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STOCK PURCHASE AGREEMENT
by and between
BRAZIL FAST FOOD CORP.
(a Delaware Corporation)
and
AIG LATIN AMERICA EQUITY PARTNERS, LTD.
(a Bermuda Company)
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS....................................................................................1
ARTICLE II SALE AND PURCHASE OF SHARES...................................................................5
2.1 Agreement to Sell and Purchase....................................................................5
2.2 Purchase Price....................................................................................5
ARTICLE III CLOSING......................................................................................5
3.1 Time of Closing...................................................................................5
3.2 The Company's Obligations.........................................................................5
3.3 the Purchaser's Obligations.......................................................................5
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................6
4.1 Organization and Corporate Power..................................................................6
4.2 Authorization.....................................................................................7
4.3 Capitalization....................................................................................7
4.4 SEC Documents and Financial Statements............................................................9
4.5 Absence of Certain Changes........................................................................9
4.6 Absence of Undisclosed Liabilities...............................................................10
4.7 Litigation.......................................................................................10
4.8 Restrictions on Business Activities..............................................................10
4.9 Certain Contracts and Arrangements...............................................................10
4.10 Title of Property...............................................................................11
4.11 Intellectual Property...........................................................................12
4.12 Environmental Matters...........................................................................13
4.13 Taxes...........................................................................................13
4.14 Employee Benefit and Labor Matters..............................................................14
4.15 Employee Matters................................................................................17
4.16 Interested Party Transactions...................................................................17
4.17 Insurance.......................................................................................17
4.18 Compliance with Laws............................................................................18
4.19 Minutes Books...................................................................................18
4.20 Complete Copies of Materials....................................................................18
4.21 Brokers' and Finders' Fees......................................................................18
4.22 Suppliers.......................................................................................18
4.23 Occupational Safety and Health..................................................................18
4.24 Representations Complete........................................................................18
ARTICLE V REPRESENTATIONS OF THE PURCHASER..............................................................19
5.1 Organization.....................................................................................19
5.2 Authority........................................................................................19
5.3 Enforceability...................................................................................19
5.4 Securities Act...................................................................................19
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ARTICLE VI CONDITIONS OF PURCHASE.......................................................................20
6.1 Conditions Precedent to the Purchaser's Performance..............................................20
6.2 Conditions Precedent to the Company's Performance................................................22
ARTICLE VII COVENANTS OF THE COMPANY....................................................................23
7.1 Use of Proceeds..................................................................................23
7.2 Registration Rights..............................................................................23
7.3 Underwriters.....................................................................................23
7.4 Exchange, Transfer and Replacement of Share Certificates.........................................23
7.5 Reservation of Shares............................................................................24
ARTICLE VIII COMPANY'S OBLIGATIONS BEFORE CLOSING.......................................................24
8.1 Affirmative Obligations of the Company...........................................................24
8.2 Negative Obligations of the Company..............................................................25
ARTICLE IX OBLIGATIONS AFTER CLOSING....................................................................26
9.1 Company's Indemnity..............................................................................26
9.2 Claims Between the Purchaser and the Company.....................................................27
9.3 De Minimis.......................................................................................27
9.4 Payment..........................................................................................27
ARTICLE X GENERAL.......................................................................................27
10.1 Amendments, Waivers and Consents................................................................27
10.2 Survival of Covenants; Assignability of Rights..................................................28
10.3 Governing Law...................................................................................28
10.4 Section Headings................................................................................28
10.5 Publicity.......................................................................................28
10.6 Counterparts....................................................................................29
10.7 Notices.........................................................................................29
10.8 Severability....................................................................................30
10.9 Expenses........................................................................................30
10.10 Entire Agreement...............................................................................30
10.11 Specific Enforcement; Injunctive Relief........................................................30
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made and
entered into as of July 23, 1997, by and between AIG Latin America Equity
Partners, Ltd., a Bermuda company (the "Purchaser"), and Brazil Fast Food Corp.,
a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Company desires to obtain Four Million Five
Hundred Thousand Dollars ($4,500,000) of additional capital by selling to the
Purchaser One Million Five Hundred Thousand (1,500,000) shares (the "Shares") of
its common stock, par value $0.0001 per share (the "Common Stock") and five-year
warrants (the "Warrants") to purchase 250,000 shares of Common Stock at an
initial exercise price of $4.00 per share, and the Purchaser desires to acquire
the same, all subject to the terms and conditions of this Stock Purchase
Agreement; and
WHEREAS, the Purchaser and the Company are, simultaneously
with the Closing of this Stock Purchase Agreement, entering into a certain
Registration Rights Agreement and a Warrant Agreement, and certain stockholders
of the Company, the Purchaser and the Company are, simultaneously with the
Closing of this Stock Purchase Agreement, entering into a Stockholders'
Agreement among the Purchaser, the Company and the persons named in Schedule A
thereto (the "Stockholders' Agreement") (collectively, the above agreements are
hereafter referred to as the "Agreements"), all of which collectively provide
for a constructive and mutually beneficial relationship between the Purchaser
and the Company; and
NOW, THEREFORE, in consideration of the respective agreements
herein contained and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the terms and
conditions set forth herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Article I.
"Agreement" shall have the meaning set forth in the recitals hereto.
"Agreements" shall have the meaning set forth in the recitals hereto.
"Balance Sheet" shall have the meaning set forth in Section 4.6.
"Balance Sheet Date" shall have the meaning set forth in Section 4.5.
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"Best Knowledge of the Company" shall mean and include (a) actual knowledge of
the executive officers and directors of the Company and (b) that knowledge which
a prudent businessperson could have obtained in the management of his or her
business affairs after making due inquiry and exercising due diligence with
respect thereto. In connection therewith, the knowledge of any such executive
officer or director of the Company shall be imputed to be the knowledge of the
Company.
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Date" shall mean such date as the parties hereto mutually agree;
provided, however, that in no event shall such date be later than August 11,
1997.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliations Act of 1985,
as amended.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall have the meaning set forth in the recitals hereto.
"Company" shall have the meaning set forth in the recitals hereto.
"Confidential Information" shall have the meaning set forth in Section 4.11.
"Contracts" shall have the meaning set forth in Section 4.9.
"Defined Benefit Plan" shall have the meaning set forth in Section 4.14.
"Defined Contribution Plan" shall have the meaning set forth in Section 4.14.
"DOL" shall mean the Department of Labor.
"Dollars, US Dollars and $" shall mean the lawful currency of the United
States of America , or its equivalent in any other currency.
"Encumbrances" shall mean all liens, mortgages, pledges, options, claims,
charges, security interests, rights of first refusal, rights of way,
hypothecations or other legal or equitable encumbrances, limitations, defects in
title or restrictions of any kind or nature whatsoever.
"Environmental Law" shall mean any requirement of foreign or U.S. federal,
state, or local law, civil or criminal, or regulation, relating to air quality,
surface water quality, ground water quality, soil, solid waste management,
hazardous or toxic substances, or the protection of health or the environment;
and all applicable state statutes and regulations; including any retroactive
amendments or extensions thereof in effect on the date hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
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"Facilities" shall have the meaning set forth in Section 4.12.
"Financial Statements" shall have the meaning set forth in Section 4.4.
"Governmental Authorization" shall mean any approval, consent, license, permit,
waiver or other authorization issued, granted, given or otherwise made available
by or under the authority of any Governmental Body.
"Governmental Body" shall mean any multi-national, U.S., Brazilian or other,
federal, national, state, local (including county, city, town, village),
municipal, or other jurisdiction or government or governmental authority
(including any branch, agency, department, official or Person, and any court or
other tribunal) or any body exercising or entitled to exercise any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature.
"Hazardous Materials" shall have the meaning set forth in Section 4.12.
"Indemnified Party" shall have the meaning set forth in Section 9.2.
"Indemnifying Party" shall have the meaning set forth in Section 9.2.
"Intellectual Property" shall mean all trademarks, service marks, trade dress,
logos and trade names; patents or inventions; copyrights (including software);
mask works; and trade secrets, formulas and confidential business information
and know-how, used or owned by or licensed to the Company or any of its
subsidiaries which are of any value or importance to its business or which it is
authorized to use in the provision, production or marketing of any services or
products now provided, produced or proposed to be provided, produced or marketed
by the Company.
"Legal Requirement" shall mean any U.S., Brazilian, or other federal, state,
local, municipal, foreign, international, multinational or other administrative
order, constitution, law, ordinance, principle of common law, regulation, code,
statute or treaty.
"Licenses" shall have the meaning set forth in Section 4.1.
"Material Adverse Effect" shall mean a material adverse effect upon the
business, operations, prospects, properties, assets, liabilities or condition
(financial or other) of the Company or the Company and its subsidiaries, taken
as a whole.
"Multi-employer Plan" shall have the meaning set forth in Section 4.14.
