<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
---------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period ended
-------------------------
Commission File Number 1-6605
------
EQUIFAX INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-0401110
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
1600 Peachtree Street, N.W. Atlanta, Georgia
P.O. Box 4081, Atlanta, Georgia 30302
- -------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
404-885-8000
----------------------------------------------------
(Registrant's telephone number, including area code)
None
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at September 30, 1998
----- ---------------------------------
Common Stock, $1.25 Par Value 147,446,368
<PAGE>
INDEX
Page No.
--------
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets --
September 30, 1998 and December 31, 1997 2 - 3
Consolidated Statements of Income --
Three Months Ended September 30, 1998 and 1997 4
Consolidated Statements of Income --
Nine Months Ended September 30, 1998 and 1997 5
Consolidated Statement of Shareholders'
Equity -- Nine Months Ended September 30, 1998 6
Consolidated Statements of Cash Flows --
Nine Months Ended September 30, 1998 and 1997 7
Notes to Consolidated Financial Statements 8 - 12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13 - 19
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 19
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 20
1
<PAGE>
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
(In thousands) 1998 1997
- -----------------------------------------------------------------------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 85,935 $ 52,251
Accounts receivable 330,541 270,665
Deferred income tax assets 34,670 39,221
Other current assets 67,061 38,795
---------- ----------
Total current assets 518,207 400,932
---------- ----------
PROPERTY AND EQUIPMENT:
Land, buildings and improvements 30,267 24,870
Data processing equipment and furniture 237,329 194,553
---------- ----------
267,596 219,423
Less accumulated depreciation 146,225 124,689
---------- ----------
121,371 94,734
---------- ----------
GOODWILL 741,361 365,427
---------- ----------
PURCHASED DATA FILES 176,834 103,282
---------- ----------
OTHER ASSETS 272,904 212,729
---------- ----------
$1,830,677 $1,177,104
========== ==========
The notes on pages 8 through 12 are an integral part of these consolidated
balance sheets.
2
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
(In thousands, except par value) 1998 1997
- ----------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt and current maturities of long-term debt $ 50,367 $ 12,984
Accounts payable 106,043 94,682
Accrued salaries and bonuses 35,536 26,404
Income taxes payable 24,680 13,827
Other current liabilities 204,610 179,712
---------- ----------
Total current liabilities 421,236 327,609
---------- ----------
LONG-TERM DEBT, LESS CURRENT MATURITIES 849,039 339,301
---------- ----------
LONG-TERM DEFERRED REVENUE 34,999 42,848
---------- ----------
OTHER LONG-TERM LIABILITIES 126,738 117,949
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 7)
SHAREHOLDERS' EQUITY:
Common stock, $1.25 par value; shares authorized -
300,000; issued - 173,422 in 1998 and 172,465 in 1997;
outstanding - 141,461 in 1998 and 142,609 in 1997 216,778 215,581
Preferred stock, $0.01 par value; shares authorized -
10,000; issued and outstanding - none in 1998 or 1997 -- --
Paid-in capital 274,862 244,496
Retained earnings 531,564 421,541
Accumulated other comprehensive income (Note 6) (23,821) (20,076)
Treasury stock, at cost, 25,976 shares in 1998
and 23,304 shares in 1997 (541,741) (447,578)
Stock held by employee benefits trusts, at cost,
5,985 shares in 1998 and 6,553 shares in 1997 (58,977) (64,567)
---------- ----------
Total shareholders' equity 398,665 349,397
---------- ----------
$1,830,677 $1,177,104
========== ==========
</TABLE>
The notes on pages 8 through 12 are an integral part of these consolidated
balance sheets.
3
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED
SEPTEMBER 30,
(In thousands, except per share amounts) 1998 1997
- --------------------------------------------------------------------------------
Operating revenue $425,414 $344,086
-------- --------
Costs of services 246,509 200,986
Selling, general and administrative expenses 79,258 60,363
-------- --------
Total operating expenses 325,767 261,349
-------- --------
Operating income 99,647 82,737
Other income, net 3,384 1,489
Interest expense (12,719) (5,229)
-------- --------
Income before income taxes 90,312 78,997
Provision for income taxes 36,783 31,757
-------- --------
Net income $ 53,529 $ 47,240
======== ========
Per common share (basic):
Net income $ 0.38 $ 0.33
======== ========
Shares used in computing basic earnings per share 141,794 144,226
======== ========
Per common share (diluted):
Net income $ 0.37 $ 0.32
======== ========
Shares used in computing diluted earnings per share 144,863 147,637
======== ========
Dividends per common share $ 0.0875 $ 0.0875
======== ========
The notes on pages 8 through 12 are an integral part of these consolidated
statements.
4
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
(In thousands, except per share amounts) 1998 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Operating revenue $1,171,972 $999,114
---------- --------
Costs of services 680,509 579,717
Selling, general and administrative expenses 218,639 190,349
---------- --------
Total operating expenses 899,148 770,066
---------- --------
Operating income 272,824 229,048
Other income, net 4,754 44,652
Interest expense (27,973) (15,033)
---------- --------
Income from continuing operations before income taxes 249,605 258,667
Provision for income taxes 100,709 111,696
---------- --------
Income from continuing operations 148,896 146,971
---------- --------
Discontinued operations:
Income from discontinued operations, net of income
taxes of $10,179 -- 14,336
Costs associated with effecting the spinoff, net of
income tax benefit of $2,154 -- (12,887)
---------- --------
Total discontinued operations -- 1,449
---------- --------
Net income $ 148,896 $148,420
========== ========
Per common share (basic):
Income from continuing operations $ 1.05 $ 1.02
Discontinued operations -- 0.01
---------- --------
Net income $ 1.05 $ 1.03
========== ========
Shares used in computing basic earnings per share 141,621 144,659
========== ========
Per common share (diluted):
Income from continuing operations $ 1.03 $ 0.99
Discontinued operations -- 0.01
---------- --------
Net income $ 1.03 $ 1.00
========== ========
Shares used in computing diluted earnings per share 144,651 148,274
========== ========
Dividends per common share $ 0.2625 $ 0.2575
========== ========
</TABLE>
The notes on pages 8 through 12 are an integral part of these consolidated
statements.
5
<PAGE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
(In thousands) SEPTEMBER 30, 1998
- ----------------------------------------------------------------------------------------
<S> <C>
COMMON STOCK:
Balance at beginning of period $ 215,581
Shares issued under stock plans 1,197
---------
Balance at end of period $ 216,778
=========
PAID-IN CAPITAL:
Balance at beginning of period $ 244,496
Shares issued under stock plans 15,926
Adjustment for treasury shares reissued for an acquisition 2,666
Adjustment for benefits trust shares reissued for benefit plans 10,392
Other 1,382
---------
Balance at end of period $ 274,862
=========
RETAINED EARNINGS:
Balance at beginning of period $ 421,541
Net income 148,896
Cash dividends paid (38,873)
---------
Balance at end of period $ 531,564
=========
ACCUMULATED OTHER COMPREHENSIVE INCOME (Note 6):
Balance at beginning of period $ (20,076)
Adjustment during period (3,745)
---------
Balance at end of period $ (23,821)
=========
TREASURY STOCK:
Balance at beginning of period $(447,578)
Cost of shares repurchased (97,447)
Cost of shares reissued for an acquisition 3,334
Cost of shares reissued under stock plans 279
Other (329)
---------
Balance at end of period $(541,741)
=========
STOCK HELD BY EMPLOYEE BENEFITS TRUSTS:
Balance at beginning of period $ (64,567)
Cost of shares reissued for benefit plans 3,843
Cost of shares reissued under stock plans 1,747
---------
Balance at end of period $ (58,977)
=========
</TABLE>
The notes on pages 8 through 12 are an integral part of this consolidated
statement.
6
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
(In thousands) 1998 1997
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 148,896 $ 148,420
Less income from discontinued operations -- (1,449)
--------- ---------
Income from continuing operations 148,896 146,971
Adjustments to reconcile income from continuing operations to
net cash provided by operating activities of continuing operations:
Depreciation and amortization 72,343 56,208
Gain from sale of business -- (42,798)
Changes in assets and liabilities:
Accounts receivable, net (27,104) (38,648)
Current liabilities, excluding debt 44,092 7,426
Other current assets (11,679) (7,850)
Deferred income taxes 10,950 14,526
Other long-term liabilities, excluding debt (14,023) 4,002
Other assets (17,010) (10,227)
--------- ---------
Net cash provided by operating activities of continuing operations 206,465 129,610
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (35,026) (25,387)
Additions to other assets, net (49,146) (28,571)
Acquisitions, net of cash acquired (474,655) (75,038)
Proceeds from sale of business -- 80,998
Investments in unconsolidated affiliates (18,778) --
--------- ---------
Net cash used in investing activities of continuing operations (577,605) (47,998)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net short-term borrowings 32,220 17,330
Net additions (payments) to long-term debt 499,216 (89,452)
Dividends paid (38,873) (38,933)
Treasury stock purchases (97,447) (79,425)
Proceeds from exercise of stock options 9,009 15,583
Other 2,571 1,687
--------- ---------
Net cash provided (used) by financing activities of continuing operations 406,696 (173,210)
--------- ---------
Effect of foreign currency exchange rates on cash (1,872) 1,361
Net cash provided by discontinued operations -- 100,148
--------- ---------
Net cash provided 33,684 9,911
Cash and cash equivalents, beginning of period 52,251 48,160
--------- ---------
Cash and cash equivalents, end of period $ 85,935 $ 58,071
========= =========
</TABLE>
The notes on pages 8 through 12 are an integral part of these consolidated
statements.
7
<PAGE>
EQUIFAX INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1998
1. BASIS OF PRESENTATION:
The financial statements included herein have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange Commission.
This information reflects all adjustments which are, in the opinion of
management, necessary for a fair presentation of the statement of financial
position of the Company as of September 30, 1998 and the results of operations
for the three and nine months ended September 30, 1998 and 1997, and the cash
flows for the nine months ended September 30, 1998 and 1997. All adjustments
made have been of a normal recurring nature. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
The Company believes that disclosures are adequate to make the information
presented not misleading. It is suggested that these financial statements be
read in conjunction with the financial statements and the notes thereto included
in the Company's annual report on Form 10-K for the year ended December 31,
1997.
2. NATURE OF OPERATIONS:
The Company principally provides information services to businesses to help them
grant credit and authorize and process credit card and check transactions. The
principal lines of business are information services and payment services (see
Note 9 for industry segment information). The principal markets for both
information and payment services are retailers, banks and other financial
institutions, with information services also serving the telecommunications and
utility industries. The Company's operations are predominately located within
the United States, with foreign operations principally located within Canada,
the United Kingdom, Chile, Brazil and Argentina.
3. USE OF ESTIMATES:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions.
These estimates and assumptions affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements as well as reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these estimates.
4. DISCONTINUED OPERATIONS:
On December 9, 1996, the Company announced its intention to split into two
independent, publicly traded companies by spinning off its Insurance Services
industry segment, contingent on receiving a favorable ruling from the IRS
regarding the tax-free status of the dividend for U.S. shareholders. In July
1997, the Company received the favorable IRS ruling and on August 7, 1997
completed the spinoff of its Insurance Services industry segment. The spinoff
was accomplished by the Company's contribution of the business units that
comprised the Insurance Services segment into one wholly owned subsidiary,
ChoicePoint Inc. All of the common stock of ChoicePoint was then distributed to
Equifax shareholders as a dividend, with one share of ChoicePoint common stock
distributed for each ten shares of Equifax common stock held. As a result of the
spinoff, the Company's consolidated statements of income and consolidated
statement of cash flows for the nine months ended September 30, 1997 have been
prepared with the Insurance Services segment results of operations and cash
flows shown as "discontinued operations". During the third quarter of 1997, the
Company recorded an expense of $15,041,000 ($12,887,000 after tax, or $.09 per
share) to reflect the net costs associated with effecting the spinoff.
8
<PAGE>
5. LONG-TERM DEBT:
In June 1998, the Company issued new 6.3% seven-year notes with a face value of
$250,000,000 in a public offering. The notes were sold at a discount of
$1,172,500. In July 1998, the Company issued new 6.9% thirty-year debentures
with a face value of $150,000,000 in a public offering. The debentures were sold
at a discount of $1,500,000. The discounts and related issuance costs will be
amortized on a straight-line basis over the respective term of the notes and
debentures.
6. SHAREHOLDERS' EQUITY:
TREASURY STOCK. During the first nine months of 1998, the Company repurchased
approximately 2,443,000 of its common shares through open market transactions at
an aggregate cost of $83,212,000. In September 1998, the Company also
repurchased 390,000 shares from an employee benefit trust for $14,235,000, which
the trust contributed to the Company's U.S. Retirement Plan. As of September 30,
1998, approximately $125 million remained authorized for future share
repurchases.
During the third quarter of 1998, the Company reissued approximately 164,000
shares valued at $6.0 million for an acquisition (note 8).
COMPREHENSIVE INCOME. Effective with the first quarter, 1998 the Company
adopted FASB Statement No. 130, "Reporting Comprehensive Income". For the nine
month periods ending September 30, 1998 and 1997, comprehensive income is as
follows:
Nine Months Ended
September 30
(In Thousands) 1998 1997
- -------------- -------- --------
Net Income $148,896 $148,420
Change in cumulative foreign
currency translation adjustment (3,745) (1,902)
-------- --------
Comprehensive income $145,151 $146,518
======== ========
Accumulated other comprehensive income at September 30, 1998 and December 31,
1997 consists of the following components:
(In Thousands) September 30, 1998 December 31, 1997
- -------------- ------------------ -----------------
Cumulative foreign currency
translation adjustment $17,429 $13,684
Adjustment for minimum liability
under supplemental retirement plan 6,392 6,392
------- -------
$23,821 $20,076
======= =======
9
<PAGE>
7. AGREEMENT WITH COMPUTER SCIENCES CORPORATION:
The Company has an agreement with Computer Sciences Corporation (CSC) under
which CSC-owned credit bureaus and certain CSC affiliate bureaus utilize the
Company's credit database service. CSC and these affiliates retain ownership of
their respective credit files and the revenues generated by their credit
reporting activity. The Company receives a processing fee for maintaining the
database and for each report supplied. The initial term of the agreement expired
in July 1998, and was renewable at the option of CSC for successive ten-year
periods. CSC has renewed the agreement for the ten-year period beginning August
1, 1998. The agreement provides CSC with an option to sell its credit reporting
businesses to the Company, and provides the Company with an option to purchase
CSC's credit reporting businesses if CSC does not elect to renew the agreement
or if there is a change in control of CSC while the agreement is in effect. Both
options expire in 2013. As of August 1, 1998, the option price is determined by
appraisal.
On November 25, 1997, CSC exercised an option, also contained in the agreement,
to sell its collection businesses to the Company at a purchase price of
approximately $38 million. This transaction was finalized in the second quarter
of 1998. Subsequent to November 25, 1997, the Company determined that the fair
value of the business being sold (based on its estimated discounted cash flows)
was less than the contractual purchase price because a major contract expiring
in 1998 would not be renewed. Accordingly, in the fourth quarter of 1997, the
Company recorded a $25,000,000 charge ($14,950,000 after tax, or $.10 per share)
to reflect a valuation loss on this acquisition, with a corresponding
$25,000,000 liability included in other current liabilities. As of September 30,
1998, the $25,000,000 liability has been reclassified to reduce the amount of
goodwill recorded with this acquisition. In October 1998, this business was sold
for approximately the carrying amount of its net assets.
8. ACQUISITIONS, EQUITY INVESTMENTS AND DIVESTITURE:
During the first nine months of 1998, the Company:
. Acquired a risk management services business in the U.S. (Note 7) and a risk
management services business in the U.K.
. Acquired the credit files of twelve affiliates located in the United States
and one affiliate located in Canada.
. Acquired The Decisioneering Group, Inc., a consulting services business in the
U.S.
. Increased its ownership to greater than 50% in two foreign affiliates in Spain
and Peru and began consolidating their operations.
. Increased the ownership in its Canadian operations to 100%.
. Made equity investments in information services companies in India and the
U.K.
. Acquired 59.3% of a credit card services company in Brazil.
. Acquired 80% of an information services company in Brazil.
. Made an equity investment in 34% of a data processing services company in
Brazil.
The businesses and increased equity interests in companies of greater than 50%
ownership were accounted for as purchases, and had a total purchase price of
$487.2 million. They were acquired for cash of $481.2 million and the reissuance
of treasury stock with a market value of $6.0 million. The equity investments
totaled $18.8 million, were acquired for cash, and were accounted for under the
equity method. The total invested in Brazilian companies was approximately $350
million. The Company expects these Brazilian investments to dilute earnings per
share approximately $.04 in 1998 and $.07 in 1999 due to increased goodwill
amortization, interest expense and expense associated with our "year
2000 program". Also, during the first quarter of 1998, the Company obtained the
control necessary and began to consolidate the operations of its 66.7%
investment in Organizacion VERAZ S.A. in Argentina which was acquired in 1997
and 1994. These acquisitions and the consolidation of VERAZ resulted in $386.0
million of goodwill and $84.4 million of purchased data files. These allocations
include $26.0 million reallocated from other assets related to the Company's
investment in VERAZ and two other foreign affiliates previously accounted for
under the equity method. Their results of operations have been included in the
consolidated statements of income from the dates of acquisition. The following
unaudited pro forma information has been prepared as if these acquisitions had
occurred on January 1, 1997. The
10
<PAGE>
information is based on historical results of the separate companies and may not
necessarily be indicative of the results that could have been achieved or, of
results which may occur in the future.
Nine Nine
(In thousands, except per share Months Ended Months Ended
amounts) September 30, 1998 September 30, 1997
- ------------------------------- ------------------ ------------------
Revenue $1,301,233 $1,167,831
Net income 136,777 137,193
Net income per common share (diluted) 0.94 0.92
During the third quarter of 1997, the company sold its National Decision Systems
business unit from its North American Information Services industry segment.
Cash proceeds, net of related divestiture expenses, totaled $80,998,000 and
resulted in a gain of $42,798,000 recorded in other income ($17,881,000 after
tax, or $.12 per share).
9. INDUSTRY SEGMENT INFORMATION:
Effective with the first quarter, 1998, the Company adopted FASB Statement No.
131, "Disclosures About Segments of an Enterprise and Related Information".
Operating revenue and operating income by industry segment for the third quarter
and first nine months of 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Third Quarter Nine Months
----------------------------- -------------------------------
Operating Revenue: 1998 1997 1998 1997
- ------------------ -------- -------- ---------- --------
<S> <C> <C> <C> <C>
North American Information Services $201,579 $178,670 $ 578,454 $533,206
Payment Services 130,369 108,612 358,493 312,951
Equifax Europe 61,559 45,547 164,665 127,257
Equifax Latin America 29,498 8,848 63,133 18,474
Other 2,409 2,409 7,227 7,226
-------- -------- ---------- --------
$425,414 $344,086 $1,171,972 $999,114
======== ======== ========== ========
Operating Income:
- -----------------
North American Information Services $ 70,525 $ 63,064 $ 202,242 $182,702
Payment Services 26,501 18,223 68,370 52,782
Equifax Europe 7,578 7,240 16,646 13,905
Equifax Latin America 6,046 1,785 14,578 4,917
Other 2,217 2,217 6,649 6,651
-------- -------- ---------- --------
Operating Contribution 112,867 92,529 308,485 260,957
General Corporate Expense (13,220) (9,792) (35,661) (31,909)
-------- -------- ---------- --------
$ 99,647 $ 82,737 $ 272,824 $229,048
======== ======== ========== ========
</TABLE>
11
<PAGE>
10. EARNINGS PER SHARE (EPS):
The income amount used in the numerator of the Company's EPS calculations is the
same for both basic and diluted EPS. A reconciliation of the average outstanding
shares used in the denominator of the calculations is as follows:
<TABLE>
<CAPTION>
Third Quarter Nine Months
--------------------------- ----------------------------
(in thousands) 1998 1997 1998 1997
- -------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Weighted average shares
outstanding (basic) 141,794 144,226 141,621 144,659
Effect of dilutive securities:
Stock options 2,776 2,914 2,737 3,118
Performance share plan 293 497 293 497
------- ------- ------- -------
Weighted average shares
outstanding (diluted) 144,863 147,637 144,651 148,274
======= ======= ======= =======
</TABLE>
11. RECENT ACCOUNTING PRONOUNCEMENT:
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative
Instruments and Hedging Activities". SFAS 133 establishes accounting and
reporting standards for derivative instruments and hedging activities, and is
effective January 1, 2000 for the Company. Based on its current level of
derivative instruments and hedging activities, the Company does not believe the
adoption of SFAS 133 will have a significant impact on its financial statements
or reported earnings.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
(Third quarter and first nine months of 1998 compared to
the third quarter and first nine months of 1997)
On August 7, 1997, the Company completed the spinoff of its Insurance Services
industry segment (Note 4). Accordingly, the results of operations information
presented below reflect only the continuing operations of the Company.
Revenue for the third quarter and first nine months increased 23.6% and 17.3%
respectively over the comparable periods of 1997. After adjusting for the May
1997 divestiture of National Decision Systems, revenue was up 23.6% in the
quarter and 18.8% in the first nine months, with approximately 13.8 and 9.4
percentage points of the respective increases attributable to acquisitions.
Operating income of $99.6 million in the quarter and $272.8 million in the first
nine months increased 20.4% and 19.1% respectively, over the prior year. These
increases are primarily the result of revenue growth and continued operating
leverage across all operating groups.
Excluding an after-tax gain of $17.9 million or $.12 per share from the sale of
National Decision Systems in May 1997, net income from continuing operations
increased 13.3% in the quarter and 15.3% year-to-date, and diluted earnings per
share from continuing operations increased 15.6% in the quarter and 18.4% year-
to-date. During the third quarter and first nine months of 1998, the Company
expensed approximately $5.7 million ($3.4 million after tax or $.02 per share)
and $14.3 million ($8.6 million after tax or $.06 per share) respectively, in
costs related to the Company's "year 2000 program". The Company expects that the
total impact of the Company's year 2000 program expenses will be approximately
$.09 per share in 1998.
The following discussion analyzes operating results by industry segment (Note
9), general corporate expense, and consolidated other income, interest expense
and effective income tax rates.
North American Information Services
- -----------------------------------
Revenue in North American Information Services, which includes U.S. Reporting
Services, U.S. Risk Management Services, Mortgage Information Services, Canadian
Operations, as well as National Decision Systems (divested in May 1997)
increased 12.8% in the quarter and 8.5% year-to-date. Excluding the divestiture,
revenue increased 12.8% in the quarter and 11.2% in the first nine months with
5.6 and 4.1 percentage points of the respective increases attributable to
acquisitions. U.S. Reporting Services revenue was up 11.0% in both periods due
to increased demand from the finance and telecommunication/utility industries as
well as growth in marketing services. Although modest pricing pressures are
expected to continue, average prices for credit reports were up slightly in both
periods. Revenue in U.S. Risk Management Services was up 27.9% in the quarter
and 19.8% year-to-date due to the May 1998 acquisition of CSC's collection
business, which the company sold in October 1998 (Note 7) and continued growth
in receivables management outsourcing. Mortgage Information Services revenue
increased $2.6 million in the quarter and $6.2 million year-to-date due to the
favorable interest rate environment.
Canadian revenues declined 4.0% in the third quarter and 4.1% in the first nine
months due to unfavorable exchange rate movements. In local currency, revenues
were up 4.9% in the quarter and 1.9% year-to-date due to a third quarter 1998
acquisition. Excluding these acquisitions, revenues were about level with the
prior year in both periods as gains in Reporting Services were offset by
declines in Risk Management revenue.
13
<PAGE>
Operating income for North American Information Services increased 11.8% in the
quarter and 10.7% year-to-date due primarily to the revenue growth in U.S.
Reporting Services, U.S. Risk Management Services, and Mortgage Information
Services.
Payment Services
- ----------------
Revenue in Payment Services, which includes Card Services, Check Services, and
Card Software, increased 20.0% in the quarter and 14.6% in the first nine months
over the comparable prior year periods with the third quarter acquisition of a
card services business in Brazil accounting for 5.7 and 2.0 percentage points of
the respective increases. Exclusive of this acquisition, Card Services revenue
was up 10.8% in the quarter and 13.3% year-to-date with growth driven by
increases in processing of both cardholder and merchant transactions. Revenue
growth in Card Services was tempered by price reductions within the CSG-Madison
operations where certain cost savings achieved from converting these operations
to the Company's card processing system are being passed on to customers.
Excluding CSG-Madison, Card Services revenue increased approximately 15% in the
quarter and 19% in the first nine months. Third quarter and year-to-date revenue
in Check Services increased 7.4% and 6.9% respectively, due primarily to
increased volume. Card Software revenues were up in both periods due to timing
of license sales between years.
Operating income increased 45.4% in the quarter and 29.5% year-to-date driven by
the revenue growth within Card Services and the operating leverage achieved from
the integration of the CSG-Madison operations, acquired in the fourth quarter of
1996. The growth in this segment's third quarter operating income also benefited
from the performance in Card Software due to higher revenues in the period.
Equifax Europe
- --------------
Equifax Europe consists of operations primarily in the United Kingdom and Spain.
During the third quarter 1998, the Company increased its ownership in the
operations in Spain to 58% and obtained the control necessary to consolidate
these operations. Also, in the first quarter 1998, Equifax Europe acquired a
risk management services business in the U.K. Exclusive of these acquisitions,
revenue was up 11.5% in the quarter and 15.1% in the first nine months, driven
by volume increases in U.K. Consumer Information Services and improved
performance across almost all industry groups.
Operating income for Equifax Europe increased 4.7% in the quarter and 19.7%
year-to-date. The third quarter operating income growth for Equifax Europe was
tempered by higher expenses related to modification of computer software for
compliance with Year 2000 and start up expenses related to a third quarter 1998
joint venture. Excluding these expenses, operating income increased 24.1% in the
quarter and 41.0% year-to-date, driven by the operating leverage obtained from
the revenue growth and continued integration of acquisitions.
Equifax Latin America
- ---------------------
Equifax Latin America consists of operations primarily in Chile, Argentina and
Brazil as well as a developing operation in Mexico. Revenue increases in both
periods were due primarily to an August 1998 acquisition in Brazil and the
consolidation of the operations in Argentina. The year-to-date revenue increase
also reflects the consolidation of the operation in Chile beginning in the
second quarter of 1997. In the first quarter of 1997, the Company owned 50% of
Chile and 33.3% of Argentina and accounted for these operations under the equity
method of accounting. In April 1997, the Company increased its ownership in
Chile to 100% and began consolidating this operation. In December 1997, the
Company increased its investment in Argentina to 66.7% and, in early 1998,
obtained the control necessary to consolidate this operation.
Operating income for Equifax Latin America was up $4.3 million in the quarter
and $9.7 million year-to-date. The third quarter and year-to-date increases were
due primarily to the ownership increase in Argentina and the acquisition in
Brazil, while the year-to-date increase also benefited from the ownership
increase in Chile.
14
<PAGE>
Other
- -----
This segment's revenue and operating income remained comparable between periods.
Its operations consist solely of a subcontract related to the Company's lottery
subsidiary.
General Corporate Expense
- -------------------------
General Corporate Expense increased $3.4 million in the third quarter and $3.8
million year-to-date over the respective prior year periods. These increases
were primarily the result of higher Year 2000 expenses and costs related to the
development of digital certificate services. The third quarter was also
negatively impacted by higher stock plan expense.
Other Income
- ------------
The $1.9 million increase in other income from the third quarter of 1997 to the
third quarter of 1998 was primarily due to higher interest income resulting from
the temporary investment of loan proceeds prior to their use for acquisitions.
The $39.9 million decrease in year-to-date other income was due to the 1997
$42.8 million gain on the sale of National Decision Systems, partially offset by
the higher levels of interest income in 1998.
Interest Expense
- ----------------
Interest expense increased $7.5 million in the quarter and $12.9 million year-
to-date due to the higher level of borrowings for acquisitions and share
repurchases.
Effective Income Tax Rates
- --------------------------
The increase in the effective tax rate in the third quarter was due primarily to
nondeductible goodwill and minority interest expense associated with certain of
the 1998 acquisitions. The decline in the year-to-date effective tax rate was
due primarily to the nondeductible goodwill related to the 1997 sale of National
Decision Systems.
FINANCIAL CONDITION
Net cash provided by operations for the first nine months increased from $129.6
million in 1997 to $206.5 million in 1998 and working capital increased $23.6
million between years. Normal capital expenditures and dividend payments were
met with these internally generated funds.
Other significant outlays in the first nine months included $97.4 million of
treasury stock purchases (Note 6), $474.7 million (net of $6.5 million cash
acquired) for acquisitions (Note 8) and $18.8 million for investments in
unconsolidated affiliates. These items were principally financed by an increase
in long-term debt and excess cash from operations. In September 1998, the
Company offered and sold $400 million in senior unsecured notes and debentures
(Note 5), with $250 million proceeds received in June and $150 million received
in July (before discounts and fees).
As of September 30, 1998, approximately $125 million remained authorized under
the Company's share repurchase program. Capital expenditures for the remainder
of 1998 are currently projected to be approximately $35 million, exclusive of
acquisitions. Additional expenditures are possible as opportunities arise. The
remaining 1998 capital expenditures, exclusive of acquisitions, should be met
with internally generated funds. At September 30, 1998, $522 million was
available under the Company's $750 million revolving credit facility to fund
future capital requirements, including the possible purchase of the CSC credit
reporting businesses (Note 7). Management feels that the Company's liquidity
will remain strong in both the short-term and long-term, and that the Company
has sufficient debt capacity to finance all of these requirements, if necessary.
15
<PAGE>
YEAR 2000 INFORMATION
Background
----------
The widespread use of computer software that relies on two digits, rather
than four digits, to define the applicable year may cause computers and
computer-controlled systems to malfunction or incorrectly process data as
we approach and enter the year 2000. In view of the potential adverse
impact of these "year 2000 problems" on our business, operations and
financial condition, we have implemented a central function to manage,
validate and report on a continuing basis to the Company's executive
management and Board of Directors with regard to our "year 2000 program."
Our year 2000 program process comprises five continuing activities: (a)
identification and assessment, (b) remediation planning, (c) remediation,
(d) testing, and (e) contingency planning for year 2000 problem failures.
The Company's Year 2000 Focus
-----------------------------
We have focused our year 2000 program primarily in the following areas: (a)
our information technology systems, which include (i) internally developed
business applications software, (ii) software provided by vendors and (iii)
the computer and peripheral hardware used in our operations; (b) electronic
data interchange systems; (c) non-information technology systems (embedded
technology) including office business machines, and security, backup power
and other building systems; and (d) the flow of materials and non-
information technology services from our vendors.
Readiness and Plans
-------------------
This section describes the status of our year 2000 program activities,
excluding our recently acquired operations in Brazil. With regard to those
Brazilian operations, we currently are integrating the results of our year
2000 acquisition due diligence with our year 2000 program process; we plan
to complete that integration activity in the first quarter of 1999.
(a) Information Technology Systems
------------------------------
We have completed our year 2000 identification, assessment and
remediation planning activities for the application software and host
environments (operating systems software and hardware) of our critical
information technology systems, including our systems for North
American Information Services, Payment Services, Equifax Europe and
Equifax Latin America. We plan to complete the remediation and testing
of those elements by December 31, 1998.
We plan to complete the identification, assessment and remediation
planning activities with regard to the other elements of our critical
information technology systems (including our local area networks and
desktop computing environments) by March 31, 1999, and the remediation
and testing activities associated with those elements by August 31,
1999.
We concurrently are addressing year 2000 issues with respect to our
non-critical information technology systems, and believe their level
of readiness will be sufficient to avoid any material impact on the
Company's business, operations or financial condition.
The majority of our information technology systems for North American
Information Services and Equifax Europe are operated at data centers
managed by IBM Global Services. IBM is assisting us in achieving year
2000 readiness for our data processing operating environments in the
IBM Global Services data centers.
(b) Electronic Data Interchange Systems
-----------------------------------
We are working with those others with whom we engage in electronic
data interchange (including vendors, customers and other data
suppliers), and with our network telecommunications service providers,
to identify,
16
<PAGE>
assess and test for potential year 2000 problem failures in our
electronic data interchange systems. Further, we are working with them
to identify, implement and test solutions for identified problems. We
believe that this process will be an ongoing one throughout 1999, as
we develop additional information regarding those systems. As part of
those efforts, we have been in contact with each of our critical
network telecommunications service providers to assess their state of
year 2000 readiness and determine the potential for year 2000 problem
failures resulting from their equipment and networks. In cases where
we determine that the risks associated with particular service
providers are not acceptable, we believe that we will be able to
timely migrate to satisfactory alternative delivery systems.
We have completed a substantial portion of our identification,
assessment and remediation planning activities for Company owned
hardware components of our critical network telecommunications
systems, and we are remediating those components as appropriate. We
believe that those identification, assessment and remediation planning
activities will be completed by March 31, 1999, and that remediation
and testing activities will be completed by August 31, 1999.
Overall, we believe that our electronic data interchange systems will
be year 2000 ready as necessary to avoid any material adverse impact
on the Company's business, operations or financial condition.
(c) Non-Information Technology Systems
----------------------------------
We have completed a substantial majority of our ongoing
identification, assessment and remediation planning for the year 2000
problem failures that may occur in our non-information technology
systems resulting from embedded technologies, including office
business machines, and security, backup power and other building
systems. We plan to complete the substantial majority of our
remediation and testing of such systems by March 31, 1999.
(d) Materials and Services
----------------------
We have distributed surveys to our materials and non-information
technology services vendors that support our material operations
requesting disclosure of their year 2000 readiness status and their
plans for addressing year 2000 problems relating to those goods and
services and any applicable delivery systems. We have requested and
will request additional assurances (including in some instances audit
and test activities) from our critical vendors that their goods,
services and delivery systems will be appropriately and timely year
2000 ready to meet our continuing needs. If any vendor is unable or
unwilling to provide appropriate assurances, we believe that we will
be able to use alternative vendors. While we believe a substantial
majority of these activities will be completed by June 30, 1999, they
will continue throughout 1999.
Costs to Address
----------------
We estimate that the cost of our year 2000 program activities will be $48
million. Through September 30, 1998, we have incurred costs of
approximately $21 million related to those activities. Regarding our annual
per share charges, we expensed approximately one cent per share in 1996 and
two cents per share in 1997 in connection with our year 2000 program
activities, plan to expense approximately nine cents per share in 1998, and
plan to expense eight cents per share in 1999. The 1999 expense estimate
includes approximately two cents per share related to our recently acquired
operations in Brazil.
Business Continuity and Contingency Planning
--------------------------------------------
We are in the process of identifying the reasonably likely year 2000
problem failures that we could experience with the goal of revising, to the
extent practical, our existing business continuity and contingency plans to
address the
17
<PAGE>
internal and external issues specific to those problems. Those plans, which
are intended to enable us to continue to operate, include performing
certain processes manually; repairing or obtaining replacement systems;
changing suppliers; and reducing or suspending certain non-critical aspects
of our operations. However, we believe that, due to the widespread nature
of potential year 2000 problems, the contingency planning process is an
ongoing one requiring continuing plan development and modification as we
obtain additional information regarding (a) our internal systems and
equipment during the remediation and testing phases of our year 2000
program, and (b) the status and impact on the Company of the year 2000
readiness of others.
Possible Consequences of Year 2000 Problems
-------------------------------------------
We believe that we have put in place the processes and are devoting the
resources necessary to achieve a level of readiness to meet our year 2000
challenges in a timely and appropriate manner. However, there can be no
assurance that our internal systems or the systems of others on which we
rely will be year 2000 ready in a timely and appropriate manner or that our
contingency plans or the contingency plans of others on which we rely will
mitigate the effects of year 2000 problem failures. Currently, we believe
the most reasonably likely worst case scenario would be a sustained,
concurrent failure of multiple critical systems (internal and external)
that support our operations. While we do not expect that scenario to occur,
that scenario if it occurs could, even despite the successful execution of
our business continuity and contingency plans, result in the reduction or
suspension of a material portion of our operations and accordingly have a
material adverse effect on our business and financial condition.
The preceding "Year 2000 Information" discussion contains various forward-
looking statements that represent our beliefs or expectations regarding
future events. When used in the "Year 2000 Information" discussion, the
words "believes," "expects," "estimates," "plans", "goals" and similar
expressions are intended to identify forward-looking statements. Forward-
looking statements include, without limitation, our expectations as to when
we will complete the identification and assessment, remediation planning,
remediation and testing activities of our year 2000 program as well as our
year 2000 contingency planning; our estimated cost of achieving year 2000
readiness; and our belief that our internal systems and equipment will be
year 2000 ready in a timely and appropriate manner. Those forward-looking
statements involve a number of risks and uncertainties that, individually
or in the aggregate, could cause the actual results to differ materially
from the projected results. Factors that may cause those differences
include availability of information technology resources; customer demand
for our products and services; continued availability of materials,
services and data from our suppliers; the ability to identify and remediate
all date sensitive lines of computer code and to replace embedded computer
chips in affected systems and equipment; the failure of others to timely
achieve appropriate year 2000 readiness; and the actions or inaction of
governmental agencies and others with respect to year 2000 problems.
18
<PAGE>
FORWARD-LOOKING INFORMATION
Statements in this Form 10-Q that relate to future plans, objectives,
expectations, performance, events and the like are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 and
the Securities Exchange Act of 1934. Future events, risks and uncertainties,
individually or in the aggregate, could cause actual results to differ
materially from those expressed or implied in these statements. Those factors
could include worldwide and U.S. economic conditions, changes in demand for the
Company's products and services, risks associated with the integration of
acquisitions and other investments, and other factors discussed in the "forward-
looking information" section in the Management's Discussion and Analysis
included in the Company's annual report on Form 10-K for the year ended December
31, 1997.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
No material change since the end of the fiscal year.
19
<PAGE>
PART II. OTHER INFORMATION
--------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
2.1 Acquisition Agreement By and Among Equifax Inc., Equifax South
America, Inc., Equifax do Brasil Holdings Ltda., P.U.P.
Participacoes S.A., Andrade Gutierrez Telecomunicacoes Ltda.,
Construtora Andrade Gutierrez S.A., SOCMA Americana S.A. and
Partech Ltda., dated August 31, 1998.
(Portions of this Exhibit have been omitted and filed separately
with the Commission under a request for confidential treatment.)
10.1 Master Agreement for Operations Support Services between Equifax
Inc. and International Business Machines Corporation, dated July
7, 1998.
(Portions of this Exhibit have been omitted and filed separately
with the Commission under a request for confidential treatment.)
27.1 Financial Data Schedule, submitted to the Commission in electronic
format
(b) Reports on Form 8-K
Registrant filed two reports on Form 8-K during the quarter for which
this report is filed.
A report on Form 8-K, dated September 4, 1998 and filed September 4,
1998, announced the Company's purchase of eighty percent of the
capital stock of Seguranca ao Credito e Informacoes ("SCI"), a
Brazilian commercial and consumer information company.
A report on Form 8-K, dated September 25, 1998 and filed September 28,
1998, announced the Company's purchase of fifty-nine percent ownership
and control in UNNISA (Unnisa - Solucoes em Meios de Pagamento Ltda.),
a major provider of full service bankcard and private label card
processing, and an effective 34% economic ownership interest in
PROCEDA (Proceda Tecnologia e Informatica S.A), Brazil's second
largest information technology outsourcer.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EQUIFAX INC.
------------
(Registrant)
Date: November 16, 1998 /s/ Thomas F. Chapman
----------------------------------
Thomas F. Chapman, President
and Chief Executive Officer
Date: November 16, 1998 /s/ Philip J. Mazzilli
----------------------------------
Philip J. Mazzilli
Corporate Vice President
Treasurer and Controller
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. SECTIONS 200.80 AND 240.24b-2.
* * * INDICATES OMITTED MATERIAL THAT IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST FILED SEPARATELY WITH THE COMMISSION
EXHIBIT 2.1
ACQUISITION AGREEMENT
by and among
EQUIFAX INC.
EQUIFAX SOUTH AMERICA, INC.
EQUIFAX DO BRASIL HOLDINGS LTDA.
P.U.P. PARTICIPACOES S.A.
ANDRADE GUTIERREZ TELECOMUNICACOES LTDA.
CONSTRUTORA ANDRADE GUTIERREZ S.A.
SOCMA AMERICANA S.A.
and
PARTECH LTDA.
Effective as of 31st August, 1998
Kilpatrick Stockton LLP
1100 Peachtree Street
Atlanta, Georgia 30309
<PAGE>
ACQUISITION AGREEMENT
Table Of Contents
-----------------
<TABLE>
<CAPTION>
Page No.
