatible with the success of the offering, then the Company
will include in such registration only the number of securities which in the
opinion of such underwriters can be sold, selected from the securities requested
to be included by all Holders and all such other holders pro rata based on the
number of securities which each of them owns. The rights afforded to the Holders
pursuant to this Section 3.3 are subject to the provisions of Section 14(b) of
the Warrant Agreement.
Section 3.4 Obligations of the Company.
(a) Whenever required under Section 3.2 or 3.3 hereof to use its best
efforts to effect the registration of any Registrable Securities, the Company
shall:
(1) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to
cause such registration statement to become and remain effective,
including, without limitation, filing of post-effective amendments and
supplements to any registration statement or prospectus necessary to
keep the registration statement current; provided, however, that if
such registration statement does not become effective, then any demand
registration pursuant to Section 3.2 prompting such undertaking by the
Company shall be deemed to be rescinded and retracted and shall not be
counted as, or
20
deemed or considered to be or to have been, a demand registration
pursuant to Section 3.2 for any purpose;
(2) as expeditiously as reasonably possible, prepare and file
with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration
statement as may be necessary to comply with the provisions of the
1933 Act with respect to the disposition of all securities covered by
such registration statement and to keep each registration and
qualification under this Agreement effective (and in compliance with
the 1933 Act) by such actions as may be necessary or appropriate for a
period of up to 180 days (if, in the reasonable discretion of the
Holders owning securities covered by such registration statement, such
period of time is necessary for the successful completion of the
offering of such securities) after the effective date of such
registration statement, all as requested by such Holders;
(3) as expeditiously as reasonably possible, furnish to the
Holders such numbers of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the
1933 Act, and such other documents as they may reasonably request in
order to facilitate the disposition of Registrable Securities owned
by them;
(4) as expeditiously as reasonably possible, use its best efforts
to register and qualify the securities covered by such registration
statement under such securities or "blue sky" laws of such
jurisdictions as shall be reasonably appropriate for the distribution
of the securities covered by the registration statement, provided that
the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general
consent to service of process in any such jurisdiction, and further
provided that (anything in this Agree-
21
ment to the contrary notwithstanding with respect to the bearing of
expenses) if any jurisdiction in which the securities shall be
qualified shall require that expenses incurred in connection with the
qualification of the securities in that jurisdiction be borne by
selling shareholders, then such expenses shall be payable by selling
shareholders pro rata to the extent required by such jurisdiction;
(5) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the
disposition or such Registrable Securities;
(6) notify each seller of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto
is required to be delivered under the 1933 Act, upon discovery that,
or upon the happening of any event as a result of which, the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
under which they were made, and at the request of any such seller or
Holders promptly prepare to furnish to such seller or Holders a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which
they were made;
(7) otherwise use its best efforts to comply with all applicable
rules and
22
regulations of the SEC, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the
period of at least twelve (12) months, but not more than eighteen (18)
months, beginning with the first full calendar month after the
effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the 1933 Act, and will
furnish to each such seller at least two (2) business days prior to the
filing thereof a copy of any post-effective amendment or supplement to
such registration statement or prospectus and shall not file any
thereof to which any such seller shall have reasonably objected, except
to the extent required by law, on the grounds that such amendment or
supplement does not comply in all material respects with the
requirements of the 1933 Act or of the rules or regulations thereunder;
(8) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of
such registration statement; and
(9) use its best efforts to list all Registrable Securities
covered by such registration statement on any securities exchange on
which any class of Registrable Securities is then listed.
(b) The Company will furnish to each Holder on whose behalf Registrable
Securities have been registered pursuant to this Agreement a signed counterpart,
addressed to such Holder, of an opinion of counsel for the Company dated the
effective date of such registration statement, and such opinion of counsel shall
cover those matters which are customarily covered in opinions of issuer's
counsel delivered to underwriters in connection with underwritten public
offerings of securities.
(c) Except as otherwise set forth in Section 3.3, if the Company at any
time proposes to
23
register any of its securities under the 1933 Act, whether or not for sale for
its own account, and such securities are to be distributed by or through one or
more underwriters, then the Company will make reasonable efforts, if requested
by any Holder of Registrable Securities who requests registration of Registrable
Securities in connection therewith pursuant to Section 3.2 or 3.3 hereof, to
arrange for such underwriters to include such Registrable Securities among the
securities to be distributed by or through such underwriters.
