EXHIBIT 2.2
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SUBSCRIPTION AND
SHAREHOLDERS AGREEMENT
dated as of
November 9, 2001
among
VELOCOM INC. and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ CANADA INTERNATIONAL (BRAZIL TELECOM I) LIMITED, ▇▇▇▇ CANADA
INTERNATIONAL (MEGATEL) LIMITED and ▇▇▇▇ CANADA INTERNATIONAL
(ESPELHO SUL) LIMITED
NORTEL NETWORKS LIMITED, LUCENT TECHNOLOGIES INC.,
TELEFONAKTIEBOLAGET LM ERICSSON (PUBL.) and ▇▇▇▇▇▇ CORPORATION
and
VESPER HOLDING, LTD.
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.......................................................................1
Section 1.1. Definitions............................................................1
ARTICLE II FORMATION OF THE COMPANY.........................................................9
Section 2.1. Formation..............................................................9
Section 2.2. Constituent Documents..................................................9
Section 2.3. Places of Business.....................................................9
Section 2.4. Term...................................................................9
ARTICLE III CAPITALIZATION; SUBSCRIPTION FOR COMMON SHARES..................................9
Section 3.1. General................................................................9
Section 3.2. Shareholder Contributions and Transactions............................10
Section 3.3. Capital Contributions Generally.......................................13
Section 3.4. Commitment; Funding; Equity Issuance..................................13
Section 3.5. Conditions to Funding Notice..........................................15
Section 3.6. Preemptive Rights.....................................................16
ARTICLE IV MANAGEMENT OF THE COMPANY.......................................................16
Section 4.1. General...............................................................16
Section 4.2. Procedures Relating to the Board of Directors.........................17
Section 4.3. Quorum of Board of Directors..........................................17
Section 4.4. Board Meetings........................................................17
Section 4.5. Board Observer........................................................18
Section 4.6. Subsidiary Directors and Voting.......................................18
ARTICLE V CERTAIN TRANSACTIONS.............................................................18
Section 5.1. Vote Required to Effect Certain Transactions..........................18
ARTICLE VI TRANSFER OF SHARES..............................................................21
Section 6.1. General Restrictions on Transfer; Legend on Certificates..............21
Section 6.2. Transfers of Shares...................................................22
Section 6.3. Exempt Transfers......................................................22
Section 6.4. Tag-Along Rights......................................................22
Section 6.5. Drag-Along Rights.....................................................24
Section 6.6. VeloCom Co-Sale Right.................................................25
Section 6.7. Put Right.............................................................26
Section 6.8 Restriction on Transfer of Special Voting Shares......................27
ARTICLE VII REPRESENTATIONS AND WARRANTIES.................................................27
Section 7.1. Representations and Warranties of the Parties.........................27
Section 7.2. Representations and Warranties of the Company.........................28
Section 7.3. Representations and Warranties of the Shareholders....................28
Section 7.4 Representations and Warranties of the New Shareholders................29
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ARTICLE VIII CERTAIN COVENANTS.............................................................29
Section 8.1. Reservation of Ordinary Shares........................................29
Section 8.2. Mandatory Redemption..................................................30
Section 8.3. Covenants Relating to Use of Technology...............................32
Section 8.4. Confidentiality.......................................................33
Section 8.5. No U.S. Trade or Business.............................................33
Section 8.6. Registration Rights...................................................33
Section 8.7 Financial Information.................................................34
Section 8.8 QUALCOMM Note.........................................................34
ARTICLE IX TERMINATION AND DISSOLUTION.....................................................35
Section 9.1. Termination and Dissolution...........................................35
ARTICLE X MISCELLANEOUS....................................................................34
Section 10.1. Notices...............................................................34
Section 10.2. Binding Nature of Agreement...........................................35
Section 10.3. Descriptive Headings..................................................35
Section 10.4. Specific Performance..................................................38
Section 10.5. Governing Law.........................................................38
Section 10.6. Counterparts; Facsimile Signatures....................................39
Section 10.7. Severability..........................................................39
Section 10.8. Entire Agreement......................................................39
Section 10.9. Amendment and Waiver..................................................39
Section 10.10. No Third Party Beneficiaries.........................................40
Section 10.11. Arbitration..........................................................40
Section 10.12. Survival.............................................................41
Section 10.13. Expenses.............................................................41
ANNEXES
Annex A - Articles of Association of the Company
Annex B - Memorandum of Association of the Company
Annex C - Voting Control Agreement
Annex D - Letter Regarding Guarantees
Annex E - Registration Rights Agreement
SCHEDULES
Schedule 1 Exchange of Existing Shareholding in Brazilian Holding Companies
Schedule 2 Contribution of AFACs in Brazilian Holding Companies
Schedule 3 Subscription for New Ordinary Shares
Schedule 4 Intentionally Omitted
Schedule 5 Subscription for ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ Commitment Shares
Schedule 6 Shareholding of the Company Immediately Following Consummation
of the Transactions Contemplated in Sections 3.2(a), (b), (d)
and (f)
Schedule 7 Vendor Warrants
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SUBSCRIPTION AND SHAREHOLDERS AGREEMENT
This SUBSCRIPTION AND SHAREHOLDERS AGREEMENT is made and entered
into as of November 9, 2001 by and among ▇▇▇▇ CANADA INTERNATIONAL (Brazil
Telecom I) LIMITED, ▇▇▇▇ CANADA INTERNATIONAL (Megatel) LIMITED and ▇▇▇▇ CANADA
INTERNATIONAL (Espelho Sul) LIMITED (together, the "BCI Parties"); VELOCOM INC.
("VeloCom") and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ("QUALCOMM") (VeloCom and QUALCOMM,
individually, a "New Shareholder" and, collectively, the "New Shareholders");
NORTEL NETWORKS LIMITED ("Nortel"), LUCENT TECHNOLOGIES INC. ("Lucent"),
TELEFONAKTIEBOLAGET LM ERICSSON (Publ.)("Ericsson"), and ▇▇▇▇▇▇ CORPORATION
("▇▇▇▇▇▇") (Nortel, Lucent, Ericsson and ▇▇▇▇▇▇, individually, a "Vendor" and,
collectively, the "Vendors"); and VESPER HOLDING, LTD., a Cayman Islands company
(the "Company"), in the case of each party along with its successors and
permitted assigns.
W I T N E S S E T H:
WHEREAS, the Company has entered into that certain Restructuring
Agreement dated as of the date hereof (the "Restructuring Agreement") among the
Company, the New Shareholders, the BCI Parties, the Vendors and certain other
parties thereto, pursuant to which (A) the BCI Parties and the New Shareholders
or their Affiliates have agreed to exchange all their equity interests in VESPER
HOLDING S.A. and VESPER HOLDING SAO PAULO S.A., each a sociedade por acoes
organized under the laws of the Federative Republic of Brazil (collectively, the
"Brazilian Holding Companies") for such number of Ordinary Shares of the Company
in the amounts and allocations as set forth in Schedules 1 and 2 hereto and (B)
the Company has agreed to issue to the Vendors Warrants to purchase such number
of Ordinary Shares of the Company in the amounts and allocations as set forth in
Schedule 7 hereto, as such amounts may be adjusted from time to time pursuant to
the terms thereof.
WHEREAS, pursuant to this Agreement, each of the New Shareholders
desires to subscribe for such number of Ordinary Shares of the Company in an
aggregate amount as set forth in Schedule 3 next to such New Shareholder's name.
WHEREAS, each of the BCI Parties, New Shareholders and Vendors deem
it in their best interests to regulate certain of their rights in connection
with their interests in the Company, and they desire to enter into this
Agreement to effectuate these purposes.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements and covenants contained herein, the sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the
following terms used in this Agreement shall have the meanings specified below:
"AFAC" shall mean an adiantamento para futuro aumento de capital
(Advance for Future Capital Increases), as such concept is interpreted pursuant
to the laws of the Federative Republic of Brazil.
"AFAC Contributions" shall have the meaning specified in Section
3.2(b).
"Affiliate(s)" and its correlative terms shall mean, with respect to
any Person, any other Person that, directly or indirectly, controls or is
controlled by or is under common control with such Person. For the purpose of
this definition, "control" (including the correlative terms "controlling",
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities or by contract or agency or
otherwise. Notwithstanding the foregoing, no individual shall be an Affiliate
solely by reason of his or her being a director, officer or employee of the
Company or any of its Subsidiaries.
"Agreement" shall mean this Subscription and Shareholders Agreement,
including the Annexes and Schedules hereto, as the same may be amended or
supplemented from time to time.
"Articles of Association" shall mean the Articles of Association of
the Company, as amended from time to time.
"BCI Parties" shall have the meaning specified in the forepart of
this Agreement.
"Brazilian Holding Companies" shall have the meaning specified in
the forepart of this Agreement.
"BREW" shall have the meaning specified in Section 8.3.
"Business" shall mean the switched fixed telephone networks
constructed, installed and operated by the Operating Companies pursuant to the
Licenses, such other business currently engaged in by the Operating Companies or
otherwise incidental to the foregoing and the business currently engaged in by
Vento.
"Business Day" shall mean a day that is not a Saturday, Sunday or
other day on which commercial banks in New York City or in the Cayman Islands
are authorized or required by law to remain closed.
"Capital Call Per Share Price" shall mean $4.95, as adjusted from
time to time as appropriate to take account of any stock or share split,
dividend, reclassification, combination or reorganization of the capital of the
Company since the date such price was last established.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, a sociedade por acoes or a limited liability company, any and all
equivalent ownership interests (but excluding any debt security that is
convertible into, or exchangeable for, any such interests) in any other Person,
and any and all warrants or options to purchase any of the foregoing.
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"Closing Date" shall mean the date hereof.
"Company" shall have the meaning specified in the forepart of this
Agreement and shall include such entity's successors and assigns.
"Current Market Price" per Ordinary Share at any date shall mean (i)
the fair market value per Ordinary Share, on a fully diluted basis, as
reasonably determined in good faith by the Board of Directors, using an
appropriate valuation method, assuming an arms-length sale to an independent
party as a going concern of all of the Ordinary Shares of the Company, without
giving regard to the lack of liquidity of the Ordinary Shares due to any
restrictions contained herein or otherwise or any discount for minority
interests and assuming the conversion or exchange of all securities then
outstanding which are convertible into or exchangeable for Ordinary Shares and
the exercise of all rights, options and warrants then outstanding and
exercisable to purchase Ordinary Shares or securities convertible into or
exchangeable for Ordinary Shares, or (ii) if there shall be a public market for
the Ordinary Shares, the average of the daily market prices for each day during
the 20 consecutive trading days commencing 45 Business Days before such date as
of which such a price can be established in the manner set forth below. The
market price for each such trading day shall be the last sale price on such day
as reported in the Consolidated Last Sale Reporting System or as quoted in the
National Association of Securities Dealers Automated Quotation System, or if
such last sale price is not available, the average of the closing bid and asked
prices as reported in either such system, or in any other case the higher bid
price quoted for such day as reported by The Wall Street Journal and the
National Quotation Bureau pink sheets.
"Dollar" or "$" shall mean lawful currency of the United States of
America.
"Drag-Along Notice" shall have the meaning specified in Section
6.5(c).
"Drag-Along Percentage" shall have the meaning specified in Section
6.5(a).
"Drag-Along Right" shall have the meaning specified in Section
6.5(a).
"Drag-Along Sale" shall have the meaning specified in Section
6.5(a).
"Ericsson" shall have the meaning specified in the forepart of this
Agreement.
"Excess Cash" shall have the meaning specified in Section 8.8(b).
"Exempt Transfer" shall have the meaning specified in Section 6.3.
"Existing Shareholder(s)" shall mean each and all of the
shareholders of the Brazilian Holding Companies on the date hereof, without
giving effect to the Restructuring.
"Financial Advisors" shall have the meaning specified in Section
5.1(a)(ii).
"Fiscal Quarter" means any quarter of a Fiscal Year.
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"Fiscal Year" means the fiscal year of the Company, which shall be
the 12 month-period ending on December 31 in each year or such other period as
the Company may designate.
"Funding Amount" shall have the meaning specified in Section
3.4(b)(i).
"Funding Commitment Shares" shall have the meaning specified in
Section 3.4(b)(i).
"Funding Date" shall have the meaning specified in Section
3.4(b)(i).
"Funding Notice" shall have the meaning specified in Section
3.4(b)(i).
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time in the United States.
"Governmental Authority" means the government of the United States,
of Brazil, of the Cayman Islands or of any other nation, or any political
subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity (including
any federal or other association of or with which any such nation may be a
member or associated) exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government.
"Guarantee Fee" shall have the meaning specified in Section 3.2(g).
"Guaranteed Debt" shall have the meaning specified in Section
3.2(g).
"Guarantees" shall have the meaning specified in Section 3.2(g).
"▇▇▇▇▇▇" shall have the meaning specified in the forepart of this
Agreement.
"ICC" shall have the meaning specified in Section 10.11.
"Indebtedness" shall have the meaning specified in the Restructuring
Agreement.
"Licenses" shall mean (1) the long distance and local fixed line
service license dated as of May 5, 1999, covering Region 3 of Brazil, to Vesper
Sao Paulo S.A. and (2) the long distance and local fixed line service license
dated as of February 4, 1999, covering Region 1 of Brazil, to ▇▇▇▇▇▇ ▇.▇., in
each case granted by Agencia Nacional de Telecomunicacoes (National
Telecommunications Agency).
"Lien" shall mean any mortgage, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance or restriction of
any kind, but excluding any pledge in connection with a bona fide financing.
"Lucent" shall have the meaning specified in the forepart of this
Agreement.
"Memorandum of Association" shall mean the Memorandum of Association
of the Company, as amended from time to time.
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"Merged Operating Company" shall have the meaning specified in
Section 8.2(a).
"New Shareholder(s)" shall have the meaning specified in the
forepart of this Agreement.
"Nortel" shall have the meaning specified in the forepart of this
Agreement.
"Operating Companies" shall mean ▇▇▇▇▇▇ ▇.▇. and ▇▇▇▇▇▇ Sao Paulo
S.A., each a sociedade por acoes organized under the laws of the Federative
Republic of Brazil, or any successor in interest.
"Operating Company Sale" shall have the meaning specified in Section
8.2(a).
"Ordinary Shares" shall mean ordinary shares, par value $0.0001 per
share, of the Company and shall include such other shares of capital as may from
time to time be issued in respect thereof or for which or into which such shares
may be exchanged or converted. All references in this Agreement to Ordinary
Shares shall be deemed to include Special Voting Shares (other than with respect
to Sections 3.1, 3.2, 6.8, 7.2 and 8.1 and the Schedules hereto).
"Percentage Interest" shall mean, except as otherwise provided
herein, with respect to any Shareholder, the percentage interest of such
Shareholder in the outstanding Ordinary Shares, represented by a fraction the
numerator of which is the number of Ordinary Shares held by such Shareholder and
the denominator of which is the aggregate number of Ordinary Shares issued and
outstanding, in each case without giving effect to any Ordinary Shares issuable
under any Warrants or options granted under the Stock Option Plan that are
outstanding but unexercised on such date.
"Person" shall mean any individual, partnership, corporation
(including a business trust), company, joint stock company, trust,
unincorporated association, joint venture or any other entity or a government or
any political subdivision or agency thereof.
"Positive EPS Date" shall mean the first date on which the Company
has earnings per share on a fully-diluted basis (computed on a consolidated
basis in accordance with GAAP) for two consecutive Fiscal Quarters equal to or
in excess of $0.00 for each such quarter.
"Preemptive Rights" shall have the meaning specified in Section 3.6.
"Proposed Contribution" shall have the meaning specified in Section
3.2(c).
"Public Offering" shall mean any bona fide public offering of equity
securities (or securities exchangeable for or convertible into equity
securities) of a Person pursuant to an effective registration statement under
the Securities Act, or any other applicable law, or any other offering which
results in such securities being listed for trading on any national or regional
securities exchange in the United States or included for trading in any national
market system or otherwise available for trading on any other major
international securities exchange.
"Put Notice" shall have the meaning specified in Section 6.7.
5
"Put Right" shall have the meaning specified in Section 6.7.
"QUALCOMM" shall have the meaning specified in the forepart of this
Agreement and shall include such entity's successors and assigns.
"QUALCOMM Commitment" shall mean $150,960,000, as such amount is
decreased from time to time by any amounts paid by QUALCOMM to the Company under
Section 3.4 or Transferred by QUALCOMM pursuant to Section 3.4(a) and Article
VI.
"QUALCOMM Commitment Shares" shall have the meaning specified in
Section 3.2(f).
"QUALCOMM Designee(s)" shall have the meaning specified in Section
4.2(ii).
"QUALCOMM Initial Purchase Shares" shall have the meaning specified
in Section 3.2(d).
"QUALCOMM Note" means that certain note issued by the Company to
QUALCOMM on the date hereof.
"QUALCOMM Sale" shall have the meaning specified in Section 6.6.
"Refund Factor" shall have the meaning specified in Section 3.2(g).
"Region" shall mean the geographic area corresponding to the
territories specified in the Licenses.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the date hereof by and among the Company and the other
parties thereto in the form of Annex E hereto.
"Remaining Cash" shall have the meaning specified in Section 8.2(a).
"Repurchase Factor" shall have the meaning specified in Section
8.2(c).
"Repurchase Right" shall have the meaning specified in Section
8.2(a).
"Restructuring" shall have the meaning specified in the
Restructuring Agreement.
"Restructuring Agreement" shall have the meaning specified in the
forepart of this Agreement.
"Rules" shall have the meaning specified in Section 10.11.
"Securities Act" shall have the meaning specified in Section 7.3(a).
"Shareholder(s)" shall include the BCI Parties, the New Shareholders
and any Vendor solely upon such Vendor being issued Ordinary Shares upon its
exercise of a Warrant, in each case along with their permitted assigns.
6
"Sold Operating Company" shall have the meaning specified in Section
8.2.
"Special Voting Shares" shall mean special voting shares, par value
$0.0001 per share, of the Company, as to which each share entitles the holder
thereof to 4 votes per share in all general and special meetings of the
Company's shareholders, and shall include such other shares of capital as may
from time to time be issued in respect thereof or for which or into which such
shares may be exchanged or converted, each share of which shall be converted
into one Ordinary Share (i) at the option of the Company at any time after
January 1, 2002 or (ii) at the option of the BCI Parties at any time after
January 1, 2002 unless such conversion would have an adverse effect on the
Licenses or result in a violation of applicable law or regulation, as reasonably
determined by the Company in good faith.
"Stock Option Plan" shall mean a stock option plan to be adopted by
the Board of Directors of the Company within 90 days of the date of this
Agreement pursuant to which the Company may grant options to members of the
Company's management to purchase Ordinary Shares in an aggregate amount not to
exceed 5% of the Ordinary Shares then outstanding (on a fully diluted basis) at
a price per Ordinary Share equal to the Current Market Price on the date of
grant.
"Subsidiary" shall mean any Person of which at least a majority of
the outstanding share capital or other indicia of ownership having voting power
under ordinary circumstances to elect directors (or the equivalent) of such
Person shall at the time be held, directly or indirectly, by the Company, by the
Company and one or more Subsidiaries of the Company, or by one or more
Subsidiaries of the Company, and shall include partnerships of which the Company
or one or more of its Subsidiaries is a general partner.
"Super Majority Vote" shall have the meaning specified in Section
5.1(a).
"Tag-Along Right" shall have the meaning specified in Section
6.4(a).
"Tag-Along Sale" shall have the meaning specified in Section 6.4(a).
"Technology" shall mean all technology used by the Company, the
Operating Companies and Vento in connection with the Business, and shall include
all inventions, propriety processes, know-how, formulae, designs, technology,
trade secrets, studies, data and other information generated, derived, produced
or gathered, directly or indirectly, in connection with the technology and the
operation or activities of the Company, the Operating Companies or any of their
Affiliates (other than the Shareholders).
"Third Party" shall mean a Person which is not an Affiliate or a
Subsidiary of the Company or any of the Shareholders.
"Transfer" shall mean any transfer, directly or indirectly,
voluntarily or involuntarily, whether or not for value, including any sale,
assignment, gift, merger, combination or other transaction or otherwise, but
excluding any pledge in connection with a bona fide financing for the Company.
"Unanimous Vote" shall have the meaning specified in Section 5.1(b).
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"VeloCom" shall have the meaning specified in the forepart of this
Agreement and shall include such entity's successors and assigns.
"VeloCom Co-Sale Right" shall have the meaning specified in Section
6.6.
"VeloCom Designee(s)" shall have the meaning specified in Section
4.2(ii).
"VeloCom Initial Purchased Shares" shall have the meaning specified
in Section 3.2(d).
"Vendor(s)" shall have the meaning specified in the forepart of this
Agreement.
"Vento" means Vento Ltda., a limitada organized under the laws of
Brazil.
"Vento Parent" shall mean BV Interativa Holdings, a Cayman Islands
company.
"Voluntary Funding Amount" shall have the meaning specified in
Section 3.4(c).
"Voluntary Funding Commitment Shares" shall have the meaning
specified in Section 3.4(c).
"Voting Control Agreement" means the Voting Control Agreement dated
as of the date hereof among the Company, the New Shareholders and the BCI
Parties in the form of Annex C hereto.
"Warrants" shall mean the warrants to purchase Ordinary Shares dated
the date hereof and issued by the Company to the Vendors pursuant to the
Restructuring Agreement as such Warrants may be adjusted from time to time in
accordance with the terms thereof.
ARTICLE II
FORMATION OF THE COMPANY
Section 2.1. Formation. The Company was incorporated as an exempted
company under the laws of the Cayman Islands on October 11, 2001. The
Shareholders agree that the rights and obligations of the Shareholders of the
Company shall be governed by the terms and conditions set forth in this
Agreement, and the provisions of the Articles of Association and Memorandum of
Association of the Company shall be amended from time to time as necessary to
conform herewith. In the event of a conflict between any provision of this
Agreement and the Memorandum or Articles of Association of the Company, the
Shareholders shall, to the extent permitted by law, take all action necessary to
cause the Memorandum or Articles of Association of the Company, as the case may
be, to be amended so as to conform with the provisions of this Agreement.
Section 2.2. Constituent Documents. The Articles of Association and
Memorandum of Association of the Company are attached hereto as Annex A and
Annex B,
8
respectively. The Articles of Association and Memorandum of Association of the
Company may be amended from time to time in accordance with their terms and the
terms of this Agreement.
Section 2.3. Places of Business. The Company's principal office
shall be at the offices of ▇▇▇▇▇▇ and ▇▇▇▇▇▇, ▇▇▇▇▇▇ House, P.O. Box 309, Grand
Cayman, Cayman Islands, B.W.I. The Company and its Subsidiaries may have
additional offices or places of business in the Region and in such other places
as the Board of Directors may designate from time to time, in each case taking
into account the tax and regulatory concerns of each of the Shareholders.
Section 2.4. Term. The existence of the Company shall continue until
the Company is dissolved and terminated as contemplated by Section 9.1.
ARTICLE III
CAPITALIZATION; SUBSCRIPTION FOR COMMON SHARES
Section 3.1. General. The Articles of Association of the Company
provide that the authorized capital of the Company consists of $50,000 divided
into 498,844,848 Ordinary Shares and 1,155,152 Special Voting Shares. Each
Ordinary Share is entitled to one vote. Each Special Voting Share is entitled to
4 votes per share. Each Special Voting Share shall convert, by way of redemption
and reissue, into one Ordinary Share (i) at the option of the Company at any
time after January 1, 2002 or (ii) at the option of the BCI Parties at any time
after January 1, 2002 unless such conversion would have an adverse effect on the
Licenses or result in a violation of applicable law or regulation, as reasonably
determined by the Company in good faith. Except for such voting and conversion
rights, the Special Voting Shares shall be identical in all other respects to
Ordinary Shares. Upon such conversion, the Company shall amend the register of
the Company to reflect the conversion by way of redemption of the Special Voting
Shares and reissue of Ordinary Shares and prepare and execute the relevant share
certificates.
Section 3.2. Shareholder Contributions and Transactions.
(a) Exchange of Existing Equity. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, each of QUALCOMM, VeloCom,
and the BCI Parties shall transfer, convey, assign and deliver to the Company
all of the existing Capital Stock held by such parties and/or their Affiliates
in the Brazilian Holding Companies (which shall represent, in the aggregate, all
of the then issued and outstanding Capital Stock of the Brazilian Holding
Companies) free and clear of all Liens, in exchange for such number of duly
authorized, validly issued, fully paid and non-assessable Ordinary Shares or
Special Voting Shares of the Company in the amounts and allocations as set forth
in Schedule 1 hereto. If QUALCOMM, VeloCom, and the BCI Parties or their
respective Affiliates have not so transferred, conveyed, assigned and delivered
all of the existing Capital Stock held by such parties in the Brazilian Holding
Companies prior to the Closing Date, then within 90 days of the Closing Date
each of QUALCOMM, VeloCom, and the BCI Parties or their respective Affiliates
shall so transfer, convey, assign and deliver to the Company all of the existing
Capital Stock held by such parties in the Brazilian Holding Companies free and
clear of all Liens, in exchange for such number of duly authorized, validly
issued, fully paid and non-assessable Ordinary Shares or
9
Special Voting Shares of the Company in the amounts and allocations as set forth
in Schedule 1 hereto. In addition, upon the terms and subject to the conditions
of this Agreement, on the Closing Date, each of the Existing Shareholders or
their respective Affiliates shall transfer, convey, assign and deliver all of
the existing Capital Stock held by such parties in Vento Parent (which shall
indirectly represent, in the aggregate, all of the then issued and outstanding
Capital Stock of Vento) free and clear of all Liens, in exchange for one (1)
Ordinary Share of the Company. If the Existing Shareholders or their respective
Affiliates have not so transferred, conveyed, assigned and delivered all of the
existing Capital Stock held by such parties in Vento Parent prior to the Closing
Date, then within 90 days of the Closing Date each of the Existing Shareholders
or their respective Affiliates shall so transfer, convey, assign and deliver all
of the existing Capital Stock held by such parties in Vento Parent free and
clear of all Liens in exchange for one (1) duly authorized, validly issued,
fully paid and non-assessable Ordinary Share of the Company.
