Document:

Exhibit 10.3

 

THE SYMBOL “[**]” DENOTES PLACES WHERE CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.

 

EXECUTION VERSION

 

QUOTA PURCHASE AGREEMENT AND OTHER COVENANTS

 

entered into by and among

 

on the one hand, as sellers:

 

JC JOINT FUNDO DE INVESTIMENTO EM PARTICIPAÇÕES MULTIESTRATÉGIA

 

and

 

BRENO MIRANDA TRABULO PINHEIRO CORREIA

 

and further, as a party joint and severally liable with the sellers,

 

CRISTINA MARIA MIRANDA DE SOUSA

 

on the other hand, as buyer,

 

NRE PARTICIPAÇÕES S.A.

 

and, as intervening and consenting party,

 

INSTITUTO DE ENSINO SUPERIOR DO PIAUÍ LTDA.

 

Dated November 27, 2018

 

 

EXECUTION VERSION

 

QUOTA PURCHASE AGREEMENT AND OTHER COVENANTS

 

This quota purchase agreement and other covenants (the “Agreement”) is entered into on November 27, 2018, by the following parties:

 

On the one hand, as sellers,

 

A.                                    JC JOINT FUNDO DE INVESTIMENTO EM PARTICIPAÇÕES MULTIESTRATÉGIA, a private equity investment fund organized as a closed-end condominium, enrolled in the National Register of Corporate Taxpayers of the Ministry of Finance (“CNPJ/MF”) under No. 23.726.2S3/0001-42, herein represented in the manner set forth in its Bylaws by its administrator, ÚNICA ADMINISTRAÇÃO E GESTÃO DE RECURSOS LTDA., headquartered at Rua Teofilo Otoni, 82, Floors 17 and 18, Centro, in the City and State of Rio de Janeiro, CEP 20090-070, enrolled in the CNPJ/MF under No. 11.010.779/0001-42 (“JC Joint FIP”); and

 

B.                                    BRENO MIRANDA TRABULO PINHEIRO CORREIA, Brazilian, married under the total separation of marital assets regime, business administrator, bearer of Identity Card RG No. [**] and enrolled in the Individual Taxpayers’ Register of the Ministry of Finance (“CPF/MF”) under No. [**], resident and domiciled at [**] (“Breno” and, when referred to together with JC Joint FIP, the “Sellers”);

 

and further, as a party joint and severally liable directly with the Sellers:

 

C.                                    CRISTINA MARIA MIRANDA DE SOUSA, Brazilian, divorced, attorney, bearer of Identity Card RG No. [**] and enrolled in the CPF/MF under No. [**], resident and domiciled at [**] (“Cristina”).

 

On the other hand, as Buyer,

 

D.                                    NRE PARTICIPAÇÕES S.A., a corporation headquartered in the City of Nova Lima, State of Minas Gerais, at Alameda Oscar Niemeyer, 119, room 504, Vila da Serra, CEP 34006-056, enrolled in the CNPJ/MF under No. 23.399.329/0001-72, herein duly represented in the manner set forth in its Bylaws (the “Buyer”);

 

(the Sellers, Cristina, and the Buyer are hereinafter referred to collectively as the “Parties,” and each one, individually and indistinctively, as a “Party”);

 

and, as intervening and consenting party,

 

E.                                     INSTITUTO DE ENSINO SUPERIOR DO PIAUÍ LTDA., a limited liability business company with headquarters at Rua Vitorino Orthiges Fernandes, 6123, Uruguai, in the City of Teresina, State of Piauí, CEP 64073-505, enrolled in the CNPJ/MF under No. 21.909.778/0001-98 and with its articles of association duly recorded with the Board of Trade of the State of Piauí (“JUCEPI”) on February 23, 2015, under NIRE 22.200.418.252 (the “Institute”).

 

WHEREAS:

 

A.                                    On the date hereof, the total capital stock of the Institute is twenty-three million, eight hundred and twenty-eight thousand Brazilian Reais (R$ 23,828,000.00), divided into twenty-three million, eight hundred and twenty-eight thousand (23,828,000) quotas, with a par value of one Brazilian Real (R$ 1.00) each (the “Quotas”), all duly subscribed for and paid in by the Sellers, as described below:

 

	
Partner
    	
 
    	
Quotas Held
    	
 
    	
Equity Interest
    	
 
    
	
JC Joint FIP
    	
 
    	
23,351,440
    	
 
    	
98
    	
%
    
	
Breno
    	
 
    	
476,560
    	
 
    	
2
    	
%
    
	
TOTAL
    	
 
    	
23,828,000
    	
 
    	
100
    	
%
    

 

B.                                    The Sellers wish to sell eighty percent (80%) of the Quotas to the Buyer (“80% Quotas”), and the Buyer wishes to purchase all of the 80% of the Quotas from the Sellers, per the terms and conditions set forth in this Agreement (the “Transaction”).

 

The Parties hereby RESOLVE to enter into this Agreement, which shall be governed by the following provisions:

 

 

1.                                      DEFINITIONS AND RULES OF CONSTRUCTION

 

1.1.                            Defined Terms. The terms below, when used in this Agreement (including its exhibits) beginning with a capital letter, both singular and plural, and their verb and noun variations, shall have the meanings set out below:

 

“Closing ACS” has the meaning ascribed to it in Section 3.2(a) of this Agreement.

 

“Conversion ACS” has the meaning ascribed to it in Section 3.2(b) of this Agreement.

 

“Affiliate” means, in relation to a Person, any Person who, directly or indirectly, Controls, is Controlled by, or is Under Common Control with said Person, or is a related company of such Person, pursuant to article 243 of the Brazilian Corporations Law. In relation to NRE, the definition of Affiliate also includes: (i) any shareholder of NRE as of the date hereof (evidenced by NRE Registered Share Book); or (ii) any company (whether or not personified) that is wholly owned by NRE. With respect to any Party who is an individual, Persons up to the 2nd degree of a kinship relationship with such Party is considered an Affiliate of such Party.

 

“Reduction AGE” has the meaning ascribed to in Section 3.2(h) of this Agreement.

 

“Price Adjustment” has the meaning ascribed to it in Section 2.3(b) of this Agreement.

 

“Price Adjustment 1” has the meaning ascribed to it in Section 2.3(a) of this Agreement.

 

“Price Adjustment 2” has the meaning ascribed to it in Section 2.3(b) of this Agreement.

 

“Governmental Authority” means any: (i) federal, state, or municipal government or other political subdivision of the Federative Republic of Brazil, or any other jurisdiction to which a particular Person is subject by reason of its headquarters, place of domicile, or place where it usually conducts its business; (ii) a governmental, executive, regulatory, legislative, judicial, or administrative entity or authority from the same jurisdictions as above; which includes, as regards items (i) and (ii), their respective agencies, semi-autonomous government entities, self-regulatory entities, divisions, departments, councils, representations, agencies, or commissions; (iii) sole court, court, tribunal, or judicial, administrative, or arbitration body; or (iv) any stock exchange or organized over-the-counter market with jurisdiction over any Party.

 

“Basket” has the meaning ascribed to it in Section 6.4.1.4 of this Agreement.

 

“B3” means B3 S.A. - Brasil, Bolsa, Balcão.

 

“Breno” has the meaning ascribed to it in the preamble of this Agreement.

 

“BR GAAP” means the accounting principles generally accepted in Brazil, under the terms of the Brazilian Corporations Law, the pronouncements of IBRACON - Institute of Independent Auditors of Brazil and CPC - Accounting Pronouncements Committee that incorporate the international accounting practices approved by the International Accounting Standards Board (IASB), applied consistently.

 

“Cash” means, in any case on a consolidated basis, the sum of the following amounts in relation to the Institute and CIS: (i) available funds (such as, but not limited to, cash, bank deposits, and cash investments, including investments in the capital markets and in Brazilian government securities); (ii) cash equivalents; and (iii) Treasury Financial Certificates - Series E (CFT-E) non-transferable and issued by the National Treasury in favor of the Institute, arising exclusively from student financing contracts signed and/or amended up to and including the date hereof referring to period to and including the date hereof within the scope of the Student Financing Fund (FIES, as defined below) and which have not yet been offset against federal taxes or social security contributions or repurchases by the National Education Development Fund (FNDE).

 

“Chamber” has the meaning ascribed to it in Section 10.3 of this Agreement.

 

“CPI” means Interbank Deposit Certificate, as made available by the CETIP on its website (www.cetip.com.br).

 

 

“CIS” means  Centro Integrado de Saúde de Teresina Ltda., a limited liability business company with headquarters at Rua Vitorino Orthiges Fernandes, 6123, Block D, Uruguai, in the City of Teresina, State of Piauí, CEP 64057-100, enrolled in the CNPJ/MF under No. 10.393.987/0001-05.

 

“Brazilian Civil Code” means Law No. 10,406, of January 10, 2002, as amended.

 

“Code of Civil Procedure” means Law No. 13,105, of March 16, 2015, as amended;

 

“Offset” has the meaning ascribed to it in Section 6.9 of this Agreement.

 

“Buyer” has the meaning ascribed to it in the preamble of this Agreement.

 

“Conflict” has the meaning ascribed to it in Section 10.2 of this Agreement.

 

“Bank Accounts” has the meaning ascribed to it in Section 0 of this Agreement.

 

“Agreement” has the meaning ascribed to it in the preamble of this Agreement.

 

“Credit Rights Assignment Agreement” has the meaning ascribed to it in Section 8.1 of this Agreement.

 

“Lease Agreement” has the meaning ascribed to it in Section 2.5 of this Agreement.

 

“Material Agreements” has the meaning ascribed to it in Section 5.1.16(a) of this Agreement.

 

“Control” (and its variations “Controlling,” “Controller,” “Controlled,” or “under common Control”) has the meaning set forth in Article 116 of the Brazilian Corporations Law.

 

“FIES Credits” has the meaning ascribed to it in Section 6.3 of this Agreement.

 

“Cristina” has the meaning ascribed to it in the preamble of this Agreement.

 

“Ordinary Course of Business” means the set of activities necessary to carry out the activities of the Institute and CIS, taking into account the continuity of such activities at their usual levels and standards and without significant interruption, provided that they are carried out in a normal, ordinary, and diligent manner, without any significant alteration or interruption in relation to the nature, means, and objectives of their activities.

 

“CVM” means the Brazilian Securities and Exchange Commission.

 

“Base Date” has the meaning ascribed to it in Section 5.1.10 of this Agreement.

 

“Final Decision” has the meaning ascribed to it in Section 6.8 of this Agreement.

 

“Fundamental Representations of the Sellers and Cristina” are the fundamental representations and warranties provided by the Sellers and Cristina in Sections 5.1.1 to 5.1.8.

 

“Claim” means any claim, action, suit, demand, judgment, dispute, proceeding (including judicial, arbitration, or administrative proceedings, or any process or inspection), formal and written request for payment by any Party, Person, and/or Governmental Authority, including any Third-Party Claim, which relates to Losses subject to reimbursement under the terms of this Agreement.

 

“Third-Party Claim” has the meaning ascribed to it in Section 6.5.1 of this Agreement.

 

“Direct Claim” has the meaning ascribed to it in Section 6.5.6 of this Agreement.

 

“Divided Claim” means any Third-Party Claim related to any matters, acts, facts, or omissions covering a period beginning before the date hereof and ending after the date hereof.

 

“Financial Statements of the Institute” has the meaning ascribed to it in Section 5.1.21 of this Agreement.

 

 

“Business Day” means any day other than one: (a) Saturday; (b) Sunday; or (c) days on which commercial banks are obligated or authorized by law to remain closed in the City of Teresina, State of Piauí, in the City of São Paulo, State of São Paulo, in the City of Rio de Janeiro, State of Rio de Janeiro, and/or in the City of Nova Lima, State of Minas Gerais.

 

“Relevant Employees” means the following employees: Antônio Afonso de Nascimento Junior and Francisco Antônio de Alencar.

 

“Indebtedness” means the sum of the following amounts with respect to the Institute and CIS: (i) all bank debts, loans, financing, or short-term or long-term debt, whether past due and unpaid or due (including principal, interest, and, when due, other financial charges including arrears and penalties), with any party; (ii) lines of credit effectively in use (including principal, interest, and, when due, any financial charges, including arrears and penalties); (iii) all overdue outstanding amounts owed to employees, agents, service providers, or other contractors that have not been paid within the originally agreed-upon term; (iv) all amounts outstanding due to suppliers that have not been paid within the originally agreed-upon term; (v) all taxes or other liabilities due, whether or not in installments, not yet paid to the tax collection agencies on their original payment dates; (vi) installment agreements with any Governmental Authority, including any REFIS in force; (vii) installments due and the residual value of commercial leases and lease agreements,  (viii) any confession or acknowledgment of debt; (ix) any accounts payable, debts, or obligations for any convictions, judgments, or arbitration awards that are final and unappealable, except for allowances for contingencies; (x) all accounts payable that are past due and outstanding that have not been paid on the original date of maturity; (xi) IOF payable related to the Related Party debt; (xii) amounts due and not yet paid with respect to the dismissal or termination of employees, staff, or directors already dismissed; and (xiii) accounts payable in arrears.

 

“Closing” has the meaning ascribed to it in Section 3.1 of this Agreement.

 

“FIES” means the Student Financing Fund, a MEC program intended to finance the studies of higher education students enrolled in paid higher education programs in accordance with Law No. 10,260/2001, as amended from time to time.

 

“Indemnification Scenario” has the meaning ascribed to it in Section 6.1 of this Agreement.

 

“Properties” means, together: (i) the property located in the City of Teresina, State of Piauí, at Rua Vitorino Orthiges Fernandes, 6123, Uruguai, subject to recording No. 74.224, of the 2nd Real Estate Registry Office of Teresina/PI; (ii) the property located in the City of Teresina, State of Piauí, at Rua Maria Socorro de Macedo Claudino, unnumbered, Uruguai, subject to recording No. 57.305, of the 2nd Real Estate Registry Office of Teresina/PI; and (iii) the property located in the City of Teresina, State of Piauí, at Rua Maria Socorro de Macedo Claudino, unnumbered, Uruguai, subject to recording No. 27.043, of the 2nd Real Estate Registry Office of Teresina/PI.

 

“Confidential Information” has the meaning ascribed to it in Section 7.1 of this Agreement.

 

“INPI” means the National Institute of Industrial Property.

 

“Institute” has the meaning ascribed to it in the preamble of this Agreement.

 

“IPTAN” means IPTAN - Instituto de Ensino Superior Presidente Tancredo de Almeida Neves S.A., a corporation headquartered at Avenida Leite de Casto, 1101, Fábricas, in the City of São João Del Rei, State of Minas Gerais, CEP 36301-182, enrolled in the CNPJ/MF under No. 03.219.494/0001-98 and registered with the Board of Trade of the State of Minas Gerais (JUCEMG) under NIRE No. 31300120457.

 

“JC Joint FIP” has the meaning ascribed to it in the preamble of this Agreement.

 

“JUCEPI” has the meaning ascribed to it in the preamble of this Agreement.

 

“Law” means any law, decree, regulation, requirement, rule, norm, ordinance, instruction, federal, state, municipal, or territorial codes, resolution, warrant, judgment, judicial decision, arbitral decision or requirement application to the Person in question, issued by a competent Governmental Authority, in each case applicable to or that binds that Person or any of his assets or to which that Person or any of his assets are subject.

 

 

“Anti-corruption Law” means Law No. 12,486, of August 1, 2013, as amended.

 

“Brazilian Corporations Law” means Law No. 6,404, of December 15, 1976, as amended.

 

“Maximum Indemnification Limit” has the meaning ascribed to it in Section 6.4.1.1 of this Agreement.

 

“Uninovafapi Trademark” means the trademark subject to INPI Case No. 905372964.

 

“MEC” means the Ministry of Education of the Federative Republic of Brazil or another body that comes to replace it.

 

“Offset Notice” has the meaning ascribed to it in Section 6.9.1 of this Agreement.

 

“Conflict Notice” has the meaning ascribed to it in Section 10.2 of this Agreement.

 

“Third-Party Claim Notice” has the meaning ascribed to it in Section 6.5.1(a) of this Agreement.

 

“Direct Claim Notice” has the meaning ascribed to it in Section 6.5.6 of this Agreement.

 

“Claim Rejection Notice” has the meaning ascribed to it in Section 6.5.6 of this Agreement.

 

“NRE” has the meaning ascribed to it in the preamble of this Agreement.

 

“Encumbrance” (and its variations) means any and all liens, charges, burdens, mortgages, pledges, attachments, fiduciary sales, fiduciary assignments, restrictions, purchase or warrant rights, charges, promise of sale, usufruct over voting and/or property rights, inventory right, preemptive right, option, limitations on the full and free use, enjoyment, or fruition of any property or right (or any of the attributes inherent or related to such property or right), whether by virtue of Law or contract.

 

“Transaction” has the meaning ascribed to it in Recital B of this Agreement.

 

“Party” has the meaning ascribed to it in the preamble of this Agreement.

 

“Indemnified Party” has the meaning ascribed to it in Section 6.5 of this Agreement.

 

“Indemnifying Party” has the meaning ascribed to it in Section 6.5 of this Agreement.

 

“Related Party” means: (i) in relation to a Person other than an individual, any of its Affiliates, or their respective direct and indirect shareholders and/or shareholders holding more than ten percent (10%) of the shares or quotas representing the total or voting share capital of said Person or that, regardless of the amount of ownership interest, has the direct or indirect Control of such Person, as well as its employees and/or management or employees or officers and directors of a Person that is considered to be a Related Party per the above terms; and (ii) in relation to an individual: (a) all of his or her ascendants and descendants in a direct line, spouse, and/or relatives from first (1st) to the fourth (4th) degree; and (b) any of their direct or indirect Controlled Companies, or any Person that is a related party of such Controlled Company under the terms of item (i) above.

 

“Buyer’s Indemnifiable Parties” has the meaning ascribed to it in Section 6.1 of this Agreement.

 

“Sellers’ Indemnifiable Parties” has the meaning ascribed to it in Section 6.2 of this Agreement.

 

“Loss” means any damage, harm, loss, obligation, disbursement, cost, and/or expense that represents actual cash outflow, including, but not limited to, judicial deposits, guarantees, fees, or administrative or judicial costs, reasonable fees and expenses with attorneys, accountants and experts, burdens from loss of suit, and administrative fees and/or costs, including those incurred during the conducting of any defense, as well as monetary correction, arrears and/or compensatory interest, fines, and any other increases and/or penalties, in any case suffered by any of the Buyer’s Indemnifiable Parties or the Sellers’ Indemnifiable Parties. The following shall not be subject to indemnification under this Agreement, nor be covered by the definition of a “Loss” contained in this instrument: (i) moral, reputational, and/or indirect damages, except when the Institute, the Sellers, or the Buyer is obligated to reimburse moral damages, indirect damages, or consequential damages suffered by third parties; and (ii) lost profits and/or loss of business opportunity.

 

 

“Person” means any individual, legal entity, entities without legal personality, company (whether or not personified), corporation, limited company, limited partnership, limited corporation, limited liability partnership, partnership without legal personality, joint venture, any other type of company, trade union, consortium, trust,  association, organization, private investment fund, or any other type of fund, any Governmental Authority, or any other person or entity, including any successor, by merger or otherwise, of any of the aforementioned parties, organized in accordance with Brazilian or foreign law.

 

“Purchase Price” has the meaning ascribed to it in Section 2.2 of this Agreement.

 

“Installment Price” has the meaning ascribed to it in Section 2.2(b) of this Agreement.

 

“First Installment of the Purchase Price” has the meaning ascribed to it in Section 2.2(a) of this Agreement.

 

“Intellectual Property” has the meaning ascribed to it in Section 5.1.17(a) of this Agreement.

 

“Quotas” has the meaning ascribed to it in Recital A of this Agreement.

 

“80% Quotas” has the meaning ascribed to it in Recital B of this Agreement.

 

“Rules” has the meaning ascribed to it in Section 10.3 of this Agreement.

 

“FIES Credit Report” has the meaning ascribed to it in Section 6.3.1 of this Agreement.

 

“Company” means Sociedade de Ensino Superior e Tecnológico do Piauí Ltda., a limited liability business company with headquarters at Rua Vitorino Orthiges Fernandes, No. 6,123, Bairro Uruguai, City of Teresina, State of Piauí, CEP 64.073-505, enrolled in the CNPJ/MF under No. 03.126.508/0001-29.

 

“Taxes” means any and all taxes of any nature (including, but not limited to, taxes, fees, social contributions, contributions for economic intervention, improvement contributions, interest contributions of professional or economic categories, and compulsory loans). All references to taxes and derivations of this word such as “tax” and “tax-related” made in this Agreement include any and all social security contributions. Also included in the meaning of Taxes are ancillary tax levies (including interest, fines, penalties, monetary restatement, and tax increases with respect thereto).

 

“Arbitral Tribunal” has the meaning ascribed to it in Section 10.3.110.3 of this Agreement.

 

“Sellers” has the meaning ascribed to it in the preamble of this Agreement.

 

1.2.                            Rules of Construction, (i) Where a reference in this Agreement is made to a recital, article, section, or exhibit, such reference shall be construed as a recital, article, section, or exhibit to this Agreement, unless otherwise indicated; (ii) the headings and titles contained in this Agreement are for reference purposes only and shall not affect in any way the meaning, analysis, or construction of this Agreement; (iii) the words “hereof,” “herein,” “hereto,” and “hereunder,” as well as words of similar meaning, when used in this Agreement, shall refer to this Agreement as a whole, and not to any specific provision of this Agreement; (iv) whenever the words “include,” “includes,” “including,” and similar expressions are used in the terms of this Agreement, they shall mean “include, without limitation,” “includes, but not limited to,” and “including, among others,” respectively, or a similar expression indicating a non-restrictive or exhaustive, but merely exemplifying, enumeration; (v) any agreement, instrument or law referred to in this Agreement or any contract or instrument that is referred to in this Agreement means the agreement, instrument, or Law as may be periodically amended, modified, altered, or replaced; (vi) references to a Person are also references to such Person’s successors and assigns of any type; and (vii) all exhibits referred to in this Agreement, if duly initialed by representatives of the Parties, shall be deemed to be an integral part of this Agreement and shall be incorporated into this Agreement by reference and integrated herein for all purposes.

 

2.                                      QUOTA PURCHASE AND SALE; LEASE

 

2.1.                            Purchase and Sale. Subject to the terms and conditions set forth in this Agreement, the Sellers hereby sell and transfer to the Buyer, and the Buyer hereby acquires and receives from the Sellers, at the purchase price agreed upon in Section 2.2, the 80% Quotas, free and clear of any Encumbrances and with all the rights and obligations attached thereto, including voting and property rights (such as dividends, preemptive rights for subscription of new

 

 

quotas, among others), as follows: (i) JC Joint FIP sells and transfers to the Buyer eighteen million, five hundred and eighty-five thousand, eight hundred and forty (18,585,840) Quotas, representing seventy-eight percent (78%) of the total Quotas; and (ii) Breno sells and transfers to the Buyer four hundred and seventy-six thousand, five hundred and sixty (476,560) Quotas, representing two percent (2%) of the total Quotas, thus withdrawing from the Institute.