-------
<S> <C>
1. ACQUISITION OF THE AG TELECOM INTERESTS........................................................... 3
1.1 Acquisition of AG Telecom's Interests........................................................ 3
2. ACQUISITION OF THE SOCMA INTERESTS................................................................ 3
2.1 Acquisition of Socma's Interest in Partech................................................... 4
2.2 Acquisition of Socma's Interest in Unnisa.................................................... 4
3. CLOSING; ADJUSTMENTS.............................................................................. 5
3.1 Closing...................................................................................... 5
3.2 Right of Rescission.......................................................................... 5
3.3 Cooperation and Further Assurances........................................................... 5
3.4 Closing Date Audits; Determination of Adjustment............................................. 6
3.5 Certain Agreements........................................................................... 8
4. ADDITIONAL COVENANTS.............................................................................. 9
4.1 Access and Inspection........................................................................ 9
4.2 Cooperation.................................................................................. 9
4.3 Expenses..................................................................................... 9
4.4 Update of Information........................................................................ 10
4.5 Brokers...................................................................................... 10
4.6 Publicity.................................................................................... 11
4.7 Certain Governmental Filings................................................................. 11
4.8 Customer Contracts........................................................................... 11
4.9 * * * Contract............................................................................... 11
4.10 Inventions Agreements........................................................................ 11
4.11 Certain Customer Contracts................................................................... 12
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
5. REPRESENTATIONS, WARRANTIES AND COVENANTS RELATING TO PARTECH, UNNISA AND PROCEDA................... 12
5.1 Existence...................................................................................... 12
5.2 Subsidiaries................................................................................... 13
5.3 Capitalization; Ownership of Equity; Foundation Documents...................................... 13
5.4 Authority; Inconsistent Obligations............................................................ 15
5.5 No Violation; Compliance with Laws............................................................. 16
5.6 Consents....................................................................................... 16
5.7 Possession of Licenses, Etc.................................................................... 16
5.8 [Intentionally Left Blank]..................................................................... 16
5.9 Financial Statements........................................................................... 16
5.10 Liabilities.................................................................................... 17
5.11 Title to Properties............................................................................ 17
5.12 Receivables.................................................................................... 18
5.13 Movable Property............................................................................... 18
5.14 Immovable Property............................................................................. 18
5.15 Intellectual Property Rights................................................................... 20
5.16 Contracts...................................................................................... 20
5.17 Insurance...................................................................................... 21
5.18 Litigation; Contingencies...................................................................... 22
5.19 Taxes.......................................................................................... 22
5.20 Employment and Labor Matters................................................................... 23
5.21 Absence of Certain Business Practices.......................................................... 24
5.22 Books and Records.............................................................................. 24
5.23 Agreements and Transactions with Related Parties............................................... 24
5.24 No Agreement in Anticipation of Sale........................................................... 25
5.25 Government Reports............................................................................. 25
5.26 Banking Relationships.......................................................................... 25
5.27 Customers and Suppliers........................................................................ 25
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
5.28 Pending Legislation........................................................................... 26
5.29 Absence of Changes............................................................................ 26
5.30 Full Disclosure............................................................................... 27
6. REPRESENTATIONS AND WARRANTIES RELATING TO THE AG GROUP............................................ 28
6.1 Existence...................................................................................... 28
6.2 Capitalization; Ownership of Equity............................................................ 28
6.3 Authority; Inconsistent Obligations............................................................ 28
6.4 No Violation; Compliance with Laws............................................................. 29
6.5 Consents....................................................................................... 29
6.6 Financial Statements........................................................................... 29
6.7 Litigation; Contingencies...................................................................... 30
6.8 Full Disclosure................................................................................ 30
7. REPRESENTATIONS AND WARRANTIES RELATING TO THE SOCMA GROUP......................................... 30
7.1 Existence...................................................................................... 31
7.2 Capitalization; Ownership of Equity............................................................ 31
7.3 Authority; Inconsistent Obligations............................................................ 31
7.4 No Violation; Compliance with Laws............................................................. 31
7.5 Consents....................................................................................... 32
7.6 Financial Statements........................................................................... 32
7.7 Litigation; Contingencies...................................................................... 32
7.8 Full Disclosure................................................................................ 32
8. REPRESENTATIONS AND WARRANTIES OF EQUIFAX.......................................................... 33
8.1 Organization................................................................................... 33
8.2 Authority; No Inconsistent Agreements.......................................................... 33
8.3 Consents....................................................................................... 34
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
9. CONDUCT OF BUSINESS PENDING CLOSING.................................................................. 34
9.1 Business in the Ordinary Course................................................................ 34
9.2 No Material Changes............................................................................ 34
9.3 Compensation................................................................................... 34
9.4 Employee Benefit Plans......................................................................... 34
10. CONDITIONS TO OBLIGATIONS OF EQUIFAX................................................................. 35
10.1 Proceedings and Documents Satisfactory......................................................... 35
10.2 Representations and Warranties................................................................. 35
10.3 Compliance with Covenants and Conditions....................................................... 35
10.4 Closing Certificates........................................................................... 35
10.5 Opinion of Counsel............................................................................. 35
10.6 Consents....................................................................................... 36
10.7 No Inconsistent Requirements................................................................... 36
10.8 No Injunction.................................................................................. 36
10.9 Additional Agreements.......................................................................... 36
10.10 Proceda Amendment.............................................................................. 36
10.11 Customer Agreements, * * * Consent and IP Agreements........................................... 36
10.12 Miscellaneous.................................................................................. 36
11. CONDITIONS TO OBLIGATIONS OF THE SELLERS............................................................. 36
11.1 Proceedings and Documents Satisfactory......................................................... 37
11.2 Representations and Warranties................................................................. 37
11.3 Compliance with Covenants and Conditions....................................................... 37
11.4 Closing Certificates........................................................................... 37
11.5 Resolutions.................................................................................... 37
11.6 Consents....................................................................................... 37
11.7 Opinion of Counsel............................................................................. 37
11.8 No Inconsistent Requirements................................................................... 38
11.9 No Injunction.................................................................................. 38
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
11.10 Additional Agreements..................................................................... 38
11.12 Equifax Undertaking....................................................................... 38
12. INDEMNITIES..................................................................................... 38
12.1 Indemnification of Equifax................................................................ 38
12.2 Payment................................................................................... 39
12.3 Defense of Claims......................................................................... 39
12.4 Indemnification of Sellers by Equifax..................................................... 41
12.5 Limitation on Liability................................................................... 41
12.6 No Contribution by Partech, Unnisa or Proceda............................................. 41
13. SURVIVAL........................................................................................ 42
13.1 Survival.................................................................................. 42
14. TERMINATION..................................................................................... 43
14.1 Termination for Certain Causes............................................................ 43
14.2 Procedure on and Effect of Termination.................................................... 43
15. MISCELLANEOUS................................................................................... 44
15.1 Notices................................................................................... 44
15.2 Counterparts.............................................................................. 45
15.3 Entire Agreement.......................................................................... 46
15.4 Governing Language........................................................................ 46
15.5 Dispute Resolution........................................................................ 46
15.6 Successors and Assigns.................................................................... 47
15.7 Partial Invalidity and Severability....................................................... 48
15.8 Waiver.................................................................................... 48
15.9 Headings.................................................................................. 48
15.10 Number and Gender......................................................................... 48
15.11 Time of Performance....................................................................... 48
</TABLE>
v
<PAGE>
<TABLE>
<S> <C> <C>
16. CERTAIN DEFINITIONS; INDEX OF DEFINITIONS....................................................... 48
16.1 Certain Definitions........................................................................ 48
16.2 Index to Definitions....................................................................... 51
</TABLE>
vi
<PAGE>
SCHEDULE OF EXHIBITS
--------------------
Exhibit A Accounts Receivable
Exhibit A-1 ABC Split-Up Consequences
Exhibit B XYZ Split-Up Consequences
Exhibit C-1 Partech December 31, 1997 Audited Financial
Statements
Exhibit C-2 Unnisa December 31, 1997 Audited Financial
Statements
Exhibit C-3 Proceda December 31, 1997 Audited Financial
Statements
Exhibit D-1 Partech May 31, 1998 Balance Sheet and Net
Working Capital and Indebtedness Calculation
Exhibit D-2 Unnisa May 31, 1998 Balance Sheet and Net
Working Capital and Indebtedness Calculation
Exhibit D-3 Proceda May 31, 1998 Balance Sheet and Net
Working Capital and Indebtedness Calculation
Exhibit E-1 Escrow Agreement (AG Telecom)
Exhibit E-2 Escrow Agreement (Socma)
Exhibit F Pledge Agreement
Exhibit G Dividend Pledge
Exhibit H Partech Articles
Exhibit I Reorganization Agreement
Exhibit J Trademark Agreement
Exhibit K AG Parent Guaranty
Exhibit L * * * Consent
Exhibit M List of Employees and Independent Contractors
Exhibit N-1 Capitalization of AG Parent
Exhibit N-2 Capitalization of AG Telecom
Exhibit O Capitalization of Socma
Exhibit P-1 Tozzini Freire Teixera e Silva Legal Opinion
Exhibit P-2 Socma Legal Department Legal Opinion
Exhibit Q Proceda Amendment
Exhibit R-1 Kilpatrick Stockton LLP Legal Opinion
Exhibit R-2 Mundie e Advogados Legal Opinion
Exhibit S Certain Additional Agreements
N.B.: THE EXHIBITS AND DISCLOSURE MEMORANDUM REFERENCED IN THIS SCHEDULE OF
- -----
EXHIBITS, AND ELSEWHERE IN THIS AGREEMENT, ARE HEREBY INCORPORATED BY REFERENCE.
THESE EXHIBITS HAVE BEEN OMITTED FOR PURPOSES OF THIS FILING, BUT WILL BE
FURNISHED SUPPLEMENTALLY TO THE COMMISSION UPON REQUEST.
<PAGE>
ACQUISITION AGREEMENT
THIS AGREEMENT is made and entered into effective as of the 31st day of
August, 1998, by and among:
(1) EQUIFAX INC., a corporation organized and existing under the laws
of the State of Georgia, United States of America, whose principal place of
business is located at 1600 Peachtree Street, N.W., Atlanta, Georgia 30309,
United States of America ("EFX");
---
(2) EQUIFAX SOUTH AMERICA, INC., a corporation organized and existing
under the laws of the State of Georgia, United States of America, whose
principal place of business is located at 1600 Peachtree Street, N.W., Atlanta,
Georgia 30309, United States of America ("ESA");
---
(3) EQUIFAX DO BRASIL HOLDINGS LTDA., a Brazilian limited liability
company ("SOCIEDADE POR QUOTAS DE RESPONSABILIDADE LIMITADA"), whose head office
is located at Rua Boa Vista, No. 254, 7th floor, suite 721, in the City of Sao
Paulo, State of Sao Paulo, Federal Taxpayers' No. 02677368-0001/14, with its
articles of association recorded at the Commercial Registry at the State of Sao
Paulo, under No. 35,215,207,148, on July 20, 1998 ("HOLDINGS");
--------
(4) P.U.P. PARTICIPACOES S.A., a Brazilian corporation ("SOCIEDADE
ANONIMA"), whose head office is located at Av. Pres. Juscelino Kubitschek, 50
Conj. 172, in the City and State of Sao Paulo, enrolled at the Federal
Taxpayers' Registry under No. 02.716.386/0001-68 ("ACQUISITION"; and together
-----------
with EFX, ESA and Holdings, collectively referred to as "EQUIFAX");
-------
(5) ANDRADE GUTIERREZ TELECOMUNICACOES LTDA., a Brazilian limited
liability company ("SOCIEDADE POR QUOTAS DE RESPONSABILIDADE LIMITADA"), whose
head office is located at Avenida Maria Coelho de Aguiar, 215, Bloco D, 4
degrees floor, in the city of Sao Paulo, State of Sao Paulo, Federal Taxpayers'
Registration No. 71.057.921/0001-39, with its Articles of Association registered
before the Board of Trade of the State of Sao Paulo ("JUCESP") under NIRE
35.213.834.579, in section as of March 03, 1995 ("AG TELECOM" and a "SELLER");
---------- ------
(6) CONSTRUTORA ANDRADE GUTIERREZ S.A., a Brazilian corporation
("SOCIEDADE ANONIMA"), whose head office is located at Rua dos Pampas, 484, in
the city of Belo Horizonte, State of Minas Gerais, Federal Taxpayers'
Registration No. 17.262.213/0001-94, with its by-laws recorded at the Board of
Trade of the State of Minas Gerais ("JUCEMG") under No. 313.000.918-30, in
section as of September 02, 1948 ("AG PARENT" and a "SELLER");
--------- ------
<PAGE>
(7) SOCMA AMERICANA S.A., an Argentine corporation ("SOCIEDAD ANONIMA"),
whose head office is located at Av. Eduardo Madero 940, Piso 15, Capital Federal
Registro No. 7034, Libro 100, tomo "A" de Sociedades Anonimas -Registro Publico
de Comercio de la Capital Federal de la Republica Argentina ("SOCMA" and a
-----
"SELLER"); and
------
(8) PARTECH LTDA., a Brazilian limited liability company ("SOCIEDADE
POR QUOTAS DE RESPONSABILIDADE LIMITADA"), whose head office is located in the
City and State of Sao Paulo, at Av. Maria Coelho Aguiar 215, Bloco D - 4th
Floor, enrolled at the Federal Taxpayers' Registry under No. 00-127.453/0001-01
("PARTECH").
-------
BACKGROUND STATEMENT
WHEREAS, the Sellers currently own, directly and in the aggregate, one
hundred percent (100%) of the outstanding quotas of Partech; and
WHEREAS, on the date of this Agreement Partech owns, directly and in
the aggregate, (i) eighty three percent (83%) of the outstanding quotas of
Unnisa-Solucoes em Meios de Pagamento Ltda., a Brazilian limited liability
company ("SOCIEDADE POR QUOTAS DE RESPONSABILIDADE LIMITADA"), whose head office
is located in the City and State of Sao Paulo, at Av. Maria Coelho Aguiar 215,
Bloco D - 4th Floor, enrolled at the Federal Taxpayers' Registry under No.
69.313.674/0001-42 ("UNNISA"), and (ii) sixty six and 67/100 percent (66.67%) of
------
the outstanding shares of Proceda Tecnologia e Informatica S.A., a Brazilian
corporation ("SOCIEDADE ANONIMA"), whose head office is located in the City and
State of Sao Paulo, at Av. Maria Coelho Aguiar 215, Bloco E - 7th Floor,
enrolled at the Federal Taxpayers' Registry under No. 55.419.667/0001-15
("PROCEDA"); and
-------
WHEREAS, on the date of this Agreement, AG Telecom and Socma own,
indirectly and in the aggregate, the remaining seventeen percent (17%) of the
outstanding quotas of Unnisa; and
WHEREAS, Sellers desire to sell to Acquisition and its Affiliates, and
Acquisition, on behalf of itself and its Affiliates, desires to acquire from to-
be-formed Affiliates of each Seller, on the Closing Date (this term and other
capitalized terms used in this Agreement being defined in either PARAGRAPH 16.1
of this Agreement or in those Paragraphs of this Agreement identified in
PARAGRAPH 16.2), (i) capital of Partech representing an aggregate fifty one
percent (51%) direct ownership interest in the capital of Partech and (ii)
capital of Unnisa representing an aggregate seventeen percent (17%) direct
ownership interest in the capital of Unnisa (collectively, the "ACQUIRED
--------
INTERESTS"); and
- ---------
WHEREAS, to accomplish their objectives the Parties have agreed to
undertake the various component parts of the transactions contemplated by this
Agreement on the
2
<PAGE>
terms set forth in this Agreement and agree that the various component parts are
integral, interdependent parts of the whole, and without which this Agreement
would not be entered into and the transactions contemplated by and provided for
in ARTICLES 1 AND 2 of this Agreement (collectively, the "ACQUISITION
-----------
TRANSACTION") would not be consummated;
- -----------
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements in this Agreement contained, and other good and
valuable consideration, the receipt and sufficiency of which are acknowledged,
the Parties agree as follows:
1. ACQUISITION OF THE AG TELECOM INTERESTS
1.1 ACQUISITION OF AG TELECOM'S INTERESTS. Subject to satisfaction or
waiver in writing of the conditions contained in ARTICLES 10 AND 11 of this
Agreement, on the Closing Date, Acquisition shall subscribe for that number of
ordinary shares of CJO Participacoes Ltda., an Affiliate of AG Telecom ("ABC"),
---
as shall represent, upon subscription, fifty percent (50.0%) of ABC's issued and
outstanding ordinary shares (collectively, the "ABC SUBSCRIBED SHARES") for an
---------------------
aggregate subscription price (the "ABC SUBSCRIPTION PRICE") payable (i) in cash
----------------------
in Brazilian reais in the amount of R$89,250,000 (Eighty Nine Million Two
Hundred Fifty Thousand Brazilian reais) and (ii) by delivery of the accounts
receivable (the "ACCOUNTS RECEIVABLE") identified and described in EXHIBIT A to
-------------------
this Agreement having a face value of R$81,116,074.26 (Eighty One Million One
Hundred Sixteen Thousand Seventy Four and 26/100 Brazilian reais). A portion of
the ABC Subscription Price shall be allocated to the capital of ABC, and the
balance of the ABC Subscription Price shall be allocated to premium. On the
Closing Date and immediately following the subscription by Acquisition for the
ABC Subscribed Shares, ABC shall be split-up in accordance with the Company Law
(the "ABC SPLIT-UP"), with the consequences set forth on EXHIBIT A-1 to this
------------
Agreement. Any and all stamp duties, taxes and similar imposts imposed or
assessed in respect of the ABC Split-Up will be borne by AG Telecom. In each
case, the ABC Subscribed Shares and the resulting shares or ownership interests
of Partech and Unnisa distributed or to be distributed shall be delivered to
EFX, or at its discretion one or more of its Affiliates, free and clear of any
and all Liens. The ABC Subscribed Shares and all resulting shares and ownership
interests that will become the property of EFX or one or more of its Affiliates
as a result of the ABC Split-Up will be registered in the name of EFX or that
Affiliate in the relevant Book of Registration of Ordinary Shares or otherwise
duly recorded and noted in the books and records of the relevant company.
2. ACQUISITION OF THE SOCMA INTERESTS
3
<PAGE>
2.1 ACQUISITION OF SOCMA'S INTEREST IN PARTECH. Subject to satisfaction
or waiver in writing of the conditions contained in ARTICLES 10 AND 11 of this
Agreement, on the Closing Date, Socma will sell to one or more of Equifax's
Affiliates incorporated and organized outside of Brazil (the "OFFSHORE
--------
AFFILIATE"), and EFX will cause the Offshore Affiliate to purchase, take and
- ---------
acquire from Socma, quotas of Partech representing in the aggregate twenty five
and one-half percent (25.50%) of the quota capital of Partech (the "SOCMA
-----
PARTECH INTEREST") free and clear of any and all Liens for a purchase price (the
- ----------------
"SPI PURCHASE PRICE") of R$66,950,000 (Sixty Six Million Nine Hundred Fifty
------------------
Thousand Brazilian reais). Any and all stamp duties, taxes and similar imposts
imposed or assessed in respect of the sale by Socma of the Socma Partech
Interest will be borne by Socma. On the Closing Date and against delivery of
the Socma Partech Interest, the Offshore Affiliate shall pay to Socma the SPI
Purchase Price by wire transfer of an amount of U.S Dollars in immediately
available funds (i) to the following account: Citibank, N.A., New York, New
York, Account No. 36968638, ABA Routing No. 021000089, standing in the name of
Socma Americana S.A., equal to the (x) SPI Purchase Price, as converted into
U.S. Dollars in accordance with this PARAGRAPH 2.1, minus (y) US$ 2,100,000 (ii)
-----
to the escrow account established with Citibank N.A. referenced in the relevant
attached escrow agreement, equal to US$ 2,100,000. Upon transfer of these sums
as prescribed in the foregoing sentence, the SPI Purchase Price shall be paid in
full. The amount of U.S. Dollars to be delivered pursuant to the foregoing sub-
item (i) will be equal to the SPI Purchase Price converted into U.S. Dollars
(rounded to the nearest whole dollar) using the SISBACEN Data System,
transaction PTAX-800, Option 5, buy rate, as published by the Central Bank of
Brazil in respect of the immediately preceding Sao Paulo Business Day, minus US$
-----
2,100,000.
2.2 ACQUISITION OF SOCMA'S INTEREST IN UNNISA. Subject to satisfaction
or waiver in writing of the conditions contained in ARTICLES 10 AND 11 of this
Agreement, on the Closing Date, Acquisition shall subscribe for that number of
ordinary shares of Investimentos Coligados Technology S.A., an Affiliate of
Socma ("XYZ"), as shall represent, upon subscription, Twenty Six and
---
47677/100,000 percent (26.47677%) of XYZ's issued and outstanding ordinary
shares (collectively, the "XYZ SUBSCRIBED SHARES") for an aggregate subscription
---------------------
price (the "XYZ SUBSCRIPTION PRICE") of R$22,300,000 (Twenty Two Million Three
----------------------
Hundred Thousand Brazilian reais). A portion of the XYZ Subscription Price
shall be allocated to the capital of XYZ, and the balance of the XYZ
Subscription Price shall be allocated to premium. On the Closing Date and
immediately following the subscription by Acquisition for the XYZ Subscribed
Shares, XYZ shall be split-up in accordance with the Company Law (the "XYZ
---
SPLIT-UP"), with the consequences set forth on EXHIBIT B to this Agreement. Any
- --------
and all stamp duties, taxes and similar imposts imposed or assessed in respect
of the XYZ Split-Up will be borne by Socma. In each case, the XYZ Subscribed
Shares and the resulting ownership interests of Unnisa distributed or to be
distributed shall be delivered to EFX, or at its discretion one or more of its
Affiliates, free and clear of any and all Liens. The XYZ Subscribed Shares and
all resulting ownership interests that will become the property of
4
<PAGE>
EFX or one or more of its Affiliates as a result of the XYZ Split-Up will be
duly recorded and noted in the books and records of the relevant company.
3. CLOSING; ADJUSTMENTS
3.1 CLOSING. Subject to the conditions contained in ARTICLES
10 AND 11 having been satisfied or waived in writing in accordance with the
terms of this Agreement, the consummation of the transactions contemplated in
this Agreement and the Additional Agreements (the "CLOSING") will take place at
-------
the office of Tozzini Freire Teixera e Silva, located at Rua Libero Badaro, 293,
20 degrees andar, Sao Paulo, Brasil, commencing at 9:00 a.m., local time, on
August 31, 1998 or any other date as may be mutually acceptable to the Parties
(the date of the Closing being referred to in this Agreement as the "CLOSING
-------
DATE"); provided, however, that the Acquisition Transaction shall for all
- ---- -------- -------
purposes be effective as of 12:01 a.m., Sao Paulo time, on September 1, 1998. To
facilitate the Closing, the Parties will meet at a pre-closing conference at the
office of Tozzini Freire Teixera e Silva, located at Rua Libero Badaro, 293, 20
degrees andar, Sao Paulo, Brasil, commencing at 9:00 a.m., local time, on the
fourth Business Day immediately preceding the Closing Date, with the intention
to finalize the Closing matters contemplated in this Agreement and the
Additional Agreements in a timely manner so as to cause the Closing to occur on
the Closing Date.
3.2 RIGHT OF RESCISSION. The Parties agree that Equifax on the
one hand or Sellers (acting jointly) on the other hand shall have the right to
rescind the Acquisition Transaction, on the Closing Date but not at any time
thereafter, as a whole and in its entirety if each of the component parts of the
Acquisition Transaction and all other actions, agreements, covenants,
undertakings or transactions required to be completed or performed by a Party on
or before the Closing Date as reflected in this Agreement or any Additional
Agreement are not consummated or performed on the Closing Date or on such other
date or time prior to the Closing Date as may be specified by giving written
notice to the other Parties of the exercise of this right. Any rescission
notice will be effective immediately and any of the transactions or component
parts thereof previously consummated shall be, and shall be deemed to be, void
ab initio, except that the Confidentiality Agreement and Sections 4.4, 4.5, 9.1
and 9.2 of the MOU shall survive.
3.3 COOPERATION AND FURTHER ASSURANCES. Between the date of this
Agreement and Closing, each Party shall take, and shall cause all of its
relevant Affiliates to take, any and all other and further actions required,
necessary or convenient to carry out the intent and purpose of the Acquisition
Transaction, this Agreement and the Additional Agreements. At Equifax's
reasonable request, whether on or after the date of this Agreement, and without
the payment of any additional monies, each Seller will, at its sole expense and
without contribution by or Liability to Equifax, Partech, Unnisa or Proceda,
execute and deliver any and all further documents and instruments of conveyance,
assignment, and transfer and will take any and all further reasonable actions as
may be necessary, in the reasonable opinion of Equifax, to transfer and convey
to
5
<PAGE>
Equifax all right, title and interest in and to the Acquired Interests, free
and clear of any and all Liens or as may otherwise be necessary or desirable to
carry out the intent of this Agreement.
3.4 CLOSING DATE AUDITS; DETERMINATION OF ADJUSTMENT. (a) The
Parties agree to cause Partech, Unnisa and Proceda to cause the independent
public accountants, Deloitte Touche Tohmatsu, to audit the balance sheets of
Partech (the "PARTECH CLOSING BALANCE SHEET"), Unnisa (the "UNNISA CLOSING
----------------------------- --------------
BALANCE SHEET") and Proceda (the "PROCEDA CLOSING BALANCE SHEET"; and together
- ------------- -----------------------------
with the Partech Closing Balance Sheet and the Unnisa Closing Balance Sheet, the
"CLOSING BALANCE SHEETS"), as appropriate, as of the Closing Date. Each Closing
----------------------
Balance Sheet will be prepared in the English language in accordance with GAAP
and in a manner consistent with the relevant December 31, 1997 balance sheet
attached to this Agreement as EXHIBIT C-1, C-2, OR C-3, as appropriate, and
shall include all accruals and adjustments required by GAAP. Within ninety (90)
days after the Closing Date: Sellers will cause Deloitte Touche Tohmatsu to
deliver to Equifax, Sellers and Arthur Andersen LLP, together with their audit
report thereon and related workpapers, the Partech Closing Balance Sheet, the
Unnisa Closing Balance Sheet and the Proceda Closing Balance Sheet, and its
calculation of Net Working Capital and Indebtedness for each of Partech, Unnisa
and Proceda (collectively, the "COMPUTATIONS"), each calculation being derived
------------
from the relevant Closing Balance Sheet. Subject to PARAGRAPH 3.4(B), the
Computations will be final and binding on the Parties for purposes of
calculating the adjustments as provided for in this PARAGRAPH 3.4.
(b) If within sixty (60) days following delivery of the Closing
Balance Sheets and the Computations, Equifax, following a review of the same by
Arthur Andersen LLP, has not given Sellers written notice of objection to any or
all of the Closing Balance Sheets and the Computations (which notice must
contain a statement in detail, with supporting documentation, of Equifax's
objections), then the Closing Balance Sheets and the Computations shall be final
and binding on all Parties for purposes of calculating the adjustments as
provided for in this PARAGRAPH 3.4. If Equifax gives such notice of objection,
then the Parties shall in good faith attempt to resolve the issues raised in the
notice among themselves. If they are unable to reach a resolution within thirty
(30) days of such notice, the issues in dispute will be promptly submitted to
KPMG Peat Marwick (the "ACCOUNTANTS") for resolution, which disputes shall not
-----------
be further subject to arbitration as provided in PARAGRAPH 15.5. If the issues
in dispute are submitted to the Accountants for resolution: (i) each Party will
furnish to the Accountants such work papers and other documents and information
relating to the disputed issues as the Accountants may request and are available
to the Party (or its independent public accountants), and will be afforded the
opportunity to present to the Accountants any material relating to the relevant
Closing Balance Sheets and the Computations and to discuss the same with the
Accountants, (ii) the determination by the Accountants as set forth in a written
notice delivered to Sellers and Equifax by the Accountants will be binding and
conclusive on all Parties, and (iii) Sellers and Equifax will each bear one-half
of the fees and expenses of the Accountants in resolving the issues in dispute.
The
6
<PAGE>
Accountants will deliver their written notice of determination within thirty
(30) days of the disputes having been referred to them. The costs of Deloitte
Touche Tohmatsu incident to the initial preparation of the Closing Balance Sheet
and the Computations shall be borne by Sellers, and the costs of Arthur Andersen
in reviewing and responding to the Closing Balance Sheet and the Computations
shall be borne by Equifax.
(c) On or before the fifth (5th) Business Day following the final
determination of the Net Working Capital and the Indebtedness for each of
Partech, Unnisa and Proceda, whether by Deloitte Touche Tohmatsu as set forth in
the Computations as originally delivered to Equifax, by agreement of the
Parties, or by the Accountants, as the case may be:
(A) if the Net Working Capital of Partech is less than R$
1,000 as reflected on EXHIBIT D-1, Sellers, jointly and
severally, shall contribute the difference in cash in
Brazilian reais to Unnisa; provided, however, any such
-------- --------
contribution shall not result in any change in the then
current ownership of its quota holders;
(B) if the Net Working Capital of Unnisa is less than R$
2,983,000 as reflected on EXHIBIT D-2, Sellers, jointly and
severally, shall contribute the difference in cash in
Brazilian reais to Unnisa; provided, however, any such
-------- --------
contribution shall not result in any change in the then
current ownership of its quota holders;
(C) if the Net Working Capital of Proceda is less than R$
2,468,000 as reflected on EXHIBIT D-3, Sellers, jointly and
severally, shall contribute the difference multiplied by 34%
in cash in Brazilian reais to Holdings;
(D) the difference between the Indebtedness of Partech as
reflected on the Partech Closing Balance Sheet and the
Indebtedness as reflected on EXHIBIT D-1 shall be paid in
cash in Brazilian reais, (x) if higher than the amount
reflected on EXHIBIT D-1, 51% of the difference by Sellers,
jointly and severally, to Holdings, and (y) if lower than
the amount reflected on EXHIBIT D-1, 51% of the difference
by Equifax to Sellers in accordance with their respective
then current pro rata ownership interests in Partech;
(E) the difference between the Indebtedness of Unnisa as
reflected on the Unnisa Closing Balance Sheet and
Indebtedness as reflected on EXHIBIT D-2 shall be paid in
7
<PAGE>
cash in Brazilian reais, (x) if higher than the amount
reflected on EXHIBIT D-2, 59.33% of the difference by
Sellers, jointly and severally, to Holdings, and (y) if
lower than the amount reflected on EXHIBIT D-2, 59.33% of
the difference by Equifax to Sellers in accordance with
their respective then current pro rata ownership interests
in Unnisa; and
(F) the difference between the Indebtedness of Proceda as
reflected on the Proceda Closing Balance Sheet and the
Indebtedness as reflected on EXHIBIT D-3 shall be paid, (x)
if higher than the amount reflected on EXHIBIT D-3, by
Sellers, jointly and severally, to Holdings multiplied by
34%, and (y) if lower than the amount reflected on EXHIBIT D-
3, 34% of the difference by Equifax to Sellers in accordance
with their respective then current pro rata ownership
interests in Proceda, in each case by wire transfer of
Brazilian reais in immediately available funds to such bank
account as the payee specifies.
(d) For purposes of this PARAGRAPH 3.4, "NET WORKING CAPITAL" will
-------------------
mean current assets minus current liabilities for Partech, Unnisa or Proceda, as
relevant, determined in accordance with GAAP, but specifically excluding any and
all management fees payable, all dividends payable, all intercompany receivables
or payables with Affiliates or indebtedness in favor of Affiliates of AG Parent
or Socma, and any other Indebtedness. For purposes of this PARAGRAPH 3.4,
"INDEBTEDNESS" will mean the sum of all indebtedness for borrowed money, all
------------
amounts payable as management fees payable and dividends payable, and
intercompany payables, less intercompany receivables for indebtedness or
----
indebtedness in favor of Affiliates of AG Parent or Socma.
3.5 CERTAIN AGREEMENTS. Following completion of the Acquisition
Transaction on the Closing Date: (i) Acquisition, AG Telecom and Socma shall
enter into an escrow agreement (the "ESCROW AGREEMENT") in the agreed form
----------------
attached to this Agreement as either EXHIBIT E-1 or E-2, as appropriate; (ii)
Acquisition, AG Telecom and Socma shall enter into the pledge agreement (the
"PLEDGE AGREEMENT") in the agreed form attached to this Agreement as EXHIBIT F;
----------------
(iii) Acquisition, AG Telecom and Socma shall enter into the private deed of
assignment of dividends (the "DIVIDEND PLEDGE") in the agreed form attached to
---------------
this Agreement as EXHIBIT G; (iv) Acquisition, AG Telecom and Socma shall cause
Partech to adopt new articles of association (the "PARTECH ARTICLES") in the
------- --------
agreed form attached to this Agreement as EXHIBIT H; (v) the relevant Persons
shall enter into the reorganization agreement (the "REORGANIZATION AGREEMENT")
------------------------
in the agreed form attached to this Agreement as EXHIBIT I; (vi) Unnisa and EFX
shall execute the trademark license agreement in the agreed form attached to
this Agreement as EXHIBIT J (the "TRADEMARK AGREEMENT"); and (vii) if required,
--------- ---------
AG Parent shall execute a guaranty in the agreed form attached to this Agreement
as EXHIBIT K (each, the "GUARANTY").
--------
8
<PAGE>
4. ADDITIONAL COVENANTS
4.1 ACCESS AND INSPECTION. Partech will provide, and each Seller agrees
to cause Partech, Unnisa and Proceda to provide, Equifax and its Representatives
full access during normal business hours from and after the date of this
Agreement until the Closing to all of the Representatives, personnel, customers,
suppliers, books and records of Partech, Unnisa and Proceda and their respective
Affiliates (including without limitation allowing Equifax and its
Representatives to make copies, extracts and translations) and will furnish any
and all information concerning their businesses and affairs as Equifax and its
Representatives may request in each case for the purpose of making a continuing
investigation of Partech, Unnisa and Proceda and their respective businesses;
provided, however, on-site visits after the date of this Agreement to the
- -------- -------
business premises of Partech, Unnisa and Proceda shall be coordinated between
Equifax and Sellers such that there shall be the least amount of disruption to
the business and operations of Partech, Unnisa and Proceda as is reasonably
practicable in the circumstances. Except for granting access to SHL Systemhouse
Inc. and its Representatives for purposes of conducting a due diligence
investigation of Proceda in a manner agreed by the Parties, none of Partech, AG
Telecom, Socma, or any member of either the AG Group or the Socma Group will
provide any other Person, or permit Unnisa or Proceda to provide any other
Person, with similar access or information between the date of this Agreement
and any termination or expiration of this Agreement. No investigation made
before or after the date of this Agreement by or on behalf of Equifax will limit
or affect in any way the representations, warranties, covenants, agreements and
indemnities of AG Telecom, Socma, Partech, or any other member of either the AG
Group or the Socma Group under or pursuant to this Agreement or any Additional
Agreement, each of which will survive any investigation and the Closing pursuant
to the terms and conditions established in this Agreement.
4.2 COOPERATION. The Parties will cooperate fully with each other and
with their respective Representatives in connection with any steps required to
be taken as part of their respective obligations under this Agreement, and all
Parties will use their best efforts to consummate the transactions contemplated
by this Agreement and to fulfill their obligations under this Agreement,
including without limitation, causing to be fulfilled at the earliest practical
date the conditions precedent to the obligations of the Parties to consummate
the transactions contemplated by this Agreement. Without the prior written
consent of the other Parties, no Party may take any intentional actions, or omit
to take any actions, that would cause the conditions precedent to the
obligations of the Parties not to be fulfilled, including, without limitation,
taking or causing to be taken any action which would cause the representations
and warranties made by a Party in this Agreement not to be true, correct and
complete as of the Closing.
4.3 EXPENSES. The Parties will bear their own legal, accounting, broker,
intermediary and other fees and expenses related to the transactions
contemplated by this Agreement and the Additional Agreements, it being
understood and agreed that all fees and expenses of J.P. Morgan will be borne by
Sellers and without any Liability to any of Equifax, Partech, Unnisa or Proceda.
The Parties acknowledge and agree that Partech,
9
<PAGE>
Unnisa and Proceda have already incurred, and may continue to incur, certain de
minimis expenses in connection with the transactions contemplated by this
Agreement, particularly in connection with the due diligence process, but in no
event shall Partech, Unnisa or Proceda have any Liability for any other expenses
of Sellers in connection with the authorization, preparation, execution and
performance of this Agreement and the transactions contemplated by this
Agreement. The Brazilian financial transactions tax ("CPMF") shall be borne
----
equally by Sellers on the one hand and Equifax on the other.
4.4 UPDATE OF INFORMATION. All documents, agreements, instruments,
statements, copies and other writings furnished to or for the benefit of Equifax
or any of its Representatives pursuant to this Agreement are and will be true,
correct and complete as of the date furnished, and any and all amendments and
supplements to the documents, agreements, instruments, statements and other
writings furnished to or for the benefit of Equifax or any of its
Representatives pursuant to this Agreement have been or will be delivered to
Equifax and its Representatives in a timely and expeditious manner prior to the
Closing. At all times prior to and including the Closing Date, AG Telecom,
Socma, Partech and Equifax will promptly provide one another with written
notification of any event, occurrence or other information of any kind
whatsoever which affects, or may affect, the continued truth, correctness or
completeness of any representation, warranty, covenant or agreement made in this
Agreement by a Party or any document, agreement, instrument, certificate or
writing furnished to or for the benefit of a Party by any other Party pursuant
to or in connection with this Agreement, and each written notification will
specifically identify any and all of the representations, warranties, covenants
and agreements affected by the fact, event, occurrence or information that
necessitated the giving of the notice. No notification or other disclosure will
be deemed to amend or supplement this Agreement, the Disclosure Memorandum, or
any representation, warranty, covenant, agreement or indemnity or any other
document, agreement, instrument, certificate or writing furnished to or for the
benefit of any Party pursuant to or in connection with this Agreement.
4.5 BROKERS. AG Group and Socma Group represent and warrant to Equifax
that no broker or finder other than J.P. Morgan has acted on their behalf or on
behalf of Partech, Unnisa or Proceda in connection with this Agreement or the
transactions contemplated in this Agreement, and AG Group and Socma Group,
severally but not jointly, agree to indemnify Equifax and hold it harmless from
and against any and all claims or demands for commissions or other compensation
by J.P. Morgan and any other broker, finder or similar agent claiming to have
been employed by or on behalf of them. Equifax represents and warrants that no
broker or finder has acted on its behalf in connection with this Agreement or
the transactions contemplated in this Agreement and agrees to indemnify AG
Group, Socma Group, Partech, Unnisa and Proceda and hold them harmless from and
against any and all claims or demands for commissions or other compensation by
any broker, finder or similar agent claiming to have been employed by or on
behalf of Equifax.
10
<PAGE>
4.6 PUBLICITY. Except to the extent required by applicable Law or
listing agreement with any securities exchange, all press releases and other
public announcements respecting the subject matter of this Agreement or any
Additional Agreement will be made only with the mutual agreement of AG Telecom,
Socma and Equifax, which agreement will not be unreasonably withheld, delayed or
conditioned. Prior to submitting any information to third parties as required
by applicable Law or listing agreement with any securities exchange, each Party
will provide the other Parties with a reasonable opportunity to review and
comment on the terms upon which such information will be disclosed.
4.7 CERTAIN GOVERNMENTAL FILINGS. The Parties will make, or cause to be
made, all filings and submissions required to be made to any Government in
connection with the transactions contemplated by or resulting from this
Agreement. Each of the Parties will furnish to the other Parties any and all
necessary information and reasonable assistance as another Party may reasonably
request in connection with its preparation of necessary filings or submissions
to any Government. Prior to filing any material application, registration,
statement or other document with the applicable governmental authority, each
Party will provide the other Parties with a reasonable opportunity to review and
comment on each that application, registration, statement or other document.
4.8 CUSTOMER CONTRACTS. Partech shall, and each Seller agrees to cause
Partech, Unnisa and Proceda to, use their commercially reasonable efforts to
procure fully executed customer agreements from * * * and any other unsigned
customer agreements (collectively, the "CUSTOMER AGREEMENTS") which are attached
-------------------
to the Disclosure Memorandum.
4.9 * * * CONTRACT. At least five (5) Business Days prior to the Closing
Date, Partech shall, and each Seller agrees to cause Unnisa and Proceda to,
procure the written consent of * * *, in the agreed form attached to this
Agreement as EXHIBIT L, for the operation of the * * * software by Proceda for
and on behalf of Unnisa (the "* * * CONSENT").
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4.10 INVENTIONS AGREEMENTS. Partech shall use its commercially
reasonable efforts (both before and after the Closing Date) to procure written
agreements (the "IP AGREEMENTS") from (i) all current employees and independent
-------------
contractors, and (ii) all employees and independent contractors who in the prior
three years have performed services for any of Partech, Unnisa or Proceda, in
each case as identified in EXHIBIT M to this Agreement, irrevocably assigning to
Partech, Unnisa or Proceda, as appropriate, without any consideration or other
conditions, any and all rights, title and interest in and to any and all
intellectual or industrial property, if any, developed or created, whether in
whole or in part, by them, each such written agreement being acceptable to
Equifax as to form, content and subject matter.
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4.11 CERTAIN CUSTOMER CONTRACTS. The Parties agree to use their
commercially reasonable efforts to have each of the Customer Contracts
renegotiated on terms and conditions reasonably satisfactory to the Parties so
as to limit the potential liability to Partech, Unnisa, Proceda and the Parties
for potential system or service failures at Partech, Unnisa or Proceda, whether
as a result of failures, interruptions, disruptions or slow-downs in their own
operating systems or as a result of the failure, interruption, disruption or
slow-down of third party products or services.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS RELATING TO PARTECH, UNNISA AND
PROCEDA
AG Telecom, Socma and Partech have prepared and delivered to Equifax a
disclosure memorandum (the "DISCLOSURE MEMORANDUM") setting forth any and all
---------------------
exceptions or supplemental information to the representations, warranties and
covenants contained in this ARTICLE 5, and have delivered to Equifax documents
and materials pursuant to this Agreement, and all of the documents and materials
so delivered are true, correct and complete as of the date furnished, and any
and all modifications or amendments to the documents and materials have been or
will be delivered to Equifax with the Disclosure Memorandum. The disclosures set
forth in the Disclosure Memorandum qualify only those representations and
warranties specifically referenced and referred to in the Disclosure Memorandum
or this Agreement, and a disclosure related to any particular representation and
warranty shall not qualify any other representation or warranty unless so
expressly stated. At all times prior to and including the Closing Date, AG
Telecom, Socma and Partech will promptly provide Equifax with written
notification of any event, occurrence or other information of any kind
whatsoever which affects or may affect, the continued truth, correctness or
completeness of any representation or warranty made in this Agreement or any
information contained in the Disclosure Memorandum. Subject to the foregoing,
each of AG Telecom, Socma and Partech, severally but not jointly, represents and
warrants to Equifax, and covenants and agrees, as of the date of this Agreement
and again as of the Closing Date, as follows:
5.1 EXISTENCE. Each of Partech and Unnisa: (a) is a Brazilian limited
liability company ("SOCIEDADE POR QUOTAS DE RESPONSABILIDADE LIMITADA"), duly
organized and registered and validly existing under the laws of Brazil, and (b)
is entitled to own or lease, or will own or lease, its assets and properties and
to carry on its business as and in the places where its business is conducted
and its assets and properties are owned or leased. Proceda: (a) is a
corporation ("SOCIEDADE ANONIMA"), duly organized and registered and validly
existing under the laws of Brazil, and (b) is entitled to own or lease, or will
own or lease, its assets and properties and to carry on its business as and in
the places where its business is conducted and its assets and properties are
owned or leased. None of Partech, Unnisa or Proceda is required to be
authorized, licensed, qualified or domesticated as a foreign Person in any
jurisdiction outside of Brazil. AG Telecom and Socma have previously furnished
Equifax with true, correct and complete copies of the organizational and
foundation documents, as amended, of each of Partech, Unnisa and Proceda. AG
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Telecom and Socma have delivered to Equifax true, correct and complete copies of
the minutes and other similar records of meetings of and actions by the
shareholders, quotaholders, directors and officers of Partech and Proceda, and
the minutes and other similar records of meetings of and actions by the
quotaholders, directors and officers of Unnisa, which, in each case, reflects
fully all issuances (whenever this is the case), transfers and redemptions of
Partech's, Unnisa's and Proceda's capital. The Disclosure Memorandum lists:
(i) all locations where Partech, Unnisa or Proceda currently owns or leases real
property, has an office or place of business, or maintains any equipment, other
asset, or has licensed any software, (ii) all locations of immovable property
formerly owned or leased by either Partech, Unnisa or Proceda, or its respective
predecessors, and (iii) all names under which each of Partech, Unnisa or Proceda
or its respective predecessors have operated, if different from its present
legal name.
5.2 SUBSIDIARIES. Except for Partech's interest in Unnisa and Proceda,
none of Partech, Unnisa or Proceda has any interest, directly or indirectly, in
any Person, nor any right, option or commitment to purchase or otherwise acquire
any interest, direct or indirect, in any Person, nor has it ever had any
interest or the right to acquire any interest. To the extent that Partech,
Unnisa or Proceda does have an interest in any other Person, that Person is not
engaged in a business competitive with that of Partech, Unnisa or Proceda or the
business to be conducted by Unnisa or Proceda on and after the Closing Date, and
none of Partech, Unnisa or Proceda has any legal responsibility, duty,
obligation or liability in respect of that Person, nor do any of the assets,
businesses, properties, revenues or profits stand for any duty, obligation or
liability of that Person.
