CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. SECTIONS 200.80 AND 240.24b-2.
* * * INDICATES OMITTED MATERIAL THAT IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST FILED SEPARATELY WITH THE COMMISSION
EXHIBIT 2.1
ACQUISITION AGREEMENT
by and among
EQUIFAX INC.
EQUIFAX SOUTH AMERICA, INC.
EQUIFAX DO BRASIL HOLDINGS LTDA.
P.U.P. PARTICIPACOES S.A.
ANDRADE GUTIERREZ TELECOMUNICACOES LTDA.
CONSTRUTORA ANDRADE GUTIERREZ S.A.
SOCMA AMERICANA S.A.
and
PARTECH LTDA.
Effective as of 31st August, 1998
Kilpatrick Stockton LLP
1100 Peachtree Street
Atlanta, Georgia 30309
ACQUISITION AGREEMENT
Table Of Contents
-----------------
Page No.
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1. ACQUISITION OF THE AG TELECOM INTERESTS........................................................... 3
1.1 Acquisition of AG Telecom's Interests........................................................ 3
2. ACQUISITION OF THE SOCMA INTERESTS................................................................ 3
2.1 Acquisition of Socma's Interest in Partech................................................... 4
2.2 Acquisition of Socma's Interest in Unnisa.................................................... 4
3. CLOSING; ADJUSTMENTS.............................................................................. 5
3.1 Closing...................................................................................... 5
3.2 Right of Rescission.......................................................................... 5
3.3 Cooperation and Further Assurances........................................................... 5
3.4 Closing Date Audits; Determination of Adjustment............................................. 6
3.5 Certain Agreements........................................................................... 8
4. ADDITIONAL COVENANTS.............................................................................. 9
4.1 Access and Inspection........................................................................ 9
4.2 Cooperation.................................................................................. 9
4.3 Expenses..................................................................................... 9
4.4 Update of Information........................................................................ 10
4.5 Brokers...................................................................................... 10
4.6 Publicity.................................................................................... 11
4.7 Certain Governmental Filings................................................................. 11
4.8 Customer Contracts........................................................................... 11
4.9 * * * Contract............................................................................... 11
4.10 Inventions Agreements........................................................................ 11
4.11 Certain Customer Contracts................................................................... 12
i
5. REPRESENTATIONS, WARRANTIES AND COVENANTS RELATING TO PARTECH, UNNISA AND PROCEDA................... 12
5.1 Existence...................................................................................... 12
5.2 Subsidiaries................................................................................... 13
5.3 Capitalization; Ownership of Equity; Foundation Documents...................................... 13
5.4 Authority; Inconsistent Obligations............................................................ 15
5.5 No Violation; Compliance with Laws............................................................. 16
5.6 Consents....................................................................................... 16
5.7 Possession of Licenses, Etc.................................................................... 16
5.8 [Intentionally Left Blank]..................................................................... 16
5.9 Financial Statements........................................................................... 16
5.10 Liabilities.................................................................................... 17
5.11 Title to Properties............................................................................ 17
5.12 Receivables.................................................................................... 18
5.13 Movable Property............................................................................... 18
5.14 Immovable Property............................................................................. 18
5.15 Intellectual Property Rights................................................................... 20
5.16 Contracts...................................................................................... 20
5.17 Insurance...................................................................................... 21
5.18 Litigation; Contingencies...................................................................... 22
5.19 Taxes.......................................................................................... 22
5.20 Employment and Labor Matters................................................................... 23
5.21 Absence of Certain Business Practices.......................................................... 24
5.22 Books and Records.............................................................................. 24
5.23 Agreements and Transactions with Related Parties............................................... 24
5.24 No Agreement in Anticipation of Sale........................................................... 25
5.25 Government Reports............................................................................. 25
5.26 Banking Relationships.......................................................................... 25
5.27 Customers and Suppliers........................................................................ 25
ii
5.28 Pending Legislation........................................................................... 26
5.29 Absence of Changes............................................................................ 26
5.30 Full Disclosure............................................................................... 27
6. REPRESENTATIONS AND WARRANTIES RELATING TO THE AG GROUP............................................ 28
6.1 Existence...................................................................................... 28
6.2 Capitalization; Ownership of Equity............................................................ 28
6.3 Authority; Inconsistent Obligations............................................................ 28
6.4 No Violation; Compliance with Laws............................................................. 29
6.5 Consents....................................................................................... 29
6.6 Financial Statements........................................................................... 29
6.7 Litigation; Contingencies...................................................................... 30
6.8 Full Disclosure................................................................................ 30
7. REPRESENTATIONS AND WARRANTIES RELATING TO THE SOCMA GROUP......................................... 30
7.1 Existence...................................................................................... 31
7.2 Capitalization; Ownership of Equity............................................................ 31
7.3 Authority; Inconsistent Obligations............................................................ 31
7.4 No Violation; Compliance with Laws............................................................. 31
7.5 Consents....................................................................................... 32
7.6 Financial Statements........................................................................... 32
7.7 Litigation; Contingencies...................................................................... 32
7.8 Full Disclosure................................................................................ 32
8. REPRESENTATIONS AND WARRANTIES OF EQUIFAX.......................................................... 33
8.1 Organization................................................................................... 33
8.2 Authority; No Inconsistent Agreements.......................................................... 33
8.3 Consents....................................................................................... 34
iii
9. CONDUCT OF BUSINESS PENDING CLOSING.................................................................. 34
9.1 Business in the Ordinary Course................................................................ 34
9.2 No Material Changes............................................................................ 34
9.3 Compensation................................................................................... 34
9.4 Employee Benefit Plans......................................................................... 34
10. CONDITIONS TO OBLIGATIONS OF EQUIFAX................................................................. 35
10.1 Proceedings and Documents Satisfactory......................................................... 35
10.2 Representations and Warranties................................................................. 35
10.3 Compliance with Covenants and Conditions....................................................... 35
10.4 Closing Certificates........................................................................... 35
10.5 Opinion of Counsel............................................................................. 35
10.6 Consents....................................................................................... 36
10.7 No Inconsistent Requirements................................................................... 36
10.8 No Injunction.................................................................................. 36
10.9 Additional Agreements.......................................................................... 36
10.10 Proceda Amendment.............................................................................. 36
10.11 Customer Agreements, * * * Consent and IP Agreements........................................... 36
10.12 Miscellaneous.................................................................................. 36
11. CONDITIONS TO OBLIGATIONS OF THE SELLERS............................................................. 36
11.1 Proceedings and Documents Satisfactory......................................................... 37
11.2 Representations and Warranties................................................................. 37
11.3 Compliance with Covenants and Conditions....................................................... 37
11.4 Closing Certificates........................................................................... 37
11.5 Resolutions.................................................................................... 37
11.6 Consents....................................................................................... 37
11.7 Opinion of Counsel............................................................................. 37
11.8 No Inconsistent Requirements................................................................... 38
11.9 No Injunction.................................................................................. 38
iv
11.10 Additional Agreements..................................................................... 38
11.12 Equifax Undertaking....................................................................... 38
12. INDEMNITIES..................................................................................... 38
12.1 Indemnification of Equifax................................................................ 38
12.2 Payment................................................................................... 39
12.3 Defense of Claims......................................................................... 39
12.4 Indemnification of Sellers by Equifax..................................................... 41
12.5 Limitation on Liability................................................................... 41
12.6 No Contribution by Partech, Unnisa or Proceda............................................. 41
13. SURVIVAL........................................................................................ 42
13.1 Survival.................................................................................. 42
14. TERMINATION..................................................................................... 43
14.1 Termination for Certain Causes............................................................ 43
14.2 Procedure on and Effect of Termination.................................................... 43
15. MISCELLANEOUS................................................................................... 44
15.1 Notices................................................................................... 44
15.2 Counterparts.............................................................................. 45
15.3 Entire Agreement.......................................................................... 46
15.4 Governing Language........................................................................ 46
15.5 Dispute Resolution........................................................................ 46
15.6 Successors and Assigns.................................................................... 47
15.7 Partial Invalidity and Severability....................................................... 48
15.8 Waiver.................................................................................... 48
15.9 Headings.................................................................................. 48
15.10 Number and Gender......................................................................... 48
15.11 Time of Performance....................................................................... 48
v
16. CERTAIN DEFINITIONS; INDEX OF DEFINITIONS....................................................... 48
16.1 Certain Definitions........................................................................ 48
16.2 Index to Definitions....................................................................... 51
vi
SCHEDULE OF EXHIBITS
--------------------
Exhibit A Accounts Receivable
Exhibit A-1 ABC Split-Up Consequences
Exhibit B XYZ Split-Up Consequences
Exhibit C-1 Partech December 31, 1997 Audited Financial
Statements
Exhibit C-2 Unnisa December 31, 1997 Audited Financial
Statements
Exhibit C-3 Proceda December 31, 1997 Audited Financial
Statements
Exhibit D-1 Partech May 31, 1998 Balance Sheet and Net
Working Capital and Indebtedness Calculation
Exhibit D-2 Unnisa May 31, 1998 Balance Sheet and Net
Working Capital and Indebtedness Calculation
Exhibit D-3 Proceda May 31, 1998 Balance Sheet and Net
Working Capital and Indebtedness Calculation
Exhibit E-1 Escrow Agreement (AG Telecom)
Exhibit E-2 Escrow Agreement (Socma)
Exhibit F Pledge Agreement
Exhibit G Dividend Pledge
Exhibit H Partech Articles
Exhibit I Reorganization Agreement
Exhibit J Trademark Agreement
Exhibit K AG Parent Guaranty
Exhibit L * * * Consent
Exhibit M List of Employees and Independent Contractors
Exhibit N-1 Capitalization of AG Parent
Exhibit N-2 Capitalization of AG Telecom
Exhibit O Capitalization of Socma
Exhibit P-1 Tozzini Freire Teixera e Silva Legal Opinion
Exhibit P-2 Socma Legal Department Legal Opinion
Exhibit Q Proceda Amendment
Exhibit R-1 Kilpatrick Stockton LLP Legal Opinion
Exhibit R-2 Mundie e Advogados Legal Opinion
Exhibit S Certain Additional Agreements
N.B.: THE EXHIBITS AND DISCLOSURE MEMORANDUM REFERENCED IN THIS SCHEDULE OF
- -----
EXHIBITS, AND ELSEWHERE IN THIS AGREEMENT, ARE HEREBY INCORPORATED BY REFERENCE.
THESE EXHIBITS HAVE BEEN OMITTED FOR PURPOSES OF THIS FILING, BUT WILL BE
FURNISHED SUPPLEMENTALLY TO THE COMMISSION UPON REQUEST.
ACQUISITION AGREEMENT
THIS AGREEMENT is made and entered into effective as of the 31st day of
August, 1998, by and among:
(1) EQUIFAX INC., a corporation organized and existing under the laws
of the State of Georgia, United States of America, whose principal place of
business is located at 1600 Peachtree Street, N.W., Atlanta, Georgia 30309,
United States of America ("EFX");
---
(2) EQUIFAX SOUTH AMERICA, INC., a corporation organized and existing
under the laws of the State of Georgia, United States of America, whose
principal place of business is located at 1600 Peachtree Street, N.W., Atlanta,
Georgia 30309, United States of America ("ESA");
---
(3) EQUIFAX DO BRASIL HOLDINGS LTDA., a Brazilian limited liability
company ("SOCIEDADE POR QUOTAS DE RESPONSABILIDADE LIMITADA"), whose head office
is located at Rua Boa Vista, No. 254, 7th floor, suite 721, in the City of Sao
Paulo, State of Sao Paulo, Federal Taxpayers' No. 02677368-0001/14, with its
articles of association recorded at the Commercial Registry at the State of Sao
Paulo, under No. 35,215,207,148, on July 20, 1998 ("HOLDINGS");
--------
(4) P.U.P. PARTICIPACOES S.A., a Brazilian corporation ("SOCIEDADE
ANONIMA"), whose head office is located at Av. Pres. Juscelino Kubitschek, 50
Conj. 172, in the City and State of Sao Paulo, enrolled at the Federal
Taxpayers' Registry under No. 02.716.386/0001-68 ("ACQUISITION"; and together
-----------
with EFX, ESA and Holdings, collectively referred to as "EQUIFAX");
-------
(5) ANDRADE GUTIERREZ TELECOMUNICACOES LTDA., a Brazilian limited
liability company ("SOCIEDADE POR QUOTAS DE RESPONSABILIDADE LIMITADA"), whose
head office is located at Avenida Maria Coelho de Aguiar, 215, Bloco D, 4
degrees floor, in the city of Sao Paulo, State of Sao Paulo, Federal Taxpayers'
Registration No. 71.057.921/0001-39, with its Articles of Association registered
before the Board of Trade of the State of Sao Paulo ("JUCESP") under NIRE
35.213.834.579, in section as of March 03, 1995 ("AG TELECOM" and a "SELLER");
---------- ------
(6) CONSTRUTORA ANDRADE GUTIERREZ S.A., a Brazilian corporation
("SOCIEDADE ANONIMA"), whose head office is located at Rua dos Pampas, 484, in
the city of Belo Horizonte, State of Minas Gerais, Federal Taxpayers'
Registration No. 17.262.213/0001-94, with its by-laws recorded at the Board of
Trade of the State of Minas Gerais ("JUCEMG") under No. 313.000.918-30, in
section as of September 02, 1948 ("AG PARENT" and a "SELLER");
--------- ------
(7) SOCMA AMERICANA S.A., an Argentine corporation ("SOCIEDAD ANONIMA"),
whose head office is located at Av. Eduardo Madero 940, Piso 15, Capital Federal
Registro No. 7034, Libro 100, tomo "A" de Sociedades Anonimas -Registro Publico
de Comercio de la Capital Federal de la Republica Argentina ("SOCMA" and a
-----
"SELLER"); and
------
(8) PARTECH LTDA., a Brazilian limited liability company ("SOCIEDADE
POR QUOTAS DE RESPONSABILIDADE LIMITADA"), whose head office is located in the
City and State of Sao Paulo, at Av. Maria Coelho Aguiar 215, Bloco D - 4th
Floor, enrolled at the Federal Taxpayers' Registry under No. 00-127.453/0001-01
("PARTECH").
-------
BACKGROUND STATEMENT
WHEREAS, the Sellers currently own, directly and in the aggregate, one
hundred percent (100%) of the outstanding quotas of Partech; and
WHEREAS, on the date of this Agreement Partech owns, directly and in
the aggregate, (i) eighty three percent (83%) of the outstanding quotas of
Unnisa-Solucoes em Meios de Pagamento Ltda., a Brazilian limited liability
company ("SOCIEDADE POR QUOTAS DE RESPONSABILIDADE LIMITADA"), whose head office
is located in the City and State of Sao Paulo, at Av. Maria Coelho Aguiar 215,
Bloco D - 4th Floor, enrolled at the Federal Taxpayers' Registry under No.
69.313.674/0001-42 ("UNNISA"), and (ii) sixty six and 67/100 percent (66.67%) of
------
the outstanding shares of Proceda Tecnologia e Informatica S.A., a Brazilian
corporation ("SOCIEDADE ANONIMA"), whose head office is located in the City and
State of Sao Paulo, at Av. Maria Coelho Aguiar 215, Bloco E - 7th Floor,
enrolled at the Federal Taxpayers' Registry under No. 55.419.667/0001-15
("PROCEDA"); and
-------
WHEREAS, on the date of this Agreement, AG Telecom and Socma own,
indirectly and in the aggregate, the remaining seventeen percent (17%) of the
outstanding quotas of Unnisa; and
WHEREAS, Sellers desire to sell to Acquisition and its Affiliates, and
Acquisition, on behalf of itself and its Affiliates, desires to acquire from to-
be-formed Affiliates of each Seller, on the Closing Date (this term and other
capitalized terms used in this Agreement being defined in either PARAGRAPH 16.1
of this Agreement or in those Paragraphs of this Agreement identified in
PARAGRAPH 16.2), (i) capital of Partech representing an aggregate fifty one
percent (51%) direct ownership interest in the capital of Partech and (ii)
capital of Unnisa representing an aggregate seventeen percent (17%) direct
ownership interest in the capital of Unnisa (collectively, the "ACQUIRED
--------
INTERESTS"); and
- ---------
WHEREAS, to accomplish their objectives the Parties have agreed to
undertake the various component parts of the transactions contemplated by this
Agreement on the
2
terms set forth in this Agreement and agree that the various component parts are
integral, interdependent parts of the whole, and without which this Agreement
would not be entered into and the transactions contemplated by and provided for
in ARTICLES 1 AND 2 of this Agreement (collectively, the "ACQUISITION
-----------
TRANSACTION") would not be consummated;
- -----------
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements in this Agreement contained, and other good and
valuable consideration, the receipt and sufficiency of which are acknowledged,
the Parties agree as follows:
1. ACQUISITION OF THE AG TELECOM INTERESTS
1.1 ACQUISITION OF AG TELECOM'S INTERESTS. Subject to satisfaction or
waiver in writing of the conditions contained in ARTICLES 10 AND 11 of this
Agreement, on the Closing Date, Acquisition shall subscribe for that number of
ordinary shares of CJO Participacoes Ltda., an Affiliate of AG Telecom ("ABC"),
---
as shall represent, upon subscription, fifty percent (50.0%) of ABC's issued and
outstanding ordinary shares (collectively, the "ABC SUBSCRIBED SHARES") for an
---------------------
aggregate subscription price (the "ABC SUBSCRIPTION PRICE") payable (i) in cash
----------------------
in Brazilian reais in the amount of R$89,250,000 (Eighty Nine Million Two
Hundred Fifty Thousand Brazilian reais) and (ii) by delivery of the accounts
receivable (the "ACCOUNTS RECEIVABLE") identified and described in EXHIBIT A to
-------------------
this Agreement having a face value of R$81,116,074.26 (Eighty One Million One
Hundred Sixteen Thousand Seventy Four and 26/100 Brazilian reais). A portion of
the ABC Subscription Price shall be allocated to the capital of ABC, and the
balance of the ABC Subscription Price shall be allocated to premium. On the
Closing Date and immediately following the subscription by Acquisition for the
ABC Subscribed Shares, ABC shall be split-up in accordance with the Company Law
(the "ABC SPLIT-UP"), with the consequences set forth on EXHIBIT A-1 to this
------------
Agreement. Any and all stamp duties, taxes and similar imposts imposed or
assessed in respect of the ABC Split-Up will be borne by AG Telecom. In each
case, the ABC Subscribed Shares and the resulting shares or ownership interests
of Partech and Unnisa distributed or to be distributed shall be delivered to
EFX, or at its discretion one or more of its Affiliates, free and clear of any
and all Liens. The ABC Subscribed Shares and all resulting shares and ownership
interests that will become the property of EFX or one or more of its Affiliates
as a result of the ABC Split-Up will be registered in the name of EFX or that
Affiliate in the relevant Book of Registration of Ordinary Shares or otherwise
duly recorded and noted in the books and records of the relevant company.
