This Joint Venture JV Agreement involves
Title: INVESTMENT AND JOINT VENTURE AGREEMENT
INVESTMENT AND JOINT VENTURE AGREEMENT
The companies named and identified below, collectively referred to as Shareholders , and individually and indiscriminately referred to as Shareholder ,
On the one part,
Sendas S.A. (hereinafter, “ SENDAS” ), having its principal place of business in the City of São João de Meriti, in the State of Rio de Janeiro, at Rodovia Presidente Dutra No. 4674, Jardim José Bonifácio, enrolled with the National Register of Legal Entities of the Ministry of Finance – CNPJ/MF under No. 31.911.548/0001 -17,
On the other part,
Companhia Brasileira de Distribuição (hereinafter, “CBD”) , having its principal place of business in the City of São Paulo, State of São Paulo, at Avenida Brigadeiro Luiz Antonio No. 3142, enrolled with the National Register of Legal Entities of the Ministry of Finance –CNPJ/MF under No. 47.508.411/0001 -56,
And, as Intervening Parties , collectively referred as such,
SENDAS EMPREENDIMENTOS E PARTICIPAÇÕES LTDA ., a private limited company, having its principal place of business in the City of São João de Meriti, in the State of Rio de Janeiro, at Rodovia Presidente Dutra No. 4674, Jardim José Bonifácio, enrolled with the National Register of Legal Entities of the Ministry of Finance – CNPJ/MF under No. 30.630.362/0001 -27 (hereinafter, “Sendas Empreendimentos”) ;
ARTHUR ANTONIO SENDAS, Brazilian, married, businessman, resident and domiciled in the City of Rio de Janeiro, State of Rio de Janeiro, holder of Identity Card No. 1.183.197, IFP/RJ, issued on July 17, 1967, enrolled with the Individual Taxpayers Register of the Ministry of Finance – CPF/MF under No. 016.084.447 -91, (hereinafter, “Sendas Controller”) ;
PÃO DE AÇÚCAR S.A. INDÚSTRIA E COMÉRCIO , having its principal place of business in the City of São Paulo, State of São Paulo, at Avenida Brigadeiro Luiz Antonio No. 3126, enrolled with the National Register of Legal Entities of the Ministry of Finance –CNPJ/MF under No. 61.550.182/0001 -69, herein duly represented by its legal representative undersigned (hereinafter, “ PAIC ”);
PEN¥NSULA PARTICIPAÇÕES LTDA. , having its principal place of business in the City of São Paulo, State of São Paulo, at Avenida Brigadeiro Luiz Antonio No. 3126, 2 nd floor, enrolled with the National Register of Legal Entities of the Ministry of Finance – CNPJ/MF under No. 58.292.210/0001 -80, herein duly represented by its legal representative undersigned (hereinafter, “ Península ”);
NOVA PENÍNSULA PARTICIPAÇÕES S.A. , a company organized and existing under the laws of the Federative Republic of Brazil, having its principal place of business in the City of São Paulo, State of São Paulo, at Avenida Brigadeiro Luiz Antonio No. 3126, 2 nd floor, enrolled with the National Register of Legal Entities of the Ministry of Finance – CNPJ/MF under No. 66.056.524/0001 -02, herein duly represented by its legal representative undersigned (hereinafter, “ Nova Península ”);
ABILIO DOS SANTOS DINIZ , Brazilian, judicially separated, businessman, holder of Identity Card SSP/SP No. 1.965.961, enrolled with the Individual Taxpayers Register of the Ministry of Finance – CPF/MF under No. 001.454.918 -20, with office in the City of São Paulo, State of São Paulo, at Avenida Brigadeiro Luiz Antonio No. 3142, (hereinafter, “CBD Controller”) ; and
SENDAS DISTRIBUIDORA S.A. , the new corporate name of Companhia Distribuidora Alves Furtado, a company having its principal place of business in the Municipality of São João de Meriti, in the State of Rio de Janeiro, at Rodovia Presidente Dutra No. 4674, part, enrolled with the National Register of Legal Entities of the Ministry of Finance – CNPJ/MF under No. 06.057.223/0001 -71, herein duly represented pursuant to its By-laws, (hereinafter, “ the Company ”);
All of the above companies herein represented through their respective By-laws or articles of association, and have decided to execute the present Investment and Association Agreement (hereinafter, the “Agreement”), which shall be governed by the following clauses and conditions:
Clause One – Recitals
1.1. – On December 3, 2003, SENDAS and CBD executed a Letter of Intent, with the purpose of agreeing on the basic conditions pursuant to which they shall promote the union of the operating activities of the two chains in the State of Rio de Janeiro.