 

2.1.1.                  Capital Stock. After the performance of the Transaction with the purchase of the 80% Quotas by the Buyer, the capital stock of the Institute shall be divided as follows:

 

	
Partner
    	
 
    	
Quotas Held
    	
 
    	
Equity Interest
    	
 
    
	
JC Joint FIP
    	
 
    	
4,765,600
    	
 
    	
20
    	
%
    
	
Buyer
    	
 
    	
19,062,400
    	
 
    	
80
    	
%
    
	
TOTAL
    	
 
    	
23,828,000
    	
 
    	
100
    	
%
    

 

2.2.                            Purchase Price. The Buyer attributed to the Institute the value of two hundred and ninety-five million Brazilian Reais (R$ 295,000,000.00) for 100% of the Quotas, assuming a net Indebtedness equal to zero. The Buyer undertakes to pay to the Sellers, for the acquisition of the 80% Quotas, the total amount of two hundred and  thirty-six million Brazilian Reais (R$ 236,000,000.00) (the “Purchase Price”), which shall be paid by the Buyer to the Sellers as follows:

 

(a)                                 one hundred and twenty-nine million, eight hundred thousand Brazilian Reais (R$ 129,800,000.00), equivalent to fifty-five percent (55%) of the Purchase Price,  is paid by the Buyer to the Sellers on the date hereof simultaneously with the execution of this Agreement (the “First Installment of the Purchase Price”), where: (i) one hundred and twenty-six million, five hundred fifty-five thousand Brazilian Reais (R$ 126,555,000.00) shall be paid to JC Joint FIP; and (ii) three million, two hundred and forty-five thousand Brazilian Reais (R$ 3,245,000.00) shall be paid to Breno; and

 

(b)                                 one hundred and six million, two hundred thousand Brazilian Reais (R$ 106,200,000.00), equivalent to forty-five percent (45%) of the Purchase Price (the “Installment Price”) shall be paid by the Buyer to the Sellers in three (3) fixed annual installments in the amount of thirty-five million, four hundred thousand Brazilian Reais (R$ 35,400,000.00) each, maturing on: November 27, 2019, November 27, 2020, and November 27, 2021, and each installment shall be paid to the Sellers as follows: (i) thirty-four million, five hundred and fifteen thousand Brazilian Reais (R$ 34,515,000.00) shall be paid to JC Joint FIP; and (ii) eight hundred and eighty-five thousand Brazilian Reais (R$ 885,000.00) shall be paid to Breno.

 

2.2.1.                  Each installment of the Installment Price shall be adjusted per the variation in the CDI rate as of the date hereof and until the date of the effective payment of said installment of the Installment Price.

 

2.3.                            Price Adjustment. In addition to the Purchase Price, the Buyer undertakes to make the following payments to the Sellers:

 

(a)                                 the amount of four million Brazilian Reais (R$ 4,000,000.00) (“Price Adjustment 1”) arising from a portion of the Institute’s Cash on the date hereof, shall be paid by the Buyer to the Sellers on the date hereof, simultaneously with the execution of this Agreement, where: (i) three million, nine hundred thousand Brazilian Reais (R$ 3,900,000.00) shall be paid to JC Joint FIP; and (ii) one hundred thousand Brazilian Reais (R$ 100,000.00) shall be paid to Breno;

 

(b)                                 the amount of eight million, nine hundred and five thousand, five hundred and forty Brazilian Reais and sixty-three cents (R$ 8,905,540.63) (“Price Adjustment 2” and, together with Price Adjustment 1, the “Price Adjustment”), equivalent to eighty percent (80%) of the amount of the reduction in capital subject to the Reduction AGE, where: (i) eight million, six hundred eighty-two thousand, nine hundred and two Brazilian Reais and twelve cents (R$ 8,682,902.12) shall be paid to JC Joint FIP; and (ii) two hundred and twenty-two thousand, six hundred and thirty-eight Brazilian Reais and fifty-two cents (R$ 222,638.52) shall be paid to Breno. The Parties hereby agree that said payment of Price Adjustment 2 due from the Buyer to the Sellers shall be paid by the Institute, at the Buyer’s expense and order, directly to the Sellers, within four (4) Business Days counted from the expiration of the legal term of sixty (60) days for opposition by creditors as of the date of the last publication of the Reduction AGE in the Official Gazette of the State of Piauí and in a widely-circulated newspaper in Teresina/PI.

 

 

2.4.                            Method of Payment. The payment of the Purchase Price and Price Adjustment shall be made via electronic transfer of available funds on the respective maturity dates indicated in Sections 2.2 and 2.3 above, into the Sellers’ bank accounts (the “Bank Accounts”), as follows:

 

	
Seller
    	
 
    	
Bank Account
    
	
JC Joint FIP
    	
 
    	
Banco BTG Pactual (208)
   Branch 001
   Account 000288892
    
	
Breno
    	
 
    	
Banco BTG Pactual (208)
   Branch 001
   Account 000281824
    

 

2.4.1.                  The Sellers and Cristina may notify the Buyer in writing by instructing it to deposit the Installment Price (or any other payment due under this Agreement) into another bank account owned by the Sellers and/or Cristina, provided that this notice is received at least three (3) Business Days prior to the date on which said payment is to be made, in which case the bank account indicated shall be considered a Bank Account for the purposes of all payments due to the Sellers and/or to Cristina under this Agreement.

 

2.4.2.                  Discharge. Proof of the transfer of the amounts to the Bank Accounts shall serve as proof of irrevocable and irreversible discharge of the Purchase Price and the Price Adjustment.

 

2.5.                            Lease Agreement. The Company, the Institute, Cristina, and the Buyer (the latter two acting as intervening and consenting parties) hereby simultaneously enter into this Agreement, a lease agreement, a copy of which is included in Exhibit 2.5 (the “Lease Agreement”), by which the Company leases the Properties to the Institute, in accordance with the terms and conditions defined in said Lease Agreement.

 

3.                                      CLOSING

 

3.1.                            Closing. The consummation of the Transaction, under the terms established in this Agreement, (the “Closing”) occurs on the date hereof at the firm Tauil & Checker Advogados Associated with Mayer Brown LLP, located at Avenida Presidente Juscelino Kubitschek, 1455, 6th floor, Vila Nova Conceição, CEP 04543-011, in the City of São Paulo, State of São Paulo.

 

3.2.                            Closing Acts. On the date hereof, the following acts are performed by the Parties and by the Company:

 

(a)                                 Signing by the Parties of the 5th Amendment to the Institute’s Articles of Association, a copy of which is provided in Exhibit 3.2(a), whereby: (i) the Sellers shall transfer the 80% Quotas to the Buyer; (ii) the current management of the Institute resign from their positions with reciprocal discharge; (iii) new members for the management of the Institute are appointed and invested in their respective positions; and (iv) the restatement of the Institute’s Articles of Association is approved (the “Closing ACS”);

 

(b)                                 Signing by the Parties of the General Incorporation Meeting by Corporate Type Conversion of the Institute from a Limited Liability Business Company into a Corporation, a copy of which is included in Exhibit 3.2(b) , by means of which the Institute is converted into a corporation (the “Conversion ACS”);

 

(c)                                  Deposit, by the Buyer to the Sellers, of the First Installment of the Purchase Price into the Bank Accounts, pursuant to the terms of Section 2.2(a);

 

(d)                                 Deposit, by the Buyer to the Sellers, of Price Adjustment 1 into the Bank Accounts, pursuant to the terms of Section 2.3(a);

 

(e)                                  Signing of the Lease Agreement by the Company, the Institute, Cristina, and the Buyer;

 

(f)                                   Signing, by JC Joint FIP, by the Buyer, and by Cristina, of the Shareholders’ Agreement of the Institute, a copy of which is found in Exhibit 3.2(f);

 

 

(g)                                  Granting of a Public Power of Attorney from the Institute to the new management of the Institute elected by the Buyer on the date hereof, to manage the Institute’s activities, with a period of validity of thirty (30) days (renewable for an additional period of thirty (30) days upon written request to the Institute), a copy of which is found in Exhibit 3.2(g); and

 

(h)                                 Signing, by the Buyer and JC Joint FIP, of the General Meeting for approval of the capital reduction of the Institute, a copy of which is found in Exhibit 3.2(h) (the “Reduction AGE”).

 

3.2.1.                  All Closing acts are part of the Transaction agreed upon among the Parties and are considered to have been performed simultaneously.

 

3.3.                            Recording of the ACS. The Closing ACS shall be recorded by the Buyer with JUCEPI within 3 (three) Business Days as of the date hereof. The Conversion ACS shall be recorded by the Buyer with JUCEPI within ten (10) days of the date of recording with JUCEPI of the Closing ACS.

 

4.                                      REPRESENTATIONS AND WARRANTIES OF THE BUYER

 

4.1.                            The Buyer, aware that the representations and warranties below are essential for the purposes of this Agreement, represents and warrants to the Sellers, on the date hereof, that:

 

4.1.1.                  Organization and Existence of the Buyer. The Buyer is legally organized and validly existing under the laws of the Federative Republic of Brazil.

 

4.1.2.                  Power and Authorization. The Buyer has the full right, capacity, and power, per the terms of the Law, to enter into, to sign, and to deliver this Agreement, as well as to fulfill all obligations assumed herein, having taken all measures and obtained all authorizations necessary to authorize its execution, and there is no legal or contractual impediment to consummating the transactions contemplated hereby. The execution and delivery of this Agreement by the Buyer, and the fulfillment of the obligations assumed by it, have been duly authorized. No other measure or other act is necessary to authorize the execution, delivery, and fulfillment of this Agreement by the Buyer.

 

4.1.3.                  No Breach, Consents. Neither the execution and the delivery of this Agreement by the Buyer, nor the fulfillment by the Buyer of any and all of its obligations hereunder, nor the consummation of the transactions established herein:

 

(a)                                 Violate the articles of association and other corporate documents of the Buyer;

 

(b)                                 Infringe on, conflict with, accelerate the performance of any obligation, or result in a breach or termination of, or otherwise give any third party any additional rights or compensation under, or right to terminate, or constitute default under the terms of, or for any contract to which the Buyer is a party, or to which the Buyer or any of its properties, goods, and/or assets are subject and/or bound;

 

(c)                                  Violate or conflict with any statute, ordinance, Law, rule, regulation, license or permit, judgment, or order of any court, arbitrator, arbitration tribunal, or other Governmental Authority or regulator to which the Buyer or any of its assets are subject, including, but not limited to, MEC regulations; and/or

 

(d)                                 Require any consent, approval, or authorization from any Person, court, or Governmental Authority, except for the recording of the Closing ACS and Conversion ACS with JUCEPI and for the notice to MEC pursuant to the terms of Section 7.4(a).

 

4.1.4.                  No Litigation. There are no outstanding or ongoing claims involving the Buyer that affect, in any way and in any manner, the execution of this Agreement and the fulfillment of the obligations now assumed. The Buyer has not breached any judgment, order, arbitration award, warrant, preliminary injunction, or order of any Governmental Authority that in any way and in any manner affects the execution of this Agreement and fulfillment of the obligations now assumed.

 

4.1.5.                  Binding Obligation. This Agreement is a valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms and conditions. This Agreement in all terms and conditions binds both the Buyer and its successors.

 

 

4.1.6.                  Solvency. The Buyer is solvent and has sufficient financial and economic capacity to make any and all payments provided for in this Agreement (including, without limitation, the Purchase Price) and to fulfill all its obligations under this Agreement.

 

4.1.7.                  No Breach of Anti-corruption Rules.

 

(a)                                 The Buyer, its subsidiaries, and, to the best of the Buyer’s knowledge, the Buyer’s executive officers, in any event, directly or indirectly, when acting on the Buyer’s behalf, as of its date of incorporation to the date hereof, have always fully complied with all applicable Brazilian anti-corruption laws and regulations, including, but not limited to, the Anti-Corruption Law, which prohibits any type of corruption, bribery, or money laundering and regulates gifts, gratuities, and expenses paid to the benefit of governmental authorities, lobbies, political donations, and political contributions, have not committed unlawful acts provided for in Law No. 9,133, of March 3, 1998, as amended, and have not: (i) offered, promised, made, paid, delivered, or authorized any contribution, gift, thing of value, payment, delivery, donation, or other improper advantage to a public agent (including any representative of Governmental Authorities); to any person related thereto, or to any person in circumstances in which it was aware or should have reasonably been aware that all or any part of said thing of value, contribution, payment, gift, or donation would be offered, delivered, or promised, directly or indirectly, to a Person with the objective of (i.a) influencing any act or decision by a Governmental Authority in the performance of its function; (i.b) inducing a Governmental Authority to do or not do any act that violates its legal function; (i.c) ensuring an improper advantage; (i.d) inducing a Governmental Authority to influence or interfere with any act or decision by any governmental entity; or (i.e) assisting the Buyer, as well as any of its subsidiaries or representatives in obtaining or maintaining business for the Buyer or any of its subsidiaries; (ii) financed, funded, sponsored, or otherwise subsidized the performance of unlawful acts under the Anti-Corruption Law; (iii) frustrated, through arrangement, combination, or any other manner, the competitive nature of a public bidding procedure; (iv) prevented, disturbed, or fraudulently carried out any act in a public bidding procedure; (v) excluded or sought to exclude a bidder by offering an advantage of any kind; (vi) obtained improper advantage or benefit from modifications or extensions of contracts entered into with the public administration, without authorization in Law, in the notice of public bidding or in the respective contractual instruments; (vii) manipulated the economic and financial balance of contracts entered into with the public administration; (viii) impeded investigation or inspection by public bodies, entities, or agents (including any representative of Governmental Authorities), or intervened in their activities, including within the scope of regulatory agencies and inspection bodies of the National Financial System; and/or (viii) performed acts in violation of any of the applicable Brazilian anti-corruption laws and regulations, including, but not limited to, the Anti-Corruption Law;

 

(b)                                 To the best of its knowledge, none of the Buyer’s executive officers have conducted or initiated any internal investigation or made any voluntary or required disclosure to any Governmental Authority or similar entity in connection with any act or omission arising out of or in any way related to non-compliance with the Anti-Corruption Law. To the best of its knowledge, none of the Buyer’s officers have received any notice, requisition, or subpoena relating to any non-compliance with the Anti-Corruption Law.

 

4.1.8.                  Audit. The Buyer, together with its advisors, has conducted its own legal, tax, accounting, and financial due diligence of the Institute and its business, as per documents made available by the Sellers, in the usual manner for this type of transaction, which achieved satisfactory results for the definition of the Purchase Price, having independently confirmed and verified any and all matters that it believed necessary or appropriate to determine the feasibility of the transactions provided for in this Agreement and the accuracy and suitability of the Purchase Price.

 

4.2.                            Valid and True Representations. The validity and truthfulness of the representations and warranties mentioned above on the date hereof constitute assumptions of this Agreement.

 

4.3.                            Severability of Representations. Each of the representations and warranties now provided by the Buyer is independent and autonomous in nature, but shall be interpreted in a systematic manner in relation to any other representations, warranties, terms, or conditions contained in this Agreement.

 

4.4.                            No Other Representations and Warranties. Except for the representations and warranties included in this Section 4, the Buyer makes no representation or warranty of any kind or nature, express or implied, to any of the Sellers and/or to Cristina. No representation or warranty of the Buyer contained in this Agreement shall restrict, limit, or prevent the  Sellers from exercising their right to indemnification provided for in Section  6.2 below.

 

 

5.                                      REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND CRISTINA.

 

5.1.                            The Sellers and Cristina, together and jointly and severally, represent and warrant to the Buyer, on the date hereof, that:

 

5.1.1.                  Organization and Existence of JC Joint FIP. JC Joint FIP is legally organized and validly existing under the Laws of Brazil and has all the power and authority necessary to conduct its activities substantially in the same manner that these activities have been and are currently being conducted to present, as well as to hold, operate, use, lease, and dispose of its property and assets.

 

5.1.2.                  Organization and Existence of the Institute. Each of the Institute and CIS is a duly organized limited liability company, validly existing in accordance with the Laws of Brazil and has all the necessary power and authority to hold, operate, use, dispose, and/or lease property and assets owned, operated, used, or leased by it, as well as to conduct its business substantially in the same manner as they have been and are currently being conducted by the Sellers to date.

 

5.1.3.                  Insolvency, Judicial and Extrajudicial Reorganization and Bankruptcy Proceedings. Each of the Institute and CIS is not in the process of judicial or extrajudicial reorganization or bankruptcy in accordance with the Laws of Brazil, nor has it been subpoenaed or summoned in any judicial or extrajudicial reorganization or bankruptcy proceedings. Neither Breno nor Cristina are involved in insolvency proceedings and have not been subpoenaed or summoned in any insolvency proceedings.

 

5.1.4.                  Power and Authorization. The Sellers,  Cristina, and the Institute have full right, capacity, and powers under the Law, to enter into, sign, and  formalize this Agreement, as well as to fulfill all obligations assumed herein, having taken all measures and obtained all authorizations necessary to authorize its execution, and there is no legal or contractual impediment to consummating the transactions contemplated in this Agreement. The execution and formalization of this Agreement by the Sellers, by Cristina, and by the Institute and the fulfillment of the obligations assumed by it have been duly authorized. No other measure or other act is necessary to authorize the execution, formalization, and fulfillment of this Agreement by the Sellers, by Cristina, and/or by the Institute.

 

5.1.5.                  Binding Obligation. This Agreement is a legal, valid, and binding obligation of the Sellers, of the Institute, and of Cristina, enforceable against them in accordance with its terms and conditions. This Agreement in all terms and conditions binds the Sellers, Cristina, and the Institute, as well as their successors and heirs.

 

5.1.6.                  No Breach and Consents. Neither the execution and the formalization of this Agreement by the Sellers, by the Institute, and by Cristina, nor the fulfillment by the Buyer of any and all of their obligations under this Agreement, nor the consummation of the transactions established herein:

 

(a)                                 Violate the articles of association, bylaws, and other corporate documents of the Institute, CIS, and/or JC Joint FIP, there being no quotaholders’/shareholders’ agreements and/or any documents binding the Quotas;

 

(b)                                 Infringe on, conflict with, accelerate the performance of any obligation, or result in a breach or termination of, or otherwise give any third party any additional rights or compensation under, or right to terminate, or constitute default or arrears under the terms of, or for any contract to which the Institute, CIS, the Sellers, and/or Cristina is a party, or to which the Institute, the Sellers, and/or Cristina or any of their respective properties, goods, and/or assets are subject and/or bound;

 

(c)                                  Violate or conflict with any statute, ordinance, Law, rule, regulation, license or permit, judgment, or order of any court, arbitrator, arbitration tribunal, or other Governmental Authority or regulator to which the Sellers, Cristina, the Institute, and/or Cristina or any of their assets are subject, including, but not limited to, MEC regulations; and/or

 

(d)                                 Require any consent, approval, or authorization, whether in advance or thereafter, from any Person, court, or Governmental Authority, except for the recording of the Closing ACS and Transformation ACS with JUCEPI and for the notice to MEC pursuant to the terms of Section 7.4(a).

 

5.1.7.                  No Litigation. There is no suit, judicial, arbitral, or administrative action, or investigation of which the Institute, Cristina, the Sellers, and/or CIS have knowledge or have been served with process, subpoenaed,

 

 

or summoned (as the case may be), to date, pending against the Institute, Cristina, the Sellers, and/or CIS that may prevent the performance and completion of the Transaction contemplated by this Agreement, per the terms and conditions set forth in this Agreement.

 

5.1.8.                  Capital Stock. The capital stock of the Institute is twenty-three million, eight hundred and twenty-eight thousand Brazilian Reais (R$ 23,828,000.00), fully subscribed for and paid in, divided into twenty-three million, eight hundred and twenty-eight thousand (23,828,000) Quotas. The Quotas are the only securities issued by the Institute to date and there are no contracts or arrangements of any kind that require the Institute to issue new quotas or securities. The Sellers: (i) are legitimate proprietors, owners, and holders of all Quotas, which are free and clear of any and all Encumbrances; (ii) all of the Quotas have been duly authorized, legally issued, and fully paid up, and there are no other subscription rights, purchase options granted, or other rights to acquire or subscribe any quotas issued by the Institute which confer on their respective holders the issuance of quotas of the Institute, or which could be converted into or exchanged for quotas issued by the Institute, issued or to be issued in the future; and (iii) have not entered into any agreement (other than this Agreement) or entered into any commitment with any third party to dispose of or to have the right to dispose of, and/or enjoy any of the Quotas or other rights to acquire or subscribe any quotas issued by the Institute.

 

5.1.9.                  Subsidiaries. Except for the corporate holding held by the Institute in CIS, the Institute does not have any holding, in Brazil or abroad, in any other Person, company (whether or not personified), enterprise, consortium, association, foundation, condominium, or joint venture, direct or indirectly, of any nature. The Institute is the sole and legitimate owner of one hundred percent (100%) of the total and voting capital stock of CIS.

 

5.1.10.           Litigation. Exhibit 5.1.10 contains a list of administrative, judicial, or arbitral proceedings filed against or by the Institute by June 22, 2018 (the “Base Date”). As of the Base Date up to the date hereof: (i) no relevant administrative, judicial, or arbitral proceedings were filed against the Institute; and (ii) the Institute did not file any relevant administrative, judicial, or arbitral proceedings.

 

5.1.11.           Infraction Notices. Exhibit 5.1.11 contains a list of infraction notices drawn up in the name of the Institute up to the Base Date. Except with respect to Exhibit 5.1.11, there is no infraction or inspection notice of which the Institute, Cristina, and/or the Sellers are aware or with respect to which they have been served with process, subpoenaed, or summoned (as the case may be), up to the Base Date, pending against the Institute, Cristina, and/or the Sellers. As of the Base Date to the date hereof, the Institute, Cristina, and/or the Sellers have not been served with process, subpoenaed, or summoned (as the case may be) with respect to any infraction or inspection notice.

 

5.1.12.           Teaching Institutions. The Institute is the maintainer of the UNINOVAFAPI University Center, accredited by the MEC to operate on the date hereof as a university center. Except for the UNINOVAFAPI University Center, the Institute does not maintain any other higher education institution in Brazil or abroad.

 

5.1.13.           Regulatory.

 

(a)                                 To the best knowledge of the Sellers and Cristina:

 

(i)                                     There is no significant breach by the Institute, as well as by the university centers, and/or colleges it maintains, with regard to the regulations and requirements of the MEC;

 

(ii)                                  There are, on the date hereof, no relevant regulatory irregularities that may result in the reduction of vacancies, restrictions on enrollment of students, cancellation of programs, or de-accreditation.

 

(iii)                               The Institute not is not party to an assessment by the MEC or any other Correction of Deficiencies Order, Consent Order, or any other consent decree or correction order or other similar document, outstanding, in force, or under negotiation with the MEC;

 

(iv)                              The programs offered by the institution of higher education maintained by the Institute comply with all the relevant requirements demanded by the MEC, the National Council of Education, the Anísio Teixeira National Institute of Studies and Educational Research - INEP, and other competent authorities;

 

(v)                                 The institution of higher education maintained by the Institute is duly accredited to teach courses in person and via distance learning, as applicable to each of the programs;

 

 

(vi)                              In the last three (3) years, an unsatisfactory grade (Grade 1 or Grade 2) has not been obtained by the higher education institution maintained by the Institute in the General Course Program Index (IGC);

 

(vii)                           The Institute is not aware of, and has not been served with process or summoned regarding proceedings for supervision of course programs that are pending before the MEC;

 

(viii)                        The partnerships with third parties signed by the Institute for the purposes of offering higher education of the type EAD were entered into with partners able to conduct their business according to applicable laws and regulations;

 

(ix)                              The Institute meets the requirements for classification as a university center, as applicable, including, but not limited to, the composition of at least one third (1/3) of teaching staff by teachers with master’s and doctoral degrees and  one-fifth (1/5) by professors hired to be full-time;

 

(x)                                 The Institute meets the relevant requirements of accreditation required by Decree No. 9,235, of December 15, 2017, including, but not limited to, the corporate acts attesting to its existence and legal capacity, sufficient equity to maintain the institution, and financial statements certified by competent professionals;

 

(xi)                              There are no outstanding sanctions that have been imposed by the MEC on the Institute; and

 

(xii)                           In the EAD course programs, the Institute performs the following activities required by applicable laws and regulations: (i) student evaluations; (ii) mandatory internship placements, when provided for in the relevant legislation; (iii) defense of completion of course programs, when provided for in the relevant laws and regulations; and (iv) activities related to teaching laboratories, when applicable.

 

(b)                                 ProUni. The Institute is legally and duly enrolled in ProUni. To the best knowledge of the Sellers and Cristina, there is no breach on the part of the Institute that could prejudice their adhesion to ProUni and/or the maintenance of the benefits granted by it to the Institute.

 

(c)                                  FIES. The Institute is duly registered with FIES and complies, in all material respects, with all applicable FIES rules. The Institute did not breach or violate any rule that could lead to the exclusion of the Institute from this program.

 

5.1.14.           Agreements with Hospitals. The agreements with hospitals have been duly complied with by the Institute in all material respects and are valid, effective, and enforceable in accordance with their respective terms. None of the Institute’s agreements with hospitals have any need for prior authorization from any Person or Governmental Authority for the implementation of the transaction provided for in this Agreement. The Institute has the agreements with hospitals listed in Exhibit 5.1.14.