2. ACQUISITION OF THE SOCMA INTERESTS
3
2.1 ACQUISITION OF SOCMA'S INTEREST IN PARTECH. Subject to satisfaction
or waiver in writing of the conditions contained in ARTICLES 10 AND 11 of this
Agreement, on the Closing Date, Socma will sell to one or more of Equifax's
Affiliates incorporated and organized outside of Brazil (the "OFFSHORE
--------
AFFILIATE"), and EFX will cause the Offshore Affiliate to purchase, take and
- ---------
acquire from Socma, quotas of Partech representing in the aggregate twenty five
and one-half percent (25.50%) of the quota capital of Partech (the "SOCMA
-----
PARTECH INTEREST") free and clear of any and all Liens for a purchase price (the
- ----------------
"SPI PURCHASE PRICE") of R$66,950,000 (Sixty Six Million Nine Hundred Fifty
------------------
Thousand Brazilian reais). Any and all stamp duties, taxes and similar imposts
imposed or assessed in respect of the sale by Socma of the Socma Partech
Interest will be borne by Socma. On the Closing Date and against delivery of
the Socma Partech Interest, the Offshore Affiliate shall pay to Socma the SPI
Purchase Price by wire transfer of an amount of U.S Dollars in immediately
available funds (i) to the following account: Citibank, N.A., New York, New
York, Account No. 36968638, ABA Routing No. 021000089, standing in the name of
Socma Americana S.A., equal to the (x) SPI Purchase Price, as converted into
U.S. Dollars in accordance with this PARAGRAPH 2.1, minus (y) US$ 2,100,000 (ii)
-----
to the escrow account established with Citibank N.A. referenced in the relevant
attached escrow agreement, equal to US$ 2,100,000. Upon transfer of these sums
as prescribed in the foregoing sentence, the SPI Purchase Price shall be paid in
full. The amount of U.S. Dollars to be delivered pursuant to the foregoing sub-
item (i) will be equal to the SPI Purchase Price converted into U.S. Dollars
(rounded to the nearest whole dollar) using the SISBACEN Data System,
transaction PTAX-800, Option 5, buy rate, as published by the Central Bank of
Brazil in respect of the immediately preceding Sao Paulo Business Day, minus US$
-----
2,100,000.
2.2 ACQUISITION OF SOCMA'S INTEREST IN UNNISA. Subject to satisfaction
or waiver in writing of the conditions contained in ARTICLES 10 AND 11 of this
Agreement, on the Closing Date, Acquisition shall subscribe for that number of
ordinary shares of Investimentos Coligados Technology S.A., an Affiliate of
Socma ("XYZ"), as shall represent, upon subscription, Twenty Six and
---
47677/100,000 percent (26.47677%) of XYZ's issued and outstanding ordinary
shares (collectively, the "XYZ SUBSCRIBED SHARES") for an aggregate subscription
---------------------
price (the "XYZ SUBSCRIPTION PRICE") of R$22,300,000 (Twenty Two Million Three
----------------------
Hundred Thousand Brazilian reais). A portion of the XYZ Subscription Price
shall be allocated to the capital of XYZ, and the balance of the XYZ
Subscription Price shall be allocated to premium. On the Closing Date and
immediately following the subscription by Acquisition for the XYZ Subscribed
Shares, XYZ shall be split-up in accordance with the Company Law (the "XYZ
---
SPLIT-UP"), with the consequences set forth on EXHIBIT B to this Agreement. Any
- --------
and all stamp duties, taxes and similar imposts imposed or assessed in respect
of the XYZ Split-Up will be borne by Socma. In each case, the XYZ Subscribed
Shares and the resulting ownership interests of Unnisa distributed or to be
distributed shall be delivered to EFX, or at its discretion one or more of its
Affiliates, free and clear of any and all Liens. The XYZ Subscribed Shares and
all resulting ownership interests that will become the property of
4
EFX or one or more of its Affiliates as a result of the XYZ Split-Up will be
duly recorded and noted in the books and records of the relevant company.
3. CLOSING; ADJUSTMENTS
3.1 CLOSING. Subject to the conditions contained in ARTICLES
10 AND 11 having been satisfied or waived in writing in accordance with the
terms of this Agreement, the consummation of the transactions contemplated in
this Agreement and the Additional Agreements (the "CLOSING") will take place at
-------
the office of Tozzini Freire Teixera e Silva, located at Rua Libero Badaro, 293,
20 degrees andar, Sao Paulo, Brasil, commencing at 9:00 a.m., local time, on
August 31, 1998 or any other date as may be mutually acceptable to the Parties
(the date of the Closing being referred to in this Agreement as the "CLOSING
-------
DATE"); provided, however, that the Acquisition Transaction shall for all
- ---- -------- -------
purposes be effective as of 12:01 a.m., Sao Paulo time, on September 1, 1998. To
facilitate the Closing, the Parties will meet at a pre-closing conference at the
office of Tozzini Freire Teixera e Silva, located at Rua Libero Badaro, 293, 20
degrees andar, Sao Paulo, Brasil, commencing at 9:00 a.m., local time, on the
fourth Business Day immediately preceding the Closing Date, with the intention
to finalize the Closing matters contemplated in this Agreement and the
Additional Agreements in a timely manner so as to cause the Closing to occur on
the Closing Date.
3.2 RIGHT OF RESCISSION. The Parties agree that Equifax on the
one hand or Sellers (acting jointly) on the other hand shall have the right to
rescind the Acquisition Transaction, on the Closing Date but not at any time
thereafter, as a whole and in its entirety if each of the component parts of the
Acquisition Transaction and all other actions, agreements, covenants,
undertakings or transactions required to be completed or performed by a Party on
or before the Closing Date as reflected in this Agreement or any Additional
Agreement are not consummated or performed on the Closing Date or on such other
date or time prior to the Closing Date as may be specified by giving written
notice to the other Parties of the exercise of this right. Any rescission
notice will be effective immediately and any of the transactions or component
parts thereof previously consummated shall be, and shall be deemed to be, void
ab initio, except that the Confidentiality Agreement and Sections 4.4, 4.5, 9.1
and 9.2 of the MOU shall survive.
3.3 COOPERATION AND FURTHER ASSURANCES. Between the date of this
Agreement and Closing, each Party shall take, and shall cause all of its
relevant Affiliates to take, any and all other and further actions required,
necessary or convenient to carry out the intent and purpose of the Acquisition
Transaction, this Agreement and the Additional Agreements. At Equifax's
reasonable request, whether on or after the date of this Agreement, and without
the payment of any additional monies, each Seller will, at its sole expense and
without contribution by or Liability to Equifax, Partech, Unnisa or Proceda,
execute and deliver any and all further documents and instruments of conveyance,
assignment, and transfer and will take any and all further reasonable actions as
may be necessary, in the reasonable opinion of Equifax, to transfer and convey
to
5
Equifax all right, title and interest in and to the Acquired Interests, free
and clear of any and all Liens or as may otherwise be necessary or desirable to
carry out the intent of this Agreement.
3.4 CLOSING DATE AUDITS; DETERMINATION OF ADJUSTMENT. (a) The
Parties agree to cause Partech, Unnisa and Proceda to cause the independent
public accountants, Deloitte Touche Tohmatsu, to audit the balance sheets of
Partech (the "PARTECH CLOSING BALANCE SHEET"), Unnisa (the "UNNISA CLOSING
----------------------------- --------------
BALANCE SHEET") and Proceda (the "PROCEDA CLOSING BALANCE SHEET"; and together
- ------------- -----------------------------
with the Partech Closing Balance Sheet and the Unnisa Closing Balance Sheet, the
"CLOSING BALANCE SHEETS"), as appropriate, as of the Closing Date. Each Closing
----------------------
Balance Sheet will be prepared in the English language in accordance with GAAP
and in a manner consistent with the relevant December 31, 1997 balance sheet
attached to this Agreement as EXHIBIT C-1, C-2, OR C-3, as appropriate, and
shall include all accruals and adjustments required by GAAP. Within ninety (90)
days after the Closing Date: Sellers will cause Deloitte Touche Tohmatsu to
deliver to Equifax, Sellers and Arthur Andersen LLP, together with their audit
report thereon and related workpapers, the Partech Closing Balance Sheet, the
Unnisa Closing Balance Sheet and the Proceda Closing Balance Sheet, and its
calculation of Net Working Capital and Indebtedness for each of Partech, Unnisa
and Proceda (collectively, the "COMPUTATIONS"), each calculation being derived
------------
from the relevant Closing Balance Sheet. Subject to PARAGRAPH 3.4(B), the
Computations will be final and binding on the Parties for purposes of
calculating the adjustments as provided for in this PARAGRAPH 3.4.
(b) If within sixty (60) days following delivery of the Closing
Balance Sheets and the Computations, Equifax, following a review of the same by
Arthur Andersen LLP, has not given Sellers written notice of objection to any or
all of the Closing Balance Sheets and the Computations (which notice must
contain a statement in detail, with supporting documentation, of Equifax's
objections), then the Closing Balance Sheets and the Computations shall be final
and binding on all Parties for purposes of calculating the adjustments as
provided for in this PARAGRAPH 3.4. If Equifax gives such notice of objection,
then the Parties shall in good faith attempt to resolve the issues raised in the
notice among themselves. If they are unable to reach a resolution within thirty
(30) days of such notice, the issues in dispute will be promptly submitted to
KPMG Peat Marwick (the "ACCOUNTANTS") for resolution, which disputes shall not
-----------
be further subject to arbitration as provided in PARAGRAPH 15.5. If the issues
in dispute are submitted to the Accountants for resolution: (i) each Party will
furnish to the Accountants such work papers and other documents and information
relating to the disputed issues as the Accountants may request and are available
to the Party (or its independent public accountants), and will be afforded the
opportunity to present to the Accountants any material relating to the relevant
Closing Balance Sheets and the Computations and to discuss the same with the
Accountants, (ii) the determination by the Accountants as set forth in a written
notice delivered to Sellers and Equifax by the Accountants will be binding and
conclusive on all Parties, and (iii) Sellers and Equifax will each bear one-half
of the fees and expenses of the Accountants in resolving the issues in dispute.
The
6
Accountants will deliver their written notice of determination within thirty
(30) days of the disputes having been referred to them. The costs of Deloitte
Touche Tohmatsu incident to the initial preparation of the Closing Balance Sheet
and the Computations shall be borne by Sellers, and the costs of Arthur Andersen
in reviewing and responding to the Closing Balance Sheet and the Computations
shall be borne by Equifax.
(c) On or before the fifth (5th) Business Day following the final
determination of the Net Working Capital and the Indebtedness for each of
Partech, Unnisa and Proceda, whether by Deloitte Touche Tohmatsu as set forth in
the Computations as originally delivered to Equifax, by agreement of the
Parties, or by the Accountants, as the case may be:
(A) if the Net Working Capital of Partech is less than R$
1,000 as reflected on EXHIBIT D-1, Sellers, jointly and
severally, shall contribute the difference in cash in
Brazilian reais to Unnisa; provided, however, any such
-------- --------
contribution shall not result in any change in the then
current ownership of its quota holders;
(B) if the Net Working Capital of Unnisa is less than R$
2,983,000 as reflected on EXHIBIT D-2, Sellers, jointly and
severally, shall contribute the difference in cash in
Brazilian reais to Unnisa; provided, however, any such
-------- --------
contribution shall not result in any change in the then
current ownership of its quota holders;
(C) if the Net Working Capital of Proceda is less than R$
2,468,000 as reflected on EXHIBIT D-3, Sellers, jointly and
severally, shall contribute the difference multiplied by 34%
in cash in Brazilian reais to Holdings;
(D) the difference between the Indebtedness of Partech as
reflected on the Partech Closing Balance Sheet and the
Indebtedness as reflected on EXHIBIT D-1 shall be paid in
cash in Brazilian reais, (x) if higher than the amount
reflected on EXHIBIT D-1, 51% of the difference by Sellers,
jointly and severally, to Holdings, and (y) if lower than
the amount reflected on EXHIBIT D-1, 51% of the difference
by Equifax to Sellers in accordance with their respective
then current pro rata ownership interests in Partech;
(E) the difference between the Indebtedness of Unnisa as
reflected on the Unnisa Closing Balance Sheet and
Indebtedness as reflected on EXHIBIT D-2 shall be paid in
7
cash in Brazilian reais, (x) if higher than the amount
reflected on EXHIBIT D-2, 59.33% of the difference by
Sellers, jointly and severally, to Holdings, and (y) if
lower than the amount reflected on EXHIBIT D-2, 59.33% of
the difference by Equifax to Sellers in accordance with
their respective then current pro rata ownership interests
in Unnisa; and
(F) the difference between the Indebtedness of Proceda as
reflected on the Proceda Closing Balance Sheet and the
Indebtedness as reflected on EXHIBIT D-3 shall be paid, (x)
if higher than the amount reflected on EXHIBIT D-3, by
Sellers, jointly and severally, to Holdings multiplied by
34%, and (y) if lower than the amount reflected on EXHIBIT D-
3, 34% of the difference by Equifax to Sellers in accordance
with their respective then current pro rata ownership
interests in Proceda, in each case by wire transfer of
Brazilian reais in immediately available funds to such bank
account as the payee specifies.
(d) For purposes of this PARAGRAPH 3.4, "NET WORKING CAPITAL" will
-------------------
mean current assets minus current liabilities for Partech, Unnisa or Proceda, as
relevant, determined in accordance with GAAP, but specifically excluding any and
all management fees payable, all dividends payable, all intercompany receivables
or payables with Affiliates or indebtedness in favor of Affiliates of AG Parent
or Socma, and any other Indebtedness. For purposes of this PARAGRAPH 3.4,
"INDEBTEDNESS" will mean the sum of all indebtedness for borrowed money, all
------------
amounts payable as management fees payable and dividends payable, and
intercompany payables, less intercompany receivables for indebtedness or
----
indebtedness in favor of Affiliates of AG Parent or Socma.
3.5 CERTAIN AGREEMENTS. Following completion of the Acquisition
Transaction on the Closing Date: (i) Acquisition, AG Telecom and Socma shall
enter into an escrow agreement (the "ESCROW AGREEMENT") in the agreed form
----------------
attached to this Agreement as either EXHIBIT E-1 or E-2, as appropriate; (ii)
Acquisition, AG Telecom and Socma shall enter into the pledge agreement (the
"PLEDGE AGREEMENT") in the agreed form attached to this Agreement as EXHIBIT F;
----------------
(iii) Acquisition, AG Telecom and Socma shall enter into the private deed of
assignment of dividends (the "DIVIDEND PLEDGE") in the agreed form attached to
---------------
this Agreement as EXHIBIT G; (iv) Acquisition, AG Telecom and Socma shall cause
Partech to adopt new articles of association (the "PARTECH ARTICLES") in the
------- --------
agreed form attached to this Agreement as EXHIBIT H; (v) the relevant Persons
shall enter into the reorganization agreement (the "REORGANIZATION AGREEMENT")
------------------------
in the agreed form attached to this Agreement as EXHIBIT I; (vi) Unnisa and EFX
shall execute the trademark license agreement in the agreed form attached to
this Agreement as EXHIBIT J (the "TRADEMARK AGREEMENT"); and (vii) if required,
--------- ---------
AG Parent shall execute a guaranty in the agreed form attached to this Agreement
as EXHIBIT K (each, the "GUARANTY").
--------
8
4. ADDITIONAL COVENANTS
4.1 ACCESS AND INSPECTION. Partech will provide, and each Seller agrees
to cause Partech, Unnisa and Proceda to provide, Equifax and its Representatives
full access during normal business hours from and after the date of this
Agreement until the Closing to all of the Representatives, personnel, customers,
suppliers, books and records of Partech, Unnisa and Proceda and their respective
Affiliates (including without limitation allowing Equifax and its
Representatives to make copies, extracts and translations) and will furnish any
and all information concerning their businesses and affairs as Equifax and its
Representatives may request in each case for the purpose of making a continuing
investigation of Partech, Unnisa and Proceda and their respective businesses;
provided, however, on-site visits after the date of this Agreement to the
- -------- -------
business premises of Partech, Unnisa and Proceda shall be coordinated between
Equifax and Sellers such that there shall be the least amount of disruption to
the business and operations of Partech, Unnisa and Proceda as is reasonably
practicable in the circumstances. Except for granting access to SHL Systemhouse
Inc. and its Representatives for purposes of conducting a due diligence
investigation of Proceda in a manner agreed by the Parties, none of Partech, AG
Telecom, Socma, or any member of either the AG Group or the Socma Group will
provide any other Person, or permit Unnisa or Proceda to provide any other
Person, with similar access or information between the date of this Agreement
and any termination or expiration of this Agreement. No investigation made
before or after the date of this Agreement by or on behalf of Equifax will limit
or affect in any way the representations, warranties, covenants, agreements and
indemnities of AG Telecom, Socma, Partech, or any other member of either the AG
Group or the Socma Group under or pursuant to this Agreement or any Additional
Agreement, each of which will survive any investigation and the Closing pursuant
to the terms and conditions established in this Agreement.
4.2 COOPERATION. The Parties will cooperate fully with each other and
with their respective Representatives in connection with any steps required to
be taken as part of their respective obligations under this Agreement, and all
Parties will use their best efforts to consummate the transactions contemplated
by this Agreement and to fulfill their obligations under this Agreement,
including without limitation, causing to be fulfilled at the earliest practical
date the conditions precedent to the obligations of the Parties to consummate
the transactions contemplated by this Agreement. Without the prior written
consent of the other Parties, no Party may take any intentional actions, or omit
to take any actions, that would cause the conditions precedent to the
obligations of the Parties not to be fulfilled, including, without limitation,
taking or causing to be taken any action which would cause the representations
and warranties made by a Party in this Agreement not to be true, correct and
complete as of the Closing.