1.2. – SENDAS – which is controlled by Sendas Controller through Sendas Empreendimentos – has been operating in the Brazilian retail market for more than 43 years and currently operates, on an exclusive basis, in the State of Rio de Janeiro, through a multi-format chain comprised by 68 stores, encompassing 6 hypermarkets and 62 supermarkets, with a total sales area of 229,000 m 2 , including gas stations, commercial galleries and drugstores, having an annual gross invoicing, in 2003, in excess of R$ 2 billion.
1.3. – CBD – which is controlled by CBD Controller through PAIC, PENÍNSULA and NOVA PENÍNSULA – currently explores 496 stores in 12 Brazilian states, of which 38 are located in the State of Rio de Janeiro, being 9 hypermarkets and 29 supermarkets, with a total sales area of 94.905 m 2 , including gas stations, commercial galleries and drugstores, having an annual gross invoicing, in 2003, of R$ 1.5 billion. Of the abovementioned 38 stores, some are explored by CBD through the company Novasoc Comercial Ltda.
1.4. – The Shareholders have decided to take advantage of the operational synergy between SENDAS and CBD in the State of Rio de Janeiro, with the purpose of obtaining scale economy, through the organization of a new regional distribution company.
1.5. – The contemplated joint venture shall be effected as described in clause three of this Agreement, through the contribution to Sendas Distribuidora S.A., of assets, rights and obligations relating to SENDAS and CBD retail activities in the State of Rio de Janeiro, and which shall comprise a total of 106 stores, a sales area of 324,000 m 2 , with an estimated annual invoicing in excess of R$ 3.5 billion.
1.6. – On July 15, 2002, SENDAS issued debentures convertible into shares, pursuant to the Deed of Issuance transcribed in book ST659, on pages 125/138, of the 23 rd Notary Office of the City of Rio de Janeiro ( Attachment 1.6 ); and almost all of such debentures were subscribed by BNDES Participações S.A. (BNDESPAR).
1.7. – On August 20, 2002, BNDESPAR, Intervening Party Sendas Empreendimentos, in its capacity of direct controlling shareholder of SENDAS, and Mr. Arthur Antonio Sendas executed SENDAS’ shareholders agreement ( Attachment 1.7 ) , through which Sendas Empreendimentos undertook, among other obligations, (i) to maintain, during the term of the shareholders agreement, the ownership of at least 51% of the voting capital of SENDAS; and (ii) not to transfer, assign, burden, encumber or in any other way dispose of, directly or indirectly, on a free of charge or cost basis, the totality or part of the shares or subscription rights corresponding to the shares mentioned in item (i) above.
1.8. – BNDESPAR Executive Board, in a meeting held on September 22, 2003, issued decision number Dir. 055/2003, stipulating that, within the approximate term of ninety (90) days, SENDAS should submit a financial restructuring plan - the actions and completion terms thereof having been established therein -, which plan should enable the reduction and the extension of the restated liabilities of SENDAS, and should be previously approved by BNDESPAR.
1.9. – With a view to the financial restructuring mentioned in item 1.8. , SENDAS initiated negotiations with creditor banks, under the coordination of UNIBANCO; such process includes the disposal of the shareholding SENDAS owns in Casa de Show S.A., which shall not be included among the assets that shall integrate the joint venture. The costs incurred in the mentioned restructuring, including any compensation due by reason of consulting and assistance services, shall be borne by SENDAS.
Clause Two – Corporate Structure
2.1. – The Company was organized on December 18, 2003, under the corporate name of Companhia de Distribuição Alves Furtado, which has been altered to Sendas Distribuidora S.A., in an Extraordinary General Meeting held on January 28, 2004.
2.2. – The Company is governed by the provisions of Law 6.404, of December 15, 1976, as amended.
2.3. – Upon the asset contribution to be made by the Shareholders to the Company’s capital pursuant to clause three, the Company’s By-laws shall be modified to contemplate the provisions of the present Agreement, observing the terms of the draft that constitutes Attachment 2.3. hereof, the parties having agreed as follows:
(a) The administration of the Company shall be an incumbency of the Board of Directors, which shall be responsible for establishing the strategic guidelines, and of the Executive Board, which shall be responsible for the management of the Company’s daily course of business.
(b) CBD shall be fully responsible for the management and the administration of the Company, within the scope of the Executive Board.
2.4. – Board of Directors – The Company’s Board of Directors shall be comprised of twelve (12) effective members and four (4) alternates, all of them shareholders, who shall be elected and may be dismissed by the Shareholders Meeting, where: (i) four (4) effective members and two (2) substitutes shall be elected by appointment of SENDAS; (ii) four (4) effective members and two (2) substitutes shall be elected by appointment of CBD; and (iii) four (4) independent members, with acknowledged experience and trustworthy reputation, without any connection with SENDAS or CBD, shall be elected through common agreement among the Shareholders.
2.4.1. – The president of the Company’s Board of Directors shall be Mr. Arthur Antonio Sendas.