(b) Contribution of AFACs. Pursuant to the Restructuring Agreement,
promptly after the Closing Date, each of QUALCOMM and/or its Affiliates and
VeloCom and/or its Affiliates shall exercise its right to convert its existing
AFACs in the Brazilian Holding Companies into new Capital Stock of the Brazilian
Holding Companies. Thereafter, upon the terms and subject to the conditions of
this Agreement, each of QUALCOMM and VeloCom shall transfer, convey, assign and
deliver all of the Capital Stock in the Brazilian Holding Companies held by
QUALCOMM and VeloCom as a result of the conversion of such AFACs (the "AFAC
Contributions") free and clear of all Liens, in exchange for such number of duly
authorized, validly issued, fully paid and non-assessable Ordinary Shares of the
Company in the amounts set forth in Schedule 2 hereto.
(c) Other Capital Injections. Upon the terms and subject to the
conditions of this Agreement, each New Shareholder may subscribe for and
purchase, and the Company will issue to such New Shareholder, such number of
duly authorized, validly issued, fully paid and non-assessable Ordinary Shares
of the Company determined by dividing the amount of the proposed capital
contribution (the "Proposed Contribution") to be made by such New Shareholder by
the Capital Call Per Share Purchase Price. Concurrently with such issuance, such
New Shareholder will pay to the Company the Proposed Contribution. Any New
Shareholder's Proposed Contribution shall equal the amount of expenses incurred
by such New Shareholder in connection with the Restructuring which the Company
or any of its Subsidiaries will pay. In addition, the Proposed Contribution by
QUALCOMM shall not exceed $4,500,000 and the Proposed Contribution by VeloCom
shall not exceed $500,000. The Company will pay, or cause its Subsidiaries to
pay, such expenses upon receipt of such Proposed Contribution. Any purchase of
Ordinary Shares made by VeloCom or QUALCOMM under this paragraph (c) shall be in
addition to, and shall not reduce any purchases or contributions that VeloCom or
QUALCOMM are otherwise required to make under this Section 3.2 or Section 3.4.
(d) Subscription for New Ordinary Shares. Upon the terms and subject
to the conditions of this Agreement, promptly after the Closing Date, (i) the
Company will issue to (A) QUALCOMM the number of duly authorized, validly
issued, fully paid and nonassessable Ordinary Shares (the "QUALCOMM Initial
Purchased Shares") specified next to QUALCOMM's name in Schedule 3 hereto and
(B) VeloCom the number of duly authorized, validly issued, fully paid and
nonassessable Ordinary Shares (the "VeloCom Initial Purchased
10
Shares") specified next to VeloCom's name in Schedule 3 hereto, (ii) QUALCOMM
will pay to the Company a total of $81,946,000 for the QUALCOMM Initial
Purchased Shares and (iii) VeloCom will pay to the Company a total of
$53,096,000 for the VeloCom Initial Purchased Shares. QUALCOMM and VeloCom shall
pay the above amounts by wire transfer of immediately available U.S. dollar
funds to such account as the Company directs by written notice delivered to
QUALCOMM and VeloCom by the Company at least two Business Days before the
Closing Date.
(e) Intentionally Omitted
(f) QUALCOMM Commitment. Upon the terms and subject to the
conditions of this Agreement, promptly after the Closing Date, the Company will
issue to QUALCOMM the number of duly authorized, validly issued, partially paid
and nonassessable Ordinary Shares (the "QUALCOMM Commitment Shares") specified
next to QUALCOMM's name in Schedule 5 hereto in exchange for the agreement of
QUALCOMM to pay to the Company the QUALCOMM Commitment, as capital calls are
made by the Company after the Closing Date from time to time pursuant to Section
3.4.
(g) BCI Guarantee Fee. Upon the terms and subject to the conditions
of this Agreement and in consideration for ▇▇▇▇ Canada International, Inc., the
ultimate parent of the BCI Parties, providing one or more guarantees (the
"Guarantees") of certain portions of the outstanding indebtedness of the
Operating Companies (the "Guaranteed Debt") pursuant to the terms of a letter in
the form of Annex D attached hereto, the Company shall pay, for so long as the
Guarantees remain outstanding, a fee of $1,000,000 per annum (the "Guarantee
Fee") to the BCI Parties or as directed in advance by the BCI Parties. The
Guarantee Fee shall be payable by wire transfer of immediately available U.S.
funds to such account as shall be directed by the BCI Parties. The Guarantee Fee
shall be paid in advance, beginning on the date upon which the Guarantees are
effective and on each subsequent one year anniversary of such date. The
Guarantee Fee for the second year shall be the amount determined by multiplying
the Guarantee Fee for the first year (net of any refund payable for such year)
by a fraction, the numerator of which is the amount of the outstanding
Guaranteed Debt at the beginning of the second year and the denominator of which
is the outstanding Guaranteed Debt at the beginning of the first year. The
Guarantee Fee for the third year shall be determined by multiplying $2,000,000
per annum by a fraction, the numerator of which is the amount of the outstanding
Guaranteed Debt at the beginning of the third year and the denominator of which
is the outstanding Guaranteed Debt at the beginning of the first year. The
Guarantee Fee for any year subsequent to the third year shall be the amount
determined by multiplying the Guarantee Fee for the prior year (net of any
refund payable for such year) by a fraction, the numerator of which is the
amount of the outstanding Guaranteed Debt at the beginning of each such
subsequent year and the denominator of which is the outstanding Guaranteed Debt
at the beginning of the prior year. In addition, the Company shall be entitled
to a refund of a portion of the Guarantee Fee previously paid in advance with
respect to any year, which refund shall be in an amount determined by
multiplying the Guarantee Fee paid for such year by a fraction, the numerator of
which is the amount of the outstanding Guaranteed Debt on the first day of such
year minus the average daily balance of the outstanding Guaranteed Debt during
such year, and the denominator of which is the amount of the outstanding
Guaranteed Debt on the first day of such year (the "Refund Factor"). The refund
for any year shall be paid to the Company on the day that the Guarantee Fee for
the subsequent year
11
is due (and the Company may offset such amounts). In the event that during any
year the outstanding Guaranteed Debt is reduced to $0 and the credit facilities
relating to such Guaranteed Debt have been terminated, the Company shall be
entitled to a final refund of a portion of the Guarantee Fee previously paid in
advance with respect to such year, which refund shall be in an amount determined
by multiplying the Guaranteed Fee for such year by the Refund Factor (assuming
that the daily balance is $0 for each day after the day on which such reduction
to $0 occurs). Such final refund shall be paid by the BCI Parties on the
Business Day immediately after the day on which such reduction to $0 by wire
transfer of immediately available U.S. funds to an account designated by the
Company. The Company's obligation to pay a Guarantee Fee under this Section
3.2(g) shall terminate once all of the Guarantees are no longer in effect or the
Guaranteed Debt shall have been reduced to $0 and the credit facilities relating
to such Guaranteed Debt have been terminated.
(h) Additional Subscriptions. Upon the terms and subject to the
conditions of this Agreement and until the date that is three months after the
date hereof, VeloCom or any shareholder of VeloCom may subscribe for and
purchase, and the Company will issue to such Person, such number of duly
authorized, validly issued, fully paid and non-assessable Ordinary Shares of the
Company determined by dividing the amount of such subscription, which shall not
exceed $20,000,000, by the Capital Call Per Share Purchase Price then in effect.
Concurrently with such issuance, such Person will pay to the Company the
subscription amount. Any purchase of Ordinary Shares made by such Person under
this paragraph (h) shall be in addition to, and shall not reduce any purchases
or contributions that VeloCom or QUALCOMM are otherwise required to make under
this Section 3.2.
(i) Certificates. Upon any issuance of Ordinary Shares to any
Shareholders pursuant to this Agreement, the Company shall deliver to such
Shareholders duly executed share certificates in such Shareholder's name, as
appropriate, in connection with each such issuance and shall amend the register
of members to reflect such Shareholders.
(j) Fractional Shares. No fractional shares shall be issued or left
remaining in connection with any issuances of Ordinary Shares pursuant to this
Section 3.2, as a result of any funding of the QUALCOMM Commitment pursuant to
Section 3.4 or as a result of any repurchase of Ordinary Shares pursuant to
Section 8.2. With respect to any fraction of a share, the Company shall pay to
the Shareholder an amount in cash equal to such fraction multiplied by the
Current Market Price per Ordinary Share, as determined on the date of such
issuance.
Section 3.3. Capital Contributions Generally. Except as otherwise
provided in Section 3.2 or Section 3.4, no Shareholder shall be required to
subscribe for and purchase Ordinary Shares or otherwise provide funding to the
Company.
Section 3.4. Commitment; Funding; Equity Issuance.
(a) General; QUALCOMM Commitment. Subject to the provisions hereof,
any VeloCom Designee, upon determining in good faith that either or both of the
Operating Companies requires additional funding in connection with the business
plan most recently approved by the Board of Directors of the Company or in
connection with making the payment of a Guarantee Fee to the BCI Parties
pursuant to Section 3.2(g), may from time to time make
12
capital calls on QUALCOMM in an amount up to the QUALCOMM Commitment; provided,
that (i) no VeloCom Designee may make any such capital call unless each of the
conditions set forth in Section 3.5 are satisfied or waived, and (ii) QUALCOMM
may Transfer any portion of the QUALCOMM Commitment, and the related QUALCOMM
Commitment Shares, to any Person in accordance with Article VI, and upon such
Transfer, such Person shall be responsible for any further funding obligation
associated with the portion of the QUALCOMM Commitment so Transferred and shall
agree to be bound by the terms of this Agreement as required by Section 6.1 and
the provisions of this Section 3.4 shall be deemed amended to provide that the
rights and obligations of QUALCOMM with respect to the QUALCOMM Commitment shall
apply pro rata to such Person and its portion of the QUALCOMM Commitment so
Transferred; provided, however, that QUALCOMM shall not be relieved of its
obligations with respect to such Transferred QUALCOMM Commitment, (1) unless on
the day of such Transfer or (2) until such time as, the transferee thereof has a
rating equal to or higher than Baa3 (or the equivalent) by ▇▇▇▇▇'▇ Investors
Service, Inc. or BBB- (or the equivalent) by Standard & Poor's Ratings Service,
a division of McGraw Hill, Inc. (or, in each case, any successor to the rating
agency business thereof).
(b) Capital Calls.
(i) Procedure. Any VeloCom Designee shall send written notice
(the "Funding Notice") to QUALCOMM specifying the amount to be paid (the
"Funding Amount") by QUALCOMM in respect of the Operating Company to
which such Funding Amount is to be contributed and the date by which the
Funding Amount must be paid (the "Funding Date"), which shall be at
least 10 days and not more than 15 days after the date that the Funding
Notice is delivered to QUALCOMM. The Funding Amount in any Funding
Notice that contemplates funding for the period that includes a day on
which a Guarantee Fee is payable pursuant to Section 3.2(g) shall be
sufficient to make such payment. The Funding Notice shall also specify
the number of QUALCOMM Commitment Shares, as adjusted from time to time
as appropriate to take account of any stock or share split, dividend,
recapitalization or reorganization of the capital of the Company since
the date such number was last established, to which the Funding Amount
relates, determined by dividing the Funding Amount by the Capital Call
Per Share Price ("Funding Commitment Shares"). Subject to the terms and
conditions hereof, QUALCOMM shall be obligated to pay the Funding Amount
to the Company no later than the Funding Date; provided however, that in
no event shall QUALCOMM be required to pay any funds in excess of the
QUALCOMM Commitment. The Funding Amount shall be in the form of cash
(unless otherwise approved by the Board of Directors by Super Majority
Vote) and shall be paid by wire transfer of immediately available U.S.
dollar funds to such account as the Company reasonably directs in its
Funding Notice. Upon payment of the Funding Amount, each of the related
Funding Commitment Shares shall become fully paid and shall not be
QUALCOMM Commitment Shares under this Agreement, including for purposes
of this Section 3.4(b). Upon payment of the Funding Amount, the Company
shall take all actions necessary to insure that such Funding Commitment
Shares have the status of duly authorized, validly issued, fully paid
and nonassessable Ordinary Shares and are not subject to the provisions
of Section 3.4(b)(ii).
13
(ii) Failure to Make Contributions. If QUALCOMM fails to pay the
Funding Amount specified in a Funding Notice pursuant to Section
3.4(b)(i) on or before the Funding Date, each of the Shareholders shall
vote all of its Ordinary Shares, and shall take all other necessary or
desirable actions within its control (whether in its capacity as
Shareholder or otherwise), and shall cause its respective designees, if
any, elected to the Company's Board of Directors to take all such action
necessary, to require that the related Funding Commitment Shares be
forfeited by QUALCOMM, whereupon such Ordinary Shares shall no longer be
issued and outstanding.
(iii) Remaining Commitment Shares. At any time after December
31, 2005, the Company by action of the Board of Directors by Super
Majority Vote may elect to reduce the QUALCOMM Commitment to $0 and
require that all remaining QUALCOMM Commitment Shares (after giving
effect to the last two sentences in clause (i) above) be forfeited by
QUALCOMM, whereupon such QUALCOMM Commitment Shares shall no longer be
issued and outstanding.
(c) Voluntary Funding of Commitment. Notwithstanding anything to the
contrary contained herein, QUALCOMM also shall have the right at any time and
from time to time, in its sole discretion, to elect to pay to the Company any
amount of the QUALCOMM Commitment not yet subject to a Funding Notice (any
amount so paid, the "Voluntary Funding Amount"). The number of QUALCOMM
Commitment Shares, as adjusted from time to time as appropriate to take account
of any stock or share split, dividend, recapitalization or reorganization of the
capital of the Company since the date such number was last established, to which
the Voluntary Funding Amount relates shall equal the Voluntary Funding Amount
divided by the Capital Call Per Share Price then in effect ("Voluntary Funding
Commitment Shares"). Upon paying the Voluntary Funding Amount, the Company shall
take all actions necessary to insure that such Voluntary Funding Commitment
Shares have the status of duly authorized, validly issued, fully paid and
nonassessable Ordinary Shares and are not subject to the provisions of Section
3.4(b)(ii).
(d) Replacement Financing. At any time after the Closing Date, the
Company by action of the Board of Directors by Super Majority Vote may, from
time to time, approve and authorize the issuance by any of the Brazilian Holding
Companies or the Operating Companies of additional debt or equity financing.
Upon receipt of the proceeds of such financing, (i) the amount of the QUALCOMM
Commitment shall be reduced by the amount of such proceeds received by such
Subsidiary (net of any fees associated with such financing) and (ii) the number
of QUALCOMM Commitment Shares, as adjusted from time to time as appropriate to
take account of any stock or share split, dividend, recapitalization or
reorganization of the capital of the Company since the date such number was last
established, determined by dividing the amount of such proceeds by the Capital
Call Per Share Price then in effect, shall be forfeited by QUALCOMM, whereupon
such QUALCOMM Commitment Shares shall no longer be issued and outstanding.
Section 3.5. Conditions to Funding Notice. The right of any VeloCom
Designee to deliver a Funding Notice pursuant to Section 3.4 is subject to the
satisfaction or waiver of the following conditions:
14
(i) the Company and the Shareholders (other than QUALCOMM) shall
have complied with all of their respective agreements and obligations contained
in Articles IV and V and there shall not have been any judicial determination
that the terms of such Articles are unenforceable;
(ii) no Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent),
which is in effect, restricting, preventing or prohibiting consummation of the
transactions contemplated by such Funding Notice (nor shall any proceeding or
action relating to any such statute, rule, regulation, order, decree or
injunction be pending), nor shall there be any proceeding initiated by any such
Governmental Authority pending or threatened, in respect of the transactions
contemplated thereby;
(iii) there shall not have occurred a material disruption of the
Brazilian economy or financial markets from their state on the date of this
Agreement; and
(iv) no principal of, interest on or other amount owing in respect
of any then-outstanding Indebtedness of the Operating Company specified in such
Funding Notice, which Indebtedness has an aggregate principal amount of more
than $2,000,000, shall have become due and payable (whether at stated maturity,
by acceleration or otherwise) and remains unpaid as of the date of such Funding
Notice.
Section 3.6. Preemptive Rights. The Company shall not issue any
Ordinary Shares or other capital or any warrant, option or other security
convertible into or exercisable for such capital of the Company, or enter into
any agreement in respect of such issuance, except in connection with the
issuance of Ordinary Shares pursuant to (i) Section 3.2 or Section 3.4, (ii) a
Public Offering, (iii) the Stock Option Plan or (iv) any exercise of the
Warrants, unless prior to such issuance the Company offers to each of the New
Shareholders and the BCI Parties the right to participate proportionately
according to the Percentage Interest of such New Shareholder or BCI Party in the
Ordinary Shares as of the date of such proposed issuance, on the same terms and
conditions (the "Preemptive Rights"). VeloCom shall have the right to assign its
Preemptive Rights to any of its shareholders in proportion to their share
ownership in VeloCom, unless otherwise agreed by such shareholders. Any right
granted pursuant to this Section 3.6 shall be exercised by written notice to the
Company given within 30 days after delivery to each New Shareholder and BCI
Party of written notice of such proposed issuance. If any such Shareholder fails
to respond to the Company within the 30-day notice period, such failure shall be
deemed to be the rejection of the right of such Shareholder to participate in
the purchase of the capital of the Company to be issued. At any time within 120
days following the date the Company has received notice (or deemed rejection)
from each such Shareholder accepting or rejecting its right to participate, the
Company may carry out the proposed issuance.
15
ARTICLE IV
MANAGEMENT OF THE COMPANY
Section 4.1. General.
(a) Board of Directors. Subject to Section 5.1 and Section 9.1, the
day-to-day business and affairs of the Company shall be managed and controlled
by the Board of Directors, which shall consist of five (5) members, in a manner
consistent with this Agreement and the Articles of Association and the
Memorandum of Association. Unless otherwise specified herein or in the Articles
of Association or the Memorandum of Association, any actions to be taken by the
Board of Directors of the Company shall require the affirmative vote of a
majority of the Board of Directors.
(b) Removal of Directors. Any of QUALCOMM or VeloCom may at any
time, and from time to time, upon request remove and replace any or all of the
Directors designated by such New Shareholder pursuant to Section 4.2. In
addition, any Director may resign at any time by giving written notice to the
New Shareholder that appointed such Director and to the Company. Such
resignation shall take effect on the date shown on or specified in such notice
or, if such notice is not dated, at the date of the receipt of such notice by
the Company. No acceptance of such resignation shall be necessary to make it
effective.
Section 4.2. Procedures Relating to the Board of Directors. Subject
to the provisions of Section 4.1, each of the Shareholders shall vote all of its
Ordinary Shares, and shall take all other necessary or desirable actions within
its control (whether in its capacity as Shareholder or otherwise), and shall
cause its respective designees, if any, elected to the Company's Board of
Directors to take all such action necessary, in order to cause:
(i) the number of directors on the Board to be five;
(ii) the election to the Board (whether at a meeting of
shareholders or by an action by written consent of shareholders in lieu
of a meeting) of (A) three representatives designated by QUALCOMM and
its permitted transferees ("QUALCOMM Designees") and (B) two
representatives designated by VeloCom and its permitted transferees
("VeloCom Designees");
(iii) at the written request of QUALCOMM given at any time
pursuant to Section 4.1(b), the immediate removal from the Board (with
or without cause) of any QUALCOMM Designee (including during any meeting
of the Board, in which case such meeting may, at the option of any
remaining director designated by QUALCOMM, be adjourned pending filling
the vacancy caused by such removal);
(iv) at the written request of VeloCom given at any time
pursuant to Section 4.1(b), the immediate removal from the Board (with
or without cause) of any VeloCom Designee (including during any meeting
of the Board, in which case such meeting may, at the option of any
remaining director designated by VeloCom, be adjourned pending filling
the vacancy caused by such removal); and
16
(v) in the event that any QUALCOMM Designee or VeloCom Designee
shall for any reason cease to serve as a member of the Board during his
or her term of office, the resulting vacancy on the Board to be filled
by a representative designated by QUALCOMM or VeloCom, as the case may
be, immediately upon request of QUALCOMM or VeloCom, as the case may be,
whether at a meeting of Shareholders or by an action by written consent
of Shareholders in lieu of a meeting.
Section 4.3. Quorum of Board of Directors. The quorum necessary for
a meeting of the Board of Directors to take any action other than those actions
set forth in Section 5.1 shall be a majority of the Directors then in office,
including one QUALCOMM Designee and one VeloCom Designee. If a quorum is not
present at a meeting, the meeting will automatically be adjourned to the same
place and at the same time the following week (or if such day is not a Business
Day, at the same time on the next following Business Day), and a majority of the
Directors then in office will constitute a quorum.
Section 4.4. Board Meetings. The Board of Directors shall hold a
regularly scheduled meeting at least once every two (2) calendar months, unless
otherwise determined by the Board of Directors but in no event less often than
once every Fiscal Year. Meetings may be in person, by telephone, or in such
other manner allowing all participants to communicate with each other at the
same time. Written notice of not less than seven (7) Business Days shall be
given in respect of a meeting of the Board of Directors of the Company or any of
its Subsidiaries, unless all directors of the Company consent to shorter notice,
whether before, at or after such meeting. Any director of the Company may call a
meeting of the directors by giving prior written notice of such meeting to the
other directors. Any director may request a postponement of a meeting, but only
one such postponement per meeting shall be permitted by each of the QUALCOMM
Designees and VeloCom Designees.
Section 4.5. Board Observer. VeloCom shall have the right to have
one observer attend all meetings of the Board of Directors of the Company and
the board of directors of each Subsidiary of the Company. Such observer shall be
designated by VeloCom (with written notice thereof to the Company) and
reasonably acceptable to the Board of Directors of the Company, and shall be
entitled to receive the same prior written notice of and copies of all written
materials relating to board meeting as the directors receive.
Section 4.6. Subsidiary Directors and Voting. The provisions of this
Article IV shall apply equally to the board of directors of each Subsidiary of
the Company and each Shareholder shall vote all of its Ordinary Shares, and
shall take all other necessary or desirable actions within its control (whether
in its capacity as Shareholder or otherwise), and shall cause its respective
designees elected to the Company's Board of Directors to take all such action
necessary, in order to cause the provisions of this Article IV to be implemented
and complied with as to each Subsidiary of the Company.
17
ARTICLE V
CERTAIN TRANSACTIONS
Section 5.1. Vote Required to Effect Certain Transactions.
(a) Super Majority Vote. Subject to Section 9.1, the Company shall
not, and the Shareholders shall not permit the Company to, take any action and
shall not permit any Subsidiary to take any action in connection with any of the
following transactions unless such transaction shall have been approved by the
affirmative vote of at least four (4) members of the Board of Directors then in
office (a "Super Majority Vote"):
(i) entering into or conducting, by the Company or any
Subsidiary, any business other than the Business, or expanding its
Business into a territory other than the Region;
(ii) any issuance and/or sale of any equity interest in the
Company or any Subsidiary (in one or a series of related transactions)
in excess of U.S. $20,000,000 other than (i) for fair market value as
determined by two independent financial advisors of international
standing, one approved by QUALCOMM and the other approved by VeloCom
(the "Financial Advisors"), and if such Financial Advisors shall not
agree on such fair market value, then such fair market value shall be
determined as follows: (A) if the lower of the fair market values
determined by the Financial Advisors is equal to or more than 90% of the
higher of the fair market values determined by the Financial Advisors,
then the fair market value shall be the average of the two valuations,
or (B) if the lower of the fair market value determined by the Financial
Advisors is less than 90% of the higher of the fair market values
determined by the Financial Advisors, then a third Financial Advisor of
international standing chosen by the Financial Advisors shall make a
determination of fair market value and the fair market value shall be
the average of such third valuation and the original valuation that is
closer to the third valuation, (ii) pursuant to capital contributions
under Section 3.2(c) and (h) and Section 3.4, (iii) in connection with
any exercise of (X) options pursuant to the Stock Option Plan or (Y) any
of the Warrants and (iv) equity interests that are subordinate to the
Ordinary Shares;
(iii) subject to Section 8.3, any material change in the
Technology used by the Company (or any Subsidiary) in the operation of
the Business or otherwise by the Company;
(iv) any Transfer or the grant, amendment or termination of any
license in respect of, any significant Technology of the Company (or any
Subsidiary);
(v) any transactions between the Company or any Operating
Company, on the one hand, and a Shareholder or any of its Affiliates, on
the other hand, unless negotiated on an arms-length basis on terms at
least as favorable as could otherwise be obtained with a Person who is
not an Affiliate of the Company, except for any agreements as in effect
immediately following closing of the Restructuring, which shall be
deemed approved;
18
(vi) any Transfer by the Company or any Subsidiary (in one or a
series of related transactions) of all or substantially all of the
assets or properties of the Company or any Subsidiary (including by way
of any merger, combination, recapitalization, reorganization,
consolidation or similar transaction), provided that a Super Majority
Vote shall not be required if (A) such Transfer occurs three (3) or more
years after the Closing Date and is made on arms-length terms and (B)
the Company obtains a fairness opinion in connection with such Transfer
issued by an independent financial advisor of international standing
reasonably acceptable to VeloCom;
(vii) any recommendation by the Board of Directors for the
shareholders of the Company to vote in favor of any voluntary
liquidation, bankruptcy, dissolution or winding up of the Company or any
Subsidiary;
(viii) any recommendation by the Board of Directors for the
shareholders of the Company to vote in favor of any change in the
jurisdiction of the organization of the Company (or any Subsidiary);
(ix) any recommendation by the Board of Directors for the
shareholders of the Company to vote in favor of any purchase or
redemption of any securities issued by the Company or any Subsidiary
(other than the QUALCOMM Note), unless such security is mandatorily
redeemable by its terms and except as provided in Section 8.2; or
(x) the creation of a Subsidiary or the voting (directly or
indirectly and whether at a meeting of shareholders or action by written
consent) of any securities owned by the Company or any Subsidiary to
take any action which would call for a Super Majority Vote if such
action was taken by the Company.