5.3 CAPITALIZATION; OWNERSHIP OF EQUITY; FOUNDATION DOCUMENTS.
(a) Partech has a total capital (the "PARTECH QUOTAS") as described in the
--------------
Disclosure Memorandum, and the capital of Partech described in the Disclosure
Memorandum constitutes all of the issued and outstanding capital of Partech.
The Partech were duly authorized and validly issued, are fully paid and non-
assessable, and were authorized, offered, issued and sold in accordance with all
applicable Laws. All amounts due in respect of the Partech Quotas have been
fully paid in the required currency, and no further assessments or calls may be
made upon or with respect to the Partech Quotas. None of the Partech Quotas
have been issued, offered, sold, registered or recorded in violation of the
preemptive or other rights of any past or present shareholder or quotaholder of
Partech or any other Person. None of the Partech Quotas are subject to any
quotaholders agreements, voting trusts or any restrictions on transfer, other
than as set forth in Partech's Articles of Incorporation or By-Laws or this
Agreement or in the Disclosure Memorandum. The Partech Quotas are owned
beneficially and legally by the Persons named in the Disclosure Memorandum.
(b) Other than as contemplated by this Agreement or in the Disclosure
Memorandum, there are no rights to subscribe for or to purchase, or any option
for the purchase of, or any agreements or arrangements providing for the
issuance (contingent or otherwise) of, or any calls, commitments or any claims
or Actions of any character
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relating to, the capital of Partech, including without limitation, any
subscription bonus, convertible debentures, share options or founders' shares.
Other than as contemplated by this Agreement or by the Disclosure Memorandum, no
Person has any right to, or option with respect to, or any agreement or
arrangements with respect to, or any calls, commitment or any claims or rights
of any character however evidenced or created to, any of the capital of Partech
or any portion of Partech's turnover or profits.
(c) Unnisa has a total capital (the "UNNISA QUOTAS") as described in the
-------------
Disclosure Memorandum, and the capital of Unnisa described in the Disclosure
Memorandum constitutes all of the outstanding capital of Unnisa. The Unnisa
Quotas were duly authorized, are fully paid and non-assessable, and were
authorized, offered, issued and sold in accordance with all applicable Laws.
All amounts due in respect of the Unnisa Quotas have been fully paid in the
required currency, and no further assessments or calls may be made upon or with
respect to those quotas. None of the Unnisa Quotas have been offered, sold,
registered or recorded in violation of the preemptive or other rights of any
past or present quotaholder of Unnisa or any other Person. None of the Unnisa
Quotas are subject to any quotaholder agreements, voting trusts or any
restrictions on transfer, other than as set forth in Unnisa's Articles of
Association or this Agreement or the Disclosure Memorandum. The Unnisa Quotas
are owned legally and beneficially by the Persons named in the Disclosure
Memorandum.
(d) Other than as contemplated by this Agreement, there are no rights to
subscribe for or to purchase, or any option for the purchase of, or any
agreements or arrangements providing for the issuance (contingent or otherwise)
of, or any calls, commitments or any claims or Actions of any character relating
to, the capital of Unnisa, including without limitation, any subscription bonus,
convertible debentures, quota options or founders' quotas. Other than as
contemplated by this Agreement or in the Disclosure Memorandum, no Person has
any right to, or option with respect to, or any agreement or arrangements with
respect to, or any calls, commitment or any claims or rights of any character
however evidenced or created to, any of the capital of Unnisa or any portion of
Unnisa's turnover or profits.
(e) Proceda has a total capital (the "PROCEDA SHARES") as described in the
--------------
Disclosure Memorandum, and the capital of Proceda described in the Disclosure
Memorandum constitutes all of the issued and outstanding capital of Proceda.
The Proceda Shares were duly authorized and validly issued, are fully paid and
non-assessable, and were authorized, offered, issued and sold in accordance with
all applicable Laws. All amounts due in respect of the Proceda Shares have been
fully paid in the required currency, and no further assessments or calls may be
made upon or with respect to the Proceda Shares. None of the Proceda Shares
have been issued, offered, sold, registered or recorded in violation of the
preemptive or other rights of any past or present shareholder of Proceda or any
other Person. None of the Proceda Shares are subject to any shareholder
agreements, voting trusts or any restrictions on transfer, other than as set
forth in Proceda's Articles of Incorporation or By-Laws or this Agreement or the
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Disclosure Memorandum. The Proceda Shares are owned beneficially and legally by
the Persons named in the Disclosure Memorandum.
(f) Other than as contemplated by this Agreement or described in the
Disclosure Memorandum, there are no rights to subscribe for or to purchase, or
any option for the purchase of, or any agreements or arrangements providing for
the issuance (contingent or otherwise) of, or any calls, commitments or any
claims or Actions of any character relating to, the capital of Proceda,
including without limitation, any subscription bonus, convertible debentures,
share options or founders' shares. Other than as contemplated by this Agreement
or described in the Disclosure Memorandum, no Person has any right to, or option
with respect to, or any agreement or arrangements with respect to, or any calls,
commitment or any claims or rights of any character however evidenced or created
to, any of the capital of Proceda or any portion of Proceda's turnover or
profits.
5.4 AUTHORITY; INCONSISTENT OBLIGATIONS.
(a) Each of the Sellers, Partech, Unnisa and Proceda have the full right,
power and authority to execute and deliver and to perform and comply with this
Agreement and the Additional Agreements to which any of them is or will be a
party. All proceedings and actions required to be taken by either Seller,
Partech, Unnisa or Proceda to authorize the execution, delivery and performance
of this Agreement and the Additional Agreements have been taken. This Agreement,
and each Additional Agreement to which any of them is or will be a party, have
been, or in the case of any Additional Agreement will be at the Closing, duly
and validly executed and delivered by each Seller, Partech, Unnisa or Proceda,
as appropriate, by its duly authorized officers or representatives. This
Agreement constitutes, and each Additional Agreement when executed and delivered
will constitute, the valid and legally binding obligation, subject to general
equity principles, of each Seller, Partech, Unnisa and Proceda, as appropriate,
enforceable in accordance with its respective terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally.
(b) Neither the execution and delivery of this Agreement or of the
Additional Agreements by either Seller or Partech, nor the consummation of the
transactions contemplated by this Agreement or by any Additional Agreement, will
(i) result in a violation of the Articles of Association, Articles of
Incorporation or By-Laws of either Seller, Partech, Unnisa or Proceda, or any
Law or Order, (ii) violate any Order or Law applicable to either Seller,
Partech, Unnisa or Proceda, or (iii) result in a breach of, conflict with or
default under, any term or provision of any indenture, note, mortgage, bond,
security agreement, loan agreement, guaranty, pledge, or other instrument,
contract, agreement or commitment to which either Seller, Partech, Unnisa or
Proceda is or will be upon consummation of the transactions contemplated by this
Agreement a party or by which any of them or any of their respective assets,
properties, or businesses is subject or bound; nor will these actions result in
(w) the creation of any Lien on any of the Acquired Interests, Partech Quotas,
Unnisa Quotas or Proceda Shares, or any of the assets, properties, businesses,
revenues or profits of Partech, Unnisa or Proceda, (x) the acceleration or
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creation of any material obligation of Partech, Unnisa or Proceda, (y) the
forfeiture of any material right or privilege of Partech, Unnisa or Proceda, or
(z) the forfeiture of any material right or privilege of either Seller, Partech,
Unnisa or Proceda that may affect its ability to perform under this Agreement or
any Additional Agreement.
5.5 NO VIOLATION; COMPLIANCE WITH LAWS. None of Partech, Unnisa or
Proceda is in default under or in violation of (a) its Articles of Association,
Articles of Incorporation or By-Laws, as appropriate, or (b) any Order or Law,
and the operations of Partech, Unnisa and Proceda have been conducted in
accordance with, and are in compliance with, all applicable Laws. Except as
indicated in the Disclosure Memorandum, none of the Sellers, Partech, Unnisa or
Proceda has any notification of any asserted present or past failure by Partech,
Unnisa or Proceda to comply with any Order or Laws.
5.6 CONSENTS. The execution and delivery by the Sellers or Partech of
this Agreement and the Additional Agreements to which any of them is to be a
party on the Closing Date, the consummation of the transactions contemplated in
this Agreement or the Additional Agreements, the conduct of the respective
businesses of Partech, Unnisa and Proceda on and after the Closing Date, and the
performance by the Sellers or Partech under this Agreement or any Additional
Agreement, as appropriate, do not (a) require the consent, approval or action
of, or any filing with or notice to, any Government or other Person, other than
for a notification filing to be made with the Brazilian anti-trust authorities
within fifteen (15) days after the Closing, (b) require the consent or approval
of Partech's quotaholders, Unnisa's quotaholders or Proceda's shareholders
(except for those previously obtained), or (c) impose any other term, condition
or restriction on Partech, Unnisa or Proceda pursuant to any Order or Law.
5.7 POSSESSION OF LICENSES, ETC. Each of Partech, Unnisa and Proceda
possesses all certificates, licenses, permits and other authorizations from
Governments (collectively, the "PERMITS"), free from burdensome restrictions,
-------
that are necessary or convenient for the ownership, maintenance and operation of
its respective properties, assets, and businesses, and none of Partech, Unnisa
or Proceda is or has been in violation of any such Permits. The Disclosure
Memorandum sets forth all material Permits held by each of Partech, Unnisa and
Proceda in connection with its business, all of which are in full force and
effect, and neither the validity nor continuance of which will be adversely
affected by the consummation of the transactions contemplated by this Agreement.
5.8 [INTENTIONALLY LEFT BLANK].
5.9 FINANCIAL STATEMENTS. Prior to the date of this Agreement, Sellers and
Partech have delivered to Equifax copies of the audited financial statements of
Partech, Unnisa and Proceda as of and for the periods ended December 31, 1994,
1995, 1996 and 1997 (together with the report thereon of Ernst and Young or
Deloitte Touche Tohmatsu, as appropriate collectively, the "AUDITED FINANCIAL
-----------------
STATEMENTS"), and the unaudited financial statements of Partech, Unnisa and
- ----------
Proceda as of and for the (i) 5-month period
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ended May 31, 1998 and (ii) 6-month period ended June 30, 1998 (the "UNAUDITED
---------
FINANCIAL STATEMENTS"; and together with the Audited Financial Statements,
- --------------------
collectively, the "FINANCIAL STATEMENTS"), in each case including a balance
--------------------
sheet, an income statement, a statement of changes in shareholders equity, and a
statement of changes in financial position, together with any related schedules.
The Financial Statements have been prepared from the books and records of
Partech, Unnisa and Proceda, as appropriate, and have been prepared in
accordance with GAAP consistently applied and present fairly the financial
condition of Partech, Unnisa and Proceda, as appropriate, as at the respective
dates of the Financial Statements and the results of its respective operations,
shareholders equity and financial position for the periods then ended. All pro
forma and projected financial information presented to Equifax in connection
with the negotiation and consummation of the transactions contemplated by this
Agreement have been prepared by Sellers consistent with historic accounting
practices and procedures and based upon facts as then in existence and
assumptions reasonable in the circumstances, and the same continue to be true
and reasonable. Each of the Sellers, Partech, Unnisa and Proceda, however,
makes no representation or warranty regarding the likelihood of the actual
occurrence of such projections.
5.10 LIABILITIES.
(a) Except as indicated in the Disclosure Memorandum, none of Partech,
Unnisa or Proceda has any debt, Liability or obligation of any kind, whether
accrued, absolute, contingent or otherwise, except (i) those reflected in the
Unaudited Financial Statements, (ii) those accounts payable incurred in the
ordinary and regular course of business since the date of the Unaudited
Financial Statements, and (iii) those incurred thereafter in the ordinary and
regular course of business consistent with past practices which do not result
from the breach of any Contract or any violation of applicable Law.
(b) None of Partech, Unnisa or Proceda is a party to any contract or
commitment to guarantee the payment or performance of any Liability or other
obligation of any other Person, or pursuant to which Partech, Unnisa or Proceda,
or their respective assets, properties, business or revenue, is or may become
liable for the indebtedness or other obligations of any other Person.
5.11 TITLE TO PROPERTIES . All assets and property, whether movable or
immovable, tangible or intangible, owned by Partech, Unnisa or Proceda are owned
exclusively by Partech, Unnisa or Proceda and free and clear of any and all
Liens except those listed and described in the Disclosure Memorandum. None of
Partech, Unnisa or Proceda owns any assets or property other than those set
forth on the relevant balance sheets included in the Unaudited Financial
Statements and those acquired thereafter in the ordinary and regular course of
business consistent with past practices and which are otherwise reflected on the
books and records of Partech, Unnisa or Proceda, as appropriate. Each of
Partech, Unnisa and Proceda has, or will have at the Closing, exclusive
possession of all of its respective assets and properties, all of which are
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physically located on the Immovable Property and are not subject to the dominion
or control of any other Person.
5.12 RECEIVABLES. Subject to any applicable reserve set forth in the
relevant Financial Statements, any and all notes receivable and accounts
receivable shown in the Financial Statements and all notes receivable and
accounts receivable held by Partech, Unnisa or Proceda on the date of this
Agreement and on the Closing Date, were, are and will be, valid and collectable
obligations of the respective makers or the relevant account debtors and were
not and are not subject to any offset, counterclaim or recoupment.
5.13 MOVABLE PROPERTY.
(a) All of the machinery, equipment, vehicles, and other items of
movable property which are owned or leased by Partech, Unnisa or Proceda are in
good condition and repair, subject to normal wear and tear, suited for the use
intended, and to the best knowledge of each of the Sellers, Partech, Unnisa or
Proceda are and have been operated in conformity with all applicable insurance
requirements, manufacturer's operating manuals, manufacturer's warranties, and
applicable Orders and Laws. The Disclosure Memorandum sets forth a list of all
movable property whose value is in excess of R$10,000, owned or leased by
Partech, Unnisa or Proceda, specifying which items are owned and which are
leased. To the best of each Sellers' and Partech's knowledge, there are no
defects or conditions which would cause the movable property to be or become
inoperable or unsafe.
(b) To the best of each Seller's and Partech's knowledge, all lessors
of any machinery, equipment or other movable property leased by Partech, Unnisa
or Proceda have fully and completely performed and satisfied their respective
duties and obligations under the leases, and none of Partech, Unnisa or Proceda
has brought or threatened any Action against any relevant lessor for failure to
perform and satisfy its duties and obligations under the relevant lease.
5.14 IMMOVABLE PROPERTY.
(a) None of Partech, Unnisa or Proceda owns any real or immovable
property. Each of Partech, Unnisa and Proceda has the lawful right to occupy
and use all real or immovable property which is used in their respective
businesses (the "IMMOVABLE PROPERTY").
------------------
(b) All agreements with respect to leases, easements, rights of way,
licenses or other interests in Immovable Property granted to Partech, Unnisa or
Proceda (collectively, the "PROPERTY LEASES") are listed in the Disclosure
---------------
Memorandum. The interest of Partech, Unnisa or Proceda, as applicable, in and
under each of the Property Leases is free and clear of any defects, claims or
Liens and subject to no present Action or threatened Action.
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(c) Each of Partech, Unnisa and Proceda is lawfully in possession of
all of its respective Immovable Property which is the subject of a Property
Lease and with respect to which Partech, Unnisa or Proceda is a tenant or lessee
or has been granted a possessory interest (the "LEASED IMMOVABLE PROPERTY"), and
-------------------------
all conditions precedent to the obligation of Partech, Unnisa or Proceda to take
possession and continue to occupy all Leased Immovable Property have been
fulfilled.
(d) There is lawfully available to all the Leased Immovable Property,
through private easements and facilities or properly dedicated public easements
and facilities, all of the water, gas, sewer, electricity and telephone service
which are now being utilized and sufficient to allow Partech, Unnisa or Proceda,
as applicable, to continue to conduct their business as presently conducted by
them and, further, to engage in their respective businesses. All of the Leased
Immovable Property has reasonably suitable ingress and egress and each parcel of
Leased Immovable Property has reasonably suitable access to the existing paved
roads and other public rights of way, which access is not limited or restricted.
(e) The present use, occupancy and operation of the Immovable
Property, and all aspects of the improvements on and to the Immovable Property
(collectively, the "IMPROVEMENTS"), are in compliance in all material respects
------------
with all, and not in material violation of any, Laws and with all private
restrictive covenants of record, and the Sellers have no knowledge of any
proposed change to the applicable Laws or the private restrictive covenants of
record that would affect any of the Immovable Property or its use, occupancy or
operation. There exist no conflicts or disputes with any Government or Person
relating to any Immovable Property or the activities on the Immovable Property.
All Improvements are in good condition and repair, ordinary wear and tear
excepted, suited for the operation of the business of Partech, Unnisa or
Proceda, as applicable.
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5.15 INTELLECTUAL PROPERTY RIGHTS.
(a) The Disclosure Memorandum sets forth a list of (i) all patents,
patent applications and registrations, trademarks, trademark applications and
registrations, copyright applications and registrations, trade names and
industrial designs, service marks and service mark applications, Brazilian or
foreign, owned or used by Partech, Unnisa or Proceda in or otherwise relating to
the operation of their respective businesses, (ii) all trade secrets, know-how,
inventions and other intellectual property, owned or used by Partech, Unnisa or
Proceda relating to the operation of their respective businesses; and (iii) all
computer systems and application software, including without limitation, all
documentation relating to the computer systems and application software, and the
latest revisions of all related object and source codes therefor, owned or used
by Partech, Unnisa or Proceda, in or otherwise relating to the operation of
their respective businesses (collectively, the "PROPRIETARY RIGHTS"). Partech,
------------------
Unnisa or Proceda, as applicable, owns the entire right, title and interest in
and to all of their respective Proprietary Rights, free and clear of any and all
Liens. None of Partech, Unnisa or Proceda has granted any license to any third
party with relation to any of the Proprietary Rights.
(b) There is no existing or, to the best knowledge of either Seller,
threatened, challenge to the use by Partech, Unnisa or Proceda of any of their
respective Proprietary Rights, and the use of the Proprietary Rights does not
infringe on the rights of any third party. Except as indicated in the
Disclosure Memorandum, no royalty or other fee is required to be paid by
Partech, Unnisa or Proceda to any Person in respect of the use of any of the
Proprietary Rights.
(c) The conduct of the businesses of Partech, Unnisa or Proceda and
the use of their Proprietary Rights do not infringe, and none of Partech, Unnisa
or Proceda has received any notice, complaint, threat or claim alleging
infringement of, any patent, trademark, trade name, copyright, industrial
design, trade secret or any other intellectual property or proprietary right of
any Person.
(d) To the best knowledge of each Seller and Partech and except as
disclosed in any Contract in respect of Proprietary Rights, there are no rights
of third parties with respect to any patent, patent application, invention,
know-how, copyrights, trademark, service mark, trade secrets, trade name,
computer system, application software or device, or other intellectual property
right which would have an adverse effect on the operations or prospects of
Partech, Unnisa or Proceda.
5.16 CONTRACTS. The Disclosure Memorandum contains a list of all written
and oral material agreements, commitments and arrangements to which Partech,
Unnisa or Proceda is a party or under which Partech, Unnisa or Proceda has any
rights or obligations (collectively, the "CONTRACTS"), including without
---------
limitation any Contracts pursuant to which any of Partech, Unnisa or Proceda
acquired or had developed any rights in or to any Proprietary Rights. Sellers
have, prior to the date of this Agreement, delivered to Equifax a true, correct
and complete copy of each written Contract and a true, correct and
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complete summary of each oral Contract. None of the Contracts, individually or
together, constitute an unlawful restraint of trade under any applicable Law.
All obligations to be performed by Partech, Unnisa or Proceda as of the date of
this Agreement under all Contracts to which any of them is a party have been
performed in accordance with their terms and no claim exists in respect of the
Contracts. None of Partech, Unnisa or Proceda is a party to any agreement or
commitment which will likely result in a material loss to Partech, Unnisa or
Proceda, as applicable, upon completion of performance or which cannot readily
be fulfilled or performed by Partech, Unnisa or Proceda, as applicable, in
accordance with its terms without undue or unusual expenditures of money or
effort, it being understood that neither Sellers nor Partech, Unnisa nor Proceda
shall be held responsible for any damages or losses arising as a result of
either Unnisa or Proceda or their respective customers or suppliers not being
Year 2000 Compliant. For purposes of this SECTION 5.16, "Year 2000 Compliant"
shall mean the ability to (1) process transactions up to, on, or after, and (2)
process transactions in respect of date up to, on, or after, January 1st, 2000,
without any degredation in or failure in the services currently provided by
Partech, Unnisa or Proceda. All of the Contracts are valid, binding and
enforceable in accordance with their terms, and are in full force and effect;
there are no existing defaults by Partech, Unnisa or Proceda under any of their
respective Contracts and no event has occurred which would constitute a default
(whether with or without notice, lapse of time or the happening or occurrence of
any event) under any Contract; and all parties to any Contract have consented
(where any relevant consent is necessary) to the consummation of the
transactions contemplated by this Agreement without requiring modification in
the rights or obligations of Partech, Unnisa or Proceda. The terms and
conditions under which either Unnisa or Proceda, as appropriate, provides
services under any Customer Agreement, including without limitation any services
to * * * are as set forth in the Disclosure Memorandum and those agreements as
described in and attached to the Disclosure Memorandum set forth as of the date
of this Agreement and as of the Closing Date the full agreement and
understanding with Unnisa or Proceda, as appropriate.
5.17 INSURANCE. Partech, Unnisa and Proceda are the sole owners of the
insurance policies as set forth in the Disclosure Memorandum, which policies
insure the assets, properties and businesses of Partech, Unnisa and Proceda, as
applicable, against the types of risks and in the amounts as are customary in
the geographies in which Partech, Unnisa and Proceda conduct their respective
businesses, and all relevant policies are in full force and effect. All
premiums due on any relevant policies have been paid, and none of Partech,
Unnisa or Proceda has received any notice of cancellation or non-renewal with
respect to any insurance policy. As of the date of this Agreement, none of
Partech, Unnisa or Proceda has any Liability for premiums or retrospective
premium adjustments for any period prior to the date of this Agreement. The
Disclosure Memorandum also lists and describes all material occurrences or facts
that may form the basis for a claim by or on behalf of Partech, Unnisa or
Proceda under any insurance policy; and each of Partech, Unnisa or Proceda, as
applicable, has timely given notice of
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all relevant occurrences to the appropriate insurer and has not waived (either
intentionally or inadvertently) its right to make the related claim under any
relevant insurance policy.
5.18 LITIGATION; CONTINGENCIES. Except as indicated in the Disclosure
Memorandum, there are no Actions existing or, to the knowledge of either Seller
or Partech, threatened against, by or affecting Partech, Unnisa or Proceda, the
property, business, revenues or assets of Partech, Unnisa or Proceda, in any
Forum, nor is there any basis for any Actions, nor do there exist any other
contingent liabilities, the eventual outcome of which might have an adverse
effect on Partech, Unnisa or Proceda after the date of this Agreement, or which
would prevent or impede the transactions contemplated by this Agreement. None
of Partech, Unnisa or Proceda has been charged with, or is under investigation
with respect to, any charge concerning any violation of any provision of any
Law. There are no unsatisfied judgments against Partech, Unnisa or Proceda or
any of Partech's, Unnisa's or Proceda's predecessors or any other Order to which
either Seller, Partech, Unnisa or Proceda, or any of Partech's, Unnisa's or
Proceda's assets or properties are subject.
5.19 TAXES. All Taxes (including without limitation, all income, property,
sales or use, customs, value added, ad valorem, withholding, employees' income
withholding and public welfare taxes, including social contribution,
unemployment fund ("FGTS"), social security contributions ("INSS") and all other
---- ----
taxes imposed on Partech, Unnisa or Proceda or their respective income,
properties, sales, operations or employee benefit plans), and all deposits in
connection with any of Taxes required by applicable Brazilian Law imposed by any
Brazilian Government, or to the knowledge of Sellers and Partech, those under
any other applicable Law imposed by any other Government and all interest on the
Taxes and penalties and additions to any Taxes, which are due and payable by
Partech, Unnisa or Proceda for all periods through the date of this Agreement
have been paid in full, other than for Taxes the legality of which is being
contested in good faith and described in the Disclosure Memorandum, and reserves
and accruals in accordance with GAAP for all other Taxes, whether or not
disputed, have been properly recorded in the Financial Statements or, in the
case of periods subsequent to the dates of the latest Financial Statements, on
the books and records of Partech, Unnisa or Proceda, as appropriate. All Taxes,
if any, due and payable in respect of the transactions contemplated by this
Agreement have been, or will be, paid by each Seller, as appropriate, as and
when due, without any contribution by or Liability to Partech, Unnisa, Proceda
or Equifax, regardless of when, how or to or against whom assessed. From and
after the date of this Agreement, Partech, Unnisa or Proceda will duly file all
returns and reports with respect to Taxes, and will pay all Taxes as and when
the Taxes become due and payable. There is not now any proposed or outstanding
assessment or adjustment against Partech, Unnisa or Proceda of additional Taxes
of any kind. Partech, Unnisa and Proceda have duly filed all required national,
state, municipal, local and foreign tax returns and reports (including without
limitation, returns for estimated tax), and all returns and reports of all other
Governments having jurisdiction, with respect to all Taxes; all relevant returns
and reports show the correct and proper amount due; and all required Taxes shown
on relevant returns or reports and except as indicated in the Disclosure
Memorandum, all assessments
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received by Partech, Unnisa or Proceda have been paid to the extent that the
Taxes, or any estimates of any Tax Liability, have become due. Except as
indicated in the Disclosure Memorandum, there are no significant Governmental
Tax audits or inquiries presently being conducted with respect to, Partech,
Unnisa or Proceda. There have been no waivers of the applicable statutory period
of limitation for any Taxes for any taxable period. None of Partech, Unnisa or
Proceda is a party to any Tax sharing or Tax allocation agreement,
understanding, arrangement or commitment. Except as indicated in the Disclosure
Memorandum, there is no material dispute or Action concerning any Tax Liability
of Partech, Unnisa or Proceda claimed or raised by a Government.
5.20 EMPLOYMENT AND LABOR MATTERS.
(a) Except as indicated in the Disclosure Memorandum, none of Partech,
Unnisa or Proceda is a party to any collective bargaining agreement or agreement
of any kind with any union or labor organization, and no union or other employee
bargaining group or organization has been certified or recognized by Partech,
Unnisa or Proceda as representing any employee, nor, to the knowledge of either
Seller, is a union or other labor organization or employee group or organization
seeking recognition for any similar purpose, and there are no controversies
pending, or to the knowledge of either Seller, threatened against Partech,
Unnisa or Proceda and any labor union or collective bargaining unit
representing, or seeking to represent, any of its employees, and there has been
no attempt by any union or other employee group or organization to organize any
employees of Partech, Unnisa or Proceda at any time in the past five years.
Each of Partech, Unnisa and Proceda has complied with all applicable Laws
relating to wages, hours, health and safety, payment of social security
withholding and other taxes, maintenance of workers' compensation insurance,
labor and employment relations, and employment discrimination.
(b) Except as expressly provided for in this Agreement or indicated in
the Disclosure Memorandum or required by law, none of Partech, Unnisa or Proceda
is obligated to provide, directly or indirectly, any benefits for employees,
including any pension, bonus, medical insurance or other employee benefits under
any practice, agreement or Law. The Disclosure Memorandum fully and accurately
describes the terms of each employee benefit program or plan maintained by or
contributed by or on behalf of Partech, Unnisa or Proceda that covers any
employees or former employees of Partech, Unnisa or Proceda (an "EMPLOYEE
--------
BENEFIT PLAN"). Except as indicated in the Disclosure Memorandum, no Action is
- ------------
existing or to the knowledge of any Seller anticipated with respect to any
Employee Benefit Plan nor with respect to any government-sponsored program of a
similar nature to which Partech, Unissa or Proceda is required to contribute, as
to which action any of said companies is alleged to have any liability. Each
Employee Benefit Plan has been administrated in compliance with all applicable
Laws and all required filings and contributions have been made. No Employee
Benefit Plan has at any time been involved in any transaction which will cause
Partech, Unnisa or Proceda to lose a favorable tax position taken with respect
to any Employee Benefit Plan. All payments to be made under or pursuant to any
Employee Benefit Plan have been made or a sufficient reserve has
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been accrued in the Financial Statements or in the relevant books and records
for all relevant periods, and each Employee Benefit Plan is fully funded in an
amount necessary to discharge Partech's, Unnisa's or Proceda's obligations under
or in connection with each Employee Benefit Plan.
(c) The Disclosure Memorandum lists all reasonably anticipated
pension, social and health obligations (including, without limitation,
retirement premiums) of Partech, Unnisa or Proceda.
5.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. None of AG Telecom, AG Parent,
Socma, Partech, Unnisa or Proceda, or any of their Affiliates, or any of their
respective officers, directors, employees, agents, nor any other Person acting
on any of their behalf has, directly or indirectly, within the past five years
given or agreed to give any gift or similar benefit to any Government employee
or other Person who is or may be in a position to help or hinder the business of
Partech, Unnisa or Proceda (or to assist Partech, Unnisa or Proceda in
connection with any actual or proposed transaction) which (a) might subject
Partech, Unnisa, Proceda or Equifax or any of Equifax's Affiliates, or any of
Equifax's or its Affiliates' directors, officers, employees or agents, to any
damage or penalty in any civil, criminal or Governmental Action, (b) if not
given in the past, might have had an adverse effect on the business or
operations of Partech, Unnisa or Proceda, or (c) if not continued in the future,
might adversely affect the business, operations, cash flows or prospects of
Partech, Unnisa or Proceda, or which might subject Partech, Unnisa, Proceda or
Equifax, or any of their respective directors, officers, employees, agent or any
other Person to suit or penalty in any private or Governmental Action, including
without limitation any suit or penalty under or pursuant to the United States
Foreign Corrupt Practices Act.
5.22 BOOKS AND RECORDS. Except as indicated in the Disclosure Memorandum,
the books, records and accounts of Partech, Unnisa or Proceda (a) have been
maintained at Partech's, Unnisa's or Proceda's, as appropriate, principal place
of business in accordance with good business practices on a basis consistent
with prior years, (b) are stated in reasonable detail and accurately and fairly
reflect the transactions of Partech, Unnisa and Proceda and dispositions of the
assets of Partech, Unnisa and Proceda, and (c) accurately and fairly reflect the
basis for the Financial Statements. Partech, Unnisa and Proceda have devised and
maintained systems of internal accounting controls sufficient to provide
reasonable assurances that (x) transactions are executed in accordance with
management's general or specific authorization, and (y) transactions are
recorded as necessary (i) to permit preparation of financial statements in
conformity with GAAP and (ii) to maintain accountability for assets.
5.23 AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES. Except as
indicated in the Disclosure Memorandum, none of Partech, Unnisa or Proceda is,
directly or indirectly, a party to any contract, agreement, or lease, or any
other arrangement with or commitment to, in each case whether oral or written,
any Related Party. Except as indicated in the Disclosure Memorandum, no Related
Party, directly or indirectly, owns
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or controls any assets or properties which are or have been used in Partech's,
Unnisa's or Proceda's businesses, and no Related Party, directly or indirectly,
engages in or has any significant interest in or in connection with any business
(x) which is or which within the last three years has been a competitor,
customer or supplier of Partech, Unnisa or Proceda or has done business with
Partech, Unnisa or Proceda, or (y) which as of the date of this Agreement sells
or distributes products or services which are similar or related to the products
or services of Partech, Unnisa or Proceda. As used in this Agreement, the term
"RELATED PARTIES" means, collectively, (a) any Person owning, or formerly
---------------
owning, beneficially or of record, directly or indirectly, any of the shares or
quotas of, or other rights or interests, in Partech, Unnisa or Proceda or any of
their Affiliates, (b) any director, officer, employee, agent, shareholder or
quotaholder of Partech, Unnisa or Proceda, (c) any Person in which any of the
foregoing Parties has, directly or indirectly, at least a five percent (5.0%)
beneficial interest in the capital or other type of equity interests of that
Person, or (d) any partnership in which Partech, Unnisa or Proceda is a partner.
5.24 NO AGREEMENT IN ANTICIPATION OF SALE. None of Partech, Unnisa,
Proceda, AG Telecom, Socma or AG Parent has, directly or indirectly, taken any
action or actions or entered into any agreements in anticipation of this
Agreement. The consummation of the transactions contemplated by this Agreement
will not entitle any employee of Partech, Unnisa or Proceda to severance pay nor
will it accelerate the time of payment, vesting or increase the amount of any
compensation or benefits due to any employee of Partech, Unnisa or Proceda.
5.25 GOVERNMENT REPORTS. The Disclosure Memorandum contains a true,
correct and complete list of, and Sellers have prior to the date of this
Agreement delivered to Equifax, true, correct and complete copies of, all Tax
returns and all material reports relating to any Employee Benefit Plan, finance
and monetary transactions, employees and employment conditions, compliance with
or violation of Law, and other matters material to the businesses of Partech,
Unnisa or Proceda filed or issued during the past five years, by Partech,
Unnisa, Proceda, AG Telecom or Socma with any Government and relating to
Partech's, Unnisa's or Proceda's respective business.
5.26 BANKING RELATIONSHIPS. The Disclosure Memorandum sets forth a
complete and accurate description of all arrangements that Partech, Unnisa or
Proceda has with any banks or other financial institutions providing for
accounts, safe deposit boxes, borrowing arrangements, and certificates of
deposit or otherwise, indicating in each case account numbers, if applicable,
and the person or persons authorized to act or sign on behalf of Partech, Unnisa
or Proceda in respect of any of the foregoing.
5.27 CUSTOMERS AND SUPPLIERS. None of AG Telecom, Socma, Partech,
Unnisa or Proceda is aware: (a) of any supplier or customer of Partech, Unnisa
or Proceda which intends to discontinue or substantially diminish or change its
relationship with Partech, Unnisa or Proceda or the terms of its relationship
with Partech, Unnisa or Proceda, (b) of any supplier of Partech, Unnisa or
Proceda which intends to increase prices or charges for goods or services
presently supplied, or (c) of any supplier of Partech, Unnisa or Proceda
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which is likely to become unable to continue its relationship with Partech,
Unnisa or Proceda, or supply the goods or services which it presently supplies
Partech, Unnisa or Proceda, without significant change in the terms and
conditions to any relevant relationship or supply arrangement.
5.28 PENDING LEGISLATION. Neither of Sellers nor any of Partech, Unnisa or
Proceda has any knowledge of or has received any notice of new or pending
legislation, regulations, rules, guidelines, administrative interpretations or
enforcement positions that, if enacted or adopted, would materially affect the
ability of Partech, Unnisa or Proceda to satisfactorily carry on their business
as presently conducted or as planned to be conducted, or the operations, cash
flows, affairs, prospects, properties or assets, or the condition, financial or
otherwise, of Partech, Unnisa or Proceda.
5.29 ABSENCE OF CHANGES. Except as expressly provided for in this
Agreement or indicated in the Disclosure Memorandum, since December 31, 1997
(the "REFERENCE DATE"):
--------------
(1) there has been no change in the business, assets, properties,
Liabilities, affairs, results of operations condition (financial or otherwise),
or cash flows of Partech, Unnisa or Proceda or in their respective relationships
with suppliers, customers, employees, prospective suppliers or customers,
lessors, lenders or others, other than changes in the ordinary course of
business, none of which have had or will have a material adverse effect on
Partech, Unnisa or Proceda, as applicable;
(2) there has been no damage, destruction or loss to the assets,
properties, or business of Partech, Unnisa or Proceda, whether or not covered by
insurance;
(3) the businesses of Partech, Unnisa and Proceda, as applicable, have
been operated in the ordinary course and consistent with their respective prior
practices;
(4) the books, accounts and records of Partech, Unnisa and Proceda
have been maintained in the usual, regular and ordinary manner on a basis
consistent with prior years and in accordance with GAAP;
(5) there has been no declaration, setting aside or payment of any
dividend or other distribution on or in respect of the stock, quotas or capital
of Partech, Unnisa or Proceda, as applicable, nor has there been any direct or
indirect redemption, retirement, purchase or other acquisition of any of the
capital of Partech, Unnisa or Proceda;
(6) no Liability of Partech, Unnisa or Proceda has been discharged or
satisfied, other than in the ordinary course of business and consistent with
prior practice;
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(7) none of Partech, Unnisa or Proceda has discontinued or determined
to discontinue the sale of any material products or services previously sold by
Partech, Unnisa or Proceda, as applicable;
(8) there has been no Lien (other than Liens for current Taxes which
are not past due) created on or in the assets of Partech, Unnisa or Proceda;
(9) there has been no sale, transfer, lease or other disposition of
any material asset(s) of Partech, Unnisa or Proceda, except in the ordinary
course of their respective businesses, and no material debt to, or claim or
right of, Partech, Unnisa or Proceda has been executed, canceled, compromised,
waived or released;
(10) there has been no amendment, termination or waiver of, or any
notice of any amendment, termination or waiver of, any material right of
Partech, Unnisa or Proceda under any Contract or under any Permit from any
Government;
(11) none of Partech, Unnisa or Proceda has entered into any
agreement, contract, lease or license outside the ordinary course of business;
and
(12) none of Partech, Unnisa or Proceda has delayed or postponed the
payment of any accounts payable or other Liabilities outside the ordinary course
of business.
5.30 FULL DISCLOSURE. No representation, warranty, covenant or agreement of
or relating to Partech, Unnisa or Proceda contained in this Agreement, in the
Disclosure Memorandum, in any Additional Agreement, or in any other written
statement or certificate delivered by either Seller or Partech, pursuant to or
in connection with this Agreement or any Additional Agreement, or in connection
with the transactions contemplated in this Agreement or any Additional
Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained in this Agreement, the Disclosure Memorandum, any Additional
Agreement, or in any other written statement or certificate delivered by either
Seller or Partech, pursuant to this Agreement, the Disclosure Memorandum or any
Additional Agreement, not misleading. There is no fact known to either Seller or
Partech which materially and adversely affects, or in the future may materially
and adversely affect, the business, operations, cash flows, affairs, prospects,
properties or assets, or the condition, financial or otherwise, of Partech,
Unnisa, Proceda or the businesses to be conducted by Partech, Unnisa and Proceda
on and after the Closing Date, or their respective operations, cash flows,
affairs, prospects, properties or assets, which has not been disclosed in this
Agreement or the Disclosure Memorandum. The information contained in the
Disclosure Memorandum will be deemed to be part of and to qualify only those
representations and warranties contained in this ARTICLE 5 specifically
referenced in the Disclosure Memorandum.
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6. REPRESENTATIONS AND WARRANTIES RELATING TO THE AG GROUP
AG Telecom and AG Parent, jointly and severally, represent, warrant and
covenant to and with Equifax, as of the date hereof and again as of the Closing
Date, as follows:
6.1 EXISTENCE. AG Parent: (a) is a corporation ("SOCIEDADE ANONIMA"),
duly organized and registered and validly existing under the laws of Brazil, and
(b) is entitled to own or lease, or will own or lease, its assets and properties
and to carry on its business as and in the places where its business is
conducted and its assets and properties are owned or leased. AG Telecom: (a) is
a limited liability company ("SOCIEDADE POR QUOTAS DE RESPONSABILIDADE
LIMITADA"), duly organized and registered and validly existing under the laws of
Brazil, and (b) is entitled to own or lease, or will own or lease, its assets
and properties and to carry on its business as and in the places where its
business is conducted and its assets and properties are owned or leased.
6.2 CAPITALIZATION; OWNERSHIP OF EQUITY. AG Parent owns, directly or
indirectly, one hundred percent (100%) of the capital of AG Telecom. The
capital of AG Parent is owned beneficially and legally as set forth in EXHIBIT
N-1 to this Agreement. The capital of AG Telecom is owned beneficially and
legally as set forth in EXHIBIT N-2 to this Agreement.
6.3 AUTHORITY; INCONSISTENT OBLIGATIONS.
(a) Each of AG Parent and AG Telecom has the full right, power and
authority to execute and deliver and to perform and comply with this Agreement
and the Additional Agreements to which either of them is or will be a party. All
proceedings and actions required to be taken by either AG Parent and AG Telecom
to authorize the execution, delivery and performance of this Agreement and the
Additional Agreements to which it is a party have been taken. This Agreement,
and each Additional Agreement to which either of them is or will be a party,
have been, or in the case of any Additional Agreement will be at the Closing,
duly and validly executed and delivered by AG Parent or AG Telecom, as
appropriate, by its duly authorized officers or representatives. This Agreement
constitutes, and each Additional Agreement when executed and delivered will
constitute, the valid and legally binding obligation, subject to general equity
principles, of AG Parent and AG Telecom, as appropriate, enforceable in
accordance with its respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the rights of
creditors generally.
(b) Neither the execution and delivery of this Agreement or of the
Additional Agreements by either AG Parent or AG Telecom, nor the consummation of
the transactions contemplated by this Agreement or by any Additional Agreement,
will (i) result in a violation of the Articles of Association, Articles of
Incorporation or By-Laws of either AG Parent or AG Telecom, or on the date of
this Agreement or on the Closing Date any applicable Law or Order, (ii) violate
any Order or Law applicable to either AG Parent
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or AG Telecom, or (iii) result in a breach of, conflict with or default under,
any term or provision of any indenture, note, mortgage, bond, security
agreement, loan agreement, guaranty, pledge, or other instrument, contract,
agreement or commitment to which either AG Parent or AG Telecom is a party or by
which any of them or any of their respective assets, properties, or businesses
are subject or bound; nor will these actions result in (w) the creation of any
Lien on any of the Acquired Interests, Partech Quotas, Unnisa Quotas or Proceda
Shares, or any of the assets, properties, businesses, revenues or profits of AG
Parent or AG Telecom, (x) the acceleration or creation of any obligation of AG
Parent or AG Telecom, (y) the forfeiture of any material right or privilege of
AG Parent or AG Telecom, or (z) the forfeiture of any material right or
privilege of either AG Parent or AG Telecom that may affect its ability to
perform under this Agreement or any Additional Agreement.
6.4 NO VIOLATION; COMPLIANCE WITH LAWS. Neither AG Parent nor AG Telecom
is in default under or in violation of (a) its Articles of Association, Articles
of Incorporation or By-Laws, as appropriate, or (b) any material applicable
Order or Law, and each of AG Parent and AG Telecom has complied with all
applicable Laws, where the failure to so comply would have a material adverse
effect on AG Parent and its consolidated subsidiaries. Neither AG Parent nor AG
Telecom has received any notification of any asserted present or past failure by
either of AG Parent or AG Telecom to comply with any material Order or Laws,
where the asserted failure if determined adversely to AG Parent would have a
material adverse effect on AG Parent and it consolidated subsidiaries.
