PAGING NETWORK DO BRASIL S.A.
SECURITIES SUBSCRIPTION AGREEMENT
This Securities Subscription Agreement ("Agreement") is entered into
on December 11, 1996 by and among (i) Paging Network do Brasil S.A., a
corporation under the laws of Brazil (the "Company"), (ii) Warburg, Xxxxxx
Ventures, L.P., a Delaware limited partnership ("Warburg"), (iii) Paging Network
International N.V., a corporation organized and existing under the laws of the
Netherlands ("PageNet"), (iv) IVP Paging (Cayman) L.P., an exempt limited
partnership organized and existing under the laws of the Cayman Islands ("IPC");
(v) Multiponto Telecomunicacoes Ltda., a limited liability company organized and
existing under the laws of Brazil ("Multiponto"), and (vi) TVA Sistema de
Televisao S.A., a limited liability company organized and existing under the
laws of Brazil ("TVA") (Warburg, PageNet, IPC, Multiponto and TVA are referred
to herein each as an "Investor" and collectively as the "Investors").
WHEREAS, the Company, which is controlled by Warburg, is to receive the
investment to be made by the Investors and conduct the activities contemplated
hereby;
WHEREAS, Warburg will cause the Company to increase its capital and issue
securities in accordance with the terms and conditions hereof; and
WHEREAS, San Francisco Communicacoes Ltda., a limited liability company
organized and existing under the laws of Brazil ("San Francisco"), is (i) the
holder of certain paging licenses granted by the Ministry of Communications,
(ii) entering into certain agreements with the Company to allow the Company to
exploit such licenses and (iii) controlled by Xxxxxx Xxxxxxx, who is a member of
the general partner of IPC;
NOW, THEREFORE, for and in consideration of the mutual promises, covenants
and agreements contained herein, the parties agree as follows:
SECTION 1. AUTHORIZATION OF AND SUBSCRIPTION FOR SECURITIES
1.1. Authorization of Common Stock, Preferred Stock and Subscription Bonds
(a) Warburg will cause the Company to authorize (i) 50,000 shares of
common stock, with no par value (the "Common Stock"), (ii) 63,000 shares of
preferred stock, with no par value (the "Preferred Stock") and (iii) the issue
of Subscription Bonds (the "Subscription Bonds") for the purchase of an
aggregate of 10,000 shares of Common Stock, to be substantially in the form set
out in Exhibit A.
1.2. Initial Issuance of Common Stock and Preferred Stock
(a) Subject to the terms and conditions hereof, on the Closing Date
(as defined below), the Company shall offer for subscription to the Investors,
and the Investors shall subscribe for, the number of shares of Common Stock, at
the cash purchase price of Reais Equivalent to U.S.$1.00 per share, set forth
opposite their respective names on Schedule 1.2(a) (such shares, collectively,
the "Initial Common Stock"). Such sales and purchases shall be effected on the
Closing Date by the Company executing and delivering to each Investor, duly
registered in its name or in the names of its Board member designee and
alternate designee, a duly executed Subscription Bulletin and certified copies
of the entries in the book of registration of shares evidencing the Initial
Common Stock being purchased by it, against delivery by each Investor to the
Company of the purchase price by certified check or wire transfer of immediately
available funds to such account as the Company shall designate, which
designation shall occur not less than three (3) Business Days prior to the
Closing Date.
(b) Subject to the terms and conditions hereof, on the Closing Date,
the Company shall offer for subscription to the Investors, and the Investors
shall subscribe to, the number of shares of Preferred Stock, at the cash
purchase price of Reais Equivalent to U.S.$1,000 per share, set forth opposite
their respective names on Schedule 1.2(b) (such shares, collectively, the
"Initial Preferred Stock"). Such sales and purchases shall be effected on the
Closing Date by the Company executing and delivering to such Investor, duly
registered in its name, a duly executed Subscription Bulletin and certified
copies of the entries in the book of registration of shares evidencing the
Initial Preferred Stock being purchased by it, against delivery to the Company
of the amount set forth opposite its name on Schedule 1.2(b)(1). All cash
payments shall be made by certified check or by wire transfer of immediately
available funds to such account as the Company shall designate, which
designation shall occur not less than three (3) Business Days prior to the
Closing Date. Within a reasonable period of time after the Closing (as defined
in Section 1.2(c) below) of the sale and purchase of the Initial Preferred Stock
pursuant to this Agreement, the Company will reimburse each such Investor for
amounts expended by such Investor for equipment, personnel, cash contributions
or other approved expenses, a recent estimate of which are as set forth on
Schedule 1.2(b)(2).
(c) The closing of the sale and purchase of the Initial Common Stock
and the Initial Preferred Stock to be purchased pursuant to Section 1.2(b) (the
"Closing") shall take place at 10:00 a.m., Sao Paulo, Brazil time, on December
11, 1996, or such other date as the Investors and the Company agree in writing
(the "Closing Date"), at the offices of Xavier, Bernardes, Braganca, Xx. Xxxxxx,
0000 - 01430-001 Sao Paulo,
-2-
Brazil, or such other location as the Investors and the Company shall mutually
select.
(d) In the event that any Investor fails to subscribe for its pro
rata share (as set forth on Schedule 1.3(a)) of Subsequent Preferred Stock
pursuant to Section 1.3, the Company may, at its option, exercisable by delivery
of written notice to such Investor at any time following such failure,
repurchase from such Investor, and such Investor shall sell to the Company, that
number of shares of Common Stock equal to the excess of (i) the number of shares
of Initial Common Stock owned by such Investor, over (ii) the number of shares
of Preferred Stock owned by such Investor, with the effect that such Investor
will own the same number of shares of Common Stock and Preferred Stock. Such
repurchase and sale shall be at the same price paid for such shares of Common
Stock.
1.3. Subsequent Issuances of Preferred Stock
(a) Subject to the terms and conditions hereof, from time to time
after the Closing Date at the written request of the Board of Directors of the
Company (the "Board of Directors"), the Company will offer for subscription to
certain of the Investors, and certain of the Investors will subscribe to,
Preferred Stock at the cash price of Reais Equivalent to U.S.$1,000 per share,
with each such Investor purchasing that number of shares equal to the percentage
set forth opposite its name on Schedule 1.3(a) multiplied by the total number of
shares of Preferred Stock set forth in the Company's request ("Subsequent
Preferred Stock"), provided, however, that in no event shall the aggregate
purchase price for Subsequent Preferred Stock subscribed by the Investors exceed
U.S.$8,700,000.
(b) Each sale and purchase of Subsequent Preferred Stock shall be
effected on a date as such Investors and the Company agree in writing, but in no
event earlier than thirty (30) days after receipt by the Investors of the
written request pursuant to paragraph (a) above (a "Subsequent Closing Date"),
by the Company executing and delivering to such Investor, duly registered in its
name, a duly executed Subscription Bulletin and certified copies of the entries
in the book of registration of shares evidencing the Subsequent Preferred Stock
being subscribed by it, against delivery by each such Investor to the Company of
the purchase price by certified check or wire transfer of immediately available
funds to such account as the Company shall designate, which designation shall
occur not less than three (3) Business Days prior to such Subsequent Closing
Date.
