PAGING NETWORK DO BRASIL S.A.
SHAREHOLDERS AGREEMENT
By this private instrument, the undersigned, this 11th day of December,
1996:
(i) Warburg, Xxxxxx Ventures, L.P., a limited partnership organized and
existing under the laws of the State of Delaware, U.S.A., with its main place of
business at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000 ("Warburg");
(ii) Paging Network International N.V., a corporation organized and
existing under the laws of the Netherlands, with its main place of business at
0000 Xxxxxxx Xxxx Xxxxxxxxx, Xxxxx, XX 00000 ("PageNet");
(iii) IVP Paging (Cayman) L.P., an exempt limited partnership organized
and existing under the laws of the Cayman Islands with an office at c/x Xxxxxx
and Xxxxxx, Xxxxxx House, Box 309, Xxxxxx Town, Grand Cayman, Cayman Islands,
British West Indies ("IPC");
(iv) Multiponto Telecomunicacoes Ltda., a limited liability company
organized and existing under the laws of Brazil, with its main place of business
at Avenida Presidente Xxxxxx Xx. 000, 00(0) Xxxxx (xxxxx), Xxx xx Xxxxxxx,
Xxxxxx, ("Multiponto");
(v) TVA Sistema Televisao S.A., a limited liability company organized and
existing under the laws of Brazil, with its main place of business at Xxx xx
Xxxxx 000, 0xx Xxxxx, Xxx Xxxxx, Xxxxxx 00000-000 ("TVA") (Warburg, PageNet,
IPC, Multiponto and TVA are collectively referred to as the "Investors");
(vi) The individuals whose names and addresses appear from time to time on
Schedule I hereto (the "Management Investors" and, together with the Investors,
the "Shareholders"); and
(vii) Paging Network do Brasil S.A., a corporation (sociedade anonima)
under the laws of Brazil with its head office in the Capital of the State of Sao
Paulo, at Xxxxxxx xxx Xxxxxx Xxxxxx, 00,000 World Trade Center, 17th Floor,
Suite 26, Sao Paulo, Brazil (the "Corporation").
R E C I T A L S:
WHEREAS, the Investors have, pursuant to the terms of a securities
subscription agreement with the Corporation (the "Securities Subscription
Agreement") have subscribed for certain shares of the Corporation, including
shares of Common Stock of the Corporation (the "Common Stock") and shares of
Preferred Stock of the Corporation (the "Preferred Stock"), as set forth of
Schedules II and III hereto, and have the right to subscribe for additional
shares of Common Stock, as set forth on Schedule IV hereto, and have agreed to
subscribe for additional shares of Preferred Stock, in the proportions set forth
on Schedule V hereto;
WHEREAS, certain of the Investors have, pursuant to the terms of the
Securities Subscription Agreement, the right to subscribe for certain additional
shares of Common Stock of the Corporation, as set forth of Schedule 2 of the
Securities Subscription Agreement; and
WHEREAS, the Shareholders and the Corporation desire to promote their
mutual interests by agreeing to certain matters relating to the operations and
management of the Corporation and the disposition of shares of capital stock in
the Corporation.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto hereby agree as follows:
CLAUSE 1--COVENANTS OF THE PARTIES
(a) Legends. The Corporation's Registered Stock Registrar, on the margin
of the Stock registration (and the certificates representing the Securities, if
any are issued), will bear the following legend reflecting the restrictions on
the transfer of such Securities contained in this Agreement:
"The securities evidenced hereby are subject to the terms of that
certain Shareholders Agreement, dated as of December 11, 1996, by and
among the Corporation and certain investors identified therein, including
certain restrictions on transfer. A copy of this Agreement has been filed
at the Corporation's head office pursuant to and for the purposes of
Article 118 of Law Nr.
6.404, of December 15, 1976.
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY SECURITIES LAW OF
BRAZIL OR ANY OTHER JURISDICTION (THE "SECURITIES LAWS"), AND MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER APPLICABLE
SECURITIES LAWS OR IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO PAGING NETWORK DO BRASIL, S.A.,
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QUALIFIES AS AN EXEMPT TRANSACTION UNDER APPLICABLE SECURITIES LAWS AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER."
(b) Shares Bound by this Agreement. All shares of the Corporation's
capital stock owned by the Shareholders on the date hereof or which may be owned
by the Shareholders in the future, including, without limitation, by means of
subscription, acquisition, bonus distribution, split or reverse split (the
"Shares"), shall be bound by this Agreement. Subscribed, acquired and bonus
shares are covered by the definition of Shares, unless otherwise expressly
excluded in the context.
(c) Additional Investors. The parties hereto acknowledge that, subject to
the terms hereof, certain employees of the Corporation may become shareholders
of the Corporation after the date hereof and that such employees will be
required, as a condition to the issuance of any Securities (or options or
warrants to acquire any Securities), to assent to the terms and conditions and
to execute a counterpart of this Agreement. Upon execution of a counterpart of
this Agreement, such employees shall be deemed to be Management Investors under
this Agreement, shall be added to Schedule I, and shall be entitled to all of
the rights and benefits afforded to the Management Investors, and be bound by
all the obligations contained, hereunder.
CLAUSE 2--CAPITAL STOCK
(a) Total Capital. The total authorized capital stock of the Corporation
shall be 113,000 shares consisting of 50,000 shares of Common Stock, with no par
value (the "Common Stock"), and 63,000 shares of Redeemable Preferred Stock,
with no par value (the "Preferred Stock").
(b) Registration and Transfer of Shares. The Corporation, at its expense,
will cause to be registered in the Corporation's book of registration of Shares
the number of fully paid and non-assessable Shares to which each holder shall be
entitled. The name of each person owning any Shares shall be entered on the book
of registration of the Corporation together with the number of Shares held by
him. The Shares shall be transferable on the book of transfer of the Corporation
by the holders thereof, with such proof as the Corporation or its agents may
reasonably require. A record shall be made of each transfer.
CLAUSE 3--RIGHTS AND PRIVILEGES OF THE SHARES
The relative powers, preferences and rights together with the
qualifications and limitations and restrictions of the Common Stock and the
Preferred Stock are as follows:
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Section 3.1. Preferred Stock.
(a) Dividends. There shall be one class of Preferred Stock. The holders of
the Preferred Stock (the "Preferred Shareholders") shall be entitled to receive,
when and as declared by the Shareholders' General Meeting (the "Shareholders'
Meeting") of the Corporation, out of any funds legally available therefor:
(i) from the date of issuance to but not including the sixth
anniversary thereof, quarterly preferential fixed cumulative dividends on
the capital value represented by such shares of Preferred Stock at the
rates set forth opposite the corresponding quarterly period following such
issuance; on the sixth anniversary of the issuance, such accumulated
dividends shall be distributed and immediately reinvested in the Company
by the holders of Preferred Stock, with the issuance of corresponding
additional shares of Preferred Stock (the "PIK Preferred Stock"):
Quarter Dividend Rate
------- -------------
1 3.000%
2 3.090%
3 3.183%
4 3.278%
5 3.377%
6 3.478%
7 3.582%
8 3.690%
9 3.800%
10 3.914%
11 4.032%
12 4.153%
13 4.277%
14 4.406%
15 4.538%
16 4.674%
17 4.814%
18 4.959%
19 5.107%
20 5.261%
21 6.321%
22 6.543%
23 6.772%
24 7.009%
(ii) from the sixth anniversary of issuance to but not including
the seventh anniversary of issuance of the Preferred Stock (or in the case
of the PIK Preferred Stock from the date of issuance to but not including
the first anniversary thereof), quarterly preferential fixed cash
dividends on the capital value (including the amount of all accumulated
dividends reinvested in accordance with item
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(a)(i) above) represented by such shares of Preferred Stock at a rate of
sixteen percent (16%) per annum;
(iii) from the seventh anniversary of issuance to but not including
the eighth anniversary of issuance (or in the case of the PIK Preferred
Stock from the first anniversary to but not including the second
anniversary thereof), quarterly preferential cash dividends on the capital
value (including the amount of all accumulated dividends reinvested in
accordance with item (a)(i) above) represented by such shares of Preferred
Stock at a rate of eighteen percent (18%) per annum; and
(iv) from the eighth anniversary of issuance to but not including
the tenth anniversary of issuance (or in the case of the PIK Preferred
Stock from the second anniversary to but not including the third
anniversary thereof), quarterly preferential cash dividends on the capital
value (including the amount of all accumulated dividends reinvested in
accordance with item (a)(i) above) represented by such shares of Preferred
Stock at a rate of twenty percent (20%) per annum.
(b) Preference. So long as any Preferred Stock remains outstanding, in no
event shall any dividend whatsoever, whether in cash or other property (other
than Common Stock), be paid or declared or any distribution be made on the
Common Stock during any fiscal year, nor shall any Common Stock be purchased,
retired or otherwise acquired (other than through the repurchase of shares
issued pursuant to employee incentive programs or agreements with management
approved by the Shareholders) for a consideration by the Corporation (i) unless
the full dividends of the Preferred Stock for all past dividend periods required
to be paid in cash shall have been paid or declared and a sum set apart
sufficient for the payment thereof, and (ii) unless, if at any time the
Corporation is obligated to retire Preferred Stock pursuant to any mandatory
redemption requirement, sinking fund or a fund of a similar nature, all arrears,
if any, in respect of the retirement of the Preferred Stock shall have been made
good. Subject to the foregoing provisions and not otherwise, such dividends
(payable in cash, stock or otherwise) as may be determined by the Shareholders'
Meeting may be declared and paid on the Common Stock from time to time out of
the remaining funds of the Corporation legally available therefor, and the
Preferred Stock shall not be entitled to participate in any such dividend,
whether payable in cash, stock or otherwise.
(c) Rights on Liquidation.
(i) Priority on Liquidation. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, then, before any distribution or payment shall be made to the
holders of the Common Stock, the holders of the Preferred Stock shall be
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entitled to be paid an amount per Share equal to U.S. $1,000 Dollars or
its equivalent in Reais or other currency, plus an amount equal to any and
all dividends accrued and unpaid thereon as of the date of such
distribution or payment (the "Preferred Priority"). If, upon any
liquidation, dissolution or winding up of the Corporation, the assets to
be distributed to the holders of the Preferred Stock shall be insufficient
to permit the payment to such holders of the full Preferred Priority, then
all of the assets of the Corporation shall be distributed ratably to the
holders of the Preferred Stock based on the aggregate Preferred Priority
for the shares of Preferred Stock held by each holder.
(ii) Distribution of Remaining Assets. If such payment of the
Preferred Priority shall have been made in full to the holders of the
Preferred Stock, the remaining assets and funds of the Corporation, if
any, shall be distributed among the holders of the Common Stock according
to their respective equity investment.
(iii) Merger or Sale of Assets. A consolidation or merger of the
Corporation with or into any other corporation or other entity in which
the holders of the Corporation's outstanding Common Stock before the
merger or consolidation do not retain a majority of the voting power of
the surviving corporation or other entity, or a sale of all or
substantially all of the assets of the Corporation, shall be deemed to be
a liquidation, dissolution or winding up of the Corporation as those terms
are used in this Clause 3.1(c).
(iv) Non-Cash Consideration. In the event that such distribution
to the holders of Preferred Stock shall include any assets other than
cash, the following provisions shall govern. The Shareholders owning
Common Stock shall first determine the fair market value of such assets
for such purpose, and shall notify all holders of Preferred Stock of such
determination. The fair market value of such assets for purposes of the
distribution under this subsection shall be the fair market value as
determined by a majority vote of the Shareholders in good faith, unless
the holders of a majority of the outstanding Preferred Stock shall object
thereto in writing within fifteen (15) days after the date of such notice.