 

5.1.15.           Fraud against Creditors. The execution and performance of the Agreement does not constitute fraud against creditors or fraud against execution. The Sellers, Cristina, and the Institute are solvent, shall not be reduced to insolvency due to the execution and fulfillment of the Agreement, and possess sufficient assets to honor all their obligations.

 

5.1.16.           Material Agreements.

 

(a)                                 The term “Material Agreements,” when used in this Agreement, means any agreement material to its operations: (i) that is related to any indebtedness or financing of property and assets; (ii) that involves the formation of a line of credit or bank financing in favor of the Institute; (iii) that is a joint venture contract, partnership, association, company (whether or not personified, including unincorporated special partnerships), or a similar arrangement, except for the participation of the Institute in the capital stock of CIS; (iv) that has not been entered into the Ordinary Course of Business; (v) that involves, individually or in the aggregate, in this case in a subsequent period of [**] months, amounts exceeding [**] Brazilian Reais (R$ [**]); (vi) technical cooperation or partnerships with third parties for the development of content or methodology for undergraduate and graduate courses; (vii) assignment of copyright and other contracts related to the production, manufacture, and distribution of educational materials used by the Institute; (viii) that involves the provision or contracting of any form of guarantee  (personal or collateral) by the Institute for any Person; and/or (ix) that involves the provision of any guarantee of which the Institute is a beneficiary.

 

 

(b)                                 The Material Agreements to which the Institute is a party on the date hereof are listed in Exhibit 5.1.16(b);

 

(c)                                  The consummation of the Transaction shall not entail early maturity or cancellation of any Material Agreement; and

 

(d)                                 The Material Agreements, referred to in item (a) above: (i) are valid, bind the respective counterparties, and are in force, except as otherwise indicated in Exhibit 5.1.16(b); (iii)  respect the Law in all its relevant respects and are valid, effective, and enforceable in relation to the  Institute and against the respective counterparties; (iv) are being complied with by the Institute, which has not infringed on any relevant obligation thereof or provided for therein; (v) to the best knowledge of the Sellers and of Cristina, the Institute has not received any notice regarding the termination,  cancellation, breach, or arrears with respect to any Material Agreement; and (vi) do not generate any pledge, attachment, mortgage, or other secured interest in the assets owned and/or held by the Institute.

 

5.1.17.           Intellectual Property.

 

(a)                                 The Institute is the only legitimate owner, possessor, licensor, or user, as the case may be, of trademarks, patents, copyrights, and/or publishing rights to the educational materials and domains listed in Exhibit 5.1.17(a) (the “Intellectual Property”). The Intellectual Property constitutes all the trademarks, patents, copyrights, and/or publishing rights to the teaching materials and domains used to conduct the Institute’s business and activities in the manner in which they are being conducted. The intellectual property is free and clear of any Encumbrance. There is no restriction on disclosure, use,  or transfer of the Intellectual Property in the manner used by the Institute on the date hereof;

 

(b)                                 On May 7, 2018, the Institute and the Company conducted an irrevocable and irreversible assignment, by the Company to the Institute, of the ownership of the Uninovafapi Trademark, which was presented to the INPI on July 19, 2018, through the “Trademark Application - Annotation of Transfer of Ownership Resulting from Assignment” No. 850180207171, as per the copies found in Exhibit 5.1.17(b); and

 

(c)                                  To the best knowledge of the Sellers and/or of Cristina, there is no service of process, subpoena, or summons against the Institute with respect to any Claim that is  in progress: (i) in which there is an allegation of violation of the rights of any third party due to the use of software or Intellectual Property; (ii) in which there is an allegation that the Institute violated any right of intellectual property of a third-party, infringed on, or improperly appropriated any such rights; and/or (iii) third party contesting the validity, enforceability, use, or ownership of any rights in Intellectual Property.

 

5.1.18.           No Breach of Anti-corruption Rules.

 

(a)                                 The Sellers, Cristina, and/or the Institute, their subsidiaries and, to the best of Cristina’s knowledge, the Relevant Employees, in any case, directly or indirectly, when acting on behalf of the Sellers, Cristina, and/or the Institute, as of the date of organization of the Institute to date, have always fully complied with all applicable Brazilian anti-corruption laws and regulations, including, but not limited to, the Anti-Corruption Law, which prohibits any type of corruption, bribery, or money laundering and regulates gifts, gratuities, and expenses paid to the benefit of government authorities, lobbies, political donations and political contributions, have not committed illegal acts provided for in Law No. 9,613, of March 3, 1998, as amended, and have not: (i) offered, promised, made, paid, delivered, or authorized any contribution, gift, thing of value, payment, delivery, donation, or other improper advantage to a public agent (including any representative of Governmental Authorities); to any person related thereto, or to any person in circumstances in which it was aware or should have reasonably been aware that all or any part of said thing of value, contribution, payment, gift, or donation would be offered, delivered, or promised, directly or indirectly, to a Person with the objective of (i.a) influencing any act or decision by a Governmental Authority in the performance of its function; (i.b) inducing a Governmental Authority to do or not do any act that violates its legal function; (i.c) ensuring an improper advantage; (i.d) inducing a Governmental Authority to influence or interfere with any act or decision by any governmental entity; or (i.e) assisting any of the Sellers, Cristina, and/or the Institute, as well as any of its subsidiaries or representatives in obtaining or maintaining business for any of the Sellers, Cristina, and/or the Institute or any of its subsidiaries; (ii) financed, funded, sponsored, or otherwise subsidized the performance of unlawful acts under the Anti-Corruption Law; (iii) frustrated, through arrangement, combination, or any other manner, the competitive nature of a public bidding procedure; (iv)

 

 

prevented, disturbed, or fraudulently carried out any act in a public bidding procedure; (v) excluded or sought to exclude a bidder by offering an advantage of any kind; (vi) obtained improper advantage or benefit from modifications or extensions of contracts entered into with the public administration, without authorization in Law, in the notice of public bidding or in the respective contractual instruments; (vii) manipulated the economic and financial balance of contracts entered into with the public administration; (viii) impeded investigation or inspection by public bodies, entities, or agents (including any representative of Governmental Authorities), or intervened in their activities, including within the scope of regulatory agencies and inspection bodies of the National Financial System; and/or (viii) performed acts in violation of any of the applicable Brazilian anti-corruption laws and regulations, including, but not limited to, the Anti-Corruption Law;

 

(b)                                 Cristina, in her capacity as officer of the Institute, Breno and, to the best of Cristina’s knowledge, none of the Relevant Employees have conducted or initiated any internal investigation or made any voluntary or required disclosure to any Governmental Authority or similar entity in connection with any act or omission arising out of or in any way related to non-compliance with the Anti-Corruption Law. Cristina, in her capacity as officer of the Institute, Breno, and, to the best of Cristina’s knowledge, none of the Relevant Employees have received any summons, requisition, or service of process related to any breach of the Anti-Corruption Law;

 

(c)                                  Neither Cristina nor Breno nor any of the Relevant Employees is currently a government official or employee of a Governmental Authority or entity controlled by a Governmental Authority (except for professors, who may for example hold positions as judges, prosecutors, officers, or other public offices or at public companies or Governmental Authorities); and

 

(d)                                 No government official or Governmental Authority is a shareholder that currently holds, directly or indirectly, any corporate stake in the Institute.

 

5.1.19.           Properties and Leases.

 

(a)                                 The Institute does not own any property, and the conduct of the business, activities, and operations of the Institute is carried out at the Properties, whose Lease Agreement is entered into on the date hereof, pursuant to the terms of Section 2.5 above;

 

(b)                                 The Lease Agreement entered into on the date hereof is legal, valid, binding, and enforceable according to its terms and conditions;

 

(c)                                  In the best knowledge of the Sellers and Cristina, the Institute or the Company have not been served with process or subpoenaed regarding any Claim questioning the possession and/or use of the Properties by the Institute or requesting the release and/or delivery of any of the Properties;

 

(d)                                 To the best knowledge of the Sellers and Cristina, there are no Claims in progress in any way involving the ownership, possession, and/or use of the Properties to carry out the activities of the Institute in a legal and valid manner; and

 

(e)                                  The Properties are not assigned, transferred, or subject to any Encumbrance, except for the verbal free lease in favor of the Institute and by assignments or subleases within the Ordinary Course of Business, such as for canteens, copiers, bank branches, promotion of events, and public events, among others.

 

5.1.20.           Assets. The Institute is legitimate owner and/or possessor (in an undisputed, peaceful, and non-precarious manner) of the assets (tangible or intangible) listed in the Financial Statements, free and clear of any Encumbrances.

 

5.1.21.           Financial Statements. Exhibit 5.1.21 contains copies of the financial statements of the Institute audited as of December 31, 2017, and unaudited as of June 30, 2018 (together, the “Institute’s Financial Statements”), prepared in accordance with basic accounting principles adopted in Brazil and accounting practices historically adopted by the Institute. The Institute’s Financial Statements are consistent, in all material respects, with the  books and records of the Institute  referring to the dates on which they were prepared, and with the Brazilian Corporations Law and Brazilian tax Law. The information contained in the Institute’s Financial Statements reflect true and correct information, in all material respects, except accounts receivable. In addition, except for accounting for PDD (policy for accounting of doubtful accounts) and accounting allowances, there are no liabilities of the Institute, according to BR GAAP, that should have been reflected on the Institute’s Financial Statements but were

 

 

not. The Institute has not assumed, guaranteed, endorsed, or otherwise become, directly or secondarily liable for any obligation or debt of any Third Party that is not duly reflected on the Statements Financial. To date, the Institute has cash amounting to [**] Brazilian Reais (R$[**]) and Indebtedness amount to [**], and any variation up to [**] percent ([**]%), higher or lower, of the amounts of Cash and Indebtedness declared in this Section 5.1.21 shall not be considered a breach of this representation by the Sellers and/or Cristina.

 

5.1.22.           Books and Records. The books and accounting and tax records of the Institute are, in all material respects, in order updated and are maintained and completed in accordance with all applicable laws.

 

5.1.23.           Accounts Receivable. The Institute’s operations carried out since the beginning of its activities as maintainer of the UNINOVAFAPI University Center that originated the Institute’s accounts receivable represent legitimate transactions conducted in the Ordinary Course of Business.

 

5.1.24.           Absence of Amendments. As of June 30, 2018, up to the date hereof:

 

(a)                                 The Institute has conducted its business and activities in the Ordinary Course of Business and in a manner consistent with the practices previously adopted, except as provided for in Exhibit 5.1.24;

 

(b)                                 There have been no material adverse changes in the financial, operating, legal, and accounting situation of the Institute;

 

(c)                                  The Institute: (i) has not engage capital investment outside the Ordinary Course of Business; (ii) had no  cancellation or substantial withdrawal in any claim or right over values, or any sale, transfer, assignment, distribution, or other dispositions of  any assets, except for those in the ordinary course  of its activities; (iii) has not made any material change in any accounting policy or maintenance of the accounting books or accounting practices;  (v)  made no sales or other disposal of any relevant asset outside the Ordinary Course of Business; (vi) has not contracted any new loan and/or Indebtedness or extended, expanded, and/or used any new or previously existing line of credit and/or Indebtedness with any financial institution and/or any Third Parties; (v) has not carried out any remission, debt forgiveness, or any unilateral termination of any claims held by the Institute against its members, associates, employees, service providers, and/or any third parties who are not students or alumni of the Institute (and, even if for students or alumni, there has been no remission or forgiveness of debts incurred outside the Ordinary Course of Business, in accordance with its past practices); and (vi) has not donated, assigned, and/or transferred, free of charge, any relevant assets, rights, and/or any other relevant assets owned by the Institute to any of its partners, associates, employees, service providers, and/or any Third Parties.

 

5.1.25.           Tax Issues.

 

(a)                                 There is no relevant breach by the Institute with respect to the Tax Laws in force on the respective date of the respective tax obligation.

 

(b)                                 The Institute is not a party to any proceeding, whether administrative or judicial, involving a matter that is Tax in nature.

 

(c)                                  Except for the ProUni and the Worker Food Program (PAT), the Institute is not a beneficiary of any tax benefit, refinancing, or installment program for taxes or tax exemption programs granted by any Governmental Authority;

 

(d)                                 To date, no request for adjustment regarding federal, state, or municipal tax returns has been made by any Governmental Authority; and

 

(e)                                  The Institute has not been notified of any audits or inquiries by Governmental Authorities ongoing with respect to any statements or in connection with the payment of any Tax or the use of any tax benefit (including tax benefits arising from ProUni, established by Law No. 11,096, of January 13, 2005, and subsequent amendments).

 

5.1.26.           Labor Issues.

 

(a)                                 The Institute observes, in all relevant respects, all labor and trade union and social security Laws and all collective bargaining agreements and letters of understanding to which it is a party, including the hiring of

 

 

contractors and outsourced labor, as well as registering of all their employees in the manner set forth in the applicable labor Law. Except as provided for in Exhibit 5.1.10, the Institute is not party to any pending arbitration, labor claim, or any other proceeding relating to any existing labor relationship, and is not subject on the date hereof to the threat of such claims. The Institute is not a signatory to any consent order that is labor in nature.

 

(b)                                 On October 31, 2018, the Institute had five hundred and eighty-nine (589) employees;

 

(c)                                  Except as set out in Exhibit 5.1.26(c), the Institute is not party to any collective bargaining agreement in force on the date of execution of this Agreement, it is not bound by any agreement entered into with any labor organization, or to  labor standards or practices agreed upon with a labor organization or association of employees that are applicable to employees of the Institute and which is in effect on the date of this Agreement, and it is not a party to any class actions alleging violation of collective labor bargaining agreements;

 

(d)                                 Exhibit 5.1.26 (d) contains a list of relevant benefits and/or incentives and/or assistance plans or programs offered by the Institute to its employees, executives, representatives, or agents on the date hereof;

 

(e)                                  There is no balance due and in arrears due from the Institute to the FGTS or INSS;

 

(f)                                   Except as required by labor laws or as reported in Exhibit 5.1.26(f), the Institute has not formalized termination agreements (or similar agreements) with respect to employees establishing any obligation (absolute or contingent) of the Institute, or any other Person, to make payments to employees after the termination of their respective employment contracts;

 

(g)                                  Except for the consigned loans listed in Exhibit 5.1.26(g), there are no: (i) loans or other liabilities payable or owed by the Institute to any officer or employee of the Institute (except for salaries, bonuses,  and wages incurred in the ordinary course of business or as determined by the labor laws); (ii) loans or debts payable or owed by such persons to the Institute; or (iii) guarantees provided by the Institute in any loan or obligation of any kind to which any one of these people is a party; and

 

5.1.27.           Environmental. On the date hereof, there is no Claim involving environmental issues filed against the Institute or CIS.

 

5.1.28.           Insurance. Exhibit 5.1.28 contains a list of the relevant corporate insurance policies, which have been taken out by the Institute and that are currently in force. All premiums related to these insurance policies that were due were paid in full and in a timely manner. To the best knowledge of the Sellers and Cristina, there is no default that has given rise to any termination under any of these insurance policies, or prejudiced the coverage they guaranteed.

 

5.1.29.           Related Party Transactions. Except as provided for in Exhibit 5.1.29, the Institute has no contract, agreement, arrangement, or transaction with any Related Party in force, nor with any of its officers or employees or their Related Parties, which is in force and/or for which there is still some pending issue.

 

5.1.30.           Guarantees. The Institute has not provided guarantees in favor of Third Parties and/or Related Parties of the Institute and/or the Sellers and/or Cristina.

 

5.1.31.           Undergraduate Programs. The Institute had, on November 16, 2018, [**] ([**]) students duly enrolled in the second semester of 2018 (2018.2) in undergraduate programs. Exhibit 5.1.31 contains: (i) the number of students enrolled per undergraduate course program; (ii) the reference value of tuition fees per undergraduate course program, in relation to 2018; and (iii) the current formal policies for the granting of discounts and scholarships by the Institute, which do not include any discounts or scholarships granted sporadically or due to commercial actions or specific and temporary strategies. Notwithstanding the foregoing, it is hereby acknowledged and agreed by the Parties that the following shall not be considered a breach of this representation by the Sellers and/or by Cristina: (a) a variation of up to [**] percent ([**]%), higher or lower, in the number of students included in Exhibit 5.1.31 for all undergraduate courses, except for the medical program; and (b) [**] percent ([**]%), higher or lower, in the number of students in Exhibit 5.1.31 in relation to the medical program.

 

5.1.31.1.                         Graduate Programs. The net revenue from the Institute’s graduate programs in the first half of 2018 was [**] Brazilian Reais (R$[**]), it being agreed that a variation of up to [**] percent ([**]%),

 

 

higher or lower, of the net revenue mentioned in this Section 5.1.31.1 shall not be considered a breach of this representation by the Sellers and/or Cristina.

 

5.1.32.           Commissions and other Payments. No amount has been pledged or guaranteed by the Sellers, the Institute, and/or Cristina in payment (to be made by or on behalf of the Institute) of commissions or brokerage fees to any third party. The amounts of the commissions and fees of the legal advisors ([**] and financial advisors ([**]) of the Sellers by virtue of the signature of this Agreement and performance of the transactions contemplated therein shall be the responsibility of the Sellers.

 

5.1.33.           Discrimination, Child Labor or Slave Labor, Harassment, and Crimes against the Environment. There is no final administrative sanction issued by any Governmental Authority against the Institute and/or its partners, executives, and/or management, due to the performance of acts that discriminate on the basis of race or gender, child labor and slave labor, and/or conviction as a result of said acts, or, further, others that may result in a crime against the environment.

 

5.1.33.1.    In the last twelve (12) months, there has been no final administrative decision against the Institute, its partners, officers, and/or management, exhausted by a Governmental Authority, and/or an adverse judgment, due to the performance of acts that constitute moral or sexual harassment.

 

5.1.34.           Federal Constitution. The prohibitions provided for in article 54, items I and II, of the Federal Constitution, have not been breached by the Institute.

 

5.1.35.           Valid and True Representations. The validity and truthfulness of the representations and warranties mentioned above on the date hereof constitute assumptions of this Agreement.

 

5.1.36.           No Other Representations and Warranties. Except for the representations and warranties included in this Section 5, none of the Sellers or Cristina make any representation or warranty of any kind or nature, express or implied, to the Buyer. No representations or warranties of the Sellers and/or Cristina contained in this Agreement, and no provision contained in any exhibit, shall restrict, limit, or prevent the Buyer from exercising its indemnification rights set forth in Section 6.1 below.

 

5.1.37.           Severability of Representations. Each of the representations and warranties now provided by the Sellers and by Cristina is independent and autonomous in nature, but shall be interpreted in a systematic manner in relation to any other representations, warranties, terms, or conditions contained in this Agreement.

 

5.1.38.           Disclosure. All disclosures and statements made by the Sellers and/or Cristina in each exhibit to this Agreement are made in a general manner and in view of all representations and warranties contained in this Agreement, and none of these disclosures refers only to one specific Section, representation, or warranty.

 

6.                                      INDEMNIFICATION

 

6.1.                            Cristina’s Obligation to Indemnify. Subject to the provisions of Sections 6.1.1 to 6.1.3 below, Cristina hereby undertakes to indemnify and hold harmless the Buyer, the Institute, CIS, their respective direct or indirect subsidiaries, their Affiliates, partners, directors, employees, management, representatives, agents, and other staff members, as the case may be (the “Buyer’s Indemnifiable Parties”), for any Loss that is suffered, paid, and/or incurred by any of the Buyer’s Indemnifiable Parties resulting from (each scenario below is considered an “Indemnification Scenario”):

 

(a)                                 Any omission, falsehood, or violation of the representations and warranties provided by the Sellers and Cristina in this Agreement, especially those set out in Section 5 above; and/or

 

(b)                                 Failure by Sellers and/or Cristina to comply with any covenant or arrangement contained in this Agreement; and/or

 

(c)                                  Any contingency of the Sellers, Cristina, the Company, any of their Related Parties or their successors, in any respective, that any Indemnifiable Party of the Buyer is (or may, under the applicable Laws, be) held to be responsible, a successor, or jointly and severally liable, under any title and at any time; and/or

 

 

(d)                                 Any act, fact, or omission related to the Institute, CIS, and/or the Properties (in the latter case, with respect only to environmental liabilities and contingencies), the triggering event of which occurred before or on the date hereof (even if materialized after the date hereof) regardless of whether such an act, fact, or omission has or has not been disclosed to the Buyer in this Agreement or in the process of due diligence  conducted by the Buyer under the Transaction and that effectively generates a Loss.

 

6.1.1.                  With respect to any Loss suffered directly by the Institute and/or CIS, which are indemnifiable under this Section 6.1, Cristina shall have the option, in her sole discretion, to indemnify: (i) [**] percent ([**]%) of the amount of the Loss suffered directly by the Institute and/or CIS, as the case may be; or (ii) [**] percent ([**]%) of the amount of the Loss suffered directly by the Buyer.

 

6.1.2.                  For the avoidance of doubt, with respect to Losses arising from Divided Claims, Cristina’s obligation to indemnify under this Agreement shall be limited to the portion of Losses that relate to acts, facts, or omissions occurring and/or generated as of the date hereof (even if materialized after the date hereof), and the portion of the Losses related to acts, facts, or omissions occurring and/or generated after the date hereof of the exclusive liability of the Institute and/or the Buyer.

 

6.1.3.                  It is hereby established that Breno and JC Joint FIP shall have no responsibility to indemnify any of the Buyer’s Indemnifiable Parties under this Agreement, and Cristina shall be responsible for indemnifying any of the Buyer’s Indemnifiable Parties in the event of an Indemnification Scenario arising from an act, fact, or omission by Breno and/or JC Joint FIP.

 

6.1.4.                  With respect to any dismissal of employees, by the Institute and/or CIS, after the date hereof, the Parties agree as follows:

 

(i)                                     The Institute shall be responsible for the payment of the severance pay provided for in the Law (including those arising from any waiver outside the authorized legal period provided for in the Law and/or collective bargaining agreement, if applicable), provided that such severance payments related to such dismissals shall not be indemnifiable by Cristina; and

 

(ii)                                  With respect to each specific dismissal that is carried out after the date hereof, if the procedures applicable set forth in Section 8.15 (and its subsections) of the Shareholders’ Agreement are not respected by the Institute, CIS, and/or the Buyer, then Cristina shall have no obligation to indemnify any of the Buyer’s Indemnifiable Parties under this Agreement with respect to any Loss arising from any labor suit brought by the employee who has suffered such specific dismissal vis-à-vis any of the Buyer’s Indemnifiable Parties.

 

6.2.                            Buyer’s Obligation to Indemnify. The Buyer hereby irrevocably and irreversibly undertakes to indemnify and hold harmless Cristina, the Sellers, their direct or indirect subsidiaries, their Affiliates (including but not limited to the Company and its partners, executives, and employees), partners, executives, employees, officers, representatives, agents, and other staff members, as applicable (the “Sellers’ Indemnified Parties”), for any and all Loss that is suffered, paid, and/or incurred by any of the Sellers’ Indemnifiable Parties resulting from:

 

(a)                                 Any falsehood, or violation of the representations and warranties provided by the Buyer in this Agreement, especially those set out in Section 4 above;

 

(b)                                 Failure by the Buyer to comply with any covenant or arrangement contained in this Agreement;

 

(c)                                  Any contingency of the Buyer and any of its Related Parties or its successors, of any type, which any of the Sellers’ Indemnifiable Parties is (or may, under the applicable Laws, be) held to be responsible, a successor, or jointly and severally liable, under any title and at any time; and/or

 

(d)                                 Any act, fact, or omission related to the Institute (even if charged to the Company and/or its partners) occurred, originated, and/or generated after the date hereof, which in any way affects any of the Sellers’ Indemnifiable Parties (including, without limitation, the Company and/or its partners).

 

6.3.                            Supervening Assets. The Parties acknowledge and agree that, as part of the Transaction contemplated by this Agreement, the Sellers shall be fully entitled to the economic benefit effectively obtained by the Institute or by the Buyer, as partners of the Institute, arising from any supervening asset that has a triggering event prior to the date hereof as a result of: (a) a decision that has become final and unappealable or against which no other objection may

 

 

be brought, including, but not limited to, Taxes and indemnities; (b) credits from bank loyalty programs and sweepstakes, and provided that it is possible to prove that adherence to such loyalty program or sweepstakes occurred prior to the signing of this Agreement; and (c) credits arising from FIES contracts entered into and/or amended up to and including [**], which refer to periods prior to and including [**] (“FIES Credits”).