(c) The obligation of the Initial Stock Investors to subscribe and
pay for Subsequent Preferred Stock shall be subject to the condition that on the
Subsequent Closing Date there shall exist no event giving rise to a mandatory
redemption of the Preferred Stock pursuant to Section 3.1(d)(i) of the
Shareholders Agreement.
-3-
1.4. Subscription Bonds
Subject to the terms and conditions hereof, on the Closing Date the
Company shall issue the Subscription Bonds to each of the Investors named on
Schedule 2.1 to purchase the number of shares of Common Stock set forth opposite
their respective names on Schedule 2.1 in accordance with Section 2 below.
1.5. Several Obligations
The obligations of the Investors hereunder are several and not
joint, and no Investor shall be obligated to subscribe for and purchase any
Securities hereunder unless each of the other Investors has subscribed for and
purchased the Securities it is obligated to purchase hereunder.
SECTION 2. SUBSCRIPTION BONDS
2.1. Issuance of Subscription Bonds
The Company hereby agrees to issue to each of the persons named on
Schedule 2.1 (each a "Holder"), a subscription bond (a "Subscription Bond"),
exercisable for an aggregate of 9,996 shares of the Common Stock of the Company
at a purchase price, subject to the provisions of Section 2.4 hereof, of U.S.
$1.00 per share (the "Purchase Price"). The Purchase Price and the number and
character of such shares of Common Stock are subject to adjustment as provided
below.
2.2. Exercise of Subscription Bond
The purchase rights evidenced by each Subscription Bond shall be
exercised by the Holder surrendering such Subscription Bond, with the form of
subscription at the end hereof duly executed by such Holder, to the Company at
its office, accompanied by payment, in cash, by certified or official bank check
or by wire transfer of an amount equal to the Purchase Price multiplied by the
number of shares of Common Stock being purchased pursuant to such exercise of
the Subscription Bond on or before the fifth anniversary of the date of such
Subscription Bond.
2.2.1. Partial Exercise
Each Subscription Bond may be exercised for less than the full
number of shares of Common Stock, in which case the number of shares receivable
upon the exercise of such Subscription Bond as a whole, and the sum payable upon
the exercise of such Subscription Bond as a whole, shall be proportionately
reduced. Upon any such partial exercise, the Company at its expense will
forthwith issue to the Holder a new Subscription Bond or Subscription Bonds of
like tenor calling for the number of shares of Common Stock as to which rights
have not
-4-
been exercised, such Subscription Bond or Subscription Bonds to be issued in the
name of the Holder or his nominee (upon payment by such Holder of any applicable
transfer taxes).
2.3. Registration of Stock on Exercise
Immediately after the exercise of a Subscription Bond and payment of
the Purchase Price, the Company, at its expense, will cause to be registered in
the Company's book of registration of shares the number of fully paid and
non-assessable shares of Common Stock or other securities or property to which
such Holder shall be entitled upon such exercise. The Company agrees that the
shares of Common Stock so registered shall be deemed to be issued to the Holder
as the record owner of such shares as of the close of business on the date on
which the corresponding Subscription Bond shall have been surrendered and
payment made for such shares as aforesaid.
2.4. Adjustments
The Purchase Price shall be subject to adjustment from time to time
in accordance with this Section 2.4. Upon each adjustment of the Purchase Price
pursuant to this Section 2.4, the Holder shall thereafter be entitled to acquire
upon exercise, at the Purchase Price resulting from such adjustment, the number
of shares of the Common Stock obtainable by multiplying the Purchase Price in
effect immediately prior to such adjustment by the number of shares of the
Common Stock acquirable immediately prior to such adjustment and dividing the
product thereof by the Purchase Price resulting from such adjustment.
2.4.1. Adjustment for Stock Dividends
(a) If and whenever on or after the date of issuance hereof the
Company shall declare a dividend or make any other distribution upon the capital
stock of the Company payable in Common Stock, any rights to subscribe for or to
purchase, or any options or subscription bonds for the purchase of, Common Stock
or any stock of other securities convertible or exchangeable for Common Stock,
if such rights, options or subscription bonds permit the holder thereof to
acquire the Common Stock at a price that is below fair market value (such
rights, options or subscription bonds being herein called "Options" and such
convertible or exchangeable stock or securities being herein called "Convertible
Securities"), then forthwith upon such declaration of a dividend or other
distribution (the "Triggering Transaction"), the Purchase Price shall be reduced
to the Purchase Price (calculated to the nearest tenth of a cent) determined by
dividing:
(i) an amount equal to the product derived by multiplying the
Number of Shares of Common Stock Deemed Outstanding immediately prior to the
Triggering Transaction by the Purchase Price then in effect, by
-5-
(ii) an amount equal to the sum of (x) the Number of Shares of
Common Stock Deemed Outstanding immediately prior to such Triggering Transaction
plus (y) the number of shares of Common Stock issued (or issuable if all of such
Options or Convertible Securities are exercised or converted as the case may be)
in connection with the Triggering Transaction.
The term "Number of Shares of Common Stock Deemed Outstanding" at
any given time shall mean the sum of (i) the number of shares of the Common
Stock outstanding at such time, and (ii) the total maximum amount of Common
Stock issuable upon the exercise of Options or the conversion or exchange of
Convertible Securities.
For purposes of determining the adjusted Purchase Price under this
Section 2.4.1, Options or Convertible Securities issuable in payment of such
dividend or distribution shall be deemed to have been issued or sold without
consideration.
(b) In case the Company shall at any time subdivide (other than by
means of a dividend payable in Common Stock covered by this Section 2.4.1), its
outstanding shares of Common Stock into a greater number of shares, the Purchase
Price in effect immediately prior to such subdivision shall be proportionately
reduced, and, conversely, in case the outstanding shares of Common Stock of the
Company shall be combined into a smaller number of shares, the Purchase Price in
effect immediately prior to such combination shall be proportionately increased.
2.4.2. Reorganization, Reclassification, Consolidation,
Merger or Sale of Assets
If any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of Common Stock shall
be entitled to receive stock, securities, cash or other property with respect to
or in exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provision
shall be made whereby the Holder shall have the right to acquire and receive
upon exercise of a Subscription Bond such shares of stock, securities, cash or
other property issuable or payable (as part of the reorganization,
reclassification, consolidation, merger or sale) with respect to or in exchange
for such number of outstanding shares of the Company's Common Stock as would
have been received upon exercise of such Subscription Bond at the Purchase Price
then in effect. The Company will not effect any such consolidation, merger or
sale, unless prior to the consummation thereof the successor corporation (if
other than the Company) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written
-6-
instrument mailed or delivered to the Holder at the last address of such Holder
appearing on the books of the Company, the obligation to deliver to such Holder
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Holder may be entitled to purchase.
