EXHIBIT 99.2
All of originally executed, governing transaction documents are drafted in the
Portuguese language. This Agreement is a fair and accurate English translation
of the originally executed Share Purchase Agreement.
SHARE PURCHASE AGREEMENT
among
UNETE DO BRASIL, LIMITADA
As Purchaser
and
Xx. Xxxxxx Francisco Sachet
Xx. Xxxxxxx Xxxxxx xx Xxxxx
Xx. Xxxxxxxx Xxxxxx Xxxx
As Shareholders
And
Conex Brasil S.A.
As Company
Dated as of October 6, 1999
SHARE PURCHASE AGREEMENT
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SHARE PURCHASE AGREEMENT (this "Agreement"), dated as of October 6, 1999,
among Unete do Brasil, Limitada, a Brazilian limited liability company (the
"Purchaser"), an indirect wholly-owned subsidiary of IFX Corporation ("IFX"),
each of those entities and/or individuals identified on Schedule A (each,
individually, a "Shareholder" and, collectively, the "Shareholders"), and Conex
Brasil S/A ("the "Company"), an entity organized an existing in accordance with
the laws of Brazil ("the "Territory").
The parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
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The definitions set forth in Schedule 1, attached hereto, are incorporated
to this Agreement by reference and made a part hereof.
ARTICLE II.
PURCHASE AND SALE
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SECTION II.01. Purchase and Sale. Subject to the terms and conditions
precedent, and based upon the representations, warranties and covenants set
forth herein, at Closing, Shareholders shall sell to the Purchaser all of the
issued and outstanding shares in the Company (the "Shares"). At Closing, the
Shareholders shall transfer good and valid title to the Shares to the Purchaser
and shall deliver to the Purchaser one or more certificates or other
documentation representing all of the Shares, together with the stock ledger of
the Company in which the appropriate assignments of the Shares to the Purchaser
will be duly executed without limitation and in proper form. In order to comply
with the legal requirement of a minimum of two shareholders in a limited
liability company, at Closing, as defined below, Purchaser shall appoint an
individual or a legal entity to purchase one Share (the "Token Shareholder").
The term "Purchaser" hereunder shall always include the Token Shareholder.
SECTION II.02. Purchase Price; Payment of Purchase Price. In consideration
of and in full payment for the Shares, the Purchaser shall pay to the
Shareholders Three Million Three Hundred and Sixty Two Thousand Eight Hundred
Eighty Seven Brazilian Reais and 65/100 cents (R$3,362,887.65) (the "Purchase
Price").
(a) at Closing, the Purchaser shall pay to the Shareholders One Million Six
Hundred and Eighty One Thousand Four Hundred Forty Four Brazilian Reais and
83/100 cents (Reais$ 1,681,443.83), which represents fifty percent (50%) of the
Purchase Price ("First Installment").
(b) Within One Hundred and Eighty (180) days after Closing, the Purchaser
shall pay to the Shareholders the equivalent of twenty five percent (25%) of the
Purchase Price("Second Installment"). If the First Installment and Second
Installment exceed the amount of the Purchase Price, then the Purchaser shall
only be responsible to pay the Second Installment up to an amount, which added
to the First Installment, equals such Purchase Price.
(c) Within Three Hundred and Sixty (360) days after Closing, the Purchaser
shall pay to the Shareholders the equivalent of one hundred percent (100%) of
the Purchase Price, less any payments made to Shareholders on the First
Installment and Second Installment hereunder ("Final Installment").
(d) The payments of the Second Installment and the Final Installment shall
be adjusted by the percentage of inflation as determined by the IGPM-FGB index
from the date of Closing through the date when the respective payment is made.
(e) Each of the First Installment, Second Installment, and Final
Installment payable to the Shareholders shall be paid to them, at Purchaser's
sole discretion, in the following manner:
(i) 100% in cash (in Brazilian Reais); or
(ii) fifty percent (50%) in cash (in Brazilian Reais) and fifty percent
(50%) in shares of common stock of IFX, Inc., par value $0.02 ("IFX
Stock"), which IFX Stock shall be deemed to have a value per share
based on the average of the reported closing trading price for the
twenty (20) day period immediately prior to the five (5) Business Day
period immediately prior to each payment date. For purposes of
calculating the number of shares payable hereunder, the rate of
exchange to convert the Brazilian Reais to the US Dollars, currency in
which the IFX Stock is traded, shall be the average of the selling and
buying exchange rate for US Dollar as published by the Central Bank of
Brazil by FISBACEN, PTAX800, on the business date immediately
preceding the date of the applicable payment.
(f) Purchaser shall cause IFX to file the S-3 Registration Statement with
the SEC within fifteen (15) business days after the applicable payment date to
register the IFX Stock to be issued hereunder for resale and shall take all
necessary steps that may be required to cause the Registration Statement to be
declared effective by the SEC. Purchaser shall cause IFX to take all necessary
steps to maintain the effective status of the Registration Statement until the
earlier to occur of the date on which all shares of IFX Stock covered thereby
are sold or the second anniversary of the effective date of the Registration
Statement. Should IFX fail to obtain an
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effective Registration Statement from SEC within forty five (45) days as from
Closing, Purchaser shall buy from the Shareholders, at Shareholders' request,
for cash consideration immediately payable to Shareholders, the IFX Stock issued
as payment of a portion of the Purchase Price (the "Return of IFX Stock"). The
Return of IFX Stock shall occur within 5 (five) business days from the receipt
by Purchaser of a notice from Shareholders of its intention to effect the Return
of IFX Stock, which notice shall in no event be earlier than 45 days from
Closing. The price to be paid by Purchaser for the IFX Stock in the Return of
the IFX Stock shall be equal to the portion of the Purchase Price that was to be
paid with such IFX Stock
SECTION II.03. Shareholder Retained Liabilities. Notwithstanding the fact
that the Purchaser is acquiring the Shares, the Shareholders shall assume, agree
to pay, perform and discharge in a timely manner, and hold the Purchaser
harmless from, all Liabilities and Indebtedness not reflected, recorded or
disclosed in the Interim Financial Statements, or which amounts exceed those
reflected in the referenced Interim Financial Statement arising, existing or
relating to periods on or prior to the Closing (collectively, the "Shareholder
Retained Liabilities"). The Purchaser shall have the right to deduct the amount
of any Shareholder Retained Liabilities from any and all payments due
Shareholders hereunder at any time or, if such payments have already been made,
to collect such amounts from the Shareholders. Each Shareholder shall only be
liable to the Purchaser for up to a percentage of the Shareholder Retained
Liabilities equal to three (3) times the percentage of Shares of the Company
owned by such Shareholder as reflected in Schedule A.
(a) Procedure: At any time that the Purchaser wishes to exercise its right
to set off any Shareholder Retained Liabilities or, if such liabilities are
found after all payments due Shareholders have been made, at any time that the
Purchaser desires to collect from Shareholders any Shareholder Retained
Liability, the Purchaser shall send written notice to the Shareholders
specifying the claim, the basis for the claim, and the amount claimed of any
Shareholder Retained Liability. The Shareholder shall then have a thirty (30)
day period to evaluate such claim and send a written notice to the Purchaser if
the Shareholders believe that the claim is unfounded. If the Shareholders send a
written notice within such period of time, then both parties shall appoint an
independent party who shall have 15 days to resolve the matter, and his/her
resolution shall be deemed final. If the Shareholders do not send a notice
within such period of time, the Shareholder Retained Liability specified in the
Purchaser notice shall be deemed final.
(b) Limitation: This Shareholder Retained Liabilities provision shall only
be valid for a period of (i) five (5) years from the date of Closing with
respect to any tax or tax-related liability, (ii) three (3) years from the date
of Closing for any claims or potential claims raised or which may be raised by
any person or entity other than the Purchaser, including without limitation any
labor related claims, and (iii) one (1) year for any other type of liability.
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(c) Discrepancy on Revenues: For purposes of this Agreement, any difference
between the Annualized Net Revenues as reflected in an audit conducted in good
faith by the Accountants within 120 days from the Closing Date ("Audit") and the
Annualized Net Revenues as reflected in the unaudited balance sheet of the
Company as of July 31, 1999, and the related unaudited statements of income,
stockholders' equity and sources and uses of the Company, together with all
related notes and schedules thereto (collectively referred to herein as the
"Interim Financial Statements") shall be deemed a Shareholder Retained Liability
in an amount equal to two (2) times the amount of such difference.
(d) Discrepancy on Net Tangible Book Value: For purposes of this Agreement,
any difference between the NTBV as reflected in the Interim Financial Statements
(except that the cash account of the Interim Financial Statements shall be
replaced with the cash account as of September 30, 1999, which the Shareholders
have delivered to the Purchaser and is enclosed herewith as Schedule 2.03.(d)),
and the NTBV as of the date of Closing, as determined by the Audit, shall be
deemed a Shareholder Retained Liability in an amount equal to the amount of such
difference. "NTBV" shall mean all assets of the Company minus all Liabilities of
the Company.