 

6.3.1.                  FIES Credits. In order for the Sellers to have control of the FIES Credits that are released, the Buyer undertakes to send to the Sellers the updated FIES Credits report, according to an example report of the FIES Credits provided in Exhibit 6.3.1 (the “FIES Credit Report”), up to [**] Business Days after being made available in SISFIES-Student Financing System, SIFES Web-Caixa, or any other system that may come to replace them, at the following frequency: (a) in the first [**] days counted from the execution of this Agreement, to present the FIES Credit Report for the immediately preceding month; and (b) after such initial term, for a period of [**] years as of the date hereof to present, at least every [**] months, the FIES Credit Report available for the period between the date of issuance of the last FIES Credit Report up to the date of receipt of the notice referred to in this subsection, within [**] Business Days after the request by the Sellers.

 

6.3.1.1.        Without the need for any request by the Sellers, within [**] Business Days after the submission of the updated FIES Credit Report to the Sellers, the Buyer shall cause the Institute to transfer to the Sellers the total value of the FIES Credit due, in the proportion established in Section 21 , into the Bank Accounts, the amounts corresponding to the Treasury Financial Certificates - Series E (CFT-E) issued in favor of the Institute by the National Treasury up to that date, net of all charges and any Taxes, and which fall under the concept of FIES Credits, to which the Sellers are entitled under the terms of Section 6.3(c) above, and in the event of delay in such transfer, the penalties provided for in Section 9.1. No offset shall be allowed for any amounts arising from FIES Credits with any amounts due from the Sellers to the Buyer under this Agreement. Proof of electronic bank transfer of the FIES Credits shall be considered, for all legal purposes, an adequate instrument proving automatic and unrestricted discharge of such amounts.

 

6.3.2.                  Other Cases. Except for the transfer of the FIES Credits, which shall follow the provisions of Section 6.3.1 above, any amounts due to the Sellers under Sections 6.3(a) and/or 6.3(b) shall be transferred within [**] days to the Sellers after their actual receipt by the Institute or CIS, net of any Taxes and other costs and/or expenses incurred by the Institute for the receipt of such amounts, including any court costs and professional fees paid by the Institute or by CIS, and no offset shall be allowed for any amounts due from the Sellers to the Buyer under this Agreement.

 

6.4.                            Limitations.

 

6.4.1.                  Limitations on Cristina’s Obligation to Indemnify. Cristina’s obligations to indemnify the Buyer’s Indemnifiable Parties shall be subject to the limitations set forth in the subsections of this Section 6.4.1.

 

6.4.1.1.        Maximum Indemnification Limit: The Cristina’s obligation to indemnify shall be limited to: (i) a maximum amount of [**] Brazilian Reais (R$[**]), in connection with indemnifications related to labor and/or social security matters, including but not limited to, in the event of breach, by the Sellers and Cristina, of the representations provided in Sections 5.1.25 (with respect to social security matters) and/or 5.1.26; or (ii) the amount of the Purchase Price, with respect to all other matters indemnifiable under Section 6.1 (the “Maximum Indemnification Limit”).

 

6.4.1.2.        Time Limit. Cristina’s obligation to indemnify shall survive: (i) for a period of [**] years as of the date hereof, with respect to Tax matters (excluding social security matters) and consumer matters; (ii) for a period of [**] years as of the date hereof, with respect to labor and/or social security matters; (iii) until the expiration of the statute of limitations with respect to environmental matters and omission, inaccuracy, or violation of any of the Fundamental Representations of the Sellers and Cristina; and (iv) for a period of [**] years as of the date hereof, with respect to all other matters indemnifiable under Section 6.1.

 

6.4.1.2.1.                                              For clarification purposes, if a Third-Party Claim, Divided Claim, and/or Direct Claim is reported prior to the expiration of the respective applicable indemnification period, the respective indemnification obligation shall survive until such Third-Party claim, Divided Claim, and/or Claim Direct is definitively resolved.

 

 

6.4.1.2.2.                                              The indemnification limit period mentioned in Section 6.4.1.2 shall not apply to Losses arising from fraud and/or bad faith on the part of any of the Sellers and/or Cristina and/or omission, inaccuracy, or violation of the representations provided in Section 4.1.7 and 5.1.18.

 

6.4.1.3.        Minimum Losses (De Minimis). Cristina shall only be obliged to reimburse an individual Loss suffered by one of the Buyer’s Indemnifiable Parties when it exceeds [**] Brazilian Reais (R$[**]), and any Loss that does not meet the minimum amount above shall be disregarded and not be included in the Basket provided for in Section 6.4.1.4 below.

 

6.4.1.4.        Cumulative Minimum Losses (Basket). Cristina shall only be required to reimburse Losses suffered by one of the Buyer’s Indemnifiable Parties as of the moment these Losses reach the cumulative minimum amount of [**] Brazilian Reais (R$[**]) (the “Basket”). Once the Basket is reached or exceeded, Cristina shall be liable for indemnifying the total amount of accumulated Losses (not just the excess over the Basket).

 

6.4.2.                  Limitation on the Buyer’s Obligation to Indemnify.  The Buyer’s obligation to indemnify shall be subject to the same indemnification limitations set forth in Section 6.4.1 above, “mutatis mutandis,” except for the Buyer’s obligation to pay the entire Purchase Price, for which there shall be no limitation, whether with respect to time or amount. With respect to the Buyer’s obligation to have the Institute pass on the FIES Credits to the Sellers, pursuant to Sections 6.3.1 and 6.3.1.1, it is hereby clarified that this is not an indemnification obligation subject to the limits and procedures set forth in Sections 6.4 and 6.5, and is governed by the provisions set forth in Sections 6.3.1 and 6.3.1.1.

 

6.5.                            Procedures. Any Party claiming indemnification pursuant to Sections 6.1 or 6.2 (an “Indemnified Party”) shall send to the other Party, from whom the indemnification is being sought (an “Indemnifying Party”), a notice of a claim for indemnification under the terms of this Agreement.

 

6.5.1.                  Third-Party Claims. The obligations and liabilities of the Indemnifying Party under this Section 6 with respect to the Claims formalized by third parties, which are subject to the indemnification provided in Sections 6.1 and 6.2 (a “Third-Party Claim”), shall be governed by and subject to the following terms and conditions:

 

(a)                                 If the Indemnified Party receives notice of any Third-Party Claim (a “Third-Party Claim Notice”), the Indemnified Party shall deliver to the Indemnifying Party such Third-Party Claim Notice (duly accompanied by all documents and information related to such Third-Party Claim that are relevant for the preparation and management of the defense against such Third-Party Claim) within a period of up to five (5) days from the receipt of such Third-Party Claim Notice by the Indemnified Party, or in a shorter period, if necessary to enable it to handle the defense in accordance with the applicable Law, but in any case not later than one third (1/3) of the period for defense, in accordance with the applicable Law.

 

(b)                                 Delay in delivery within the time limit set forth above or failure to deliver the Third-Party Claim Notice shall exempt the Indemnifying Party from its obligations under this Section 6, except (i) if said omission or delay is not proven to have prejudiced the submission of the defense against the Third-Party Claim in question; (ii) the term for the defense is equal to or less than three (3) days. In the event dealt with in item (ii), the Indemnified Party may submit, on its own behalf, a defense in the context cope of the Third-Party Claim in question, and shall send to the Indemnifying Party a copy of the defense filed by it within five (5) Business Days after the date of its submission. In this case, the Indemnified Party shall be responsible, at its own expense, for all costs incurred in the conduct of said Third-Party Claim (i.e., attorneys’ fees and the like, expert fees, and court costs). Upon becoming aware of the Third-Party Claim, the Indemnifying Party may, at any time, proceed to conduct it, and may even change the attorneys originally engaged by the Indemnified Party to others of its choice, provided that it pays the fees of such attorneys of its choice, as well as costs and charges;

 

(c)                                  Upon receiving the Third-Party Claim Notice, the Indemnifying Party shall have the right to: (i) within a period of up to fifteen (15) days counted from the receipt of such Third-Party Claim Notice (but in any case not later than two-thirds (2/3) of the total term for a defense, in accordance with the applicable Law), recognize the merits of the Third-Party Claim, in which case it shall be responsible for paying, with its own funds, for the full satisfaction and/or liquidation of the Third-Party Claim, in order to hold the Indemnified Party totally harmless from any Losses; or (ii) within the same period of up to fifteen (15) days from the receipt of the Third-Party Claim Notice (but in any case not more than two thirds (2/3) of the total term for a defense, according to the applicable Law), state

 

 

in writing that it shall assume and control the full defense against such Third-Party Claim (respecting the provisions of item (g) below in the case of a Divided Claim) at its own expense (including making any judicial deposits and presenting any guarantees necessary) and through the attorneys of its choice, provided, however, that the Indemnified Party may, at its sole cost and expense, accompany the defense against such Third-Party Claim, and it is agreed that the Indemnifying Party shall be solely responsible for the development and result of such defense; or

 

(d)                                 If, upon receiving the Claim Notice, the Indemnifying Party fails to act within the time period and for the purposes of the provisions of Section 6.5.1(c), the Indemnified Party shall be responsible for submitting the appropriate defense, in which case all the respective costs (court costs, expenses, deposits, and guarantees, expert fees, and reasonable attorneys’ fees contracted) shall be borne by the Indemnifying Party, via direct payment to those entitled thereto by law or through prompt reimbursement to the Indemnified Party;

 

(e)                                  If the Indemnifying Party exercises the right to submit any defense in any Third-Party Claim as mentioned above, the Indemnified Party shall grant all necessary legal powers to the representatives appointed by the Indemnifying Party, exclusively to promote its defense within the scope of the Third-Party Claim, including powers for settlement, agreement, discharge, and appointment of a legal substitute, subject to the provisions of Section 6.5.1(h) below;

 

(f)                                   If the Indemnifying Party exercises the right to submit any defense against any Third-Party Claim as mentioned above, it shall keep the Indemnified Party reasonably informed of the progress of the defense against such Third-Party Claim and the Indemnified Party shall cooperate in such defense with the Indemnified Party and make available to the Indemnifying Party all witnesses, relevant records, materials, and information held by the Indemnified Party or under the control of the Indemnified Party related to the defense and reasonably requested by the Indemnifying Party. Likewise, if the Indemnified Party conducts the defense against the Third-Party Claim, it shall keep the Indemnifying Party reasonably informed of the progress of the defense against such Third-Party Claim, and the Indemnifying Party shall cooperate with the Indemnified Party in such defense and make available to the Indemnified Party all witnesses, records, materials, and information held by the Indemnifying Party or under the control of the Indemnifying Party relating to the defense reasonably requested by the Indemnified Party;

 

(g)                                  With respect to a Divided Claim, the Indemnifiable Party with the greatest economic exposure to the requests contained in said Divided Claim shall have the right to control the defense; and

 

(h)                                 A Party may not enter into any settlement or transaction in any Third-Party Claim without the prior written, specific consent of the other Party, as applicable, unless such settlement or transaction: (i) involves disbursement in an amount equal to or less than fifty thousand Brazilian Reais (R$ 50,000.00); (ii) does not involve recognition of guilt or admission of violation of Law; (iii) does not contain affirmatory or prohibitory obligations that are non-monetary; or (iv) contemplate comprehensive and irrevocable discharge of the counterparty with respect to the subject matter of such settlement or transaction.

 

6.5.2.                  Third-Party Claims in progress. The Parties establish that Third-Party Claims in progress on the date hereof shall continue to be conducted by the Institute and/or CIS and their current legal advisors, under the control of the Sellers.

 

6.5.3.                  Judicial Guarantees and Deposits. In the event that it is necessary to submit, in the course of a Third-Party Claim, judicial guarantees or deposits for the conduct of the corresponding defense, the costs of providing such guarantees or deposits shall be considered indemnifiable costs in the form of Losses, it being provided that, if the Indemnifying Party is wholly or partially victorious in such defense, such judicial guarantees or deposits shall be withdrawn in accordance with the applicable laws and regulations and immediately passed on to said Indemnifying Party.

 

6.5.4.                  Clearance Certificates. If, at any time, the Indemnified Party is unable to obtain any clearance certificate or non-clearance certificate  with the effect of clearance from any public agency by reason of a Third-Party Claim that is indemnifiable under this Agreement, the Indemnifying Party shall make its best efforts, solely in connection with the Third-Party Claims, including, but not limited to, the submission of any guarantees, deposits, or assets permitted by applicable Laws, in order to obtain clearance certificates or non-clearance certificates with the effect of clearance in question, in order for the Indemnified Party to be able to continue in due course with its activities and operations. If the Indemnifying Party does not obtain the clearance certificates or non-clearance certificates with the effects of clearance in question within forty-five (45) days counted from the receipt of notice

 

 

from the Indemnified Party accordingly, the Indemnified Party shall have the right to take all appropriate actions pursuant to the applicable Laws in order to obtain the certificate in question, and any and all costs related to these actions, as set forth above, shall be considered a Loss that may be indemnified by the Indemnifying Party. The period of forty-five (45) days provided for in this Section 6.5.4 shall be reduced to fifteen (15) days in the event of a clearance certificate for federal taxes or a non-clearance certificate with the effect of clearance for federal tax purposes necessary to prove the good standing of the Institute vis-à-vis FIES and/or ProUni.

 

6.5.5.                  Registration of Debtors and Protests. Similarly, if the Indemnified Party is enrolled with any protection of credit bodies, bad payer registries (a credit bureau such as SERASA, etc.), or have debt claims protested against it by reason of Third-Party Claims which are indemnifiable under this Agreement, the Indemnifying Party shall use its best efforts, including but not limited to, the presentation of any guarantees, deposits, or assets permitted by the applicable Laws in order to remove the Indemnified Party from such registers. If the Indemnifying Party does not bring the situation in question into good standing within forty-five (45) days counted from the receipt of notice from the Indemnified Party accordingly, the Indemnified Party shall have the right to take all appropriate actions pursuant to the applicable Laws in order to bring the situation in question into good standing, and any and all costs related to these actions shall be considered a Loss that may be indemnified by the Indemnifying Party. The period of forty-five (45) days provided for in this Section 6.5.5 shall be reduced to fifteen (15) days in the event it is necessary to prove the good standing of the Institute vis-à-vis FIES and/or ProUni.

 

6.5.6.                  Direct Claims. With respect to any Claim indemnifiable under the terms of this Section 6 other than a Third-Party Claim (a “Direct Claim”), the Indemnified Party shall send to the Indemnifying Party a notice of such Direct Claim (a “Direct Claim Notice”). The Indemnifying Party shall have ten (10) Business Days as of the receipt of such Direct Claim Notice to review and respond to the Indemnified Party. In the event that the Indemnifying Party does not send such response within the period of ten (10) Business Days mentioned above, the Indemnifying Party shall be deemed to have assumed responsibility for the payment of said Direct Claim within five (5) days after said period of ten (10) Business Days. In the event that the Indemnifying Party notifies the Indemnified Party of such Direct Claim (a “Claim Rejection Notice”), the Indemnifying Party and the Indemnified Party shall in good faith negotiate a solution to such dispute and, if such dispute is not amicably resolved within ten (10) days as of the receipt of the Claim Rejection Notice, then this dispute shall be submitted to dispute resolution under the terms of Section 10.3 below. However, if such a dispute is resolved within ten (10) days as of receipt of a Claim Rejection Notice, the Indemnifying Party shall make the payment of the Direct Claim directly to the Indemnified Party, up to within five (5) days counted from the date of resolution of the Direct Dispute.

 

6.6.                            Loss Reduction. Any Losses subject to indemnification to any Indemnified Party under the terms of this Section 6 shall, prior to the effective payment of any indemnification, as applicable, be reduced by any and all amounts: (i) effectively received by way of any indemnification related to any insurance policy of which any Indemnified Party is a beneficiary; (ii) effectively recovered by the Indemnified Party from third parties in relation to such Loss; and (iii) in the case of Losses suffered by the Institute and/or CIS that correspond to a real and effective reduction of the obligation to collect income tax (income tax credit), resulting from a real and effective deduction with effect on cash, for the purposes of income tax, from such Loss. For the purposes of item (iii) above, the Indemnified Party shall provide to the Indemnifying Party, within [**] days after the real and actual occurrence of a deduction, access to the information of the Institute that allows the Indemnifying Party to verify the actual and effective deductibility with effect on cash of any reduction of an obligation to collect income tax.

 

6.7.                            Net Indemnification. Any and all amounts due as a result of the obligation to indemnify Losses suffered by any Party, as set forth in this Agreement, shall have a neutral Tax effect for the Indemnified Party, which shall be indemnified in the net amount of its Loss, without a tax prejudice or benefit with such payment. In this sense, the amount of the indemnifiable Loss shall be increased for any taxes levied on the payment, return, or refund from the Loss in question, whether retained by the Indemnifying Party or due from the Party receiving the respective payment, return, or refund (gross-up). Likewise, if the Loss incurred by the Indemnified Party allows for a benefit from the Tax point of view (e.g., if it is deductible from the calculation basis of income tax, social contributions, or in any other manner), the corresponding Tax benefit shall be deducted from the amount of the indemnifiable Loss.

 

6.8.                            Payment of Indemnification. The amount related to Losses indemnifiable under the terms of this Section 6 shall only be payable by the Indemnifying Party to the Indemnified Party upon a final and unappealable judicial judgment or arbitral award, against which no type of appeal or recourse is possible (except for a motion to set aside), through agreement between the Parties, or, further, through a judicial or extrajudicial settlement which has been duly ratified or executed (a “Final Decision”). After a Final Decision related to an Indemnifiable Loss under the terms of

 

 

this Section 6, the Indemnifying Party shall have [**] days to make full payment of such Loss, always subject to the terms, procedures, and limitations set forth in this Section 6 (including, but not limited to, the limitations of Section 6.4).

 

6.9.                            Offset. Each Seller and Cristina hereby agree and authorize that as soon as an Indemnification Scenario begins to represent an indemnifiable Loss in the manner set forth in Section 6.8, subject to the limitations set forth in Section 6.4 (including, but not limited to, the  Basket), the Buyer shall be entitled to offset the amounts owed by Cristina against the lease payments owed by the Institute (or any of its subsidiaries, Affiliates, or successors) to the Company as a result of the Lease Agreement (the “Offset”), subject to the provisions of the subsection below.

 

6.9.1.                  In order for the Buyer to proceed with the Offset provided for in Section 6.9 above, the Buyer shall send a notice, for purposes of awareness, in writing to the Sellers, to Cristina, and to the Company, in which the Buyer shall list the Indemnifiable Loss being offset, with a reasonable level of detail (an “Offset Notice”). Such Offset may be made against up to [**] percent ([**]%) of the amount of the monthly rent owed by the Institute (or any of its subsidiaries, Affiliates, or successors) to the Company as a result of the Lease Agreement, provided that such Offset shall only be initiated with respect to the rent payment due in the month following the month of receipt of an Offset Notice by the Sellers, Cristina, and the Company. The Offset may be performed by the Buyer up to the total indemnification amount, duly corrected under the terms of this Agreement, due from Cristina until it is totally and entirely discharged.

 

7.                                      ADDITIONAL COVENANTS

 

7.1,                            Confidentiality. Each Party and its directors, officers, employees, service providers, consultants, representatives, and agents shall keep confidential any information exchanged under this Agreement, including but not limited to the amount of the purchase price and all data and information obtained by either Party prior to the execution and for the performance of this Agreement, during the negotiation of this Agreement, including information about the Institute of a legal, financial, accounting, and commercial nature (the “Confidential Information”).

 

7.1.1.                  The following Information shall not be considered confidential information for the purposes of this Agreement, namely, Information that: (i) is developed independently by the Parties or is not subject to confidentiality and is legally received from another source that has the right to provide it; (ii) has become available to the public without breach of this Agreement; (iii) on the date of disclosure to a Party was known to the Party as not being subject to confidentiality, as evidenced by documentation in its possession; (iv) the Parties agree in writing is free from such restrictions. The Parties may disclose Confidential Information that must, either now or in the future, be disclosed as required by applicable Law (a fact regarding which the Parties shall receive notice and an opportunity to attempt to restrict disclosure), including rules and regulations of CADE, of Boards of Trade, of the CVM, and/or B3 to which the Institute may be subject in the future, or by virtue of a judicial decision.

 

7.1.2.                  No Party shall provide access, without the prior consent of the other Party, to the Confidential Information to any Person whose review of the Confidential Information is not essential to the Transaction.

 

7.2.                            Publicity. The Parties and their representatives and agents shall not issue or authorize any press release or other type of announcement with respect to the transactions contemplated in this Agreement, except with the prior written consent of the other Party, except where such disclosure is required by Law or by a Governmental Authority (in which case the Buyer shall be permitted to examine and make comments on such notice or announcement, prior to its release).

 

7.3.                            Safekeeping of Documents and Access to Information. The Parties acknowledge and agree that, as the Company has already maintained the UNINOVAFAPI University Center, certain documents and information of the Company, the Sellers, and/or Cristina, but related to the operations of the UNINOVAFAPI University Center, may be kept at the Properties used by the Institute for the conduct of its activities, as well as in systems and software currently in the possession of the Institute. The Parties undertake to ensure that the Institute keeps and preserves such documents and information with all necessary care, as though it were that of the Institute, in order that, if necessary, they may be used by the Company, the Sellers, and/or Cristina when requested by them. Such documents and information shall be kept for the period required by applicable Law.

 

 

7.3.1.                  In addition to the documents and information mentioned in Section 7.3 above, certain documents and information regarding the Company, the Sellers, Cristina, and/or their Affiliates that does not relate to the operations of the UNINOVAFAPI University Center and that are currently kept, may continue to be kept at the properties, as well as on systems and software currently in the possession of the Institute, while JC Joint FIP, Cristina, and/or any of their Affiliates remain partners of the Institute.

 

7.3.2.                  The Company, the Sellers, and Cristina shall be guaranteed full and unrestricted access to the documents and information referred to in Sections 7.3 and 7.3.3 above, on Business Days and during business hours, and the Company, the Sellers, and Cristina may work with staff members of the Institute and request that they send copies of said documents and information.

 

7.4.                            Post-Closing Obligations.

 

(a)                                 The Buyer undertakes within thirty (30) days from the date hereof to provide and prove to the Sellers the sending of a notice to the MEC reporting, for the purposes of Decree No. 9,235, of December 15, 2017, of MEC Ordinance No. 23, of December 21, 2017, and Normative Ordinance No. 19/2016, regarding the Closing of the Transaction, with a summary of its main conditions and effects;

 

(b)                                 The Buyer undertakes to arrange for the request to update all the Institute’s records and information, in order to reflect the identity of partners and management: (i) within fifteen (15) days from the date of recording of the Closing ACS with JUCEPI, before all the tax Governmental Authorities; and (ii) within a period of up to thirty (30) days as of the date of recording of the closing ACS with JUCEPI, before other applicable public registries and registers;

 

(c)                                  The Buyer undertakes to cause the Institute to publish the Reduction AGE in the Official Gazette of the State of Piauí and in a newspaper of wide circulation in Teresina/PI within up to five (5) Business Days as of the date hereof; and

 

(d)                                 The Buyer undertakes to cause the Institute to file the Reduction AGE with JUCEPI within ten (10) Business Days as of the expiration of the legal deadline for opposition by creditors of sixty (60) days counted from the publication of the Reduction AGE in the Official Gazette of the State of Piauí and in a newspaper of wide circulation in Teresina/PI, as per item (c) above.

 

8.                                      FIDUCIARY ASSIGNMENT OF CREDIT RIGHTS

 

8.1.                            In order to ensure fulfillment of the Buyer’s obligations to pay the purchase price, and without prejudice to the Sellers in in the exercise of other rights and prerogatives set forth in this Agreement, the Sellers, the Buyer, and the Institute undertake to enter into and the Buyer undertakes to cause IPTAN to enter into, within [**] Business Days as of the date hereof, a Credit Rights Assignment Agreement, substantially in the form of the draft found in Exhibit 8.1, which is intended to assign, in favor of the Sellers, the credit rights of the Institute and IPTAN, arising from the educational services they provide, in a total amount equivalent to: (a) [**] percent ([**]%) of the total of the Institute’s receivables; and (b) [**] percent ([**]%) of the total of IPTAN’s receivables (the “Credit Rights Assignment Agreement”).