2.4.3. Notices of Record Date, Etc.
In the event that
(1) the Company shall declare any cash dividend upon its Common
Stock, or
(2) the Company shall declare any dividend upon its Common Stock
payable in stock or make any special dividend or other distribution to the
holders of its Common Stock, or
(3) the Company shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class or other rights,
or
(4) there shall be any capital reorganization or reclassification of
the capital stock of the Company, including any subdivision or combination of
its outstanding shares of Common Stock, or consolidation or merger of the
Company with, or sale of all or substantially all of its assets to, another
corporation, or
(5) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in connection with such event, the Company shall give to the Holder:
(i) at least twenty (20) days' prior written notice of the
date on which the books of the Company shall close or a record shall be taken
for such dividend, distribution or subscription rights or for determining rights
to vote in respect of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up; and
(ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least
twenty (20) days' prior written notice of the date when the same shall take
place.
Such notice in accordance with the foregoing clause (i) shall also
specify, in the case of any such dividend, distribution or subscription rights,
the date on which the holders of Common Stock shall be entitled thereto, and
such notice in accordance with the foregoing clause (ii) shall also specify the
date on which the holders of Common Stock shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification,
-7-
consolidation, merger, sale, dissolution, liquidation or winding up, as the case
may be. Each such written notice shall be given by first class mail, postage
prepaid, addressed to the Holder at the address of such Holder as shown on the
books of the Company.
2.4.4. Adjustment by Shareholders
If any event occurs as to which, in the opinion of the holders of a
majority of the outstanding Preferred Stock, the provisions of this Section 2.4
are not strictly applicable or if strictly applicable would not fairly protect
the rights of the Holder in accordance with the essential intent and principles
of such provisions, then the Company shall make an adjustment in the application
of such provisions, in accordance with such essential intent and principles, so
as to protect such rights as aforesaid, but in no event shall any adjustment
have the effect of increasing the Purchase Price as otherwise determined
pursuant to any of the provisions of this Section 2.4 except in the case of a
combination of shares of a type contemplated in Section 2.4.1 and then in no
event to an amount larger than the Purchase Price as adjusted pursuant to this
Section 2.4.
2.4.5. Officer's Statement as to Adjustments
Whenever the Purchase Price shall be adjusted as provided in Section
2.4 hereof, the Company shall forthwith file at each office designated for the
exercise of this Subscription Bond, a statement, signed by the Chairman of the
Board, the President, any Vice President or Treasurer of the Company, showing in
reasonable detail the facts requiring such adjustment and the Purchase Price
that will be effective after such adjustment. The Company shall also cause a
notice setting forth any such adjustments to be sent by mail, first class,
postage prepaid, to the record Holder at his or its address appearing on the
Company's book of registration of shares. If such notice relates to an
adjustment resulting from an event referred to in Section 2.4.3, such notice
shall be included as part of the notice required to be mailed and published
under the provisions of Section 2.4.3 hereof.
2.5. No Impairment
The Company will not, by amendment of its by-laws or through
reorganization, consolidation, merger, dissolution, sale of assets or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of any Subscription Bond, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the Holder
against impairment. Without limiting the generality of the foregoing, the
Company will not increase the par value of any shares of stock receivable upon
the exercise of each Subscription Bond above the amount payable therefor upon
such exercise, and at all times will take all such action as may
-8-
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and non-assessable stock upon the exercise of each Subscription
Bond.
2.6. Reservation of Stock, etc., issuable on exercise of Subscription
Bonds
The Company shall at all times reserve and keep available out of its
authorized but unissued stock, solely for the issuance and delivery upon the
exercise of each Subscription Bond and other similar Subscription Bonds, such
number of its duly authorized shares of Common Stock as from time to time shall
be issuable upon the exercise of each Subscription Bond and all other similar
warrants at the time outstanding.
2.7. Replacement of Subscription Bond
Upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of a Subscription Bond and (in the
case of loss, theft or destruction) upon delivery of an indemnity agreement
(with surety if reasonably required) in an amount reasonably satisfactory to it,
or (in the case of mutilation) upon surrender and cancellation thereof, the
Company will issue, in lieu thereof, a new Subscription Bond of like tenor.
2.8. Remedies
The Company stipulates that the remedies at law of the Holder in the
event of any default by the Company in the performance of or compliance with any
of the terms of a Subscription Bond are not and will not be adequate, and that
the same may be specifically enforced.
2.9. Negotiability, etc.
Each Subscription Bond is issued upon the following terms, to all of
which each taker or owner thereof consents and agrees:
(a) Subject to the legend appearing in Section 2.11 hereof, title to
a Subscription Bond may be transferred by endorsement (by the Holder executing a
form of assignment including guaranty of signature) and delivery in the same
manner as in the case of a negotiable instrument transferable by endorsement and
delivery.
(b) Any person in possession of a Subscription Bond properly
endorsed is authorized to represent himself as absolute owner thereof and is
granted power to transfer absolute title thereto by endorsement and delivery
thereof to a bona fide purchaser thereof for value; each prior taker or owner
waives and renounces all of his equities or rights in a Subscription Bond in
favor of every such bona fide purchaser, and every such bona fide
-9-
purchaser shall acquire title thereto and to all rights represented hereby and
thereby.
(c) Until a Subscription Bond is transferred on the books of the
Company, the Company may treat the registered Holder as the absolute owner
thereof for all purposes without being affected by any notice to the contrary.
(d) Prior to the exercise of a Subscription Bond, the Holder shall
not be entitled to any rights of a stockholder of the Company with respect to
shares for which the Subscription Bond shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
(e) The Company shall not be required to pay any federal or state
transfer tax or charge in Brazil or the United States that may be payable in
respect of any transfer involved in the transfer or delivery of a Subscription
Bond or the entry in the book of registration of shares of Common Stock or the
entry in the book of transfer of shares of Common Stock upon the exercise of a
Subscription Bond until any and all such taxes and charges shall have been paid
by the Holder or until it has been established to the Company's satisfaction
that no such tax or charge is due.
2.10. Subdivision of Bonds
Each Subscription Bond (as well as any new Subscription Bonds issued
pursuant to the provisions of this Section) is exchangeable, upon the surrender
thereof by the Holder, at the principal office of the Company, for any number of
new Subscription Bonds of like tenor and date representing in the aggregate the
right to subscribe for and purchase the number of shares of Common Stock of the
Company which may be subscribed for and purchased hereunder.
2.11. Legends
All Subscription Bonds shall be in substantially the form as Exhibit
A attached hereto and shall bear the following legends:
THIS SUBSCRIPTION BOND AND THE SECURITIES ISSUABLE UPON ITS EXERCISE
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED, OR ANY OTHER 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.,
QUALIFIES AS AN EXEMPT TRANSACTION
-10-
UNDER APPLICABLE SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER.
THIS SUBSCRIPTION BOND AND THE SECURITIES ISSUABLE UPON ITS EXERCISE
ARE SUBJECT TO THE TERMS OF THAT CERTAIN SHAREHOLDERS AGREEMENT, DATED AS OF
DECEMBER 11, 1996, BY AND AMONG PAGING NETWORK DO BRASIL S.A. AND CERTAIN
INVESTORS IDENTIFIED THEREIN, INCLUDING CERTAIN RESTRICTIONS ON TRANSFER. A COPY
OF THIS AGREEMENT HAS BEEN FILED WITH THE SECRETARY OF PAGING NETWORK DO BRASIL
S.A. AND IS AVAILABLE UPON REQUEST.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors that:
3.1. Corporate Organization
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of Brazil. Attached hereto as Exhibit B is a
true and complete copy of the by-laws of the Company, as amended through the
date hereof and duly registered with the Board of Commerce of the State of Sao
Paulo (the "by-laws").
