EXHIBIT 99.2
STOCK PURCHASE AGREEMENT
dated as of March 12, 2004
by and among
TELEFONOS DE MEXICO, S.A. DE C.V.,
WORLDCOM, INC.,
MCI INTERNATIONAL, INC.,
MCI WORLDCOM INTERNATIONAL, INC.
and
MCI WORLDCOM BRAZIL LLC
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS....................................................................................................2
Section 1.01. Definitions................................................................................2
ARTICLE 2 SALE AND PURCHASE OF SHARES....................................................................................5
Section 2.01. Sale and Purchase of the Shares............................................................5
Section 2.02. Deliveries by the Sellers and Buyer........................................................5
Section 2.03. Closing....................................................................................6
Section 2.04. No Prior Change of Control.................................................................6
Section 2.05. Acquisition Subsidiaries...................................................................6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PARENT AND THE SELLERS.......................................................6
Section 3.01. Corporate Existence and Power..............................................................6
Section 3.02. Due Authorization..........................................................................7
Section 3.03. Governmental Authorizations; Non-Contravention.............................................7
Section 3.04. Title to Shares and Common Stock...........................................................8
Section 3.05. No Other Assets............................................................................9
Section 3.06. Related Party Agreements...................................................................9
Section 3.07. Finders' Fees..............................................................................9
Section 3.08. Board Approval and Recommendation..........................................................9
Section 3.09. Foreign Investment Registration............................................................9
Section 3.10. No Other Representations or Warranties.....................................................9
Section 3.11. Capital Gain..............................................................................10
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER.......................................................................10
Section 4.01. Corporate Existence and Power.............................................................10
Section 4.02. Corporate Authorization...................................................................10
Section 4.03. Governmental Authorizations; Non-Contravention............................................10
Section 4.04. Finders' Fees.............................................................................11
Section 4.05. Sufficiency of Funds......................................................................11
Section 4.06. No Reliance...............................................................................11
Section 4.07. Investment Intent.........................................................................12
ARTICLE 5 COVENANTS OF BUYER AND THE SELLERS............................................................................12
Section 5.01. Commercially Reasonable Efforts...........................................................12
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 5.02. Certain Filings...........................................................................15
Section 5.03. Conduct of the Sellers....................................................................15
Section 5.04. Public Announcements......................................................................17
Section 5.05. Notices of Certain Events.................................................................17
Section 5.06. Refinancing of Certain Indebtedness.......................................................18
Section 5.07. Indemnification and Insurance.............................................................18
Section 5.08. Sale Motion...............................................................................19
Section 5.09. Certain Regulatory Obligations............................................................20
Section 5.10. Indemnification by Parent and Sellers.....................................................21
Section 5.11. Use of Name...............................................................................21
Section 5.12. Transfer of Shares by New Startel.........................................................21
Section 5.13. Confidentiality...........................................................................21
Section 5.14. No Solicitation...........................................................................22
Section 5.15. Company Assets............................................................................22
Section 5.16. Startel Loan..............................................................................23
ARTICLE 6 CONDITIONS TO THE SHARE PURCHASE..............................................................................23
Section 6.01. Conditions to Obligations of Each Party...................................................23
Section 6.02. Conditions to the Obligations of Buyer....................................................23
Section 6.03. Conditions to the Obligations of the Sellers..............................................25
ARTICLE 7 TERMINATION...................................................................................................25
Section 7.01. Termination...............................................................................25
Section 7.02. Effect of Termination.....................................................................27
ARTICLE 8 MISCELLANEOUS.................................................................................................27
Section 8.01. Notices...................................................................................27
Section 8.02. Non-Survival of Representations and Warranties............................................28
Section 8.03. Amendments; No Waivers....................................................................29
Section 8.04. Expenses; Sales and Transfer Taxes........................................................29
Section 8.05. Successors and Assigns....................................................................29
Section 8.06. Governing Language; Governing Law.........................................................29
Section 8.07. Jurisdiction..............................................................................29
Section 8.08. WAIVER OF JURY TRIAL......................................................................30
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 8.09. Counterparts; Effectiveness; No Third Party Beneficiaries.................................30
Section 8.10. Entire Agreement..........................................................................30
Section 8.11. Captions..................................................................................30
Section 8.12. Severability..............................................................................30
Section 8.13. Remedies..................................................................................30
Section 8.14. Parent Guarantee..........................................................................31
Section 8.15. Interpretation............................................................................31
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of March 12,
2004, executed in the City of ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of
America, by and among Telefonos de Mexico, S.A. de C.V., a Mexican sociedad
anonima de capital variable ("Buyer"), WorldCom, Inc., a Georgia corporation (or
its successor in interest following the Effective Date (as hereinafter defined))
("Parent"), MCI International, Inc., a Delaware corporation (or its successor in
interest following the Effective Date) ("MCII"), MCI WorldCom International,
Inc., a Delaware corporation (or its successor in interest following the
Effective Date) ("MCIWI"), and MCI WorldCom Brazil LLC, a Delaware limited
liability company (or its successor in interest following the Effective Date)
("MCIWB" and, collectively with MCII and MCIWI, the "Sellers").
WHEREAS, Parent and each of the Sellers is a debtor-in-possession
under title 11 of the United States Code, 11 U.S.C. ss. 101 et seq. (the
"Bankruptcy Code"), and each filed a voluntary petition for relief under chapter
11 of the Bankruptcy Code on July 21, 2002 or November 8, 2002, in the United
States Bankruptcy Court for the Southern District of New York (the "Bankruptcy
Court"); and
WHEREAS, on October 31, 2003, the Bankruptcy Court entered an order
confirming Debtors' Modified Second Amended Joint Plan of Reorganization under
chapter 11 of the Bankruptcy Code, dated October 21, 2003, as amended and
modified (the "Chapter 11 Plan"); and
WHEREAS, as of the Effective Date, Parent and the Sellers will be
reorganized under the Chapter 11 Plan; and
WHEREAS, as of the date hereof, the Chapter 11 Plan is not effective;
and
WHEREAS, each of the Sellers is an indirect wholly owned Subsidiary
of Parent; and
WHEREAS, Sellers own, directly and indirectly, all of the issued and
outstanding shares of capital stock, participations and ownership interests
(collectively, the "Shares") of the companies set forth on Annex A hereto (each
a "Company" and, collectively, the "Companies"); and
WHEREAS, Sellers own, indirectly through wholly owned subsidiaries,
all of the equity interests of Startel Participacoes Ltda., a Brazilian limited
liability company ("Startel"), and New Startel Participacoes Ltda., a Brazilian
limited liability company ("New Startel" and, together with Startel, the "Direct
Holders"), as more fully described on Annex A hereto; and
WHEREAS, as of the date hereof, the Direct Holders own, in the
aggregate, 64,405,151,125 shares of common stock, without par value (the "Common
Stock"), of Embratel Participacoes S.A ("Embratel"); and
WHEREAS, the Sellers desire to sell to Buyer, and Buyer desires to
purchase from the Sellers, the Shares for the Purchase Price and upon the terms
and conditions hereinafter set forth and in accordance with Section 363 of the
Bankruptcy Code to the extent applicable prior to the Effective Date; and
WHEREAS, certain terms used in this Agreement are defined in Section
1.01.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions.
(a) The following terms, as used herein, have the following meanings:
"Actual Knowledge" means, with respect to any Person, the actual
knowledge of those executives of such Person who actively participated in the
negotiation of this Agreement on behalf of such Person and, with respect to
Parent and Sellers, any employees of Parent or any of its Affiliates (other than
Embratel or its Subsidiaries) who serve as members of the Board of Directors of
Embratel or any of its Subsidiaries, it being understood that it is not
anticipated or required that any diligence efforts will be undertaken by any
such executives or employees.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person.
"Alternate Proposal" means any proposal or offer from a third party
to acquire, directly or indirectly, the Shares, the Common Stock or the business
of Embratel.
"Business Day" means a day other than Saturday, Sunday or other day
on which commercial banks in Rio de Janeiro, Brazil or New York, New York are
authorized or required by Law to close.
"Concessions" means collectively the (i) Concession Agreement 89/98
for the provision of domestic long distance telephone services; (ii) Concession
Agreement 90/98 for the provision of international long distance telephone
services; (iii) Authorization Term Nr. 219/2002 for the provision of Switched
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Fixed Telephone Services in the Regions I, II and III; (iv) Authorization Term
Nr. 026/2003 for the provision of Network Telecommunications Transportation
converted into the Multimedia Communications Service License by ANATEL Act nr.
41.122/03; (v) Authorization Term Nr. 023/2003 for the provision of Global
Movable Satellite Services; and (vi) Authorization Term Nr. 037/1998 Maritime
Movable Services.
"Confidentiality Agreement" means the Confidentiality Agreement,
dated February 6, 2004, among Buyer, Embratel and Parent.
"Disclosure Documents" means Embratel's Annual Report on Form 20-F
for the fiscal year ended December 31, 2002, filed by Embratel on June 27, 2003;
the Offering Memorandum, dated November 24, 2003, relating to the issuance by
Empresa Brasileira de Telecomunicacoes S.A. of $200,000,000 aggregate principal
amount of its 11% Guaranteed Notes due 2008; and any reports subsequently filed
by Embratel with the SEC or the CVM, together in each case with any documents
incorporated by reference therein or exhibits thereto.
"Governmental Entity" means any federal, state, local or foreign
government or any court, tribunal, administrative agency or commission or other
governmental or regulatory authority or agency, domestic, foreign or
supranational.
"Law" means any federal, state, local or foreign law (including
common law), statute, code, ordinance, order, decree, judgment, rule, resolution
or regulation.
"Losses" means, with respect to a Person, any and all claims, losses,
liabilities, costs, penalties, fines and amounts paid or expenses incurred
(including reasonable fees for attorneys, accountants, consultants and experts),
damages, obligations to third parties, expenditures, judgments, awards or
settlements that are imposed upon or otherwise incurred by such Person.