"Ordinary Course of Business" shall mean an action taken by a Person which is:
(a) consistent with the past practices of such Person and taken in the
ordinary course of the normal day-to-day operations of such Person;
(b) not required to be authorized by the board of directors of such
Person (or by any Person or group of Persons exercising similar authority); and
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(c) similar in nature and magnitude to actions customarily taken,
without any authorization by the board of directors (or by any Person or group
of Persons exercising similar authority), in the ordinary course of the normal
day-to-day operations of other Persons that are in the same line of business as
such Person.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Person" shall mean any individual, corporation, (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Plan" shall have the meaning set forth in Section 4.14.
"Purchaser" shall have the meaning set forth in the recitals hereto.
"Purchase Price" shall have the meaning set forth in Section 2.2.
"Purchaser Indemnified Party" shall have the meaning set forth in Section 9.1.
"Purchaser Losses" shall have the meaning set forth in Section 9.1.
"Real Properties" shall mean the real properties owned, leased, occupied or used
by the Company, or in connection with its business.
"Receita Federal" shall have the meaning set forth in Section 4.14.
"SEC Documents" shall have the meaning set forth in Section 4.4.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shares" shall have the meaning set forth in the recitals hereto.
"Stock Option Plan" shall have the meaning set forth in Section 4.3.
"Stockholders' Agreement" shall have the meaning set forth in the recitals
hereto.
"Taxes" shall mean any federal, state, local, municipal or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, wind-fall profits, environmental (including taxes under the Code
Section 59A), customs, duties, capital stock, franchise, profits, business and
occupation, withholding, social security (or similar), unemployment, disability,
real property or personal property, intangibles, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated or other tax
of any kind whatsoever, including any interest, penalty, or addition thereto
whether disputed or not imposed by or on behalf of the United States, Brazil, or
any other country (or any political subdivision or tax authority thereof or
therein).
"Tax Return" shall mean any return, declaration, estimate, report, claim for
refund, or information return or statement relating to Taxes, including any
amendment thereof.
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"Third Party Intellectual Property Rights" shall have the meaning set forth in
Section 4.11.
"Warrants" shall have the meaning set forth in the recitals hereto.
ARTICLE II
SALE AND PURCHASE OF SHARES
2.1 Agreement to Sell and Purchase. At the Closing, the
Company agrees, on the terms and subject to the conditions hereinafter set
forth, to sell, transfer and deliver or cause to be sold, transferred and
delivered to the Purchaser, free and clear of all Encumbrances, and the
Purchaser agrees to purchase from the Company on the terms, subject to the
conditions, and in reliance upon the covenants, agreements, representations,
warranties and indemnities of the Company hereinafter set forth, the Shares and
the Warrants.
2.2 Purchase Price. In consideration of the issuance to the
Purchaser of the Shares and the Warrants, at the Closing, the Purchaser shall
pay to the Company as the purchase price (the "Purchase Price") Four Million
Five Hundred Thousand Dollars ($4,500,000) by wire transfer in immediately
available funds to an account designated in writing by the Company.
ARTICLE III
CLOSING
3.1 Time of Closing. Subject to the terms and conditions of
this Agreement, the closing (the "Closing") of the sale and purchase of the
Shares and the Warrants shall take place at the offices of Xxxxxx,
Xxxxxx-Xxxxxxx, Colt & Mosle, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at such
time and place as may be acceptable to the parties provided, however, that in no
event shall such date be later than August 11, 1997.
3.2 The Company's Obligations. At the Closing, the Company is
delivering to the Purchaser (i) a duly executed copy of this Agreement; (ii) the
Shares; (iii) the Warrants; (iv) a duly executed copy of the Registration Rights
Agreement; (v) a duly executed copy of the Stockholders' Agreement; (vi) a duly
executed copy of the Warrant Agreement; (vii) an opinion of counsel to the
Company required by Section 6.1 hereof; (viii) the President's Certificate
required by Section 6.1 hereof; (ix) the Good Standing Certificate(s) required
by Section 6.1 hereof; and (x) the Certificate of Incorporation, Bylaws, and
resolutions of the Board of Directors of the Company authorizing the execution,
delivery and performance of this Agreement, and such other certificates and
opinions as the Purchaser may reasonable request.
3.3 The Purchaser's Obligations. At the Closing, the Purchaser
is delivering to the Company (i) the Purchase Price; (ii) a duly executed copy
of this Agreement; (iii) a duly executed copy of the Registration Rights
Agreement; (iv) a duly executed copy of the Stockholders' Agreement; (v) a duly
executed copy of the Warrant Agreement;
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and (vi) evidence of the authorization of the execution, delivery and
performance of this Agreement..
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Purchaser to enter into this Agreement,
the Company represents and warrants to the Purchaser, its successors and assigns
as follows:
4.1 Organization and Corporate Power
(a) Each of the Company and its subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and is qualified to do business as a foreign
corporation in each jurisdiction in which such qualification is required, except
where the failure to so qualify could not have a Material Adverse Effect. Each
of the Company and its subsidiaries has all required power and authority
(corporate and other) to own, operate and lease its properties and assets and to
carry on its business as presently conducted, and the Company has all required
power and authority (corporate and other) to enter into and perform each of the
Agreements and to carry out the transactions contemplated hereby and thereby.
The copies of the Certificate of Incorporation and By-Laws of the Company, as
amended to date, which have been furnished to counsel for the Purchaser by the
Company, are correct and complete at the date hereof. Neither the Company nor
any of its subsidiaries is in violation of any of the provisions of its
Certificate of Incorporation or By-Laws or equivalent organizational documents.
No consent, approval, order, license, permit or authorization of, or
registration, declaration or filing with, any Governmental Body or any other
Person is required to be obtained or made by or with respect to the Company in
connection with any of the Agreements or the consummation of the transactions
contemplated hereby or thereby, except where the failure to obtain or make could
not have a Material Adverse Effect.
(b) Except as disclosed in Schedule 4.1, the Company is the
owner, directly or indirectly through its subsidiaries, of all outstanding
shares of capital stock of each of its subsidiaries and all such shares are duly
authorized, validly issued, fully paid and non-assessable and are owned by the
Company, directly or indirectly through its subsidiaries, free and clear of all
liens, charges, claims and Encumbrances or rights of others. There are no
outstanding subscriptions, options, warrants, puts, calls, rights, exchangeable
or convertible securities or other commitments or agreements of any character
relating to the issued or unissued capital stock or other securities of any such
subsidiary, or otherwise obligating the Company or any such subsidiary to issue,
transfer, sell, purchase, redeem or otherwise acquire such securities. The
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity.
(c) Except as provided in Schedule 4.1, the Company and each
of its subsidiaries and their respective properties, assets, operations and
businesses are in
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compliance in all material respects with all applicable statutes, laws,
ordinances, rules and regulations of any court, administrative agency or
commission or other Governmental Body and any filing requirements relating
thereto, including Environmental Laws. The Company and each of its subsidiaries
has obtained all permits, licenses and other authorizations (collectively,
"Licenses") which are required with respect to the operation of their respective
businesses and the ownership of their respective assets under U.S., Brazilian or
other, federal, state, local and foreign laws, including Environmental Laws
except when the failure to obtain could not have a Material Adverse Effect, and
each of them is in compliance in all material respects with all terms and
conditions of such Licenses.
4.2 Authorization. Each of the Agreements and all documents
and instruments executed pursuant thereto, are legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms. The execution and delivery of each of the Agreements by
the Company does not, and the consummation of the transactions contemplated
hereby or thereby will not, conflict with, or result in any violation of, or
default under (with or without notice or lapse of time, or both), or give rise
to a right of termination, cancellation or acceleration of any obligation or
loss of any benefit under (i) any provision of the Certificate of Incorporation
or Bylaws or equivalent organizational documents of the Company or any of its
subsidiaries, as amended, or (ii) any mortgage, indenture, lease, contract or
other agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, laws, ordinance rule or regulation applicable to the
Company or any of its subsidiaries or any of their respective properties, assets
or businesses, except where such conflict, violation, default, termination,
cancellation or acceleration with respect to the foregoing provisions of clause
(ii) would not have and could not reasonably be expected to have a Material
Adverse Effect. The execution, delivery and performance of the Agreements and
the issuance of the Shares and the Warrants have been duly authorized by all
necessary corporate action of the Company.
4.3 Capitalization.
(a) The authorized capital stock of the Company consists of
20,000,000 shares of Common Stock, $0.0001 par value, and 5,000 shares of
Preferred Stock $.01 par value, of which there were issued and outstanding
immediately prior to Closing 10,784,525 shares of Common Stock and no shares of
Preferred Stock. There are no other outstanding shares of capital stock or
voting securities and no outstanding commitments to issue any shares of capital
stock or voting securities other than pursuant to (i) the exercise of options
outstanding under the Company's Stock Option Plan (the "Stock Option Plan"),
(ii) the exercise of outstanding warrants evidencing the right of the holders
thereof to purchase an aggregate of 5,379,250 shares of Common Stock, as more
fully described in Schedule 4.3 hereof, (iii) the exercise of outstanding
options ("Director Options") granted to certain Directors of the Company to
purchase 220,000 shares of Common Stock and (iv) as provided in the Agreements.