(b) Unanimous Vote. Subject to Section 9.1, the Company shall not,
and the Shareholders shall not permit the Company to, take any action and shall
not permit any Subsidiary to take any action in connection with any of the
following transactions unless such transaction shall have been approved by the
unanimous consent of all of the members of the Board of Directors (and the board
of directors of such Subsidiary, as the case may be) (a "Unanimous Vote"):
(i) any recommendation by the Board of Directors for the
shareholders of the Company to vote in favor of any change in the number
of members of the Board of Directors of the Company (or any Subsidiary)
or any committee thereof; or
(ii) any recommendation by the Board of Directors for the
shareholders of the Company to vote in favor of any amendment,
modification or repeal of any provision of the Articles of Association
(or other organizational documents) or Memorandum of Association of the
Company (or any Subsidiary).
(c) New Shareholder Voting. Each of the New Shareholders shall vote
all of its Ordinary Shares for, and shall take all other necessary or desirable
actions within its control (whether in its capacity as a New Shareholder or
otherwise) to effect, any transaction or action that has been approved by a
Super Majority Vote or a Unanimous Vote.
19
(d) Consent Rights. (i) So long as the Special Voting Shares have
not converted into Ordinary Shares, the Company shall not, and the Shareholders
shall not permit the Company to, take any action and shall not permit any
Subsidiary to take any action in connection with any of the following
transactions unless such transaction shall have been approved by the affirmative
vote of the BCI Parties:
(i) entering into or conducting, by the Company or any
Subsidiary, any material business other than the telecommunications
business in Brazil;
(ii) any Transfer by the Company or any Subsidiary (in one or a
series of related transactions) of all or substantially all of the
assets or properties of the Company or any Subsidiary (including by way
of any merger, combination, recapitalization, reorganization,
consolidation or similar transaction);
(iii) any voluntary liquidation, bankruptcy, dissolution or
winding up of the Company or any Subsidiary;
(iv) any change in the jurisdiction of the organization of the
Company (or any Subsidiary); or
(v) the creation of a Subsidiary or the voting (directly or
indirectly and whether at a meeting of shareholders or action by written
consent) of any securities owned by the Company or any Subsidiary to
take any action which would require such consent under this Section
5.1(d) if such action was taken by the Company.
(e) BCI Prior Consent. The BCI Parties hereby consent to any
Subsidiary of the Company taking any action in connection with the Restructuring
that has been approved by QUALCOMM and VeloCom or otherwise approved by
management or the board of directors of any or all of the Subsidiaries of the
Company in connection with the pursuit of new, or modifications to existing,
telecommunications licenses in Brazil.
(f) Voting Control Agreement. The parties acknowledge that the
Company, the New Shareholders and the BCI Parties will enter into the Voting
Control Agreement, which will contain terms substantially similar to those set
forth in Article IV and Section 5.1(a), (b), (c), and (d). The Voting Control
Agreement will terminate when the Special Voting Shares convert into Ordinary
Shares. In the event of any conflict between the terms of this Agreement and the
Voting Control Agreement, the terms of this Agreement shall control, and each of
the Company, the New Shareholders and the BCI Parties shall take all action
necessary or desirable within its control (whether in its capacity as a
Shareholder or otherwise) and shall cause its respective designees, if any,
elected to the Company's Board of Directors to take all such action necessary to
give effect to terms of this Agreement.
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ARTICLE VI
TRANSFER OF SHARES
Section 6.1. General Restrictions on Transfer; Legend on
Certificates. The Ordinary Shares shall be transferable only as provided in this
Agreement and in the Articles of Association. No Transfer of any Ordinary Shares
or issuance of Ordinary Shares pursuant to Section 3.2(h) shall be made to any
Person unless such Person shall have agreed in writing, as a Shareholder, to be
bound by the provisions of this Agreement. Upon (a) the Transfer other than an
Exempt Transfer of any Ordinary Shares in accordance with this Agreement, the
transferee shall have the same rights and be bound by the same obligations as
the transferor under this Agreement other than any rights and obligations
arising under Sections 6.4, 6.6 and 6.7, and (b) the Exempt Transfer of any
Ordinary Shares in accordance with this Agreement, the transferee shall have the
same rights and be bound by the same obligations as the transferor under this
Agreement, provided, however, that in each case the assumption of obligations
under the QUALCOMM Commitment shall be governed by Section 3.4(a). Upon any
issuance of Ordinary Shares pursuant to Section 3.2(h), the Person acquiring
such Ordinary Shares shall have the same rights and be bound by the same
obligations as VeloCom arising under Sections 6.5, 6.6 and 6.7. Any purported
Transfer of Ordinary Shares without compliance with the applicable provisions of
this Agreement and the Articles of Association shall be void and of no effect.
Each certificate representing Ordinary Shares shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THESE
SHARES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS (A) IN COMPLIANCE WITH THE REGISTRATION AND
QUALIFICATION REQUIREMENTS OF THE ACT AND OF THE SECURITIES LAWS OF ANY
APPLICABLE STATE OR JURISDICTION, OR (B) (1) PURSUANT TO APPLICABLE
EXEMPTIONS FROM THE REGISTRATION AND QUALIFICATION REQUIREMENTS OF SUCH
SECURITIES LAWS, AND (2) IF REASONABLY REQUESTED BY VESPER HOLDING, LTD.
(THE "COMPANY"), UPON FURNISHING TO THE COMPANY AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY AS TO SUCH EXEMPTION. IN
ADDITION, SUCH SHARES ARE SUBJECT TO CERTAIN VOTING AGREEMENTS AND
TRANSFER RESTRICTIONS AS SET FORTH IN A SHAREHOLDERS AGREEMENT, DATED
NOVEMBER 9, 2001, AS AMENDED FROM TIME TO TIME, BY AND AMONG THE
REGISTERED OWNER OF THIS CERTIFICATE, THE COMPANY AND CERTAIN OTHER
SHAREHOLDERS OF THE COMPANY."
Section 6.2. Transfers of Shares. Except for Exempt Transfers or
Transfers permitted or required by the Registration Rights Agreement, or
following approval by Super
21
Majority Vote in accordance with Section 5.1, each Shareholder may only Transfer
all or any portion of its Ordinary Shares in compliance with this Article VI.
Section 6.3. Exempt Transfers. The restrictions on Transfer provided
in Sections 6.2, 6.4, 6.5, 6.6 and 6.7 shall not be applicable to any Transfer
(an "Exempt Transfer") (i) (A) by any Shareholder to its Affiliates or (B) from
any such Affiliate to any such Shareholder or to another Affiliate of such
Shareholder or (ii) effected more than 18 months after the Closing Date by
VeloCom to its shareholders in proportion to their share ownership, unless
otherwise agreed by such shareholders.
Section 6.4. Tag-Along Rights. (a) If QUALCOMM shall enter into an
agreement to effect, or propose to effect, a sale, transfer or other disposition
of Ordinary Shares (provided, that with respect to the BCI Parties, such sale,
transfer or other disposition must be in excess of 51% of the Ordinary Shares
then owned by QUALCOMM) (a "Tag-Along Sale"), each of the Vendors and the BCI
Parties (as applicable) shall have the right (a "Tag-Along Right"), but not the
obligation, to participate in such Tag-Along Sale by selling up to the number of
Ordinary Shares equal to the number of Ordinary Shares subject to the Tag-Along
Sale multiplied by its respective Percentage Interest immediately prior to the
consummation of the Tag-Along Sale. For purposes of this Section 6.4 only,
Percentage Interest shall be calculated as follows: (i) if QUALCOMM enters into
an agreement for a Tag-Along Sale prior to the earlier of the date which is 42
months after the Closing Date or the Positive EPS Date, then the number of
Ordinary Shares owned by VeloCom shall be excluded from the aggregate number of
Ordinary Shares issued and outstanding (denominator in the Percentage Interest
definition), (ii) if QUALCOMM enters into an agreement for a Tag-Along Sale
after the earlier of the date which is 42 months after the Closing Date or the
Positive EPS Date, then the number of Ordinary Shares owned by VeloCom shall be
included in the aggregate number of Ordinary Shares issued and outstanding
(denominator in the Percentage Interest definition), and (iii) in either case,
if any Vendor intends to exercise a Warrant to obtain Ordinary Shares to sell in
the Tag-Along Sale, the number of Ordinary Shares to be so obtained by any such
Vendor shall be included in the number of Ordinary Shares held by such Vendor
(numerator in the Percentage Interest definition) and the aggregate number of
Ordinary Shares to be so obtained by all such Vendors shall be included in the
aggregate number of Ordinary Shares issued and outstanding (denominator in the
Percentage Interest definition). The number of Ordinary Shares which QUALCOMM is
entitled to Transfer in the Tag-Along Sale shall be reduced to the extent of the
participation of any Vendor or BCI Party (as applicable) pursuant to this
Section 6.4. Any such sale by a Vendor or BCI Party (as applicable) exercising a
Tag-Along Right shall be for the same price and on the same terms and conditions
as the proposed Tag-Along Sale by QUALCOMM. If in the Tag-Along Sale QUALCOMM
intends to sell any QUALCOMM Commitment Shares along with the corresponding
portion of the QUALCOMM Commitment (as permitted under Section 3.4(a)) and the
per share sale price applicable to the Tag-Along Sale does not take into account
the value of the QUALCOMM Commitment being so assumed, then the per share price
applicable to each Vendor's and each BCI Party's Tag-Along Right shall be
increased to include such value. None of the Vendors or BCI Parties (as
applicable) shall be obligated to pay any portion of the transaction costs
associated with a Tag-Along Sale or the sale, transfer or delivery of securities
pursuant thereto, other than such Vendor's or BCI Party's costs.
22
(b) Notwithstanding the foregoing, the provisions of Section 6.4(a)
shall not apply to (i) any bona fide public sale of Ordinary Shares sold, or to
the securities so sold or to holders thereof, pursuant to an effective
registration statement under the Securities Act in which the Shareholders may
participate, (ii) any sale of Ordinary Shares on the New York Stock Exchange,
over Nasdaq or on any other internationally recognized securities exchange on
which the Ordinary Shares are listed following the initial Public Offering, or
(iii) any Transfer of Ordinary Shares as permitted by Section 6.3.
(c) QUALCOMM shall provide each of the Vendors and the BCI Parties
(as applicable) with 30 days' prior written notice of such proposed Tag-Along
Sale, setting forth in reasonable detail the consideration per share to be paid
by the transferee, the number of shares to be sold and the other terms and
conditions of the Tag-Along Sale, along with a copy of the agreement(s)
providing for the Tag-Along Sale. If any Vendor or BCI Party (as applicable)
wishes to participate in the Tag-Along Sale, it shall provide written notice of
its participation to QUALCOMM within 15 days of its receipt of the notice
specified in the preceding sentence. Such notice shall set forth the number (on
an aggregate basis) of Ordinary Shares such Vendor or BCI Party (as applicable),
as the case may be, elects to include in the Tag-Along Sale. If such notice is
not received by QUALCOMM within the 15-day period specified above, QUALCOMM
shall have the right to sell or otherwise transfer the Ordinary Shares to the
proposed transferee without any participation by such Shareholder, but only (i)
for the price and on the terms and conditions stated in the notice, and (ii) if
the Tag-Along Sale is consummated not later than 60 days after the end of such
15-day period specified above.
(d) In the event that a Vendor exercising a Tag-Along Right does not
own at the time of such notice some or all of the Ordinary Shares which it has
elected to sell but intends to obtain such shares by means of exercising some or
all of its Warrants, then such Vendor shall deliver a Purchase Form (as such
term is defined in the Warrants) to the Company simultaneously with its
delivering the tag-along notice to QUALCOMM pursuant to paragraph (c) above.
Along with the Purchase Form, such Vendor shall also deliver to the Company
payment for the exercise price for such Ordinary Shares as required by the
Warrant. The Company shall issue such Ordinary Shares to such Vendor in
accordance with the Warrant as near the scheduled closing date of such Tag-Along
Sale as is reasonably practicable but in any event no less than five (5) days
prior to such scheduled closing date.
(e) Each Vendor or BCI Party (as applicable) exercising a Tag-Along
Right (i) shall be responsible for delivering to the transferee the certificate
or certificates representing all Ordinary Shares that it is selling and
collecting directly from the transferee the consideration to be paid in
connection with the sale of such Ordinary Shares and (ii) shall cooperate in
good faith to effect the sale to such transferee hereunder.
(f) If (i) any Vendor exercises a Warrant in anticipation of a
Tag-Along Sale as described in paragraph (d) above and (ii) after the Company
issues Ordinary Shares to such Vendor as a result of such exercise, the
Tag-Along Sale is not consummated or the purchaser in the Tag-Along Sale fails
to purchase all of such Ordinary Shares from such Vendor, such Vendor may elect
to have (x) the exercise of the Warrant rescinded with respect to those Ordinary
Shares which were not purchased by such purchaser and (y) the Warrant
correspondingly adjusted such
23
that the number of Ordinary Shares as to which such Warrant will be exercisable
includes such unpurchased Ordinary Shares.