4.3 EXPENSES. The Parties will bear their own legal, accounting, broker,
intermediary and other fees and expenses related to the transactions
contemplated by this Agreement and the Additional Agreements, it being
understood and agreed that all fees and expenses of J.P. Morgan will be borne by
Sellers and without any Liability to any of Equifax, Partech, Unnisa or Proceda.
The Parties acknowledge and agree that Partech,
9
Unnisa and Proceda have already incurred, and may continue to incur, certain de
minimis expenses in connection with the transactions contemplated by this
Agreement, particularly in connection with the due diligence process, but in no
event shall Partech, Unnisa or Proceda have any Liability for any other expenses
of Sellers in connection with the authorization, preparation, execution and
performance of this Agreement and the transactions contemplated by this
Agreement. The Brazilian financial transactions tax ("CPMF") shall be borne
----
equally by Sellers on the one hand and Equifax on the other.
4.4 UPDATE OF INFORMATION. All documents, agreements, instruments,
statements, copies and other writings furnished to or for the benefit of Equifax
or any of its Representatives pursuant to this Agreement are and will be true,
correct and complete as of the date furnished, and any and all amendments and
supplements to the documents, agreements, instruments, statements and other
writings furnished to or for the benefit of Equifax or any of its
Representatives pursuant to this Agreement have been or will be delivered to
Equifax and its Representatives in a timely and expeditious manner prior to the
Closing. At all times prior to and including the Closing Date, AG Telecom,
Socma, Partech and Equifax will promptly provide one another with written
notification of any event, occurrence or other information of any kind
whatsoever which affects, or may affect, the continued truth, correctness or
completeness of any representation, warranty, covenant or agreement made in this
Agreement by a Party or any document, agreement, instrument, certificate or
writing furnished to or for the benefit of a Party by any other Party pursuant
to or in connection with this Agreement, and each written notification will
specifically identify any and all of the representations, warranties, covenants
and agreements affected by the fact, event, occurrence or information that
necessitated the giving of the notice. No notification or other disclosure will
be deemed to amend or supplement this Agreement, the Disclosure Memorandum, or
any representation, warranty, covenant, agreement or indemnity or any other
document, agreement, instrument, certificate or writing furnished to or for the
benefit of any Party pursuant to or in connection with this Agreement.
4.5 BROKERS. AG Group and Socma Group represent and warrant to Equifax
that no broker or finder other than J.P. Morgan has acted on their behalf or on
behalf of Partech, Unnisa or Proceda in connection with this Agreement or the
transactions contemplated in this Agreement, and AG Group and Socma Group,
severally but not jointly, agree to indemnify Equifax and hold it harmless from
and against any and all claims or demands for commissions or other compensation
by J.P. Morgan and any other broker, finder or similar agent claiming to have
been employed by or on behalf of them. Equifax represents and warrants that no
broker or finder has acted on its behalf in connection with this Agreement or
the transactions contemplated in this Agreement and agrees to indemnify AG
Group, Socma Group, Partech, Unnisa and Proceda and hold them harmless from and
against any and all claims or demands for commissions or other compensation by
any broker, finder or similar agent claiming to have been employed by or on
behalf of Equifax.
10
4.6 PUBLICITY. Except to the extent required by applicable Law or
listing agreement with any securities exchange, all press releases and other
public announcements respecting the subject matter of this Agreement or any
Additional Agreement will be made only with the mutual agreement of AG Telecom,
Socma and Equifax, which agreement will not be unreasonably withheld, delayed or
conditioned. Prior to submitting any information to third parties as required
by applicable Law or listing agreement with any securities exchange, each Party
will provide the other Parties with a reasonable opportunity to review and
comment on the terms upon which such information will be disclosed.
4.7 CERTAIN GOVERNMENTAL FILINGS. The Parties will make, or cause to be
made, all filings and submissions required to be made to any Government in
connection with the transactions contemplated by or resulting from this
Agreement. Each of the Parties will furnish to the other Parties any and all
necessary information and reasonable assistance as another Party may reasonably
request in connection with its preparation of necessary filings or submissions
to any Government. Prior to filing any material application, registration,
statement or other document with the applicable governmental authority, each
Party will provide the other Parties with a reasonable opportunity to review and
comment on each that application, registration, statement or other document.
4.8 CUSTOMER CONTRACTS. Partech shall, and each Seller agrees to cause
Partech, Unnisa and Proceda to, use their commercially reasonable efforts to
procure fully executed customer agreements from * * * and any other unsigned
customer agreements (collectively, the "CUSTOMER AGREEMENTS") which are attached
-------------------
to the Disclosure Memorandum.
4.9 * * * CONTRACT. At least five (5) Business Days prior to the Closing
Date, Partech shall, and each Seller agrees to cause Unnisa and Proceda to,
procure the written consent of * * *, in the agreed form attached to this
Agreement as EXHIBIT L, for the operation of the * * * software by Proceda for
and on behalf of Unnisa (the "* * * CONSENT").
-------------
4.10 INVENTIONS AGREEMENTS. Partech shall use its commercially
reasonable efforts (both before and after the Closing Date) to procure written
agreements (the "IP AGREEMENTS") from (i) all current employees and independent
-------------
contractors, and (ii) all employees and independent contractors who in the prior
three years have performed services for any of Partech, Unnisa or Proceda, in
each case as identified in EXHIBIT M to this Agreement, irrevocably assigning to
Partech, Unnisa or Proceda, as appropriate, without any consideration or other
conditions, any and all rights, title and interest in and to any and all
intellectual or industrial property, if any, developed or created, whether in
whole or in part, by them, each such written agreement being acceptable to
Equifax as to form, content and subject matter.
11
4.11 CERTAIN CUSTOMER CONTRACTS. The Parties agree to use their
commercially reasonable efforts to have each of the Customer Contracts
renegotiated on terms and conditions reasonably satisfactory to the Parties so
as to limit the potential liability to Partech, Unnisa, Proceda and the Parties
for potential system or service failures at Partech, Unnisa or Proceda, whether
as a result of failures, interruptions, disruptions or slow-downs in their own
operating systems or as a result of the failure, interruption, disruption or
slow-down of third party products or services.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS RELATING TO PARTECH, UNNISA AND
PROCEDA
AG Telecom, Socma and Partech have prepared and delivered to Equifax a
disclosure memorandum (the "DISCLOSURE MEMORANDUM") setting forth any and all
---------------------
exceptions or supplemental information to the representations, warranties and
covenants contained in this ARTICLE 5, and have delivered to Equifax documents
and materials pursuant to this Agreement, and all of the documents and materials
so delivered are true, correct and complete as of the date furnished, and any
and all modifications or amendments to the documents and materials have been or
will be delivered to Equifax with the Disclosure Memorandum. The disclosures set
forth in the Disclosure Memorandum qualify only those representations and
warranties specifically referenced and referred to in the Disclosure Memorandum
or this Agreement, and a disclosure related to any particular representation and
warranty shall not qualify any other representation or warranty unless so
expressly stated. At all times prior to and including the Closing Date, AG
Telecom, Socma and Partech will promptly provide Equifax with written
notification of any event, occurrence or other information of any kind
whatsoever which affects or may affect, the continued truth, correctness or
completeness of any representation or warranty made in this Agreement or any
information contained in the Disclosure Memorandum. Subject to the foregoing,
each of AG Telecom, Socma and Partech, severally but not jointly, represents and
warrants to Equifax, and covenants and agrees, as of the date of this Agreement
and again as of the Closing Date, as follows:
5.1 EXISTENCE. Each of Partech and Unnisa: (a) is a Brazilian limited
liability company ("SOCIEDADE POR QUOTAS DE RESPONSABILIDADE LIMITADA"), duly
organized and registered and validly existing under the laws of Brazil, and (b)
is entitled to own or lease, or will own or lease, its assets and properties and
to carry on its business as and in the places where its business is conducted
and its assets and properties are owned or leased. Proceda: (a) is a
corporation ("SOCIEDADE ANONIMA"), duly organized and registered and validly
existing under the laws of Brazil, and (b) is entitled to own or lease, or will
own or lease, its assets and properties and to carry on its business as and in
the places where its business is conducted and its assets and properties are
owned or leased. None of Partech, Unnisa or Proceda is required to be
authorized, licensed, qualified or domesticated as a foreign Person in any
jurisdiction outside of Brazil. AG Telecom and Socma have previously furnished
Equifax with true, correct and complete copies of the organizational and
foundation documents, as amended, of each of Partech, Unnisa and Proceda. AG
12
Telecom and Socma have delivered to Equifax true, correct and complete copies of
the minutes and other similar records of meetings of and actions by the
shareholders, quotaholders, directors and officers of Partech and Proceda, and
the minutes and other similar records of meetings of and actions by the
quotaholders, directors and officers of Unnisa, which, in each case, reflects
fully all issuances (whenever this is the case), transfers and redemptions of
Partech's, Unnisa's and Proceda's capital. The Disclosure Memorandum lists:
(i) all locations where Partech, Unnisa or Proceda currently owns or leases real
property, has an office or place of business, or maintains any equipment, other
asset, or has licensed any software, (ii) all locations of immovable property
formerly owned or leased by either Partech, Unnisa or Proceda, or its respective
predecessors, and (iii) all names under which each of Partech, Unnisa or Proceda
or its respective predecessors have operated, if different from its present
legal name.
5.2 SUBSIDIARIES. Except for Partech's interest in Unnisa and Proceda,
none of Partech, Unnisa or Proceda has any interest, directly or indirectly, in
any Person, nor any right, option or commitment to purchase or otherwise acquire
any interest, direct or indirect, in any Person, nor has it ever had any
interest or the right to acquire any interest. To the extent that Partech,
Unnisa or Proceda does have an interest in any other Person, that Person is not
engaged in a business competitive with that of Partech, Unnisa or Proceda or the
business to be conducted by Unnisa or Proceda on and after the Closing Date, and
none of Partech, Unnisa or Proceda has any legal responsibility, duty,
obligation or liability in respect of that Person, nor do any of the assets,
businesses, properties, revenues or profits stand for any duty, obligation or
liability of that Person.
5.3 CAPITALIZATION; OWNERSHIP OF EQUITY; FOUNDATION DOCUMENTS.
(a) Partech has a total capital (the "PARTECH QUOTAS") as described in the
--------------
Disclosure Memorandum, and the capital of Partech described in the Disclosure
Memorandum constitutes all of the issued and outstanding capital of Partech.
The Partech were duly authorized and validly issued, are fully paid and non-
assessable, and were authorized, offered, issued and sold in accordance with all
applicable Laws. All amounts due in respect of the Partech Quotas have been
fully paid in the required currency, and no further assessments or calls may be
made upon or with respect to the Partech Quotas. None of the Partech Quotas
have been issued, offered, sold, registered or recorded in violation of the
preemptive or other rights of any past or present shareholder or quotaholder of
Partech or any other Person. None of the Partech Quotas are subject to any
quotaholders agreements, voting trusts or any restrictions on transfer, other
than as set forth in Partech's Articles of Incorporation or By-Laws or this
Agreement or in the Disclosure Memorandum. The Partech Quotas are owned
beneficially and legally by the Persons named in the Disclosure Memorandum.
(b) Other than as contemplated by this Agreement or in the Disclosure
Memorandum, there are no rights to subscribe for or to purchase, or any option
for the purchase of, or any agreements or arrangements providing for the
issuance (contingent or otherwise) of, or any calls, commitments or any claims
or Actions of any character
13
relating to, the capital of Partech, including without limitation, any
subscription bonus, convertible debentures, share options or founders' shares.
Other than as contemplated by this Agreement or by the Disclosure Memorandum, no
Person has any right to, or option with respect to, or any agreement or
arrangements with respect to, or any calls, commitment or any claims or rights
of any character however evidenced or created to, any of the capital of Partech
or any portion of Partech's turnover or profits.
(c) Unnisa has a total capital (the "UNNISA QUOTAS") as described in the
-------------
Disclosure Memorandum, and the capital of Unnisa described in the Disclosure
Memorandum constitutes all of the outstanding capital of Unnisa. The Unnisa
Quotas were duly authorized, are fully paid and non-assessable, and were
authorized, offered, issued and sold in accordance with all applicable Laws.
All amounts due in respect of the Unnisa Quotas have been fully paid in the
required currency, and no further assessments or calls may be made upon or with
respect to those quotas. None of the Unnisa Quotas have been offered, sold,
registered or recorded in violation of the preemptive or other rights of any
past or present quotaholder of Unnisa or any other Person. None of the Unnisa
Quotas are subject to any quotaholder agreements, voting trusts or any
restrictions on transfer, other than as set forth in Unnisa's Articles of
Association or this Agreement or the Disclosure Memorandum. The Unnisa Quotas
are owned legally and beneficially by the Persons named in the Disclosure
Memorandum.
(d) Other than as contemplated by this Agreement, there are no rights to
subscribe for or to purchase, or any option for the purchase of, or any
agreements or arrangements providing for the issuance (contingent or otherwise)
of, or any calls, commitments or any claims or Actions of any character relating
to, the capital of Unnisa, including without limitation, any subscription bonus,
convertible debentures, quota options or founders' quotas. Other than as
contemplated by this Agreement or in the Disclosure Memorandum, no Person has
any right to, or option with respect to, or any agreement or arrangements with
respect to, or any calls, commitment or any claims or rights of any character
however evidenced or created to, any of the capital of Unnisa or any portion of
Unnisa's turnover or profits.
(e) Proceda has a total capital (the "PROCEDA SHARES") as described in the
--------------
Disclosure Memorandum, and the capital of Proceda described in the Disclosure
Memorandum constitutes all of the issued and outstanding capital of Proceda.
The Proceda Shares were duly authorized and validly issued, are fully paid and
non-assessable, and were authorized, offered, issued and sold in accordance with
all applicable Laws. All amounts due in respect of the Proceda Shares have been
fully paid in the required currency, and no further assessments or calls may be
made upon or with respect to the Proceda Shares. None of the Proceda Shares
have been issued, offered, sold, registered or recorded in violation of the
preemptive or other rights of any past or present shareholder of Proceda or any
other Person. None of the Proceda Shares are subject to any shareholder
agreements, voting trusts or any restrictions on transfer, other than as set
forth in Proceda's Articles of Incorporation or By-Laws or this Agreement or the
14
Disclosure Memorandum. The Proceda Shares are owned beneficially and legally by
the Persons named in the Disclosure Memorandum.
(f) Other than as contemplated by this Agreement or described in the
Disclosure Memorandum, there are no rights to subscribe for or to purchase, or
any option for the purchase of, or any agreements or arrangements providing for
the issuance (contingent or otherwise) of, or any calls, commitments or any
claims or Actions of any character relating to, the capital of Proceda,
including without limitation, any subscription bonus, convertible debentures,
share options or founders' shares. Other than as contemplated by this Agreement
or described in the Disclosure Memorandum, no Person has any right to, or option
with respect to, or any agreement or arrangements with respect to, or any calls,
commitment or any claims or rights of any character however evidenced or created
to, any of the capital of Proceda or any portion of Proceda's turnover or
profits.
5.4 AUTHORITY; INCONSISTENT OBLIGATIONS.
(a) Each of the Sellers, Partech, Unnisa and Proceda have the full right,
power and authority to execute and deliver and to perform and comply with this
Agreement and the Additional Agreements to which any of them is or will be a
party. All proceedings and actions required to be taken by either Seller,
Partech, Unnisa or Proceda to authorize the execution, delivery and performance
of this Agreement and the Additional Agreements have been taken. This Agreement,
and each Additional Agreement to which any of them is or will be a party, have
been, or in the case of any Additional Agreement will be at the Closing, duly
and validly executed and delivered by each Seller, Partech, Unnisa or Proceda,
as appropriate, by its duly authorized officers or representatives. This
Agreement constitutes, and each Additional Agreement when executed and delivered
will constitute, the valid and legally binding obligation, subject to general
equity principles, of each Seller, Partech, Unnisa and Proceda, as appropriate,
enforceable in accordance with its respective terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally.
(b) Neither the execution and delivery of this Agreement or of the
Additional Agreements by either Seller or Partech, nor the consummation of the
transactions contemplated by this Agreement or by any Additional Agreement, will
(i) result in a violation of the Articles of Association, Articles of
Incorporation or By-Laws of either Seller, Partech, Unnisa or Proceda, or any
Law or Order, (ii) violate any Order or Law applicable to either Seller,
Partech, Unnisa or Proceda, or (iii) result in a breach of, conflict with or
default under, any term or provision of any indenture, note, mortgage, bond,
security agreement, loan agreement, guaranty, pledge, or other instrument,
contract, agreement or commitment to which either Seller, Partech, Unnisa or
Proceda is or will be upon consummation of the transactions contemplated by this
Agreement a party or by which any of them or any of their respective assets,
properties, or businesses is subject or bound; nor will these actions result in
(w) the creation of any Lien on any of the Acquired Interests, Partech Quotas,
Unnisa Quotas or Proceda Shares, or any of the assets, properties, businesses,
revenues or profits of Partech, Unnisa or Proceda, (x) the acceleration or
15
creation of any material obligation of Partech, Unnisa or Proceda, (y) the
forfeiture of any material right or privilege of Partech, Unnisa or Proceda, or
(z) the forfeiture of any material right or privilege of either Seller, Partech,
Unnisa or Proceda that may affect its ability to perform under this Agreement or
any Additional Agreement.
5.5 NO VIOLATION; COMPLIANCE WITH LAWS. None of Partech, Unnisa or
Proceda is in default under or in violation of (a) its Articles of Association,
Articles of Incorporation or By-Laws, as appropriate, or (b) any Order or Law,
and the operations of Partech, Unnisa and Proceda have been conducted in
accordance with, and are in compliance with, all applicable Laws. Except as
indicated in the Disclosure Memorandum, none of the Sellers, Partech, Unnisa or
Proceda has any notification of any asserted present or past failure by Partech,
Unnisa or Proceda to comply with any Order or Laws.
