Exhibit 10.5
AGREEMENT
This AGREEMENT is entered by and between:
MASTEC, INC., a company organized and existing under the laws
of the State of Florida, United States of America, with head
office at 0000 X.X. 00xx Xxxxxx, in the city of Miami, State
of Florida, United States of America, and/or any of its
affiliated companies (hereinafter referred to as "MasTec"),
and
INEPAR S.A. - INDUSTRIA E CONSTRUCOES, a company organized and existing
under the laws of Brazil, with head office at Av. Xxxxxxxxx X. xx Xxxxxxxx,
no. 11.400, Cidade Industrial, in the city of Curitiba, state of Parana,
Brazil (hereinafter referred to as "Inepar" ),
(hereinafter jointly referred to as "Parties").
WHEREAS
This Agreement is based on the following:
A. MasTec and Inepar executed an Agreement of Intent, dated May 17, 1997
(hereinafter referred to as "Agreement"), providing for the terms and
conditions to organize a Brazilian corporation, with the purpose of
operating in the Brazilian market of rendering of services for the
introduction of telecommunication systems, and which stocks would be
100% (one hundred per cent) held by the Parties.
B. Inepar organized on June 26, 1997, a corporation under its control,
named MasTec Inepar S.A. - Sistemas de Telecomunicacoes, with head
office at Avenida Xxxxxxxxx X. xx Xxxxxxxx, no. 11.400-CIC, in the city
of Curitiba, State of Parana, Brazil, with acts of incorporation filed
with the Most Worthy Commercial Registry of the State of Parana under
no. 41300045739, in session held on July 01, 1997 (hereinafter referred
to as "Corporation"), in order that, in the future and in accordance
with the Agreement, the Corporation carried out a capital increase to
allow the admittance of the new stockholder MasTec (hereinafter
referred to as "Capital Increase"), and as of the Capital Increase,
referred to as "Newco".
Taking into consideration the term of the Agreement of Intent and its mutual
commitments stipulated herein, the Parties agree to execute this
Agreement to be governed by the following clauses and conditions:
I - THE CORPORATION
1. The corporation capital is currently composed of 100,000 (one hundred
thousand) common nominative stocks, in that Inepar holds 99.50% of its
total capital:
1.1 Newco shall be a corporation governed by the provisions of its
articles of organization (hereinafter referred to as "Articles
of Organization") and by the applicable laws, in that all of
its existing stocks and each and every stock to be issued in
the future shall be subject to the terms and conditions of
this Agreement.
2. Inepar transferred the Corporation all backlog - with the respective
accounting on June 30, 1997 - of the following agreements:
(i) PI 5148 with Telerj, dated June 30,1996;
(ii) PI 5152 with Equitel, dated February 17, 1997;
(iii) PI 5153 with Telepar, dated March 1l, 1997;
(iv) PI 5154 with Telepar, dated January 31, l997;
(v) PI 5155 with Telesp, dated December 31, 1996;
(vi) PI 5156 with Telesp, dated December 31, 1996;
(vii) PI 5157 with Motorola, dated March 11, l997;
(viii) PI 5158 with Telesp, dated May 30, 1997;
(ix) PI 5159 with Telesp, dated June 23, 1997;
(x) FI 5160 with Telepar, dated April 01, 1997; and
(xi) PT 5161 with Alcoa, dated June 20, 1997, (hereinafter jointly referred
to as "Transferred Agreements").
Inepar shall also transfer to the Corporation the Agreements which on the
occasion of this Agreement are under negotiation with the customers:
(i) Motorola - Telepar - South Region, value estimated at
US$ 32,000,000.00 (thirty two million US dollars);
(ii) Consorcio Globaltelecom - Band B, value estimated at
US$ 100,000,000.00 (one hundred million US dollars) and
(iii) Telepar - infrastructure for the conventional telephony, value
estimated at US$ 9,000,000.00 (nine million US dollars), (hereinafter
jointly referred to as "Agreements to be Transferred").
The Transferred Agreements together with the Agreements to be Transferred
represent a total backlog of approximately the equivalent in Brazilian currency
to US$ 370,000,000.00 (three hundred seventy million US dollars), in that the
Agreements to be Transferred shall be automatically incorporated to Newco by
Inepar on the occasion of their definite execution.