(e) Brokers and Advisors: For purposes of this Agreement, any accounts
payable to or any amounts due after Closing to any advisor that the Company or
the Shareholders have hired or used in connection with the preparation for and
consummation of this transaction shall be deemed Shareholder Retained
Liabilities in an amount equal to such amounts payable or otherwise due.
(f) Already Discounted Liabilities: The Liabilities listed in Schedule
2.03.(f)(i) and Schedule 2.03.(f)(ii) have already been discounted by the
Purchaser from the Purchase Price and, therefore, shall not be deemed
Shareholder Retained Liabilities hereunder. The Purchaser shall reimburse the
Shareholders only for the amount of any Liabilities listed in Schedule
2.03.(f)(ii) which statute of limitation has already elapsed without resulting
in any pending or resolved claim against the Company. Such reimbursement shall
be made within fifteen (15) days of receiving a written notice by the
Shareholders specifying the requested information, and having duly verified such
claim.
SECTION II.04. Closing. The closing of the sale of the Shares (the
"Closing") shall take place at such location as shall be agreed upon and on such
day as the conditions set forth in Sections 5.01 and 5.02 hereof have been
satisfied (the "Closing Date").
ARTICLE III.
REPRESENTATIONS AND
WARRANTIES OF THE SHAREHOLDERS
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As an inducement to the Purchaser to enter into this Agreement, each of the
Shareholders, jointly and severally, hereby represents and warrants to the
Purchaser as follows:
SECTION III.01. Authority of the Company and the Shareholders. The Company
and each Shareholder has all necessary power and authority to enter into this
Agreement, to carry out his or its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and each Shareholder, and this Agreement constitutes
the legal, valid and binding obligation of the Company and each of such
Shareholders enforceable against the Company and/or such Shareholder in
accordance with its terms.
SECTION III.02. Ownership of the Shares. Each Shareholder is the sole
record and beneficial owner of that number of Shares set forth opposite such
Shareholder's name on Schedule "A", which Shares (a) together with the Shares
owned by the other Shareholders, collectively constitute one hundred percent
(100%) of the Shares of the Company, (b) are owned by such Shareholder free and
clear of any Encumbrances, and (c) upon delivery by such Shareholder on the
Closing Date of certificates and/or other documentation evidencing such shares
and receipt by the Shareholders of payment therefor in accordance with this
Agreement, the Purchaser shall be registered in the register of the Shareholders
of the Company and shall have good and valid title to such Shares and the Shares
shall be free and clear of all Encumbrances.
SECTION III.03. Organization and Qualification of the Company. The Company
is a corporation duly incorporated and validly existing under the Laws of the
Territory. The Company has all necessary corporate power and authority to own,
operate or lease the properties and assets now owned, operated or leased by it
and to carry on the Business as it has been, is currently and is anticipated to
be conducted. The Company is duly licensed and qualified to do business and is
in good standing in each jurisdiction in which the properties owned or leased by
it or the operation of the Business makes such licensing or qualification
necessary or desirable. All corporate actions taken by the Company have been
duly authorized and the Company has not taken any action that in any respect
conflicts with, constitutes a default under or results in a violation of any
provision of its articles of incorporation, by-laws or similar organizational or
governing documents, in each case as amended and/or restated through the date
hereof (collectively, the "Charter Documents").
SECTION III.04. Ownership of the Company. The authorized capital of the
Company consists of Sixty Thousand (60,000) shares, par value R$1 per share, of
which Sixty Thousand shares are currently issued and outstanding. Each issued
and outstanding share in the capital of the Company (i) is validly issued and
outstanding, (ii) was issued in compliance with all applicable securities laws
and (iii) is duly authorized, fully paid and nonassessable. The Shares
constitute all of the issued and outstanding shares in the capital of the
Company and, except for the Shareholders, no other Person owns any shares in the
capital of the Company. There are no options, calls, warrants, convertible
securities, profits interests, preemptive rights, rights of first refusal or
other rights, agreements, arrangements or commitments of any character relating
to the
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Shares or any equity or other interests of the Company or any Shareholder to
issue or sell any of the Shares or any other equity or other similar interests
of or in the Company.
SECTION III.05. No Subsidiaries. The Company does not own, directly or
indirectly, whether of record or beneficially, any voting, investment, equity or
other interest in any Person or any right (contingent or otherwise) to acquire
the same.
SECTION III.06. No Conflict. Assuming that all consents, approvals,
authorizations and other actions referred to in Section 3.07 have been obtained,
the execution, delivery and performance of this Agreement by the Company and
each of the Shareholders and the consummation of the transactions contemplated
hereby do not and will not (a) violate, conflict with or result in the breach of
any provision of the Charter Documents of the Company or any Law or Governmental
Order, or (b) conflict with, result in any breach of, constitute a default (or
an event which with the giving of notice or lapse of time, or both, would become
a default) under, require any consent under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or cancellation of,
or result in the creation of any Encumbrance on any of the assets or properties
of the Company pursuant to, any agreement, permit, other instrument, or
arrangement to which the Company or any Shareholder is a party.
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SECTION III.07. Consents and Approvals. Except as indicated in Schedule
3.07, the execution, delivery and performance of this Agreement by the Company
and each of the Shareholders do not and will not require any consent, approval,
authorization or other order of, action by, filing with or notification to any
Governmental Authority or any other Person.
SECTION III.08. Financial Information, Books and Records, Projections and
Operating Data. (a) True and complete copies of (i) the unaudited balance sheet
of the Company for the fiscal year ended as of December 31, 1996, December 31,
1997, and December 31, 1998 (of if incorporated later than 1996, from the year
of organization) and the related unaudited statements of income, retained
earnings, shareholders' equity and sources and uses of the Company, together
with all related notes and schedules thereto, accompanied by the reports thereon
of the Accountants (or their affiliate in the Territory) (collectively referred
to herein as the "Financial Statements") and (ii) the unaudited balance sheet of
the Company as of July 31, 1999, and the related unaudited statements of income,
retained earnings, stockholders' equity and cash flows of the Company, together
with all related notes and schedules thereto (collectively referred to herein as
the "Interim Financial Statements") have been delivered by the Company to the
Purchaser. The Financial Statements and the Interim Financial Statements, as
well as the books of account and other financial records of the Company and the
projections provided by the Company (i) were prepared in accordance with the
books of account and other financial records of the Company, (ii) present fairly
the financial condition and results of operations of the periods covered
thereby, (iii) have been prepared in accordance with the Territory GAAP applied
on a basis consistent with the past practices of the Company, (iv) are complete
and correct, and do not contain or reflect any material inaccuracies or
discrepancies, (v) any projections are based on assumptions in light of current
economic conditions, and (vi) include the adjustments that are necessary for a
fair presentation of the financial condition of the Company and the results of
the operations of the Company as of the dates thereof or for the periods covered
thereby, subject, in the case of the Interim Financial Statements, to year-end
adjustments.
SECTION III.09. No Undisclosed Liabilities. There are no Liabilities of the
Company, other than Liabilities (i) reflected or reserved against on the balance
sheet included in the Interim Financial Statements, or (ii) incurred since the
date of the most recent unaudited balanced sheet included in the Financial
Statements in the ordinary course of the Business consistent with the past
practices of the Company and which do not have a Material Adverse Effect. Any
reserves reflected on the balance sheet included in the Interim Financial
Statements against Liabilities of the Company have been established on a basis
consistent with the past practices of the Company and in accordance with the
Territory GAAP.
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SECTION III.10. Receivables. The Receivables reflected in the most recent
balance sheet included in the Financial Statements or that have arisen since
December 31, 1998 (a) arose from, and the Receivables existing as of the Closing
Date will have arisen from, the sale of services and the sale and licensing of
products by the Company in the ordinary course of the Business consistent with
the Company's past practices, to Persons who or which are not Affiliates of the
Company or any Shareholder, and (b) constitute or will, as of the Closing Date,
constitute, as the case may be, valid, undisputed and fully collectible claims
of the Company, not subject to any claims of set-off, off-set or other defenses
or counterclaims, except to the extent that appropriate reserves therefor are
included in the Financial Statements.
SECTION III.11. Conduct of Business in the Ordinary Course. Since the date
of the Interim Financial Statements, (a) there has occurred no event or
development which could have Material Adverse Effect with respect to the
Company, (b) the Company has conducted the Business only in the ordinary course
and consistent with its past practices, and (c) the Company has not taken, or
entered into any arrangement or agreement to take, any of the actions described
in Section 4.01 hereof.
SECTION III.12. Litigation. Except as set forth on Schedule 3.12 (which,
with respect to each Action disclosed therein, sets forth: the parties, nature
of the proceeding, date and method commenced, amount of damages or other relief
sought and, if applicable, paid or granted), there are no Actions by or against
the Company or any Shareholder (or, as applicable, any of their respective
Affiliates) or affecting any of the Assets or the Business, pending or, to the
knowledge of the Shareholders, threatened. None of the matters disclosed on
Schedule 3.12 has affected or could reasonably be expected to affect the
legality, validity or enforceability of this Agreement or the consummation of
the transactions contemplated hereby. Neither the Company nor any Shareholder
nor any of their respective assets is subject to any Governmental Order nor, to
the Shareholders' knowledge, are there any such Governmental Orders threatened
to be imposed by any Governmental Authority.