 

9.                                      GENERAL PROVISIONS

 

9.1.                            Adjustment for Inflation and Penalties. The Parties agree that, unless expressly provided for otherwise in this Agreement, all arrears due from one Party to another shall be subject to adjustment for inflation pro rata die based on the positive variation in the IPCA rate, calculated as of the date of the respective maturity until actual payment, plus (i) interest of one percent (1%) per month calculated  pro rata die, plus (ii) a two percent (2%) penalty over the amount owed.

 

9.2.                            Expenses. Each Party shall bear its respective expenses related to the preparation, negotiation, and execution of this Agreement, including all fees and expenses with agents, representatives, legal advisers, and accountants, unless otherwise agreed upon per the terms of this Agreement.

 

9.3.                            Entire Agreement; Amendments. This Agreement, the Lease Agreement, and the Credit Rights Assignment Agreement, together with their respective exhibits, constitute the entire agreement and understanding between the Parties and shall supersede all other agreements and understandings, whether oral or written, entered

 

 

into by and among the Parties with respect to the subject matter of this Agreement, the Lease Agreement, and the Credit Rights Assignment Agreement, unless otherwise expressly provided for in such agreements. No Party shall be bound by any prior or contemporaneous understanding or statement with respect to the subject matter of this Agreement, the Lease Agreement, and the Credit Rights Assignment Agreement, and no change or modification to any provision of this Agreement, the Lease Agreement, and the Credit Rights Assignment Agreement shall take effect unless effected in writing and signed by each of the respective parties to such agreements.

 

9.4.                            Reciprocal Cooperation. The signatories of this Agreement undertake, for all legal purposes and effects, to sign and execute any and all documents, agreements, and instruments, as necessary to comply with and fulfill the terms and conditions of this Agreement and to implement the transactions provided for herein.

 

9.5.                            Severability and Survival of Contractual Provisions. All provisions contained herein must be construed in such a way as to comply, validly and effectively, with the applicable Law; however, if any provision contained herein is held to be prohibited or invalid under the terms of the applicable Law, such provision shall be deemed ineffective to the exact extent of such prohibition or invalidity; provided that, in such a case, that fact shall not affect the other terms of such provision or other provisions of this Agreement, unless the prohibited or invalid provision is so essential to this Agreement that it is assumed that the Parties would not have entered into this Agreement without such invalid provision.

 

9.6.                            Waiver. Failure by either Party at any time to demand strict fulfillment of any provision of this Agreement shall not be construed as a waiver of its future fulfillment and shall in no way affect its right to require the respective fulfillment. In addition, the waiver of any breach of a provision of this Agreement by a Party shall not be deemed to be or treated as waiver of any subsequent breach of that provision or a waiver or novation of the provision itself, unless it is manifested in writing and signed by that Party.

 

9.7.                            Binding Effect; Assignment. This Agreement is entered into irrevocably and irreversibly and shall bind and inure to the benefit of the Parties, the Institute, and their respective successors and assigns. No Party may, directly or indirectly, assign or otherwise transfer to any Third Party any of its rights and obligations under this Agreement without the prior written consent of the other Parties.

 

9.8.                            Acceptance of the Agreement. The Parties and the Institute expressly confirm that they have knowledge of and participated on their own behalf in the negotiation of all Sections, terms, and conditions of this Agreement and the Transaction, and agree to all Sections, terms, and conditions of this Agreement and the Transaction, and consent to and accept their share of the rights and obligations set forth herein.

 

9.9.                            Joint and Several Liability. For the purposes of this Agreement, the Sellers and Cristina are considered vis-à-vis the Buyer to be one Party, jointly and severally liable with each other, for all legal purposes, except as provided for in Section 6.1.3 above. Cristina remains jointly and severally liable for any and all obligations assumed by the Sellers pursuant to this Agreement, expressly irrevocably and irreversibly waiving the benefit provided for in article 828 of the Brazilian Civil Code.

 

9.10.                     Counterparts; Signatures. This Agreement shall be executed in five (5) counterparts and each counterpart shall be considered an original. All pages of this Agreement in all their respective counterparts shall be initialed.

 

9.11.                     Taxes. Except as otherwise provided for in this Agreement, each Party shall be liable for the payment of any Tax when the applicable Law assigns it the status of taxpayer, including those that may be due from the Sellers as a result of the sale of the 80% Quotas. The Parties authorize the withholding of any withholding Taxes that may apply to any payments due under this Agreement.

 

9.12.                     Notices. All notices or other communications relating to this Agreement shall be in writing and delivered by hand (against acknowledgment of receipt), via registered mail, or via courier services (against acknowledgment of receipt), therein using a reputable courier service, and all notices or communications under this Agreement shall also be forwarded by e-mail,  exclusively for the purposes of awareness (which do not constitute notices for the purposes of this Agreement). Notices shall be sent to the following addresses:

 

(a)                                 If to the Buyer:

 

NRE PARTICIPAÇÕES S.A.
  [**]

 

 

with an additional copy to (which shall not constitute a notice):

 

Lobo de Rizzo Advogados
  [**]

 

(b)                                 If to the Sellers:

 

BRENO MIRANDA TRABULO PINHEIRO CORREIA
  [**]

 

JC JOINT FUNDO DE INVESTIMENTO EM PARTICIPAÇÕES MULTIESTRATÉGIA
  [**]

 

with an additional copy to (which shall not constitute a notice):

 

CRISTINA MARIA MIRANDA DE SOUSA
  [**]

 

(c)                                  If to the Institute:

 

INSTITUTO DE ENSINO SUPERIOR DO PIAUÍ S.A.
  [**]

 

(d)                                 If to Cristina:

 

CRISTINA MARIA MIRANDA DE SOUSA
  [**]

 

with an additional copy to (which shall not constitute a notice):

 

BRENO MIRANDA TRABULO PINHEIRO CORREIA
  [**]

 

9.12.1.           The notices and communications shall be considered received on the date stated on the shipping or delivery confirmation or on the notice of receipt, as the case may be, unless the date thereof is not a Business Day, in which case it shall be considered received on the next Business Day.

 

9.12.2.           Any Party to this Agreement may change the address to which the notice shall be sent via written notice to the other Parties in accordance with Section 9.12 above. If a change of address is not reported by the Party in question to the other Parties, all notices sent to the old address shall be deemed to have been duly delivered.

 

9.8.                            Intervening Party. The Institute signs this Agreement in order to: (i) declare its knowledge and agreement with all its terms and conditions; and (ii) to undertake to fulfill the obligations hereby assumed by it.

 

9.9.                            Specific Performance. The Parties and the Institute agree that, pursuant to articles 497 and 498 of the Code of Civil Procedure, the specific performance of the obligations contemplated in this Agreement may be procured, without prejudice to the reimbursement of Losses incurred by the claimant Party as a result of breach of such obligations and payment of the penalties set forth in this Agreement and other penalties.

 

9.10.                     Extrajudicial Enforceable Instrument. This document constitutes an extrajudicially enforceable instrument, pursuant to article 784 of the Code of Civil Procedure.

 

9.11.                     Authorization to Initial.

 

a)                                     JC Joint FIP hereby grants powers to Mr. Augusto Frigo de Carvalho Marciano, enrolled in the OAB/SP under No. [**], to initial the pages of this Agreement and/or any of its exhibits; and

 

b)                                     The Buyer hereby grants powers to: (i) Porfirio Martin Victor, enrolled with the OAB/SP under No. [**]; and (ii) Camila Corrêa de Pontes, enrolled in the CPF/MF under No. [**], to initial the pages of this Agreement and/or any of its exhibits.

 

 

10.                               APPLICABLE LAW AND DISPUTE RESOLUTION

 

10.1.                     Applicable Law. This Agreement shall be governed, interpreted and enforced in accordance with the laws of the Federative Republic of Brazil.

 

10.2.                     Amicable Dispute Resolution. Without prejudice to any of the Parties’ ability to initiate the procedure set forth in Section 10.3 below at any time, the Parties shall use their best efforts to resolve, in good faith, attending to their mutual interests, any dispute, conflict, question, doubt, or divergence of any nature that may arise in relation to or under the Agreement, their obligations, performance, or construction (including, without limitation, any question as to its existence, validity, construction, and performance), as well as the legal deal arising out of the Transaction (a “Dispute”). To this end, any Party shall notify the other Parties of its intention to initiate the procedure contemplated by this Section 10.2 (a “Dispute Notice”), and the Parties may, if interested, meet to try to resolve such Dispute by means of amicable discussions in good faith. If the Parties choose to negotiate in advance, they shall do so within fifteen (15) days from the delivery of the Dispute Notice from one Party to the other Parties. If the Dispute is not resolved amicably, it shall be resolved as provided for below.

 

10.3.                     Dispute Resolution. Any controversy involving any of the Parties and/or intervening parties, including their successors in any way arising under this Agreement and which is not remedied in the terms above (provided that both Parties have expressly demonstrated an interest in amicably resolving a Dispute), shall be submitted for arbitration managed by the Chamber of Business Mediation and Arbitration of Brazil - CAMARB (the “Chamber”), in accordance with its arbitration rules in force at the time of the initiation of arbitration (the “Rules”) and with Law No. 9,307/96. The arbitration shall be conducted in the Portuguese language and shall be processed and adjudicated according to Brazilian Law, with decisions based on equity being forbidden. The arbitration shall be confidential and the decision by the arbitrators shall bind the parties to the arbitration independently of any other formality or procedure.

 

10.3.1.           The arbitration shall be assigned to an arbitral tribunal composed of three arbitrators (the “Arbitral Tribunal”). Each Party shall appoint one (1) arbitrator. If there is more than one claimant, all of them shall appoint one (1) arbitrator by mutual agreement. If there is more than one (1) respondent, all of them shall appoint one arbitrator by mutual agreement. The third arbitrator, who shall serve as chairman of the Arbitral Tribunal, shall be chosen by mutual agreement by the arbitrators appointed by the Parties.

 

10.3.2.           The seat of the arbitration shall be the City of São Paulo, State of São Paulo, Brazil, and the Arbitral Tribunal may reasonably designate the execution of specific acts in other localities, upon prior consultation with the parties.

 

10.3.3.           Before empaneling the Arbitral Tribunal, any of the Parties may request injunctions or interim relief from Judicial Authorities, when it is clear that any request for an injunction or interim relief from the Judicial Authorities shall not affect the existence, validity, and effectiveness of this arbitration commitment, nor shall it represent exemption from the requirement to submit the Dispute to arbitration. After the empaneling of the Arbitral Tribunal, requests for preliminary injunctive measures or anticipation of relief should be addressed to the Arbitral Tribunal.

 

10.3.4.           For: (a) the preliminary injunctive measures and anticipation of relief before the empaneling of the Arbitral Tribunal; (b) execution of the Arbitral Tribunal’s decisions, including the final judgment and any partial judgment; (c) any suit for annulment based on article 32 of Law No. 9,307/96; and (d) Disputes that, under Brazilian Law, cannot be submitted to arbitration, the Courts of the Judicial District of Teresina, State of Piauí, Brazil, is elected as the sole competent jurisdiction, thus renouncing all others, however special or privileged they may be.

 

10.3.5.           Costs incurred in the arbitration (including, but not limited to, arbitrators’ fees and costs of the Arbitral Chamber) shall be borne by the party that succumbs (i.e., loses) in the claim in the manner decided by the arbitration tribunal.

 

10.3.6.           Prior to the execution of the Arbitration Agreement, the Arbitral Chamber shall be competent to decide on the consolidation of simultaneous arbitration proceedings based on this or any other instrument signed by the Parties, pursuant to the terms of the Rules. After the signature of the Arbitration Agreement, this competence shall be that of the arbitral tribunal, which may consolidate simultaneous arbitration proceedings based on this or any other instrument signed among the Parties, provided that: (i) such procedures relate to the same legal

 

 

relationship; (ii) the arbitration provisions are compatible; and (iii) the consolidation does not result in prejudice to one of the parties. The competence for consolidation shall be that of the first arbitral tribunal empaneled and its decision shall be binding on all parties.

 

And, in witness whereof, the Parties execute this Agreement in five (5) counterparts with the same form and content, in the presence of the two undersigned witnesses.

 

São Paulo/SP, November 27, 2018.

 

(Remainder of page intentionally left blank)

 

 

EXECUTION VERSION

 

	
 
    	
BRENO MIRANDA TRABULO PINHEIRO CORREIA
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

	
 
    	
JC JOINT FUNDO DE INVESTIMENTO EM PARTICIPAÇÕES   MULTIESTRATÉGIA
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 

Name:
    	
 

Luiz Álvaro de Paiva Ferreira
    
	
 
    	
 
    	
Title:
    	
Fiduciary   Management Officer
    

 

(Signature page of the Quota Purchase and Sale Agreement and Other Covenants entered into on November 27, 2018, between Breno Miranda Trabulo Pinheiro Correia, JC Joint Fundo de Investimento em Participações Multiestratégia, NRE Participações S.A., Cristina Maria Miranda de Sousa, and, as intervening and consenting party, Instituto de Ensino Superior do Piauí S.A.)

 

 

	
 
    	
NRE   PARTICIPAÇÕES S.A.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
Nicolau   Carvalho Esteves
    
	
 
    	
 
    	
Title:
    	
Attorney-in-fact
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
Virgílio Deloy Capobianco Gibbon
    
	
 
    	
 
    	
Title:
    	
Officer
    

 

(Signature page of the Quota Purchase and Sale Agreement and Other Covenants entered into on November 27, 2018, between Breno Miranda Trabulo Pinheiro Correia, JC Joint Fundo de Investimento em Participações Multiestratégia, NRE Participações S.A., Cristina Maria Miranda de Sousa, and, as intervening and consenting party, Instituto de Ensino Superior do Piauí S.A.)

 

 

	
 
    	
INSTITUTO DE ENSINO SUPERIOR DO PIAUÍ S.A.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
Cristina Maria Miranda de Sousa
    
	
 
    	
 
    	
Title:
    	
 
    

 

(Signature page of the Quota Purchase and Sale Agreement and Other Covenants entered into on November 27, 2018, between Breno Miranda Trabulo Pinheiro Correia, JC Joint Fundo de Investimento em Participações Multiestratégia, NRE Participações S.A., Cristina Maria Miranda de Sousa, and, as intervening and consenting party, Instituto de Ensino Superior do Piauí S.A.)

 

 

	
 
    	
CRISTINA MARIA MIRANDA DE SOUSA
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

(Signature page of the Quota Purchase and Sale Agreement and Other Covenants entered into on November 27, 2018, between Breno Miranda Trabulo Pinheiro Correia, JC Joint Fundo de Investimento em Participações Multiestratégia, NRE Participações S.A., Cristina Maria Miranda de Sousa, and, as intervening and consenting party, Instituto de Ensino Superior do Piauí S.A.)

 

 

Witnesses:

 

 

	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
Name: Regiane do Santos Silva
    	
 
    	
 
    	
Name: Mayra Carmo Oliveira Santos
    
	
 
    	
ID (RG):   [**]
    	
 
    	
 
    	
ID (RG):   [**]
    
	
 
    	
Tax ID   (CPF): [**]
    	
 
    	
 
    

 

(Signature page of the Quota Purchase and Sale Agreement and Other Covenants entered into on November 27, 2018, between Breno Miranda Trabulo Pinheiro Correia, JC Joint Fundo de Investimento em Participações Multiestratégia, NRE Participações S.A., Cristina Maria Miranda de Sousa, and, as intervening and consenting party, Instituto de Ensino Superior do Piauí S.A.)Exhibit 10.4

 

THE SYMBOL “[**]” DENOTES PLACES WHERE CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.

 

EXECUTION VERSION

 

SHARE PURCHASE AND SALE AGREEMENT AND OTHER COVENANTS

 

BETWEEN

 

on one side, as Sellers,

 

JOÃO CARLOS RIBEIRO PEDROSO,

 

LEONI MARGARIDA BERTOLIN,

 

JOSÉ CARLOS JANUÁRIO,

 

RICARDO PEDROSO

 

and

 

DAIANE PEDROSO CANTO

 

on the other, as Buyer,

 

NRE PARTICIPAÇÕES S.A.

 

DATED DECEMBER 5, 2018

 

 

SHARE PURCHASE AND SALE AGREEMENT AND OTHER COVENANTS

 

This Share Purchase and Sale Agreement and Other Covenants (“Agreement”) is entered into on this date of December 5, 2018 (“Signing Date”) between the following parties:

 

1. JOÃO CARLOS RIBEIRO PEDROSO, Brazilian, industrialist, married under the community property regime, holder of Identity Card [**], issued by SSI/SC, SSN [**], resident and domiciled in [**], (“João Carlos”);

 

2. LEONI MARGARIDA BERTOLIN, Brazilian, widow, businesswoman, holder of Identity Card [**], issued by SSI/SC, SSN [**], resident and domiciled in [**] (“Leoni”):

 

3. JOSÉ CARLOS JANUÁRIO, Brazilian, businessman, legally separated, holder of Identity Card [**], issued by SSI/SC, SSN [**], resident and domiciled in [**] (“José”);

 

4. RICARDO PEDROSO, Brazilian, businessman, married under the separation of property regime, holder of Identity Card [**], issued by SSP/SC, SSN [**], resident and domiciled in [**] (“Ricardo”): AND

 

5. DAIANE PEDROSO CANTO, Brazilian, businesswoman, married under the separation of property regime, holder of Identity Card [**], issued by SSP/SC, SSN [**], resident and domiciled in [**] (“Daiane” and, together with João Carlos, Leoni, José, Ricardo and Daiane, the “Sellers”),

 

AND,

 

6. NRE PARTICIPAÇÕES S.A., a corporation with head office in the City of Nova Lima, State of Minas Gerais, at Alameda Oscar Niemeyer. n° 119, salas 504, 1.501 and 1.503, bairro Vila da Serra, CEP 34.006-56, EIN 23.399.329/0001-72, herein represented by ITS legal representatives (the “Buyer”);

 

Sellers and Buyer shall also be individually referred to as “Party” and collectively as “Parties”;

 

and as Intervening Parties:

 

7. FADEP - FACULDADE EDUCACIONAL DE PATO BRANCO LTDA., a limited liability company, headquartered in the State of Paraná, in the City of Pato Branco, at Rua Benjamin Borges dos Santos, 1.100, Bairro Fraron, EIN 03.420.225/0001-95, hereinafter referred to as “Company” or “FADEP”, herein represented pursuant to its articles of incorporation, and

 

8. RD ADMINISTRAÇÃO E PARTICIPAÇÃO LTDA., a limited liability company, headquartered in the State of Paraná, in the City of Pato Branco, at Rua Benjamin Borges dos Santos, n° 1.100, sala 01, Bairro Fraron. CEP 85.503-350, EIN 14.292.337/0001-24, herein represented pursuant to its articles of incorporation, (“RD” and, jointly with FADEP, hereinafter referred to as “Companies”).

 

WHEREAS;

 

(1) the Sellers are, on this date, the only partners of RD, thus they hold all shares in said company, fully subscribed and paid up in national currency, as per Annex 2.1.

 

(2) R.D and João Carlos are together, on this date, the holders of all shares in FADEP, fully subscribed and paid up in national currency, as per Annex 2A.

 

(3) the Buyer intends to purchase from the Sellers and the Sellers intend to sell to the Buyer all of their respective shares representing RD’s capital, and the Buyer intends to purchase from João Carlos seventy-seven thousand and four hundred forty (77,440) shares issued by FADEP, as provided for herein (“Transaction”); therefore, the Parties hereby wish to establish the terms and conditions that will govern the Transaction;

 

(4) RD is a holding company with no operational activities and currently has, as its only asset, the shares representing FADEP’s capital (in addition to a current account held with Banco Bradesco without any liabilities);

 

(5) FADEP develops all its activities in the FADEP Operational Property (as defined below), with the exception of the engineering laboratory;

 

 

(6) FADEP Operational Property is not subject to acquisition by the Buyer and has been transferred to the receiving companies Palmasplac Agropastoril Ltda. (EIN 74.058.710/0001-09) and JRP Administração e Participações Ltda. (EIN 16.750.948/0001-02) (“New Owners”), by means of a partial spin-off of FADEP registered with the Board of Trade of the State of Paraná on October 31, 2018 (“FADEP Partial Spin-off”), and the registration of such transfer in the competent real estate registry office shall be made as soon as possible after this Closing Date and after the release of the mortgage pursuant to Clause 4.4, as a result of CCB’s discharge when FADEP Operational Property will become the sole and exclusive property of the companies Palmasplac Agropastoril Ltda. and JRP Administração e Participações Ltda.;

 

(7) RD, as a result of FADEP Partial Spin-Off, was subject to a corporate reorganization, by transferring part of its equity corresponding to all of its investments in the company Palmasplac Agropastoril Ltda.  (EIN 74.058.710/000109), by means of a partial spin-off transaction, duly registered with the State of Paraná Board of Trade on November 12, 2018 (“RD Partial Spin-off”), and FADEP Partial Spin-off, together with RD Partial Spin-off, shall be henceforth referred to as “FADEP Corporate Reorganization” for the purposes of this instrument;

 

(8) FADEP Operational Property is the subject of a regularization process described in greater detail in Annex A hereto (the “Regularization Process”);

 

(9) on this Closing Date, (i) the Sellers will cause the New Owners to sign as lessors, and the Buyer will cause FADEP to sign as lessee, a lease agreement whose object is the rental of FADEP Operational Property to FADEP, to carry out FADEP’s activities in said location (“Lease Agreement”); and (ii) the Buyer will cause FADEP to sign as sub-lessor, and João Carlos will sign as sub-lessee, an agreement with the option of subletting part of FADEP Operating Facility to carry out the activity of elementary education in said property (“Sublease Agreement”), which will be assigned in the future to a company controlled by it through which said activity will be carried out, and the drafts of these agreements are attached hereto as Annex 3.2(f)(1) and Annex 3.2(f)(2), respectively;

 

(10) FADEP offers a long-term financing program for the payment of tuition fees to CEI students, for medical students, and FEI, for students from other courses, the “CEI and FEI Programs”, and this program generates credit in favor of FADEP,

 

NOW, THEREFORE, the Parties have mutually agreed to enter into this Agreement, which shall be governed by the clauses, terms and conditions stipulated below.

 

CLAUSE ONE - DEFINITIONS AND INTERPRETATIONS

 

1.1. Except as otherwise provided in this Agreement, all capitalized terms used herein or in any Annex hereto, in the singular or plural, and their verbal and nominal variations, as the case may be, shall have the following meanings:

 

“Governmental Authority” means the government of the Federative Republic of Brazil or any foreign State, or any of its political subdivisions at federal, state or municipal level, or any arbitral, regulatory, fiscal, judicial or public body, department, committee, authority, court, tribunal, government agency, autarchy, central bank or other entity of any kind in charge of executive, legislative, judicial, regulatory or administrative duties, or that belongs to the government, in any case with jurisdiction over the subject matter(s) under discussion.

 

“Governmental Authorizations” means any approval, consent, license, permit, waiver or other form of authorization issued or granted by any Governmental Authority.

 

“BR GAAP” means the accounting principles and procedures generally accepted in Brazil, especially those issued by the Brazilian Accounting Pronouncements Committee (CPC), applicable to companies in general, pursuant to Applicable Law.

 

“BRPE” means Banco Regional de Desenvolvimento do Extremo Sul.

 

“Chamber” has the meaning ascribed to it in Clause 12.9.

 

“FADEP Partial Spin-off” has the meaning ascribed to it in Recital 6.

 

“RD Partial Spin-off” has the meaning ascribed to it in Recital 6.

 

 

“Escrow Account” has the meaning ascribed to it in Clause 2.4.

 

“Relevant Agreement” means all covenants, instruments, guarantees, amendments, contracts, obligations or commitments in force to which the Companies are a party or that otherwise bind the Companies or their assets, properties or businesses, and which (a) create any Lien on any of the assets of the Companies; (b) involve the establishment, by the Companies in favor of third parties or by third parties in favor of the Companies, of guarantees of obligations or other indebtedness; (c) are related to any commitment of capital investments; (d) constitute an outsourced supply or service provision agreement so that the businesses of the Companies continue operating in their normal course and in a manner consistent with past practices after this Closing Date, or (e) are otherwise relevant to the Companies or to the development of their businesses, understood as the contracts / agreements that are essential to the regular operation of the Companies’ activities and that without the existence of which the Companies could not develop their activities and businesses, preventing the use of the area, relevant service providers, relevant employees or the regular inflow of financial resources.

