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CPFL ENERGIA S.A.
- American Depositary Shares
each representing three Common Shares
INTERNATIONAL PURCHASE AGREEMENT
Dated: -, 2004
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CPFL ENERGIA S.A.
- American Depositary Shares
each representing three Common Shares
INTERNATIONAL PURCHASE AGREEMENT
-, 2004
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Pactual Capital Corporation
as International Representatives of the several International Underwriters
c/o Merrill Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
CPFL Energia S.A., a Brazilian corporation (the "Company"), and the other
entities listed in Schedule B hereto (the "Selling Shareholders") confirm their
respective agreements with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), Pactual Capital Corporation ("Pactual")
and each of the other underwriters named in Schedule A hereto (collectively, the
"International Underwriters", which term shall also include any underwriter
substituted as hereinafter provided in Section 11 hereof) for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇
and Pactual are acting as representatives (in such capacity, the "International
Representatives"), with respect to the issue and sale by the Company and the
sale by the Selling Shareholders, acting severally and not jointly, and the
purchase by the International Underwriters, acting severally and not jointly, of
the respective numbers of American Depositary Shares ("ADSs"), each ADS
representing three common shares, without par value, of the Company ("Common
Shares"), set forth in Schedules A and B hereto, and with respect to the grant
by the Company and the Selling Shareholders to the International Underwriters,
acting severally and not jointly, of the option described in Section 2(b) hereof
for the International Underwriters to purchase all or any part of - additional
ADSs, to cover overallotments, if any. The aforesaid - ADSs (the "International
Initial Securities") to be purchased by the International Underwriters and all
or any part of the - ADSs subject to the option described in Section 2(b) hereof
(the "International Option Securities") are hereinafter called, collectively,
the "International Securities". The offer of the International Securities by the
International Underwriters is hereinafter called the "International Offering".
The Common Shares to be represented by ADSs are hereinafter referred to as
the "Underlying Shares". The Underlying Shares are to be deposited pursuant to a
deposit agreement (the "Deposit Agreement"), among the Company, The Bank of New
York, as depositary (the "Depositary"), and the owners and beneficial owners
from time to time of the
American Depositary Receipts ("ADRs") to be issued under the Deposit Agreement
and evidencing the ADSs.
It is understood that the Company and the Selling Shareholders are
concurrently entering into an agreement dated the date hereof (the "Brazilian
Underwriting Agreement") providing for the sale by the Company and the Selling
Shareholders in Brazil (the "Brazilian Offering") of an aggregate of - Common
Shares (the "Brazilian Initial Securities") through arrangements with certain
Brazilian underwriters named in that agreement (the "Brazilian Underwriters")
for whom Banco ▇▇▇▇▇▇▇ ▇▇▇▇▇ de Investimentos S.A. and Banco Pactual S.A. are
acting as coordinators (together, the "Brazilian Coordinators"). The Company and
the Selling Shareholders have also granted an option to one of the Brazilian
Underwriters to purchase up to an additional - Common Shares (the "Brazilian
Option Securities" and together with the Brazilian Initial Securities, the
"Brazilian Securities") to cover overallotments, if any. The closing of the
International Offering contemplated by this Agreement is contingent upon the
contemporaneous closing of the Brazilian Offering contemplated by the Brazilian
Underwriting Agreement.
The International Underwriters and the Brazilian Underwriters are
hereinafter collectively called the "Underwriters", the International Initial
Securities and the Brazilian Initial Securities are referred to collectively
herein as the "Initial Securities", and the International Securities and the
Brazilian Securities are hereinafter collectively called the "Securities". The
International Offering and the Brazilian Offering are hereinafter collectively
called the "Offerings". This Agreement and the Brazilian Underwriting Agreement
are hereinafter collectively called the "Purchase Agreements". Unless the
context otherwise requires, references to the "Securities" herein shall also
constitute references both to the Common Shares and to the ADSs (and to the
Underlying Shares). All references to "US dollars" or "$" herein are to United
States dollars.
The International Underwriters and the Brazilian Coordinators will
concurrently enter into an agreement among syndicates of even date herewith (the
"Intersyndicate Agreement") providing for the coordination of certain
transactions among the Underwriters under the direction of ▇▇▇▇▇▇▇ ▇▇▇▇▇ (in
such capacity, the "Global Coordinator").
The Company and the Selling Shareholders understand that the International
Underwriters propose to make a public offering of the International Securities
as soon as the International Representatives deem advisable after this Agreement
has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form F-1 (No. 333-118494), including
the related preliminary prospectus or prospectuses, covering the registration of
the Underlying Shares under the Securities Act of 1933, as amended (the "1933
Act"). Such registration statement also relates to the Brazilian Securities that
are being registered solely for the purpose of their resale in the United States
in such transactions as require registration under the 1933 Act. Promptly after
execution and delivery of this Agreement, the Company will prepare and file a
prospectus in accordance with the provisions of Rule 430A ("Rule 430A") of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of the 1933 Act
Regulations. Two forms of prospectus are to be used in
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connection with the offering and sale of the Securities: one relating to the
International Securities (the "Form of International Prospectus") and one, in
Portuguese, relating to the offering and sale of the Brazilian Securities (the
"Form of Brazilian Prospectus"). The information included in the Form of
International Prospectus that was omitted from such registration statement at
the time it became effective but that is deemed to be part of such registration
statement at the time it became effective pursuant to paragraph (b) of Rule 430A
is referred to as "Rule 430A Information". Each Form of International Prospectus
used before such registration statement became effective, and any prospectus
that omitted the Rule 430A Information that was used after such effectiveness
and prior to the execution and delivery of this Agreement, is herein called a
"preliminary prospectus". Such registration statement, including the exhibits
and any schedules thereto, at the time it became effective and including the
Rule 430A Information is herein called the "Registration Statement". Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
is herein referred to as the "Rule 462(b) Registration Statement", and after
such filing the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The final Form of International Prospectus and the final
Form of Brazilian Prospectus, in the forms first furnished to the Underwriters
for use in connection with the Offerings are herein called the "Prospectus" and
the "Brazilian Prospectus", respectively. For purposes of this Agreement, all
references to the Registration Statement, any preliminary prospectus, the
Prospectus or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
The Company and the Depositary have prepared and filed with the Commission
a registration statement on Form F-6 (No. 333-118760) and a related prospectus,
which may be in the form of the ADR certificate, for registration under the 1933
Act of the ADSs evidenced by ADRs, have filed such amendments thereto and such
amended preliminary prospectuses as may have been required to the date hereof,
and will file such additional amendments thereto and such amended prospectuses
as may hereafter be required. The registration statement on Form F-6 for
registration of the ADSs evidenced by ADRs, as amended at the time it becomes
effective (including by the filing of any post-effective amendments thereto),
and the prospectus included therein, as then amended, are hereinafter called the
"ADR Registration Statement" and the "ADR Prospectus", respectively.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to each International Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(d) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(d) hereof, and agrees with each International
Underwriter, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement, any Rule 462(b) Registration Statement and the ADR
Registration Statement and any post-effective amendment thereto has become
effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement, any Rule 462(b) Registration
Statement or the ADR Registration Statement and any post-effective
amendment thereto has been issued under the 1933 Act and no proceedings
for that purpose have been instituted or are pending or, to the knowledge
of the Company, are
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contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any International Option
Securities are purchased, at the relevant Date of Delivery), the
Registration Statement, the Rule 462(b) Registration Statement and any
amendments and supplements thereto complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Neither the Prospectus nor any amendments or supplements thereto at the
time the Prospectus or any such amendment or supplement thereto was issued
and at the Closing Time (and, if any International Option Securities are
purchased, at the Date of Delivery), included or will include an untrue
statement of a material fact or omitted or will omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or Prospectus
made in reliance upon and in conformity with written information furnished
to the Company by (i) any International Underwriter through the
International Representatives expressly for use in the Registration
Statement (or any amendment thereto) or the Prospectus (or any amendment
or supplement thereto), it being agreed and understood that the only such
information is that described as such in Section 7(b) hereof or (ii) any
Selling Shareholder expressly for use in the Registration Statement (or
any amendment thereto) or the Prospectus (or any amendment or supplement
thereto), it being agreed and understood that the only such information is
that described in Section 7(a) hereof.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when
so filed in all material respects with the 1933 Act and the 1933 Act
Regulations and each preliminary prospectus and the Prospectus delivered
to the Underwriters for use in connection with the International Offering
was identical to the electronically transmitted copies thereof filed with
the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
At the time the ADR Registration Statement became effective and at
the Closing Time (and, if any International Option Securities are
purchased, at the relevant Date of Delivery), the ADR Registration
Statement complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and did not and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. The ADR Prospectus, at the time the ADR
Prospectus or any amendment or supplement thereto was issued and at the
Closing Time (and, if any International Option Securities are purchased,
at the relevant Date of Delivery), did not and will not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not
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misleading.
(ii) Independent Accountants. Deloitte Touche Tohmatsu Auditores
Independentes, independent auditors, and PricewaterhouseCoopers Auditores
Independentes, independent auditors, which have certified the financial
statements and supporting schedules included in the Registration Statement
and the Prospectus are independent public accountants in accordance with
the accounting standards established by the Instituto dos Auditores
Independentes do Brasil and the Conselho Federal de Contabilidade and as
required by the 1933 Act and the 1933 Act Regulations.
(iii) Financial Statements. The Company's financial statements
included in the Registration Statement and the Prospectus, together with
the related schedules and notes thereto, present fairly the financial
position of the Company and its consolidated subsidiaries at the dates
indicated and the statements of operations, changes in shareholders'
equity, changes in financial position and changes in cash flows of the
Company and its consolidated subsidiaries for the periods specified; and
such financial statements have been prepared, in all material respects, in
conformity with Law No. 6,404 (the "Corporation Law"), the rules and
regulations issued by the Comissao de Valores Mobiliarios (the "CVM") and
the accounting standards issued by the Instituto dos Auditores
Independentes do Brasil -- IBRACON ("Brazilian Accounting Principles")
applied on a consistent basis throughout the periods covered thereby, and
contain all required reconciliations to United States generally accepted
accounting principles ("U.S. GAAP"). The financial statements of Rio
Grande Energia S.A. ("RGE") included in the Registration Statement and the
Prospectus, together with the related schedules and notes thereto, present
fairly the financial position of RGE and its consolidated subsidiaries at
the dates indicated and the statements of operations, changes in
shareholders' equity, changes in financial position and changes of cash
flow of RGE and its consolidated subsidiaries for the periods specified;
and such financial statements have been prepared, in all material
respects, in conformity with Brazilian Accounting Principles applied on a
consistent basis throughout the periods covered thereby. The supporting
schedules included in the Registration Statement and the Prospectus
present fairly in accordance with Brazilian Accounting Principles the
information required to be stated therein. The selected financial data and
the summary financial information included in the Prospectus present
fairly the information shown therein and have been compiled on a basis
consistent with that of the Company's audited financial statements
included in the Registration Statement and the Prospectus.
(iv) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business (a "Material Adverse Effect"), (B) there
have been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, that
are material with respect to the Company and its subsidiaries considered
as one enterprise, and (C) there has been no dividend, interest or
5
other distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
(v) Organization of the Company. The Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the Federative Republic of Brazil ("Brazil"), and has
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectus and to enter into
and perform its obligations under this Agreement and the Deposit Agreement
(together, the "Principal Agreements"), and the Company is duly qualified
as a foreign corporation to transact business and is in good standing in
each other jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or to be in good standing
would not result in a Material Adverse Effect.
(vi) Organization of Subsidiaries. Each subsidiary of the Company
has been duly incorporated and is validly existing as a corporation in
good standing under the laws of Brazil, and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus and
is duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify or to be in
good standing would not result in a Material Adverse Effect; all of the
issued and outstanding capital stock of each such subsidiary has been duly
authorized and validly issued, is fully paid and nonassessable and, to the
extent such ownership is disclosed in the Registration Statement and the
Prospectus, is owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity other than such security interests,
mortgages, pledges, liens and encumbrances disclosed in the Registration
Statement and the Prospectus; and none of the outstanding shares of
capital stock of any subsidiary were issued in violation of the preemptive
or similar rights of any securityholder of such subsidiary. The only
"subsidiaries" of the Company are the entities listed on Exhibit 21.1 to
the Registration Statement. As used in this agreement, the term
"subsidiaries" shall have the meaning ascribed to such term in the
immediately preceding sentence.
(vii) Capitalization. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus in the column
entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to the Purchase Agreements or
pursuant to the exercise, or conversion, of the subscription rights held
by the International Finance Corporation referred to in the Prospectus).
The shares of issued and outstanding capital stock of the Company,
including the Securities to be purchased by the Underwriters from the
Selling Shareholders, have been duly authorized and validly issued in
compliance with all applicable Brazilian laws and are fully paid and
non-assessable; and none of the outstanding shares of capital stock,
including the Securities to be purchased by the Underwriters from the
Selling Shareholders, were issued in violation of the preemptive or other
similar rights of any securityholder of the Company. Except as disclosed
in the Registration Statement and the Prospectus, there are no outstanding
securities convertible into or exchangeable for, or warrants or rights to
6
purchase from the Company Common Shares or any other shares of capital
stock of the Company or any of its subsidiaries nor are there any
obligations of the Company to allot, issue or transfer, the Securities.
(viii) Authorization of Purchase Agreements. Each of this Agreement
and the Brazilian Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
(ix) Authorization of Deposit Agreement. The Deposit Agreement has
been duly authorized, executed and delivered by the Company and, assuming
due authorization, execution and delivery thereof by the Depositary,
constitutes a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject as
to enforcement to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights generally
and to general equity principles and, with respect to enforceability in
Brazil, subject to proper notarization and legalization of the Deposit
Agreement with a Brazilian Consulate, registration with the appropriate
Registry of Titles and Deeds in Brazil and translation into Portuguese by
a sworn translator. The Deposit Agreement conforms in all material
respects to the description thereof contained in the Registration
Statement and the Prospectus.
(x) Validity of ADRs. Upon the due and authorized issuance by the
Depositary of ADRs evidencing the ADSs against the deposit of the
Underlying Shares in accordance with the provisions of the Deposit
Agreement, such ADRs will be duly and validly issued under the Deposit
Agreement and persons in whose names such ADRs are registered will be
entitled to the rights of registered holders of ADRs evidencing the ADSs
specified therein and in the Deposit Agreement. The ADRs conform in all
material respects to the description thereof contained in the Registration
Statement and the Prospectus.
(xi) No Limitation on Vote, Transfer. Except as disclosed in the
Registration Statement and the Prospectus, there are no limitations on the
rights of holders of Common Shares, ADSs or ADRs evidencing the ADSs to
hold or vote or transfer their respective securities.
(xii) No Limitation on Payment of Dividends by the Company. Except
as disclosed in the Registration Statement and the Prospectus, no
approvals are currently required in Brazil in order for the Company to pay
dividends, interest on company capital or other distributions declared by
the Company to the holders of Common Shares, including the Depositary and,
except as disclosed in the Registration Statement and the Prospectus,
under current laws and regulations of Brazil and any political subdivision
thereof, any amounts payable with respect to the Underlying Shares upon
liquidation of the Company or upon redemption thereof and dividends,
interest and other distributions declared and payable on the Underlying
Shares may be paid by the Company to the Depositary in Brazilian reais
that may be converted into foreign currency and freely transferred out of
Brazil, as long as the investment in respect of the Underlying Shares is
registered with the Banco Central do Brasil (the "Central Bank"), and,
except as
7
disclosed in the Registration Statement and the Prospectus, no such
payments made to holders thereof or therein who are non-residents of
Brazil will be subject to income, withholding or other taxes under laws
and regulations of Brazil or any political subdivision or taxing authority
thereof or therein and will otherwise be free and clear of any other tax,
duty, withholding or deduction in Brazil or any political subdivision or
taxing authority thereof or therein and without the necessity of obtaining
any governmental authorization in Brazil or any political subdivision or
taxing authority thereof or therein as long as the investment in respect
of the Underlying Shares is registered with the Central Bank.
(xiii) No Limitation on Payment of Dividends or Transfer of Assets
by Subsidiaries. Except as disclosed in the Registration Statement and the
Prospectus, no subsidiary of the Company is currently prohibited, directly
or indirectly, from paying any dividends or other distributions to the
Company, from making any other distribution on such subsidiary's capital
stock, or from transferring any of such subsidiary's property or assets to
the Company.
(xiv) Authorization and Description of Securities. The Securities to
be purchased by the International Underwriters and the Brazilian
Underwriters from the Company have been duly authorized for issuance and
sale to the International Underwriters pursuant to this Agreement and to
the Brazilian Underwriters pursuant to the Brazilian Underwriting
Agreement, respectively, and, when issued and paid for in accordance with
this Agreement or the Brazilian Underwriting Agreement, as the case may
be, and, in the case of the ADSs, the Deposit Agreement, will be validly
issued, fully paid and non-assessable and will be issued free and clear of
all security interests, mortgages, pledges, liens, encumbrances, claims or
equities; the Common Shares carry, and the ADRs and the ADSs will carry,
the rights and obligations described in the Prospectus, including
statements under the captions "Description of Capital Stock" and
"Description of American Depositary Shares" and such descriptions conform
in all material respects to the rights set forth in the instruments
defining the same; no holder of the Securities is or will be subject to
personal liability by reason of being such a holder; and the issuance of
the Securities is not subject to the preemptive or other similar rights of
any securityholder of the Company.
(xv) Absence of Defaults and Conflicts. Neither the Company nor any
of its subsidiaries is in violation of its estatuto social or other
equivalent constitutive or organizational documents or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, debenture, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or
by which it or any of them may be bound, or to which any of the property
or assets of the Company or any subsidiary is subject (collectively,
"Agreements and Instruments"), except for such defaults that would not,
singly or in aggregate, result in a Material Adverse Effect; and the
execution, delivery and performance of each of the Principal Agreements
and the consummation of the transactions contemplated in each of the
Principal Agreements and in the Registration Statement and the Prospectus
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the
8
Securities as described in the Prospectus under the caption "Use of
Proceeds") and compliance by the Company with its obligations under each
of the Principal Agreements have been duly authorized by all necessary
corporate action and all required approvals from each applicable
governmental or regulatory body have been received and do not and will
not, whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
or any subsidiary pursuant to, the Agreements and Instruments (except for
such conflicts, breaches, defaults or Repayment Events or liens, charges
or encumbrances that would not result in a Material Adverse Effect), nor
will such action result in any violation of the provisions of the estatuto
social or other equivalent constitutive documents of the Company or any
subsidiary or any applicable treaty, law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
the Company or any subsidiary or any of their assets, properties or
operations. As used herein, a "Repayment Event" means any event or
condition that gives the holder of any note, debenture or other evidence
of indebtedness (or any person acting on such holder's behalf) the right
to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company or any subsidiary.
(xvi) Arrangements with Directors, Executive Officers and
Affiliates. There is no material indebtedness and no relationships or
transactions between the Company on the one hand and its affiliates,
officers or directors (or any person related to such officer or director
including his/her spouse or infant children, or any company or undertaking
in which he/she holds a controlling interest) or their shareholders,
customers or suppliers on the other hand which, although required to be
disclosed, are not disclosed in the Registration Statement and the
Prospectus.
(xvii) Absence of Labor Dispute. (A) No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge of
the Company, is imminent, and (B) the Company is not aware of any existing
or imminent labor disturbance by the employees of any of its or any
subsidiary's principal suppliers, manufacturers, customers or contractors,
which, in the case of either (A) or (B), would result in a Material
Adverse Effect.