5.6 CONSENTS. The execution and delivery by the Sellers or Partech of
this Agreement and the Additional Agreements to which any of them is to be a
party on the Closing Date, the consummation of the transactions contemplated in
this Agreement or the Additional Agreements, the conduct of the respective
businesses of Partech, Unnisa and Proceda on and after the Closing Date, and the
performance by the Sellers or Partech under this Agreement or any Additional
Agreement, as appropriate, do not (a) require the consent, approval or action
of, or any filing with or notice to, any Government or other Person, other than
for a notification filing to be made with the Brazilian anti-trust authorities
within fifteen (15) days after the Closing, (b) require the consent or approval
of Partech's quotaholders, Unnisa's quotaholders or Proceda's shareholders
(except for those previously obtained), or (c) impose any other term, condition
or restriction on Partech, Unnisa or Proceda pursuant to any Order or Law.
5.7 POSSESSION OF LICENSES, ETC. Each of Partech, Unnisa and Proceda
possesses all certificates, licenses, permits and other authorizations from
Governments (collectively, the "PERMITS"), free from burdensome restrictions,
-------
that are necessary or convenient for the ownership, maintenance and operation of
its respective properties, assets, and businesses, and none of Partech, Unnisa
or Proceda is or has been in violation of any such Permits. The Disclosure
Memorandum sets forth all material Permits held by each of Partech, Unnisa and
Proceda in connection with its business, all of which are in full force and
effect, and neither the validity nor continuance of which will be adversely
affected by the consummation of the transactions contemplated by this Agreement.
5.8 [INTENTIONALLY LEFT BLANK].
5.9 FINANCIAL STATEMENTS. Prior to the date of this Agreement, Sellers and
Partech have delivered to Equifax copies of the audited financial statements of
Partech, Unnisa and Proceda as of and for the periods ended December 31, 1994,
1995, 1996 and 1997 (together with the report thereon of Ernst and Young or
Deloitte Touche Tohmatsu, as appropriate collectively, the "AUDITED FINANCIAL
-----------------
STATEMENTS"), and the unaudited financial statements of Partech, Unnisa and
- ----------
Proceda as of and for the (i) 5-month period
16
ended May 31, 1998 and (ii) 6-month period ended June 30, 1998 (the "UNAUDITED
---------
FINANCIAL STATEMENTS"; and together with the Audited Financial Statements,
- --------------------
collectively, the "FINANCIAL STATEMENTS"), in each case including a balance
--------------------
sheet, an income statement, a statement of changes in shareholders equity, and a
statement of changes in financial position, together with any related schedules.
The Financial Statements have been prepared from the books and records of
Partech, Unnisa and Proceda, as appropriate, and have been prepared in
accordance with GAAP consistently applied and present fairly the financial
condition of Partech, Unnisa and Proceda, as appropriate, as at the respective
dates of the Financial Statements and the results of its respective operations,
shareholders equity and financial position for the periods then ended. All pro
forma and projected financial information presented to Equifax in connection
with the negotiation and consummation of the transactions contemplated by this
Agreement have been prepared by Sellers consistent with historic accounting
practices and procedures and based upon facts as then in existence and
assumptions reasonable in the circumstances, and the same continue to be true
and reasonable. Each of the Sellers, Partech, Unnisa and Proceda, however,
makes no representation or warranty regarding the likelihood of the actual
occurrence of such projections.
5.10 LIABILITIES.
(a) Except as indicated in the Disclosure Memorandum, none of Partech,
Unnisa or Proceda has any debt, Liability or obligation of any kind, whether
accrued, absolute, contingent or otherwise, except (i) those reflected in the
Unaudited Financial Statements, (ii) those accounts payable incurred in the
ordinary and regular course of business since the date of the Unaudited
Financial Statements, and (iii) those incurred thereafter in the ordinary and
regular course of business consistent with past practices which do not result
from the breach of any Contract or any violation of applicable Law.
(b) None of Partech, Unnisa or Proceda is a party to any contract or
commitment to guarantee the payment or performance of any Liability or other
obligation of any other Person, or pursuant to which Partech, Unnisa or Proceda,
or their respective assets, properties, business or revenue, is or may become
liable for the indebtedness or other obligations of any other Person.
5.11 TITLE TO PROPERTIES . All assets and property, whether movable or
immovable, tangible or intangible, owned by Partech, Unnisa or Proceda are owned
exclusively by Partech, Unnisa or Proceda and free and clear of any and all
Liens except those listed and described in the Disclosure Memorandum. None of
Partech, Unnisa or Proceda owns any assets or property other than those set
forth on the relevant balance sheets included in the Unaudited Financial
Statements and those acquired thereafter in the ordinary and regular course of
business consistent with past practices and which are otherwise reflected on the
books and records of Partech, Unnisa or Proceda, as appropriate. Each of
Partech, Unnisa and Proceda has, or will have at the Closing, exclusive
possession of all of its respective assets and properties, all of which are
17
physically located on the Immovable Property and are not subject to the dominion
or control of any other Person.
5.12 RECEIVABLES. Subject to any applicable reserve set forth in the
relevant Financial Statements, any and all notes receivable and accounts
receivable shown in the Financial Statements and all notes receivable and
accounts receivable held by Partech, Unnisa or Proceda on the date of this
Agreement and on the Closing Date, were, are and will be, valid and collectable
obligations of the respective makers or the relevant account debtors and were
not and are not subject to any offset, counterclaim or recoupment.
5.13 MOVABLE PROPERTY.
(a) All of the machinery, equipment, vehicles, and other items of
movable property which are owned or leased by Partech, Unnisa or Proceda are in
good condition and repair, subject to normal wear and tear, suited for the use
intended, and to the best knowledge of each of the Sellers, Partech, Unnisa or
Proceda are and have been operated in conformity with all applicable insurance
requirements, manufacturer's operating manuals, manufacturer's warranties, and
applicable Orders and Laws. The Disclosure Memorandum sets forth a list of all
movable property whose value is in excess of R$10,000, owned or leased by
Partech, Unnisa or Proceda, specifying which items are owned and which are
leased. To the best of each Sellers' and Partech's knowledge, there are no
defects or conditions which would cause the movable property to be or become
inoperable or unsafe.
(b) To the best of each Seller's and Partech's knowledge, all lessors
of any machinery, equipment or other movable property leased by Partech, Unnisa
or Proceda have fully and completely performed and satisfied their respective
duties and obligations under the leases, and none of Partech, Unnisa or Proceda
has brought or threatened any Action against any relevant lessor for failure to
perform and satisfy its duties and obligations under the relevant lease.
5.14 IMMOVABLE PROPERTY.
(a) None of Partech, Unnisa or Proceda owns any real or immovable
property. Each of Partech, Unnisa and Proceda has the lawful right to occupy
and use all real or immovable property which is used in their respective
businesses (the "IMMOVABLE PROPERTY").
------------------
(b) All agreements with respect to leases, easements, rights of way,
licenses or other interests in Immovable Property granted to Partech, Unnisa or
Proceda (collectively, the "PROPERTY LEASES") are listed in the Disclosure
---------------
Memorandum. The interest of Partech, Unnisa or Proceda, as applicable, in and
under each of the Property Leases is free and clear of any defects, claims or
Liens and subject to no present Action or threatened Action.
18
(c) Each of Partech, Unnisa and Proceda is lawfully in possession of
all of its respective Immovable Property which is the subject of a Property
Lease and with respect to which Partech, Unnisa or Proceda is a tenant or lessee
or has been granted a possessory interest (the "LEASED IMMOVABLE PROPERTY"), and
-------------------------
all conditions precedent to the obligation of Partech, Unnisa or Proceda to take
possession and continue to occupy all Leased Immovable Property have been
fulfilled.
(d) There is lawfully available to all the Leased Immovable Property,
through private easements and facilities or properly dedicated public easements
and facilities, all of the water, gas, sewer, electricity and telephone service
which are now being utilized and sufficient to allow Partech, Unnisa or Proceda,
as applicable, to continue to conduct their business as presently conducted by
them and, further, to engage in their respective businesses. All of the Leased
Immovable Property has reasonably suitable ingress and egress and each parcel of
Leased Immovable Property has reasonably suitable access to the existing paved
roads and other public rights of way, which access is not limited or restricted.
(e) The present use, occupancy and operation of the Immovable
Property, and all aspects of the improvements on and to the Immovable Property
(collectively, the "IMPROVEMENTS"), are in compliance in all material respects
------------
with all, and not in material violation of any, Laws and with all private
restrictive covenants of record, and the Sellers have no knowledge of any
proposed change to the applicable Laws or the private restrictive covenants of
record that would affect any of the Immovable Property or its use, occupancy or
operation. There exist no conflicts or disputes with any Government or Person
relating to any Immovable Property or the activities on the Immovable Property.
All Improvements are in good condition and repair, ordinary wear and tear
excepted, suited for the operation of the business of Partech, Unnisa or
Proceda, as applicable.
19
5.15 INTELLECTUAL PROPERTY RIGHTS.
(a) The Disclosure Memorandum sets forth a list of (i) all patents,
patent applications and registrations, trademarks, trademark applications and
registrations, copyright applications and registrations, trade names and
industrial designs, service marks and service mark applications, Brazilian or
foreign, owned or used by Partech, Unnisa or Proceda in or otherwise relating to
the operation of their respective businesses, (ii) all trade secrets, know-how,
inventions and other intellectual property, owned or used by Partech, Unnisa or
Proceda relating to the operation of their respective businesses; and (iii) all
computer systems and application software, including without limitation, all
documentation relating to the computer systems and application software, and the
latest revisions of all related object and source codes therefor, owned or used
by Partech, Unnisa or Proceda, in or otherwise relating to the operation of
their respective businesses (collectively, the "PROPRIETARY RIGHTS"). Partech,
------------------
Unnisa or Proceda, as applicable, owns the entire right, title and interest in
and to all of their respective Proprietary Rights, free and clear of any and all
Liens. None of Partech, Unnisa or Proceda has granted any license to any third
party with relation to any of the Proprietary Rights.
(b) There is no existing or, to the best knowledge of either Seller,
threatened, challenge to the use by Partech, Unnisa or Proceda of any of their
respective Proprietary Rights, and the use of the Proprietary Rights does not
infringe on the rights of any third party. Except as indicated in the
Disclosure Memorandum, no royalty or other fee is required to be paid by
Partech, Unnisa or Proceda to any Person in respect of the use of any of the
Proprietary Rights.
(c) The conduct of the businesses of Partech, Unnisa or Proceda and
the use of their Proprietary Rights do not infringe, and none of Partech, Unnisa
or Proceda has received any notice, complaint, threat or claim alleging
infringement of, any patent, trademark, trade name, copyright, industrial
design, trade secret or any other intellectual property or proprietary right of
any Person.
(d) To the best knowledge of each Seller and Partech and except as
disclosed in any Contract in respect of Proprietary Rights, there are no rights
of third parties with respect to any patent, patent application, invention,
know-how, copyrights, trademark, service mark, trade secrets, trade name,
computer system, application software or device, or other intellectual property
right which would have an adverse effect on the operations or prospects of
Partech, Unnisa or Proceda.
5.16 CONTRACTS. The Disclosure Memorandum contains a list of all written
and oral material agreements, commitments and arrangements to which Partech,
Unnisa or Proceda is a party or under which Partech, Unnisa or Proceda has any
rights or obligations (collectively, the "CONTRACTS"), including without
---------
limitation any Contracts pursuant to which any of Partech, Unnisa or Proceda
acquired or had developed any rights in or to any Proprietary Rights. Sellers
have, prior to the date of this Agreement, delivered to Equifax a true, correct
and complete copy of each written Contract and a true, correct and
20
complete summary of each oral Contract. None of the Contracts, individually or
together, constitute an unlawful restraint of trade under any applicable Law.
All obligations to be performed by Partech, Unnisa or Proceda as of the date of
this Agreement under all Contracts to which any of them is a party have been
performed in accordance with their terms and no claim exists in respect of the
Contracts. None of Partech, Unnisa or Proceda is a party to any agreement or
commitment which will likely result in a material loss to Partech, Unnisa or
Proceda, as applicable, upon completion of performance or which cannot readily
be fulfilled or performed by Partech, Unnisa or Proceda, as applicable, in
accordance with its terms without undue or unusual expenditures of money or
effort, it being understood that neither Sellers nor Partech, Unnisa nor Proceda
shall be held responsible for any damages or losses arising as a result of
either Unnisa or Proceda or their respective customers or suppliers not being
Year 2000 Compliant. For purposes of this SECTION 5.16, "Year 2000 Compliant"
shall mean the ability to (1) process transactions up to, on, or after, and (2)
process transactions in respect of date up to, on, or after, January 1st, 2000,
without any degredation in or failure in the services currently provided by
Partech, Unnisa or Proceda. All of the Contracts are valid, binding and
enforceable in accordance with their terms, and are in full force and effect;
there are no existing defaults by Partech, Unnisa or Proceda under any of their
respective Contracts and no event has occurred which would constitute a default
(whether with or without notice, lapse of time or the happening or occurrence of
any event) under any Contract; and all parties to any Contract have consented
(where any relevant consent is necessary) to the consummation of the
transactions contemplated by this Agreement without requiring modification in
the rights or obligations of Partech, Unnisa or Proceda. The terms and
conditions under which either Unnisa or Proceda, as appropriate, provides
services under any Customer Agreement, including without limitation any services
to * * * are as set forth in the Disclosure Memorandum and those agreements as
described in and attached to the Disclosure Memorandum set forth as of the date
of this Agreement and as of the Closing Date the full agreement and
understanding with Unnisa or Proceda, as appropriate.
5.17 INSURANCE. Partech, Unnisa and Proceda are the sole owners of the
insurance policies as set forth in the Disclosure Memorandum, which policies
insure the assets, properties and businesses of Partech, Unnisa and Proceda, as
applicable, against the types of risks and in the amounts as are customary in
the geographies in which Partech, Unnisa and Proceda conduct their respective
businesses, and all relevant policies are in full force and effect. All
premiums due on any relevant policies have been paid, and none of Partech,
Unnisa or Proceda has received any notice of cancellation or non-renewal with
respect to any insurance policy. As of the date of this Agreement, none of
Partech, Unnisa or Proceda has any Liability for premiums or retrospective
premium adjustments for any period prior to the date of this Agreement. The
Disclosure Memorandum also lists and describes all material occurrences or facts
that may form the basis for a claim by or on behalf of Partech, Unnisa or
Proceda under any insurance policy; and each of Partech, Unnisa or Proceda, as
applicable, has timely given notice of
21
all relevant occurrences to the appropriate insurer and has not waived (either
intentionally or inadvertently) its right to make the related claim under any
relevant insurance policy.
5.18 LITIGATION; CONTINGENCIES. Except as indicated in the Disclosure
Memorandum, there are no Actions existing or, to the knowledge of either Seller
or Partech, threatened against, by or affecting Partech, Unnisa or Proceda, the
property, business, revenues or assets of Partech, Unnisa or Proceda, in any
Forum, nor is there any basis for any Actions, nor do there exist any other
contingent liabilities, the eventual outcome of which might have an adverse
effect on Partech, Unnisa or Proceda after the date of this Agreement, or which
would prevent or impede the transactions contemplated by this Agreement. None
of Partech, Unnisa or Proceda has been charged with, or is under investigation
with respect to, any charge concerning any violation of any provision of any
Law. There are no unsatisfied judgments against Partech, Unnisa or Proceda or
any of Partech's, Unnisa's or Proceda's predecessors or any other Order to which
either Seller, Partech, Unnisa or Proceda, or any of Partech's, Unnisa's or
Proceda's assets or properties are subject.
5.19 TAXES. All Taxes (including without limitation, all income, property,
sales or use, customs, value added, ad valorem, withholding, employees' income
withholding and public welfare taxes, including social contribution,
unemployment fund ("FGTS"), social security contributions ("INSS") and all other
---- ----
taxes imposed on Partech, Unnisa or Proceda or their respective income,
properties, sales, operations or employee benefit plans), and all deposits in
connection with any of Taxes required by applicable Brazilian Law imposed by any
Brazilian Government, or to the knowledge of Sellers and Partech, those under
any other applicable Law imposed by any other Government and all interest on the
Taxes and penalties and additions to any Taxes, which are due and payable by
Partech, Unnisa or Proceda for all periods through the date of this Agreement
have been paid in full, other than for Taxes the legality of which is being
contested in good faith and described in the Disclosure Memorandum, and reserves
and accruals in accordance with GAAP for all other Taxes, whether or not
disputed, have been properly recorded in the Financial Statements or, in the
case of periods subsequent to the dates of the latest Financial Statements, on
the books and records of Partech, Unnisa or Proceda, as appropriate. All Taxes,
if any, due and payable in respect of the transactions contemplated by this
Agreement have been, or will be, paid by each Seller, as appropriate, as and
when due, without any contribution by or Liability to Partech, Unnisa, Proceda
or Equifax, regardless of when, how or to or against whom assessed. From and
after the date of this Agreement, Partech, Unnisa or Proceda will duly file all
returns and reports with respect to Taxes, and will pay all Taxes as and when
the Taxes become due and payable. There is not now any proposed or outstanding
assessment or adjustment against Partech, Unnisa or Proceda of additional Taxes
of any kind. Partech, Unnisa and Proceda have duly filed all required national,
state, municipal, local and foreign tax returns and reports (including without
limitation, returns for estimated tax), and all returns and reports of all other
Governments having jurisdiction, with respect to all Taxes; all relevant returns
and reports show the correct and proper amount due; and all required Taxes shown
on relevant returns or reports and except as indicated in the Disclosure
Memorandum, all assessments
22
received by Partech, Unnisa or Proceda have been paid to the extent that the
Taxes, or any estimates of any Tax Liability, have become due. Except as
indicated in the Disclosure Memorandum, there are no significant Governmental
Tax audits or inquiries presently being conducted with respect to, Partech,
Unnisa or Proceda. There have been no waivers of the applicable statutory period
of limitation for any Taxes for any taxable period. None of Partech, Unnisa or
Proceda is a party to any Tax sharing or Tax allocation agreement,
understanding, arrangement or commitment. Except as indicated in the Disclosure
Memorandum, there is no material dispute or Action concerning any Tax Liability
of Partech, Unnisa or Proceda claimed or raised by a Government.