SECTION III.13. Certain Interests. (a) Except as disclosed on Schedule
3.13, no officer, director of the Company, no Shareholder nor any of their
respective Affiliates: (i) has any direct or indirect financial interest in any
competitor, supplier or customer of the Company (except that it may have an
interest of less than 3% of the shares of a publicly traded company); (ii) owns,
directly or indirectly, in whole or in part, or has any other interest in any
tangible or intangible property which the Company uses or has used in the
conduct of the Business or otherwise; (iii) has outstanding any Indebtedness to
the Company; or (iv) is a party to any transaction with the Company (including,
without limitation, any contract, agreement or other arrangement providing for
the furnishing of services by, or rental of real or personal property from, or
otherwise requiring payments to, any such director, officer, employee, partner
or shareholder or such Affiliate). For purposes of Sub-Section 3.13.(i) the word
"Affiliate" shall not include item (e) of the Affiliate definition in Schedule
1.
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SECTION III.14. Compliance with Laws. The Company has conducted and
continues to conduct its business in accordance with and in compliance with all
Laws and Governmental Orders applicable to the Company, its assets and the
Business.
SECTION III.15. Material Contracts. (a) The Shareholders have delivered, or
made available to the Purchaser for review and duplication, true, correct and
complete copies (or in the case of oral contracts, summaries thereof) of all of
the following contracts and agreements (including, without limitation, oral and
informal arrangements) of the Company (such contracts and agreements, together
with all material contracts, agreements, leases and subleases concerning the
management or operation of any Real Property to which the Company is a party
(which material contracts and agreements relating to Real Property are listed on
Schedule 3.16), being "Material Contracts"):
(i) each contract and agreement for the purchase, sale or lease
of Tangible Personal Property , all management contracts and contracts or
commitments with officers, employees, Shareholders, independent contractors
or consultants (or similar understandings or arrangements) involving
exclusive rights, all contracts or commitments for capital expenditures,
under the terms of which the Company: (A) is reasonably anticipated to pay
or otherwise give consideration of more than US$5,000 in the aggregate over
the course of any fiscal year or (B) cannot be cancelled by the Company
without penalty or further payment and without more than thirty (30) days'
notice;
(ii) all Internet service, website, website hosting, electronic
mail, broker, representative, franchise, agency, sales promotion, sales
representative, market research, marketing, consulting and advertising
contracts and agreements to which the Company is a party;
(iii) all contracts and agreements relating to Indebtedness of
the Company in excess of US$5,000 individually or US$25,000 in the
aggregate;
(iv) all contracts and agreements with any Governmental Authority
to which the Company is a party;
(v) all contracts and agreements that limit or purport to limit
the ability of the Company or any Shareholder to compete in any line of
business or with any Person or from disclosing information with respect to
the Business;
(vi) all contracts and agreements relating to Intellectual
Property;
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(vii) all other contracts and agreements (whether or not made in
the ordinary course of business), which are material to the Company or the
conduct of the Business.
(b) Each Material Contract: is valid and binding on, and is in full
force and effect and valid and binding with respect to, each Shareholder and/or
the Company who or which is a party thereto, and upon consummation of the
transactions contemplated by this Agreement shall continue in full force and
effect without penalty or other adverse consequence, including, without
limitation, consequences resulting from any due on sale, change in control or
similar provision, if any, contained therein. Except as set forth on Schedule
3.15(b): (A) neither the Company nor any Shareholder is in breach of, or default
under, any Material Contract; (B) to the Shareholders' knowledge, no other party
to any Material Contract is in breach thereof or default thereunder.
SECTION III.16. Real Property. Schedule 3.16 sets forth a true, correct and
complete list of all Real Property owned or leased by the Company.
SECTION III.17. Assets. The Company owns, leases or has the legal right to
use all the properties and assets used or intended to be used in the conduct of
the Business (all such properties, assets and contract rights being the
"Assets"). The Company has good title to, or, in the case of leased Assets,
valid and subsisting leasehold interests in, all the Assets, free and clear of
all Encumbrances. All of the Assets (including all operating equipment,
computers and peripheral equipment) are in good operating condition and repair,
and are suitable and usable for the purposes for which they are used and
intended.
SECTION III.18. Intellectual Property.
(a) Schedule 3.18 sets forth a true and complete list of all
Intellectual Property, other than pre-packaged, commercially available, non-
customized software (e.g., "canned" word processing and spread sheet software)
(collectively, "Standard Software"), which is owned and/or used, licensed or
sublicensed by the Company in the operation of the Business. The Company has
full ownership of, or the legal right to use and/or license or sublicense, all
such Intellectual Property in the manner in which it is currently used in the
conduct of the Business and such use does not conflict with, misappropriate or
infringe, and has not been alleged to conflict with, misappropriate or infringe,
any Intellectual Property rights or franchises of any Person. No current or
former consultant, independent contractor, shareholder, employee or Affiliate of
the Company or, to the knowledge of the Shareholders, any other Person has any
right, title or interest in any of the Intellectual Property owned by the
Company. Neither the Company nor any Shareholder has taken, or failed to take,
any action that jeopardized, or which has or is reasonably likely to have the
effect of jeopardizing, the Company's sole and exclusive ownership of the
Intellectual Property owned by the Company.
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(b) Except as set forth on Schedule 3.18(b), there are no licenses,
contracts or other agreements pursuant to which the Company (i) has agreed to
grant or has granted rights to any Person with respect to any Intellectual
Property (including, without limitation, rights in connection with works made
for hire). To the knowledge of the Shareholders, none of the Company
Intellectual Property owned by the Company is being infringed by any Person.
(c) Except as set forth on Schedule 3.18(c), to the best of the
Company's knowledge after due inquiry, none of the computer software contained
in any product, program or other Intellectual Property used by or on behalf of
the Company, or licensed, created or maintained by the Company to or for any
third party, contains any date field which could cause or allow such software to
fail to perform any of its intended functions in a proper manner in connection
with the date change occurring on January 1, 2000 (the "Year 2000 Problem").
SECTION III.19. Customers. Schedule 3.19 sets forth a list of all current
customers of the Company. Except as disclosed on Schedule 3.19, the Company has
not received any notice, nor do the Shareholders have knowledge, that any
significant customer of the Company has ceased, or will cease, to use the goods
or services of, or lease property from, the Company, or has substantially
reduced, or will substantially reduce, the use of such goods or services or
lease of property at any time.
SECTION III.20. Suppliers. The Company has not received any notice, nor
do the Shareholders have knowledge, that any supplier will not sell supplies and
other goods or services to the Company at any time after the date hereof on
terms and conditions substantially similar to those used in its current sales to
the Company, subject only to general and customary price increases.
SECTION III.21. Labor Matters. (a) The Company is a party to a collective
bargaining agreement with SINDPPD-RS applicable to Persons employed or engaged
by it and, to the knowledge of the Shareholder, currently there are no
organizational campaigns, petitions or other unionization activities seeking
recognition of a collective bargaining representative that could affect the
Company; (b) there are no unfair labor practices, charges or complaints pending,
or to the knowledge of the Shareholders, threatened against the Company; (c) the
Company is currently in compliance with all applicable employment Laws in the
Territory, including without limitation,, labor relations, employment
standards, social security, unemployment insurance, housing policy, occupational
health and safety, workers' compensation, pay equity, employment equity, human
rights, and reserves for severance; (d) the Company has paid in full to all its
employees, or adequately accrued for in accordance with the Territory GAAP and
all applicable Laws, all wages, salaries, commissions, bonuses, benefits and
other compensation due to or on behalf of such employees; (e) there is no claim,
charge, procedure, or investigation that has been asserted or is now pending or,
to the knowledge of the Shareholders, threatened before any Governmental
Authority with respect to any Persons currently or formerly employed by the
Company.
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SECTION III.22. Employees. Schedule 3.22 lists the name, place of
employment, the current annual salary rates, bonuses, deferred or contingent
compensation, pension, accrued vacation, severance and other like benefits paid
in 1998 and payable (in cash or otherwise) in or with respect to 1999, the date
of employment and a description of position and job function of each current
salaried employee, officer, director, consultant or agent of the Company.
SECTION III.23. Taxes. (a) (i) All returns and reports in respect of
Taxes required to be filed with respect to the Company prior to the date hereof
have been timely filed; (ii) all Taxes required to be shown on such returns and
reports or otherwise due have been timely paid; (iii) all such returns and
reports are true, correct and complete; (iv) no adjustment relating to such
returns has been proposed by any Tax authority and no basis exists for any such
adjustment; (v) there are no pending or threatened actions or proceedings for
the assessment or collection of Taxes against the Company; (vi) there are no Tax
liens on any assets of the Company; (vii) neither the Company nor any
Shareholder has been at any time a member of any partnership or joint venture or
the holder of a beneficial interest in any trust for any period for which the
statute of limitations for any Tax has not expired; (viii) all Taxes required to
be withheld, collected or deposited by or with respect to the Company have been
timely withheld, collected or deposited, as the case may be, and, to the extent
required, have been paid to the relevant taxing authority.