(d) In connection with the preparation and filing of each registration
statement registering Registrable Securities under this Agreement, the Company
will give the Holders of Registrable Securities on whose behalf such Registrable
Securities are to be so registered and their underwriters, if any, and their
respective counsel and accountants, the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the SEC, and each amendment thereof or supplement thereto, and will
give each of them such access to its books and records and such opportunities to
discuss the business of the Company with its officers, its counsel and the
independent public accountants who have certified its financial statements, as
shall be necessary, in the opinion of such Holders or such underwriters or their
respective counsel, in order to conduct a reasonable and diligent investigation
within the meaning of the 1933 Act.
Section 3.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Article III that the
Holders shall furnish to the Company such information regarding them, the
Registrable Securities held by them, and the intended method of disposition of
such securities as the Company shall reasonably request and as shall be required
in connection with the action to be taken by the Company.
Section 3.6 Expenses of Registration. All expenses incurred in connection
with a registration pursuant to Section 3.2 or 3.3 hereof (excluding
underwriters' discounts and commissions, which shall be borne by the sellers),
including without limitation all registration and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the
24
Company and the reasonable fees and disbursements of one counsel for the
selling Holders (which counsel shall be selected by a majority in interest of
such Holders) shall be borne by the Company.
Section 3.7 Underwriting Requirements. In connection with any registration
of Registrable Securities under this Agreement, the Company will, if re-
quested by the underwriters for any Registrable Securities included in such
registration, enter into an underwriting agreement with such underwriters for
such offering, such agreement to contain such representations and warranties
by the Company, and such other terms and provisions as are customarily contained
in underwriting agreements with respect to secondary distributions, including,
without limitation, provisions relating to indemnification and contribution. The
Holders on whose behalf Registrable Securities are to be distributed by such
underwriters shall be parties to any such underwriting agreement, and the
representations and warranties by the Company and the other agreements on the
part of the Company to and for the benefit of such underwriters shall be also
made to and for the benefit of such Holders of Registrable Securities. The
Company shall use its reasonable best efforts to cause the underwriting
agreement to comply with Section 3.8. Such underwriters shall be selected (i) by
the Company, in the case of a registration pursuant to Section 3.3, or (ii) by
the Holders requesting a demand registration, in the case of a registration
pursuant to Section 3.2.
Section 3.8 Indemnification. In the event any Registrable Securities are
included in a registration statement under Article III:
(a) To the fullest extent permitted by law, the Company will indemnify and
hold harmless each Holder requesting or joining in a registration, any
underwriter (as defined in the 1933 Act) for it, and each person, if any, who
controls such Holder or such underwriter within the meaning of the 1933 Act,
from and against any losses, claims, damages, expenses (including reasonable
attorneys' fees and expenses and reasonable costs of investigation) or
liabilities, joint or several, to which they or any of them may become subject
under the 1933 Act or otherwise, insofar as such losses, claims, damages,
expenses or liabilities (or actions or proceed-
25
ings, whether commenced or threatened, in respect thereof) arise out of or
are based on any untrue or alleged untrue statement of any material fact
contained in such registration statement including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein, or necessary to make the
statements therein not misleading, or arise out of any alleged violation by the
Company of any rule or regulation promulgated under the 1933 Act applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration; provided, however, that the indemnity
agreement contained in this Section 3.8(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable to anyone for any
such loss claim, damage, liability or action to the extent that it arises out of
or is based upon an untrue statement or omission made in connection with such
registration statement, preliminary prospectus, final prospectus or amendments
or supplements thereto in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Holder, underwriter or control person. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Holder, underwriter or control person and shall survive the transfer of such
securities by such Holder.
(b) To the fullest extent permitted by law, each Holder requesting or
joining in a registration will indemnify and hold harmless the Company, as the
case may be, each of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls the Company within the
meaning of the 1933 Act, and each agent and any underwriter for the Company and
any person who controls any such agent or underwriter and each other Holder and
any person who controls such Holder (within the meaning of the 1933 Act) against
any losses, claims, damages or liabilities to which the Company or any such
director, officer, control person, agent, underwriter, or other Holder may
become subject, under the 1933 Act or otherwise, insofar as such
26
losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon an untrue statement of any material fact
contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto,
or arise out of or are based upon the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or omission was made in such registration statement, preliminary or
final prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with written information furnished by such Holder with respect to
such Holder expressly for use in connection with such registration; and such
Holder will reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer, control person, agent, underwriter, or
other Holder in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity obligation of
each such Holder hereunder shall be limited to and shall not exceed the proceeds
actually received by such Holder upon a sale of Registrable Securities pursuant
to a registration statement hereunder; and provided, further, that the indemnity
agreement contained in this Section 3.8(b) shall not apply to amounts paid in
settlements effected without the consent of such Holder (which consent shall not
be unreasonably withheld). Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or any such
director, officer, Holder, underwriter or control person and shall survive the
transfer of such securities by such Holder.