6.5 CONSENTS. The execution and delivery by AG Parent and AG Telecom of
this Agreement and the Additional Agreements to which either of them is to be a
party, the consummation of the transactions contemplated in this Agreement or
the Additional Agreements, and the performance by AG Parent or AG Telecom under
this Agreement or any Additional Agreement, as appropriate, do not (a) require
the consent, approval or action of, or any filing with or notice to, any
Government or other Person, other than for a notification filing to be made with
the Brazilian anti-trust authorities within fifteen (15) days after the Closing,
(b) require the consent or approval of AG Parent's or AG Telecom's shareholders
(except for those previously obtained), or (c) impose any other term, condition
or restriction on AG Parent, AG Telecom, Partech, Unnisa or Proceda pursuant to
any applicable Order or Law.
6.6 FINANCIAL STATEMENTS. Prior to the date of this Agreement, AG Parent
and AG Telecom have delivered to Equifax copies of the consolidated audited
financial statements of AG Parent and AG Telecom and its consolidated
subsidiaries and affiliates as of and for the periods ended December 31, 1995,
1996 and 1997 (together with the report thereon of the independent auditors
referenced therein (collectively, the "AG AUDITED FINANCIAL STATEMENTS"), and
-------------------------------
the consolidated unaudited financial statements of AG Parent and its
consolidated subsidiaries and affiliates as of and for the 6-month period ended
June 30, 1998 (the "AG UNAUDITED FINANCIAL STATEMENTS"; and together with the AG
---------------------------------
Audited Financial Statements, collectively, the "AG FINANCIAL STATEMENTS"), in
-----------------------
each case including a balance sheet, an income statement, a statement of changes
in
29
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shareholders equity, and a statement of changes in financial position, together
with any related schedules. The AG Financial Statements have been prepared from
the books and records of AG Parent and its consolidated subsidiaries and
affiliates and have been prepared in accordance with GAAP consistently applied
and present fairly the consolidated financial condition of AG Parent and its
consolidated subsidiaries and affiliates as at the respective dates of the AG
Financial Statements and the results of its respective operations, shareholders
equity and financial position for the periods then ended.
6.7 LITIGATION; CONTINGENCIES. There are no Actions existing or, to the
knowledge of either AG Parent or AG Telecom, threatened against, by or affecting
AG Parent or AG Telecom, the property, business, revenues or assets of AG Parent
or AG Telecom, in any Forum, nor is there any basis for any Actions, nor do
there exist any other contingent liabilities, the eventual outcome of which
might have a material adverse effect on AG Parent and its consolidated
subsidiaries after the date of this Agreement, or which would prevent or impede
the transactions contemplated by this Agreement. None of AG Parent or AG Telecom
has been charged with, or is under investigation with respect to, any material
charge concerning any violation of any provision of any Law. There are no
material unsatisfied judgments against AG Parent or AG Telecom or any of their
predecessors or any other material Order to which either AG Parent or AG
Telecom, or any of AG Parent's or AG Telecom's material assets or properties,
are subject.
6.8 FULL DISCLOSURE. No representation, warranty, covenant or agreement
of or relating to AG Parent or AG Telecom contained in this Agreement, in any
Additional Agreement, or in any other written statement or certificate delivered
by either AG parent or AG Telecom, pursuant to or in connection with this
Agreement or any Additional Agreement, or in connection with the transactions
contemplated in this Agreement or any Additional Agreement, contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained in this Agreement, any
Additional Agreement, or in any other written statement or certificate delivered
by either AG Parent or AG Telecom, pursuant to this Agreement or any Additional
Agreement, not misleading. There is no fact known to either AG Parent or AG
Telecom which materially and adversely affects, or in the future may materially
and adversely affect, the business, operations, cash flows, affairs, prospects,
properties or assets, or the condition, financial or otherwise, of Partech,
Unnisa, Proceda or the businesses to be conducted by Partech, Unnisa and Proceda
on and after the Closing Date, or their respective operations, cash flows,
affairs, prospects, properties or assets, which has not been disclosed in this
Agreement or the Disclosure Memorandum.
7. REPRESENTATIONS AND WARRANTIES RELATING TO THE SOCMA GROUP
Socma represents, warrants and covenants to and with Equifax, as of the
date hereof and again as of the Closing Date, as follows:
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7.1 EXISTENCE. Socma: (a) is a corporation ("SOCIEDAD ANONIMA"), duly
organized and registered and validly existing under the laws of Argentina, and
(b) is entitled to own or lease, or will own or lease, its assets and properties
and to carry on its business as and in the places where its business is
conducted and its assets and properties are owned or leased.
7.2 CAPITALIZATION; OWNERSHIP OF EQUITY. The capital of Socma is owned
beneficially and legally as set forth in EXHIBIT O to this Agreement.
7.3 AUTHORITY; INCONSISTENT OBLIGATIONS.
(a) Socma has the full right, power and authority to execute and deliver
and to perform and comply with this Agreement and the Additional Agreements to
which it is or will be a party. All proceedings and actions required to be taken
by Socma to authorize the execution, delivery and performance of this Agreement
and the Additional Agreements to which it is a party have been taken. This
Agreement, and each Additional Agreement to which Socma is or will be a party,
have been, or in the case of any Additional Agreement will be at the Closing,
duly and validly executed and delivered by Socma by its duly authorized officers
or representatives. This Agreement constitutes, and each Additional Agreement
when executed and delivered will constitute, the valid and legally binding
obligation, subject to general equity principles, of Socma, enforceable in
accordance with its respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the rights of
creditors generally.
(b) Neither the execution and delivery of this Agreement or of the
Additional Agreements by Socma, nor the consummation of the transactions
contemplated by this Agreement or by any Additional Agreement, will (i) result
in a violation of the Articles of Association, Articles of Incorporation or By-
Laws of Socma, or on the date of this Agreement or on the Closing Date any
applicable material Law or Order, (ii) violate any Order or Law applicable to
Socma, or (iii) result in a breach of, conflict with or default under, any term
or provision of any indenture, note, mortgage, bond, security agreement, loan
agreement, guaranty, pledge, or other instrument, contract, agreement or
commitment to which Socma is a party or by which any of them or any of their
respective assets, properties, or businesses is subject or bound; nor will these
actions result in (w) the creation of any Lien on any of the Acquired Interests,
Partech Quotas, Unnisa Quotas or Proceda Shares, or any of the assets,
properties, businesses, revenues or profits of Socma, (x) the acceleration or
creation of any obligation of Socma, (y) the forfeiture of any material right or
privilege of Socma, or (z) the forfeiture of any material right or privilege of
Socma that may affect its ability to perform under this Agreement or any
Additional Agreement.
7.4 NO VIOLATION; COMPLIANCE WITH LAWS. Socma is not in default under or
in violation of (a) its Articles of Association, Articles of Incorporation or
By-Laws, as appropriate, or (b) any material applicable Order or Law, and Socma
has complied with
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all applicable Laws, where the failure to so comply would have a material
adverse effect on Socma and its consolidated subsidiaries. Socma has not
received any notification of any asserted present or past failure by Socma to
comply with any material applicable Order or Laws, where the asserted failure if
determined adversely to Socma would have a material adverse effect on Socma and
its consolidated subsidiaries.
7.5 CONSENTS. The execution and delivery by Socma of this Agreement and
the Additional Agreements to which it is to be a party, the consummation of the
transactions contemplated in this Agreement or the Additional Agreements, and
the performance by Socma under this Agreement or any Additional Agreement, as
appropriate, do not (a) require the consent, approval or action of, or any
filing with or notice to, any Government or other Person, other than for a
notification filing to be made with the Brazilian anti-trust authorities within
fifteen (15) days after the Closing, (b) require the consent or approval of
Socma's shareholders (except for those previously obtained), or (c) impose any
other term, condition or restriction on Socma, Partech, Unnisa or Proceda
pursuant to any applicable Order or Law.
7.6 FINANCIAL STATEMENTS. Prior to the date of this Agreement, Socma has
delivered to Equifax copies of the consolidated audited financial statements of
Socma and its consolidated subsidiaries and affiliates as of and for the periods
ended January 31, 1996, 1997 and 1998 (together with the report thereon of Henry
Martin, Lisdero & Associates (collectively, the "SOCMA FINANCIAL STATEMENTS"),
--------------------------
in each case including a balance sheet, an income statement, a statement of
changes in shareholders equity, and a statement of changes in financial
position, together with any related schedules. The Socma Financial Statements
have been prepared from the books and records of Socma and its consolidated
subsidiaries and affiliates and have been prepared in accordance with GAAP
consistently applied and present fairly the consolidated financial condition of
Socma and its consolidated subsidiaries and affiliates as at the respective
dates of the Socma Financial Statements and the results of its respective
operations, shareholders equity and financial position for the periods then
ended.
7.7 LITIGATION; CONTINGENCIES. There are no Actions existing or, to the
knowledge of Socma, threatened against, by or affecting Socma, the property,
business, revenues or assets of Socma, in any Forum, nor is there any basis for
any Actions, nor do there exist any other contingent liabilities, the eventual
outcome of which might have a material adverse effect on Socma and its
consolidated subsidiaries after the date of this Agreement, or which would
prevent or impede the transactions contemplated by this Agreement. Socma has not
been charged with, or is under investigation with respect to, any material
charge concerning any violation of any provision of any Law. There are no
material unsatisfied judgments against Socma or any of its predecessors or any
other material Order to which Socma, or any of Socma's material assets or
properties, are subject.
7.8 FULL DISCLOSURE. No representation, warranty, covenant or agreement
of or relating to Socma contained in this Agreement, in any Additional
Agreement, or in any
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other written statement or certificate delivered by Socma, pursuant to or in
connection with this Agreement or any Additional Agreement, or in connection
with the transactions contemplated in this Agreement or any Additional
Agreement, contains or will contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements contained in this
Agreement, any Additional Agreement, or in any other written statement or
certificate delivered by Scoma, pursuant to this Agreement or any Additional
Agreement, not misleading. There is no fact known to Socma which materially and
adversely affects, or in the future may materially and adversely affect, the
business, operations, cash flows, affairs, prospects, properties or assets, or
the condition, financial or otherwise, of Partech, Unnisa, Proceda or the
businesses to be conducted by Partech, Unnisa and Proceda on and after the
Closing Date, or their respective operations, cash flows, affairs, prospects,
properties or assets, which has not been disclosed in this Agreement or the
Disclosure Memorandum.
8. REPRESENTATIONS AND WARRANTIES OF EQUIFAX
Equifax represents, warrants and covenants, as of the date hereof and again
as of the Closing Date, as follows:
8.1 ORGANIZATION. Each of EFX and ESA: (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia, U.S.A., and (b) is entitled to own or lease, or will own or lease, its
assets and properties and to carry on its business as and in places where the
business is conducted and the properties are owned or leased. Holdings: (a) is
a limited liability company ("SOCIEDADE POR QUOTAS DE RESPONSABILIDADE
LIMITADA"), duly organized and registered and validly existing under the laws of
Brazil, and (b) is entitled to own or lease, or will own or lease, its assets
and properties and to carry on its business as and in places where the business
is conducted and the properties are owned or leased. Acquisition: (a) is a
corporation ("SOCIEDADE ANONIMA"), duly organized and registered and validly
existing under the laws of Brazil, and (b) is entitled to own or lease, or will
own or lease, its assets and properties and to carry on its business as and in
places where the business is conducted and the properties are owned or leased.
8.2 AUTHORITY; NO INCONSISTENT AGREEMENTS. Each of EFX, ESA, Holdings
and Acquisition has full power and authority to make, execute and perform this
Agreement and the Additional Agreements and the transactions contemplated by
this Agreement and the Additional Agreements. This Agreement and all
transactions required under this Agreement to be performed by each of EFX, ESA,
Holdings and Acquisition have been duly and validly authorized and approved by
all necessary corporate action on their part. This Agreement has been duly and
validly executed and delivered on behalf of each of EFX, ESA, Holdings and
Acquisition by its duly authorized officers, and this Agreement constitutes the
valid and legally binding obligation of each of them, enforceable, subject to
general equity principles, in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws
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affecting the rights of creditors generally. Neither the execution and delivery
of this Agreement or any Additional Agreement, nor the consummation of the
transactions contemplated by this Agreement or any Additional Agreement, will
constitute a violation or breach of the articles of incorporation or by-laws or
other organizational document of any of them.
8.3 CONSENTS. The execution and delivery by EFX, ESA, Holdings and
Acquisition of this Agreement and each Additional Agreement to which any of them
is to be a party on the Closing Date, the consummation of the transactions
contemplated in this Agreement or in the Additional Agreements and the
performance by EFX, ESA, Holdings and Acquisition under this Agreement or any
Additional Agreement, as appropriate, do not: (a) require the consent, approval
or action or, or any filing with or notice to, any Government or other person,
other than for a notification filing to be made with the Brazilian anti-trust
authorities within fifteen (15) days after the Closing, or (b) the consent or
approval of EFX's, ESA's, Holdings' or Acquisition's shareholders or
quotaholders, except for those previously obtained.
9. CONDUCT OF BUSINESS PENDING CLOSING
Each of Sellers and Partech covenants and agrees that, except as may
otherwise be provided or permitted in this Agreement, without the prior written
consent of Equifax, between the date of this Agreement and the Closing Date:
9.1 BUSINESS IN THE ORDINARY COURSE. Each of Partech, Unnisa and
Proceda will conduct their respective businesses only in the ordinary and usual
course and consistent with prior practices.
9.2 NO MATERIAL CHANGES. Except as may be expressly permitted by this
Agreement, no action will be taken by either Seller, nor will either Seller
allow any of Partech, Unnisa or Proceda to take any action, which will
materially alter the organization, capitalization, or financial structure,
practices or operations of Partech, Unnisa or Proceda or their respective
businesses.
9.3 COMPENSATION. No increase will be made in the compensation payable
or to become payable to any director, officer, employee or agent of Partech,
Unnisa or Proceda and no bonus or profit sharing payment or other arrangement
(whether current or deferred) will be made to or with that director, officer,
employee or agent. No officer, director or employee will be hired, and no
consultant or agent will be retained, by Partech, Unnisa or Proceda at a salary
or fee in excess of R$65,000 (Sixty Five Thousand Brazilian reais) per annum.
9.4 EMPLOYEE BENEFIT PLANS. Each of Partech, Unnisa and Proceda will
continue the Employee Benefit Plans as they exist on the date hereof until the
Closing Date, and shall adopt no additional such plans nor amend the Employee
Benefit Plans
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during said period. Each of Partech, Unnisa and Proceda will make all
contributions required of them and shall withhold and transfer all employee
contributions required, according to the terms of the Employee Benefit Plans
during said period.
10. CONDITIONS TO OBLIGATIONS OF EQUIFAX
The obligations of Equifax under this Agreement are subject to the
fulfillment and satisfaction of each and every one of the following conditions
on or prior to the Closing, any or all of which may be waived in writing in
whole or in part by Equifax:
10.1 PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings taken in
connection with the consummation of the transactions contemplated in this
Agreement and the Additional Agreements and all documents and papers reasonably
required in connection with this Agreement and the Additional Agreements, will
be reasonably satisfactory to Equifax and its counsel, and Equifax and its
counsel will have timely received copies of the relevant documents and papers,
all in form and substance satisfactory to Equifax and its counsel, as reasonably
requested by Equifax or its counsel.
10.2 REPRESENTATIONS AND WARRANTIES. Subject to the exceptions and
supplemental information set forth in this Agreement, any Additional Agreement
or the Disclosure Memorandum, the representations and warranties contained in
this Agreement, the Additional Agreements and in any certificate, instrument,
schedule, agreement or other writing delivered by or on behalf of, or in respect
of, Sellers, the other members of the AG Group, the other members of the Socma
Group, Partech, Unnisa or Proceda in connection with the transactions
contemplated by this Agreement or the Additional Agreements will be true and
correct as of the date when made and will be deemed to be made again at and as
of the Closing Date and will be true and correct at and as of the Closing Date.
10.3 COMPLIANCE WITH COVENANTS AND CONDITIONS. Sellers, the other members
of the AG Group, the other members of the Socma Group, Partech, Unnisa and
Proceda Company will have performed and complied with all covenants, agreements
and conditions required by this Agreement to be performed or complied with prior
to or on the Closing Date.
10.4 CLOSING CERTIFICATES. Sellers, the other members of the AG Group,
the other members of the Socma Group, and Partech will have delivered to Equifax
certificates, executed by the appropriate officers or other Representative of
each party, dated as of the Closing, certifying in such detail as Equifax may
request as to the fulfillment and satisfaction of the conditions specified in
PARAGRAPHS 10.2 AND 10.3.
10.5 OPINION OF COUNSEL. Equifax will have received from (i) Tozzini
Freire Teixera e Silva, special Brazilian legal counsel for Partech, AG Telecom,
AG Parent and
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Socma, and (ii) Dr. Antonio Solsona and Dr. Gustavo Lombardo, general counselors
of Socma, a legal opinion, dated as of the Closing Date, in substantially the
forms set forth in EXHIBITS P-1 AND P-2, respectively, to this Agreement.
10.6 CONSENTS. Equifax will have received from any and all Persons and
Governments any and all relevant consents, authorizations and approvals as are
necessary for the consummation of the transactions contemplated by this
Agreement, and all notices required to be given to all Persons and Governments
will have been given and all applicable waiting periods will have expired.
10.7 NO INCONSISTENT REQUIREMENTS. No Action will have been commenced by
any Government or Person seeking to enjoin or prohibit the transactions
contemplated by this Agreement or any Additional Agreement.
10.8 NO INJUNCTION. No temporary restraining order, preliminary or
permanent injunction or other order by any court of competent jurisdiction which
prohibits the consummation of the transactions contemplated in this Agreement
will have been issued and remain in effect on the Closing Date; provided,
--------
however, that the Parties will use all reasonable efforts to have each and every
- -------
relevant order or injunction vacated or reversed prior to the Closing Date.
10.9 ADDITIONAL AGREEMENTS. Equifax will have received duly executed and
delivered execution counterpart originals of each Additional Agreement, in each
case signed by the relevant Persons.
10.10 PROCEDA AMENDMENT. Equifax shall have received a fully executed
counterpart original of a certain Amendment No. 3 to Shareholders Agreement (the
"PROCEDA AMENDMENT") in the agreed form attached to this Agreement as EXHIBIT Q.
-----------------
10.11 CUSTOMER AGREEMENTS, * * * CONSENT AND IP AGREEMENTS. Equifax shall
have received a copy of the fully executed * * * Consent, and to the extent
executed and delivered by the relevant Person, copies of any fully executed
Customer Agreement or IP Agreement.
10.12 MISCELLANEOUS. Equifax and its counsel will have received any and
all other opinions, certifications, documents, instruments and agreements from
the Sellers, Partech, Unnisa and Proceda, and their respective counsel, as
Equifax and its counsel may reasonably request.
11. CONDITIONS TO OBLIGATIONS OF THE SELLERS
The obligations of the Sellers under this Agreement are subject to the
fulfillment and satisfaction of each and every of the following conditions on or
prior to the Closing, any or all of which may be waived in whole or in part by
the Sellers:
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11.1 PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings taken in
connection with the consummation of the transactions contemplated in this
Agreement and the Additional Agreements and all documents and papers reasonably
required in connection with this Agreement and the Additional Agreements, will
be reasonably satisfactory to Sellers and their counsel, and Sellers and their
counsel will have timely received copies of the relevant documents and papers,
all in form and substance satisfactory to Sellers and their counsel, as
reasonably requested by Sellers or their counsel.
11.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in this Agreement, the Additional Agreements and in any certificate,
instrument, schedule, agreement or other writing delivered by or on behalf of,
or in respect of, Equifax in connection with the transactions contemplated by
this Agreement or the Additional Agreements will be true and correct as of the
date when made and will be deemed to be made again at and as of the Closing Date
and will be true and correct at and as of the Closing Date.
11.3 COMPLIANCE WITH COVENANTS AND CONDITIONS. Equifax will have
performed and complied with all covenants, agreements and conditions required by
this Agreement to be performed or complied with prior to or on the Closing Date.
11.4 CLOSING CERTIFICATES. Equifax will have delivered to Sellers
certificates, executed by the appropriate officers or other Representative,
dated as of the Closing, certifying in such detail as Sellers may request as to
the fulfillment and satisfaction of the conditions specified in PARAGRAPHS 11.2
AND 11.3.
11.5 RESOLUTIONS. Equifax will have delivered to the Sellers duly
adopted resolutions of the Board of Directors of ESA, Holdings and Acquisition,
certified by the Secretary or an Assistant Secretary or other appropriate
Person, dated the Closing Date, authorizing and approving the execution of this
Agreement by ESA, Holdings and Acquisition, and all other action necessary to
enable ESA, Holdings and Acquisition to comply with the terms of this Agreement
and each Additional Agreement to which it is a party.
11.6 CONSENTS. Each of the Sellers, other members of the AG Group and
the Socma Group, Partech, Unnisa and Proceda will have received from any and all
Persons and Governments any and all relevant consents, authorizations and
approvals as are necessary for the consummation of the transactions contemplated
by this Agreement, and all notices required to be given to all Persons and
Governments will have been given and all applicable waiting periods shall have
expired.
11.7 OPINION OF COUNSEL. The Sellers will have received from Kilpatrick
Stockton LLP and Mundie e Advogados, legal counsel to EFX, ESA, Holdings and
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Acquisition, as appropriate, a legal opinion, dated the Closing Date, in
substantially the form set forth in EXHIBITS R-1 AND R-2, respectively, to this
Agreement.
11.8 NO INCONSISTENT REQUIREMENTS. No Action will have been commenced
by any Government or Person seeking to enjoin or prohibit the transactions
contemplated by this Agreement or by any Additional Agreement.
11.9 NO INJUNCTION. No temporary restraining order, preliminary or
permanent injunction or other order by any court of competent jurisdiction which
prohibits the consummation of the transactions contemplated in this Agreement
will have been issued and remain in effect on the Closing Date; provided,
--------
however, that the Parties will use all reasonable efforts to have any and all
- -------
relevant order or injunction vacated or reversed.
11.10 ADDITIONAL AGREEMENTS. Each Seller will have received duly
executed and delivered counterpart execution originals of each Additional
Agreement.
11.11 EQUIFAX UNDERTAKING. Seller will have received a copy of a fully
executed counterpart of the Undertaking referred to in the Proceda Amendment.
12. INDEMNITIES
12.1 INDEMNIFICATION OF EQUIFAX. In accordance with and subject to the
further provisions of this ARTICLE 12, AG Telecom and AG Parent (jointly and
severally as between them) on the one hand, and Socma, on the other hand (each
of which is an "INDEMNITOR") will, severally but not jointly, indemnify and hold
----------
harmless Equifax and Equifax's Affiliates (which for purposes of ARTICLE 12 of
this Agreement does not include Partech, Unnisa or Proceda) and their respective
officers, directors, agents and employees (collectively, "INDEMNITEES"), from
-----------
and against and in respect of any and all loss, damage, Liability, cost and
expense, including reasonable attorneys' fees and amounts paid in settlement
(collectively, the "INDEMNIFIED LOSSES"), suffered or incurred by any one or
------------------
more of the Indemnitees by reason of, or arising out of:
(a) any misrepresentation, breach of warranty or breach or
nonfulfillment of any agreement of the Sellers, any other member of the AG
Group, any other member of the Socma Group, Partech, Unnisa or Proceda contained
in this Agreement, any Additional Agreement, or in any other certificate,
schedule, instrument or document delivered to Equifax by or on behalf of Sellers
or Partech pursuant to or in connection with the provisions of this Agreement or
any Additional Agreement;
(b) all liabilities and obligations of, or claims, demands or actions
against, Equifax or Equifax's Affiliates, Partech, Unnisa or Proceda of any
nature whatsoever, whether known or unknown, accrued, absolute, contingent or
otherwise, existing as of the date of this Agreement or at any time hereafter
relating to periods on or prior to the Closing Date, to the extent not reflected
in the relevant balance sheets or
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included in the Unaudited Financial Statements, including without limitation:
(i) any Tax liabilities (to the extent not so reflected or reserved against)
accrued in respect of, or measured by the income of, Partech, Unnisa or Proceda
for any period or portion of a period on or prior to the Closing Date or arising
out of transactions entered into or any state of facts existing on or prior to
the Closing Date; (ii) any claims or liabilities arising out of any act or
omission of Partech, Unnisa or Proceda or any of its directors, officers, agents
or employees or any claims or liabilities with respect to defective, or
allegedly defective, goods or services; or (iii) any claim or liability arising
out of a breach by Partech, Unnisa or Proceda of any Contract relating to any
period on or prior to the Closing Date allegedly defective, goods or services;
or (iii) any claim or liability arising out of a breach by Partech, Unnisa or
Proceda of any contract relating to any period on or prior to the Closing Date;
it being understood that, in no event whatsoever, none of AG Telecom, AG Parent
nor Socma shall be held responsible for any damages or losses arising as a
result of Unnisa or Proceda or their respective customers or suppliers not being
Year 2000 Compliant.
(c) the use of any Proprietary Rights, whether before or after the
Closing Date, and whether by Partech, Unnisa or Proceda, other than for the use
of any Proprietary Rights after the Closing Date not in compliance with any
related Contract;
(d) any and all Actions, suits, proceedings, claims, demands,
assessments, judgments, fees and expenses, incident to any of the foregoing or
incurred in investigating or attempting to avoid any Actions, suits,
proceedings, claims, demands, assessments, judgments, fees and expenses or to
oppose the imposition of any Actions, suits, proceedings, claims, demands,
assessments, judgments, fees and expenses, or in enforcing this Agreement in
connection with any breach or default or threatened breach or default by an
Indemnitor, including without limitation the provisions of this ARTICLE 12.
12.2 PAYMENT. Subject to the provisions of PARAGRAPH 12.3 below, (i)
after a final, non-appealable judgment has been rendered or a settlement has
been reached in respect of a third party claim or Action, or (ii) in the case
of a claim for Indemnified Losses arising other than pursuant to a third party
claim or Action, after the award of the Arbitral Body has been issued or a
settlement has been reached, Indemnitor shall reimburse the Indemnitees within
30 days of written demand on the Indemnitor for any amounts to which Indemnitees
are entitled to indemnification pursuant to this ARTICLE 12.
12.3 DEFENSE OF CLAIMS.
(a) Except as provided in PARAGRAPH 12.3(B), if any Action by a third
party arises after the date of this Agreement for which Indemnitor may be liable
under the terms of this Agreement, then the Indemnitees will notify Indemnitors
in accordance with the provisions of this ARTICLE 12, and will give Indemnitors
a reasonable opportunity:
(i) to conduct any proceedings or negotiations in connection with the
Action and necessary or appropriate to defend the Indemnitees;
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(ii) to take all other required steps or proceedings to settle or
defend any Action; and
(iii) to employ counsel reasonably acceptable to Indemnitees to
contest any Action in the name of the Indemnitees or otherwise.
The expenses of all proceedings, contests or lawsuits with respect to the
Actions will be borne by Indemnitors.
(b) If Indemnitors do not assume the defense of, or if after so
assuming the Indemnitors fail to defend, any Action, then the Indemnitees may
defend against any claim or Action in the manner they may deem appropriate and
the Indemnitees may settle any claim or Action on the terms they deem
appropriate, and Indemnitors will promptly reimburse the Indemnitees for the
amount of all expenses, legal and otherwise, reasonably and necessarily incurred
by the Indemnitees in connection with the defense against and settlement of any
claim or Action. If no settlement of any claim or Action is made, Indemnitors
will satisfy any judgment rendered with respect to any claim or in any Action,
before the Indemnitees are required to do so, and pay all expenses, legal or
otherwise, reasonably and necessarily incurred by the Indemnitees in the defense
of any claim or Action.
(c) If a judgment is rendered against any of the Indemnitees in any
Action covered by the indemnification under this Agreement, or any Lien in
respect of any judgment attaches to any of the assets of any of the Indemnitees
or Partech, Unnisa or Proceda, Indemnitors will immediately upon any entry or
attachment pay the relevant judgment in full or discharge the relevant Lien
unless, at the expense and direction of Indemnitors, an appeal is taken under
which the execution of the judgment or satisfaction of the Lien is stayed. If
and when a final judgment is rendered in any action, Indemnitors will forthwith
pay any judgment or discharge any Lien before any of the Indemnitees is
compelled to do so.
(d) Any notice required to be given to Indemnitors pursuant to
PARAGRAPH 12.3(A) shall be given no later than the latter of: (i) the end of the
first half of the term within which an answer or other response to the Action is
required to be made (the "ANSWER PERIOD") and (ii) two Business Days after
-------------
receipt by an Indemnitee of notice of the Action. Indemnitors shall assume the
defense of any Action, if at all, by notice to Indemnitees no later than the
earlier of: (i) the end of the second third of the Answer Period and (ii) three
Business Days prior to the date by which an answer or other response to the
Action is required to be made. Indemnitors' failure to notify Indemnitees within
the specified time shall be conclusively deemed an election by Indemnitors not
to assume such defense. Any failure by Indemnitees to give the requisite notice
within the time specified in this PARAGRAPH 12.3(D) will not relieve Indemnitors
of the obligation to indemnify Indemnitees pursuant to this ARTICLE 12 except to
the extent that the defense of any Action is materially prejudiced by the delay.
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(e) The Indemnitors or the Indemnitees, as appropriate, shall have
the right to participate in the defense of any Action related to an Indemnified
Loss at their sole cost and expense and the cost and expense of that
participation shall not be an Indemnified Loss. Notwithstanding anything
contained in this ARTICLE 12 to the contrary, Indemnitors may not settle any
claim or Action, without the prior approval of Indemnitees, which approval shall
not be unreasonably withheld, delayed or conditioned.
12.4 INDEMNIFICATION OF SELLERS BY EQUIFAX. Equifax will indemnify and
hold harmless Sellers, the AG Group and the Socma Group from and against and in
respect of any and all loss, damage, Liability, cost and expense, including
reasonable attorneys' fees and amounts paid in settlement suffered or incurred
by any one or more of them by reason of, or arising out of: (i) any
misrepresentation, breach of warranty or breach or nonfulfillment of any
agreement of Equifax contained in this Agreement or in any certificate,
schedule, instrument or document delivered to Sellers by or on behalf of Equifax
pursuant to the provisions of this Agreement or any Additional Agreement; and
(ii) any and all Actions, suits, proceedings, claims, demands, assessments,
judgments, fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid any Actions, suits, proceedings, claims,
demands, assessments, judgments, fees and expenses or to oppose the imposition
of any Actions, suits, proceedings, claims, demands, assessments, judgments,
fees and expenses, or in enforcing this Agreement, including without limitation
the provisions of this PARAGRAPH 12.4.
12.5 LIMITATION ON LIABILITY. Notwithstanding anything in this ARTICLE
12 to the contrary, in any case in which both the AG Group and the Socma Group
are liable with respect to the same Indemnified Losses, their liability shall
not be joint but shall instead be several and proportional to their respective
equity interests in Partech immediately prior to the Closing. The obligation of
the AG Group and the Socma Group to indemnify the Indemnitees shall be net of
any tax effects directly accruing to the Indemnitees directly related to the
Indemnified Losses. The AG Group and the Socma Group shall only be liable to
indemnify the Indemnitees in respect of Indemnified Claims once the aggregate
Indemnified Claims exceed R$ * * *, and only in respect of those Indemnified
Claims in excess of R$ * * *; provided, however, if the aggregate Indemnified
-------- -------
Claims exceed R$ * * *, the AG Group and the Socma Group shall reimburse
Indemnitees for the first R$ * * * of Indemnified Claims not previously
reimbursed.
12.6 NO CONTRIBUTION BY PARTECH, UNNISA OR PROCEDA. Partech, Unnisa or
Proceda will not have any Liability to either or both Sellers, or any other
member of either the AG Group or the Socma Group, as a result of any
misrepresentation or breach of representation or warranty by Partech, Unnisa or
Proceda contained in this Agreement, any Additional Agreement or any
certificate, schedule, instrument, agreement or other writing delivered by or on
behalf of, or in respect of, Partech, Unnisa or Proceda pursuant to this
Agreement, any Additional Agreement or in connection with the transactions
contemplated by this Agreement or any Additional Agreement, or the breach of any
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covenant or agreement of Partech, Unnisa or Proceda contained in this Agreement,
any Additional Agreement or any certificate, schedule, instrument, agreement or
other writing by or on behalf of, or in respect of, Partech, Unnisa or Proceda
pursuant to the terms of this Agreement or any Additional Agreement or in
connection with the transactions contemplated by this Agreement or any
Additional Agreement. Neither AG Telecom nor Socma, nor any other present or
future member of the AG Group or the Socma Group, will have any right of
indemnification or contribution against Partech, Unnisa or Proceda on account of
any event or condition occurring or existing prior to or on the date of this
Agreement or the Closing Date.
13. SURVIVAL.
13.1 SURVIVAL. The representations, warranties, covenants, agreements
and indemnities of the Parties contained in this Agreement or any Additional
Agreement, or in any writing delivered pursuant to the provisions of this
Agreement or any Additional Agreement, will survive any investigation prior, on
or subsequent to the date of this Agreement made by Equifax or its
Representatives and the consummation of the transactions contemplated in this
Agreement, any Additional Agreement or in any writing delivered pursuant to the
provisions of this Agreement or any Additional Agreement and will continue in
full force and effect for the periods specified below (the "SURVIVAL PERIOD"):
---------------
(a) representations and warranties relating to title and ownership of
quotas or shares in any of Partech, Unnisa or Proceda, corporate authorization,
organization, good standing and qualification; compliance with laws; fraud or
willful misrepresentation, and completeness of disclosure, will survive
indefinitely;
(b) representations and warranties relating to labor and employment
claims, employee benefit matters, and Taxes will survive until expiration of any
applicable statute or period of limitations, and any extensions of the
applicable statute or period of limitations; and
(c) all other representations, warranties, covenants, agreements and
indemnities will be of no further force and effect after the expiration of three
(3) years from the Closing Date;
Provided, however, that any claim for an Indemnified Loss presented in writing
- -------- -------
to the indemnifying party (together with any relevant supporting documentation)
in accordance with the terms of this Agreement within the Survival Period will
continue to be a valid claim until resolved.
42
<PAGE>
14. TERMINATION.
14.1 TERMINATION FOR CERTAIN CAUSES.
This Agreement may be terminated at any time prior to or on the
Closing Date by Equifax or by Sellers, upon written notice to the other as
follows:
(a) By Equifax, if (i) the results of its due diligence investigation
-------
of Partech, Unnisa and Proceda reveal Liabilities in excess of R$ * * *, which
Liabilities are not properly reflected in the Unaudited Financial Statements, or
(ii) there is an adverse change in the condition or value (financial or
otherwise) of any of Partech, Unnisa or Proceda, individually or in the
aggregate, or in their respective assets, properties, businesses, liabilities or
operations, in excess of R$ * * *.
(b) By Sellers, if the terms, covenants or conditions of this
-------
Agreement to be complied with or performed by Equifax at or before the Closing
Date will not have been complied with or performed and any noncompliance or
nonperformance will not have been waived by Sellers.
(c) By Sellers or by Equifax, if any Action will have been instituted
---------------------
or threatened against any party to this Agreement to restrain or prohibit, or to
obtain substantial damages in respect of, this Agreement or the consummation of
the transactions contemplated in this Agreement, which, in the reasonable and
good faith opinion of any party, makes consummation of the transactions
contemplated in this Agreement inadvisable.
14.2 PROCEDURE ON AND EFFECT OF TERMINATION.
(a) Pursuant to PARAGRAPH 14.1 of this Agreement, written notice of
termination will be given to all other Parties by the Party electing to
terminate, and this Agreement will terminate upon the giving of notice, without
further action by any of the Parties, with the consequence and effect set forth
in this PARAGRAPH 14.2.
(b) If for any reason on the Closing Date there has been
nonfulfillment of an undertaking by or covenant for Equifax or for AG Telecom
and Socma not waived in writing by or on behalf of the Party in whose favor the
undertaking or covenant runs, the Party in whose favor the undertaking or
covenant runs, in addition to any other right or remedy available to it for
breach or non-performance of this Agreement or any Additional Agreement, may
refuse to consummate the transactions contemplated by this Agreement without
Liability or obligation on its part whatsoever. Notwithstanding the foregoing,
the obligations of the Parties pursuant to PARAGRAPHS 4.3, 4.5, 4.6, 13.1, 14.1,
14.2 and 15.5 will survive any termination.
43
<PAGE>
15. MISCELLANEOUS.
15.1 NOTICES.
(a) All notices, demands or other communications required or permitted to be
given or made under this Agreement will be in writing and (i) delivered
personally, (ii) sent by an internationally recognized express courier service,
or (iii) sent by certified airmail, return receipt requested to the intended
recipient of the notice, demand or other communication at its address set forth
below. Any notice, demand or communication will be deemed to have been duly
given (x) immediately if personally delivered, (y) on the fourth Business Day
after delivery to an international express courier services, or (z) on the tenth
Business Day after delivery to the relevant postal service and in proving the
giving of any notice, demand or other communication, it will be sufficient to
show that the envelope containing the notice, demand or other communication was
duly addressed (as evidenced by the courier receipt). The addresses of the
Parties for purposes of this Agreement are:
If to Sellers:
If to Socma
Americana S.A.:
Balcarc 683
(1063) Capital Federal
Argentina
Tel. 54-1-346-5800
Fax 54-1-346-5911
Attn: * * *
c.c. * * *
If to AG Companies:
Av. Maria Coelho Aguiar, 215
Bloco D - 4o andar
Sao Paulo - SP
Brazil
Tel. 55-11-3741-8512
Fax 55-11-3741-3033
Attn. * * *
44
<PAGE>
in each case with a copy to:
Tozzini Freire Teixeira e Silva
Rua Libero
Badaro, 293 - 19 degrees Andar
CEP 01095-9000
Sao Paulo - SP - Brazil
Tel. 55-11-232-2100
Fax. 55-11-232-3100
Attn: * * *
If to Equifax: Equifax Inc.
11601 Roosevelt Boulevard
St. Petersburg, Florida 33716
United States of America
Attn: * * *
Executive Vice President and Group Executive
Equifax Inc.
1600 Peachtree Street
Atlanta, Georgia 30309
United States of America
Attn.: * * *
Corporate Vice President and General Counsel
With a copy to: Kilpatrick Stockton LLP
(which will not Suite 2800
constitute notice) 1100 Peachtree Street
Atlanta, Georgia 30309-4530
United States of America
Attn.: * * *
(b) Any Party may change the address to which notices, requests,
demands or other communications to the relevant Party will be delivered or
mailed by giving notice of the address change to the other Parties in the manner
provided in this Agreement.
15.2 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, and all of which will
constitute one and the same instrument.
45
<PAGE>
15.3 ENTIRE AGREEMENT. Except as expressly set forth to the contrary in
this PARAGRAPH 15.3, this Agreement and the Additional Agreements, together
supersede all prior discussions and agreements between the Parties with respect
to the subject matter of this Agreement and the Additional Agreements, including
without limitation the MOU, and this Agreement and the Additional Agreements
contains the sole and entire agreement among the Parties with respect to the
matters covered by this Agreement and the Additional Agreements.
Notwithstanding the immediately preceding sentence, (i) the Confidentiality
Agreement, shall survive the execution and delivery of this Agreement in
accordance with its terms and (ii) Sections 4.4, 4.5, 9.1 and 9.2 of the MOU
(the "SURVIVING MOU PROVISIONS") shall survive the execution and delivery of
------------------------
this Agreement; provided that should the transactions contemplated by this
--------
Agreement be consummated, the Confidentiality Agreement and the Surviving MOU
Provisions shall thereafter be null and void ab initio. This Agreement will not
be altered or amended except by an instrument in writing signed by or on behalf
of the Party entitled to the benefit of the provision against whom enforcement
is sought.
15.4 GOVERNING LANGUAGE. Notwithstanding the translation of this
Agreement into any other language, the official language of this Agreement is
the English language, which will be controlling. Each document, agreement,
instrument, statement, notice or other communication required or permitted to be
given in connection with this Agreement will be in the English language.
15.5 DISPUTE RESOLUTION.
(a) Any and all disputes (each, a "DISPUTED MATTER") arising out of
---------------
or in connection with the execution, interpretation, performance or
nonperformance of this Agreement will be arbitrated and settled by the
procedures established in this PARAGRAPH 15.5.
(b) Disputed Matters will be solely and finally settled by
arbitration, which will be conducted in New York, New York, U.S.A., by a panel
of three arbitrators, one of whom shall be selected by Equifax, one of whom
shall be selected by Sellers, and the third of who shall be selected by the
arbitrators selected by Equifax and Sellers. The arbitration procedure may be
initiated by any of the Parties by written notice to the other Party to the
Disputed Matter. Any notice will specify in reasonable detail the dispute being
submitted to arbitration. The Parties renounce all recourse to litigation and
agree that the award of the arbitrators will be final and subject to no judicial
review.
(c) The arbitrators will conduct the proceedings, including arguments
and briefs, in the English language and in accordance with the international
rules (the "RULES") of the American Arbitration Association ("ARBITRAL BODY");
----- -------------
provided that the provisions of this Agreement will prevail in the event of any
- --------
conflict between the Rules and the provisions of this Agreement. The
arbitrators will decide the issues submitted in accordance with the provisions
and commercial purposes of this Agreement, provided that
46
<PAGE>
all substantive questions of law will be determined under the laws of Brazil
(without regard to the principles of conflicts of laws of any relevant state and
country). All decisions of the arbitrators will be in writing and submitted to
the Parties, and will set forth findings of fact and conclusions of law.
(d) The Parties will facilitate the arbitration by: (i) making
available to one another and to the arbitrators for examination, inspection and
extraction all documents, books, records and personnel under their control if
determined by the arbitrators to be relevant to the Disputed Matter; (ii)
conducting arbitration hearings to the greatest extent possible on successive
days; and (iii) observing strictly the time periods established by the Rules or
by the arbitrators for submission of evidence or briefs.
(e) In the final award, the arbitrators will divide all costs, other
than fees of counsel, incurred in conducting the arbitration, in any manner as
the arbitrators deem just and equitable under the circumstances. Judgment on
the award of the arbitrators may be entered into by any court having
jurisdiction over the Party against whom enforcement of the award is being
sought.
(f) Each Party agrees that any award of the arbitrators against it
and on which judgment is entered may be executed against the assets of that
Party in any jurisdiction, including Brazil and the United States of America. By
execution of this Agreement, each Party irrevocably consents to the jurisdiction
of any court having jurisdiction over that Party for the purpose of enforcing
any award. Each of the Parties irrevocably consents to the service of process by
registered mail, postage prepaid, international express courier, or by personal
service within or without Argentina, Brazil or the State of Georgia or the State
of New York, to the fullest extent permitted by applicable Law. Each of the
Parties hereby irrevocably designates and appoints CSC Network, 375 Hudson
Street, 11th Floor, New York, New York, as its respective designee, appointee
and local agent to receive for and on behalf of that Person, service of process
in such respective jurisdictions in any arbitration, legal action or proceeding.
(g) Each Party irrevocably waives, to the fullest extent permitted by
law, any objection it may now or hereafter have to any suit, Action or
proceeding arising out of or relating to this Agreement that is brought in any
jurisdiction designated in the preceding subparagraph, and further irrevocably
waives any claim that any suit, Action or proceeding so brought has been brought
in an inconvenient forum.