In the event of such objection, the valuation of such assets for purposes
of such distribution shall be determined by an arbitrator selected by the
objecting Shareholders and the other Shareholders, or in the event a
single arbitrator cannot be agreed upon within ten (10) days after the
written objection sent by the objecting Shareholders in accordance with
the previous sentence, the valuation of such assets shall be determined by
arbitration in which (A) the objecting Shareholders shall name in their
notice of objection one arbitrator, (B) the other Shareholders shall name
a second arbitrator within fifteen
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(15) days from the receipt of such notice, (C) the two arbitrators thus
selected shall select a third arbitrator within fifteen (15) days
thereafter, and (D) the three arbitrators thus selected shall determine
the valuation of such assets within fifteen (15) days thereafter for
purposes of such distribution by majority vote. In the event the second or
third arbitrator is not selected as provided herein, then such arbitrator
shall be selected by the President of the American Arbitration Association
("AAA"). The costs of such arbitration shall be borne by the Corporation
or by the holders of Preferred Stock (on a pro rata basis out of the
assets otherwise distributable to them) as follows: (A) if the valuation
as determined by the arbitrators is greater than ninety percent (90%) of
the valuation as determined by the Shareholders, the holders of Preferred
Stock shall pay the costs of the arbitration, and (B) otherwise, the
Corporation shall bear the costs of the arbitration. The arbitration shall
be held in New York, New York in accordance with the International
Arbitration Rules of the AAA. The award made by the arbitrators shall be
binding upon the parties hereto, no appeal shall be taken from such award
and judgment thereon may be entered in any court of competent jurisdiction
to the extent permitted by such jurisdiction.
(d) Redemption.
(i) At the election of the holders of a majority of the
outstanding Preferred Stock, made by written notice to the Corporation,
the Preferred Stock shall be subject to mandatory redemption (to the
extent that such redemption shall not violate any applicable provisions of
the laws of Brazil, based upon the advice of counsel) at a price per share
equal to U.S. $1,000, plus an amount equal to any and all dividends
accrued and unpaid thereon as of the date of such redemption (the
"Redemption Price") as follows:
(A) if the Corporation defaults in the performance of or compliance
with any term contained herein and such default is not remedied
within thirty (30) days after the earlier of (1) a Responsible
Officer obtaining actual knowledge of such default and (2) the
Corporation receiving written notice of such default from any
Preferred Stock holder; or
(B) if a Material Adverse Change (as defined in the Securities
Subscription Agreement) occurs; or
(C) if a Liquidity Event (as defined in the Securities Subscription
Agreement) occurs.
(ii) On the tenth anniversary of the date of issuance of Preferred
Stock pursuant to the Securities Subscription Agreement, all shares of
Preferred Stock then
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outstanding shall be redeemed at the per share price equal to the
Redemption Price.
(iii) If the Corporation is unable to redeem any shares of
Preferred Stock because such redemption would violate the applicable laws
of Brazil, then the Corporation shall redeem such shares to the extent
possible on a pro rata basis and thereafter as soon thereafter as the
restrictions precluding such redemption shall no longer be applicable.
(iv) In case of redemption of only part of the shares of Preferred
Stock at any time outstanding, the shares to be redeemed shall be selected
pro rata (as nearly as may be) from all holders in proportion to the
number of shares of Preferred Stock held by each of them, except as may be
required by applicable law. Notice of every redemption provided for in
this Clause 3.1(d) shall be given by as provided in Clause 12(e) to every
holder of record, any of whose shares are then to be redeemed, not less
than 15 nor more than 30 days prior to the date fixed as the date of the
redemption thereof, at the respective addresses of such holders as the
same shall appear on the stock transfer books of the Corporation. The
notice shall state that the shares specified in such notice will be
redeemed by the Corporation at the Redemption Price and on the date
specified in such notice, accompanied by cash or a certified check in the
amount of any stock transfer tax applicable to such transaction. On and
after the date specified in the notice described above, each holder of
shares called for redemption shall be entitled to receive therefor the
applicable Redemption Price. If the Corporation shall give notice of
redemption as aforesaid (and unless the Corporation shall fail to pay the
Redemption Price in accordance with such notice), all shares called for
redemption shall be deemed to have been redeemed on the date specified in
such notice, and such shares so called for redemption shall from and after
such date cease to represent any interest whatever in the Corporation or
its property, and the holders thereof shall have no rights other than the
right to receive such Redemption Price but without any interest thereon
from or after such date.
(v) Cancellation of Redeemed Shares. All shares of the Preferred
Stock purchased or redeemed by the Corporation shall be forthwith retired
and canceled and shall not be reissued, nor shall any other stock be
issued in place thereof, but the Corporation may, nevertheless, from time
to time thereafter increase its capital stock in the manner and to the
extent permitted by law and by the Corporation's bylaws.
(e) Voting Rights. The Preferred Stock shall be entitled to vote as a
class in connection with the matters set forth in
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Section 4.2 hereof, and each share of Preferred Stock shall be entitled to
one vote in connection therewith.
Section 3.2. Common Stock.
(a) Dividends. Subject to the preferences and other rights of the
Preferred Stock as set out above, the holders of Common Stock shall be entitled
to receive an annual dividend of 1/2 of 1% of the annual net profits of the
Corporation, in the manner declared by the Shareholders Meeting and/or the Board
of Directors and out of funds legally available therefor. Holders of Common
Stock shall be entitled to share equally, share for share, in such dividends.
The holders of Common Stock hereby agree to the accumulation and non-payment of
dividends for a period of ten (10) years from the date hereof or until the
redemption of the Preferred Stock, whichever occurs earlier.
(b) Liquidation. In the event of any liquidation, dissolution or winding
up of the affairs of the Corporation, voluntary or involuntary, after payment or
provision for payment to the holders of Preferred Stock of the amounts to which
they may be entitled as set out above, the remaining assets of the Corporation
available to Shareholders shall be distributed equally per share to the holders
of Common Stock.
(c) Voting Rights. Each share of Common Stock shall be entitled to one
vote in the Shareholders' Meeting.
CLAUSE 4--SHAREHOLDERS' MEETINGS
Section 4.1. Meetings.
(a) Ordinary Meeting. The ordinary meeting of shareholders for the
election of directors, the examination and deliberation of the accounts of
management and the financial statements, and the transaction of any other
business shall be held up to the end of April of each year in such place where
the Corporation has its main offices. If said day be a legal holiday, said
meeting shall be held on the next succeeding business day.
(b) Extraordinary Meetings. Extraordinary meetings of the shareholders for
any purpose may be called at any time by the Board of Directors, or by the
President, and shall be called by the President at the request of the holders of
five percent (5%) (or such other percentage as may be required by Brazilian law)
of the outstanding shares of any class of capital stock entitled to vote.
Extraordinary meetings shall be held at such place where the Corporation has its
main offices.
(c) Notice of Meetings. Written notice of the time and place of any
shareholder's meeting, whether ordinary or extraordinary, shall be given to each
shareholder entitled to vote thereat, by personal delivery or by mailing the
same as provided in Clause 12(e) to him at his address as the same
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appears upon the records of the Corporation at least ten (10) days but not more
than sixty (60) days before the day of the meeting and published as required by
law. Notice of any adjourned meeting need not be given except by announcement at
the meeting so adjourned, unless otherwise ordered in connection with such
adjournment. Such further notice, if any, shall be given as may be required by
law. The Corporation shall consider this notice as renewed as often as is
necessary in order to keep it current.
(d) Quorum. Any number of shareholders, together holding at least a
majority of the capital stock of the Corporation issued and outstanding and
entitled to vote, who shall be present in person or represented by proxy at any
meeting duly called, shall constitute a quorum for the transaction of all
business, except as otherwise provided by law, the Corporation's bylaws or this
Agreement.
(e) Voting. Each shareholder entitled to vote at any meeting may vote
either in person or by proxy, but no proxy shall be voted on or after one year
from its date. Each shareholder entitled to vote shall at every meeting of the
shareholders be entitled to one vote for each share of stock registered in his
name on the record of shareholders. At all meetings of shareholders all matters,
except as otherwise provided by Brazilian corporation law, shall be determined
by the affirmative vote of the majority of shares present in person or by proxy
and entitled to vote on the subject matter. Voting at meetings of shareholders
need not be by written ballot.
(f) Amendment to By-Laws. For so long as any Investor holds directly or
indirectly, at least ten percent (10%) of the Common Stock outstanding on a
fully diluted basis, the Corporation shall not amend its by-laws without the
consent of such Investor.
Section 4.2. Resolutions of the Preferred Shareholders.
(a) The resolutions of the Preferred Shareholders shall be taken by the
quorums and majorities provided by Brazilian law. However, the Corporation will
refrain from taking any of the following actions without the affirmative vote of
the holders of a majority of the Preferred Stock:
(i) Purchase of Assets. The Corporation will not, and will not
permit any of its Subsidiaries to, purchase or otherwise acquire (in one
or a series of related transactions) any part of the property or assets of
any person except that:
(A) the Corporation and its Subsidiaries may transfer assets
among themselves;
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(B) the Corporation and its Subsidiaries may purchase inventory,
materials and equipment as set forth in the Operating Budget
(or, for the nine month period following the Closing Date, the
interim Operating Budget); and
(C) the Corporation and its Subsidiaries may make Permitted
Capital Expenditures (as defined in the Securities
Subscription Agreement).
(ii) Commitments. The Corporation will not, and will not permit
any of its Subsidiaries to, contract, create, incur, assume or suffer to
exist any obligation in excess of U.S.$250,000 or its equivalent in Reais
or other currency unless such obligation has been contemplated in the
Operating Budget (or, for the nine month period following the Closing
Date, the interim Operating Budget).
(iii) Amendment to By-laws. The Corporation will not, and will not
permit any of its Subsidiaries to, amend its by-laws, including, without
limitation, any reduction of the minimum cumulative and fixed dividends of
the Preferred Stock.
(iv) Limitation on Guarantees. Except for the guaranty of
permitted obligations of any Subsidiary, the Corporation will not, and
will not permit any of its Subsidiaries to, contract, create, incur,
assume or suffer to exist any obligation, contingent or otherwise,
directly or indirectly guaranteeing (including, without limitation, as a
result of being a general partner of another Person, unless the underlying
obligation is expressly made non-recourse as to such general partner) any
Indebtedness or other obligation of another Person. Indebtedness as used
herein shall mean all obligations which in accordance with GAAP are
classified as liabilities upon a balance sheet of such Person.
(v) Liens. The Corporation will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist
any Lien upon or with respect to any property or assets (real or personal,
tangible or intangible) of the Corporation or any of its Subsidiaries,
whether now owned or hereafter acquired, or sell any such property or
assets subject to an understanding or agreement, contingent or otherwise,
to repurchase such property or assets (including sales of accounts
receivable with recourse to the Corporation or any or its Subsidiaries),
or assign any right to receive income, excluding, however, from the
operation of this Section:
(A) Liens incurred or deposits made in the ordinary course of
business in connection with workers, compensation,
unemployment insurance and other
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types of social security or to secure the performance of
tenders, statutory obligations, bids, leases, government
contracts, performances and return of money bonds and similar
obligations, but not any Lien in favor of a surety arising in
connection with an actual default under a construction
contract;
(B) Liens incidental to the normal conduct of the business of
the Corporation or any Subsidiary or the ownership of its
property (including without limitation leases or subleases
granted to other Persons, mechanics liens, minor survey
exceptions, title defects, minor encumbrances, easements,
reservations, rights of others for rights-of-way, zoning or
other restrictions as to the use of real property), which
are not created in connection with the incurrence of
indebtedness and which do not in the aggregate materially
interfere with the use or value of such property in the
operation of the business of the Corporation and its
Subsidiaries taken as a whole;
(C) Liens of or resulting from any judgment rendered by a court of
competent jurisdiction, the appeal of which the Corporation or
a Subsidiary is prosecuting in good faith, and for which the
Corporation shall have made reserves or other appropriate
provision, if any, in respect thereof in accordance with GAAP;
and
(D) Liens for taxes, assessments or other governmental charges or
levies, either not yet due and payable.