2.4.1. – By reason of the intuitu personae nature of the appointment of Mr. Arthur Antonio Sendas to preside the Company’s Board of Directors, in the event of his death, incapacity or disqualification during the term of this Agreement, the Shareholders shall, by mutual agreement and within thirty (30) days counted from the date of the event, elect a substitute.
2.5. – Executive Board – The Company shall have an Executive Board comprised of at least three (3) and no more than five (5) members, who shall have a term office of two (2) years and may be reelected. From among the executive officers one shall be the Chief Executive Officer and the others shall have no special designation.
2.5.1. – For the purposes of the provided in item 2.5, SENDAS hereby agrees to cause its representatives in the Company’s Board of Directors to vote along with CBD representatives, in relation to appointments of Officers made by CBD representatives.
2.5.2. – The Shareholders agree that the operating and administrative management of the Company shall be entirely incumbent upon CBD. Hence, CBD shall have complete freedom to make any and all decisions relating to the daily operations of the stores of the Company, and the direct management of the businesses shall be assigned to experienced professionals, with trustworthy reputation and renowned technical capacity, who meet the qualification criteria needed to exercise their respective functions.
2.5.3. – The Executive Board shall have complete freedom to make any operating decisions, including, but not being limited to: (i) management and administration of the stores, including alterations in their respective formatting; (ii) appointment and dismissal of other executives of the Company; (iii) hiring and dismissal of the Company’s employees, in general.
2.5.4. - The Company’s Executive Board shall be comprised of professional executives originating from the chains of stores of the Shareholders or hired within the marketplace.
2.5.5. – The members of the Executive Board shall be assessed by the Board of Directors every other year, according to the performance indicators known as Key Performance Indicators (“K.P.I.”), such as defined in the Shareholders Agreement mentioned in item 2.8 below (“ Shareholders Agreement ”), and based on the market best practices.
2.6. – Committees – The Company shall have an Executive Committee, a Financial Committee, a Development and Marketing Committee and an Auditing Committee, the function which is to assist the interaction and cooperation between the Executive Board and the Board of Directors. The Shareholders hereby agree to create a Special Committee to settle discrepancies on the terms of the Shareholders Agreement.
2.6.1. – The Committees’ Coordinators shall be appointed as follows: (i) the Coordinator of the Executive Committee and of the Auditing Committee shall be appointed by CBD; and (ii) the Coordinator of the Financial Committee and of the Development and Marketing Committee shall be appointed by SENDAS.
2.6.2. – The Committees shall have the duties ascribed to them in the draft By-laws that constitute Attachment 2.3.
2.7. – Election of the Initial Administrators – The Shareholders hereby agree:
(a) To elect as members of the Company’s Board of Directors: (i) by appointment of CBD: (I) as Effective directors: Abílio dos Santos Diniz, Ana Maria Falleiros Diniz, Augusto Marques da Cruz Filho and Caio Racy Mattar; (II) as Alternate directors: Enéas César Pestana Neto and Hugo Antonio Jordão Bethlem; (ii) by appointment of SENDAS: (I) as Effective directors: Arthur Antonio Sendas, who shall be the President of the Board of Directors, Arthur Antonio Sendas Filho, Nelson Antonio Sendas and Aprígio Lopes Xavier; (II) as Alternate directors: Manoel Antônio Sendas Filho and Francisco Antônio Sendas; (iii) as independent directors: Maria Silvia Bastos Marques, Gerald Dinu Ress, Marcílio Marques Moreira and Paschoal Ricardo Neto;
(b) To cause their representatives at the Board of Directors to elect, as the initial executive officers of the Company, Messrs. Augusto Marques da Cruz Filho (as Chief Executive Officer), Arthur Antonio Sendas Filho, Aprígio Lopes Xavier and Caio Racy Mattar.
2.8. – Shareholders Agreement – On the Closing Date (as defined in item 11.1. below), the Shareholders shall execute the Shareholders Agreement, in the form of Attachment 2.8.
2.9. – Management Agreement – SENDAS and CBD may render administrative services to the Company, and the services rendered by CBD shall be governed by the Management Agreement, the draft of which constitutes Attachment 2.9.
Clause Three – Implementation of the Joint Venture
3.1. – The contribution, to the Company, of the assets, rights and obligations relating to the retail activities of SENDAS and CBD in the State of Rio de Janeiro shall be made in the form of Attachment 3.1. , thereby resulting in the transfer, to the Company, of all the establishments explored by SENDAS and CBD in the State of Rio de Janeiro, substantially
3.1.1. – CBD hereby agrees, concomitantly with the contribution of the establishments it directly explores, to contribute also the establishments it explores through Novasoc Comercial Ltda., and CBD shall own the shares issued by the Company in exchange for the contribution, in the form of Attachment 3.1. , of all establishments it directly or indirectly explores in the State of Rio de Janeiro.
3.2. – In order to enable the immediate integration to the Company of the retail activ