(xviii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or
any subsidiary that is required to be disclosed in the Registration
Statement and the Prospectus (other than as disclosed therein), or which
might be reasonably likely to result in a Material Adverse Effect, or
which might materially and adversely affect the properties or assets
thereof or the consummation of the transactions contemplated in this
Agreement and the Brazilian Underwriting Agreement or the performance by
the Company of its obligations hereunder or thereunder; the aggregate of
all pending legal or governmental proceedings to which the Company or any
subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Registration
Statement and the
9
Prospectus, including ordinary routine litigation incidental to the
business, could not result in a Material Adverse Effect.
(xix) Possession of Intellectual Property. The Company and its
subsidiaries own or possess or otherwise have the legal right to use, or
can acquire on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade
names or other intellectual property (collectively, "Intellectual
Property") necessary to carry on the business now operated by them, and
neither the Company nor any of its subsidiaries has received any notice or
is otherwise aware of any infringement of or conflict with asserted rights
of others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
subsidiaries therein which infringement or conflict (if the subject of any
unfavorable decision, ruling or finding) or invalidity or inadequacy,
singly or in the aggregate, would result in a Material Adverse Effect.
(xx) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
or any stock exchange authority is necessary or required for the
performance by the Company of its obligations under any of this Agreement,
the Brazilian Underwriting Agreement or the Deposit Agreement in
connection with the offering, issuance or sale of the Securities under
this Agreement, the Brazilian Underwriting Agreement or the Deposit
Agreement or the consummation of the transactions contemplated by any of
this Agreement, the Brazilian Underwriting Agreement or the Deposit
Agreement except for (A) such as have been already made or obtained under
the 1933 Act or the 1933 Act Regulations; (B) the approval by the Banco
Central do Brasil (the "Central Bank") and the CVM of the Deposit
Agreement and qualification of the Deposit Agreement under Annex V to
Resolution No. 1,289 of March 20, 1987, as amended, of the Conselho
Monetario Nacional ("National Monetary Council"), which approval has been
already made or obtained or will be obtained prior to the Closing Time;
(C) the approval by the CVM of the offering of the Securities as
contemplated by this Agreement and the Brazilian Underwriting Agreement;
(D) the approval by the Central Bank of the payment of the fees,
commissions and expenses pursuant to this Agreement and the Deposit
Agreement, which approval has been already made or obtained or will be
obtained prior to the Closing Time; (E) the registration of the corporate
acts undertaken by the Company in connection with the International
Offering and the Brazilian Offering with the Junta Comercial (Board of
Commerce) of the State of Sao Paulo; (F) such as have been obtained under
the laws and regulations of jurisdictions outside the United States and
Brazil in which the International Securities are offered; (G) such as may
be required under the securities or Blue Sky laws of the various states in
the United States; and (H) such as have been already made to or obtained
from The New York Stock Exchange (the "NYSE").
(xxi) Absence of Manipulation. Neither the Company nor any director
or affiliate of the Company has taken, nor will the Company or any
director or affiliate take, directly or indirectly, any action which is
designed to or which has constituted or which
10
would be expected to cause or result in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale
of the Securities.
(xxii) Conduct of Business; Possession of Licenses and Permits. The
Company and each of its subsidiaries (A) has conducted and is conducting
its business in compliance with all applicable laws, rules, regulations
and industry codes of each jurisdiction in which its business is carried
out, including without limitation, Law No. 8,987, dated February 13, 1995,
Law No. 9,074, dated July 7, 1995, Law No. 10,438, dated April 26, 2002,
Law No. 10,604, dated December 17, 2002, and Law No. 10,748, dated March
15, 2004, all as amended, and all orders, regulations, rules, codes or
instruments issued or approved pursuant to the foregoing laws that apply
to the Company and its subsidiaries, and the rules, regulations and
policies of the Ministerio das Minas e Energia ("Ministry of Mines and
Energy"), the Agencia Nacional de Energia Eletrica ("▇▇▇▇▇") including,
without limitation, Resolution No. 22, dated February 4, 1999, Resolution
No. 63, dated May 12, 2004, and Resolution No. 444, dated October 26, 2001
(in each case as amended) and any other applicable Brazilian governmental
agency or body (collectively, the "Electricity Regulations") and (B)
possesses all such concessions, permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by,
and have made all declarations and filings with, the appropriate Brazilian
federal, state, local or other regulatory agencies or bodies required for
the authorization, execution and delivery by the Company of any of the
Principal Agreements or necessary to conduct the business now operated by
them, except where the failure so to possess would not, singly or in the
aggregate, result in a Material Adverse Effect; the Company and its
subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, result in a Material Adverse Effect; all of
the Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not, singly or
in the aggregate, result in a Material Adverse Effect; and neither the
Company nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental
Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material
Adverse Effect).
(xxiii) No Changes in Legislation, Regulation or Policy. Except as
disclosed in the Registration Statement and the Prospectus, there is (A)
no legislation, regulation or policy, whether existing or proposed, of any
Brazilian federal, state, local or other regulatory agency or body, nor
(B) to the knowledge of the Company, is there any pending or threatened
change in the Electricity Regulations, which would, in the case of (A) or
(B), singly or in the aggregate, result in a Material Adverse Effect.
(xxiv) Concession Contracts. (A) The Company's and each of its
subsidiaries' concession contracts with ▇▇▇▇▇ or any other governmental
entity with power to represent the Brazilian federal government are in
full force and effect, and have not been amended since the date of this
Agreement, and (B) neither the Company nor any of its subsidiaries has
received any notice of the termination of any of such contracts, or,
except as disclosed in the Registration Statement and the Prospectus, of
any adverse changes to
11
tariff rates in effect as of the date of this Agreement, set by ▇▇▇▇▇, or
by any other governmental entity with powers to set tariff rates, pursuant
to the terms of such contracts; except, in the case of each of either (A)
and (B), which would singly or in the aggregate, result in a Material
Adverse Effect.
(xxv) Title to Property. The Company and its subsidiaries have good
and marketable title to all material real property owned by the Company
and its subsidiaries and good title to all other properties owned by them,
in each case, free and clear of all mortgages, pledges, liens, security
interests, claims, restrictions or encumbrances of any kind except such as
(A) are disclosed in the Prospectus and the Registration Statement, (B)
specified in the concession agreement relating to such properties subject
to a concession agreement or (C) do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company or any of
its subsidiaries; and all of the leases and subleases material to the
business of the Company and its subsidiaries, considered as one
enterprise, and under which the Company or any of its subsidiaries holds
properties described in the Prospectus, are in full force and effect, and
neither the Company nor any subsidiary has any notice of any material
claim of any sort that has been asserted by anyone adverse to the rights
of the Company or any subsidiary under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company or
such subsidiary to the continued possession of the leased or subleased
premises under any such lease or sublease.
(xxvi) Sufficiency of Real Property Rights. The Company and its
subsidiaries own, lease or have easements in, over, across, along or upon,
all real property required by them to operate and carry on the electricity
generation and distribution businesses described in the Registration
Statement and the Prospectus as being carried on by them, except where the
failure so to own, lease or have easements would not, singly or in the
aggregate, result in a Material Adverse Effect.
(xxvii) Investment Company Act. The Company is not required, and
upon the issuance and sale of the Securities as contemplated in this
Agreement and the Brazilian Underwriting Agreement and the application of
the net proceeds therefrom as described in the Prospectus will not be
required, to register as an "investment company" under the U.S. Investment
Company Act of 1940, as amended (the "1940 Act").
(xxviii) PFIC Status. Neither the Company nor any of its
subsidiaries is, and upon the sale of the Securities contemplated by this
Agreement and the Brazilian Underwriting Agreement will not become, (A) a
"passive foreign investment company" as defined in Section 1297 of the
U.S. Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated thereunder or (B) a "foreign personal holding
company" as defined in Section 522 of the Code.
(xxix) Environmental Laws. Except as disclosed in the Registration
Statement and the Prospectus and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its subsidiaries is in violation of any Brazilian federal,
state or local or foreign statute, law, rule, regulation,
12
ordinance, code, policy or rule of law or any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent, decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating to
the release or threatened release of chemicals, pollutants, contaminants,
wastes, toxic substances, hazardous substances, petroleum or petroleum
products, asbestos-containing materials or mold (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials
(collectively, "Environmental Laws"), (B) the Company and its subsidiaries
have all permits, authorizations and approvals required under any
applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or, to the Company's knowledge,
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of its subsidiaries and (D) there are, to the Company's
knowledge, no events or circumstances that would reasonably be expected to
form the basis of an order for clean-up or remediation, or an action, suit
or proceeding by any private party or governmental body or agency, against
or affecting the Company or any of its subsidiaries relating to Hazardous
Materials or any Environmental Laws.
(xxx) Review of Effect of Environmental Laws. In the ordinary course
of its business, the Company periodically reviews the effect of
Environmental Laws on the business, operations and properties of the
Company and its subsidiaries, in the course of which it indemnifies and
evaluates associated costs and liabilities (including, without limitation,
any capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws, or any permit, license
or approvals, any related constraints on operating activities and any
potential liabilities to third parties); on the basis of such review,
except as disclosed in the Prospectus (exclusive of any amendment or
supplement thereto), the Company has reasonably concluded that such
associated costs and liabilities would not, singly or in the aggregate,
have a Material Adverse Effect, whether or not arising from transactions
in the ordinary course of business.
(xxxi) Registration Rights. Except as disclosed in the Registration
Statement and the Prospectus, there are no persons with registration
rights or other similar rights to have any securities registered pursuant
to the Registration Statement or otherwise registered by the Company under
the 1933 Act or with the CVM.
(xxxii) Tax Returns. The Company and its subsidiaries have duly
filed with the appropriate Brazilian taxing authorities all material tax
returns, reports and other information required to have been filed by any
of them up to the date hereof or have duly requested extensions thereof
and all such returns, reports and other information are up to date,
correct, and on a proper basis, and have paid all material taxes required
to be paid by them and any related assessments, charges, levies, fines or
penalties, except for any such taxes, assessments, charges, levies, fines
or penalties that are being contested in good faith and by appropriate
proceedings; and there is no known actual or proposed tax
13
deficiency, assessment, charge, levy, fine or penalty against it as to
which a reserve would be required to be established under Brazilian
Accounting Principles which has not been so reserved or which is required
to be disclosed in the Prospectus which has not been so disclosed and so
far as the Company is aware, there are no facts or circumstances in
existence which would reasonably be expected to give rise to any such
deficiency, assessment, charge, levy, fine or penalty.
(xxxiii) Accounting Procedures. The Company and each of its
subsidiaries (A) makes, keeps and prepares books, records and accounts
which fairly reflect transactions and dispositions of its assets and (B)
has devised and maintained a system of internal and accounting controls
which provide reasonable assurance that (I) transactions are executed in
accordance with management's general or specific authorizations; (II)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with Brazilian Accounting Principles; (III)
accountability of assets is maintained, including regular reconciliations
with existing assets and taking of appropriate action with respect to any
differences; (IV) access to its assets is permitted only in accordance
with management's general or specific authorizations; and (V) financial
reports are prepared on a timely basis based on the transactions recorded
pursuant to clause (II) above under Brazilian Accounting Principles. These
reports provide the basis for the preparation of the Company's
consolidated financial statements under Brazilian Accounting Principles
and have been maintained in compliance with applicable laws.
(xxxiv) Stamp Duty; Transfer Tax. No transaction, stamp, capital or
other issuance, registration or transfer taxes or duties are payable in
Brazil by or on behalf of the International Underwriters to any Brazilian
taxing authority in connection with (A) the issuance, sale and delivery by
the Company or the Selling Shareholders to or for the account of the
International Underwriters of the International Securities, (B) the
initial sale and delivery by the International Underwriters of the
International Securities to purchasers thereof, (C) the holding or
transfer outside Brazil of the International Securities, (D) the deposit
of the Underlying Shares with the Depositary and the issuance and delivery
of the corresponding ADRs, or (E) the execution and delivery of any
Principal Agreement, except withholding tax at the rate of 15% on fees and
expenses payable to the International Underwriters, which may be payable
at a rate of 10% by the Brazilian payor on payments made in connection
with the provision of certain technical services potentially including the
fees and expenses payable to the International Underwriters.
(xxxv) Insurance. The business, undertakings, properties and assets
of the Company and each of its subsidiaries are adequately insured against
all such risks as are normally insured by persons carrying on similar
businesses in Brazil as those carried on by the Company and any of its
subsidiaries, as the case may be, and such insurances include all the
insurances which the Company or any of its subsidiaries, as the case may
be, are required under terms of any material lease or any material
contract in respect of any of its properties to undertake and such
insurances are in full force and effect and, so far as the Company is
aware, there are no circumstances which would reasonably be expected to
render any of such insurances void or voidable and there is no material
insurance claim made by or against the Company or any of its subsidiaries,
pending,
14
outstanding or, to the knowledge of the Company, threatened and so far as
the Company is aware, no facts or circumstances exist which would
reasonably be expected to give rise to any such claim and all due premiums
in respect thereof have (if due) been paid.
(xxxvi) Choice of Law; Consent to Jurisdiction; Appointment of Agent
for Service of Process. The choice of the laws of the State of New York as
the governing law of this Agreement is a valid choice of law under the
laws of Brazil and will be honored by courts in Brazil. The Company has
the power and authority to submit, and pursuant to Section 14 of this
Agreement, has legally, validly, effectively and irrevocably submitted, to
the personal jurisdiction of each U.S. federal court and New York state
court located in the Borough of Manhattan, in The City of New York, New
York, U.S.A. (each, a "New York Court"), and the Company has the power to
designate, appoint and empower, and pursuant to Section 14 hereof, has
legally, validly, effectively and irrevocably designated, appointed and
empowered, the Authorized Agent (as defined in Section 14 hereof) for
service of process in any action arising out of or relating to this
Agreement or the Securities in any New York Court, and service of process
effected on such Authorized Agent will be effective to confer valid
personal jurisdiction over the Company as provided in Section 14 hereof.
(xxxvii) Waiver of Immunity. Neither the Company, any of its
subsidiaries nor any of its or their properties (except as specified in
the concession agreement relating to such properties subject to a
concession agreement), assets or revenues has any right of immunity under
Brazilian or New York law, from any legal action, suit or proceeding, from
the giving of any relief in any such legal action, suit or proceeding,
from set-off or counterclaim, from the jurisdiction of any Brazilian, New
York or U.S. federal court, from service of process, attachment upon or
prior to judgment, or attachment in aid of execution of judgment, or from
execution of a judgment, or other legal process or proceeding for the
giving of any relief or for the enforcement of a judgment, in any such
court, with respect to its obligations, liabilities or any other matter
under or arising out of or in connection with this Agreement or the
Brazilian Underwriting Agreement; and, to the extent that the Company, any
of its subsidiaries or any of its or their properties, assets or revenues
may have or may hereafter become entitled to any such right of immunity in
any such court in which proceedings may at any time be commenced, the
Company waives or will waive such right to the extent permitted by law and
has consented to such relief and enforcement as provided in Section 13
hereof.
(xxxviii) Enforceability of New York Judgment. Any final judgment
for a fixed or readily calculable sum of money rendered by a New York
Court having jurisdiction under its own domestic laws in respect of any
suit, action or proceeding against the Company based upon this Agreement
and the Deposit Agreement would be declared enforceable against the
Company by Brazilian courts without reexamination of the merits of the
case; provided that (A) it is for payment of a sum certain; (B) fulfills
all formalities required for its enforceability under the laws of the
country in which it was issued; (C) is issued by a competent court after
service of process on the Company or after sufficient evidence of the
Company's absence has been given, as required under applicable law; (D) is
not subject to appeal; (E) is authenticated by a Brazilian consulate in
the country in
15
which it is issued and is accompanied by a sworn translation in
Portuguese; and (F) is not contrary to Brazilian national sovereignty,
public policy or public morality.
(xxxix) Listing. The International Securities have been approved for
listing on the NYSE, subject to notice of issuance, and the Brazilian
Securities have been approved for listing on the Bolsa de Valores de Sao
Paulo ("BOVESPA").
(xl) Foreign Corrupt Practices. Neither the Company nor any of its
subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any of its subsidiaries is using or has
used any of the Company's or its subsidiaries corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses; is
making or has made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated
or is in violation of any provision of applicable Brazilian law or of the
U.S. Foreign Corrupt Practices Act of 1977, as amended; or made or is
making any other unlawful payment.
(b) Representations and Warranties by the Selling Shareholders. Each
Selling Shareholder, severally and not jointly, represents and warrants to each
International Underwriter as of the date hereof, as of the Closing Time, and, if
the Selling Shareholder is selling International Option Securities on a Date of
Delivery, as of each such Date of Delivery, and agrees with each International
Underwriter, as follows:
(i) Accurate Disclosure. To the knowledge of such Selling
Shareholder, the representations and warranties of the Company contained
in Section 1(a) hereof are true and correct; such Selling Shareholder has
reviewed and is familiar with the Registration Statement and the
Prospectus and, to the knowledge of such Selling Shareholder, neither the
Prospectus nor any amendments or supplements thereto includes any untrue
statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; such Selling Shareholder is
not prompted to sell the Securities to be sold by such Selling Shareholder
hereunder by any information concerning the Company or any subsidiary of
the Company which is not set forth in the Registration Statement and the
Prospectus.
(ii) Authorization of Agreements. Such Selling Shareholder has the
power and authority, and all authorizations and approvals required by law,
(A) to enter into this Agreement, the Brazilian Underwriting Agreement and
the Power of Attorney (as defined herein), (B) to execute and deliver a
letter of instruction (the "Letter of Instruction") directing Banco
Bradesco S.A., as registrar of the Common Shares, to (I) transfer the
Underlying Shares of such Selling Shareholder to the account of the
Depositary in the manner set forth in the Prospectus and in accordance
with the terms of the Deposit Agreement and this Agreement and (II)
deposit such Underlying Shares with the Depositary pursuant to the Deposit
Agreement and (C) to sell, transfer and deliver to the International
Underwriters the International Securities and to the Brazilian
Underwriters the Brazilian Securities to be sold by such Selling
Shareholder in the manner contemplated by this Agreement and the Brazilian
Underwriting Agreement, respectively.
16
(iii) Due Execution of Purchase Agreements. This Agreement and the
Brazilian Underwriting Agreement have been duly authorized, executed and
delivered by or on behalf of such Selling Shareholder.
(iv) Due Execution of Power of Attorney and Letter of Instructions
Power. Such Selling Shareholder has duly executed and delivered, in the
form heretofore furnished to the International Representatives, the Power
of Attorney appointing certain individuals as such Selling Shareholder's
attorneys-in-fact (the "Attorneys-in-Fact") to the extent set forth
therein relating to the transactions contemplated hereby (the "Power of
Attorney") and the Letter of Instructions; and the Attorneys-in-Fact, and
each of them, is authorized to execute and deliver this Agreement and the
certificate referred to in Section 6(i) hereof or that may be required
pursuant to Sections 6(o) and 6(p) hereof on behalf of such Selling
Shareholder, to sell, assign and transfer to the International
Underwriters the Securities to be sold by such Selling Shareholder
hereunder, to determine the purchase price to be paid by the International
Underwriters to such Selling Shareholder, as provided in Section 2(a)
hereof, to authorize the delivery of the Securities to be sold by such
Selling Shareholder hereunder, to accept payment therefor, and otherwise
to act on behalf of such Selling Shareholder in connection with this
Agreement.
