MEMORANDUM OF UNDERSTANDING
THIS MEMORANDUM OF UNDERSTANDING ("MEMORANDUM") is made this 1st day of
October, 1997 ("EXECUTION DATE"), and contains the principal terms of the
understandings and agreements reached as of October 1, 1997, between
BrasilSat Harald, S.A., ("BRASILSAT"), a corporation organized and existing
under the laws of Brasil, South America, with domicile at Curitiba, Parana,
Brasil and UNR-XXXX Division of UNR Industries, Inc. ("XXXX"), a corporation
organized and existing under the laws of the State of Delaware, United States
of America, with domicile at Peoria, Illinois, U.S.A., related to the
incorporation of a Company in Brasil.
WITNESSETH:
WHEREAS, BrasilSat is currently engaged, among other things, in the design,
engineering, manufacture, marketing, sales, distribution and installation of
angle and solid leg towers.
WHEREAS, XXXX is currently engaged, among other things, in the design,
engineering, manufacture, marketing, sales, distribution and installation of
tubular and solid leg towers, poles, steel accessories and equipment shelters.
WHEREAS, BrasilSat is the owner of the land and constructions presently being
used by BrasilSat for its tower facilities and has agreed in principle to
lease to the Company hereinafter described a portion of the land and
constructions for a manufacturing and storage and operations facility.
WHEREAS, BrasilSat and XXXX have agreed in principle to incorporate a Company
in Brasil ("THE COMPANY") for the purpose of the design, engineering,
manufacture, marketing, sales, distribution and installation in Brasil of
towers, steel and concrete poles, equipment shelters, related accessories and
galvanizing facilities.
WHEREAS, for the purposes aforesaid, BrasilSat, XXXX, and the Company will
enter into certain agreements in accordance with the Schedule of Related
Agreements hereinafter provided. The existing galvanizing plant and the
planned galvanizing expansion of Harald are not part of the above scope of
this instrument.
WHEREAS, BrasilSat, and XXXX hereby wish to agree and determine the extent
and understandings of the agreements reached between them with respect
thereto.
NOW THEREFORE, BrasilSat, and XXXX hereby express their agreement and
understanding as to the following matters:
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ARTICLE I
BUSINESS PURPOSES
1.1 The Company will design, engineer, manufacture, market, sell,
distribute and install the following products:
A. TOWERS: Towers and other similar structures manufactured of
steel members, designed to support antennae and other devices
required to be raised above ground level ("TOWERS"). Towers will
be included after a 12 to 18 month period from the Closing Date
at XXXX'x option. BrasilSat retains the right to manufacture
and sell angle and solid leg towers after this period. During
this period (12 to 18 month period from the Closing Date)
BrasilSat will be the exclusive distributor of XXXX'x towers in
Brazil. During this period (12 to 18 month period from the
Closing Date) XXXX will be the exclusive distributor of
BrasilSat's towers outside of Brasil.
B. POLES: Tubular structures made of steel, concrete, fiber glass
or other material, designed to support antennae and other
devices required to be raised above ground level, for use in
the communications markets in the territory and other as yet
unknown applications ("POLES").
C. EQUIPMENT SHELTERS: Relocatable enclosures constructed of a
variety of materials including concrete, steel, fiberglass and
others, which are designed to house electronics in connection
with the towers and steel poles and other as yet unknown
applications ("SHELTERS").
D. STEEL ACCESSORIES COMPONENTS: Platforms, braces, dish mounts,
antenna mounts, safety cables and devices, lighting hardware
and grounding materials for the towers and poles.
E. INSTALLATION SERVICES: All installations and site services
related to the above products.
F. GALVANIZING: The process of applying molten zinc to steel.
(The Towers, Steel Poles, Equipment Shelters, Steel Accessories
Components, Installation Services and Galvanizing are hereinafter
collectively referred to as the "PRODUCTS".)
1.2 The Company may engage in any and all acts, things, business and
activities that are related, incidental or conducive directly to the sale of
the Products in the Territory as defined in the article 1.6.