(c) Any person seeking indemnification under this Section 3.8 will (i) give
prompt notice to the indemnifying party of any claim with respect to which it
seeks indemnification (but the failure to give such notice will not affect the
right to indemnification hereunder, unless the indemnifying party is materially
prejudiced by such failure) and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest may exist between such indemnified
and indemnifying parties with respect to such claim, permit such indemnifying
party, and other indemnifying parties similarly situated, jointly to assume the
defense of such
27
claim with counsel reasonably satisfactory to the parties. In the event that the
indemnifying parties cannot mutually agree as to the selection of counsel, each
indemnifying party may retain separate counsel to act on its behalf and at its
expense. The indemnified party shall in all events be entitled to participate in
such defense at its expense through its own counsel. If such defense is not
assumed by the indemnifying party, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). No indemnifying party will consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation. An indemnifying party who is not entitled to, or elects not to,
assume the defense of a claim will not be obligated to pay the fees and expenses
of more than one counsel for all parties indemnified by such indemnifying party
with respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the reasonable fees and expenses of
such additional counsel.
(d) If for any reason the foregoing indemnification is unavailable to any
party or insufficient to hold it harmless as and to the extent contemplated by
the preceding paragraphs of this Section 3.8, then each indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such loss, claim, damage, expense or liability in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the applicable indemnified party, as the case may be, on the other
hand, and also the relative fault of the Company and any applicable indemnified
party, as the case may be, as well as any other relevant equitable
considerations.
Section 3.9 Lock-Up Agreement. If required by the underwriter, each
Shareholder agrees not to sell or otherwise transfer or dispose of any Common
Stock (or other securities) of the Company held by such Shareholder
28
(other than securities included in the applicable registration statement or
shares purchased in the public market after the effective date of registration)
or any interest or future interest therein during such period (not to exceed 180
days) as is acceptable to the underwriter following the effective date of each
registration statement of the Company filed under the 1933 Act which includes
securities to be sold to the public in an underwritten offering. The Company may
impose stop transfer instructions with respect to the shares of Common Stock (or
other securities) subject to the foregoing restriction until the end of said
period.
Section 3.10 No Inconsistent Agreements. The Company agrees that it has not
entered into, and it will not hereafter enter into, any agreement with respect
to the registration of its securities that is inconsistent with (or superior to)
the rights granted to the Holders of Registrable Securities in this Agreement.
Section 3.11 Stock Split and Reverse Stock Split. If, on or after the
receipt by the Company of a request for registration of a public offering
pursuant to Section 3.2 hereof, the proposed managing underwriter or
underwriters of such offering reasonably believes that the number of shares to
be registered is not the number necessary for the success of such offering, the
Company shall use its best efforts to cause each share of its outstanding Common
Stock to be converted into such number of shares of such Common Stock so that
the number of shares of Registrable Securities to be registered is equal to the
number which such managing underwriter or underwriters reasonably believes is
necessary for the success of such offering. If necessary in connection
therewith, the Company shall use its best efforts to cause to be recommended,
approved and adopted by its Board of Directors and approved and adopted by its
shareholders, and, if so approved and adopted, file and cause to become
effective, an amendment to its articles of incorporation increasing the number
of shares of Common Stock which the Company is authorized to issue. Each
Shareholder, together with its Permitted Transferees, hereby agrees to vote the
Shares held by it in favor of adopting such amendment.
29
ARTICLE IV
Miscellaneous
Section 4.1 Remedies. The parties to this Agreement acknowledge and agree
that the covenants of the Company and the Shareholders set forth in this
Agreement may be enforced in equity by a decree requiring specific performance.
In the event of a breach of any material provision of this Agreement, the
aggrieved party will be entitled to institute and prosecute proceedings in any
court of competent jurisdiction to enforce specific performance of such
provision, as well as to obtain damages for breach of this Agreement. Without
limiting the foregoing, if any dispute arises concerning the sale or other
disposition of any of the Shares subject to this Agreement or concerning any
other provisions hereof or the obligations of the parties hereunder, the parties
to this Agreement agree that an injunction may be issued in connection therewith
(including, without limitation, restraining the sale or other disposition of
such Shares or rescinding any such sale or other disposition). Such remedies
shall be cumulative and non-exclusive and shall be in addition to any other
rights and remedies the parties may have under this Agreement or otherwise.