"Material Adverse Effect" means any change in or effect on the
business of Embratel or its Subsidiaries that is or is reasonably likely to be
materially adverse to the business, operations, properties (including intangible
properties and leased, owned or managed properties), condition (financial or
otherwise), assets, liabilities or regulatory status of Embratel and its
Subsidiaries, taken as a whole, other than changes or effects resulting from (i)
conditions in the Brazilian economy or the Brazilian or United States securities
markets in general or resulting from conditions in telecommunications industry
in general, except to the extent that Embratel or its Subsidiaries are
materially disproportionately affected thereby or (ii) this Agreement, the
announcement or performance hereof or the transactions contemplated hereby.
"Person" means any individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
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"SEC" means the United States Securities and Exchange Commission.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors, administrators or other persons performing
similar functions are at any time directly or indirectly owned by such Person.
Any reference in this Agreement to a statute shall be to such
statute, as amended from time to time, and to the rules and regulations
promulgated thereunder.
(b) Each of the following terms is defined in the Section set forth opposite
such term:
Term Section
---- -------
1998 Purchase Agreement.................... 5.09
Agreement.................................. Preamble
ANATEL..................................... 2.05
Bankruptcy Code............................ Preamble
Bankruptcy Court........................... Preamble
BCL........................................ 2.04
Buyer...................................... Preamble
Buyer Disclosure Schedule.................. Article 4
Buyer Documents............................ 4.02
▇▇▇▇....................................... 3.03(a)
Chapter 11 Plan............................ Preamble
Closing.................................... 2.03
Closing Date............................... 2.03
Common Stock............................... Preamble
Company, Companies......................... Preamble
CVM........................................ 2.04
Direct Holders............................. Preamble
Effective Date............................. 5.05(e)
Embratel................................... Preamble
Encumbrance................................ 3.04(a)
GGP........................................ 3.03(a)
GTL........................................ 3.03(a)
Indebtedness............................... 5.06
MCII....................................... Preamble
MCIWI...................................... Preamble
MCIWB...................................... Preamble
Mixed Information.......................... 5.13
New Startel................................ Preamble
Outside Date............................... 5.01(f)
Parent..................................... Preamble
Payment Date .............................. 5.01(f)
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Term Section
---- -------
Payment Due Date........................... 5.01(f)
Protected Information...................... 5.13
Purchase Price............................. 2.02
Representatives ........................... 5.14
Sale Motion ............................... 5.08(a)
Sale Order ................................ 5.08(b)
Seller Disclosure Schedule................. Article 3
Seller Documents........................... 3.02
Sellers.................................... Preamble
Share Purchase............................. 2.01
Shares..................................... Preamble
Startel.................................... Preamble
Startel Loan............................... 5.16
Termination Amount......................... 5.01(f)
Termination Event.......................... 5.01(f)
Transfer Taxes............................. 5.08(c)
Usufruct................................... 3.04(b)
ARTICLE 2
SALE AND PURCHASE OF SHARES
Section 2.01. Sale and Purchase of the Shares. Upon the terms and
subject to the conditions contained herein, at the Closing, each of the Sellers
shall sell and transfer to Buyer (or its designees pursuant to Section 2.05),
and Buyer (or such designees) shall purchase and accept from each of the
Sellers, that number of Shares set forth next to such Seller's name on Schedule
2.01 attached hereto (the "Share Purchase").
Section 2.02. Deliveries by the Sellers and Buyer. At the Closing:
(a) Each of the Sellers and Buyer shall execute and deliver the
required amendments to the articles of association of each of the Companies
in form and substance necessary to assign and transfer the Shares to Buyer.
(b) Buyer shall pay an amount in cash equal to U.S.$360,000,000 (THREE
HUNDRED SIXTY MILLION DOLLARS), less any amounts actually paid by Buyer to
the Sellers pursuant to Section 5.01(f) hereof, to an account designated in
writing by the Sellers, not less than three (3) Business Days prior to the
Closing, by wire transfer of immediately available funds (such amount to be
paid at Closing, the "Purchase Price").
(c) Buyer shall deliver to the Sellers the certificate referred to in
Section 6.03(c) hereof.
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(d) The Sellers shall deliver to Buyer the certificate referred to in
Section 6.02(c) hereof.
Section 2.03. Closing. Unless this Agreement shall have been earlier
terminated in accordance with its terms, the closing of the Share Purchase (the
"Closing") shall take place at (a) the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. local time, on a date
mutually agreed upon by the Sellers and Buyer but not later than two Business
Days after the day on which the conditions precedent set forth in Article 6 have
been satisfied or waived (other than any conditions precedent that are not
capable of being satisfied until the Closing, but subject to the satisfaction or
waiver of those conditions), or (b) such other place, date or time as may be
mutually agreed upon in writing by the Sellers and Buyer. The date of the
Closing is referred to herein as the "Closing Date."
Section 2.04. No Prior Change of Control. Any and all rights related
to the Shares and the shares of Common Stock shall remain vested with the
Sellers or the Direct Holders, as the case may be, until the Closing Date. No
provision of this Agreement shall operate to transfer control of the Companies
or any of their respective Affiliates prior to the Closing Date in violation of
ANATEL Resolution 101 of February 4, 1999 (Regulation for the Verification of
the Control and Transfer of Control of Telecommunications Service Companies),
Article 254-A of the Brazilian Corporation Law (the "BCL") and Rule 361 of March
5, 2002 of the Brazilian Securities Commission (the "CVM").
Section 2.05. Acquisition Subsidiaries. Prior to the date on which
Buyer and the Sellers make the filing with Agencia Nacional de Telecomunicacoes
("ANATEL") contemplated by Section 5.01(a) hereof, Buyer may designate (by
written notice to Parent) one or more of its Subsidiaries to receive all or any
part of the Shares; provided, however, that any such designation shall not
vitiate Buyer's obligations hereunder.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE SELLERS
Except as set forth in the disclosure schedule delivered by Parent
and the Sellers to Buyer on or prior to the date hereof (the "Seller Disclosure
Schedule"), Parent and each of the Sellers hereby jointly and severally
represents and warrants to Buyer as follows:
Section 3.01. Corporate Existence and Power. Parent and each Seller,
each Company and New Startel is a corporation or other entity duly organized and
registered, as applicable, validly existing and in good standing under the Laws
of the jurisdiction of its organization as set forth on Annex A and, subject to
Section 5.08 hereof, has all requisite corporate or other applicable
organizational power and authority to carry on its business as currently
conducted.
6
Section 3.02. Due Authorization. Except as contemplated by Section
5.08 hereof, Parent and each Seller has all requisite power and authority to
execute and deliver this Agreement and each other agreement, document, or
instrument or certificate contemplated by this Agreement or to be executed by
Parent or such Seller in connection with the consummation of the transactions
contemplated by this Agreement (the "Seller Documents"), and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Seller Documents and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of Parent and each Seller. This Agreement has been, and each
of the Seller Documents will be at or prior to the Closing, duly and validly
executed and delivered by Parent and each Seller and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and each of the other Seller Documents when so
executed and delivered will constitute, legal, valid and binding obligations of
Parent and each Seller, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar Laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
Section 3.03. Governmental Authorizations; Non-Contravention.
(a) The execution, delivery and performance by Parent and each Seller
of this Agreement and the other Seller Documents and the consummation by Parent
and such Seller of the transactions contemplated hereby and thereby require no
action by or in respect of, or filing with, any Governmental Entity, other than
(i) compliance with any applicable requirements of Laws, rules and regulations
governing antitrust or merger control matters, including, without limitation,
the filing with Conselho Administrativo de Defesa Economica ("▇▇▇▇") through
ANATEL, (ii) compliance with any applicable requirements of Law governing
telecommunications matters including, without limitation, the General
Telecommunications Law (the "GTL") and the General Grants Plan (the "GGP"), and
receipt of all requisite approvals of ANATEL, (iii) compliance with any
applicable requirements of any securities or takeover Laws, whether domestic or
foreign, including, without limitation, Article 254-A of the BCL and Rule 361 of
March 5, 2002 of the CVM, (iv) filings with the applicable Boards of Trade of
amendments to the articles of association of each of the Companies in order to
assign and transfer the Shares, (v) approval by the Bankruptcy Court of this
Agreement and the transactions contemplated hereby, and (vi) any actions or
filings the absence of which would not materially impair the ability of Parent
or such Seller to consummate the transactions contemplated by this Agreement.
(b) The execution, delivery and performance by Parent or each Seller
of this Agreement and the other Seller Documents and the consummation by Parent
or such Seller of the transactions contemplated hereby and thereby do not and
will not: (i) conflict with or violate any provision of the organizational
documents of Parent or such Seller or the Companies or New Startel; (ii)
assuming compliance with the matters referred to in Section 3.03(a), contravene,
7
conflict with, or result in a violation or breach of any provision of any
applicable Law, judgment, injunction, order or decree, except as would not
materially impair the ability of such Seller to consummate the transactions
contemplated by this Agreement; or (iii) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or result in any, or give rise to any rights of termination,
cancellation or acceleration of any obligations or any loss of any material
benefit under, or result in the creation of an Encumbrance on any of the
properties or assets (whether owned, leased or managed) of a Seller, a Company
or New Startel pursuant to any agreement, contract, instrument, permit, license
or franchise to which a Seller, Company or New Startel is a party or by which
any of a Seller's, a Company's or New Startel's property (whether owned, leased
or managed) is bound or affected, except in each case under this clause (iii)
for breaches or defaults, rights of termination, cancellation or acceleration or
losses or creations of Encumbrances that would not materially impair the ability
of any Seller to consummate the transactions contemplated by this Agreement.