(b) The Shareholders have delivered to the Purchaser correct and
complete copies of all of the Company's income, franchise and similar tax
returns since January 1, 1996, and correct and complete summaries of all
examination reports, and statements of deficiencies assessed against or agreed
to by the Company since January 1, 1996.
(c) On the balance sheet included in the Interim Financial
Statements, reserves and allowances have been provided adequate to satisfy all
Liabilities for Taxes relating to the Company for periods through the date
thereof.
SECTION III.24. Insurance. Schedule 3.24 sets forth a true and complete
list of all liability, property and other insurance policies currently in effect
that insure the Business, the Assets or any of the Company's employees, listing
for each such policy the identity of the insurance carrier, the policy period,
the limits and retentions and any special exclusions. Each such policy is valid
and binding and in full force and effect, all premiums thereunder have been paid
and the Company has not received any notice of cancellation or termination
thereof or is in default thereunder.
SECTION III.25. Investment Representations.
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(a) Each Shareholder is acquiring the IFX Stock to be issued to him
hereunder for his own account, for investment only, and not with a view to the
resale or distribution thereof. Each Shareholder represents that he, alone or
with his Purchaser Representative (as such term is defined in Rule 501 of
Regulation D of the Securities Act), has such knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks associated with ownership of IFX Stock. Each Shareholder is able to bear
the substantial economic risks associated with ownership of IFX Stock, including
the risk of losing his entire investment, and can afford to hold IFX Stock to be
acquired by him hereunder for an indefinite period of time
(b) Each Shareholder acknowledges receipt of IFX's Annual Report on
Form 10-K for the fiscal year ended June 30, 1998 and IFX's Quarterly Report[s]
on Form 10-Q for the quarter[s] ended September 30, 1998 and December 31, 1998,
each as filed with the United States Securities Exchange Commission (the "SEC
Filings") and represents that he and/or his Purchaser Representative (i) has
reviewed the SEC Filings and (ii) has been afforded the opportunity to ask
questions and receive answers from personnel and representatives of IFX
concerning IFX and the IFX Stock, and to obtain any additional information that
IFX possesses or can acquire without unreasonable effort or expense that is
necessary to verify any of the information contained in any SEC Filings or
otherwise provided by IFX.
(c) Each Shareholder understands and acknowledges that (i) the shares
of IFX Stock issued to him hereunder or pursuant to the transactions
contemplated hereby (A) at the time of issuance, will not be registered under
the Securities Act or any applicable securities Laws and will be issued pursuant
to an exemption from registration provided by Regulation S promulgated under the
Securities Act ("Regulation S") or by Section 4(2) of the Securities Act in
reliance upon the representations and warranties of the Shareholders contained
herein, (B) may not be sold, transferred or otherwise disposed of (1) unless
registered under the Securities Act and applicable securities laws or unless an
exemption from registration is available or (2) except in accordance with
Regulation S or Rule 144 promulgated under the Securities Act, (ii) hedging
transactions involving shares of IFX Stock issued to him hereunder or pursuant
to the transaction contemplated hereby may not be conducted other than in
compliance with the Securities Act, and (iii) each certificate representing any
such shares will be imprinted with a legend in substantially the following form:
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THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
OTHER UNITED STATES, FOREIGN FEDERAL, OR STATE LAWS. NO SALE, OFFER TO
SELL, ASSIGNMENT, PLEDGE, HYPOTHECATION, GIFT, TRANSFER OR OTHER
DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE MADE
UNLESS A REGISTRATION STATEMENT WITH RESPECT TO SUCH SHARES IS THEN IN
EFFECT UNDER THE ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE ACT IS AVAILABLE WITH RESPECT TO SAID TRANSFER AND THE REQUIREMENTS OF
OTHER APPLICABLE LAWS ARE SATISFIED. HEDGING TRANSACTIONS INVOLVING THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED OTHER THAN IN
COMPLIANCE WITH THE ACT.
(d) Each Shareholder (i) represents that he is not a U.S. Person (as
defined in Appendix A hereto) and that he is not acquiring the IFX Stock issued
to him hereunder for the account or benefit of any U.S. Person, (ii)
acknowledges that IFX is obligated, and by this provision IFX hereby is bound,
to refuse to register (and to instruct its Secretary and transfer agent to
refuse to register) any transfer of the shares of IFX Stock acquired hereunder
by such Shareholder that is not made pursuant to a registration under the
Securities Act or in compliance with the provisions of Regulation S, Rule 144 or
another available exemption from registration, and (iii) represents that the
offer to acquire the IFX Stock issued hereunder to such Shareholder was not
communicated to or accepted by such Shareholder while he was in the United
States (as defined in Regulation S) and that this Agreement and each other
document contemplated hereby was executed by such Shareholder outside the United
States.
SECTION III.26. Full Disclosure. No representation or warranty of the
Shareholders in this Agreement and no statement contained in any written
financial or operating data or certificate furnished or to be furnished to the
Purchaser pursuant to this Agreement, or in connection with the transactions
contemplated by this 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 herein or therein not misleading.
ARTICLE IV.
COVENANTS
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SECTION IV.01. Conduct of Business. Except as contemplated by this
Agreement, during the period from the date of this Agreement through the
Closing, the Company shall, and the Shareholders shall cause the Company to,
conduct its operations and the Business in the ordinary course consistent with
its past practice and in compliance with all Laws and, to the extent consistent
therewith, and the Shareholders shall use their reasonable best efforts to
preserve intact the Company's current business organization and operations.
Without limiting the foregoing and except as provided herein, the Company shall
not, without the prior written consent of the Purchaser, take or enter into any
arrangement or agreement to take, any action to:
(a) issue any capital shares or other equity interests of the
Company, or any options, warrants or other instruments convertible or exchange
for the foregoing, split, combine or reclassify any of the shares in the capital
of the Company, or declare, set aside, pay or make any dividend or other
distribution of any kind on or with respect to any of the Shares in the capital
of the Company or any obligations convertible or exchangeable into any capital
shares or other equity interests of the Company, or authorize any of the
foregoing;
(b) except as expressly permitted hereunder, incur any Indebtedness
except in the ordinary course of the Business consistent with past practice;
(c) enter into any license, contract or other agreement pursuant to
which the Company grants any rights with respect to any Intellectual Property;
(d) enter into, amend, terminate, take or omit to take any action
that would constitute a violation of or default under, or waive any rights
under, any Material Contract, or enter into any contract, arrangement or
agreement with any Affiliate of the Company, Shareholder or any officer or
director of the Company;
(e) initiate, compromise or settle any litigation or arbitration
proceeding;
(f) change in any material respects (i) its accounting methods,
principles or practices, except insofar as may be required by a generally
applicable change in the Territory GAAP; and (ii) its manner of dealing with
suppliers or customers of the Company, including, without limitation, any
billing, credit, collection, account receivable methods, policies or procedures
in connection therewith;
(g) acquire, sell, lease or encumber any of the Assets or other
property of the Company;
(h) amend, revoke, cancel or otherwise modify any of its Charter
Documents;
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(i) take any action, or fail to take any action permitted by this
Agreement with the knowledge that such action or failure to take action would
result in (i) any of the representations or warranties contained in Article III
becoming or being untrue; or (ii) any of the conditions to the transactions
contemplated in this Agreement set forth in Article VI not being satisfied;
(j) make or commit to make any capital expenditure in excess of
US$10,000, other than as expressly contemplated by the business plan of the
Company delivered to the Purchaser; or
(k) increase in any manner the compensation or fringe benefits of any
employee, consultant, independent contractor, officer or director of the
Company, including without limitation through the granting or acceleration of
vesting of stock options or employee benefits, or enter into, adopt or amend any
Plan.
SECTION IV.02. Reasonable Best Efforts. Prior to and following the
Closing, each of the parties hereto shall use its reasonable best efforts (a) to
take, or cause to be taken, all appropriate action, and do, or cause to be done,
all things necessary and proper under applicable Law to consummate and make
effective the transactions contemplated hereby as promptly as practicable, (b)
to obtain from any Governmental Authority or any other Person any consents,
licenses, permits, waivers, approvals, authorizations, or orders required to be
obtained or made by the parties hereto or any of their Affiliates in connection
with the authorization, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and (c) as promptly as
practicable, to make all necessary filings, and thereafter make any other
required submissions, with respect to this Agreement required under any
applicable Laws. The parties shall cooperate with each other in connection with
the taking of all such actions and making of all such filings, including
providing copies of all such documents to the non-filing parties and their
advisors prior to filing and, if required, to accept all reasonable additions,
deletions or changes suggested in connection therewith. Each of the parties
shall use its reasonable best efforts to furnish to the other parties all
information required in connection with the transactions contemplated by this
Agreement.
SECTION IV.03. Confidential Information.