Section 4.2 Entire Agreement; Amendment; Waiver. This Agreement, together
with the Schedule hereto, sets forth the entire understanding of the parties,
and as of the closing contemplated by the Stock Purchase and Redemption
Agreement supersedes all prior agreements and all other arrangements and
communications, whether oral or written, with respect to the subject matter
hereof, including, without limitation, the rights and obligations of the
Existing Shareholders under the Prior Shareholders Agreement, and each Existing
Shareholder hereby waives all of its rights under the Prior Shareholders
Agreement and hereby cancels the Prior Shareholders Agreement. The Schedule may
be amended to reflect changes in the composition of the Shareholders and changes
in stock ownership that may occur from time to time as a result of Permitted
Transfers or Transfers permitted under Article II hereof. Amendments to the
Schedule reflecting Permitted Transfers or Transfers permitted under Article II
hereof shall become effective when a copy of this Agreement, as executed by any
new transferee, is filed with the Company, except as other-
30
wise provided in Section 4.13 hereof. Any other amendments to, or the
termination of, this Agreement shall require the prior written consent of a
majority in interest of the Shareholders. Notwithstanding the preceding
sentence, no amendment may adversely affect the Lee Group Shareholders, the
Non-Management Shareholders or the Management Shareholders at any time, unless
consented to in writing by a majority in interest of such adversely affected
group. Notwithstanding any provisions to the contrary contained herein, any
party may waive any rights with respect to which such party is entitled to the
benefits under this Agreement. No waiver of or consent to any departure from any
provision of this Agreement shall be effective unless signed in writing by the
party entitled to the benefit thereof.
Section 4.3 Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if the invalid
or unenforceable provision were omitted.
Section 4.4 Notices. All notices and other communications necessary or
contemplated under this Agreement shall be in writing and shall be delivered in
the manner specified herein or, in the absence of such specification, shall be
deemed to have been duly given three (3) business days after mailing by
certified mail, when delivered by hand, upon confirmation of receipt by
telecopy, or one (1) day after sending by overnight delivery service, to the
respective addresses of the parties set forth below:
(a) For notices and communications to the Existing Shareholders, to the
respective addresses set forth in the Schedule;
(b) for notices and communications to the Company:
Rayovac Corporation
601 Rayovac Drive
Madison, Wisconsin 53711-2497
Attn: President
Facsimile No.: (608) 278-6666
31
(c) for notices and communications to the Lee Group Shareholders, to the
respective addresses set forth in the Schedule, with a copy to:
Skadden, Arps, Slate,
Meagher & Flom
One Beacon Street
Boston, MA 02108
Attention: Louis A. Goodman, Esq.
Facsimile No.: (617) 573-4822
By notice complying with the foregoing provisions of this Section 4.4, each
party shall have the right to change the mailing address for future notices and
communications to such party.
Section 4.5 Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and to their respective
transferees, successors and assigns; provided, however, that the rights under
this Agreement may not be assigned except as expressly provided herein, it being
understood that the Company's rights hereunder may be assigned by the Company to
any corporation which is the surviving entity in a merger, consolidation or like
event involving the Company. No such assignment shall relieve an assignor of
its obligations hereunder.
Section 4.6 Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts (regardless of the laws that might otherwise
govern under applicable Massachusetts principles of conflicts of law) as to all
matters, including but not limited to matters of validity, construction, effect,
performance and remedies.
Section 4.7 Termination. Without affecting any other provision of this
Agreement requiring termination of any rights in favor of any Shareholder,
Permitted Transferee or any other transferee of Shares, the provisions of
Articles II and III of this Agreement shall terminate as to such Shareholder,
Permitted Transferee or other transferee, when, pursuant to and in accordance
with this Agreement such Shareholder, Permitted Transferee or other transferee
as the case may be, no longer own any Shares; provided that termination pursuant
to this Section 4.7 shall only occur in respect of a Shareholder
32
after all Permitted Transferees in respect thereof also no longer own any
Shares. As provided above, the provisions of Sections 2.3, 2.4, 2.5 and 2.6
shall not apply to the Shares owned by Shareholders following a Public Offering.
Section 4.8 Recapitalization, Exchanges, Etc. The provisions of this
Agreement shall apply, to the full extent set forth herein with respect to
Shares, to any and all shares of capital stock of the Company or any successor
or assign of the Company (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in exchange for, or in
substitution of the Shares, by reason of a stock dividend, stock split, stock
issuance, reverse stock split, combination, recapitalization, reclassification,
merger, consolidation or otherwise.
