Shareholders’ Agreement

 

 

 

 

 

SECTION 1 – SHARES BOUND TO THE AGREEMENT

1.1.      Bound Shares. Are subject to this Agreement (1) all Shares issued by the Company under property, directly or indirectly, of the members of the Controlling Group on this date, as described in the recitals of this Agreement, and/or that become property of any member of the Controlling Group, directly or indirectly, in the future, including, but not limited to, (i) upon succession, subscription, acquisition, bonus, stock split or reverse stock split, and (ii) as a result of mergers (including merger of shares), amalgamations, spin-offs, or other types of corporate reorganization, or, also, from the exercise of stock options, subscription bonuses or share subscription rights, set forth or not in this Agreement, and (2) securities convertible into or exchangeable to shares issued by the Company or preemptive rights for the subscription of the Company’s shares, including, without limitation, any equity interest subscribed, acquired (including by means of the execution of instruments that assure the voting or veto rights in the decisions of the Company) or exchanged by such shares, which are subject to the terms and conditions provided in this Agreement (“Bound Shares“).

 

1.2.      Share Ownership; Absence of Liens. Each member of the Controlling Group represents, individually and not jointly, (i) that it is the holder and legitimate owner of his Shares, as described in the recitals of this Agreement; (ii) that his Shares are free and clear of any liens or encumbrances, except for this Agreement, liens on the Shares held by the Original Shareholders existing on the date hereof and lien existing on the Shares held by Principal on the date hereof in favor of Bank BPI, S.A., Banco Comercial Português S.A., Novo Banco S.A. and Caixa Geral de Depósitos S.A. (“Creditors Principal“), under the terms of the Private Instrument of Share Pledge Agreement, entered into on December 28, 2010, as amended (the “Quota Pledge Agreement“); and (iii) that there are no judicial, arbitral or administrative proceeding that may, in any way, directly or indirectly, affect and/or restrict the free exercise of the rights and prerogatives inherent to his Shares.

 

1.3.      Bylaws. The Company is governed (i) by its bylaws; (ii) by this Agreement; and (iii) by the applicable law. The members of the Controlling Group agree that, in case of discrepancy between the provisions in this Agreement and the Company’s bylaws, the provisions of this Agreement shall prevail in relation to the members of the Controlling Group. In this case, the members of the Controlling Group will cause the Company to call, as soon as possible, a shareholders’ meeting to amend the bylaws and adapt it to the terms of this Agreement.

 

1.4.      Compliance with the Agreement. The Company undertakes to comply with each and every provision of this Agreement during its term. The Company will not register, consent or ratify any vote or approval from the members of the Controlling Group or any member of the Company’s Board of Directors indicated by them, and will not perform or refrain from performing any act that violates or is incompatible with the provisions of this Agreement.

 

1.4.1.     Pursuant to Paragraph 8 of the Article 118 of the Corporations Law, the chairman of the shareholders’ meeting of the Company, as well as the chairman of the collegiate management bodies of the Company will be obliged to not compute any vote cast in violation to the provisions of this Agreement. Shall be observed the provisions of Paragraph 9 of the same Article 118 in case of absence or abstention of vote in decisions of the shareholders’ meetings and the collegiate management bodies.

 

1.5.      Beneficiary Certificates. The Company does not have any outstanding beneficiary certificate. The issuance of participation certificates by the Company is prohibited.

 

1.6       Controlled Subsidiaries. The Company has on this date, the following Controlled Subsidiaries: (a) Agile Car Locações Ltda. – EPP, a limited liability company enrolled with the CNPJ/MF under No. 09.337.014/0001-70, with head office at Rua Paraoquena, No. 81, Jardim América, in the City of Belo Horizonte, State of Minas Gerais; (b) Auto Ricci S.A., a corporation enrolled with the CNPJ/MF under No. 00.282.862/0001-54, with head office at Avenida Cerro Azul, No. 2032, Jardim Novo Horizonte III Part, Zip Code 87010-000, in the City of Maringá, State of Paraná; (c) Acelero Comércio de Veículos Ltda., a limited liability company, enrolled with the CNPJ/MF under No. 11.884.974/0001-00, with head office at Avenida Colombo, No. 2111, Bairro Vila Nova, Zip Code 87045-000, in the City of Maringá, State of Paraná; (d) Unidas S.A., a corporation enrolled with the CNPJ/MF under No. 04.437.534/0001-30, with head office in the City of São Paulo, State of São Paulo, at Rua Cincinato Braga, No. 338, Bela Vista, Zip Code 01333-010; (e) Unidas Comercial de Veículos Ltda. a limited liability company, enrolled with the CNPJ/MF under No. 07.754.767/0001-55, with head office in the City of São Paulo, State of São Paulo, at Rua Cincinato Braga, No. 388, 1st floor, Bela Vista, Zip Code 01333-010; (f) Unidas Locadora de Veículos Ltda., a limited liability company, enrolled with the CNPJ/MF under No. 01.079.210/0001-80, with head office in the City of São Paulo, State of São Paulo, at Rua Cincinato Braga, No. 388, 3rd floor, Bela Vista, Zip Code 01333-010; and (g) Unidas Franquias do Brasil S.A., a corporation, enrolled with the CNPJ/MF under No. 07.462.626/0001-69, with head office in the City of São Paulo, State of São Paulo, at Rua Cincinato Braga, No. 388, 2nd Floor, Bela Vista, Zip Code 01333-010. For the purposes of the provisions of this Agreement: (1) “Controlled Subsidiary” means any Person in which the Company holds direct or indirect Control; “Control” means, in relation to any Person (i) the ownership of partner rights which ensure, permanently, the majority of votes in the decisions of the shareholders’ meetings, and the power to appoint the majority of managers of the applicable person and (ii) the effective use of its power to direct the corporate activities and guide the functioning of the management bodies of the applicable person; and (2) “Person” means any individual or entity, non-personified company, governmental or regulatory body and its subdivisions, investment funds and clubs, managed portfolios, pension funds, entities administrating third-party or condominium’s resources.

 

1.7       Applicability to the Controlled Subsidiaries. The provisions set forth in Sections 2, 3.6, 3.7 and 4 of this Agreement, including, without limitation, the procedures and provisions related to the Prior Meeting, are also applicable to the Controlled Subsidiaries of the Company (including Controlled Subsidiaries that the Company may hold in the future). The approval, by the Company, in the capacity of partner, shareholder or quotaholder, of any acts or matters in any Controlled Subsidiary, that would require the holding of a Prior Meeting in the terms of this Agreement for their valid deliberation in a shareholders’ meeting, or in any other management body of the Company, will depend on the holding of a Prior Meeting in the terms of this Agreement in order for the Company, in the capacity of partner, shareholder or quotaholder, to exercise its voting right on such act or matter under deliberation in the Controlled Subsidiary.

 


SECTION 2 – SHAREHOLDERS’ MEETINGS

2.1.      Shareholders’ Meetings. The resolutions of the shareholders’ meeting of the Company will be made according to the bylaws of the Company, provided that:

 

(A)       In relation with the matters listed below, the favorable vote of the totality of members of the Original Controlling Group will be required:

 

(i)           declaration of or filing for bankruptcy or request for judicial or extrajudicial reorganization of the Company;

 

(ii)          request for dissolution, liquidation, extinction or any other unilateral insolvency procedure of the Company;

 

(iii)         any amendment to the corporate purpose of the Company and/or any Controlled Subsidiary which materially affects the activities of the Company and/or its Controlled Subsidiaries, considering, however, that the purchase, sale and lease of assets (such as vehicles, machinery and equipment) will always be considered activities pertaining to the corporate purpose of the Company;

 

(iv)         change of the bylaws related to: (a) the authority and powers of the Shareholders’ Meeting, the Board of Directors and the Board of Officers of the Company; and (b) the composition of the Board of Directors and the Board of Officers, which may affect the veto rights attributed to the Controlling Group in the terms of Clause 2.1;

 

(v)          corporate reorganization of the Company and its Affiliates, including mergers (of companies or of shares), spin-off, amalgamation and/or another form of business combination, in the terms of the CVM Deliberation No. 665 of August 4, 2011 (or another norm that may replace or amend it);

 

(vi)         grant or change of the stock option plans granted to the administrators and employees of the Company, except for the stock options already granted;

 

(vii)        performance of operations between the Company and its Affiliates or Related Parties;

 

(viii)        deliberation regarding any of the matters subject to the veto right of the Company, when proposed, discussed or performed in Controlled Subsidiaries; and

 

(ix)         cancelling the registration as a listed company, cancel the registration for negotiation of shares in the regulated securities markets and/or any event which results in the exit of Novo Mercado.