(h) Notwithstanding any provision of this PARAGRAPH 15.5 to the
contrary, any Party will be entitled to seek injunctive and other equitable
relief in any court of competent jurisdiction to enforce the provisions of this
Agreement.
15.6 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and
will inure to the benefit of the Parties and their respective heirs, executors,
legal representatives, successors and assigns, but may not be assigned by any
Party without the written consent of all other Parties, except to an Affiliate.
47
<PAGE>
15.7 PARTIAL INVALIDITY AND SEVERABILITY. All rights and restrictions
contained in this Agreement may be exercised and will be applicable and binding
only to the extent that they do not violate any applicable laws and are intended
to be limited to the extent necessary to render this Agreement legal, valid and
enforceable. If any term of this Agreement, or part of this Agreement, not
essential to the commercial purpose of this Agreement will be held to be
illegal, invalid or unenforceable by a court of competent jurisdiction, it is
the intention of the Parties that the remaining terms of this Agreement, or part
of this Agreement, will constitute their agreement with respect to the subject
matter of this Agreement and all remaining terms, or parts of this Agreement,
will remain in full force and effect. To the extent legally permissible, any
illegal, invalid or unenforceable provision of this Agreement will be replaced
by a valid provision which will implement the commercial purpose of the illegal,
invalid or unenforceable provision.
15.8 WAIVER. Any term or condition of this Agreement may be waived at
any time by the Party which is entitled to the benefit of the term, but only if
the waiver is evidenced by a writing signed by the relevant Party. No failure
on the part of any Party to this Agreement to exercise, and no delay in
exercising any right, power or remedy created under this Agreement, will operate
as a waiver thereof, nor will any single or partial exercise of any right, power
or remedy by any Party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. No waiver by any Party to this
Agreement or any breach of or default in any term or condition of this Agreement
will constitute a waiver of or assent to any succeeding breach of or default in
the same or any other term or condition of this Agreement.
15.9 HEADINGS. The headings of particular provisions of this Agreement
are inserted for convenience only and will not be construed as a part of this
Agreement or serve as a limitation or expansion on the scope of any term or
provision of this Agreement.
15.10 NUMBER AND GENDER. Where the context requires, the use of the
singular form in this Agreement will include the plural, the use of the plural
will include the singular, and the use of any gender will include any and all
genders.
15.11 TIME OF PERFORMANCE. Time is of the essence.
16. CERTAIN DEFINITIONS; INDEX OF DEFINITIONS
16.1 CERTAIN DEFINITIONS. For purposes of this Agreement, the following
capitalized terms will have the meanings specified below (all terms used in this
Agreement which are not defined in this PARAGRAPH 16.1 but defined elsewhere in
this Agreement, will have for purposes of this Agreement the meanings set forth
elsewhere in this Agreement):
48
<PAGE>
"ACTION" will mean any action, suit, complaint, counter-claim, claim,
------
petition, set-off or administrative proceeding, whether at law, in equity or
otherwise, and whether conducted by or before any Government or other Person.
"ADDITIONAL AGREEMENTS" will mean, collectively, the Escrow Agreement,
---------------------
the Pledge Agreement, the Dividend Pledge, the Partech Quotaholders Agreement,
the Partech Articles, the Reorganization Agreement, the Trademark License
Agreement, each Guarantee, those writings, documents, agreements and instruments
identified on Exhibit S attached to this Agreement, and each other writing,
document, agreement or instrument which by its terms recites that it is an
"Additional Agreement" for purposes of this Agreement.
"AFFILIATE" of any Person will mean any other Person directly or
---------
indirectly controlling, controlled by, or under direct or indirect common
control with the former Person. A Person will be deemed to control another
Person if that Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise.
"AG GROUP" will mean AG Telecom, AG Parent and each Affiliate of AG
--------
Parent that executes and delivers an Additional Agreement, and "member of the AG
Group" will mean any one of them.
"ARTICLE" AND "PARAGRAPH" and like references are to this Agreement
------- ---------
unless otherwise specified, and all "EXHIBITS" are references to those attached
--------
to this Agreement and incorporated in this Agreement by this reference, unless
otherwise specified.
"BRAZIL" will mean the Federative Republic of Brazil.
------
"BUSINESS DAY" will mean any day other than a Saturday, a Sunday or a
------------
day on which commercial banks in either Atlanta, Georgia, United States of
America, Buenos Aires, Argentina, or Sao Paulo, Brazil, are required or
authorized to be closed.
"COMPANY LAW" will mean Law No. 6,404 dated December 15, 1976, as
-----------
amended, and where applicable, the Limitada Law of 1919, each being laws of
Brasil.
"CONFIDENTIALITY AGREEMENT" will mean a certain Mutual Confidentiality
-------------------------
Agreement, dated April 15, 1998, among EFX, Partech and the other signatories
thereto.
"FORUM" will mean any national, provincial, municipal, local or
-----
foreign court, governmental agency, administrative body or agency, tribunal,
private alternative dispute resolution system, or arbitration panel.
49
<PAGE>
"GAAP" will mean Brazilian generally accepted accounting principles,
----
consistently applied, as in effect from time to time.
"GOVERNMENT" will mean any national, provincial, state, municipal,
----------
local or foreign government or any ministry, department, commission, board,
bureau, agency, authority, instrumentality, unit, or taxing authority thereof.
"LAW" will mean all national, provincial, state, municipal, local or
---
foreign constitutions, statutes, rules, regulations, ordinances, acts, codes,
legislation, treaties, conventions and similar laws and legal requirements, as
in effect from time to time.
"LIABILITY" will mean any liability or obligation whether known or
---------
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated and whether due or to become due.
"LIEN" will mean any claim, mortgage, pledge, hypothecation, security
----
interest, encumbrance, lien or charge of any kind, or any rights of others,
however evidenced or created (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, or any lease
having a similar effect or result).
"MOU" will mean a certain Memorandum of Understanding, dated June 26,
---
1998, as the same has been or may be amended, modified and supplemented, among
EFX, Socma, AG Telecom and Partech.
"ORDERS" will mean all orders, writs, judgments, decrees, rulings and
------
awards of any Forum or Government.
"PARTIES" will mean the signatories to this Agreement, and a "PARTY"
------- -----
will mean any one of them.
"PERSON" will mean and include an individual, a partnership, a joint
------
venture, a corporation, a trust, an unincorporated organization, any legal or
juridical entity, the equivalent of any of the foregoing under any Law, and any
Government.
"R$ OR "BRAZILIAN REAIS" will mean the lawful currency of Brazil.
----------------------
"REPRESENTATIVE" of a Party will mean that Party's directors,
--------------
officers, partners, employees, agents, accountants, lenders, lawyers, investment
bankers, merchant bankers, and other financial or professional advisors or
consultants.
"SOCMA GROUP" will mean Socma and any Affiliate of Socma that executes
-----------
and delivers an Additional Agreement, and "member of the Socma Group" will mean
any one of them.
50
<PAGE>
"TAXES" will mean any taxes, levies, imposts, duties, fees,
-----
assessments, deductions, withholdings or other charges of whatever nature,
including without limitation income, gross receipts, excise, property, sales,
transfer, license, payroll, withholding, social security, and franchise taxes,
imposed or levied by Brazil, or any state, local or foreign Government, or by
any department, agency or other political subdivision or taxing authority
thereof or therein and all interests, penalties, additions to tax, and other
similar liabilities with respect to the Taxes and relating to any period on or
prior to the Closing Date.
"US$ OR "UNITED STATES DOLLARS" will mean the lawful currency of the
-----------------------------
United States of America.
16.2 INDEX TO DEFINITIONS. The definitions for the following defined
terms used in this Agreement can be found as follows:
<TABLE>
<CAPTION>
DEFINED TERM PARAGRAPH REFERENCE
------------- -------------------
<S> <C>
ABC................................................................. 1.1
ABC Subscribed Shares............................................... 1.1
ABC Subscription Price.............................................. 1.1
ABC Split-Up........................................................ 1.1
Accountants......................................................... 3.4(b)
Accounts Receivable................................................. 1.1
Acquired Interests.................................................. Preamble
Acquisition......................................................... Preamble
Acquisition Transaction............................................. Preamble
AG Audited Financial Statements..................................... 6.6
AG Financial Statements............................................. 6.6
AG Parent........................................................... Preamble
AG Telecom.......................................................... Preamble
AG Unaudited Financial Statements................................... 6.6
Answer Period....................................................... 12.3(d)
Arbitral Body....................................................... 15.5(c)
Audited Financial Statements........................................ 5.9
Closing............................................................. 3.1
Closing Balance Sheet............................................... 3.4(a)
Closing Date........................................................ 3.1
Computations........................................................ 3.4(a)
Contracts........................................................... 5.16
Customer Agreements................................................. 4.8
Disclosure Memorandum............................................... 5
Disputed Matter..................................................... 15.5(a)
Dividend Pledge..................................................... 3.5
EFX................................................................. Preamble
Employee Benefit Plan............................................... 5.20(b)
</TABLE>
51
<PAGE>
<TABLE>
<S> <C>
Equifax.................................................................. Preamble
ESA...................................................................... Preamble
Escrow Agreement......................................................... 3.4
Financial Statements..................................................... 5.9
FGTS..................................................................... 5.19
Guaranty................................................................. 3.5
Holdings................................................................. Preamble
Immovable Property....................................................... 5.14(a)
Improvements............................................................. 5.14(e)
Indebtedness............................................................. 3.4(d)
Indemnified Losses....................................................... 12.1
Indemnitees.............................................................. 12.1
Indemnitor............................................................... 12.1
INSS..................................................................... 5.19
IP Agreements............................................................ 4.10
Leased Immovable Property................................................ 5.14(c)
Net Working Capital...................................................... 3.4(d)
Offshore Affiliate....................................................... 2.1
Partech.................................................................. Preamble
Partech Articles......................................................... 3.5
Partech Closing Balance Sheet............................................ 3.4(a)
Partech Contracts........................................................ 3.15
Partech Quotaholders Agreement........................................... 3.5
Partech Quotas........................................................... 5.3(a)
* * * Consent............................................................ 4.9
Permits.................................................................. 5.7
Pledge Agreement......................................................... 3.5
Proceda.................................................................. Preamble
Proceda Amendment........................................................ 10.10
Proceda Closing Balance Sheet............................................ 3.4(a)
Proceda Shares........................................................... 5.3(e)
Property Leases.......................................................... 5.14(b)
Proprietary Rights....................................................... 5.15(a)
Reference Date........................................................... 5.29
Related Parties.......................................................... 5.23
Reorganization Agreement................................................. 3.5
Rules.................................................................... 15.5(c)
Seller................................................................... Preamble
Socma.................................................................... Preamble
Socma Audited Financial Statements....................................... 7.6
Socma Financial Statements................................................ 7.6
Socma Partech Interest.................................................... 2.1
Socma Unaudited Financial Statements...................................... 7.6
SPI Purchase Price........................................................ 2.1
Survival Period...........................................................13.1
</TABLE>
52
<PAGE>
<TABLE>
<S> <C>
Surviving MOU Provisions.................................................. 15.3
Trademark Agreement....................................................... 3.5
Unaudited Financial Statements............................................ 5.9
Unnisa.................................................................... Preamble
Unnisa Closing Balance Sheet.............................................. 3.4(a)
Unnisa Quotas............................................................. 5.3(c)
XYZ....................................................................... 2.2
XYZ Subscribed Shares..................................................... 2.2
XYZ Subscription Price.................................................... 2.2
XYZ Split-Up.............................................................. 2.2
Year 2000 Compliant....................................................... 5.16
</TABLE>
53
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement in three
(03) counterparts on September 8th, 1998, in the City and State of Sao Paulo,
Brazil, in the presence of two (02) witnesses.
EQUIFAX INC.
By:/s/ * * *
-------------------
* * *
EQUIFAX SOUTH AMERICA INC.
By:/s/ * * *
-------------------
* * *
EQUIFAX DO BRASIL HOLDINGS LTDA
By:/s/ * * *
----------------------------
P.U.P. PARTICIPACOES S.A.
By:/s/ * * *
----------------------------
ANDRADE GUTIERREZ
TELECOMMUNICACOES LTDA.
By:/s/ * * *
-----------------------
* * *
CONSTRUTORA ANDRADE
GUTIERREZ S.A.
By:/s/ * * *
-----------------------
* * *
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
54
<PAGE>
[SIGNATURES CONTINUED FROM PRECEDING PAGE]
SOCMA AMERICANA S.A.
By: * * *
--------------------------
* * *
PARTECH LTDA.
By: * * *
----------------------------------
* * *
By: * * *
----------------------------
* * *
Witnesses:
1. /s/ Edson Monti Bacha 2./s/ [SIGNATURE ILLEGIBLE]
---------------------- -------------------------
Name: * * * Name: * * *
RG: * * * RG: * * *
CIC: * * * CIC: * * *
55
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. SECTIONS 200.80 AND 240.24b-2.
*** INDICATES OMITTED MATERIAL THAT IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST FILED SEPARATELY WITH THE COMMISSION
EXHIBIT 10.1
MASTER AGREEMENT
FOR
OPERATIONS SUPPORT SERVICES
This Master Agreement is entered into as of January 1, 1998 (the "Effective
---------
Date"), between
----
1. International Business Machines Corporation, a New York corporation
("IBM"),
-----
AND
2. Equifax Inc., a Georgia corporation ("Equifax"), and constitutes a
-------
complete restatement and further amendment of that certain Agreement for Systems
Operations Services, dated April 20, 1993, as amended, between IBM (successor in
interest to Integrated Systems Solutions Corporation ("ISSC")) and Equifax (the
----
"1993 Agreement").
--------------
The Parties agree to the terms and conditions set forth in this Master
Agreement (including the forms of Exhibits and Schedules referenced in this
Master Agreement), and in each Transaction Document (including the Supplement
and Schedules referenced in each Transaction Document) executed by the Parties
referencing this Master Agreement. Each Transaction Document is incorporated
into this Master Agreement, and the several Transaction Documents and this
Master Agreement are herein collectively referred to as the "Agreement".
Signed for and on behalf of IBM:
INTERNATIONAL BUSINESS MACHINES CORPORATION
Signature: * 7/7/98
-------------------------------
Title: Vice President
---------------------------------
Signed for and on behalf of Equifax:
EQUIFAX INC.
Signature: * 7/7/98
-------------------------------
Title: Corporate Vice President
---------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. PURPOSE/STRUCTURE/TERM OF AGREEMENT................................... 1
1.1 Purpose of Agreement............................................ 1
1.2 Structure of Agreement.......................................... 2
1.3 Term of Agreement............................................... 3
1.4 Extension of Services........................................... 3
2. DEFINITIONS........................................................... 3
3. THE SERVICES.......................................................... 15
3.1 Obligation to Provide Services.................................. 15
3.2 Performance..................................................... 15
3.3 Disaster Recovery Services...................................... 16
3.4 Audits.......................................................... 16
3.5 Facilities and Data Center...................................... 17
3.6 Security........................................................ 18
3.7 Technology Refresh.............................................. 18
3.8 Software Licenses............................................... 18
3.9 Software Currency............................................... 20
3.10 * .......................................................... 20
3.11 Software - Substitutions and Additions.......................... 21
3.12 New Services.................................................... 21
3.13 Affiliates...................................................... 22
4. WARRANTIES/REPRESENTATIONS/COVENANTS.................................. 22
4.1 Work Standards.................................................. 22
4.2 Noninfringement................................................. 23
4.3 * ........................................................... 23
4.4 Authorization and Enforceability................................ 23
4.5 Disclaimer...................................................... 23
4.6 Regulatory Proceedings and Compliance with Laws................. 24
4.7 * ........................................................... 24
4.8 Covenant of Cooperation and Good Faith.......................... 24
5. TRANSITION............................................................ 24
5.1 Transition Plan................................................. 24
5.2 Affected Employees.............................................. 25
5.3 Resources and Facilities........................................ 25
6. INTEGRATED PLANNING TEAM/CHANGE CONTROL PROCESS....................... 26
6.1 Equifax/IBM Integrated Planning Team............................ 26
6.2 Reports/Projections/Plans....................................... 27
</TABLE>
<PAGE>
<TABLE>
<S> <C>
6.3 Change Control Process........................................... 28
7. SERVICES STAFFING/MANAGEMENT/ADMINISTRATION........................... 29
7.1 Project Executives.............................................. 29
7.2 Replacement of Personnel........................................ 29
7.3 Retention of Experienced Personnel.............................. 30
7.4 Efficient Use of Resources...................................... 30
8. RELATIONSHIP PROTOCOLS................................................ 30
8.1 Evolving Nature of Relationship................................. 30
8.2 Required Consents............................................... 31
8.3 Appointment as Attorney In Fact................................. 33
8.4 Conflicts of Interests.......................................... 34
8.5 Alternate Providers............................................. 34
8.6 Use of Subcontractors........................................... 35
8.7 Equifax Approvals and Notification.............................. 36
9. CHARGES/NEW SERVICES/INVOICES/PAYMENTS................................ 36
9.1 Disbursements................................................... 36
9.2 Monthly Charge.................................................. 36
9.3 Additional Charges.............................................. 37
9.4 Cost of Living Adjustment....................................... 37
9.5 Taxes........................................................... 37
9.6 New Services.................................................... 38
9.7 Invoice Payment................................................. 38
9.8 * ........................................................... 38
9.9 * ........................................................... 39
9.10 Other Credits................................................... 40
9.11 * ........................................................... 40
9.12 Disputed Charges/Credits........................................ 40
9.13 Reduction of Equifax Work....................................... 41
10. INTELLECTUAL PROPERTY RIGHTS.......................................... 41
10.1 Ownership of Materials.......................................... 41
10.2 Obligations Regarding Materials................................. 42
11. CONFIDENTIALITY/DATA SECURITY......................................... 43
11.1 Confidential Information........................................ 43
11.2 Obligations..................................................... 43
11.3 Exclusions...................................................... 44
11.4 Loss of Company Information..................................... 44
11.5 Limitation...................................................... 45
11.6 Data............................................................ 45
12. TERMINATION........................................................... 45
12.1 Termination By Equifax.......................................... 45
12.2 Termination by IBM.............................................. 46
12.3 Termination Charges............................................. 46
</TABLE>
<PAGE>
<TABLE>
<S> <C>
12.4 [Reserved]..................................................... 47
12.5 Services Transfer Assistance................................... 47
12.6 Other Rights Upon Termination.................................. 48
12.7 Effect of Termination/Survival of Selected Provisions.......... 49
13. LIABILITY............................................................. 49
13.1 Liability Caps................................................. 49
13.2 Exclusions..................................................... 50
13.3 Direct Damages and Cover Charges............................... 50
13.4 Dependencies................................................... 51
13.5 Remedies....................................................... 51
14. INDEMNITIES........................................................... 51
14.1 Indemnity by IBM............................................... 51
14.2 Indemnity by Equifax........................................... 53
14.3 Employment Actions............................................. 54
14.4 Exclusive Remedy............................................... 55
14.5 Indemnification Procedures..................................... 55
15. INSURANCE AND RISK OF LOSS............................................ 55
15.1 IBM Insurance.................................................. 55
15.2 Risk of Property Loss.......................................... 56
15.3 * ........................................................... 57
16. DISPUTE RESOLUTION.................................................... 57
16.1 Dispute Resolution Procedures.................................. 57
16.2 Continued Performance.......................................... 58
17. GENERAL............................................................... 59
17.1 Relationship of Parties........................................ 59
17.2 Entire Agreement, Updates, Amendments and Modifications........ 59
17.3 Force Majeure.................................................. 59
17.4 Nonperformance................................................. 60
17.5 Waiver......................................................... 60
17.6 Severability................................................... 60
17.7 Counterparts................................................... 61
17.8 Governing Law.................................................. 61
17.9 Binding Nature and Assignment.................................. 61
17.10 Notices........................................................ 61
17.11 No Third Party Beneficiaries................................... 63
17.12 Other Documents................................................ 63
17.13 Consents and Approvals......................................... 63
17.14 Headings....................................................... 64
17.15 Remarketing.................................................... 64
17.16 Commencement of Actions........................................ 64
17.17 IBM Logo Products Warranties................................... 65
</TABLE>
<PAGE>
EXHIBITS
--------
EXHIBIT
- -------
1 Master Agreement Structure Diagram
2 Transaction Document Structure Diagram
3 IPT Charter and Operating Procedures Guidelines
N.B.: The Exhibits and Attachments referenced in the Schedule of
-----
Exhibits and Schedule of Attachments, and elsewhere in this Agreement,
are hereby incorporated by reference. These Exhibits and Attachments
have been omitted for purposes of this filing, but will be furnished
supplementally to the Commission upon request.
<PAGE>
ATTACHMENTS
-----------
FORM OF TRANSACTION DOCUMENT
FORM OF SUPPLEMENT
Schedule TITLE
A "Applications Software"
* - "Systems Software - Equifax"
* - "Systems Software - IBM"
B "Systems Software"
* - "Systems Software - Equifax"
* - "Systems Software - IBM"
C "Equifax Provided Hardware"
*
*
D "IBM Machines"
*
*
E The "Services, Measures of Utilization, and
* Operational and Financial Responsibilities"
*
F Leases, Licenses and Other Contracts
*
*
G "Disaster Recovery Services"
*
*
H "Transition Plan"
*
TD)
I "Network Locations"
*
J "Charging Methodologies"
*
K "Applications Installation Standards"
* (Operating Environment IT
*
L "Security Procedures and Responsibilities -
* Data and Physical"
*
<PAGE>
M "Help Desk Services"
*
*
N "Projects"
*
*
O "Affected Employees"
*
P Maintenance Terms
*
Q Outstanding Employee Claims
*
R "Services Transition Assistance"
*
S "Service Levels *
*
*
T "Equifax Provided Office Furnishings"
*
U "Bill of Sale"
*
V "Key Employees"
*
<PAGE>
1. PURPOSE/STRUCTURE/TERM OF AGREEMENT
1.1 PURPOSE OF AGREEMENT
a) IBM is a provider of a broad range of operations support services for on-
line information services companies including, without limitation,
information technology, information management, communications and related
services, and is experienced and skilled in the administration, management,
provision and performance of such services and the business functions,
responsibilities and tasks attendant with such services. IBM desires (i)
to continue to provide certain of these operations support services to the
Equifax Group for the Equifax Business, and to continue to perform and
assume the functions, responsibilities and tasks attendant with such
operations support services as currently performed by IBM for the Equifax
Business and the Equifax Group; and (ii) to provide additional quantities
and elements of these and other operations support services to the Equifax
Group for the Equifax Business and to perform and assume the functions,
responsibilities and tasks attendant with such operations support services
as currently performed by the Equifax Group or as envisioned to be required
for the Equifax Business and the Equifax Group, all as specifically set
forth in this Agreement. Equifax desires that such operations support
services for the Equifax Business and the Equifax Group and the attendant
functions, responsibilities and tasks, be performed and assumed by IBM.
The Agreement documents the terms and conditions under which (i) the
Equifax Group will obtain such operations support services from IBM and
(ii) IBM will administer, manage, support, provide and perform such
services and the functions, responsibilities and tasks attendant with such
services, for the Equifax Group.
b) The Parties have identified goals and objectives that they intend that
IBM's performance pursuant to the Agreement will assist the Parties to
achieve. These goals and objectives include the following: (i) engaging IBM
(A) under a master agreement to provide, and/or cause to be provided
through its Affiliates and other subcontractors, certain operations support
services to Equifax and certain of its Affiliates on a worldwide basis *
(B) to * provide such operations support services to, and perform and
assume the functions, responsibilities and tasks attendant with such
support services for, the Equifax Business and the Equifax Group * of
the Equifax Business and the Equifax Group; and (C) to * define * of
the information management systems operations of the Equifax Group in
support of the Equifax Business; (ii) * for current and additional
resource consumption and for reductions in resource consumption and *
resources chargeable and available to the Equifax Group and committed by
IBM to the Equifax Group; (iii) taking advantage of * to improve *
experienced by the Equifax Group and to enable the Equifax Group to *
for the Equifax Business; (iv) * of the Equifax Group's * covered
under this Agreement; (v) * to the Equifax Group; (vi) * the *
(vii) * of the Equifax Group and Equifax Business; and (viii) providing
an opportunity to transition the Services back to the Equifax Group or to
another service provider from IBM *
c) IBM recognizes that the Equifax Group * customer and agrees that * and
requires that IBM * where commercially reasonable to attain *
<PAGE>
including, without limitation, * to the Equifax Group *
d) The provisions of this Section 1.1 are intended to be a statement of the
-----------
purpose of the Agreement and are not intended to alter the plain meaning of
the terms and conditions of the Agreement or to require either Party to
undertake performance obligations beyond those set forth in the Agreement.
* the * of the Agreement are * such * and * with the *
1.2 STRUCTURE OF AGREEMENT
a) The Services will be grouped around the following technology platforms and
clusters of services: * Each such technology platform/cluster of services
is herein referred to generically as a "Tower".
b) The Agreement is comprised of (i) the provisions set forth in this Master
Agreement and the forms of the Exhibits and Schedules referenced herein as
illustrated in Exhibit 1; and (ii) each Transaction Document including the
---------
Supplement and Schedules referenced in each Transaction Document as
illustrated in Exhibit 2.
---------
c) The Services will be defined * and all Towers located at one (1) site,
or to be migrated to one (1) site, will be the subject of a single
Transaction Document in the form of Exhibit 3. Each Transaction Document
---------
will be comprised of a Supplement in the form of Exhibit 4 and Schedules in
---------
the forms described in Exhibit 1, configured as noted on Exhibit 2. The
--------- ---------
Transaction Documents will collectively define the Services provided to the
Equifax Group across multiple Towers at multiple locations in one (1) or
more countries and the terms and conditions upon which the Services will be
provided.
d) Transaction Documents will be executed by the Parties. The terms of
Transaction Documents will be governed by the terms of the Master Agreement
unless the Parties specifically note the deviations from the terms of the
Master Agreement for the purposes of such Transaction Document in the
Section of the Transaction Document entitled "Deviations From Terms of
Master Agreement".
e) Each Transaction Document will be submitted to and approved by the
Integrated Planning Team prior to execution by the Parties. The approval
will be evidenced by a representative of each of the Parties who is also a
member of the Integrated Planning Team, noting and attesting to the
approval of the Integrated Planning Team on a cover sheet to such
Transaction Document.
f) IBM and Equifax will be the primary contracting parties under the Agreement
and under each Transaction Document. Each of the Parties may assign a
Transaction Document to one of its Affiliates for performance, *
Moreover, as a condition precedent to such assignment, the Affiliate shall
accept such assignment and agree to assume the full, timely and proper
performance of the duties and obligations of the Party assigning such
Transaction Document to such Affiliate in a written document in form and
content satisfactory to the other Party.
<PAGE>
1.3 TERM OF AGREEMENT
The term of the Agreement will begin as of the Effective Date and will terminate
upon the later to occur of (a) the expiration of the Transaction Document with
the longest term extending past the tenth (10/th/) anniversary of the Effective
Date, or (b) upon a termination date that is effective not sooner than six (6)
months after the tenth (10/th/) anniversary of the Effective Date set forth in a
notice by either Party to the other Party (the "Term"), unless earlier
----
terminated in accordance with the provisions of the Agreement.
1.4 EXTENSION OF SERVICES
Equifax may request and IBM will once extend the provision of the Services
pursuant to any Transaction Document or the Services Transfer Assistance
pursuant to any Transaction Document for up to * ("Extension Period") upon not
less than * prior written notice before the scheduled termination or
expiration of the provision of such Services or Services Transfer Assistance, or
if applicable, notice given within * after the effective date of a notice of
termination for any reason by either Party, other than Termination for
Convenience. However, in the event Equifax is in default with respect to the
payment of any amounts under a Transaction Document at the start of the
Extension Period, IBM will extend the provision of such Services or Services
Transfer Assistance as described in this Section 1.4, only if * and *
-----------
during such Extension Period and * such Transaction Document for such *
period. Equifax will be * for the remaining part of such Extension Period
covered by such *
2. DEFINITIONS
In the Agreement (including each Transaction Document and the Supplement and
Schedules thereto), the following terms will have the following meanings:
Action has the meaning given in Section 17.8.
AD/M means both Applications Development and Applications
Maintenance.
AD/M Projects means the Applications Development and Applications
Maintenance performed during the Term and the
production cutover date for the corresponding Scheduled
Projects and/or each New Service added during the Term
requiring the performance of Applications Development
and Applications Maintenance by IBM.
Affected Employees has the meaning given in Section 5.2.
Affiliates means, with respect to a Party, any entity at any time
Controlling, Controlled by or under common Control with
such Party.
Agreement means this Master Agreement for Operations Support
Services Agreement and the forms of Exhibits and
Schedules referenced herein and each Transaction
Document referencing the Master Agreement for
Operations Support Services and the Supplement and
Schedules referenced therein.
<PAGE>
Annual Service Charge has the meaning given in the Supplement and
or ASC Schedules to each Transaction Document for such
Transaction Document.
Applications Development means the programming of any new applications
software, and changes or enhancements to existing
Applications Software. Programming effort shall
include the pre and post development analysis,
planning, design, coding, testing, installation,
provision of a single set of program and training
documentation per Applications Software program
and training necessary to complete the task.
Applications Development means the pre and post development analysis,
Methodology planning, design, coding, testing, installation,
provision of a single set of program and training
documentation per Application Software program and
training necessary to complete the task.
Applications Maintenance means defect identification and provision of
fixes, and installation of those fixes and updates
for the Applications Software provided by the
Applications Software vendors as part of normal
maintenance service for the Applications Software
for which there is no charge by such vendors in
addition to periodic maintenance charges, if any,
and defect identification, provision of fixes and
installation of those fixes and updates for
Applications Software for which there is no
generally commercially available maintenance
support.
Applications Software means those programs and programming, including
all supporting documentation and media, that
perform specific user related data processing,
data management and telecommunications tasks,
including updates, enhancements, modifications,
releases and Derivative Works thereof.
Applications Software as of the Commencement Date
is listed in Schedule A to each Transaction
Document for such Transaction Document, which
Schedule shall be updated pursuant to Section 8.1
during the Term to reflect the then-current
Applications Software.
Applications Software - means the Applications Software listed on Schedule
Equifax A to each Transaction Document for such
Transaction Document under such heading, provided
or to be provided by Equifax.
Applications Software - means the Applications Software listed on Schedule
IBM A to each Transaction Document for such
Transaction Document under such heading, provided
or to be provided by IBM.
Authorized User means a person or entity authorized to use the
Services, including without limitation the System,
by Equifax.
Baseline(s) has the meaning given in Schedule J to each
Transaction Document for such Transaction
Document.
Business and Operations has the meaning given in Section 6.2(b).
Support Plan
Cable or Cabling means the wires or cables that interconnect
Machines and/or connect a Machine to a facility
connection.
<PAGE>
Change Control Process has the meaning given in Section 6.3 of the
-----------
Agreement.
Change of Control means the transfer of the Control of a Party, or a
sale of substantially all of the assets of a
Party, from the persons or persons who hold such
Control on the Effective Date to another person or
persons, but shall not include a transfer of the
Control of a Party to an Affiliate of such Party.
Change Request has the meaning given in Section 6.3.
-----------
Claim has the meaning given in Section 14.5(a).
---------------
Code has the meaning given in Section 10.
----------
Commencement Date means the date set forth in each Transaction
Document for the start of the Services covered by
such Transaction Document.
Company Information has the meaning given in Section 11.1.
------------
Confidential Information has the meaning given in Section 11.1.
------------
Contract Year means each twelve (12) calendar month period, or
portion thereof, beginning January 1 of each
calendar year during the Term.
Control, Controlling, or means possessing, directly or indirectly, the
Controlled power to direct or cause the direction of the
management and policies of an entity through
ownership of greater than fifty (50%) percent of
the voting securities of such entity.
Cost of Living Adjustment has the meaning given in Schedule J to each
----------
("COLA") Transaction Document for such Transaction
Document.
CRF or Change Request Form has the meaning given in Section 6.3.
-----------
Data Center means the data centers from which the Services are
provided located in the Facilities as set forth in
each Transaction Document.
Data Network means the communication facilities and components
set forth in the Schedules to each Transaction
Document that are used to transmit voice, image
and data signals and which initially consist of
the communications facilities and components used
by the Equifax Group immediately prior to the
Commencement Date to provide information
communication services to the Equifax Group,
including without limitation, all Machines,
Software, communications lines, Cabling and Wiring
used to connect and transmit information among the
Facilities and the Network Locations, but does not
include End User Machines.
Derivative Work means a work based on one or more pre-existing
works, including without limitation, a
condensation, transformation, expansion or
adaptation, which would constitute a copyright
infringement if prepared without authorization of
the owner of the copyright of such pre-existing
work.
<PAGE>
Develop has the meaning given in Section 10.
----------
Direct Damages has the meaning given in Section 13.3.
------------
Direct Damages Caps has the meaning given in Section 13.1(b).
--------------
* *
Disaster Recovery Center means the location designated by such name or its
equivalent in the Disaster Recovery plan
referenced in Schedule G to each Transaction
----------
Document for such Transaction Document.
Disaster Recovery Services means the Disaster Recovery services described in
Schedule G to each Transaction Document for such
----------
Transaction Document.
Effective Date means the date set forth on the initial page of
the Master Agreement.
End User Machines means all work stations, terminals, printers, fax
machines, and associated peripheral equipment used
by end users and described in a Schedule to each
Transaction Document for such Transaction
Document, whether stationary or mobile equipment
used by end users, but does not include the work
stations being used by IBM personnel in connection
with the scheduled Projects or the Equifax
Provided Hardware located in the Data Center.
Elements of the Services has the meaning given in Section 17.15.
-------------
Equifax Business means the businesses engaged in by the Equifax
Group.
Equifax Code means Code Developed by IBM and/or its
subcontractors independently or jointly with the
Equifax Group and/or their contractors, as part of
the Services. Equifax Code shall not include any
IBM Derivative Code.
Equifax Direct Damages Cap has the meaning given in Section 13.1(b).
--------------
Equifax Derivative Code means Developed Code, which constitutes Derivative
Work of software for which the copyright is owned
by the Equifax Group and/or their contractors.
Equifax Group means individually and collectively Equifax and
its existing and future Affiliates that are using
and/or receiving any portion of the Services.
<PAGE>
Equifax In-Scope Operations means all functions, responsibilities, tasks and
activities that are described in the Agreement and
each Transaction Document (including the
Supplement and Schedules thereto) that are to be
performed by IBM under the Agreement, including,
without limitation, those performed for the
Equifax Group by the Affected Employees that are
directly related to information technology
services under each Transaction Document before
they entered the employ of IBM and/or its
Affiliates and subcontractors and those performed
by IBM and/or its Affiliates for Equifax and/or
its Affiliates immediately prior to the
Commencement Date under any Transaction Document
or agreement with IBM comprised of or directly
related to the information technology services
under such Transaction Document and otherwise
within the scope of the prior Transaction Document
or agreement between Equifax and IBM pursuant to
which such services were performed unless
specifically deleted or otherwise described
(versus not described) in the new Transaction
Document.
Equifax LAN Software has the meaning given in Schedule A to each
----------
Transaction Document for such Transaction
Document.
Equifax Provided Hardware means the computer equipment peripheral devices,
storage media, Cabling, connectors, the Data
Network, the LAN, telephone equipment and other
equipment (however described) provided from time
to time by the Equifax Group for use by IBM to
perform and deliver the Services and fulfill its
obligations under the Agreement. The Equifax
Provided Hardware as of the Commencement Date is
listed on and/or referred to in Schedule C to each
----------
Transaction Document for such Transaction
Document, which schedule shall be updated pursuant
to Section 8.1 during the Term to reflect the then
-----------
- vcurrent Equifax Provided Hardware.
Equifax Provided Office means the desks, chairs, filing cabinets, office
Furnishings cube partitions and other office furniture
(however described) provided from time to time by
the Equifax Group for use by IBM to perform and
deliver the Services and fulfill its obligations
under the Agreement. The Equifax Provided Office
Furnishings as of the Commencement Date are listed
on and/or referred to in Schedule T to each
----------
Transaction Document for such Transaction
Document, which schedule shall be updated pursuant
to Section 8.1 during the Term to reflect the then
-----------
- current Equifax Provided Office Furnishings.
Equifax Server shall have the meaning given in a Schedule to
Configurations each Transaction Document for such Transaction
Document.
Equifax Software means Applications Software-Equifax, Systems
Software-Equifax and Equifax LAN Software.
<PAGE>
Equifax Works means literary works of authorship (other than
Code) Developed by IBM and/or its subcontractors
independently or jointly with the Equifax Group
and/or its contractors under the Agreement,
specifically for the Equifax Group or the Equifax
Business or specifically for the purpose of
providing the Services, including without
limitation user manuals, charts, graphs and other
written documentation, and machine-readable text
and files, but shall not include any Derivative
Works of any works in which the copyright is owned
by IBM, its Affiliates or subcontractors.
Equifax/IBM Integrated has the meaning given in Section 6.1.
-----------
Planning Team
Execution Date has the meaning given in Section 8.3(c).
--------------
Extension Period has the meaning given in Section 1.4
-----------
Facilities has the meaning given in a Schedule to each
Transaction Document for such Transaction
Document.
Force Majeure Event has the meaning given in Section 17.3(a).
---------------
Help Desk means the IBM help desk which is staffed by IBM to
provide support to Equifax as described in
Schedule M to each Transaction Document for such
----------
Transaction Document.
IBM Code means Code Developed by IBM personnel at IBM's
expense and not as part of the Services, but used
to provide the Services, which code does not
constitute a Derivative Work of any software owned
by the Equifax Group, IBM, or their respective
Affiliates or contractors or subcontractors. IBM
Code shall not include any Equifax Derivative
Code.
IBM Derivative Code means Code Developed under the Agreement, which
constitutes Derivative Works of software for which
the copyright is owned by IBM, its Affiliates or
its subcontractors.
IBM Direct Damages Cap has the meaning given in Section 13.1(a)(i).
IBM Indemnitees has the meaning given in Section 14.2.
------------
IBM Interfaces means Code and/or literary works of authorship
created at IBM's expense, by IBM personnel and/or
its contractors and not as part of the Services,
but used to provide the Services, and interface or
describe and instruct regarding the interface,
between and among Applications Software and the
Systems Software, which does not constitute a
Derivative Work of any software or literary works
of authorship owned by the Equifax Group, IBM, or
their respective Affiliates or contractors,
including without limitation, user manuals,
charts, graphs and other written documentation,
and machine-readable text and files.
IBM LAN Software has the meaning given in Schedules A and B.
------------------
<PAGE>
IBM Logo Products has the meaning given in Section 4.7.
-----------
IBM Machines means the computer equipment, peripheral devices,
storage media, cabling, connectors, extenders and
other equipment (however described) including
without limitation, modems, routers and termination
boxes for the Network located in the Facilities and
other Equifax Group Sites, including without
limitation Data Center and at the Network
Locations, provided by or through and used from
time to time by IBM to perform and deliver the
Services and fulfill its obligations under the
Agreement. The IBM Machines as of the Commencement
Date are listed on Schedule D to each Transaction
----------
Document for such Transaction Document, which
schedule shall be updated pursuant to Section 8.1
-----------
during the Term to reflect the then current IBM
Machines.
IBM Software means the Applications Software-IBM, Systems
Software-IBM and IBM LAN Software.
* *
IBM Works means literary works of authorship (other than
Code) Developed at IBM's expense, by IBM personnel
and/or its contractors and not specifically for the
Equifax Group or the Equifax Business or not
specifically for the purpose of providing the
Services, but used to provide the Services,
including without limitation user manuals, charts,
graphs and other written documentation and machine-
readable text and files, but shall not include any
Derivative Works of any works in which the
copyright is owned by Equifax or its Affiliates or
subcontractors.
Indemnified Party has the meaning given in Section 14.4.
------------
Indemnifying Party has the meaning given in Section 14.5(a).
---------------
Indemnitee has the meaning given in Section 14.1.
------------
<PAGE>
Installations, Moves, Adds "Installation" means the installation of circuits,
and Changes or (IMACs) network hardware and software and network end-user
equipment at any Authorized User location, *
"Move" means the physical disconnection of network
equipment and services and, in some cases, the
relocation to another site. In most cases, this
activity is coordinated with outside vendors, such
as telephone company representatives. *
Recording of assets by decal and serial number *
"Add" means the process of adding, expanding and
possibly reconfiguring network systems. This may
involve circuits, circuit speeds or network
equipment. In some cases, network software would be
affected *. "Change" means the process of
altering an existing network system or environment
and could include network software upgrades and
system or technology enhancements. The change could
be implemented by IBM or a third-party vendor, *.
Integrated Planning Team means the team composed of the individuals
or "IPT" specified in Section 6.
---------
Key Employees means those employees agreed by Equifax and IBM
to be key employees pursuant to each Transaction
Document and identified in Schedule V thereto.
----------
Level One Support has the meaning given in a Schedule to each
Transaction Document for such Transaction Document.
Level Three Support has the meaning given in a Schedule to each
Transaction Document for such Transaction Document.
Level Two Support has the meaning given in a Schedule to each
Transaction Document for such Transaction Document.
Listed Subcontractors has the meaning given in Section 8.6(a).
--------------
Local Area Network (LAN) means all communications equipment and components
that are used to transmit voice, image and data
signals within a local area network and which
initially consist of the communications facilities
and components in use by Equifax immediately prior
to the Commencement Date to provide local area
network communications facilities to the Equifax
Group as described in Schedule I to each
----------
Transaction Document for such Transaction Document,
including without limitation the associated
attachments, peripherals, features, software and
accessories, communications lines and Cabling,
including the wiring systems, at the locations
specified in such Schedule.
Losses means all losses, liabilities, damages, penalties
and claims (including taxes and all related
interest and penalties incurred directly with
respect thereto), and all related costs, expenses
and other charges (including all reasonable
attorneys' fees and reasonable costs of
investigation, litigation, settlement, judgment,
interest and penalties).
<PAGE>
Machines means the IBM Machines and Equifax Provided
Hardware.
* means those Software fixes and updates provided by
the Software vendors as part of normal maintenance
service for the Software for which there is no
charge by such vendors in addition to periodic
maintenance charges, if any.
Materials means the Equifax Code, the Equifax Derivative
Code, the Equifax Works, the IBM Code, the IBM
Derivative Code, the IBM Works and the IBM
Interfaces.
* has the meaning given in Schedule S to each
----------
Transaction Document for such Transaction Document.
Monthly Charge has the meaning given in Schedule J to each
----------
Transaction Document for such Transaction Document.
Network means the Data Network, Local Area Network and
Voice Services.
Network Locations has the meaning given in Schedule I to each
----------
Transaction Document for such Transaction Document.
Network Vendors means any third parties providing information
communication services to Equifax which are
accessed or will be accessed through the Network.
New Services has the meaning given in Section 3.12.
-------------
Notice has the meaning given in Section 16.1(b)
---------------
Other Products has the meaning given in Section 4.5(c).