Section 4.9 Lee Group Shareholder Representative. Each Lee Group
Shareholder hereby designates and appoints (and each Permitted Transferee of
each such Lee Group Shareholder is hereby deemed to have so designated and
appointed) each of Scott A. Schoen and Warren C. Smith, Jr., as his
attorney-in-fact with full power of substitution for each of them (the "Lee
Group Shareholder Representative"), to serve as the representative of each such
person to perform all such acts as are required, authorized or contemplated by
this Agreement to be performed by such person and hereby acknowledges that the
Lee Group Shareholder Representative shall be the only person authorized to take
any action so required, authorized or contemplated by this Agreement by each
such person. Each such person further acknowledges that the foregoing
appointment and designation shall be deemed to be coupled with an interest and
shall survive the death or incapacity of such person. Each such person hereby
authorizes (and each such Permitted Transferee shall be deemed to have
authorized) the other parties hereby to disregard any notice or other action
taken by such person pursuant to this Agreement except for the Lee Group
Shareholder Representative. The other parties hereto are and will be entitled to
rely on any action so taken or any notice given by the Lee Group Shareholder
Representative and are and will be entitled and authorized to give notices only
to the Lee Group Shareholder Representative for any notice contemplated by this
Agreement to be given to any such person. A successor to the Lee Group Share-
33
holder Representative may be chosen by a majority in interest of the Lee Group
Shareholders, provided that notice thereof is given by the new Lee Group
Shareholder Representative to the Company and to each other Shareholder.
Section 4.10 Action Necessary to Effectuate the Agreement. The parties
hereto agree to take or cause to be taken all such corporate and other action as
may be necessary to effect the intent and purposes of this Agreement.
Section 4.11 Purchase for Investment; Legend on Certificate. Each of the
parties acknowledges that all of the Shares held by such party are being (or
have been) acquired for investment and not with a view to the distribution
thereof and that no Transfer of Shares may be made except in compliance with
applicable federal and state securities laws. Each of the certificates of Shares
of the Company which are now or hereafter owned by the Shareholders and which
are subject to the terms of this Agreement shall have endorsed in writing,
stamped or printed, thereon the following legend:
"The shares represented by this stock certificate are subject to the terms
and conditions, including restrictions on transfer, of a Shareholders Agreement
dated as of September 12, 1996, as amended from time to time. A copy of the
Shareholders Agreement is on file with the Secretary of the Company and will be
mailed to any properly interested person without charge upon the Company's
receipt of a written request therefor. Any sale or transfer in violation of said
Agreement shall be null and void."
All certificates of Shares shall also bear all legends required by federal
and state securities laws.
Section 4.12 Effectiveness of Transfers. All Shares Transferred by a
Shareholder (other than pursuant to an effective registration statement under
the 1933 Act or pursuant to a Rule 144 Transaction) shall, except as otherwise
expressly stated herein, be held by the transferee thereof pursuant to this
Agreement. Such transferee shall, except as otherwise expressly stated herein,
have all the rights and be subject to all of the obligations of a Shareholder
under this Agreement (as through
34
such party had so agreed pursuant to Section 4.13 hereof) automatically and
without requiring any further act by such transferee or by any parties to this
Agreement. Without affecting the preceding sentence, if such transferee is not
a Shareholder on the date of such Transfer, then such transferee, as a condition
to such Transfer, shall confirm such transferee's obligations hereunder in
accordance with Section 4.13 hereof. No Shares shall be Transferred on the
Company's books and records, and no Transfer of Shares shall be otherwise
effective, unless any such Transfer is made in accordance with the terms and
conditions of this Agreement, and the Company is hereby authorized by all of the
Shareholders to enter appropriate stop transfer notations and its transfer
records to give effect to this Agreement.
Section 4.13 Additional Shareholders. Subject to the restrictions on
Transfers of Shares contained herein, any Person who is not already a
Shareholder acquiring Shares (except for transferees acquiring Shares in an
offering registered under the 1933 Act or in a Rule 144 Transaction and except
as otherwise permitted by the Board), shall, on or before the Transfer or
issuance to it of Shares, sign a counterpart signature page hereto in form
reasonably satisfactory to the Company and shall thereby become a party to this
Agreement to be bound hereunder as (a) a Management Shareholder if a Permitted
Transferee or an employee of the Company or any of its Subsidiaries, (b) a Lee
Group Shareholder if a Permitted Transferee or an employee or affiliate of
Thomas H. Lee Company or Equity Fund or (c) a Non-Management Shareholder if such
person or entity does not fall within either (i) or (ii) above; provided that a
transferee which is a Permitted Transferee under clause (b) of the definition of
Permitted Transferee shall not be obligated to so agree until foreclosure on its
pledge.
