Exhibit 2.10
DESCRIPTION OF AMERICAN DEPOSITARY SHARES
The following description of the American depositary shares (the “Common ADSs”) representing common shares without par value (“Common Shares”) of Oi S.A.—In Judicial Reorganization (“Oi” or the “Company”)is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to the amended and restated deposit agreement (the “Common Deposit Agreement”) dated February 27, 2012 among Oi S.A., The Bank of New York Mellon (the “Depositary”), as depositary, and the owners and holders from time to time of American depositary shares (“Common ADSs”) pursuant to which the Common ADSs were issued, including the form of American depositary receipts (“ADR”). For more complete information, you should read the entire Common Deposit Agreement and the form of ADR. The form of Common Deposit Agreement (including the form of ADR) is incorporated by reference as an exhibit to Oi’s annual report on Form20-F for the year ended December 31, 2019. Capitalized terms shall have the meaning stated herein or the meaning stated in the Common Deposit Agreement.
General
The Bank of New York Mellon, currently located at 225 Liberty Street, New York, New York 10286, as Depositary, registers and delivers Common ADSs. Each Common ADS represents five Common Shares (or a right to receive five Common Shares) deposited with the principal São Paulo office of Itaú Unibanco S.A., as custodian for the Depositary. Each Common ADS also represents any other securities, cash or other property which may be held by the Depositary under the Common Deposit Agreement.
You may hold Common ADSs either (A) directly (i) by having an ADR, which is a certificate evidencing a specific number of Common ADSs, registered in your name, or (ii) by having Common ADSs registered in your name in the Direct Registration System, or DRS, or (B) indirectly by holding a security entitlement in Common ADSs through your broker or other financial institution. If you hold Common ADSs directly, you are a registered Common ADS holder, also referred to as an Common ADS holder. This description assumes you are a Common ADS holder. If you hold Common ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of Common ADS holders described in this section. You should consult with your broker or financial institution to find out what those procedures are.
DRS is a system administered by The Depository Trust Company, also referred to as DTC, pursuant to which the Depositary may register the ownership of uncertificated Common ADSs, which ownership shall be confirmed by periodic statements sent by the Depositary to the registered holders of uncertificated Common ADSs.
As a Common ADS holder, Oi will not treat you as one of its shareholders, and you will therefore not have shareholder rights established by Brazilian law and by Oi’s bylaws. Since the Depositary is the registered holder of all Common Shares underlying the Common ADSs, the Depositary will be treated as Oi’s shareholder. The Common Deposit Agreement among Oi, the Depositary and all holders of Oi’s Common ADSs, sets forth the rights of all Common ADS holders, as well as the rights and obligations of the Depositary. New York law governs the Common Deposit Agreement and the Common ADSs. The following is a summary of the material provisions of the Common Deposit Agreement. For more complete information, you should read the entire Common Deposit Agreement and the form of ADR relating to the Common ADSs.
Fees and Expenses
Persons depositing or withdrawing Common Shares must pay:
| | • | | US$5.00 (or less) per 100 Common ADSs (or portion of 100 Common ADSs) for the issuance of Common ADSs, including issuances resulting from a distribution of Common Shares or rights or other property; |
| | • | | US$5.00 (or less) per 100 Common ADSs (or portion of 100 Common ADSs) for the cancellation of Common ADSs for the purpose of withdrawal, including in the event of the termination of the Common Deposit Agreement; |
| | • | | US$0.02 (or less) per Common ADS (or portion thereof) for any cash distribution; |
| | • | | US$0.02 (or less) per Common ADS (or portion thereof) per calendar year for depositary services; |
| | • | | in the event of distributions of securities (other than Common Shares), a fee equivalent to the fee for the issuance of Common ADSs referred to above, which would have been charged, as a result of the deposit of such securities (treating such securities as Common Shares); |
| | • | | registration or transfer fees for the transfer and registration of Common Shares on Oi’s share register to or from the name of the Depositary or its agent when you deposit or withdraw Common Shares; |
| | • | | charges of the Depositary for (1) cable, telex and facsimile transmissions (when expressly provided in the Common Deposit Agreement), and (2) expenses of converting foreign currency to U.S. dollars; |
| | • | | taxes and other governmental charges the Depositary or the custodian have to pay on any Common ADS or Common Share underlying a Common ADS, for example, stock transfer taxes, stamp duty or withholding taxes, as necessary; and |
| | • | | any charges incurred by the Depositary or its agents for servicing the deposited securities, as necessary. |
The Depositary collects its fees for the delivery and surrender of Common ADSs directly from investors depositing Common Shares or surrendering Common ADSs or from intermediaries acting for them. The Depositary also collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The Depositary may collect its annual fee for depositary services by deductions from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The Depositary may collect any of its fees by deduction from any cash distribution payable to Common ADS holders that are obligated to pay those fees. The Depositary may generally refuse to providefee-attracting services until its fees for those services are paid.
From time to time, the Depositary may make payments to Oi to reimburse and / or share revenue from the fees collected from Common ADS holders, or waive fees and expenses for services provided, generally relating to costs and expenses arising out of the establishment and maintenance of the Common ADS program. In performing its duties under the Common Deposit Agreement, the Depositary may use brokers, dealers or other service providers that are affiliates of the Depositary and that may earn or share fees or commissions.
The Depositary may convert currency itself or through any of its affiliates and, in those cases, acts as principal for its own account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under the Common Deposit Agreement and the rate that the Depositary or its affiliate receives when buying or selling foreign currency for its own account. The Depositary makes no representation that the exchange rate used or obtained in any currency conversion under the Common Deposit Agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most favorable to Common ADS holders, subject to the Depositary’s obligations under the Common Deposit Agreement. The methodology used to determine exchange rates used in currency conversions is available upon request.
Dividends and Other Distributions
How will Common ADS Holders receive dividends and other distributions on the Common Shares?
The Depositary has agreed to pay to Common ADS holders the cash dividends or other distributions it or the custodian receives on Common Shares or other deposited securities, after deducting its fees and expenses. You will receive these distributions in proportion to the number of Common Shares your Common ADSs represent.
| | • | | Cash. The Depositary will convert any cash dividend or other cash distribution Oi pays on the Common Shares into U.S. dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the United States. If that is not possible or if any government approval is needed and cannot be obtained, the Common Deposit Agreement allows the Depositary to distribute the foreign currency only to those Common ADS holders to whom it is possible to do so. It will hold the foreign currency it cannot convert for the account of the Common ADS holders who have not been paid. It will not invest the foreign currency and it will not be liable for any interest. |
Before making a distribution, any withholding taxes or other governmental charges that must be paid will be deducted. The Depositary will distribute only whole U.S. dollars and cents and will round fractional cents to the nearest whole cent. If thereal-to-dollar exchange rate fluctuates during a time when the Depositary cannot convert the foreign currency, you may lose some or all of the value of the distribution.
| | • | | Shares. The Depositary may distribute additional Common ADSs representing any Common Shares Oi distributes as a dividend or free distribution. The Depositary will only distribute whole Common ADSs. It will sell Common Shares which would require it to deliver a fractional Common ADS and distribute the net proceeds in the same manner and subject to the same conditions as if such amount were a cash dividend or other cash distribution. If the Depositary does not distribute additional Common ADSs, the outstanding Common ADSs will also represent the new Common Shares. The Depositary may sell a portion of the distributed Common Shares sufficient to pay its fees and expenses in connection with that distribution. |
| | • | | Rights to Purchase Additional Shares. If Oi offers holders of its securities any rights to subscribe for additional Common Shares or any other rights, the Depositary may make these rights available to Common ADS holders. If the Depositary decides it is not legal and practical to make the rights available but that it is practical to sell the rights, the Depositary will use reasonable efforts to sell the rights and distribute the proceeds in the same way as it does with cash. The Depositary will allow rights that are not distributed or sold to lapse. In that case, you will receive no value for them. |
If the Depositary makes rights available to Common ADS holders, it will exercise the rights and purchase the Common Shares on your behalf. The Depositary will then deposit the Common Shares and deliver Common ADSs to the persons entitled to them. It will only exercise rights if you pay it the exercise price and any other charges the rights require you to pay.
U.S. securities laws may restrict transfers and cancellation of the Common ADSs represented by Common Shares purchased upon exercise of rights. For example, you may not be able to trade these Common ADSs freely in the United States. In this case, the Depositary may deliver restricted depositary shares that have the same terms as the Common ADSs described in this section except for changes needed to put the necessary restrictions in place.
| | • | | Other Distributions. The Depositary will send to Common ADS holders anything else Oi distributes on deposited securities in any manner it may reasonably deem equitable and practicable for accomplishing such distribution. If in the opinion of the Depositary such a distribution is deemed not to be feasible, the Depositary may either sell the property Oi distributed and distribute the net proceeds in the same manner and subject to the same conditions as if such amount were a cash dividend or other cash distribution or it may hold the distributed property, in which case Common ADSs will also represent the newly distributed property. However, the Depositary is not required to distribute any securities (other than Common ADSs) to Common ADS holders unless it receives satisfactory evidence from Oi that it is legal to make that distribution. The Depositary may sell a portion of the distributed securities or property sufficient to pay its fees and expenses in connection with that distribution. |
The Depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any Common ADS holders. Oi has no obligation to register Common ADSs, Common Shares, rights or other securities under the Securities Act. Oi also has no obligation to take any other action to permit the distribution of Common ADSs, Common Shares, rights or anything else to Common ADS holders. This means that you may not receive the distributions Oi makes on Common Shares or any value for them if it is illegal or impractical for Oi to make them available to you.
Deposit, Withdrawal and Cancellation
How are Common ADSs issued?
The Depositary will deliver Common ADSs if you or your broker deposits Common Shares or evidence of rights to receive Common Shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the Depositary will register the appropriate number of Common ADSs in the names you request and will deliver the Common ADSs to or upon the order of the person or persons that made the deposit.
How can Common ADS holders withdraw the deposited securities?
You may surrender your Common ADSs at the Depositary’s corporate trust office. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the Depositary will deliver the Common Shares and any other deposited securities underlying the Common ADSs to the Common ADS holder or a person the Common ADS holder designates at the office of the custodian. Or, at your request, risk and expense, the Depositary will deliver the deposited securities at its corporate trust office, if feasible.
Common ADS holders have the right to cancel their Common ADSs and withdraw the underlying Common Shares at any time except:
| | • | | when temporary delays arise because: (1) the Depositary has closed its transfer books or Oi has closed its transfer books, (2) the transfer of Common Shares is blocked to permit voting at a shareholders’ meeting, or (3) Oi is paying a dividend on its Common Shares; |
| | • | | when you owe money to pay fees, taxes and similar charges; and |
| | • | | when it is necessary to prohibit withdrawals in order to comply with any U.S. or foreign laws or governmental regulations that apply to Common ADSs or to the withdrawal of Common Shares or other deposited securities. |
This right of withdrawal may not be limited by any other provision of the Common Deposit Agreement.
How do Common ADS holders interchange between certificated Common ADSs and uncertificated Common ADSs?
You may surrender your ADR to the Depositary for the purpose of exchanging your ADR for uncertificated Common ADSs. The Depositary will cancel that ADR and will send to the Common ADS holder a statement confirming that the Common ADS holder is the registered holder of uncertificated Common ADSs.
Upon receipt by the Depositary of a proper instruction from a registered holder of uncertificated Common ADSs requesting the exchange of uncertificated Common ADSs for certificated Common ADSs, the Depositary will execute and deliver to the Common ADS holder an ADR evidencing those Common ADSs.
Voting Rights
How do you vote?
The Common Shares entitle their holders to vote on all matters presented to a vote of shareholders of Oi as set forth under “Description of Share Capital—Voting Rights” In Oi’s annual report on Form20-F for the year ended December 31, 2019.
Common ADS holders do not have voting rights but may instruct the Depositary to vote the number of deposited Common Shares their Common ADSs represent. The Depositary will notify Common ADS holders of shareholders’ meetings and arrange to deliver Oi’s voting materials to them if Oi asks it to. Those materials will describe the matters to be voted on and explain how Common ADS holders may instruct the Depositary how to vote. For instructions to be valid, they must reach the Depositary by a date set by the Depositary.
Otherwise, you won’t be able to exercise your right to vote unless you withdraw the Common Shares. However, you may not know about the meeting enough in advance to withdraw the Common Shares.
The Depositary will try, as far as practical, subject to the laws of Brazil and of Oi’sby-laws, to vote or to have its agents vote the Common Shares or other deposited securities as instructed by Common ADS holders. The Depositary will only vote or attempt to vote as instructed or as provided in the following sentence. If Oi requested the Depositary to solicit your voting instructions at least 30 days before the meeting date but the Depositary does not receive your instructions by the date it set, the Depositary will consider you to have given instructions to give a discretionary proxy to a person designated Oi by with respect to the number of Common Shares your Common ADSs represent and the Depositary will give that discretionary proxy, except that the Depositary will not give a discretionary proxy if Oi informs the Depositary that (i) Oi does not wish to receive it, (ii) substantial opposition to the question to be voted exists, or (iii) that matter would materially and adversely affects the rights of holders of Common Shares.
Oi cannot assure you that you will receive the voting materials in time to ensure that you can instruct the Depositary to vote the Common Shares represented by your Common ADSs. In addition, the Depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote the Common Shares represented by your Common ADSs and there may be nothing you can do if the Common Shares represented by your Common ADSs are not voted as you requested.
In order to give you a reasonable opportunity to instruct the Depositary as to the exercise of voting rights relating to deposited securities, if Oi requests the Depositary to act, Oi agrees to give the Depositary notice of any such meeting and details concerning the matters to be voted upon at least 30 days in advance of the meeting date.
Payment of Taxes
You will be responsible for any taxes or other governmental charges payable on your Common ADSs or on the deposited securities represented by any of your Common ADSs. The Depositary may refuse to register any transfer of your Common ADSs or allow you to withdraw the deposited securities represented by your Common ADSs until such taxes or other charges are paid. The Depositary may apply payments owed to you or sell deposited securities represented by your Common ADSs to pay any taxes owed and you will remain liable for any deficiency. If the Depositary sells deposited securities represented by your Common ADSs, it will, if appropriate, reduce the number of Common ADSs held by you to reflect the sale and pay to you any proceeds, or send to you any property, remaining after it has paid the taxes.
Reclassifications, Recapitalizations and Mergers
| | |
If Oi: | | Then: |
• Changes the nominal or par value of the Common Shares • Reclassifies, splits up or consolidates any of the deposited securities • Distributes securities on the Common Shares that are not distributed to you | | The cash, Common Shares or other securities received by the Depositary will become deposited securities. Each Common ADS will automatically represent its equal share of the new deposited securities. |
• Recapitalizes, reorganizes, merges, liquidates, sells all or substantially all of its assets, or takes any similar action | | The Depositary may, and will if Oi asks it to, distribute some or all of the cash, Common Shares or other securities it received. It may also deliver new ADRs or ask you to surrender your outstanding ADRs in exchange for new ADRs identifying the new deposited securities. |
Amendment and Termination
How may the Common Deposit Agreement be amended?
Oi may agree with the Depositary to amend the Common Deposit Agreement and the ADRs without your consent for any reason. If an amendment adds or increases fees or charges, except for taxes and other governmental charges or expenses of the Depositary for registration fees, facsimile costs, delivery charges or similar items, or prejudices a substantial right of Common ADS holders, it will not become effective for outstanding Common ADSs until 30 days after the Depositary notifies Common ADS holders of the amendment. At the time an amendment becomes effective, you are considered, by continuing to hold your Common ADSs, to agree to the amendment and to be bound by the ADRs and the Common Deposit Agreement as amended.
How may the Common Deposit Agreement be terminated?
The Depositary will terminate the Common Deposit Agreement at Oi’s direction by mailing notice of termination to the applicable Common ADS holders then outstanding at least 30 days prior to the date fixed in such notice for such termination. The Depositary may also terminate the Common Deposit Agreement by mailing notice of termination to Oi and the applicable Common ADS holders if 60 days have passed since the Depositary told Oi it wants to resign but a successor depositary has not been appointed and accepted its appointment.
The Depositary may terminate the Common Deposit Agreement on as little as 15 days’ notice if it believes it may be subject to legal liability because Oi failed to provide information required by Brazilian government regulators.
After termination, the Depositary and its agents will do the following under the Common Deposit Agreement but nothing else: collect distributions on the deposited securities, sell rights and other property, and deliver Common Shares and other deposited securities upon cancellation of Common ADSs. Four months after termination, the Depositary may sell any remaining deposited securities by public or private sale. After that, the Depositary will hold the money it received on the sale, as well as any other cash it is holding under the Common Deposit Agreement for the pro rata benefit of the Common ADS holders that have not surrendered their Common ADSs. It will not invest the money and has no liability for interest. The Depositary’s only obligations will be to account for the money and other cash. After termination, Oi’s only obligations will be to indemnify the Depositary and to pay fees and expenses of the Depositary that Oi agreed to pay.
Limitations on Obligations and Liability
Limits on Oi’s Obligations and the Obligations of the Depositary; Limits on Liability to Common ADS Holders
The Common Deposit Agreement expressly limits Oi’s obligations and the obligations of the Depositary. It also limits Oi’s liability and the liability of the Depositary. Oi and the Depositary:
| | • | | are only obligated to take the actions specifically set forth in the Common Deposit Agreement without negligence or bad faith; |
| | • | | are not liable if Oi is or the Depositary is prevented or delayed by law or circumstances beyond our control from performing Oi’s or the Depositary’s obligations under the Common Deposit Agreement; |
| | • | | are not liable if Oi or the Depositary exercises discretion permitted under the Common Deposit Agreement; |
| | • | | are not liable for the inability of any Common ADS holder to benefit from any distribution on deposited securities that is not made available to Common ADS holders under the terms of the Common Deposit Agreement, or for any special, consequential or punitive damages for any breach of the terms of the Common Deposit Agreement; |
| | • | | have no obligation to become involved in a lawsuit or other proceeding related to the Common ADSs or the Common Deposit Agreement on your behalf or on behalf of any other person; |
| | • | | are not liable for the acts or omissions of any securities depositary, clearing agency or settlement system; and |
| | • | | may rely upon any documents Oi believes or the Depositary believes in good faith to be genuine and to have been signed or presented by the proper person. |
In the Common Deposit Agreement, Oi and the Depositary agree to indemnify each other under certain circumstances.
Requirements for Depositary Actions
Before the Depositary will deliver or register a transfer of a Common ADS, make a distribution on a Common ADS, or permit withdrawal of Common Shares, the Depositary may require:
| | • | | payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any Common Shares or other deposited securities; |
| | • | | satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and |
| | • | | compliance with regulations it may establish, from time to time, consistent with the Common Deposit Agreement, including presentation of transfer documents. |
The Depositary may refuse to deliver Common ADSs or register transfers of Common ADSs generally when the transfer books of the Depositary or Oi’s transfer books are closed or at any time if the Depositary or Oi thinks it advisable to do so.
Direct Registration System
In the Common Deposit Agreement, all parties to the Common Deposit Agreement acknowledge that the DRS and Profile Modification System, or Profile, will apply to uncertificated Common ADSs upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC pursuant to which the Depositary may register the ownership of uncertificated Common ADSs, which ownership shall be evidenced by periodic statements sent by the Depositary to the registered holders of uncertificated Common ADSs. Profile is a required feature of DRS which allows a DTC participant, claiming to act on behalf of a registered Common ADS holder, to direct the Depositary to register a transfer of those Common ADSs to DTC or its nominee and to deliver those Common ADSs to the DTC account of that DTC participant without receipt by the Depositary of prior authorization from the Common ADS holder to register that transfer.
In connection with and in accordance with the arrangements and procedures relating to DRS/Profile, the parties to the Common Deposit Agreement understand that the Depositary will not verify, determine or otherwise ascertain that the DTC participant which is claiming to be acting on behalf of a Common ADS holder in requesting registration of transfer and delivery described in the paragraph above has the actual authority to act on behalf of the Common ADS holder (notwithstanding any requirements under the Uniform Commercial Code). In the Common Deposit Agreement, the parties agree that the Depositary’s reliance on and compliance with instructions received by the Depositary through the DRS/Profile System and in accordance with the Common Deposit Agreement, shall not constitute negligence or bad faith on the part of the Depositary.
Shareholder Communications; Inspection of Register of Holders of Common ADSs
The Depositary will make available for your inspection at its office all communications that it receives from Oi as a holder of deposited securities that Oi makes generally available to holders of deposited securities. The Depositary will send you copies of those communications if Oi asks it to. You have a right to inspect the register of Common ADS holders, but not for the purpose of contacting those holders about a matter unrelated to Oi’s business or the Common ADSs.
Jury Trial Waiver
The Common Deposit Agreement provides that, to the extent permitted by law, Common ADS holders waive the right to a jury trial of any claim they may have against Oi or the Depositary arising out of or relating to Common Shares, the Common ADSs or the Common Deposit Agreement, including any claim under the U.S. federal securities laws. If Oi or the Depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable in the facts and circumstances of that case in accordance with applicable case law.