Section 3.04. Title to Shares and Common Stock.
(a) As of immediately prior to the Closing, each Seller will have
good, valid and marketable title (subject only to transfer restrictions imposed
by any applicable securities Laws) to all of such Seller's Shares (as set forth
on Annex A hereto), free and clear of any lien, charge, encumbrance, security
interest, claim or right of others (each, an "Encumbrance") and, subject to the
terms and conditions hereof, at the Closing, such Seller will assign and
transfer good, valid and marketable title to all such Shares, free and clear of
any Encumbrance (other than any Encumbrance that may be created by, or imposed
under, any agreement or instrument to which Buyer is a party, as a result of
Buyer's consummation of the transactions contemplated hereby). Other than with
respect to the Usufruct (as defined below), none of Parent, the Sellers or any
Company is a party to any voting agreement, shareholders agreement or other
agreement, arrangement or understanding with respect to the Shares or the shares
of Common Stock including, without limitation, any agreement, arrangement or
understanding with respect to the voting, registration, sale, gift or other
transfer of such Shares or shares of Common Stock.
(b) Each Direct Holder has good, valid and marketable title (subject
only to transfer restrictions imposed by any applicable securities Laws) to all
of such Direct Holder's shares of Common Stock (as set forth on Annex A hereto),
free and clear of any Encumbrance, except for the rights under the Instrument
for the Establishment of the Usufruct of Shares, dated June 29, 2001 (the
"Usufruct"), by and between New Startel and Instituto Embratel 21, a Brazilian
not-for-profit company, with respect to the shares of Common Stock owned by New
Startel, which Usufruct shall be terminated at Closing pursuant to Section 5.12
hereof, without any further liability or obligation whatsoever to New Startel.
(c) As of November 13, 2003, the Direct Holder's shares of Common
Stock in the aggregate represent not less than (i) fifty-one and seven-tenths
percent (51.7%) of Embratel's outstanding voting stock and (ii) nineteen and
two-tenths percent (19.2%) of Embratel's total outstanding capital stock.
8
(d) The Shares constitute all of the issued and outstanding capital
stock, participations and ownership interests of the Companies.
Section 3.05. No Other Assets. Except as provided in Section 3.05 of
the Seller Disclosure Schedule, at Closing none of the Companies or New Startel
(i) owns any material assets or is subject to any liabilities of any kind
(whether known or unknown, contingent or otherwise) or (ii) has conducted any
business or operations other than in connection with holding the Shares and/or
the shares of Common Stock, as the case may be.
Section 3.06. Related Party Agreements. Section 3.06 of the Seller
Disclosure Schedule sets forth each written contract, agreement or other
arrangement between Embratel or any of its Affiliates, on the one hand, and
Parent or any of the Sellers or their respective Affiliates, on the other hand.
Parent and Sellers reasonably believe that all such contracts, agreements or
other arrangements are on terms materially no less favorable to Embratel or its
Affiliate, as the case may be, than those that might have reasonably been
obtained on an arms length basis from unrelated third parties.
Section 3.07. Finders' Fees. Except for Lazard Freres & Co. LLC,
whose fees will be paid by the Sellers, there is no investment banker, broker,
finder or other intermediary that has been retained by or is authorized to act
on behalf of Parent or the Sellers who might be entitled to any fee or
commission from Parent or the Sellers in connection with the transactions
contemplated by this Agreement.
Section 3.08. Board Approval and Recommendation. The Board of
Directors of Parent and each Seller has determined that a sale and assignment of
the Shares pursuant to this Agreement under Section 363 of the Bankruptcy Code
is in the best interests of Parent or such Seller, as the case may be.
Section 3.09. Foreign Investment Registration. The relevant
investments in the capital stock of the Companies evidenced by the Shares owned
by the Sellers, to be sold by such Sellers, pursuant to this Agreement, have
been duly registered with the Central Bank of Brazil as direct foreign
investments in the Companies and such registration is up-to-date, in good
standing and not subject to any restriction or limitation that would adversely
affect the ability of Buyer to succeed to such registrations. In the case of
MCIWI, such aggregate amount in respect of its Shares is equal to
US$19,900,544.47. In the case of MCIWB, such aggregate amount in respect of its
Shares is equal to US$1,972,230,973.81.
Section 3.10. No Other Representations or Warranties. Except for the
representations and warranties made by Parent or the Sellers in Article 3 of
this Agreement, none of Parent or the Sellers or their Affiliates or agents
makes any representations or warranties, and Buyer hereby disclaims any other
representations or warranties, whether made by Parent or the Sellers or any of
their Affiliates, or any of their respective agents, with respect to the
negotiation, execution, delivery or performance of this Agreement,
notwithstanding the delivery or disclosure to Buyer or its Affiliates or agents
of any documentation or other information with respect to any one or more of the
foregoing.
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Section 3.11. Capital Gain. The sale of the Shares pursuant to this
Agreement will not result in any capital gain for any of the Sellers and will
not cause any income tax liability for Buyer or its representatives in Brazil,
pursuant to Article 26 of Brazilian Law No. 10.833/33.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as set forth in the disclosure schedule delivered by Buyer to
the Sellers on or prior to the date hereof (the "Buyer Disclosure Schedule"),
Buyer represents and warrants to the Sellers as follows:
Section 4.01. Corporate Existence and Power. Buyer is a company duly
organized and registered, validly existing and in good standing under the Laws
of its jurisdiction of incorporation and has all requisite corporate power and
authority to carry on its business as currently conducted.
Section 4.02. Corporate Authorization. Buyer has all requisite power
and authority to execute and deliver this Agreement and each other agreement,
document, or instrument or certificate contemplated by this Agreement or to be
executed by Buyer in connection with the consummation of the transactions
contemplated by this Agreement (the "Buyer Documents"), and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Buyer Documents and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of Buyer. This Agreement has been, and each of the Buyer
Documents will be at or prior to the Closing, duly and validly executed and
delivered by Buyer and (assuming the due authorization, execution and delivery
by the other parties hereto and thereto) this Agreement constitutes, and each of
the other Buyer Documents when so executed and delivered will constitute, legal,
valid and binding obligations of Buyer, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar Laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
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Section 4.03. Governmental Authorizations; Non-Contravention.
(a) The execution, delivery and performance by Buyer of this
Agreement and the other Buyer Documents and the consummation by Buyer of the
transactions contemplated hereby and thereby require no action by or in respect
of, or filing with, any Governmental Entity, other than (i) compliance with any
applicable requirements of Laws, rules and regulations governing antitrust or
merger control matters, including, without limitation, the filing with ▇▇▇▇
through ANATEL, (ii) compliance with any applicable requirements of Law
governing telecommunications matters including, without limitation, the GTL and
the GGP, and receipt of all requisite approvals of ANATEL, (iii) compliance with
any applicable requirements of any securities or takeover Laws, whether domestic
or foreign, including, without limitation, Article 254-A of the BCL and Rule 361
of March 5, 2002 of the CVM, (iv) filings with the applicable Boards of Trade of
amendments to the articles of association of each of the Companies in order to
assign and transfer the Shares, and (v) any actions or filings the absence of
which would not materially impair the ability of Buyer to consummate the
transactions contemplated by this Agreement.
(b) The execution, delivery and performance by Buyer of this
Agreement and the consummation by Buyer of the transactions contemplated hereby
do not and will not: (i) conflict with or violate any provision of the
organizational documents of Buyer; or (ii) assuming compliance with the matters
referred to in Section 4.03(a), contravene, conflict with, or result in a
violation or breach of any provision of any applicable Law, regulation,
judgment, injunction, order or decree, except as would not materially impair the
ability of Buyer to consummate the transactions contemplated by this Agreement.
Section 4.04. Finders' Fees. There is no investment banker, broker,
finder or other intermediary that has been retained by or is authorized to act
on behalf of Buyer who might be entitled to any fee or commission from the
Sellers or any of their Affiliates upon consummation of the transactions
contemplated by this Agreement.
Section 4.05. Sufficiency of Funds. Buyer has and will continue to
have sufficient funds to pay the Purchase Price and any expenses incurred by it
or its Affiliates or agents in connection with the transactions contemplated by
this Agreement, and to otherwise perform its obligations hereunder.
Section 4.06. No Reliance. Buyer acknowledges and agrees that (a) it
has not been induced by and has not relied upon any representations, warranties
or statements, whether express or implied, made by the Sellers or any of their
respective Affiliates or agents representing or purporting to represent the
Sellers that are not expressly set forth in this Agreement, whether or not any
such representations, warranties or statements were made in writing or orally;
(b) it has made its own assessment of the business of Embratel and its
Subsidiaries and future prospects thereof and is sufficiently experienced to
make an informed judgment with respect thereto; and (c) neither the Sellers nor
any of their respective Affiliates or agents has made any representation or
warranty, express or implied, as to the future prospects of the business of
Embratel or any of its Subsidiaries or profitability thereof, or with respect to
any forecasts, projections or business plans prepared by or on behalf of
Embratel, the Sellers or any of their respective Affiliates.
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Section 4.07. Investment Intent. Buyer is acquiring the Shares and
the shares of Common Stock for its own account and not with a view to, or for
sale in connection with, any distribution or resale thereof in violation of
applicable Law, including without limitation Section 2(11) of the Securities Act
of 1933. Buyer (either alone or together with its advisors) has sufficient
knowledge and experience in financial and business matters so as to be capable
of evaluating the merits and risks of its investment in the Shares and the
shares of Common Stock and is capable of bearing the economic risks of such
investment.
ARTICLE 5
COVENANTS OF BUYER AND THE SELLERS
The parties hereto agree that:
Section 5.01. Commercially Reasonable Efforts.