Section 6.5. Drag-Along Rights. (a) If, at any time after the
earlier of the date which is 42 months after the Closing Date or the Positive
EPS Date, QUALCOMM shall, in one or in a series of transactions, enter into an
agreement to effect, or propose to effect, a sale, transfer or other disposition
to a Third Party of Ordinary Shares owned by QUALCOMM in an amount greater than
50% of the then outstanding Ordinary Shares of the Company (a "Drag-Along
Sale"), then QUALCOMM shall have the right (a "Drag-Along Right") to require
VeloCom to sell, transfer and deliver, or cause to be sold, transferred and
delivered to such Third Party, Ordinary Shares in an amount equal to the number
of Ordinary Shares then owned by VeloCom multiplied by the Drag-Along
Percentage. The "Drag-Along Percentage" shall mean the percentage represented by
a fraction the numerator of which is the number of Ordinary Shares owned by
QUALCOMM that are subject to the Drag-Along Sale and the denominator of which is
the aggregate number of Ordinary Shares owned by QUALCOMM immediately prior to
such Drag-Along Sale. The Ordinary Shares owned by VeloCom that are to be sold
in the Drag-Along Sale shall be sold at the same price per share and on the same
terms and conditions as are applicable to the Drag-Along Sale. If in the
Drag-Along Sale QUALCOMM intends to sell any QUALCOMM Commitment Shares along
with the corresponding portion of the QUALCOMM Commitment (as permitted under
Section 3.4(a)) and the per share sale price applicable to the Drag-Along Sale
does not take into account the value of the QUALCOMM Commitment being so
assumed, then the per share price applicable to the Drag-Along Right shall be
increased to include such value. VeloCom shall not be obligated to pay any
portion of the transaction costs associated with a Drag-Along Sale or the sale,
transfer or delivery of securities pursuant thereto.
(b) Notwithstanding the foregoing, the provisions of this Section
6.5 shall not apply to (i) any bona fide public sale of Ordinary Shares sold, or
to the securities so sold or to holders thereof, pursuant to an effective
registration statement under the Securities Act in which the Shareholders may
participate, (ii) any sale of Ordinary Shares on the New York Stock Exchange,
over Nasdaq or on any other internationally recognized securities exchange on
which the Ordinary Shares are listed following the initial Public Offering or
(iii) any Transfer of Ordinary Shares as permitted by Section 6.3.
(c) QUALCOMM shall provide 30 days' prior written notice
("Drag-Along Notice") to VeloCom, setting forth in reasonable detail the
consideration per share to be paid by the Third Party, the number of shares to
be sold by VeloCom and the other terms and conditions of the Drag-Along Sale,
including the date of the closing of such Drag-Along Sale, along with a copy of
the agreement(s) providing for the Drag-Along Sale. QUALCOMM shall also provide
a copy of such notice to the Company.
(d) VeloCom (i) shall deliver to the Third Party the certificate or
certificates representing all Ordinary Shares that VeloCom is required to sell
in the Drag-Along Sale on or before the closing of such sale, (ii) shall collect
directly from the Third Party the consideration to be paid for the Ordinary
Shares it is selling in the Drag-Along Sale and (iii) shall cooperate in good
faith to effect the sale to such Third Party hereunder. If VeloCom should fail
to so deliver its certificates representing Ordinary Shares, VeloCom shall be
deemed to have immediately given a transfer notice in respect of the shares
subject to the Drag-Along Notice. Upon transfer
24
of the shares to the Third Party pursuant to the Drag-Along Sale, the Company
shall amend the register of the Company to reflect the new shareholdings and
prepare and execute the relevant share certificates pertaining thereto.
Section 6.6. VeloCom Co-Sale Right. (a) If, after the earlier of the
date which is 42 months after the Closing Date or the Positive EPS Date,
QUALCOMM shall enter into an agreement to effect, a sale, transfer or other
disposition of Ordinary Shares (a "QUALCOMM Sale"), VeloCom shall have the right
(a "VeloCom Co-Sale Right"), but not the obligation (i) if such QUALCOMM Sale,
whether in one or in a series of related transactions with a Third Party or its
Affiliates, relates to more than 50% of the then outstanding Ordinary Shares, to
participate in such QUALCOMM Sale by selling all (but not less than all) of
VeloCom's Ordinary Shares or (ii) in any other QUALCOMM Sale, to participate in
such QUALCOMM Sale by selling up to the number of Ordinary Shares equal to the
number of Ordinary Shares subject to the QUALCOMM Sale multiplied by VeloCom's
Percentage Interest immediately prior to the QUALCOMM Sale and, in each case,
the number of Ordinary Shares which QUALCOMM is entitled to Transfer in the
QUALCOMM Sale shall be reduced to the extent of the participation of VeloCom
pursuant to this Section 6.6. Any such sale by VeloCom exercising its VeloCom
Co-Sale Right shall be on the same terms and conditions as the proposed QUALCOMM
Sale by QUALCOMM. If in the QUALCOMM Sale QUALCOMM intends to sell any QUALCOMM
Commitment Shares along with the corresponding portion of the QUALCOMM
Commitment (as permitted under Section 3.4(a)) and the per share sale price
applicable to such transaction does not take into account the value of the
QUALCOMM Commitment being so assumed, then the per share price applicable to the
VeloCom Co-Sale Right shall be increased to include such value.
(b) Notwithstanding the foregoing, the provisions of this Section
6.6 shall not apply to (i) any bona fide public sale of Ordinary Shares sold, or
to the securities so sold or to holders thereof, pursuant to an effective
registration statement under the Securities Act in which VeloCom may
participate, (ii) any sale of Ordinary Shares on the New York Stock Exchange,
over Nasdaq or on any other internationally recognized securities exchange on
which the Ordinary Shares are listed following the initial Public Offering, or
(iii) any Transfer of Ordinary Shares as permitted by Section 6.3.
(c) QUALCOMM shall provide VeloCom with 30 days' prior written
notice of such proposed QUALCOMM Sale, setting forth in reasonable detail the
consideration per share to be paid by the transferee, the number of shares to be
sold and the other terms and conditions of the QUALCOMM Sale, along with a copy
of the agreement(s) providing for the QUALCOMM Sale. If VeloCom wishes to
participate in the QUALCOMM Sale, it shall provide written notice of its
participation to QUALCOMM within 15 days of its receipt of the notice specified
in the preceding sentence. Such notice shall set forth the number (on an
aggregate basis) of Ordinary Shares VeloCom elects to include in the QUALCOMM
Sale. If such notice is not received by QUALCOMM within the 15-day period
specified above, QUALCOMM shall have the right to sell or otherwise transfer the
Ordinary Shares to the proposed transferee without any participation by VeloCom,
but only (i) on the terms and conditions stated in the notice, and (ii) if the
QUALCOMM Sale is consummated not later than 60 days after the end of such 15-day
period specified above.
25
(d) VeloCom shall be responsible for delivering to the transferee
the certificate or certificates representing all Ordinary Shares that it is
selling and collecting directly from the transferee the consideration to be paid
in connection with the sale of such Ordinary Shares and shall cooperate in good
faith to effect the sale to such transferee hereunder.
Section 6.7. Put Right. If prior to the earlier of the date which is
42 months after the Closing Date or the Positive EPS Date QUALCOMM shall enter
into an agreement to effect, in one or in a series of related transactions with
a Third Party or such Third Party's Affiliates, a sale, transfer or other
disposition of more than 50% of the then outstanding Ordinary Shares, VeloCom
shall have the right (a "Put Right") to elect to sell to QUALCOMM, and QUALCOMM
shall be required to purchase from VeloCom for cash, all (but not less than all)
of VeloCom's Ordinary Shares. Notwithstanding anything herein to the contrary,
the Put Right may not be exercised until after the earlier of the date which is
42 months after the Closing Date or the Positive EPS Date and shall expire 6
months after such date. The purchase price of VeloCom's Ordinary Shares
purchased by QUALCOMM pursuant to the Put Right shall be the greater of (x) the
price per Ordinary Share sold by QUALCOMM in the transaction giving effect to
the Put Right and (y) the Current Market Price at the time the Put Right is
exercised. If in the transaction giving rise to the Put Right QUALCOMM intends
to sell any QUALCOMM Commitment Shares along with the corresponding portion of
the QUALCOMM Commitment (as permitted under Section 3.4(a)) and the per share
sale price applicable to such transaction does not take into account the value
of the QUALCOMM Commitment being so assumed, then the per share price applicable
to the Put Right shall be increased to include such value. On the date of the
closing of the transaction giving rise to the Put Right, QUALCOMM shall confirm
in writing to VeloCom its obligations arising from the Put Right in form
reasonably satisfactory to VeloCom. The Put Right shall be exercised by delivery
to QUALCOMM of a written notice (the "Put Notice") of such exercise. The closing
of the purchase of VeloCom's Ordinary Shares pursuant to this Section 6.7 shall
take place at the principal offices of the Company (or such other place as
QUALCOMM and VeloCom may agree) no later than sixty (60) days following receipt
by QUALCOMM of the Put Notice. At the closing of the purchase of VeloCom's
Ordinary Shares pursuant to this Section 6.7, VeloCom shall assign and transfer
to QUALCOMM good and valid title to VeloCom's Ordinary Shares to be sold and
transferred, free and clear of all Liens, and QUALCOMM shall pay to VeloCom the
purchase price for such Ordinary Shares in cash by delivery of a certified check
or bank check or by wire transfer of immediately available funds to such account
as VeloCom shall direct by written notice delivered to QUALCOMM not later than
two (2) Business Days prior to such closing.
Section 6.8 Restriction on Transfer of Special Voting Shares.
Notwithstanding anything to the contrary in this Agreement, the Special Voting
Shares shall not be Transferable.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1. Representations and Warranties of the Parties. Each of
the parties hereto, individually and not jointly, and each additional
Shareholder becoming a party hereto, represents, warrants and covenants, to each
other as follows:
26
(a) It is duly organized, validly existing and in good standing, if
applicable, under the laws of its jurisdiction of establishment. If it is not a
Vendor, it has full power and authority, as the case may be, to own, lease and
operate the assets held or used by it to conduct its business as currently
conducted. It has the power and authority to enter into this Agreement and to
carry out its obligations hereunder.
(b) The execution and delivery of this Agreement by such party and
the consummation of the transactions provided for hereby does not and will not
(i) conflict with or violate any provision of the certificate of incorporation,
memorandum of association, articles of association, bylaws or any other document
of governance, as applicable, of such party, (ii) violate, conflict with or
result in the breach or termination of, or otherwise give any other Person the
right to accelerate, renegotiate or terminate or receive any payment, or
constitute a default, event of default or an event which with notice, lapse of
time, or both, would constitute a default or event of default, under the terms
of any material contract to which such party is a party or is bound, (iii)
result in the creation of any material Liens upon any of their respective
properties, except as may be contemplated by the Restructuring (as defined in
the Restructuring Agreement), or (iv) constitute a violation by any such party
of any applicable law.
Section 7.2. Representations and Warranties of the Company. The
Company represents, warrants and covenants to the parties hereto that the
authorized capital of the Company consists solely of 498,844,848 Ordinary Shares
and 1,155,152 Special Voting Shares, and any Ordinary Shares and Special Voting
Shares issued pursuant to this Agreement, when issued, will be, duly authorized,
validly issued, outstanding, fully paid and nonassessable, provided that any
Ordinary Shares issued pursuant to Section 3.2(f) will be partially paid when
issued and fully paid upon payment of the Funding Amounts as set forth in
Section 3.4(b). Except as provided for in this Agreement, the Stock Option Plan
and the Warrants, there are no outstanding options, warrants or any other equity
interest (or commitments to issue any of the same) with respect to the Company
or its capital. Immediately following the Closing Date, assuming the
consummation of the transactions described in Sections 3.2(a) through (f), the
Capital Stock of the Company shall be held as specified in Schedule 6 hereto.
Section 7.3. Representations and Warranties of the Shareholders.
Each of the Shareholders represents, warrants and covenants, individually and
not jointly, to the Company as follows:
(a) Such Shareholder is an "accredited investor", as such term is
defined in Rule 501 of Regulation D, or not a "U.S. Person", as such term is
defined in Rule 902 of Regulation S, in each case, under the Securities Act of
1933, as amended (the "Securities Act").
(b) Such Shareholder acknowledges that the Ordinary Shares have not
been registered under the Securities Act or under the laws of any state or other
jurisdiction, and that except as contemplated pursuant to the Registration
Rights Agreement, the Company is under no obligation to so register the Ordinary
Shares. Such Shareholder understands and agrees that the Ordinary Shares must be
held indefinitely unless (subject to any transfer restrictions in this
Agreement) such Ordinary Shares are subsequently transferred (i) pursuant to an
effective registration statement under the Securities Act and, where required,
under the laws of any state or other jurisdiction or (ii) pursuant to an
exemption from applicable registration requirements.
27
(c) Such Shareholder recognizes that there is no established trading
market for the Ordinary Shares and that it is unlikely that any public market
for the Ordinary Shares will develop for the foreseeable future.