(vi) Indebtedness. The Corporation will not, and will not permit
any of its Subsidiaries to, contract, create, incur, assume or suffer to
exist any Indebtedness in excess of U.S.$250,000 or its equivalent in
Reais or other currency, unless such indebtedness has been contemplated in
the Operating Budget (or, for the nine month period following the Closing
Date, the interim Operating Budget), except accrued expenses and current
trade accounts payable incurred in the ordinary course.
(vii) Transactions with Affiliates. The Corporation will not, and
will not permit any of its Subsidiaries to, enter into any transaction or
series of related transactions (including without limitation the purchase,
lease, sale or exchange of properties of any kind or the rendering of any
service) with any Affiliate (other than the Corporation or another
Subsidiary), except pursuant to the reasonable requirements of the
Corporation's or such Subsidiary's business and upon fair and reasonable
terms no less favorable to the Corporation or such Subsidiary than would
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be obtainable in a comparable arm's-length transaction with a Person not
an Affiliate.
(viii) No Other Business. The Corporation will not, and will not
permit any of its Subsidiaries to, engage directly or indirectly in any
business other than the operation and marketing of wireless messaging
services in Brazil.
(ix) Issuance of Eguity. The Corporation will not, and will not
permit any of its Subsidiaries to, issue any equity interest or any
options or subscription rights to purchase, or securities convertible
into, equity interests, except (A) all shares of Common Stock and
Preferred Stock issued pursuant to the Stock Subscription Agreement or
Section 3.1(a) hereto, (B) shares of Common Stock issued to Management
Investors on the date hereof, and (C) 2,487 shares of Common Stock
reserved for possible issuance to management of the Corporation and its
Subsidiaries, provided, however, that the Corporation or any of its
Subsidiaries may (A) issue replacements of then outstanding shares of
capital stock, (B) declare stock splits, stock dividends and similar
issuances which do not decrease the percentage ownership (on a fully
diluted basis, taking into account the exercise of all permitted
subscription rights) of the Shareholders in the Common Stock of the
Corporation or the Corporation or any of its Subsidiaries in any class of
the capital stock of such Subsidiary, and (C) issue capital stock to
qualify Directors to the extent required by applicable law.
(x) Bankruptcy, Reorganization, Sale of Assets, Etc. The
Corporation will not, and will not permit any of its Subsidiaries to,
enter into any action for a composition with creditors, the winding up,
liquidation or dissolution of the Corporation or its Subsidiaries or
entering into by them of any transaction of merger or consolidation, or
conveyance, sale, lease or other disposition of (or agreement to do any of
the foregoing at any future time) all or substantially all of assets
thereof, whether in a single transaction or a series of related
transactions, except that the Corporation and its Subsidiaries may
transfer assets among themselves.
(xi) Dividends. The Corporation will not, and will not permit any
of its Subsidiaries to, declare, authorize or pay any Dividend (as defined
in Clause 10(a) below) except as otherwise required by Brazilian law or
the Preferred Stock dividend provided for in Section 3.1(a) hereof.
(b) The limitations set forth in Subsections (i), (ii), (iv), (v) and
(viii) of this Section 4(a) will terminate on the date Warburg ceases to own any
Preferred Stock. The Shareholders also hereby agree that on the date Warburg
ceases to own any
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Preferred Stock, they will amend the Corporation's by-laws to terminate those
provisions of such by-laws that correspond to Subsections (i), (ii), (iv), (v)
and (viii) of this Section 4(a).
CLAUSE 5--DIRECTORS
Section 5.1. Board and Meetings.
(a) Composition of the Board. The Corporation's Board of Directors shall
be composed of five (5) permanent members and five (5) alternate members: two
designees of Warburg, one designee of PageNet, one designee of IPC, and the
President/Chief Executive Officer of the Corporation. For so long as (A) PageNet
shall hold at least ten percent (10%) of the shares of the Common Stock
outstanding on a fully diluted basis, taking into account the exercise of all
permitted subscription rights, or (B) the Technical Services Agreement, of even
date herewith, between Paging Network, Inc. and the Corporation is in effect,
PageNet shall be entitled to appoint one (1) permanent member and one (1)
alternate member of the Board of Directors. For so long as IPC shall hold at
least ten percent (10%) of the shares of the Common Stock outstanding on a fully
diluted basis it shall be entitled to appoint one (1) permanent member and one
(1) alternate member of the Board of Directors. Notwithstanding the foregoing,
for so long as Warburg shall hold more shares of the Common Stock outstanding on
a fully diluted basis than any other shareholder of the Corporation, Warburg
shall have the right if it chooses to designate a majority of the members of the
Board of Directors. In the event Warburg is not entitled to designate a majority
of the members of the Board pursuant to the preceding sentence, but Warburg
shall hold at least ten percent (10%) of the shares of the Common Stock
outstanding on a fully diluted basis it shall be entitled to appoint one (1)
permanent member and one (1) alternate member of the Board of Directors. Any
person invited by a Board member may attend and participate (without vote) at
the meetings. In addition to the foregoing, for so long as each of TVA and
Multiponto shall be a Shareholder, each shall be entitled to appoint one (1)
person to attend and participate (without vote) at the meetings. Such attendee
shall receive copies of all minutes of Board meetings. In the event that either
TVA or Multiponto shall hold at least ten percent (10%) of the shares of Common
Stock outstanding on a fully diluted basis it shall be entitled to appoint one
(1) permanent member and one (1) alternate member of the Board of Directors. For
purposes of this Section, "shares of Common Stock outstanding on a fully diluted
basis" shall include shares of Common Stock issuable upon the exercise of any
options or subscription bonds.
(b) Election. The Shareholders undertake to exercise their voting rights
so that such permanent members and alternates are elected in accordance with the
preceding clause.
(c) Presence at Meetings. The Shareholders hereby undertake to endeavor to
use their best efforts so that the
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permanent members appointed by them or their respective alternate members are
present at all meetings of Corporation's Board of Directors and of any of its
Subsidiaries. In the event of absence or impediment of any of the permanent
members, such member shall be mandatorily substituted by his alternate member
who shall vote on behalf of the permanent member as if he was present at the
meeting.
(d) Resignation, Etc. In the event of resignation or permanent impediment
of any member during the term of office to which he was elected, his replacement
shall be appointed by the Shareholder that had appointed the replaced member.
(e) Qualifying Shares. Each Shareholder agrees to obtain from each Board
member appointed by it full powers to exercise the voting right attached to any
Shares owned by each Board member at the Corporation's General Meetings, as well
as powers to transfer such Shares to such Shareholder in case the assigned
member ceases, for any reason, to be a Board member.
(f) Replacement Directors. In the event that any PageNet Director, IPC
Director, or Warburg Director designated in the manner set forth above is unable
to serve, or once having commenced to serve is removed or withdraws from the
Board (a "Withdrawing Director"), such Withdrawing Director's replacement (the
"Substitute Director") will be designated by PageNet, IPC, or Warburg, as the
case may be. A PageNet Director may be removed, with or without cause, by
PageNet and PageNet shall thereafter have the right to nominate a replacement
for such director. An IPC Director may be removed, with or without cause, by IPC
and IPC shall thereafter have the right to nominate a replacement for such
director. A Warburg Director may be removed, with or without cause, by Warburg
and Warburg shall thereafter have the right to nominate a replacement for such
director. A TVA Director, if any, may be removed, with or without cause, by TVA
and TVA shall thereafter have the right to nominate a replacement for such
director. The Shareholders and the Corporation agree to take all action within
their respective power, including, but not limited to, the voting of capital
stock of the Corporation owned by them, to cause the election of such Substitute
Director promptly following his or her nomination.
(g) Ordinary Meetings. The Board of Directors shall hold an annual meeting
for the purpose of organization and the transaction of any business immediately
after the ordinary meeting of the shareholders, provided a quorum of directors
is present. Other regular meetings may be held at such times as may be
determined from time to time by resolution of the Board of Directors.
(h) Extraordinary Meetings. Extraordinary meetings of the Board of
Directors may be called by the Chairman of the Board of Directors or by the
President.
-15-
(i) Notice and Place of Meetings. Meetings of the Board of Directors may
be held at the principal office of the Corporation, or at such other place as
shall be stated in the notice of such meeting. Notice of any extraordinary
meeting, and, except as the Board of Directors may otherwise determine by
resolution, notice of any ordinary meeting also, shall be given as provided in
Clause 12(e) to each director addressed to him at his residence or usual place
of business, so as to arrive at least five days before the day on which the
meeting is to be held, or if sent to him at such place by telegraph or cable, or
delivered personally or by telephone, not later than four days before the day on
which the meeting is to be held. No notice of the annual meeting of the Board of
Directors shall be required if it is held immediately after the annual meeting
of the shareholders and if a quorum is present.
(j) Business Transacted at Meetings, Etc. Any business may be transacted
and any corporate action may be taken at any ordinary or extraordinary meeting
of the Board of Directors at which a quorum shall be present, whether such
business or proposed action be stated in the notice of such meeting or not,
unless special notice of such business or proposed action shall be required by
statute. The Board of Directors shall keep minutes of all business transacted
and actions taken at such meetings.
(k) Quorum. A majority of the Board of Directors at any time in office
shall constitute a quorum, subject to the terms of this Agreement and provided
that at least one Warburg Director is present at such meeting. At any meeting at
which a quorum is present, the vote of a majority of the members present shall
be the act of the Board of Directors unless the act of a greater number is
specifically required by law or by this Agreement. The members of the Board
shall act only as the Board and the individual members thereof shall not have
any powers as such.
(l) Compensation. The directors shall not receive any stated salary for
their services as directors, but by resolution of the Board of Directors a fixed
fee and expenses of attendance may be allowed for attendance at each meeting,
with such approval by the Shareholders as may be required by law. Nothing herein
contained shall preclude any director from serving the Corporation in any other
capacity, as an officer, agent or otherwise, and receiving compensation
therefor.
(m) Action Without a Meeting. Any action required or permitted to be taken
at any meeting of the Board of Directors, or of any committee thereof, may be
taken without a meeting if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed in the
minute books with the minutes of the proceedings of the Board or committee.
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(n) Meetings Through Use of Communications Equipment. Members of the Board
of Directors, or any committee designated by the Board of Directors, shall,
except as otherwise provided by law, have the power to participate in a meeting
of the Board of Directors, or any committee, by means of a conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, and such participation shall constitute
presence in person at the meeting. Minutes shall be taken at such meetings as
may be required by law.
(o) Chairman of the Board of Directors. The Board of Directors in its
discretion may also elect a Chairman of the Board of Directors. The Chairman of
the Board of Directors shall be a director and shall have such power and perform
such duties as may from time to time be assigned to him by the Board of
Directors.
(p) President. The President shall, when present, preside at all meetings
of the shareholders, and, in the absence of the Chairman of the Board of
Directors, at meetings of the Board of Directors. He shall have power to call
extraordinary meetings of the shareholders or of the Board of Directors or of
the Executive Committee at any time. He shall be the chief executive officer of
the Corporation, and shall have the general direction of the business, affairs
and property of the Corporation, and of its several officers, and shall have and
exercise all such powers and discharge such duties as usually pertain to the
office of President.