5.20 EMPLOYMENT AND LABOR MATTERS.
(a) Except as indicated in the Disclosure Memorandum, none of Partech,
Unnisa or Proceda is a party to any collective bargaining agreement or agreement
of any kind with any union or labor organization, and no union or other employee
bargaining group or organization has been certified or recognized by Partech,
Unnisa or Proceda as representing any employee, nor, to the knowledge of either
Seller, is a union or other labor organization or employee group or organization
seeking recognition for any similar purpose, and there are no controversies
pending, or to the knowledge of either Seller, threatened against Partech,
Unnisa or Proceda and any labor union or collective bargaining unit
representing, or seeking to represent, any of its employees, and there has been
no attempt by any union or other employee group or organization to organize any
employees of Partech, Unnisa or Proceda at any time in the past five years.
Each of Partech, Unnisa and Proceda has complied with all applicable Laws
relating to wages, hours, health and safety, payment of social security
withholding and other taxes, maintenance of workers' compensation insurance,
labor and employment relations, and employment discrimination.
(b) Except as expressly provided for in this Agreement or indicated in
the Disclosure Memorandum or required by law, none of Partech, Unnisa or Proceda
is obligated to provide, directly or indirectly, any benefits for employees,
including any pension, bonus, medical insurance or other employee benefits under
any practice, agreement or Law. The Disclosure Memorandum fully and accurately
describes the terms of each employee benefit program or plan maintained by or
contributed by or on behalf of Partech, Unnisa or Proceda that covers any
employees or former employees of Partech, Unnisa or Proceda (an "EMPLOYEE
--------
BENEFIT PLAN"). Except as indicated in the Disclosure Memorandum, no Action is
- ------------
existing or to the knowledge of any Seller anticipated with respect to any
Employee Benefit Plan nor with respect to any government-sponsored program of a
similar nature to which Partech, Unissa or Proceda is required to contribute, as
to which action any of said companies is alleged to have any liability. Each
Employee Benefit Plan has been administrated in compliance with all applicable
Laws and all required filings and contributions have been made. No Employee
Benefit Plan has at any time been involved in any transaction which will cause
Partech, Unnisa or Proceda to lose a favorable tax position taken with respect
to any Employee Benefit Plan. All payments to be made under or pursuant to any
Employee Benefit Plan have been made or a sufficient reserve has
23
been accrued in the Financial Statements or in the relevant books and records
for all relevant periods, and each Employee Benefit Plan is fully funded in an
amount necessary to discharge Partech's, Unnisa's or Proceda's obligations under
or in connection with each Employee Benefit Plan.
(c) The Disclosure Memorandum lists all reasonably anticipated
pension, social and health obligations (including, without limitation,
retirement premiums) of Partech, Unnisa or Proceda.
5.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. None of AG Telecom, AG Parent,
Socma, Partech, Unnisa or Proceda, or any of their Affiliates, or any of their
respective officers, directors, employees, agents, nor any other Person acting
on any of their behalf has, directly or indirectly, within the past five years
given or agreed to give any gift or similar benefit to any Government employee
or other Person who is or may be in a position to help or hinder the business of
Partech, Unnisa or Proceda (or to assist Partech, Unnisa or Proceda in
connection with any actual or proposed transaction) which (a) might subject
Partech, Unnisa, Proceda or Equifax or any of Equifax's Affiliates, or any of
Equifax's or its Affiliates' directors, officers, employees or agents, to any
damage or penalty in any civil, criminal or Governmental Action, (b) if not
given in the past, might have had an adverse effect on the business or
operations of Partech, Unnisa or Proceda, or (c) if not continued in the future,
might adversely affect the business, operations, cash flows or prospects of
Partech, Unnisa or Proceda, or which might subject Partech, Unnisa, Proceda or
Equifax, or any of their respective directors, officers, employees, agent or any
other Person to suit or penalty in any private or Governmental Action, including
without limitation any suit or penalty under or pursuant to the United States
Foreign Corrupt Practices Act.
5.22 BOOKS AND RECORDS. Except as indicated in the Disclosure Memorandum,
the books, records and accounts of Partech, Unnisa or Proceda (a) have been
maintained at Partech's, Unnisa's or Proceda's, as appropriate, principal place
of business in accordance with good business practices on a basis consistent
with prior years, (b) are stated in reasonable detail and accurately and fairly
reflect the transactions of Partech, Unnisa and Proceda and dispositions of the
assets of Partech, Unnisa and Proceda, and (c) accurately and fairly reflect the
basis for the Financial Statements. Partech, Unnisa and Proceda have devised and
maintained systems of internal accounting controls sufficient to provide
reasonable assurances that (x) transactions are executed in accordance with
management's general or specific authorization, and (y) transactions are
recorded as necessary (i) to permit preparation of financial statements in
conformity with GAAP and (ii) to maintain accountability for assets.
5.23 AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES. Except as
indicated in the Disclosure Memorandum, none of Partech, Unnisa or Proceda is,
directly or indirectly, a party to any contract, agreement, or lease, or any
other arrangement with or commitment to, in each case whether oral or written,
any Related Party. Except as indicated in the Disclosure Memorandum, no Related
Party, directly or indirectly, owns
24
or controls any assets or properties which are or have been used in Partech's,
Unnisa's or Proceda's businesses, and no Related Party, directly or indirectly,
engages in or has any significant interest in or in connection with any business
(x) which is or which within the last three years has been a competitor,
customer or supplier of Partech, Unnisa or Proceda or has done business with
Partech, Unnisa or Proceda, or (y) which as of the date of this Agreement sells
or distributes products or services which are similar or related to the products
or services of Partech, Unnisa or Proceda. As used in this Agreement, the term
"RELATED PARTIES" means, collectively, (a) any Person owning, or formerly
---------------
owning, beneficially or of record, directly or indirectly, any of the shares or
quotas of, or other rights or interests, in Partech, Unnisa or Proceda or any of
their Affiliates, (b) any director, officer, employee, agent, shareholder or
quotaholder of Partech, Unnisa or Proceda, (c) any Person in which any of the
foregoing Parties has, directly or indirectly, at least a five percent (5.0%)
beneficial interest in the capital or other type of equity interests of that
Person, or (d) any partnership in which Partech, Unnisa or Proceda is a partner.
5.24 NO AGREEMENT IN ANTICIPATION OF SALE. None of Partech, Unnisa,
Proceda, AG Telecom, Socma or AG Parent has, directly or indirectly, taken any
action or actions or entered into any agreements in anticipation of this
Agreement. The consummation of the transactions contemplated by this Agreement
will not entitle any employee of Partech, Unnisa or Proceda to severance pay nor
will it accelerate the time of payment, vesting or increase the amount of any
compensation or benefits due to any employee of Partech, Unnisa or Proceda.
5.25 GOVERNMENT REPORTS. The Disclosure Memorandum contains a true,
correct and complete list of, and Sellers have prior to the date of this
Agreement delivered to Equifax, true, correct and complete copies of, all Tax
returns and all material reports relating to any Employee Benefit Plan, finance
and monetary transactions, employees and employment conditions, compliance with
or violation of Law, and other matters material to the businesses of Partech,
Unnisa or Proceda filed or issued during the past five years, by Partech,
Unnisa, Proceda, AG Telecom or Socma with any Government and relating to
Partech's, Unnisa's or Proceda's respective business.
5.26 BANKING RELATIONSHIPS. The Disclosure Memorandum sets forth a
complete and accurate description of all arrangements that Partech, Unnisa or
Proceda has with any banks or other financial institutions providing for
accounts, safe deposit boxes, borrowing arrangements, and certificates of
deposit or otherwise, indicating in each case account numbers, if applicable,
and the person or persons authorized to act or sign on behalf of Partech, Unnisa
or Proceda in respect of any of the foregoing.
5.27 CUSTOMERS AND SUPPLIERS. None of AG Telecom, Socma, Partech,
Unnisa or Proceda is aware: (a) of any supplier or customer of Partech, Unnisa
or Proceda which intends to discontinue or substantially diminish or change its
relationship with Partech, Unnisa or Proceda or the terms of its relationship
with Partech, Unnisa or Proceda, (b) of any supplier of Partech, Unnisa or
Proceda which intends to increase prices or charges for goods or services
presently supplied, or (c) of any supplier of Partech, Unnisa or Proceda
25
which is likely to become unable to continue its relationship with Partech,
Unnisa or Proceda, or supply the goods or services which it presently supplies
Partech, Unnisa or Proceda, without significant change in the terms and
conditions to any relevant relationship or supply arrangement.
5.28 PENDING LEGISLATION. Neither of Sellers nor any of Partech, Unnisa or
Proceda has any knowledge of or has received any notice of new or pending
legislation, regulations, rules, guidelines, administrative interpretations or
enforcement positions that, if enacted or adopted, would materially affect the
ability of Partech, Unnisa or Proceda to satisfactorily carry on their business
as presently conducted or as planned to be conducted, or the operations, cash
flows, affairs, prospects, properties or assets, or the condition, financial or
otherwise, of Partech, Unnisa or Proceda.
5.29 ABSENCE OF CHANGES. Except as expressly provided for in this
Agreement or indicated in the Disclosure Memorandum, since December 31, 1997
(the "REFERENCE DATE"):
--------------
(1) there has been no change in the business, assets, properties,
Liabilities, affairs, results of operations condition (financial or otherwise),
or cash flows of Partech, Unnisa or Proceda or in their respective relationships
with suppliers, customers, employees, prospective suppliers or customers,
lessors, lenders or others, other than changes in the ordinary course of
business, none of which have had or will have a material adverse effect on
Partech, Unnisa or Proceda, as applicable;
(2) there has been no damage, destruction or loss to the assets,
properties, or business of Partech, Unnisa or Proceda, whether or not covered by
insurance;
(3) the businesses of Partech, Unnisa and Proceda, as applicable, have
been operated in the ordinary course and consistent with their respective prior
practices;
(4) the books, accounts and records of Partech, Unnisa and Proceda
have been maintained in the usual, regular and ordinary manner on a basis
consistent with prior years and in accordance with GAAP;
(5) there has been no declaration, setting aside or payment of any
dividend or other distribution on or in respect of the stock, quotas or capital
of Partech, Unnisa or Proceda, as applicable, nor has there been any direct or
indirect redemption, retirement, purchase or other acquisition of any of the
capital of Partech, Unnisa or Proceda;
(6) no Liability of Partech, Unnisa or Proceda has been discharged or
satisfied, other than in the ordinary course of business and consistent with
prior practice;
26
(7) none of Partech, Unnisa or Proceda has discontinued or determined
to discontinue the sale of any material products or services previously sold by
Partech, Unnisa or Proceda, as applicable;
(8) there has been no Lien (other than Liens for current Taxes which
are not past due) created on or in the assets of Partech, Unnisa or Proceda;
(9) there has been no sale, transfer, lease or other disposition of
any material asset(s) of Partech, Unnisa or Proceda, except in the ordinary
course of their respective businesses, and no material debt to, or claim or
right of, Partech, Unnisa or Proceda has been executed, canceled, compromised,
waived or released;
(10) there has been no amendment, termination or waiver of, or any
notice of any amendment, termination or waiver of, any material right of
Partech, Unnisa or Proceda under any Contract or under any Permit from any
Government;
(11) none of Partech, Unnisa or Proceda has entered into any
agreement, contract, lease or license outside the ordinary course of business;
and
(12) none of Partech, Unnisa or Proceda has delayed or postponed the
payment of any accounts payable or other Liabilities outside the ordinary course
of business.
5.30 FULL DISCLOSURE. No representation, warranty, covenant or agreement of
or relating to Partech, Unnisa or Proceda contained in this Agreement, in the
Disclosure Memorandum, in any Additional Agreement, or in any other written
statement or certificate delivered by either Seller or Partech, pursuant to or
in connection with this Agreement or any Additional Agreement, or in connection
with the transactions contemplated in this Agreement or any Additional
Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained in this Agreement, the Disclosure Memorandum, any Additional
Agreement, or in any other written statement or certificate delivered by either
Seller or Partech, pursuant to this Agreement, the Disclosure Memorandum or any
Additional Agreement, not misleading. There is no fact known to either Seller or
Partech which materially and adversely affects, or in the future may materially
and adversely affect, the business, operations, cash flows, affairs, prospects,
properties or assets, or the condition, financial or otherwise, of Partech,
Unnisa, Proceda or the businesses to be conducted by Partech, Unnisa and Proceda
on and after the Closing Date, or their respective operations, cash flows,
affairs, prospects, properties or assets, which has not been disclosed in this
Agreement or the Disclosure Memorandum. The information contained in the
Disclosure Memorandum will be deemed to be part of and to qualify only those
representations and warranties contained in this ARTICLE 5 specifically
referenced in the Disclosure Memorandum.
27
6. REPRESENTATIONS AND WARRANTIES RELATING TO THE AG GROUP
AG Telecom and AG Parent, jointly and severally, represent, warrant and
covenant to and with Equifax, as of the date hereof and again as of the Closing
Date, as follows:
6.1 EXISTENCE. AG Parent: (a) is a corporation ("SOCIEDADE ANONIMA"),
duly organized and registered and validly existing under the laws of Brazil, and
(b) is entitled to own or lease, or will own or lease, its assets and properties
and to carry on its business as and in the places where its business is
conducted and its assets and properties are owned or leased. AG Telecom: (a) is
a limited liability company ("SOCIEDADE POR QUOTAS DE RESPONSABILIDADE
LIMITADA"), duly organized and registered and validly existing under the laws of
Brazil, and (b) is entitled to own or lease, or will own or lease, its assets
and properties and to carry on its business as and in the places where its
business is conducted and its assets and properties are owned or leased.
6.2 CAPITALIZATION; OWNERSHIP OF EQUITY. AG Parent owns, directly or
indirectly, one hundred percent (100%) of the capital of AG Telecom. The
capital of AG Parent is owned beneficially and legally as set forth in EXHIBIT
N-1 to this Agreement. The capital of AG Telecom is owned beneficially and
legally as set forth in EXHIBIT N-2 to this Agreement.
6.3 AUTHORITY; INCONSISTENT OBLIGATIONS.
(a) Each of AG Parent and AG Telecom has the full right, power and
authority to execute and deliver and to perform and comply with this Agreement
and the Additional Agreements to which either of them is or will be a party. All
proceedings and actions required to be taken by either AG Parent and AG Telecom
to authorize the execution, delivery and performance of this Agreement and the
Additional Agreements to which it is a party have been taken. This Agreement,
and each Additional Agreement to which either of them is or will be a party,
have been, or in the case of any Additional Agreement will be at the Closing,
duly and validly executed and delivered by AG Parent or AG Telecom, as
appropriate, by its duly authorized officers or representatives. This Agreement
constitutes, and each Additional Agreement when executed and delivered will
constitute, the valid and legally binding obligation, subject to general equity
principles, of AG Parent and AG Telecom, as appropriate, enforceable in
accordance with its respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the rights of
creditors generally.
(b) Neither the execution and delivery of this Agreement or of the
Additional Agreements by either AG Parent or AG Telecom, nor the consummation of
the transactions contemplated by this Agreement or by any Additional Agreement,
will (i) result in a violation of the Articles of Association, Articles of
Incorporation or By-Laws of either AG Parent or AG Telecom, or on the date of
this Agreement or on the Closing Date any applicable Law or Order, (ii) violate
any Order or Law applicable to either AG Parent
28
or AG Telecom, or (iii) result in a breach of, conflict with or default under,
any term or provision of any indenture, note, mortgage, bond, security
agreement, loan agreement, guaranty, pledge, or other instrument, contract,
agreement or commitment to which either AG Parent or AG Telecom is a party or by
which any of them or any of their respective assets, properties, or businesses
are subject or bound; nor will these actions result in (w) the creation of any
Lien on any of the Acquired Interests, Partech Quotas, Unnisa Quotas or Proceda
Shares, or any of the assets, properties, businesses, revenues or profits of AG
Parent or AG Telecom, (x) the acceleration or creation of any obligation of AG
Parent or AG Telecom, (y) the forfeiture of any material right or privilege of
AG Parent or AG Telecom, or (z) the forfeiture of any material right or
privilege of either AG Parent or AG Telecom that may affect its ability to
perform under this Agreement or any Additional Agreement.
6.4 NO VIOLATION; COMPLIANCE WITH LAWS. Neither AG Parent nor AG Telecom
is in default under or in violation of (a) its Articles of Association, Articles
of Incorporation or By-Laws, as appropriate, or (b) any material applicable
Order or Law, and each of AG Parent and AG Telecom has complied with all
applicable Laws, where the failure to so comply would have a material adverse
effect on AG Parent and its consolidated subsidiaries. Neither AG Parent nor AG
Telecom has received any notification of any asserted present or past failure by
either of AG Parent or AG Telecom to comply with any material Order or Laws,
where the asserted failure if determined adversely to AG Parent would have a
material adverse effect on AG Parent and it consolidated subsidiaries.
6.5 CONSENTS. The execution and delivery by AG Parent and AG Telecom of
this Agreement and the Additional Agreements to which either of them is to be a
party, the consummation of the transactions contemplated in this Agreement or
the Additional Agreements, and the performance by AG Parent or AG Telecom under
this Agreement or any Additional Agreement, as appropriate, do not (a) require
the consent, approval or action of, or any filing with or notice to, any
Government or other Person, other than for a notification filing to be made with
the Brazilian anti-trust authorities within fifteen (15) days after the Closing,
(b) require the consent or approval of AG Parent's or AG Telecom's shareholders
(except for those previously obtained), or (c) impose any other term, condition
or restriction on AG Parent, AG Telecom, Partech, Unnisa or Proceda pursuant to
any applicable Order or Law.
6.6 FINANCIAL STATEMENTS. Prior to the date of this Agreement, AG Parent
and AG Telecom have delivered to Equifax copies of the consolidated audited
financial statements of AG Parent and AG Telecom and its consolidated
subsidiaries and affiliates as of and for the periods ended December 31, 1995,
1996 and 1997 (together with the report thereon of the independent auditors
referenced therein (collectively, the "AG AUDITED FINANCIAL STATEMENTS"), and
-------------------------------
the consolidated unaudited financial statements of AG Parent and its
consolidated subsidiaries and affiliates as of and for the 6-month period ended
June 30, 1998 (the "AG UNAUDITED FINANCIAL STATEMENTS"; and together with the AG
---------------------------------
Audited Financial Statements, collectively, the "AG FINANCIAL STATEMENTS"), in
-----------------------
each case including a balance sheet, an income statement, a statement of changes
in
29
shareholders equity, and a statement of changes in financial position, together
with any related schedules. The AG Financial Statements have been prepared from
the books and records of AG Parent and its consolidated subsidiaries and
affiliates and have been prepared in accordance with GAAP consistently applied
and present fairly the consolidated financial condition of AG Parent and its
consolidated subsidiaries and affiliates as at the respective dates of the AG
Financial Statements and the results of its respective operations, shareholders
equity and financial position for the periods then ended.