(a) Subject to the terms and conditions of this Agreement, each of
Buyer, Parent and the Sellers will use its commercially reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws and regulations to
cause to be satisfied all conditions precedent to its obligations under this
Agreement and to consummate and make effective the transactions contemplated by
this Agreement, in each case as soon as practicable after the date hereof. In
furtherance and not in limitation of the foregoing, each of Buyer and the
Sellers agrees (i) as promptly as practicable after the date hereof, but in any
event within fifteen (15) Business Days of the date hereof, to make an
appropriate filing with each of ▇▇▇▇ and ANATEL with respect to the transactions
contemplated by this Agreement, (ii) as promptly as practicable after the date
hereof, but in any event within thirty (30) days of the date hereof, to make an
appropriate filing with CVM with respect to the transactions contemplated by
this Agreement to obtain the approval of the public offer referred to in Section
5.09(a) hereof, (iii) to comply with all of the requirements of the applicable
Boards of Trade including, without limitation, the filing of amendments to the
respective articles of association of each of the Companies in order to assign
and transfer the Shares, (iv) to make such other filings as are required under
Laws, rules and regulations governing antitrust or merger control matters with
respect to the transactions contemplated hereby as promptly as practicable after
the date hereof, (v) to take any act, make any undertaking or receive any
clearance or approval required by ▇▇▇▇, ANATEL, CVM, any other Governmental
Entity or under applicable Law and (vi) not to take any action that would
reasonably be expected to materially delay or prevent the consummation of the
transactions contemplated hereby.
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(b) Each of Buyer and the Sellers will, and will cause its respective
Affiliates (provided that the Sellers will use their commercially reasonable
efforts to cause Embratel and its Subsidiaries) to (i) respond as promptly as
practicable to any inquiries or requests received from any Governmental Entity
for additional information or documentation, and (ii) not enter into any
agreement with any Governmental Entity not to consummate, or delay the
consummation of the transactions contemplated by this Agreement, except with the
prior consent of the other party (which consent shall not be unreasonably
withheld or delayed).
(c) [Intentionally Omitted].
(d) From the date hereof to Closing, subject to compliance with all
applicable Laws, and to the extent permissible under Section 2.04 hereof, Parent
and the Sellers shall use commercially reasonable efforts to cause Embratel and
its Subsidiaries, officers, directors, employees, auditors and agents to afford
the officers, employees and agents of Buyer reasonable access at reasonable
times to its officers, employees, agents, properties, offices and other
facilities and to all books and records; provided, however, that Buyer shall
have a reasonable need for such access and shall not interfere with the
operation of business of Embratel or its Subsidiaries.
(e) Subject to Section 2.04 hereof and to compliance with all
applicable Laws, each of Buyer and the Sellers shall (i) promptly notify the
other party of any written communication to that party or its Affiliates (other
than Embratel and its Subsidiaries) from any Governmental Entity and permit the
other party to review in advance any proposed written communication to any of
the foregoing; (ii) not agree to participate in any substantive meeting or
discussion with any Governmental Entity in respect of any filings, investigation
or inquiry concerning this Agreement or the transactions contemplated hereby
unless it consults with the other party in advance and, to the extent permitted
by such Governmental Entity, gives the other party the opportunity to attend and
participate at any such meeting; and (iii) furnish the other party with copies
of all correspondence, filings, and communications (and memoranda setting forth
the substance thereof) between it and its representatives on the one hand, and
any Governmental Entities or members of their respective staffs on the other
hand, with respect to this Agreement and the transactions contemplated hereby
(except that the Sellers shall be under no obligation of any kind to provide
Buyer with any documents, material or other information relating to the
valuation of Embratel or to alternatives to this Agreement and the transactions
contemplated hereby).
(f) As an added inducement to Parent and the Sellers to enter into
this Agreement with Buyer, the parties hereto intend and have agreed that Buyer
shall make certain payments to the Sellers in the event that the regulatory
approvals required in order to consummate the transactions contemplated hereby
are delayed or not obtained or injunctions in respect of the granting thereof
are issued. Consistent therewith, (i) on the first Business Day following the
date hereof, Buyer shall pay an amount in cash equal to U.S.$20,000,000 (TWENTY
MILLION DOLLARS) to an account of Sellers designated by the Sellers, by wire
transfer of immediately available funds, and (ii) if the Closing shall not
already have occurred, on (A) the date that is ninety (90) days after the date
of the entry of the Sale Order or (B) July 9, 2004 if the Effective Date shall
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have occurred prior to the Bankruptcy Court having entered the Sale Order, Buyer
shall pay an additional amount in cash equal to U.S.$10,000,000 (TEN MILLION
DOLLARS) to an account of Sellers designated by the Sellers, by wire transfer of
immediately available funds; provided that, if on the applicable date specified
in clause (ii)(A) or (ii)(B) above the conditions to Closing set forth in
Section 6.01(c) and Section 6.02 have not been satisfied or waived by the
parties hereto, then such payment shall be delayed until the first Business Day
thereafter on which such conditions set forth in Section 6.01(c) and Section
6.02 shall have been satisfied or waived. The payment referred to in clause (ii)
above shall be made by Buyer regardless of whether the various other conditions
precedent to the consummation of the Share Purchase have then been satisfied or
waived (including, without limitation, the receipt of all requisite regulatory
and other legal approvals). The date on which the payment referred to in clause
(ii) above is due shall be referred to herein as the "Payment Due Date" and the
date on which such payment is made shall be referred to herein as the "Payment
Date." In the event that this Agreement is validly terminated by (x) Buyer
pursuant to Section 7.01(b) (but only if the order, decree, ruling or other
action issued or taken by such Governmental Entity is of a non-regulatory nature
(which, for purposes hereof, shall mean that such order, decree, ruling or other
action does not arise out of, relate to or concern antitrust, competitition or
telecommunications matters)) or Sections 7.01(d), (i) or (j) hereof, or (y)
Parent or the Sellers pursuant to Sections 7.01(b) (but only if the order,
decree, ruling or other action issued or taken by such Governmental Entity is of
a non-regulatory nature (which, for purposes hereof, shall mean that such order,
decree, ruling or other action does not arise out of, relate to or concern
antitrust, competitition or telecommunications matters)) or Sections 7.01(e),
(f) or (g), then the Sellers shall pay to Buyer promptly (but in any event
within ten (10) Business Days) following such termination all amounts previously
paid by Buyer to the Sellers pursuant to this Section 5.01(f) as of the date of
such termination. In addition, in the event that this Agreement is validly
terminated by Buyer pursuant to Section 7.01(k) hereof on or before the Payment
Due Date, then the Sellers shall pay to Buyer promptly (but in any event within
ten (10) Business Days) following such termination all amounts previously paid
by Buyer to the Sellers pursuant to this Section 5.01(f) as of the date of such
termination. Notwithstanding anything contained herein to the contrary, until
all requisite regulatory approvals are obtained and the Closing shall have
occurred, the Sellers shall continue to exercise full and exclusive control of
the Companies and New Startel. If the Closing shall not have occurred by July 8,
2005 (the "Outside Date") and the conditions to Closing set forth in Section
6.01(c) and Section 6.02 have been satisfied or waived by the parties hereto,
Buyer shall unconditionally and irrevocably pay an additional amount in cash
equal to U.S.$10,000,000 (TEN MILLION DOLLARS) as well as all amounts
theretofore due and payable and not yet paid by Buyer under this Section 5.01(f)
(such payment, the "Termination Amount") to an account of the Sellers designated
by the Sellers, by wire transfer of immediately available funds; provided,
however, that if at any time, there shall be a final and non-appealable order of
or other final determination by ANATEL or ▇▇▇▇ permanently restraining, denying,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement or other action is taken or not taken by ANATEL or ▇▇▇▇ which has such
effect or this Agreement is terminated pursuant to Section 7.01(b) hereof where
14
the relevant order, decree, ruling or other action is of a regulatory nature (as
referred to above) (a "Termination Event"), then Buyer shall promptly thereafter
unconditionally and irrevocably pay the Termination Amount to an account of the
Sellers designated by the Sellers, by wire transfer of immediately available
funds; provided further, however, that if a Termination Event occurs prior to
the Payment Date, then the Termination Amount shall be an amount in cash equal
to U.S.$20,000,000 (TWENTY MILLION DOLLARS).
Section 5.02. Certain Filings. Buyer and the Sellers shall cooperate
with one another and use their commercially reasonable efforts (i) in
determining whether any action by or in respect of, or filing with, any
Governmental Entity is required, or any actions, consents, approvals or waivers
are required to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated by this
Agreement and (ii) in taking such actions or making any such filings, furnishing
information required in connection therewith and seeking timely to obtain any
such actions, consents, approvals or waivers.
Section 5.03. Conduct of the Sellers.
(a) During the period from the date of this Agreement to the Closing
Date, except as may be required by applicable Law, the Sellers shall not, and
shall cause the Companies and New Startel not to, without the consent of Buyer,
except for and as provided under the Usufruct with respect to the shares of
Common Stock held by New Startel, (i) sell, transfer (including by operation of
law), give, pledge, encumber, assign or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to the sale,
transfer, gift, pledge, encumbrance, assignment or other disposition of, the
Shares or any shares of Common Stock, other than for those Encumbrances which
will be released prior to the Closing; provided, however, that the vesting of
assets in the reorganized Sellers in accordance with the Chapter 11 Plan upon
emergence from chapter 11 of the Bankruptcy Code shall not constitute a transfer
or other disposition of the Shares in contravention of this subsection, (ii)
deposit the Shares or any shares of Common Stock into a voting trust or grant
any proxies or enter into a voting agreement, power of attorney or voting trust
with respect to the Shares or any shares of Common Stock, other than any such
actions in connection with the voting of the shares of Common Stock at any
meeting of the shareholders of Embratel or by written consent of the
shareholders, in each case, occurring prior to the Closing Date, (iii) adopt or
propose any change in their respective organizational documents other than in
connection with the Chapter 11 Plan, (iv) merge or consolidate with any other
Person or acquire assets, equity or debt of any Person, or make loans or
extensions of credit to any Person, (v) take any action that would have the
effect of preventing or materially delaying the Sellers from performing any of
their respective obligations under this Agreement, or (vi) make, declare or pay
any dividend or distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any Shares or any securities or obligations convertible into
or exchangeable for any Shares, other than as permitted by Section 5.15.
15
(b) During the period from the date of this Agreement to the Closing
Date, except as otherwise expressly provided for herein or required by
applicable Law, the Sellers shall use their commercially reasonable efforts to
cause each of Embratel and its Subsidiaries to conduct its business and
operations in the ordinary course consistent with past practice, to maintain and
preserve its business organization and its material rights and franchises, and
to retain the services of its officers and key employees and maintain
relationships with material customers, suppliers, lessees, licensees and other
third parties to the end that its goodwill and ongoing business shall not be
impaired in any material respect. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to the Closing
Date, except as set forth in Section 5.03 of the Seller Disclosure Schedule and
to the extent permissible under Section 2.04 hereof, the Sellers shall use their
commercially reasonable efforts to cause Embratel and its Subsidiaries not to,
without the prior written consent of Buyer:
(i) do or effect any of the following actions with respect to
any securities of Embratel: (A) adjust, split, combine, recapitalize or
reclassify its capital stock, (B) make, declare or pay any dividend or
distribution on, or directly or indirectly redeem, purchase or otherwise
acquire, any shares of its capital stock or any securities or obligations
convertible into or exchangeable for any shares of its capital stock other than
for dividends paid by Embratel in the ordinary course of business on the shares
of preferred stock, without par value, of Embratel, and other than pursuant to
the terms of such capital stock as set forth in Embratel's By-Laws, (C) grant
any Person any right or option to acquire any shares of its capital stock other
than grants to directors, officers and employees pursuant to and in accordance
with the terms of Embratel's existing stock option plan(s) as of the date hereof
and in amounts consistent with past practice, (D) issue, deliver or sell or
agree to issue, deliver or sell any additional shares of its capital stock or
any securities, instruments or obligations convertible into or exchangeable or
exercisable for any shares of its capital stock or such securities (except (i)
pursuant to the exercise of outstanding options and options issued after the
date hereof in accordance with clause (C) of this paragraph, (ii) for grants of
stock to directors, officers and employees pursuant to and accordance with
Embratel's existing stock grant plan(s) (if any) as of the date hereof and in
amounts consistent with past practice and (iii) for issuances of shares of
capital stock or securities, instruments or obligations convertible into or
exchangeable or exercisable for shares of capital stock or securities, for cash
at fair market value in an amount not to exceed $100,000,000 in the aggregate)
or (E) enter into any agreement, understanding or arrangement with respect to
the sale or voting of its capital stock;
(ii) sell, transfer, lease, pledge, mortgage, encumber or
otherwise dispose of any amount of its property or assets that is material to
Embratel and its Subsidiaries, taken as a whole, other than in the ordinary
course of business consistent with past practice;
(iii) make or propose any changes in its By-Laws or similar
organizational document;
16
(iv) merge or consolidate with any other Person or acquire
assets or capital stock of any other Person which are material to Embratel and
its Subsidiaries, taken as a whole; or
(v) authorize any of, or commit, propose or agree to take any
of, the foregoing actions.
For purposes of this Agreement, Parent and the Sellers shall be
deemed to have used their commercially reasonable efforts to cause Embratel and
its Subsidiaries to take or not take any actions contemplated herein if Parent
and the Sellers (i) cause Startel to exercise all voting rights with respect to
the shares of Common Stock in a manner consistent with the obligations of the
Sellers hereunder at any meeting of the shareholders of Embratel or by written
consent of the shareholders, (ii) request and endeavor to persuade Embratel and
its Subsidiaries to act in a manner consistent with the provisions of this
Agreement, and (iii) request and endeavor to persuade any employees of Parent
who serve as members of the Board of Directors of Embratel or its Subsidiaries
to vote on matters submitted to any such Board of Directors in a manner
consistent with the provisions of this Agreement to the extent that so voting
would be considered by them to be in the best interests of Embratel or such
Subsidiary of Embratel, as applicable, and its respective stockholders and
otherwise consistent with their fiduciary duties as directors. None of the
Sellers, the Companies or New Startel shall be obligated to cause any board
member or officer of Embratel to take or not take any specific action or to
approve or reject any specific proposal with respect to any matter.
Section 5.04. Public Announcements. Buyer, Parent and the Sellers
will consult with each other before issuing any press release or making any
public statement with respect to this Agreement or the transactions contemplated
hereby and, except as may be required by applicable Law or any listing agreement
with any national securities exchange, will not issue any such press release or
make any such public statement prior to such consultation.
Section 5.05. Notices of Certain Events. Buyer, on the one hand, and
Parent and the Sellers, on the other hand, shall promptly notify the other of:
(a) the receipt by Buyer, Parent or Sellers, as the case may be, of
any notice or other communication from any Person alleging that the consent
of such Person is or may be required in connection with the transactions
contemplated by this Agreement (other than as contemplated by Sections 3.03
and 4.03 hereof);
(b) the receipt by Buyer, Parent or Sellers, as the case may be, of
any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement;
(c) (i) the occurrence or failure to occur, of any event of which it
has Actual Knowledge, which occurrence or failure to occur would be likely
to cause any such parties representations or warranties in this Agreement
to be untrue or inaccurate in any material respect at any time from the
date hereof until the Closing or (ii) any material failure on its part to
comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder, provided, however, that the delivery of
any notice pursuant to this Section 5.05 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice;
17
(d) any actions, suits, claims, investigations or proceedings
commenced or overtly threatened, in each case, of which it has Actual
Knowledge, against, relating to or involving or otherwise affecting Buyer,
the Sellers or any of their respective Affiliates that relate to the
consummation of the transactions contemplated by this Agreement; and
(e) the occurrence of the effective date of the Chapter 11 Plan (the
"Effective Date").
Section 5.06. Refinancing of Certain Indebtedness. To the extent that
the Share Purchase or any other transaction contemplated by this Agreement
results in the acceleration in payment of, or obligation to prepay any
Indebtedness of Embratel or any of its Subsidiaries at Closing (after giving
effect to any waivers or amendments of the instruments evidencing such
Indebtedness), Buyer hereby agrees to take such action as is necessary to ensure
that all such Indebtedness is repaid on or after Closing within any time limits
imposed and in a manner that shall not impair the business of Embratel or any of
its Subsidiaries in any material respect. For the purposes of this Agreement,
"Indebtedness" means, without duplication, (a) all obligations for borrowed
money or with respect to deposits or advances of any kind, (b) all obligations
evidencing bonds, debentures, notes or other similar instruments or upon which
interest charges are customarily paid, (c) all guarantees of the foregoing, (d)
all obligations for the deferred purchase price of property or services (other
than current accounts payable arising in the ordinary course of business), (e)
all payment obligations with respect to interest rate or currency protection
agreements, (f) all obligations as an account party under any letter of credit,
(g) all obligations under capital leases, and (h) any prepayment or other
payments or penalties on any Indebtedness incurred as a result of the
transactions contemplated by this Agreement.
Section 5.07. Indemnification and Insurance.
(a) From and after the Closing Date, Buyer shall use its commercially
reasonable efforts to cause Embratel to (i) indemnify and hold harmless, to the
fullest extent permitted under applicable Law, the individuals who on or prior
to the Closing Date were directors or officers of Embratel or any of its
Subsidiaries (collectively, the "Indemnitees") with respect to all acts or
omissions by them in their capacities as such or taken at the request of
Embratel or any of its Subsidiaries at any time prior to the Closing Date, (ii)
agree to maintain all rights of the Indemnitees to indemnification and
exculpation from liabilities for acts or omissions occurring at or prior to the
Closing Date as provided in the respective By-laws (or comparable organizational
18
documents) of Embratel or any of its Subsidiaries as now in effect, and any
indemnification agreements or arrangements of Embratel or any of its
Subsidiaries shall survive the Share Purchase and shall continue in full force
and effect in accordance with their terms, (iii) pay any expenses of any
Indemnitee under this Section 5.07 as incurred to the fullest extent permitted
under applicable Law, provided that the person to whom expenses are advanced
provides an undertaking to repay such advances to the extent required by
applicable Law, and (iv) ensure that such rights shall not be amended, or
otherwise modified in any manner that would adversely affect the rights of the
Indemnitees, unless such modification is required by applicable Law.
(b) From and after the Closing Date, Buyer shall use its commercially
reasonable efforts to cause Embratel to maintain in effect, for the six-year
period commencing immediately after the Closing Date, Embratel's current
directors' and officers' liability insurance covering acts or omissions
occurring prior to the Closing Date with respect to those persons who are
currently covered by Embratel's directors' and officers' liability insurance
policy on terms with respect to such coverage and amount no less favorable to
Embratel's directors and officers currently covered by such insurance than those
of such policy in effect on the date hereof or, if substantially equivalent
insurance coverage is unavailable, the best available coverage; provided,
however, that Buyer shall not be required to use its commercially reasonable
efforts to cause Embratel to pay an annual premium for such directors' and
officers' liability insurance in excess of 200% of the annual premium currently
paid by Embratel for such insurance, but in such case shall cause Embratel to
purchase as much of such coverage as possible for that amount; provided,
further, however, that, if Embratel's current directors' and officers' liability
insurance expires, is terminated or is canceled, Buyer shall use its
commercially reasonable efforts to cause Embratel to obtain directors' and
officers' liability insurance covering such acts or omissions with respect to
each such person on terms with respect to such coverage and amount no less
favorable to Embratel's directors and officers currently covered by such
insurance than those of such policy in effect immediately prior to the date of
such expiration, termination or cancellation, subject to the immediately
preceding proviso.