 

(B)       Notwithstanding the provisions of item (A) of Section 2.1 and observed the provisions of Sections 2.1.1 and 2.1.2, as long as a Investing Shareholders hold 85% (eight five percent) or more of the Bound Shares held by it on this date (“Relevant Interest“), such Investing Shareholder shall have, individually, the veto right in relation to the matters listed below:

 

(i)          capital increase of the Company, except for (a) an increase resulted from a public offer of shares, according to item (viii) below and (b) as of the second increase to the Company’s corporate capital, whenever that capital increase arise out of Imminent Need of Capital by the Company;

 

(ii)          declaration and distribution of dividends in amounts exceeding 25% of the net profits of the Company or (b) interest on net equity in amounts exceeding the permitted by the applicable law;

 

(iii)         acquisition, by the Company, of (a) another company in the same rent a car business with a fleet exceeding 10,000 (ten thousand) vehicles or (b) a rent a car trademark that is not a replacement of the “Unidas” trademark;

 

(iv)         granting of stock option plans to the managers and employees of the Company involving amounts exceeding 4% of the total corporate capital of the Company at that time;

 

(v)          corporate reorganization of the Company and its Affiliates, including merger (of companies and stock-for-stock), spin-off, amalgamation and/or another form of business combination, in the terms of the CVM Deliberation No. 665 of August 4, 2011 (or another norm that may replace or amend it), except for (a) corporate reorganizations involving solely companies of the same economic group of the Company and/or Unidas S.A. on this date and (b) any corporate reorganization related to or for the implementation of an acquisition, in any way, of a company in the rent a car business with a fleet inferior to ten thousand (10,000) vehicles;

 

(vi)         transactions between the Company and its Affiliates or Related Parties, except for transactions made exclusively between the Company, Unidas S.A. and/or their respective subsidiaries, directly or indirectly;

 

(vii)        amendment to the corporate purpose of the Company and/or any Controlled Subsidiary which, except for the inclusion of a purpose already existing on this date in any of its Controlled Subsidiaries or subsidiaries, directly or indirectly;

 

(viii)        performance, by the Company, of a public offer of shares in which the valuation of the company used for this purpose is inferior to R$2,500,000,000.00 (two-billion five-hundred million reais) pre-money;

 

(ix)          repurchase or redemption of Shares or securities issued by the Company, except for the repurchase or redemption of shares until the limit of 4% of its corporate capital to transfer to the beneficiaries of the stock option plans granted by the Company;

 

(x)          declaration or filing for bankruptcy or request for judicial or extrajudicial reorganization of the Company.

 

(xi)         issuance, by the Company, of securities convertible into shares, except for issuance of securities considering a valuation of the Company for the purposes of conversion into shares of its issuance, in amounts higher than R$2,500,000,000.00 (two-billion five-hundred million reais); and

 

(xii)        cancelling the registration as a listed company, cancel the registration for negotiation of shares in the regulated securities markets and/or any event which results in the exit of Novo Mercado.

 

2.1.1.     In the event that an Investing Shareholder ceases to hold an equity interest equal to or greater than the Relevant Interest, such Investing Shareholder shall lose the veto right over the matters listed in item (B) of this Section, but the other Investing Shareholder shall remain with such veto right and may exercise it solely for as long as it holds an equity interest equal to or greater than the Relevant Interest.

 

2.1.2.   The Original Controlling Group undertakes to decide on all matters of interest of the Company, included or not in the agenda of any shareholders’ meeting or board of directors’ meeting, in a previous meeting to be held by the Original Controlling Group at the head offices of the Company within up to 1 (one) Business Day prior to the previous meeting for the applicable shareholders’ meeting or board of directors meeting. The Original Controlling Group shall decide on the matter in question always by majority of the corporate capital of the Company held by them, with the exception of the matters for which it is attributed a veto right to Mr. Dirley Ricci or company Controlled by him, under the terms of this Agreement. From the decisions of the referred previous meetings it will be drawn a minutes which, signed by all attending members, shall serve as an instruction of vote to the Original Controlling Group at the previous meeting, shareholders meeting or to their representatives in the board of directors. The veto rights attributed to Mr. Dirley Ricci (or companies Controlled by him) as well as to its representatives in the board of directors shall not be counted and may not be exercised if they are not expressly stated in the minutes of the aforementioned previous meeting.

 

2.1.3.   For the purposes of the provisions of this Agreement, (1) “Affiliate” means (a) in relation to an entity (i) any individual or other entity which holds, directly or indirectly, the Control of such entity, (ii) any entity Controlled, directly or indirectly, by such person; or (iii) any entity directly or indirectly under common Control of such person; and (b) in relation to an individual, any entity which, directly or indirectly, is Controlled by such individual; (2) “Related Parties” means (i) the officers and members of the Board of Directors of the Company, as well as their respective spouses, brothers, first or second degree ascending or descending relatives, or any entities in which shareholders, statutory officers or members of the Board of Directors of the Company may appoint, by law, voting agreement or other kind of agreement, one (1) or more managers (statutory officers or members of the board of directors), or have influence over the direction of the corporate activities or guidance of its management bodies, and (ii) shareholders, as well as their respective spouses, brothers, first or second degree ascending or descending relatives which may appoint, by law, voting agreement or other kind of agreement, one (1) or more managers (statutory officers or members of the board of directors), or have influence over the direction of the corporate activities or guidance of its bodies; and (3) “Imminent Need of Capital” means if, at any time of verification, the ratio of Net Debt / EBITDA of the Company, calculated quarterly and considering the amounts of the EBITDA of the last twelve (12) months, be higher than 3.25 (three point twenty five).

 


SECTION 3 – MANAGEMENT

3.1.      Management. The Company will be managed by the board of directors and the board of officers, according to its bylaws, this Agreement and the applicable laws.

 

3.2.      Composition of the Board of Directors. The board of directors of the Company will be composed, at least, five (5) and, at most, seven (7) members, pursuant to the bylaws of the Company. The Parties hereby agree that, if at any moment, the shareholders of the Company that are not party to this Agreement have the right to elect one or more members of the board of directors (by multiple vote, separate vote or any other form) and that, as a consequence, it is not possible to implement the provisions of Section 3.3 below, the Parties shall take all necessary measures to change the bylaws of the Company in order to increase the number of members of the board of directors in order to permit the fulfillment of Section 3.3.

 

3.3.      Appointment of the Members of the Board of Directors. During the term of this Agreement, the members of the Controlling Group undertake to exercise their voting right in the Prior Meetings and in the shareholders’ meetings, in order to assure the appointment of the members of the board of directors of the Company as follows:

 

(i)           LF will have the right to appoint one (1) effective member of the board of directors, which will be the Vice-President of the board of Directors of the Company;

 

(ii)          SR will have the right to appoint one (1) effective member of the board of directors, which will be the President of the board of directors of the Company after the period set forth in item (iv) below;

 

(iii)         Dirley Ricci will have the right to appoint one (1) effective member of the board of directors of the Company;

 

(iv)         As long as Principal holds shares representing five percent (5%) or more of the corporate capital of the Company, Principal will have the right to appoint one (1) effective member of the board of directors of the Company, and, for the period of two (2) years counted as of this date, such member will be the President of the board of directors of the Company. After such term, the President of the board of directors of the Company will be appointed by SR. In the event that the Creditors Principal, under the terms of the Quota Pledge Agreement, enforce the guarantee provided therein with respect to the Shares of ownership of Principal, the members of the Controlling Group agree, as of this date, that the right of Principal provided in this Section shall continue in full force and effect (except for the right to appoint the President of the board of directors of the Company, which shall be appointed by the majority of the members of the board of directors), observed that (a) the right to elect one member of the board of directors shall be exercised jointly by Principal and the Creditors Principal by means of an instruction of vote duly executed; and (b) the right shall expire immediately after any of the following events, whichever occurs first: (I) Principal ceases to be a shareholder of the Company; (II) Principal and the Creditors Principal cease to hold, jointly, shares representative of five percent (5%) or more of the corporate capital of the Company; or (III) Principal ceases to be a party to this Agreement, for any reason;

 

(v)          As long as Enterprise holds shares representing five percent (5%) or more of the corporate capital of the Company, Enterprise will have the right to appoint one (1) effective member of the board of directors of the Company; and

 

(vi)         the remaining members of the board of directors will be appointed by the Original Shareholders, according to the terms of the law and the applicable self-regulation, except for the seats which are eventually filled through a multiple vote or separate vote procedures, pursuant to Article 141 of the Corporations’ Law, or through the exercise of other legal rights, if applicable.

 

3.3.1      The members of the Controlling Group hereby waive and undertake to, as long as they are Shareholders, not exercise the rights granted by the Article 141 of the Corporations’ Law, as well as not request the adoption of the multiple vote or separate vote procedures in the terms of the aforementioned article.

 

3.3.2      Considering the provided in items (iv) and (v) of Section 3.3 above, in case the equity interest of any of the Investing Shareholders in the corporate capital of the Company falls below five percent (5%), but is equal to or greater than three percent (3%), of the total corporate capital, such Investing Shareholders may appoint one (1) observer to the board of directors, who shall be able to participate in the board of directors meetings, but only in a merely advisory role, without any executive or decision making powers.

 

3.3.3.     In case any of Enterprise or Principal, at any time, decides to dismiss the respective member of the board of directors elected by it and does not elect a substitute, the right to elect such member of the board of directors shall be transferred to the Original Controlling Group, which shall indicate an additional member for the board of directors in place of Enterprise or Principal, as the case may be. In the event an Investing Shareholder exercises the right provided for in this Section 3.3.3: (a) the term provided in Section 6.3.1(ii), with respect to the Investing Sharheolder that exercised such right, shall be counted as of the date in which the member of the board of directors appointed by Enterprise or Principal, as applicable, no longer holds such position; being, however, that (b) if the Investing Shareholder that exercised such right shall, provided it holds at least 5% (five percent) of the shares representative of the corporate capital of the Company, reclaim its right to appoint a member of the board of directors of the Company provided that it exercises such interest, in writing, to the other Shareholders signatories of this Agreement, at least, 90 (ninety) days in advance of the next annual shareholders’ meeting of the Company, being that, in the event of (b), the term provided in Section 6.3.1(ii) shall restart and be counted entirely only after the new destitution or the date in which the Investing Shareholder no longer holds the right to appoint a member of the board of directors pursuant to the terms of this Agreement.

 

3.3.4      The percentage of the interest held in the Company’s corporate capital necessary for Principal and Enterprise to able to (a) appoint members to the board of directors of the Company pursuant to the terms of Sections 3.3.(iv) and (v) above and (b) appoint observant to the board of directors of the Company pursuant to the terms of the Section 3.3.2 above, shall be reduced and adjusted proportionally to the dilution caused to the respective participation of Principal and Enterprise in the Company’s corporate capital by the first public offer of primary shares distribution issued by the Company that occurs after the date hereof. For avoidance of doubt, this provision shall apply only to the first public offer of primary shares and may not be applied to any subsequent public offer.