 

“Escrow Account Agreement” has the meaning assigned in Clause 2.4.

 

“Lease Agreement” has the meaning assigned in Recital 9.

 

“Sublease Agreement” has the meaning assigned in Recital 9,

 

“Prohibited Contribution” means to make, deliver or facilitate, directly or indirectly, any payments or gifts, or to give anything of value, or to offer or to promise payments or gifts of any kind to Government Officials or any Prohibited Recipients, or any person knowing that all or a portion of these sums or things of value will be offered, delivered, or promised, directly or indirectly, to any Government Official or any Prohibited Recipient, for purposes of (a) influencing any official act or decision of a Government Official or Prohibited Recipient;  (b) persuading a Government Official or Prohibited Recipient to use his / her influence to encourage or influence any official act or decision of a government or any of its entities and subdivisions; or (c) ensuring any improper advantage to assist in obtaining or retaining any business or directing any business to any person.

 

“Control” means (a) the ownership of partners’ rights that permanently assures a majority of the votes in the resolutions of the general meeting or shareholders’ meetings and the power to elect the majority of board members and/or directors of a particular Person; and (b) the effective use of said rights to manage the corporate activities and conduct the operation of the departments of such Person, directly or indirectly, individually or jointly with other Persons. The terms “Controlled by”, “Controlling Shareholder” and “under Joint Control” should be construed accordingly.

 

“Closing Date” has the meaning ascribed to it in Clause 2.1 below.

 

“Decision” means any ruling, judgment, arbitral award, court order, instruction or decision issued by any Governmental Authority.

 

“Tax Return” means, in relation to any Tax, any statement related to such Tax, any report, declaration or document that must be filed pursuant to Applicable Law with respect to such Tax, any claims for refund of Taxes paid, and any corrections or supplements to any of the foregoing.

 

“FADEP Financial Statements” has the meaning ascribed to it in Clause 5.1.11.

 

“RD Financial Statements” has the meaning ascribed to it in Clause 5.1.1.

 

“Prohibited Recipient” means any Government Official or any officer or employee of any financial institution owned by the government or any agency, entity or subdivision of the government, any political candidate, political entity or official of a political entity or official of a national public organization or any person acting with official capacity for or on behalf of any person mentioned above.

 

“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the City of São Paulo, State of São Paulo, in the City of Nova Lima, State of Minas Gerais, or in the City of Pato Branco, State of Paraná are obligated or authorized by law to remain closed.

 

 

“FIES” means the Student Financing Fund, a program for the granting of funding to students regularly enrolled in paid higher education courses and with a positive evaluation in the MEC processes.

 

“Lien” means any legal, contractual or legal liens or restrictions, including, without limitation, any rights in rem, guarantee, pledge, mortgage, restriction, easement, usufruct, charge, encumbrance, property limitation, defect, third-party rights, claims, liens, domain registration agreements, lease, sublease, license of use, easement, adverse possession, option involving ownership, preemptive right and any other right, claim, negotiation, or any other demands, restrictions or limitations of any nature or other agreement that may affect the legitimate and free ownership of the asset in question or which may in any way prevent its disposal by the respective owner,

 

“Guararapes” means the company Indústria de Compensados Guararapes Ltda, EIN 77.911.266/0001-98.

 

“FADEP Operational Property” means the property located in the State of Paraná, in the city of Pato Branco, at Rua Benjamin Borges dos Santos, 1.100, Bairro Fraron, enrollment number 24.269, registered in the 2nd Real Estate Registry Office of Pato Branco.

 

“Confidential Information” has the meaning ascribed to it in Clause 8.1.

 

“JUCEPAR” means the Board of Trade of the State of Paraná.

 

“Law” means any laws, rules, regulations, ordinances, standards, codes, normative acts, instructions, judgments or decrees issued by any Governmental Authority anywhere applicable to a particular Party and in force on that date or which may be subsequently enacted.

 

“Anti-Corruption Laws” means all anti-bribery and anti-corruption laws, rules and regulations applicable in Brazil, including, without limitation, Federal Law 12846, of August 1, 2013 and any other applicable Law with purpose and scope that would prevent or prohibit corruption or the practice of any Prohibited Contribution to any Prohibited Recipient.

 

“MEC” means the Ministry of Education of the Federative Republic of Brazil.

 

“Business” means the activities included in FADEP’s corporate purpose, pursuant to the articles of incorporation included in Annex 5.1.5(a) hereto.

 

“Indemnity Notification” has the meaning ascribed to it in Clause 6.4.

 

“New Owners” has the meaning ascribed to it in Recital 6.

 

“Objection of Loss” has the meaning ascribed to it in Clause 6.5,

 

“Government Official” means (a) an employee, director or representative, or any person acting with official authority for or on behalf of (a. I) a national, state or municipal government, or its political subdivisions, (a.2) council, committees, courts or agencies, civil or military, of any of the aforementioned departments, in any case as duly established; (a.3) an association, organization or enterprise owned or controlled by the government, regardless of the percentage of ownership interest held by the government; or (a.4) a political entity; (b) a legislative, administrative or judicial official, whether elected or appointed; (c) an official or individual holding a position in a political party; (d) a candidate for political office; (e) an individual who holds an official, ceremonial, or other office with a government or any of its departments; or (f) a director or employee of a supranational organization.

 

“Transaction” has the meaning set out in Recital 3.

 

“Future Installments” has the meaning ascribed to it in Clause 2.1.2(b).

 

“Indemnifiable Party” has the meaning ascribed to it in Clause 6.4.

 

“Buyer’s Indemnified Parties” has the meaning ascribed to it in Clause 6.1.

 

“Seller’s Indemnified Parties” has the meaning ascribed to it in Clause 6.2.

 

 

“Losses” means any incurred liabilities, shortfalls, damages, deficits, costs or expenses, disbursements, fines, penalties, fees. Taxes, fines, penalties imposed by regulatory agencies and / or Governmental Authorities, equity variation or supervening liabilities or existence of undisclosed liabilities (in all cases including reasonable fees of attorneys and other consultants necessary to defend the Loss in question, as well as court expenses, legal costs, interest, charges) of any nature, including contractual, and which are indemnified under this Agreement, excluding in any case indirect damages and loss of profits but including loss of profits directly related to the interruption of FADEP’s activities in accordance with the determination of the Governmental Authority, only if and to the extent that such interruption is exclusively due to the non-compliance by the Sellers with the stages of the Regularization Process set forth in Annex A incumbent upon them.

 

“Indemnifiable Loss” has the meaning ascribed to it in Clause 6.4.

 

“Person” means any natural or legal person or entity with or without legal personality, including, but not limited to, any partnership, company, association, fund, trusts, investment fund, equity fund or Governmental Authority.

 

“Related Person” means, with respect to a Person, (a) any of its partners, shareholders, subsidiaries or jointly-controlled companies with them, or a company that Controls such partners or shareholders, or, in the case of an individual partner or shareholder, the spouses, descendants or direct ascendants or any relative up to the third degree; (b) any director or board member of such Person or any of its Subsidiaries; (c) any Person in which the partners or shareholders hold, directly or indirectly, more than 5% of the capital; (d) any investment fund managed by such Person or by any of its respective Related Persons or of which this Person is the sole shareholder; or (e) any limited partnerships in which such Person or any of its Related Persons is the general partner.

 

“Additional Term” has the meaning ascribed to it in Clause 4.3.3.

 

“Discussion Period” has the meaning ascribed to it in Clause 6.5.

 

“Extended Term” has the meaning ascribed to it in Clause 4.3.2.

 

“Price” has the meaning ascribed to it in Clause 2.1.1.

 

“Regularization Process” has the meaning ascribed to it in Recital 8.

 

“FADEP Property Power-of-Attorney” has the meaning ascribed to it in Clause 4.2.1,

 

“Intellectual Property” means all intellectual property rights, whether owned or licensed for use, whether registered or not, including the rights on; (a) patents and applications for patent registration, utility models, import / confirmation patents, certificates of invention, registration certificates and similar rights; (h) trademarks and service marks, certification marks, commercial presentations, corporate names, brand names, logos and similar indications of origin; (c) inventions, disclosures of invention, discoveries and improvements, patentable or otherwise, (d) know-how, trade secrets, business and technical information, methodologies, technology, schematics, drawings, prototypes, models, results, studies and other information or exclusive or confidential data; (e) software, including data files, source codes, object codes, application programming interface, computerized databases and other software-related specifications and documentation; (f) writings, author works, industrial designs, databases and other works that may be protected by copyrights; (g) internet domain names; and (h) information and data, exclusive or otherwise, relating to customers, clients of customers and end users; and (i) claims, causes of request and defenses related to the enforcement of any of the foregoing; in any case related to items (a) through (i) above, including all registrations, registration applications, renewals and extensions of any of the above by or before any Governmental Authority.

 

“ProUni” means the University for All Program, created by Law 11096, of January 13, 2005, as amended, and has the purpose of granting full and partial scholarships to students of undergraduate courses and sequential courses of specific training in private higher education institutions.

 

“Shares” has the meaning ascribed to it in Clause 2.1.

 

“FADEP Shares” has the meaning ascribed to it in Clause 2.1.

 

“RD Shares” has the meaning ascribed to it in Clause 2.1.

 

 

“Reais” means the currency of the Federative Republic of Brazil.

 

“Third Party Complaint” has the meaning ascribed to it in Clause 6.6.

 

“FADEP Corporate Reorganization” has the meaning ascribed to it in Recital 7.

 

“REFIS” means the general term for tax recovery programs and installments of federal tax debts.

 

“Companies” has the meaning set forth in the Recitals of this Agreement.

 

“Subsidiary” means Oncorad - Clínica de Radioterapia do Sudoeste Ltda. and Clínica de Diagnóstico por Imagem S/C Ltda, which were subsidiaries of FADEP until September 19, 2018 and September 11, 2018, respectively.

 

“Transfer of FADEP Operational Property” has the meaning ascribed to it in Clause 4.2.

 

“Tax” means any similar levies, duties, contributions and charges, withheld or not at source, whether they are assessed: (i) on income, transfer, capital gains, ownership, possession, added value, profits, payroll and other remuneration to employee, consumption, goodwill, assets, import, export and social security; levied on employment, disability, property, wealth, social welfare, emoluments, consumption, occupation, sale, use, transfer, added value, alternative minimum or any similar or estimated tax (including any cost, contribution or other charges of the same nature or charged in lieu of any tax); (ii) Brazilian taxes such as ICMS (Tax on the Circulation of Goods and Services), IPI (Tax on Industrialized Products), COFINS (Contribution to Social Security Financing), PIS (Social Integration Program), ISS (Tax on Services), IPTU (Urban Property Tax), FGTS (Employee Severance Fund), and IOF (Tax on Financial Operations); and (iii) any late-payment charge levied by any Governmental Authority due to the application of such taxes (such as correction for inflation, interest and/or fines).

 

1.2. Rules for Interpretation. In this Agreement, except as otherwise expressly stated: (a) words in the singular form include the plural form and vice versa, and words in one gender include any gender; (b) a reference to this Agreement shall include any of its Annexes, and references to Clauses and Annexes are references to clauses and Annexes of this Agreement; (c) a reference to a part of a document includes the authorized successors and assignees of such part; (d) references to any document or instrument shall include all changes and addenda, substitutions, modifications, consolidations and supplements to said document, except where stated otherwise; (e) references to any provision of law shall be construed as references to such provisions as subsequently amended, supplemented, consolidated or newly enacted, or their application as may be amended by other provisions, including any other provisions by which they come to be superseded (with or without changes) and any other orders, regulations and instruments of other subordinate laws, as enacted under applicable law; (f) the titles have been included solely for convenience and do not limit or affect the interpretation of this Agreement; and (g) no phrase introduced by the terms “including,” “includes,” “in particular” or any similar expression shall be construed restrictively and shall not limit the meaning of the words preceding any such terms,

 

CLAUSE TWO — PURCHASE AND SALE OF SHARES AND PRICE

 

2.1. Purchase and Sale. Subject to the terms and conditions set forth in this Agreement, (i) the Sellers hereby sell and transfer to the Buyer, on this date (“Closing Date”), and the Buyer hereby acquires and receives from the Sellers, irrevocably, irreversibly and in the proportion detailed in Annex 2.1, directly, all 478,000 (four hundred seventy-eight thousand) shares representing the capital of RD, free and clear of any and all Liens, representing 100% of the total and voting capital of RD, hereinafter defined as the “RD Shares”; and (ii) João Carlos hereby sells and transfers, on this Closing Date, to the Buyer, and the Buyer hereby acquires and receives from João Carlos, all 77,440 (seventy-seven thousand, four hundred forty) shares representing the capital of FADEP held by João Carlos (hereinafter known as “FADEP Shares” and, when referred to jointly with the RD Shares, hereinafter known as the “Shares”). As a consequence of the acquisition of the RD Shares, the Buyer acquires, indirectly, all 626,560 (sixty-six thousand, five hundred sixty) shares representing the capital of FADEP held by RD, which, for the purposes of this Agreement, are included in the definitions of “FADEP Shares” and “Shares.”

 

2.1.1. Price. In consideration of the acquisition of the Shares, the Buyer will pay the Sellers the overall amount of R$ 135,646,473.30 (one hundred thirty-five million, six hundred forty-six thousand, four hundred seventy-three reais) (“Price”), to be transferred to the Sellers under the terms and conditions set out below, in the proportion and to the bank accounts indicated in Annex 2.1.1. The Parties hereby agree that the Price described above shall be

 

 

adjusted in accordance with Clause 2.1.2.2 below, as well as, if at a lower amount, upon verification of Indemnifiable Losses by the Sellers pursuant to Clause 6.1 of this Agreement.

 

2.1.1.1 For the avoidance of doubt, the Parties hereby declare and acknowledge that the Price stipulated in Clause 2.1.1 above already reflects the amount related to the 60 (sixty) new openings of the medicine program approved by the competent authorities as published in the Federal Official Gazette (DOU) on October 26, 2018.

 

2.1.2. Payment. The Price shall be paid by the Buyer to the Sellers in the proportion and to the bank accounts indicated in Annex 2.1.1 as follows:

 

(a) a first installment in the amount of R$ 82,800,000.00 (eighty-two million, eight hundred thousand reais) shall be paid on this Closing Date, subject to a possible deduction or increase of the Price Adjustment, as provided for in Clause 2.1. 2.2 below, and the amount provided for in item (c), according to the allocations described in Annex 2.1.2 (a);

 

(b) the remaining balance of the Price, corresponding to R$ 52,846,473.30 (fifty-two million, eight hundred forty-six thousand, four hundred seventy-three Reais and thirty centavos), shall be paid in three equal installments in the amount of R$ 17,615,491.10 (seventeen million, six hundred fifteen thousand, four hundred ninety-one Reais and ten centavos) each, and these three installments (referred to as 1st, 2nd and 3rd) listed below are defined as the “Future installments,” respectively falling due as follows: (1st) 6 (six) months from this Closing Date; (2nd) 12 (twelve) months from this Closing Date; and the last installment, (3rd): 18 (eighteen) months from this Closing Date (the latter being hereinafter referred to as the “Third Installment of the Price”); future installments of the Price will be deducted from the amounts provided in item (c) below; and

 

(c) the Buyer shall deduct the amount equivalent to five percent (5%) of each installment of the price set forth in items (a) and (b) above, minus (i) applicable taxes of Buyer’s responsibility; and (ii) any and all indemnities owed or paid to an Indemnifiable Party of the Buyer under this Agreement, and shall pay, on the respective date, the amount withheld and discounted, on behalf of and on the order of the Sellers, directly to the Sellers’ counsel indicated in Annex 2.1. 2 (c).

 

(d) the Future Installments, as well as the installment amounts set forth in item (c) above, shall be adjusted according to the Selic Rate as of this Closing Date until the date of actual payment.

 

2.1.2.1 For the avoidance of doubt, the Sellers hereby acknowledge that the obligation to pay the amounts set forth in item (b) of Clause 2.1.2 above is the sole responsibility of the Sellers and that the Buyer will make the payment directly to the counsel indicated by the Sellers in Annex 2.1.2 (c), on behalf of and on the order of the Sellers.

 

2.1.2.2. Price Adjustment. The Parties agree that the aforementioned Price was established based on the assumption that the Companies do not have — on the base date of the Closing Date — any financial debts recorded or qualifying for accounting recognition on that date, nor cash or cash equivalents, using the same accounting methodologies used in the Financial Statements. Therefore, the Parties undertake to adjust the Price in such a way that: (a) any liabilities arising from outstanding or current bank debts or past-due indebtedness, whether current or non-current, existing on the Closing Date (such as any outstanding balance of CCB, as applicable, under Clause 3.1 (g) herein) shall reduce the Price for the purposes of this Agreement, and therefore shall be deducted from the spot-payment portion of the Price provided in Clause 2.1.2 (a) above; and (b) any positive amounts recorded as cash and cash equivalents on the Closing Date will increase the Price for the purposes of this Agreement, and therefore shall be added to the spot-payment portion of the Price provided in Clause 2.1.2 (a) above.

 

2.1.2.3 Distribution of dividends. Considering that, on FADEP’s balance sheet as of November 30, 2018, FADEP had accumulated profits, and profits for the year, amounting to R$ 4,056,545.94 (four million, fifty six thousand, five hundred forty-five reais and ninety-four centavos), on December 4, 2018 (i) João Carlos and RD held a FADEP Partners’ Meeting to approve the distribution of FADEP’s profits in the amount of R$ 4,056,545.94 (four million, fifty-six thousand, five hundred forty-five reais and ninety-four centavos), pursuant to Annex 2.1.2.3(i), and made FADEP pay the foregoing distribution on the date above by means of a bank transfer of immediately available funds (“TED”) to the respective receivers; (ii) the Sellers held a meeting of RD partners to approve the distribution of profits in the amount of R$ 3,430,753.89 (three million, four hundred thirty thousand, seven hundred fifty-three Reais and eighty-nine centavos) pursuant to Annex 2.1.2.3 (ii), already considering the profits distributed by FADEP

 

 

under the terms of the previous item, and made RD pay the foregoing distribution on the date above by means of a bank transfer of immediately available resources (“TED”) to the respective receivers.

 

2.1.2.3.1. In the event that the amount referring to the profits for FY 2018 is less than the distribution made in the form of the clause above, as indicated in FADEP’s independent audit, the amount distributed above the foregoing amount shall be considered as a loan by FADEP to the Sellers. The Parties hereby agree that the amount of the loan shall be increased by the Price and shall be owed by the Buyer to the Sellers. The Sellers hereby instruct the Buyer to pay this portion of the Price directly to FADEP for discharge, on its account and order, of the loan referred to herein.

 

2.2 Discharge. Proof of deposit of the respective installments of the Price by the Buyer in the Sellers’ bank accounts shall be deemed as proof of payment of each installment due, and, by means of such proofs of deposit, the Sellers will automatically give the most general, unrestricted and irrevocable discharge to the Buyer with respect to the payment of the respective installment paid, and shall have no further claim, for any reason of purpose whatsoever.

 

2.3 Late-payment interest. If the Buyer no fails to make the timely payment of any part of the Price, including those provided in Clause 2.1.2 above, the Buyer shall be subject to payment to the Sellers, in the proportion set forth in Annex 2.1.1, of a fine of 2% (two percent) on the unpaid amount, corrected for inflation, plus interest of 1% (one percent) per month calculated pro rata die.

 

2.4 Guarantees. The Buyer agrees to establish as guarantee for the payment of Future Installments, pursuant to Clause 2.1.2 above, a lien on an escrow account opened for this purpose by the Buyer at Banco Itaú S.A. within a period of up to ten (10) Business Days, counted from the present Closing Date (the “Escrow Account”), substantially pursuant to the draft contract that constitutes Annex 2.4 to this instrument, which will be signed within thirty (30) Business Days from the present Closing Date (“Escrow Account Agreement”), as well as on (a) the receivables generated by FADEP, which will be processed through the aforementioned account, under the terms set forth in the Escrow Account Agreement; and (b) the funds deposited in the Escrow Account, under the terms of Clause 2.4.1 below.

 

2.4.1. The Parties agree that the amount of the Third Installment of the Price, duly remunerated by the Selic rate from the Closing Date until the date of actual deposit, will be deposited in the Escrow Account by the Buyer immediately after the opening thereof, in any event no later than forty-eight (48) hours from the account opening date. Accordingly, on the date on which payment of the Third Installment of the Price is payable by the Buyer, as set forth in Clause 2.1.2 (b) above, the funds deposited in the Escrow Account shall be used for settling the Third Installment of the Price, pursuant to of the Escrow Account Agreement, by transferring to the Sellers, under the terms and in the proportions established in Clause 2.1.1 above, the amount equivalent to the Third installment of the Price (corrected for inflation pursuant to Clause 2.1.2 (d)). In the event that the funds existing in the Escrow Account are insufficient on the payment date, the Buyer shall transfer the balance directly to the Sellers.

 

CLAUSE THREE — CLOSING

 

3.1 Closing. As agreed upon between the Parties, the formalization of the acquisition of the Shares and the consequent payment of the first installment of the Price are made on this Closing Date, at the law offices of Campos Mello Advogados, in the City of São Paulo, SP, located at Av. Presidente Juscelino Kubitschek, 360, 10° andar.

 

3.2 Closing Acts. On This Closing Date, the following acts are/were practiced by the Parties (“Closing Acts”):

 

(a) Change of the Articles of Organization of RD. The Buyer and the Sellers sign the amendment of RD’s Articles of Organization in the form of Annex 3.2 (a) to this Agreement, whereby (a) the RD Shares are transferred to the Buyer: (b) the resignation of the administrators from the positions they hold in RD management is consigned; and (c) the new administrators of RD are appointed, who immediately take office, by signing the aforementioned corporate act. The Sellers shall perform all necessary acts for the faithful filing of this contractual amendment with the competent authorities.

 

(b) Amendment in FADEP’s Articles of Incorporation. RD and João Carlos sign the amendment to FADEP’s articles of organization in the form of Annex 3.2 (b) to this Agreement, whereby (a) the FADEP Shares held by João Carlos are transferred to the Buyer; (b) the resignation of the administrators from the positions they hold in FADEP management is consigned; and (c) the new administrators of FADEP are appointed, who take office immediately, by

 

 

signing the aforementioned corporate act. The Sellers shall perform all necessary acts for the faithful filing of this contractual amendment with the competent authorities.

 

(c) Payment of the First Installment of the Price. The Buyer made the payment of the First Installment of the Price to the Sellers as provided for in Clause 2.1.2 above, according to the amounts, proportions and bank accounts indicated in Annex 2.1.1, in compliance with the provisions set forth in Clause 2.1.2 above; the amount corresponding to the departure of CCB plus charges relating to the prior discharge was deducted from the First Installment of the Price pursuant to Clause 3.2(i) below;

 

(d) Escrow Account Agreement. The Parties sign the Escrow Account Agreement, in the form of Annex 2.4 to this instrument.

 

(e) [This item (e) Closing was intentionally waived by mutual agreement between the parties pursuant to Clause 2.4.1]

 

(f) Lease and Sublease Agreement. FADEP, the New Owners and João Carlos sign the FADEP Operational Property Lease Agreement and the Sublease Agreement of part of FADEP Operational Property, in the form of Annexes 3.2(f)1 and 3.2(f)2 to the present Contract, respectively;

 

(g) Loan-For-Use Agreement (Laboratory). The Buyer and Guararapes sign the Loan-For-Use Agreement related to the laboratory, in the form of Annex 4.2(g) to this instrument.

 

(h) Loan-For-Use Agreement (Cabanha Area). FADEP and Eliseu Miguel Bertelli (SSN 451.804.589-00) signed the Loan-For-Use Agreement relating to the Cabanha Area, in the form of Annex 3.2(h) to this Agreement;

 

(i) Real guarantee. The Buyer, the Sellers and the New Owners undertake, within 15 days of this Closing Date, to formalize the mortgage deed on the FADEP Operational Property in favor of the Buyer, in guarantee of certain obligations of the Sellers established in the this Agreement, as provided in Clause 7.1 below, in the exact terms set out in Annex 7.1 to this Agreement, and shall execute all documents and make all necessary registrations for the aforementioned formalization vis-à-vis the competent registry authorities subsequent to the Closing, in compliance with the step-by-step procedure established in Clause 4.2.2 below.