(v) Noncontravention. The execution and delivery of this Agreement,
the Brazilian Underwriting Agreement, the Power of Attorney, the Letter of
Instruction and the transfer of such Selling Shareholder's Underlying
Shares pursuant to the Deposit Agreement to the account of the Depositary
and sale and delivery of the Securities to be sold by such Selling
Shareholder and the consummation of the transactions contemplated in this
Agreement and in the Brazilian Underwriting Agreement and compliance by
such Selling Shareholder with its obligations hereunder and thereunder do
not and will not, whether with or without the giving of notice or passage
of time or both, conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any tax, lien, charge or
encumbrance upon the Securities to be sold by such Selling Shareholder or
any property or assets of such Selling Shareholder pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, license, lease or other agreement or instrument to which such
Selling Shareholder is a party or by which such Selling Shareholder may be
bound, or to which any of the property or assets of such Selling
Shareholder is subject, nor will such action result in any violation of
the provisions of the charter or by-laws or other organizational
instrument of such Selling Shareholder, if applicable, or any applicable
treaty, law, statute, rule, regulation, judgment, order, writ or decree of
any government, government instrumentality or court, Brazilian or foreign,
having jurisdiction over such Selling Shareholder or any of its
properties.
(vi) Good and Marketable Title. Such Selling Shareholder has and
will at the Closing Time and, if any International Option Securities are
purchased, on the relevant Date of Delivery, have good and marketable
title to the Securities to be sold by such Selling Shareholder hereunder,
free and clear of any security interest, mortgage, pledge, lien, charge,
claim, equity or encumbrance of any kind, other than pursuant to this
Agreement and the Brazilian Underwriting Agreement; and upon delivery of
such Securities and payment of the purchase price therefor as contemplated
in this Agreement and the Brazilian Underwriting Agreement, assuming each
such Underwriter has no
17
notice of any adverse claim (within the meaning of Section 8-105 of the
New York Uniform Commercial Code), each of the Underwriters will receive
good and marketable title to the Securities purchased by it from such
Selling Shareholder, free and clear of any security interest, mortgage,
pledge, lien, charge, claim, equity or encumbrance of any kind or adverse
claim within the meaning of Section 8-102 of the New York Uniform
Commercial Code.
(vii) Absence of Manipulation. Such Selling Shareholder has not
taken, and will not take, directly or indirectly, any action that is
designed to or which has constituted or which would be expected to cause
or result in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities.
(viii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency,
or any stock exchange authority is necessary or required for the
performance by such Selling Shareholder of its obligations under this
Agreement, the Brazilian Underwriting Agreement, the Letter of Instruction
or the Power of Attorney, or in connection with the sale and delivery of
the Securities under this Agreement or the Brazilian Underwriting
Agreement or the consummation of the transactions contemplated hereby or
thereby, except for (A) such as have been already made or obtained under
the 1933 Act or the 1933 Regulations, (B) the approval by the Central Bank
and the CVM of the Deposit Agreement and qualification of the Deposit
Agreement under Annex V to Resolution No. 1,289 of March 20, 1987, as
amended, of the National Monetary Council, which approval has been already
made or obtained or will be obtained prior to the Closing Time; (C) the
approval by the CVM of the offering of the ADSs and the Securities as
contemplated by this Agreement and the Brazilian Underwriting Agreement;
(D) the approval of the Central Bank of the payment of fees, commissions
and reimbursement of expenses pursuant to this Agreement and the Deposit
Agreement, which approval has been already made or obtained or will be
obtained prior to the Closing Time; (E) the registration of the corporate
acts undertaken by such Selling Shareholder in connection with the
International Offering and the Brazilian Offering with the Junta Comercial
(Board of Commerce) of the State of Sao Paulo and the State of Rio de
Janeiro, as the case may be; (F) such as have been obtained under the laws
and regulations of jurisdictions outside the United States and Brazil in
which the International Securities are offered; (G) such as may be
required under the securities or Blue Sky laws of the various states in
the United States; and (H) such as have been already made to or obtained
from the NYSE.
(ix) No Association with NASD. Neither such Selling Shareholder nor
any of its affiliates directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, or has any other association with (within the meaning of Article I,
Section 1(m) of the By-laws of the NASD, Inc.), any member firm of the
NASD, Inc. (the "NASD"), except as previously disclosed to the
International Underwriters or their U.S. counsel.
(x) Stamp Duty; Transfer Tax. No transaction, stamp, capital or
other issuance, registration or transfer taxes or duties are payable in
Brazil by or on behalf of
18
the International Underwriters to any Brazilian taxing authority in
connection with (A) the sale and delivery by such Selling Shareholder to
or for the account of the International Underwriters of the International
Securities, (B) the initial sale and delivery by the International
Underwriters of the International Securities sold by such Selling
Shareholder to purchasers thereof, (C) the holding or transfer outside
Brazil of the International Securities sold by such Selling Shareholder,
(D) the deposit of the Underlying Shares to be sold by such Selling
Shareholder with the Depositary and the issuance and delivery of the
corresponding ADRs, or (E) the execution and delivery of this Agreement or
the Brazilian Underwriting Agreement, except withholding tax at the rate
of 15% on fees and expenses payable to the International Underwriters,
which may be payable at a rate of 10% by the Brazilian payor on payments
made in connection with the provision of certain technical services
potentially including the fees and expenses payable to the International
Underwriters.
(xi) Enforceability of New York Judgment. Any final judgment for a
fixed or readily calculable sum of money rendered by a New York Court
having jurisdiction under its own domestic laws in respect of any suit,
action or proceeding against such Selling Shareholder based upon this
Agreement would be declared enforceable against such Selling Shareholder
by Brazilian courts without reexamination of the merits of the case;
provided that (A) it is for payment of a sum certain; (B) fulfills all
formalities required for its enforceability under the laws of the country
in which it was issued; (C) is issued by a competent court after service
of process on such Selling Shareholder or after sufficient evidence of
such Selling Shareholder's absence has been given, as required under
applicable law; (D) is not subject to appeal; (E) is authenticated by a
Brazilian consulate in the country in which it is issued and is
accompanied by a sworn translation in Portuguese; and (F) is not contrary
to Brazilian national sovereignty, public policy or public morality.
(c) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the International
Representatives or to counsel for the International Underwriters shall be deemed
a representation and warranty by the Company to each International Underwriter
as to the matters covered thereby; and any certificate signed by or on behalf of
any Selling Shareholder as such and delivered to the International
Representatives or to counsel for the International Underwriters pursuant to the
terms of this Agreement shall be deemed a representation and warranty by such
Selling Shareholder to the International Underwriters as to the matters covered
thereby.
SECTION 2. Sale and Delivery to the International Underwriters; Closing.
(a) International Initial Securities. On the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company and each Selling Shareholder, severally and not jointly,
agree to sell to each International Underwriter, severally and not jointly, and
each International Underwriter, severally and not jointly, agrees to purchase
from the Company and each Selling Shareholder, at the price per ADS set forth in
Schedule C hereto, that proportion of the number of International Initial
Securities set forth in Schedule B hereto opposite the name of the Company or
each Selling Shareholder, as the case may be, which the number of International
Initial Securities set forth in Schedule A hereto
19
opposite the name of such International Underwriter, plus any additional number
of International Initial Securities which such International Underwriter may
become obligated to purchase pursuant to the provisions of Section 11 hereof,
bears to the total number of International Initial Securities, subject, in each
case, to such adjustments among the International Underwriters as the
International Representatives in its sole discretion shall make to eliminate any
sales or purchases of fractional securities.
(b) International Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company and each Selling Shareholder, acting
severally and not jointly, hereby grant an option to the International
Underwriters, severally and not jointly, to purchase up to an additional -
International Securities at the same price per ADS set forth in subsection (a).
The option hereby granted will expire 30 calendar days after the date hereof and
may be exercised in whole or in part from time to time only for the purpose of
covering overallotments which may be made in connection with the offering and
distribution of the International Initial Securities upon notice by the
International Representatives to the Company and the Selling Shareholders
setting forth the aggregate number of International Option Securities as to
which the option is being exercised and the time and date of payment and
delivery for such International Option Securities, as determined by the
International Representatives. The Global Coordinator may reallocate
International Option Securities between and among the syndicates of the
Offerings in accordance with the Intersyndicate Agreement. If the option is
exercised as to all or any portion of the International Option Securities, each
of the International Underwriters, acting severally and not jointly, will
purchase that proportion of the total number of International Option Securities
then being purchased which the number of International Initial Securities set
forth in Schedule A hereto opposite the name of such International Underwriter
bears to the total number of International Initial Securities, provided that if
the several International Underwriters elect to purchase less than all of the
International Option Securities, the International Option Securities to be
purchased will be allocated pro rata among the Company and each Selling
Shareholder based on number of International Securities covered by the options
granted by them pursuant to this Section 2(b), subject in each case to (A) any
reallocation that the Global Coordinator may make with respect to International
Option Securities among syndicates of the Offerings and (B) such adjustments
among the International Underwriters as the International Representatives in its
sole discretion shall make to eliminate any sales or purchases of fractional
shares.
(c) Payment and Delivery of ADRs. ADRs evidencing the International
Securities purchased by the International Underwriters hereunder shall be
delivered by the Company and the Selling Shareholders to the International
Representatives through the facilities of The Depository Trust Company, New
York, New York ("DTC"), for the respective accounts of the International
Underwriters, against payment by or on behalf of such International Underwriters
of the purchase price therefor by wire transfer in U.S. dollars in immediately
available funds to accounts designated by the Company and the Selling
Shareholders. It is understood that each International Underwriter has
authorized the International Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
International Initial Securities and the International Option Securities, if
any, which it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as
representative of the International Underwriters, may (but shall not be
obligated to) make payment of the purchase price for the International Initial
Securities or the International Option Securities, if any, to be purchased by
any International
20
Underwriter whose funds have not been received by the Closing Time or the
relevant Date of Delivery, as the case may be, but such payment shall not
relieve such International Underwriter from its obligations hereunder.
(d) Time and Date of Deliveries and Payments. The time and date of
delivery of and payment for the International Initial Securities shall be at or
about 9:30 a.m., New York City time on -, 2004 (unless postponed in accordance
with the provisions of Section 11), or such other time not later than ten
business days after such date as the International Representatives and the
Company may agree upon in writing (such time and date of payment and delivery
being herein called the "Closing Time"). The time and date of delivery and
payment with respect to the International Option Securities shall be at or about
9:30 a.m., New York City time on the date specified by the International
Representatives in a written notice given by the International Representatives
of an election by the International Underwriters' to purchase such International
Option Securities, or such other time and date as the International
Representatives and the Company may agree upon in writing. Any such time and
date for delivery of and payment for the International Option Securities, if not
the Closing Time, is herein called a "Date of Delivery".
The documents to be delivered at the Closing Time or at any Date of
Delivery by or on behalf of the parties hereto pursuant to Section 6 hereof,
including any additional documents reasonably requested by the International
Underwriters pursuant to Section 6(p) hereof, will be delivered at the offices
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ at or about 9:30 a.m., New York City time, on the day of the Closing Time
or the relevant Date of Delivery, as applicable.
(e) Denominations; Registration. The ADR evidencing the International
Securities shall be in such denominations and registered in such names as the
International Representatives may request in writing at least one full business
day before the Closing Time or the relevant Date of Delivery, as the case may
be. The form of ADR will be made available for examination and packaging by the
International Representatives in the City of New York not later than 10:00 a.m.,
New York time, on the business day prior to the Closing Time or relevant Date of
Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
International Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b) hereof, will comply with the requirements of
Rule 430A and will notify the International Representatives immediately, and
confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement or to the ADR Registration Statement shall become
effective, or any supplement to the Prospectus or any amended Prospectus shall
have been filed, (ii) of the receipt of any comments from the Commission, (iii)
of any request by the Commission for any amendment to the Registration Statement
or to the ADR Registration Statement or any amendment or supplement to the
Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the ADR Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or of
the initiation or threatening of any
21
proceedings for any of such purposes of which the Company is aware. The Company
will promptly effect the filings necessary pursuant to Rule 424(b) and will take
such steps as it deems necessary to ascertain promptly whether the form of
prospectus transmitted for filing under Rule 424(b) was received for filing by
the Commission and, in the event that it was not, it will promptly file such
prospectus. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the International
Representatives notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)) or to the ADR
Registration Statement or any amendment, supplement or revision to either the
prospectus included in the Registration Statement at the time it became
effective or to the Prospectus, will furnish the International Representatives
with copies of any such documents a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file or use any such
document to which the International Representatives or counsel for the
International Underwriters reasonably object.
(c) Delivery of Registration Statements. The Company has furnished or will
deliver to the International Representatives and counsel for the International
Underwriters, without charge, signed copies of the Registration Statement and
the ADR Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will also deliver
to the International Representatives, without charge, a conformed copy of the
Registration Statement and the ADR Registration Statement as originally filed
and of each amendment thereto (without exhibits) for each of the International
Underwriters. The copies of the Registration Statement and each amendment
thereto furnished to the International Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
International Underwriter, without charge, as many copies of each preliminary
prospectus as each International Underwriter reasonably requested, and the
Company hereby consents to the use of such copies for purposes permitted by the
1933 Act. The Company will furnish to each International Underwriter, without
charge, prior to 5:00 p.m., New York City time on the day next succeeding the
date of this Agreement and during the period when the Prospectus is required to
be delivered under the 1933 Act, such number of copies of the Prospectus (as
amended or supplemented) as such International Underwriter may reasonably
request. The Prospectus and any amendments or supplements thereto furnished to
the International Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇, except
to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the completion of
the distribution of the International Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required by
the 1933 Act to be delivered in connection with sales of the International
Securities, any event shall occur or condition shall exist as a result of which
it is necessary, in the reasonable opinion of counsel for the International
Underwriters or for the
22
Company, to amend the Registration Statement, the ADR Registration Statement or
amend or supplement the Prospectus in order that the Prospectus will not include
any untrue statements of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances, existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the reasonable opinion of such counsel, at any such time
to amend the Registration Statement, the ADR Registration Statement or amend or
supplement any Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Company will promptly prepare and file with
the Commission, subject to Section 3(b) hereof, such amendment or supplement as
may be necessary to correct such statement or omission or to make the
Registration Statement, the ADR Registration Statement or the Prospectus comply
with such requirements, and the Company will furnish to the International
Underwriters such number of copies of such amendment or supplement as the
International Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the International Underwriters, to qualify the International
Securities for offering and sale under the applicable securities laws of such
U.S. states and other jurisdictions as the International Representatives may
reasonably designate and to maintain such qualifications in effect for as long
as may be necessary to complete the distribution of the Securities, which period
shall in no event be less than one year from the later of the effective date of
the Registration Statement and any Rule 462(b) Registration Statement; provided,
however, that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject. In each jurisdiction in which the International
Securities have been so qualified, the Company will file such statements and
reports as may be required by the laws of such jurisdiction to continue such
qualification in effect for as long as may be necessary to complete the
distribution of the International Securities.
(g) Rule 158. The Company will timely file such reports pursuant to the
Securities Exchange Act of 1934 (the "1934 Act") as are necessary in order to
make generally available to its securityholders as soon as practicable an
earnings statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect the listing
of the International Securities on the NYSE and the Brazilian Securities on
BOVESPA.
(j) Restriction on Sale of Securities. During a period of 180 days after
the date of the Prospectus, the Company will not, without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Pactual, directly or indirectly (i) offer, pledge,
lend, sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to purchase
or otherwise transfer or dispose of any Common Shares or ADSs or any security
that constitutes the right to receive Common Shares or ADSs or any securities
convertible into or exercisable or exchangeable for or repayable with Common
Shares or ADSs or file or cause to be
23
filed with the Commission or the CVM any registration statement with respect to
any of the foregoing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequences of ownership of the Common Shares or ADSs, whether any
such swap or other agreement or transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Shares or ADSs or such other
securities, in cash or otherwise. Notwithstanding the foregoing, if: (1) during
the last 17 days of the 180-day lock-up period the Company issues an earnings
release or material news or a material event relating to the Company occurs; or
(2) prior to the expiration of the 180-day lock-up period, the Company announces
that it will release earnings results during the 16-day period beginning on the
last day of the 180-day lock-up period, the restrictions imposed by this
paragraph shall continue to apply until the expiration of the 18-day period
beginning on the issuance of the earnings release or the occurrence of the
material news or material event. The foregoing shall not apply to (A) the
Securities to be sold hereunder or under the Brazilian Underwriting Agreement;
(B) the issuance by the Company of ADSs or Common Shares upon the exercise of
contractual rights disclosed in the Registration Statement and the Prospectus
with International Finance Corporation; (C) the issuance by the Company of
Common Shares in connection with special financing extended by Banco Nacional de
Desenvolvimento Economico e Social - BNDES ("BNDES") to the Company or its
subsidiaries in connection with the BNDES's program to recapitalize electricity
distribution companies in Brazil (the "BNDES Recap Program"), including, without
limitation, transactions involving conversion or exchange of debt into equity;
and (D) the issuance by the Company of Common Shares in connection with
acquisitions of other companies, provided that any recipient of such Common
Shares (or any person that becomes entitled to any rights in connection with
such Common Shares by virtue of such acquisition) expressly agrees in writing to
comply with the restrictions contained in this paragraph for the period then
remaining.
(k) Other Documents. The Company will furnish to the Depositary and to
holders of ADRs, directly or through the Depositary, such reports, documents and
other information described in the Prospectus under the caption "Description of
American Depositary Shares" in accordance with the procedures stated thereunder.
(l) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act, will file all
documents required to be filed with the Commission pursuant to the 1934 Act
within the time periods required by the 1934 Act and the rules and regulations
of the Commission thereunder.
(m) Submission of Documents. The Company agrees to timely file with the
NASD, the NYSE, the Commission, the CVM, the Central Bank, BOVESPA and any other
governmental or regulatory agency, authority or instrumentality in the United
States and Brazil, as may be required, such reports, documents, agreements and
other information which the Company may from time to time be required to file,
including those relating to the implementation and payment of dividends,
interest or other distributions on the Securities.
(n) Stabilization and Manipulation. The Company agrees not to (and to use
its best efforts to cause its affiliates not to) take, directly or indirectly,
any action which is designed to or which constitutes or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of any
security of the Company.
24
(o) Deposit of Underlying Shares. Prior to the Closing Time and each Date
of Delivery, the Company will deposit or cause to be deposited the Underlying
Shares to be sold by the Company with the Depositary in accordance with the
provisions of the Deposit Agreement so that the ADRs evidencing the ADSs to be
delivered by the Company to the International Underwriters at such Closing Time
or Date of Delivery are executed, countersigned and issued by the Depositary
against receipt of such Underlying Shares and delivered to the International
Underwriters at such Closing Time or Date of Delivery.
(p) Deposit Agreement. The Company agrees to abide by the covenants set
forth in the Deposit Agreement.
SECTION 4. Covenants of the Selling Shareholders. In further consideration
of the agreements of the International Underwriters herein contained, each of
the Selling Shareholders, severally and not jointly, covenants with each
International Underwriter as follows:
(a) Underlying Shares. That the Underlying Shares to be sold by such
Selling Shareholder hereunder are subject to the interest of the Underwriters
and that the obligations of such Selling Shareholder hereunder shall not be
terminated by any act of such Selling Shareholder or by operation of any law
existing on the date hereof.
(b) Deposit of Underlying Shares. Prior to the Closing Time and each Date
of Delivery, such Selling Shareholder will deposit or cause to be deposited with
the Depositary the Underlying Shares to be sold by it so that the ADRs
evidencing the ADSs to be delivered by such Selling Shareholder to the
International Underwriters at such Closing Time or Date of Delivery are
executed, countersigned and issued by the Depositary against receipt of such
Underlying Shares and delivered to the International Underwriters at such
Closing Time or Date of Delivery.