(b) The Company has been recently formed by the conversion of a
limited liability company and does not yet conduct any material business. The
Company has imported certain equipment necessary to set up a paging system and
such equipment constitutes the Company's assets; its only liabilities are those
incurred in connection with the Company's formation and the acquisition of such
equipment.
(c) The Board of Directors has authorized the execution, delivery
and performance of this Agreement, and each of the transactions contemplated
hereby. No other action is necessary to authorize such execution, delivery and
performance, and upon such execution and delivery, this Agreement shall
constitute the valid and binding obligation of the Company, enforceable in
accordance with its terms, except as the enforceability hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and general
principles of equity. The Board of Directors has authorized the issuance of the
Common Stock, the Preferred Stock and the Subscription Bonds (including the
Common Stock issuable thereunder, the "Subscription Bonds Stock"), and upon the
execution and delivery thereof, each Subscription Bond will constitute the valid
and binding obligation of the Company, enforceable in accordance with its terms,
except as the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to the enforcement of creditors' rights generally.
-11-
3.2. Subsidiaries
The Company on the date hereof does not, and on the Closing Date
will not, have any equity investment in any other company or legal entity.
3.3. Capitalization
(a) On the date hereof, the authorized capital stock of the Company
consists of 50,000 shares of Common Stock and 63,000 shares of Preferred Stock.
On the Closing Date, there will be 30,760 shares of Common Stock outstanding and
21,300 shares of Preferred Stock outstanding. The Company has reserved 33,000
shares of Preferred Stock for issuance to the holders of Preferred Stock as a
payment in kind dividend.
(b) Upon issuance, sale and delivery as contemplated by this
Agreement, the Initial Common Stock and the Initial Preferred Stock will be duly
authorized, validly issued, fully paid and non-assessable shares of the Company,
free of all preemptive or similar rights. The Subsequent Preferred Stock will,
when issued as contemplated by this Agreement, be duly authorized, validly
issued, fully paid and non-assessable shares of the Company, free of all
preemptive or similar rights. The Subscription Bonds Stock will, when issued in
accordance with the terms of the Subscription Bonds, be duly authorized, validly
issued, fully paid and non-assessable shares of the Company, free of all
preemptive or similar rights.
(c) Except for the Subscription Bonds, on the Closing Date there
will be no shares of Common Stock or any other equity security of the Company
issuable upon conversion or exchange of any security of the Company nor will
there be any rights or options outstanding or other agreements to acquire shares
of Common Stock nor will the Company be contractually obligated to purchase,
redeem or otherwise acquire any of its outstanding shares of Common Stock,
except for this Agreement and the Subscription Bonds.
3.4. Consents and Approvals
The creation, authorization, issuance, offer and sale of the Initial
Common Stock, the Preferred Stock, the Subscription Bonds and the Subscription
Bonds Stock do not require any consent, approval or action of, or filing,
registration or qualification with, any governmental or judicial authority on
the part of the Company or the vote, consent or approval in any manner of the
holders of any security of the Company as a condition to the execution and
delivery by the Company of this Agreement and the performance by the Company of
its obligations hereunder will not violate (i) the terms of the by-laws, or any
agreement to which the Company is a party or by which it is bound or (ii) any
federal or state law of Brazil or the United States.
-12-
3.5. Registration Rights
Except as provided in the Registration Rights Agreement, the Company
will not, as of the Closing Date, be under any obligation to register any of its
securities under the securities laws of Brazil or any other jurisdiction.
3.6. CVM Registration
None of the Company's securities are registered, or required to be
registered with the Comissao de Valores Mobiliarios (the "CVM") or any
securities regulator of any other jurisdiction.
3.7. Private Offering
Neither the Company nor anyone acting on its behalf has sold or has
offered any of the Securities for sale to, or solicited offers to buy from, or
otherwise approached or negotiated with respect thereto with, any prospective
purchaser, other than the Investors. Neither the Company nor anyone acting on
its behalf shall offer the Securities for issue or sale to, or solicit any offer
to acquire any of the same from anyone. Based upon the representations of the
Investors set forth in Section 4, the offer, issuance and sale of the Securities
are and will be exempt from the registration and prospectus delivery
requirements of the securities laws of Brazil, and have been registered or
qualified (or are exempt from registration and qualification) under the
registration, permit or qualification requirements of all applicable securities
laws of Brazil.
3.8. Brokerage
There are no claims for brokerage commissions or finder's fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement made by or on behalf of the Company and the
Company agrees to indemnify and hold the Investors harmless against any costs or
damages incurred as a result of any such claim.
3.9. Use of Proceeds
The Company shall use the proceeds of the sale of the Securities (a)
to hire management and other employees for the Company, (b) to build out the
infrastructure required for the business of the Company, (c) to provide working
capital for the Company and (d) for the Company's general corporate purposes.
SECTION 4. REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of the Investors
(a) Each of the Investors severally and not jointly represents
and warrants to the Company as follows:
-13-
(i) It has full power and legal right to execute and deliver
this Agreement and to perform its obligations hereunder.
(ii) It is a validly existing organization, duly organized
under the laws of its jurisdiction of organization.
(iii) It has taken, or prior to the Closing Date will have
taken, all action necessary for the authorization, execution, delivery, and
performance of this Agreement and its obligations hereunder, and, upon execution
and delivery by the Company, this Agreement shall constitute the valid and
binding obligation of such Investor, enforceable against such Investor in
accordance with its terms, except that such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to the enforcement of creditors' rights
generally.
(iv) There are no claims for brokerage commissions or finder's
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement made by or on behalf of such Investor
and such Investor agrees to indemnify and hold the Company harmless against any
costs or damages incurred as a result of any such claim.
(v) Such Investor, and each of its Affiliates that will
acquire any Securities, has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
investment in the Company as contemplated by this Agreement, and is able to bear
the economic risk of such investment for an indefinite period of time. It has
been furnished access to such information and documents as it has requested and
has been afforded an opportunity to ask questions of and receive answers from
representatives of the Company concerning the terms and conditions of this
Agreement and the purchase of the Securities contemplated hereby.
4.2. Representations and Warranties of Multiponto and TVA
In addition to its representations and warranties made in
Section 4.1, each of Multiponto and TVA, severally but not jointly, represents
and warrants to the Company and to the other Investors as follows:
(i) It has full power and legal right to execute and deliver
the License Agreements to which it is a party and to perform its obligations
thereunder.
(ii) It has taken all action necessary for the authorization,
execution, delivery, and performance of the License Agreements to which it is a
party and its obligations thereunder, and, upon execution and delivery by it,
such License
-14-
Agreements shall constitute the valid and binding obligation of it, enforceable
against it in accordance with its respective terms and conditions, except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to the enforcement of creditors' rights generally.
4.3. Representations and Warranties of IPC
(a) IPC represents and warrants to the Company and to the other
Investors as follows:
(i) San Francisco has full power and legal right to execute
and deliver the License Agreement to which it is a party and to perform its
obligations thereunder.
(ii) San Francisco is a validly existing organization, duly
organized under the laws of Brazil.
(iii) San Francisco has taken all action necessary for the
authorization, execution, delivery, and performance of the License Agreement to
which it is a party and its obligations thereunder, and, upon execution and
delivery by it, the License Agreement shall constitute its valid and binding
obligation, enforceable against San Francisco in accordance with its terms and
conditions, except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to the enforcement of creditors' rights generally.
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
5.1. Resale of Securities
Each of the Investors severally covenants that it will not sell or
otherwise transfer the Securities except pursuant to the terms and conditions of
the Shareholders Agreement.
5.2. Further Assurance
Each of the parties shall execute such documents and other papers
and take such further actions as may be reasonably required or desirable to
carry out the provisions hereof and the transactions contemplated hereby or by
any other agreement attached hereto. Each such party shall use its reasonable
best efforts to fulfill or obtain the fulfillment of the conditions to the
Closing as promptly as practicable.
SECTION 6. INVESTORS' CLOSING CONDITIONS
The obligation of the Investors to purchase and pay for the Initial
Common Stock and the Initial Preferred Stock on the Closing Date, as provided in
Section 1 hereof, shall be subject
-15-
to the performance by the Company of its agreements theretofore to be performed
hereunder and to the satisfaction, prior thereto or concurrently therewith, of
the following further conditions:
6.1. Representations and Warranties
The representations and warranties of the Company and of IPC,
Multiponto and TVA contained in this Agreement shall be true on and as of the
Closing Date as though such warranties and representations were made at and as
of such date, except as otherwise affected by the transactions contemplated
hereby.
6.2. Compliance with Agreement
The Company and Multiponto and TVA shall have performed and complied
with all agreements, covenants and conditions contained in this Agreement which
are required to be performed or complied with by the Company prior to or on the
Closing Date.
6.3. Officer's Certificate
The Investors shall have received a certificate, dated the Closing
Date, signed by the President of each of the Company, Multiponto and TVA
certifying that the conditions specified in the foregoing Sections 6.1 and 6.2
hereof have been fulfilled.
6.4. License Agreements
Each of Multiponto, TVA and San Francisco shall have executed and
delivered to the Company Operating Agreements, Powers of Attorney, Subscription
Agreement, proxy to execute Subscription Agreements with the Subscribers,
Promise of Assignment and Transfer of Permission and Rights Agreements,
irrevocable proxies to persons chosen by mutual agreement with the Company for
purposes of cooperating in all required proceedings with the Brazilian
authorities, and related Equipment Acquisition Agreements, all in form and
substance satisfactory to PageNet and Warburg (each a "License Agreement" and
collectively "License Agreements"), and accompanied by such legal opinions as
the Company may reasonably request. The transactions contemplated by each
License Agreement shall have been consummated to the reasonable satisfaction of
PageNet and Warburg.
-16-
6.5. Employment Agreements
Each of the employees of the Company listed on Schedule 6.5 shall
have executed an Employment Agreement, substantially in the form attached as
Exhibit B hereto (collectively, the "Employment Agreements").
6.6. Shareholders Agreement
The Company and each of the other parties thereto shall have
executed the Shareholders Agreement, the form of which is attached as Exhibit C
hereto (the "Shareholders Agreement").
6.7. Technical Services Agreement
The Company and Paging Network, Inc., a Delaware corporation, shall
have executed the Technical Services Agreement, the form of which is attached as
Exhibit D hereto (the "Technical Services Agreement").
6.8. Registration Rights Agreement
The Company and each of the other parties thereto shall have
executed the Registration Rights Agreement, the form of which is attached as
Exhibit E hereto (the "Registration Rights Agreement").
6.9. Initial Board of Directors
On the Closing Date, the Board of Directors shall consist of one
designee of IPC, one designee of PageNet, two designees of Warburg and the Chief
Executive Officer of the Company.
6.10. Initial Operating Budget
On the Closing Date, the Company shall have provided to the
Investors a nine-month interim operating budget (which shall include monthly
operating budgets).
6.11. Legal Opinion
On the Closing Date, the Company shall have provided to the
Investors an opinion of counsel, which will cover (i) valid organization and
existence of the Company, (ii) valid authorization, issuance and enforceability
of Securities being issued at Closing, (iii) valid authorization and
enforceability of all agreements being executed in connection with the Closing,
(iv) non-existence of conflicts with the by-laws or agreements to which the
Company is a party or by which the Company is bound, or applicable laws or
regulations, and (v) compliance with all applicable regulatory requirements.
-17-
SECTION 7. COMPANY CLOSING CONDITIONS
The obligation of the Company to issue and deliver the Initial
Common Stock, the Initial Preferred Stock and the Subscription Bonds on the
Closing Date, as provided in Section 1.2 hereof, shall be subject to the
performance by the Investors of their agreements theretofore to be performed
hereunder and to the satisfaction, prior thereto or concurrently therewith, of
the following further conditions:
7.1. Representations and Warranties
The representations and warranties of each of the Investors
contained in this Agreement shall be true on and as of the Closing Date as
though such warranties and representations were made at and as of such date,
except as otherwise affected by the transactions contemplated hereby.
7.2. Compliance with Agreement
Each of the Investors shall have performed and complied with all
agreements, covenants and conditions contained in this Agreement which are
required to be performed or complied with by it prior to or on the Closing Date.
7.3. Investors' Certificates
The Company shall have received a certificate from each of the
Investors, dated the Closing Date, signed by a duly authorized representative of
such Investor, certifying that the conditions specified in the foregoing
Sections 7.1 and 7.2 hereof have been fulfilled.
SECTION 8. COVENANTS
8.1. Financial and Business Information
From and after the date hereof, the Company shall deliver to each of
the Investors so long as such Investor owns any Securities:
(a) Monthly and Quarterly Statements - as soon as practicable, and
in any event within thirty (30) days after the close of each month of each
fiscal year of the Company in the case of monthly statements and thirty-five
(35) days after the close of each of the first three fiscal quarters of each
fiscal year of the Company in the case of quarterly statements, a consolidated
balance sheet, statement of income and statement of cash flows of the Company
and any Subsidiaries as at the close of such month or quarter and covering
operations for such month or quarter, as the case may be, and the portion of the
Company's fiscal year ending on the last day of such month or quarter, all in
reasonable detail and prepared in accordance with both U.S. GAAP and Brazilian
GAAP and reconciled with each other, subject
-18-
to audit and year-end adjustments, setting forth in each case in comparative
form the figures for the comparable period of the previous fiscal year. The
Company shall also provide comparisons of each pertinent item to the budget
referred to in subsection (c) below.
(b) Annual Statements - as soon as practicable after the end, of
each fiscal year of the Company, and in any event within seventy-five (75) days
thereafter, duplicate copies of:
(1) consolidated and consolidating balance sheets of the
Company and any Subsidiaries at the end of such year; and
(2) consolidated and consolidating statements of income,
stockholders' equity and cash flows of the Company and any Subsidiaries for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year,
all in reasonable detail and accompanied by an opinion thereon of independent
certified public accountants of recognized international standing selected by
the Company, which is expected to be Ernst & Young, Auditores Independents S.C.,
which opinion shall state that such financial statements fairly present the
financial position of the Company and any Subsidiaries on a consolidated basis
and have been prepared in accordance with U.S. GAAP and Brazilian GAAP and
reconciled with each other (except for changes in application in which such
accountants concur) and that the examination of such accountants in connection
with such financial statements has been made in accordance with generally
accepted auditing standards, and accordingly included such tests of the
accounting records and such other auditing procedures as were considered
necessary in the circumstances, and the Company shall also provide comparisons
of each pertinent item to the budget referred to in subsection (c) below.
(c) Operating Budget - no later than thirty (30) days prior to the
commencement of each fiscal year of the Company, the Operating Budget for such
fiscal year.
(d) Capital Budget - no later than thirty (30) days prior to the
commencement of each fiscal year of the Company, the Capital Budget for such
fiscal year.
(e) Audit Reports - promptly upon receipt thereof, one copy of each
other financial report and internal control letter submitted to the Company by
independent accountants in connection with any annual, interim or special audit
made by them of the books of the Company and its Subsidiaries.
(f) Other Reports - promptly upon their becoming available, one copy
of each financial statement, report, or notice sent by the Company to
stockholders generally, of each financial statement, report, or notice sent by
the Company or any of its Subsidiaries to the CVM or any successor agency, if
-19-
applicable, of each regular or periodic report and any registration statement,
prospectus or written communication (other than transmittal letters) in respect
thereof filed by the Company or any Subsidiary with, or received by such Person
in connection therewith from, any domestic or foreign securities exchange, the
CVM or any successor agency or any foreign regulatory authority performing
functions similar to the CVM, of any press release issued by the Company or any
Subsidiary, and of any material of any nature whatsoever prepared by the CVM or
any successor agency thereto or any other authority which relates to or affects
in any way the Company or any Subsidiary.
(g) Progress Report - prior to each regularly scheduled meeting of
the Board of Directors, a narrative report shall be delivered to each of the
Investors describing the activities of the Company and its Subsidiaries since
the date of the last such report, including a description of business
development, operating results and marketing efforts.
(h) Requested Information - with reasonable promptness, the Company
and its Subsidiaries shall furnish each of the Investors with such other data
and information as from time to time may be reasonably requested.
8.2. Inspection
As long as an Investor directly or indirectly holds at least five
percent (5%) of the outstanding Common Stock (including shares of Common Stock
issuable upon the exercise of any options or subscription bonds), the Company
shall permit such Investor, its nominees, assignees, and its representatives to
visit and inspect any of the properties of the Company and its Subsidiaries, to
examine all its books of account, records, reports and other papers not
contractually required of the Company to be confidential or secret, to make
copies and extracts therefrom, and to discuss its affairs, finances and accounts
with its officers, directors, key employees and independent public accountants
or any of them (and by this provision the Company authorizes said accountants to
discuss with such Investor, its nominees, assignees and representatives the
finances and affairs of the Company and any Subsidiaries), all at such
reasonable times and as often as may be reasonably requested upon prior written
notice.
8.3. Confidentiality
As to so much of the information and other material furnished under
or in connection with this Agreement (whether furnished before, on or after the
date hereof, including without limitation information furnished pursuant to
Sections 8.1 and 8.2 hereof) as constitutes or contains confidential business,
financial or other information of the Company or any Subsidiary (the
confidentiality of which is essential to the success of the business of the
Company and its Subsidiaries), each of the
-20-
Investors covenants for itself and its directors, officers and partners that it
will use due care to prevent its officers, directors, partners, employees,
counsel, accountants and other representatives, including nominees, and
assignees from disclosing such information to Persons other than their
respective authorized employees, counsel, accountants, stockholders, partners,
limited partners and other authorized representatives; provided, however, that
each Investor may disclose or deliver any information or other material
disclosed to or received by it should such Investor be advised by its counsel
that such disclosure or delivery is required by law, regulation or judicial or
administrative order and, provided, further, that in connection with offerings
by any Investor of interests in itself or any of its Affiliates, such Investor
may disclose certain information, subject to the prior approval of the other
Investors, to potential investors that are not competitors of the Company. The
Investors hereby consent to the previous disclosure by Multiponto to certain
prospective investors and by IPC to certain of its prospective limited partners
(in each case identified on a separate schedule delivered to each of the other
parties hereto) of information regarding the Company (including details
regarding the Company's business plan) and the terms of the transaction
contemplated by this Agreement. 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, financial and other information
regarding the Company 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 limited partnership in connection with the offering and sale of its
interests. In addition, financial and other information regarding the Company 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, provided
that under no circumstances will any proprietary information (which, for this
purpose, excludes such financial information) of the Company be disclosed to
such limited partners or shareholders. In the event of any termination of this
Agreement prior to the Closing Date, the provisions of this Section 8.3 shall
survive such termination and each Investor shall return to the Company all
confidential material previously furnished to such Investor or its officers,
directors, partners, employees, counsel, accountants and other representatives
in connection with this transaction. For purposes of this Section 8.3, "due
care" means at least the same level of care that such Investor would use to
protect the confidentiality of its own sensitive or proprietary information.
-21-
8.4. Conduct of Business and Maintenance of Existence
The Company shall, and shall cause its Subsidiaries to, continue to
engage in business of the same general type as now conducted by it and/or
contemplated to be conducted by it, and preserve, renew and keep in full force
and effect its corporate existence and take all reasonable action to maintain
all rights, privileges and franchises necessary or desirable in the normal
conduct of its business. The Company shall, and shall cause its Subsidiaries to,
require all of its employees or consultants to enter into appropriate
confidentiality agreements to protect confidential information relating to the
business of the Company and its Subsidiaries, including trade secrets.
8.5. Compliance with Laws
The Company shall, and shall cause its Subsidiaries to, comply in
all material respects with all applicable laws, rules, regulations and orders
except where the failure to comply would not have a material adverse effect on
the business, properties, operations, prospects or financial condition of the
Company. Without limiting the generality of the foregoing, neither the Company
nor any Subsidiary of the Company (nor any officer, director, employee, agent of
the Company or any of its Subsidiaries) will, directly or indirectly, make or
authorize any payment, contribution or gift of money, property, or services, (a)
as a kickback or bribe to any Person or (b) to any political organization, or
the holder or any aspirant to any elective or appointive public office except
for personal political contributions not involving the direct or indirect use of
funds of the Company or any of its Subsidiaries.
8.6. Insurance
The Company will maintain insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks as
is usually carried by companies of similar size and credit standing engaged in
similar business and owning similar properties, provided that such insurance is
and remains available to the Company at commercially reasonable rates.
8.7. Keeping of Books
The Company will keep proper books of record and account, in which
full and correct entries shall be made of all financial transactions and the
assets and business of the Company in accordance with U.S. GAAP and Brazilian
GAAP.
8.8. Securities Registers
The ownership of Securities shall be evidenced by the Company's book
of registration of shares and all transfers shall be duly recorded on the
Company's book of transfer of shares.
-22-
8.9. Notice of a Liquidity Event
Promptly and in any event within two (2) Business Days after the
occurrence of a Liquidity Event, the Company will give written notice thereof to
the holders of all outstanding Preferred Stock, which notice shall (A) refer
specifically to this Section 8.9, and (B) describe the Liquidity Event in
reasonable detail. Within thirty (30) days after the date of such notice, the
holders of a majority of the Preferred Stock then outstanding shall have the
right to require the Company to redeem all the outstanding Preferred Stock,
together with any accrued and unpaid dividends thereon. In the case that the
Company has insufficient funds legally available to redeem all the outstanding
Preferred Stock, the Company shall redeem the Preferred Stock pro rata.
For purposes of this Agreement: a "Liquidity Event" will be deemed
to have occurred at such time as the Company (A) winds up, liquidates or
dissolves its affairs or enters into any transaction of merger or consolidation
as a result of which the Investors, as a group, own less than fifty percent
(50%) of the outstanding Voting Stock of the surviving corporation, or conveys,
sells, leases or otherwise disposes of all or substantially all of its assets,
whether in a single transaction or a series of related transactions or (B)
issues any capital stock in a Qualified Initial Public Offering.
SECTION 9. AMENDMENT AND WAIVER
9.1. Requirements
This Agreement may be amended, and the observance of any term hereof
may be waived (either retroactively or prospectively), with (and only with) the
written consent of the Company and each Investor.
9.2. Solicitation of Preferred Stock Holders
The Company will provide each holder of Preferred Stock
(irrespective of the number of shares of Preferred Stock then owned by it) with
sufficient information, sufficiently far in advance of the date a decision is
required, to enable such holder to make an informed and considered decision with
respect to any proposed amendment, waiver or consent in respect of any of the
provisions of this Agreement, pursuant to the first proviso of Section 9.1. The
Company will deliver executed or true and correct copies of each amendment,
waiver or consent effected pursuant to the provisions of this Section 9 to each
holder of Preferred Stock promptly following the date on which it is executed
and delivered by, or receives the consent or approval of, the requisite number
of holders of Preferred Stock.
-23-
9.3. Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section 9
that alters the rights or obligations of the holders of Preferred Stock applies
equally to all holders of Preferred Stock and is binding upon them and upon each
future holder of any shares of Preferred Stock and upon the Company without
regard to whether any such shares have been marked to indicate such amendment or
waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement not expressly amended or waived or impair any right
consequent thereon. No course of dealing between the Company and any holder of
Preferred Stock nor any delay in exercising any rights hereunder shall operate
as a waiver of any rights of any holder of such Preferred Stock. As used herein,
the term "this Agreement" and references thereto shall mean this Agreement as it
may from time to time be amended or supplemented.
SECTION 10. INTERPRETATION OF THIS AGREEMENT
10.1. Terms Defined
As used in this Agreement, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such term:
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 its investments (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 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.
Board of Directors: shall have the meaning set forth in Section 1.3.
-24-
Business Day: shall mean a day other than: (i) a Saturday or a Sunday, or
(ii) any other day on which commercial banks in the State of New York, U.S.A.
or in Sao Paulo or Rio de Janeiro, Brazil are required or authorized to close.
Capital Budget: shall mean an annual capital budget describing the intended
capital investment strategy of the Company and its Subsidiaries, which shall
have been approved by the Board of Directors.
Closing: shall have the meaning set forth in Section 1.2(c).
Closing Date: shall have the meaning set forth in Section 1.2(c).
Common Stock: shall have the meaning set forth in Section 1.1.
Employment Agreements: shall have the meaning set forth in Section 6.5.
Brazilian GAAP or U.S. GAAP: shall mean, respectively, Brazil or United States
generally accepted accounting principles, applied on a consistent basis.
Initial Preferred Stock: shall have the meaning set forth in Section 1.2(b).
Initial Common Stock: shall have the meaning set forth in Section 1.2(a).
License Agreements: shall have the meaning set forth in Section 6.4.
Lien: shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), preference, priority or
other security agreement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under any recording or notice
statute, and any lease having substantially the same effect as any of the
foregoing).
Liquidity Event: shall have the meaning set forth in Section 8.9.
Material Adverse Change: shall mean a material adverse change in the business,
operations, affairs, financial condition, assets or properties of the Company
and its Subsidiaries taken as a whole or otherwise, including, without
limitation, the loss of, or the failure to obtain, licenses necessary for the
normal conduct of the business of the Company and its Subsidiaries.
Operating Budget: shall mean a five-year operating budget of the Company and its
Subsidiaries (the first year of which shall
-25-
include monthly operating budgets), which shall have been approved by the Board
of Directors.
Permitted Capital Expenditures: shall mean expenditures by the Company and its
Subsidiaries which should be capitalized in accordance with Brazilian GAAP and
which shall have been approved in the Operating Budget.
Person: shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
Preferred Stock: shall have the meaning set forth in Section 1.1.
Qualified Initial Public Offering: shall mean an initial public offering of the
Common Stock pursuant to a registration statement declared effective by the CVM
or any other securities regulator pursuant to the Securities Laws of Brazil or
any other jurisdiction in which the aggregate net proceeds received by the
Company exceed $30 million.
Registration Rights Agreement: shall have the meaning set forth in Section
6.8.
Reais Equivalent: means the amount in Brazilian currency equivalent to U.S.
Dollars as determined by the exchange rate applicable to foreign capital
repatriation and dividend remittances quoted by Banco de Boston, at 11:00 a.m.
on the relevant day (or by Banco de Brasil S.A. in the absence of a quotation by
Banco de Boston).
Required Holders: shall mean, at any time, the holders of at least a majority of
the Preferred Stock at the time outstanding (exclusive of Preferred Stock then
owned by the Company or any of its Subsidiaries).
Securities: shall mean the Initial Common Stock, the Initial Preferred Stock,
the Subsequent Preferred Stock, the Subscription Bonds and/or the
Subscription Bonds Stock.
Stock: shall mean the Initial Common Stock, the Initial Preferred Stock, the
Subsequent Preferred Stock and the Subscription Bonds Stock.
Shareholders Agreement: shall have the meaning set forth in Section 6.6.
Subscription Bonds: shall have the meaning set forth in Section 2.
Subscription Bonds Stock: shall have the meaning set forth in Section 3.1(c).
-26-
Subsequent Closing Date: shall have the meaning set forth in Section 1.3(b).
Subsequent Preferred Stock: shall have the meaning set forth in Section 1.3(a).
Subsidiary: shall mean, 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.
Technical Services Agreement: shall have the meaning set forth in Section 6.7.
Voting Stock: shall mean, with respect to any Person, any shares of stock or
other equity interests of any class or classes of such Person whose holders are
entitled under ordinary circumstances (irrespective of whether at the time stock
or other equity interests of any other class or classes shall have or might have
voting power by reason of the happening of any contingency) to vote for the
election of a majority of the directors, managers, trustees or other governing
body of such Person.
10.2. 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 U.S. GAAP at
the time in effect, to the extent applicable, except where such principles are
inconsistent with the requirements of this Agreement.
10.3. 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 applicable whether such action is taken directly or indirectly by such
Person.
-27-
10.4. Governing Law: Submission to Jurisdiction
(a) This Agreement shall be governed by and construed in accordance
with the substantive laws of the State of New York applicable to contracts made
and to be performed entirely within such State, excluding choice-of-law
principles of the law of such State that would require the application of the
laws of a jurisdiction other than such State. Any legal action or proceeding
with respect to this Agreement may be brought in the courts of the State of New
York or of the United States for the Southern District of New York, and, by
execution and delivery of this Agreement, each party hereto irrevocably accepts
for itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The Company and each non-United States
Investor hereby irrevocably designates, appoints and empowers CT Corporation
System, with offices on the date hereof at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000 as its designee, appointee and agent to receive, accept and acknowledge
for and on its behalf, and in respect of its property, service of any and all
legal process, summons, notices and documents which may be served in any such
action or proceeding. If for any reason such designee, appointee and agent shall
cease to be available to act as such, the Company agrees to designate a new
designee, appointee and agent in New York City. Each party hereto irrevocably
consents to the service of process out of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, at the address of such party set forth in
Section 11.1 hereof, such service to become effective thirty (30) days after
such mailing.
(b) Each party hereto hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement
brought in the courts referred to in clause (a) above and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum.
10.5. 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.
SECTION 11. MISCELLANEOUS
11.1. Notices
(a) All communications under this Agreement shall be in writing and
shall be delivered by hand, internationally recognized air courier or facsimile
transmission, charges prepaid:
-28-
(1) if to Warburg, at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, facsimile number (000) 000-0000 marked for 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 the
Company in writing,
(2) if to PageNet, at 0000 Xxxxxxx Xxxx Xxxx., Xxxxx, Xxxxx
00000, facsimile number (000) 000-0000, marked for 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 the Company in
writing; or
(3) if to IPC, at Xxx Xxxxxxxx Xxxxxxxx, 000-Xxxx. 00, Xxx
Xxxxx, Xxxxxx, 04532-001, facsimile number 011-55-11-822-7177, 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(xxxxxxx) 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, 00000-000, facsimile number
011-55-11-852-9447, 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 Company, 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; or
(b) Any notice so addressed shall be deemed to be given: if
delivered by hand, on the date of such delivery; if mailed 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
and if sent be facsimile transmission, on the date of its receipt.
-29-
11.2. Expenses and Taxes
(a) The Company agrees to pay the reasonable attorneys' fees and
disbursements incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement and the other instruments and
agreements entered into pursuant to this Agreement, and any amendments to the
same, said payment to be made no later than thirty (30) days after a xxxx for
such fees and/or disbursements has been sent to the Company.
(b) The Company will pay, and save and hold the Investors harmless
from any and all liabilities (including interest and penalties) with respect to,
or resulting from any delay or failure in paying, stamp and other taxes (other
than income taxes), if any, which may be payable or determined to be payable on
the execution and delivery of this Agreement or the acquisition of the Stock or
the shares of Common Stock issuable upon conversion of the Stock.
11.3. Reproduction of Documents
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications which may hereafter
be executed, (b) documents received by the Investors on the Closing Date (except
for certificates or instruments evidencing the Securities themselves), and (c)
financial statements, certificates and other information previously or hereafter
furnished to the Investors, may be reproduced by the Investors by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process and any Investor may destroy any original document so
reproduced. All parties hereto agree and stipulate that any such reproduction,
to the extent permissible by the applicable procedural law, 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 an Investor in the regular course of business) and that
any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
11.4. Termination and Survival
All representations and warranties contained in this Agreement shall
survive the execution and delivery of this Agreement, regardless of any
investigation made at any time by or on behalf of the Company or any Investor.
All statements contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant to this Agreement shall be deemed
representations and warranties of the Company under this Agreement.
-30-
11.5. Successors and Assigns
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties.
11.6. Entire Agreement
This Agreement and the Exhibits hereto embody the entire agreement
and understanding with respect to the subject matter hereof among the parties
and supersede all prior agreements and understandings relating thereto.
11.7. Limitation on Enforcement of Remedies
The Company hereby agrees that it will not assert against the
limited partners or stockholders of any of the Investors any claim it may have
under this Agreement by reason of any failure or alleged failure by such
Investor to meet its obligations hereunder.
11.8. 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.
IN WITNESS WHEREOF the parties herein have executed this 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
PAGING NETWORK INTERNATIONAL N.V.
By: /s/ Xxxx Xxxxxxx Xxxxx
-----------------------------
Name: Xxxx Xxxxxxx Xxxxx
Title: Attorney-in-fact
WARBURG, XXXXXX VENTURES, L.P.
By: WARBURG, XXXXXX & CO.,
its General Partner
By: /s/ Xxxxxxx X. Xxxx
-----------------------------
Name: Xxxxxxx X. Xxxx
Title: Partner
-31-
IVP PAGING (CAYMAN) L.P.
By IVP International Venture Partners,
Inc., its General Partner
By: /s/Xxxxxx Xxxxxxx
-----------------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Partner
MULTIPONTO TELECOMMUNICACOES 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
-32-
SCHEDULE 1.2(a)
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 Telecommunicacoes 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. 4 $4.00
board designees and alternates
IVP Paging (Cayman) L.P. board 2 $2.00
designee and alternate
Paging Network International N.V. 2 $2.00
board designee and alternate
SCHEDULE 1.2(b)(1)
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 Telecommunicacoes Ltda. 1,420 $1,000 $1,420,000
SCHEDULE 1.2(b)(2)
Investor Expenditures
Name Amount
--------------------------------------------------------------------------------
Warburg, Xxxxxx Ventures, L.P. $1,000,000
IVP Paging (Cayman) L.P. $775,000
Paging Network International N.V. $750,000
Muliponto Telecommunicacoes Ltda. $0
TVA Sistema de Televisao S.A. $0
SCHEDULE 1.3(a)
Subsequent Preferred Stock Percentages
INVESTOR PERCENTAGE
Warburg, Xxxxxx Ventures, L.P. 66.667
IVP Paging (Cayman) L.P. 26.667
Multiponto Telecommunicacoes Ltda. 6.667
SCHEDULE 2.1
Subscription Bonds
INVESTOR NUMBER OF EXERCISE TOTAL
SHARES OF PRICE PER EXERCISE
STOCK SHARE PRICE
Paging Network International N.V. 7,997 $1.00 $7,997
Multiponto Telecommunicacoes Ltda. 1,000 $1.00 $1,000
TVA Sistema de Televisao S.A. 999 $1.00 $999
SCHEDULE 3.2
Subsidiaries
NONE.
SCHEDULE 6.5
Key Employees
Xxxxxx Xxxxxx
Xxxxx Xxxxxxxx