 

(j) Discharge of CCB. It is hereby established that the Buyer withheld — from the amount of the First Installment of the Price (as operationalization of part of the Price adjustment provided for in Clause 2.1.2.2) — an amount corresponding to the balance of CCB plus the charges levied on the previous discharge, as notified by BRDE pursuant to Annex 3.2 (j) to this Agreement, and immediately after this Closing Date, shall allocate such amount to the full settlement of CCB, by means of electronic transfer of immediately available resources (“TED”).

 

(k) FADEP Property Power-of-Attorney. FADEP granted a public instrument of power of attorney to Ricardo with sufficient powers to perform, vis-à-vis the registry agencies and other competent authorities, the necessary acts to (a) formalize the transfer of the FADEP Operational Property; and (b) cancel the mortgage in favor of BRDE, pursuant to Clause 4.2.1 below.

 

(l) Other Acts. The Parties shall sign any and all other documents or instruments, as well as perform all other necessary or appropriate measures for the regular implementation of the acts set forth in this Agreement, and definitively grant to the Parties the rights provided for in this Agreement and the corresponding obligations and responsibilities, pursuant to this instrument.

 

3.3. Simultaneity of the Closing Acts. Unless otherwise agreed by the Parties in writing, all acts and obligations set forth in Clause 3.2 above shall be considered simultaneous, and no act and/or obligation shall be deemed to have been actually practiced and the Closing Acts shall not be deemed to have been validly concluded until all other acts and/or obligations have been finalized.

 

3.4. Records relating to the Closing Acts. The Parties hereby undertake to put forth their best efforts in order to take any and all measures necessary for the registration of the corporate acts mentioned in Clauses 3.2(a) and 3.2(b) above, at the Paraná State Board of Trade (JUCEPAR) within the period of up to ten (10) Business Days counted from this Closing Date. Furthermore, the Parties hereby undertake to put forth their best efforts to take any and all measures necessary to register (i) the Lease Agreement referred to in Clause 3.2(f)l: and (ii) of the mortgage instrument mentioned in Clause 3.2(i) above at the competent Real Estate Registry Office(s), in both cases

 

 

complying with the deadlines and the previous provisions set forth in Clause 4.2.2 below. FADEP will assume the responsibility of taking such documents to the real estate registry offices; the Buyer and the Sellers (by themselves and by the New Owners of the FADEP Operational Property, as applicable) assume the responsibility of signing any document or making available any document necessary for executing the aforementioned records.

 

CLAUSE FOUR — POST-CLOSING ACTS

 

4.1 Post-Closing Acts. Immediately after this Closing Date, the Sellers and the Buyer (as described in the respective obligations) undertake to proceed as set forth in Clauses 4.2, 4.3, 4.4, 4.5 and 4.6 below, under the terms described therein.

 

4.2. Transfer of the FADEP Operational Property. FADEP was object of partial spin-off with respect to the FADEP Operational Property, which was conferred on the New Owners’ assets, through the FADEP Partial Spin-off registered with the Paraná State Board of Trade (JUCEPAR) on October 31, 2015. Considering that the spun-off portion of FADEP’s assets consists of real estate, and that the formalization of the FADEP Partial Spin-off with JUCEPAR has already occurred, as mentioned above, the registration of the transfer of the FADEP Operational property at the competent real estate registry office shall be carried out as soon as possible after this date, and release of the mortgage pursuant to Clause 4.4 below, as a result of the discharge of CCB, and then the FADEP Operational Property shall be the sole and exclusive property of the New Owners (“FADEP Operational Property Transfer”). Accordingly, the Sellers shall take all necessary measures to complete the transfer of ownership of the FADEP Operational Property to the New Owners, and the Sellers and New Owners shall be responsible for any and all provisions, disbursements, taxes and other payments levied on such transfer. The Buyer and FADEP hereby declare that they are aware and in agreement that the Buyer will not acquire the FADEP Operational Property within the scope of the Operation and will become the lessee of said property, it being certain that the Transfer of the Operational Property shall be completed and formalized (upon registration at the competent real estate registry office) after this Closing Date only by virtue of the legal impossibility of doing so prior to this date, and without any consideration, indemnity or other payment being owed to FADEP or to the Buyer on the part of the Sellers or the New Owners as a result of such legal impossibility of effecting the registration at the competent real estate registry office prior to this Closing Date.

 

4.2.1. In order to enable the FADEP Operational Property Transfer, the Buyer undertakes, by itself and by FADEP (after this Closing Date), to cooperate with the Sellers, including but not limited to giving them ample access to their legal representatives for any signatures that may be necessary to formalize such transfer (especially vis-à-vis the Real Estate Registry Office), and the Buyer and FADEP shall have no obligation related to this process except to cooperate with the Sellers under the terms established herein. To this end, FADEP granted, on this Closing Date, a public instrument of power-of-attorney to Ricardo, granting sufficient powers to perform, vis-à-vis the registry office and other competent authorities, all acts necessary to (i) formalize the FADEP Operational Property Transfer; and (ii) cancellation of the mortgage in favor of BRDE, pursuant to Clause 4.4 below, and this power-of-attorney instrument is included as Annex 4.2.1 to this Agreement (“FADEP Property Power-of-Attorney”).

 

4.2.2. The Parties hereby agree that the measures relating to the FADEP Operational Property stipulated in this Agreement shall be in the following chronological order: (1) corporate approval and registration of the corporate acts of the FADEP Partial Spin-off with the Paraná state Board of Trade (JUCEPAR), which already occurred on October 31, 2018; (2) signing, on this Closing Date, of the Lease Agreement and the Sublease Agreement between FADEP and the New Owners, pursuant to this Agreement; (3) discharge of CCB and initiation of the mortgage cancellation process in favor of BRDE, pursuant to Clause 4.4; (4) registration of the constructed area, under the terms of the Regularization Process; (5) registration in the competent real estate registry office, by the Sellers (through power-of-attorney, if necessary), of the FADEP Operational Property Transfer to the New Owners; (6) registration, by the Buyer, of the Lease Agreement on the chain of title (matricula) of the FADEP Operational Property; (7) registration, by the Buyer, of the mortgage in favor of the Buyer referred to in Clause 7.1 of this Agreement, on the chain of title of the FADEP Operational Property. The Parties agree that the provision described in item (4) above is estimated and may not materialize in this specific order.

 

4.3. Regularization of the FADEP Operational Property. The Sellers undertake to complete the Regularization Process, as described in Annex A to this instrument, even if this Property becomes owned by the New Owners, and in this case, should make the New Owners observe and fully comply with said Regularization Process of this property. The Sellers declare that, irreversibly and irrevocably, they are solely, wholly and exclusively responsible for any and all measures, directly or indirectly necessary for the Regularization Process (except for the provisions of

 

 

specific jurisdiction of the public entities at which such process will be carried out), and shall also hold the Buyer harmless and free from any of these obligations. Additionally, the Sellers will be solely, wholly and exclusively liable for all expenses, penalties, fines, taxes, social welfare contributions, fees, emoluments, costs, expenses and any other amounts to comply with the Regularization Process.

 

4.3.1. The Sellers undertake to complete, by the dates indicated in the timetables regarding the Regularization Process, the due and complete regularization of the FADEP Operational Property, by sending to the Buyer all the licenses, authorizations, approvals and permits necessary for the regularization and occupancy of the FADEP Operational Property, aimed at the development of FADEP’s activities on said property, including but not limited to building licenses, the occupancy permit (Habite-se) (or the Property Regularity Certificate issued by City Hall), and the Fire Department Inspection Report (“AVCB”).

 

4.3.2. In the event the Regularization Process is not completed within the period established in said process (Annex A to this Agreement), the Parties agree that there will be an additional six-month grace period for its conclusion (“Extended Period”).

 

4.3.3. In the event that the Regularization Process is not completed by the end of the Extended Period and this non-completion lasts until the expiration of the immediately following six-month period (called the “Additional Period”), the Buyer and FADEP, as lessee of the FADEP Operational property, will immediately suspend the transfer of the rental amount provided for in the Lease Agreement during the Additional Period. The amount withheld will be subject to fixed-income financial investment.

 

4.3.4. Once the Regularization Process is completed within the Additional Period, FADEP, as lessee of FADEP Operational Property, will transfer the full amount that was withheld during the term of the Additional Period, plus the net result of the financial investment, and will start paying the rent pursuant to the Lease Agreement.

 

4.3.5. However, if the Regularization Process is not completed within the Additional Period: (a) the entire amount of the rent retained during that period will not be passed on to the owner of the FADEP Operational Property; and (b) the Buyer and the FADEP, as lessee of the FADEP Operational Property, will terminate the payment of the rent due pursuant to the Lease Agreement, and such rent payment shall again take place on the day immediately following the completion of the Property Regularization Process.

 

4.3.6. The Sellers agree to make the New Owners of the FADEP Operational Property sign an instrument that reflects the provisions of the foregoing Clauses 4.3, 4.4 and 4.5, providing for the agreement of the New Owners to assume, jointly with the Sellers, the obligations of aforementioned items.

 

4.4. Payment of CCB and cancellation of the BRDE mortgage. The Buyer shall allocate the amount discounted from the First Installment of the Price to FADEP, so that the latter can provide for the discharge of CCB and, once CCB has been discharged, the Sellers shall perform all the necessary acts that are attributable thereto so that the mortgage on the FADEP Operational Property granted as collateral for its payment, as set forth in the respective chain of title, is canceled. After the cancellation of this lien, there shall be no mortgage, encumbrance, promise of sale (other than the transfer obligation provided for in this Agreement), rent or any right of any Person over the FADEP Operational Property, which shall be free of any of these or other types of encumbrance, and thereafter: (a) the mortgage will be constituted after this Closing Date in favor of the Buyer; and (b) the existence of the Lease Agreement will be the only encumbrances of the FADEP Operational Property. The Parties agree that ownership of said property shall only be transferred after the discharge referred to in this clause, provided that the Buyer and FADEP undertake to maintain, for this purpose, the FADEP Property Power-of-Attorney, pursuant to Clause 4.2.1 above.

 

4.5 Insurance Policy. The Sellers and the Buyer agree to perform and make FADEP perform all the necessary acts that may be attributed thereto to cancel Insurance Policy No. 5177201760180051361, having BRDE as beneficiary or, alternatively, and if authorized by the insurer, transfer the beneficiary of said policy in such a way that the New Owners of the FADEP Operational Property become the beneficiaries.

 

4.6 Certain Assets and Liabilities. The Parties acknowledge and agree that there are certain assets and liabilities at FADEP that are not part of the Transaction and are owned by Sellers, including: (i) credits derived from the CEI and FEI Programs made by FADEP up to this Closing Date; (ii) receivables past-due for over 180 days on this Closing Date; and (iii) FADEP’s operational receipts, as well as others described and estimated (amounts subject to confirmation by the Parties) in Annex 4.6. The Parties agree to make a short-term adjustment by February 15, 2019,

 

 

including all of the assets and liabilities indicated as “short-term” in the aforementioned Annex 4.6, and a second long-term adjustment by April 15, 2019 including all accounts indicated as “long term” in the aforementioned Annex 4.6. Such adjustment shall be part of the Price and shall be paid from one party to the other on the dates indicated above.

 

CLAUSE FIVE - REPRESENTATIONS AND WARRANTIES

 

5.1. Representations and Warranties of the Sellers. Each one of the Sellers provides the Buyer with the representations and warranties contained in Annex 5.1 to this Agreement, which are true, accurate and complete on this Closing Date.

 

5.2. Representations and Warranties of the Buyer. The Buyer provides the Sellers with the following representations and warranties, which are true, accurate and complete on this Closing Date.

 

5.2.1 Proper Incorporation and Authorization. The Buyer declares that it is a company duly incorporated and validly existing, in accordance with the laws of the Federative Republic of Brazil, and is in good standing pursuant to Applicable Laws, and has full powers and capacity to conduct its business dealings as they are currently conducted, to hold and use its properties or assets that it proposes to hold or use and to fulfill all its obligations under this Agreement, and that it has performed all acts and obtained all corporate or contractual approvals required to authorize the execution and complete fulfillment of this Agreement.

 

5.2.2 Validity and Enforceability. This Agreement constitutes a valid and binding commitment of the Buyer, and is enforceable against the Buyer in accordance with its terms and conditions.

 

5.2.3. Non-existence of Violation. The execution and consummation of this Agreement and the Operation Contracts and other contracts related by the Buyer do not violate any law, standard, regulation, judicial or arbitrational decision, or decision by any Governmental Authority with respect to the Buyer or any contract, commitment, obligation, understanding, agreement or restriction of any nature of which the Buyer is a party or to which it is subject.

 

5.2.4. Approvals and Consents. The Buyer is not obligated to obtain any consent, approval, authorization, order, registration, qualification, license, permit, notification, report or other filing with any Governmental Authority regarding the signing and delivery of this Agreement or upon consummation of the operations provided for therein.

 

5.2.5. Auditing. Subject to the provisions of Clause 6.1.2 below, the Buyer has performed the accounting and legal audit process at FADEP, and has requested documents and information from the Sellers and from FADEP that the Buyer has deemed as necessary in order to sign this Agreement and to consummate the obligations set forth in this Agreement. This item shall not be construed by any person as a limitation or obligation of the Sellers to indemnify the Buyer. This obligation of indemnification remains and continues to be valid under clause six below.

 

5.2.6. Financial capacity. The Buyer and the Guarantor have the financial capacity to comply with the payments set forth in Clauses 2.1.1 and 2.3 above, as well as to fulfill all their obligations provided for in this Agreement.

 

CLAUSE SIX - INDEMNITY

 

6.1. Obligation to indemnify sellers. Subject to the provisions of this Clause Six, the Sellers undertake jointly and severally to indemnify, defend and hold harmless, without duplicity, the Companies, the Buyer and the respective shareholders thereof, as the case may be, as well as Officers, members of the Board of Directors, and the authorized successors and assignees of the Buyer (the “Buyer’s Indemnifiable Parties”) for any Loss that is effectively incurred by the respective Buyer’s Indemnifiable Party as a result of:

 

(a) non-fulfillment, misrepresentation, insufficiency and/or inaccuracy of any of the representations and warranties made by the Sellers in this Agreement, regardless of any degree of materiality or qualification of better knowledge with which such representation or warranty has been provided;

 

(b) total or partial non-fulfillment of any obligation, covenant or commitment assumed by the Sellers in this Agreement;

 

 

(c) any and all obligations or liabilities, of any nature whatsoever (including, but not limited to, those of a tax, civil, commercial, administrative, environmental, regulatory, labor, criminal and/or social welfare nature), whether present, past or future, of the Sellers and companies controlled by the Sellers or part of the business conglomerate of the Sellers and Related Parties thereof, including Subsidiaries, not coming from the Companies and which falls upon any Buyer’s Indemnifiable Party, regardless of when the triggering event thereof occurred and regardless of knowledge thereof by any of the Parties or otherwise disclosed by this Agreement;

 

(d) subject to the procedure set forth in Clause 6.4 below, any and all obligations or liabilities, regardless of the nature thereof (including but not limited to those of a tax, civil, commercial, administrative, environmental, regulatory, labor, criminal or social welfare nature) resulting from or related to acts, facts or omissions directly related to the Companies and occurring prior to the Closing Date and/or whose triggering event occurred up to this Closing Date, even if they come to be materialized after the Closing Date, regardless of whether or not they are provisioned in the FADEP Financial Statements and RD Financial Statements, are known to any of the Parties or otherwise disclosed by this Agreement or the audit performed by the Buyer at the Companies;

 

(e) any Third-Party Claim resulting from or relating to the events stipulated in subitems (c) or (d) of this Clause 6.1, whether previously existing Third-Party Claims or those proposed in the future, as the case may be; and

 

(f) any and all obligations or liabilities, of any nature, resulting from or relating to the FADEP Corporate Reorganization, whether a Direct Loss or a Loss arising from a Third-Party Claim (initiated by any Person, whether a creditor, third party, or any other Person related to the companies involved in the FADEP Corporate Reorganization), whether previously existing Third-Party Claims or those proposed in the future, as the case may be.

 

6.1.1. Possibility of Compensation and Withholding. Subject to the assumption of Seller’s disagreement as to a certain Indemnifiable Loss, the Parties hereby agree that, notwithstanding any right or remedy available to Buyer, if any indemnity is owed by the Sellers to any Buyer’s Indemnifiable Party, under the terms of Clause 6.1 above, and in compliance with the time limit (and exceptions thereto) and the procedures set forth in this Agreement, the amount of the respective Indemnifiable Loss, plus any penalties and other increases provided for in this Agreement, shall be offset by the Buyer with (a) any payment owed by the Buyer or by FADEP to the Sellers due to the amounts related to the Future Installments of the Price, and if such amounts are not sufficient, the outstanding balance may be offset against (b) the value of the remaining rent payments of the Lease Agreements (in any event, “Compensation”). If the amount of the remaining rent payments is insufficient to pay the amount owed, the Sellers jointly agree to (c) indemnify the Buyer directly, under the terms and conditions set forth in this Agreement.

 

6.1.2. Auditing. The availability of the documents and information by the Sellers and the Companies to the Buyer within the scope of the Audit, or even outside this scope, does not exempt the Sellers from the obligation to pay any amount that may be indemnifiable by them to the Buyer under this Agreement, including for facts or acts known to and/or disclosed to the Buyer.

 

Obligations to Indemnify the Buyer

 

6.2. Obligations to Indemnify the Buyer. Subject to the provisions of this Clause Six, the Buyer undertakes to indemnify, defend and hold harmless the Sellers and their respective Related Persons, directors, board members and their successors and authorized assignees (the “Sellers’ Indemnifiable Parties”) for any Loss that is effectively incurred by the respective Sellers’ Indemnifiable Party as a result of:

 

(a) non-fulfillment, misrepresentation, insufficiency and/or inaccuracy of any of the representations and warranties made by the Buyer in this Agreement, regardless of any degree of materiality or qualification of better knowledge with which such representation or warranty has been provided;

 

(b) total or partial non-fulfillment of any obligation, covenant or commitment assumed by the Buyer in this Agreement;

 

(c) any and all obligations or liabilities, of any nature whatsoever (including, but not limited to, those of a tax, civil, commercial, administrative, environmental, regulatory, labor, criminal and/or social welfare nature), whether present, past or future, of the Buyer, which falls upon any Sellers’ Indemnifiable Party after this Closing Date, regardless of when the generating event thereof occurred and regardless of knowledge thereof by any of the Parties or otherwise disclosed by this Agreement; and

 

 

(d) any Third-Party Claim resulting from or related to the events set forth in paragraph (c) of this Clause 6.2, whether they are previously existing Third-Party Claims or those proposed in the future, as the case may be.

 

6.3. Limitations.

 

6.3.1. Time Limits. Subject to the provisions of Clause 6.3.3 below, the obligation to indemnify established in this Clause 6 shall remain valid and enforceable for a term of [**] from this Closing Date. Any obligation of indemnification that would be terminated according to the term of [**] established herein shall continue to be valid if the claim for such indemnity has been expressed in a timely manner, in the form and under the terms of this Agreement, and such obligation shall remain valid until the respective claim for indemnification has been fulfilled or otherwise resolved, as provided for in this Clause 6.

 

6.3.2. Maximum Amount of Indemnity. Subject to the provisions of Clause 6.3.3 below, the Parties agree that the Sellers’ obligation to indemnify the Indemnifiable Parties, under this Agreement, is limited to [**] percent ([**]%) of the Price.

 

6.3.3 Exceptions to the Indemnity Limits. In the case of Indemnifiable Losses incurred by a Buyer’s Indemnifiable Party related to RD or to the transfer of ownership of the Shares, or to the events set forth in Clauses 6.1 (c) and 6.1 (f) above, the following shall not apply: (a) the limit set forth in Clause 6.3.2 above (such Losses shall not be included in the calculation to determine the extent of such limit); (b) the time limiting factor provided for in Clause 6.3.1 of the Agreement; or (c) the limitation of loss of profits and indirect damages provided for in the definition of “Loss” herein. For the avoidance of doubt, the exclusion of the aforementioned limits may not be used for Indirect Losses of a Buyer’s Indemnifiable Party that originates from FADEP (except as a result of the FADEP Corporate Reorganization).

 

6.4. Procedure of Indemnity for Direct Losses. In the event that one Party incurs an Indemnifiable Loss under the terms of Clauses 6.1 and 6.2 above, which is not due to a Third-Party Claim (for the purposes of this Clause, an “Indemnifiable Party” and “Indemnifiable Loss,” respectively), the Indemnifiable Party shall notify the Indemnifying Party (“Indemnifying Party”) regarding the Indemnifiable Loss incurred, specifying in a detailed and substantiated manner its cause and the amount involved or, in the absence of such information, a bona-fide estimate, along with a copy of all available documentation on the subject (“Indemnity Notification”).

 

6.4.1. Once the Indemnification Notification is received, the Indemnifying Party shall respond to the Indemnifiable Party within ten (10) Business Days from the receipt of the Indemnity Notification, informing whether it agrees with said Indemnity Notification or if it disagrees with the terms therein.  After expiry of the term of ten (10) Business Days without the Indemnifying Party having notified the Indemnifiable Party, the sum of the Indemnifiable Loss referred to in the Indemnity Notification will be owed by the Indemnifying Party and shall be paid by the Indemnifying Party to the Indemnifiable Party within ten (10) days; provided that in the case of Losses due by the Sellers to the Buyer or to any of the Companies and there is a balance of the Offsetting amount, as applicable, the Offsetting method provided for in this Agreement shall be used for the definitive payment of the respective Indemnifiable Loss to the Indemnifiable Party in question, provided that if the Offsetting does not represent a sufficient amount to pay the Indemnifiable Loss, the remaining balance shall be paid by the Indemnifying Party to the respective Indemnifiable Party, in national currency, within the ten-day period stipulated above. For the avoidance of doubt, payment of the Indemnifiable Loss shall be made by the Indemnifying Party always to the Indemnifiable Party that has directly suffered the Loss, in national currency, within ten (10) days.

 

6.4.2. If, however, the Indemnifying Party disagrees in whole or in part with the Indemnity Notification and/or the corresponding amount, and notifies the other Party of its disagreement within the period of ten (10) Business Days referred to in Clause 6.4.1 above, the dispute shall be settled pursuant to Clause 6.5 below.

 

6.5. Disputes over the Obligation to Indemnify. If it does not agree with an Indemnity Notification sent pursuant to Clause 6.4 above, the Indemnifying Party may, within the period of ten (10) Business Days stipulated in said Clause, request in writing to the Indemnifiable Party clarifications and additional information on the Losses object of such Indemnity Notification, which shall be provided in writing by the Indemnifiable Party within ten (10) Business Days from the receipt of the request for clarification. If the Indemnifying Party is satisfied with the clarifications and agrees with the Indemnity Notification, the provisions of Clause 6.4.1 above shall apply. If, on the other hand, the Indemnifying Party is not satisfied with the clarifications and additional information provided by the Indemnifiable Party and has objections to the sum of the Indemnities in question, the Indemnifying Party shall send to the

 

 

Indemnifiable Party, within a period of up to ten (10) Business Days from the date of receipt of such clarifications and information, a notice describing in detail its disagreements with respect to the amount of Losses object of the request for clarification (“Loss Objection”). In this case, the Parties shall discuss the Loss Objection in good faith and, if there is no agreement within ten (10) Business Days (“Discussion Period”) from the date of receipt of the Loss Objection by the Indemnifiable Party, the Loss Objection shall be resolved in accordance with the conflict resolution mechanism set forth in Clause 12.9 below.

 

6.5.1. If any Loss Objection relates only to part of the Losses claimed through an Indemnity Notification, the undisputed amounts of the Losses in question shall follow the provisions of Clause 6.4.1.

