Rayovac 2009 Annual Report Download - page 34

Table of Contents
Index to Financial Statements
ITEM 3. LEGAL PROCEEDINGS
Litigation
We are subject to litigation from time to time in the ordinary course of business. The amount of any liability with respect to any litigation to which we
are now subject cannot currently be determined. Other than the matters set forth below, we are not party to any pending legal proceedings which, in the
opinion of management, are material or may be material to our business or financial condition.
On February 3, 2009, Spectrum Brands, Inc. and its U.S. subsidiaries filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy
Code with the U.S. Bankruptcy Court for the Western District of Texas. The Chapter 11 Cases were jointly administered by the court as Case Number
09−50455. On July 15, 2009, the court entered a written order confirming the debtors’ plan of reorganization. On August 28, 2009, the debtors emerged
from Chapter 11 protection. The debtors’ plan of reorganization had been subject to an appeal by the official committee representing the interests of the
debtors’ pre−petition equity holders whose equity interests were cancelled pursuant to the terms of the plan. On September 23, 2009, the United States
District Court for the Western District of Texas dismissed the equity committee’s appeal without prejudice.
A final award was issued in Fiscal 2009 in the Company’s arbitration proceeding with Tabriza Brasil Empreendimentos Ltda. (“Tabriza”),
Administração e Participações Ltda and VARTA AG, the former owners of the Company’s subsidiary, Microlite, with respect to a number of matters
arising out of the Company’s acquisition of Microlite in September 2004. These proceedings included, among other things, the right to receive
indemnification for various alleged breaches of representations, warranties, covenants and agreements made by the selling shareholders in the acquisition
agreement and the Company’s obligation to pay additional amounts to Tabriza pursuant to its earn−out rights under the acquisition agreement.
In November 2007, the arbitration panel resolved certain matters at the summary judgment stage. Among the matters decided at the summary
judgment stage, the panel found that Tabriza was entitled to receive from the Company interest on certain earn−out payments previously made and that
Tabriza was entitled to receive an additional amount with respect to the earn−out as a result of a decision issued by an independent auditor engaged by the
parties to determine certain disputed matters submitted to it with respect to the earn−out calculation.
On January 23, 2009, the arbitration panel issued a final award regarding the matters it decided at summary judgment. Under the final award, the total
net amount owed by the Company arising out of the arbitration proceedings is approximately $8 million. These amounts were all paid by the end of the third
quarter of Fiscal 2009.
The Company continues to analyze proofs of claim filed with the bankruptcy court with respect to lease rejection damages and other unsecured claims
generally, and the Company may, in its discretion and in accordance with the confirmed plan of reorganization, file objections with the bankruptcy court to
certain of such claims. This process will continue until those claims that the Company determines to address in the bankruptcy court are resolved.
Environmental
We are subject to various federal, state and local environmental laws and regulations. We believe we are in substantial compliance with all such
environmental laws that are applicable to our operations. See also the discussion captioned “Governmental Regulation and Environmental Matters” under
Item 1 above.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report.
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