Section 4.14 No Waiver. No course of dealing and no delay on the part of
any party hereto in exercising any right, power or remedy conferred by this
Agreement shall operate as waiver thereof or otherwise prejudice such party's
rights, powers and remedies. No single or partial exercise of any rights, powers
or remedies conferred by this Agreement shall preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
35
Section 4.15 Financial Statements. The Company will provide Thomas F. Pyle,
Jr. with a copy of the regularly prepared monthly financial statements of the
Company provided to the Company's principal lender at the time provided to such
lender and a copy of the quarterly and annual financial statements of the
Company at the time filed with the SEC. The provisions of this Section 4.15
shall not apply (i) after a Public Offering or (ii) when Thomas F. Pyle, Jr. and
his Associates cease to own 50% of the Shares owned by them on the date hereof
(as equitably adjusted to account for stock dividends, stock splits, reverse
stock splits or other similar reclassifications), whichever first occurs.
Section 4.16 Counterpart. This Agreement may be executed in two or more
counterparts each of which shall be deemed an original but all of which together
shall constitute one and the same instrument, and all signatures need not appear
on any one counterpart.
Section 4.17 Headings. All headings and captions in this Agreement are for
purposes of reference only and shall not be construed to limit or affect the
substance of this Agreement.
Section 4.18 Number; Gender. When the context so requires, the singular
shall include the plural and the plural shall include the singular and the
gender of any pronoun shall include the other gender.
36
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed as of the date and year first above written.
RAYOVAC CORPORATION
By: /s/ David A. Jones
--------------------------------
Name: David A. Jones
Title: Director
37
Lee Group Shareholders:
THOMAS H. LEE EQUITY FUND III, L.P.
By: THL EQUITY ADVISORS III
LIMITED PARTNERSHIP,
as General Partner
By: THL EQUITY TRUST III,
as General Partner
By: /s/ Warren C. Smith, Jr.
-------------------------------------
Name: Warren C. Smith, Jr.
Title: Trustee
THOMAS H. LEE FOREIGN FUND III, L.P.
By: THL EQUITY ADVISORS
III LIMITED PARTNERSHIP,
as General Partner
By: THL EQUITY TRUST III,
as General Partner
By: /s/ Warren C. Smith, Jr.
---------------------------------------
Name: Warren C. Smith, Jr.
Title: Trustee
38
Lee Group Shareholders (continued):
THL-CCI LIMITED PARTNERSHIP
By: /s/ Warren C. Smith, Jr.
---------------------------------------
Warren C. Smith, Jr., as
agent and attorney-in-fact
under Purchaser Appoint-
ment of Agent and Power of
Attorney dated September 3,
1996 of THL-CCI Limited
Partnership
39
Management Shareholders:
Roger F. Warren
Trygve Lonnebotn
James A. Broderick
Gary E. Wilson
Kenneth V. Biller
Dale R. Tetzlaff
Russell E. Lefevre
Raymond L. Balfour
Arthur Homa
By: /s/ Thomas F. Pyle, Jr.
-----------------------------------
Thomas F. Pyle, Jr., as
agent and attorney-in-fact
under Shareholder Appoint-
ment of Agent and Power of
Attorney dated March 1,
1996 executed by each of
the Redemption Sharehold-
ers (as defined in the
Stock Purchase and Redemp-
tion Agreement), and not
in his individual capacity
40
Management Shareholders (continued):
/s/ David A. Jones
-----------------------------------
David A. Jones
41
Non-Management Shareholders:
Thomas F. Pyle, Jr.