All outstanding shares of Common Stock are duly authorized, validly issued,
fully paid and non-assessable and are free of any Encumbrances other than any
liens or encumbrances created by or imposed
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upon the holders thereof, and are not subject to preemptive rights or rights of
first refusal created by statute, the Certificate of Incorporation, as amended,
or Bylaws, as amended, of the Company or any agreement to which the Company is a
party or by which it is bound. Immediately prior to Closing, the Company has
reserved 500,000 shares of Common Stock for issuance to employees and
consultants pursuant to the Stock Option Plan, no shares have been issued
pursuant to option exercises, 372,500 shares are subject to outstanding,
unexercised options, and no shares are subject to outstanding stock purchase or
other rights. Immediately prior to Closing, the Company has reserved 5,379,250
shares of Common Stock for issuance upon exercise of the warrants described on
Schedule 4.3. Except for the rights created pursuant to the Agreements, the
warrants described on Schedule 4.3, the Stock Option Plan and the Director
Options, there are no other options, warrants, calls, rights, commitments or
agreements of any character to which the Company is a party or by which it is
bound obligating the Company to issue, deliver, sell, repurchase or redeem, or
cause to be issued, delivered, sold, repurchased or redeemed, any shares of
capital stock of the Company or obligating the Company to grant, extend,
accelerate the vesting of, change the price of, or otherwise amend or enter into
any such option, warrant, call, right, commitment or agreement. Other than as
set forth on Schedule 4.3 hereof, there are no contracts, commitments or
agreements relating to voting, purchase or sale of the Company capital stock (i)
between or among the Company and any of its stockholders or other Persons and
(ii) to the Best Knowledge of the Company, between or among any of the Company
stockholders. True and complete copies of all agreements and instruments
relating to or issued under the Stock Option Plan, have been filed as an exhibit
to the SEC documents and such agreements and instruments have not been amended,
modified or supplemented, and there are no agreements to amend, modify or
supplement such agreements or instruments in any case from the form as filed.
(b) Other than as provided in Schedule 4.3 and as set forth in
the Registration Rights Agreement, there are no outstanding rights (other than
those of which have been satisfied) which permit the holder thereof to cause the
Company to file a registration statement under the Securities Act or which
permit the holder thereof to include securities of the Company in a registration
statement filed by the Company under the Securities Act, and there are no
outstanding agreements or other commitments which otherwise relate to the
registration of any securities of the Company under the Securities Act. All
securities of the Company heretofore issued and sold by the Company were issued
and sold in compliance with all applicable Federal and state securities laws.
Assuming that the representations and warranties of the Purchaser set forth in
Article V are true and correct, the offering, issuance and sale of the Shares
and the Warrants will be exempt from the registration requirements of the
Securities Act.
4.4 SEC Documents and Financial Statements. The Company has
furnished or made available to the Purchaser a true and complete copy of each
statement, report, registration statement (with the prospectus in the form filed
pursuant to Rule 424(b) under the Securities Act, definitive proxy statement and
other filing filed with the SEC by the Company since January 1, 1996, and, prior
to the Closing, the Company will have furnished the Purchaser with true and
complete copies of any additional documents
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filed with the SEC by the Company prior to the Closing (collectively, the "SEC
Documents"). In addition, the Company has made available to the Purchaser all
exhibits to the SEC Documents filed prior to the date hereof, and will promptly
make available to the Purchaser all exhibits to any additional SEC Documents
filed prior to the Closing. The Company has filed with the SEC all reports and
registration statements and other filings required to be filed with the SEC
under the rules and regulations of the SEC. All documents required to be filed
as exhibits to the SEC Documents have been so filed, and all material contracts
so filed as exhibits are in full force and effect, except those which have
expired in accordance with their terms or have been revised as disclosed in the
SEC Documents, and neither the Company nor any of its subsidiaries is in default
thereunder. As of their respective filing dates, the SEC Documents complied in
all material respects with the requirements of the Exchange Act and the
Securities Act, and none of the SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, except to the extent
corrected by a subsequently filed SEC Document. The financial statements of the
Company, including the notes thereto, included in the SEC Documents (the
"Financial Statements") were complete and correct in all material respects as of
their respective dates, complied as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto as of their respective dates, and were prepared
in accordance with generally accepted accounting principles applied on a basis
consistent throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto or, in the case of unaudited
statements included in Quarterly Reports on Form 10-Q, as permitted by Form 10-Q
of the SEC). The Financial Statements fairly present the financial condition and
operating results of the Company and its subsidiaries at the dates and for the
periods indicated therein (subject, in the case of unaudited statements, to
normal, recurring year-end adjustments). There has been no change in the
Company's accounting policies except as described in the notes to the Financial
Statements.
4.5 Absence of Certain Changes. Since March 31, 1997, (the
"Balance Sheet Date"), each of the Company and its subsidiaries has conducted
its business in the Ordinary Course of Business, consistent with past practice
and there has not occurred: (i) any change, event or condition (whether or not
covered by insurance) that has resulted in, or might reasonably be expected to
result in, a Material Adverse Effect; (ii) any acquisition, sale or transfer of
any material asset of the Company or any of its subsidiaries; (iii) any change
in accounting methods or practices (including any change in depreciation or
amortization policies or rates) by the Company or any of its subsidiaries or any
revaluation by the Company or any of its subsidiaries of any of their respective
assets; (iv) any declaration, setting aside, or payment of a dividend or other
distribution with respect to the shares of capital stock of the Company, or any
direct or indirect redemption, purchase or other acquisition by the Company of
any of its shares of capital stock; (v) any material contract entered into by
the Company or any of its subsidiaries, other than in the Ordinary Course of
Business and as provided to the Purchaser, or any material amendment or
termination of, or default under, any material contract to which the Company or
any of its subsidiaries is a party or by which any of
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them are bound; or (vi) any commitment or agreement by the Company or any of its
subsidiaries to do any of the things described in the preceding clauses (i)
through (v).
4.6 Absence of Undisclosed Liabilities. Neither the Company
nor any of its subsidiaries has any material obligations or liabilities of any
nature (matured or unmatured, fixed or contingent) other than (i) those set
forth or adequately provided for in the balance sheet included in the Company's
Quarterly Report on Form 10-Q for the period ended March 31, 1997, including the
notes thereto (the "Balance Sheet"), (ii) those incurred in the Ordinary Course
of Business and not required to be set forth in the Balance Sheet under
generally accepted accounting principles, (iii) those incurred in the Ordinary
Course of Business since the Balance Sheet Date; and (iv) those incurred in
connection with the execution of the Agreements.
4.7 Litigation. Except as set forth in the SEC Documents or on
Schedule 4.7, there is no private or governmental action, suit, proceeding,
claim, arbitration or investigation pending before any agency, court or
tribunal, foreign or domestic, or, to the Best Knowledge of the Company,
threatened against the Company, any of its subsidiaries or any of their
respective properties or any of their respective officers or directors (in their
capacities as such) that, individually or in the aggregate, if determined
adversely against the Company and its subsidiaries could reasonably be expected
to have a Material Adverse Effect. There is no judgment, decree or order against
the Company, or any of its subsidiaries or, to the Best Knowledge of the
Company, any of their respective directors or officers (in their capacities as
such), that could prevent, enjoin, alter or delay any of the transactions
contemplated by the Agreements, or that could reasonably be expected to have a
Material Adverse Effect.
4.8 Restrictions on Business Activities. There is no material
agreement, judgment, injunction, order or decree binding upon the Company or any
of its subsidiaries which has or reasonably could be expected to have the effect
of prohibiting or materially impairing any current or future business practice
of the Company or any of its subsidiaries, any acquisition of property by the
Company or any of its subsidiaries or the conduct of business by the Company or
any of its subsidiaries as currently conducted or as proposed to be conducted by
the Company or any of its subsidiaries.
4.9 Certain Contracts and Arrangements. Except for agreements
listed as exhibits to the SEC Documents, neither the Company nor any of its
subsidiaries is a party to any (i) material employment agreement or employment
agreement with any officer or director, (ii) material collective bargaining or
industry-wide labor agreement, (iii) material license agreement or arrangement,
(iv) indenture, mortgage, note, installment obligation, agreement or other
instrument relating to the borrowing of money in excess of $50,000 or the
guaranty of any obligation for the borrowing of money in excess of such amount,
or (v) other material agreement or arrangement.