(c) Form W-8. To deliver to the International Representatives prior to the
Closing Time a properly completed and executed Treasury Department Form W-8.
(d) Restriction on Sale of Securities. During a period of 180 days after
the date of the Prospectus, such Selling Shareholder will not, without the prior
written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Pactual, directly or indirectly (i) offer,
pledge, lend, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of any Common Shares or ADSs or any
security that constitutes the right to receive Common Shares or ADSs or any
securities convertible into or exercisable or exchangeable for or repayable with
Common Shares or ADSs or file or cause to be filed with the Commission or the
CVM any registration statement with respect to any of the foregoing or (ii)
enter into any swap or any other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, the economic consequences of ownership
of the Common Shares or ADSs, whether any such swap or other agreement or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Shares or ADSs or such other securities, in cash or otherwise.
Notwithstanding the foregoing, if: (1) during the last 17 days of the 180-day
lock-up period the Company issues an earnings release or material news or a
material event relating to the Company occurs; or (2) prior to the expiration of
the 180-day lock-up period, the Company announces that it will release earnings
results during the 16-day period beginning on
25
the last day of the 180-day lock-up period, the restrictions imposed by this
paragraph shall continue to apply until the expiration of the 18-day period
beginning on the issuance of the earnings release or the occurrence of the
material news or material event. The foregoing shall not apply to (A) the
Securities to be sold hereunder or under the Brazilian Underwriting Agreement;
(B) the loan of Common Shares made by such Selling Shareholder to one of the
Brazilian Underwriters in connection with such Brazilian Underwriter's
stabilization activities; (C) the loan of Common Shares made by such Selling
Shareholder to Brazilian investors in connection with the first day of trading
of Common Shares on the BOVESPA; (D) pledges or other security interests
existing on the date of this Agreement, and identified in writing to ▇▇▇▇▇▇▇
▇▇▇▇▇ and Pactual on or prior to the date of this Agreement, on Common Shares
owned by such Selling Shareholder, which pledge or other security interest
secures debt of such Selling Shareholder; provided, however, that to the extent
such pledge or other security interest permits the holder of such pledge or
security interest to receive such Common Shares in exchange or by way of
conversion of such debt, such holder expressly agrees in writing to comply with
the restrictions contained in this paragraph for the period then remaining; and
(E) pledges or other security interests granted by such Selling Shareholder on
Common Shares in connection with special financing extended by BNDES to the
Company or its subsidiaries in connection with the BNDES Recap Program,
including, without limitation, transactions involving conversion or exchange of
debt into equity.
SECTION 5. Payment of Expenses.
(a) Expenses. The Company will pay or cause to be paid all expenses
incident to the performance of its obligations under this Agreement, including
(i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto and of the ADR Registration Statement and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the Securities to the
Underwriters, including any stock or other transfer taxes and any stamp or other
duties payable upon the sale, issuance or delivery of the Securities to the
Underwriters, (iv) the delivery of the Underlying Shares to the Depositary, (v)
the fees and disbursements of the Company's counsel, accountants and other
advisors, (vi) the qualification of the International Securities under
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the International Underwriters in connection therewith and in connection with
the preparation of the Blue Sky survey and any supplement thereto, (vii) the
printing and delivery to the International Underwriters of copies of the
Registration Statement and the ADR Registration Statement as originally filed
with the Commission and of each amendment thereto, each preliminary prospectus
and of the Prospectus and any amendments or supplements thereto, (viii) the fees
and expenses of the Depositary, any transfer agent or registrar, and each
custodian, if any, for the Securities, (ix) the costs and expenses of the
Company relating to investor presentations on any "road show" undertaken in
connection with the marketing of the Securities, including without limitation,
expenses associated with the production of road show slides and graphics, fees
and expenses of any consultants engaged in connection with the road show
presentations, travel and lodging expenses of the representatives and officers
of the Company and any such consultants, and the cost of aircraft and other
transportation chartered in connection with the road show, (x)
26
the fees and expenses incurred in connection with the listing of the
International Securities on the NYSE and the Brazilian Securities on BOVESPA,
(xi) the filing fees in connection with the review by the NASD of the terms of
the sale of the Securities, (xii) the filing, registration and clearance with
the NASD in connection with the offering of the Securities, (xiii) the fees and
expenses of the Authorized Agent (as defined in Section 14 hereof) and (xiv)
out-of-pocket expenses, including, without limitation, fees and disbursements of
counsel, of the International Underwriters to the extent such out-of-pocket
expenses which relate to the Offerings exceed US$1,000,000. It is understood,
however, that except as provided in this Section and Section 7 hereof, the
Underwriters will pay all of their costs and expenses, including, without
limitation, stock transfer taxes payable on resale of any of the International
Securities by them, any advertising expenses in connection with any offers they
make and the expenses of the Underwriters incurred or relating to the road show.
(b) Expenses of the Selling Shareholders. The Selling Shareholders,
severally, will pay all expenses incident to the performance of their respective
obligations under, and the consummation of the transactions contemplated by this
Agreement, including (i) any stock or other transfer taxes and any stamp or
other duties payable upon the sale or delivery of the Securities to the
Underwriters and (ii) the fees and disbursements of their respective counsel and
other advisors, to the extent the Company has not agreed to pay for such
expenses referred to in this clause (ii).
(c) Termination of Agreement. If this Agreement is terminated by the
International Representatives in accordance with the provisions of Section 6,
Section 10(a)(i) or Section 12 hereof, the Company shall reimburse the
International Underwriters for all of their out-of-pocket expenses, including
the reasonable fees and disbursements of counsel for the International
Underwriters.
(d) Allocation of Expenses. The provisions of this Section shall not
affect any agreement that the Company and the Selling Shareholders may make for
the sharing of such costs and expenses.
SECTION 6. Conditions of the International Underwriters' Obligations. The
obligations of the several International Underwriters hereunder are subject to
the accuracy of the representations and warranties of the Company and the
Selling Shareholders contained in Section 1 hereof or in certificates of any
officer of the Company or any subsidiary of the Company or on behalf of any
Selling Shareholder delivered pursuant to the provisions hereof, to the
performance by the Company and the Selling Shareholders of their respective
covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, and the ADR Registration
Statement, has become effective and at Closing Time no stop order suspending the
effectiveness of the Registration Statement or the ADR Registration Statement
shall have been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the International Underwriters. A prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a
27
post-effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A).
(b) Opinion and Negative Assurance Letter of U.S. Counsel for Company and
the Selling Shareholders. At Closing Time, the International Representatives
shall have received the favorable opinion and negative assurance letter, each
dated as of Closing Time, of Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, U.S. counsel
for the Company and the Selling Shareholders, in form and substance satisfactory
to counsel for the International Underwriters, together with signed or
reproduced copies of such opinion for each of the other International
Underwriters, to the effect set forth in Exhibits A-1 and A-2 hereto.
(c) Opinion and Negative Assurance Letter of Brazilian Counsel for Company
and the Selling Shareholders. At Closing Time, the International Representatives
shall have received the favorable opinion and negative assurance letter, each
dated as of such Closing Time, of ▇▇▇▇▇▇ Filho, ▇▇▇▇▇ Filho, Marrey Jr. e
▇▇▇▇▇▇▇ Advogados, Brazilian counsel for the Company and the Selling
Shareholders, in form and substance satisfactory to counsel for the
International Underwriters, together with signed or reproduced copies of such
letter for each of the other Underwriters, to the effect set forth in Exhibits
B-1 and B-2 hereto.
(d) Opinion of Counsel for the Selling Shareholders. At Closing Time, the
International Representatives shall have received the favorable opinions, each
dated as of such Closing Time, of counsel for the Selling Shareholder, in form
and substance satisfactory to counsel for the International Underwriters,
together with signed or reproduced copies of such letter for each of the other
International Underwriters, to the effect set forth in Exhibits C-1 through C-3
hereto.
(e) Opinion and Negative Assurance Letter of U.S. Counsel for
International Underwriters. At Closing Time, the International Representatives
shall have received the favorable opinion and negative assurance letter, each
dated as of such Closing Time, of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, U.S. counsel
for the International Underwriters, in form and substance satisfactory to the
International Representatives, together with signed or reproduced copies of such
letter for each of the other International Underwriters.
(f) Opinion of Brazilian Counsel for International Underwriters. At
Closing Time, the International Representatives shall have received the
favorable opinion, dated as of such Closing Time, of Machado, Meyer, Sendacz e
Opice Advogados, Brazilian counsel for the International Underwriters, in form
and substance satisfactory to the International Representatives, together with
signed or reproduced copies of such letter for each of the other International
Underwriters.
(g) Opinion of Counsel for Depositary. At Closing Time, the International
Representatives shall have received the favorable opinion, dated as of such
Closing Time, of ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, counsel for the Depositary, in
form and substance satisfactory to counsel for the International Underwriters,
together with signed or reproduced copies of such letter for each of the other
International Underwriters to the effect set forth in Exhibit D hereto.
(h) Officers' Certificates. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business
28
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, and
the International Representatives shall have received a certificate of the Chief
Executive Officer of the Company and of the Chief Financial Officer of the
Company, dated as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in Section 1(a)
hereof are true and correct with the same force and effect as though expressly
made at and as of Closing Time, (iii) the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to Closing Time, and (iv) no stop order suspending the effectiveness
of the Registration Statement or the ADR Registration Statement has been issued
and no proceedings for that purpose have been instituted or are pending or, to
their knowledge, contemplated by the Commission.
(i) Certificates of Selling Shareholders. At Closing Time, the
International Representatives shall have received a certificate of an
Attorney-in-Fact on behalf of each Selling Shareholder, dated as of Closing Time
to the effect that (i) the representations and warranties of such Selling
Shareholder contained in Section 1(b) hereof are true and correct in all
respects with the same force and effect as though expressly made at and as of
Closing Time and (ii) such Selling Shareholder has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied under this
Agreement at or prior to Closing Time.
(j) Accountants' Comfort Letters. At the time of the execution of this
Agreement, the International Representatives shall have received from each of
Deloitte Touche Tohmatsu Auditores Independentes and PricewaterhouseCoopers
Auditores Independentes a letter dated such date, in form and substance
satisfactory to the International Representatives, together with signed or
reproduced copies of such letter for each of the other International
Underwriters containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(k) Bring-down Comfort Letters. At Closing Time, the International
Representatives shall have received from each of Deloitte Touche Tohmatsu
Auditores Independentes and PricewaterhouseCoopers Auditores Independentes a
letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (j) of this
section, except that the specified date referred to shall be a date not more
than three business days prior to Closing Time.
(l) Approval of Listing; Acceptance for Settlement. At Closing Time, (i)
the International Securities shall have been approved for listing on the NYSE,
subject only to official notice of issuance, (ii) the listing of the Brazilian
Securities on BOVESPA shall be in full force and effect and (iii) the
International Securities shall have been accepted for settlement through the
facilities of DTC.
(m) Purchase of Brazilian Initial Securities. Contemporaneously with the
purchase by the International Underwriters of the International Initial
Securities under this Agreement, the Brazilian Underwriters shall have purchased
the Brazilian Initial Securities under the Brazilian Underwriting Agreement.
29
(n) Brazilian Governmental Approvals. The Company and the Selling
Shareholders shall have received the approvals of the CVM and the Central Bank
referred to in Sections 1(a)(xxi) and 1(b)(viii) hereof.
(o) Conditions to Purchase of International Option Securities. In the
event that the International Underwriters exercise their option provided in
Section 2(b) hereof to purchase all or any portion of the International Option
Securities, the representations and warranties of the Company and the Selling
Shareholders contained herein and the statements in any certificates furnished
by the Company, any subsidiary of the Company and the Selling Shareholders
hereunder shall be true and correct as of each Date of Delivery and, at the
relevant Date of Delivery, the International Representatives shall have
received:
(i) Officers' Certificates. A certificate, dated such Date of
Delivery, of the chief executive officer or chief financial or accounting
officer of the Company confirming that the certificate delivered at the
Closing Time pursuant to Section 6(h) hereof remains true and correct as
of such Date of Delivery.
(ii) Certificates of Selling Shareholders. A certificate, dated such
Date of Delivery, of an Attorney-in-Fact on behalf of each Selling
Shareholder confirming that the certificate delivered at the Closing Time
pursuant to Section 6(i) hereof remains true and correct as of such Date
of Delivery.
(iii) Opinion of U.S. Counsel for Company. The favorable opinion of
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, United States counsel for the Company,
in form and substance satisfactory to counsel for the International
Underwriters, each dated such Date of Delivery, relating to the
International Option Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion required by Section 6(b)
hereof.
(iv) Opinion of Brazilian Counsel for Company and the Selling
Shareholders. The favorable opinion and of ▇▇▇▇▇▇ Filho, ▇▇▇▇▇ Filho,
Marrey Jr. e ▇▇▇▇▇▇▇ Advogados, counsel for the Company and the Selling
Shareholders, in form and substance satisfactory to counsel for the
International Underwriters, dated such Date of Delivery, relating to the
International Option Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion required by Section 6(c)
hereof.
(v) Opinion of Counsel for the Selling Shareholders. The favorable
opinions of counsel for each of the Selling Shareholders, in form and
substance satisfactory to counsel for the International Underwriters,
dated such Date of Delivery, relating to the International Option
Securities to be purchased on such Date of Delivery and otherwise to the
same effect as the opinions required by Section 6(d) hereof.
(vi) Opinion and Negative Assurance Letter of U.S. Counsel for
Underwriters. The favorable opinion and negative assurance letter of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, United States counsel for the
International Underwriters, in form and substance satisfactory to the
International Underwriters, each dated such Date of Delivery, relating to
the International Option Securities to be purchased on such Date of
Delivery and
30
otherwise to the same effect as the opinion and negative assurance letter
required by Section 6(e) hereof.
(vii) Opinion of Brazilian Counsel for Underwriters. The favorable
opinion of Machado, Meyer, Sendacz e Opice Advogados, Brazilian counsel
for the International Underwriters, in form and substance satisfactory to
the International Underwriters, dated such Time of Delivery, relating to
the International Option Securities to be purchased on such Time of
Delivery and otherwise to the same effect as the opinion required by
Section 6(f) hereof.
(viii) Opinion of Counsel for Depositary. The favorable opinion of
▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, counsel for the Depositary, in form and
substance satisfactory to counsel for the International Underwriters,
dated such Date of Delivery, relating to the International Option
Securities to be purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Section 6(g) hereof.
(ix) Bring-down Comfort Letters. A letter from each of Deloitte
Touche Tohmatsu Auditores Independentes and PricewaterhouseCoopers
Auditores Independentes in form and substance satisfactory to the
International Representatives and dated such Date of Delivery,
substantially in the same form and substance as the letters furnished to
the International Underwriters pursuant to Section 6(k) hereof, except
that the "specified date" in the letters furnished pursuant to this
paragraph shall be a date not more than three business days prior to such
Date of Delivery.
(p) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the International Underwriters shall have been furnished with such
documents and opinions as they may require for the purpose of enabling them to
pass upon the issuance and sale of the Securities as herein contemplated, or in
order to evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company and the Selling Shareholders in connection with the
issuance and sale of the Securities as herein contemplated shall be satisfactory
in form and substance to the International Representatives and counsel for the
International Underwriters.
(q) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, the Deposit Agreement, or, in the case of any condition to the
purchase of International Option Securities at a Date of Delivery which is after
the Closing Time, the obligations of the several International Underwriters to
purchase the relevant International Option Securities, may be terminated by the
International Representatives by notice to the Company and the Selling
Shareholders at any time at or prior to the Closing Time or such Date of
Delivery, as the case may be, and such termination shall be without liability of
any party to any other party except as provided in Section 5 and except that
Sections 1, 7, 8, 9, 13, 14 and 15 shall survive any such termination and remain
in full force and effect.
31
SECTION 7. Indemnification.
(a) Indemnification of the International Underwriters. The Company and the
Selling Shareholders, severally and not jointly, agree to indemnify and hold
harmless each International Underwriter, its affiliates, as such term is defined
in Rule 501(b) under the 1933 Act (each, an "Affiliate"), its selling agents and
each person, if any, who controls any International Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information,
or the ADR Registration Statement or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus, the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that any such settlement is
effected with the written consent of the Company and the Selling
Shareholders; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of one counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
Pactual), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
International Underwriter through the International Representatives expressly
for use in the Registration Statement and the ADR Registration Statement (or any
amendment thereto), including the Rule 430A Information, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) and;
provided, further, however, that such indemnity from any Selling Shareholder
shall only pertain to information furnished by such Selling Shareholder for use
in the Registration Statement and the ADR Registration Statement (or any
amendment thereto), including the Rule 430A Information, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto), it being
32
understood and agreed that the only such information furnished by such Selling
Shareholder consists of information relating to such Selling Shareholder in the
Prospectus under the caption "Principal and Selling Shareholders".
(b) Indemnification of the Company, Directors and Officers and Selling
Shareholders. Each International Underwriter severally agrees to indemnify and
hold harmless the Company, its directors, each of its officers who signed the
Registration Statement and the ADR Registration Statement and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act, and each Selling Shareholder, and each person, if
any, who controls such Selling Shareholder within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement and the ADR Registration Statement (or any amendment thereto),
including the Rule 430A Information, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such
International Underwriter through the International Representatives expressly
for use in the Registration Statement and the ADR Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), it being understood and agreed that the only
such information furnished by any International Underwriter consists of the
following information in the Prospectus furnished on behalf of each
International Underwriter: the information contained in the seventh, fifteen,
eighteenth, twentieth, twenty-second, twenty-third, twenty-fourth,
twenty-seventh and twenty-eighth paragraphs under the caption "Underwriting".
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
Pactual, and, in the case of parties indemnified pursuant to Section 6(b) above,
counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 7 or Section 8 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified
33
party from all liability arising out of such litigation, investigation,
proceeding or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party.
(d) Other Agreements with Respect to Indemnification. The provisions of
this Section shall not affect any agreement among the Company and the Selling
Shareholders with respect to indemnification.
SECTION 8. Contribution. If the indemnification provided for in Section 7
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Shareholders on the one hand and the International Underwriters on the
other hand from the offering of the International Securities pursuant to this
Agreement or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Selling Shareholders on the one hand and of the
International Underwriters on the other hand in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Shareholders
on the one hand and the International Underwriters on the other hand in
connection with the offering of the International Securities pursuant to this
Agreement shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the International Securities pursuant to this
Agreement (before deducting expenses) received by the Company and the Selling
Shareholders and the total underwriting discount received by the International
Underwriters, in each case as set forth on the cover of the Prospectus, or, if
Rule 434 is used, the corresponding location on the Term Sheet, bear to the
aggregate initial public offering price of the Securities as set forth on the
cover of the Prospectus.
The relative fault of the Company and the Selling Shareholders on the one
hand and the International Underwriters on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Selling Shareholders
or by the International Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, the Selling Shareholders and the International Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 8 were determined by pro rata allocation (even if the International
Underwriters were treated as one entity for such purposes) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this Section 8. The aggregate amount of losses,
liabilities, claims, damages and expenses incurred by an indemnified party and
referred to above in this Section 8 shall be deemed to include any legal or
other expenses reasonably incurred by such
34
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, no International
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the International Securities underwritten by
it and distributed to the public were offered to the public exceeds the amount
of any damages which such International Underwriter has otherwise been required
to pay by reason of any such untrue or alleged untrue statement or omission or
alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls an
International Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act and each International Underwriter's Affiliates and
selling agents shall have the same rights to contribution as such International
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement and the ADR Registration Statement, and each
person, if any, who controls the Company or any Selling Shareholder within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have
the same rights to contribution as the Company or such Selling Shareholder, as
the case may be. The International Underwriters' respective obligations to
contribute pursuant to this Section 8 are several in proportion to the number of
International Initial Securities set forth opposite their respective names in
Schedule A hereto and not joint.
The provisions of this Section shall not affect any agreement among the
Company and the Selling Shareholders with respect to contribution.
SECTION 9. Representations, Warranties and Agreements to Survive. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries or the
Selling Shareholders submitted pursuant hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any International Underwriter or its Affiliates or selling agents, any person
controlling any International Underwriters, its officers or directors, any
person controlling the Company or any person controlling any Selling Shareholder
and shall survive delivery and payment for the International Securities.
SECTION 10. Termination of Agreement.
(a) Termination; General. The International Representatives may terminate
this Agreement, by notice to the Company and the Selling Shareholders, at any
time at or prior to Closing Time (i) if there has been, since the time of
execution of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects
35
of the Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States, Brazil or
the international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions or U.S. or Brazilian currency exchange rates or exchange controls, in
each case the effect of which is such as to make it, in the judgment of the
International Representatives, impracticable or inadvisable to market the
International Securities or to enforce contracts for the sale of the
International Securities, or (iii) if trading in any securities of the Company
has been suspended or materially limited by the Commission, the CVM, the NYSE or
BOVESPA, or if trading generally on the American Stock Exchange, the NYSE or
BOVESPA or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the NASD, the CVM or any other governmental
authority, or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States or with respect
to Clearstream or Euroclear systems in Europe or (iv) if a banking moratorium
has been declared by Brazilian, U.S. federal or New York authorities, or (v) if
there is a change, or an official announcement by a competent authority of a
prospective change, in Brazilian or U.S. taxation adversely affecting the
Company, the Securities or the transfer thereof.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 5 hereof, and provided, further, that Sections 1,
7, 8, 9, 13, 14 and 15 shall survive such termination and remain in full force
and effect.
SECTION 11. Default by One or More of the International Underwriters. If
one or more of the International Underwriters shall fail at Closing Time or a
Date of Delivery to purchase the Securities which it or they are obligated to
purchase under this Agreement (the "Defaulted Securities"), the International
Representatives shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting International Underwriters,
or any other underwriters, to purchase all, but not less than all, of the
Defaulted Securities in such amounts as may be agreed upon and upon the terms
herein set forth; if, however, the International Representatives shall not have
completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the non-defaulting
International Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting International Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement or, with respect to any
Date of Delivery which occurs after the Closing Time, the obligation of the
International Underwriters to purchase and of the Company to sell the
International Option Securities to be purchased and sold on such Date of
Delivery shall terminate without liability on the part of any non-defaulting
International
36
Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
International Underwriter from liability in respect of its default.
In the event of any such default that does not result in a termination of
this Agreement or, in the case of a Date of Delivery that is after Closing Time,
that does not result in a termination of the obligation of the International
Underwriters to purchase and the Company and the Selling Shareholders to sell
the relevant International Option Securities, as the case may be, either the
International Representatives or the Company and any Selling Shareholder shall
have the right to postpone Closing Time or the relevant Date of Delivery, as the
case may be, for a period not exceeding seven days in order to effect any
required changes in the Registration Statement, the ADR Registration Statement
or Prospectus or in any other documents or arrangements. As used herein, the
term "International Underwriters" includes any person substituted for a
International Underwriter under this Section 11.
SECTION 12. Default by one or more of the Selling Shareholders or the
Company.
(a) Default by One or More of the Selling Shareholders. If a Selling
Shareholder shall fail at Closing Time or at a Date of Delivery to sell and
deliver the number of Securities that such Selling Shareholder is obligated to
sell hereunder, and the remaining Selling Shareholders do not exercise the right
hereby granted to increase, pro rata or otherwise, the number of Securities to
be sold by them hereunder to the total number to be sold by all Selling
Shareholders as set forth in Schedule B hereto, then the International
Underwriters may, at option of the International Representatives, by notice from
the International Representatives to the Company and the non-defaulting Selling
Shareholders, either (a) terminate this Agreement without any liability on the
fault of any non-defaulting party except that the provisions of Sections 1, 5,
7, 8, 9, 13, 14 and 15 shall remain in full force and effect or (b) elect to
purchase the Securities that the non-defaulting Selling Shareholders and the
Company have agreed to sell hereunder. No action taken pursuant to this Section
12 shall relieve any Selling Shareholder so defaulting from liability, if any,
in respect of such default.
In the event of a default by any Selling Shareholder as referred to in
this Section 12, each of the International Representatives, the Company and the
non-defaulting Selling Shareholders shall have the right to postpone Closing
Time or a Date of Delivery for a period not exceeding seven days in order to
effect any required change in the Registration Statement or Prospectus or in any
other documents or arrangements.
(b) Default by Company. If the Company shall fail at Closing Time or at a
Date of Delivery to sell the number of Securities that it is obligated to sell
hereunder, then this Agreement shall terminate without any liability on the part
of any non-defaulting party; provided, however, that the provisions of Sections
1, 5, 7, 8, 9, 13, 14 and 15 shall remain in full force and effect. No action
taken pursuant to this Section shall relieve the Company from liability, if any,
in respect of such default.
SECTION 13. Waiver of Immunities. To the extent that the Company, the
Selling Shareholders or any of their respective properties, assets or revenues
may have or may hereafter
37
become entitled to, or have attributed to the Company or the Selling
Shareholders, any right of immunity, on the grounds of sovereignty or otherwise,
from any legal action, suit or proceeding, from the giving of any relief in any
such legal action, suit or proceeding, from setoff or counterclaim, from the
jurisdiction of any Brazilian, New York or U.S. federal court, from service of
process, from attachment upon or prior to judgment, from attachment in aid of
execution of judgment, or from execution of judgment, or other legal process or
proceeding for the giving of any relief or for the enforcement of any judgment,
in any such court in which proceedings may at any time be commenced, with
respect to the obligations and liabilities of the Company or the Selling
Shareholders, or any other matter under or arising out of or in connection with,
the Principal Agreements or any of them, the Company and the Selling
Shareholders hereby irrevocably and unconditionally waive or will waive such
right to the extent permitted by law, and agree not to plead or claim, any such
immunity and consents to such relief and enforcement.
SECTION 14. Consent to Jurisdiction; Appointment of Agent for Service of
Process.
(a) Consent to Jurisdiction. The Company and the Selling Shareholders, by
their execution and delivery of this Agreement, hereby irrevocably consent and
submit to the nonexclusive jurisdiction of any New York Court in personam
generally and unconditionally in respect of any such suit or proceeding.
(b) Appointment of Agent for Service of Process. The Company and the
Selling Shareholders further, by their execution and delivery of this Agreement,
irrevocably designate, appoint and empower CT Corporation System, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ as their designee, appointee and authorized agent
(the "Authorized Agent") to receive for and on their behalf service of any and
all legal process, summons, notices and documents that may be served in any
action, suit or proceeding brought against the Company or Selling Shareholders,
respectively, with respect to their obligations, liabilities or any other matter
arising out of or in connection with this Agreement and that may be made on the
Authorized Agent in accordance with legal procedures prescribed for such courts,
and it being understood that the designation and appointment of CT Corporation
System as the Authorized Agent shall become effective immediately without any
further action on the part of the Company or the Selling Shareholders. Each of
the Company and the Selling Shareholders represents to each International
Underwriter that it has notified CT Corporation System of such designation and
appointment and that CT Corporation System has accepted the same. The Company
and Selling Shareholders further agree that, to the extent permitted by law,
proper service of process upon CT Corporation System (or its successors as agent
for service of process) and written notice of said service to the Company or
Selling Shareholders pursuant to Section 16, shall be deemed in every respect
effective service of process upon the Company or Selling Shareholders,
respectively, in any such suit or proceeding. If for any reason such designee,
appointee and agent hereunder shall cease to be available to act as such, the
Company and Selling Shareholders agree to designate a new designee, appointee
and agent in The City of New York, New York on the terms and for the purposes of
this Section 14 reasonably satisfactory to the International Representatives.
The Company and Selling Shareholders further hereby irrevocably consent and
agree to the service of any and all legal process, summons, notices and
documents in any such action, suit or proceeding against the Company or Selling
Shareholders, respectively, by serving a copy thereof upon the relevant agent
for service of process referred to in this Section 14 (whether or not the
38
appointment of such agent shall for any reason prove to be ineffective or such
agent shall accept or acknowledge such service) and by mailing copies thereof by
registered or certified air mail, postage prepaid, to the Company or Selling
Shareholders, respectively, at the addresses specified in or designated pursuant
to this Agreement. The Company and Selling Shareholders agree that the failure
of any such designee, appointee and agent to give any notice of such service to
them shall not impair or affect in any way the validity of such service or any
judgment rendered in any action or proceeding based thereon. Nothing herein
shall in any way be deemed to limit the ability of the International
Underwriters and the other persons referred to in Sections 7 and 8 to serve any
such legal process, summons, notices and documents in any other manner permitted
by applicable law or to obtain jurisdiction over the Company or the Selling
Shareholders or bring actions, suits or proceedings against the Company or
Selling Shareholders in such other jurisdictions, and in such manner, as may be
permitted by applicable law. The Company and Selling Shareholders hereby
irrevocably and unconditionally waive, to the fullest extent permitted by law,
any objection that they may now or hereafter have to the laying of venue of any
of the aforesaid actions, suits or proceedings arising out of or in connection
with this Agreement brought in any New York Court and hereby further irrevocably
and unconditionally waive and agree not to plead or claim in any such court that
any such action, suit or proceeding brought in such court has been brought in an
inconvenient forum.
SECTION 15. Judgment Currency. The Company and the Selling Shareholders
agree to indemnify each International Underwriter and each person, if any, who
controls such International Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, and each International Underwriter
severally agrees to indemnify the Company, its directors, each of its officers
who signed the Registration Statement and the ADR Registration Statement, the
Selling Shareholders and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against
any loss incurred, as incurred, as a result of any judgment being given in
connection with this Agreement, the Prospectus, the Registration Statement or
the ADR Registration Statement for which indemnification is provided by such
person pursuant to Section 7 of this Agreement and any such judgment or order
being paid in a currency (the "Judgment Currency") other than U.S. dollars as a
result of any variation as between (i) the spot rate of exchange in New York at
which the Judgment Currency would have been convertible into U.S. dollars as of
the date such judgment or order is entered, and (ii) the spot rate of exchange
at which the indemnified party is first able to purchase U.S. dollars with the
amount of the Judgment Currency actually received by the indemnified party. If,
alternatively, the indemnified party receives a profit as a result of such
currency conversion, it will return any such profits to the indemnifying party
(after taking into account any taxes or other costs arising in connection with
such conversion and repayment). The foregoing indemnity shall constitute a
separate and independent, several and not joint, obligation of the Company, the
Selling Shareholders and the International Underwriters and shall continue in
full force and effect notwithstanding any such judgment or order as aforesaid.
The term "spot rate of exchange" shall include any premiums and costs of
exchange payable in connection with the purchase of, or conversion into, the
relevant currency.
SECTION 16. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
International Underwriters shall be directed to the International
Representatives care of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
39
▇▇▇▇▇ Incorporated, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇, attention of Equity Capital Markets with a copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; notices to the Company shall be directed to it at Rodovia
Campinas Mogi - Mirim km 2.6 CP 1408, CEP ▇▇▇▇▇-▇▇▇ ▇▇▇▇▇▇▇▇, Sao Paulo, Brasil,
attention of ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ with a copy to Cleary, Gottlieb,
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇; and notices to the Selling Shareholders shall be directed to
them at, (i) in the case of VBC Energia S.A., Av. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, No. 1.297/1.307, 14 andar CEP 04571-010, Sao Paulo, SP, Brasil,
attention of ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ Filho, (ii) in the case of 521 Participacoes
S.A., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇, ▇▇ andar, CEP ▇▇▇▇▇-▇▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇,
▇▇▇▇▇▇, attention of ▇▇▇▇ ▇▇▇▇▇▇▇ do ▇▇▇▇▇, and (iii) in the case of Bonaire
Participacoes S.A., ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇. ▇▇, ▇▇ andar, CEP ▇▇▇▇▇-▇▇▇, ▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇, attention of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇.
SECTION 17. Parties. This Agreement shall each inure to the benefit of and
be binding upon the International Underwriters, the Company and the Selling
Shareholders and their respective successors. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the International Underwriters, the Company and the
Selling Shareholders and their respective successors and the controlling persons
and officers and directors referred to in Sections 7 and 8 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the International Underwriters, the Company and the Selling
Shareholders and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any International Underwriter shall be deemed to be a successor by reason merely
of such purchase.
SECTION 18. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 19. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT
AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY
TIME.
SECTION 20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all
counterparts shall together constitute one and the same Agreement.
SECTION 21. Effect of Headings. The Section headings herein and the Table
of Contents are for convenience only and shall not affect the construction
hereof.
SECTION 22. Taxes. All payments to be made by the Company and the Selling
Shareholders under this Agreement shall be paid free and clear of and without
deduction or withholding for or on account of, any present or future taxes,
levies, imposts by Brazil or by any department, agency or other political
subdivision or taxing authority thereof or therein, and all
40
interest, penalties or similar liabilities with respect thereto (collectively,
"Taxes"). If any Taxes are required by law to be deducted or withheld in
connection with such payments, the Company and the Selling Shareholders will
increase the amount paid so that the full amount of such payment is received by
the International Underwriters.
41
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to each of the Company and the
Attorneys-in-Fact for the Selling Shareholders a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the International Underwriters, the Company and the Selling Shareholders
in accordance with its terms.
Very truly yours,
CPFL ENERGIA S.A.
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
VBC ENERGIA S.A.
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
521 PARTICIPACOES S.A.
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
BONAIRE PARTICIPACOES S.A.
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
PACTUAL CAPITAL CORPORATION
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By:____________________________________
Authorized Signatory
For themselves and as International Representatives
of the other International Underwriters named in
Schedule A hereto
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this ____ the day of -, 2004, before me, a notary public within
and for said county, personally appeared - and -, to me personally known who
being duly sworn, did say that such persons are - and -, respectively, and
authorized signatories of CPFL Energia S.A., one of the persons described in and
which executed the foregoing instrument, and acknowledges said instrument to be
the free act and deed of said corporation.
____________________________________________
[NOTARIAL SEAL]
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this ____ the day of -, 2004, before me, a notary public within
and for said county, personally appeared - and -, to me personally known who
being duly sworn, did say that such persons are - and -, respectively, and
authorized signatories of VBC Energia S.A., one of the persons described in and
which executed the foregoing instrument, and acknowledges said instrument to be
the free act and deed of said corporation.
____________________________________________
[NOTARIAL SEAL]
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this ____ the day of -, 2004, before me, a notary public within
and for said county, personally appeared - and -, to me personally known who
being duly sworn, did say that such persons are - and -, respectively, and
authorized signatories of 521 Participacoes S.A., one of the persons described
in and which executed the foregoing instrument, and acknowledges said instrument
to be the free act and deed of said corporation.
____________________________________________
[NOTARIAL SEAL]
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this ____ the day of -, 2004, before me, a notary public within
and for said county, personally appeared - and -, to me personally known who
being duly sworn, did say that such persons are - and -, respectively, and
authorized signatories of Bonaire Participacoes S.A., one of the persons
described in and which executed the foregoing instrument, and acknowledges said
instrument to be the free act and deed of said corporation.
____________________________________________
[NOTARIAL SEAL]
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this ____ the day of -, 2004, before me, a notary public within
and for said county, personally appeared -, to me personally known who being
duly sworn, did say that such person is an authorized signatory of Merrill,
Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, one of the persons described in and
which executed the foregoing instrument, and acknowledges said instrument to be
the free act and deed of said corporation.
____________________________________________
[NOTARIAL SEAL]
Schedule A
LIST OF INTERNATIONAL UNDERWRITERS
Number of International
Initial Securities
Name of International Underwriter (in the form of ADSs)
--------------------------------- ---------------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Pactual Capital Corporation
Credit Suisse First Boston LLC
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
UBS Securities LLC
-------------
Total.......................................
=============
Sch A-1
Schedule B
LIST OF COMPANY AND SELLING SHAREHOLDERS
Number of International Initial Maximum Number of International
Securities to be Sold to Option Securities Be Sold
------------------------ -------------------------
CPFL Energia S.A.
VBC Energia S.A.
521 Participacoes S.A.
Bonaire Participacoes S.A. ------------------- ---------------------
Total..............................
Sch B-1
Schedule C
OFFERING PRICE
CPFL ENERGIA S.A.
- American Depositary Shares, each representing three Common Shares
1. The initial public offering price per share for the ADSs,
determined as provided in Section 2, shall be US$-.
2. The purchase price per share for the ADSs to be paid by the
several Underwriters shall be US$-, being an amount equal to the initial public
offering price set forth above less US$- per share.
Sch C-1
EXHIBIT A-1
FORM OF OPINION OF COMPANY'S U.S. COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 6(b)
[Letterhead of
CLEARY, GOTTLIEB, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇]
Writer's Direct Dial: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
[-], 2004
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Pactual Capital Corporation
as International Representatives of the
several International Underwriters
c/o Merrill Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
We have acted as special United States counsel to CPFL Energia S.A.,
a Brazilian corporation (sociedade anonima) (the "Company"), and the selling
shareholders named in Schedule B to the International Purchase Agreement (as
defined below) (the "Selling Shareholders") in connection with the offering by
the Company and the Selling Shareholders pursuant to a registration statement on
Form F-1 (No. 333-118494) of an aggregate of [-] American Depositary Shares (the
"ADSs"), each representing three common shares (the "Common Shares") of the
Company. Such registration statement, as amended when it became effective,
including the information deemed to be a part thereof as of such time pursuant
to Rule 430A under the Securities Act of 1933, as amended (the "Securities
Act"), is herein called the "Registration Statement," and the related
prospectus, as first filed with the Securities and Exchange Commission pursuant
to Rule 424(b)([-]) under the Securities Act, is herein called the "Prospectus."
The ADSs will be evidenced by American Depositary Receipts (the "ADRs") issued
pursuant to a deposit agreement, dated as of [-], 2004 (the "Deposit
Agreement"), among the Company, The Bank of New York, as depositary (the
"Depositary"), and all owners and beneficial owners from time to time of ADRs.
This opinion letter is furnished pursuant to Section 6(b) of the international
purchase agreement dated [-], 2004 (the "International Purchase Agreement")
among the Company, the Selling Shareholders and the several international
underwriters named in Schedule A thereto (the "International Underwriters").
In arriving at the opinions expressed below, we have reviewed the
following documents:
Ex A-1-1
(a) an executed copy of the International Purchase Agreement;
(b) the Registration Statement;
(c) the registration statement of the Company on Form F-6, as
amended (File No. 333-118760), for the registration of the ADSs under the
Securities Act;
(d) the Prospectus;
(e) an executed copy of the Deposit Agreement;
(f) a form of the ADR attached to the Deposit Agreement; and
(g) the documents delivered to you by the Company and the Selling
Shareholders at the closing pursuant to the International Purchase Agreement.
In addition, we have reviewed the originals or copies certified or
otherwise identified to our satisfaction of all such corporate records of the
Company and the Selling Shareholders and such other instruments and other
certificates of public officials, officers and representatives of the Company
and the Selling Shareholders and such other persons, and we have made such
investigations of law, as we have deemed appropriate as a basis for the opinions
expressed below.