Section 5.08. Sale Motion.
(a) Within five (5) Business Days after the date of execution hereof
by the parties hereto, Parent and the Sellers shall file a motion (the "Sale
Motion") with the Bankruptcy Court seeking approval and entry of the Sale Order
(as hereinafter defined). The parties hereto acknowledge that in connection with
seeking entry of the Sale Order and implementation thereof, this Agreement
(together with the Exhibits and Schedules attached hereto) will be filed with
the Bankruptcy Court and made publicly available, and prior to the entry of the
Sale Order, disclosures relating to the transactions contemplated by this
Agreement will be made to the official committee of unsecured creditors (and its
representatives) appointed in connection with the Sellers' chapter 11 cases
pending in the Bankruptcy Court, and the parties agree that such filing and
disclosures will not violate any confidentiality obligations owing to any party
hereto, whether pursuant to the Confidentiality Agreement, this Agreement or
otherwise.
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(b) The Sellers shall propose and submit to the Bankruptcy Court an
order of the Bankruptcy Court (the "Sale Order"), in form and substance
reasonably acceptable to Buyer, approving this Agreement and all of the terms
and conditions hereof, and approving and authorizing the Sellers to consummate
the transactions contemplated hereby. Without limiting the generality of the
foregoing, the Sale Order shall find and provide, among other things, that (a)
the Shares to be assigned and transferred to Buyer pursuant to this Agreement
shall be assigned and transferred to Buyer free and clear of all Encumbrances;
(b) Buyer has acted in good faith within the meaning of Section 363(m) of the
Bankruptcy Code and, as such, is entitled to the protections afforded thereby;
(c) this Agreement was negotiated, proposed and entered into by the parties
without collusion, in good faith and from arm's length bargaining positions; (d)
neither the Sellers nor Buyer has engaged in any conduct that would cause or
permit this Agreement to be avoided under Section 363(n) of the Bankruptcy Code;
(e) the Bankruptcy Court shall retain jurisdiction to resolve any controversy or
claim arising out of or relating to this Agreement, or the breach hereof as
provided in Section 8.07; and (f) this Agreement and the transactions and
instruments contemplated hereby, shall be specifically performable and
enforceable against and binding upon, and not subject to rejection or avoidance
by, the Sellers or any chapter 7 or chapter 11 trustee of the Sellers and their
respective estates.
(c) Pursuant to the Sale Motion, the Sellers shall request that the
Sale Order entered by the Bankruptcy Court exempt the sale of the Shares under
this Agreement from any stamp tax, transfer tax or similar tax which may be
payable by reason of the sale of the Shares under this Agreement or the
transactions contemplated herein (collectively, the "Transfer Taxes"). In the
event that the Sale Order entered by the Bankruptcy Court does not provide such
an exemption and Transfer Taxes are required to be paid, or in the event any
such Transfer Taxes are assessed at any time thereafter, then all such Transfer
Taxes associated with the Share Purchase shall be paid by Buyer at Closing or,
if assessed at any time thereafter, shall be paid promptly by Buyer following
such assessment. Buyer and the Sellers agree to provide each other reasonable
assistance in the preparation and filing of any kind and all required Transfer
Tax returns for or with respect to such Transfer Taxes with any and all
appropriate taxing authorities.
(d) Buyer, Parent and the Sellers shall cooperate with filing and
prosecuting the Sale Motion and obtaining entry of the Sale Order, and Parent
and the Sellers shall deliver to Buyer prior to filing, and as early in advance
as is practicable to permit adequate and reasonable time for Buyer and its
counsel to review and comment, copies of all proposed pleadings, motions,
notices, statements, schedules, applications, reports and other papers to be
filed by Parent or Sellers in connection with the Sale Motion and the relief
requested therein; provided, however, upon the occurrence of the Effective Date,
the obligations imposed in this subsection (d) shall be deemed satisfied and
Parent and the Sellers shall withdraw the Sale Motion.
(e) Sellers shall use all commercially reasonable efforts to seek and
obtain prompt Bankruptcy Court approval of the Sale Order; provided, however,
upon the occurrence of the Effective Date, the obligations imposed in this
subsection (e) shall be deemed satisfied and Parent and the Sellers shall
withdraw the Sale Motion.
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Section 5.09. Certain Regulatory Obligations.
(a) Buyer hereby agrees to comply with all of the requirements of
Section 254-A of the BCL and Rule 361 of March 5, 2002 of CVM including, without
limitation, making a public offer to purchase all of the outstanding shares of
Common Stock not owned by the Direct Holders upon Closing in accordance with the
provisions of Section 254-A of the BCL.
(b) Buyer hereby agrees that, from and after the Closing Date, Buyer
shall indemnify and hold Sellers and their respective directors, officers,
employees, Affiliates, agents, representatives, successors and permitted assigns
harmless from and against any and all Losses in respect of any claims made on or
after the Closing Date and based upon, arising from, relating to or otherwise in
respect of the special regulatory obligations contained in Article FIVE of the
Share Purchase Agreement, dated August 4, 1998 (the "1998 Purchase Agreement"),
by and between the Brazilian Federal Government and Startel.
Section 5.10. Indemnification by Parent and Sellers. Parent and the
Sellers hereby agree that, from and after the Closing, Parent and the Sellers
shall indemnify and hold Buyer and its directors, officers, employees,
Affiliates, agents, representatives, successors and permitted assigns harmless
from and against any and all Losses based upon, attributable to or resulting
from the failure of the representations and warranties of Sellers set forth in
Section 3.05 hereof to be true and correct in all respects.
Section 5.11. Use of Name. Buyer hereby agrees that as promptly as
practicable after the Closing, but in any event within thirty (30) days of the
Closing Date, to cause each of the Companies to amend its articles of
association and/or take such other action in order to remove the names "MCI"(TM)
and/or "WorldCom"(TM) from the corporate name of such Company.
Section 5.12. Transfer of Shares by New Startel. At the Closing (and
simultaneously therewith), the Sellers shall cause New Startel to transfer all
of the shares of Common Stock it owns to Buyer or a Person designated by Buyer.
Section 5.13. Confidentiality. For a period of two (2) years from the
date hereof, and subject to Section 5.08 hereof, except as required by Law or
stock exchange rule, the Sellers and their Affiliates (other than Embratel and
its Subsidiaries) shall not, directly or indirectly, disclose to any Person or
entity or use any proprietary information not in the public domain or generally
known or available in the industry, in any form, acquired prior to the Closing
Date, relating to the business and operations of Embratel or its Subsidiaries,
including but not limited to any such information regarding customers, vendors,
suppliers, trade secrets, training programs, manuals or materials, technical
information, contracts, systems, procedures, mailing lists, know-how, trade
21
names, improvements, price lists, financial or other data (including the
revenues, costs or profits associated with any of Embratel's or its
Subsidiaries' services), business plans, code books, invoices and other
financial statements, computer programs, software systems, databases, discs and
printouts, plans (business, technical or otherwise), customer and industry
lists, correspondence, internal reports, personnel files, sales and advertising
material, telephone numbers, names, addresses or any other compilation of
information, written or unwritten, which is or was used by Embratel or its
Subsidiaries, to the extent that such information is owned by Embratel or its
Subsidiaries on the date hereof (collectively, "Protected Information");
provided, however, that if any of the Sellers or their Affiliates (other than
Embratel and its Subsidiaries) are presently in possession of Protected
Information that (x) is necessary to use in the ordinary course of business of
Parent or any controlled Affiliate of Parent (other than Embratel or its
Subsidiaries) and (y) cannot reasonably be redacted, segregated or otherwise
separated from information about or owned by Parent which is necessary to use in
the ordinary course of business of Parent (hereinafter, "Mixed Information"),
then the Protected Information which is so embedded in such Mixed Information
may be used by Parent and its Affiliates in the ordinary course of business;
provided that Parent and its Affiliates may not use any such Protected
Information to compete or seek to compete with the business or operations of
Embratel or its Subsidiaries. Upon the reasonable request of Buyer, during such
two (2) year period, Parent and its Affiliates (other than Embratel and its
Subsidiaries) shall use their commercially reasonable efforts to cooperate with
Buyer (at Buyer's expense) in the development of procedures intended to further
implement the intent of this Section 5.13.
Section 5.14. No Solicitation. Parent and each Seller shall not, and
shall cause its officers, directors, employees, agents and representatives
(collectively, the "Representatives") not to (i) solicit or initiate any
inquiries regarding the submission of any Alternate Proposal, (ii) participate
in any discussions or negotiations regarding, or furnish to any Person any
information with respect to, any Alternate Proposal or (iii) enter into any
agreement with respect to any Alternate Proposal or approve any Alternate
Proposal. Upon execution of this Agreement, Parent and each Seller shall, and
shall cause its Representatives to, immediately cease any existing activities,
discussions, or negotiations with any parties conducted heretofore with respect
to any of the foregoing. Notwithstanding the foregoing, but subject to Section
7.01(j), prior to the entry of the Sale Order, Parent and the Sellers may
furnish information concerning the business, properties or assets of Embratel
and its Subsidiaries to any Person or group, and may negotiate and participate
in discussions and negotiations with such Person or group concerning an
Alternate Proposal if (i) such Person or group has submitted an unsolicited
written Alternate Proposal and (ii) the Sellers, in the exercise of their
fiduciary duties, determine that such action is in the best interest of their
chapter 11 estates and creditors.
Section 5.15. Company Assets. To the extent that any of the Companies
or New Startel owns any assets (other than the Shares, the assets set forth on
Section 3.05 of the Seller Disclosure Schedule or any assets received as a
result of dividends or distribution on the Common Stock), each of Buyer, Parent,
and the Sellers shall use their commercially reasonable efforts to cause the
Company or Companies owning any such additional assets to take all actions
reasonably necessary to cause such assets to be transferred to the Sellers (or a
designee of the Sellers) at the Sellers' expense, or divested and the proceeds
transferred to the Sellers (or a designee of the Sellers) without cost, expense
or liability to Buyer or any Company.