(q) Deposits. All funds of the Corporation shall be deposited from time to
time to the credit of the Corporation in such bank or banks or other
depositories as the Board of Directors may select, and, for the purpose of such
deposit, checks, drafts, subscription rights and other orders for the payment of
money which are payable to the order of the Corporation, may be endorsed for
deposit, assigned and delivered by any officer of the Corporation, or by such
agents of the Corporation as the Board of Directors or the President may
authorize for that purpose.
(r) Voting Stock of Other Corporations. Except as otherwise ordered by the
Board of Directors, the President or the Treasurer shall have full power and
authority on behalf of the Corporation to attend and to act and to vote at any
meeting of the shareholders of any corporation of which the Corporation is a
shareholder and to execute a proxy to any other person to represent the
Corporation at any such meeting, and at any such meeting the President or the
Treasurer or the holder of any such proxy, as the case may be, shall possess and
may exercise any and all rights and powers incident to ownership of such stock
and which, as owner thereof, the Corporation might have possessed and exercised
if present. The Board of Directors may from time to time confer like powers upon
any other person or persons.
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CLAUSE 6--OFFICERS
(a) Election, Term of Office and Qualifications. The officers shall be
chosen annually by the Board of Directors. Each such officer shall, except as
herein otherwise provided, hold office until his successor shall have been
elected and taken office. The Chairman of the Board of Directors, if any, and
the President shall be directors of the Corporation, and should any one of them
cease to be a director, he shall ipso facto cease to be such officer. Except as
otherwise provided by law, any number of offices may be held by the same person.
(b) Removal of Officers. Any officer of the Corporation may be removed
from office, with or without cause, by a vote of a majority of the Board of
Directors.
(c) Resignation. Any officer of the Corporation may resign at any time.
Such resignation shall be in writing and shall take effect at the time specified
therein, and if no time be specified, at the time of its receipt by the
President or Secretary. The acceptance of a resignation shall not be necessary
in order to make it effective, unless so specified therein.
(d) Filling of Vacancies. A vacancy in any office shall be filled by
the Board of Directors.
(e) Compensation. The compensation of the officers shall be fixed by the
Board of Directors, or by any committee upon whom power in that regard may be
conferred by the Board of Directors, with such approval by the Shareholders as
may be required by law.
(f) Vice-Presidents. The Vice-Presidents, or any of them, shall, subject
to the direction of the shareholders, at the request of the President or in his
absence, or in case of his inability to perform his duties from any cause,
perform the duties of the President, and, when so acting, shall have all the
powers of, and be subject to all restrictions upon, the President. The
Vice-Presidents shall also perform such other duties as may be assigned to them
by the shareholders, and the shareholders may determine the order of priority
among them.
(g) Secretary. The Secretary shall perform such duties as are incident to
the office of Secretary, or as may from time to time be assigned to him by the
Board of Directors, or as are prescribed by the Corporation's by-laws.
(h) Treasurer. The Treasurer shall perform such duties and have powers as
are usually incident to the office of Treasurer or which may be assigned to him
by the Board of Directors.
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CLAUSE 7--COMMITTEES
(a) Committees. Committees, whose members need not be directors, may be
appointed by the Board of Directors, which committees shall hold office for such
time and have such powers and perform such duties as may from time to time be
assigned to them by the Board of Directors. Any member of such a committee may
be removed at any time, with or without cause, by the Board of Directors. Any
vacancy in a committee occurring from any cause whatsoever may be filled by the
Board of Directors.
(b) Resignation. Any member of a committee may resign at any time. Such
resignation shall be made in writing and shall take effect at the time specified
therein, or, if no time be specified, at the time of its receipt by the
President or Secretary. The acceptance of a resignation shall not be necessary
to make it effective unless so specified therein.
(c) Quorum. A majority of the members of a committee shall constitute a
quorum, subject to the terms of this Agreement. The act of a majority of the
members of a committee present at any meeting at which a quorum is present shall
be the act of such committee. The members of a committee shall act only as a
committee, and the individual members thereof shall not have any powers as such.
(d) Record of Proceedings, Etc. Each committee shall keep a record of its
acts and proceedings, and shall report the same to the Board of Directors when
and as required by the Board of Directors.
(e) Organization, Meetings, Notices, Etc. A committee may hold its
meetings at the principal office of the Corporation, or at any other place which
a majority of the committee may at any time agree upon. Each committee may make
such rules as it may deem expedient for the regulation and carrying on of its
meetings and proceedings. Unless otherwise ordered by the Executive Committee,
any notice of a meeting of such committee may be given by the Secretary of the
Corporation or by the chairman of the committee and shall be sufficiently given
if mailed to each member at his residence or usual place of business at least
two days before the day on which the meeting is to be held, or if sent to him at
such place by telegraph or cable, or delivered personally or by telephone not
later than 24 hours before the time at which the meeting is to be held.
(f) Compensation. Each member of any committee shall be entitled to
compensation only for the out-of-pocket expenses incurred by him as a result of
serving on such committee.
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CLAUSE 8--TRANSFER OF STOCK
(a) Resale of Securities.
(i) No Shareholder shall Transfer any Securities other than in
accordance with the provisions of this Clause 8. Any Transfer or purported
Transfer made in violation of this Clause 8 shall be null and void and of
no effect. For purposes of this Clause 8, the term Common Stock shall
include any subscription bonds or options to acquire shares of Common
Stock.
(ii) For a period commencing on the Closing Date and ending on the
20th annual anniversary thereof, no Shareholder will sell or otherwise
Transfer its Securities without the prior written approval of Warburg,
which approval will not be unreasonably withheld. The foregoing
restriction shall not apply to Transfers to such Shareholder's Affiliates,
which Affiliates agree in writing to be bound by all restrictions
applicable to the transferring Shareholder or to Transfers to Directors as
Directors' qualifying shares. Notwithstanding the foregoing, after the
fifth anniversary of the date hereof, each of IPC and Multiponto shall be
permitted to Transfer Common or Preferred Stock owned by it without the
prior written approval of Warburg, provided that any such Transfer shall
be subject to the provisions of Clause 8(b)(i).
(iii) No Management Investor will sell or otherwise Transfer any of
his or her Common Stock for a period of five (5) years from the date on
which such Common Stock is no longer subject to forfeiture (pursuant to
the Subscription Agreement between the Corporation and such Management
Investor pursuant to which such Common Stock was acquired) without the
prior written approval of the Board, which approval will not be
unreasonably withheld. The foregoing restriction shall not apply to
Transfers (A) to members of such Management Investor's family or trusts
for the benefit of such Management Investor or such Management Investor's
family; provided in each instance that such transferee agrees to be bound
by the provisions of this Agreement as if such transferee were an original
signatory hereto and (B) pursuant to the terms of Section 11 of the
Employment Agreement between the Corporation and such Management Investor.
(b) Right of First Offer.
(i) No Shareholder shall Transfer any of the Securities owned by it
(except for Transfers to one of its Affiliates, provided in each instance
that such Affiliate agrees to be bound by the provisions of this Agreement
as if such Affiliate were an original signatory hereto) unless the
Shareholder desiring to make the Transfer (hereinafter
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referred to as the "Transferor") shall have first provided notice of such
intention to Transfer pursuant to Clause 8(b)(1)(A).
(A) Offer by PageNet. In the event the Transferor wishes to
Transfer any of its Securities (the securities proposed to be
transferred being referred to as the "Subject Securities"), it shall
provide written notice of such intention to PageNet. PageNet shall,
within thirty (30) days of the date of such notice (i) irrevocably
offer in writing to purchase the Subject Securities for an amount
(the "Offer Price") as may be specified by PageNet (the "Offer") or
(ii) inform the Transferor in writing that it does not wish to
purchase the Subject Securities. In the event PageNet fails to
comply with the preceding sentence within such 30-day period, it
shall be deemed to have waived its right to offer to purchase the
Subject Securities. The Offer shall not contain any material
conditions (other than the receipt of all required consents and
approvals) and shall specify a date for the closing of the purchase
which shall not be more than thirty (30) days after the later of the
giving of such notice or the receipt of all required consents and
approvals. The Corporation, PageNet and the Transferor agree to use
their best efforts to obtain all required consents and approvals
promptly.
(B) Acceptance of Offer. Within 10 business days after the
receipt of the Offer, the Transferor may, at its option, accept the
Offer by giving written notice thereof to PageNet.
(C) Closing of Purchase. In the event the Transferor accepts
the Offer, the closing of the purchase shall take place at the
office of the Corporation or such other location as shall be
mutually agreed upon and the purchase price shall be paid at the
closing. At the closing, the Transferor shall deliver to PageNet all
instruments required to transfer the Subject Securities.
(D) Release from Restriction; Termination of Rights. If
PageNet fails to make an Offer in accordance with Clause 8(b)(i)(A),
the Transferor shall be free to Transfer the Subject Securities
without restriction. If PageNet makes an Offer that is not accepted
by the Transferor, the Transferor shall disclose to PageNet the
terms of each offer (including the identity of the offeror) received
by the Transferor in respect of the Subject Securities and shall
thereafter be entitled to Transfer the Subject Securities to a third
party at a price equal to or greater than the Offer Price (and
subject to no
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material conditions other than regulatory approvals and those
contained in PageNet's offer, except as otherwise provided in this
Clause 8(b)(i)(D)); provided that the transferee agrees, in writing,
to be bound by the provisions of this Agreement. If the Transferor
shall fail to Transfer the Subject Securities within 180 days
following the date on which the Transferor receives the Offer or, if
no Offer is received, the last day on which PageNet was entitled to
make the Offer, such Subject Securities shall again become subject
to all the restrictions of this Clause 8. Any Transfer by Warburg
pursuant to this Clause 8(b)(i) shall be subject to the provisions
of Clause 8(d) hereof.
(E) Right to Match Offer. Notwithstanding the provisions of
Clause 8(b)(i)(D), if the offer price received by the Transferor in
connection with a third party offer is no more than seven and
one-half percent (7.5%) greater than the offer price of the Offer
made by PageNet, then PageNet shall have the right, within ten (10)
business days after the Transferor notifies PageNet of such third
party offer, to make an Offer that matches the offer price and is on
terms as favorable as the third party offer. If PageNet makes such
an Offer, such Offer shall be accepted by the Transferor.
(ii) Neither the Corporation nor any of its Subsidiaries shall
Transfer all or substantially all of the assets of the Corporation and its
Subsidiaries, taken as a whole (the "Corporation Assets"), unless it shall
have first provided notice of such intention to effect such Transfer
pursuant to Clause 8(b)(ii)(A).
(A) Offer by PageNet. In the event the Corporation or any of
its Subsidiaries (hereinafter referred to as an "Asset Transferor")
wishes to Transfer the Corporation Assets, it shall provide written
notice of such intention to PageNet. PageNet shall, within thirty
(30) days of the date of such notice (i) irrevocably offer in
writing to purchase the Corporation Assets for an amount (the "Asset
Offer Price") as may be specified by PageNet (the "Asset Offer") or
(ii) inform the Corporation in writing that it does not wish to
purchase the Corporation Assets. In the event PageNet fails to
comply with the preceding sentence within such 30-day period, it
shall be deemed to have waived its right to offer to purchase the
Corporation Assets. The Asset Offer shall not contain any material
conditions (other than the receipt of all required consents and
approvals and those that would be required by any purchaser) and
shall specify a date for the closing of the purchase which shall not
be more than thirty (30) days after the later of the giving of
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such notice or the receipt of all required consents and approvals.