In rendering the opinions expressed below, we have assumed the
authenticity of all documents submitted to us as originals and the conformity to
the originals of all documents submitted to us as copies. In addition, we have
assumed and have not verified (i) the accuracy as to factual matters of each
document we have reviewed (including, without limitation, the accuracy of the
representations and warranties of the Company and the Selling Shareholders in
the International Purchase Agreement) and (ii) that the ADRs conform to the form
thereof that we have reviewed.
Based on the foregoing, and subject to the further assumptions and
qualifications set forth below, it is our opinion that:
1. The International Purchase Agreement has been duly executed
and delivered by the Company and each Selling Shareholder under the law of the
State of New York and is a valid, binding and enforceable agreement of the
Company and each Selling Shareholder (except that we express no opinion with
respect to Sections 7 and 8 of the International Purchase Agreement providing
for indemnification and contribution).
2. The Deposit Agreement has been duly executed and delivered by
the Company under the law of the State of New York and is a valid, binding and
enforceable agreement of the Company (except that we express no opinion with
respect to Section 5.8 of the Deposit Agreement providing for indemnification)
and upon due issuance by the Depositary of ADRs evidencing the ADSs against the
deposit of the Common Shares in respect thereof in accordance with the
provisions of the Deposit Agreement, such ADRs will be duly and validly issued
and
Ex A-1-2
the persons in whose names the ADRs are registered will be entitled to the
rights specified therein and in the Deposit Agreement.
3. The deposit of the Common Shares and the issuance of the ADRs
pursuant to the Deposit Agreement and the sale of the ADSs to the International
Underwriters pursuant to the International Purchase Agreement do not, and the
performance by the Company of its obligations in the International Purchase
Agreement and the Deposit Agreement will not, (a) require any consent, approval,
authorization, registration or qualification of or with any governmental
authority of the United States or the State of New York that in our experience
normally would be applicable to general business entities with respect to such
deposit, issuance, sale or performance, except such as have been obtained or
effected under the Securities Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (but we express no opinion relating to any state
securities or Blue Sky laws), or (b) result in a violation of any United States
federal or New York State law or published rule or regulation that in our
experience normally would be applicable to general business entities with
respect to such deposit, issuance, sale or performance (but we express no
opinion relating to the United States federal securities laws or any state
securities or Blue Sky laws).
4. The performance by each of the Selling Shareholders of its
obligations in the International Purchase Agreement will not (a) require any
consent, approval, authorization, registration or qualification of or with any
governmental authority of the United States or the State of New York that in our
experience normally would be applicable to general business entities with
respect to such performance, except such as have been obtained or effected under
the Securities Act and the Exchange Act (but we express no opinion relating to
any state securities or Blue Sky laws), or (b) result in a violation of any
United States federal or New York State law or published rule or regulation that
in our experience normally would be applicable to general business entities with
respect to such performance (but we express no opinion relating to the United
States federal securities laws or any state securities or Blue Sky laws).
5. The statements set forth under the heading "Description of
American Depositary Shares" in the Prospectus, insofar as such statements
purport to summarize certain provisions of the ADSs and the Deposit Agreement,
provide a fair summary of such provisions, and the statements made in the
Prospectus under the heading "Taxation--Certain United States Federal Income Tax
Consequences," insofar as such statements purport to summarize certain federal
income tax laws of the United States, constitute a fair summary of the principal
U.S. federal income tax consequences of an investment in the ADSs.
6. Under the laws of the State of New York relating to submission
to jurisdiction, the Company, pursuant to Section 14 of the International
Purchase Agreement and Section 7.8 of the Deposit Agreement, has (i) validly and
irrevocably submitted to the personal jurisdiction of any New York State or U.S.
federal court located in the Borough of Manhattan, The City of New York, in any
action arising out of or related to the International Purchase Agreement or the
Deposit Agreement, as applicable, (ii) to the fullest extent permitted by law,
validly and irrevocably waived any objection to the venue of a proceeding in any
such court, and (iii) validly appointed CT Corporation System as its initial
authorized agent for the purpose described in Section 14 of the International
Purchase Agreement and Section 7.8 of the Deposit Agreement; and service of
process effected in the manner set forth in Section 14 of the International
Purchase
Ex A-1-3
Agreement and Section 7.8 of the Deposit Agreement will be effective to confer
valid personal jurisdiction over the Company in any such action.
7. Under the laws of the State of New York relating to submission
to jurisdiction, each of the Selling Shareholders, pursuant to Section 14 of the
International Purchase Agreement, has (i) validly and irrevocably submitted to
the personal jurisdiction of any New York State or U.S. federal court located in
the Borough of Manhattan, The City of New York, in any action arising out of or
related to the International Purchase Agreement, (ii) to the fullest extent
permitted by law, validly and irrevocably waived any objection to the venue of a
proceeding in any such court, and (iii) validly appointed CT Corporation System
as its initial authorized agent for the purpose described in Section 14 of the
International Purchase Agreement; and service of process effected in the manner
set forth in Section 14 of the International Purchase Agreement will be
effective to confer valid personal jurisdiction over such Selling Shareholder in
any such action.
8. No registration of the Company under the Investment Company
Act of 1940, as amended, is required for the offer and sale of the ADSs by the
Company in the manner contemplated by the International Purchase Agreement and
the Prospectus.
9. Assuming that (a) The Depository Trust Company ("DTC") is a
"clearing corporation" as defined in Section 8-102(a)(5) of the Uniform
Commercial Code (as in effect in the State of New York, the "UCC") and (b) each
of the International Underwriters acquires its interest in the ADSs it has
pruchased without notice of any adverse claim (within the meaning of Section
8-105 of the UCC), each International Underwriter that has purchased ADSs from a
Selling Shareholder, made payment therefor pursuant to the International
Purchase Agreement and had such ADSs credited to a securities account of such
International Underwriter maintained with DTC will have acquired a securities
entitlement (within the meaning of Section 8-102(a)(17) of the UCC) to such
securities, and no action based on an adverse claim may be asserted against such
International Underwriter with respect to such security entitlement.
Insofar as the foregoing opinions relate to the validity, binding
effect or enforceability of any agreement or obligation of the Company or the
Selling Shareholders, (a) we have assumed that the Company, each Selling
Shareholder and each other party to such agreement or obligation has satisfied
those legal requirements that are applicable to it to the extent necessary to
make such agreement or obligation enforceable against it (except that no such
assumption is made as to the Company or the Selling Shareholders regarding
matters of the federal law of the United States of America or the law of the
State of New York that in our experience normally would be applicable to general
business entities with respect to such agreement or obligation), (b) such
opinions are subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and to general principles of equity and
(c) such opinions are subject to the effect of judicial application of foreign
laws or foreign governmental actions affecting creditors' rights.
We express no opinion as to the enforceability of Section 13 of the
International Purchase Agreement or Section 7.9 of the Deposit Agreement to the
extent that the waivers of immunity set forth therein purport to apply to any
immunity to which the Company or the Selling Shareholders, as the case may be,
may become entitled after the date thereof.
Ex A-1-4
With respect to our opinion in paragraph 2 above, we express no view
on the Depositary's or any other person's title or other rights, if any, in or
to the Common Shares.
The foregoing opinions are subject to the following qualifications:
(i) we express no opinion as to the subject matter jurisdiction of any United
States federal court to adjudicate any action where jurisdiction based on
diversity of citizenship under 28 U.S.C. Section 1332 does not exist , (ii) we
express no opinion as to the enforceability of Section 15 of the International
Purchase Agreement relating to currency indemnity and (iii) we note that the
designation in Section 14 of the International Purchase Agreement and Section
7.8 of the Deposit Agreement of any U.S. federal court sitting in the Borough of
Manhattan, the City and State of New York as a venue for actions or proceedings
relating to the International Purchase Agreement or the Deposit Agreement, as
applicable, is (notwithstanding the waivers in such provisions) subject to the
power of such courts to transfer actions pursuant to 28 U.S.C. Section 1404(a)
or to dismiss such actions or proceedings on the grounds that such a federal
court is an inconvenient forum for such an action or proceeding.
The foregoing opinions are limited to the federal law of the United
States of America and the law of the State of New York.
We are furnishing this opinion letter to you, as International
Representatives of the International Underwriters, solely for the benefit of the
International Underwriters in their capacity as such in connection with the
offering of the ADSs. This opinion letter is not to be relied on by or furnished
to any other person or used, circulated, quoted or otherwise referred to for any
other purpose, except that the opinions in paragraphs 2, 3 and 8 (subject to the
related assumptions and qualifications) may be relied upon by the Depositary in
its capacity as such. We assume no obligation to advise you, or to make any
investigations, as to any legal developments or factual matters arising
subsequent to the date hereof that might affect the opinions expressed herein.
Very truly yours,
CLEARY, GOTTLIEB, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
By ____________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, a Partner
Ex A-1-5
EXHIBIT A-2
FORM OF NEGATIVE ASSURANCE LETTER OF COMPANY'S U.S. COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 6(b)
[Letterhead of
CLEARY, GOTTLIEB, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇]
Writer's Direct Dial: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
[-], 2004
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Pactual Capital Corporation
as International Representatives of the
several International Underwriters
c/o Merrill Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
We have acted as special United States counsel to CPFL Energia S.A.,
a Brazilian corporation (sociedade anonima) (the "Company"), and the selling
shareholders named in Schedule B to the International Purchase Agreement (as
defined below) (the "Selling Shareholders") in connection with the offering by
the Company and the Selling Shareholders pursuant to a registration statement on
Form F-1 (No. 333-118494) of an aggregate of [-] American Depositary Shares (the
"ADSs"), each representing three common shares (the "Common Shares") of the
Company. Such registration statement, as amended when it became effective,
including the information deemed to be a part thereof as of such time pursuant
to Rule 430A under the Securities Act of 1933, as amended (the "Securities
Act"), is herein called the "Registration Statement," and the related
prospectus, as first filed with the Securities and Exchange Commission pursuant
to Rule 424(b)([-]) under the Securities Act, is herein called the "Prospectus."
In addition, we have acted as special United States counsel to the Company in
connection with the preparation and filing with the Commission under the
Securities Act of a registration statement on Form F-6 (No. 333-118760) relating
to the offer and sale by the Company of the ADSs evidenced by American
Depositary Receipts. Such registration statement, as amended when it became
effective (but not including the exhibits filed as a part thereof or
incorporated by reference therein), is herein called the "F-6 Registration
Statement." This letter is furnished to you pursuant to Section 6(b) of the
international purchase agreement dated [-], 2004 (the "International Purchase
Agreement") among the Company, the Selling
Ex A-2-1
Shareholders and the several international underwriters named in Schedule A
thereto (the "International Underwriters").
Because the primary purpose of our professional engagement was not
to establish or confirm factual matters or financial, accounting or statistical
information, and because many determinations involved in the preparation of the
Registration Statement, the F-6 Registration Statement and the Prospectus are of
a wholly or partially non-legal character or relate to legal matters outside the
scope of our opinion letter to you of even date herewith, we are not passing
upon and do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement, the F-6
Registration Statement or the Prospectus (except to the extent expressly set
forth in numbered paragraph 5 of our opinion letter to you of even date
herewith) and we make no representation that we have independently verified the
accuracy, completeness or fairness of such statements (except as aforesaid).
However, in the course of our acting as special United States
counsel to each of the Company and the Selling Shareholders in connection with
its preparation of the Registration Statement, the F-6 Registration Statement
and the Prospectus, we participated in conferences and telephone conversations
with representatives of the Company and the Selling Shareholders,
representatives of the independent public accountants for the Company,
representatives of Brazilian counsel to the Company and the Selling
Shareholders, your representatives and representatives of your United States and
Brazilian counsel, during which conferences and conversations the contents of
the Registration Statement, the F-6 Registration Statement and the Prospectus
and related matters were discussed, and we reviewed certain records and
documents furnished to us by the Company and the Selling Shareholders.
Based on our participation in such conferences and conversations and
our review of such records and documents as described above, our understanding
of the U.S. federal securities laws and the experience we have gained in our
practice thereunder, we advise you that:
(a) The Registration Statement and the F-6 Registration
Statement (except, in each case, the financial statements and schedules
and other financial data included therein, as to which we express no
view), at the time they became effective, and the Prospectus (except as
aforesaid), as of the date thereof, appeared on their face to be
appropriately responsive in all material respects to the requirements of
the Securities Act and the rules and regulations thereunder. In addition,
we do not know of any contracts or other documents of a character required
to be filed as exhibits to the Registration Statement or the F-6
Registration Statement or required to be described in the Registration
Statement, the F-6 Registration Statement or the Prospectus that are not
filed or described as required.
(b) No information has come to our attention that causes us
to believe that the Registration Statement or the F-6 Registration
Statement (except, in each case, the financial statements and schedules
and other financial data included therein, as to which we express no
view), at the time they became effective, contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Ex A-2-2
(c) No information has come to our attention that causes us
to believe that the Prospectus (except the financial statements and
schedules and other financial data included therein, as to which we
express no view), as of the date thereof or hereof, contained or contains
an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
We confirm to you that (based solely upon a telephonic confirmation
from a representative of the Commission) the Registration Statement and the F-6
Registration Statement are effective under the Securities Act and, to the best
of our knowledge, no stop order with respect thereto has been issued, and no
proceeding for that purpose has been instituted or threatened, by the
Commission.
We are furnishing this letter to you, as International
Representatives of the International Underwriters, solely for the benefit of the
International Underwriters in their capacity as such in connection with the
offering of the ADSs. This letter is not to be relied on by or furnished to any
other person or used, circulated, quoted or otherwise referred to for any other
purpose. We assume no obligation to advise you, or to make any investigations,
as to any legal developments or factual matters arising subsequent to the date
hereof that might affect the views expressed herein.
Very truly yours,
CLEARY, GOTTLIEB, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
By __________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, a Partner
Ex A-2-3
EXHIBIT B-1
FORM OF OPINION OF COMPANY'S BRAZILIAN COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 6(c)
[Letterhead of ▇▇▇▇▇▇ FILHO, ▇▇▇▇▇ FILHO, MARREY JR. E ▇▇▇▇▇▇▇ ADVOGADOS]
Sao Paulo, September [-], 2004
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
Pactual Capital Corporation
and the other several international underwriters (the "International
Underwriters") named in Schedule A to the International Purchase Agreement
referred to below
c/o Merrill Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
1. We are qualified to practice law in the Federative Republic of Brazil
("Brazil") and have acted as special Brazilian counsel to CPFL Energia
S.A. (the "Company"), VBC Energia S.A. ("VBC"), 521 Participacoes S.A.
("521") and Bonaire Participacoes S.A. ("Bonaire" and together with VBC
and 521, the "Selling Shareholders"), each a corporation organized
under the laws of Brazil, in connection with the public offering and
sale by the Company and the Selling Shareholders an aggregate of [o] of
American Depositary Shares (the "ADSs"), each representing three acoes
ordinarias of the Company, without par value ("Common Shares"), and an
aggregate of [o] additional American Depositary Shares (the "Optional
ADSs") to be sold by the Company and the Selling Shareholders in
connection with the over-allotment option, if exercised, pursuant to
the international purchase agreement (the "International Purchase
Agreement") dated [o], 2004 among the Company, the Selling Shareholders
and the International Underwriters.
2. This opinion is being furnished to you pursuant to Section 6(c) of the
International Purchase Agreement.
Ex B-1-1
3. Except as otherwise provided herein, expressions defined or to which
meaning has been assigned in the International Purchase Agreement have
the same meanings when used in this opinion.
4. For the purposes of giving this opinion we have examined and/or relied
upon copies of the following documents:
(i) an executed copy of the Brazilian Underwriting Agreement;
(ii) an executed copy of the International Purchase Agreement;
(iii) an executed copy of the Deposit Agreement;
(iv) a copy of the Registration Statement;
(v) a copy of the Prospectus and Brazilian Prospectus;
(vi) a copy of the Company's estatuto social (the "Company's
By-Laws");
(vii) such other documents, corporate documents, stock transfer
books and registers, corporate records, contracts and
certificates of officers of the Company and of the Selling
Shareholders, furnished to us by the Company and the Selling
Shareholders, as we may have considered necessary or desirable
to examine for the purpose of giving this opinion.
Unless otherwise indicated herein, the documents referred to in items
(i) to (iii) above are collectively referred to as the "Transaction
Documents".
5. We have not made any investigation of the laws of any jurisdiction
outside Brazil and this opinion is given solely in respect of the laws
of Brazil, as of the date hereof and not in respect of any other law.
In particular, we have made no independent investigation of the laws of
the State of New York and do not express or imply any opinion on such
laws. In relation to all matters of United States federal and New York
State laws, we understand that you are relying on the opinion of
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, the United States counsel for the
Company and the Selling Shareholders, dated as of the date hereof and
delivered pursuant to Section 6(b) of the International Purchase
Agreement.
Ex-B-1-2
6. The phrase expressed in the opinions contained in subparagraph 9(v)
below to the effect that no holder of shares issued by the Company
shall be subject to personal liability solely by reason of being such a
holder shall be deemed to refer only to personal liability for the
debts of the Company and to no other liability whatsoever.
7. In giving this opinion, we have made the following assumptions:
(i) that all documents submitted to us in draft form or as
facsimile or copy or specimen documents conform to their
originals;
(ii) that all documents submitted to us as originals are authentic;
(iii) that the signatures on the originals, certified copies or
copies of all documents submitted to us are genuine;
(iv) that the Transaction Documents have been validly authorized,
executed and delivered by all parties thereto (other than the
Company and the Selling Shareholders);
(v) the capacity, power and authority of, and the fulfillment of
all internal authorization procedures by, each of the parties
to the Transaction Documents, other than the Company and the
Selling Shareholders, to execute, deliver and perform its
respective obligations in respect of the Transaction
Documents;
(vi) that each of the parties to the Transaction Documents, other
than the Company and the Selling Shareholders, has been duly
organized and established and is validly existing at the date
of execution of the Transaction Documents;
(vii) that each of the parties to the Transaction Documents, other
than the Company and the Selling Shareholders, has all
necessary regulatory and other approvals, exemptions, licenses
and authorizations to perform its obligations under such
Transaction Documents to which it is a party;
(viii) that except as specifically otherwise mentioned there is no
provision of the law of any jurisdiction other than Brazil
which has any implication in relation to the opinions
expressed herein;
Ex-B-1-3
(ix) that the Transaction Documents constitute legal, valid and
binding obligations of each of the parties thereto, other than
the Company and the Selling Shareholders, enforceable against
each of the parties thereto in accordance with their terms;
and
(x) the validity and enforceability under the law of any
jurisdiction other than Brazil of those of the Transaction
Documents as are expressed to be subject to the law of such
other jurisdiction and, insofar as any obligation expressed to
be incurred under any of the documents is to be performed in
or is otherwise subject to any jurisdiction outside Brazil,
such performance will not be unlawful under the laws of that
jurisdiction.
8. As to matters of fact, we have relied upon the representations and
warranties made in the Transaction Documents by the Company and the
Selling Shareholders or certificates of public officials and authorized
officers of the Company and the Selling Shareholders on behalf of the
Company and the Selling Shareholders, respectively.
9. Based on the above assumptions and subject to the reservations,
qualifications and explanations set forth below, we are of the opinion
that:
(i) The Company and each subsidiary of the Company (as defined in
item 9(iv) below) has been duly organized and is validly
existing as a corporation (sociedade por acoes) in good
standing under the laws of Brazil with corporate power and
authority under such laws to own, lease and operate its
properties and conduct its business in Brazil as described in
the Prospectus, except to the extent that the failure to be in
good standing, would not, singly or in the aggregate, have a
Material Adverse Effect.