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Section 5.16. Startel Loan. On or prior to the Closing, at the
Sellers' option, MCII shall do either of the following, alone or in combination:
(i) assign and transfer to Buyer (or a designee of Buyer), for no consideration,
all of its right, title and interest in and to the Loan Agreement, dated July
30, 1998, by and between MCII and Startel, relating to the intercompany loan
from MCII to Startel, the principal amount of which on the date hereof is
$182,313,837.79, but which may be reduced prior to Closing at the Sellers'
election (the "Startel Loan"); and/or (ii) contribute to the capital of Startel
an amount equal to the outstanding principal amount of the Startel Loan plus all
accrued and unpaid interest thereon, in which case any Shares representing an
equity interests in Startel which may be issued in respect of such contribution
shall be transferred to Buyer at Closing for no additional consideration.
ARTICLE 6
CONDITIONS TO THE SHARE PURCHASE
Section 6.01. Conditions to Obligations of Each Party. The
obligations of Buyer, Parent and the Sellers to consummate the Share Purchase
are subject to the satisfaction or waiver (in writing), on or prior to the
Closing Date, of the following conditions:
(a) no provision of any applicable Law or regulation and no judgment,
injunction, order, decree of any Governmental Entity or other legal
restraint shall prohibit the consummation of the Share Purchase;
(b) all consents, approvals or other authorizations of any
Governmental Entity required in connection with the consummation of the
transactions contemplated hereby shall have been obtained, except for such
consents or approvals which, if not obtained, would not materially impair
the ability of the parties to consummate the transactions contemplated by
this Agreement; and
(c) the Bankruptcy Court shall have entered the Sale Order, in form
and substance reasonably acceptable to Buyer, which, among other things,
shall have authorized and directed the Sellers to assign and transfer to
Buyer the Shares free and clear of all Encumbrances and such Sale Order
shall not be subject to any stay issued by the Bankruptcy Court or any
other court of competent jurisdiction; provided, however, that upon the
occurrence of the Effective Date, the condition imposed in this subsection
(c) shall be deemed satisfied, Parent and the Sellers shall withdraw the
Sale Motion, and all obligations of Parent and the Sellers set forth in
this Agreement to seek Bankruptcy Court approval shall be deemed satisfied.
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Section 6.02. Conditions to the Obligations of Buyer. The obligations
of Buyer to consummate the Share Purchase are subject to the satisfaction on or
prior to the Closing Date of the following further conditions, any of which may
be waived in writing by Buyer:
(a) the Sellers shall have performed in all material respects all of
their respective obligations hereunder required to be performed by them at
or prior to the Closing Date; provided, however, that upon the occurrence
of the Effective Date, all obligations of Parent and the Sellers set forth
in this Agreement to seek Bankruptcy Court approval shall be deemed
satisfied;
(b) the representations and warranties of Parent and the Sellers
contained in Article 3 of this Agreement, disregarding all qualifications
and exceptions contained therein relating to materiality, shall be true and
correct as of the date hereof and as of the Closing Date as if made on and
as of the Closing Date (or, if given as of a specific date, at and as of
such date), except where the failure of such representations and warranties
(other than the representations and warranties contained in Sections
3.04(a) and (b) hereof) to be true and correct would not materially impair
the ability of Parent and the Sellers to consummate the transactions
contemplated by this Agreement;
(c) Buyer shall have received a certificate signed by an authorized
representative of the Sellers to the foregoing effect;
(d) on the Closing Date, (i) the shares of Common Stock owned by the
Direct Holders shall represent not less than a majority of the outstanding
voting stock of Embratel on a fully diluted basis, (ii) no shares of
capital stock of Embratel shall have been issued since November 13, 2003,
other than, in the case of this clause (ii) only, as would have been
permissible under Section 5.03(b)(i), assuming for this purpose that such
section were applicable from and after such date, and (iii) Embratel's
preferred shares (acoes preferenciais) shall not be entitled to vote with
the holders of the Common Stock (acoes ordinarias) on matters submitted to
Embratel's shareholders;
(e) all of the matters set forth on Schedule 6.02(e) shall be true and
correct as of the Closing Date (after giving effect to the qualifications
and exceptions included in such Schedule, including in the introductory
paragraph hereof), provided that it is understood and agreed that this
condition shall be deemed satisfied unless Buyer shall have provided to
Parent and Sellers reasonable evidence which establishes that any of such
matters is not true and correct;
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(f) since the date hereof, there shall not have occurred any event or
condition that has had, or that would be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect; and
(g) Buyer and the Sellers shall have received a valid clearance
certificate (Certidao Negativa de Debito - CND) issued by the Instituto
Nacional do Seguro Social and such other clearance certificates in respect
of each of the Companies that may be required to file the respective
amendments to the articles of association with the relevant commercial
registries.
Section 6.03. Conditions to the Obligations of the Sellers. The
obligations of the Sellers to consummate the Share Purchase are subject to the
satisfaction on or prior to the Closing Date of the following further
conditions, any of which may be waived in writing by the Sellers:
(a) Buyer shall have performed in all material respects all of its
obligations hereunder required to be performed by it on or prior to the Closing
Date;
(b) the representations and warranties of Buyer contained in this
Agreement, disregarding all qualifications and exceptions contained therein
relating to materiality, shall be true and correct as of the date hereof and as
of the Closing Date as if made on and as of the Closing Date (or, if given as of
a specific date, at and as of such date), except where the failure to be true
and correct would not materially impair the ability of Buyer to consummate the
transactions contemplated by this Agreement; and
(c) the Sellers shall have received a certificate signed by an
executive officer of Buyer to the foregoing effect.
ARTICLE 7
TERMINATION
Section 7.01. Termination. This Agreement may be terminated and the
Share Purchase abandoned at any time prior to the Closing:
(a) by mutual written agreement of the Sellers and Buyer;
(b) by either the Sellers or Buyer, if any Governmental Entity shall
have issued an order, decree or ruling or taken any other action (which
order, decree or ruling or other action each party hereto shall use its
reasonable best efforts to have vacated or reversed), in each case
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have become final and non-appealable; provided,
however, that neither party hereto shall be permitted to terminate this
Agreement pursuant to this Section 7.01(b) unless and until such party
shall have complied with all of its obligations set forth in Section
5.01(f) hereof;
25
(c) by either the Sellers or Buyer on July 9, 2005, if the Closing has
not occurred on or before the Outside Date; provided that the right to
terminate this Agreement pursuant to this Section 7.01(c) shall not be
available to any party whose breach of any provision of this Agreement
results in the failure of the Closing to have occurred by such time;
provided further that the right to terminate this Agreement pursuant to
this Section 7.01(c) shall not be available to Buyer unless and until Buyer
shall have complied with all of its obligations set forth in Section
5.01(f) hereof;
(d) by Buyer, if Parent or the Sellers shall have breached or failed
to perform any obligation, agreement, covenant, representation or warranty
on the part of Parent or the Sellers set forth in this Agreement, which
breach or failure to perform (i) prevents the conditions set forth in
Sections 6.01 and 6.02 from being satisfied, and (ii) shall not have been
cured within ten (10) Business Days of notice from Buyer (if such breach is
reasonably capable of being cured in such 10-Business Day period);
(e) by Parent or the Sellers, if Buyer shall have breached or failed
to perform any obligation, agreement, covenant, representation or warranty
on the part of Buyer set forth in this Agreement, which breach or failure
to perform (i) would prevent the conditions set forth in Sections 6.01 and
6.03 of this Agreement from being satisfied, and (ii) shall not have been
cured within ten (10) Business Days of notice from the Sellers (if such
breach is reasonably capable of being cured in such 10-Business Day
period), or if Buyer fails to make any of the payments required under
Section 5.01(f) hereof as and when due;
(f) by Parent or the Sellers, if, in the Sellers' exercise of their
fiduciary duties, the Sellers determine, prior to the entry of the Sale
Order, that consummation of the transactions contemplated hereunder is not
in the best interests of their chapter 11 estates and creditors, in which
event Buyer shall be deemed to have waived all claims, damages, actions and
causes of action of whatever kind and nature (including any claims for
attorney's fees), whether known or unknown, fixed or contingent, matured or
unmatured, liquidated or unliquidated or otherwise, arising from, related
to, or concerning this Agreement (other than with respect to the Sellers'
payment obligation to Buyer pursuant to Section 5.01(f) hereof);
(g) by Parent or the Sellers, if Parent and the Sellers have complied
with the covenant contained in Section 5.08(e) and the Bankruptcy Court (i)
does not enter the Sale Order by the date that is forty five (45) days
after the date of the Sale Motion or (ii) denies issuance of the Sale Order
within such forty five (45) day period;
26
(h) by Buyer, if Parent and the Sellers have not executed and
delivered this Agreement by 6:00 p.m. New York City time on March 12, 2004;
(i) by Buyer, if (i) the Sale Motion has not been filed with the
Bankruptcy Court on or before March 19, 2004 or (ii) the Bankruptcy Court
does not enter the Sale Order by the date that is thirty (30) days after
the date of the Sale Motion;
(j) by Buyer, if Parent or the Sellers (i) breach the covenant
contained in Section 5.08(e) or (ii) either directly or through their
representatives, solicit or initiate any discussions or negotiations, or
engage in active negotiations, or enter into any agreement, with any third
party with respect to a purchase and sale, directly or indirectly, of the
Shares, the Common Stock or the business of Embratel. For the avoidance of
doubt, engaging in discussions with a third party which are solely intended
to clarify the terms or conditions of any unsolicited proposal received
from a third party or to reject such proposal shall not constitute engaging
in active negotiations; and
(k) by Buyer, if any of the matters set forth in Schedule 6.02(e)
shall not be true and correct such that the condition set forth in Section
6.02(e) hereof would not be satisfied and such failure to be true and
correct is not reasonably capable of being cured by the Closing Date.