6.7 LITIGATION; CONTINGENCIES. There are no Actions existing or, to the
knowledge of either AG Parent or AG Telecom, threatened against, by or affecting
AG Parent or AG Telecom, the property, business, revenues or assets of AG Parent
or AG Telecom, in any Forum, nor is there any basis for any Actions, nor do
there exist any other contingent liabilities, the eventual outcome of which
might have a material adverse effect on AG Parent and its consolidated
subsidiaries after the date of this Agreement, or which would prevent or impede
the transactions contemplated by this Agreement. None of AG Parent or AG Telecom
has been charged with, or is under investigation with respect to, any material
charge concerning any violation of any provision of any Law. There are no
material unsatisfied judgments against AG Parent or AG Telecom or any of their
predecessors or any other material Order to which either AG Parent or AG
Telecom, or any of AG Parent's or AG Telecom's material assets or properties,
are subject.
6.8 FULL DISCLOSURE. No representation, warranty, covenant or agreement
of or relating to AG Parent or AG Telecom contained in this Agreement, in any
Additional Agreement, or in any other written statement or certificate delivered
by either AG parent or AG Telecom, pursuant to or in connection with this
Agreement or any Additional Agreement, or in connection with the transactions
contemplated in this Agreement or any Additional Agreement, contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained in this Agreement, any
Additional Agreement, or in any other written statement or certificate delivered
by either AG Parent or AG Telecom, pursuant to this Agreement or any Additional
Agreement, not misleading. There is no fact known to either AG Parent or AG
Telecom which materially and adversely affects, or in the future may materially
and adversely affect, the business, operations, cash flows, affairs, prospects,
properties or assets, or the condition, financial or otherwise, of Partech,
Unnisa, Proceda or the businesses to be conducted by Partech, Unnisa and Proceda
on and after the Closing Date, or their respective operations, cash flows,
affairs, prospects, properties or assets, which has not been disclosed in this
Agreement or the Disclosure Memorandum.
7. REPRESENTATIONS AND WARRANTIES RELATING TO THE SOCMA GROUP
Socma represents, warrants and covenants to and with Equifax, as of the
date hereof and again as of the Closing Date, as follows:
30
7.1 EXISTENCE. Socma: (a) is a corporation ("SOCIEDAD ANONIMA"), duly
organized and registered and validly existing under the laws of Argentina, and
(b) is entitled to own or lease, or will own or lease, its assets and properties
and to carry on its business as and in the places where its business is
conducted and its assets and properties are owned or leased.
7.2 CAPITALIZATION; OWNERSHIP OF EQUITY. The capital of Socma is owned
beneficially and legally as set forth in EXHIBIT O to this Agreement.
7.3 AUTHORITY; INCONSISTENT OBLIGATIONS.
(a) Socma has the full right, power and authority to execute and deliver
and to perform and comply with this Agreement and the Additional Agreements to
which it is or will be a party. All proceedings and actions required to be taken
by Socma to authorize the execution, delivery and performance of this Agreement
and the Additional Agreements to which it is a party have been taken. This
Agreement, and each Additional Agreement to which Socma is or will be a party,
have been, or in the case of any Additional Agreement will be at the Closing,
duly and validly executed and delivered by Socma by its duly authorized officers
or representatives. This Agreement constitutes, and each Additional Agreement
when executed and delivered will constitute, the valid and legally binding
obligation, subject to general equity principles, of Socma, enforceable in
accordance with its respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the rights of
creditors generally.
(b) Neither the execution and delivery of this Agreement or of the
Additional Agreements by Socma, nor the consummation of the transactions
contemplated by this Agreement or by any Additional Agreement, will (i) result
in a violation of the Articles of Association, Articles of Incorporation or By-
Laws of Socma, or on the date of this Agreement or on the Closing Date any
applicable material Law or Order, (ii) violate any Order or Law applicable to
Socma, or (iii) result in a breach of, conflict with or default under, any term
or provision of any indenture, note, mortgage, bond, security agreement, loan
agreement, guaranty, pledge, or other instrument, contract, agreement or
commitment to which Socma is a party or by which any of them or any of their
respective assets, properties, or businesses is subject or bound; nor will these
actions result in (w) the creation of any Lien on any of the Acquired Interests,
Partech Quotas, Unnisa Quotas or Proceda Shares, or any of the assets,
properties, businesses, revenues or profits of Socma, (x) the acceleration or
creation of any obligation of Socma, (y) the forfeiture of any material right or
privilege of Socma, or (z) the forfeiture of any material right or privilege of
Socma that may affect its ability to perform under this Agreement or any
Additional Agreement.
7.4 NO VIOLATION; COMPLIANCE WITH LAWS. Socma is not in default under or
in violation of (a) its Articles of Association, Articles of Incorporation or
By-Laws, as appropriate, or (b) any material applicable Order or Law, and Socma
has complied with
31
all applicable Laws, where the failure to so comply would have a material
adverse effect on Socma and its consolidated subsidiaries. Socma has not
received any notification of any asserted present or past failure by Socma to
comply with any material applicable Order or Laws, where the asserted failure if
determined adversely to Socma would have a material adverse effect on Socma and
its consolidated subsidiaries.
7.5 CONSENTS. The execution and delivery by Socma of this Agreement and
the Additional Agreements to which it is to be a party, the consummation of the
transactions contemplated in this Agreement or the Additional Agreements, and
the performance by Socma under this Agreement or any Additional Agreement, as
appropriate, do not (a) require the consent, approval or action of, or any
filing with or notice to, any Government or other Person, other than for a
notification filing to be made with the Brazilian anti-trust authorities within
fifteen (15) days after the Closing, (b) require the consent or approval of
Socma's shareholders (except for those previously obtained), or (c) impose any
other term, condition or restriction on Socma, Partech, Unnisa or Proceda
pursuant to any applicable Order or Law.
7.6 FINANCIAL STATEMENTS. Prior to the date of this Agreement, Socma has
delivered to Equifax copies of the consolidated audited financial statements of
Socma and its consolidated subsidiaries and affiliates as of and for the periods
ended January 31, 1996, 1997 and 1998 (together with the report thereon of Henry
Martin, Lisdero & Associates (collectively, the "SOCMA FINANCIAL STATEMENTS"),
--------------------------
in each case including a balance sheet, an income statement, a statement of
changes in shareholders equity, and a statement of changes in financial
position, together with any related schedules. The Socma Financial Statements
have been prepared from the books and records of Socma and its consolidated
subsidiaries and affiliates and have been prepared in accordance with GAAP
consistently applied and present fairly the consolidated financial condition of
Socma and its consolidated subsidiaries and affiliates as at the respective
dates of the Socma Financial Statements and the results of its respective
operations, shareholders equity and financial position for the periods then
ended.
7.7 LITIGATION; CONTINGENCIES. There are no Actions existing or, to the
knowledge of Socma, threatened against, by or affecting Socma, the property,
business, revenues or assets of Socma, in any Forum, nor is there any basis for
any Actions, nor do there exist any other contingent liabilities, the eventual
outcome of which might have a material adverse effect on Socma and its
consolidated subsidiaries after the date of this Agreement, or which would
prevent or impede the transactions contemplated by this Agreement. Socma has not
been charged with, or is under investigation with respect to, any material
charge concerning any violation of any provision of any Law. There are no
material unsatisfied judgments against Socma or any of its predecessors or any
other material Order to which Socma, or any of Socma's material assets or
properties, are subject.
7.8 FULL DISCLOSURE. No representation, warranty, covenant or agreement
of or relating to Socma contained in this Agreement, in any Additional
Agreement, or in any
32
other written statement or certificate delivered by Socma, pursuant to or in
connection with this Agreement or any Additional Agreement, or in connection
with the transactions contemplated in this Agreement or any Additional
Agreement, contains or will contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements contained in this
Agreement, any Additional Agreement, or in any other written statement or
certificate delivered by Scoma, pursuant to this Agreement or any Additional
Agreement, not misleading. There is no fact known to Socma which materially and
adversely affects, or in the future may materially and adversely affect, the
business, operations, cash flows, affairs, prospects, properties or assets, or
the condition, financial or otherwise, of Partech, Unnisa, Proceda or the
businesses to be conducted by Partech, Unnisa and Proceda on and after the
Closing Date, or their respective operations, cash flows, affairs, prospects,
properties or assets, which has not been disclosed in this Agreement or the
Disclosure Memorandum.
8. REPRESENTATIONS AND WARRANTIES OF EQUIFAX
Equifax represents, warrants and covenants, as of the date hereof and again
as of the Closing Date, as follows:
8.1 ORGANIZATION. Each of EFX and ESA: (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia, U.S.A., and (b) is entitled to own or lease, or will own or lease, its
assets and properties and to carry on its business as and in places where the
business is conducted and the properties are owned or leased. Holdings: (a) is
a limited liability company ("SOCIEDADE POR QUOTAS DE RESPONSABILIDADE
LIMITADA"), duly organized and registered and validly existing under the laws of
Brazil, and (b) is entitled to own or lease, or will own or lease, its assets
and properties and to carry on its business as and in places where the business
is conducted and the properties are owned or leased. Acquisition: (a) is a
corporation ("SOCIEDADE ANONIMA"), duly organized and registered and validly
existing under the laws of Brazil, and (b) is entitled to own or lease, or will
own or lease, its assets and properties and to carry on its business as and in
places where the business is conducted and the properties are owned or leased.
8.2 AUTHORITY; NO INCONSISTENT AGREEMENTS. Each of EFX, ESA, Holdings
and Acquisition has full power and authority to make, execute and perform this
Agreement and the Additional Agreements and the transactions contemplated by
this Agreement and the Additional Agreements. This Agreement and all
transactions required under this Agreement to be performed by each of EFX, ESA,
Holdings and Acquisition have been duly and validly authorized and approved by
all necessary corporate action on their part. This Agreement has been duly and
validly executed and delivered on behalf of each of EFX, ESA, Holdings and
Acquisition by its duly authorized officers, and this Agreement constitutes the
valid and legally binding obligation of each of them, enforceable, subject to
general equity principles, in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws
33
affecting the rights of creditors generally. Neither the execution and delivery
of this Agreement or any Additional Agreement, nor the consummation of the
transactions contemplated by this Agreement or any Additional Agreement, will
constitute a violation or breach of the articles of incorporation or by-laws or
other organizational document of any of them.
8.3 CONSENTS. The execution and delivery by EFX, ESA, Holdings and
Acquisition of this Agreement and each Additional Agreement to which any of them
is to be a party on the Closing Date, the consummation of the transactions
contemplated in this Agreement or in the Additional Agreements and the
performance by EFX, ESA, Holdings and Acquisition under this Agreement or any
Additional Agreement, as appropriate, do not: (a) require the consent, approval
or action or, or any filing with or notice to, any Government or other person,
other than for a notification filing to be made with the Brazilian anti-trust
authorities within fifteen (15) days after the Closing, or (b) the consent or
approval of EFX's, ESA's, Holdings' or Acquisition's shareholders or
quotaholders, except for those previously obtained.
9. CONDUCT OF BUSINESS PENDING CLOSING
Each of Sellers and Partech covenants and agrees that, except as may
otherwise be provided or permitted in this Agreement, without the prior written
consent of Equifax, between the date of this Agreement and the Closing Date:
9.1 BUSINESS IN THE ORDINARY COURSE. Each of Partech, Unnisa and
Proceda will conduct their respective businesses only in the ordinary and usual
course and consistent with prior practices.
9.2 NO MATERIAL CHANGES. Except as may be expressly permitted by this
Agreement, no action will be taken by either Seller, nor will either Seller
allow any of Partech, Unnisa or Proceda to take any action, which will
materially alter the organization, capitalization, or financial structure,
practices or operations of Partech, Unnisa or Proceda or their respective
businesses.
9.3 COMPENSATION. No increase will be made in the compensation payable
or to become payable to any director, officer, employee or agent of Partech,
Unnisa or Proceda and no bonus or profit sharing payment or other arrangement
(whether current or deferred) will be made to or with that director, officer,
employee or agent. No officer, director or employee will be hired, and no
consultant or agent will be retained, by Partech, Unnisa or Proceda at a salary
or fee in excess of R$65,000 (Sixty Five Thousand Brazilian reais) per annum.
9.4 EMPLOYEE BENEFIT PLANS. Each of Partech, Unnisa and Proceda will
continue the Employee Benefit Plans as they exist on the date hereof until the
Closing Date, and shall adopt no additional such plans nor amend the Employee
Benefit Plans
34
during said period. Each of Partech, Unnisa and Proceda will make all
contributions required of them and shall withhold and transfer all employee
contributions required, according to the terms of the Employee Benefit Plans
during said period.
10. CONDITIONS TO OBLIGATIONS OF EQUIFAX
The obligations of Equifax under this Agreement are subject to the
fulfillment and satisfaction of each and every one of the following conditions
on or prior to the Closing, any or all of which may be waived in writing in
whole or in part by Equifax:
10.1 PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings taken in
connection with the consummation of the transactions contemplated in this
Agreement and the Additional Agreements and all documents and papers reasonably
required in connection with this Agreement and the Additional Agreements, will
be reasonably satisfactory to Equifax and its counsel, and Equifax and its
counsel will have timely received copies of the relevant documents and papers,
all in form and substance satisfactory to Equifax and its counsel, as reasonably
requested by Equifax or its counsel.
10.2 REPRESENTATIONS AND WARRANTIES. Subject to the exceptions and
supplemental information set forth in this Agreement, any Additional Agreement
or the Disclosure Memorandum, the representations and warranties contained in
this Agreement, the Additional Agreements and in any certificate, instrument,
schedule, agreement or other writing delivered by or on behalf of, or in respect
of, Sellers, the other members of the AG Group, the other members of the Socma
Group, Partech, Unnisa or Proceda in connection with the transactions
contemplated by this Agreement or the Additional Agreements will be true and
correct as of the date when made and will be deemed to be made again at and as
of the Closing Date and will be true and correct at and as of the Closing Date.
10.3 COMPLIANCE WITH COVENANTS AND CONDITIONS. Sellers, the other members
of the AG Group, the other members of the Socma Group, Partech, Unnisa and
Proceda Company will have performed and complied with all covenants, agreements
and conditions required by this Agreement to be performed or complied with prior
to or on the Closing Date.
10.4 CLOSING CERTIFICATES. Sellers, the other members of the AG Group,
the other members of the Socma Group, and Partech will have delivered to Equifax
certificates, executed by the appropriate officers or other Representative of
each party, dated as of the Closing, certifying in such detail as Equifax may
request as to the fulfillment and satisfaction of the conditions specified in
PARAGRAPHS 10.2 AND 10.3.
10.5 OPINION OF COUNSEL. Equifax will have received from (i) Tozzini
Freire Teixera e Silva, special Brazilian legal counsel for Partech, AG Telecom,
AG Parent and
35
Socma, and (ii) Dr. Antonio Solsona and Dr. Gustavo Lombardo, general counselors
of Socma, a legal opinion, dated as of the Closing Date, in substantially the
forms set forth in EXHIBITS P-1 AND P-2, respectively, to this Agreement.
10.6 CONSENTS. Equifax will have received from any and all Persons and
Governments any and all relevant consents, authorizations and approvals as are
necessary for the consummation of the transactions contemplated by this
Agreement, and all notices required to be given to all Persons and Governments
will have been given and all applicable waiting periods will have expired.
10.7 NO INCONSISTENT REQUIREMENTS. No Action will have been commenced by
any Government or Person seeking to enjoin or prohibit the transactions
contemplated by this Agreement or any Additional Agreement.
10.8 NO INJUNCTION. No temporary restraining order, preliminary or
permanent injunction or other order by any court of competent jurisdiction which
prohibits the consummation of the transactions contemplated in this Agreement
will have been issued and remain in effect on the Closing Date; provided,
--------
however, that the Parties will use all reasonable efforts to have each and every
- -------
relevant order or injunction vacated or reversed prior to the Closing Date.
10.9 ADDITIONAL AGREEMENTS. Equifax will have received duly executed and
delivered execution counterpart originals of each Additional Agreement, in each
case signed by the relevant Persons.
10.10 PROCEDA AMENDMENT. Equifax shall have received a fully executed
counterpart original of a certain Amendment No. 3 to Shareholders Agreement (the
"PROCEDA AMENDMENT") in the agreed form attached to this Agreement as EXHIBIT Q.
-----------------
10.11 CUSTOMER AGREEMENTS, * * * CONSENT AND IP AGREEMENTS. Equifax shall
have received a copy of the fully executed * * * Consent, and to the extent
executed and delivered by the relevant Person, copies of any fully executed
Customer Agreement or IP Agreement.
10.12 MISCELLANEOUS. Equifax and its counsel will have received any and
all other opinions, certifications, documents, instruments and agreements from
the Sellers, Partech, Unnisa and Proceda, and their respective counsel, as
Equifax and its counsel may reasonably request.
11. CONDITIONS TO OBLIGATIONS OF THE SELLERS
The obligations of the Sellers under this Agreement are subject to the
fulfillment and satisfaction of each and every of the following conditions on or
prior to the Closing, any or all of which may be waived in whole or in part by
the Sellers:
36
11.1 PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings taken in
connection with the consummation of the transactions contemplated in this
Agreement and the Additional Agreements and all documents and papers reasonably
required in connection with this Agreement and the Additional Agreements, will
be reasonably satisfactory to Sellers and their counsel, and Sellers and their
counsel will have timely received copies of the relevant documents and papers,
all in form and substance satisfactory to Sellers and their counsel, as
reasonably requested by Sellers or their counsel.