2.1. Inepar shall gear its best efforts with its customers
to approve the transfer of the Transferred Agreements and
of the Agreements to be Transferred to Newco. In the
event the status of minority of Inepar in Newco causes
any impediment for the presentation of the Agreements at
Newco, the Parties shall consider, among others, the
alternative to subcontract the purpose of the Transferred
Agreements and of the Agreements to be Transferred to
Newco and/or present Newco the backlog - with the
respective accounting - of other agreements or services of
Inepar and/or of any of its subsidiary companies in order
to perform the amount of the invoicing and respective margins
of profitability which arise out of the agreements herein
referred to above.
II - CAPITAL INCREASE
3. The Parties agree that at July 31, 1997 (hereinafter referred to as
"capital increase date") Inepar, company's majority stockholder, will
carry out a Special Stockholders' Meeting, recording its respective
Minutes with the purpose of: (i) increasing the corporate's capital so as
to allow the admittance of the new stockholder MasTec, (ii) transferring
the head office of Newco from Curitiba (State of Parana) to Sao Paulo
(State of Sao Paulo) and (iii) issuing new common stocks of Newco (the
"Stocks"), which shall be subscribed and paid in by MasTec representing
fifty-one per cent (51%) of Newco's total capital (hereinafter referred to
as "Subscription"). The Subscription shall be preceded by the guarantee
statements issued by Inepar pursuant to item iv hereof.
3.1. MasTec shall transfer, in cash, the amount in
Brazilian currency equivalent to US$ 29,400,000.00 (twenty-
nine million four hundred thousand US dollars) in order to pay
up the stocks. Such value shall be paid in eleven (11)
installments in that the first installment shall be paid, at
the Capital Increase Date, in the value, in Brazilian
currency, equivalent to US$ 5,000,000.00 (five million US
dollars), followed by ten (10) equal monthly installments in
the value, in Brazilian currency, equivalent to
US$ 2,440,000.00 (two million four hundred forty thousand
US$ dollars).
4. MasTec will issue to Inepar at the Capital Increase Date, in recognition
of goodwill, two hundred fifty thousand (250,000) common stocks of MasTec
and an option to acquire fifty thousand (50,000) additional common stocks
of MasTec at the NYSE closing market price on May 16 1997 for a term of up
to ten (10) years.
5. Newco's stock composition, as of July 31, 1997, will be fifty-one percent
(51%) of the stocks to MasTec and forty-nine percent (49%) of the stocks
to Inepar, in order to allow the consolidation and merger of Newco
results, in Brazil, in the accounting-financial structure of MasTec in the
United States of America.
III - OPERAT1ONAL CONDITIONS
6. On the Capital Increase Date, Inepar will provide and transfer to the
Company all documents needed for the operation of the Corporation in the
field of rendering of services of introduction of telecommunication
systems.
7. After the Capital Increase Date, possible acquisitions of regional
companies will be analyzed aiming for the best Brazilian market share; in
that the first company to be analyzed for such purpose will be CIDE
ENGENHARIA LTDA., with head office in the city of Curitiba, State of
Parana, Brazil.
IV - GUARANTEES AND REPRESENTATIONS
Inepar states the following:
(A) the legal existence and regular operation and functioning of
the controlled Corporation;
(B) the validity and effectiveness of Transferred Agreements to
be Transferred;
(C) the nonexistence of any labor, fiscal or social security
demand against the Controlled Corporation, and the
nonexistence of any liens regarding the properties and assets
of the Controlled Corporation;
(D) the net equity position of controlled Company is reflected in
the balance sheet of the Capital Increase Date, attached
hereto as Annex 8. (D); and
(E) the nonexistence of any liabilities or contingencies not
disclosed in said Annex 8. (D).
V - NEWCO'S MANAGEMENT
9. After the Capital Increase Date, the Parties agree that Newco shall have
a Board of Directors formed by up to five (5) members. The Board of
Directors shall consist of two (2) Directors appointed by MasTec, two (2)
Directors to be appointed by Inepar and the President of Newco. A
chairman of the board will be appointed by mutual agreement between the
parties. The powers of said Board of Directors will be defined in the
Articles of Organization.
9.1 In case of temporary impediment, the Chairman himself may appoint
another Member to substitute for him, and in case of definitive
vacancy the Parties will choose, by common agreement another
Chairman who will be in office until the end of the tenure.