(d) The Ordinary Shares are being acquired by such Shareholder for
its own account for the purpose of investment and not with a view to their
distribution, it being understood that the right to dispose of such Ordinary
Shares shall be entirely within such Shareholder's discretion subject to the
transfer restrictions set forth in this Agreement. Such Shareholder will refrain
from transferring or otherwise disposing of any of its respective Ordinary
Shares or any interest therein in such manner as to cause the Company to violate
the registration requirements of the Securities Act or any applicable securities
or blue sky laws of any state or jurisdiction.
(e) Such Shareholder has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of an
investment in the Ordinary Shares.
(g) Such Shareholder has had the opportunity at a reasonable time
prior to the date of this Agreement to ask questions of, and receive answers
from, the Company concerning the terms and conditions of the transactions
contemplated hereby and the Registration Rights Agreement. Such Shareholder has
received, reviewed and analyzed all other documents requested from the Company
relating to the Ordinary Shares and such information necessary to enable it to
evaluate the merits and risks of an investment in the Ordinary Shares. The
Company has afforded such Shareholder the opportunity to discuss such
Shareholder's investment in the Company and to ask and receive answers to any
questions relating to the investment in the Ordinary Shares.
Section 7.4 Representations and Warranties of the New Shareholders.
(a) QUALCOMM represents, warrants and covenants to the parties
hereto that the total amount of equity contributed to the Brazilian Holding
Companies and Operating Companies by QUALCOMM and/or its Affiliates since June
1, 2001 is $33,434,000.
(b) VeloCom represents, warrants and covenants to the parties hereto
that the total amount of equity contributed to the Brazilian Holding Companies
and Operating Companies by VeloCom and/or its Affiliates since June 1, 2001 is
$26,904,000.
ARTICLE VIII
CERTAIN COVENANTS
Section 8.1. Reservation of Ordinary Shares. The Articles of
Association of the Company shall provide that 11,014,670 Ordinary Shares of the
authorized share capital of the Company may be issuable only in connection with
the exercise of the options under the Stock Option Plan, the Warrants and the
conversion of the Special Voting Shares, and each of the Shareholders shall vote
all of its Ordinary Shares or Special Voting Shares, and shall take all other
necessary or desirable actions within its control (whether in its capacity as
Shareholder or
28
otherwise), and shall cause its respective designees, if any, elected to the
Company's Board of Directors to take all such action necessary, to ensure that
the amount of such restricted Ordinary Shares under the Articles of Association
of the Company is equal to or greater than the number of Ordinary Shares as
shall be required for any issuance and delivery upon exercise of the options
under the Stock Option Plan, the Warrants or the conversion of the Special
Voting Shares and to ensure that the Company otherwise performs its obligations
under the Warrants.
Section 8.2. Mandatory Redemption. (a) In the event that (i) the
Company sells or otherwise disposes of, directly or indirectly (including by way
of a disposition of shares of any parent company thereof) all or substantially
all of the shares or assets of either of the Operating Companies (the "Sold
Operating Company"), or the successor entity resulting from a merger or
consolidation of the Operating Companies (the "Merged Operating Company") to a
Third Party (an "Operating Company Sale"), and (ii) any cash proceeds from such
sale remain after use thereof to repay all indebtedness owed by the Company and
its Subsidiaries (including, without limitation, all indebtedness owed by the
Company and its Subsidiaries to the Shareholders) (the "Remaining Cash"), then
the Vendors shall have the right (the "Repurchase Right"), but not the
obligation, to require the Company to use such Remaining Cash to repurchase
Ordinary Shares acquired upon exercise of the Warrants and/or Warrants on a pro
rata basis as set forth in this Section 8.2. If the Sold Operating Company is
(i) the Merged Operating Company, then each Vendor shall have a Repurchase
Right; (ii) ▇▇▇▇▇▇ ▇.▇., then each of Nortel, Ericsson and ▇▇▇▇▇▇ shall have a
Repurchase Right; or (iii) Vesper Sao Paulo S.A., then each of Lucent and ▇▇▇▇▇▇
shall have a Repurchase Right. The Company shall cause all Subsidiaries involved
in any Operating Company Sale to promptly distribute the Remaining Cash to the
Company for application as contemplated hereby. For purposes of this Section 8.2
only, "Third Party" shall mean a Person that is not a Subsidiary of the Company.
If the Operating Company Sale is to an Affiliate of the Company that is not a
Subsidiary of the Company, such sale shall be negotiated on an arms-length basis
on terms and at a price at least as favorable as could otherwise be obtained
with a Person who is not an Affiliate of the Company.
(b) Promptly after determination of the Remaining Cash of an
Operating Company Sale, the Company shall provide each applicable Vendor with a
notice setting forth the Remaining Cash and the Current Market Price per
Ordinary Share. If any Vendor wishes to exercise its Repurchase Right, it shall
provide written notice to the Company within 15 days of its receipt of the
notice specified in the previous sentence. The notice shall set forth the number
(on an aggregate basis) of Ordinary Shares and/or Warrants such Vendor elects to
have the Company repurchase. If such notice is not received within the 15-day
period specified above, the Vendor shall be deemed to have waived its Repurchase
Right.
(c) In the event that the Remaining Cash is insufficient to
repurchase at the Current Market Value all of the Ordinary Shares and Warrants
in each case set forth in the notices by all Vendors exercising Repurchase
Rights, then the Company shall repurchase from each such Vendor the (i) number
of Ordinary Shares set forth in such Vendor's notice multiplied by the
Repurchase Factor and (ii) the number of Warrants set forth in such Vendor's
notice multiplied by the Repurchase Factor. The repurchase price per Ordinary
Share shall be equal to the Current Market Value. The repurchase price per
Warrant shall be equal to the Current Market Value minus the Exercise Price (as
defined in the Warrant). The "Repurchase Factor" shall mean a fraction, the
numerator of which is the Remaining Cash divided by the Current
29
Market Value, and the denominator of which is the sum of the aggregate number of
Ordinary Shares set forth in such notices plus the number of Ordinary Shares
into which the number of Warrants set forth in such notices could be converted
upon a cashless exercise pursuant to Section (a)(2) of the Warrants.
(d) The closing of such repurchase shall take place on the fifth day
after the 15-day period referred to in Section 8.2(b). At such closing, (i) the
Vendor exercising its Repurchase Right shall deliver to the Company the
certificate or certificates representing all of the Ordinary Shares and/or
Warrants that are being repurchased and (ii) the Company shall deliver the
aggregate purchase price for such Ordinary Shares and/or Warrants by wire
transfer of immediately available U.S. dollar funds to such account as each such
Vendor directs by written notice delivered to the Company at least two (2)
Business Days before such closing.
(e) In the event that (i) the Company effects an Operating Company
Sale and (ii) any of the Remaining Cash relating to such Operating Company Sale
has not been used to repurchase the Ordinary Shares and/or Warrants of the
Vendors exercising Repurchase Rights pursuant to Section 8.2(a) -- (d), then the
BCI Parties shall have the right, but not the obligation, to require the Company
to use any such excess Remaining Cash to repurchase up to a number of the
Ordinary Shares held by the BCI Parties as set forth below; provided that, the
BCI Parties shall be entitled to such right only if the Sold Operating Company
is (x) the Merged Operating Company or (y) the second Operating Company to be a
Sold Operating Company. If the Sold Operating Company is (A) the Merged
Operating Company, then the BCI Parties may require the Company to use such
excess Remaining Cash, if any, to repurchase 100% of the Ordinary Shares owned
by the BCI Parties and (B) the second of the Operating Companies to be a Sold
Operating Company, then the BCI Parties may require the Company to use such
excess Remaining Cash, if any, to repurchase 100% of the Ordinary Shares owned
by the BCI Parties; in each case only to the extent of such excess Remaining
Cash. The repurchase price per Ordinary Share shall be equal to the Current
Market Value. Promptly after determination of the excess Remaining Cash, if any,
after giving effect to the transactions contemplated by Section 8.2(a) -- (d),
the Company shall provide the BCI Parties with a notice setting forth such
excess Remaining Cash, if any, and the Current Market Price per Ordinary Share.
If the BCI Parties wish to exercise their rights under this Section 8.2(e), they
shall provide written notice to the Company within 15 days of their receipt of
the notice specified in the previous sentence. The notice shall set forth the
number (on an aggregate basis and allocated among the BCI Parties) of Ordinary
Shares that the BCI Parties elect to have the Company repurchase. If such notice
is not received within the 15-day period specified above, the BCI Parties shall
be deemed to have waived its rights hereunder. The closing of such repurchase
shall take place on the fifth day after the 15-day period referred to in the
previous sentence. At such closing, (i) the BCI Parties shall deliver to the
Company the certificate or certificates representing all of the Ordinary Shares
that are being repurchased and (ii) the Company shall deliver the aggregate
purchase price for such Ordinary Shares by wire transfer of immediately
available U.S. dollar funds to such account as the BCI Parties direct by written
notice delivered to the Company at least two (2) Business Days before such
closing.
(f) Each of the New Shareholders shall vote all of its Ordinary
Shares, and shall take all other necessary or desirable actions within its
control (whether in its capacity as Shareholder or otherwise), and shall cause
its respective designees, if any, elected to the
30
Company's Board of Directors to take all other action necessary, to approve (to
the extent such approval is required under the Articles of Association) the
repurchase by the Company of Ordinary Shares in the manner set forth in this
Section 8.2.
Section 8.3. Covenants Relating to Use of Technology. (a) For a
period of five years after the Closing Date, the Company shall direct its
Subsidiaries to use primarily CDMA technology, including IS95A, cdma2000 1x,
cdma2000 1xEV or its successor standard in the 1.9 gigahertz frequency band.
(b) For a period of ten years after the Closing Date, the Company
shall cause at least 90% of the CDMA terminals purchased or otherwise acquired
in each year by the Subsidiaries and (to the extent practicable and relevant)
their Affiliates (including, without limitation, terminals purchased and
distributed by third parties pursuant to arrangements with the Subsidiaries and
their Affiliates) to utilize QUALCOMM ASIC chips; provided, however, that
terminals using such chips are available and are offered under commercially
reasonable terms.
(c) For a period of ten years after the Closing Date, the Company
shall cause the Subsidiaries and (to the extent practicable and relevant) their
Affiliates to purchase CDMA test equipment from QUALCOMM; provided, however,
that such equipment is available and is offered under commercially reasonable
terms.
(d) The Company shall, and shall cause the Subsidiaries and (to the
extent practicable and relevant) their Affiliates, to cooperate with QUALCOMM to
advance the deployment of QUALCOMM's Binary Runtime for Wireless uniform
wireless application programming interface ("BREW") as follows:
(i) the relevant Subsidiaries and (to the extent practicable and
relevant) their Affiliates and QUALCOMM shall work in good faith to
negotiate and execute a definitive written agreement pursuant to which
such Subsidiaries (and to the extent practicable and relevant) their
Affiliates shall deploy or cause the deployment of QUALCOMM's BREW
technology and utilize BREW middleware services from QUALCOMM, in
connection therewith, such agreement to be on commercially reasonable
terms at least as favorable as could otherwise be obtained with a Person
who is not an Affiliate of the Company;
(ii) the relevant Subsidiaries and (to the extent practicable
and relevant) their Affiliates shall publicly express support for the
BREW platform; and
(iii) the relevant Subsidiaries and (to the extent practicable
and relevant) their Affiliates shall cooperate to encourage application
developers to develop applications for operation under the BREW
environment.
(e) QUALCOMM and the Company shall work in good faith to
negotiate and execute a definitive written agreement with VeloCom pursuant to
which VeloCom would develop the 3.4GHz spectrum in the Region for VeloCom's own
account, subject to consent of
31
the creditors of the Operating Companies. VeloCom shall fund all network
development with additional funds VeloCom shall raise from third parties.
QUALCOMM and the Company shall work in good faith to cause the Operating
Companies to negotiate and execute definitive written agreements with VeloCom in
respect of infrastructure sharing and revenue agreements for the 3.4GHz
spectrum, provided that the terms of such agreements shall be at an arms-length
basis on commercially reasonable terms at least as favorable as could otherwise
be obtained with a Person who is not an Affiliate of the Operating Companies and
shall comply with all covenants required by creditors of the Operating
Companies. The Company or its Subsidiaries shall have the right to purchase the
company that VeloCom establishes to develop the 3.4GHz spectrum. The purchase
price of such company shall be paid on an installment schedule to be agreed upon
by the parties and shall be based on fair market value as determined by an
internationally recognized investment banker mutually acceptable to QUALCOMM and
VeloCom; provided, however, that in no event shall such purchase price be less
than the total amount of capital invested by VeloCom at such date in connection
with its development of the 3.4GHz spectrum.