(ii) Each Selling Shareholder has been duly organized and is
validly existing as a corporation (sociedade por acoes) in
good standing under the laws of Brazil with corporate power
and authority under such laws to own, lease and operate its
properties and conduct its business in Brazil, except to the
extent that the failure to be in good standing, would not,
singly or in the aggregate, have a material adverse change in
the condition, financial or otherwise, or in the earnings,
business affairs, or business prospects of such Selling
Shareholder, whether or not arising in the ordinary course of
business.
(iii) The Selling Shareholders own, and on the Closing Time will
own, the Common Shares to be sold by the Selling Shareholders
pursuant to the International Purchase Agreement and the
Brazilian Underwriting Agreement free and clear of all
security interests, mortgages, pledges, claims, liens or
encumbrances and has, and on the Closing Time will have, the
legal right and power to enter into the International Purchase
Agreement and the
Ex-B-1-4
Brazilian Underwriting Agreement and to sell, transfer and
deliver the Common Shares to be sold by the Selling
Shareholders.
(iv) All of the issued and outstanding capital stock of each
subsidiary of the Company has been duly authorized and validly
issued, is fully paid and nonassessable and, to the extent
such ownership is disclosed in the Prospectus, is owned by the
Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance,
claim or equity other than such security interests, mortgages,
pledges, liens and encumbrances disclosed in the Prospectus;
and none of the outstanding shares of capital stock of any
subsidiary of the Company was issued in violation of the
preemptive or similar rights of any securityholder of such
subsidiary. The only "subsidiaries" of the Company are the
entities listed on Exhibit 21.1 to the Registration Statement.
As used in this opinion letter, the term "subsidiaries" shall
have the meaning ascribed to such term in the immediately
preceding sentence.
(v) The authorized capital stock of the Company conforms as to
legal matters in all material respects to the description
thereof contained in the Prospectus. All the shares of capital
stock of the Company (including the Common Shares evidenced by
ADSs and all other Common Shares to be sold by each Selling
Shareholder) outstanding prior to the issuance of the Common
Shares to be sold by the Company pursuant to the International
Purchase Agreement and the Brazilian Underwriting Agreement,
have been duly authorized and validly issued and are fully
paid and non-assessable. The Common Shares to be sold by the
Company pursuant to the International Purchase Agreement and
the Brazilian Underwriting Agreement have been duly authorized
and, when issued, delivered and paid for, will be validly
issued, fully paid and non-assessable. No holder of the Common
Shares is or will be subject to personal liability solely by
being such holder. To our knowledge, except as described in
the Prospectus, there are no outstanding securities issued by
the Company convertible into or exchangeable for, or warrants,
rights or options to purchase from the Company or obligations
of the Company to issue, any class of capital stock of the
Company.
(vi) The Common Shares (in the form of ADSs) to be purchased by the
International Underwriters and the Common Shares to be
underwritten by the Brazilian Underwriters from the Company
have been duly authorized for issuance and sale to the
International Underwriters pursuant to the International
Purchase Agreement and to the Brazilian Underwriters pursuant
to the Brazilian Underwriting Agreement, respectively, and,
when issued and paid for in accordance with the International
Purchase Agreement or the Brazilian Underwriting Agreement, as
the case may be,
Ex-B-1-5
will be validly issued, fully paid and non-assessable and will
be issued free and clear of all security interests, mortgages,
pledges, liens or encumbrances; and the issuance of the Common
Shares is not subject to the preemptive or other similar
rights of any securityholder of the Company.
(vii) None of the ADSs or Common Shares are subject to the
preemptive rights of any shareholder of the Company in
connection with the Offerings.
(viii) Except as disclosed in the Prospectus, to our knowledge, there
are no contracts, agreements or understanding between the
Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company
to include such securities in the securities registered
pursuant to the Registration Statement or in any securities
being registered pursuant to any other registration statement
filed by the Company under the Securities Act.
(ix) The Registration Statement, the Prospectus and preliminary
prospectus relating to the offering of the ADSs, the
Prospectus and the preliminary and final prospectuses relating
to the Brazilian Offering have been duly authorized by the
Company [and each of the Selling Shareholders].
(x) The International Purchase Agreement and the Brazilian
Underwriting Agreement have been duly authorized, executed and
delivered by the Company and each of the Selling Shareholders.
The Deposit Agreement has been duly authorized, executed and
delivered by the Company. Each of the Transaction Documents
constitutes a valid and legally binding agreement of the
Company and each of the Selling Shareholders, enforceable
against the Company and each of the Selling Shareholders in
accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights
generally or by equitable principles relating to
enforceability and, with respect to indemnification and
contribution provisions, by considerations of public policy.
(xi) The execution and delivery by the Company of the Transaction
Documents and compliance by the Company with the terms
thereof, will not (a) to our knowledge, conflict with or
result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company pursuant to, any
indenture, mortgage, loan agreement or other agreement or
instrument to which the Company is a
Ex-B-1-6
party or by which the Company is bound, (b) result in any
violation of the provisions of the Company's By-Laws, (c)
result in the violation of any applicable law, statute, rule
or regulation of Brazil, or (d) to our knowledge, result in
the violation of any judgment or order of any Brazilian court
or arbitrator or governmental or regulatory authority having
jurisdiction over the Company or any of its properties, assets
or operations, except in the case of (a) and (d) above, for
such conflict, breach, violation, default or lien, charge or
encumbrance that could not reasonably be expected to have a
Material Adverse Effect.
(xii) No consent, approval, authorization, order, registration or
qualification of or with any Brazilian court or arbitrator or
governmental or regulatory authority is required to be
obtained by the Company or by the Selling Shareholders for the
authorization and execution, delivery and performance of each
of the Transaction Documents or the sale of the ADSs, except
for (a) approvals which have been obtained from the Central
Bank and the CVM relating to the Deposit Agreement under Annex
V to Resolution No. 1,289 of March 20, 1987, as amended, of
the National Monetary Council, (b) approvals which have been
obtained from the CVM relating to the offering of the Common
Shares and ADSs as provided for in the Transaction Documents,
(c) approvals which have been obtained from the Central Bank
relating to the payment of the fees, expenses and commissions
contemplated by the International Purchase Agreement, (d) as
may be required, approval from the Central Bank for any
payment abroad pursuant to Sections 7 and 8 of the
International Purchase Agreement, and (e) other authorizations
subject to the qualification outlined in paragraph 10(x)
below.
(xiii) Except as disclosed in the Prospectus, to our knowledge, there
is no action, suit, or proceeding threatened or pending to
which the Company or its subsidiaries is a party or to which
any property of the Company or its subsidiaries is subject,
before any Brazilian governmental, judicial or administrative
authority which, if determined adversely to the Company or its
subsidiaries, could, individually or in the aggregate,
reasonably be expected to (a) have a Material Adverse Effect
or (b) materially and adversely affect the ability of the
Company to perform its obligations under the Transaction
Documents.
(xiv) The statements made in the Prospectus under "Risk Factors --
Risks Relating to Our Operations and the Brazilian Power
Industry," "Risk Factors -- Risks Relating to the ADSs and Our
Common Shares," "Exchange Rates," "Market Information," "The
Brazilian Power Industry," "Description of Capital Stock,"
"Dividends and Dividend Policy," "Taxation - Brazilian Tax
Considerations" and " -- Other Relevant Brazilian
Ex-B-1-7
Taxes" and "Enforcement of Judgments Against Foreign Persons",
to the extent that they constitute matters of Brazilian law,
fairly summarize the matters described therein in all material
respects.
(xv) Except as otherwise disclosed in the Prospectus, to our
knowledge the Company and its subsidiaries have such
certificates, authorizations, licenses, concessions,
approvals, orders or permits issued by the appropriate
regulatory agencies or bodies of Brazil necessary to conduct
its electricity operations as described in the Prospectus
("Governmental Approvals"), the Governmental Approvals are in
full force and effect, and the Company is in compliance with
the terms and conditions of the Governmental Approvals, except
to the extent that the failure to have in full force and
effect, or non-compliance with, any such Governmental
Approvals could not reasonably be expected to have a Material
Adverse Effect.
(xvi) The Common Shares conform in all material respects to the
description thereof contained in the Prospectus.
(xvii) The Common Shares have been duly listed and admitted for
trading on the BOVESPA and the Company is registered as a
listed company with the CVM in Brazil.
(xviii) Except as otherwise described in the Prospectus and other than
Brazilian withholding taxes, generally at a rate of 15% (or
25% depending on the nature of the services rendered or
depending on whether the beneficiary is resident or domiciled
in a jurisdiction that imposes income tax at a maximum rate
lower than 20%, that does not impose income tax or that
imposes restrictions on disclosure of shareholding composition
or ownership of investments) on payments made by the Company,
to the International Underwriters under the International
Purchase Agreement, there is no tax, duty, levy, impost,
deduction, charge or withholding imposed on or, to our
knowledge, pending or proposed to, by Brazil or any political
subdivision or taxing authority thereof or therein or any
federation or organization or similar entity of which Brazil
is a member, to the International Underwriters or the
purchasers of ADSs in the capacity of taxpayers (a) on or by
virtue of the Company's execution, delivery, performance or
enforcement of the Transaction Documents or any document to be
furnished thereunder; or (b) on any payment to be made
pursuant to the Transaction Documents or on payments by the
Company to any holder of ADSs; or (c) on the resale and
delivery of such ADSs, evidenced by ADRs, by the International
Underwriters in the manner contemplated in the Prospectus.
Under current Brazilian
Ex-B-1-8
law and regulations, dividends, either in cash or any other
form, paid on the Common Shares (including Common Shares
represented by ADSs) are not and will not be subject to any
Brazilian withholding or any other tax, except as otherwise
described in the Prospectus.
(xix) All dividends and other distributions declared and payable on
the Common Shares represented by ADSs may under the current
laws and regulations of Brazil be paid to the Depositary in
Brazilian reais that may be converted into foreign currency
that currently may be freely transferred out of Brazil, and
the payment of such dividends and other distributions do not
currently require obtaining any governmental authorization in
Brazil, so long as the ADR program remains duly registered
with the CVM and the Central Bank.
(xx) Subject to the qualifications outlined in paragraphs 10(iv),
10(vi) and 10(vii) below, the International Purchase Agreement
and the Deposit agreement are in proper legal form under the
laws of Brazil for the enforcement thereof in Brazil against
the Company and, to the extent applicable, the Selling
Shareholders in the courts of Brazil, and, it is not necessary
to ensure the legality, validity, enforceability or
admissibility in evidence of the International Purchase
Agreement and the Deposit Agreement in Brazil or any political
subdivision thereof that it be filed or recorded or enrolled
with any court or other authority in Brazil or any political
subdivision thereof or that any stamp, registration or similar
tax be paid in Brazil or any political subdivision thereof on
or in respect of the International Purchase Agreement and
Deposit Agreement, other than court costs, including, without
limitation, filing fees.
(xxi) Subject to the requirements outlined in paragraph 10(xiii)
below, the governing law clause subjecting the International
Purchase Agreement and the Deposit Agreement to New York State
law is valid under Brazilian law. Assuming that the
International Purchase Agreement and Deposit Agreement are
legal, valid and binding under New York State law, the
International Purchase Agreement and Deposit Agreement are
enforceable against the Company and, in the case of the
International Purchase Agreement, the Selling Shareholders in
accordance with their terms (subject to the civil procedure
rules of Brazil including, without limitation, rules as to
service of process and the applicable provisions of the choice
of law of the State of New York) except that the
enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally.
Ex-B-1-9
(xxii) Subject to the qualifications outlined in paragraph 10(ix) and
10(xiv) below, the Company and the Selling shareholders have
the power to submit, and pursuant to the International
Purchase Agreement and Deposit agreement have legally,
validly, effectively and irrevocably submitted, to the
non-exclusive jurisdiction of any New York Court, and have the
power to designate, and have appointed and empowered, an agent
for service of process in any suit or proceeding based on or
arising under the International Purchase Agreement and Deposit
Agreement in any New York Court.
10. This opinion is subject to the following qualifications, explanations
and reservations:
(i) Any provisions of any of the Transaction Documents providing
that any specification or determination will be conclusive and
binding will not be conclusive and binding if such calculation
or determination is fraudulent and will not necessarily
prevent judicial inquiry into the merits of any claim by an
aggrieved party.
(ii) Our opinion as regards the binding effect of the obligations
of the Company and the Selling Shareholders under the
Transaction Documents is subject to all limitations arising
from bankruptcy, insolvency, liquidation, reorganization, and
similar laws affecting creditors' rights generally, including,
without limitations, intervention or extrajudicial liquidation
decreed by the Central Bank. Claims for salaries, wages,
social security, taxes and other statutorily preferred claims
will have preference over any other claims, including secured
ones.
(iii) Any judgment against the Company or the Selling Shareholders
in any of the non-Brazilian courts mentioned in the
Transaction Documents with respect to the Transaction
Documents will be enforceable in the courts of Brazil without
a reexamination of the merits if previously confirmed by the
Federal Supreme Court of Brazil and such confirmation is only
given if such judgment:
(a) fulfills all formalities required for its
enforceability under the laws of the country where it
was issued;
(b) was issued by a competent court (a) after due service
of process on the Company or the Selling
Shareholders, as the case may be; or (b) after
sufficient evidence of the Company's or the Selling
Shareholders 's absence has been given, as the case
may be, as required under applicable law;
(c) is not subject to appeal;
Ex-B-1-10
(d) was authenticated by a Brazilian Consulate in the
country in which it was issued and is accompanied by
a sworn translation into the Portuguese language;
(e) is for a payment of a sum certain; and
(f) is not against Brazilian national sovereignty, public
policy or morality.
(iv) In the event that any suit is brought against the Company or
the Selling Shareholders in Brazil, certain court costs and
deposits to secure judgment may be due and any plaintiff not
resident in Brazil will be required to make deposits as
security for process costs and for third party attorney's fees
if it does not possess any real property in Brazil, in
accordance with article 835 of the Brazilian Civil Procedure
Code.
(v) In the event that any suit is brought against the Company or
each of the Selling Shareholders, service of process upon any
of such parties, if made in Brazil, must be effected in
accordance with Brazilian law.
(vi) In order to assure the admission of the Transaction Documents
before the public agencies and courts in Brazil, (a) the
signatures of the parties thereto signing outside Brazil must
be notarized by a notary public licensed as such under the
laws of the place of signing and the signature of such notary
public should be authenticated by the Brazilian Consulate
having jurisdiction over the place of execution, (b) the
document must be translated into Portuguese by a sworn
translator; and (c) the document and its sworn translation
must be registered with the appropriate Registry of Deeds and
Documents in Brazil.
(vii) Any documents in a foreign language (including without
limitation documents relating to any foreign judgment) to be
admitted in Brazilian courts or any other Brazilian public
authority will have to be translated into the Portuguese
language by a sworn translator.
(viii) Any judgment obtained against the Company or the Selling
Shareholders in the courts of Brazil in respect of any sum
payable by such party under any of the Transaction Documents
will be expressed in the Brazilian currency equivalent to the
amount payable in the currency designated in the Transaction
Documents, converted at the commercial exchange rate of the
date on which such judgment is obtained.
Ex-B-1-11
(ix) The Authorized Agent has been appointed by the Company and the
Selling Shareholders in accordance with Section 14 of the
International Purchase Agreement for a term of five years.
(x) After the consummation of the transactions contemplated by the
International Purchase Agreement and by the Brazilian
Underwriting Agreement, compliance with the Deposit Agreement
may require from time to time, that the Company, the
Depositary or the Custodian apply of and obtain certain
consents, approvals, authorizations, orders, registrations and
qualifications of or with Brazilian governmental or regulatory
authorities, which have not been obtained and are not
obtainable as of the date hereof, as provided in the Deposit
Agreement.
(xi) We express no opinion as to the enforceability of the
provisions of Section 9 of the International Purchase
Agreement providing for indemnification and contribution by
the parties to losses, claims, damages and liabilities
incurred by other parties to the International Purchase
Agreement.
(xii) We express no opinion as to the enforceability of the
provisions of Section 15 of the International Purchase
Agreement providing for indemnification by one party thereto
against any loss in obtaining the currency due to such party
under such agreement from a court judgment in another
currency.
(xiii) Notwithstanding that the International Purchase Agreement and
the Deposit Agreement are expressed to be governed by New York
State law, such law will only be recognized and enforced in
Brazil if not against Brazilian national sovereignty, public
policy or morality. Except as otherwise disclosed in this
opinion, we have no reason to believe that the obligations of
the Company provided for in the Purchase agreement or Deposit
Agreement would be against Brazilian national sovereignty,
public policy or morality.
(xiv) Pursuant to Section 44 of the Company's By-laws any disputes
involving (a) its By-laws, (b) rules of the Novo ▇▇▇▇▇▇▇, (c)
provisions of the Brazilian Corporate Law, (d) rules issued by
the National Monetary Council, the Central Bank and the CVM,
(e) rules of the BOVESPA and (f) other regulation applicable
to the capital markets, shall be resolved through arbitral
proceedings to be conducted by the Camara de Arbitragem do
▇▇▇▇▇▇▇ created by the BOVESPA.
(xv) Under Brazilian law, injunction relief may be granted or
denied at discretion of the court.
Ex-B-1-12
(xvi) Under Brazilian law, a person may not properly waive or be
deprived of the right to submit a claim to the judiciary
system or be deprived of its property without due process;
therefore, any waivers by the Company and the Selling
Shareholders with respect to their respective rights and any
waivers to assert a claim against the International
Underwriters may not be enforced by a Brazilian court.
(xvii) In rendering the opinions set forth herein, we note that any
conclusion on any particular issue is not a guarantee or
prediction of what a court would hold but, rather, sets forth
our conclusions as to what would or should be the proper
result for a court to reach in a properly presented and
decided case in which the facts and assumptions relied on
herein are established.
11 This opinion is addressed to you solely for your own use and may not be
transmitted to anyone else nor is it to be relied upon by anyone else
or for any other purpose or quoted or referred to in any public
document or filed with anyone without our express written consent,
except that The Bank of New York may rely upon the opinions set forth
in [paragraphs 9(i), 9(iv), 9 (v), 9(ix), 9(xii), 9(xvi), 9(xvii) and
9(xviii)].
12 This opinion is limited to the matters and transactions expressly
stated herein and does not extend to, and is not to be read as extended
by implication to, any other matter or transaction in connection with
the Transaction Documents or the transactions or documents referred to
therein.
13 This opinion letter speaks only as of the date hereof. We expressly
disclaim any responsibility to advise you of any development or
circumstance of any kind including any change of law or fact that may
occur after the date of this opinion letter even though such
development, circumstance or change may affect the legal analysis, a
legal conclusion or any other matter set forth in or relating to this
opinion letter. Accordingly, you should seek advice of your counsel as
to the proper application of this opinion letter at such time.
14 This opinion will be governed by and construed in accordance with the
laws of Brazil in effect on the date hereof.