Marvin G. Siegert
Robert W. Zimmerman
By: /s/ Marvin G. Siegert
---------------------------------------
Marvin G. Siegert, as
agent and attorney-in-fact
under Shareholder Appoint-
ment of Agent and Power of
Attorney dated March 1,
1996 executed by each of
the Redemption Sharehold-
ers (as defined in the
Stock Purchase and Redemp-
tion Agreement), and not
in his individual capacity
42
SCHEDULE OF SHAREHOLDERS
================================================================================
Number of Shares of
Shareholder Common Stock Owned
- --------------------------------------------------------------------------------
Thomas H. Lee Equity Fund III, L.P. 13,864,135
c/o Thomas H. Lee Company
75 State Street
Boston, MA 02109
- --------------------------------------------------------------------------------
Thomas H. Lee Foreign Fund III, L.P. 858,950
c/o Thomas H. Lee Company
75 State Street
Boston, MA 02109
- --------------------------------------------------------------------------------
THL-CCI Limited Partnership 1,457,405
c/o Thomas H. Lee Company
75 State Street
Boston, MA 02109
- --------------------------------------------------------------------------------
David A. Jones 227,895
2910 Coles Way
Atlanta, GA 30350
- --------------------------------------------------------------------------------
Roger F. Warren 569,735
505 Summit Road
Madison, WI 53704
- --------------------------------------------------------------------------------
Marvin G. Siegert 205,105
7518 Red Fox Trail
Madison, WI 53717
- --------------------------------------------------------------------------------
Trygve Lonnebotn 410,210
1157 Amherst Drive
Madison, WI 53705
- --------------------------------------------------------------------------------
James A. Broderick 205,105
102 Glen Thistle Road
Madison, WI 53705
- --------------------------------------------------------------------------------
Gary E. Wilson 113,945
W12035 Baltic Avenue
Merrimac, WI 53561
- --------------------------------------------------------------------------------
Robert W. Zimmerman 45,580
N2747 Brown Lane
Waupaca, WI 54981
- --------------------------------------------------------------------------------
Kenneth V. Biller 91,160
7318 Old Sauk Road
Middleton, WI 53562
- --------------------------------------------------------------------------------
Dale R. Tetzlaff 102,550
941 Lori Lane
Sun Prairie, WI 53590
43
- --------------------------------------------------------------------------------
Russell E. Lefevre 170,920
5826 Schumann Drive
Madison, WI 53711
- --------------------------------------------------------------------------------
Raymond L. Balfour 125,000
29 Blue Ridge Court
Madison, WI 53705
- --------------------------------------------------------------------------------
Arthur Homa 40,000
18 Madeline Island
Madison, WI 53719
- --------------------------------------------------------------------------------
Thomas F. Pyle, Jr. 2,022,785
3500 Corbin Court
Madison, WI 53704
with a copy to:
Benjamin F. Garmer, III
Foley & Lardner
Firstar Center
777 East Wisconsin Avenue
Milwaukee, WI 53202-5367
================================================================================
44
AMENDMENT TO
RAYOVAC SHAREHOLDERS AGREEMENT
This Amendment (this "Amendment") to the Shareholders Agreement dated as of
September 12, 1996, by and among Rayovac Corporation, a Wisconsin corporation
(the "Company"), and the shareholders of the Company referred to therein (the
"Initial Agreement") is entered into as of __ July 1997 by and among the
Company, those persons listed as Lee Group Shareholders on the signature pages
hereof, those persons listed as Management Shareholders on the signature pages
hereof, and those persons listed as Non-Management Shareholders on the signature
pages hereof. Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to such terms in the Initial Agreement.
Whereas, Thomas F. Pyle, Jr. ("Pyle") and Marvin G. Siegert, Judith A.
Siegert, Kimberly A. Waterfield, Amy J. Carroll, and Kristen M. Siegert
(collectively, the "Siegerts"), who are Non-Management Shareholders, may wish to
sell some or all of their shares of Common Stock; and
Whereas, the Lee Group Shareholders, one or more of the Management
Shareholders, and some current managers of the Company who are not parties to
the Initial Agreement, may wish to purchase some or all of Pyle's and the
Siegerts' shares of Common Stock; and
Whereas, the Initial Agreement does not permit such a transaction or
transactions; and
Whereas, pursuant to Section 4.2 of the Initial Agreement, the Initital
Agreement may be amended by a written instrument duly executed by a majority in
interest of each of the Lee Group Shareholders, Management Shareholders, and
Non-Management Shareholders; and
-2-
Whereas, the signatories hereto represent a majority in interest of each of
the Lee Group Shareholders, Management Shareholders, and Non-Management
Shareholders;
Now, therefore, in consideration of the foregoing, the Initial Agreement is
hereby amended as follows:
Section 2.1 of the Initial Agreement is hereby amended by adding the
following clauses immediately after clause (f):
"(g) Each of Thomas F. Pyle, Jr., Marvin G. Siegert, Judith A.
Siegert, Kimberly A. Waterfield, Amy J. Carroll, and Kristen M.
Siegert may Transfer all or any part of the Shares owned by such
Shareholder to one or more Lee Group Shareholders or the Company.
(h) Notwithstanding anything set forth in this Agreement to the
contrary, no Shareholder may Transfer all or any part of the
Shares owned by such Shareholder if such Transfer of Shares
constitutes a Prohibited Transaction. A "Prohibited Transaction"
is any transaction which would, in the reasonable opinion of the
Company or the Company's independent accountants, jeopardize the
Company's ability to account for the transactions contemplated by
the Recapitalization Agreement as a leveraged recapitalization."