In the event of termination and abandonment by Buyer or the Sellers,
or both, pursuant to Section 7.01 hereof, written notice thereof shall forthwith
be given to the other party or parties, and this Agreement shall terminate, and
the Share Purchase shall be abandoned, without further action by Buyer, Parent
or the Sellers.
Section 7.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 7.01, this Agreement shall become void and of no effect with
no liability on the part of any party (or any shareholder, director, officer,
employee, agent, consultant, representative or Affiliate of such party) to the
other party hereto; provided that nothing in this Section 7.02 shall (i) relieve
Buyer or the Sellers of any liability for a breach of this Agreement prior to
the date of termination or relieve either party from its obligation to make any
payments to the extent provided in Section 5.01(f) or (ii) require the Sellers
to return any payments theretofore made by Buyer other than in accordance with
Section 5.01(f) hereof; provided further that in the event that this Agreement
is validly terminated pursuant to Section 7.01 hereof under circumstances where
the Sellers are not required to return to Buyer any of the amounts specified in
Section 5.01(f), then none of the parties hereto shall have any further
liability hereunder. The damages recoverable by the non-breaching party shall
include all attorneys' fees reasonably incurred by such party in connection with
the transactions contemplated hereby. The provisions of Section 7.01 and this
Section 7.02, and of Article 8 and the Confidentiality Agreement shall survive
any termination hereof pursuant to Section 7.01.
27
ARTICLE 8
MISCELLANEOUS
Section 8.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given,
if to Buyer, to:
Telefonos de Mexico, S.A. de C.V.
Parque Via 190, Oficina 702
Col. ▇▇▇▇▇▇▇▇▇▇
CP ▇▇▇▇▇ ▇▇▇▇▇▇, D.F.
Mexico
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇ ▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to Parent or a Seller, to:
WorldCom, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5:00 P.M. in the place of
receipt and such day is a Business Day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding Business Day in the place of receipt.
28
Section 8.02. Non-Survival of Representations and Warranties.
Other than claims for (i) indemnification pursuant to Section 5.10
hereof with respect to the representations and warranties contained in Section
3.05 hereof (which shall survive for periods coterminous with any applicable
statute of limitation) and (ii) the representations and warranties contained in
Sections 3.04(a) and (b) hereof (which shall survive indefinitely), the
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto, shall not survive the Closing or the
termination of this Agreement.
Section 8.03. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived prior to
the Closing if, but only if, such amendment or waiver is in writing and is
signed, in the case of an amendment, by each party to this Agreement or, in the
case of a waiver, by each party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
Section 8.04. Expenses; Sales and Transfer Taxes. Except as otherwise
provided in this Section 8.04, all costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
All sales and transfer taxes (including all security transfer taxes, if any)
incurred in connection with the transactions contemplated hereby and all filing
fees in connection with the filings with, and approvals by ▇▇▇▇, ANATEL and the
CVM shall be borne by Buyer.
Section 8.05. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto.
Section 8.06. Governing Language; Governing Law. Notwithstanding the
translation of this Agreement into any other language, the official language of
this Agreement is the English language, which will be controlling. Each
document, agreement, instrument, statement, notice or other communication
required or permitted to be given in connection with this Agreement will be in
the English language. This Agreement shall be governed by and construed in
accordance with the Law of the State of New York, without regard to the
conflicts of law rules of such state.
29
Section 8.07. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby shall be brought
exclusively in any federal or state court located in the State of New York, and
each of the parties hereby consents to the jurisdiction of such courts (and of
the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by Law, any
objection that it may now or hereafter have to the laying of venue of any such
suit, action or proceeding in any such court or that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient form;
provided, however, that, until the entry of a final decree closing the
bankruptcy cases of Parent and the Sellers, the Bankruptcy Court shall retain
jurisdiction over any and all disputes arising under or otherwise relating to
the construction and enforcement of the Sale Order and the transactions
consummated thereunder. Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 8.01 shall
be deemed effective service of process on such party.
Section 8.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 8.09. Counterparts; Effectiveness; No Third Party
Beneficiaries. This Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall become effective
on the date of its execution by the parties hereto in the City of New York. No
provision of this Agreement is intended to confer any rights, benefits,
remedies, obligations, or liabilities hereunder upon any Person other than the
parties hereto and their respective successors and assigns.
Section 8.10. Entire Agreement. This Agreement (and all exhibits and
schedules hereto) and the Confidentiality Agreement constitute the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement.
Section 8.11. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
Section 8.12. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
30
hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
Section 8.13. Remedies. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by Law. The
parties hereto agree that irreparable damage would occur if any provision of
this Agreement were not performed in accordance with the terms hereof and that
the parties shall be entitled, without posting a bond or similar indemnity, to
an injunction or injunctions to prevent breaches of this Agreement or to enforce
specifically the performance of the terms and provisions hereof in any federal
or state court located in the State of New York, in addition to any other remedy
to which they are entitled at law or in equity.
Section 8.14. Parent Guarantee. Parent hereby unconditionally agrees
to cause each Seller to fulfill its obligations under this Agreement.
Section 8.15. Interpretation.
(a) The words "hereof", "herein" and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement, and article,
section, paragraph, exhibit and schedule references are to the articles,
sections, paragraphs, exhibits and schedules of this Agreement unless otherwise
specified. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." All terms defined in this Agreement shall have the defined meanings
contained herein when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms. Any agreement, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument or statute as from time to time, amended, qualified
or supplemented, including (in the case of agreements and instruments) by waiver
or consent and (in the case of statutes) by succession of comparable successor
statutes and all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.
(b) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
31
(c) The inclusion of any matter in any disclosure schedule attached
hereto in connection with any representation, warranty, covenant or agreement
that is qualified as to materiality is not an admission by the party making such
disclosure that such matter is material or would (or would be reasonably
expected to) impair the ability of such party to consummate the transactions
contemplated by this Agreement. Section headings and numbers used in the
disclosure schedules attached hereto refer to the corresponding sections of this
Agreement, are for convenience only and are not to be used to interpret any
provision of this Agreement or such disclosure schedules. Where reasonably
apparent, matters disclosed in any section or subsection of one party's
disclosure schedule are deemed to be disclosed with respect to any other section
or subsection of such party's disclosure schedule, whether or not an explicit
cross-reference appears.
32
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
Telefonos de Mexico, S.A. de C.V.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Malleda
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Malleda
Title: Legal Representative
WORLDCOM, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President and
General Counsel
MCI INTERNATIONAL, INC.
By: /s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary
MCI WORLDCOM INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary
MCI WORLDCOM BRAZIL LLC
By: /s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary
33
ANNEX A
TO STOCK PURCHASE AGREEMENT
---------------------------
COMPANIES AND OWNERSHIP PERCENTAGES
-----------------------------------
----------------------------------------- --------------------- ---------------------------- -----------------------------------
STOCKHOLDERS (SELLERS);
JURISDICTION OF JURISDICTION;
COMPANY AUTHORIZATION SHARE CAPITAL PERCENTAGE OWNED
----------------------------------------- --------------------- ---------------------------- -----------------------------------
WORLDCOM HOLDING Brazil R$2,220,484,275.00 MCI WorldCom Brazil LLC
DO BRASIL LTDA. Delaware
99.99999995%
MCI WorldCom International, Inc.
Delaware
0.00000005%
----------------------------------------- --------------------- ---------------------------- -----------------------------------
MCI INTERNATIONAL Brazil R$3,111,823,811.00 WorldCom Holding do Brasil Ltda.
TELECOMUNICACOES Brazil
DO BRASIL LTDA. 98.997%
MCI WorldCom International, Inc.
Delaware
1.003%
----------------------------------------- --------------------- ---------------------------- -----------------------------------
MCI SOLUTIONS - Brazil R$100,300.00 MCI International Telecomunicacoes do
TELECOMUNICACOES . Brasil Ltda.
LTDA Brazil
99.40%
MCI International, Inc.
Delaware
0.60%
----------------------------------------- --------------------- ---------------------------- -----------------------------------
STARTEL PARTICIPACOES LTDA. Brazil R$3,095,175,570.00 MCI International Telecomunicacoes do
Brasil Ltda.
Brazil
99.99999677%
MCI Solutions - Telecomunicacoes Ltda.
Brazil
0.00000320%
MCI International, Inc.
Delaware
0.00000003%
----------------------------------------- --------------------- ---------------------------- -----------------------------------
A-1
OWNERSHIP OF COMMON STOCK BY DIRECT HOLDERS
-------------------------------------------
------------------------------------------ ----------------------- ----------------------------- ----------------------------------
COMPANY JURISDICTION OF NUMBER OF SHARES OF COMMON STOCKHOLDERS;
AUTHORIZATION STOCK OWNED DIRECTLY PERCENTAGE OWNED
------------------------------------------ ----------------------- ----------------------------- ----------------------------------
STARTEL PARTICIPACOES LTDA. Brazil 62,054,576,448 MCI International
Telecomunicacoes do
Brasil Ltda.
99.99999677%
MCI Solutions -
Telecomunicacoes Ltda.
0.00000320%
MCI International, Inc.
0.00000003%
------------------------------------------ ----------------------- ----------------------------- ----------------------------------
NEW STARTEL PARTICIPACOES LTDA. Brazil 2,350,574,677 Startel Participacoes Ltda.
99.999999%
MCI International
Telecomunicacoes do
Brasil Ltda.
0.000001%
------------------------------------------ ----------------------- ----------------------------- ----------------------------------
A-2