Very truly yours,
Ex-B-1-13
▇▇▇▇▇▇ FILHO, ▇▇▇▇▇ FILHO, MARREY JR. E ▇▇▇▇▇▇▇
ADVOGADOS
Ex-B-1-14
EXHIBIT B-2
FORM OF NEGATIVE ASSURANCE LETTER OF COMPANY'S
BRAZILIAN COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 6(c)
[Letterhead of ▇▇▇▇▇▇ FILHO, ▇▇▇▇▇ FILHO, MARREY JR. E ▇▇▇▇▇▇▇ ADVOGADOS]
Sao Paulo, September [-], 2004
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
Pactual Capital Corporation
and the other several international underwriters (the "International
Underwriters") named in Schedule A to the International Purchase Agreement
referred to below
c/o Merrill Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
We are qualified to practice law in the Federative Republic of Brazil ("Brazil")
and have acted as special Brazilian counsel to CPFL Energia S.A. (the
"Company"), VBC Energia S.A. ("VBC"), 521 Participacoes S.A. ("521") and Bonaire
Participacoes S.A. ("Bonaire" and together with VBC and 521, the "Selling
Shareholders"), each a corporation organized under the laws of Brazil, in
connection with the public offering and sale by the Company and the Selling
Shareholders an aggregate of [o] of American Depositary Shares (the "ADSs"),
each representing three acoes ordinarias of the Company, without par value
("Common Shares"), and an aggregate of [o] additional American Depositary Shares
(the "Optional ADSs") to be sold by the Company and the Selling Shareholders in
connection with the over-allotment option, if exercised, pursuant to the
international purchase agreement (the "International Purchase Agreement") dated
[o], 2004 among the Company, the Selling Shareholders and the International
Underwriters. This letter is being furnished to you pursuant to Section 6(c) of
the International Purchase Agreement.
Because the primary purpose of our professional engagement was not to establish
or confirm factual matters or financial, accounting or statistical information,
and because many determinations involved in the preparation of the Registration
Statement on Form F-1, as amended (No. 333-118494), relating to the sale of the
ADSs (the "Registration Statement") and the related Prospectus dated [o], 2004
(the "Prospectus") are of a wholly or partially non-legal character or relate to
legal matters outside the scope of our opinion letter to you of even date
herewith, we are not passing upon and do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except to the extent set forth in
paragraph 9(xiv) of our opinion letter to you of even date herewith, and we make
no representation that we have independently verified the accuracy, completeness
or fairness of such statements, except as aforesaid.
Ex B-2-1
In connection with, and under the circumstances applicable to, the offering of
the ADSs, we participated in discussions with representatives of the Company and
the Selling Shareholders, the Company's independent accountants and its United
States counsel and with representatives of the Underwriters and their United
States and Brazilian counsel, in which the contents of the Registration
Statement and the Prospectus and related matters were discussed and we have also
reviewed certain records and documents furnished to us by the Company. Certain
of such records and documents were governed by laws other than Brazilian law,
and, accordingly, we necessarily relied upon directors, officers, internal
counsel and employees of the Company and U.S. counsel to the Company and other
persons in evaluating such records and documents.
On the basis of the information that we have obtained in the performance of the
activities referred to above, as well as our understanding of the Brazilian
securities laws and the experience we have gained in our practice thereunder, we
confirm that no information has come to our attention that has caused us to
believe that (a) the Registration Statement at the time it became effective,
contained an untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein not misleading, and (b) the
Prospectus, as of the date thereof or hereof, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that, in each case, we
express no belief with respect to the financial statements and schedules or
other financial[, operational or statistical] data included therein or omitted
from the Registration Statement and the Prospectus [and the information
furnished in writing to the Company by or on behalf of the Underwriters
specifically for inclusion in the Registration Statement and the Prospectus], as
to which we express no view.
This letter is addressed to you solely for your own use and may not be
transmitted to anyone else nor is it to be relied upon by anyone else or for any
other purpose or quoted or referred to in any public document or filed with
anyone without our express written consent. We expressly disclaim any
responsibility to advise you of any development or circumstance of any kind
including any legal developments or factual matters that may occur after the
date of this letter even though such development, circumstance or change may
affect the views expressed in this letter.
This letter will be governed by and construed in accordance with the laws of
Brazil in effect on the date hereof.
Very truly yours,
Ex B-2-2
▇▇▇▇▇▇ FILHO, ▇▇▇▇▇ FILHO, MARREY JR. E ▇▇▇▇▇▇▇
ADVOGADOS
Ex B-2-3
EXHIBIT C
FORM OF OPINION OF COUNSEL TO SELLING SHAREHOLDERS
TO BE DELIVERED PURSUANT TO SECTION 6(d)
[Letterhead of
COUNSEL TO SELLING SHAREHOLDER]
Sao Paulo, ___________, 2004
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Pactual Capital Corporation
and the other several international underwriters (the "International
Underwriters") named in Schedule A to the International Purchase Agreement
referred to below
c/o Merrill Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
1. We are in house counsel / general counsel to [Name of
Selling Shareholder] (the "Selling Shareholder") and we are qualified to
practice law in the Federative Republic of Brazil ("Brazil"). We are rendering
this opinion in connection with the public offering and sale by the Selling
Shareholder of __ American Depositary Shares (the "ADSs"), each representing
three acoes ordinarias without par value (the "Common Shares") of CPFL Energia
S.A. (the "Company"), and __________ additional American Depositary Shares
("Optional ADSs") to be sold by the Selling Shareholder in connection with the
over-allotment option, if exercised, pursuant to the international purchase
agreement (the "International Purchase Agreement") dated ________, 2004 among
the Company, the Selling Shareholder, the other selling shareholders parties
thereto and the International Underwriters. This opinion is given to you
pursuant to Section 6(d) of the International Purchase Agreement.
2. Except as otherwise provided herein, capitalized terms used
herein shall have the same meanings ascribed to them in the International
Purchase Agreement.
3. For the purposes of giving this opinion we have examined
and/or relied upon copies of the following documents:
(i) an executed copy of the International Purchase
Agreement;
C-1-1
(ii) an executed copy of the Brazilian Underwriting
Agreement;
(iii) a copy of the Prospectus;
(iv) an executed copy of the Power of Attorney;
(v) an executed copy of the Letter of Instruction;
(vi) a certified copy of the Selling Shareholder's
Estatuto Social (the "Selling Shareholder's
By-laws"); and
(vii) such other documents, stock transfer books and
registers, corporate records and certificates of
officers of the Selling Shareholder as we may have
deemed necessary for the purpose of this opinion.
4. We have not made any investigation of the laws of any
jurisdiction outside Brazil and this opinion is given solely in respect of the
laws of Brazil, as of the date hereof and not in respect of any other law.
5. Unless otherwise indicated herein, the documents referred
to in subparagraphs 3(i) through (iv) above are collectively referred to as the
"Transaction Documents".
6. In giving this opinion, we have made the following
assumptions:
(i) that all documents submitted to us as facsimile or
copy or specimen documents conform to their
originals;
(ii) that all signatures on the originals, certified
copies or copies submitted to us of the Transaction
Documents are genuine;
(iii) that all documents submitted to us as originals are
authentic;
(iv) that the Transaction Documents have been validly
authorized, executed and delivered by all parties
thereto (other than the Selling Shareholder);
(v) the capacity, power and authority of, and the
fulfillment of all internal authorization procedures
by each of the parties, other than the Selling
Shareholder, to the Transaction Documents to execute,
deliver and perform its respective obligations in
respect of the Transaction Documents;
(vi) that each of the parties, other than the Selling
Shareholder, to the Transaction Documents has been
duly organized and established and is validly
existing at the date of execution of the Transaction
Documents;
C-1-2
(vii) that each of the parties, other than the Selling
Shareholder, to the Transaction Documents has all
necessary regulatory and other approvals, exemptions,
licenses and authorizations to perform its
obligations under such of the Transaction Documents
to which it is a party;
(viii) that except as specifically otherwise mentioned there
is no provision of the law of any jurisdiction other
than Brazil which has any implication in relation to
the opinions expressed herein; and
(ix) the validity and enforceability under the laws of any
jurisdiction other than Brazil of those of the
Transaction Documents as are expressed to be subject
to the law of such other jurisdiction and, insofar as
any obligation expressed to be incurred under any of
the Transaction Documents is to be performed in or is
otherwise subject to any jurisdiction outside Brazil,
such performance will not be unlawful under the laws
of that jurisdiction.
7. As to matters of fact, we have relied upon the
representations and warranties made in the International Purchase Agreement by
the Selling Shareholder and/or certificates, documents and oral and/or written
information of the Selling Shareholder provided to us by officers of the Selling
Shareholder on behalf of the Selling Shareholder.
8. Based on the above assumptions and subject to the
reservations, qualifications and explanations set forth below, we are of the
opinion that:
(i) The Selling Shareholder has been duly incorporated
and is validly existing as a corporation (sociedade
por acoes) in good standing under the laws of Brazil.
(ii) The Selling Shareholder has full power and authority
to enter into the Transaction Documents. Each of the
Transaction Documents has been duly authorized,
executed and delivered by the Selling Shareholder
and, assuming due authorization, execution and
delivery by the other parties thereto, each of the
Transaction Documents constitutes a valid and legally
binding agreement of the Selling Shareholder
enforceable in accordance with its terms.
(iii) The Selling Shareholder has valid title to the Common
Shares to be sold by the Selling Shareholders
pursuant to the International Purchase Agreement and
Brazilian Underwriting Agreement free and clear of
all security interests, claims, liens, equities and
other encumbrances.
(iv) The Prospectus and preliminary prospectus relating to
the offering of the ADSs, the Prospectus and the
preliminary and final prospectuses relating to the
Brazilian Offering have been duly authorized by the
Selling Shareholder.
C-1-3
(v) The submissions by the Selling Shareholder to the
jurisdiction of the U.S. federal or New York state
courts sitting in the Borough for Manhattan, New
York, set forth in the International Purchase
Agreement constitute valid and legally binding
obligations of the Selling Shareholder, and service
of process effected in the manner set forth in the
International Purchase Agreement, assuming validity
under the laws of the State of New York, and subject
to the reservation set forth in subparagraph 9(vii)
below, will be effective to confer valid personal
jurisdiction over the Selling Shareholder under the
laws of Brazil.
(vi) The International Purchase Agreement is in proper
legal form for enforcement against the Selling
Shareholder in Brazil. To ensure the legality,
validity, enforceability or admissibility in evidence
of the International Purchase Agreement in Brazil, it
is not necessary that any of them be filed or
recorded or enrolled with any court or authority in
Brazil or that any stamp, registration or similar tax
be paid in Brazil, other than court costs, including
filing fees and deposits to guarantee judgment
required by Brazilian law and regulations, except
that (A) the signature of the patties thereto and any
other document that may be deemed to be or become a
part of any such agreements shall have been notarized
by a notary public licensed as such under the law of
the place of signing and the signature of such notary
public shall have been authenticated by the Brazilian
consular office and the International Purchase
Agreement and any other document that may be deemed
to be or become a part of any such agreement shall
have been registered with the appropriate Registry of
Titles and Deeds in Brazil and (B) the International
Purchase Agreement shall have been translated into
Portuguese by a sworn translator. Any International
Underwriter in respect of the International Purchase
Agreement is entitled to ▇▇▇ as plaintiff in the
Brazilian courts for the enforcement of its
respective rights against the Selling Shareholder.
(vii) The execution and delivery by the Selling Shareholder
of the Transaction Documents, the consummation by the
Selling Shareholder of the transactions contemplated
in the Transaction Documents and compliance by the
Selling Shareholder with the terms of the Transaction
Documents do not and will not result in any violation
of the Selling Shareholder's By-Laws, whether with or
without the giving of notice or lapse of time or
both, and do not and will not conflict with, or
result in a breach of any of the terms or provisions
of, or constitute a default under, or result in the
creation or imposition of any lien, charge or
encumbrance upon any property or assets of the
Selling Shareholder under (A) to our knowledge, any
contract, indenture, mortgage, loan agreement, note,
lease or any other agreement or instrument to which
the Selling Shareholder is a
C-1-4
party or by which it may be bound or to which any of
its properties or assets may be subject, (B) any
existing applicable law, rule or regulation of Brazil
or (C) to our knowledge, any judgment, order or
decree of any Brazilian government, governmental
instrumentality or court having jurisdiction over the
Selling Shareholder or any of its properties, assets
or operations; and
(viii) Assuming that the Transaction Documents are legal,
valid and binding under New York law, the Transaction
Documents are valid and legally binding, and
enforceable against the Selling Shareholder in
accordance with their respective terms (subject to
the civil procedure rules of Brazil including without
limitation, rules as to service of process and the
applicable provisions of the chosen law of New York),
except that the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights
generally and enforceability of indemnification and
contribution provisions may be limited by
considerations of public policy.
9. This opinion is subject to the following qualifications,
explanations and reservations:
(i) any provisions of any of the Transaction Documents
providing that any specification or determination
will be conclusive and binding will not be conclusive
and binding if such specification or determination is
fraudulent and will not necessarily prevent judicial
inquiry into the merits of any claim by an aggrieved
party;
(ii) in the event that any suit is brought against the
Selling Shareholder in Brazil, certain court costs
and deposits to guarantee judgment may be due;
(iii) in order to assure the admission of the Transaction
Documents, other than the Brazilian Underwriting
Agreement and the Letter of Instruction, before the
public agencies and courts in Brazil (i) the
signatures of the parties thereto signing outside
Brazil should be notarized by a notary public
licensed as such under the laws of the place of
signing and the signature of such notary public
should be authenticated by a consular official of
Brazil; (ii) the Transaction Documents should be
registered with the appropriate Registry of Titles
and Deeds in Brazil, and (iii) the Transaction
Documents should be translated into the Portuguese
language by a sworn translator;
(iv) our opinion as regards the binding effect of the
obligations of the Selling Shareholder under the
Transaction Documents is subject to all limitations
arising from bankruptcy, insolvency, liquidation,
C-1-5
reorganization, and similar laws affecting creditors
rights generally, including, without limitations,
intervention or extrajudicial liquidation decreed by
the Central Bank of Brazil. Claims for salaries,
wages, social security and taxes will have preference
over any claims, including secured ones;
(v) any judgment against the Selling Shareholder in any
of the non-Brazilian courts mentioned in the
International Purchase Agreement arising out of or in
relation to the obligations of the Selling
Shareholder under the International Purchase
Agreement will be enforceable in the courts of Brazil
if previously confirmed by the Federal Supreme Court
of Brazil, and such confirmation is only given if
such judgment:
a. is for a payment of a sum certain;
b. fulfills all formalities required
for its enforceability under the
laws of the country where it was
issued;
c. is issued by a competent court
after service of process on the
Selling Shareholder or after
sufficient evidence of the Selling
Shareholder's absence has been
given, as required under applicable
law;
d. is not subject to appeal;
e. is authenticated by a Brazilian
Consulate in the country in which
it is issued and is accompanied by
a sworn translation into
Portuguese; and
f. is not contrary to Brazilian
national sovereignty, public policy
or public morality;
(vi) according to the resolutions of the Selling
Shareholder's Board of Directors, the appointment of
the Authorized Agent upon whom process may be served
in any action based on the International Purchase
Agreement is valid for a period of up to five years,
provided that such agent may be successively
appointed by the Selling Shareholder's Board of
Directors for additional terms of limited duration;
(vii) in the event that any suit is brought against the
Selling Shareholder, service of process upon the
Selling Shareholder, if made in Brazil, must be
effected in accordance with Brazilian law;
(viii) any judgment obtained against the Selling Shareholder
in the courts of Brazil in respect of any sum payable
by it under any of the International Purchase
Agreement will be expressed in the Brazilian
C-1-6
currency equivalent to the U.S. Dollars of such sum
at the commercial exchange rate of the date at which
such judgment is obtained;
(ix) any documents in a foreign language, including,
without limitation, documents relating to any foreign
judgment, to be admitted in Brazilian courts or any
other Brazilian public authority will have the be
translated into Portuguese by a sworn translator; and
(x) notwithstanding that the Transaction Documents, other
than the Brazilian Underwriting Agreement and the
Letter of Instruction, are expressed to be governed
by New York law, such law will only be recognized and
enforced in Brazil if not against Brazilian national
sovereignty, public policy or public morality,
however, we have no reason to believe that the
obligations of the Selling Shareholder provided for
in the Transaction Documents would be against
Brazilian national sovereignty, public policy and
public morality.
10. We express no opinion as to the enforceability of Section
8 of the International Purchase Agreement providing for contribution by the
parties to certain costs and expenses incurred by other parties to such
agreement.
11. This opinion is addressed to you solely for your own use
and may not be transmitted to anyone else nor is to be relied upon by anyone
else or for any other purpose or quoted or referred to in any public document or
filed with anyone without express consent. This opinion is limited to the
matters expressly stated herein and does not extend to, and is not to be read as
extended by implication to, any other matter in connection with the Transaction
Documents or the transactions or documents referred to therein.
12. This opinion will be governed by and construed in
accordance with the laws of Brazil in effect on the date hereof.
Yours sincerely,
C-1-7
EXHIBIT D
FORM OF OPINION OF COUNSEL TO THE DEPOSITARY
TO BE DELIVERED PURSUANT TO SECTION 6(g)
[Letterhead of
▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP]
__________, 2004
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Pactual Capital Corporation
and the other several international underwriters (the "International
Underwriters") named in Schedule A to the International Purchase Agreement
referred to below
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: CPFL Energia S.A.
Ladies and Gentlemen:
We are acting as counsel for The Bank of New York, as depositary, in
connection with the Deposit Agreement dated as of _______, 2004 (the "Deposit
Agreement") among CPFL Energia S.A. (the "Company"), The Bank of New York, as
depositary (the "Depositary"), and all Owners and Beneficial Owners from time to
time of American Depositary Receipts ("ADRs") issued thereunder.
We are delivering this opinion at the request of the Depositary to you, as
International Underwriters named in Schedule A to the International Purchase
Agreement dated _______, 2004 among the Company, the other entities listed in
Schedule B thereto (the "Selling Shareholders") and you, in connection with the
contemplated purchases by the International Underwriters of up to ___________
common shares, without par value (the "Shares"), of the Company to be delivered
in the form of Shares or American Depositary Shares (the "ADSs") evidenced by
ADRs.
Based on the foregoing, and subject to the accuracy of the assumptions and
to the qualifications set forth below, we are of the opinion that:
Ex D-1
(i) The Deposit Agreement has been duly authorized, executed and
delivered by the Depositary and constitutes a valid and binding agreement of the
Depositary enforceable against the Depositary in accordance with its terms,
except as enforcement of it may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or similar laws of general application
relating to or affecting creditors' rights and by general principles of equity.
(ii) Upon execution and delivery by the Depositary of ADRs
evidencing the ADSs against the deposit of Shares in accordance with the
provisions of the Deposit Agreement, the ADSs will be validly issued and will
entitle the holders of the ADSs to the rights specified in those ADRs and in the
Deposit Agreement.
These opinions are based upon the assumptions that (a) the Deposit
Agreement has been duly authorized, executed and delivered by the Company and
constitutes a valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, (b) all the Shares are duly authorized,
validly issued, fully paid and non-assessable and are registered or not required
to be registered in accordance with the Securities Act of 1933, as amended, and
(c) all signatures on documents examined by us are genuine. In giving these
opinions, we have also relied as to certain matters, without independent
verification, on information obtained from public officials or officers of the
Depositary.
We are members of the New York Bar only and do not hold ourselves out as
practicing under, nor do we express any opinion on or as to the effect of, any
laws other than the laws of the State of New York and the Federal laws of the
United States.
We are giving the opinions set forth in this letter as of the date of this
letter, and we assume no obligation to advise you of factual or legal changes
which may thereafter be brought to our attention.
These opinions are solely for the benefit of the International
Underwriters and may not be relied upon by any other person or entity without
our prior written consent. Nothing in this letter shall be construed to create
any liability for the Depositary.
Very truly yours,
▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
Ex D-2