In witness whereof, the parties hereto have executed this Amendment as of
the date first written above.
Rayovac Corporation Lee Group Shareholders:
THOMAS H. LEE EQUITY FUND III, L.P.
By: ________________________ THOMAS H. LEE FOREIGN FUND III, L.P.
David A. Jones THL-CCI LIMITED PARTNERSHIP
Chairman of the Board,
President, and C.E.O. By: ______________________________
Warren C. Smith, Jr.
Lee Group Stockholder Representative
By: _______________________________
Scott A. Schoen
Lee Group Stockholder Representative
-3-
Management Shareholders
- ----------------------------------- ------------------------------
David A. Jones Dale R. Tetzlaff
- ----------------------------------- ------------------------------
Roger F. Warren Russell E. Lefevre
- ----------------------------------- ------------------------------
Trygve Lonnebotn Raymond L. Balfour
- ----------------------------------- ------------------------------
James A. Broderick Arthur S. Homa
- ----------------------------------- ------------------------------
Gary E. Wilson Kenneth V. Biller
- ----------------------------------- ------------------------------
Kent J. Hussey Merrell M. Tomlin
- -----------------------------------
Stephen P. Shanesy
Non-Management Shareholders
- ----------------------------------- ------------------------------
Thomas F. Pyle, Jr. Marvin G. Siegert
- -----------------------------------
Robert W. Zimmermann
July 25, 1997
Rayovac Corporation
601 Rayovac Drive
Madison, Wisconsin 53711
Re: Registration Statement on Form S-8
----------------------------------
Ladies and Gentlemen:
I am Vice President and General Counsel of Rayovac Corporation, a Wisconsin
corporation (the "Company"), and have acted as counsel to the Company in
connection with the preparation of a Registration Statement on Form S-8 (the
"Registration Statement"), for the purpose of registering with the Securities
and Exchange Commission, under the Securities Act of 1933, as amended (the "1933
Act"), 665,000 shares (the "Shares") of common stock, par value $.01 per share,
of the Company issuable upon the exercise of options granted under the Company's
1997 Stock Option Plan (the "Plan").
In this connection, I have examined and am familiar with originals or
copies, certified or otherwise identified to my satisfaction, of (i) the
Registration Statement, (ii) the Plan, (iii) the Restated Articles of
Incorporation and Restated By-Laws of the Company, each as currently in effect,
(iv) certain resolutions adopted by the Board of Directors of the Company
relating to the issuance of the Shares and certain related matters, and such
other documents, certificates and records as I have deemed necessary or
appropriate as a basis for the opinion set forth herein. In my examination, I
have assumed the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to me as certified,
conformed or photostatic copies and the authenticity of the originals of such
copies. As to any facts material to the opinion expressed herein which I have
not independently established or verified, I have relied upon statements and
representations of officers and other representatives of the Company and others.
Rayovac Corporation
July 25, 1997
Page 2
I am admitted to the practice of law in the State of Illinois, and to the
extent that matters of law are addressed herein, the opinion expressed is
limited to the federal laws of the United States of America, the State of
Illinois and the General Corporation Law of the State of Wisconsin.
Based upon and subject to the foregoing, I am of the opinion that the
Shares have been duly authorized for issuance and, when the Shares have been
paid for and certificates therefor have been issued and delivered in accordance
with the terms of the Plan as contemplated by the Registration Statement, the
Shares will be validly issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, I do not thereby admit that I am
in the category of persons whose consent is required under Section 7 of the 1933
Act or the Rules and Regulations promulgated thereunder.
This opinion is furnished by me, as counsel to the Company, in connection
with the filing of the Registration Statement and, except as provided in the
immediately preceding paragraph, is not to be used, circulated, quoted or
otherwise referred to for any other purpose without my express written
permission or relied upon by any other person.
Very truly yours,
/s/ James A. Broderick
James A. Broderick
Exhibit 23.1
Consent of Independent Accountants
We consent to the incorporation by reference in this registration statement of
Rayovac Corporation on Form S-8 of our report dated November 22, 1996, on our
audits of the consolidated financial statements and financial statement schedule
of Rayovac Corporation as of and for the periods ended September 30, 1996 and
June 30, 1996 and 1995 appearing in the registration statement on Form S-1 (File
No. 333-17895) of Rayovac Corporation filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933.
/s/ Coopers & Lybrand L.L.P.
Milwaukee, Wisconsin
July 25, 1997