The Corporation, its Subsidiaries and PageNet agree to use their
best efforts to obtain all required consents and approvals promptly.
(B) Acceptance of Offer. Within ten (10) business days after
the receipt of the Asset Offer, the Asset Transferor may, at its
option, accept the Asset Offer by giving written notice thereof to
PageNet.
(C) Closing of Purchase. In the event the Asset Transferor
accepts the Asset Offer, the closing of the purchase shall take
place at the office of the Corporation or such other location as
shall be mutually agreed upon and the purchase price shall be paid
at the closing. At the closing, the Asset Transferor shall deliver
to PageNet all certificates, instruments and other documents
necessary to effectuate the transfer and conveyance of the
Corporation Assets.
(D) Release from Restriction, Termination of Rights. If
PageNet fails to make an Asset Offer in accordance with Clause
8(b)(ii)(A), the Asset Transferor shall be free to Transfer the
Corporation Assets without restriction. If PageNet makes an Asset
Offer that is not accepted by the Asset Transferor, the Asset
Transferor shall disclose the terms of each offer (including the
identity of the offeree) received by it in respect of the
Corporation Assets and shall thereafter be entitled to Transfer the
Corporation Assets to a third party at a price equal to or greater
than the Asset Offer Price (and subject to no material conditions
other than regulatory approvals and those imposed by PageNet). If
the Asset Transferor shall fail to Transfer the Corporation Assets
within 180 days following the date on which it receives the Asset
Offer or, if no Asset Offer is received, the last day on which
PageNet was entitled to make the Asset Offer, such the Corporation
Assets shall again become subject to all the restrictions of this
Clause 8.
(E) Right to Match Offer. Notwithstanding the provisions of
Clause 8(b)(ii)(D), if the offer price received by the Asset
Transferor in connection with a third party offer is no more than
seven and one-half percent (7.5%) greater than the offer price of
the Asset Offer made by PageNet, then PageNet shall have the right,
within ten (10) business days after the Asset Transferor notifies
PageNet of such third party offer, to make an Asset Offer that
matches the offer price and is on terms as favorable as the third
party offer. If PageNet makes such an Offer, such Offer shall be
accepted by the Asset Transferor.
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(iii) For purposes of Clause 8(b)(i) and (b)(ii) above, if the
consideration to be received by the Transferor or the Asset Transferor is
other than cash, indebtedness or securities, the value of such
consideration shall be its fair market value. Any securities offered as
consideration shall be valued as follows:
(A) If traded on a national securities exchange, the value
shall be deemed to be the average of the closing prices of the
securities on such exchange over the 30-day period ending three (3)
days prior to the closing; and
(B) If actively traded over-the-counter, the value shall be
deemed to be the average of the daily averages of the closing bid
and asked prices over the 30-day period ending three (3) days prior
to the closing; and
(C) If there is no active public market, the value shall be
the fair market value thereof, as determined in good faith by the
Transferor or the Asset Transferor, as the case may be; provided,
however, that in the event any such securities are subject to
investment letter or similar restrictions on free marketability,
such securities shall reflect an appropriate discount from the
market value determined pursuant to paragraphs (A), (B) or (C) of
this clause to reflect the fair market value thereof, as determined
in good faith by the Transferor or the Asset Transferor, as the case
may be.
(iv) Neither Warburg, Xxxxxx & Co. nor any of its Affiliates
will Transfer its equity interest in Warburg if the sole purpose of
such Transfer is to circumvent the provisions of this Clause 8(b).
(v) None of TVA, IPC or Multiponto nor any Affiliate thereof
having an ownership interest (direct ownership in the case of a general
partner of a partnership and indirect ownership in the case of a limited
partner of a limited partnership) in the Corporation will undergo a Change
of Control without providing prior written notice of such Change of
Control to PageNet, which shall notify PageNet of all of the facts and
circumstances surrounding such Change of Control. If such a Change of
Control of TVA, IPC or Multiponto, as the case may be, or any such
Affiliate shall have occurred without advance notice to TVA, IPC or
Multiponto, as the case may be, or such Affiliate, IPC shall provide such
notice of Change of Control as soon as practicable after becoming aware of
it. Within thirty (30) days of the date of such notice, PageNet shall have
the right, exercisable by written notice (the "Call Notice") to TVA, IPC
or Multiponto, as the case may be, and such
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Affiliates (the "Callees") to purchase itself or cause to be purchased at
the purchase price set forth below, all but not less than all of the
Securities owned by the Callees, on such date that is the later of thirty
(30) days following the Call Notice, or thirty (30) days after the later
of the date on which all required consents and approvals have been
received, or such shorter time as may be specified by PageNet in the Call
Notice. The purchase price to be paid by PageNet shall be the Fair Market
Value of the Securities, without regard to the Change of Control, on the
date the Call Notice is given. For purposes of this clause (iv), "Fair
Market Value" means the value as determined by PageNet in good faith and
with due care, unless TVA, IPC or Multiponto, as the case may be, shall
object thereto in writing within 15 days after the date of such Call
Notice. In the event of such objection, the Fair Market Value shall be
determined by an arbitrator selected by PageNet and TVA, IPC or
Multiponto, as the case may be, in the event a single arbitrator cannot be
agreed upon within 10 days after the written objection sent by TVA, IPC or
Multiponto, as the case may be, in accordance with the previous sentence,
the Fair Market Value shall be determined by arbitration in which (1) TVA,
IPC or Multiponto, as the case may be, shall name in its notice of
objection one arbitrator, (2) PageNet shall name a second arbitrator
within 15 days from the receipt of such notice, (3) the two arbitrators
thus selected shall select a third arbitrator within 15 days thereafter,
and (4) the three arbitrators thus selected shall determine the Fair
Market Value within 15 days thereafter by majority vote. In the event the
third arbitrator is not selected as provided herein, then such arbitrator
shall be selected by the President of the AAA. The costs of such
arbitration shall be borne by PageNet or TVA, IPC or Multiponto, as the
case may be, as follows: (1) if the Fair Market Value determined by the
arbitrators is greater than 90% of the Fair Market Value as determined by
PageNet, then any of TVA, IPC or Multiponto, as the case may be, shall pay
the costs of the arbitration, and (2) otherwise, PageNet shall bear the
costs of the arbitration. The arbitration shall be held in New York, New
York in accordance with the International Arbitration Rules of the AAA.
The award made by the arbitrators shall be binding upon the parties
hereto, no appeal shall be taken from such award and judgment thereon may
be entered in any court of competent jurisdiction. For purposes of this
Clause 8(b)(v), a "Change of Control" shall occur upon the earlier of (1)
a Person or group of affiliated or associated Persons (an "Acquiring
Person") (in the case of IPC, not including any existing shareholder, or
employee or group of shareholders or group of employees of IPC's general
partner) having acquired beneficial ownership of 50% or more of the
outstanding
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equity securities or equity interests of TVA, IPC or Multiponto, as the
case may be, or such Affiliate (or, in the case of IPC, 50% or more of the
outstanding equity securities or equity interests of the general partner
of such entity or any such Affiliate) or a public announcement or
knowledge by TVA, IPC or Multiponto, as the case may be, or any such
Affiliate that an Acquiring Person intends to acquire beneficial ownership
of 50% or more of such outstanding equity securities or equity interests,
or, in the case of any other Investor or such Affiliate organized as a
partnership or limited liability company, a change in the majority control
of a general or managing partner, of such Investor or Affiliate; or (2)
immediately following the commencement of, or announcement of an intention
to make, a tender offer or exchange offer the consummation of which would
result in the beneficial ownership by a person or group of 50% or more of
such outstanding equity securities or equity interests.
(c) Tag-Along Rights for Management Investors.
(i) In the event the Shareholders, acting together, intend to
Transfer one hundred percent (100%) of their shares of Common Stock, they
shall notify the Management Investors, in writing, of such proposed
Transfer and its terms and conditions. Within ten (10) business days of
the date of such notice, each Management Investor shall notify the
Shareholders if he or she elects to participate in such Transfer. Each
Management Investor who so notifies the Shareholders shall have the right
to sell, at the same price and on the same terms and conditions as the
Shareholders, all (but not less than all) of his or her shares of Common
Stock. Any Transfer by the Shareholders pursuant to this Clause 8(c) shall
be subject to the provisions of Clause 8(b) hereof.
(ii) Notwithstanding anything contained in this Clause 8(c), in the
event that all or a portion of the purchase price consists of securities
and the sale of such securities to the Management Investors would require
either a registration under any securities laws or the preparation of a
disclosure document, then, at the option of the Shareholders, the
Management Investors may receive, in lieu of such securities, the fair
market value of such securities in cash, as determined in good faith by
the Board under this Clause 8(d). Any transfer by the Shareholders
pursuant to this Clause 8(d) shall be subject to the provisions of Clause
8(b) hereof.
(d) Tag-Along Rights of Shareholders.
(i) In the event any Shareholder intends to Transfer its shares of
Common Stock (a "Selling Shareholder") (other than to an Affiliate of such
Selling Shareholder), such Selling Shareholder shall notify the other
Shareholders, in writing, of such proposed Transfer and its terms and
conditions. Within thirty (30) days of
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the date of such notice, each Shareholder shall notify the Selling
Shareholder if it elects to participate in such Transfer. Each Shareholder
that so notifies the Selling Shareholder shall have the right to sell, at
the same price and on the same terms and conditions as the Selling
Shareholder, an amount of shares equal to the shares of Common Stock the
third party actually proposes to purchase multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock issued
and owned by such Shareholder and the denominator of which shall be the
aggregate number of shares of Common Stock issued and owned by the Selling
Shareholder and each Shareholder exercising its rights under this Clause
8(d). Any Transfer by the Shareholders pursuant to this Clause 8(d) shall
be subject to the provisions of Clause 8(b) hereof.
(ii) In the event the Selling Shareholder intends to Transfer its
Preferred Stock (other than to an Affiliate of the Selling Shareholder),
the Selling Shareholder shall notify the other Shareholders, in writing,
of such proposed Transfer and its terms and conditions. Within thirty (30)
days of the date of such notice, each Shareholder shall notify the Selling
Shareholder if it elects to participate in such Transfer. Each Shareholder
that so notifies the Selling Shareholder shall have the right to sell, at
the same price and on the same terms and conditions as the Selling
Shareholder, a number of shares of Preferred Stock equal to the aggregate
number of shares of Preferred Stock the third party actually proposes to
purchase multiplied by a fraction, the numerator of which shall be the
aggregate number of shares of Preferred Stock owned by such Shareholder
and the denominator of which shall be the aggregate number of shares of
Preferred Stock owned by the Selling Shareholder and each Shareholder
exercising its rights under this Clause 8(d). Any Transfer by the
Shareholders pursuant to this Clause 8(d) shall be subject to the
provisions of Clause 8(b) hereof.
(iii) Notwithstanding anything contained in this Clause 8(d), in
the event that all or a portion of the purchase price consists of
securities and the sale of such securities to the Shareholders would
require either a registration under any securities laws or the preparation
of a disclosure document, then, at the option of the Selling Shareholder,
the Shareholders may receive, in lieu of such securities, the fair market
value of such securities in cash, as determined in good faith by the
Board.
(e) Drag-Along Right.