(a) Each Shareholder recognizes and acknowledges that all
confidential and proprietary information of the Business and the business of the
Purchaser and/or IFX (collectively, "Confidential Information") constitutes
valuable, special and unique assets owned by the Company, which are being
acquired by the Purchaser pursuant to the Transaction, or owned by the Purchaser
and/or IFX. At no time shall any Shareholder, any Shareholder's Affiliates, the
Company or any of the Company's Related Persons disclose any Confidential
Information for any reason whatsoever.
-16-
(b) Each Shareholder acknowledges that the transaction contemplated
by this Agreement and certain Confidential Information furnished by the
Purchaser and/or IFX to the Shareholders hereunder, may constitute material,
nonpublic information of IFX under United States federal securities Laws and/or
the rules and regulations of the Nasdaq Stock Market, Inc. Each Shareholder
agrees not to trade, directly or indirectly, and agrees to each of its Related
Persons and other representatives of the Company and such Shareholder, as
applicable, who obtains knowledge of such material, nonpublic information of IFX
not to trade in IFX Stock until the material terms of such information have been
disclosed to the public, such as by means of a press release or publication in a
newspaper of general circulation.
(c) Each Shareholder agrees that money damages alone would not be an
adequate remedy for breach of Sections 4.03, 4.04 or 4.05, and that, in the
event of a breach or threatened breach of such provisions, (i) the Purchaser
and/or IFX shall be entitled to an injunction and each Shareholder agrees not to
oppose the granting of such equitable relief and to waive any requirement for
the posting of a bond in connection with such remedy. Nothing herein shall be
construed as prohibiting the Purchaser and/or IFX from pursuing any other
remedies available to it for such breach or threatened breach, including
recovery of damages. The Shareholders shall be liable, jointly and severally,
for any breach by their respective Related Persons of this Section 4.03.
SECTION IV.04. Non-Competition. Except as otherwise provided in this
Section 4.04, each Shareholder covenants and agrees that neither he nor any of
his Affiliates (except that the word "Affiliate" for the sole purposes of Sub-
Section 4.4 (a) shall exclude any persons listed in item (e) of the definition
of "Affiliate" on Schedule 1), either alone or jointly with or on behalf of any
Person, whether as principal, agent, partner, stockholder, director, consultant,
employee or otherwise, and whether directly or indirectly, shall:
(a) at any time during three (3) years after the Closing Date (the
"Relevant Period"), form, create, organize, acquire or have an interest in,
directly or indirectly, any business that is directly or substantially related
to Internet access and web hosting of any form within the Territory, Central or
South America (except for an interest of up to 10% in a company traded in any
stock exchange), and at any time during twelve (12) months after the Closing
Date (the "Reduced Relevant Period"), work for, carry on, assist on any aspect
related to Internet access or web hosting of any business within the Territory,
Central or South America. Any Shareholder who, after the Reduced Relevant
conducts any of the activities prohibited during such period of time, he/she
shall send a written notice to the Purchaser confirming the nature of the work
performed.
(b) at any time during the Relevant Period, interfere with the
performance of any agreement relating to the Business;
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SECTION IV.05. Non-Solicitation. Each Shareholder agrees that during the
Relevant Period, neither such Shareholder nor any of his or its Related Persons
will solicit any of the officers, directors or employees of the Company, the
Purchaser, IFX or any of their respective subsidiaries or Affiliates to leave
his or her employment and accept employment elsewhere.
SECTION IV.06. Other ISP Acquisitions. Notwithstanding any provisions in
this Agreement to the contrary, nothing herein shall prevent or otherwise
prohibit the Purchaser, IFX or any of their respective Affiliates from acquiring
one or more other Internet service providers with operations in the Territory.
In addition, the parties agree that the Purchaser and/or IFX shall have the
right to promote and advertise any of such acquired Internet service providers,
either together or separately from the Company, in their sole and absolute
discretion.
ARTICLE V.
CLOSING CONDITIONS AND DELIVERIES
---------------------------------
SECTION V.01. Conditions to Shareholders' Obligations; Closing Deliveries
of the Purchaser. The obligations of the Shareholders to consummate the
transactions contemplated by this Agreement shall be subject to the delivery by
the Purchaser, at or prior to the Closing Date, of payment of the First
Installment of the Purchase Price payable upon Closing, and (ii) a letter from
IFX guaranteeing the payment of the Purchase Price to the Shareholders.
SECTION V.02. Conditions to Purchaser's Obligations; Closing Deliveries of
the Shareholders. The obligations of the Purchaser to consummate the
transactions contemplated by this Agreement shall be subject to the delivery by
the Shareholders, at or prior to the Closing Date, of each of the following:
(a) A certificate, signed by each of the Shareholders and dated the
Closing Date, certifying that:
(i) the representations and warranties of the Shareholders
contained in this Agreement are true and correct in all material respects
on and as of the Closing Date;
(ii) no Action has been commenced or threatened by or before any
Governmental Authority against any of the Shareholders or the Company;
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(iii) all authorizations, consents, orders and approvals of all
Governmental Authorities and officials and all third party consents which
are necessary or desirable for the consummation of the transactions
contemplated by this Agreement, each in form and substance satisfactory to
the Purchaser in its reasonable good faith determination, including without
limitation, the authorization of change of ownership from the Governmental
Authorities; and
(iv) since the date of the most recent unaudited balance sheet
included in the Interim Financial Statements, no event or events has
occurred, or is reasonably likely to occur, which, individually or in the
aggregate, has, or could reasonably be expected to have, a Material Adverse
Effect.
(b) Charter Documents. A certified copy of the most recently adopted
articles of incorporation and bylaws of the company, and any amendments thereto
as of the Closing.
(c) Minute Books. The minute books and shareholder register of the
Company, certified by the appropriate officer or director of each such entity as
of the Closing Date.
(d) Resignations. The resignations of each of the officers, attorneys
in fact (including without limitation, Xxxxxx Xxxxxxxxx Sachet) and directors of
the Company to the extent requested by the Purchaser, including a release of any
payments due them by the Company.
(e) Cash Accounts. The Purchaser shall have received, if it so
requests, terminations of authority, effective as of the Closing Date, by each
employee or agent of each of the Company having signatory or other authority
over the cash, checking, lock box, safe deposit and other depositary
arrangements of the Company.
(f) Release Agreements. The Purchaser shall have received from each
Shareholder an executed comprehensive general release, in form and substance
reasonably satisfactory to the Purchaser, pursuant to which such Shareholder
shall release the Company from all claims of and other liabilities to such
Shareholder for all periods up to and including the Closing Date.
(g) Due Diligence. The Purchaser shall be satisfied with the results
of its legal and financial due diligence regarding the Company and the Business,
in its sole and absolute discretion.
(h) Network Profile Form. The Purchaser shall have received from the
Company a duly completed copy of the Network Profile Form set forth in Schedule
5.02(i);
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(i) Subscriber Information. Purchaser shall have received from the
Company duly completed copies of the information contained in Schedule 5.02(j)
pertaining to each subscriber of the Company in a format satisfactory to the
Purchaser; and
(j) Clearance Debt Certificates. The Shareholders shall have delivered
to Purchaser clearance debt certificates in the name of each Shareholder issued
by the competent Civil, Criminal, Labor and Federal, State and Tax authorities.
(k) Charter Amendment. The Shareholders shall have executed,
initialed, and delivered to the Purchaser the amendment to the charter of the
Company (alteracao do contrato social), resolving on (i) the transfer of the
Shares from Shareholders to Purchaser and to the Token Quotaholder; (ii) the
appointment of the new managers of the Company as designated by Purchaser.
(l) Lease Agreements. The Company shall have entered into amendments
to the lease agreements it is a party to in a form satisfactory to the
Purchaser.
ARTICLE VI.
TERMINATION
-----------
SECTION VI.01. Termination. This Agreement may be terminated at any time
prior to Closing:
(a) by the mutual consent of the Shareholders and the Purchaser; or
(b) by the Purchaser, if (i) there has been a material breach by any
Shareholder of any covenant or agreement on his part to be performed or complied
with under this Agreement, and such breach is not cured as soon as practicable,
but in no event later than three (3) Business Days, following receipt by the
Shareholders of written notice thereof, (ii) any of the Shareholders is in
material breach of any of the representations and warranties of Shareholders or
any of them contained in Article III of this Agreement or (iii) the Closing has
not occurred prior to October 6, 1999.
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SECTION VI.02. Effect of Termination. Except for Sections 4.03, 6.02 and
Article VIII, which Sections and Article shall survive any termination of this
Agreement, this Agreement shall be null and void, and all other rights and
obligations of the Purchaser and the Shareholders under this Agreement shall
forthwith cease and have no further force or effect, provided that the
termination of this Agreement shall not relieve any party of any liability for
breach of this Agreement prior to the date of termination.
SECTION VI.03. Exclusivity; Termination Fee.
(a) Unless and until this Agreement is terminated, neither the Company
nor any Shareholder nor any of their respective officers, directors, employees,
representatives, agents or Affiliates, as applicable, will (i) directly or
indirectly, encourage, solicit, initiate or engage in any discussions or
negotiations with, or knowingly provide any information to, any Person (other
than the Purchaser and/or IFX), concerning a potential joint venture, equity
investment, merger, amalgamation, acquisition, combination, consolidation,
liquidation, recapitalization, reorganization, purchase or sale of material
assets, purchase or sale of equity or debt interests of the Company or similar
transactions involving the shares in the capital of the Company (each, a
"Proposal"), or (ii) engage in negotiations with, or disclose any nonpublic
information relating to the Company, or afford access to the properties, books
or records of the Company to, any Person that informs the Company and/or any of
the Shareholders that it is considering making, or has made, a Proposal. The
Company and each of the Shareholders shall immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any Person
(other than the Purchaser and/or IFX) conducted heretofore with respect to any
Proposal and will notify the Purchaser and IFX promptly if any such inquiries or
proposals are received by, any such information is requested from or any such
negotiations or discussion are sought to be initiated with the Company and/or
any of the Shareholders, or any of such Persons.
(b) In the event that (i) the transactions contemplated hereby are not
consummated for any reason other than a termination of this Agreement by the
Shareholders pursuant to Section 6.01(iii), and (ii) an agreement relative to a
Proposal (a "Third Party Agreement") is executed at any time on or prior to
October 6, 1999, then the Purchaser and IFX shall be entitled to receive from
the Company and the Shareholders, jointly and severally, and the Company and the
Shareholders, jointly and severally, shall be obligated to pay to the Purchaser
and IFX, the sum of US$$200,000 in cash (the "Termination Fee") within five (5)
Business Day following execution of the Third Party Agreement, whether or not
the Proposal contemplated thereby is completed. It is understood and agreed by
the parties hereto that the Termination Fee is intended to constitute liquidated
damages because the actual amount of damages which would be sustained by the
Purchaser and IFX as a result of such termination is difficult, if not
impossible, to ascertain and that the agreement of the parties with regard to
the payment of the foregoing sum as liquidated damages represents a good faith
effort by each of the parties to establish the reasonable amount of restitution
necessary to provide for recovery of all costs and expenses associated with
efforts to consummate the transactions contemplated hereby, including, without
limitation, the Purchaser's and IFX's opportunity costs.
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ARTICLE VII.
INDEMNIFICATION
---------------
SECTION VII.01. Indemnification of the Purchaser.
(a) Survival. All agreements, representations and warranties contained
herein shall survive the execution and delivery of this Agreement and the
Closing, regardless of any investigation made at any time with respect to any of
the foregoing or any information the parties may have in respect thereto for a
period of five (5) years following the Closing Date; provided, however, that any
agreement, representation or warranty contained in Sections 3.01, 3.02, 3.03,
3.04, 3.09, 3.18, 3.25, and 3.26 hereof shall survive for a period of 10 years
following the Closing date; and provided, further, that any representation or
warranty contained in Sections 3.23 hereof shall survive until the expiration of
any applicable statute of limitations of any Law referred to therein (taking
into account any applicable tolling provisions with respect thereto).
(b) The Purchaser's Right to Indemnification. Subject to the
provisions of this Article VII, (i) the Shareholders, jointly and severally
(subject to the limitations of percentage of liability set forth in Section
2.03), hereby agree to indemnify and hold harmless the Purchaser, its officers,
directors, shareholders, employees, agents, attorneys, successors, predecessors
and assigns from and against any and all losses, obligations, liabilities,
damages, claims, deficiencies, costs and expenses (including, but not limited
to, the amount of any settlement entered into pursuant hereto and all reasonable
legal and other expenses incurred in connection with the investigation,
prosecution or defense of the matter but excluding consequential damages)
(collectively "Claims"), which may be asserted against or sustained or incurred
by the Purchaser in connection with, arising out of, or relating to (A) any
breach or alleged breach of any of the representations, warranties, agreements
and covenants made by the Shareholders herein or in any Exhibit or Schedule,
certificate or other document delivered to the Purchaser by or on behalf of the
Shareholders in connection with this Agreement; or (B) any false, incorrect or
misleading representation or warranty made by or on behalf of any Shareholder
herein or in any Exhibit or Schedule, certificate or other document delivered to
the Purchaser by or on behalf of any Shareholder in connection with this
Agreement; and (ii) any and all costs and expenses (including, but not limited
to, reasonable legal expenses) incurred by the Purchaser in connection with the
enforcement of its rights under this Agreement.
(c) Right of Set Off; Method of Set Off. In addition to, and not in
limitation of, the Purchaser's rights to indemnification as set forth in this
Article VII, the Purchaser shall have the right to set off against any amounts
owed to the Shareholders pursuant to Section 2 hereof any amounts for which the
Purchaser or any other Person identified in this Section is entitled to
indemnification hereunder.
-22-
SECTION VII.02. Procedure for Claims.
Notice of Claim. Promptly, but in any event within thirty (30)
days after obtaining knowledge of any claim or demand which may give rise to, or
could reasonably give rise to, a claim for indemnification hereunder (referred
to herein as an "Indemnification Claim"), the Purchaser shall give written
notice to the Shareholders of such Indemnification Claim ("Notice of Claim").
The failure to give a timely Notice of Claim to the Shareholders shall not
relieve the Shareholders from any liability that they may have to the Purchaser
hereunder to the extent that the Shareholders are not prejudiced by such
failure. The Notice of Claim shall set forth a description of the facts giving
rise to and the amount (or a reasonable estimate) of the loss, damage or expense
suffered, or which may be suffered, by the Purchaser as a result of such
Indemnification Claim and the Shareholders shall pay the amount of the
Indemnification Claim to Purchaser with in five (5) days after Shareholders,
receive notice of the amount due to purchaser as a result of such
Indemnification Claim; provided however, that the Purchaser shall be required
to pay the amounts actually received by Shareholders to the person asserting the
Indemnification Claim.
If the Shareholders elect to defend a Third Party Claim, the Purchaser
shall have the right to participate in its defense, at the Purchaser's
expense (and without the right to indemnification for such expense under
this Agreement); provided, however, that the reasonable fees and expenses
of counsel retained by the Purchaser shall be at the expense of the
Shareholders if (A) the use of the counsel chosen by the Shareholders to
represent the Purchaser would present such counsel with a conflict of
interest; (B) the parties to such proceeding include both Purchaser and the
Shareholders and there may be legal defenses available to the Purchaser
which are different from or additional to those available to the
Shareholders; (C) within ten (10) days after being advised by the
Shareholders of the identity of counsel to be retained to represent the
Purchaser, the Purchaser shall have objected to the retention of such
counsel for valid reasons (which shall be stated in a written notice to the
Shareholders), and the Shareholders shall not have retained different
counsel reasonably satisfactory to the Purchaser; or (iv) the Shareholders
shall authorize the Purchaser to retain separate counsel at the expense of
the Shareholders.
ARTICLE VIII.
GENERAL PROVISIONS
------------------
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SECTION VIII.01. Expenses. All costs and expenses incurred by the
Shareholders or the Company in connection with the transactions contemplated
hereby, including, without limitation, the fees and expenses of all brokers,
accountants (other than routine audit costs) and counsel (other than routine
corporate organizational work) for the Company and for the Shareholders, which
have not been paid through the date of Closing, shall be the exclusive
responsibility of the Shareholders and not the Company, and shall be deemed a
Shareholder Retained Liability as set forth in Section 2.02.(e).
SECTION VIII.02. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by reputable overnight courier service, cable, facsimile, telegram,
telex or registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 8.02):
(a) if to the Purchaser:
Unete do Brasil, Limitada,
C/o IFX, Inc.
00000 Xxxxxxxx Xxxx, 0xx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
XXXXXX XXXXXX OF AMERICA
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxxxx
with a copy to:
Xxxx, Xxxxxx & Xxxxxxxxx
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
XXXXXX XXXXXX OF AMERICA
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx
(b) if to the Shareholders:
c/o ____________________
________________________
________________________
________________________
Telephone:______________
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with a copy to:
______________________________
______________________________
______________________________
Facsimile:
Attention:
SECTION VIII.03. Shareholders' Representative. Each Shareholder, by his
execution hereof, hereby designates Xxxxxx Xxxxxxxx (the "Representative") as
his representative with full power and authority to communicate to the Purchaser
the opinion of such Shareholder with respect to all matters arising under and
pursuant to this Agreement. Any notice or other communication given to the
Representative shall be deemed to have been given to each Shareholder. Neither
the Representative nor the Successor Representative will resign until a
successor representative shall have been appointed.
SECTION VIII.04. Public Announcements. Except as required by law, no
Shareholders shall make, or cause to be made, any press release or public
announcement in respect of this Agreement or the transactions contemplated
hereby or otherwise communicate with any news media without the prior written
consent of the Purchaser.
SECTION VIII.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible.
SECTION VIII.06. Entire Agreement. This Agreement, including all of the
exhibits and schedules attached hereto which are incorporated herein by this
reference, constitutes the entire agreement of the parties hereto with respect
to the subject matter hereof and thereof and supersedes all prior agreements and
undertakings, both written and oral, between the Shareholders and the Purchaser
with respect to the subject matter hereof and thereof.
SECTION VIII.07. Assignment. This Agreement and the rights and duties
hereunder may not be assigned or assumed by operation of law or otherwise (other
than an assignment by the Purchaser to an Affiliate of the Purchaser) without
the express written consent of the Shareholders and the Purchaser (which consent
may be granted or withheld in the sole discretion of the Shareholders or the
Purchaser, as applicable).
-25-
SECTION VIII.08. Amendment; Waiver. This Agreement may not be amended or
modified except by an instrument in writing signed by, or on behalf of, the
Shareholders and the Purchaser. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder shall
not constitute a waiver of any of such rights.
SECTION VIII.09. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the Federative Republic of Brazil.
SECTION VIII.10. Jurisdiction; Service of Process. Each party hereto
agrees that any action or proceeding initiated by any party hereto and arising
directly or indirectly out of or relating to this Agreement shall be brought in
the courts of competent jurisdiction in the city of Porto Alegre, Rio Grande do
Sul, Brazil ( the "Brazilian Courts"). Each party hereto expressly submits to
the jurisdiction of the Brazilian Courts in any such action or proceeding, and
hereto consents to process being served in any suit, action or proceeding of the
nature referred to above or an arbitration in accordance with this Agreement
either (a) by the mailing of a copy thereof by registered or certified mail,
postage prepaid, return receipt requested, to its address as set forth herein or
(b) by serving a copy thereof upon such party's authorized agent for service of
process (to the extent permitted by applicable law, regardless of whether the
appointment of such agent for service of process for any reason shall prove to
be ineffective or such agent for service of process shall accept or acknowledge
such service). Each Shareholder, by its execution hereof, hereby duly appoints
CT Corporation System as its agent for service of process hereunder, and the
Purchaser, by its execution hereof, hereby duly appoints IFX as its agent for
service of process hereunder. Each party hereto agrees that such service, to the
fullest extent permitted by law, shall be deemed in every respect effective
service of process upon it and shall be taken and held to be valid personal
service upon and personal delivery to it. Each party hereto waives any claim in
any action or proceeding permitted hereunder to be brought in an Brazilian Court
that such court is an inconvenient forum or an improper forum based on lack of
venue or jurisdiction.
SECTION VIII.11. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-26-
IN WITNESS WHEREOF, each of the parties have executed, or caused to be
executed by its duly authorized officer, this Agreement, and the spouses of each
of the Shareholders have also executed this Agreement indicating their
acceptance of the foregoing transaction and all of the terms and conditions set
forth herein and in all Schedules hereto, in each case as of the date first
written above.
PURCHASER:
---------
Unete do Brasil, Limitada
By: __________________________
Name:
Title:
THE COMPANY:
-----------
_____________________
By: __________________________
Name:
Title:
SHAREHOLDERS:
------------
_______________________________
Name:
Signature:
_______________________________
Name:
Signature:
_______________________________
Name:
Signature:
[SIGNATURE PAGE TO SHARE PURCHASE AGREEMENT]
-27-
SCHEDULE A
----------
Shareholders Number of Shares Percentages
------------ --------------------------------
Xxxxxx Xxxxxxxxx Sachet 20,000 33.33%
------------------------------- ------ -----
Xxxxxxxx Xxxxxx xx Xxxxx Xxxx 20,000 33.33%
------------------------------- ------ -----
Xxxxxxx xx Xxxxxx Xxxxx 20,000 33.33%
------------------------------- ------ -----
[AWAITING CONFIRMATION OF SHARE TRANSFERS AND PAYMENT OF PURCHASE PRICE]
------------------------------------------------------------------------
-28-
Appendix A
----------
Definition of U.S. Person
-------------------------
(1) "U.S. Person" means:
(i) any natural person resident in the United States;
(ii) any partnership or corporation organized or incorporated under
the laws of the United States;
(iii) any estate of which any executor or administrator is a U.S.
person;
(iv) any trust of which any trustee is a U.S. person;
(v) any agency or branch of a foreign entity located in the United
States;
(vi) any non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the benefit or
account of a U.S. person;
(vii) any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary organized,
incorporated, or (if an individual) resident in the United States; and
(viii) any partnership or corporation if:
(A) organized or incorporated under the laws of any foreign
jurisdiction; and
(B) formed by a U.S. person principally for the purpose of
investing in securities not registered under the Act, unless it is
organized or incorporated, and owned, by accredited investors (as
defined in Rule 501(a) under the Act) who are not natural persons,
estates or trusts.
(2) Notwithstanding the foregoing paragraph (1), the following are not
"U.S. persons":
(i) any discretionary account or similar account (other than an estate
or trust) held for the benefit or account of a non-U.S. person by a dealer or
other professional fiduciary organized, incorporated, or (if an individual)
resident in the United States;
(ii) any estate of which any professional fiduciary acting as executor
or administrator is a U.S. person if:
(A) an executor or administrator of the estate who is not a U.S.
person has sole or shared investment discretion with respect to the assets
of the estate; and
-29-
(B) the estate is governed by foreign law;
(iii) any trust of which any professional fiduciary acting as trustee
is a U.S. person, if a trustee who is not a U.S. person has sole or shared
investment discretion with respect to the trust assets, and no beneficiary of
the trust (and no settlor if the trust is revocable) is a U.S. person;
(iv) an employee benefit plan established and administered in
accordance with the law of a country other than the United States and customary
practices and documentation of such country;
(v) any agency or branch of a U.S. person located outside the United
States if:
(A) the agency or branch operates for valid business reasons; and
(B) the agency or branch is engaged in the business of insurance or
banking and is subject to substantive insurance or banking regulation,
respectively, in the jurisdiction where located; and
(vi) the International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank, the Asian
Development Bank, the African Development Bank, the United Nations, and their
agencies, affiliates and pension plans, and any other similar international
organizations, their agencies, affiliates and pension plans.
"United States" means the United States of America, its territories and
possessions, any State of the United States and the District of Columbia.
Summarized from Rule 902(k),
General Rules and Regulations
Under the United States Securities Act of 1933,
as amended
-30-
Schedule 1
----------
Definitions
-----------
As used in this Agreement, the following terms shall have the following
meanings:
"Accountants" means Ernst & Young or its Affiliate in the Territory.
"Action" means any claim, action, suit, arbitration, inquiry, review,
audit, proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, (a) any other
Person which, directly or indirectly, owns or controls, is under common
ownership or control with, or is owned or controlled by, such specified Person;
(b) any other Person which is a director, officer or partner or is, directly or
indirectly, the beneficial owner of ten percent (10%) or more of any class of
equity securities of the specified Person or a Person described in foregoing
clause (a); (c) another Person of which the specified Person is a director,
officer or partner or is, directly or indirectly, the beneficial owner of ten
percent (10%) or more of any class of equity securities; (d) another Person in
which the specified Person has a substantial beneficial interest as to which the
specified Person serves as trustee or in a similar capacity; and/or (e) any
spouse or member of the family (i.e., children and parents) of the specified
Person or any of the foregoing Persons. As used in this definition, the term
"control" includes, without limitation, the possession, directly or indirectly,
of the power to direct the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Annualized Net Revenues" means net revenues of the Company (gross revenues
minus any applicable sales and other taxes) during the period of three (3)
months ending July 31, 1999, multiplied by four (4), less all accounts
receivable past due for 60 days or more as of July 31, 1999.
"Business" means the Internet service provider business of the Company and
all related activities as currently conducted and anticipated to be conducted by
the Company.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Encumbrance" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, setoff, preferential arrangement or restriction of
any kind, including, without limitation, any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of ownership.
"Governmental Authority" means any United States or Territory national,
federal, state, departmental, provincial or local, or any foreign government,
governmental, regulatory or administrative authority, agency or commission or
any court, tribunal, or judicial or arbitral body.
"Governmental Order" means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
-31-
"Indebtedness" means, with respect to any Person on any specified date, (a)
all indebtedness or obligations of such Person, whether fixed or contingent,
incurred for any purpose; (b) all obligations of such Person as lessee under
leases that have been or should be, recorded as capital leases; (c) all
obligations, fixed or contingent, under letters of credit and similar
instruments; (d) all obligations to purchase, redeem, retire, defease or
otherwise acquire for value any capital stock of such Person or any warrants,
rights or options to acquire such capital stock; (e) all indebtedness of others
of the types referred to in clauses (a) through (d) above that is guaranteed,
directly or indirectly, in any manner by such Person; and (f) all indebtedness
of the types referred to in clauses (a) through (d) above secured by (or for
which the holder of such indebtedness has an existing right, contingent or
fixed, to be secured by) any Encumbrance on property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person may not have assumed or become liable for the payment of such
indebtedness.
"Intellectual Property" means any and all (a) inventions, ideas and
conceptions of potentially patentable subject matter; (b) statutory invention
registrations, patents, patent registrations and applications, and all rights
therein provided by international treaties or conventions and all improvements
thereto; (c) trademarks, service marks, trade dress, logos, trade names and
corporate and partnership names, Internet domain names, electronic mail and
world wide web addresses, web site designs, applications and protocols,
including all common law rights, and registrations and applications for
registration thereof and all rights therein provided by international treaties
or conventions; (d) domestic and international copyrights (registered or
otherwise) and registrations and applications for registration thereof, and all
rights therein provided by international treaties or conventions (including,
without limitation, works made for hire); (e) "moral rights" and waivers of such
rights by others; (f) computer and/or Internet software and applications,
including, without limitation, source code, operating systems and
specifications, data, data bases, files, documentation and other materials
related thereto; (g) trade secrets and confidential, technical and business
information; (h) whether or not confidential, technology, research and
development information, drawings, specifications, designs, plans, proposals,
technical data, copyrightable works, financial, marketing and business data,
selling, pricing and cost information or procedures, business and marketing
plans and customer and supplier lists and information; (i) copies and tangible
embodiments of all the foregoing, in whatever form or medium, including,
electronic formats; (j) all rights to obtain and rights to apply for patents,
and to register trademarks and copyrights; and (k) all rights to xxx or recover
and retain damages and costs and attorneys' fees for present and past
infringement of any of the foregoing.
"Law" means any national, federal, state, local, provincial or foreign
statute, law, ordinance, regulation, rule, code, order, other requirement or
rule of law in the United States or in the Territory.
"Liabilities" means any and all Indebtedness, debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable, including, without limitation, those
arising under any Law (including, without limitation, any Law relating to
environmental, health and safety matters), Action or Governmental Order and
those arising under any contract, agreement, arrangement, commitment or
undertaking. "Liabilities" shall not mean liabilities arising out of an
enactment of a law that is applied retroactively for periods prior to the
enactment of the statute and creates a liability and violation that would not
have otherwise been deemed a violation or liability prior to the enactment of
the law.
-32-
"Material Adverse Effect" means any circumstance, change in, or effect on
the Company that: (a) is, or could be expected to, or, materially adverse to the
Company; (b) could be expected to adversely affect the ability of the Company to
operate or conduct the Business in the manner in which it is currently, or is
anticipated to be, operated or conducted by the Company or (c) could be expected
to have a material adverse effect upon the validity or enforceability of this
Agreement or the rights and remedies of the Purchaser hereunder.
"Person" means any individual, partnership, firm, corporation, limited
liability company or partnership, association, trust, unincorporated
organization or other entity.
"Real Property" means the real property owned or leased by the Company,
together with all buildings and other structures, facilities or improvements
currently or hereafter located thereon, all fixtures, systems, wiring, equipment
and items of personal property of the Company attached or appurtenant thereto
and all easements, licenses, and rights relating to the foregoing.
"Receivables" means any and all accounts receivable, notes and other
amounts receivable by the Company from third parties, including, without
limitation, customers and advertisers, arising in any manner from the Business
before the date hereof, together with all unpaid financing and other charges
with respect thereto.
"Related Persons" shall mean, with respect to any Person, its directors,
officers, employees, representatives, agents, licensees, or Affiliates.
"Securities Act" means the United States Securities Act of 1933, as
amended, together with all regulations now or hereafter promulgated thereunder
and any successor statute thereto.
"Shareholders" means each of those Persons identified on Schedule A and
their respective legal representatives, heirs, successors and assigns.
"Tangible Personal Property" means machinery, computers, equipment, tools,
supplies, wiring, furniture, fixtures, personalty, vehicles and other tangible
personal property (free of any Liabilities) used in the Business or owned or
leased by the Company.
"Tax" or "Taxes" means any and all taxes, surtaxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, fines, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Authority or other taxing
authority, including, without limitation: taxes or other charges on or with
respect to income, capital, franchises, windfall or other profits, gross
receipts, goods and services tax (GST), harmonized sales taxes, land transfer
tax, property, sales, provincial sales tax, use, capital stock, payroll,
employment, social security, workers' compensation, employer health, social
services, education, unemployment insurance or compensation, or net worth; taxes
or other charges in the nature of excise, withholding, ad valorem, stamp,
transfer, value added, or gains taxes; license, registration and documentation
fees; and customs duties, tariffs, and similar charges that are or have been (a)
imposed, assessed or collected by or under authority of any Governmental
Authority, or (b) payable pursuant to
-33-
any tax sharing agreement or similar contract, and all unemployment insurance,
health insurance and other government pension plan premiums or contributions.
"Territory GAAP" means generally accepted accounting principles and
practices in the Territory as in effect during the relevant period and applied
consistently throughout the periods involved.
"US GAAP" means United States generally accepted accounting principles and
practices as in effect during the relevant period and applied consistently
throughout the periods involved.
-34-
SCHEDULE TO EXHIBIT 99.2
In addition to the Share Purchase Agreement with Conex Brasil S.A. (Exhibit
99.2), the Company executed Portuguese language Share Purchase Agreements with
W3 Informatica Ltda, K3 Informatica Ltda, and Conex Canoas Ltda. The three
Portuguese language Share Purchase Agreements not filed are substantially
identical, in all material respects, to this Exhibit 99.2, except with respect
to the following:
Document 1:
-----------
(1) The "Agreement" is a Quata Purchase Agreement because the Company is a
Brazilian Limited Liability Company ("Ltda."). First Paragraph of Document
1.
(2) The "Company" is W3 Informatica Ltda First Paragraph of Document 1.
(3) The "Shareholders" are: Xxxxxxx Xxxxxx, Xxxxxxx Xxxxxx xx Xxxxx, and
Xxxxxxx Xxxxxxxx Xxxxx. First Paragraph of Document 1 and Schedule 1 of
Document 1.
(4) Article II, SECTION II.02. Purchase Price; Payment of Purchase Price. The
"Purchase Price" is One Million Six Hundred Ninety Two Thousand Two Hundred
and Three Brazilian Reais and 75/100 cents (R$ 1,692,203.75).
(5) Article II, Section II.03. Shareholder Retained Liabilities: Document 1 has
a subsection (g) that does not exist in the Agreement attached in the
Current Report, which reads as follows:
(g) Shareholder Loans: At any time prior to Closing, Shareholders may
cause the Company to repay to them the outstanding loans in the
amount of Thirty Thousand Reais (R $30,000). Such repayment shall
not affect in any way the Purchase Price since the repayment of
the loan shall represent a reduction of Liabilities and a
corresponding reduction of cash account, both of which offset
each other.
(6) Article IX, Section IX.01: This article and section does not exist in the
Agreement attached in the Current Report, which reads as follows:
Article IX. ADDITIONAL PROVISIONS
---------------------
SECTION IX.01. Sale of Company Cars. The Purchaser agrees that, at the
Shareholder's written request within 30 days from the Closing Date, the
Purchaser shall cause the Company to pay-off the residual amounts owed with
regards to the financial lease of three (3) cars which are currently owned by
the Company (the "Lease Payment"). Within a maximum of 30 days from the Lease
Payment the Shareholders shall pay to the Company an amount equal to the Lease
Payment, and the Company will transfer the leased cars to the Shareholders. The
Shareholders shall be responsible for any costs associated with the Lease
Payments, including but not limited to, any tax consequences to the Company that
may arise from the Lease Payment.
Document 2:
-----------
(1) The "Agreement" is a Quata Purchase Agreement because the acquired entity
is a Brazilian Limited Liability Company ("Ltda."). First Paragraph of
Document 2.
(2) The "Company" is K3 Informatica Ltda. First Paragraph of Document 2.
(3) The "Shareholders" are: Xxxxxxx Xxxxx Xxxxxxxx, Xxxxxx Xxxxx Xxxxxxxx Xxxx
and Xxxxxxx Xxxx Piageti. First Paragraph of Document 2 and Schedule 1 of
Document 2.
(4) Article II, SECTION II.02. Purchase Price; Payment of Purchase Price. The
"Purchase Price" is Four Hundred Thirty Five Thousand Seven Hundred and
Eighty Five Brazilian Reais and 20/100 cents (R$ 435,785.20).
Document 3:
-----------
(1) The "Agreement" is a Quata Purchase Agreement because the acquired entity
is a Brazilian Limited Liability Company ("Ltda."). First Paragraph of
Document 3.
(2) The "Company" is Conex Canoas Ltda. First Paragraph of Document 3.
(3) The "Shareholders" are: Xxxx Xxxxxxxx Xxxxxxx and Xxxxxx Xxxxxxxxx Xxxxxxx.
First Paragraph of Document 3 and Schedule 1 of Document 3.
(4) Article II, SECTION II.02. Purchase Price; Payment of Purchase Price. The
"Purchase Price" is Four Hundred Fifty Thousand Two Hundred Seventy
Brazilian Reais and 66/100 cents (R$ 450,270.66).
(5) Aricle II, Section II.03. Shareholder Retained Liabilities: Document 3 has
a subsection (g) that does not exist in the Agreement attached in the
Current Report as, which reads as follows:
(h) Shareholder Loans: At any time prior to Closing, Shareholders may
cause the Company to repay to them the outstanding loans in the
amount of Fifteen Thousand Six Hundred and Fifteen Reais (R
$15,615.00). Such repayment shall not affect in any way the
Purchase Price since the repayment of the loan shall represent a
reduction of Liabilities and a corresponding reduction of cash
account, both of which offset each other.