The Company is in compliance with the provisions of all
material contracts (the "Contracts") to which it is a party, including, without
limitation, (i) the Assignment and Transfer of Quotas and Other Covenants dated
March 19, 1996 by and among Bob's Industria e Comercio Ltda. ("BIEC"), Xxxxxxx
Xxxxxx ("Bisoni"), the
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Company and Vendex do Brasil Industria e Comercio Ltda. ("Vendex"); (ii) the
Conditional Assignment and Transfer of Trademark Rights dated March 19, 1996
between the Company and Vendex International, N.V. and (iii) the Pledge and
Security Agreement dated March 19, 1996 by and among Xxxxxx Investments A.E.C.
("Xxxxxx"), the Company, BIEC, Vendex and Vendex International, N.V., and there
is no default or event that with or without notice or lapse of time, or both,
would constitute a default or an event of acceleration by any party to any of
the Contracts or would give any party the right to terminate, modify, cancel or
exercise any remedy under any of the Contracts. All necessary Governmental
Authorizations with respect to the Contracts have been obtained. The Company has
not given or received any notice or other communication (oral or written)
regarding any actual, alleged, possible or potential violation or breach of, or
default under any Contract and does not have any knowledge or reason to believe
that any party to any of the Contracts intends to cancel or terminate any
Contract or to exercise or not exercise any options under any Contract. The
Company is not a party to, nor is it or its property bound by, any agreement
that is materially adverse to the business, operations, prospects, assets,
liabilities or condition, financial or other, of the Company or of the Company
and its subsidiaries, taken as a whole.
4.10 Title of Property. Each of the Company and its
subsidiaries has good and valid title to all of their respective properties,
interests in properties and assets, real and personal, reflected in the Balance
Sheet or acquired after the Balance Sheet Date (except properties, interests in
properties and assets sold or otherwise disposed of since the Balance Sheet date
in the Ordinary Course of Business), or in the case of leased properties and
assets, valid leasehold interests in such properties, free and clear of all
Encumbrances, except (i) liens for of current taxes not yet due and payable,
(ii) such imperfections of title, liens and easements as do not and will not
materially detract from or interfere with the use of the properties subject
thereto or affected thereby, or otherwise materially impair business operations
involving such properties and (iii) liens securing debt which is reflected on
the Balance Sheet. The plants, property and equipment of the Company and its
subsidiaries are in good operating condition and repair. All properties used in
the operations of the Company and its subsidiaries are reflected in the Balance
Sheet to the extent generally accepted accounting principles require the same to
be reflected.
4.11 Intellectual Property.
(a) The Company or its subsidiaries owns, or is licensed or
otherwise possesses legally enforceable rights to use, all Intellectual Property
that is used or proposed to be used in the business of the Company and the
businesses of its subsidiaries as currently conducted or as proposed to be
conducted by the Company and its subsidiaries, except to the extent that the
failure to have such rights have not and could not reasonably be expected to
have a Material Adverse Effect.
(b) To the Best Knowledge of the Company, there is no material
unauthorized use, disclosure, infringement or misappropriation of any
Intellectual Property rights of the Company or any of its subsidiaries, any
trade secret material to the
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Company or any of its subsidiaries, or any material licenses, sublicenses and
other agreements as to which the Company or any of its subsidiaries is a party
and pursuant to which the Company or any of its subsidiaries is authorized to
use any third party patents, trademarks or copyrights, including software
("Third Party Intellectual Property Rights"), by any third party, including any
employee or former employee of the Company or any of its subsidiaries. Neither
the Company nor any of its subsidiaries has entered into any agreement to
indemnify any other Person against any charge of infringement of any
Intellectual Property.
(c) Neither the Company nor any of its subsidiaries is, nor
will the Company or any of its subsidiaries be as a result of the execution and
delivery of the Agreements or the performance of the Company's obligations under
the Agreements, in breach of any license, sublicense or other agreement relating
to the Intellectual Property or Third Party Intellectual Property Rights.
(d) All patents, registered trademarks, service marks and
copyrights held by the Company or any of its subsidiaries are valid and
subsisting. Neither the Company nor any of its subsidiaries (i) has been sued in
any suit, action or proceeding which involves a claim of infringement of any
patents, trademarks, service marks, copyrights or violation of any trade secret
or other proprietary right of any third party or (ii) has brought any action,
suit or proceeding for infringement of Intellectual Property or breach of any
license or agreement involving Intellectual Property against any third party.
The manufacture, marketing, licensing or sale of the products and services of
the Company and its subsidiaries do not infringe any patent, trademark, service
xxxx, copyright, trade secret or other proprietary right of any third party.
(e) Each of the Company and its subsidiaries has secured valid
written assignments from all consultants and employees who contributed to the
creation or development of Intellectual Property of the rights to such
contributions that the Company and its subsidiaries does not already own by
operation of law.
(f) Each of the Company and its subsidiaries has taken all
reasonable and appropriate steps to protect and preserve the confidentially of
all Intellectual Property not otherwise protected by patents, or patent
applications or copyright ("Confidential Information"). All use, disclosure or
appropriation of Confidential Information owned by the Company and its
subsidiaries or to a third party has been pursuant to the terms of a written
agreement with such third party. All use, disclosure or appropriation of
Confidential Information not owned by the Company and its subsidiaries has been
pursuant to the terms of a written agreement with the owner of such Confidential
Information, or is otherwise lawful.
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4.12 Environmental Matters
(a) The following terms shall be defined as follows:
(i) "Hazardous Materials" shall mean any toxic
or hazardous substance, material or waste or any pollutant or contaminant, or
infectious or radioactive substance or material, including without limitation,
petroleum products and those substances, materials and wastes defined in or
regulated under any Environmental Law.
(ii) "Facilities" shall mean all buildings and
improvements on the Real Properties.
(b) The Company represents and warrants as follows with
respect to the operations of the Company and its subsidiaries: (i) to the Best
Knowledge of the Company, no friable asbestos is contained in the Facilities;
(ii) all Hazardous Materials have been disposed of in accordance with all
Environmental Laws; (iii) the Company and its subsidiaries has received no
notice (verbal or written) of any noncompliance of the Facilities or its past or
present operations with Environmental Laws; (iv) no notices, administrative
actions or suits are pending or, to the Best Knowledge of the Company,
threatened relating to a violation of any Environmental Laws; (v) to the Best
Knowledge of the Company, there have not been in the past, and are not now, any
Hazardous Materials under or migrating to or from the Facilities or the Real
Properties; (vi) to the Best Knowledge of the Company, there have not been in
the past, and are not now, any underground tanks or underground improvements at,
on or under the Real Properties, including without limitation , treatment or
storage tanks, sumps, or water, gas or oil xxxxx; (vii) to the Best Knowledge of
the Company, the Facilities and the Company's and its subsidiaries uses and
activities therein have at all times complied with all Environmental Laws; and
(viii) the Company and its subsidiaries have all the permits and licenses
required to be issued and are in full compliance with the terms and conditions
of those permits.
4.13 Taxes. The Company and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for tax purposes of which the
Company or any of its subsidiaries is or has been a member have timely filed all
Tax Returns required to be filed by it taking into account extensions of due
dates, has paid all Taxes shown thereon to be due and has provided adequate
accruals in accordance with generally accepted accounting principles in its
financial statements for any Taxes that have not been paid, whether or not shown
as being due on any Tax Returns. Except as disclosed in the SEC Documents, (i)
no material claim for Taxes has become a lien against the property of the
Company or any of its subsidiaries or is being asserted against the Company
other than liens for Taxes not yet due and payable, (ii) no audit of any Tax
Return of the Company or any of its subsidiaries is being conducted by a Tax
authority, (iii) no Tax authority is now asserting, or to the Best Knowledge of
the Company, threatening to assert against the Company or any of its
subsidiaries any deficiency or claim for additional Taxes, and there are no
requests for information from a Tax authority currently outstanding that could
affect the Taxes of the Company or any of its subsidiaries, (iv) no extension of
the statute of limitations on the assessment of any
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Taxes has been granted by the Company or any of its subsidiaries and is
currently in effect, and (v) neither the Company nor any of its subsidiaries has
entered into any compensatory agreements with respect to the performance of
services which payment thereunder would result in a nondeductible expense
pursuant to Sections 162(m) or 280G of the Code. Neither the Company nor any of
its subsidiaries is a party to any tax sharing or tax allocation agreement nor
does the Company owe any amount under any such agreement. The Company and each
of its subsidiaries is in full compliance with all terms and conditions of any
tax exemptions or other tax-sparing agreement or order of a foreign government
and the consummation of the transactions contemplated by the Agreements shall
not have any adverse effect on the continued validity and effectiveness of such
tax exemptions or other tax-sparing agreement or order.
4.14 Employee Benefit and Labor Matters.
(a) Neither the Company nor any subsidiary has in the past
and does not now sponsor, maintain, contribute or otherwise have any obligation
with respect to any pension, profit sharing, retirement, fringe benefit,
deferred compensation, stock purchase, stock option, incentive, bonus, vacation,
severance, disability, hospitalization, medical insurance or life insurance
plan, oral or written commitment of any nature regarding retiree health care, or
program or any other type of employee benefit plan, program or arrangement
within the meaning of Section 3(3) of ERISA including without limitation any
defined benefit plan within the meaning of Section 3(35) of ERISA or Section
414(j) of the Code or any defined contribution plan within the meaning of
Section 3(34) of ERISA or Section 414(j) of the Code or any multiemployer plan
within the meaning of Section 3(37) and 4001(a)(3) of ERISA for the benefit of
any current or former officers or employees of the Company or any subsidiary or
their beneficiaries (whether on an active or frozen basis).
(b) Except as set forth on Schedule 4.14, neither the Company
nor any subsidiary has in the past and does not now sponsor, maintain,
contribute or otherwise have any obligation with respect to any pension, profit
sharing, retirement, fringe benefit, deferred compensation, stock purchase,
stock option, incentive, bonus, vacation, severance, disability,
hospitalization, medical insurance or life insurance plan, oral or written
commitment of any nature regarding retiree health care, or program or any other
type of employee benefit plan, program or arrangement under Brazilian law
including without limitation any defined benefit plan ("Defined Benefit Plan")
or any defined contribution plan ("Defined Contribution Plan") or any
multiemployer plan ("Multiemployer Plan") for the benefit of any current or
former officers or employees of the Company or any subsidiary or their
beneficiaries (whether on an active or frozen basis) (hereinafter each
individually referred to as a "Plan" and collectively referred to as the
"Plans")
(c) Except as set forth on Schedule 4.14, (A) the Company and
each subsidiary have complied in all material respects with all applicable laws,
rules and regulations of governmental agencies or authorities relating to the
employment of labor in connection with the operation of their businesses,
including, without limitation, ERISA
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and the regulations and published interpretations of the Internal Revenue
Service, regulations issued by the Brazilian Internal Revenue Services ("Receita
Federal"), the Secretaria de Previdencia Complementar and the Superintendencia
de Seguros Privados - SUSEP, the PBGC or the Department of Labor thereunder, the
requirements of COBRA, related to continuation of group health coverage by
employees and former employees, and those relating to wages, hours, salaries,
"aditionais" and other benefits granted by law, including "Consolidacao das Xxxx
do Trabalho" by virtue of collective bargaining agreements or individual
employment agreements, unemployment insurance, workers' compensation, equal
employment opportunity, collective bargaining and the payment and withholding of
Taxes, including income and disability Taxes and any other applicable
contributions required by law, including, but not limited to, social security
taxes and the severance indemnity account and (B) except as disclosed in the SEC
Documents, (x) since March 19, 1996, neither the Company nor any subsidiary has
experienced any strikes, work stoppages, significant grievance proceedings or
claims of unfair labor practices filed nor have there been any threats known to
the Company within such period to file any such significant grievance
proceedings or claims of unfair labor practices and (y) to the Best Knowledge of
the Company prior to March 19, 1996, neither the Company nor any subsidiary has
experienced any strikes, work stoppages, significant grievance proceedings or
claims of unfair labor practices filed nor have there been any threats known to
the Company within such period to file any such significant grievance
proceedings or claims of unfair labor practices.
(d) Except as set forth in Schedule 4.14, neither the Company
nor any subsidiary has in the past and does not now sponsor, maintain,
contribute to or otherwise have any obligation with respect to any Plan. The
Company has furnished to Purchaser true and correct copies of (A) all documents
evidencing each of the Plans referred to in Schedule 4.14 hereto (or true and
correct written summaries of such Plans to the extent not evidenced by
documents) and all employee communications with respect to the Plans, (B) copies
of the last filed Annual Report with respect to each Plan and all Schedules and
exhibits to all such reports (to the extent such reports were required) and the
most recent actuarial valuation and annual accounting of Plan assets and (C) all
contracts relating to such Plans with respect to which the Company, the Plans
may have liability, including without limitation, insurance contracts,
investment management agreements, subscription and participation agreements and
record keeping agreements.
(e) Each Plan administered by the Company has been operated in
accordance with all applicable laws, the Company's By-Laws and its internal
procedures. No investigation or review by the Brazilian Authorities, including,
but not limited to, the Receita Federal, the Secretaria de Previdencia
Complementar and the Superintendencia de Seguros Privados - SUSEP is currently
pending. No assessment of any Taxes has been made, or to the Best Knowledge of
the Company, is contemplated against the Company or any subsidiary on the basis
of a failure of any qualification or exemption. Annual Reports have been timely
filed with respect to all Plans.
(f) Except as set forth on Schedule 4.14, there has been no
material violation of the administrative, reporting and disclosure requirements
imposed under
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applicable Brazilian laws for which a penalty has been or may be imposed with
respect to any Plan listed in Schedule 4.14 which could potentially disqualify
the Plan. No Plan has any material liability of any nature, accrued or
contingent, including, without limitation, liabilities for Taxes and
contributions (including excise and penalty Taxes), other than for routine
payments (including but not limited to death benefit payments) to be made in due
course to or on behalf of participants and beneficiaries.
(g) (A) Except as set forth on Schedule 4.14, the Company and
each subsidiary have made all payments due to date under or with respect to each
Plan set forth in Schedule 4.14 and all amounts properly accrued to date due as
liabilities of the Company or any subsidiary, under or with respect to each
Plan, for the current plan years, have been recorded on the books of the Company
or any subsidiary; (B) the Company and each subsidiary have performed all
material obligations required to be performed, and are not in material default
under, or in material violation of, any such Plan; (C) the Company and each
subsidiary are in compliance in all material respects with the requirements
prescribed by all statutes, orders or governmental rules or regulations
applicable to each such Plan, and none of the Company, any subsidiary, any such
Plan is required to take any action to remedy any material violation of any of
such requirements; (D) there are no actions, suits, arbitrations, claims (other
than insignificant claims), governmental or other proceedings (formal or
informal) or investigations pending or to the knowledge of the Company,
threatened against any such Plan, the assets of any such Plan, or any fiduciary,
administrator or sponsor (in its capacity as such) of any such Plan or related
trust (except for claims for benefits payable in the normal operation of such
Plan which have not previously been denied under such Plan); (E) except as set
forth on Schedule 4.14, no such Plan has incurred any accumulated funding
deficiency or actuarial deficiency whether or not waived by the competent
authorities; (F) neither the Company nor any subsidiary has incurred, and does
not reasonably expect to incur, any liability to the Brazilian authorities,
including, but not limited to, the Receita Federal, the Secretaria de
Previdencia Complementar and the Superintendencia de Seguros Privados - SUSEP ,
and no Defined Benefit Plan described in Schedule 4.14 has been terminated or
has been the subject of any termination proceeding under circumstances which
could reasonably result in the imposition of any such liability on the Company
or any subsidiary; (G) no notice of termination has been filed by the plan
administrator with respect to any such Defined Benefit Plan; (H) neither the
Company nor any subsidiary has contributed, nor does it now contribute to any
Multiemployer Plan nor does it have any liability or potential liability for
complete or partial withdrawal from any Multiemployer Plan; and (I) the Company
has the power to amend and/or terminate every Plan.
4.15 Employee Matters. The Company and each of its
subsidiaries is in compliance with all applicable laws and regulations
respecting employment, discrimination in employment, terms and conditions of
employment, wages, hours and occupational safety and health and employment
practices, and is not engaged in any unfair labor practice, except where the
failure to be in compliance or the engagement in such unfair labor practices
could not have a Material Adverse Effect. Except as set forth
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in the SEC Documents, there are no material pending claims against the Company
or any of its subsidiaries under any workers compensation plan or policy or for
long term disability. Neither the Company nor any of its subsidiaries has
obligations under COBRA with respect to any former employees or qualifying
beneficiaries thereunder, except for obligations that could not have a Material
Adverse Effect. There are no controversies pending or, to the Best Knowledge of
the Company, threatened, between the Company or any of its subsidiaries and any
of its employees, which controversies have or could reasonably be expected to
have a Material Adverse Effect.
4.16 Interested Party Transactions. Except as disclosed in the
SEC Documents, neither the Company nor any of its subsidiaries is indebted to
any director, officer, employee or agent of the Company or any of its
subsidiaries (except for amounts due as normal salaries and bonuses and in
reimbursement of ordinary expenses), and no such person is indebted to the
Company or any of its subsidiaries and there have been no other transactions of
the type required to be disclosed pursuant to Items 402 and 404 of Regulation
S-K under the Securities Act and the Exchange Act since January 1, 1996.
4.17 Insurance. The Company and each of its subsidiaries has
policies of insurance and bonds of the type and in amounts customarily carried
by Persons conducting businesses or owning assets similar to those of the
Company and its subsidiaries and is sufficient in amount and scope to cover
those risks to which the Company and its subsidiaries are exposed. There is no
material claim pending under any of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid and the Company and its
subsidiaries are otherwise in compliance in all material respects with the terms
of such policies and bonds. To the Best Knowledge of the Company there is no
threatened termination of, or material premium increase with respect to, any of
such policies.
4.18 Compliance with Laws. Each of the Company and its
subsidiaries has complied with, is not in violation of, and has not received any
notices of violation with respect to, any U.S., Brazilian, or other, federal,
state, or local statute, law or regulation with respect to the conduct of its
business, or the ownership or operation of its business, except for such
violations or failures to comply which, singly or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
4.19 Minutes Books. The minutes of the Company made available
to the Purchaser contain complete and accurate summaries of all meetings of
directors and stockholders or actions by written consent since the time of
incorporation of the Company and the respective subsidiaries through the date of
this Agreement, and reflect all transactions referred to in such minutes
accurately in all material respects.
4.20 Complete Copies of Materials. The Company and its
subsidiaries has delivered or made available true and complete copies of each
document that has been requested by the Purchaser or its counsel in connection
with their legal and accounting review of the Company and its subsidiaries.
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4.21 Brokers' and Finders' Fees. The Company has not incurred,
nor will it incur, directly or indirectly, any liability for brokerage or
finders' fees or agents' commissions or investment bankers' fees or any similar
charges in connection with the Agreements or any transaction contemplated
hereby.
4.22 Suppliers. As of the date hereof, no material supplier of
the Company or any of its subsidiaries has indicated to the Company or any of
its subsidiaries that it will stop, or decrease the rate of, supplying
materials, products or services to the Company or any of its subsidiaries .
Neither the Company nor any of its subsidiaries has breached any agreement with,
or engaged in any fraudulent conduct with respect to, any supplier of the
Company or any of its subsidiaries.
4.23 Occupational Safety and Health. The Company and its
subsidiaries and their respective operations, assets and other properties are
presently in compliance with all applicable occupational safety and health Legal
Requirements. Neither the Company nor any of its subsidiaries has received any
notice of, or know of or has any reasonable grounds to believe that there exists
any potential environmental or occupational safety and health problem in
connection with the Company's or its subsidiaries' operations, assets or
properties.
4.24 Representations Complete. None of the representations or
warranties made by the Company herein or in any Schedule, attached hereto, or in
any certificate furnished by the Company or any of its subsidiaries pursuant to
this Agreement, or the SEC Documents, contains or will contain at the Closing
Date any untrue statement of a material fact, or omits or will omit at the
Closing Date to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.
ARTICLE V
REPRESENTATIONS OF THE PURCHASER
To induce the Company to execute this Agreement, the Purchaser
hereby represents and warrants to, and covenants with, the Company with respect
to the Purchaser's purchase of Shares and Warrants hereunder, that:
5.1 Organization. The Purchaser is a company duly
organized, validly existing and in good standing under the laws of Bermuda.
5.2 Authority. The Purchaser has the full right, power, legal
capacity and authority to execute, deliver and perform its obligations under the
Agreements. The execution and delivery of each of the Agreements by the
Purchaser does not, and the consummation of the transactions contemplated hereby
or thereby will not, conflict with, or result in any violation of, or default
under (with or without notice or lapse of time, or both), or give rise to a
right of termination, cancellation or acceleration of any obligation or loss of
any benefit under (i) any provision of the organizational documents of the
Purchaser or (ii) any mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, laws,
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ordinance, rule or regulation applicable to the Purchaser or any of its
subsidiaries or any of their respective properties, assets or businesses, except
where such conflict, violation, default, termination, cancellation or
acceleration with respect to the foregoing provisions of clause (ii) would not
have and could not reasonably be expected to have a material adverse effect on
the Purchaser. The execution, delivery and performance of the Agreements have
been duly authorized by all necessary action of the Purchaser.
5.3 Enforceability. This Agreement has been, and the other
agreements, documents and instruments required to be delivered by the Purchaser
hereunder, when executed and delivered in accordance with the provisions hereof
will be duly executed and delivered on behalf of the Purchaser and this
Agreement constitutes and the other Agreements, when so executed and delivered
will constitute, a legal, valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with the terms hereof and
thereof.
5.4 Securities Act.
(a) The Shares and Warrants to be purchased by the Purchaser
pursuant to this Agreement are being acquired for investment purposes only and
not with a view to any public distribution thereof, and it will not offer to
sell or otherwise dispose of the Shares or Warrants so acquired by it in
violation of any of the registration requirements of the Securities Act.
(b) The Purchaser has substantial experience in business and
financial matters and in making investments of the type contemplated by this
Agreement and is capable of evaluating the merits and risks of its purchase of
the Shares and Warrants and is able to bear the economic risks of its
investment.
(c) The Purchaser has had an opportunity to discuss the
Company's business, management and financial affairs, and the terms and
conditions of the Shares and Warrants with the Company's management and all such
questions have been answered to the full satisfaction of the Purchaser.
(d) The Purchaser is an entity that qualifies as an
"accredited investor" within the meaning of Rule 5.01(a) of Regulation D under
the Securities Act.
ARTICLE VI
CONDITIONS OF PURCHASE
6.1 Conditions Precedent to the Purchaser's Performance. The
obligation of the Purchaser to consummate the transactions described herein
which are to be consummated on the Closing Date and to perform its other
covenants and agreements in accordance with the terms and conditions of this
Agreement is subject to the satisfaction, at or before Closing, of each of the
conditions set forth in this Section 6.1. The Purchaser may waive any or all of
these conditions in whole or in part without prior notice; provided, however,
that no such waiver of a condition shall constitute a waiver by
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the Purchaser of any of its other rights or remedies, at law or in equity, if
the Company shall be in default of any of its respective representations,
warranties, agreements, or covenants under this Agreement.
(a) Representations and Warranties of Shareholder or Company.
All representations and warranties made by the Company in the Agreements, or in
any other statement that shall be delivered to the Purchaser by or on behalf of
the Company in connection with the transactions contemplated hereby and thereby
shall be true and complete when made, and on and as of the Closing Date as
though made as of such date.
(b) Performance of the Company. The Company shall have
performed and complied with all covenants and agreements, and satisfied all
obligations and conditions required by the Agreements to be performed, complied
with or satisfied by it at or before the Closing.
(c) No Adverse Changes. During the period from the Balance
Sheet Date to Closing, there shall not have been or occurred any material
adverse change in the business, operations, prospects, properties, assets,
liabilities or condition, (financial or other), of the Company or the Company
and its subsidiaries, taken as a whole and neither the Company nor any of its
subsidiaries shall have sustained any material loss or damage to any of their
respective assets or properties, whether or not insured.
(d) Certificate of the Company The Purchaser shall have
received a certificate, dated as of the Closing Date, signed by the Company's
President certifying, in such detail as the Purchaser and its counsel may
reasonably request, that the conditions specified in paragraphs (a) through (c)
above and (g), (j) and (n) below have been satisfied.
(e) Share Certificates. The Purchaser shall have received
share certificates representing all of the Shares and the Warrants, duly
registered in the name of the Purchaser.
(f) Good Standing Certificate. The Purchaser shall have
received certificates of good standing of the Company dated not more than one
month prior to Closing, in the State of Delaware and each of the other
jurisdictions in which it is qualified to do business at the time of Closing.
(g) Absence of Litigation. No action, suit, or proceeding
before any Governmental Body pertaining to the transactions contemplated by the
Agreements or to their consummation, shall have been instituted or threatened by
a third party on or before the Closing.
(h) Notice of Changes. The Purchaser shall have received from
the President and Chief Financial Officer of the Company a certificate, dated
the Closing Date, that on the basis of a review of the latest available
accounting records of the Company and its subsidiaries and upon consultation
with other responsible officers of the Company and its subsidiaries, and upon
other pertinent inquiries that they may deem
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necessary, from the Balance Sheet Date to a specific date not more than five
business days before Closing, there was no adverse change in the financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole.
(i) Opinion of Counsel. The Purchaser shall have received from
counsel for the Company, Xxxxxxxxx Xxxxxx Xxxxxxx Xxxxxx & Xxxxxx, P.C., their
opinion addressed to the Purchaser, dated the Closing Date in the form set forth
in Exhibit 6.1 hereto.
(j) Authorization. The Board of Directors of the Company shall
have duly adopted resolutions in form reasonably satisfactory to the Purchaser
authorizing the Company to consummate the transactions contemplated hereby and
by the other Agreements in accordance with the terms hereof and thereof, and the
Purchaser shall have received a duly executed certificate of the Secretary or an
Assistant Secretary of the Company setting forth a copy of such resolutions and
such other matters as may be requested by the Purchaser.
(k) Stockholders' Agreement. The Company, the Purchaser, and
certain stockholders of the Company identified by the Purchaser shall have
executed and delivered a Stockholders' Agreement in the form of Exhibit A
hereto, with a revised Schedule D thereto, which Schedule shall be acceptable to
the parties hereto.