(i) Subject to the provisions of Clause 8(b), if at any time and
from time to time after the date of this Agreement, Warburg wishes to
Transfer in a bona fide arms' length sale all of its shares of Common
Stock or Preferred
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Stock to any Person or Persons who are not Affiliates of Warburg (for
purposes of this Clause 8(e), the "Proposed Transferee"), Warburg shall
have the right (for purposes of Clause 8(e), the "Drag-Along Right") to
require each Shareholder to sell to the Proposed Transferee all of the
shares of Common Stock (including any subscription rights or options to
acquire Common Stock) or Preferred Stock, as applicable (for the same per
share consideration as proposed to be received by Warburg) then owned by
such Shareholder. Each Shareholder agrees to take all steps necessary to
enable him or it to comply with the provisions of this Clause 8(e) to
facilitate Warburg's exercise of a Drag-Along Right.
(ii) To exercise a Drag-Along Right, Warburg shall give each
Shareholder a written notice (for purposes of this Clause 8(e), a
"Drag-Along Notice") containing (1) the name and address of the Proposed
Transferee and (2) the proposed purchase price, terms of payment and other
material terms and conditions of the Proposed Transferee's offer. Each
Shareholder shall thereafter be obligated to sell the shares of Common
Stock (including shares of Common Stock issuable upon exercise of any
subscription rights or options held directly or indirectly by such
Shareholder), and/or, if applicable, Preferred Stock subject to such
Drag-Along Notice; provided that the sale to the Proposed Transferee is
consummated within ninety (90) days of delivery of the Drag-Along Notice.
If the sale is not consummated within such 90-day period, then each
Shareholder shall no longer be obligated to sell such Shareholder's shares
pursuant to that specific Drag Along Right, but shall remain subject to
the provisions of this Clause 8(e).
(iii) Notwithstanding anything contained in this Clause 8(e), in
the event that all or a portion of the purchase price consists of
securities and the sale of such securities to the Shareholders would
require either a registration under any securities laws or the preparation
of a disclosure document, then, at the option of Warburg, the Shareholders
may receive, in lieu of such securities, the fair market value of such
securities in cash, as determined in good faith by the Board.
(f) Repurchase of Management Shareholder Shares.
(i) In the event that the employment of any Management Investor
with the Corporation or any of its Subsidiaries is terminated by the
Corporation for Just Cause (as defined in the Employment Agreement between
the Corporation and such Management Investor), the Corporation may, at its
option, exercisable by delivering written notice to such Management
Investor at any time specifying the date of the repurchase, repurchase
from such Management Investor any and all shares of Common Stock owned by
such Management Investor, and such Management
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Investor shall sell to the Corporation such Common Stock, at a purchase
price equal to U.S. $1.00 per share of Common Stock.
(ii) In the event that (A) the employment of any Management
Investor with the Corporation or any of its Subsidiaries is terminated by
the Corporation without Just Cause or by the Management Investor for Good
Reason (as defined in such person's Employment Agreement) or (B) any
Management Investor voluntarily terminates employment with the Corporation
or any of its Subsidiaries or (C) the employment of any Management
Investor is terminated by reason of death, disability, or retirement on or
after the normal retirement age set forth in the Corporation's (or any
Subsidiary's) policies, the Corporation may, at its option, exercisable by
delivering written notice to such Management Investor (or his estate) at
any time specifying the date of the repurchase, repurchase from such
Management Investor (or his estate) any and all shares of Common Stock
owned by such Management Investor, and such Management Investor shall sell
to the Corporation such Common Stock, at a purchase price per share equal
to the greater of U.S. $1.00 or the fair market value of such shares of
Common Stock, as determined in good faith by the Board.
(iii) Any repurchase pursuant to clauses (i) or (ii) above by the
Corporation shall be effected by such Management Investor delivering to
the Corporation the duly endorsed stock certificates evidencing the Common
Stock to be repurchased, or such other instrument for the transfer of
ownership thereof as provided by Brazilian law against delivery by the
Corporation to such Management Investor of the aggregate purchase price
for such shares of Common Stock.
(g) Preemptive Right. If at any time after the date hereof, the
Corporation proposes to issue equity securities of any kind (the term "equity
securities" shall include for these purposes any subscription rights, options or
other rights to acquire equity securities and debt securities convertible into
equity securities) of the Corporation, other than the issuance of (i) securities
to the public in a firm commitment underwriting pursuant to a registration
statement filed under any securities laws, (ii) securities pursuant to the
acquisition of another corporation by the Corporation by merger, purchase of
substantially all of the assets or other form of reorganization, (iii) Common
Stock (or options or subscription rights to acquire Common Stock) issued to
Management Investors or pursuant to an employee stock option plan, stock bonus
plan, stock purchase plan or other management equity program approved by the
Shareholders, provided such securities do not exceed seven and one-half percent
(7.5%) of the shares of Common Stock outstanding on the date hereof on a fully
diluted basis after giving effect to the subscription rights held by PageNet,
Multiponto and TVA, with
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respect to which the Shareholders hereby agree to waive their preemptive rights,
then as to each Shareholder, the Corporation shall:
(A) give written notice setting forth in reasonable detail (1) the
designation and all of the terms and provisions of the securities proposed to be
issued (the "Proposed Securities"), including, where applicable, the voting
powers, preferences and relative participating, optional or other special
rights, and the qualification, limitations or restrictions thereof and interest
rate and maturity; (2) the price and other terms of the proposed sale of such
securities; (3) the amount of such securities proposed to be issued; and (4)
such other information as the Shareholders may reasonably request in order to
evaluate the proposed issuance;
(B) offer to issue to each such Shareholder a portion of the Proposed
Securities equal to a percentage determined by dividing (x) the number of shares
of Common Stock held directly or indirectly by such Shareholder and issuable to
such Shareholder, assuming conversion in full of any convertible securities then
held directly or indirectly by such Shareholder, by (y) the total number of
shares of Common Stock then held directly or indirectly by all of the
Shareholders; and
(C) offer to issue to each such Shareholder holding Preferred Stock that
portion of the Proposed Securities necessary to preserve such Preferred
Shareholder's ownership interest of the Corporation represented by such
Preferred Stock.
Each Shareholder holding Preferred Stock hereby agrees to waive its
preemptive rights under Brazilian law except those preemptive rights under (C)
above to purchase the Proposed Securities.
Each Investor must exercise its purchase rights hereunder within ten (10)
days after receipt of such notice from the Corporation. Each Management Investor
must notify the Corporation within ten (10) days after receipt of such notice of
his election to exercise his purchase rights within thirty (30) days after
receipt of such notice, subject only to the procurement of adequate financing.
If all of the Proposed Securities offered to such Shareholders are not fully
subscribed by such Shareholders, the remaining Proposed Securities will be
reoffered to the Shareholders purchasing their full allotment upon the terms set
forth in this Clause 8(g), until all such Proposed Securities are fully
subscribed for or until all such Shareholders have subscribed for all such
Proposed Securities which they desire to purchase, except that such Shareholders
must exercise their purchase rights within five days after receipt of an such
reoffers. To the extent that the Corporation offers two or more securities in
units, Shareholders must purchase such
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units as a whole and will not be given the opportunity to purchase only one of
the securities making up such unit.
Upon the expiration of the offering periods described above, the
Corporation will be free to sell such Proposed Securities that the Shareholders
have not elected to purchase during the ninety (90) days following such
expiration on terms and conditions no more favorable to the purchasers thereof
than those offered to such holders. Any Proposed Securities offered but not sold
by the Corporation after such 90-day period must be reoffered to the
Shareholders pursuant to this Clause 8(g).
The election by a Shareholder not to exercise its subscription rights
under this Clause 8(g) in any one instance shall not affect its right (other
than in respect of a reduction in its percentage holdings) as to any subsequent
proposed issuance. Any sale of such securities by the Corporation without first
giving the Shareholders the rights described in this Clause 8(g) shall be void
and of no force and effect.
CLAUSE 9--NONCOMPETITION PROVISIONS
(a) Non-Competition Agreement. Each Investor acknowledges that the
agreements and covenants contained in this Agreement are essential to protect
the value of the Corporation's business and assets and, in its capacity as a
Shareholder, it has obtained and will obtain such confidential or proprietary
knowledge, contacts, know-how and experience and there is a substantial
probability that such knowledge, know-how, contacts and experience could be used
to the substantial advantage of a competitor of the Corporation and to the
Corporation's substantial detriment. Therefore, each Investor other than TVA and
Multiponto agrees that for the period commencing on the date of this Agreement
and ending on the earlier of (i) three years following the date on which such
Investor no longer holds any Common Stock and (ii) the date on which this
Agreement is terminated pursuant to Clause 12(d)(i) (such period is hereinafter
referred to as the "Restricted Period"), neither the Investor nor its controlled
Affiliates shall participate or engage, directly or indirectly, for itself or on
behalf of or in conjunction with any person, partnership, corporation or other
entity, whether as an agent, employee, officer, director, shareholder, partner,
joint venturer, investor or otherwise, in the provision of facilities-based
one-way or two-way paging or portable wireless messaging services (including
without limitation a service that provides substantially the same service as
VoiceNow(R) and other advanced paging services) in Brazil at any time during the
Restricted Period. Notwithstanding the foregoing, nothing herein shall prohibit
an Investor from owning up to 5% of any publicly traded entity. In the event
that TVA engages in any activity that would be prohibited by the provisions of
the second sentence of this Clause 9(a) if it were applicable to TVA, TVA agrees
that, notwithstanding any provisions of this Agreement or the Securities
Subscription Agreement or the bylaws of the
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Corporation or otherwise, it shall no longer be entitled to receive from the
Corporation any information not in the public domain or generally known in the
industry. In the event that Multiponto engages in any activity that would be
prohibited by the provisions of the second sentence of this Clause 9(a) if it
were applicable to Multiponto, Multiponto agrees that, notwithstanding any
provisions of this Agreement or the Securities Subscription Agreement or the
bylaws of the Corporation or otherwise, it shall no longer be entitled to
receive from the Corporation any information not in the public domain or
generally known in the industry.
(b) Nondisclosure of Confidential Information. The Shareholder shall not
disclose to any person or entity or use, either during the Restricted Period or
at any time thereafter, any information not in the public domain or generally
known in the industry, in any form, acquired by the Shareholder or, if acquired
following the Restricted Period, such information which, to the Shareholder's
knowledge, has been acquired, directly or indirectly, from any person or entity
owing a duty of confidentiality to the Corporation or any of its Subsidiaries or
affiliates, relating to the Corporation, its Subsidiaries or affiliates,
including but not limited to information regarding customers, vendors,
suppliers, trade secrets, training programs, manuals or materials, technical
information, contracts, systems, procedures, mailing lists, know-how, trade
names, improvements, price lists, financial or other data (including the
revenues, costs or profits associated with any of the Corporation's products or
services), business plans, code books, invoices and other financial statements,
computer programs, software systems, databases, discs and printouts, plans
(business, technical or otherwise), customer and industry lists, correspondence,
internal reports, personnel files, sales and advertising material, which is or
was used in the business of the Corporation or any of its Subsidiaries. The
Shareholder agrees and acknowledges that all of such information, in any form,
and copies and extracts thereof, are and shall remain the sole and exclusive
property of the Corporation, and upon request of the Board, the Shareholder
shall return to the Corporation the originals and all copies of any such
information provided to or acquired by the Shareholder, and shall have destroyed
or return to the Corporation all files, correspondence and/or other
communications received from the Corporation, maintained and/or originated by
the Shareholder during the Restricted Period. Notwithstanding the foregoing, if
and to the extent that any Investor is a limited partnership, or resells or
transfers the Securities acquired by it to a limited partnership of which such
Investor (or another entity controlled by or under common control with such
Investor) is the majority or controlling general partner or to any other entity
controlled by or under common control with such Investor, financial and other
information regarding the Corporation of the type customarily included in a
private placement memorandum offering interests in a private equity investment
fund may be included in the private placement memorandum or other offering
document used by such
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limited partnership in connection with the offering and sale of its interests.
In addition, financial and other information regarding the Corporation of the
type typically provided to limited partners in private equity investment funds
with respect to the investments made by those funds may be provided on a
periodic basis to the limited partners of such limited partnership, and to the
shareholders of the general partner of such limited partnership, provided that
under no circumstances will any proprietary information (which, for this
purpose, excludes such financial information) of the Corporation be disclosed to
such limited partners or shareholders.
(c) Injunctive Relief; Modification of Provisions. Without intending to
limit the remedies available to the Corporation, each Shareholder acknowledges
that a breach of any of the covenants contained in this Clause 9 may result in
material irreparable injury to the Corporation or its Subsidiaries or Affiliates
for which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of such a
breach or threat thereof, the Corporation shall be entitled to obtain a
temporary restraining order and/or a preliminary or permanent injunction
restraining the Shareholder from engaging in activities prohibited by this
Clause 9 or such other relief as may be required specifically to enforce any of
the covenants in this Clause 9. If any provision of this Clause 9 is determined
by a court of competent jurisdiction to be invalid in part, it shall be
curtailed, both as to time and location, to the minimum extent required for its
validity under the applicable law and shall be binding and enforceable with
respect to each Shareholder as so curtailed. In any case, whether or not the
injunctive relief provided for herein is obtained, the breach of any of the
covenants contained in this Clause 9 shall give rise to the payment by the
violating shareholder to the Corporation, of a penalty equal to the market value
of the Securities held by such Shareholder.
CLAUSE 10--INTERPRETATION OF THIS AGREEMENT
(a) Terms Defined. As used in this Agreement, the following terms
have the respective meaning set forth below:
Affiliate: means, with respect to any Person, any other Person directly or
indirectly controlling (including, but not limited to, all directors and
officers of such Person), controlled by or under direct or indirect common
control with, such Person (provided that The Opportunity Fund shall not be
deemed an Affiliate of Multiponto as long as the investments of The Opportunity
Fund (i) are not in any person, partnership, corporation or other entity that
provides facilities-based one-way or two-way paging or portable wireless
messaging services (including without limitation a service that provides
substantially the same service as VoiceNow(R) and other advanced paging
services) in Brazil, or (ii) are limited to 10% or less of
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any publicly traded entity). For these purposes, independent of Brazilian law, a
Person shall be deemed to control a corporation (i) where the shares of the
corporation are not publicly traded, if such Person holds, directly or
indirectly, fifty one percent (51%) or more of the Voting Stock of such
corporation, or has the right (by contract or otherwise) to elect a majority or
more of the board of directors of such corporation; and (ii) where the shares of
the corporation are publicly traded, if such Person holds, directly or
indirectly, twenty five percent (25%) or more of the Voting Stock of such
corporation, or has the right (by contract or otherwise) to elect twenty five
percent (25%) or more of the board of directors of such corporation. Each
general partner of a partnership shall be deemed to control such partnership.
Dividend: with respect to any Person shall mean that such Person has
declared, or paid any dividend or returned any capital to, its shareholders or
authorized or made any other distribution, payment or delivery of property
(other than capital stock of the Corporation) or cash to its shareholders as
such, or redeemed, retired, purchased, or otherwise acquired, directly or
indirectly, for consideration, any shares of any class of its capital stock
outstanding on or after the Closing Date (or any options or subscription rights
issued by such Person with respect to its capital stock), or set aside any funds
for any of the foregoing purposes, or shall have permitted any of its
Subsidiaries to purchase or otherwise acquire for a consideration any shares of
any class of the capital stock of such Person outstanding on or after the
Closing Date (or any options or subscription rights issued by such Person with
respect to its capital stock). Without limiting the foregoing, Dividends with
respect to any Person shall also include all payments made or required to be
made by such Person with respect to any stock appreciation rights plans, equity
incentive or achievement plans or any similar plans or the setting aside of any
funds for the foregoing purposes.
GAAP: means generally accepted accounting principles that are consistent
with the principles promulgated or accepted by Ernst & Young Auditores
Independents S.C. and its predecessors, as in effect from time to time in
Brazil.
Operating Budget: means a five-year operating budget of the Corporation
and its Subsidiaries (the first year of which shall include monthly operating
budgets), which shall have been approved in the Operating Budget.
Paging Assets: the goods, equipment, and systems, related to the provision
and operation of the activities of the Corporation, including the
facilities-based one-way or two-way paging or portable wireless messaging
services (including without limitation a service that provides substantially the
same services as VoiceNow(R) and other advanced paging services), as
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well as rights of any nature related to the exploitation of such activities.
Person: an individual, partnership, joint-stock company, corporation,
trust or unincorporated organization, and a government or agency or political
subdivision thereof.
Qualified Initial Public Offering: means an initial public offering of the
Common Stock pursuant to a registration statement declared effective by the
Comissao de Valores Mobiliarios or any other securities regulator pursuant to
any securities laws in which the aggregate net proceeds received by the
Corporation exceed $30 million.
Securities: the shares of Common Stock, options or subscription rights to
acquire Common Stock and/or the Preferred Stock, as the context may require.
Subsidiary: means as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a fifty percent (50%) interest in the profits or capital thereof is owned
by such Person or one or more of its Subsidiaries or such Person and one or more
of its Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
Transfer: any sale, assignment, pledge, hypothecation, or other
disposition or encumbrance.
Voting Stock: securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
(b) Accounting Principles. Where the character or amount of any asset or
amount of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, this shall be done in accordance
with GAAP at the time in effect, to the extent applicable, except where such
principles are inconsistent with the requirements of this Agreement.
(c) Directly or Indirectly. Where any provision in this Agreement refers
to action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be
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applicable whether such action is taken directly or indirectly by such Person.
(d) Governing Law Submission to Jurisdiction.
(i) This Agreement shall be governed and constructed in
accordance with the Laws of the Federative Republic of Brazil.
(ii) Except as otherwise provided for in this Agreement, the
parties hereof elect the Courts of the City of Sao Paulo, State of Sao
Paulo to settle any disputes arising herefrom, and hereby waives any other
Courts, as privileged as they may be.
(e) Section Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
(f) Monetary Damages, Specific Performance and Injunctive Relief. The
obligations arising from this Agreement shall be registered in the Book of
Registration of Nominative Shares of the Corporation and in the respective share
certificates, if issued, such registration constituting an impediment to the
carrying out of any acts contrary to the provisions of this Agreement, the
Corporation being thus legitimately authorized not to effect, in this case, the
registration of such acts and thus refuse to transfer the ownership or title to
any rights on the shares covered by this Agreement. The failure to comply with
the obligations arising from this Agreement by the Shareholders, their heirs,
successors or assigns, shall give rise to a right of specific performance of
such obligation ("obrigacao de fazer"), the Court order substituting for the
consent of the defaulting party or Shareholders, as provided for in Articles 639
and 641 of the Brazilian Civil Procedure Code, as well as in Article 119 of Law
6.404, of December 15, 1976, notwithstanding the right to receive
indemnification for the losses and damages arising from such violation.
(g) Consent of the Corporation. For purposes of article 118 of Law 6.404,
of December 15, 1976, one of the counterparts of this Agreement shall be filed
at the Corporation's head offices. The Corporation executes this Agreement as a
consenting party and undertakes to faithfully observe all of the terms and
conditions hereof.
CLAUSE 11--INDEMNIFICATION
The Corporation shall indemnify to the fullest extent permitted under and
in accordance with the laws of Brazil any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative by
reason of the fact that he is or was a director,
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officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, trustee, employee or agent of
or in any other capacity with another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Expenses incurred in defending a civil or criminal action, suit or
proceeding shall (in the case of any action, suit or proceeding against a
director or officer of the Corporation) or may (in the case of any action, suit
or proceeding against a trustee, employee or agent) be paid by the Corporation
in advance of the final disposition of such action, suit or proceeding as
authorized by the Board upon receipt of an undertaking by or on behalf of the
indemnified person to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Corporation as authorized in
this Clause.
No director shall be personally liable to the Corporation or any
Shareholder for monetary damages for breach of fiduciary duty as a director,
except for any matter in respect of which such director shall be liable by
reason that, in addition to any and all other requirements for liability, he:
(i) shall have breached his duty of loyalty to the
Corporation or the Shareholder(s);
(ii) shall not have acted in good faith or, in failing to
act, shall not have acted in good faith;
(iii) shall have acted in a manner involving intentional misconduct
or a knowing violation of law or, in failing to act, shall have acted in a
manner involving intentional misconduct or a knowing violation of law; or
(iv) shall have derived an improper personal benefit.
The indemnification and other rights set forth in this Article shall not
be exclusive of any provisions with respect thereto in the By-laws or any other
contract or agreement between the Corporation and any officer, director,
employee or agent of the Corporation.
CLAUSE 12--MISCELLANEOUS
(a) Pre-Incorporation Expenses. Each of the Shareholders agrees that the
Corporation shall reimburse the Shareholders for
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all expenses incurred by it in connection with the provision of services and
equipment prior to the execution and delivery of the Securities Subscription
Agreement, this Agreement and related agreements.
(b) Investment in License Holders. Each of the Shareholders agrees that
they shall use their respective best efforts to cause Multiponto, TVA and San
Francisco Comunicacoes Ltda., a limited liability company organized and existing
under the laws of Brazil ("San Francisco"), to enter into agreements enabling
the Corporation or one of its Affiliates to become a shareholder (to the largest
degree permitted under applicable law) in such entities or such other entity as
may be the transferee of the Licenses.
(c) Shareholder Commitment to Vote. Each of the Shareholders agrees that,
from time to time as may be required, it shall vote any Securities directly or
indirectly held by it in favor of any proposal to effect all of the provisions
of this Agreement.
(d) Termination. The initial term of this Agreement shall commence on the
date hereof and shall continue until the tenth (10th) anniversary of the date
hereof. The initial term shall be extended for a successive ten (10) year term
provided that (i) no less than 25% of the then outstanding Securities are held
directly or indirectly by more than one of the Shareholders and (ii) no
Shareholder has given notice of termination of this Agreement by delivering
notice of termination within 60 days prior to the expiration of the initial term
of this Agreement. Notwithstanding the foregoing, except for the provisions of
Clause 9 hereof, this Agreement shall terminate on the earlier to occur of (x)
the date on which each Shareholder that holds at least ten percent (10%) of the
Common Stock outstanding on a fully diluted basis shall have agreed to terminate
this Agreement or (y) the date on which the Corporation consummates a Qualified
Initial Public Offering.
(e) Notices.
(i) All communications under this Agreement shall be in writing
and shall be delivered by hand, internationally recognized air courier or
facsimile transmission, charges prepaid:
(1) if to Warburg, at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, facsimile number (000) 000-0000, marked for the attention of
Xxxxxxx X. Xxxx (with a copy to Xxxxxxx Xxxx & Xxxxxxxxx, One Citicorp
Center, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, facsimile
number (000) 000-0000, Attn: Xxxxxx X. Xxxxxxx), or at such other address
as Warburg may have furnished in writing to the Corporation and the other
Shareholders,
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(2) if to PageNet, at 0000 Xxxxxxx Xxxx Xxxxxxxxx, Xxxxx,
Xxxxx 00000, facsimile number (000) 000-0000, marked for the attention of
Xxxxx X. Xxxxxxxx (with a copy to Xxxxxxx, Xxxx & Xxxxx LLP, 000 Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000-0000, facsimile number (000) 000-0000,
Attn: Xxxxx X. Xxxxxxx), or at such other address as PageNet may have
furnished in writing to the Corporation and the other Shareholders,
(3) if to IPC, Xxx Xxxxxxxx Xxxxxxxx, 000-xxxx. 00, Xxx Xxxxx,
Xxxxxx, 00000-000, facsimile number 00-000-0000, marked for the attention
of Xxxxxx Xxxxxxx (with a copy to Xxxxxx & Xxxxx, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000-0000, facsimile number (000) 000-0000, Attn: Xxxxxxxx
X. Xxxxxx), or at such other address as it may have furnished in writing
to the Investors.
(4) if to Multiponto, at Avenida Presidente Xxxxxx Xx. 000,
00(0) Xxxxx (xxxxx), Xxx xx Xxxxxxx, Xxxxxx, facsimile number
011-55-21-240-1667, marked for the attention of Xxxxxx Xxxxxx (with a copy
to Xxxxxx Xxxxxxxx, facsimile number 011-55-21-220-3445), or at such other
address as it may have furnished in writing to the Investors.
(5) if to TVA, at Xxx xx Xxxxx 000, 0xx Xxxxx, Xxx Xxxxx,
Xxxxxx, 00000-000, facsimile number 011-55-11-822-9335, marked for the
attention of Xxxx Xxxxxx Guizelini Balieiro (with a copy to Xxxxx & Rameh,
Xxx Xxxxx xx Xxxxxxxx, Xx. 000, 00xx Xxxxx, Xxx Xxxxx, Xxxxxx 01411-011,
facsimile number 000-00-000-0000, Attn: Xxx Xxxxx and Xxxxxx Xxxxx), or at
such other address as it may have furnished in writing to the Investors.
(6) if to the Corporation, at Xxxxxxx xxx Xxxxxx Xxxxxx,
00,000 World Trade Center, 17th Floor, Suite 26, Sao Paulo, Brazil,
facsimile number 011-55-11-521-1814, marked for the attention of the
President (with a copy to Xavier, Bernardes, Braganca, Xx. Xxxxxx 0000,
Xxx Xxxxx, Xxxxxx, facsimile number 011-55-11-282-5580, Attn: M. Xxxxxx
Xxxxx), or at such other address as it may have furnished in writing to
the Investors.
(7) if to a Management Investor, at the address set forth
opposite his/her name or the signature page of this Agreement.
(ii) Any notice so addressed shall be deemed to be given: if
delivered by hand, on the date of such delivery; if sent by courier, on
the third Business Day following the date of such mailing; if mailed by
registered or certified airmail, on the sixth Business Day after the date
of such mailing; if sent by facsimile transmission, on the date of
receipt.
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(f) Reproduction of Documents. This Agreement and all documents relating
thereto, including, without limitation, (i) consents, waivers and modifications
which may hereafter be executed, (ii) documents received by each Shareholder
pursuant hereto and (iii) financial statements, certificates and other
information previously or hereafter furnished to each Shareholder, may be
reproduced by each Shareholder by an photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and each Shareholder
may destroy any original document so reproduced. All parties hereto agree and
stipulate that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by each
Shareholder in the regular course of business) and that any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.
(g) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, provided
that the provisions of Clauses 8(c) and (d) are not assignable without the
consent of Warburg.
(h) Entire Agreement; Amendment and Waiver. This Agreement constitutes the
entire understanding of the parties hereto relating to the subject matter hereof
and supersedes all prior agreements or understandings with respect to the
subject matter hereof among such parties. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with (and only with) the
written consent of each of the Shareholders; provided, however, that no
amendment that adversely affects that Management Investors and not the
Shareholders shall be effective against the Management Investors unless (i) the
written consent of the holders of a majority of the shares of Common Stock held
directly or indirectly by the Management Investors has been obtained and (ii)
such amendment affects all Management Investors equally.
(i) Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other provisions of this Agreement shall nevertheless remain in full
force and effect. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner.
(j) No Agency. No party to this Agreement shall, by virtue of having
entered into this Agreement, be deemed to be the legal representative or agent
of any other party, and no party shall have the right or authority to approve,
create, or incur any liability or any obligation of any kind, express or
implied,
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against or in the name of or on behalf of any other party, except to the extent
otherwise expressly provided in this Agreement.
(k) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
(l) Multiponto Proxy. Multiponto agrees to vote all of its Securities in
accordance with the Term of Representation among Multiponto, Xxxxx Xxxxxxxx and,
to the extent that Xxxxx Xxxxxxxx'x appointment thereunder shall terminate for
any reason whatsoever, in the same manner as Warburg.
(m) Further Agreements.
(A) Each of Multiponto, San Francisco and TVA covenants to cause the
following provisions to be completed within six (6) months of the Closing
Date (as defined in the Securities Subscription Agreement):
(i) use its best efforts to obtain all necessary approvals and to
comply with all applicable regulations and each shall
incorporate a wholly owned new company ("NewCo") for the sole
purpose of holding the Paging Assets; and
(ii) use its best efforts to obtain all necessary approvals and to
comply with all applicable regulations and each shall make the
necessary applications to the Ministry of Communications of
Brazil in order to transfer the Paging Assets to NewCo; and
(iii) assuming such approvals are obtained, transfer the Paging
Assets to NewCo in a lawful manner; and
(iv) assuming such approvals are obtained, each shall permit the
Corporation to purchase 49% of the voting stock and 100% of
the non-voting stock, which shall constitute 66 2/3% of all of
the capital stock, of each NewCo, the consideration being the
receipt by each of Multiponto and TVA of Subscription Bonds
pursuant to the Securities Subscription Agreement and, in the
case of San Francisco, by an indirect participation of its
principal quotaholder, through IPC, in the Corporation; and
(v) assuming such approvals are obtained, use its best efforts to
obtain all necessary approvals in order to transfer to the
Corporation the Licenses
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and the remaining voting stock of NewCo, and all its Paging
Assets; and
(vi) each shall use its best efforts, in cooperation with the
Company, to obtain assurances from the Ministry of
Communications so as to permit the organization of the
business using a reseller structure which employs two-party
subscriber agreements between the Operator or its agents and
the subscribers to the paging services; and each shall take
all measures necessary to amend the operating agreement
between each and the Company so as to achieve this objective
once such assurances have been obtained.
(B) In connection with the foregoing provisions of Section 12(m)(A), the
Corporation agrees to reimburse each of Multiponto, San Francisco and TVA for
their reasonable out-of-pocket expenses incurred in connection with the
foregoing activities, up to a maximum of $10,000 per entity.
(C) In the event of a breach of Section 12(m)(A), the breaching party
shall forfeit its equity interest in the Corporation; provided that the breach
was not the result of the action or inaction of a government or regulatory
authority, such as the Ministry of Communications of Brazil. In the case of a
breach by San Francisco (which does not have an equity interest in the
Corporation), IPC shall forfeit 2,000 of its 8,000 shares of Common Stock and
25% (up to a maximum of 2,000 shares) of its shares of Preferred Stock, but
shall retain the balance of its equity interest in the Corporation.
(D) The Shareholders covenant and agree that they shall organize or
restructure the Corporation in order to comply with Brazilian legal and
regulatory requirements relating to foreign ownership of the Paging Assets.
(E) IPC shall transfer its equity interest in the Corporation (or its
remaining interest in each Paging Assets holding company) to a Brazilian entity
if necessary in order to satisfy Brazilian ownership requirements under
Brazilian law.
(F) The Corporation and the shareholders of the respective Paging Assets
companies will agree to enter into shareholder agreements pursuant to which the
Corporation shall have a veto over any transfer or any other disposition of the
Paging Assets or use of them not related to the conduct of the Corporation's
business.
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IN WITNESS WHEREOF, the parties hereto have executed this Shareholders
Agreement as of the date first above written.
PAGING NETWORK DO BRASIL, S.A.
By:/s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
WARBURG, XXXXXX VENTURES, L.P.
By: WARBURG, XXXXXX & CO., its
General Partner
By:/s/ Xxxxxxx X. Xxxx
------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Partner
PAGING NETWORK INTERNATIONAL N.V.
By: /s/ Xxxx Xxxxxxx Xxxxx
------------------------------------
Name: Xxxx Xxxxxxx Xxxxx
Title: Attorney-in-fact
IVP PAGING (CAYMAN) L.P.
By IVP - International Venture Partners,
Inc., its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Managing Partner
MULTIPONTO TELECOMUNICACOES LTDA.
By: /s/ Xxxxxxx Xxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxx Xxxxxxxx
Title: Attorney-in-fact
TVA SISTEMA DE TELEVISAO S.A.
By: /s/ Xxxxxxxx Xxxxxxxx
/s/ Xxxxxxx Xxx Xxxxxx
------------------------------------
Name: Xxxxxxxx Xxxxxxxx
Name: Xxxxxxx Xxx Xxxxxx
Title: Attorneys-in-fact
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MANAGEMENT INVESTORS
/s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx Xxxxxx
Address:
R. Amauri, 513 - Apt. 906
Jardim Paulista
CEP 00000-000 - Xxx Xxxxx, Xxxxxx
/s/ Xxxxx Xxxxxxxx
------------------------------------
Xxxxx Xxxxxxxx
Address:
Xx. Xxxxxxx, 000 - Xxx. 000X
Xxx Xxxxx, Xxxxxx
The undersigned agrees to be bound by the provisions of Section 12(m) of
this Agreement as if made a party hereto.
SAN FRANCISCO COMMUNICACOES LTDA.
/s/ Xxxxxxx Xxxxxx dos Xxxxxx
------------------------------------
By: Xxxxxxx Xxxxxx dos Xxxxxx
Title: Attorney-in-fact
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SCHEDULE I
Management Investors
Individuals
Xxxxxx Xxxxxx
Marco Fregenel
SCHEDULE II
Initial Common Stock
TOTAL
NUMBER PRICE PER PURCHASE
OF SHARES SHARE PRICE
Warburg, Xxxxxx Ventures, L.P. 19,996 $1.00 $19,996.00
IVP Paging (Cayman) L.P. 7,998 $1.00 $7,998.00
Multiponto Telecomunicacoes Ltda. 2,000 $1.00 $2,000.00
Paging Network International N.V. 1 $1.00 $1.00
TVA Sistema de Televisao S.A. 1 $1.00 $1.00
Warburg, Xxxxxx Ventures, L.P. board 4 $1.00 $4.00
designees and alternates
IVP Paging (Cayman) L.P. board 2 $1.00 $2.00
designee and alternate
Paging Network International N.V. 2 $1.00 $2.00
board designee and alternate
SCHEDULE III
Initial Preferred Stock
TOTAL
NUMBER PRICE PER PURCHASE
INVESTOR OF SHARES SHARE PRICE
Warburg, Xxxxxx Ventures, L.P. 14,200 $1,000 $14,200,000
IVP Paging (Cayman) L.P. 5,680 $1,000 $5,680,000
Multiponto Telecomunicacoes Ltda. 1,420 $1,000 $1,420,000
SCHEDULE IV
Subscription Bonds
NUMBER OF EXERCISE TOTAL
SHARES OF PRICE PER EXERCISE
INVESTOR STOCK SHARE PRICE
Paging Network International N.V. 7,997 $1.00 $7,997
Multiponto Telecomunicacoes Ltda. 1,000 $1.00 $1,000
TVA Sistema de Televisao S.A. 999 $1.00 $999
SCHEDULE V
Subsequent Preferred Stock Percentages
INVESTOR PERCENTAGE
Warburg, Xxxxxx Ventures, L.P. 66.667
IVP Paging (Cayman) L.P. 26.667
Multiponto Telecomunicacoes Ltda. 6.667
Multiponto Telecomunicacoes Ltda. 6.667