1.3 The Company has the exclusive right to sell all Products, referred
in subparagraph (1.1) of Subsections A to F of this Section 1., and those
developed in the future to all markets in the Territory as defined in the
article 1.6. This exclusivity is subject to existing XXXX distribution
contracts and the ability and willingness of the Company to provide economic
and logistic advantages to the target market in the Territory as defined in
the article 1.6.
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1.4 New Products may be added from time to time when business
requirements mandate as determined by the Company's management consistent
with any agreements entered into by BrasilSat or XXXX.
1.5 The Company will use XXXX'x and BrasilSat's name and trademarks
under the Technology License and Technical Assistance Agreement to maximize
market acceptance of the Products.
1.6 For purposes of Article I of this Memorandum, the word "Territory"
shall mean South America and such other territories as the parties may
hereafter mutually agree.
ARTICLE II
CONTRIBUTIONS
2.1 BrasilSat will provide the Company with 51%, and XXXX will provide
the Company with 49%, of the initial working capital for the operations of
the Company. Any additional working capital that may be required for the
operation of the Company will be obtained through additional capital
contributions or through normal banking facilities as agreed by BrasilSat and
XXXX. It is the desire of the Parties that the Company shall borrow its
capital requirements whenever possible and practical.
2.2 XXXX will, pursuant to a Technology License and Technical
Assistance Agreement, provide the Company, at no cost, with technical
information, design criteria and specifications, manufacturing methods,
process and know-how of a highly technical nature for the design,
engineering, manufacture, marketing, sale and installation of the Products;
and will license the Company to use XXXX'x name and trademarks in connection
with the sale of the Products.
2.3 BrasilSat and XXXX will, pursuant to Supply Agreements, provide the
Company with required parts and other capital and production items at
manufacturing or acquisition cost plus 10% for handling, where economic or
other advantage exists to the Company. All freight and other expenses will be
the responsibility for the Company, when it may apply.
2.4 BrasilSat will lease to the Company at least for a two-year term a
portion of the land and constructions that are presently being used as
BrasilSat's facilities, at the cost of US$ 100.00 (one hundred dollars) per
month.
2.4.1. The Company will be responsible for the required leasehold
improvements. (The Company will explore Parana' State benefits available
to industrial facilities).
2.5 BrasilSat will vacate that portion of BrasilSat's facilities to be
leased by BrasilSat to the Company.
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ARTICLE III
FORMATION AND ORGANIZATION OF THE COMPANY;
DISPOSITION OF SHARES
3.1 BrasilSat and XXXX will, on the Incorporation Date, incorporate the
Company as a jointly owned capital corporation under, and in accordance with,
the laws of Brasil, with corporate domicile in Curitiba, Parana, Brasil.
3.2 The name of the Company will be XXXX/BrasilSat S.A. or such other
name authorized by necessary governmental approval and corporate action of
the Company.
3.3 BrasilSat will subscribe and pay for 51% of the shares of stock of
the Company; and, XXXX will subscribe and pay for 49% of the shares of stock
of the Company.
3.4 The management and the regulations of the Company are set forth in
the Attachments A (Statutes of the Company) and B (Shareholders Agreement) of
this document. The parties agree to execute the terms of those documents
according to the Section VI (Incorporation and Closing Date), as a final
document that will be not submitted to later negotiation, except if agreed by
parties or changes necessary to comply with Government ruling.
ARTICLE IV
FUNDING AND CAPITAL
4.1 The initial minimum portion of the capital stock of the Company will
be the equivalent amount of approximately U.S. $1,000,000.00 represented by
shares with par value of U.S. $1,000.00 each, fully subscribed and paid in.