11.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in this Agreement, the Additional Agreements and in any certificate,
instrument, schedule, agreement or other writing delivered by or on behalf of,
or in respect of, Equifax in connection with the transactions contemplated by
this Agreement or the Additional Agreements will be true and correct as of the
date when made and will be deemed to be made again at and as of the Closing Date
and will be true and correct at and as of the Closing Date.
11.3 COMPLIANCE WITH COVENANTS AND CONDITIONS. Equifax will have
performed and complied with all covenants, agreements and conditions required by
this Agreement to be performed or complied with prior to or on the Closing Date.
11.4 CLOSING CERTIFICATES. Equifax will have delivered to Sellers
certificates, executed by the appropriate officers or other Representative,
dated as of the Closing, certifying in such detail as Sellers may request as to
the fulfillment and satisfaction of the conditions specified in PARAGRAPHS 11.2
AND 11.3.
11.5 RESOLUTIONS. Equifax will have delivered to the Sellers duly
adopted resolutions of the Board of Directors of ESA, Holdings and Acquisition,
certified by the Secretary or an Assistant Secretary or other appropriate
Person, dated the Closing Date, authorizing and approving the execution of this
Agreement by ESA, Holdings and Acquisition, and all other action necessary to
enable ESA, Holdings and Acquisition to comply with the terms of this Agreement
and each Additional Agreement to which it is a party.
11.6 CONSENTS. Each of the Sellers, other members of the AG Group and
the Socma Group, Partech, Unnisa and Proceda will have received from any and all
Persons and Governments any and all relevant consents, authorizations and
approvals as are necessary for the consummation of the transactions contemplated
by this Agreement, and all notices required to be given to all Persons and
Governments will have been given and all applicable waiting periods shall have
expired.
11.7 OPINION OF COUNSEL. The Sellers will have received from Kilpatrick
Stockton LLP and Mundie e Advogados, legal counsel to EFX, ESA, Holdings and
37
Acquisition, as appropriate, a legal opinion, dated the Closing Date, in
substantially the form set forth in EXHIBITS R-1 AND R-2, respectively, to this
Agreement.
11.8 NO INCONSISTENT REQUIREMENTS. No Action will have been commenced
by any Government or Person seeking to enjoin or prohibit the transactions
contemplated by this Agreement or by any Additional Agreement.
11.9 NO INJUNCTION. No temporary restraining order, preliminary or
permanent injunction or other order by any court of competent jurisdiction which
prohibits the consummation of the transactions contemplated in this Agreement
will have been issued and remain in effect on the Closing Date; provided,
--------
however, that the Parties will use all reasonable efforts to have any and all
- -------
relevant order or injunction vacated or reversed.
11.10 ADDITIONAL AGREEMENTS. Each Seller will have received duly
executed and delivered counterpart execution originals of each Additional
Agreement.
11.11 EQUIFAX UNDERTAKING. Seller will have received a copy of a fully
executed counterpart of the Undertaking referred to in the Proceda Amendment.
12. INDEMNITIES
12.1 INDEMNIFICATION OF EQUIFAX. In accordance with and subject to the
further provisions of this ARTICLE 12, AG Telecom and AG Parent (jointly and
severally as between them) on the one hand, and Socma, on the other hand (each
of which is an "INDEMNITOR") will, severally but not jointly, indemnify and hold
----------
harmless Equifax and Equifax's Affiliates (which for purposes of ARTICLE 12 of
this Agreement does not include Partech, Unnisa or Proceda) and their respective
officers, directors, agents and employees (collectively, "INDEMNITEES"), from
-----------
and against and in respect of any and all loss, damage, Liability, cost and
expense, including reasonable attorneys' fees and amounts paid in settlement
(collectively, the "INDEMNIFIED LOSSES"), suffered or incurred by any one or
------------------
more of the Indemnitees by reason of, or arising out of:
(a) any misrepresentation, breach of warranty or breach or
nonfulfillment of any agreement of the Sellers, any other member of the AG
Group, any other member of the Socma Group, Partech, Unnisa or Proceda contained
in this Agreement, any Additional Agreement, or in any other certificate,
schedule, instrument or document delivered to Equifax by or on behalf of Sellers
or Partech pursuant to or in connection with the provisions of this Agreement or
any Additional Agreement;
(b) all liabilities and obligations of, or claims, demands or actions
against, Equifax or Equifax's Affiliates, Partech, Unnisa or Proceda of any
nature whatsoever, whether known or unknown, accrued, absolute, contingent or
otherwise, existing as of the date of this Agreement or at any time hereafter
relating to periods on or prior to the Closing Date, to the extent not reflected
in the relevant balance sheets or
38
included in the Unaudited Financial Statements, including without limitation:
(i) any Tax liabilities (to the extent not so reflected or reserved against)
accrued in respect of, or measured by the income of, Partech, Unnisa or Proceda
for any period or portion of a period on or prior to the Closing Date or arising
out of transactions entered into or any state of facts existing on or prior to
the Closing Date; (ii) any claims or liabilities arising out of any act or
omission of Partech, Unnisa or Proceda or any of its directors, officers, agents
or employees or any claims or liabilities with respect to defective, or
allegedly defective, goods or services; or (iii) any claim or liability arising
out of a breach by Partech, Unnisa or Proceda of any Contract relating to any
period on or prior to the Closing Date allegedly defective, goods or services;
or (iii) any claim or liability arising out of a breach by Partech, Unnisa or
Proceda of any contract relating to any period on or prior to the Closing Date;
it being understood that, in no event whatsoever, none of AG Telecom, AG Parent
nor Socma shall be held responsible for any damages or losses arising as a
result of Unnisa or Proceda or their respective customers or suppliers not being
Year 2000 Compliant.
(c) the use of any Proprietary Rights, whether before or after the
Closing Date, and whether by Partech, Unnisa or Proceda, other than for the use
of any Proprietary Rights after the Closing Date not in compliance with any
related Contract;
(d) any and all Actions, suits, proceedings, claims, demands,
assessments, judgments, fees and expenses, incident to any of the foregoing or
incurred in investigating or attempting to avoid any Actions, suits,
proceedings, claims, demands, assessments, judgments, fees and expenses or to
oppose the imposition of any Actions, suits, proceedings, claims, demands,
assessments, judgments, fees and expenses, or in enforcing this Agreement in
connection with any breach or default or threatened breach or default by an
Indemnitor, including without limitation the provisions of this ARTICLE 12.
12.2 PAYMENT. Subject to the provisions of PARAGRAPH 12.3 below, (i)
after a final, non-appealable judgment has been rendered or a settlement has
been reached in respect of a third party claim or Action, or (ii) in the case
of a claim for Indemnified Losses arising other than pursuant to a third party
claim or Action, after the award of the Arbitral Body has been issued or a
settlement has been reached, Indemnitor shall reimburse the Indemnitees within
30 days of written demand on the Indemnitor for any amounts to which Indemnitees
are entitled to indemnification pursuant to this ARTICLE 12.
12.3 DEFENSE OF CLAIMS.
(a) Except as provided in PARAGRAPH 12.3(B), if any Action by a third
party arises after the date of this Agreement for which Indemnitor may be liable
under the terms of this Agreement, then the Indemnitees will notify Indemnitors
in accordance with the provisions of this ARTICLE 12, and will give Indemnitors
a reasonable opportunity:
(i) to conduct any proceedings or negotiations in connection with the
Action and necessary or appropriate to defend the Indemnitees;
39
(ii) to take all other required steps or proceedings to settle or
defend any Action; and
(iii) to employ counsel reasonably acceptable to Indemnitees to
contest any Action in the name of the Indemnitees or otherwise.
The expenses of all proceedings, contests or lawsuits with respect to the
Actions will be borne by Indemnitors.
(b) If Indemnitors do not assume the defense of, or if after so
assuming the Indemnitors fail to defend, any Action, then the Indemnitees may
defend against any claim or Action in the manner they may deem appropriate and
the Indemnitees may settle any claim or Action on the terms they deem
appropriate, and Indemnitors will promptly reimburse the Indemnitees for the
amount of all expenses, legal and otherwise, reasonably and necessarily incurred
by the Indemnitees in connection with the defense against and settlement of any
claim or Action. If no settlement of any claim or Action is made, Indemnitors
will satisfy any judgment rendered with respect to any claim or in any Action,
before the Indemnitees are required to do so, and pay all expenses, legal or
otherwise, reasonably and necessarily incurred by the Indemnitees in the defense
of any claim or Action.
(c) If a judgment is rendered against any of the Indemnitees in any
Action covered by the indemnification under this Agreement, or any Lien in
respect of any judgment attaches to any of the assets of any of the Indemnitees
or Partech, Unnisa or Proceda, Indemnitors will immediately upon any entry or
attachment pay the relevant judgment in full or discharge the relevant Lien
unless, at the expense and direction of Indemnitors, an appeal is taken under
which the execution of the judgment or satisfaction of the Lien is stayed. If
and when a final judgment is rendered in any action, Indemnitors will forthwith
pay any judgment or discharge any Lien before any of the Indemnitees is
compelled to do so.
(d) Any notice required to be given to Indemnitors pursuant to
PARAGRAPH 12.3(A) shall be given no later than the latter of: (i) the end of the
first half of the term within which an answer or other response to the Action is
required to be made (the "ANSWER PERIOD") and (ii) two Business Days after
-------------
receipt by an Indemnitee of notice of the Action. Indemnitors shall assume the
defense of any Action, if at all, by notice to Indemnitees no later than the
earlier of: (i) the end of the second third of the Answer Period and (ii) three
Business Days prior to the date by which an answer or other response to the
Action is required to be made. Indemnitors' failure to notify Indemnitees within
the specified time shall be conclusively deemed an election by Indemnitors not
to assume such defense. Any failure by Indemnitees to give the requisite notice
within the time specified in this PARAGRAPH 12.3(D) will not relieve Indemnitors
of the obligation to indemnify Indemnitees pursuant to this ARTICLE 12 except to
the extent that the defense of any Action is materially prejudiced by the delay.
40
(e) The Indemnitors or the Indemnitees, as appropriate, shall have
the right to participate in the defense of any Action related to an Indemnified
Loss at their sole cost and expense and the cost and expense of that
participation shall not be an Indemnified Loss. Notwithstanding anything
contained in this ARTICLE 12 to the contrary, Indemnitors may not settle any
claim or Action, without the prior approval of Indemnitees, which approval shall
not be unreasonably withheld, delayed or conditioned.
12.4 INDEMNIFICATION OF SELLERS BY EQUIFAX. Equifax will indemnify and
hold harmless Sellers, the AG Group and the Socma Group from and against and in
respect of any and all loss, damage, Liability, cost and expense, including
reasonable attorneys' fees and amounts paid in settlement suffered or incurred
by any one or more of them by reason of, or arising out of: (i) any
misrepresentation, breach of warranty or breach or nonfulfillment of any
agreement of Equifax contained in this Agreement or in any certificate,
schedule, instrument or document delivered to Sellers by or on behalf of Equifax
pursuant to the provisions of this Agreement or any Additional Agreement; and
(ii) any and all Actions, suits, proceedings, claims, demands, assessments,
judgments, fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid any Actions, suits, proceedings, claims,
demands, assessments, judgments, fees and expenses or to oppose the imposition
of any Actions, suits, proceedings, claims, demands, assessments, judgments,
fees and expenses, or in enforcing this Agreement, including without limitation
the provisions of this PARAGRAPH 12.4.
12.5 LIMITATION ON LIABILITY. Notwithstanding anything in this ARTICLE
12 to the contrary, in any case in which both the AG Group and the Socma Group
are liable with respect to the same Indemnified Losses, their liability shall
not be joint but shall instead be several and proportional to their respective
equity interests in Partech immediately prior to the Closing. The obligation of
the AG Group and the Socma Group to indemnify the Indemnitees shall be net of
any tax effects directly accruing to the Indemnitees directly related to the
Indemnified Losses. The AG Group and the Socma Group shall only be liable to
indemnify the Indemnitees in respect of Indemnified Claims once the aggregate
Indemnified Claims exceed R$ * * *, and only in respect of those Indemnified
Claims in excess of R$ * * *; provided, however, if the aggregate Indemnified
-------- -------
Claims exceed R$ * * *, the AG Group and the Socma Group shall reimburse
Indemnitees for the first R$ * * * of Indemnified Claims not previously
reimbursed.
12.6 NO CONTRIBUTION BY PARTECH, UNNISA OR PROCEDA. Partech, Unnisa or
Proceda will not have any Liability to either or both Sellers, or any other
member of either the AG Group or the Socma Group, as a result of any
misrepresentation or breach of representation or warranty by Partech, Unnisa or
Proceda contained in this Agreement, any Additional Agreement or any
certificate, schedule, instrument, agreement or other writing delivered by or on
behalf of, or in respect of, Partech, Unnisa or Proceda pursuant to this
Agreement, any Additional Agreement or in connection with the transactions
contemplated by this Agreement or any Additional Agreement, or the breach of any
41
covenant or agreement of Partech, Unnisa or Proceda contained in this Agreement,
any Additional Agreement or any certificate, schedule, instrument, agreement or
other writing by or on behalf of, or in respect of, Partech, Unnisa or Proceda
pursuant to the terms of this Agreement or any Additional Agreement or in
connection with the transactions contemplated by this Agreement or any
Additional Agreement. Neither AG Telecom nor Socma, nor any other present or
future member of the AG Group or the Socma Group, will have any right of
indemnification or contribution against Partech, Unnisa or Proceda on account of
any event or condition occurring or existing prior to or on the date of this
Agreement or the Closing Date.
13. SURVIVAL.
13.1 SURVIVAL. The representations, warranties, covenants, agreements
and indemnities of the Parties contained in this Agreement or any Additional
Agreement, or in any writing delivered pursuant to the provisions of this
Agreement or any Additional Agreement, will survive any investigation prior, on
or subsequent to the date of this Agreement made by Equifax or its
Representatives and the consummation of the transactions contemplated in this
Agreement, any Additional Agreement or in any writing delivered pursuant to the
provisions of this Agreement or any Additional Agreement and will continue in
full force and effect for the periods specified below (the "SURVIVAL PERIOD"):
---------------
(a) representations and warranties relating to title and ownership of
quotas or shares in any of Partech, Unnisa or Proceda, corporate authorization,
organization, good standing and qualification; compliance with laws; fraud or
willful misrepresentation, and completeness of disclosure, will survive
indefinitely;
(b) representations and warranties relating to labor and employment
claims, employee benefit matters, and Taxes will survive until expiration of any
applicable statute or period of limitations, and any extensions of the
applicable statute or period of limitations; and
(c) all other representations, warranties, covenants, agreements and
indemnities will be of no further force and effect after the expiration of three
(3) years from the Closing Date;
Provided, however, that any claim for an Indemnified Loss presented in writing
- -------- -------
to the indemnifying party (together with any relevant supporting documentation)
in accordance with the terms of this Agreement within the Survival Period will
continue to be a valid claim until resolved.
42
14. TERMINATION.
14.1 TERMINATION FOR CERTAIN CAUSES.
This Agreement may be terminated at any time prior to or on the
Closing Date by Equifax or by Sellers, upon written notice to the other as
follows:
(a) By Equifax, if (i) the results of its due diligence investigation
-------
of Partech, Unnisa and Proceda reveal Liabilities in excess of R$ * * *, which
Liabilities are not properly reflected in the Unaudited Financial Statements, or
(ii) there is an adverse change in the condition or value (financial or
otherwise) of any of Partech, Unnisa or Proceda, individually or in the
aggregate, or in their respective assets, properties, businesses, liabilities or
operations, in excess of R$ * * *.
(b) By Sellers, if the terms, covenants or conditions of this
-------
Agreement to be complied with or performed by Equifax at or before the Closing
Date will not have been complied with or performed and any noncompliance or
nonperformance will not have been waived by Sellers.
(c) By Sellers or by Equifax, if any Action will have been instituted
---------------------
or threatened against any party to this Agreement to restrain or prohibit, or to
obtain substantial damages in respect of, this Agreement or the consummation of
the transactions contemplated in this Agreement, which, in the reasonable and
good faith opinion of any party, makes consummation of the transactions
contemplated in this Agreement inadvisable.
14.2 PROCEDURE ON AND EFFECT OF TERMINATION.
(a) Pursuant to PARAGRAPH 14.1 of this Agreement, written notice of
termination will be given to all other Parties by the Party electing to
terminate, and this Agreement will terminate upon the giving of notice, without
further action by any of the Parties, with the consequence and effect set forth
in this PARAGRAPH 14.2.
(b) If for any reason on the Closing Date there has been
nonfulfillment of an undertaking by or covenant for Equifax or for AG Telecom
and Socma not waived in writing by or on behalf of the Party in whose favor the
undertaking or covenant runs, the Party in whose favor the undertaking or
covenant runs, in addition to any other right or remedy available to it for
breach or non-performance of this Agreement or any Additional Agreement, may
refuse to consummate the transactions contemplated by this Agreement without
Liability or obligation on its part whatsoever. Notwithstanding the foregoing,
the obligations of the Parties pursuant to PARAGRAPHS 4.3, 4.5, 4.6, 13.1, 14.1,
14.2 and 15.5 will survive any termination.
43
15. MISCELLANEOUS.
15.1 NOTICES.
(a) All notices, demands or other communications required or permitted to be
given or made under this Agreement will be in writing and (i) delivered
personally, (ii) sent by an internationally recognized express courier service,
or (iii) sent by certified airmail, return receipt requested to the intended
recipient of the notice, demand or other communication at its address set forth
below. Any notice, demand or communication will be deemed to have been duly
given (x) immediately if personally delivered, (y) on the fourth Business Day
after delivery to an international express courier services, or (z) on the tenth
Business Day after delivery to the relevant postal service and in proving the
giving of any notice, demand or other communication, it will be sufficient to
show that the envelope containing the notice, demand or other communication was
duly addressed (as evidenced by the courier receipt). The addresses of the
Parties for purposes of this Agreement are:
If to Sellers:
If to Socma
Americana S.A.:
Balcarc 683
(1063) Capital Federal
Argentina
Tel. 54-1-346-5800
Fax 54-1-346-5911
Attn: * * *
c.c. * * *
If to AG Companies:
Av. Maria Coelho Aguiar, 215
Bloco D - 4o andar
Sao Paulo - SP
Brazil
Tel. 55-11-3741-8512
Fax 55-11-3741-3033
Attn. * * *
44
in each case with a copy to:
Tozzini Freire Teixeira e Silva
Rua Libero
Badaro, 293 - 19 degrees Andar
CEP 01095-9000
Sao Paulo - SP - Brazil
Tel. 55-11-232-2100
Fax. 55-11-232-3100
Attn: * * *
If to Equifax: Equifax Inc.