9.2. In case of vacancy or definitive impediment of any Board Member,
the Party which has appointed said Member shall appoint a
substitute who will complete the performance of the tenure of the
substituted Member.
10.0 Newco will be formed having five officers as follows: (i) one President
named by MasTec, who will serve also serve as a Board Director, (ii)
two (2) officers named individually Executive Vice-President to be
appointed by the President and the Commercial Director to be appointed
by Inepar, (iii) one Financial-Managing Director to be appointed by
MasTec, and (iv) one Technical Director to be appointed by Inepar. The
powers of said officers will be defined in the Articles of
Organization.
10.1. In case of vacancy or definitive impediment of any officer,
the Party or the President appointed him, as the case may be,
shall appoint a substitute who will end the tenure of the
substituted officer.
10.2. Newco's President shall have all the necessary powers to carry
out the Company's management.
10.3. In Newco President's absence, Executive VicePresident
Director, jointly with any other Director, may perform the
President Director's duties.
10.4. The Parties agree that, as stockholders of Newco, MasTec
and/or Inepar, as the case may be, they may grant and assign a
sole stock held by them to natural individuals who come to
form the Management Committee of Newco, in order to comply
with the legal demands related to the members of such board.
The stocks then disposed of shall be encumbered in favor of
the respective assignor stockholders. It is also agreed that,
should any of said natural individuals fail to participate in
Newco's Management Committee, the stocks shall be immediately
assigned to the respective assignor stockholder, who will be
fully in charge of such obligation fulfillment.
VI - NOTICES
11. Any notice shall be given, as provided for herein, in writing, and will
be effective upon its receipt, if sent by registered air mail, and in
case the notice is sent by fax it will be effective when confirmed by
the original copy sent via registered air mail, to the Party at the
address indicated hereinbelow or at another address, as said Party may
indicate, by means of written notice pursuant to the provisions of this
Section.
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To MasTec: To Inepar:
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Attention: Xxxx Xxxxxxx Attention: Di Xxxxx Xxxxx
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Fax no.:000 000 0000 Fax no.: 00 00 000 0000
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VII - MISCELLANEOUS
12. This Agreement shall be effective for a period of ten (10) years as of
the present date or, whenever observed that time limitation meanwhile no
changes in the original share of Newco's stockholders occur, and in such
case, if none of them delivers a notice informing about its
determination not to consent with its renewal before the end of the
ten-year term, this Agreement shall be renewed without any additional
measure for an indefinite term.
12.1. In case of decrease in either party's interests in Newco, the
terms of this Agreement shall be reviewed.
13. The Parties may validate the obligations hereunder by specific
performance or any other legal action, including claim for damages, to
which they have the right, under the applicable laws.
14. The terms of this Agreement shall bind the Parties to their respective
successors or authorized assignees. No right or obligation shall be
granted or assigned hereunder, by any of the Parties, without prior
written consent of the other Party.
15. This Agreement represents the full agreement between the Parties
regarding the matters discussed and shall prevail on all other prior
related settlements, compromises, and documents. Any amendments,
cancellation or renounce shall require a written document duly executed
by the Parties.
16. This Agreement will be ruled by Brazilian laws. Any disputes which
result from this Agreement shall be firstly settled by arbitration,
then, if necessary, by the Courts of the city of Sao Paulo, State of
Sao Paulo, excluding any other, no matter how privileged it may be.
IN WITNESS WHEREOF, the Parties execute this Agreement in three (3) counterparts
before the two (2) undersigned witnesses,
Sao Paulo, July 21, 1997
MASTEC, INC.
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxxx Xxxxxx
By: Xxxxx X. Xxxxxxx By: Xxxxxx Xxxxxx
Title: Senior Vice President and Title: Senior Vice President
Chief Financial Officer
INEPAR S . A. INDUSTRIA E CONSTRUCOES
/s/ Xxxxxxx de Oms Sobrinho /s/ Mario Xxxxx Xxxxxxxxx
By: Xxxxxxx de Oms Sobrinho By: Mario Xxxxx Xxxxxxxxx
Title: President title: Vice-President
Witnesses:
/s/ Xxxxx Xxxx Filho
Name: Name:
RG: RG:
