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SHARE PLEDGE AGREEMENT
among
FiberCore, Inc.
and
Algar S.A. - Empreendimentos e Participacoes
and
Xtal Fibras Opticas S.A.
and
Mamore Participacoes S.A.
Dated June 20, 2000
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<PAGE>
SHARE PLEDGE AGREEMENT
By this private instrument, dated as of June 20, 2000, and in the best form of
law, the parties herein below:
I. FiberCore, Inc., a company duly organized and validly existing duly
organized under the Laws of the State of Nevada, United States of
America, with its principal head office at 253, Worcester Road,
Charlton, MA ("FCI"), herein duly represented by its legal
representative, or any other legal entity or individual designated by
FCI (FCI and/or entity designated by FCI, hereinafter designated as
"Grantee");
II. Algar S.A. - Empreendimentos e Participacoes, a company duly organized
and validly existing under the Laws of the Federative Republic of
Brazil, with its principal head office in the city of Uberlandia, State
of Minas Gerais, at Av. Alexandrino Garcia, 2689, Distrito Industrial
("Algar"), enrolled with the National Registry of Legal Entities of the
Ministry of Finance ("CNPJ/MF") under No. 17.835.026/0001-52
(hereinafter designated as "Grantor"), herein duly represented by its
legal representative;
III. Xtal Fibras Opticas S.A., a company duly organized and validly existing
under the Laws of the Federative Republic of Brazil, with its principal
head office in the city of Uberlandia, State of Minas Gerais, at Av.
Alexandrino Garcia, 2689, Distrito Industrial, enrolled with the
National Registry of Legal Entities of the Ministry of Finance
(CNPJ/MF) under No. 71.340.707/0001-95 hereinafter designated as
"Xtal"), herein duly represented by its legal representative; and
IV. Mamore Participacoes S.A., a company duly organized and validly
existing under the Laws of the Federative Republic of Brazil, with its
principal head office in the city of the City of Uberlandia, State of
Minas Gerais, at Avenida Alexandrino Garcia, 2689, cj. 07, Sala A,
Distrito Industrial, enrolled with the National Registry of Legal
Entities of the Ministry of Finance (CNPJ/MF) under No.
03.509.491/0001-99 (hereinafter designated as the "Company") herein
duly represented by its legal representative.
WHEREAS Grantee and Grantor have entered into an Investment Agreement dated June
20, 2000 (the "Investment Agreement"), pursuant to which Grantee will hold 90%
(ninety percent) of the shares of the Company, in accordance with the terms and
conditions set forth in the Investment Agreement, and Grantor will hold 10% (ten
percent) of the shares of the Company;
WHEREAS, on the date hereof, the total issued and outstanding share capital of
the Company is R$ 6,488,612.00, fully subscribed and entirely paid in, divided
into 648,864A and 5,839,748B voting common shares, with no par value, all in
book-entry form (hereinafter referred to as the "Shares");
WHEREAS, Grantor owns the number of Shares of the Company set forth opposite its
name as evidenced in Exhibit A attached hereto and made an integral part hereof;
WHEREAS, Grantor has assumed several debts of Xtal, by means of the execution of
the assumption of indebtedness agreements attached hereto as Annex B ("Assumed
Indebtedness"), and, the creditors of such Assumed Indebtedness were not
informed of the assumption, therefore, Xtal is still liable for mentioned debts
before third parties;
WHEREAS, Grantor has expressly agreed to pay the Assumed Indebtedness at
maturity, related to Xtal ;
WHEREAS, Grantor has agreed to indemnify Grantee against any and all costs,
contingencies, liabilities and lost profits resulting from facts, acts,
conditions or contingencies which existed at or occurred on or before the
Closing Date, in accordance with and subject to the procedures established in
Section V of the Investment Agreement (the "Algar's Indemnification
Obligations", as such term is defined in Section V of the Investment
Agreement");
WHEREAS, Grantor intends to guarantee to the Grantee that Grantor will remain
liable for the debts of Xtal assumed by means of the Assumption of Indebtedness,
as well as any costs, liabilities, contingencies and lost profits related to
Xtal that has its beginning in a fact, act or condition that have occurred
before and on the Closing Date of the Investment Agreement, Grantor has agreed
to pledge for the benefit of Grantee 10% (ten percent) of the Shares that
Grantor now owns in the share capital of the Company, which shall remain at all
times free and clear of liens, burdens, debts, claims or doubts;
WHEREAS it is a condition precedent for the execution of the Investment
Agreement, that the Grantor has executed and delivered to Grantee the present
Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
set forth herein, the parties have agreed to execute this Agreement as follows:
1. Wherever used in this Agreement, unless the context shall otherwise require
or the terms are otherwise defined herein, the terms defined in the Investment
Agreement shall have the same meanings herein.
1.1 In addition:
(i) "Additions" shall mean any charges, whether judicial or not,
attorneys' fees, costs, expenses and any other additions or
supplements to the Secured Indebtedness which may be incurred
by Grantee in connection with the enforcement of the Pledge
hereunder;
(ii) "Civil Code" shall mean the Brazilian Civil Code containing the
legislative framework of the civil law system in Brazil;
(iii) "Commercial Code" shall mean the Brazilian Commercial Code
containing the legislative framework of commercial transactions
and operations in Brazil;
(iv) "Guaranteed Obligations" shall mean the Assumed Indebtedness
and Algar's Indemnification Obligations;
(v) "GRANTEE" shall mean FCI;
(vi) "GRANTOR" shall mean Algar;
(vii) "Pledged Shares" shall mean each of the Shares described in
Exhibit A which are subject to the Pledge created under Section
2 below; "Pledged Shares" shall also comprise: (i) all shares
of the Company received by GRANTOR as a result of stock splits
or stock bonuses or stock dividends on or with respect to any
Pledged Shares; and (ii) all shares (of any company) received
by GRANTOR in exchange, replacement or substitution of any
Pledged Shares; and
(viii) "Corporation Law" shall mean Federal Law No. 6,404/76, and any
and all amendments thereto.
2. As security to secure payment of the Guaranteed Obligations, as well as the
Additions, GRANTOR hereby pledges (hereinafter referred to as the "Pledge") for
the benefit of GRANTEE the Pledged Shares.
2.1 GRANTOR hereby represents that:
2.1.1 it is the sole holder of record and beneficial owner of the
Pledged Shares listed in Exhibit A and that the Pledged Shares are free and
clear from any lien, burden, debt, claim or doubts and that there exists no
claim, action, suit, investigation or proceeding pending or, to the knowledge of
GRANTOR, threatened before any arbitrator or before any court or other authority
which relates to such Pledged Shares;
2.1.2 this Agreement has been duly authorized, executed and delivered
by it and constitutes its legal, valid and binding obligation; and
2.1.3 no consent, approval, authorization or other order from any third
party is required for (i) the execution and delivery of this Agreement by it or
(ii) for the exercise by GRANTEE of the rights in respect of the Pledged Shares
pursuant to this Agreement, except as may be required in connection with the
disposition of the Pledged Shares by laws affecting the offering and sale of
securities generally.
3. Pursuant to the relevant provision of the Commercial Code, and, more
specifically, Section 39 of the Corporation Law, the Pledge set forth hereunder
shall be constituted by means of the registration thereof in the relevant books
of the Company, and shall remain in effect until the Pledge is released in
accordance with Section 12 of this Agreement.
3.1 GRANTEE or its designees shall have the full right at any time to
inspect the registration books of the Company to verify the good standing of the
Pledge created hereunder.
4. So long as no Guaranteed Obligation is due and not paid by the GRANTOR (in
accordance with the provisions of the Investment Agreement), any and all cash
dividends pertaining to the Shares shall be freely payable by the Company to the
GRANTOR and GRANTOR shall continue to exercise all voting rights and any other
rights attached to the Pledged Shares.
5. GRANTOR hereby agrees that until the Pledge is released in accordance with
Section 12 of this Agreement it shall not:
(i) sell, transfer, assign, dispose or agree to sell, transfer,
assign or dispose of any of its Pledged Shares to any third
parties and/or assign or transfer any of its rights and
obligations under this Agreement, except as provided for in
Articles 6.4 of the Shareholders' Agreement dated June 20, 2000
, entered into among FCI, Fibercore Ltda. ("FCI Brazil"),
Algar, Xtal and the Company (the "Shareholders' Agreement");
(ii) exercise its voting rights aiming at the dissolution,
liquidation, winding up or extinction of the Company; or
(iii) create or permit the creation of any lien, burden or
encumbrance on the Pledged Shares or on a part thereof save for
the Pledge created hereunder.
6. The Company hereby agrees not to recognize any of the transactions referred
to in Section 5 of this Agreement (other than the Pledge hereunder) or any other
transaction in violation of the provisions set forth herein.
7. GRANTEE hereby expressly acknowledges and agrees that so long as no
Guaranteed Obligation is due and not paid by the Grantor (in accordance with the
provisions of the Investment Agreement), the voting rights attributed to the
Pledged Shares shall not be impaired by the Pledge created herein and GRANTOR
agrees with such acknowledgment.
8. GRANTOR shall give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that may be
legally necessary (in the reasonable judgment of GRANTEE) to create, preserve,
perfect or validate the Pledge granted pursuant hereto or to enable GRANTEE to
exercise and enforce its rights hereunder with respect to the Pledge hereunder.
9. In the event that any Guaranteed Obligation is due and not paid by the
GRANTOR (in accordance with the provisions of the Investment Agreement) beyond
any applicable grace period thereof and provided that such non-payment has not
been remedied within the contractual or mutually agreed time frame then, in
addition to having the right to exercise any rights and remedies of a secured
party upon default under the law, the GRANTEE may sell the Pledged Shares at any
public or private sale in accordance with Article 774, item III of the Brazilian
Civil Code.
10. The proceeds resulting from any collection, sale or enforcement of the
Pledge hereunder, or any other cash at the time held by the GRANTEE in
connection with the Pledged Shares, shall be applied by the GRANTEE, in its sole
discretion, to the payment, in whole or in part, of the Guaranteed Obligations
and any Additions in full. If such proceeds are not sufficient to cover the
Guaranteed Obligations and any Additions, GRANTEE shall allocate such proceeds
to any part of the Guaranteed Obligations and any Additions in its sole
discretion.
11. (a) GRANTOR hereby appoints GRANTEE, as its attorney-in-fact, granting to
GRANTEE express, special and irrevocable powers to sell, assign and transfer to
third parties as many Pledged Shares as necessary to settle the Guaranteed
Obligations, including its relevant Additions, according to the terms and
conditions set forth herein and in the Investment Agreement, to take any action
and to execute all the necessary documents and forms to consummate such acts,
including but not limited to, the execution of the competent share purchase
agreement, to receive the relevant price therefor and to grant release, as well
as to apply the proceeds thereof for the partial or total payment of the
Guaranteed Obligations, including its relevant Additions.
(b) Such irrevocable power of attorney is granted by GRANTOR for the
benefit of GRANTEE in accordance with Article 774, item III and Article 1317,
items I and II, of the Brazilian Civil Code and shall remain in force until the
complete fulfillment and payment of all Secured Indebtedness under the
Investment Agreement and any Additions, as well as of the GRANTOR's obligations
under this Agreement.
(c) In exercising its rights and remedies under this Agreement, GRANTEE
shall be under no duty or obligation and shall incur no liability toward GRANTOR
other than returning the balance of the proceeds from the sale of the Pledged
Shares, if any, after the Secured Indebtedness and its relevant Additions have
been paid in full to the GRANTOR.
12. (a) The Pledge set forth hereunder shall become effective immediately upon
its registration in the books of the Company and shall remain in full force and
effect until the date on which any of the call and put options provided for in
Articles 6.3, 6.4 and 6.5 of the Shareholders' Agreement is exercised as
provided for therein.
(b) Upon the expiration of the Pledge, the notation of its termination and
of the release of the Shares shall be promptly made in the books of the Company.
(c) Except as provided for in this Section 12, the Pledge created herein
can only be canceled or partially released if preceded by an express written
consent of GRANTEE.
13. No waiver by either party of any condition, nor the breach of any term and
covenant contained herein, in one or more instances shall be deemed to be or be
construed as a further or continuous waiver of any such condition or breach, or
a waiver of any other condition or of any breach of any other term or covenant.
14. Any amendment hereto shall only be valid if made in writing and executed by
all the parties hereto. The GRANTOR agrees to register this Agreement and any
amendment hereto with the competent Cartorio de Registro de Titulos e
Documentos, within fifteen (15) days after the execution of the relevant
agreement, and to promptly provide the other parties hereto with a registered
copy of this Agreement and of any such amendment to this Agreement with such
"Cartorio". For registration purposes only, the amount of this Agreement is R$
600,000.00 (six hundred thousand Reais).
15. It is expressly agreed by the parties that any and all costs, expenses,
duties and taxes related to the execution and the registration of this Agreement
and any amendment to this Agreement with the appropriate "Cartorio" referred to
above shall be borne solely by the GRANTEE;
16. This Agreement is executed, and any amendment to this Agreement shall be
executed, in both Portuguese and English versions and, in case of conflict, the
English version shall prevail and control.
17. This Agreement binds and inures to the benefit of the parties hereto, their
heirs and successors, provided that neither the Company nor GRANTOR may assign
or transfer, in whole or in part, their rights and obligations hereunder without
the prior written consent of GRANTEE.
18. The validity and interpretation of this Agreement and the legal relations of
the parties hereto shall be governed by the laws of Brazil. The parties hereto
irrevocably agree to submit any dispute arising hereunder to the exclusive
jurisdiction of the central courts sitting in the city of Sao Paulo, State of
Sao Paulo, Brazil, with the exclusion of any other court, no matter how
privileged it may be or become.
19. The parties hereto hereby agree that no amendment to this Agreement shall be
deemed a novation of any of the obligations or provisions set forth herein.
20. Any notice or request required or permitted to be given or made hereunder
shall be in writing. Such notice or request shall be deemed to have been duly
given or made when it shall be delivered by hand, registered airmail, cable or
telex, or facsimile to the party to which it is required or permitted to be
given or made as such party's address specified below or at such other address
as such party shall have designated by notice to the party giving such notice or
making such request.
(a) if to Grantor: Algar S.A. - Empreendimentos e Participacoes
Avenida Alexandrino Garcia, 2689
Distrito Industrial, Uberlandia
Att: Nelson Cascelli Reis
(b) if to Grantee: FiberCore, Inc.
P.O. BOX 180
253 Worcester Road
Charlton, MA 01507, U.S.A
Att: Dr. Mohd Aslami
(c) if to the Company : Mamore Participacoes S.A.
Alexandrino Garcia, 2689, cj. 07, Sala A
Distrito Industrial, Uberlandia
Att: Antonio Carlos de Campos
(d) if to Xtal: Xtal Fibras Opticas S.A.
Avenida Alexandrino Garcia, 2689 - Sala 8
Distrito Industrial, Uberlandia
Att: Antonio Carlos de Campos
IN WITNESS WHEREOF, and in the presence of the two (2) witnesses below,
the parties hereto have duly executed this Agreement in several equal
counterparts each of which is an original, but all of which together constitute
one and the same agreement and to be effective as of the day and year first
above written.
FiberCore, Inc.
-------------------------------------------
By: Mohd A Aslami
Title: President Chief Executive Officer
Algar S.A. - Empreendimentos e
Participacoes S.A.
-------------------------------------------
By: Nelson Cascelli Reis
Title: Attorney-in-fact
-------------------------------------------
By: Jose Mauro Leal Costa
Title: Chief Executive Officer
Xtal Fibras Opticas S.A.
------------------------------------------
By: Jose Mauro Leal Costa
Title: President
------------------------------------------
By: Antonio Carlos Campos
Title: Managing Director
Marmore Participacoes S.A.
------------------------------------------
By: Nelson Cascelli Reis
Title: Attorney-in-fact
------------------------------------------
By: Jose Mauro Leal Costa
Title: Attorney-in-fact
Witnesses:
1.
-----------------------------------
Name: Giseli Aparecida Perez Araujo
RG: 16.978.964
CPF: 074.393.068-13
2.
-----------------------------------
Name: Eliane Barbosa Mari
RG: 8.690.203
CPF: 762.429.948-87
<PAGE>
EXHIBIT A
Ownership of Shares of the Company and Shares Subject to the Pledge
<TABLE>
<CAPTION>
------------------------- ------------- ----------------------- ----------------- -------------------
Total % of the Total Total No. % of Pledged
No. of Issued and of Pledged Shares in the
Shares Outstanding Shares Total Issued and
Owned Share Capital Outstanding
Share Capital
------------------------- ------------- ----------------------- ----------------- -------------------
<S> <C> <C> <C> <C>
Algar S.A. 648,863 10% 648,863 10%
Empreendimentos
e Participacoes
------------------------- ------------- ----------------------- ----------------- -------------------
</TABLE>