--------------
Parties means IBM and Equifax as detailed on the initial
page of the Agreement.
Party means IBM or Equifax as detailed on the initial
page of the Agreement.
* means the service levels and performance
responsibilities under which the Services will be
provided. The * are described in Schedule S to each
Transaction Document for such Transaction Document.
* *
Poll means to electronically connect the Facilities to
the other Equifax Group sites to retrieve data,
perform downloads/updates and/or execute remote
diagnostics.
Project means the portion of the Services described in
Schedule N to each Transaction Document.
----------
Project Executive has the meaning given in Section 7.1.
-----------
<PAGE>
Required Consents means any consents or approvals required to be
obtained (a) to allow IBM and its subcontractors to
assume financial and/or support, operational,
management and administrative responsibility for
the Equifax Software, the Equifax Provided Hardware
and the Equifax Provided Office Furnishings in
connection with the Services; (b) for the
licensing, transfer and/or grant of the right to
the Equifax Group to use the IBM Software and IBM
Machines as contemplated by the Agreement; and (c)
for the Equifax Group and IBM and its
subcontractors to have access to and use of the
space, equipment, software and/or third party
services provided under the Third Party Agreements
in connection with the Services as contemplated by
the Agreement.
Resource Unit ("RU") has the meaning given in Schedule E to each
----------
Transaction Document for such Transaction Document.
* *
Service Employees has the meaning given in Section 12.6(g).
---------------
Services means the Equifax In-Scope Operations, including,
without limitation, any migration of the Equifax
In-Scope Operations from the Equifax Group to IBM
pursuant to a Transaction Document.
Services Transfer has the meaning given in Section 12.5.
Assistance ------------
* *
Software means IBM Software and Equifax Software.
Supplement means the Supplement to each Transaction Document
containing the charges and certain other necessary
information.
System means the Machines, Software and Network covered
under the Agreement and the operating environment
therefor.
Systems Software means those programs and programming (including all
supporting documentation and media) that perform
tasks related to the functioning of the data
processing, and telecommunication equipment which
is used to operate the Applications Software or
otherwise to support the provision of the Services
by IBM under the Agreement, whether or not licensed
to IBM. Systems Software may include but is not
limited to, database creation and management
software, application development tools, operating
systems, software utilities, data security
software, data network software, communications
monitors and data base managers. Systems Software
as of the Commencement Date is listed in Schedule B
----------
to each Transaction Document for such Transaction
Document, which schedule shall be updated pursuant
to Section 8.1 during the Term to reflect the then
-----------
current Systems Software.
<PAGE>
Systems Software - Equifax means the systems software and general purpose
software such as the database creation and
management software, utility software and
applications development tools software listed in
Schedule B to each Transaction Document for such
----------
Transaction Document under such heading provided or
to be provided by Equifax.
Systems Software-IBM means Systems Software listed in Schedule B to each
----------
Transaction Document for such Transaction Document
under the heading "Systems Software-IBM", provided
or to be provided by IBM.
Systems Software means defect identification and fixes, and
Maintenance installation of those fixes and updates provided by
software vendors as part of normal maintenance
service for Systems Software for which there is no
charge by such vendor in addition to periodic
maintenance charges, if any, and, subject to
Section 3.9 defect identification, provision of
-----------
fixes and installation of those fixes and updates
for Systems Software used by IBM to provide the
Services for which there is no generally
commercially available maintenance and support.
Term has the meaning given in Section 1.3 and any
-----------
extension and renewal term described in the
Agreement.
Termination Charge means the amount set forth in a Supplement to a
Transaction Document.
Third Party Agreements means those contractual, leasing and licensing
arrangements for which IBM has undertaken
financial, management and/or administrative
responsibility and pursuant to which a member of
the Equifax Group receives any third party
products, software and/or services in connection
with the provision of the Services. Third Party
Agreements to which one or more members of the
Equifax Group is a party are listed on Schedule F
----------
to each Transaction Document for such Transaction
Document, which schedule shall be updated pursuant
to Section 8.1 during the Term to reflect the then-
-----------
current Third Party Agreements.
Third Party Provider means a business or entity other than a member of
the Equifax Group or IBM that provides products,
software and/or services under a Third Party
Agreement, in support of the provision of the
Services by IBM.
Tower has the meaning given in Section 1.2(a).
--------------
Trade Secrets has the meaning given in Section 11.1
------------
Transaction Document means each document executed by IBM with Equifax
pursuant to the Agreement, providing for the
performance and delivery of a portion of the
Services to a specific site or group of sites with
respect to one or more of the Towers. Such document
will be in the form of Exhibit 3 and structured as
---------
described in Exhibit 2.
---------
* *
<PAGE>
Transition Costs means the costs incurred and profit charged by IBM
on such costs to transition into a Transaction
Document Services arrangement. Such costs do not
include the costs of hardware or software to
provide the on-going Services.
Transition Period has the meaning given in Section 5.1(a).
--------------
Transition Personnel has the meaning given in Section 5.1(b).
--------------
Transition Plan has the meaning given in Section 5.1(a).
--------------
Unplanned Resource Unit has the meaning given in Schedule J to each
----------
Transaction Document.
Version means those Software updates that generally add
function to the existing Software and may be
provided by the Software vendors at a fee over and
above the standard periodic software maintenance
costs.
* *
Voice Equipment means PBXs and Key Systems (AT&T and non-AT&T),
telephony switches, key systems, telephone sets,
voice mail equipment, voice response units and
associated software and equipment performing
similar functions.
Voice Services means all Voice Equipment and associated
controllers, channel banks, carrier services (e.g.,
VNET), lines and Cabling, together with all
software related thereto, used to transmit voice
traffic within or outside of Equifax locations, but
does not include the Data Network.
Wind-Down Expenses means the net amount, after IBM takes commercially
reasonable action to * that will reimburse IBM
for the actual reasonable costs that IBM incurs in
* in the event of a termination occurring
prior to the expiration of the Term or the term of
any Transaction Document; provided, however,
Equifax shall have the right to *
Wiring means those cables or wires that are internal to
the building structure and that interconnect
machines within the same building or between
buildings.
<PAGE>
* *
* *
3. THE SERVICES
3.1 Obligation to Provide Services
a) Starting on the Commencement Date of each Transaction Document and
continuing during the term of each Transaction Document, IBM shall provide
the Services to, and perform the Services for, the Equifax Group.
b) In performing and providing the Services, the relationship of IBM with the
members of the Equifax Group will be as an independent contractor. However,
as a result of its position in providing and performing the Services, the
Parties acknowledge that certain employees of IBM and each of its
Affiliates providing portions of the Services may have a unique knowledge
of the information technology operations of the members of the Equifax
Group that no employee of a member of the Equifax Group will have in full,
and employees of IBM and each of its Affiliates providing portions of the
Services will be interacting with the employees, executive management and
accountants to the Equifax Group and the members thereof, and will be
performing functions that would otherwise be performed by employees of the
Equifax Group.
c) There may be * (including the Transaction Documents and the Supplements
and Schedules thereto) which are * and are * . If such * are
determined to be * or are * the Services, *. Each such determination
shall be made by agreement of the Parties or resolved pursuant to the
dispute resolution provisions of Section 16.
----------
3.2 PERFORMANCE
a) IBM agrees that the performance of the Services covered by each Transaction
Document will * subject to the limitations and in accordance with the
provisions set forth in the Agreement.
<PAGE>
b) Concurrent with the semi-annual Business and Operations Support Plan review
process described in Sections 6.1 and 6.2 and more often if requested by
------------ ---
Equifax, Equifax and IBM will review and agree to commercially reasonable
changes, modifications, deletions and replacements of and additions to the
* under each Transaction Document for the purposes of better and more
timely reflecting, facilitating and supporting the continuing development,
and evolving priorities of the Equifax Group and the Equifax Business. Any
such changes will be implemented through the Change Control Process. The
* shall not be changed, modified or adjusted downward or upward without
the prior written agreement of the Parties. The Parties intend that the
* will be * . The Parties agree to cooperate and deal with each other in
good faith to promptly resolve on a reasonable basis in consonance with the
purposes of the review process, any differences between the Parties
regarding appropriate changes to, modifications of, additions to, deletions
of and replacements of the *
c) IBM will continue to use the existing measurement and monitoring tools and
procedures to set Resource Unit Baseline measurements and to measure and
report IBM's performance of the Services. * Subject to Equifax's prior
approval (which approval shall not be unreasonably withheld), IBM shall
implement the necessary measurement and monitoring tools and procedures
required to set Resource Unit Baseline measurements and to measure and
report IBM's performance of the Services * may be developed, modified and
changed during the term of each Transaction Document and as the Services
may evolve and be supplemented and enhanced during the Term. Such
measurement and monitoring shall permit reporting at a reasonable level of
detail sufficient to verify compliance with * and application of any *
IBM shall prepare and maintain detailed records regarding its compliance
with the and the determination and application of. * Upon request, IBM
shall provide Equifax with information and reasonable access to such tools
and procedures, and the records relating thereto, for purposes of
verification of the reported performance levels.
3.3 DISASTER RECOVERY SERVICES
IBM will provide Disaster Recovery Services under each Transaction Document in
accordance with Schedule G to each Transaction Document. If IBM fails to
----------
provide Disaster Recovery Services to the extent and in accordance with the time
table set forth in such Schedule for a period as set forth in Schedule G to each
----------
Transaction Document, Equifax will be entitled, at its election * upon
written notice to IBM. If Equifax elects to * Equifax shall give notice
to IBM of such election within thirty (30) days after the occurrence of the
event on which. * In the event of * is authorized under this Section
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3.3, Equifax shall not be required to * any * or * to IBM. Such * shall
- ---
not constitute the sole and exclusive remedy of Equifax for such failure of
performance by IBM.
3.4 AUDITS
a) IBM will assist the Equifax Group in meeting their respective audit and
regulatory requirements, including providing access to * to enable the
<PAGE>
Equifax Group and its auditors and examiners to conduct appropriate audits
and examinations of the Equifax Group's operations and IBM's operations
relating to the performance of the Services, and to verify the accuracy of
IBM's charges and credits to Equifax and that the Services are being
provided in accordance with the Agreement * provided, however, that
neither Equifax nor its auditors will be allowed access to other IBM or IBM
Affiliates customers' records or IBM confidential and proprietary data; but
provided further that nothing in the Agreement shall limit or restrict
Equifax's or IBM's rights in discovery proceedings pursuant to any civil
litigation. Such access will require forty-eight (48) hour written notice
to IBM and will be provided at reasonable hours. If any audit or
examination reveals that IBM's invoices for the audited period are not
correct (other than amounts in dispute pursuant to Section 9.12), IBM
------------
shall promptly reimburse Equifax for the amount of any overcharges, or
Equifax shall promptly pay IBM for the amount of any undercharges. If any
such audit activities interfere with IBM's ability to perform the Services
* under any Transaction Document, IBM shall be relieved of such
performance obligations under such Transaction Document to the extent
caused by such audit activity. If the assistance required of IBM shall
cause IBM to expend resources and incur additional costs to provide such
assistance that are not within the scope of the Services and Resource Unit
Baselines, Equifax shall reimburse IBM for such costs.
b) Subject to Section 4.6, IBM agrees to make any changes to the Services and
-----------
take other actions which are necessary in order to maintain compliance with
laws or regulations applicable to its performance and provision of the
Services. Subject to Section 4.6, Equifax may submit to IBM findings and
-----------
recommendations regarding changes to the Services necessary for the
compliance by Equifax with applicable laws and regulations which IBM will
analyze and consider in good faith. IBM shall promptly respond to Equifax
regarding IBM's evaluation and activity plan for such findings and
recommendations.
3.5 FACILITIES AND DATA CENTER
a) IBM will not * as set forth in each Transaction Document without the
prior written consent of Equifax as described in Section 5.3(d).
-------
b) During the Term, IBM will provide the Equifax Group with access upon prior
notice to * in order for Equifax to * and such * will be conducted in
a manner reasonably calculated not to interfere with IBM's provision of
Services.
c) IBM will provide reasonable access to * as necessary or appropriate for
the performance, delivery and use of the Services by the Equifax Group and
for the operation, maintenance, upgrade, support and use of any other
Equifax hardware, software and other resources * (i) to the Equifax
Group's authorized employees, agents and representatives, and (ii) * of
installation, maintenance, support and upgrade services, technology and
hardware for the System and any other Equifax hardware, software and other
resources located in the Facilities including the Data Center serviced
thereby. To the extent practical in light of such installation,
maintenance, support and upgrade requirements, Equifax will provide *
notice to IBM prior to any *
<PAGE>
d) All access to * shall be subject to (i) reasonable data and records
protection and physical security measures (including Equifax physical
security requirements) and (ii) such Equifax Group employees, agents and
representatives * undertaking reasonable confidentiality requirements
relating to such visits.
3.6 SECURITY
Equifax will authorize all access to all Software operated by, and Company
Information and other records of the Equifax Group in the possession of, IBM in
support of the Services covered by each Transaction Document through the data
and records security procedures as described in Schedule L to such Transaction
----------
Document. IBM shall notify Equifax of the identity of each of the entities and
personnel working with IBM to provide and perform the Services covered by each
Transaction Document that are to be authorized access to the Software utilized
in support of the Services covered by such Transaction Document and the level of
security access required by each. The Parties shall cooperate in administering
security procedures regarding such access, in accordance with such Schedule.
IBM will enable such access by persons as designated by Equifax and deny such
access to all other persons, in accordance with such Schedule.
3.7 TECHNOLOGY REFRESH
IBM will refresh the information technologies components of the Services
(including both hardware and software components) as specifically provided in
the Agreement (including each Transaction Document). This Section 3.7 shall not
-----------
affect or limit IBM's obligations or authority to perform the repair,
maintenance and upgrade functions and services as set forth in the Agreement.
3.8 SOFTWARE LICENSES
a) IBM will comply with all license obligations under all licenses and
maintenance agreements for the Software, including without limitation, the
obligations of nondisclosure and scope of use; provided, however, IBM will
only be obligated under this Section 3.8(a) with regard to the licenses and
--------------
maintenance agreements for Equifax Software to the extent the obligations
thereunder are disclosed to and accepted by IBM. To the extent provided to
IBM by Equifax prior to execution of each Transaction Document, IBM shall
be deemed to have reviewed and accepted the obligations under the licenses
and maintenance agreements for the Equifax Software listed on Schedules to
such Transaction Document as of the Commencement Date under such
Transaction Document, unless otherwise noted in such Transaction Document.
b) All IBM Software provided by IBM in connection with the Services and any
Equifax Software licensed under a Third Party Agreement shall be licensed
(and the attendant maintenance arrangements contracted) in the name of the
Equifax Group member designated by Equifax as the licensee with IBM having
the right to access and use such Software in performing the Services,
unless IBM can procure such Software (and/or attendant maintenance
arrangement) on a more cost effective basis licensed in its own name.
c) IBM shall use commercially reasonable efforts to obtain * for the
Software licensed and contracted in IBM's name as licensee to Equifax upon
termination or expiration of the Agreement and as applicable, each
Transaction
<PAGE>
Document. If IBM is unable to obtain * the rights described in the
immediately preceding sentence, and, in any event, prior to (i) the
addition to the IBM Software of any software which is not listed in
Schedules to a Transaction Document for the Equifax operations covered by
such Transaction Document; or (ii) any upgrade, enhancement or modification
of any IBM Software listed in Schedules to a Transaction Document for the
Equifax operations covered by such Transaction Document, IBM shall (A)
obtain Equifax's prior written consent for any such actions, (B) provide
Equifax with information regarding * for such IBM Software upon the
expiration or termination of the Agreement and as applicable, each
Transaction Document, and (C) use commercially reasonable efforts to obtain
* upon the expiration or termination of the Agreement upon the * of
such requirements. If Equifax does not respond to a request for consent
from IBM within * of receipt of such request together with the
information and confirmation of the actions required of IBM in this Section
-------
3.8(c), Equifax shall be deemed to have granted its consent to the actions
------
for which IBM requested consent. IBM shall consider and take into account
in the negotiation of its licensing and maintenance arrangements with
providers of the IBM Software, *
d) IBM shall not direct the Equifax Group to terminate, extend, replace, amend
or add licenses for the Software and/or the maintenance arrangements
attendant therewith, contracted in the name of a member of the Equifax
Group without notifying Equifax in writing of the proposed action by IBM
and obtaining Equifax's prior written agreement; moreover, IBM shall
provide to Equifax a written report of the reasons for, and the impact and
ramifications on the Services of, such proposed action concurrently with
such notification. IBM may terminate, replace, amend or add licensees for
the IBM Software as it chooses so long as IBM continues to perform the
Services in the manner required by the Agreement; provided, however, IBM
agrees to provide * written notification to Equifax prior to each such
termination, replacement, amendment or addition and concurrently with such
notification, deliver to Equifax a written report of the reasons for, and
the impact and ramifications on the Services of, IBM's proposed action. In
addition, if such action by IBM with respect to a license and/or
maintenance arrangement for the IBM Software will have an impact on the
Services or the monitoring and/or evaluation of the Services in a manner
that in turn will have a * on the Equifax Group or the ability of IBM or
Equifax to monitor and/or evaluate the performance and delivery of the
Services, and IBM is notified in writing by Equifax of its estimate of such
* prior to IBM's implementation of such action and IBM elects to proceed,
IBM will provide or cause to be provided the programs, services, rights and
other benefits and resources that are the subject of such licenses and
maintenance agreements to the Equifax Group on terms no less favorable than
the terms of such license and maintenance agreements and ensure that there
shall be no negative impact on the ability of IBM or Equifax to monitor
and/or evaluate the performance and delivery of the Services. If Equifax in
connection with or resulting from IBM's termination, replacement, amendment
or addition of any license for IBM Software and/or maintenance arrangement
incurs additional * or * including but not limited to * and IBM has
been notified in writing by Equifax of its estimate of such * prior to
IBM's implementation of such action and IBM elects to proceed, IBM shall
promptly * Equifax * Equifax; provided, however, that in each instance
in this Section 3.8(d) that Equifax provides IBM an estimate of the
--------------
* of an action by IBM on Equifax, the * by Equifax in
<PAGE>
each such instance shall not * of the * provided to IBM for each such
instance.
e) IBM will provide to Equifax, and update as changes occur, a listing of all
Software by name, Maintenance Release and Version promoted into production
on each Machine at each location of the Machines.
3.9 SOFTWARE CURRENCY
The Parties agree to maintain reasonable currency for Maintenance Releases
and Versions of Software, unless Equifax requests otherwise. For purposes
of this Section, "reasonable currency" shall mean that the next Maintenance
Release or Version is installed not later than the longer of (i) * after
the date the licensor makes such Maintenance Release or Version
commercially available, or (ii) within * after the date the licensor
* which causes Equifax to be * unless such Maintenance Release or
Version * in which case *
In the event Equifax requests IBM to expedite installation of a Maintenance
Release or Version or to delay the installation of a Maintenance Release or
Version of specific Software beyond such period or requires operation and
maintenance of multiple Versions of Software, IBM shall do so, provided,
that if IBM reasonably determines that it will incur any additional costs
as a result of such requests (e.g., Software support costs due to
withdrawal of maintenance by the licensor, multiple version charges, etc.)
for resources not otherwise required to provide the Services under the
applicable Transaction Document or covered under a current Resource Unit
Baseline for such Transaction Document, then IBM will notify Equifax of the
amount of such costs in writing and Equifax, at its option, will either
delay installation of such Maintenance Release or Version or update the
Software to the current level (as applicable) or reimburse IBM for any
demonstrable costs. The installation and promotion into production of each
Maintenance Release and Version shall be performed in accordance with the
Change Control Process.
In addition, Equifax shall * to the extent directly impacted by the delay
or acceleration of the next Maintenance Release or Version until such time
as the affected Software is brought to "reasonable currency" as defined in
this Section 3.9.
-----------
3.10 *
IBM will take commercially reasonable measures to ensure that * IBM will
continue to perform the * in place at the Equifax Group prior to the
Commencement Date of each Transaction Document, and will continue to *
that are commercially reasonable and consistent with industry standards. If
a * IBM shall * and * to * provided, however, IBM shall * if
required due to the nature or severity of * shall bear the costs
associated with such efforts. Notwithstanding any other term of this
Section 3.10, neither
------------
<PAGE>
Party shall be liable to the other Party or any of its Affiliates for any
such costs incurred by any of them with respect to * IBM shall be
relieved of * to the extent such * impacts IBM's ability to satisfy
such *
3.11 SOFTWARE - SUBSTITUTIONS AND ADDITIONS
a) If Equifax requests a substitution of any Software under any Transaction
Document for which IBM has financial responsibility, Equifax shall * in
the * by which the * attributable to the substituted Software * or is
* the then-current * being * attributable to the Software being
replaced. If Equifax * any Software for which IBM has financial
responsibility * to a Transaction Document and does not immediately *
Equifax may utilize an * to the then-current applicable * attributable
to such * Software to * attributable to * Software or receive a *
IBM will provide Equifax with the requisite * support documentation to
assist Equifax in evaluating the decision to * Equifax will be
responsible for any other * to the Software vendor associated with such
*
b) Equifax may * the Schedules to any Transaction Document. IBM agrees *
use and operate any Software * provided, however, that any resources
(software, hardware, personnel, etc.) required to install, delete and/or
operate such added Software that is not otherwise required to provide the
Services under such Transaction Document, or covered under a current
Resource Unit Baseline for such Transaction Document, will be provided as
New Services pursuant to Sections 3.12. Equifax shall be permitted by IBM
-------------
to * and IBM shall provide the cooperation, information and access
necessary or appropriate to permit Equifax to perform such functions.
c) If IBM timely notifies Equifax that any software requested by Equifax be
substituted for, deleted from, or added to, the Software will have an
adverse impact on the operation of the System before such action is
effected and Equifax directs IBM to effect such action even in view of such
notice * such action affects IBM's ability to *
3.12 NEW SERVICES
a) During the Term, Equifax may request IBM to perform a "New Services"
------------
(defined as an additional function, responsibility or task under any
Transaction Document that requires resources for which there is no current
Resource Unit Baseline or charging methodology under such Transaction
Document, that is, such function, responsibility or task is not included in
the Monthly Charge and is not charged separately under another methodology
other than this New Services provision). Further, Equifax's request for a
New Service may include a request for IBM to * one or more * then being
provided under the applicable Transaction Document * New Services. In
such event, IBM shall determine the * related to
<PAGE>
the element or elements of the Services * and those required for the New
Services being added.
Promptly after receiving each request for New Services from Equifax, IBM
will provide a written quote for such New Services to Equifax setting forth
the * and * in the * and/or * under the applicable Transaction
Document, and as applicable, * in existing * and additional * if any,
that will be attributable to such New Services, and will concurrently
deliver to Equifax as a part of such quote a detailed description of and
proposal for the New Services together with a report regarding the
ramifications and impacts of such New Services on the Services under such
Transaction Document. All changes in the * and other * will be based
upon the required proportional * in * and other * applicable to the
New Services relative to the * and existing other * Upon receipt of
such quote and other documentation, Equifax may then elect to have IBM
perform the New Services, and the * and, if applicable, * and * under
such Transaction Document will be established and/or adjusted to reflect
such New Services in a written amendment to the Agreement in accordance
with Section 17.2. Notwithstanding the foregoing, nothing herein shall be
------------
deemed to obligate Equifax to obtain New Services from IBM.
b) The Parties agree that * will not be deemed to be New Services, if such
* by IBM in its sole discretion or pursuant to the
provisions of the Agreement.
3.13 AFFILIATES
If the Equifax Group acquires any additional Affiliates or other operations or
assets during the Term and desires that IBM provide the Services for such
Affiliates or other operations or assets, IBM will provide such Affiliates or
other operations or assets with Services in accordance with the Agreement,
subject to additional charges if acceptance of such responsibilities by IBM
would require usage of Baseline Resources in excess of the Baseline Resources
set forth in the Agreement or additional charges if acceptance of such
responsibilities by IBM would require the performance of New Services as
described in Section 3.12.
------------
4. WARRANTIES/REPRESENTATIONS/COVENANTS
4.1 Work Standards
IBM warrants, represents and covenants that * the Services will be performed
for the Equifax Group in a * workmanlike manner in accordance with industry
standards applicable to the performance of such services.
<PAGE>
4.2 NONINFRINGEMENT
Each of the Parties covenants that it will perform its responsibilities under
the Agreement in a manner that does not infringe, or constitute an infringement
or misappropriation of, any patent, trade secret, copyright or other proprietary
right of any third party. Notwithstanding this provision or any other provision
in the Agreement, Equifax makes no warranty or representation with respect to
any claims for such infringement or misappropriation by virtue of * provided,
however, that this Section 4.2 shall not relieve Equifax from any liability or
-----------
obligation under Sections 8.2 and 14.2.
------------ ----
4.3 *
IBM covenants that IBM will take commercially reasonable steps to * IBM
further covenants that with respect to any * IBM will not knowingly *
including upon expiration or termination of the Agreement or any Transaction
Document for any reason, without Equifax's prior written consent.
4.4 AUTHORIZATION AND ENFORCEABILITY
Each Party hereby represents and warrants that:
a) it has all requisite corporate power and authority to enter, and fully
perform pursuant to, into the Agreement;
b) the execution, delivery and performance of the Agreement and the
consummation of the transactions contemplated hereby have been duly and
properly authorized by all requisite corporate action on its part; and
c) the Agreement has been duly executed and delivered by such Party.
4.5 DISCLAIMER
a) IBM does not warrant the accuracy of any advice, report, data or other
product delivered to Equifax to the extent any inaccuracies are caused by
data and/or software provided by Equifax. Such products are delivered AS
IS, and IBM shall not be liable for any inaccuracy therein. IBM will
promptly notify Equifax of any such inaccuracies of which IBM becomes aware
and the cause therefore if known by IBM. *
b) * IBM does not assure uninterrupted or error-free operations of the
Software and Machines.
c) Except as set forth in a Transaction Document, IBM is not providing any
Year 2000 Services under the Agreement. IBM shall not be responsible for
its failure to perform any of its obligations (including, for example,
failure to meet * under the Agreement, if such failure is the result of the
inability of
1) Equifax's,
<PAGE>
2) a third party's or
3) IBM's products installed prior to the Execution Date of a Transaction
Document
(for example, software, hardware or firmware) ("Other Products") to
--------------
correctly exchange, process and handle date data (including, but not
limited to, calculating, comparing and sequencing) within, from, into and
between the twentieth and twenty-first centuries, and the years 1999 and
2000, including leap year calculations.
d) IBM assumes no responsibilities or obligations to cause products or
deliverables provided by IBM to accurately exchange date data with Other
Products or to cause Other Products to accurately exchange date data with
products or deliverables provided by IBM.
e) EXCEPT AS PROVIDED IN THE AGREEMENT, THERE ARE NO OTHER EXPRESS WARRANTIES
OR COVENANTS, AND THERE ARE NO IMPLIED WARRANTIES OR COVENANTS, INCLUDING,
BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OR COVENANTS OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE.
4.6 Regulatory Proceedings and Compliance with Laws
Each Party agrees at its cost and expense to obtain all necessary regulatory
approvals applicable to its business, to obtain any necessary permits for its
business, and to comply with all laws and regulatory requirements applicable to
the performance of its obligations under the Agreement.
4.7 *
*
4.8 COVENANT OF COOPERATION AND GOOD FAITH
The Parties covenant to timely and diligently cooperate, with due consideration
of the goals, objectives and purposes of the Agreement, to facilitate the
performance of their respective duties and obligations under the Agreement in a
commercially reasonable manner. Further, the Parties agree to deal and
negotiate with each other and their respective Affiliates in good faith in the
execution and implementation of their duties and obligations under the
Agreement.
5. TRANSITION
5.1 Transition Plan
a) Prior to the Commencement Date for each Transaction Document or such other
date as the Parties may agree, IBM and Equifax through the Equifax/IBM
Integrated Planning Team will have developed and agreed upon the
"Transition Plan" set forth in Schedule H to such Transaction Document,
----------
describing (i) the transition from the Equifax Group to IBM or its
Affiliate of the Affected Employees, if any; (ii) the transition of the
administration, management, operation under and financial responsibility
for the
<PAGE>
Third Party Agreements from the Equifax Group to IBM or its Affiliate; and
(iii) the transition of the performance of and responsibility for the other
functions, responsibilities and tasks currently performed by the Equifax
Group to IBM or its Affiliate which comprise the Services covered by such
Transaction Document. The Transition Plan shall be implemented and
completed over a mutually agreed period as set forth in the Transition Plan
starting on the Commencement Date, which period shall not extend beyond a
date certain set forth in such Transaction Document, without the prior
written agreement of the Parties (the "Transition Period").
-----------------
Notwithstanding the foregoing in this Section 5.1(a), IBM's and Equifax's
--------------
responsibilities and obligations with respect to the Affected Employees,
the Third Party Agreements and the other elements of the Services as set
forth in the Agreement shall commence on the dates set forth in such
Transaction Document, or if no date is set forth in such Transaction
Document, the Commencement Date under such Transaction Document.
b) During the Transition Period, Equifax will cooperate with IBM in
implementing the Transition Plan by providing the personnel (or portions of
the time of the personnel) set forth in the Transition Plan ("Transition
----------
Personnel") and performing the tasks described for Equifax in the
---------
Transition Plan. During the Transition Period, IBM will be responsible for
the provision of the Services set forth in each Transaction Document
(including within those Services the implementation of the Transition
Plan).
5.2 AFFECTED EMPLOYEES
The Equifax Group may eliminate certain of the positions within the Equifax
Group associated with the Equifax In-Scope Operations commencing on the
Commencement Date under any Transaction Document and through the end of the
Transition Period under such Transaction Document. IBM will, with Equifax's
consent, * each of the individuals listed on Schedule O to such Transaction
----------
Document, in accordance with the employment guidelines set forth on such
Schedule (the "Affected Employees"). All costs and expenses incurred by IBM in
------------------
connection with the offer to employ and the employment of the Affected Employees
shall be the responsibility of IBM. IBM will * with respect to each Affected
Employee after the Commencement Date for the period until they receive offers
and reject such offers, become IBM employees, or IBM determines not to offer
employment to an Affected Employee in accordance with its employment guidelines
and notifies Equifax in writing of such determination.
5.3 RESOURCES AND FACILITIES
a) To enable IBM to provide the Services, the Parties may agree under a
Transaction Document for Equifax to provide, at no charge to IBM, the use
of the Equifax Provided Hardware, Equifax Provided Office Furnishings,
Equifax facilities, and offices services such as reasonable local analog
telephone services for the sole purpose of providing and performing the
Services covered by the Transaction Document for the Equifax Group. *
All such items provided by Equifax shall comply with all applicable laws
and regulations relating to safety and use. Subject to the satisfaction of
Equifax's obligation with respect to compliance with applicable laws and
regulations, IBM shall ensure a safe working environment is maintained with
the Equifax Provided Hardware, Equifax Provided Office Furnishings and
Equifax facilities in compliance with all applicable laws and regulations,
and shall take no action that will compromise such safety of such working
environment or violate such laws and regulations.
<PAGE>
When the Parties agree that the Equifax Provided Hardware and Equifax
Provided Office Furnishings are no longer deemed necessary to perform the
Services, Equifax's obligations set forth in this Section and in any
Transaction Document with respect to each such item of resources shall
terminate.
b) Except as otherwise provided in the Agreement, * the responsibility and
obligation to provide and administer, manage, support, maintain and pay for
all resources (including, without limitation, personnel, hardware,
software, facilities, services and other items, however described)
necessary or appropriate for IBM to provide, perform and deliver the
Services as described in the Agreement.
c) IBM will provide and have on site as set forth in each Transaction Document
its Project Executive under each such Transaction Document prior to the
Commencement Date and for the duration of the term of each such Transaction
Document, and will timely provide additional trained and qualified
personnel as necessary or appropriate to facilitate and ensure the timely
and proper definition, provision, performance and delivery of the Services
in accordance with the Agreement.
d) IBM will have the right to change the location of the IBM activities
associated with the Services under any Transaction Document * and upon
the occurrence of a Force Majeure Event. * whether any and all changes
in the location * of such IBM activities may result *
6. INTEGRATED PLANNING TEAM/CHANGE CONTROL PROCESS
6.1 EQUIFAX/IBM INTEGRATED PLANNING TEAM
a) The Parties shall form and participate in an Integrated Planning Team in
accordance with the provisions of this Section 6 for the following
---------
purposes:
(i) to provide leadership and direction for the relationship over the
Term;
(ii) to define and forecast the resources required to be allocated by IBM
to perform and deliver the Services pursuant to the procedures and
processes for the preparation and update of the "Business and
Operations Support Plan";
(iii) to define and evaluate the objectives, substance, repricing and
performance of the Services and pricing of new and replacement
services;
(iv) to provide second level issue resolution for matters that the line
managers are unable to resolve; and
(v) to report to Equifax and IBM regarding each of the foregoing areas.
b) The Integrated Planning Team will be comprised of dedicated staffs from
both Parties, representing technology and business management from multiple
geographic locations, as provided in Exhibit 3 and
---------
<PAGE>
each Transaction Document. The Integrated Planning Team will be co-chaired
by Equifax's Senior Vice President - North American Technology and IBM's
Senior Project Executive through the first year of the Term and then the
Integrated Planning Team shall be co-chaired as mutually agreed by the
Parties thereafter. The "Charter and Operating Procedures Guidelines" for
the Integrated Planning Team are set forth in Exhibit 3 and may be modified
---------
by the Parties from time to time during the Term upon agreement.
6.2 REPORTS/PROJECTIONS/PLANS
a) Prior to the Execution Date of each Transaction Document, IBM will provide
Equifax a plan showing the * that are included in the Annual Services
Charge and reflected in the Baselines. Such plan will be updated
whenever there is * or the addition or replacement of Services under such
Transaction Document through New Services pursuant to Section 3.12 herein.
Charges and credits with respect to the acceleration, delay or cancellation
of * are handled by the charging/credit and pricing adjustment processes
set forth in this Agreement, Annual Services Charge adjustments, the
Transaction Document and its Schedules (e.g., Baseline Adjustment, ARCs,
RRCs, New Services, benchmarking, etc.).
b) Commencing on June 30, 1998 and on June 30 and December 31 of each year of
the Term thereafter, Equifax will provide to the Integrated Planning Team
its projected business and volume requirements for the Services for the
next * and * calendar months. Further, Equifax will provide to the
Integrated Planning Team in the first week of each calendar quarter its
forecasted business and volume requirement for the Services for the * .
The * forecast may be amended by Equifax on * prior written notice.
Within * of receipt of each such projection and amendment, IBM will
review and respond to the projections from Equifax with the technical
provision requirements that it deems necessary to satisfy the business and
volume requirements projected by Equifax. After review and acceptance by
the Integrated Planning Team, the IBM response will be incorporated into
the Business and Operations Support Plan.
c) Commencing on September 30, 1998 and on March 31 and September 30 of each
year during the Term, IBM will provide to the Integrated Planning Team the
then current Business and Operations Support Plan. The Business and
Operations Support Plan will be composed of a short-term, technical plan
covering * and any long-range, strategic plan covering * , both of
which will be driven by the Equifax Group's business goals and objectives
as reflected in the projections described in 6.2(a) above. The short-term
------
plan will include an identification of support, processes, systems,
resources and changes required by the Equifax Group, and a projected time
schedule for developing, integrating and implementing the requirements. The
long-range plan will treat the strategic aspects of the support of the
business goals and objectives of the Equifax Group as set forth in the
projections described in Section 6.2(a), including, without limitation,
--------------
flexible use of resources managed by IBM as part of the Services in support
of the Equifax Group's business priorities and strategies.
IBM will draft the Business and Operations Support Plan with Equifax's
active participation, cooperation and advice through the Integrated
Planning Team. IBM will provide input for the plan regarding industry
trends with respect to the Services and proposals with regard to the
Services for process improvements, change management, skilled development,
quality improvement, cost per Resource Unit reductions, increased
efficiency and flexibility in operations and resource utilization, and
enhance functionality. The final Business and Operations Support Plan for
each * period will be provided by IBM based on the mutual agreement of
the Parties, with any disputed matters being submitted to the dispute
<PAGE>
resolution process set forth in Section 16. The Business and Operations
----------
Support Plan will be reviewed and updated at least semi-annually
thereafter. Any changes to the Agreement or the Services required by the
Business and Operations Support Plan will be defined, approved and
implemented in accordance with the Change Control Process set forth in
Section 6.3.
-----------
6.3 CHANGE CONTROL PROCESS
Within * after the Effective Date and for the remainder of the Term, the
Parties shall define, establish, implement, document and maintain a change
control process for activities, processes, provisions and operations under the
Agreement including each Transaction Document and to evolve the Services (the
"Change Control Process"). The purposes and objectives of the Change Control
Process are (i) to determine whether a change to the System is within the scope
of the Services or constitutes a New Service under the applicable Transaction
Documents, (ii) to prioritize all requests for changes to the System ("Change
------
Requests"), (iii) to minimize the risk of exceeding both time and cost estimates
- --------
associated with the Change Requests by identifying, documenting, quantifying,
controlling, managing and communicating Change Requests and their disposition
and as applicable, implementation; and (iv) to identify the different roles,
responsibilities and actions that shall be assumed and taken by the Parties to
define and implement the changes to the System.
The Project Executives shall be the focal point for all Change Requests and
shall be responsible for promptly and diligently effecting the activities set
forth above in this Section 6.3 with respect to each Change Request.
-----------
The Change Control Process shall include, at a minimum:
a. Changes to the System may be requested by either Party. Since a
change may affect the price, schedule or other terms, both the Equifax
and IBM Project Executives must review and approve, in writing, each
Change Request before any change is implemented.
b. The Party proposing a Change Request will write a Change Request Form
("CRF"), describing the change, the rationale for the change and the
---
effect that change will have, if completed, or the impact it will
have, if rejected, on the Agreement, any Transaction Document and/or
the Services.
c. Equifax's or IBM's Project Executive, as appropriate, will review the
proposed Change Request. If accepted, the CRF will be submitted to
the other Party for review and approval. If rejected, the CRF will
be returned to the originator along with the reason for rejection.
d. All material Change Requests shall be forwarded to the Integrated
Planning Team for review and approval prior to implementation.
e. Each approved Change Request will be implemented through a written
change authorization. If any Change Request results in a change in
scope, price, or terms and conditions, then the Agreement and affected
Transaction Document including the Supplement and Schedules thereto,
will be updated to reflect the changes in scope, price or terms and
conditions, as appropriate pursuant to Section 17.2.
------------
<PAGE>
7. SERVICES STAFFING/MANAGEMENT/ADMINISTRATION
7.1 PROJECT EXECUTIVES
a) Prior to the Commencement Date under each Transaction Document, IBM and
Equifax will each designate an individual to whom all communications to the
appointing Party may be addressed and who has the authority to act for the
appointing Party and its subcontractors in connection with all aspects of
such Transaction Document (the "Project Executive").
-----------------
b) Unless otherwise provided in a Transaction Document, IBM shall cause each
person assigned as a IBM Project Executive under each Transaction Document
to devote substantially all of his or her working time and effort in the
employ of IBM to his or her responsibilities for the provision of the
Services under such Transaction Document as required by such Transaction
Document, subject to IBM's reasonable holiday, vacation and medical leave
policies and subject to occasional, short-term, non-recurring work on other
assignments by IBM related to the Project Executive's areas of expertise.
Before the initial and each subsequent assignment of an individual to such
position, each Party shall notify the other Party of * . Each Party
agrees to discuss with the other Party any objections the other Party may
have to such assignment.
c) IBM will give Equifax at least * advance notice of a change of the
person appointed as the IBM Project Executive under each Transaction
Document, and will discuss with Equifax any objections Equifax may have to
such change. IBM shall not * the IBM Project Executive * to the
Equifax service team under any Transaction Document, nor shall IBM *
during the term of any Transaction Document, unless Equifax consents to
such * , or the IBM employee *
7.2 REPLACEMENT OF PERSONNEL
If Equifax reasonably and in good faith determines that it is not in Equifax's
best interests for any IBM or subcontractor employee to be appointed to perform
or to continue performing any of the Services, Equifax shall give IBM written
notice specifying the reasons for its position and requesting that such employee
not be appointed or be removed from the IBM or IBM subcontractor employee group
servicing Equifax and be replaced with another IBM employee or IBM subcontractor
employee. Promptly after its receipt of such a notice, IBM shall investigate
the matters set forth in the notice, discuss with Equifax the results of the
investigation, and resolve the matter in a mutually agreeable manner.
<PAGE>
7.3 RETENTION OF EXPERIENCED PERSONNEL
If IBM fails under any Transaction Document to meet the * under any Transaction
Document persistently or continuously and if Equifax reasonably believes such
failure is attributable in whole or in part to IBM's reassignment, movement, or
other changes in the human resources allocated by IBM to the performance and
delivery of the Services pursuant to such Transaction Document or the Agreement
and/or to the IBM subcontractors assigned to the Equifax service team, Equifax
will notify IBM of such belief and the basis for such belief. Upon receipt of
such notice from Equifax, IBM (a) will promptly provide to Equifax a report
setting forth IBM's position regarding the matters raised by Equifax in its
notice; (b) will meet with Equifax to discuss the matters raised by Equifax in
its notice and IBM's positions with regard to such matters; and (c) will
promptly and diligently take commercially reasonable action to *
7.4 EFFICIENT USE OF RESOURCES
IBM shall take commercially reasonable actions (a) to efficiently administer,
manage, operate and use the resources employed by IBM to provide and perform the
Services that are chargeable to Equifax under the Agreement, and (b) to
diligently and continuously improve the performance and delivery of the Services
by IBM and the elements of the policies, processes, procedures and System that
are used by IBM to perform and deliver the Services, including, without
limitation, re-engineering, tuning, optimizing, balancing or reconfiguring the
processes, procedures and systems used to perform, deliver and track the
Services.
8. RELATIONSHIP PROTOCOLS
8.1 EVOLVING NATURE OF RELATIONSHIP
a) The Supplement and Schedules to each Transaction Document will be updated
by the Parties as necessary or appropriate from time to time during the
Term to accurately reflect the evolution of the Services and components and
elements of the Services as described therein. The preceding sentence is
not intended, nor is it authorization, to expand the scope of the Services
except as provided pursuant to Section 3.12 entitled "New Services."
------------
b) For the one hundred-eighty (180) days following the Commencement Date under
each Transaction Document, IBM and Equifax reserve the right to inventory,
validate and update any information that is reflected in or omitted from
the Transaction Document and attached Supplement and/or Schedules. If
discrepancies are detected, the Transaction Document, Supplement and/or
Schedules shall be promptly changed, modified, updated and adjusted to
correct such discrepancies upon mutual agreement, so that the Transaction
Document, Supplement and/or Schedules will be correct and accurately
reflect the Services and charges provided by IBM to Equifax Group. If
either Party disputes the existence of a discrepancy identified by the
other Party, the Parties will submit the matter to the Equifax/IBM
Integrated Planning Team for dispute resolution as specified in Section 16.
----------
c) Both Equifax and IBM agree that the Services provided * of the Equifax
Group and IBM, that the relationship memorialized by the Agreement and the
Transaction Documents * as the operating and business environment of the
Equifax Group * , and that the scope of the Services that will be
provided by IBM during the Term and corresponding fees charged by IBM *
with the written agreement of the Parties pursuant to the Change Control
Process. Therefore, the Integrated Planning Team will periodically evaluate
the business and operating strategies of each
<PAGE>
Party and recommend * to optimize such strategies and determine the
effect that any * may have on * under the Agreement.
8.2 REQUIRED CONSENTS
a) The Equifax Group shall remain the contracting party of record for the
Third Party Agreements allocable to each Transaction Document and to which
the Equifax Group is a party on the Execution Date under each such
Transaction Document. * the responsibility for timely obtaining all
Required Consents under the Third Party Agreements allocable to a
Transaction Document and to which * is a party, except Third Party
Agreements * . IBM will provide Equifax with advice and counsel regarding
IBM's experience and agreements with the third party vendors under the
Third Party Agreements to which the Equifax Group is a party on the
Execution Date under each such Transaction Document with regard to
obtaining any Required Consents, and the benefit of any relationship of IBM
with each such third-party vendor to the extent permitted under the IBM-
third party vendor arrangement to obtain any Required Consent. *
management and administrative responsibilities for obtaining all Required
Consents under the Third Party Agreements allocable to each Transaction
Document existing on the Execution Date of each such Transaction Document,
subject to the * terms of each such Required Consent. * the
responsibility for timely obtaining all Required Consents under Third Party
Agreements allocable to a Transaction Document to which * is a party,
subject to the * terms of each such Required Consent. The provisions of
this Section shall be applicable to New Services unless otherwise provided
by the Parties in the documentation governing New Services.
b) Subject to the provisions of Section 8.3, IBM will use commercially
-----------
reasonable efforts to obtain, and will act as Equifax's attorney in fact in
connection with obtaining, any Required Consents that are both (i) *
under Section 8.2(a), and (ii) under Third Party Agreements allocable to a
Transaction Document that are * the * under such Transaction Document.
Upon obtaining a third party vendor's agreement to terms for a Required
Consent, the Required Consent shall be provided to Equifax for review,
approval, and signature. If IBM is unable to obtain the Required Consent
within a reasonable time in a form acceptable to Equifax, then the Parties'
obligations with respect to the performance of, and payment for, any
Services dependent on such Required Consent shall be determined in
accordance with the provisions of Section 8.2(e).
---------------
c) Subject to Section 8.2(d), * the costs, if any, of obtaining all Required
Consents, including without limitation, all charges and fees related to
obtaining the Required Consents for the Third Party Agreements allocable to
each Transaction Document and to which the Equifax Group is a party
existing as of the Execution Date under each such Transaction Document,
except agreements for software * by * and Third Party Agreements
relating to Systems Software, Machine maintenance and Machine leases, * the
costs of obtaining all Required Consents for the Third Party Agreements
allocable to each Transaction Document existing as of the Execution Date
under each Transaction Document and not described above as the * . For
all Third Party Agreements allocable to each Transaction Document entered
into after the Execution Date under each such Transaction Document, the *
shall bear the costs, if any, of obtaining Required Consents. In addition,
* the costs, if any, associated with the cancellation and re-licensing of
any Software allocable to a Transaction Document and licensed by the
Equifax Group prior to the Execution Date under such Transaction Document
if required for IBM to provide the Services after the Commencement Date
under
<PAGE>
such Transaction Document, except Software * the cost, if any, associated
with the cancellation and re-licensing of any Software allocable to a
Transaction Document and licensed by the Equifax Group prior to the
Execution Date under such Transaction Document * , if required for IBM to
provide the Services after the Commencement Date under such Transaction
Document. The provisions of this Section shall be applicable to New
Services unless otherwise provided by the Parties in the documentation
governing New Services
d) Notwithstanding anything to the contrary in Section 8.2(c), * any costs
--------------
allocable to * under Section 8.2(c) provided that: (i) the costs are
--------------
incurred because the third party vendor from whom a Required Consent is
requested or who requires cancellation and re-licensing of Software has a
pre-existing policy to charge for or not grant a Required Consent or to
require cancellation and re-licensing of Software * ,(ii) the third party
vendor does not have such a policy generally with respect to * , (iii)
the policy is not limited to * , and (iv) * diligent and commercially
reasonable efforts to * the vendor * as * . In any such case, * a
functionally equivalent substitute, if available, for the product or
service provided by the third party vendor, * in good faith
implementation of such substitute product or service. No substitute product
or service will be implemented without * , which shall not be * . *
under this Section 8.2(d) shall be * by a third party vendor that are
directly attributable to such third party vendor's pre-existing policy to
charge for Required Consents or to require cancellation and relicensing of
Software * and shall not in any event include any amounts that would have
otherwise been charged by such third party vendor if another outsourcing
services provider was requesting a Required Consent or * Software.
e) Notwithstanding any other provision of the Agreement, no Services requiring
a Required Consent shall commence and no Monthly Charge or other charge
shall commence for such Services until all applicable Required Consents for
such Services are obtained, unless otherwise agreed by the Parties;
provided, however, that to the extent the Monthly Charge or other charge
includes amounts that constitute * of IBM, such amounts will be due and
payable to IBM by Equifax within a period not to exceed * following
commencement of such Services. * a list each * setting forth the
status of each Required Consent until all Required Consents are obtained. *
shall timely cooperate * in order to facilitate the proper and timely
publication of such monthly Required Consents list. Subject to the
foregoing portion of this Section 8.2(e), if any Required Consent is not
--------------
obtained with respect to any of the Third Party Agreements existing as of
the Commencement Date under any Transaction Document, and prior to the
Commencement Date, the Parties agree to commence the provision of Services
without such Required Consents, the Parties shall cooperate with each other
in achieving a reasonable alternative arrangement for Equifax to continue
to process its work with minimum interference to its business operations
unless and until such Required Consents are obtained. The * shall be * if
caused by Required Consents needed from (i) * , (ii) from the licensors
of the * , and/or (iii) from third-party vendors under any Third Party
Agreements * generally as described in Section 8.2(c), and in all other
--------------
instances *
<PAGE>
8.3 APPOINTMENT AS ATTORNEY IN FACT
a) Equifax appoints IBM as the attorney in fact of the members of the Equifax
Group, and IBM accepts such appointment as a part of the Services, for the
limited purposes of administering, managing, supporting, operating under
and paying under the Third Party Agreements to which one or more members of
the Equifax Group is a party, and to obtain certain Required Consents as
provided in Section 8.2(b), in connection with the Services as contemplated
-------------
by the Agreement. Equifax does not appoint IBM as the attorney in fact of
the members of the Equifax Group for the purposes of entering into oral or
written agreements with any individual or business entity for or in the
name of the Equifax Group or their Affiliates, without the prior express
written approval of Equifax. Equifax agrees to promptly notify all Third
Party Providers under the Third Party Agreements to which one or more
members of the Equifax Group is a party of such appointment. Subject to
its obligation to indemnify Equifax for any applicable penalties, damages,
termination or other charges under Section 14.1, IBM may direct that the
------------
Equifax Group cancel, substitute, terminate, change or add to the Third
Party Providers under the Third Party Agreements as it chooses so long as
IBM continues to perform the Services in the manner required by the
Agreement; provided, however, IBM * prior to the cancellation,
substitution, termination, change or addition of any Third Party Agreement
to which one or more members of the Equifax Group is or will be a party.
* If any such cancellation, substitution, termination, change or
addition of a Third Party Agreement will have an impact on the operations
of users that are outside the scope of the Services and Equifax has
notified IBM prior to the expiration of * of such impact and IBM elects
to proceed, IBM will provide or cause to be provided the products and/or
services that are the subject of such Third Party Agreement to the users
that are outside the scope of the Services on terms no less favorable than
the terms of the applicable Third Party Agreement.
b) IBM will perform its obligations and responsibilities as an attorney in
fact pursuant to Section 8.3(a) under all Third Party Agreements to which a
--------------
member of the Equifax Group is a party subject to the provisions of the
Agreement, including, without limitation, Section 8.2, this Section 8.3,
----------- -----------
Section 9.1 and Section 11. Upon Equifax's request, IBM will provide to
----------- ----------
Equifax all information and documentation related to its activities as the
Equifax Group's attorney in fact with regard to such Third Party
Agreements. Equifax may terminate or provide additional restrictions on
IBM's attorney in fact appointment with respect to any Third Party
Agreement to which one or more of the members of the Equifax Group is a
party if IBM (i) fails to pay any amount due in a timely manner; (ii)
permits an actual default to occur; or (iii) does not diligently pursue the
service and financial benefits available to the Equifax Group under such
Third Party Agreement.
c) Beginning on the Execution Date (as defined in the applicable Transaction
Document) of each Transaction Document and for the term of each such
Transaction Document, the Equifax Group will not enter into any new, or
terminate or amend any existing, Third Party Agreement to which one or more
members of the Equifax Group is a party that adversely impacts IBM's
ability to provide the Services covered by such Transaction Document or
increases IBM's cost of providing such Services without the prior written
consent of IBM.
<PAGE>
8.4 CONFLICTS OF INTERESTS
a) Each Party recognizes that IBM personnel providing Services to the Equifax
Group under the Agreement may perform similar services for others and the
Agreement shall not prevent IBM from performing similar services for others
subject to the restrictions set forth in Section 11 and/or the applicable
--------------------------------
Transaction Document; provided, however, IBM shall not use any of the
--------------------
Equifax Provided Hardware or Equifax Software or Equifax Provided Office
Furnishings to perform similar services for others (including the IBM),
without the prior written consent of Equifax.
b) Neither Party, through its personnel at any site covered under a
Transaction Document, shall knowingly, directly or indirectly, * during
the Term of the Agreement unless otherwise agreed in writing by the Parties
and except as provided in Section 12.6(g). Equifax or IBM * to or *
---------------
from general * will be exempted from this provision.
c) Any * shall be as specified in the applicable Transaction Document.
8.5 ALTERNATE PROVIDERS
a) During the Term, Equifax shall have the right to retain third party
suppliers to perform any service, function, responsibility, activity or
task that is within the scope of the Services or would constitute a New
Service pursuant to Section 3.12, or to perform any such services,
------------
functions, responsibilities or tasks (whether all or a part of the Services
or the New Services) internally. IBM shall cooperate with any such third
party supplier and Equifax as requested from time to time. Such
cooperation shall include, without limitation, (i) providing reasonable
physical and electronic access to the Facilities, the Data Center and the
books and records in the possession of IBM regarding the Equifax Business
and/or the Services; (ii) use of any Machines used by IBM to perform
services for the Equifax Group for the Equifax Business; (iii) use of any
of the Software (other than any Software where the underlying license
agreement does not authorize such access and consent permitting such access
and use has not been obtained); (iv) providing such information (subject to
an appropriate confidentiality agreement, if appropriate) regarding the
operating environment, System constraints, and other operating parameters
as is reasonably necessary for the work product of the third party supplier
of the Equifax Group to be compatible with the Services or New Services;
and (v) such other reasonable cooperation as may be requested by Equifax.
b) IBM's obligations hereunder shall be subject to the third party suppliers'
compliance with reasonable Facilities and Data Center data and physical
security and other applicable standards and procedures, execution of
appropriate confidentiality agreements, and reasonable scheduling of
computer time and access to other resources to be furnished by IBM pursuant
to the Agreement.
c) If IBM's cooperation with Equifax or any third party supplier performing
work as described in Section 8.5(a), causes IBM to expend *
--------------
additional resources and incur costs that IBM would not otherwise have
expended but which fall within the scope of activities comprising the
Services, such additional resources and costs will be charged to Equifax
* and/or * therefor; provided, however, if the additional
resources expended and costs incurred are not within the scope of
activities comprising the Services, Equifax shall reimburse IBM * for
such resources subject to Section 9.11 hereof and for * as
invoiced. The Parties further agree that if in IBM's reasonable, good faith
determination, a third party supplier's
<PAGE>
activities affect IBM's ability to meet the Performance Standards or
otherwise provide the Services in accordance with the Agreement, IBM will
provide written notice to Equifax of such determination. The Parties will
cooperate to determine and verify whether such effect is caused by a third
party supplier, the extent of such affect, and how to ameliorate any such
effect. IBM shall be excused for any inability to * or otherwise
provide any of the Services to the extent, and only for the period, any
such third party supplier's activities directly affect and impact IBM's
ability to * or otherwise provide any of the Services in accordance
with the Agreement.
d) Equifax's retention of third party suppliers pursuant to this Section 8.5
-----------
to perform services, functions, activities, tasks or responsibilities that
are within the scope of the Services shall not relieve Equifax of its
obligations set forth in the Agreement to pay IBM the charges applicable to
such services, functions, activities, tasks or responsibilities as set
forth in the Agreement, unless Equifax is relieved from such charge
pursuant to a provision of the Agreement or by the agreement of IBM.
8.6 USE OF SUBCONTRACTORS
a) Within * after the Commencement Date under each such Transaction
Document, the Parties will * under each such Transaction Document
that the * to perform and deliver the part or portion of the Services
indicated on such list as the "Listed Subcontractors"), Affiliates of IBM
shall be deemed to be Listed Subcontractors. * of any subcontractor's
activity with respect to the Equifax Group or the Services, * decision
to * for any function, responsibility or task, (i) that could have
a material affect on the quality, timing, cost, consistency or
performance of the Services under any Transaction Document or on the
operations of any member of the Equifax Group or on the security of the
Equifax Group data, books and records, or Facilities, or on the Equifax
Business as conducted by any member of the Equifax Group, or (ii) where the
subcontractor will interface directly with the members of the Equifax
Group. Upon Equifax's request, * in order to permit Equifax to
determine * Such information shall include * Subject to IBM's
timely provision of the foregoing information to Equifax, Equifax shall *
that is the subject of the * if Equifax has not notified IBM in
writing of * such * on or before the * day after receipt of such
notice from IBM. IBM shall not * unless and until IBM and
Equifax shall have * In addition, IBM shall not disclose any
Confidential Information of the Equifax Group to any subcontractor unless
and until such subcontractor has agreed in writing to protect the
confidentiality of such Confidential Information in a manner equivalent to
that required of IBM by Section 11.
----------
b) IBM shall remain primarily liable and obligated to Equifax for the timely
and proper performance of all of its obligations hereunder even if such
obligations are delegated to third party subcontractors (including, without
limitation, Affiliates of IBM entering into Transaction Documents with
Equifax and Affiliates of Equifax), and for the proper and timely
performance and actions of any person or entity to which it delegates or
subcontracts any such obligation.
<PAGE>
8.7 EQUIFAX APPROVALS AND NOTIFICATION
For those areas of the Services where Equifax (a) has reserved a right-of-
approval, consent or agreement, (b) is required to provide notification, and/or
(c) is to perform a responsibility set forth in the Agreement, and such
approval, consent, notification or performance is delayed or withheld beyond the
period provided in the Agreement, including any Transaction Document and the
Supplement and the Schedules thereto, without authorization or right and, such
delay or withholding is not caused by IBM and affects IBM's ability to provide
the Services under the Agreement including any Transaction Document and the
Supplement and Schedules thereto, Equifax will relieve IBM of the responsibility
for * that portion of the Services to the extent, but only to the extent,
directly affected by such delay or withholding. Equifax will reimburse IBM in
accordance with the Agreement for additional resources, if any, incurred during
such period as a direct result thereof. If not specified otherwise in the
Agreement, the period for such approval or notification shall be * days
unless another time period is otherwise agreed by the Parties.
9. CHARGES/NEW SERVICES/INVOICES/PAYMENTS
9.1 DISBURSEMENTS
Beginning on the Commencement Date of each Transaction Document, IBM will pay as
part of the Services covered by such Transaction Document the Third Party
Providers for the provision of the software, products and services under the
Third Party Agreements as set forth in the applicable Transaction Document. In
addition, IBM will reimburse Equifax in a timely manner for payments to such
Third Party Providers by the Equifax Group for amounts allocable to periods on
and after the Commencement Date under each such Transaction Document. Equifax
will promptly reimburse IBM for all payments to such Third Party Providers made
by IBM if such payments are allocable to the periods prior to any such
Commencement Date and are not otherwise the responsibility of IBM under the
Agreement. If IBM should receive during the Term any refund, credit or other
rebate in respect of such Third Party Agreements which is attributable to a
period prior to the Commencement Date under the applicable Transaction Document,
IBM will promptly notify Equifax of such refund, credit or rebate and will
promptly pay to Equifax the full amount of such refund, credit or rebate. If
Equifax should receive during the Term any refund, credit or other rebate in
respect of such Third Party Agreements which is attributable to a period after
the Commencement Date under the applicable Transaction Document, Equifax will
promptly notify IBM of such refund, credit or rebate and will promptly pay to
IBM the full amount of such refund, credit or rebate.
9.2 MONTHLY CHARGE
For each month of each Contract Year during the term under each Transaction
Document, Equifax agrees to pay the Monthly Charge as specified in the
Supplement and Schedules to such Transaction Document, together with the other
amounts as described in this Section 9.
---------
All periodic charges under each Transaction Document are to be computed on a
calendar month basis, and will be prorated for any partial month, unless
specifically stated otherwise in the Agreement (including the applicable
Transaction Document).
On a monthly basis IBM will invoice Equifax the Monthly Charge under each
Transaction Document for that month in advance, as specified in the Supplement
and Schedules to each such Transaction Document. The invoices will separately
state applicable taxes owed by Equifax by tax jurisdiction, and charges for
other elements comprising the Monthly Charge as determined by the Parties
pursuant to Section 9.5(b).
--------------
<PAGE>
9.3 ADDITIONAL CHARGES
Beginning at * under each Transaction Document and at * of each
Transaction Document, Equifax and IBM will review the quantity of Resource
Units utilized by Equifax during * and calculate the * Unplanned
Resource Units utilized by Equifax during * Equifax and IBM will
calculate the charges applicable to such * Unplanned Resource Units for
* in accordance with the Schedule addressing charges under each Transaction
Document, and Equifax will pay the amount of the result of such calculation in
accordance with Section 9.7.
-----------
9.4 COST OF LIVING ADJUSTMENT
IBM will charge or credit Equifax a Cost of Living Adjustment ("COLA") under
each Transaction Document in accordance with the procedures set forth in
Schedule J to each such Transaction Document beginning after the Commencement
- ----------
Date under each such Transaction Document, as set forth in such Schedule.
9.5 TAXES
a) The disbursements described in Section 9.1, the Monthly Charges described
-----------
in Section 9.2, the additional charges described in Section 9.3 and the
----------- -----------
COLA described in Section 9.4, paid by Equifax are inclusive of
-----------
applicable * taxes attributable to the period on or after the Commencement
Date under each Transaction Document based upon or measured by * cost in
acquiring or providing * furnished to or used by IBM in providing and
performing the Services, (ii) the value or cost of * and (iii) all
taxes payable by IBM with respect to * provided, however, Equifax will
be responsible for paying all * taxes due on or with respect to *
Each Party shall bear sole responsibility for all taxes, assessments and
other real property-related levies on *
b) The Parties agree to reasonably cooperate with each other in good faith to
more accurately determine and reflect each Party's tax liability and to
minimize such liability to the extent legally permissible. Each Party
shall provide and make available to the other any resale certificates and
other exemption certificates or information reasonably requested by either
Party. The Parties will also work together to segregate the Monthly
Charges and other charges, reimbursements and amounts payable hereunder,
into separate payment accounts charged under separate invoices, as
appropriate, for Services and the components of the Services (i.e.,
components that are taxable and nontaxable, including those for which a
sales, use or similar tax has already been paid by IBM and for which IBM
functions merely as a paying agent for Equifax in receiving goods, supplies
or services including licensing arrangements that otherwise are nontaxable
or have previously been subjected to tax, components that are capitalized,
and components that are expensed).
c) Notwithstanding any other provision of the Agreement, if a services, value
added or similar tax is assessed on IBM's provision of the Services (or any
New Services) to Equifax or on IBM's charges to Equifax under the
Agreement, Equifax will be responsible for and pay the amount of any such
tax.
<PAGE>
9.6 NEW SERVICES
a) The charges for New Services will be integrated into the Supplement and
Schedules to the affected Transaction Document in accordance with Sections
--------
3.12 and 17.2.
---- ----
b) If the Parties cannot agree either that a function, responsibility or task
falls within the definition of a New Service, * The determination of
whether any function, responsibility or task is a New Service will be
determined pursuant to the dispute resolution provisions in Section 16.
----------
Equifax shall * of any * the disputed function, responsibility or task
under this Section 9.6 * and * of any * the disputed function,
-----------
responsibility or task under this Section 9.6 * by Equifax or * in
-----------
accordance with * if requested by IBM, pending a resolution of the
dispute in accordance with Section 16. Any * Equifax of any such * by
----------
Equifax * and * pursuant to this Section 9.6 after resolution of the
-----------
applicable dispute, shall be * from the * with respect to such
dispute and then by IBM. All * not * and * by either Party to the
other Party upon resolution of the dispute with respect to which * shall be
* upon resolution of the * together with * at the * from the date
that the * was * IBM from Equifax under the Agreement through the date
of * IBM to Equifax.
9.7 INVOICE PAYMENT
At its election, Equifax will pay each invoice for charges under the Agreement
either by wire funds transfer or other electronic means acceptable to IBM to an
account specified by IBM or by bank check, within the calendar month in which
such invoice is received by Equifax, provided Equifax receives such invoice on
or before the * day of such month; otherwise such payment shall be made
within * days after the date of Equifax's receipt of the invoice. In the event
that any invoice payment is not received by IBM within * days following the
date specified for such payment herein, a late payment fee of * per month, or
the maximum amount permissible by law, whichever is less, of the unpaid, late
invoice payment will be due and payable by Equifax to IBM from the date such
payment became overdue through the date of payment to IBM.
No invoice for charges for any of the Services shall be delivered to Equifax *;
provided, however, any Services that are * expressly stated in the Agreement
as * shall be excluded from the limitation of this sentence to the extent, but
only to the extent, expressly set forth in the Agreement.
9.8 *
a) At the end of the first * of the Term and at the end of each * period
thereafter, Equifax U.S. may elect * on a Transaction Document basis *.
The cost payable to * will be * The Parties will jointly * The *
will focus on *
b) Each Transaction Document will set forth a * for *
<PAGE>
provided under such Transaction Document and * The * will be either
the * or an agreed * and the Parties shall exercise the rights and
obligations described herein if * the agreed upon * For purposes of
the Agreement, the * shall be the * of * to which * were *
c) The result of each * will be submitted to the IPT, Equifax and IBM. In
the event that the * indicates that IBM's *, the IPT will promptly *
identify opportunities for improvements in the * of the Services *
d) With respect to each area identified by the IPT * as an area for
improvement * of the Services * as set forth in Section 9.8(c),
--------------
IBM * proceed in a commercially reasonable manner * Equifax will
cooperate with IBM in a commercially reasonable manner to assist IBM in
this activity. Notwithstanding the foregoing, IBM may, at its sole
discretion, elect to *
e) *
f) In the event that IBM shall fail to comply with the requirements of Section
-------
9.8(d) as to * Equifax may * with respect to * as to which IBM has
------
failed to comply with the requirements of Section 9.8(d), * the Services
---------------
allocable to * and take such * the Services and * in the Services *
for the Services *.
g) Nothing in this Section 9.8 shall be deemed to reduce or increase the
-----------
obligations of IBM to provide the Services * as set forth in the Agreement.
9.9 *
If IBM * set forth in any Transaction Document, IBM shall * set forth in a
Schedule to such Transaction Document (each, a * collectively, the *against
the * for the * following the month in which the * The Parties agree that
the * are a *
<PAGE>
* that the Equifax Group * for which * in the Agreement, that the * in
each such * would be * and that the * the Equifax Group. The Parties
agree that the * and are the * of Equifax with respect to the * with
respect to which such * are * to Equifax subject to and as limited by the
provisions of Sections 12 and 13.
------------------
9.10 OTHER CREDITS
Except as otherwise set forth in the Agreement, with respect to any amount to be
paid or reimbursed to Equifax by IBM at the time any such amount is due and
payable to Equifax, IBM may pay that amount to Equifax by applying a credit for
the month such amount is due and payable against the charges otherwise payable
to IBM under the Agreement, at IBM's option. Notwithstanding the foregoing, if
the amount to be so paid or reimbursed by IBM in any specific month, exceeds the
charges to Equifax for such month, IBM shall promptly pay any difference to
Equifax by check or wire transfer during such month. *
9.11 *
IBM will * the Equifax Group for the * pursuant to a Transaction Document
that will be * IBM, or in the case of a Transaction Document that has been
assigned to an IBM Affiliate, * IBM or such IBM Affiliate, * after the
Effective Date, * for * Equifax * to * subject to any changes *
to reflect the * IBM or such IBM Affiliate * provided, however, that the
provisions of this Section 9.11 apply only to * and * IBM or IBM Affiliates *
------------
after the Effective Date.
9.12 DISPUTED CHARGES/CREDITS
In the event Equifax disputes the accuracy or applicability of a charge or
credit or other financial arrangement described in the Agreement (i.e., Monthly
Charge, Unplanned Resource Units, COLA, Service Credits, pass-through billings,
etc.), Equifax shall notify IBM of such dispute as soon as practicable after the
discrepancy has been discovered. The Parties will investigate and resolve the
dispute using the dispute resolution processes provided under Section 16 of the
----------
Agreement. Any undisputed amounts contained in or applicable to an invoice will
be paid by Equifax and any undisputed credit amounts will be promptly credited
by IBM. Upon request of either Party, Equifax in the case of a disputed charge,
or IBM in the case of a disputed credit, shall * Upon resolution of the
dispute, the Parties shall be paid * in connection with such dispute in
proportion to the amount received by each Party with respect to such dispute,
and the Parties shall each pay * attributable to the disputed amount in an *
of the disputed amount paid to each Party. Unpaid and uncredited monies that are
in dispute and *
<PAGE>
9.13 REDUCTION OF EQUIFAX WORK
a) If, during the Term, Equifax experiences significant changes in the scope
or nature of its business which have or are reasonably expected to have the
effect of causing a substantive and sustained decrease in the amount of IBM
resources used in performing the Services, provided such decreases are not
due to Equifax resuming the provision of such Services by itself or Equifax
transferring the provision of such Services to another vendor, such changes
shall be governed by this Section 9.13. Examples of the kinds of events
------------
that might cause such substantial decreases are:
1) changes in Equifax's products or markets;
2) mergers, acquisitions or divestitures; or
3) changes in market priorities.
b) Equifax will notify IBM of any event or discrete set of events which
Equifax believes qualifies under this Section 9.13, and IBM will identify
------------
in a plan that will be submitted to Equifax for review and acceptance, any
changes that can be made to accommodate such decrease of resource
requirements in a cost-effective manner without disruption to Equifax's
ongoing operations, and the *
c) Upon acceptance by Equifax, IBM will make any applicable adjustments to the
* and the * to reflect the foregoing and distribute an amended
Supplement to the Parties.
d) Equifax may, at its option and expense, employ an accredited and
independent auditor to verify IBM's methodology for calculating * conforms
to accepted accounting practices.
10. INTELLECTUAL PROPERTY RIGHTS
IBM, the members of the Equifax Group and their respective contractors and
subcontractors may develop, create, modify or personalize (collectively,
"Develop") certain computer programming code, including source and object code
- --------
("Code") and other Materials in order to perform the Services. The provisions
----
of this Section 10 set forth the respective rights of Equifax and IBM in such
----------
Code and other Materials. This Section 10 does not apply to development,
----------
modification, creation, or personalization of templates for commercially
available IBM products (for example, Lotus Notes templates). To the extent that
Services under any Transaction Document include the development, modification,
creation or personalization of such templates, rights with respect to such
templates will be set forth in the applicable Transaction Document or applicable
Schedule(s).
10.1 OWNERSHIP OF MATERIALS
With respect to any Materials whether Developed solely by IBM or its
subcontractors, or jointly by the Equifax Group personnel or their
subcontractors and IBM or its subcontractors, ownership will be as follows:
a) * shall be owned by Equifax or another member of the Equifax Group, as
applicable. During the Term, IBM shall have an irrevocable, nonexclusive,
worldwide, paid-up license to use, execute, reproduce, display, perform,
operate, distribute, modify, develop, personalize and create Derivative
Works from such Materials internally, and the right to sublicense third
parties to do any of the foregoing, for the sole purpose of performing the
Services.
<PAGE>
b) * shall be owned by IBM. During the Term , the Equifax Group shall have an
irrevocable, nonexclusive, worldwide, paid-up license to use in the Equifax
Business, execute, operate, reproduce, display, perform, distribute,
modify, Develop, personalize and create Derivative Works from, such
Materials internally, and the right to sublicense third parties to do any
of the foregoing for the Equifax Group.
c) With respect to any Materials whether or not Developed under the Agreement,
which are or have been Developed solely by the Equifax Group personnel
and/or their contractors, such Materials shall be owned by Equifax. IBM
shall have an irrevocable, nonexclusive, worldwide, paid-up license to use,
execute, operate, reproduce, display, perform, distribute, modify, Develop,
personalize and create Derivative Works from such Materials internally and
the right to sublicense third parties to do any of the foregoing, to the
extent necessary and for the sole purpose of performing the Services during
the Term.
d) Any ownership or license rights herein granted to either Party or another
member of the Equifax Group or any other Authorized Users are limited by
and subject to any patents and copyrights held by, and terms and conditions
of any license agreements with, applicable Third Party Providers.
e) To the extent that by operation of law any of the Materials may not be
owned by IBM or the Equifax Group to which ownership has been allocated
under this Section 10, each Party agrees to promptly assign, or cause to be
----------
assigned, and take such actions and execute and deliver such documents as
shall be necessary or appropriate to effect such assignment without further
consideration. Each Party hereby assigns, without further consideration,
the ownership of all right, title and interest in all U.S. and foreign
copyrights, and mask work rights (if any) in the Materials to the other
Party as set forth in this Section 10. Such assignee shall have the right
----------
to obtain and hold in its own name or transfer patents and copyrights,
applications, registrations, renewals and all other rights relating or
pertinent thereto.
10.2 OBLIGATIONS REGARDING MATERIALS
a) The Parties agree to reproduce copyright legends which appear on any
portion of the Materials which may be owned by the Parties and any and all
third parties.
b) Except as set forth in Section 11, the Agreement shall not preclude either
----------
Party from Developing materials or providing services which are competitive
to the Materials or Services which might be delivered pursuant to the
Agreement, except to the extent any of same may infringe any of the other
Party's * rights.
c) Neither the Agreement nor any disclosure made hereunder grants any license
to either Party under any patents rights, copyrights, mask work rights or
trade secrets of the other Party, except for the licenses expressly granted
under this Section 10 and Section 12.6 hereof.
---------- ------------
d) Each Party and their respective Affiliates shall have the right to develop
commercialize, use, publish and distribute materials and/or intellectual
property which may be substantially similar to the Materials (including,
without limitation, computer programs and other copyrighted works) for
their own use, for third parties or for other purposes provided that such
activities are effected without breach of their obligations under the
Agreement and do not infringe the intellectual property rights of the other
Party and/or its Affiliates.
<PAGE>
11. CONFIDENTIALITY/DATA SECURITY
11.1 Confidential Information
IBM and Equifax each acknowledge that the other Party and/or its Affiliates
possesses and will continue to possess information, which has commercial value
in such other Party's and/or its Affiliates' business and is not in the public
domain. Such information has been created, discovered, developed by such other
Party and its Affiliates or provided to it by a third party, and such other
Party and/or its Affiliates holds property rights in such information by
assignment, license or otherwise. "Confidential Information" means with respect
------------------------
to a Party, * including, without limitation, the terms of the Agreement *
"Trade Secrets" mean with respect to a Party, information related to the
-------------
services and/or business of the disclosing Party and/or its Affiliates and/or of
a third party which (a) derives economic value, actual or potential, from not
being generally known to or readily ascertainable by other persons who can
obtain economic value from its disclosure or use; and (b) is the subject of
efforts by the disclosing Party and/or its Affiliates that are reasonable under
the circumstances to maintain its secrecy, including without limitation (i)
marking any information reduced to tangible form clearly and conspicuously with
a legend identifying its confidential or proprietary nature; (ii) identifying
any oral presentation or communication; * Assuming the criteria in sections
(a) and (b) above are met, Trade Secrets include, but are not limited to,
technical and nontechnical data, formulas, patterns, compilations, computer
programs and software, devices, drawings, processes, methods, techniques,
designs, programs, financial plans, product plans, and lists of actual or
potential customers and suppliers. "Company Information" means collectively the
-------------------
Confidential Information and Trade Secrets. *
11.2 OBLIGATIONS
a) Equifax and IBM will each * use the same level of care to prevent
disclosure to third parties and to hold confidential, the Company
Information of the other Party as it employs to avoid disclosure,
publication or dissemination of its own information of a similar nature but
in no event less than a reasonable standard of care. Notwithstanding the
foregoing, the Parties and their Affiliates to which a Transaction Document
is assigned may disclose Company Information in the case of Equifax and its
Affiliates which accept assignment of a Transaction Document, to members of
the Equifax Group, and in the case of both Parties and their Affiliates,
which accept assignment of a Transaction Document, to the authorized
contractors and subcontractors involved in providing and using the Services
under the Agreement where: (i) such disclosure is necessary to permit the
members of the Equifax Group and the contractor or subcontractor to perform
its duties hereunder or use the Services; (ii) members of the Equifax Group
and the contractor or subcontractor agree in writing to observe the
confidentiality and restricted use and disclosure covenants and standards
of care set forth in this Section 11 and IBM and Equifax are each third
----------
party beneficiaries for all purposes; and (iii) IBM in the case of Equifax
Company Information received by IBM and/or its Affiliates and disclosed by
them as permitted herein or Equifax in the case of IBM Company Information
received by Equifax and/or its Affiliates and disclosed by them as
permitted herein, assumes full responsibility for the acts or omissions
<PAGE>
of its Affiliates, contractors and subcontractors no less than if the acts
or omissions were those of IBM and Equifax respectively.
b) Neither Equifax nor IBM shall use the Company Information of the other
Party except in the case of IBM and its Affiliates and subcontractors, (i)
in connection with the performance of the Services and (ii) as otherwise
specifically permitted in the Agreement, and in the case of Equifax, its
contractors and other members of the Equifax Group, (A) as specifically
permitted in the Agreement and (B) in connection with the use of the
Services. IBM shall be responsible to ensure that its Affiliates and
subcontractors comply with this Section 11.2(b) and Equifax shall be
---------------
responsible to ensure that the members of the Equifax Group and its
contractors comply with this Section 11.2(b).
---------------
c) Without limiting the generality of the foregoing, neither Party nor their
Affiliates will publicly disclose the terms of the Agreement, except to the
extent permitted by this Section 11 and to enforce the terms of the
----------
Agreement, without the prior written consent of the other. Furthermore,
neither IBM nor Equifax nor their Affiliates will make any use of the
Company Information of the other Party and its Affiliates except as
contemplated by the Agreement; acquire any right in or assert any lien
against the other Party's Company Information except as contemplated by the
Agreement; or refuse to promptly return, provide a copy of or destroy such
Company Information upon the request of the disclosing Party.
d) Notwithstanding any other provision of the Agreement, neither Party will be
restricted in using, in connection with its business operations, any data
processing or network management ideas, concepts, know-how and techniques
which are retained in the minds of employees who have had access to the
other Party's Company Information.
11.3 EXCLUSIONS
Notwithstanding the foregoing, this Section 11 will not apply to any information
----------
which IBM or Equifax can demonstrate was: (a) at the time of disclosure to it,
in the public domain; (b) after disclosure to it, published or otherwise becomes
part of the public domain through no fault of the receiving party; (c) without a
breach of duty owed to the disclosing party, is in the possession of the
receiving party at the time of disclosure to it; (d) received after disclosure
to it from a third party who had a lawful right to and, without a breach of duty
owed to the disclosing party, did disclose such information to it; or (e)
independently developed by the receiving party without reference to Company
Information of the disclosing party. Further, either Party may disclose the
other Party's Company Information to the extent required by law or order of a
court or governmental agency. However, the recipient of such Company
Information must give the other Party prompt notice and make a reasonable effort
to obtain a protective order or otherwise protect the confidentiality of such
information, all at the discloser's cost and expense. It is understood that the
receipt of Company Information under the Agreement will not limit or restrict
assignment or reassignment of employees of IBM and its Affiliates and the
Equifax Group within or between the respective Parties and their Affiliates.
11.4 LOSS OF COMPANY INFORMATION
The receiving Party will immediately notify the disclosing Party, orally or in
writing in the event of any disclosure, loss, or use in violation of the
Agreement of a disclosing Party's Company Information known to the receiving
Party.
<PAGE>
11.5 LIMITATION
The covenants of confidentiality set forth herein (a) will apply after the
Effective Date to any Company Information disclosed to the receiving Party
before and after the Effective Date and (b) will continue and must be maintained
from the Effective Date through the * and (i) with respect to Trade Secrets,
until the earlier of * or until such Trade Secrets no longer qualify as trade
secrets under applicable law; and (ii) with respect to Confidential Information
for a period equal to the shorter of * or until such Confidential Information no
longer qualifies as confidential under applicable law. Neither Party will be
responsible for the security of the Company Information of the other Party
during transmission via public communications facilities or for the loss of or
damage to such information during transmission, except to the extent that such
breach of security or loss or damage is caused by the failure of such Party to
perform its obligations under the Agreement, including exercisin g the standard
of care set forth in Section 11.2(a).
--------------
11.6 DATA
All of Equifax's Company Information (including, without limitation, data,
records and reports related to the Equifax Group, the Equifax Business and the
Services) is represented by Equifax to be the exclusive property of Equifax,
and/or its Affiliates or the property of third parties licensed to Equifax
and/or its Affiliates, and the furnishing of such information, data, records and
reports to, or access to such items by, IBM and/or its Affiliates and/or
subcontractors will not grant any express or implied license to or interest in
IBM and/or its Affiliates and/or subcontractors relating to such information,
data, records and reports except as required to perform the Services pursuant to
the Agreement. Unless specifically provided otherwise in a Transaction
Document, IBM shall have no responsibility with respect to compliance with laws
or regulations applicable to the storage, maintenance, and distribution of
Equifax Company Information to the extent that any such activity by IBM is
performed or implemented in accordance with Equifax's instruction or direction.
Upon request by Equifax at any time and from time to time and without regard to
the default status of the Parties under the Agreement, IBM and/or its Affiliates
and/or subcontractors shall promptly deliver to Equifax Equifax's Company
Information (including without limitation all data, records and related reports
regarding the Equifax Group, the Equifax Business and the Services) in
electronic (tape) format and in such hard copy as existing on the date of the
request by Equifax.
12. TERMINATION
12.1 Termination By Equifax
Equifax may terminate any individual Transaction Document for the following
reasons:
a) A material breach of such Transaction Document by IBM and/or its Affiliates
that remains uncured for * after receipt of written notice thereof;
provided, however, if a material breach of such Transaction Document by IBM
and/or its Affiliates (other than a breach of Section 11 hereof) occurs
----------
that by its nature cannot be cured by IBM in such * period but IBM
submits a commercially reasonable written plan to Equifax within such
period to cure such breach after the * period (but in no event more than *
after such notice of breach), the cure period for such breach shall be
extended to the date set forth in the plan; or
b) There exists * (i) on the Services support of the * of the Equifax Group
or the portion of
<PAGE>
the Equifax Group constituting the user group under such Transaction
Document, or (ii) on the management of the Services or the portion of the
Services covered by such Transaction Document; or
c) * upon * Equifax to IBM; or
d) In the event of * upon one hundred eighty (180) days prior notice by
Equifax to IBM, which notice must be given within 180 days after * or
e) IBM and/or its Affiliate that has accepted assignment of such Transaction
Document becomes insolvent or is unable to pay its debts or enters into or
files (or has filed or commenced against it) a petition, arrangement,
application, action or other proceeding seeking relief or protection under
the bankruptcy laws of the United States or any similar laws of the United
States or any state of the United States or any other country or transfers
all or substantially all of its assets to another person or entity; or
f) IBM and/or its Affiliate that has accepted assignment of such Transaction
Document * under the circumstances and resulting from the events described
in * or
g) Under the circumstances set forth in Section *
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12.2 TERMINATION BY IBM
IBM may terminate any Transaction Document for a material default by Equifax
that remains uncured for a period of * after written notice thereof to Equifax
from IBM.
12.3 TERMINATION CHARGES
a) In the event of a termination by Equifax pursuant to * or * Equifax shall
pay IBM * and * In the event of a termination by Equifax pursuant to *
Equifax shall pay IBM * but will not be responsible for *. In the event
of a termination by Equifax pursuant to * or * or * or * or * for failing
to provide * , Equifax shall not be responsible for the payment of * In the
instance of a termination by equifax pursuant to * Equifax may not recover
any damages from IBM for * , provided that nothing in this sentence shall
preclude any recovery by Equifax pursunat to Section 8.4(b), Section 9,
------------- ---------
Section 10, Section 11, Section 12, Section 13, Section 14, Section 15, or
---------- ---------- ---------- ---------- ---------- ----------
Section 17.3.
------------
b) Except as set forth in Section 12.3(a), Equifax shall not be obligated to
---------------
pay any charges that would otherwise accrue and be payable by Equifax
pursuant to the Agreement or any Transaction Document after the effective
date of the expiration or termination of the Agreement or any such
Transaction Document.
<PAGE>
12.4 [RESERVED]
12.5 SERVICES TRANSFER ASSISTANCE
a) The Parties agree that IBM will cooperate with the Equifax Group to assist
in the orderly transfer of the services, functions, responsibilities, tasks
and operations comprising the Services under each Transaction Document
provided by IBM and its Affiliates hereunder to one or more members of the
Equifax Group itself or another services provider in connection with the
expiration or earlier termination of the Agreement and/or each Transaction
Document for any reason, however described. * Services Transfer Assistance
thereunder is completed. Upon Equifax's request IBM or its Affiliate shall
provide transfer assistance in connection with migrating the work of the
Equifax Group to the Equifax Group itself or another services provider
("Services Transfer Assistance") commencing up to * prior to expiration or
----------------------------
upon any notice of termination, or of non-renewal of the Agreement or any
Transaction Document. In the event Equifax shall * and payable under the
Agreement within * of the start of Services Transfer Assistance, with or
without an attendant * IBM shall not be required to provide Services
Transfer Assistance unless Equifax * for * if any, applicable to the
Transaction Document(s) * and a reasonable projection of * such Transaction
Documents for the * Services Transfer Assistance. In no event will
Equifax's * be considered a failure by Equifax to * hereunder. Further, IBM
shall provide the Services Transfer Assistance in accordance with this
Section 12.5 even in the event of Equifax's * with or without an * if
------------
Equifax * of the * the Transaction Document(s) being terminated (other than
the * which shall be * as provided in the Supplement) for the Services
Transfer Assistance * Equifax desires IBM to provide such services to the
Equifax Group or its designees. Services Transfer Assistance shall be
provided through the effective date of the expiration or termination of the
Services under the Transaction Documents being terminated, and upon request
by Equifax, the effective date of such expiration or termination shall be
extended for up to * thereafter pursuant to the terms and conditions of the
Agreement and applicable Transaction Document(s) * shall be considered * of
such Transaction Documents, however any such * shall not affect the payment
date or amount of any applicable Termination Charges, which Termination
Charges shall be due and payable as of * Services Transfer Assistance shall
include, but not be limited to, providing the Equifax Group and their
respective agents, contractors and consultants, as necessary, with services
described in a Schedule to each Transaction Document.
b) If any Services Transfer Assistance provided by IBM requires the
utilization of additional resources that IBM would not otherwise use in the
performance of the Agreement and applicable Transaction Documents but for
which there is a current Resource Unit Baseline, Equifax will pay IBM for
such usage at the then-current applicable Transaction Document(s) charges
and in the manner set forth in the applicable Transaction Document(s). If
the Services Transfer Assistance requires IBM to * in the performance of
the Services under the Agreement and applicable Transaction Document(s),
then IBM shall notify Equifax of the identity and scope of the activities
requiring that IBM * and the projected * that will be * for the performance
of such assistance. Upon Equifax's authorization, IBM shall perform *
Within * after the date of the
<PAGE>
* Equifax * to provide such assistance to Equifax.
c) If Equifax exercises its option to * by IBM for Services Transfer
Assistance with regard to any Transaction Document and it is determined
that such * associated with the Services Transfer Assistance, then IBM
shall * or, if no * promptly * Equifax at the end of such Services
Transfer Assistance. Conversely, if the * IBM for Services Transfer
Assistance with regard to any Transaction Document does no * hereunder
for the provision of Services Transfer Assistance to Equifax, then IBM
shall * and Equifax shall *
12.6 OTHER RIGHTS UPON TERMINATION
At the expiration or earlier termination of the Agreement and/or any Transaction
Document for any reason, however described, IBM agrees in each such instance, as
applicable:
a) Upon Equifax's request, IBM agrees to sell to Equifax or its designee for *
the IBM Machines owned by IBM then currently being used by IBM primarily to
perform the Services or the portion of the Services covered by the
Transaction Document, as applicable. In the case of IBM Machines that IBM
is leasing and using primarily to perform the Services, IBM agrees to
permit Equifax or its designee to either buy-out the lease on the IBM
Machines and purchase the IBM Machines from the lessor or assume the
lease(s) and secure the release of IBM thereon, subject to the terms of the
applicable lease. Equifax shall be responsible for any sales, use or
similar taxes associated with such purchase of such IBM Machines or the
assumption of such leases.
b) IBM will grant to the members of the Equifax Group and their Affiliates an
irrevocable, nonexclusive, worldwide, perpetual, paid-up source and object
code license to use, execute, operate, reproduce, display, perform,
distribute, modify, Develop and personalize, and create Derivative Works
from, * as a part of and in connection with the Equifax Business, and the
right to sublicense third parties to do any of the foregoing for the
members of the Equifax Group. Except as specifically set forth in this
Section 12.6(b), nothing in this Section 12.6(b) grants Equifax any license
-------------- --------------
to any materials *
c) IBM will provide to the Equifax Group a source code and an object code
license for * and not otherwise owned by or licensed to Equifax in
accordance with Section 12.6(b) and not generally commercially available
---------------
for use by the Equifax Group as a part of and in connection with the
Equifax Business, upon terms and prices to be mutually agreed upon by the
Parties * or, in the case where no such * At Equifax's option, IBM will
recommend a mutually agreeable commercially available substitute, if
available, to perform the same function.
d) Subject to Section 12.6(e), if IBM has licensed or purchased and is using
--------------
any generally commercially available Software to provide the Services to
the Equifax Group at the date of expiration or termination of the Agreement
or any Transaction Document, Equifax may elect to take a transfer or an
assignment of the license for such software (and any attendant maintenance
agreement), subject to the terms of such license, and reimburse IBM for the
initial license or purchase charges for such IBM Software in an
<PAGE>
amount equal to the remaining unamortized cost of such Software, if any,
depreciated over a * life. Equifax shall also pay any transfer
fee or charge imposed by the applicable vendor and not the obligation of
IBM hereunder, and subject to Equifax's acceptance of any applicable vendor
terms and conditions, such licensed Software shall be transferred or
assigned to Equifax.
e) If IBM has licensed or purchased and is using any generally commercially
available Software to provide the Services to the Equifax Group and other
IBM customers in a shared environment at the date of expiration or
termination of the Agreement or any Transaction Document, IBM, upon request
by Equifax, will assist Equifax in obtaining licenses for such Software
(and any attendant maintenance agreement) subject to Equifax's payment of
any license fee and other charge imposed by the applicable vendor.
f) IBM will use commercially reasonable efforts to negotiate license
arrangements with third parties that will minimize the amount of license
and maintenance agreement transfer and assignment fees to be paid by
Equifax. Equifax may participate in the negotiation of such license and
maintenance agreement arrangements. IBM shall provide reasonable advance
written notice to Equifax of such anticipated negotiations.
g) Upon the date of expiration or termination of the Agreement or any
Transaction Document for any reason, the Equifax Group shall have the right
to * for the Equifax Group hereunder or under such Transaction Document,
as applicable ("Service Employees"). Promptly after either Party provides
-----------------
the other Party written notice of termination or expiration with the prior
consent of each Services Employee (each of whom IBM will notify of
Equifax's interest), IBM agrees, subject to the agreement of the Service
Employees, to supply Equifax with the names and resumes requested by
Equifax for the purpose of exercising its rights under this Section 12.6,
------------
at no charge. Equifax's rights under this Section 12.6 will take precedence
------------
over any * that may otherwise limit an *.
h) Upon Equifax's request, IBM will transfer or assign to Equifax or its
designee, on mutually acceptable terms and conditions, any Third Party
Agreements not otherwise treated in this Section 12.6, applicable solely to
------------
services being provided to Equifax, including, without limitation, Third
Party Agreements for maintenance, Disaster Recovery Services and other
necessary third party services then being used by IBM to perform the
Services subject to the payment by Equifax of any transfer fee or charge
imposed by the applicable vendors.
12.7 EFFECT OF TERMINATION/SURVIVAL OF SELECTED PROVISIONS
Notwithstanding the expiration or earlier termination of the Services or the
Agreement or any Transaction Document for any reason however described, the
following Sections of the Agreement shall survive any such expiration or
termination: Section 8.4(b), Section 10, Section 11, Section 12.5, Section 12.6,
--------------- ---------- ---------- ------------ ------------
Section 12.7, Section 13, Section 14, Section 15, Section 16.1 and Section 17.
- ------------ ---------- ---------- ---------- ------------ ----------
13. LIABILITY
13.1 LIABILITY CAPS
a) Except as provided in Section 13.2, the liability of IBM and its Affiliates
------------
to Equifax and its Affiliates under each Transaction Document arising out
of or resulting from the performance or non-performance of
<PAGE>
IBM and/or its Affiliates and/or subcontractors of the Services and its
obligations under such Transaction Document shall be limited in the
aggregate for all claims, causes of action or occurrences:
(i) to Direct Damages incurred by Equifax and its Affiliates equal to the
charges paid by Equifax for the Services set forth in the supplement
to such Transaction Document during the * months immediately prior
to the first event which is the subject of the first claim or if *
months have not elapsed in the term of such Transaction Document at
the time of the first such event, the charges to Equifax for the
Services set forth in such Supplement during the * months of the
term of such Transaction Document ("IBM Direct Damages Cap"); and
(ii) in the event Equifax claims Direct Damages for event(s) which are the
subject matter of claim(s) or cause(s) of action which are the basis
for and result in Equifax's termination of the Agreement or any
Transaction Document pursuant to * then Equifax shall be entitled to
recover * from IBM, not to exceed * which amount shall be applied
only toward such *.
b) Except as provided in Section 13.2, the liability of Equifax to IBM arising
-------------
out of or resulting from the performance and non-performance of its
obligations under each Transaction Document shall be * which in the
aggregate shall not exceed * (the "Equifax Direct Damages Cap"). The
--------------------------
IBM Direct Damages Cap and the Equifax Direct Damages Cap are herein
collectively called the "Direct Damages Caps".
-------------------
13.2 EXCLUSIONS
The provisions of Section 13.1 will not apply to (a) * including but not
limited to * (b) the * (c) Losses arising from * (d) the amounts to be paid
or credited to Equifax as * (e) amounts payable by IBM under * of the
Agreement; and (f) amounts payable to Equifax. *
13.3 DIRECT DAMAGES AND COVER CHARGES
Unless specifically provided to the contrary in the Agreement, neither party
shall have any liability whether based on contract, tort (including without
limitation, negligence), warranty, guarantee or any other legal or equitable
grounds to the other party for any damages other than Direct Damages.
a) "Direct Damages" mean actual, direct damages incurred by the claiming Party
--------------
which include, by way of example but without limitation, * but "Direct
Damages" shall not include (A) loss of
<PAGE>
interest, profit or revenue of the claiming Party or (B) incidental,
consequential, special or indirect damages suffered by the claiming Party
* and shall not include punitive or exemplary damages suffered by the
claiming Party arising from or related to the Agreement, even if such Party
has been advised of the possibility of such losses or damages.
b) * means all costs and expenses * after commercially reasonable efforts
to mitigate such costs and expenses.
13.4 DEPENDENCIES
In no event will IBM or its subcontractors be liable for any damages if and to
the extent caused by Equifax's or its Affiliates' or its subcontractors' failure
to perform its responsibilities hereunder; provided, however, for the purposes
of this Section 13.4, neither IBM nor its Affiliates nor the Third Party
------------
Providers shall be considered a subcontractor of Equifax. Neither Equifax nor
its Affiliates or subcontractors shall be liable for any damages if and to the
extent caused by any failure to perform by IBM or its Affiliates or
subcontractors.
13.5 REMEDIES
At its option, Equifax may seek all remedies available to it under law and in
equity or * subject to the limitations and provisions specified in this
Section 13. If IBM's provision of the Services is such that * and
- ----------
Equifax elects to * Equifax's * shall constitute * with respect to
*. However, within * of the * Equifax * with respect to
any * upon which Equifax is basing * Equifax may * and pursue a damage
claim against IBM, if any such claim exists.
14. INDEMNITIES
14.1 Indemnity by IBM
IBM will indemnify and hold each member of the Equifax Group and their
respective officers, directors, employees, agents, successors, contractors and
assigns (each an "Indemnitee") harmless from and against any and all Losses
----------
incurred by any of them arising from or in connection with:
a) any Claims of infringement of any patent or any copyright, trademark,
service mark, trade name, trade secret, or similar property right conferred
by contract or by common law * or any state, alleged to have been
incurred because of or arising out of any aspect of the Services (including
without limitation any information technology, information management and
communications services, equipment, software or other resources) provided
by IBM and/or its Affiliates or subcontractors in its performance of the
Services; provided, however, IBM will have no obligation with respect to
any Losses to the extent arising from or in connection with Claims for
copyright infringement and/or breach of software licenses related
<PAGE>
to the Services committed by an Indemnitee or any employee of an Indemnitee
that is not the result of IBM and/or its Affiliates or subcontractors
failing to perform its obligations under the Agreement including, without
limitation, obtaining any Required Consent for which it has responsibility;
and provided, further, that IBM will have no obligation with respect to any
Losses to the extent arising out of or in connection with an Indemnitee's
modification of a program or a machine provided by IBM and/or its
Affiliates or subcontractors, or an Indemnitee's combination, operation or
use of the services, equipment, software or other resources provided by IBM
and/or its Affiliates or subcontractors with devices, data, programs or
other resources not furnished by, through or at the specification of IBM or
its Affiliates or subcontractors, or an Indemnitee's use of equipment or
software provided by IBM and/or its Affiliates to such Indemnitee under a
Transaction Document in a country or countries other than those countries
specifically designated in the Transaction Document *
b) any Claims, however described (including without limitation, failure to *
or arising from IBM's exercise of its rights to * pursuant to Section
8.3(a)), accruing during the term of a Transaction Document (that is, not
arising or resulting from a breach by the Equifax Group before such
effective date or after the termination date of such Transaction Document)
regarding any * covered by such Transaction Document; provided, however,
IBM will have no obligation with respect to any Losses to the extent
arising out of or in connection with Claims for copyright infringement
and/or breach of software licenses related to the Services (i) committed by
any Indemnitee or any employee of an Indemnitee that is not the result of
IBM and/or its Affiliates or subcontractors failing to perform its
obligations under such Transaction Document including, without limitation,
* or (ii) to the extent arising out of or result from Equifax failing to
perform its obligations under the Agreement including *
c) any Claims for personal injuries, death or damage to tangible personal or
real property of third parties including employees of IBM, its Affiliates,
contractors and subcontractors caused by the negligence or willful
misconduct of IBM, its employees, Affiliates, contractors or
subcontractors; provided that IBM will have no obligation under this part,
to the extent the same arise out of or in connection with the negligence or
willful misconduct of a member of the Equifax Group;
d) any Claims for amounts, including but not limited to taxes, interest and
penalties, assessed or claimed against the Equifax Group which are
obligations of IBM under the Agreement;
e) any Claim for * arising out of the Agreement or as a result of the
Services performed at the Facilities, the Data Center or the other Equifax
sites or locations to the extent IBM or its Affiliates or subcontractors
has * or * from which the Claim arises;
f) any Claims directly attributable to IBM's decision to request that Equifax
* and Equifax's assent to and compliance with such decision and *
incurred by Equifax associated with such decision by IBM and compliance by
Equifax;
g) any Claims for * arising out of or resulting from IBM * or other
information provided to Equifax in writing regarding * for the Services
to Equifax; and
<PAGE>
h) any Claims by any Affected Employees arising out of or resulting from their
employment, or the termination of their employment, with IBM and/or its
Affiliates, except to the extent any such Claim arises from a wrongful act
of Equifax and/or its Affiliates and/or subcontractors.
In the event and to the extent that a Claim is made against an Indemnitee by an
employee of IBM, its contractors or subcontractors providing services, products
and/or software hereunder, the Parties agree that IBM shall indemnify and hold
harmless the Indemnitee to the same extent as if the Claim was made by a non-
employee of IBM, its contractors or subcontractors. IBM's indemnification
hereunder shall be primary and immediate. Accordingly, in addition to other
provisions herein, and in order to render the Parties' intent and this
indemnification agreement fully enforceable, IBM, in an indemnification claim
hereunder, expressly and without reservation waives any defense or immunity it
may have under any applicable workers' compensation law(s) or any other statute
or judicial decision disallowing or limiting such indemnification and consents
to a cause of action for indemnity. This waiver and consent to indemnification
is made irrespective of and specifically waiving any defense or immunity under
any statute or judicial decision.
14.2 INDEMNITY BY EQUIFAX
Equifax will indemnify and hold harmless IBM, its Affiliates that are assignees
of a Transaction Document, and their respective officers, directors, employees,
agents, successors and assigns (each an "IBM Indemnitee") harmless from and
--------------
against any and all Losses incurred by any of them arising from or in connection
with:
a) any Claims of infringement of any patent or any copyright, trademark,
service mark, trade name, trade secret, or similar property right conferred
by contract or by common law * or any state, alleged to have been
incurred because of or arising out of any equipment, materials and other
resources (including without limitation information technology, information
management and communications services equipment, software or other
resources) provided to IBM and/or its Affiliates by the Equifax Group in
connection with the performance of the Services; provided, however, Equifax
will have no obligation with respect to any Losses to the extent arising
out of or in connection with Claims for copyright infringement and/or
breach of software licenses related to the Services, committed by an IBM
Indemnitee or any employee of an IBM Indemnitee that is not the result of
the Equifax Group failing to perform its obligations under the Agreement
including, without limitation, obtaining any Required Consent for which it
has responsibility; and provided, further, that Equifax will have no
obligation with respect to any Losses to the extent arising out of or in
connection with an IBM Indemnitee's modification of a program or a machine
provided by a member of the Equifax Group, or a IBM Indemnitee's
combination, operation or use of the equipment, software or other resources
provided by the Equifax Group with devices, data, programs or other
resources not furnished by the Equifax Group, or an IBM Indemnitee's use of
equipment or software provided by the Equifax Group to such IBM Indemnitee
under a Transaction Document in a country or countries other than those
countries specifically designated in the Transaction Document *
b) any Claims accruing before the effective date or after the termination date
of a Transaction Document regarding any * by such Transaction Document,
including without limitation, failure to * but not including Claims
arising or resulting from IBM and/or its Affiliates failing to perform its
obligations under the Agreement including, without limitation, *
<PAGE>
c) any Claims for amounts, including without limitation, taxes, interest and
penalties assessed or claimed against IBM which are obligations of Equifax
under the Agreement;
d) any Claims for personal injuries, death or damage to tangible personal or
real property of third parties including employees of the Equifax Group
caused by the negligence or willful misconduct of the Equifax Group or
their employees; provided that Equifax will have no obligation, under this
part, to the extent the same arise out of or in connection with the
negligence or willful misconduct of IBM, its Affiliates or subcontractors;
e) any Claims arising out of or resulting from the operations of the Equifax
Group, including the provision of access to the Services pursuant to
Section 17.15, to the extent such Claims do not arise out of a breach of
-------------
the Agreement by IBM and are not the subject of a specific indemnity
provided to Equifax by IBM in Section 14.1; provided, however, that Equifax
------------
will have no obligation under this item, to the extent the Claims arise out
of or result from the negligence or willful misconduct of IBM, its
Affiliates or subcontractors;
f) any Claim for violation of * arising out of the Services performed at the
Facilities, the Data Center or other Equifax Group sites or locations
except to the extent that IBM or its Affiliates or subcontractors has
caused the * from which the Claim arises;
g) any Claims by any Affected Employees arising out of or resulting from their
employment, or the termination of their employment, with Equifax, except
to the extent any such Claim arises from a wrongful act of IBM and/or its
Affiliates and/or subcontractors; and
h) any Claims arising out of or resulting from the operations of the Equifax
Group and arising from acts of Authorized Users.
In the event and to the extent that a Claim is made by an employee of a member
of the Equifax Group against an IBM Indemnitee, the Parties agree that Equifax
shall indemnify and hold harmless the IBM Indemnitee to the same extent as if
the Claim was made by a non-employee of the members of the Equifax Group.
Equifax's indemnification hereunder shall be primary and immediate.
Accordingly, in addition to other provisions herein, and in order to render the
Parties' intent and this indemnification agreement fully enforceable, Equifax,
in an indemnification Claim hereunder, expressly and without reservation waives
any defense or immunity it may have under any applicable workers' compensation
law(s) or any other statute or judicial decision disallowing or limiting such
indemnification and consents to a cause of action for indemnity. This waiver
and consent to indemnification is made irrespective of and specifically waiving
any defense or immunity under any statute or judicial decision.
14.3 EMPLOYMENT ACTIONS
It is agreed that IBM shall be solely and exclusively responsible for personnel
decisions affecting IBM's employees, contractors, subcontractors and agents
(including without limitation, hiring, promotions, training, compensation,
evaluation, discipline, and discharge). Equifax shall be solely and exclusively
responsible for personnel decisions affecting employees, contractors, and agents
of the members of the Equifax Group (including without limitation, hiring,
promotion, training, compensation, evaluation, discipline and discharge).
<PAGE>
14.4 EXCLUSIVE REMEDY
The indemnification rights of each Indemnitee and IBM Indemnitee (individually
an "Indemnified Party") for third party Claims pursuant to Sections 14.1 and
----------------- -----------------
14.2, shall be the sole and exclusive remedy of such Indemnified Party with
- ----
respect to each such third party Claim to which such indemnification relates.
14.5 INDEMNIFICATION PROCEDURES
a) Written notice shall be given to the Party that is obligated to provide
indemnification under Sections 14.1 and 14.2 (the "Indemnifying Party"), if
---------------------- ------------------
any civil, criminal, administrative or investigative action or proceeding
is commenced or threatened by a third party (any of the above being a
"Claim") against any Indemnified Party. Such notice shall be given as
------
promptly as practicable but in all events, within a period that will not
prejudice the rights of the Indemnified Party under the Agreement to defend
the Claim. After such notice, if the Indemnifying Party acknowledges in
writing to the Indemnified Party that the Agreement applies with respect to
such Claim, then the Indemnifying Party shall be entitled to take control
of the defense and investigation of such Claim and to employ and engage
attorneys of its sole choice to handle and defend the same, at the
Indemnifying Party's sole cost and expense. The Indemnifying Party must
deliver written notice of its election of taking such control of the claim
to the Indemnified Party not fewer than ten (10) days prior to the date on
which a response to such Claim is due or such lesser period as is
reasonable given the nature of the Claim and the notice and response time
permitted by law or the facts and circumstances. The Indemnified Party
shall cooperate in all reasonable respects with the Indemnifying Party and
its attorneys in the investigation, trial, defense and settlement of such
Claim and any appeal arising therefrom. The Indemnified Party may
participate in such investigation, trial, defense and settlement of such
Claim and any appeal arising therefrom, through its attorneys or otherwise,
at its own cost and expense. No settlement of a Claim that involves a
remedy other than the payment of money by the Indemnifying Party shall be
entered into without the consent of the Indemnified Party, which consent
will not be unreasonably withheld.
b) After notice to the Indemnified Party of the Indemnifying Party's election
to assume full control of the defense of any such Claim, the Indemnifying
Party shall not be liable for any legal expenses incurred thereafter in
connection with the defense of that Claim by the Indemnified Party. If the
Indemnifying Party does not promptly assume full control over and
diligently pursue the defense of a Claim as provided in this Section 14.5,
------------
the Indemnified Party shall have the right to defend, settle or otherwise
resolve the Claim in such manner as it may deem appropriate, at the cost
and expense of the Indemnifying Party, and the Indemnifying Party may
participate in such defense, at its sole cost and expense. In no event
shall any settlement of the Claim pursuant to this Section 5(b) require the
------------
consent of the Indemnifying Party.
15. INSURANCE AND RISK OF LOSS
15.1 IBM INSURANCE
During the Term of the Agreement, IBM and each IBM contractor and subcontractor
shall maintain and keep in force, at its own expense, the following minimum
insurance coverages and minimum limits:
a) workers' compensation insurance, with statutory limits as required by the
various laws and regulations applicable to the employees of IBM or any IBM
contractor or subcontractor;
b) employer's liability insurance, for employee bodily injuries and deaths,
with a limit * each accident;
<PAGE>
c) comprehensive or commercial general liability insurance, covering claims
for bodily injury, death and property damage, including premises and
operations, independent contractors, products, services and completed
operations (as applicable to the Services), personal injury, contractual,
and broad-form property damage liability coverages, with limits as follows:
(1) occurrence/aggregate limit * for bodily injury, death and property
damage per occurrence of * combined aggregate; or (2) split liability,
without aggregate limits, of (i) * for bodily injury per person; (ii) *
for bodily injury per occurrence; and (iii) * per occurrence for
property damage;
d) comprehensive automobile liability insurance, covering owned, non-owned and
hired vehicles, with limits as follows (1) combined single limit of * for
bodily injury, death and property damage per occurrence; or (2) split
liability limits of (i) * for bodily injury per person; (ii) * for
bodily injury per occurrence; and (iii) * for property damage; and
e) all-risk property insurance, on a replacement cost basis, covering the real
and personal property of IBM which IBM is obligated to insure by the
Agreement. Such real and personal property may include buildings,
equipment, furniture, fixtures and supply inventory.
All such policies of insurance of IBM and its contractors and subcontractors
shall provide that the same shall not be canceled nor the coverage modified nor
the limits changed without first giving * prior written notice thereof to
Equifax. No such cancellation, modification or change shall affect IBM's
obligation to maintain the insurance coverages required by the Agreement. Except
for workers' compensation insurance *. All liability insurance policies shall be
written on an "occurrence" policy form.* As its interest may appear on the
property insurance policies of IBM. IBM shall be responsible for payment of any
and all deductibles from insured claims under its policies of insurance. The
coverage afforded under any insurance policy obtained by IBM pursuant to the
Agreement shall be primary coverage regardless of whether or not Equifax has
similar coverage. IBM and its contractors and subcontractors shall not perform
under the Agreement without the prerequisite insurance *. Unless previously
agreed to in writing by Equifax, IBM's contractors and subcontractors shall
comply with the insurance requirements herein. The minimum limits of coverage
required by the Agreement may be satisfied by a combination of primary and
excess or umbrella insurance policies. If IBM or its contractors or
subcontractors shall fail to comply with any of the insurance requirements
herein, upon written notice to IBM by Equifax and a * cure period, Equifax may,
without any obligation to do so *. The maintenance of the insurance coverages
required under the Agreement shall in no way operate to limit the liability of
IBM to Equifax under the provisions of the Agreement.
The parties do not intend to shift all risk of loss to insurance. The naming of
Equifax as additional insured is not intended to be a limitation of Provider's
liability and shall in no event be deemed to, or serve to, limit Provider's
liability to Equifax to available insurance coverage or to the policy limits
specified in this Section 14, nor to limit Equifax's rights to exercise any and
----------
all remedies available to Equifax under contract, at law or in equity.
15.2 RISK OF PROPERTY LOSS
IBM is responsible for risk of loss of, or damage to, the Software, Machines,
Equifax Provided Office Furnishings and * in its possession or control, and
Equifax is responsible for risk of loss of, or damage to, the Software, Machines
and * in its possession or control.
<PAGE>
15.3 *
a) To the extent permitted by law, IBM and its Affiliates, contractors,
subcontractors, and their respective directors, officers, employees, agents
and insurers * the member of the Equifax Group and their respective
directors, officers, employees, agents, contractors and subcontractors *
IBM and its Affiliates, contractors and subcontractors * in connection
with the Agreement. Each * of IBM and its Affiliates, contractors and
subcontractors * the Equifax Group and their respective directors,
officers, employees, agents, contractors and subcontractors * in
connection with the Agreement.
b) To the extent permitted by law, Equifax, the other members of the Equifax
Group and their respective directors, officers, employees, agents and
insurers * and its Affiliates, contractors and subcontractors *
Equifax and the other members of the Equifax Group * IBM and its
Affiliates, contractors and subcontractors * in connection with the
Agreement.
16. DISPUTE RESOLUTION
16.1 Dispute Resolution Procedures
a) Any dispute between the Parties either with respect to the interpretation
of any provision of the Agreement or with respect to the performance
hereunder by IBM or by Equifax or their respective Affiliates shall be
resolved as specified in this Section 16.1.
------------
1) Upon the written request of either Party, a dispute shall be submitted
to the Integrated Planning Team for resolution.
2) The Integrated Planning Team shall meet as often as necessary to gather
and furnish to each Party all non-privileged information with respect
to the matter in issue which is appropriate and germane in connection
with its resolution.
3) The Integrated Planning Team shall discuss the problem and negotiate in
good faith in an effort to resolve the dispute without the necessity
of any formal proceeding relating thereto.
4) During the course of such negotiation, all reasonable requests made by
one Party to the other for nonprivileged information reasonably
related to the Agreement, will be honored in order that each Party may
be fully advised of the other Party's position.
5) The specific format for such discussions will be left to the discretion
of the Integrated Planning Team, but may include the preparation of
agreed upon statements of fact or written statements of position
furnished by each Party to the other Party.
<PAGE>
b) If the Integrated Planning Team does not resolve the dispute within *
after the date of receipt by the other Party of a request to submit the
dispute to the Integrated Planning Team as described in Section 16.1(a)(1)
------------------
(the "Notice"), then the dispute shall be escalated to an officer of
------
Equifax and an officer of IBM, for their review and resolution within *
days after receipt of the Notice.
c) If the officers referred to in Section 16.1(b) do not resolve the dispute
---------------
within * after the Notice, then the dispute shall be escalated to the
President of Equifax and the IBM corporate officer in charge of IBM Global
Services, for their review and resolution within * after the Notice.
d) If the dispute is not resolved by the Parties' representatives identified
in Section 16.1(c) within * after the Notice, the Parties agree to try in
good faith to resolve the dispute * before resorting to litigation or
some other dispute resolution procedure.
e) If the dispute is not resolved by * within * days after the Notice,
then the Parties may initiate formal proceedings; however, formal
proceedings for the judicial resolution of any such dispute may not be
commenced until the earlier of:
1) the designated representatives concluding in good faith that amicable
resolution through continued negotiation of the matter in issue does
not appear likely; or
2) * after the Notice; or
3) * before the statute of limitations governing any cause
of action relating to such dispute would expire.
Notwithstanding anything to the contrary in this Section 16.1(e), the Integrated
---------------
Planning Team shall have the authority to stay the time periods set forth in
this Section 16.1 upon unanimous vote of its members to take such action.
------------
f) Notwithstanding any other provision of this Section 16.1, either Party may
------------
resort to court action for injunctive relief at any time if the dispute
resolution processes set forth in this Section would permit or cause
irreparable injury to such Party or any third party claiming against such
Party, due to delay arising out of the dispute resolution process.
16.2 CONTINUED PERFORMANCE
The Parties agree to continue performing their respective obligations under the
Agreement while the dispute is being resolved unless and until such obligations
are terminated or expire in accordance with the provisions of the Agreement or
unless such performance is prevented by the actions of the other Party.
<PAGE>
17. GENERAL
17.1 RELATIONSHIP OF PARTIES
The Agreement shall not be construed as constituting either Party or its
Affiliates as partner of the other Party and its Affiliates or to create any
other form of legal association that would impose liability upon one Party or
its Affiliates for the act or failure to act of the other Party and its
Affiliates or as providing either Party or its Affiliates with the right, power
or authority (express or implied) to create any duty or obligation of the other
Party and its Affiliates, except as provided in Section 8.3. Each Party shall
------- ---
be responsible for the management, direction and control of the employees of
such Party and its Affiliates and such employees shall not be employees of the
other Party or its Affiliates.
Each Party will submit to the other Party all advertising, written sales
promotion, press releases and other publicity matters relating to the Agreement
in which the other Party's or its Affiliate's name or mark is mentioned or
language from which the connection of said name or mark may be inferred or
implied, and will not publish or use such advertising, sales promotion, press
releases, or publicity matters without prior written approval of the other
Party. However, either Party may include the other Party's and/or its
Affiliates name and a factual description of the work performed under the
Agreement on employee bulletin boards, in its list of references and in the
experience Section of proposals to third parties, in internal business planning
documents and in its annual report to stockholders, and whenever required by
reason of legal, accounting or regulatory requirements.
17.2 ENTIRE AGREEMENT, UPDATES, AMENDMENTS AND MODIFICATIONS
The Agreement (including the Transaction Documents and the Supplement and
Schedules thereto) constitutes the entire agreement of the Parties and their
Affiliates with regard to the Services and matters addressed therein, and all
prior agreements (including, without limitation, the Agreement for Systems
Operations Services dated April 20, 1993, as amended), letters, proposals,
discussions and other documents regarding the Services and the matters addressed
in the Agreement (including the Transaction Documents and the Supplement and
Schedules) and are superseded and merged into the Agreement (including the
Transaction Documents and the Supplement and Schedules thereto). Updates,
amendments and modifications to the Agreement including the Transaction
Documents may not be made orally, but shall only be made by a written document
signed in the case of this Master Agreement by both Parties and in the case of
each Transaction Document, by the Parties and, if applicable, permitted asignees
of such Transaction Documents. Any terms and conditions varying from the
Agreement (including the Transaction Documents and the Supplement and Schedules
thereto) on any order or written notification from either Party or its
Affiliates shall not be effective or binding on the other Party or its
Affiliates.
17.3 FORCE MAJEURE
a) Neither Party shall be liable for any default or delay in the performance
of its obligations hereunder, except for payment defaults, if and to the
extent and while such default or delay is caused, directly or indirectly,
by fire, flood, earthquake, elements of nature or acts of God, acts of war,
terrorism, riots, civil disorders, rebellions or revolutions, strikes,
lockouts, or labor difficulties or any other similar cause beyond the
reasonable control of such Party and its Affiliates other than strikes,
lockouts, or labor difficulties initiated by such Party's or its Affiliates
or subcontractor's employees; and provided such default or delay could not
have been prevented by reasonable precautions and cannot reasonably be
circumvented by the nonperforming Party or its Affiliates through the use
of alternate sources, work-around plans or other means, (individually, each
being a "Force Majeure Event").
-------------------
<PAGE>
b) If a Force Majeure Event occurs, the nonperforming Party will be excused
from any further performance or observance of the obligation(s) so affected
for as long as such circumstances prevail and such Party continues to use
commercially reasonable efforts to recommence performance or observance
whenever and to whatever extent possible without delay. Any Party so
delayed in its performance will immediately notify the other by telephone
and describe at a reasonable level of detail the circumstances causing such
delay (to be confirmed in writing within * after the inception of such
delay).
c) If any Force Majeure Event substantially prevents, hinders, or delays
performance of the Services under any Transaction Document necessary for
the performance of the critical functions of the Equifax users of such
Services for more than * then at Equifax's option:
i) Equifax may * . Provided Equifax has not * pursuant to Section
17.3(c)(ii) and Equifax continues to make payment to IBM under such
Transaction Document and Equifax exerts reasonable efforts to * for
the provision of such Services to Equifax until such time as IBM
restores the Services and meets the Performance Standards but in no
event for more than * and/or
ii) Until such time as IBM has restored the Services, Equifax may * by
Equifax in a written notice * , and Equifax will pay all fees due
and payable * .If Equifax elects * , Equifax shall only pay on
account of such * (but will not be liable for * as well as *
d) This Section 17.3 does not limit or otherwise affect IBM's obligation to
------------
provide Disaster Recovery Services in accordance with Section 3.3 and the
-----------
Schedules to each Transaction Document. In the event of a Force Majeure
Event affecting Equifax, this Section 17.3 will not limit or otherwise
------------
relieve Equifax's obligation to pay any monies due IBM under the terms of
the Agreement, except as provided in Section 17.3(c)(ii) and Section 3.3.
------------------- -----------
17.4 NONPERFORMANCE
To the extent any nonperformance by either Party of its nonmonetary obligations
under the Agreement results from or is caused by the other Party's failure to
perform its obligations under the Agreement, such nonperformance shall be
excused.
17.5 WAIVER
No waiver of any breach of any provision of the Agreement shall constitute a
waiver of any prior, concurrent or subsequent breach of the same or any other
provisions hereof.
17.6 SEVERABILITY
If any provision of the Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby, and such
<PAGE>
provision shall be deemed to be restated to reflect the Parties' original
intentions as nearly as possible in accordance with applicable law(s).
17.7 COUNTERPARTS
The Agreement shall be executed in counterparts. Each such counterpart shall be
an original and together shall constitute but one and the same document.
17.8 GOVERNING LAW
The Agreement and any and all claims and disputes arising out of or in
connection with or related to the relationships and arrangements between the
Equifax Group and IBM and its Affiliates described in the Agreement will be
governed by and construed in accordance with the laws of the State of Georgia
and the United States of America. The Parties hereby (a) agree that the * or if
such court does not have subject matter jurisdiction, the appropriate * shall
have exclusive jurisdiction over the actions arising out of or related to or in
connection with the Agreement and the subject matter of the Agreement, whether
in contract, tort, or any other form of action ("Action"); (b) agree to initiate
------
any such Action against the other Party only in such courts; (c) agree that they
shall not raise any defense to the lawful jurisdiction of such courts; and (d)
agree that they shall not attempt the removal of any Action to any other court,
whether local, state or federal courts of the United States or the courts of any
other country.
17.9 BINDING NATURE AND ASSIGNMENT
The Agreement will be binding on the Parties and their respective successors and
permitted assigns. Except as provided in this Section 17.9, neither Party may,
------------
or will have the power to, assign the Agreement without the prior written
consent of the other, which consent shall not be unreasonably withheld, except
that either Party may assign its rights and obligations under the Agreement in
whole or in part to an Affiliate which expressly assumes such Party's
obligations and responsibilities hereunder, without the approval of the other
Party. The assigning Party shall remain fully liable for and shall not be
relieved from the full performance of all obligations under the Agreement. Any
attempted assignment that does not comply with the terms of this Section 17.9
------------
shall be null and void. Any Party assigning its rights or obligations to an
Affiliate in accordance with the Agreement shall provide written notice thereof
to the other Party together with a copy of the assignment document, within three
(3) business days of such assignment.
17.10 NOTICES
a) Whenever one Party is required or permitted to give notice to the other
Party under the Agreement, such notice will be in writing unless otherwise
specifically provided herein and will be deemed given when delivered in
hand, one (1) day after being given to an express courier with a reliable
system for tracking delivery, or five (5) days after the day of mailing,
when mailed by United States mail, registered or certified mail, return
receipt requested, postage prepaid, or when sent if delivered by facsimile.
b) Notifications will be addressed as follows:
1) For breach or default under the Master Agreement, notify:
In the case of IBM: In the case of Equifax:
<PAGE>
IBM Co-Chairman of the Equifax Co-Chairman of the
Integrated Planning Team Integrated Planning Team
* *
* *
Facsimile: * Facsimile: *
with a copy to: with a copy to:
IBM General Counsel Equifax Chief Legal Officer
* *
* *
Facsimile: * Facsimile: *
2) For termination, breach or default under a Transaction Document,
notify:
In the case of IBM: In the case of Equifax:
IBM Project Executive Equifax Project Executive
at the Notice address set forth at the Notice address set forth
in the affected Transaction in the affected Transaction
Document Document
with copies to: with copies to:
IBM Co-Chairman of the Equifax Co-Chairman of the
* *
* *
Facsimile: * Facsimile: *
and and
IBM General Counsel Equifax Chief Legal Officer
* *
* *
Facsimile: * Facsimile: *
3) For all other notices under the Master Agreement:
In the case of IBM: In the case of Equifax:
IBM Co-Chairman of the Equifax Co-Chairman of the
Integrated Planning Team Integrated Planning Team
* *
* *
Facsimile: * Facsimile: *
<PAGE>
4) For all other notices under a Transaction Document:
In the case of IBM: In the case of Equifax:
IBM Project Executive Equifax Project Executive
at the Notice address set forth at the Notice address set forth
in the affected Transaction in the affected Transaction
Document Document
with a copy to: with a copy to:
IBM Co-Chairman of the Equifax Co-Chairman of the
Integrated Planning Team Integrated Planning Team
* *
* *
Facsimile: * Facsimile: *
Either Party hereto may from time to time change its address for notification
purposes by giving the other prior written notice of the new address and the
date upon which it will become effective.
17.11 NO THIRD PARTY BENEFICIARIES
The Parties do not intend, nor will any Section hereof be interpreted, to create
for any third party beneficiary rights with respect to either of the Parties,
except (a) each member of the Equifax Group and each IBM Affiliate shall be a
third party beneficiary under the Agreement with respect to enforcement of any
rights such member of the Equifax Group or IBM Affiliate may have under Section
-------
10, Section 11, or Section 14 of the Agreement, and (b) each Affiliate of the
- -- ---------- ----------
Parties to which a Transaction Document has been assigned and accepted, will
have the rights and benefits described in that Transaction Document, *
---------
17.12 OTHER DOCUMENTS
Upon request of the other Party, on or after the Effective Date and the date(s)
of any Transaction Documents and amendments or revisions to any of the
foregoing, each Party shall furnish to the other such certificate of its
Secretary, certified copy of resolutions of its Board of Directors, or opinion
of its counsel as shall evidence that the Agreement or any amendment or revision
hereto has been duly executed and delivered on behalf of such Party or its
Affiliates.
17.13 CONSENTS AND APPROVALS
The Parties agree that in any instance where a consent, approval or agreement is
required of a Party in order for the other Party to perform under or comply with
the terms and conditions of the Agreement, then such Party will not unreasonably
withhold or delay such consent, approval or agreement and where consent,
approval or agreement cannot be provided, the Party shall notify the other Party
in a timely manner.
<PAGE>
17.14 HEADINGS
All headings herein and the table of contents are not to be considered in the
construction or interpretation of any provision of the Agreement. The Agreement
was drafted with the joint participation of both Parties and shall be construed
neither against nor in favor of either, but rather in accordance with the fair
meaning thereof. In the event of any apparent conflicts or inconsistencies
between the provisions of the Master Agreement, the Exhibits, the Transaction
Documents, the Schedules or other attachments to the Master Agreement and
Transaction Documents, such provisions shall be interpreted so as to make them
consistent to the extent possible, and if such is not possible, the provisions
of the Master Agreement shall prevail.
17.15 REMARKETING
Equifax may not remarket all or any portion of the Services provided under the
Agreement, or make all or any portion of the Services available to any party,
without the prior written consent of IBM; provided, however, Equifax may *
("Elements of the Services") subject to the following limitations:
------------------------
1. Equifax shall independently set its own pricing and policies in connection
with any such access to Elements of the Services;
2. Equifax does not utilize IBM's name as part of its * any such access to
Elements of the Services;
3. Equifax discloses to * accessing Elements of the Services that IBM is
running the Systems but that IBM has no liability of any kind to
4. if Equifax's activities for * accessing Elements of the Services cause
IBM to fail to meet a *, IBM shall be excused from such failure to the
extent IBM demonstrates that the failure was caused by such * activities
and to the extent such failure was not caused by IBM's failure to satisfy
its obligations under the Agreement; and
5. if IBM incurs incremental costs in connection with any such access to
Elements of the Services by * , such costs will be treated either under
an existing charging methodology or, if none exists, then as a New Service
in accordance with Section 3.12 hereof.
------------
Nothing herein may be construed to limit or hinder Equifax or the other members
of the Equifax Group from (i) marketing, selling or performing its services to
and for its customers or potential customers and/or (ii) from providing any
portion of the Services to its Affiliates.
17.16 COMMENCEMENT OF ACTIONS
Neither party may bring an action, regardless of form, arising out of the
Agreement more than two (2) years after the later to occur of the date on which
the cause of action has arisen or the date such cause of action was or should
have been discovered.
<PAGE>
17.17 IBM LOGO PRODUCTS WARRANTIES
Nothing in the Agreement is intended to replace, supercede or vitiate the
warranties and attendant rights and remedies granted to members of the Equifax
Group by IBM Logo Products as set forth in any applicable lease, purchase and/or
license arrangement.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EQUIFAX INC.
FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US$
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 85,935
<SECURITIES> 0
<RECEIVABLES> 338,439
<ALLOWANCES> 7,898
<INVENTORY> 0
<CURRENT-ASSETS> 518,207
<PP&E> 267,596
<DEPRECIATION> 146,225
<TOTAL-ASSETS> 1,830,677
<CURRENT-LIABILITIES> 421,236
<BONDS> 849,039
0
0
<COMMON> 216,778
<OTHER-SE> 806,426
<TOTAL-LIABILITY-AND-EQUITY> 1,830,677
<SALES> 1,171,972
<TOTAL-REVENUES> 1,171,972
<CGS> 680,509
<TOTAL-COSTS> 680,509
<OTHER-EXPENSES> 218,639
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,973
<INCOME-PRETAX> 249,605
<INCOME-TAX> 100,709
<INCOME-CONTINUING> 148,896
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 148,896
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.03
</TABLE>