(l) Registration Rights Agreement. The Company and the
Purchaser shall have executed and delivered a Registration Rights Agreement in
the form of Exhibit B hereto.
(m) Warrant Agreement. The Company and the Purchaser shall
have executed and delivered a Warrant Agreement in the form of Exhibit C hereto.
(n) Reservation of Shares. The Company shall have reserved for
issuance solely for the purposes of issue upon exercise of the Warrants, such
number of shares of Common Stock as shall then be issuable upon exercise of the
Warrants.
(o) Purchaser Authorization. The execution and delivery of
the Agreements and the consummation of the transactions contemplated hereby and
thereby shall have been authorized by all necessary action (corporation or
other) on the part of the Purchaser.
(p) All Proceedings Satisfactory. All corporate and other
proceedings taken prior to or at the Closing in connection with the transactions
contemplated by this Agreement, and all documents and evidences incident
thereto, shall be reasonably satisfactory in form and substance to the
Purchaser, and the Purchaser shall receive such copies thereof.
(q) Employment Agreements. The Purchaser shall have received
evidence, satisfactory to the Purchaser, that each Person party to a severance
or employment agreement with the Company has agreed that the acquisition by the
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Purchasers or its transferees of Common Stock on the Closing Date and from time
to time thereafter, including the Shares and the Warrants will not constitute a
"Change of Control" as such term is defined in each such agreement.
(r) Other. The Purchaser shall have received such other
opinions, certificates, and documents as it may reasonably request and shall
have completed its due diligence review of the Company and be satisfied with the
results thereof.
6.2 Conditions Precedent to the Company's Performance. The
obligations of the Company to consummate the transactions described herein which
are to be consummated on the Closing Date and to perform its other covenants and
agreements in accordance with the terms and conditions of this Agreement are
subject to the satisfaction, at or before Closing, of each of the conditions set
forth in this Section 6.2. The Company may waive any or all of these conditions
in whole or in part without prior notice; provided, however, that no such waiver
of any condition shall constitute a waiver by the Company of any of their rights
or remedies, at law or in equity, if the Purchaser shall be in default of any of
its representations, warranties, agreements or covenants under this Agreement.
(a) Representations and Warranties of the Purchaser. All
representations and warranties by the Purchaser contained in this Agreement or
in any written statement delivered by the Purchaser under this Agreement shall
be true on and as of the Closing Date as though such representations and
warranties were made on and as of such date.
(b) Performance of the Purchaser. The Purchaser shall have
performed and complied with all covenants and agreements, and satisfied all
obligations and conditions required by this Agreement to be performed, complied
with, or satisfied by it on or before the Closing.
ARTICLE VII
COVENANTS OF THE COMPANY
The Company shall comply with the following covenants, except
as shall otherwise be expressly agreed pursuant to a written consent executed by
the Purchaser.
7.1 Use of Proceeds. The proceeds received by the Company
hereunder shall be used by the Company exclusively for the purposes set forth in
Schedule 7.1.
7.2 Registration Rights. All Shares purchased by the Purchaser
under this Agreement and all shares to be issued upon exercise of the Warrants
shall be subject to registration rights in accordance with the Registration
Rights Agreement set forth in Exhibit B.
7.3 Underwriters. Banco Icatu S.A. and/or Icatu Securities,
Inc. shall have the right of first refusal to be the sole and exclusive
underwriter or placement agent
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with respect to any debt or equity instruments issued by the Company; provided,
however, that any underwriting or placement wholly within the United States of
America and/or Europe or having a significant tranche therein shall have a
co-managing underwriter or co-placement agent reasonably satisfactory to the
Company and Banco Icatu S.A. and/or Icatu Securities, Inc.
7.4 Exchange, Transfer and Replacement of Share Certificates.
Upon surrender of any certificate representing Shares or Warrants for exchange
or transfer at the offices of the Company, the Company shall, at its expense
(exclusive of applicable transfer taxes), issue in exchange therefor new
certificates in such denomination or denominations as may be requested for the
same aggregate number of shares of Common Stock or Warrants represented by the
certificate so surrendered and registered as may be requested. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any certificate representing Shares or Warrants and, in the
case of any such loss, theft or destruction, upon delivery of an agreement of
indemnity, and if required such other instruments or security bond, reasonably
satisfactory to the Company and its transfer agent, or, in the case of any such
mutilation, upon surrender and cancellation thereof, the Company shall, at its
expense, issue a new certificate for the same aggregate number of Shares or
Warrants represented by such lost, stolen, destroyed or mutilated certificate,
as the case may be.
7.5 Reservation of Shares The Company will at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issue upon exercise of the Warrants, such number of shares of Common
Stock as shall then be issuable upon exercise of the Warrants. The Company
covenants that all shares of Common Stock which shall be issuable upon exercise
of the Warrants shall, at the time of delivery thereof and upon payment of the
exercise price with respect thereto, be duly and validly issued and fully paid
and non-assessable and free from all preemptive or similar rights, taxes, liens,
charges and Encumbrances with respect to the issue thereof, and that upon
issuance such shares shall have been registered with the Securities and Exchange
Commission under the Securities Act and shall be listed on each securities
exchange, if any, on which the other shares of outstanding Common Stock of the
Company are then listed.
ARTICLE VIII
COMPANY'S OBLIGATIONS BEFORE CLOSING
8.1 Affirmative Obligations of the Company. During the period
from the date of this Agreement and continuing until the Closing, the Company
agrees (except to the extent expressly contemplated by this Agreement or as
consented to in writing the Purchaser), to carry on its and its subsidiaries'
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted; to pay Taxes when due subject (i) to good faith
disputes over such debts or Taxes, and (ii) to the Purchaser's consent to the
filing of material Tax Returns, if applicable; to pay or perform all other
obligations when due; and to use all reasonable efforts consistent with past
practice and
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policies to preserve intact its and its subsidiaries' present business
organizations, use its best efforts consistent with past practice to keep
available the services of its and its present subsidiaries' officers and key
employees and use its best efforts consistent with past practice to preserve its
relationships with suppliers, distributors, licensors, licensees, and others
having business dealings with it, to the end that its and its subsidiaries'
ongoing businesses shall be unimpaired at the Closing. The Company agrees to
notify promptly the Purchaser of any event or occurrence not in the Ordinary
Course of its Business, and of any event which could have a Material Adverse
Effect. Without limiting the foregoing, except as expressly contemplated by this
Agreement, the Company shall not do or cause or permit any of the actions set
forth in Section 9 of the Stockholders' Agreement, without the prior written
consent of the Purchaser;
The Company agrees that if the Shares and the shares of Common
Stock underlying the Warrants are not subject to an effective registration
statement within 135 days after the Closing Date, the Purchaser shall have the
right to sell the Shares to the Company at a price of $4.00 per share and the
Company shall have the obligation to purchase the Shares for cash within 30 days
following such 135-day period.
8.2 Negative Obligations of the Company. During the period
from the date of this Agreement and continuing until the Closing, except as
expressly contemplated by this Agreement, the Company shall not do, cause or
permit any of the following without the prior written consent of the Purchaser,
which consent shall not be unreasonable withheld:
(a) Material Contracts. Enter into any material contract or
commitment, or violate, amend or otherwise modify or waive any of the terms of
any of its material contracts;
(b) Intellectual Property. Transfer to any Person any rights
to its Intellectual Property;
(c) Exclusive Rights. Enter into or amend any agreements
pursuant to which any other party is granted exclusive marketing or other
exclusive rights of any type or scope with respect to any of its products or
technology;
(d) Dispositions. Sell, lease, license or otherwise dispose
of or encumber any of its properties or assets which are material, individually
or in the aggregate, to its and its subsidiaries' business, taken as a whole;
(e) Indebtedness. Incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others, other than in the Ordinary Course of
Business consistent with the Business Plan (as such term is defined in the
Stockholders' Agreement);
(f) Leases. Enter into any operating lease providing for
payments in excess of an aggregate of $100,000, other than in the Ordinary
Course of Business consistent with the Business Plan;
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(g) Payment of Obligations. Pay, discharge or satisfy in an
amount in excess of $10,000 in any one case or $100,000 in the aggregate, any
claim, liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise) arising other than in the Ordinary Course of Business,
other than the payment, discharge or satisfaction of liabilities reflected or
reserved against in the Financial Statements and other than the expenses related
to this Agreement or any of the transactions contemplated hereby;
(h) Capital Expenditures. Make any capital expenditures,
capital additions or capital improvements except in the Ordinary Course of
Business consistent with the Business Plan;
(i) Insurance. Reduce the amount of any insurance coverage
provided by existing insurance policies;
(j) Employee Benefit Plans; New Hires; Pay Increases. Adopt
or amend any employee benefit or stock purchase or option plan, or hire any new
director level or officer level employee, pay any special bonus or special
remuneration to any employee or director, or increase the salaries or wage rates
of its employees;
(k) Severance Arrangements. Grant any severance or
termination pay (i) to any director or officer, or (ii) to any other employee,
except payments made pursuant to standard written agreements outstanding on the
date hereof;
(l) Lawsuits. Commence a lawsuit other than (i) for the
routine collection of bills or (ii) in such cases where it in good faith
determines that failure to commence suit would result in the material impairment
of a valuable aspect of its business, provided that it consults with the
Purchaser prior to the filing of such a suit;
(m) Acquisitions. Acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof;
(n) Taxes. Other than in the Ordinary Course of Business, make
or change any material election in respect of Taxes, adopt or change any
accounting method in respect of Taxes, file any material Tax Return or any
amendment to a material Tax Return, enter into any closing agreement or settle
any claim or assessment in respect of Taxes, or consent to any extension or
waiver of the limitation period applicable to any claim or assessment in respect
of Taxes;
(o) Revaluation. Revalue any of its assets, including without
limitation writing down the value or inventory or writing off notes or accounts
receivable other than in the Ordinary Course of Business; or
(p) Other. Take or agree in writing or otherwise to take, any
of the actions described in Sections 8.2(a) through (o) above, or any action
which would make
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any of its representations or warranties contained in this Agreement untrue or
incorrect or prevent it from performing or cause it not to perform its covenants
hereunder.
ARTICLE IX
OBLIGATIONS AFTER CLOSING
9.1 Company's Indemnity. The Company hereby agrees to
indemnify, defend and hold harmless the Purchaser, any affiliate of the
Purchaser and any director, officer, employee, representative or agent of any of
them (a "Purchaser Indemnified Party") from and against, and agrees to pay or
cause to be paid to the Purchaser all amounts ("Purchaser Losses") equal to the
sum of, any and all claims, demands, costs, expenses or other liabilities of any
kind that any Purchaser Indemnified Party may incur or suffer, directly or
indirectly, including without limitation the cost of investigation, fines,
penalties, cleanup, containment and preventative, restoration or mitigating
measures and all professional fees (including without limitation reasonable
attorneys', accountants', consultants' and engineering fees) which arise out of,
result from or relate to any misrepresentation or breach by the Company of, or
any failure by the Company to perform, any of its representations, warranties,
covenants, obligations or agreements in any of the Agreements, or in any
schedule, certificate, exhibit, or other instrument furnished by, or on behalf
of, the Company under the Agreements.
9.2 Claims Between the Purchaser and the Company. Any claim
for indemnification under this Agreement which does not result from the
assertion of a claim by a third party shall be asserted by written notice given
by the party seeking indemnification (the "Indemnified Party") to the other
party (the "Indemnifying Party"). The Indemnifying Party shall have a period of
20 days within which to respond thereto. If the Indemnifying Party does not
respond within such 20 day period, the Indemnifying Party shall be deemed to
have accepted responsibility for such indemnity, and shall have no further right
to contest the validity of such claim. If the Indemnifying Party does respond
within such 20 day period and rejects such claim in whole or in part, the
Indemnified Party shall be free to pursue such remedies as may be available to
it under this Agreement and applicable law.
9.3 De Minimis If the Closing occurs, the Purchaser shall not
make any claims or assert any rights under this Agreement until the aggregate
amount of all actual damages incurred by the Purchaser exceeds $50,000 (fifty
thousand dollars). At such time the Purchaser shall be entitled to recover the
full amount of such damages. The limitation set forth in this Section 9.3 shall
not apply to (a) any misrepresentation or breach of any representation or
warranty which the Company had knowledge at the time such representation or
warranty was made or deemed to have been made that such representation or
warranty was untrue, (ii) any breach or misrepresentation of Section 4.6 or
(iii) any intentional breach or failure to perform any covenant or obligation or
agreement contained herein
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9.4 Payment. Any and all amounts determined from time to time
to be paid by the group hereto by reason of its indemnity obligations under
Section 9.1 of this Agreement shall be paid in cash, on demand.
ARTICLE X
GENERAL
10.1 Amendments, Waivers and Consents. For the purposes of
this Agreement and all agreements, documents and instruments executed pursuant
hereto, except as otherwise specifically set forth herein or therein, no course
of dealing between the Company and the Purchaser and no delay on the part of any
party hereto in exercising any rights hereunder or thereunder shall operate as a
waiver of the rights hereof and thereof. No covenant or other provision hereof
or thereof may be waived otherwise than by a written instrument signed by the
party so waiving such covenant or other provision. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon the Purchaser
and the Company.
10.2 Survival of Covenants; Assignability of Rights
(a) All representations and warranties of the Company
contained herein or in any of the other Agreements or in any certificate or
other instrument delivered by the Company pursuant to the Agreements or in
connection with the transactions contemplated hereby or thereby shall survive
the closing.
(b) This Agreement and the rights hereunder shall not be
assignable or transferable by the Purchaser or the Company (except by operation
of law in connection with a merger, consolidation or other reorganization or
sale of all or substantially all the assets of the Purchaser or the Company)
without the prior written consent of the other party hereto; provided that the
Purchaser may assign, in its sole discretion, any or all of its rights,
interests and obligations under this Agreement to any transferee of the Shares
or Warrants. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns. The assignment by the Purchaser of any
rights, interest or obligations under this Agreement to any transferee of the
Shares or Warrants acquired hereunder shall not affect or diminish the rights or
obligations of the Purchaser under this Agreement.
10.3 Governing Law The enforcement of this Agreement shall be
governed by, and in connection with such enforcement this Agreement shall be
construed in accordance with, the laws of the State of New York.
10.4 Section Headings. The descriptive headings in this
Agreement have been inserted for convenience only and shall not be deemed to
limit or otherwise affect the construction of any provision thereof or hereof.
10.5 Publicity.The Company and the Purchaser agree that (a) no
public release or announcement concerning the transactions contemplated hereby
shall be issued
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by any party hereto without the prior consent of the other party, except as such
release or announcement may be required by law or the rules or regulations of
any securities exchange, in which case the party required to make the release or
announcement shall allow the other party reasonable time to comment on such
release or announcement in advance of such issuance and (b) without the prior
consent of the Purchaser, the Company shall not issue any public release or
announcement or issue or distribute any document to be used in connection with
the private or public sale of debt or equity securities of the Company if such
release, announcement or document refers to the Purchaser's investment in or
contracts or other arrangements with the Company, except as may be required by
law or the rules or regulations of any securities exchange or by any
Governmental Body, in which case the Company shall allow the Purchaser
reasonable time to comment on the relevant portions of such release,
announcement or document.
10.6 Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which when so executed and
delivered shall be taken to be an original; but such counterparts shall together
constitute but one and the same document.
10.7 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or mailed by certified or registered mail, postage prepaid,
return receipt requested, or delivered to a nationally recognized next business
day courier for delivery on the next business day, or by facsimile, with a copy
sent as aforesaid and in any instance addressed as follows:
(i) if to the Purchaser
AIG Latin America Equity Partners, Ltd.
AIG Latin America Investment Advisors, Inc.
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
with a copy to:
Xxxxxx, Xxxxxx-Xxxxxxx, Colt & Mosle
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx Xxxxxxx, Esq.
(ii) if to the Company
Brazil Fast Food Corp.
Praia do Flamengo
200-22(degree): Andar
CEP 00000-000
Xxx xx Xxxxxxx, Xxxxxx
Attention: Xxxxx xxx Xxxxxx Vader
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with a copy to:
Xxxxxxxxx Xxxxxx Xxxxxxxx Xxxxxx & Xxxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxx Xxxxxxx, Esq.
10.8 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions or this Agreement.
10.9 Expenses. The Company shall pay all costs and expenses
that it incurs with respect to the negotiation, execution, delivery and
performance of this Agreement, and the Purchaser shall pay all costs and
expenses that it incurs with respect to the negotiation, execution, delivery and
performance of this Agreement
10.10 Entire Agreement. This Agreement and the agreements
referred to herein contain the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings relating to such subject matter.
10.11 Specific Enforcement; Injunctive Relief. The parties
acknowledge that damages would be an inadequate remedy for any breach of the
provisions of this Agreement. Therefore, the obligations of the parties
hereunder shall be specifically enforceable and each of the parties agrees that
each of them shall be entitled to an injunction, restraining order or other
equitable relief from any court of competent jurisdiction, restraining any party
from committing any violations of the provisions of this Agreement.
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IN WITNESS WHEREOF, the undersigned have executed this
Agreement as a sealed instrument as of the day and year first above written.
BRAZIL FAST FOOD CORP.
By: /s/ X.Xxx Xxxxxx Vader
----------------------------------
Name: X. Xxx Xxxxxx Vader
Title: Chief Executive Officer
AIG LATIN AMERICA EQUITY PARTNERS, LTD.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxx
Title: Chief Executive Officer
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