4.2 BrasilSat and XXXX will subscribe and pay in cash for shares of the
minimum portion of the capital stock of the Company on the Incorporation
Date, in the amounts set forth opposite their respective names below:
Name of Shareholder Number of Shares Percentage
------------------- ---------------- ----------
BrasilSat 510 51%
ROHN 490 49%
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ARTICLE V
CONDITIONS FOR INCORPORATION AND CLOSING
5.1 The incorporation of the Company shall be subject to fulfillment,
prior to the Incorporation Date, of the following conditions, and each of the
parties hereto shall do all things necessary for the due fulfillment of such
conditions prior to or on the Incorporation Date:
A. GOVERNMENTAL APPROVAL. All necessary governmental consent,
authorization or approval must be obtained for entering into
the Shareholders' Agreement, for engaging in the business
purposes described in this Memorandum, for the incorporation of
the Company, and for the purchase of the shares of the Company
by BrasilSat and XXXX.
B. OTHER GOVERNMENTAL PERMITS. The Company and each of the parties
shall have obtained the necessary governmental permits and
authorizations to enable them to comply with their obligations
under the agreements described in Section 6.2 of this
Memorandum and under the Articles of Incorporation and Bylaws
of the Company.
C. SHAREHOLDERS' AGREEMENT. BrasilSat and XXXX shall have entered
into a Shareholders' Agreement in form and substance
satisfactory to BrasilSat and XXXX as set forth in Attachment B.
D. INCORPORATION INSTRUMENT. The Bylaws of the Company and any
necessary permit for incorporation shall have been duly
executed by BrasilSat and XXXX as set forth in Attachment A.
E. SUBSCRIPTION AND PAYMENT FOR SHARES. BrasilSat and XXXX shall
have subscribed and paid in full for their shares of capital
stock of the Company as provided in Article III of this
Memorandum.
F. UNR-XXXX Board of Directors Approval.
G. BrasilSat Board of Directors Approval.
H. OTHER INSTRUMENTS AND STEPS. All actions to be taken at the
Incorporation Date pursuant to this Memorandum shall be deemed
to have taken place simultaneously, and no actions or
transactions will be deemed to have taken place, or document to
have been delivered, or payment to have been made, unless all
actions and transactions have been completed and all documents
have been executed and delivered.
5.2 The obligations of the parties hereunder, and of BrasilSat and XXXX
under the Shareholders' Agreement, shall be subject to fulfillment, prior to
the Closing Date, of the following conditions, and each of the parties hereto
shall do all things necessary for the due fulfillment of such conditions
prior to or on the Closing Date:
A. INCORPORATION OF THE COMPANY. The conditions in Section 6.1 shall
have been satisfied.
B. TECHNOLOGY LICENSE AND TECHNICAL ASSISTANCE AGREEMENT. XXXX,
BrasilSat and the Company shall have entered into a Technology
License and
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Technical Assistance Agreement in the form and substance
satisfactory to BrasilSat and XXXX pursuant to which XXXX and
BrasilSat will provide the Company, at no cost, with technical
information, assistance and counsel, design criteria and
specifications (which are already in their possession),
manufacturing methods, minimum quality standards, process and
know-how of a highly technical nature for the design,
manufacture, marketing, sale and installation of the Products;
and, will license the Company to use XXXX'x and BrasilSat's
name and trademarks in connection with the sale of the Products.
C. SUPPLY AGREEMENTS. BrasilSat, XXXX and the Company shall have
entered into Supply Agreements in form and substance
satisfactory to BrasilSat and XXXX pursuant to which BrasilSat
and XXXX will provide the Company with required parts and other
capital and production items at manufacturing or acquisition
cost plus 10% for handling, where economic or other advantage
exists to the Company.
C.1. The Company shall enter into an agreement to acquire from
XXXX at XXXX'x cost the presses and welding equipment required
for the production of tapered steel poles.
D. LEASE AGREEMENT. BrasilSat shall have entered into a
Commercial Lease agreement with the Company.
E. MANAGEMENT APPOINTMENTS. BrasilSat shall appoint the President
and XXXX shall appoint the Chief Financial Officer and the
independent auditors.