11601 Roosevelt Boulevard
St. Petersburg, Florida 33716
United States of America
Attn: * * *
Executive Vice President and Group Executive
Equifax Inc.
1600 Peachtree Street
Atlanta, Georgia 30309
United States of America
Attn.: * * *
Corporate Vice President and General Counsel
With a copy to: Kilpatrick Stockton LLP
(which will not Suite 2800
constitute notice) 1100 Peachtree Street
Atlanta, Georgia 30309-4530
United States of America
Attn.: * * *
(b) Any Party may change the address to which notices, requests,
demands or other communications to the relevant Party will be delivered or
mailed by giving notice of the address change to the other Parties in the manner
provided in this Agreement.
15.2 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, and all of which will
constitute one and the same instrument.
45
15.3 ENTIRE AGREEMENT. Except as expressly set forth to the contrary in
this PARAGRAPH 15.3, this Agreement and the Additional Agreements, together
supersede all prior discussions and agreements between the Parties with respect
to the subject matter of this Agreement and the Additional Agreements, including
without limitation the MOU, and this Agreement and the Additional Agreements
contains the sole and entire agreement among the Parties with respect to the
matters covered by this Agreement and the Additional Agreements.
Notwithstanding the immediately preceding sentence, (i) the Confidentiality
Agreement, shall survive the execution and delivery of this Agreement in
accordance with its terms and (ii) Sections 4.4, 4.5, 9.1 and 9.2 of the MOU
(the "SURVIVING MOU PROVISIONS") shall survive the execution and delivery of
------------------------
this Agreement; provided that should the transactions contemplated by this
--------
Agreement be consummated, the Confidentiality Agreement and the Surviving MOU
Provisions shall thereafter be null and void ab initio. This Agreement will not
be altered or amended except by an instrument in writing signed by or on behalf
of the Party entitled to the benefit of the provision against whom enforcement
is sought.
15.4 GOVERNING LANGUAGE. Notwithstanding the translation of this
Agreement into any other language, the official language of this Agreement is
the English language, which will be controlling. Each document, agreement,
instrument, statement, notice or other communication required or permitted to be
given in connection with this Agreement will be in the English language.
15.5 DISPUTE RESOLUTION.
(a) Any and all disputes (each, a "DISPUTED MATTER") arising out of
---------------
or in connection with the execution, interpretation, performance or
nonperformance of this Agreement will be arbitrated and settled by the
procedures established in this PARAGRAPH 15.5.
(b) Disputed Matters will be solely and finally settled by
arbitration, which will be conducted in New York, New York, U.S.A., by a panel
of three arbitrators, one of whom shall be selected by Equifax, one of whom
shall be selected by Sellers, and the third of who shall be selected by the
arbitrators selected by Equifax and Sellers. The arbitration procedure may be
initiated by any of the Parties by written notice to the other Party to the
Disputed Matter. Any notice will specify in reasonable detail the dispute being
submitted to arbitration. The Parties renounce all recourse to litigation and
agree that the award of the arbitrators will be final and subject to no judicial
review.
(c) The arbitrators will conduct the proceedings, including arguments
and briefs, in the English language and in accordance with the international
rules (the "RULES") of the American Arbitration Association ("ARBITRAL BODY");
----- -------------
provided that the provisions of this Agreement will prevail in the event of any
- --------
conflict between the Rules and the provisions of this Agreement. The
arbitrators will decide the issues submitted in accordance with the provisions
and commercial purposes of this Agreement, provided that
46
all substantive questions of law will be determined under the laws of Brazil
(without regard to the principles of conflicts of laws of any relevant state and
country). All decisions of the arbitrators will be in writing and submitted to
the Parties, and will set forth findings of fact and conclusions of law.
(d) The Parties will facilitate the arbitration by: (i) making
available to one another and to the arbitrators for examination, inspection and
extraction all documents, books, records and personnel under their control if
determined by the arbitrators to be relevant to the Disputed Matter; (ii)
conducting arbitration hearings to the greatest extent possible on successive
days; and (iii) observing strictly the time periods established by the Rules or
by the arbitrators for submission of evidence or briefs.
(e) In the final award, the arbitrators will divide all costs, other
than fees of counsel, incurred in conducting the arbitration, in any manner as
the arbitrators deem just and equitable under the circumstances. Judgment on
the award of the arbitrators may be entered into by any court having
jurisdiction over the Party against whom enforcement of the award is being
sought.
(f) Each Party agrees that any award of the arbitrators against it
and on which judgment is entered may be executed against the assets of that
Party in any jurisdiction, including Brazil and the United States of America. By
execution of this Agreement, each Party irrevocably consents to the jurisdiction
of any court having jurisdiction over that Party for the purpose of enforcing
any award. Each of the Parties irrevocably consents to the service of process by
registered mail, postage prepaid, international express courier, or by personal
service within or without Argentina, Brazil or the State of Georgia or the State
of New York, to the fullest extent permitted by applicable Law. Each of the
Parties hereby irrevocably designates and appoints CSC Network, 375 Hudson
Street, 11th Floor, New York, New York, as its respective designee, appointee
and local agent to receive for and on behalf of that Person, service of process
in such respective jurisdictions in any arbitration, legal action or proceeding.
(g) Each Party irrevocably waives, to the fullest extent permitted by
law, any objection it may now or hereafter have to any suit, Action or
proceeding arising out of or relating to this Agreement that is brought in any
jurisdiction designated in the preceding subparagraph, and further irrevocably
waives any claim that any suit, Action or proceeding so brought has been brought
in an inconvenient forum.
(h) Notwithstanding any provision of this PARAGRAPH 15.5 to the
contrary, any Party will be entitled to seek injunctive and other equitable
relief in any court of competent jurisdiction to enforce the provisions of this
Agreement.
15.6 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and
will inure to the benefit of the Parties and their respective heirs, executors,
legal representatives, successors and assigns, but may not be assigned by any
Party without the written consent of all other Parties, except to an Affiliate.
47
15.7 PARTIAL INVALIDITY AND SEVERABILITY. All rights and restrictions
contained in this Agreement may be exercised and will be applicable and binding
only to the extent that they do not violate any applicable laws and are intended
to be limited to the extent necessary to render this Agreement legal, valid and
enforceable. If any term of this Agreement, or part of this Agreement, not
essential to the commercial purpose of this Agreement will be held to be
illegal, invalid or unenforceable by a court of competent jurisdiction, it is
the intention of the Parties that the remaining terms of this Agreement, or part
of this Agreement, will constitute their agreement with respect to the subject
matter of this Agreement and all remaining terms, or parts of this Agreement,
will remain in full force and effect. To the extent legally permissible, any
illegal, invalid or unenforceable provision of this Agreement will be replaced
by a valid provision which will implement the commercial purpose of the illegal,
invalid or unenforceable provision.
15.8 WAIVER. Any term or condition of this Agreement may be waived at
any time by the Party which is entitled to the benefit of the term, but only if
the waiver is evidenced by a writing signed by the relevant Party. No failure
on the part of any Party to this Agreement to exercise, and no delay in
exercising any right, power or remedy created under this Agreement, will operate
as a waiver thereof, nor will any single or partial exercise of any right, power
or remedy by any Party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. No waiver by any Party to this
Agreement or any breach of or default in any term or condition of this Agreement
will constitute a waiver of or assent to any succeeding breach of or default in
the same or any other term or condition of this Agreement.
15.9 HEADINGS. The headings of particular provisions of this Agreement
are inserted for convenience only and will not be construed as a part of this
Agreement or serve as a limitation or expansion on the scope of any term or
provision of this Agreement.
15.10 NUMBER AND GENDER. Where the context requires, the use of the
singular form in this Agreement will include the plural, the use of the plural
will include the singular, and the use of any gender will include any and all
genders.
15.11 TIME OF PERFORMANCE. Time is of the essence.
16. CERTAIN DEFINITIONS; INDEX OF DEFINITIONS
16.1 CERTAIN DEFINITIONS. For purposes of this Agreement, the following
capitalized terms will have the meanings specified below (all terms used in this
Agreement which are not defined in this PARAGRAPH 16.1 but defined elsewhere in
this Agreement, will have for purposes of this Agreement the meanings set forth
elsewhere in this Agreement):
48
"ACTION" will mean any action, suit, complaint, counter-claim, claim,
------
petition, set-off or administrative proceeding, whether at law, in equity or
otherwise, and whether conducted by or before any Government or other Person.
"ADDITIONAL AGREEMENTS" will mean, collectively, the Escrow Agreement,
---------------------
the Pledge Agreement, the Dividend Pledge, the Partech Quotaholders Agreement,
the Partech Articles, the Reorganization Agreement, the Trademark License
Agreement, each Guarantee, those writings, documents, agreements and instruments
identified on Exhibit S attached to this Agreement, and each other writing,
document, agreement or instrument which by its terms recites that it is an
"Additional Agreement" for purposes of this Agreement.
"AFFILIATE" of any Person will mean any other Person directly or
---------
indirectly controlling, controlled by, or under direct or indirect common
control with the former Person. A Person will be deemed to control another
Person if that Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise.
"AG GROUP" will mean AG Telecom, AG Parent and each Affiliate of AG
--------
Parent that executes and delivers an Additional Agreement, and "member of the AG
Group" will mean any one of them.
"ARTICLE" AND "PARAGRAPH" and like references are to this Agreement
------- ---------
unless otherwise specified, and all "EXHIBITS" are references to those attached
--------
to this Agreement and incorporated in this Agreement by this reference, unless
otherwise specified.
"BRAZIL" will mean the Federative Republic of Brazil.
------
"BUSINESS DAY" will mean any day other than a Saturday, a Sunday or a
------------
day on which commercial banks in either Atlanta, Georgia, United States of
America, Buenos Aires, Argentina, or Sao Paulo, Brazil, are required or
authorized to be closed.
"COMPANY LAW" will mean Law No. 6,404 dated December 15, 1976, as
-----------
amended, and where applicable, the Limitada Law of 1919, each being laws of
Brasil.
"CONFIDENTIALITY AGREEMENT" will mean a certain Mutual Confidentiality
-------------------------
Agreement, dated April 15, 1998, among EFX, Partech and the other signatories
thereto.
"FORUM" will mean any national, provincial, municipal, local or
-----
foreign court, governmental agency, administrative body or agency, tribunal,
private alternative dispute resolution system, or arbitration panel.
49
"GAAP" will mean Brazilian generally accepted accounting principles,
----
consistently applied, as in effect from time to time.
"GOVERNMENT" will mean any national, provincial, state, municipal,
----------
local or foreign government or any ministry, department, commission, board,
bureau, agency, authority, instrumentality, unit, or taxing authority thereof.
"LAW" will mean all national, provincial, state, municipal, local or
---
foreign constitutions, statutes, rules, regulations, ordinances, acts, codes,
legislation, treaties, conventions and similar laws and legal requirements, as
in effect from time to time.
"LIABILITY" will mean any liability or obligation whether known or
---------
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated and whether due or to become due.
"LIEN" will mean any claim, mortgage, pledge, hypothecation, security
----
interest, encumbrance, lien or charge of any kind, or any rights of others,
however evidenced or created (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, or any lease
having a similar effect or result).
"MOU" will mean a certain Memorandum of Understanding, dated June 26,
---
1998, as the same has been or may be amended, modified and supplemented, among
EFX, Socma, AG Telecom and Partech.
"ORDERS" will mean all orders, writs, judgments, decrees, rulings and
------
awards of any Forum or Government.
"PARTIES" will mean the signatories to this Agreement, and a "PARTY"
------- -----
will mean any one of them.
"PERSON" will mean and include an individual, a partnership, a joint
------
venture, a corporation, a trust, an unincorporated organization, any legal or
juridical entity, the equivalent of any of the foregoing under any Law, and any
Government.
"R$ OR "BRAZILIAN REAIS" will mean the lawful currency of Brazil.
----------------------
"REPRESENTATIVE" of a Party will mean that Party's directors,
--------------
officers, partners, employees, agents, accountants, lenders, lawyers, investment
bankers, merchant bankers, and other financial or professional advisors or
consultants.
"SOCMA GROUP" will mean Socma and any Affiliate of Socma that executes
-----------
and delivers an Additional Agreement, and "member of the Socma Group" will mean
any one of them.
50
"TAXES" will mean any taxes, levies, imposts, duties, fees,
-----
assessments, deductions, withholdings or other charges of whatever nature,
including without limitation income, gross receipts, excise, property, sales,
transfer, license, payroll, withholding, social security, and franchise taxes,
imposed or levied by Brazil, or any state, local or foreign Government, or by
any department, agency or other political subdivision or taxing authority
thereof or therein and all interests, penalties, additions to tax, and other
similar liabilities with respect to the Taxes and relating to any period on or
prior to the Closing Date.
"US$ OR "UNITED STATES DOLLARS" will mean the lawful currency of the
-----------------------------
United States of America.
16.2 INDEX TO DEFINITIONS. The definitions for the following defined
terms used in this Agreement can be found as follows:
DEFINED TERM PARAGRAPH REFERENCE
------------- -------------------
ABC................................................................. 1.1
ABC Subscribed Shares............................................... 1.1
ABC Subscription Price.............................................. 1.1
ABC Split-Up........................................................ 1.1
Accountants......................................................... 3.4(b)
Accounts Receivable................................................. 1.1
Acquired Interests.................................................. Preamble
Acquisition......................................................... Preamble
Acquisition Transaction............................................. Preamble
AG Audited Financial Statements..................................... 6.6
AG Financial Statements............................................. 6.6
AG Parent........................................................... Preamble
AG Telecom.......................................................... Preamble
AG Unaudited Financial Statements................................... 6.6
Answer Period....................................................... 12.3(d)
Arbitral Body....................................................... 15.5(c)
Audited Financial Statements........................................ 5.9
Closing............................................................. 3.1
Closing Balance Sheet............................................... 3.4(a)
Closing Date........................................................ 3.1
Computations........................................................ 3.4(a)
Contracts........................................................... 5.16
Customer Agreements................................................. 4.8
Disclosure Memorandum............................................... 5
Disputed Matter..................................................... 15.5(a)
Dividend Pledge..................................................... 3.5
EFX................................................................. Preamble
Employee Benefit Plan............................................... 5.20(b)
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Equifax.................................................................. Preamble
ESA...................................................................... Preamble
Escrow Agreement......................................................... 3.4
Financial Statements..................................................... 5.9
FGTS..................................................................... 5.19
Guaranty................................................................. 3.5
Holdings................................................................. Preamble
Immovable Property....................................................... 5.14(a)
Improvements............................................................. 5.14(e)
Indebtedness............................................................. 3.4(d)
Indemnified Losses....................................................... 12.1
Indemnitees.............................................................. 12.1
Indemnitor............................................................... 12.1
INSS..................................................................... 5.19
IP Agreements............................................................ 4.10
Leased Immovable Property................................................ 5.14(c)
Net Working Capital...................................................... 3.4(d)
Offshore Affiliate....................................................... 2.1
Partech.................................................................. Preamble
Partech Articles......................................................... 3.5
Partech Closing Balance Sheet............................................ 3.4(a)
Partech Contracts........................................................ 3.15
Partech Quotaholders Agreement........................................... 3.5
Partech Quotas........................................................... 5.3(a)
* * * Consent............................................................ 4.9
Permits.................................................................. 5.7
Pledge Agreement......................................................... 3.5
Proceda.................................................................. Preamble
Proceda Amendment........................................................ 10.10
Proceda Closing Balance Sheet............................................ 3.4(a)
Proceda Shares........................................................... 5.3(e)
Property Leases.......................................................... 5.14(b)
Proprietary Rights....................................................... 5.15(a)
Reference Date........................................................... 5.29
Related Parties.......................................................... 5.23
Reorganization Agreement................................................. 3.5
Rules.................................................................... 15.5(c)
Seller................................................................... Preamble
Socma.................................................................... Preamble
Socma Audited Financial Statements....................................... 7.6
Socma Financial Statements................................................ 7.6
Socma Partech Interest.................................................... 2.1
Socma Unaudited Financial Statements...................................... 7.6
SPI Purchase Price........................................................ 2.1
Survival Period...........................................................13.1
52
Surviving MOU Provisions.................................................. 15.3
Trademark Agreement....................................................... 3.5
Unaudited Financial Statements............................................ 5.9
Unnisa.................................................................... Preamble
Unnisa Closing Balance Sheet.............................................. 3.4(a)
Unnisa Quotas............................................................. 5.3(c)
XYZ....................................................................... 2.2
XYZ Subscribed Shares..................................................... 2.2
XYZ Subscription Price.................................................... 2.2
XYZ Split-Up.............................................................. 2.2
Year 2000 Compliant....................................................... 5.16
53
IN WITNESS WHEREOF, the Parties have executed this Agreement in three
(03) counterparts on September 8th, 1998, in the City and State of Sao Paulo,
Brazil, in the presence of two (02) witnesses.
EQUIFAX INC.
By:/s/ * * *
-------------------
* * *
EQUIFAX SOUTH AMERICA INC.
By:/s/ * * *
-------------------
* * *
EQUIFAX DO BRASIL HOLDINGS LTDA
By:/s/ * * *
----------------------------
P.U.P. PARTICIPACOES S.A.
By:/s/ * * *
----------------------------
ANDRADE GUTIERREZ
TELECOMMUNICACOES LTDA.
By:/s/ * * *
-----------------------
* * *
CONSTRUTORA ANDRADE
GUTIERREZ S.A.
By:/s/ * * *
-----------------------
* * *
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
54
[SIGNATURES CONTINUED FROM PRECEDING PAGE]
SOCMA AMERICANA S.A.
By: * * *
--------------------------
* * *
PARTECH LTDA.
By: * * *
----------------------------------
* * *
By: * * *
----------------------------
* * *
Witnesses:
1. /s/ Edson Monti Bacha 2./s/ [SIGNATURE ILLEGIBLE]
---------------------- -------------------------
Name: * * * Name: * * *
RG: * * * RG: * * *
CIC: * * * CIC: * * *
55