 

6.6. Indemnity Procedure involving Third Party Claims. If any claim, investigation, request for information (including the initiation of an investigation procedure), arbitration action or proceeding that could result in an Indemnifiable Loss is filed or initiated by a third party against an Indemnifiable Party (“Third Party Claim”), the respective Indemnifiable Party shall send a notice to the Indemnifying Party with a copy of the documents relating to such Third Party Claim (“Notice of Third Party Claim”), in order to inform the Indemnifying Party of the Third Party Claim and to decide, at its sole discretion, whether or not it will conduct the defense against said Third Party Claim (“Defense”).  The Notice of Third Party Claim shall be sent by the Indemnifiable Party to the Indemnifying Party within no later than five (5) days as of the date of the Third Party Claim in question, or within a period permitting the Indemnifying Party to have a term equal to one half of the time limit established for the response or defense of the Third Party Claim, whichever is shorter, in the event that the Indemnifiable Party fails to comply with its obligations under this Clause 6.6 (including failure to send the Notice of Third Party Claim within said period), the Indemnifying Party shall be exempt from its obligations to indemnify under this Agreement.

 

6.6.1. Response to Notice. After receiving the Notice of Third Party Claim, the Indemnifying Party shall, within a maximum period of five (5) Business Days from the receipt of the notification sent by the Indemnifiable Party, or within a period that allows the Indemnifiable Party to have a term equivalent to 1/3 (one third) of the statutory deadline established for the response or defense of such Third Party Claim, whichever is shorter, to respond to the Indemnifiable Party about its decision regarding (I) the payment of the Loss involved in the Third Party Claim, (ii) the conduct of the Defense against said Third Party Claim, or (iii) its disagreement with the obligation to indemnify under the Third Party Claim in question. Should the Indemnifying Party fail to response within the aforementioned period, it shall be understood that the Indemnifying Party has no intention of responding, making payment or conducting the Defense, in which case the Indemnifiable Party shall conduct the defense against the Third Party Claim in question.

 

6.6.2. Conduct of Defense. In the event that the Indemnifying Party decides to present the applicable Defense, the Indemnifiable Party shall cooperate with the Indemnifying Party, providing access to all information necessary for the preparation of the response or defense, and, if so requested by the Indemnifying Party, grant within the shortest reasonably possible period specific powers to an attorney appointed by the Indemnifying Party and approved by the Indemnifiable Party (as provided below), and said attorney cannot be unreasonably refused, to conduct the Defense under the Third Party Claim. In such a case, any and all costs incurred, including attorney’s fees, as well as procedural costs related to the defense of the Third Party Claim shall be borne and directly paid by the Indemnifying Party, as the Indemnifying Party shall hire a recognized attorney, who shall conduct the Defense actively and diligently. The Indemnifiable Party may supervise and monitor the proceedings through contacts with the attorney so appointed, and the Indemnifying Party undertakes to instruct its attorneys to promptly respond to any inquiries from the Indemnifiable Party.

 

6.6.2.1. If the Indemnifying Party is conducting the Defense and wishes to enter into an agreement with the respective Third Party, it shall notify the Indemnifiable Party at least eight (8) Business Days in advance of its execution. The Indemnifiable Party may, by counter-notification sent within two (2) Business Days from the above notice, not agree to such execution and request its reconsideration, provided that (i) such disagreement is duly justified; and (ii) the agreement unambiguously results in prejudice to the image or reputation of the Indemnifiable Party or can reasonably induce a multiplier effect of claims.

 

6.6.3. If the Defense of a Third Party Claim is to be conducted by the Indemnifiable Party, the Indemnifiable Party shall conduct such Defense reasonably and in good faith, retaining an attorney who shall conduct the Defense actively and diligently. The reasonable expenses and costs incurred by the Indemnifiable Party with such Defense shall constitute the concept of Indemnifiable Loss. In this case, the Indemnifying Party shall collaborate with the Indemnifiable Party, providing access to all information necessary to prepare the response or defense, as applicable.

 

 

The Indemnifying Party may, at its own expense, supervise and monitor the proceedings through contacts with the attorney so appointed, and the Indemnifiable Party undertakes to instruct its attorneys to promptly answer any inquiries from the Indemnifying Party. In this case, the Indemnifiable Party may not enter into agreements or pay any amount in connection with such Third Party Claim (unless expressly and unequivocally determined by a Governmental Authority) without the prior written consent of the Indemnifying Party, which shall not be unreasonably withheld.

 

6.6.4. The Indemnifying Party is, in all cases, solely liable for the payment of any procedural disbursement relating to any Third Party Claim (including, without limitation, provision of a guarantee, surety or court deposit, attachment bond or payment due as a result of decisions granting injunctive relief or provisional enforcement), and if the Indemnifiable Party assumes its own defense under the Third Party Claim, the Indemnifying Party shall reimburse all reasonable disbursements made by the Indemnifiable Party with such Third Party Claim within five (5) Business Days, on condition that proof of disbursement is provided (such amounts shall be refunded to the Indemnifying Party in the event that the Third Party Claim is finally settled in favor of the Indemnifiable Party, to the extent that the Indemnifiable Party effectively recovers them).  In the event that the Indemnifiable Party is an Indemnifiable Party of the Buyer, such amount may be deducted by the Buyer from the Offsetting amount, subject to the provisions of this Agreement.

 

6.7. Obligation to Indemnity. For the cases set forth in Clause 6.6 above, an Indemnifiable Loss shall be considered to have been effectively incurred after: (i) the res judicata of any final court decision; (ii) any unappealable decision in an administrative proceeding, and provided that there is no action or recourse in the courts in progress and the Indemnifying Party declares that it does not intend to initiate the respective legal action; (Ii) final award rendered in arbitration; or (iv) the execution and/or ratification, as the case may be, of agreements to settle a Third Party Claim (subject to the provisions of Clause 6.6.2.1 above). Once they become definitively incurred pursuant to this Clause 6.7, Indemnifiable Losses shall be paid by the Indemnifying Party to the Indemnifiable Party within [**] days, provided that in the case of Losses due by the Sellers to an Indemnifiable Party of the Buyer and there is a balance of the Offsetting amount, such Indemnifiable Loss shall be Indemnified under the terms set forth in this Agreement for the definitive payment of the respective Indemnifiable Loss to the Buyer, provided that if the Offsetting does not represent a sufficient amount to pay the Indemnifiable Loss, the remaining balance shall be paid by the Indemnifying Party to said Indemnifiable Party in national currency, within the [**]-day period stipulated above. For the avoidance of doubt, payment of the full amount of the Loss shall be made by the Indemnifying Party(ies) to the Indemnifiable Party(ies) of the Buyer who has directly sustained the Loss, in national currency, within the [**]-day period stipulated above, unless it is subject to Offsetting, in which case the corresponding amount may be Offset by the Buyer, although the Indemnifiable Party in question is not the same.

 

6.8. Annulment of Tax Effects. The amounts relating to any indemnity payable under this Agreement shall be paid directly to the Indemnifiable Party that has sustained the respective Loss, plus any taxes levied in order to neutralize any tax effects for the Indemnifiable Party. Notwithstanding, if the payment of a Loss incurred by an Indemnifying Party of the Buyer (other than the Buyer) is made through Compensation, the amount to be withheld for Compensation shall be calculated net of Taxes, so that such net amount corresponds to the full amount of the Loss, and in the event that Taxes will affect the payment of the Indemnity through Compensation, the Sellers may make the payment directly to the Indemnifiable Party, provided that they do so within the period provided for in item 6.7. Such possibility of direct payment in the event that Taxes may be levied on the payment of indemnity by means of Compensation or any other means does not in any way exclude the obligation to indemnify under this Contract.

 

6.9. Labor indemnity. The Parties agree that, in relation to the Sellers’ obligation to indemnify the Indemnifiable Parties of the Buyer, the Sellers shall indemnify the Buyer’s Indemnifying Parties up to the limit of R$[**] per year (summing up the amounts of the Losses incurred in that period), derived from the Loss suffered by the Buyer’s Indemnifiable Parties with labor claims, provided that the complainants have been dismissed by decision of FADEP. If such Loss exceeds the amount provided for herein, the Sellers agree to indemnify the Buyer’s Indemnifying Parties in accordance with the procedure of Clause Six, in the amount equivalent to [**]% of the value of the Loss. However, it is hereby agreed that (1) labor claims of any director of FADEP; (2) labor claims or litigation related or based on moral damages; and (3) labor claims or litigation related or based on non-payment of social security or tax matters, are not subject to the limit in Brazilian reais provided for herein and the percentage reducer ([**]%) is also not applicable. In such cases (1 to 3), Sellers shall fully indemnify the Buyer’s Indemnifiable Parties.

 

6.10. CCB - It is hereby agreed between the Parties, with respect to the prepayment of CCB, as provided in this Contract, that in the event that the creditor bank informs that FADEP owes a value other than that paid in advance

 

 

by FADEP to the bank, the Buyer or FADEP will pay the amount informed by the creditor bank and will automatically offset the amount paid to the bank with the subsequent portion of the Price in order to deduct from that subsequent Price installment the full amount paid, equivalent to the amount informed by the creditor bank. In such event, the Sellers agree to this automatic payment and will not oppose or use the opposition mechanisms provided for herein.

 

CLAUSE SEVEN - REAL GUARANTEE

 

7.1. Notwithstanding any right or remedy available to the Buyer, including under this Contract, which includes, for example, the possibility, at Buyer’s sole discretion, of the Clearing and Retention mechanisms mentioned in Clause 6.1.1 above, aiming to ensure compliance with the Seller’s obligations under this Contract, including, without limitation to Seller’s indemnity obligations to the Buyer’s Indemnified Parties, the Sellers and the Buyer shall, on this Closing Date, sign a mortgage instrument on the FADEP Operational Property in favor of the Buyer, in the exact terms of the draft attached this Contract as Annex 7.1, and shall also conclude all documents and make all necessary records for said formalization before the competent bodies and authorities.

 

7.1.1 The amount indicated in the mortgage instrument contained in Annex 7.1 to this Contract is based on the evaluation of the FADEP Operational Property made in November 2018, pursuant to the appraisal report contained in Annex 7.1.1 to this Contract.

 

7.1.2. Upon expiration of the term of 5 years as of this Closing Date, in the event of Material Losses against FADEP or an Indemnifiable Party that may be indemnified by Sellers in favor of the Buyer, correspond to the total amount of two million Reais (R$ 2,000,000.00) or less, the Parties agree that the real guarantee on the FADEP Operational Property will be fully released. The Parties agree to perform the acts necessary for such release within a period of up to 10 Business Days as of the end of the 5-year term provided for herein. Otherwise, in the event that the amount exceeds the total amount of two million reais (R$ 2,000,000.00) provided for herein, the Parties agree to negotiate in good faith the replacement of the mortgage with another guarantee with a value as closest as possible to the amount verified, provided it has been previously agreed between Buyer and Sellers. In the event that the Parties do not agree on the replacement, the real guarantee on the FADEP Operational Property will continue for the periods and in the manner provided for herein.

 

CLAUSE EIGHT - CONFIDENTIALITY

 

8.1. Confidentiality. The Parties, by themselves and by their Related Persons and their respective representatives (understood as any officers, board members, employees, advisors, auditors, lawyers, consultants and/or contractors for any purpose), shall, for the term of (5) years as of the date hereof, maintain strict confidentiality regarding the information presented in this Contract and the operations hereunder, as well regarding the information on the Intervening Parties and the Parties made available for the purposes of this Contract (“Confidential Information”). Any disclosure of Confidential Information may only be made with the express written consent of all Parties. For the purposes of this Contract, Confidential Information shall not be deemed to include: (a) information that have become or will become public domain, without such occurrence by breach of any obligation of confidentiality applicable to the Parties; (b) information that were known by any Party at the time of its disclosure and have not been obtained, directly or indirectly, from another Party or from third parties subject to an obligation of confidentiality; or (c) information that are disclosed as a result of compliance with a specific legal requirement or express Order of any Governmental Authority, pursuant to the Law. The restrictions provided for in this Clause shall not apply to the Buyer in relation to its direct and indirect investors who require such knowledge, to whom the Buyer may furnish information on the current transaction. Notwithstanding the foregoing, the Buyer undertakes to alert such investors to the obligation of confidentiality provided for herein, and they shall remain liable before the Seller for any breach of this obligation.

 

8.2. Public Announcements. The Parties bind themselves, their successors, their Related Persons and respective advisers to consult the other Parties before releasing any press release or making any public statement as to the content of the information in this Contract and of the operations provided herein, and shall not disclose any press release or make any public statement without prior approval of its form and content in advance by the other Parties. Notwithstanding, the Parties undertake to approve and authorize any disclosures that have to be made by any Party, as required by law or Governmental Authority, except for its right to contribute and comment on the terms of such disclosure.

 

 

CLAUSE NINE - TERM, DEFAULT AND CONTRACT EXPIRATION

 

9.1. This Agreement shall remain in force until the obligation herein provided are met, except if terminated under the terms of Clause 9.2 below,

 

9.2. In the event of default by any of the Parties, as herein provided in relation to the Closing Acts, provided that the innocent party shall be entitled to elect one of the following alternatives, at its own discretion: (i) to maintain this Agreement in force and demand its specific compliance, under the terms of the Law; or (ii) terminate this Agreement upon written notification for acknowledgment, event in which the innocent party shall be exempted from the obligations of the Operation, however, the confidentiality obligations previously defined shall remain in full force and effect, as well as the provisions for settlement of disputes, notifications, and indemnity, including for failure to comply with the obligations herein provided.

 

CLAUSE TEN — NO COMPETITION AND FORMATION OF GROUPS

 

10.1. For [**] years as of the present date and strictly to the State of Paraná, the Sellers shall individually and by their respective Related Persons, acting as shareholder, participant, partner, sponsor, technical adviser, board member, director, agent, administrator, financier, employee, consultant, trustee, or similar position, undertake to not exploit, participate, hold, control, manage or administrate, directly or indirectly, any business, activity, consortium, company or entity either directly engaged or by means of agents (including franchises) in the same businesses of FADEP. Failure to comply with this obligation shall lead to payment of non-compensatory fine by Sellers to the benefit of the Buyer, equivalent to [**] percent ([**]%) of the Price. The Sellers hereby acknowledge that the obligations herein provided are fair; and the price paid by Buyer to Sellers for the shares, as herein determined also include the compliance of these obligations by the Sellers.

 

10.1.1. As an exception, the scope of Clause 10.1 above does not provide for the performance of elementary- and high school-level education activities by Sellers and the Related Persons.

 

10.2. For [**] years as of the present date, Sellers, both individually and by their Related Persons, agree to not persuade or attempt to persuade any FADEP employee or administrator to leave FADEP, or otherwise employ, hire or attempt to hire or support any other person to hire any FADEP employee or administrator.

 

CLAUSE ELEVEN — COMPLIANCE WITH THE LAW

 

11.1. The Parties do hereby declare and acknowledge that the termination of this Agreement for non-compliance with the Closing Act at the present Closing Date, under the terms of Clause 9.2, with the consequence lack of consummation of the Operation, will neither frustrate any expectation of law nor lead to any right for compensation or payment of indemnity or any other amount for any of the Parties.

 

CLAUSE TWELVE - GENERAL PROVISIONS

 

12.1. Notifications. All notices or other communications related to this Agreement shall be made in writing and delivered by registered mail, by courier services (with acknowledgment of receipt), using an internationally reputable courier company or also by e-mail (with acknowledgment of delivery). Notices will be forwarded to the addresses of the following Parties: The notices and communications shall be considered received on the delivery confirmation date, upon confirmation of delivery or return receipt, as the case may be, except if this date is not a business day, in such case the notification and communication shall be considered to be delivered on the immediately next business day. Any Party may change the address to which the notice shall be sent, by written notice to the other Parties, pursuant to this Clause.

 

To Sellers:

 

João Carlos
  [**]

 

CC to (which is not a notice for the purposes of this Agreement):

 

Wongtschowski e Zanotta Advogados
  [**]

 

 

To Buyer:

 

NRE
  [**]

 

12.2. Expenses. Each Party shall bear its respective expenses relating to the preparation, negotiation and signature of this Agreement and the services related thereto, including all fees and expenses of agents, representatives, legal advisers, and accountants.

 

12.3. Entire Agreement. This Agreement and its respective annexes, recital represent all the agreements and understandings between the Parties referring to the transactions herein described and replace any and all previous agreements between the Parties. None of the Parties is bound to any understanding or statement in relation to the aforementioned matters, except for those included in this Agreement or subsequently agreed upon in writing between the Parties.

 

12.4. Assignment. Sellers and Buyer shall not partially or entirely assign this Agreement without prior written agreement from the other Party provided that, however, after the payment of Price, the Buyer may assign the Agreement to any of its Related Persons.

 

12.5. Waiver; Amendments. In the event that the Parties waive the compliance with the provision of this Agreement, this shall not be construed as a waiver for the future compliance with these provisions by any of the Parties, unless this intention is formalized in a written document signed by the respective Party. The provisions of this Agreement, even though related to only one of the Parties, may be amended or waived only upon a written agreement entered into between all contracting Parties.

 

12.6. Severability. If, by any reason, any provision of this Agreement is considered null and void, this provision shall be limited to the broadest possible extent as to produce its effects, and the validity, legality and effectiveness of the remaining provisions of this Agreement shall not, in any manner, be affected or impaired.

 

12.7. Specific Execution. The Parties agree that the allocation of losses and damages, even though owed and determined in accordance with the Law, shall not represent an adequate and sufficient compensation for the default of the obligations herein provided. After the acknowledgment of the default and right for specific execution through arbitration, any of the Parties may judicially claim the specific execution of the obligation not complied upon judicial order, pursuant to article 784, item III of the Code of Civil Procedure.

 

12.8. Governing Law. This Agreement will be ruled and construed in accordance with the laws of the Federative Republic of Brazil.

 

12.9. Conflict Resolution by Arbitration. Any dispute, litigation, issue, doubt or divergence of any nature directly or indirectly related to this Agreement involving any of the Parties and the Intervening Party (“Involved Parties”) shall be settled through arbitration, to be conducted and administrated by the Center for Mediation and Arbitration of the Brazil-Canada Chamber of Commerce (“Chamber”), pursuant to the procedures of the Chamber which are in force at the commencement of the arbitration procedures (“Regulation”).

 

12.9.1. The arbitration shall be carried out by an Arbitration Court composed of three arbitrators (“Arbitration Court”), appointed in accordance with the Chamber’s Regulation. Each Involved Party shall appoint an arbitrator. The third arbitrator, who shall be the chairman of the Arbitration Court, shall be elected by both arbitrators appointed by the Involved Party. In the event that there is another claimant, all shall appoint a single arbitrator, under common agreement; in the event that there is more than on claimant, all of them shall appoint a single arbitration under common agreement. Any omissions, refusals, disputes, doubts and disagreements as to the appointment of the arbitrators by the Involved Parties or in relation to the appointment of the third arbitrator shall be settled in accordance with the Regulation. The procedures determined in this clause shall also apply to the cases of replacement of arbitrator.

 

12.9.1.1 The arbitrator shall base his decision solely on the material law governing this Agreement, and not perform an equity trial.

 

12.9.2. The arbitration shall be conducted in the city and state of São Paulo in Portuguese language.

 

 

12.9.3. The arbitral award shall be final, conclusive and binding with respect to the Involved Parties, and any decision contained in the arbitration award shall be acknowledged and enforceable in any competent court, except for requests for correction and clarification to the Arbitration Court, as provided for in article 30 of Law No. 9307/96 and any annulment action based on article 32 of Law 9307/96.

 

12.9.4. The Parties hereby agree that the arbitration procedure shall be kept under confidentiality and that any information or documents, including any petition or documentation exchanged or produced for the arbitration (including, but not limited to, dossiers and other documents submitted or exchanged, any testimony or verbal statements, and any award) shall not be disclosed outside the arbitration court, the administration office, the Involved Parties and their consultants, and any other Person that is necessary to conduct the arbitration, except (a) as necessary to provide for preparatory judicial measures for the arbitration proceedings or for the execution of decisions rendered by the arbitration court, including the arbitral award, observing the confidentiality of justice; and/or (b) as required by the legislation and regulations applicable to the Involved Parties.

 

12.9.5. Before the provision of the arbitration award, each of the Involved Parties shall bear with the respective costs and expenses arising from the arbitration procedures. The arbitration costs and expenses, including the arbitrator’s fees, shall be covered by the losing Involved Party. In the event of a decision that benefits both Involved Parties, the costs will be paid to the proportion determined in the arbitration award.

 

12.9.6. The Involved Parties agree that the arbitration procedure described in this Clause is the only and exclusive method through which the Involved Parties shall settle disputes arising from this Agreement; provided that, however, the Parties to this Agreement expressly agree that no provision of this Agreement shall prevent the Involved Parties from submitting any matter to the competent court with jurisdiction over either Party for the sole purpose of performance of the necessary judicial actions to maintain the status quo or otherwise prevent irreparable damage to any of the Involved Parties until the constitution of the Arbitration Court.

 

12.9.7. The Court of the Judicial District of the Capital of the State of São Paulo is hereby elected, renouncing all others, however special or privileged they may be, for (i) precautionary measures and prior judgments to the constitution of the Arbitration Court, (ii) any annulment measure based on article 32 of Law 9307/96 and (iii) any conflicts that under Brazilian law cannot be submitted to arbitration. The execution of the decisions of the Arbitration Court, including arbitration award and a possible partial decision, shall be conducted in the Judicial District of the capital of the state of São Paulo.

 

12.9.8. Payment of indemnity, including for losses and damages, due to breach of the provisions of this Agreement shall not be considered sufficient compensation, also not excluding the specific execution herein provided.

 

12.9.9. The Involved Parties are bound to this provision for all purposes and effects of the arbitration clause.

 

12.10. Spouse’s Consent. The spouse of João Carlos, Mrs. Inelde Pedroso, Brazilian, married, holder of Identity Card [**], SSN [**], resident and domiciled at [**], declares that she has read, agreed, and consented with the present Agreement and all operations herein provided, and also agrees to be bound to the provisions of this Agreement to the extent that she may have any rights under the terms of this instrument or any rights on any shares of FADEP and/or RD, including, in any case, rights under the asset community regime or applicable laws related to the community of property.

 

12.11. Intervening party. The Companies, as Intervening Parties, declare that they fully acknowledge the Agreement and agree with all its terms and conditions, as well as with all obligations undertaken under such Agreement, thus being bound to them.

 

12.12. Definitive Share Acquisition Documentation. This Agreement, the Lease and Sublease Agreements, the Escrow Account Agreement and any other documents entered into between the parties related to the operations herein provided, and with the aforementioned documents, hereinafter “Operation Contracts”, are related and shall be construed together.

 

12.13. Annexes. The Annexes to these Agreement, all signed by all Parties, are an integral part of this Agreement.

 

IN WITNESS WHEREOF, the Parties sign this Agreement in three (3) counterparts of equal form and purport before two undersigned witnesses.

 

 

	
São Paulo, December 05,   2018
    
	
 
    	
 
    
	
MRE PARTICIPAÇÕES S.A.
    	
JOÃO CARLOS RIBEIRO PEDROSO
    
	
 
    	
 
    
	
LEONI MARGARIDA BERTOLIN
    	
JOSÉ CARLOS JANUÁRIO
    
	
 
    	
 
    
	
RICARDO PEDROSO
    	
DAIANE PEDROSO CANTO
    
	
 
    	
 
    
	
Intervening parties:
    	
 
    
	
 
    	
 
    
	
FADEP - FACULDADE EDUCACIONAL DE PATO   BRANCO LTDA.
    
	
By:
    	
 
    
	
Position:
    	
 
    
	
 
    	
 
    
	
RD ADMINISTRAÇÃO E PARTICIPAÇÃO LTDA.
    	
 
    
	
By:
    	
 
    
	
 
    	
 
    
	
Position:
    	
 
    
	
 
    	
 
    
	
Spouse’s   Consent:
    	
 
    
	
 
    	
 
    
	
INELDE PEDROSO
    	
 
    
	
 
    	
 
    
	
Witnesses:
    	
 
    
	
 
    	
 
    
	
Name and   SSN:
    	
 
    
	
[**]
    	
 
    
	
ID: [**]
    	
 
    
	
SSN: [**]
    	
 
    
	
 
    	
 
    
	
Name and   SSN:
    	
 
    
	
[**]
    	
 
    
	
ID [**]
    	
 
    
	
SSN [**]

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