F. OTHER INSTRUMENT AND STEPS. All actions to be taken at the
Closing Date pursuant to this Memorandum shall be deemed to
have taken place simultaneously, and no actions or transactions
will be deemed to have taken place, or document to have been
delivered, or payment to have been made, unless all actions and
transactions have been completed and all documents have been
executed and delivered.
ARTICLE VI
INCORPORATION AND CLOSING DATES;
SCHEDULE OF RELATED AGREEMENTS
6.1 For purposes of this Memorandum, "Incorporation Date" shall mean
October 15, 1997, or any such later date as may be agreed by BrasilSat and
XXXX, which shall be no later than November 11, 1997, the date on which the
Company will be incorporated.
6.2 For purposes of this Memorandum, "Closing Date" shall mean
October 2, 1997.
6.3 For purposes of this Memorandum, the following Schedule of Related
Agreements, the date for submission of initial drafts, and the parties
responsible for preparation
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of the initial drafts shall govern:
SCHEDULE OF RELATED AGREEMENTS
DATE OF RESPONSIBLE
AGREEMENT INITIAL DRAFT PARTY
--------- ------------- -----------
Shareholders' Agreement Oct. 2 both
Bylaws Oct. 2 both
Technology License and
Technical Assistance Agreement Oct. 2 XXXX
BrasilSat's Supply Agreement Oct. 2 BrasilSat
XXXX'x Supply Agreement Oct. 2 XXXX
Lease Agreement Oct. 2 BrasilSat
Distribution Agreement Nov. 3 XXXX
In addition, the parties will enter into such other agreements, as the
parties deem necessary or desirable to consummate and perform the
transactions contemplated herein. The parties will promptly enter into good
faith negotiations and will use their best efforts to enter into the
foregoing definitive agreements prior to the Closing Date.
ARTICLE VII
NEGOTIATION EXCLUSIVITY; LANGUAGE;
GOVERNING LAW;
7.1 Until the Closing Date, or the mutual termination of negotiations,
whichever occurs first, the parties agree not to solicit from, negotiate or
enter into any agreement with any other person or entity with respect to the
transactions that are the subject of this Memorandum.
7.2 This Memorandum will be executed in English, and Portuguese and
English will be the language to govern. The agreements described in
Section 6.3 will be executed in Portuguese, and Portuguese will be the
language to govern.
7.3 This Memorandum, and the agreements described in Section 6.3 will
be governed by and interpreted in accordance with the laws of Brasil.
The transactions noted above will require the approval of the Boards of
Directors of BrasilSat and XXXX and all necessary government approvals. The
purpose of this Memorandum is to confirm the parties' discussions to date
regarding the transactions noted above. This Memorandum is not binding on any
party, and creates no rights or duties in any of the parties. Binding rights
and duties will only be created or imposed pursuant to the Shareholders'
Agreement and other definitive agreements described in Section 6.3 of
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this Memorandum. Any precontractual liability for any act or omission, or any
express or implied business combination, partnership or venture of the
parties under the principles set forth in this Memorandum, is expressly
excluded.
ARTICLE VIII
CONFIDENTIALITY
8.1 The parties agree that during the course of the negotiations either
party may acquire access to confidential or proprietary information of the
other and agree that said information shall be held in strict confidence and
shall not be revealed, disclosed, published or distributed to any third
party, except their employees, agents and representatives who need to know
such information in order to facilitate the purpose of this Memorandum and
the negotiation and execution of the definitive agreements described in
Section 7.3.
IN WITNESS WHEREOF, BrasilSat and XXXX have caused this Memorandum to be duly
executed as of the Execution Date.
BrasilSat Harald, S.A. UNR-XXXX
Division of UNR Industries, Inc.
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/s/ Joao do Espirito Xxxxx Xxxxx /s/ Xxxxx X. Xxxxxxxxx
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Joao do Espirito Xxxxx Xxxxx Xxxxx X. Xxxxxxxxx
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Diretor Presidente President and
Chief Executive Officer
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