 

3.4.      Dismissal or Replacement. Each member of the Controlling Group may, at any time, decide for the dismissal or replacement of any director it has appointed in accordance with Section 3.3.(i), (ii), (iii), (iv) and (v) and the members of the Controlling Group may, at any time and by majority of votes, decide for the dismissal of any director it has appointed in accordance with Section 3.3.(vi).

 

3.5.      Dismissal, Resignation or Impediment. In case of dismissal, resignation or permanent impediment of any member of the board of directors during the term-in-office to which he has been appointed, his replacement shall be appointed by the member of the Controlling Group that appointed him or, in case the member to be dismissed or replaced has been appointed pursuant to Section 3.3.(vi), in accordance with the procedure set forth in Sections 3.3.3 or Section 3.4, as applicable. In this regard, in order to proceed with the replacement of such director, pursuant to this Section, the members of the Controlling Group undertake to exercise their voting rights to call, install and hold, pursuant to the terms of the Company’s bylaws and this Agreement, a Prior Meeting and shareholders’ meeting of the Company to implement such dismissal or replacement, as the case may be, immediately after the request of the member of the Controlling Group in question, or, in case the member to be dismissed or replaced has been appointed according to Section 3.3.(vi), by any of the Original Shareholders.

 

3.6.      Approval Quorum. The decisions of the meetings of the Board of Directors of the Company will be taken according to the Company’s bylaws, observing that:

 

(A)       in relation to the matters listed below, the favorable vote of the totality of the members of the Board of Directors appointed by the Original Controlling Group will be required:

 

(i)           the purchase, sale and/or encumbrance of any assets (in one or a series of related transactions), by the Company and/or any Controlled Subsidiary, in amounts exceeding R$10,000,000.00 (ten million reais), except for the acquisition, sale and/or encumbrance of vehicles in the ordinary course of business or other assets approved or included in the yearly budget of the Company and/or its Controlled Subsidiaries, observed that the approval of the yearly budget of the Company and its Controlled Subsidiaries will be in the power of the Board of Directors;

 

(ii)          the acquisition, sale and/or encumbrance of any real properties (in one or a series of related transactions), by the Company and/or any Controlled Subsidiary, in amounts exceeding ten million reais (R$ 10,000,000.00);

 

(iii)         the appointment or replacement of the auditors of the Company and/or its Controlled Subsidiaries for other than the following audit firm: PriceWaterhouseCoopers, KPMG, Deloitte & Touche or Ernst & Young; and

 

(iv)         the execution, amendment and/or termination of an agreement (including the assignment of contractual position or rights and obligations), of any nature, with clients, suppliers and/or service providers, which individual value exceeds 100% (one hundred percent) of the net equity of the Company and/or its Controlled Subsidiaries, as the case may be, regarding the immediately preceding fiscal year, except financing and loan agreements or other forms of raising funds.

 

(B)     Notwithstanding the provisions of item (A) of this Section 3.6 and observed the provisions of Section 3.6.3, each of the members of the Board of Directors appointed by each of the Investing Shareholders, while the respective Investing shareholders holds an equity interest in the Company equal to or greater than the Relevant Interest, he/she will have, individually the veto right in relation to the matters listed below:

 

 

(a)          approval of the yearly budget of the Company and its Controlled Subsidiaries which provides for expenses and income higher than twenty-five percent (25%) of the expenses and income set forth in the yearly budget of the Company related to the immediately preceding year;

 

(b)          approval of obligations or expenses, by the Company, in amounts exceeding ten percent (10%) of the amounts provided for in the yearly budget of the Company; and

 

(c)          the hiring or assumption of, or the practice of any act that makes the Company or any of its Controlled Subsidiaries responsible for any indebtedness which makes the ratio of Net Debt/EBITDA of the Company, calculated quarterly and considering the amounts of the EBITDA of the last twelve (12) months, be higher than 3.25 (three point twenty five).

 

3.6.1      In the event that an Investing Shareholder ceases to hold an equity interest equal to or greater than the Relevant Interest, the members of the board of directors appointed by such Investing Shareholder shall lose the veto right over the matters listed in item (B) of this Section, but the members of the board of directors appointed by the other Investing Shareholder shall remain with such veto right and may exercise it solely for as long as it holds an equity interest equal to or greater than the Relevant Interest.

 

3.6.2      For the purposes of the provisions of this Agreement, (A) “Net Debt” of the Company means the Gross Debt deducted from the Cash; (B) “Gross Debt” of the Company means the sum of the consolidated debts before investment funds, individuals and entities, including debts contracted in local and international capital and financial markets, derivatives, loan and financing and issuance of titles and securities, as well as endorsement, surety and other collateral and fidejussory guarantees given, as well as amounts to pay to shareholders, including amounts related to redeemable preferred shares and amounts payable, net of receivables, resulting from hedge contracts or other derivatives, whereas: (i) None of the operations including in item “2. Forfaiting operations” set forth in the OFÍCIOCIRCULAR/CVM/SNC/SEPnº 01/2107 will be included in the calculation of the Gross Debt; and (ii) in case any of the debts referred to in this item has, as guarantee, in whole or in part, resources applied in fixed income investment funds, or in bank deposits certificates, with daily liquidity, shall only be considered as “Gross Debt” their respective net balances, that is, the amounts of each respective debt which are not guaranteed by fiduciary assignment of applications. In case a certain debt has, as fiduciary guarantee in amounts exceeding the respective debt, the net balance of this debt, for calculation of the Gross Debt, will be considered zero; (C) “Cash” of the Company means the balance of the cash in hand and financial applications with immediate liquidity, deducted from all balances in hand or financial applications which are encumbered or separated in favor of third-parties; and (D) “EBITDA” means the sum ascertained in a certain twelve (12) month period: (i) of the profit/loss before taxes, contributions and minority interests (it shall not be considered, for the purposes of ascertaining the profit/loss, the merely accountable expenses, which have no effect in cash, related to the stock option plans of the Company). (ii) of the expenses of depreciation and amortization, (iii) of the financial expenses deducted from the financial incomes and (iv) of the non operational results which occurred in the same period. In case the Company acquires, or in another way, merges a Company that is consolidated in its financial statements, the EBITDA of the Company will be adjusted and calculated proforma, considering the EBITDA of the referred company, calculated as provided in this item, for the twelve (12) month period in question.

 

3.7.      Board of Officers. During the term of this Agreement, the members of the Controlling Group undertake to exercise their voting rights in the Prior Meetings and to cause the members of the Board of Directors elected by them to exercise their voting rights in the meetings of the board of directors of the Company, in order to assure the appointment of the members of the board of officers of the Company as follows:

 

(i)           LF will be Chief Executive Officer of the Company. In his absence, the Chief Executive Officer of the Company shall be elected by the majority of the members of the Original Controlling Group; and

 

(ii)          the remaining members of the board of officers will be appointed by the majority of the members of the Board of Directors.

 

3.8.      Rent a Car Department. The members of the Controlling Group agree and set forth that the Company will have a special department for the Rent a Car segment. During the period of two (2) years counted as of this date, the Investing Shareholders will have the right to appoint, jointly, the head of the Rent a Car segment department, being that the Original Controlling Group, acting jointly and in writing, may veto the name appointed by the Investing Shareholders, provided that such veto is reasonable and justified. For the avoidance of doubt, (a) in the event of exercise of the veto right provided herein, the Investing Shareholders shall continue to have the right to, jointly, appoint the head of the Rent a Car segment department; and (b) after the term 2-year period provided herein, the head of the Rent a Car segment department will be appointed by the Original Controlling Shareholders.

 

3.9.      Committees. The members of the Controlling Group agree and set forth that the Company will have two (2) advisory committees to support the Board of Directions, according to the provisions below:

 

3.9.1      Rent a Car Committee (RAC). The Rent a Car Committee, to be installed as from this date, will be composed of three (3) members, with their respective substitutes, and shall meet once per month ordinarily, and whenever necessary extraordinarily. The Rent a Car Committee will have, among other functions, the functions of assisting and making recommendations to the board of officers and the board of directors of the Company, of its subsidiaries and its franchises, including, but not limited to (i) drafting of business plan; (ii) evaluating the market conditions of the rent a car segment; (iii) strategies of price and activities; (iv) follow up and monitoring the activities of the rent a car segment; and (v) the matters that are submitted to it by the board of officers and the board of directors, as well as those that it considers as relevant. The members of the Controlling Group agree to exercise their voting right in the shareholders’ meetings of the Company in order to assure (i) to Principal, observed the provisions of this Agreement, while holder of equity interest equal to or greater than the Relevant Interest, the appointment and nomination of one (1) member of the Rent a Car Committee, (ii) to Enterprise, observed the provisions of this Agreement, while holder of equity interest equal to or greater than the Relevant Interest, the appointment and nomination of one (1) member of the Rent a Car Committee and (iii) to the members of the Original Controlling Group, jointly, in any case and at any time, the appointment and nomination of one (1) member of the Rent a Car Committee. For avoidance of doubt, in case, at any time, Principal or Enterprise, as the case may be become holder of shares representing less than the Relevant Interest, the respective Rent a Car Committee member, in case one of them reduces its equity interest in the corporate capital according to this Clause, or all members of the Committee, in case both reduce the equity interest, shall be appointed exclusively by the members of the Original Controlling Group.

 

3.9.2      Fleet Management Committee. The Fleet Management Committee, to be installed as from this date, will be composed of three (3) members, with their respective substitutes, and shall meet once per month ordinarily, and whenever necessary extraordinarily. The Fleet Management Committee will have, among other functions, the functions of assisting and making recommendations to the board of officers and to the board of directors of the Company and of its Subsidiaries, including, but not limited to, (i) drafting of business plan; (ii) evaluating the market conditions of subcontracting and fleet management segment; (iii) strategies of price and activities; (iv) follow up and monitoring the activities of the subcontracting and fleet management segment; and (v) the matters that are submitted to it by the board of officers and the board of directors, as well as those that it considers as relevant. The members of the Controlling Group agree to exercise their voting right in the meetings of the Company in order to assure (i) to the Investing Shareholders, that are holders of an equity interest equal to or greater than the Relevant Interest, the right to appoint and nominate, jointly, one (1) member of the Fleet Management Committee, and (ii) to the members of the Original Controlling Group, jointly, in any case and at any time, the appointment and nomination of two (2) members of the Fleet Management Committee. For avoidance of doubt, (i) in case, at any time, the equity interest of both Investing Shareholders is reduced to an amount lower than the Relevant Interest, all members of the Fleet Management Committee shall be appointed exclusively by the members of the Original Controlling Group; (ii) in case, at any time, the equity interest of only one of the Investing Shareholders is reduced to an amount lower than the Relevant Interest, the other Investing Shareholder that remains with an equity interest equal to or greater to the Relevant Interest, shall have the right to appoint, acting solely, one member of the Fleet Management Committee.

 


SECTION 4 – VOTING RIGHT AND PRIOR MEETING

4.1.      Prior Meeting. The members of the Controlling Group agree that they shall decide with respect to the matters included in the agenda of any shareholders’ meeting or board of directors’ meetings of the Company and/or its Controlled Subsidiaries, as applicable, in a prior meeting, in order to determine the vote of the members of the Controlling Group or the members of the Board of Directors appointed by the Controlling Group, as the case may be (“Prior Meetings“).

 

4.1.1.   For avoidance of doubts, in case Enterprise or Principal waive their right to appoint a member of the board of directors of the Company under the terms of Clause 3.3.3 and in the agenda of a determined board of directors meeting there is a matter that is listed in Clause 3.6(B), it will continue to be decided in a prior meeting, being that the applicable shareholder shall have the right to exercise directly the veto rights indicated in Clause 3.6(B) which, if exercised, shall bind the vote of the other members of the Controlling Group and of the board members appointed by them so that they vote contrary to the approval of the matter in question.

 

4.2.      Deliberation Quorum. Each and every deliberation in the referred Prior Meeting will be taken, excluded any participation of third-parties, upon the approval of the majority of the Company’s corporate capital percentage held by the members of the Controlling Group (discounting the interest held by the remaining shareholders of the Company), except for (i) the matters listed in Sections 2.1(A) and 3.6(A) herein, which shall be taken by the unanimous approval of the members of the Original Controlling Group or the members of the Board of Directors appointed by the members of the Original Controlling Group, respectively, and (ii) the matters listed in Clauses 2.1(B) and 3.6(B), which shall be taken in compliance with the veto right of the Investing Shareholders or the members of the Board of Directors appointed by the Investing Shareholders, respectively.

 

4.3.      Call. The Prior Meetings shall be called by any member of the Controlling Group or representative of the members of the Controlling Group in the Board of Directors, upon a written notice delivered to the remaining members of the Controlling Group, with a copy of the call notice of the respective meeting of the board of directors or shareholders’ meeting of the Company and any supporting material related to the agenda (which must be provided by the Company also in the English language), as the case may be, at least three (3) business days prior to the holding of the referred Prior Meeting. The written notice will be dismissed if all members of the Controlling Group, duly represented, attend the meeting.

 

4.4.      Installation. The Prior Meetings will be held until two (2) business immediately before the date of the respective meeting of the board of directors or shareholders’ meeting of the Company, in the head office of the Company, being that the meeting must have means for the participation by videoconference, conference call or any other mean of remote participation accepted by all the members of the Controlling Group, with the same agenda of the respective meeting of the board of directors or shareholders’ meeting of the Company, as the case may be. The members of the Controlling Group may not decide in the Prior Meeting with respect to any matter not specified in the agenda of the respective meeting of the board of directors or shareholders’ meeting of the Company or, also, in the call notice of the Prior Meeting, unless all members of the Controlling Group are attending the Prior Meeting and expressly agree to do so.

 

4.5       Installation Quorum and Absence. The Prior Meeting will be validly installed, on first call, with the presence of all members of the Controlling Group or, on second call, with the presence of any two (2) members of the Controlling Group, whereas the Prior Meeting on second call shall occur in the first business day after the first call meeting date. The absence of any member of the Controlling Group in the Prior Meeting, provided that it was regularly called and installed, will not exempt or release him from his obligation to vote (and cause the director appointed by him to vote) in block in accordance with the decisions taken in a Prior Meeting, as set forth in Section 4.6 below.

 

4.6       Block Vote. As provided in Section 4.7 below, the decisions taken in a Prior Meeting will bind the vote of all members of the Controlling Group in the respective shareholders’ meeting or meeting of the board of directors’ of the Company, whereas the members of the Controlling Group shall vote or cause the directors appointed by them to vote in block in such shareholders’ meeting or meeting of the board of directors, as the case may be, in accordance with such decisions.

 

4.6.1    Notwithstanding the provision of Section 4.6 above, pursuant to the law, in the event that a shareholder or a member of the board of directors reasonably and in good faith understands that the decision of the Prior Meeting would represent a breach of its fiduciary duties as a shareholder of the Company or as a board member of the Company, he/she shall have the right to state in the instruction of vote his/hers reasons to disagree or to abstain from voting, being certain that, in case of abstention, it is hereby authorized, irrevocably and irreversibly, that the Original Controlling Group shall have the right to vote with the shares of the one that has abstained under the terms of Section 4.8 below.

 

4.7       Minutes of the Prior Meetings. The decisions taken in the Prior Meeting will be drawn in minutes of the meeting, which will be executed by all members of the Controlling Group attending the applicable meeting. Copies from such minutes shall be extracted, which will serve as voting instruction for the Controlling Group, their representatives and the directors appointed by them, in the respective shareholders’ or board of directors’ meeting of the Company, as the case may be. For the purposes of the provisions of this Section 4.7, the members of the Controlling Group shall provide a copy of the minutes of each Prior Meeting to their representatives and to the directors appointed by them, as well as to any member of the Controlling Group absent in the Prior Meeting in question.

 

4.8       Absence or Abstention of Vote. Each of the members of the Controlling Group agrees that (i) non-attendance at the board of directors’ or shareholders’ meeting of the Company, or (ii) abstention from voting by any of the members of the Controlling Group or directors appointed by them at a shareholders’ meeting or meeting of the board of directors of the Company (except as provided in Section 4.2 above), shall give the other members of the Controlling Group or directors appointed by them the right to vote with the Shares belonging to the absent or silent member of the Controlling Group or director, in order to give effect to the deliberation regularly taken at the respective Prior Meeting. Likewise, in the event that any of the members of the Controlling Group or the directors appointed by them present at the respective shareholders’ meeting, or a meeting of the Company’s board of directors, cast a vote contrary to the resolution regularly taken at the Prior Meeting, such vote shall not be computed by the chairman of the shareholders’ meeting or meeting of the board of directors of the Company, and other members of the Controlling Group or directors appointed by them may vote with the Shares of the member of the Controlling Group or director in order to give effect to the deliberation taken regularly in a Prior Meeting.

 

4.8.1      For the sole purpose of Section 4.8 above, each of the members of the Controlling Group grants to the other members, irrevocably and irreversibly, pursuant to articles 684 and 685 of Law 10,406, of January 10, 2002 (“Civil Code“), express and specific powers to vote at the Company’s shareholders’ meetings on its behalf, with the sole purpose of giving effect and efficacy to the decision taken regularly in a Prior Meeting held pursuant to this Agreement.

 

4.9       Absence of Deliberation in a Prior Meeting. If any matter that is not foreseen in the agenda of a shareholders’ meeting or meeting of the board of officers of the company is discussed in shareholders’ meeting board of directors’ meeting of the Company, the members of the Controlling Group undertake to vote or cause the directors appointed by them to vote to withdraw such matter from the agenda or suspend the applicable shareholders’ or board of directors’ meeting, as the case may be, in order that they may meet in a Prior Meeting to deliberate in advance on such matter. If no member of the Controlling Group or director request the withdrawal of the applicable matter from the agenda or the suspension of the applicable shareholders’ meeting or board of directors’ meeting, as provided above, the members of the Controlling Group or the directors appointed by them, as the case may be, will be able to vote freely on such matter.

 


SECTION 5 – SHARE TRANSFERS

5.1.      Lock-up Period. Pursuant to Section 5.2 below, the members of the Original Controlling Group shall not transfer, directly or indirectly, for a term of five (5) years as of May 11, 2017 (“Lock-Up Period – Original Controlling Group“), any of their Bound Shares. Similarly, the Investing Shareholders may not transfer, directly or indirectly, for a period of two (2) years from the date hereof (“Lock-Up Period – Investing Shareholders“) and, jointly with the Lock-Up Period – Original Controlling Group, “Lock-Up Periods“), any of their Bound Shares. For this purpose, the members of the Controlling Group undertake not to transfer, directly or indirectly, during their respective Lock-Up Periods, their Bound Shares, except as expressly authorized in Sections 5.2, 5.6 and 5.8 below. Upon termination of their respective Lock-Up Periods, the applicable members of the Controlling Group shall no longer be subject to the Lock-Up Period provided herein, but shall observe the rules of the Right of First Refusal and Tag Along Right, as defined below, for each and every Transfer of Bound Shares, except as expressly authorized in Sections 5.6 and 5.8 below.

 

5.1.1.     For the purposes of this Agreement, “Transfer” (which includes the expressions “Transfer” and “Transferred“) means, directly or indirectly, the transfer, sale, assignment (including the assignment of the right of first refusal, or resulted from the non exercise of such right), exchange, donation, delivery in payment, contribution or other form of voluntary or involuntary disposal, conditioned or not, including the transfer, sale, assignment, exchange, donation, delivery in payment, contribution or other form of disposal resulted from the foreclosure of mortgage, pledge, guarantee right or other right of retention, or, also, relating to any legal determination, amalgamation, merger (of shares or of entities), spin off, reorganization, consolidation, issuance of shares or other operations with correlated effects.

 

5.1.2      The Lock-Up Period Investing Shareholders shall be anticipated, immediately and automatically terminated with respect to Principal in the event that its participation in the corporate capital of the Company is reduced to a percentage below the one provided in Section 3.3(iv) as a result of (i) a primary public offering for the sale of shares of the Company; or (ii) as a result of any corporate reorganization regarding or for the implementation of an acquisition, through any means, of a company that acts in the car rental business with a fleet of less than 10,000 (ten thousand) vehicles.

 

5.1.3      The Lock-Up Period – Investing Shareholders shall be anticipated, immediately and automatically terminated with respect to Enterprise in the event that (a) its participation in the corporate capital of the Company is reduced to a percentage below the one provided in Section 3.3(v) as a result of (i) a primary public offering for the sale of shares of the Company; or (ii) as a result of any corporate reorganization regarding or for the implementation of an acquisition, through any means, of a company that acts in the car rental business with a fleet of less than 10,000 (ten thousand) vehicles; or (b) the International National and Alamo Master Franchise Agreement between Vanguard Car Rental USA LLC and Unidas made on 16 April 2012, as amended from time to time (the “MFA“), is terminated by (i) a decision of the Vanguard Car Rental USA LLC  as a result of a breach by the Company or one of its Affiliates of the MFA; or (ii) by a decision of the Company or one of its Affiliates without cause under the terms of the MFA; or (c) the breach of the representations and warranties given by the Company or by the Original Shareholders under the terms of Clauses7.3.9 (Anti-corruption Laws) and 7.4.5 (Anti-corruption Laws) of the Investment Agreement, being understood that, in this case, the specific event that gave rise to such breach was of knowledge or by instruction of the management of the Company.

 

5.2.      Transfers Allowed During the Lock-up and After its Expiration. During the Lock-up Period, and after its expiration, regardless of any prior authorization or ratification of the other members of the Controlling Group or the compliance with the terms of the Right of First Refusal or Tag Along Right: (i) each of the members of the Original Controlling Group may transfer their Bound Shares up to, at most, 1.5% of the total corporate capital of the Company; (ii) Enterprise may transfer its Bound Shares up to, at most, 0.56% of the total corporate capital of the Company; (iii) Principal may transfer its Bound Shares up to, at most, 0.73% of the total corporate capital of the Company and (iv) RCC may transfer, indirectly, its Bound Shares of the Company’s total corporate capital exclusively regarding to a possible corporate reorganization of RCC as a result of the Mafip liquidation. Any Bound Shares to be Transferred under the terms of this Section will be immediately released from this Agreement and, for this purpose, (i) the assigning member of the Controlling Group shall notify the institution responsible for the bookkeeping of the shares of the Company (“Bookkeeping Agent‘) so it may formalize the release of such Bound Shares from this Agreement, executing and providing the documents requested to give effectiveness to the respective release and cancel of the annotation referred to in Section 13.1 in relation to such Bound Shares, and (ii) the other members of the Controlling Group shall cooperate for this purpose in a timely manner, in case it is needed and requested by the Company and/or the assigning member of the Controlling Group.

 

5.3.      Tag Along Right. In case any member of the Controlling Group (“Selling Member‘) wishes to Transfer, directly or indirectly, part or the entirety of its Bound Shares, after the elapsing of its respective Lock-up Period set forth in Section 5.1. (if applicable for such member), the members of the Controlling Group (“Non-Selling Members‘) shall have the right to, individually and alternatively to the Right of First Refusal set forth in Section 5.4 or the Right of First Offer in Section 5.5, notify, upon the receipt of a Notice about the Offer Terms and within the term set forth in Section 5.4.2, the Selling Member about its intent to exercise its right to sell part or the entirety of its shares, jointly with the Selling Member, in proportion to the shares to be transferred by the Selling Member in relation to the corporate capital of the Company, under the same terms and conditions of the Offer Terms received by the Selling Member (“Tag Along Right“).

 

5.3.1      Exercise of the Tag Along Right. The Non-Selling Members will have the right to exercise its Tag Along Rights upon the delivery of a written notice to the Selling Member, observing the same terms and procedures set forth in Section 5.4.1 and subsequent sections of this Agreement.

 

5.4       Right of First Refusal. None of the members of the Controlling Group may, directly or indirectly, after the Lock-up Period set forth in Section 5.1 (if applicable for such member), and observing the provisions of this Section 5.4 and its Sub-sections, Transfer part or the entirety of its Bound Shares (“Bound Shares Offered“), without first offering them to the members of the Original Controlling Group, which will have the right of first refusal to acquire the Bound Shares Offered, proportionally to its respective interest in the corporate capital of the Company (excluding the interest of the Selling Member, as well as the members of the Original Controlling Group which expressly or tacitly waive the exercise of such right), under the same terms and conditions of the Offer Terms received by the Selling Member from a third-party acting in good faith (“Third Party in Good Faith“), according to the procedure described below (“Right of First Refusal‘). For avoidance of doubt, the right of first refusal provided in this Section shall benefit only the members of the Original Controlling Group and not Enterprise and Principal.

 

5.4.1.     In case the Selling Member wishes to Transfer its Bound Shares, in whole or in part, to a Third Party in Good Faith, such Selling Member shall notify the members of the Original Controlling Group, in writing, delivering a copy of the binding offer not subject to amendments, which shall contain, at least, the following information (“Offer Terms Notice‘): (a) the number of Bound Shares Offered, (b) the price (“Price“) offered by the Third Party in Good Faith (not being permitted any payment which is not in cash), (c) the term for payment, (d) the guarantees to be given, (e) all the other conditions of the proposed sale or transfer and (f) the complete name and identification of the interested buyer (“Offer Terms“), apart from the commitment of the interested buyer in writing, to adhere to this Agreement if required to in writing, by the unanimity of the members of the Original Controlling Group at their own discretion, undertaking all obligations of the Selling Member.

 

5.4.2.     During the thirty (30) days following the receipt of the Offer Terms Notice, the Original Controlling Shareholders shall deliver to the Selling Member, individually, a written notice, irrevocably and irreversibly confirming if they exercise or waive their respective Rights of First Refusal in relation to the totality (and not less than the totality) of the Bound Shares Offered to which they are entitled to, according to the Offer Terms. In case one or more of Original Controlling Shareholders exercise their respective Right of First Refusal, the Bound Shares Offered shall be acquired by them proportionally to their respective equity interest in the corporate capital of the Company (excluding the equity interest of the Selling Member, as well as the equity interest of the Original Controlling Shareholder which expressly or tacitly waive the exercise of such right).

 

5.4.3.     The selling member will transfer the Offered Shares to the members of the Original Controlling Group which exercised the Right of First Refusal (provided that the exercise of the Right of First Refusal is for the totality of Bound Shares Offered), simultaneously to the receipt of the Price in accordance with the Offer Terms, within thirty (30) days counted from the end of the thirty (30) days set forth in Section 5.4.2 above for the exercise of the Right of First Refusal, unless if a longer term is set forth or required under the Offer Terms (including in view of the necessary approval of the transaction by antitrust authorities), case in which such longer term shall prevail.

 

5.4.4.     It is hereby expressly agreed that, in case the members of the Original Controlling Group: (a) do not exercise their Right of First Refusal over the totality of the Bound Shares Offered in the terms of the Offer Terms Notice; and/or (b) do not notify the Selling Member timely, or refrain from notifying, or also, refrain from making the payment of the Price in the due term, then the Selling Member will be free to transfer the total (and not less than the total) of the Bound Shares Offered to the Third Party in Good Faith, pursuant to the Offer Terms, during the sixty (60) subsequent days, in the exact Offer Terms, including in relation to the Price.

 

5.4.5.     If after the sixty (60) day period referred to in Section 5.4.4 the sale has not occurred, in case it still wishes to Transfer the Bound Shares or if the Offer Terms have been altered in any way, the Selling Member shall have to restart the procedure set forth in Sections 5.4.1 to 5.4.4 above.

 

5.4.6.     In any case of Transfer of the Bound Shares Offered to the Third Party in Good Faith, (i) the members of the Original Controlling Group will have the right to require that the Selling Member and/or the Third Party in Good Faith provide the members of the Original Controlling Group the documents which prove the closing of the transaction under the Offer Terms (including, without limitation, the binding offer, the share purchase agreement, the corporate documents of the Third Party in Good Faith and its Controllers, among others), regardless of eventual confidentiality obligations eventually assumed by the Selling Member and/or the Third Party in Good Faith; and (ii) the Third Party in Good Faith shall, as a condition of validity and effectiveness of the transfer, adhere, expressly and unrestrainedly, this Agreement, if requested, in writing, by the unanimity of the members of the Original Controlling Group at their own discretion, succeeding the Selling Member in all of its rights and obligations set forth in this Agreement.

 

5.4.7.     In case the Selling Member wishes to Transfer part of its Bound Shares in the stock market or over-the-counter market, the procedure set forth in Section 5.4.7 and its Sub-sections shall be applied, thus not applying the procedure set forth in Sections 5.4.1 to Section 5.4.6. In this case, such Selling Member shall notify, in writing, the members of the Original Controlling Group, two (2) business days immediately before the date in which the Selling Member wishes to make such sale (“Notice regarding Stock Market Transfer“).

 

5.4.7.1.    The Notice Regarding Stock Market Transfer shall contain the number of Bound Shares Offered and an irrevocable and irreversible offer for the members of the Original Controlling Group to acquire the Bound Shares for the screen price of the Bound Shares Offered on the opening of the market on the second business day after the delivery of the Notice regarding Stock Market Transfer (“Pricing Date” and “Screen Price“).

 

5.4.7.2.    On the first business day following the receipt of the Notice regarding Stock Market Transfer, the Non-Selling Members shall deliver to the Selling Member, individually, a written notice, irrevocably and irreversibly, confirming if they exercise or waive their respective Right of First Refusal related to the entirety (and not less than the entirety) of the Bound Shares Offered to which they are entitled, according to the Notice regarding Stock Market Transfer.

 

5.4.7.3.    In case the totality of Original Controlling Group exercise their respective Right of First Refusal, the Bound Shares Offered shall be acquired by them proportionally to their respective equity interest in the corporate capital of the Company on the Pricing Date, for the Screen Price. In this case, the Selling Member shall transfer or instruct the transfer of the Offered Shares to the Original Controlling Group which exercised its/their Right of First Refusal (provided that the exercise of the Right of First Refusal is over the entirety of the Bound Shares Offered), simultaneously to the payment of the Screen Price, which shall occur within five (5) days counted from the Pricing Date.

 

5.4.7.4.    It is expressly agreed that, in case the Original Controlling Group: (a) do not exercise their Right of First Refusal over the totality of the Bound Shares Offered under the terms of the Notice regarding Stock Market Transfer; and/or (b) do not timely notify or do not notify the Selling Member under the terms of Section 5.4.7.2, then the Selling Member will be free to transfer the Bound Shares Offered (including partially), as provided in the Notice regarding Stock Market Transfer, on the Pricing Date.

 

5.4.7.5.    After the term of five (5) business days counted from the Pricing Date, if the sale has not occurred, and the Selling Member still wishes to Transfer his Bound Shares in the stock Market or over-the-counter market, the Selling Member shall restart the procedure set forth in this Section 5.4.7.

 

5.4.7.6.    In case the member of the Original Controlling Group which exercised the Right of First Refusal in the terms of this Clause 5.4.7 and its Sub-clauses, do(es) not make the payment of the Screen Price within five (5) business days counted from the Pricing Date, it/they shall pay a non compensatory fine of two percent (2%) of the total amount and interest on arrears of one percent (1%) per month, without disregarding losses and damages and specific performance.

 

5.5.      Right of First Offer. During the term of this Agreement, if Enterprise decides to Transfer its Offered Bound Shares, Enterprise may, first, offer the Offered Bound Shares simultaneously to all members of the Original Controlling Group, which shall have the right to jointly or individually, make a first offer for the acquisition of the entirety of the Offered Bound Shares. In case one or more of the members of the Original Controlling Group accepts Enterprise’s offer as provided in Section 5.5.3 or makes an offer for the acquisition of the Offered Bound Shares, each of such members of the Original Controlling Group shall acquire the Offered Bound Shares in the proportion of their respective participation held until such date in the corporate capital of the Company, disregarded the participation of the other shareholders of the Company (“Right of First Offer“).

 

5.5.1.     The offer for the exercise of Right of First Offer shall be made through a notification, in writing, sent by Enterprise to each of the members of the Original Controlling Group, with a copy to the board of officers of the Company, which includes the total number of Offered Bound Shares, how much such Offered Bound Shares represent in relation to the corporate capital of the Company, and, if of Enterprise’s interest, the value and the terms for payment of such Bound Shares

 

5.5.2      During the 30 days following the receipt of the notification referred to in Section 5.5.1 above, each of the member of the board of directors of the Original Controlling Group shall have the right to present an acceptance to the proposal of Enterprise or present a binding offer for the acquisition of the totality of the Bound Shares, containing the price and conditions of payment, as well as the remaining aspects of the offer terms of the members of the Original Controlling Group.

 

5.5.3      In the event none of the members of the Original Controlling Group accepts the proposal of Enterprise and Enterprise does not intend to Transfer its Bound Shares pursuant to the terms of the proposal presented by one or more of the members of the Original Controlling Group, as the case may be, Enterprise shall have the right, within a 90 (ninety) days term as of the receipt of the terms of the proposal or the end of the term for the exercise of the Right of First Offer, whichever occurs first, to pursue third parties interested in acquiring the Bound Shares, and Enterprise may only Transfer the Bound Shares to third parties if (i) the amount offered by such third party for each of the Bound Shares are greater than the price per share offered in the proposal from the members of the Original Controlling Group, as applicable, and (ii) the payment conditions are equal or better than those provided in the referred Proposal Terms of the members of the referred Original Controlling Group. If none of the members of the Original Controlling Group present, during the term provided in Section 5.5.2 above, any proposal for acquisition of the Bound Shares, Enterprise shall be free to, for a period of 90 (ninety) days as of the end of the term for the Right of First Offer, Transfer the Bound Shares to any interested third party at any price and conditions, observed, however, the provided in Sections 5.1. If Enterprise does not finalize the Transfer of the Bound Shares within 90 (ninety) days as of the end of the referenced term in the Right of First Offer, the procedure mentioned in Section 5.5 above shall be restarted.

 

5.5.4      During the term of 5 (five) Business Days as of the consummation of the Transfer of the Bound Shares provided in Section 5.5.3 above, Enterprise shall notify each one of the members of the Original Controlling Group, evidencing that the transfer has been executed for a price equal or greater than the one contained in the terms of the proposal.

 

5.6.      Transfers to the Affiliates. Transfers, at any time, by any member of the Controlling Group, of Bound Shares, to any Affiliate, are hereby authorized, without having to observe the provisions of Sections 5.1, 5.2, 5.3, 5.4 and its Sub-sections.

 

5.6.1.     In case the Transfer is made to an Affiliate, the assigning member of the Controlling Group shall: (a) in case the assignee Affiliate is a Controlled Subsidiary of the assigning member, undertake, in writing, as a condition precedent to the transfer, to not Transfer or share the Control of such Affiliate, in any way, without offering the Bound Shares held by it to the other members of the Controlling Group, in the terms and procedure set forth in this Section 5; (b) if the assignee Affiliate is a Controller of the assigning member, obtain the written statement from the assignee’s respective Controllers, undertaking not to Transfer the Control of such Affiliate; (c) in any case, and as a condition for the transfer of the Bound Shares, remain jointly liable for every obligation undertaken by the Affiliate under this Agreement, and cause such Affiliate to adhere to this Agreement, upon the execution of the respective Term of Adhesion, agreeing to comply with its terms and conditions, succeeding the assigning member in the capacity of signatory of the Agreement for all purposes and effects; and (d) the acquirer will become part of the definition of Controlling Group, for the purposes of this Agreement.

 

5.7.      Restrictions. None of the members of the Controlling Group shall pay up the corporate capital of any company (other than an Affiliate) with its Bound Shares, or create any usufruct or lend those shares to any person other than an Affiliate, without previously observing the procedures of this Section 5, except in case of a public offering of shares issued by the Company.

 

5.8.      Public Offering of Shares. Whenever a secondary public offering of shares (that is, a public offering which involves the sale of existing Shares) is made, the members of the Controlling Group will be entitled to include in such offer, Bound Shares they hold, proportionally to their respective percentage of equity interest in the corporate capital of the Company in relation to the total amount of public distribution in the secondary market, provided that, during the Lock-Up Period, each of the members of the Controlling Group shall be limited to include in the secondary public offer the percentages set forth in Section 5.2 above. In the event of a secondary public offering of shares (that is, a public offer which involves the sale of existing Shares) is made after the elapse of the respective Lock Up period, it will be assured to each member of the Controlling Group the right to include, in such offer, Bound Shares held by them in the proportion of their respective participation in the corporate capital of the Company in relation to the total amount of public distribution in the secondary market.

 

5.8.1.   Primary Public Offering. In the event of a primary public offering of shares or instruments convertible into shares the Company, it shall be guaranteed to the member of the Controlling Group the right of first refusal in the offer in the proportion of its respective participation in the corporate capital of the Company and in relation to the total amount of the primary public offering.

 

5.9.      RCC. The RCC shareholders also acknowledge and agree with the provisions of this Agreement, especially with this Section 5, thus being jointly liable with RCC regarding the compliance with the provisions herein, proportionally to their equity interest in RCC. During the term in which this Agreement binds RCC, the RCC shareholders may become direct shareholder of the Company, by any mechanism of transfer or succession of property, provided that the procedure set forth in Section 5.6 above is observed, and they execute an unconditional term of adhesion to this Agreement to become shareholders of the Company, observing that the RCC Shareholders shall remain jointly liable for all obligations undertaken by the partners of RCC pursuant to the Agreement.

 

5.9.1      An eventual Transfer of equity interest from RCC to an Affiliate shall follow the procedure set forth in Section 5.6. In case the obligation set forth in this Section is not complied with by the RCC Shareholders, RCC’s voting right set forth in this Agreement will be immediately and automatically suspended, whereas LF e SR will vote on its place as if they held the totality of Bound Shares, in the Prior Meetings held while the obligation is not complied with.

 

5.10     Breaches. Any transfer of Bound Shares in breach of this Agreement will be deemed null and ineffective, thus being forbidden (i) its recording by the Company in the Book of Registry of Shares of the Company and (ii) the exercise of the corresponding voting right or any other right granted by the Bound Shares by the assigning member of the Controlling Group and by the new assignee shareholder.

 

5.11     Succession. In case of death, declared absence or permanent incapacity of any of the members of the Controlling Group, the remaining members of the Controlling Group will have the right to opt, at their own discretion, by majority of votes taking into consideration the participation of the corporate capital of the Company held by them, within twenty (20) days counted from the death event, declared absence or permanent incapacity, to invite the successors and heirs to adhere to this Agreement and succeed the deceased, absent, or incapable member, in the capacity of signatory of this Agreement. In the event that there is no decision to invite the successors or heirs, the Bound Shares held by the deceased, absence or incapable member shall be released from this Agreement.

 

5.11.1    In case the members of the Controlling Group opt for the alternative set forth in Section 5.11(i) above, the successors and heirs of the deceased, absent or incapable member may accept or not the invitation, within the term provided in the notification, and in case of acceptance, they shall adhere to this Agreement upon the execution of a corresponding term of adhesion, expressly agreeing to comply with its terms and conditions, succeeding the deceased, absent or incapable member, in the capacity of signatory of this Agreement, for every purposes and effects.

 

5.11.2    In case they opt for the alternative set forth in Section 5.11(ii) above, the remaining members of the Controlling Group shall request, within the term provided therein, to the Bookkeeping Agent, the formalization of the release of the Bound Shares held by the deceased, absent or incapable member from this Agreement, executing and providing the documents requested to effect the respective release and cancel the annotation referred to in Section 13.1 in relation to such Bound Shares.

 

5.11.3.   The absence of manifestation from the remaining members of the Controlling Group, in the form provided in Section 5.11, or their manifestation after the term provided therein will imply in the exercise of the option to Section 5.11(ii) above.


SECTION 6 – OTHER COVENANTS AND OBLIGATIONS

6.1.      Information Access. During the term of this Agreement, the members of the Controlling Group will have the right to obtain information of the Company pursuant to the provisions of the Corporations’ Law, and the managers of the Company shall cause the Company to provide, periodically and upon request, the applicable information (including, without limitation, legal financial, accounting, commercial and operational agreements, projections, agreements with related parties, shareholders’ agreements and programs for purchase of shares of other titles and securities issued by the Company, among others). The member of the Controlling Group who requests the information shall bear with eventual costs incurred to the Company for the obtainment of the requested information, including the translation, if the member of the Controlling Group requests that the information be provided in English.

 

6.2.      Confidentiality. Each of the members of the Controlling Group and their directors, officers, employees, service providers, representatives and agents will maintain the confidential nature of any information exchanged in relation to this Agreement, including, without limitation, all data and information obtained by any of the members prior to the execution and for the performance of this Agreement, and information about the Company of legal, financial, accounting, commercial and operational nature, among others.

 

6.2.1.     Shall not be considered confidential information for the purposes of this Agreement, information that: (i) are developed independently by the members of the Controlling Group or not subject to confidentiality, and received lawfully of another source which has the right to provide them; (ii) become available to the public without breach to this Agreement; (iii) on the date of disclosure to a member of the Controlling Group were known by such member as not being, demonstrably, subject to confidentiality; (iv) the members of the Controlling Group agree, in writing and unanimously, that they are free of the restrictions of confidentiality set forth in this Agreement; or (v) currently or in the future, in the reasonable understanding of the party, should be disclosed as a result of the applicable Law, norms and regulations of the Brazilian Securities Exchange Commission (Comissão de Valores Mobiliários – CVM) and the B3 – Brasil, Bolsa, Balcão to which the Company or the party may be subject in the future or due to a judicial decision.

 

6.2.2.     None of the members of the Controlling Group will give access, without the prior consent of the other, and the members of the Controlling Group will not be obliged to give access, to the confidential information to any Person that does not undertake in writing, prior to the obtainment of such access, to keep its confidential nature, including, without limitation, directors, officers, employees, representatives and agents of each member of the Controlling Group in question.

 

6.2.3.     The obligations of this Section will remain in effect for four (4) years counted as of the date on which the respective member of the Controlling Group is no longer bound to this Agreement.

 

6.3       Non-Compete and Non-Hiring. Each of the members of the Controlling Group, as from this date, undertake, solely and not jointly, for themselves and the companies and persons which are, directly or indirectly, their Affiliates, for all legal purposes, to refrain from, in Brazil, directly or indirectly, including through their Controlled Subsidiaries: (i) compete with the activities of the Company, of Unidas or of its respective subsidiaries listed in Section 6.3.4 below, in any manner, directly or indirectly, be it in the capacity of partner, shareholder, quotaholder, manager and/or employee of any company, consortium or any other type of association which engages into activities that compete with the activities of the Company, of Unidas S.A. and/or their respective subsidiaries listed in Section 6.3.4 below (ii) hiring, offer employment, persuade or try to attract any manager or employee with a management or supervision position in the Company and/or Unidas S.A. or any subsidiary, to leave its job or terminate its contractual bond with the Company, Unidas S.A. and/or any of its subsidiaries, for any reason or purpose.

 

6.3.1.     The obligations of each member of the Controlling Group set forth in Section 6.3 above shall remain valid and in effect with respect to each member of the Controlling Group (i) for as long as such member is a shareholder of the Company and has the right to appoint an effective member or an observer of the board of directors of the Company, under the terms of this Agreement; or (ii) for a term of 2 (two) years counted as of the date the member ceases to have the right to appoint an effective member or observer of the board of directors of the Company, under the terms of this agreement, considering any waiver of such period under the terms of Section 3.3.3, observed that such period of 2 years shall immediately terminate with respect to Enterprise in case (A) the MFA is terminated (i) by initiative of Vanguard Car Rental USA LLC as a result of a breach by the Company or one of its Affiliates; or (ii) by a decision of the Company or its Affiliates without cause under the terms of the MFA; or (B) the breach of the representations and warranties given by the Company or by the Original Shareholders under the terms of Clauses 7.3.9 (Anti-corruption Laws) and 7.4.5 (Anti-corruption Laws) of the Investment Agreement, being understood that, in this case, the specific event that gave rise to such breach was of knowledge or by instruction of the management of the Company. In such case, the obligations to not compete of Enterprise provided in this Section 6.3 shall survive only as long as Enterprise is a shareholder of the Company and has the right to appoint an effective member or observer of the board of directors, and has not permanently relinquished such rights under the terms of this Agreement.

 

6.3.2      The parties agree in an irreversible and irrevocable manner that the payment of the price provided in the Investment Agreement already contemplates the compensation for the obligation not to compete contracting herein and set forth that if a party fails to comply with its non-compete obligation provided herein, any members of the Controlling Group that are in compliance with their obligation may notify or the Company by itself may notify the breaching shareholder so that it may remedy such breach within the term of 10 (ten) days counted as of the date of receipt of the notification, being that, in case the breaching party does not proceed with the remediation of such breach within the term provided, the breaching party shall become subject to the payment of a daily non-compensatory fine of R$ 100.000,00 (one hundred thousand reais), due to the Company by the party that is in breach of the obligation, applicable as of the date of the termination of the cure period, without prejudice to the right of the Company to demand, in addition to the payment of the fine above, (i) indemnification, to  the Company, for additional losses and damages which may be proven and (ii) judicial claim for specific performance, from the Company for of the non-complied with obligation upon a judicial order, according to the terms of the Brazilian Civil Procedure Code.

 

6.3.3      For clarity, the Parties acknowledge that any activities that are exercised by Enterprise, direct or indirectly, which are expressly permitted by the MFA – and only within such terms and conditions – shall not be interpreted as a breach of the obligation not to compete provided in this Agreement.

 

6.3.4      For this purposes of Section 6.3.3, the list of activities subject to the non-compete are: (i) rental of vehicles with or without driver; (ii) rental of commercial and industrial machinery or similar equipment; (iii) management of fleet whether owned or leased; (iv) intermediation and agency of financial services to act as banking correspondent; (v) retail sale of used vehicles, utility vehicles and vans; and (vi) sale in the form of consignment of automotive vehicles.

 

6.4       Loss of Rights. In the event that (i) the MFA is terminated by Vanguard Car Rental USA LLC without cause under the terms of the MFA or by the Company or any of its Affiliates as a result of a breach of the MFA by Vanguard Car Rental USA LLC; or (ii) there is a breach of the representations and warranties provided by Enterprise under the terms of Section 7.1.6 (Anti-corruption Laws) in the Investment Agreement, as long as such specific event that has given rise to such breach was of knowledge or by instruction of the managers of Enterprise, all rights granted to Enterprise under the terms of Sections 2.1(B), 3.3(v), 3.3.2, 3.3.3, 3.4, 3.4.1, 3.5, 3.6(B), 3.8, 3.9, 3.9.1, 3.9.2, 5.3, 5.8 of this Agreement shall be immediately terminated, not having any effectiveness before the Original Controlling Group. In such case, and not withstanding the rights granted to it under the terms of Sections 2.1(B), 3.3(v), 3.3.2, 3.3.3, 3.4, 3.4.1, 3.5, 3.6(B), 3.8, 3.9, 3.9.1, 3.9.2, 5.3, 5.8, Enterprise shall continue obliged to all other terms, conditions and obligations undertaken by it under this instrument, which shall remain valid and enforceable including, without limitation, those se forth in Sections 1, 4, 5, 6, 7, 8, 10 and following.


SECTION 7 – TERM AND TERMINATION

7.1.      Term and Termination. This Agreement is in effect as from this date and will remain in effect for the term of 15 (fifteen) years, being automatically renewed for an equal period, if no Shareholder manifests otherwise in writing no later than 6 (six) months prior to the end of the 15 (fifteen) year term.

 

7.2.      Termination Events. Notwithstanding the terms set forth in Section 7.1 above, this Agreement will be terminated (i) by mutual agreement between the Parties, (ii) in relation to any member of the Original Controlling Group who Transfers (through one or more operations) Bound Shares representing more than fifty percent (50%) of the Bound Shares it holds currently; (iii) in relation to any Investing Shareholder who Transfers (through one or more operations) Bound Shares in such an amount that results in such Investing Shareholder holding less than 3% (three percent) of the shares representing the corporate capital of the Company; (iv) in relation to Enterprise, to its own discretion, in the event that the MFA is terminated (a) by initiative of Vanguard Car Rental USA LLC as a result of a breach of the MFA by the Company or any of its Affiliates; or (b) by initiative of the Company or its Affiliates without cause under the terms of the MFA. or (v) in relation to the successors and heirs of the deceased, absent or incapable member of the Controlling Group, pursuant to Section 5.11.2 and 5.11.3.

 

7.3.      Survival of Clauses. Notwithstanding the provisions of Sections 7.1 and 7.2, the Sections 6.2 (and its Subsections), 6.3 (and its Subsections), 8, 9, 10, 11, 12, 13, 14, 15, and 16 of this Agreement will remain valid and in effect and will oblige the parties according to their terms and conditions.

 


SECTION 8 – BINDING OBLIGATION AND ASSIGNMENT

8.1.      Binding Obligation and Assignment. This Agreement is executed irrevocably and irreversibly, binding all parties and intervening consenting parties, for themselves and their successors at any title, and authorized assignees for any purpose. None of the parties may, directly or indirectly, assign or in another way transfer, to any third-party, any of its rights and obligations under this Agreement, without the prior written consent of the other parties.


SECTION 9 – NOTIFICATIONS

9.1.      Notifications. All notifications, communications and notices required or permitted herein shall be made in writing and delivered to each party through facsimile and registered card with receipt notice (being considered delivered the notification on the date provided on the receipt notice), to the addresses informed below, or to any other address appointed by the signatories to the Company and the others, in the terms of this Clause.

 

(i)           To LF:

Avenida Raja Gabaglia, nº 1.781, 13th floor

Belo Horizonte – MG

 

(ii)          To SR:

Avenida Raja Gabaglia, nº 1.781, 13th floor

Belo Horizonte – MG

 

(iii)         To RCC or RCC Shareholders:

To: Dirley Pignatti Ricci

Avenida Cerro Azul, 2046, Jardim Novo Horizonte Maringá – PR

 

(iv)         To Principal

Concelho de Amadora, Estrada de Alfragide 67 (entrada principal)

Estrada do Seminário 4 (entrada secundária)

2614-519, Alfragide

 

(v)          To Enterprise

Attention:  Rick A Short – President and Treasurer

600 Corporate Park Drive

St Louis Missouri 63105

 

(vi)         To the Company:

To: Luis Fernando Memoria Porto

Avenida Engenheiro Caetano Álvares, No. 150

São Paulo – SP


SECTION 10 – ENTIRE AGREEMENTS AND AMENDMENTS

10.1.    Entire Agreements and Amendments. This Agreement constitutes the entire agreement and understanding between the parties and replaces every other agreement and understanding, verbal or written, entered into by and between the parties in regard with the purpose of this agreement, except if this Agreement sets forth otherwise. None of the parties is bound by any understanding or prior or current representation in relation to the purpose of this agreement, whereas no amendment or change of any provision of this Agreement will be in effect unless made in writing and signed by each of the parties. The members of Controlling Group undertake to not enter into, without the prior written consent of all the remaining members of the Controlling Group, any other shareholders’ agreement, voting agreement or similar in relation to its Shares.

 

10.2.    Sole Agreement. The signatories represent and warrant that, individually and not jointly: (i) this Agreement is the only one which regulates the political and economic rights in relation to the Bound Shares, including rules regarding the transfer of shares; (ii) this Agreement revokes and replaces, expressly, any agreement, contract or pact in relation to the political and economic rights, including rules regarding the transfer of shares, in relation to the shares of the Company they hold; and (iii) the Company may not file, in its head office, and annotate with the Bookkeeping Agent or in the corporate books (if applicable), another agreement, contract or pact in relation to political and economic rights, including rules regarding the transfer of shares, with relation to the shares of the Company held by the signatories.

 


SECTION 11 – SEVERABILITY OF THE PROVISION AND SURVIVAL OF THE CONTRACTUAL CLAUSES

11.1.    Severability of the Provisions. Every provision contained herein shall be construed as to comply, validly and effectively, with the applicable Law. Notwithstanding, in case any provision contained herein is considered ineffective under the terms of the Law, such provision shall be considered ineffective in the exact proportion of this prohibition or invalidity, being understood that, in this case, this fact will not affect the other terms of this provision or other provisions of this Agreement, unless the prohibited or invalid provision is of great essentiality to this Agreement to a point which it is presumed that the parties would not have entered into this Agreement without such invalidated provision.

 


SECTION – 12 WAIVER

12.1.    Waiver. No term or tolerance granted by any of the parties to the others, in relation with the terms of this Agreement will affect, in any manner, this Agreement or any of the rights or obligations of the parties, unless within the strict terms of the tolerance granted.


SECTION 13 – ANNOTATION AND REGISTRATION; REPRESENTATIVE

13.1.    Annotation. This Agreement will be filed in the head office of the Company, in the form and for the purposes of the provisions of Article 118 of the Corporations Law. The Company shall annotate this Agreement and its liens over the Bound Shares with the Bookkeeping Agent, in the form and for the purposes of the provisions of Articles 40, items II and 118 of the Corporations’ Law.

 

13.2.    Representative. For the purposes of Article 118, Paragraph 10 of the Corporations’ Law, each member of the Controlling Group appoints their respective representative below, which may be accessed through the information provided in Section 9:

 

(a)          LF:       Luis Fernando Memoria Porto.

(b)          SR:       Sérgio Augusto Guerra de Resende.

(c)          RCC:     Dirley Ricci.

(d)          Principal           Miguel Martins.

(e)          Enterprise       [·].

 


SECTION 14 – SPECIFIC PERFORMANCE

14.1.    Specific Performance. The parties agree that the attribution of losses and damages, even if due and determined in accordance with the Law, will not constitute a proper and sufficient compensation for the default of the obligations set forth in this Agreement. Any of the parties may judicially claim the specific performance of the non complied with obligation upon a judicial order, pursuant to Article 118 ,paragraph 3 of the Corporations’ Law, as well as Articles 497 and 815 of Law 13,105 of March 16, 2015 (“Brazilian Civil Procedure Code“).


SECTION 15 – APPLICABLE LAW

15.1.    Applicable Law. This Agreement will be construed solely according to the Laws of the Federative Republic of Brazil.


SECTION 16 – ARBITRATION

16.1.    Arbitration. The parties agree that any dispute arising from this Agreement which may not be solved amicably by the parties within an non-extendable term of thirty (30) days will be solved through arbitration, in the Capital of the State of São Paulo, before the Camara de Arbitragem do Mercado(“Chamber”), according to its regulation (“Regulation‘) which the parties represent to have knowledge of the full content, acknowledging, expressly and as of now, its full applicability, as well as commit to respect its provisions without any challenge. The Arbitral Court referred to in this Section 16 will be ad hoc and will observe the terms of Law 9,307/96, applying, in regard to the installation of the arbitral procedure, the provision of Article 6 of such law. The parties shall be obliged to execute the arbitration committee as soon as urged to do so, under a daily fine to be stipulated by the competent judge and without prejudice of the judicial obtainment of such supply. For arbitration purposes, the claimant shall appoint one (1) arbitrator and the defendant party shall appoint the other arbitrator, and the third arbitrator will be appointed by the two (2) appointed arbitrators, which shall be persons of known expertise in the main subject of the conflict. The arbitrators’ fees and expenses incurred will be borne by the losing party, and will be borne proportionally in case of reciprocal defeat. The arbitration installed pursuant to this arbitral clause shall be appreciated and discussed solely based on the Laws of the Federative Republic of Brazil. The arbitration procedures will be made in Portuguese, in the capital of the State of São Paulo, provided that documents originally in English and testimonies in English of individuals who do not have Portuguese as a native language may be presented without translation. The arbitration award will be definitive, constituting a judicial enforcing instrument binding the parties and their successors. The refusal of any member of the Controlling Group to submit itself to the decision of the arbitration award will be deemed as a breach of this Agreement and will cause the application of penalties and liability for losses and damages and ceasing profits resulted from the non-submission to the decision.

 

16.1.1.   The arbitral award will have enforcing effect and, if not complied with, will be taken to the judicial court for compliance with, without discussion of the subject and the arbitration award, enforcing the decision in the Courts of the City of São Paulo, State of São Paulo, waiving to any other courts, however privileged it may be, which will also analyze injunctions prior to the installation of the arbitral court and the annulment of the arbitration award.

 

16.1.2.   Each party remains entitled to claim in the common courts the judicial measures with the purpose of obtaining injunctions for protection or safeguard of rights, or with a preparatory nature prior to the installation of the arbitral court, without this being construed as a waiver to arbitration. For the exercise of the aforementioned jurisdictional measures, the Parties elect the Courts of the City of São Paulo, State of São Paulo, with express waiver to any other, however privileged it may be.

 

16.1.3.   The arbitral award will be final and will bind the Parties. The Parties agree not to submit any conflict to a judicial or arbitral proceeding other than the ones provided herein.