Section 8.4. Confidentiality. Each Shareholder and Vendor shall use,
and shall cause its Affiliates, employees and agents to use, their reasonable
best efforts to ensure that the terms of this Agreement and confidential
proprietary information concerning the business and affairs of the Company and
its Subsidiaries are not disclosed to third parties unless otherwise approved by
a Super Majority Vote; provided, that, such information may be disclosed to
third parties (i) to the extent reasonably required to accomplish any proposed
Transfer under Article VI, if the transferees agree in writing to keep such
information confidential, (ii) as necessary in connection with any private
offering of securities held by a Shareholder or any of its Affiliates, if the
offerees agree in writing to keep such information confidential, (iii) as
necessary in connection with any Public Offering of securities of a Shareholder
or any of its Affiliates (and related reporting obligations occasioned thereby)
or (iv) as required by law.
Section 8.5. No U.S. Trade or Business. The New Shareholders shall
use their reasonable best efforts in order to cause the Company and its
Subsidiaries to conduct their respective businesses so that it or they will not
be considered to be engaged in a trade or business in the United States for U.S.
Federal income tax purposes; provided, however, that each member of the Board of
Directors or of any committee thereof may participate in a meeting of the Board
or of such committee by means of conference telephone or similar communications
equipment from the United States.
Section 8.6. Registration Rights. The Company shall enter into the
Registration Rights Agreement pursuant to which certain Shareholders shall have
the right to cause the Company to register Ordinary Shares held by such
Shareholders.
Section 8.7 Financial Information. (a) The Company shall deliver, or
cause to be delivered, to each New Shareholder and Vendor (for so long as such
Person shall hold Ordinary Shares or Warrants):
(i) As soon as practicable and in any event within 120 days after
the end of each Fiscal Year, beginning with the Fiscal Year ending December 31,
2001, the audited consolidated balance sheet of the Company and its Subsidiaries
as of the end of such year and the related consolidated statements of income or
operations, shareholders' equity and cash flows
32
for such Fiscal Year, together with unaudited consolidating schedules for the
Company and its Subsidiaries with respect to each of such financial statements,
in each case setting forth in comparative form the figures for the previous
Fiscal Year, and accompanied by the opinion of independent certified public
accountants of recognized standing, which opinion shall state that such
consolidated financial statements present fairly the financial position and
results of operations for the periods indicated in conformity with GAAP; and
(ii) As soon as practicable and in any event within 60 days after
the end of each Fiscal Quarter, unaudited financial statements, including
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such quarter and the related unaudited consolidated statements of income,
stockholders' equity and cash flow for such quarter and the portion of the
Fiscal Year ended at the end of such quarter, setting forth in each case in
comparative form the consolidated figures for the corresponding periods of the
prior Fiscal Year, all in reasonable detail and certified by the Company's Chief
Financial Officer as fairly presenting the consolidated financial condition of
the Company and its Subsidiaries, as the case may be, as of the dates indicated,
and their consolidated results of operations and cash flows for the periods
indicated, in conformity with GAAP, subject to customary year-end adjustments
and the absence of footnotes.
(b) The Company shall deliver, or cause to be delivered, to the BCI
Parties:
(i) within 15 days of filing, such financial statements of the
Operating Companies as are required to be filed with the Brazilian Commercial
Registry; and
(ii) within 15 days of a request by the BCI Parties, such
information as shall be reasonably necessary for the BCI Parties to assess the
valuation of a proposed issuance by the Company of Ordinary Shares or other
capital stock of the Company which gives rise to Preemptive Rights under Section
3.6 (subject to the BCI Parties entering into appropriate confidentiality
arrangements with the Company).
Section 8.8 QUALCOMM Note. (a) The Company shall not, and each New
Shareholder shall take all necessary or desirable actions within its control
(whether in its capacity as Shareholder or otherwise) to cause the Company not
to, and shall cause its respective designees, if any, elected to the Company's
Board of Directors not to, declare or pay any dividend so long as any amounts
remain outstanding under the QUALCOMM Note, unless consented to by QUALCOMM.
(b) Until the date on which no amounts remain outstanding under the
QUALCOMM Note, the Company shall cause the Operating Companies to distribute
directly or indirectly all Excess Cash to the Company and the Company shall
apply such Excess Cash toward the repayment of any outstanding amounts under the
QUALCOMM Note, in each case to the extent permitted by applicable law. Each of
the New Shareholders shall vote all of its Ordinary Shares, and shall take all
other necessary or desirable actions within its control (whether in its capacity
as Shareholder or otherwise), and shall cause its respective designees, if any,
elected to the Company's Board of Directors (and the Boards of Directors of the
relevant Subsidiaries of the Company) to take all other action necessary, to
cause the provisions of this Section 8.8(b) to be implemented and complied with.
For purposes of this Section 8.8, "Excess
33
Cash" shall mean, with respect to an Operating Company, all cash of such
Operating Company in excess of the cash necessary to (i) fund the ongoing
ordinary course operations for the next six months of such Operating Company
pursuant to its business plan then in effect, and (without duplication) (ii)
make all scheduled payments of principal of and interest on all then outstanding
Indebtedness of such Operating Company due within the next six months.
ARTICLE IX
TERMINATION AND DISSOLUTION
Section 9.1. Termination and Dissolution. This Agreement shall
become effective upon execution by the parties listed on the signature pages
hereto, and, except as otherwise provided in this Agreement, the provisions of
this Agreement shall remain in full force and effect as between the Shareholders
and the Vendors until such time as (x) any such Shareholder shall cease to hold
any Ordinary Shares or (y) any such Vendor shall cease to own any Ordinary
Shares or Warrants, in which case, this Agreement (other than Section 8.4) shall
terminate in respect of such Shareholder or Vendor only. The New Shareholders
shall be entitled to terminate this Agreement in the event of the appointment of
a receiver/liquidator of the Company or the Operating Companies resulting in
substantial disruption of the Business of the Operating Companies for more than
120 Days. The termination of this Agreement, for whatever cause, shall not
affect any provision of this Agreement which expressly operates in the event of
or despite expiry or termination of this Agreement, and termination of this
Agreement shall be without prejudice to any claim which has been made or may be
made by one of the parties hereto against another for breach by such other party
of any of its obligations under this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand, mail or overnight courier service, or sent by fax, as
follows:
If to the Company or any
Subsidiary thereof, to:
▇/▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
Georgetown, Grand Cayman, Cayman Islands
with a copy to: VeloCom and QUALCOMM
If to the BCI Parties, to:
34
▇▇▇▇ Canada International (Brazil
Telecom I) Limited
Arawak ▇▇▇▇▇▇▇▇
Road Town, Tortola
British Virgin Islands
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇ Canada International Inc.
1000 de La Gauchetiere St. West
Suite 1100
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Vice-President, Law and
Corporate Secretary
If to VeloCom, to:
VeloCom, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
with a copy to:
VeloCom, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
If to QUALCOMM, to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
35
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lucent, to:
Lucent Technologies Inc.
▇▇▇-▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
If to Nortel, to:
Nortel Networks Limited
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Treasurer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
with copy to:
Nortel Networks (CALA) Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Secretary
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
If to Ericsson, to:
Telefonaktiebolaget LM Ericsson (Publ.)
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: CFO
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
36
If to ▇▇▇▇▇▇ Corporation, to:
▇▇▇▇▇▇ Corporation
Building A/1250
▇▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
with copy to:
▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ Corporation
Microwave Communications
Division
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Any party hereto may change its address or fax number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be effective upon receipt.
Section 10.2. Binding Nature of Agreement. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto, their successors in interest and their permitted assigns.
Section 10.3. Descriptive Headings The descriptive headings of the
several sections and paragraphs of this Agreement are inserted for reference
only and shall not limit or otherwise affect the meaning hereof.
Section 10.4. Specific Performance. Without limiting the rights of
each party hereto to pursue all other legal and equitable rights available to
such party for the other parties' failure to perform their obligations under
this Agreement, the parties hereto acknowledge and agree that the remedy at law
for any failure to perform their obligations hereunder would be inadequate and
that each of them, respectively, shall be entitled to seek specific performance,
injunctive relief or other equitable remedies in the event of any such failure.
Section 10.5. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAW THEREOF OTHER THAN SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW.
37
Section 10.6. Counterparts; Facsimile Signatures. This Agreement may
be executed simultaneously in any number of counterparts, each of which shall be
deemed an original, but all such counterparts shall together constitute one and
the same instrument. This Agreement may be executed by facsimile signatures.
Section 10.7. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
Section 10.8. Entire Agreement. This Agreement is intended by the
parties hereto as a final and complete expression of their agreement and
understanding with respect to the subject matter contained herein and supersedes
all prior agreements, negotiations and understandings, written or oral, among
the parties with respect to the subject matter hereof and thereof.
Section 10.9. Amendment and Waiver. Any provision of this Agreement
may be amended if, but only if, such amendment is in writing and is signed by
the New Shareholders; provided that any such amendment that adversely affects
the rights and obligations of a specific Shareholder or Vendor shall require the
written consent of such Shareholder or Vendor. Any provision may be waived if,
but only if, such waiver is in writing and is signed by or on behalf of the
party waiving such provision.
Section 10.10. No Third Party Beneficiaries. Nothing in this
Agreement shall convey any rights upon any person or entity which is not a party
to this Agreement, except as expressly set forth herein.
Section 10.11. Arbitration. (a) Except as otherwise provided in
Section 10.4, the parties agree to submit any disputes arising out of, relating
to, or in connection with, the interpretation, execution, or performance of this
Agreement to final and binding arbitration in New York, New York, United States
of America. The rules of the International Chamber of Commerce ("ICC") shall
apply except to the extent modified by this Section 10.11.
(b) The parties agree that the choice of arbitrators shall be as
follows:
(1) If there are only two sides to a dispute, one (1) arbitrator
shall be appointed by each side and the third shall be selected by the
two party-appointed arbitrators or, failing agreement, by the ICC, in
accordance with the rules of the ICC.
(2) If there are more than two sides to a dispute, then the
three (3) arbitrators shall be appointed by the parties to the dispute
in accordance with the rules of the ICC established for the appointment
of a sole arbitrator. If the parties are not able to agree on all three
arbitrators then the International Chamber of Commerce shall appoint the
remaining one, two or three arbitrators in accordance with the rules of
the ICC.
38
(c) The arbitration shall be held in the English language. The
parties agree that the obligations herein are "commercial" and that the New York
Convention on Recognition and Enforcement of Foreign Arbitral Awards is
applicable or, if such convention has not then been ratified by the Cayman
Islands, the Inter-American Convention on International Commercial Arbitration
shall also apply. The prevailing party/parties shall be entitled to recover from
the other party/parties (as part of the arbitral award or order) its or their
reasonable attorneys' fees and other costs of arbitration.
(d) Any decision or award of the arbitral tribunal shall be final
and binding upon the parties to the arbitration proceeding. The parties hereby
waive to the extent permitted by law any rights to appeal or to review of such
award by any court or tribunal. The arbitral award may be enforced against the
parties to the arbitration proceeding or their assets wherever they may be found
and a judgment upon the arbitral award may be entered in any court having
jurisdiction thereof.
(e) To the extent that each party has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, it
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement.
Section 10.12. Survival. The representations and warranties,
covenants, agreements and the provisions of this Article X contained herein
shall survive the execution and delivery hereof or any related statute of
limitations, and shall survive the termination of this Agreement indefinitely.
Section 10.13. Expenses. Except as specifically provided for in
Section 3.2(c), each party shall bear its own expenses incurred in connection
with the negotiation, execution and closing of this Agreement and the related
agreements and the transactions contemplated hereby and thereby.
39
S-1
This is a signature page of the Subscription and Shareholders Agreement and
shall constitute an integral part thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Subscription
and Shareholders Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
Sworn to before me this VESPER HOLDING, LTD.
___ day of ____________.
_______________________ By: _______________________________
Notary Public Name:
Title:
S-2
Sworn to before me this VELOCOM INC.
___ day of ____________.
_______________________ By: _______________________________
Notary Public Name:
Title:
S-3
Sworn to before me this ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
___ day of ____________.
_______________________ By: _______________________________
Notary Public Name:
Title:
S-4
Sworn to before me this ▇▇▇▇ CANADA INTERNATIONAL (BRAZIL
TELECOM I) LIMITED
___ day of ____________.
_______________________ By: _______________________________
Notary Public Name:
Title:
Sworn to before me this ▇▇▇▇ CANADA INTERNATIONAL
(MEGATEL) LIMITED
___ day of ____________.
_______________________ By: _______________________________
Notary Public Name:
Title:
Sworn to before me this ▇▇▇▇ CANADA INTERNATIONAL
(ESPELHO SUL) LIMITED
___ day of ____________.
_______________________ By: _______________________________
Notary Public Name:
Title:
S-5
Sworn to before me this NORTEL NETWORKS LIMITED
___ day of ____________.
_______________________ By: _______________________________
Notary Public Name:
Title:
S-6
Sworn to before me this LUCENT TECHNOLOGIES INC.
___ day of ____________.
_______________________ By: _______________________________
Notary Public Name:
Title:
S-7
Sworn to before me this TELEFONAKTIEBOLAGET LM ERICSSON
(PUBL.)
___ day of ____________.
_______________________ By: _______________________________
Notary Public Name:
Title:
S-8
Sworn to before me this ▇▇▇▇▇▇ CORPORATION
___ day of ____________.
_______________________ By: _______________________________
Notary Public Name:
Title: