UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549
	SCHEDULE 13D

 

Under the Securities Exchange Act of 1934
(Amendment No. 4)*

 

(Name of Issuer)

 

(Title of Class of Securities)

 

(CUSIP Number)

 

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

 

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

** The CUSIP number is for the American Depositary Shares relating to the Common Shares. No CUSIP number exists for the underlying Common Shares, since such shares are not traded in the United States.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

(1)  Includes (a) 571,455,214 Common Shares of Oi S.A. held directly by Portugal Telecom, SGPS, S.A., (b) 36,367,992 Common Shares held by Bratel Brasil S.A., one of the other Reporting Persons and a subsidiary of Portugal Telecom, SGPS, S.A., and (c) 474,348,720 Common Shares with respect to which Portugal Telecom has a call option, as described in Item 4 of this Statement on Schedule 13D.

 

(2)  Includes the aggregate number of Common Shares of Oi S.A. with respect to which the Reporting Person may be deemed to share voting and dispositive power pursuant to the shareholders’ agreements described in Item 6 of this Statement on Schedule 13D.  The percentage reported in Row (13) assumes that all the Common Shares subject to Portugal Telecom’s call option are outstanding, although the Common Shares subject to the call option are expected to be held in treasury by Oi S.A. and its subsidiaries until the earlier of the exercise or expiration of the call option.

 

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(1)  Represents Common Shares held by Bratel Brasil S.A., one of the other Reporting Persons and a subsidiary of Bratel B.V.

 

(2)  Includes the aggregate number of Common Shares of Oi S.A. with respect to which the Reporting Person may be deemed to share voting and dispositive power pursuant to the shareholders’ agreements described in Item 6 of this Statement on Schedule 13D.  The percentage reported in Row (13) assumes that all the Common Shares subject to Portugal Telecom’s call option are outstanding, although the Common Shares subject to the call option are expected to be held in treasury by Oi S.A. and its subsidiaries until the earlier of the exercise or expiration of the call option.

 

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(1) Includes the aggregate number of Common Shares of Oi S.A. with respect to which the Reporting Person may be deemed to share voting and dispositive power pursuant to the shareholders’ agreements described in Item 6 of this Statement on Schedule 13D.  The percentage reported in Row (13) assumes that all the Common Shares subject to Portugal Telecom’s call option are outstanding, although the Common Shares subject to the call option are expected to be held in treasury by Oi S.A. and its subsidiaries until the earlier of the exercise or expiration of the call option.

 

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Schedule 13D

 

Preliminary Statement

 

This Amendment No. 4 (this “Amendment”) amends the Statement on Schedule 13D, filed on June 13, 2012 (the “Original Schedule 13D”), by the entities identified on the cover pages of this Schedule 13D (collectively, the “Reporting Persons”), as amended by Amendment No. 1 filed on October 8, 2013 (“Amendment No. 1”), Amendment No. 2 filed on February 27, 2014 (“Amendment No. 2”) and Amendment No. 3 filed on May 14, 2014 (“Amendment No. 3”; the Original Schedule 13D, as amended by Amendment No. 1, Amendment No. 2 and Amendment No. 3, and as further amended by this Amendment, this “Statement”), by the Reporting Persons.  Except as otherwise specified in this Amendment, all previous Items are unchanged.  Capitalized terms used herein which are not defined herein have the meanings given to them in the Original Schedule 13D, Amendment No. 1, Amendment No. 2 and/or Amendment No. 3 (as applicable).

 

On October 1, 2013, Portugal Telecom, SGPS, S.A. (“Portugal Telecom”) entered into a Memorandum of Understanding (“MOU”) with Oi S.A. (“Oi” or the “Issuer”), AG Telecom Participações S.A. (“AG Telecom”), LF Tel. S.A. (“LF Tel”), Pasa Participações S.A. (“Pasa”), EDSP75 Participações S.A. (“EDSP75”), Bratel Brasil S.A. (“Bratel Brasil” and, together with AG Telecom, LF Tel, Pasa, EDSP75 and Telemar Participações S.A. (“TmarPart” or “CorpCo”), the “Oi Holding Companies”), Avistar, SGPS, S.A., a shareholder of Portugal Telecom and an affiliate of Banco Espírito Santo, S.A. (“BES”), and Nivalis Holding B.V., a shareholder of Portugal Telecom and an affiliate of RS Holding, SGPS, S.A. (“Nivalis”), with respect to a proposed combination (the “Business Combination”) of the businesses of Portugal Telecom, Oi and the Oi Holding Companies into TmarPart.  Portugal Telecom and Oi announced the Business Combination on October 2, 2013.  Pursuant to the Business Combination, among other things, Oi has become the owner of the PT Assets (as defined below) and is expected to become a wholly owned subsidiary of TmarPart, and Portugal Telecom is expected to merge with and into TmarPart with TmarPart as the surviving company.

 

As previously reported in Amendment No. 3, on May 5, 2014, Oi completed the Oi Capital Increase (as defined in Amendment No. 1), pursuant to which, among other things, Oi issued Common Shares and Preferred Shares to Portugal Telecom in exchange for the transfer by Portugal Telecom to Oi of all of the shares of PT Portugal, which, at the time of the transfer, owned the PT Assets (as defined in Amendment No. 3).

 

The PT Assets included all of the shares of PT Portugal, SGPS, S.A. and Portugal Telecom International Finance B.V. (the “Oi Subsidiaries”), which Oi Subsidiaries held certain short-term investments (the “Rioforte Investments”) issued by Rio Forte Investments S.A. (“Rioforte”).  The Rioforte Investments, in the aggregate amount of €897 million, matured on July 15 and 17, 2014 and were not repaid by Rioforte.  On July 15, 2014, Portugal Telecom and Oi entered into a new memorandum of understanding (the “Second MOU”) with respect to the Rioforte Investments and the Business Combination that is described in Item 4 below.  On July 22, 2014, Rioforte publicly announced that it had filed for creditor protection (gestion contrôlée) under Luxembourg law.

 

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Schedule 13D

 

The Reporting Persons are filing this Amendment No. 4 to update the information previously reported in the Statement as a result of the execution of the Second MOU.

 

Item 2.                     Identity and Background

 

As previously reported in Amendment No. 3, upon completion of the Oi Capital Increase, PT Portugal, PT Comunicações, MEO and PT Móveis ceased to be Reporting Persons for purposes of this Statement because they are no longer subsidiaries of Portugal Telecom.  A new agreement among the remaining Reporting Persons to jointly file this Amendment and any future amendments to the Original Schedule 13D in accordance with Rule 13d-1(k) of the Securities and Exchange Act of 1934 is attached as Exhibit 1.

 

The last two paragraphs of Item 2 of the Statement, as previously amended, are hereby amended and restated in their entirety as follows:

 

The name, present principal occupation or employment (and the name, principal business and address of any corporation or other organization in which such employment is conducted) and citizenship of each director and executive officer, as applicable, of each Reporting Person is provided on Exhibit 2 to the Amendment, which is incorporated by reference herein.

 

During the last five years, none of the Reporting Persons nor, to the knowledge of the Reporting Persons, any person named on Exhibit 2 (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

 

Item 3.                     Source of Funds

 

The information set forth in Item 3 of the Statement is hereby amended by adding the following paragraphs at the end thereof:

 

Upon completion of the Oi Capital Increase, including Common Shares issued pursuant to the underwriters’ option to purchase additional shares, the Reporting Persons directly owned 1,082,171,926 Common Shares, or 38.96% of the issued and outstanding Common Shares.

 

Pursuant to the Second MOU, which is described in Item 4 below, Portugal Telecom and Oi have agreed to negotiate in good faith the terms of definitive agreements (the “Definitive Agreements”) pursuant to which Portugal Telecom expects, subject to conditions, to transfer to the Oi Subsidiaries 474,348,720 Common Shares, representing 17.08% of the issued and outstanding Common Shares, and 948,697,440 Preferred Shares in exchange for the Rioforte Investments in the aggregate principal amount of €897 million.  In addition, Portugal Telecom expects to receive the call option to purchase Common Shares and Preferred Shares (or, upon completion of the Merger of Shares, common shares of CorpCo) described in Item 4 below.

 

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Schedule 13D

 

The information set forth in Item 4 of this Statement is hereby incorporated by reference in this Item 3.

 

Item 4.                     Purpose of Transaction

 

The following new subsection is added at the end of Item 4 of the Statement:

 

Second Memorandum of Understanding

 

On July 15, 2014, in light of the Rioforte Investments and the pending Business Combination, Portugal Telecom and Oi entered into the Second MOU.  Pursuant to the Second MOU, Portugal Telecom and Oi agreed to negotiate in good faith the terms of the Definitive Agreements with respect to the matters described below.

 

Pursuant to the Second MOU, the Definitive Agreements must be agreed within 20 days after the date of the Second MOU by Portugal Telecom, Oi, the Oi Subsidiaries and by the other parties to the definitive agreements with respect to the Business Combination signed on February 19, 2014 and described in Amendment No. 2 (the “Business Combination Agreements”).

 

The Second MOU will remain in effect until the earlier of (i) the date of execution of the Definitive Agreements and (ii) September 12, 2014.

 

Exchange of Common and Preferred Shares for the Rioforte Investments

 

Pursuant to the Second MOU, Portugal Telecom expects, subject to conditions, to transfer to the Oi Subsidiaries 474,348,720 Common Shares, representing 17.08% of the issued and outstanding Common Shares, and 948,697,440 Preferred Shares (collectively, the “Exchanged Shares”) in exchange (the “Exchange”) for the Rioforte Investments in the aggregate principal amount of €897 million.

 

The Exchange of the Exchanged Shares for the Rioforte Investments is expected to occur simultaneously, no later than three (3) business days after all the conditions set forth below under “Conditions to the Implementation of the Second MOU” have been satisfied.  The date of the Exchange is referred to herein as the “Exchange Completion Date.”

 

Call Option Granted to Portugal Telecom

 

Pursuant to the Second MOU, Oi and the Oi Subsidiaries are expected to grant to Portugal Telecom a call option (the “Call Option”) to purchase Common Shares and Preferred Shares of the same number and class as the Exchanged Shares (or upon completion of the Merger of Shares, to purchase common shares of CorpCo) (collectively, the “Option Shares”).  The total number of Option Shares is subject to adjustment to reflect any split or reverse split of shares.

 

Portugal Telecom will be entitled to exercise the Call Option at any time, in whole or in part, during a period of 6 years from the Exchange Completion Date; provided that the number of Option Shares that Portugal Telecom may purchase pursuant to the Call Option will be

 

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Schedule 13D

 

reduced (i) by 10% of the original Option Shares upon the first anniversary of the Exchange Completion Date and (ii) by 18% of the original Option Shares on each successive anniversary of the Exchange Completion Date thereafter, beginning on the second anniversary of the Exchange Completion Date.

 

The exercise price for the Call Option, payable in cash, will be R$2.0104 per Common Share (or per common share of CorpCo, as applicable) and R$1.8529 for Preferred Share, in each case adjusted by the Brazilian CDI rate plus 1.5% per annum from the Exchange Completion Date to the date of payment.

 

Amendments to the Business Combination Agreements

 

Pursuant to the Second MOU, the parties also contemplate that the Business Combination Agreements will be revised to reflect (1) the extension of the deadline for completion of the Business Combination, (2) the necessary adjustments to the structure of the Merger to ensure that the shareholders of Portugal Telecom may receive, as soon as possible, shares of CorpCo in accordance with a legally permitted structure to be determined by mutual agreement of the parties and (3) the limitation of the voting rights of Portugal Telecom in the by-laws of CorpCo to a maximum of 7.5%.

 

In addition, the Second MOU sets forth the proposed members of the Board of Directors of CorpCo to be elected in preparation for the migration of CorpCo to the Novo Mercado of the BM&FBOVESPA and the Merger of Shares.

 

Conditions to the Exchange and the Definitive Agreements

 

The completion of the Exchange is subject to (1) the approval of the Comissão de Valores Mobiliários (the Brazilian Securities Commission) of the receipt of the Exchanged Shares by the Oi Subsidiaries, the granting of the Call Option to Portugal Telecom and the holding of treasury shares of Oi equal to the applicable maximum number of Option Shares during the period of the Call Option, (2) the execution of the Definitive Agreements and (3) the corporate approvals described below.

 

The execution of the Definitive Agreements and the consummation of the transactions contemplated thereby are subject to approval (1) by the General Shareholders’ Meeting of Portugal Telecom and the approval, prior to calling the General Shareholders’ Meeting, of the Board of Directors of Portugal Telecom, (2) by the meeting of the shareholders (reunião prévia) of TmarPart and (3) by the Board of Directors of Oi, each of which meetings must be held by September 8, 2014.

 

Other Agreements

 

Each of the parties has agreed that so long as the Second MOU is in effect, it will not take legal action or pursue arbitration, in any jurisdiction and at any time, against the other party, its current directors and officers or its directors and officers at the time of the relevant events, with respect to the Oi Capital Increase, the subscription agreement entered into by Portugal Telecom on February 19, 2014 with respect to the Oi Capital Increase, the Rioforte Investments or the

 

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Schedule 13D

 

transfer thereof in the Oi Capital Increase, other than acts that are necessary to maintain and preserve their legal rights.  In addition, the parties have agreed that the Definitive Agreements will include a provision for the mutual, full and irrevocable release, encompassing the respective current directors and officers and the directors and officers of the parties at the time of the relevant events, as well as a waiver of any claim and any litigation right with respect to the Rioforte Investments and their contribution to Oi.

 

The Second MOU is governed by Brazilian law, and any dispute with respect to the Second MOU is to be resolved through arbitration in Rio de Janeiro, Brazil before an arbitration panel administered by the Brazil-Canada Chamber of Commerce.

 

Item 5.                     Interest in Securities of the Issuer

 

Items 5(a), (b) and (c)

 

The information set forth in Items 5(a), (b) and (c) of the Statement is hereby amended by adding the following paragraphs at the end of the subsection of the Statement entitled “Information as to Common Shares of the Issuer that May Be Deemed to Be Beneficially Owned by the Reporting Persons”:

 

After giving effect to the Oi Capital Increase, as of the date hereof, the Reporting Persons may be deemed to beneficially own, directly and indirectly, 1,372,721,714 Common Shares, or 49.43% of the issued and outstanding Common Shares.

 

Following the execution of the Definitive Agreements and the consummation of the Exchange, the Reporting Persons are expected to beneficially own the following Common Shares:

 

·                                          the Reporting Persons will directly own 607,823,206 Common Shares, or 26.39% of the issued and outstanding Common Shares (giving effect to the exchange of the Exchanged Shares and the holding of those Exchanged Shares in treasury by the Oi Subsidiaries);

 

·                                          pursuant to the Call Option, the Reporting Persons will have the right to acquire an additional 474,348,720 Common Shares, which, if exercised in full, would result in the Reporting Persons again owning directly 38.96% of the Common Shares; and

 

·                                          the Reporting Persons hold a direct and indirect interest in TmarPart (as detailed below), which holds 290,594,788 Common Shares, or 12.62% of the issued and outstanding Common Shares.

 

As of the date of this Statement (as amended), the Reporting Persons hold their direct and indirect interest in TmarPart as follows:

 

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Schedule 13D

 

·                                          the Reporting Persons directly own 383,359,675 common shares of TmarPart, or 5.0% of the total issued common shares of TmarPart (in addition to preferred shares of TmarPart, which are not reported on this Statement);

 

·                                          the Reporting Persons own 57.5% of the share capital, including 49.8% of the voting share capital, of Pasa, the remainder of which is held by Venus, as described below.  Pasa indirectly owns 2,826,846,254 common shares of TmarPart, representing 37.2% of TmarPart’s issued and outstanding share capital;

 

·                                          the Reporting Persons own 57.5% of the share capital, including 49.8% of the voting share capital, of EDSP75, the remainder of which is held by Sayed, as described below.  EDSP75 indirectly owns 2,826,846,254 common shares of TmarPart, representing 37.2% of TmarPart’s issued and outstanding share capital;

 

·                                          PTB2 owns 208,599,126 common shares and 179,482,423 preferred shares of Venus, representing 65.0% of the share capital, including 50.0% of the voting share capital, of Venus, which owns 42.5% of the share capital, including 50.2% of the voting share capital, of Pasa; and

 

·                                          PTB2 owns 410,106,399 common shares and 352,862,887 preferred shares of Sayed, representing 65.0% of the share capital, including 50.0% of the voting share capital, of Sayed, which owns 42.5% of the share capital, including 50.2% of the voting share capital, of EDSP75.

 

The Reporting Persons’ existing beneficial ownership interests in the capital stock of TmarPart and Oi, taking into account (1) the shares acquired by such Reporting Persons in the Oi Capital Increase, (2) the share exchanges described in Item 6 of Amendment No. 2, (3) the subscription and conversion of the debentures referred to in Item 4 of Amendment No. 3, (4) the consummation of the Exchange described in Item 4 of this Amendment and (5) the other steps of the Business Combination, including the Merger of Shares and the Portugal Telecom Merger, are expected to cause Portugal Telecom to beneficially own interests in TmarPart and Oi such that shareholders of Portugal Telecom are expected to hold a minimum stake of 25.6% of TmarPart’s issued and outstanding share capital (assuming no exercise by Portugal Telecom of the Call Option).

 

The information set forth in Item 4 of this Amendment is hereby incorporated by reference in this Item 5.

 

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Schedule 13D

 

Item 6.                     Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

 

The following new subsection is added at the end of Item 6 of the Statement:

 

Second Memorandum of Understanding

 

On July 15, 2014, Portugal Telecom and Oi entered into the Second MOU described in Item 4 of this Amendment, which is incorporated by reference in this Item 6.  The description of the Second MOU is a summary only and is qualified in its entirety by the terms of the Second MOU, which is filed as Exhibit 32 to this Amendment and is incorporated herein by reference.

 

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Schedule 13D

 

Item 7.                     Material to Be Filed as Exhibits

 

Exhibit		Description
1.		Joint Filing Agreement, dated as of July 28, 2014, by and between the Reporting Persons, which supersedes previous Joint Filing Agreement, dated as of October 7, 2013.
2.		Directors and Executive Officers of the Reporting Persons.
3.		Shareholders’ Agreement of Telemar Participações S.A., dated as of April 25, 2008, among AG Telecom Participações S.A., LF Tel S.A., Fundação Atlântico de Seguridade Social, Asseca Participações S.A. and, as intervening parties, Telemar Participações S.A. and Andrade Gutierrez Investimentos em Telecomunicações S.A. (English translation) (incorporated by reference to the Form 6-K of Tele Norte Leste Participações S.A. filed on February 19, 2009 (SEC File No. 001-14487)).
4.		Amendment to the Shareholders Agreement of Telemar Participações S.A., dated as of January 25, 2011, among AG Telecom Participações S.A., Luxemburgo Participações S.A., LF Tel S.A., Fundação Atlântico de Seguridade Social, and, as intervening party, Telemar Participações S.A. (English translation) (incorporated by reference to Exhibit 3.02 of the Form 20-F of Tele Norte Leste Participações S.A. filed on May 4, 2011 (SEC File No. 001-14487)).
5.		Private Shareholders Agreement of Telemar Participações S.A., dated as of April 25, 2008, among AG Telecom Participações S.A., LF Tel S.A., Asseca Participações S.A., BNDES Participações S.A.—BNDESPAR, Fiago Participações S.A., Fundação Atlântico de Seguridade Social and, as intervening parties, Telemar Participações S.A., Caixa de Previdência dos Funcionários do Banco do Brasil—PREVI, Fundação Petrobras de Seguridade Social—PETROS, Fundação dos Economiários Federais—FUNCEF and Andrade Gutierrez Investimentos em Telecomunicações S.A. (English translation) (incorporated by reference to the Form 6-K/A of Tele Norte Leste Participações S.A. filed on November 27, 2009 (SEC File No. 001-14487)).
6.		Amendment to the Shareholders Agreement of Telemar Participações S.A., dated as of January 25, 2011, among AG Telecom Participações S.A., Luxemburgo Participações S.A., BNDES Participações S.A.—BNDESPar, Caixa de Previdência dos Funcionários do Banco do Brasil—PREVI, Fundação Atlântico de Seguridade Social, Fundação dos Economiários Federais—FUNCEF, Fundação Petrobras de Seguridade Social—PETROS, LF Tel S.A., Bratel Brasil S.A. and, as intervening parties, Telemar Participações S.A. and Portugal Telecom, SGPS S.A. (English translation) (incorporated by reference to Exhibit 3.04 of the Form 20-F of Tele Norte Leste Participações S.A. filed on May 4, 2011 (SEC File No. 001-14487)).

 

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Schedule 13D

 

7.		Shareholders Agreement of Pasa Participações S.A., dated as of January 25, 2011, among Andrade Gutierrez Telecomunicações Ltda., Bratel Brasil S.A. and, as intervening parties, Pasa Participações S.A., AG Telecom Participações S.A., Luxemburgo Participações S.A., La Fonte Telecom S.A., EDSP75 Participações S.A., LF Tel S.A. and Portugal Telecom, SGPS, S.A. (English translation). (incorporated by reference to Exhibit 4.10 of the Form 20-F of Portugal Telecom, SGPS, S.A. filed on May 6, 2011 (SEC File No. 001-13758)).
8.		Shareholders Agreement of EDSP75 Participações S.A., dated as of January 25, 2011, among La Fonte Telecom S.A., Bratel Brasil S.A. and, as intervening parties, EDSP75 Participações S.A., LF Tel S.A., Pasa Participações S.A., Andrade Gutierrez Telecomunicações Ltda., AG Telecom Participações S.A., Luxemburgo Participações S.A., and Portugal Telecom, SGPS, S.A. (English translation). (incorporated by reference to Exhibit 4.11 of the Form 20-F of Portugal Telecom, SGPS, S.A. filed on May 6, 2011 (SEC File No. 001-13758)).
9.		Memorandum of Understanding, dated as of October 1, 2013, among Oi S.A., AG Telecom Participações S.A., LF Tel. S.A., Pasa Participações S.A., EDSP75 Participações S.A., Bratel Brasil S.A., Portugal Telecom SGPS, S.A., Avistar, SGPS, S.A. and Nivalis Holding B.V. (incorporated by reference to Exhibit 9 of Amendment No. 1 to the Schedule 13D of Oi S.A., filed on October 8, 2013 (SEC File No. 005-83981)).
10.		Memorandum of Understanding relating to CTX Participações S.A. and Contax Participações S.A., dated as of October 1, 2013, among AG Telecom Participações S.A., Andrade Gutierrez Telecomunicações Ltda., LF Tel. S.A., La Fonte Telecom S.A., Pasa Participações S.A., EDSP75 Participações S.A., Bratel Brasil S.A. and Portugal Telecom SGPS, S.A. (incorporated by reference to Exhibit 10 of Amendment No. 1 to the Schedule 13D of Oi S.A., filed on October 8, 2013 (SEC File No. 005-83981)).
11.		Share Exchange Agreement (Contrato de Permuta de Participações Societárias), dated as of February 19, 2014, among Andrade Gutierrez S.A., Bratel Brasil S.A. and, as intervening parties, Pasa Participações S.A., AG Telecom Participações S.A., Jereissati Telecom S.A., EDSP75 Participações S.A., L.F. Tel S.A. and Fundação Atlântico de Seguridade Social (English Translation) (incorporated by reference to Exhibit 11 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).
12.		Share Exchange Agreement (Contrato de Permuta de Participações Societárias), dated as of February 19, 2014, among Jereissati Telecom S.A., Bratel Brasil S.A. and, as intervening parties, Pasa Participações S.A., AG Telecom Participações S.A., Andrade Gutierrez S.A., EDSP75 Participações S.A., L.F. Tel S.A. and Fundação Atlântico de Seguridade Social (English Translation) (incorporated by reference to Exhibit 12 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).

 

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Schedule 13D

 

13.		Second Amendment to the Shareholders’ Agreement of Telemar Participações S.A. (2º Aditivo ao Acordo de Acionistas da Telemar Participações S.A.), dated as of February 19. 2014, among AG Telecom Participações S.A., LF Tel S.A., Fundação Atlântico de Seguridade Social and, as intervening party, Telemar Participações S.A. (English Translation) (incorporated by reference to Exhibit 13 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).
14.		Terms of Termination of the Shareholders’ Agreement of Telemar Participações S.A. (Termo de Resilição do Acordo de Acionistas da Telemar Participações S.A.), dated as of February 19. 2014, among AG Telecom Participações S.A., LF Tel S.A., Fundação Atlântico de Seguridade Social and, as intervening party, Telemar Participações S.A. (English Translation) (incorporated by reference to Exhibit 14 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).
15.		Second Amendment to the Shareholders’ Agreement of Telemar Participações S.A. (2º Aditivo ao Acordo de Acionistas da Telemar Participações S.A.), dated as of February 19, 2014, among AG Telecom Participações S.A., BNDES Participações S.A.—BNDESPAR, Caixa de Previdência dos Funcionários do Banco do Brasil—PREVI, Fundação Atlântico de Seguridade Social, Fundação dos Economiários Federais—FUNCEF, Fundação Petrobras de Seguridade Social—PETROS, LF Tel S.A., Bratel Brasil S.A. and, as intervening parties, Telemar Participações S.A. and Portugal Telecom, SGPS, S.A. (English Translation) (incorporated by reference to Exhibit 15 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).
16.		Terms of Termination of the Shareholders’ Agreement of Telemar Participações S.A. (Termo de Resilição do Acordo de Acionistas da Telemar Participações S.A.), dated as of February 19, 2014, among AG Telecom Participações S.A., BNDES Participações S.A.—BNDESPAR, Caixa de Previdência dos Funcionários do Banco do Brasil—PREVI, Fundação Atlântico de Seguridade Social, Fundação dos Economiários Federais—FUNCEF, Fundação Petrobras de Seguridade Social—PETROS, LF Tel S.A., Bratel Brasil S.A. and, as intervening parties, Telemar Participações S.A. and Portugal Telecom, SGPS, S.A. (English Translation) (incorporated by reference to Exhibit 16 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).
17.		First Amendment to the Shareholders’ Agreement of Pasa Participações S.A. (1º Aditivo ao Acordo de Acionistas da Pasa Participações S.A.), dated as of February 19, 2014, among Andrade Gutierrez S.A., Bratel Brasil S.A. and, as intervening parties, Pasa Participações S.A., AG Telecom Participações S.A., Jereissati Telecom S.A., EDSP75 Participações S.A., LF Tel S.A., Portugal Telecom, SGPS, S.A., Sayed RJ Participações S.A., Venus RJ Participações S.A. and PTB2 S.A. (English Translation) (incorporated by reference to Exhibit 17 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).

 

14

 

Schedule 13D

 

18.		Terms of Termination of the Shareholders’ Agreement of Pasa Participações S.A. (Termo de Resilição do Acordo de Acionistas da Pasa Participações S.A.), dated as of February 19, 2014, among Andrade Gutierrez S.A., Bratel Brasil S.A. and, as intervening parties, Pasa Participações S.A., AG Telecom Participações S.A., Jereissati Telecom S.A., EDSP75 Participações S.A., LF Tel S.A. and Portugal Telecom, SGPS, S.A. (English Translation) (incorporated by reference to Exhibit 18 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).
19.		First Amendment to the Shareholders’ Agreement of EDSP75 Participações S.A. (1º Aditivo ao Acordo de Acionistas da EDSP75 Participações S.A.), dated as of February 19, 2014, among Jereissati Telecom S.A., Bratel Brasil S.A. and, as intervening parties, EDSP75 Participações S.A., LF Tel S.A., Andrade Gutierrez S.A., Pasa Participações S.A., AG Telecom Participações S.A., Portugal Telecom, SGPS, S.A., Sayed RJ Participações S.A., Venus RJ Participações S.A. and PTB2 S.A. (English Translation) (incorporated by reference to Exhibit 19 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).
20.		Terms of Termination of the Shareholders’ Agreement of EDSP75 Participações S.A. (Termo de Resilição do Acordo de Acionistas da EDSP75 Participações S.A.), dated as of February 19, 2014, among Jereissati Telecom S.A., Bratel Brasil S.A. and, as intervening parties, EDSP75 Participações S.A., LF Tel S.A., Andrade Gutierrez S.A., Pasa Participações S.A., AG Telecom Participações S.A. and Portugal Telecom, SGPS, S.A. (English Translation) (incorporated by reference to Exhibit 20 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).
21.		Temporary Voting Agreement of the Shareholders of Oi S.A. and Telemar Participações S.A. (referred to as “CorpCo”) (Compromisso Provisório de Voto dos Acionistas da Oi S.A. e da Telemar Participações S.A. (a ser denominada “CorpCo”)), dated February 19, 2014, among Portugal Telecom, SGPS, S.A., Caravelas Fundo de Investimento em Ações, Bratel Brasil S.A., Telemar Participações S.A., Andrade Gutierrez S.A., Jereissati Telecom S.A. and, as intervening party, Oi S.A. (English Translation) (incorporated by reference to Exhibit 21 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).
22.		Subscription Agreement for Shares of Capital Stock Issued by Oi S.A. (Contrato de Subscrição de Ações de Emissão da Oi S.A.), dated February 19, 2014, between Oi S.A. and Portugal Telecom, SGPS, S.A. (English Translation) (incorporated by reference to Exhibit 22 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).

 

15

 

Schedule 13D

 

23.		Private Instrument of Commitment to Assign Priority Rights (Instrumento Particular de Compromisso de Cessão de Direito de Prioridade), dated February 19, 2014, among Telemar Participações S.A., Valverde Participações S.A., AG Telecom Participações S.A., LF Tel S.A. and Portugal Telecom, SGPS, S.A. (English Translation) (incorporated by reference to Exhibit 23 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).
24.		Debenture Subscription Agreement for the First Private Issuance of Unsecured Debentures Convertible into Common and Preferred Shares, in a Single Series, of Venus RJ Participações S.A. (Contrato de Subscrição de Debêntures da Primeira Emissão Privada de Debêntures Conversíveis em Ações Ordinárias e Preferenciais, da Espécie Quirografária em Série Única, da Venus RJ Participações S.A.), dated as of February 19, 2014, between PTB2 S.A. and Venus RJ Participações S.A. (English Translation) (incorporated by reference to Exhibit 24 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).
25.		Debenture Subscription Agreement for the First Private Issuance of Unsecured Debentures Convertible into Common and Preferred Shares, in a Single Series, of Sayed RJ Participações S.A. (Contrato de Subscrição de Debêntures da Primeira Emissão Privada de Debêntures Conversíveis em Ações Ordinárias e Preferenciais, da Espécie Quirografária em Série Única, da Sayed RJ participações S.A.), dated as of February 19, 2014, between Sayed RJ Participações S.A. and PTB2 S.A. (English Translation) (incorporated by reference to Exhibit 25 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).
26.		Debenture Subscription Agreement for the First Private Issuance of Unsecured Debentures Convertible into Common and Preferred Shares, in Series, of Pasa Participações S.A. (Contrato de Subscrição de Debêntures da Primeira Emissão Privada de Debêntures Conversíveis em Ações Ordinárias e Preferenciais, da Espécie Quirografária em Séries, da Pasa Participações S.A.), dated as of February 19, 2014, among Pasa Participações S.A., Bratel Brasil S.A. and Venus RJ Participações S.A. (English Translation) (incorporated by reference to Exhibit 26 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).
27.		Debenture Subscription Agreement for the First Private Issuance of Unsecured Debentures Convertible into Common and Preferred Shares, in Series, of EDSP75 Participações S.A. (Contrato de Subscrição de Debêntures da Primeira Emissão Privada de Debêntures Conversíveis em Ações Ordinárias e Preferenciais, da Espécie Quirografária em Séries, da EDSP75 Participações S.A.), dated as of February 19, 2014, among EDSP75 Participações S.A., Bratel Brasil S.A. and Sayed RJ Participações S.A. (English Translation) (incorporated by reference to Exhibit 27 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).

 

16

 

Schedule 13D

 

28.		Debenture Subscription Agreement for the Third Private Issuance of Subordinated Debentures Convertible into Common Shares, in a Single Series, of AG Telecom Participações S.A. (Contrato de Subscrição de Debêntuntes da Terceira Emissão Privada de Debêntures Conversíveis em Ações Ordinárias, da Espécie Subordinada em Série Única, da AG Telecom Participações S.A.), dated as of February 19, 2014, among Pasa Participações S.A. and AG Telecom S.A. (English Translation) (incorporated by reference to Exhibit 28 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).
29.		Debenture Subscription Agreement for the Fifth Private Issuance of Subordinated Debentures Convertible into Common Shares, in a Single Series, of LF Tel S.A. (Contrato de Subscrição de Debêntuntes da Quinta Emissão Privada de Debêntures Conversíveis em Ações Ordinárias, da Espécie Subordinada em Série Única, da LF Tel Participações S.A.), dated as of February 19, 2014, among LF Tel S.A. and EDSP75 Participações S.A. (English Translation) (incorporated by reference to Exhibit 29 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).
30.		Debenture Subscription Agreement for the Twelfth Private Issuance of Subordinated Debentures Convertible into Common Shares, in a Single Series, of Telemar Participações S.A. (Contrato de Subscrição de Debêntures da Décima Segunda Emissão Provada de Debêntures Conversíveis em Ações Ordinárias, da Espécie Subordinada em Série Única, da Telemar Participações S.A.), dated as of February 19, 2014, among Telemar Participações S.A., AG Telecom Participações S.A. and LF Tel S.A. (English Translation) (incorporated by reference to Exhibit 30 of Amendment No. 2 to the Schedule 13D of Oi S.A., filed on February 27, 2014 (SEC File No. 005-83981)).
31.		Waiver Letter (Renúncia de Condição Precedente do Contrato de Subscrição de Ações de Emissão da Oi S.A.), dated as of April 28, 2014, relating to the waiver by Portugal Telecom, SGPS, S.A. of a condition precedent to the Subscription Agreement entered into between Portugal Telecom, SGPS, S.A. and Oi S.A., dated as of February 19, 2014 (English translation) (incorporated by reference to Exhibit 31 of Amendment No. 3 to the Schedule 13D of Oi S.A., filed on May 14, 2014 (SEC File No. 005-83981)).
32.		Memorandum of Understanding (Memorando de Entendimentos), dated as of July 15, 2014, between Portugal Telecom SGPS, S.A. and Oi S.A.

 

17

 

SIGNATURES

 

After reasonable inquiry and to the best of the knowledge and belief of the undersigned, the undersigned certify that the information set forth in this statement is true, complete and correct.

 

Dated:  July 28, 2014

 

	PORTUGAL TELECOM, SGPS, S.A.
	By:	/s/ Henrique Granadeiro
		Name:	Henrique Granadeiro
		Title:	Chief Executive Officer
	By:	/s/ Luis Pacheco de Melo
		Name:	Luis Pacheco de Melo
		Title:	Chief Financial Officer
	BRATEL B.V.
	By:	/s/ C.C. van den Broek
		Name:	C.C. van den Broek
		Title:	Director B
	By:	/s/ Carlos Cruz
		Name:	Carlos Cruz
		Title:	Director A
	BRATEL BRASIL S.A.
	By:	/s/ Shakhaf Wine
		Name:	Shakhaf Wine
		Title:	President
	By:	/s/ Pedro Guterres
		Name:	Pedro Guterres
		Title:	Director

 

 

 

Schedule 13D

Exhibit 1

 

JOINT FILING AGREEMENT

 

The undersigned acknowledge and agree that the foregoing statement on Schedule 13D is filed on behalf of each of the undersigned and that all subsequent amendments to this statement on Schedule 13D shall be filed on behalf of each of the undersigned without the necessity of filing additional joint filing agreements. The undersigned acknowledge that each shall be responsible for the timely filing of such amendments, and for the completeness and accuracy of the information concerning him or it contained therein, but shall not be responsible for the completeness and accuracy of the information concerning the others, except to the extent that it knows or has reason to believe that such information is inaccurate.

 

Dated:  July 28, 2014

 

	PORTUGAL TELECOM, SGPS, S.A.
	By:	/s/ Henrique Granadeiro
		Name:	Henrique Granadeiro
		Title:	Chief Executive Officer
	By:	/s/ Luis Pacheco de Melo
		Name:	Luis Pacheco de Melo
		Title:	Chief Financial Officer
	BRATEL B.V.
	By:	/s/ C.C. van den Broek
		Name:	C.C. van den Broek
		Title:	Director B
	By:	/s/ Carlos Cruz
		Name:	Carlos Cruz
		Title:	Director A

 

 

Schedule 13D

 

	BRATEL BRASIL S.A.
	By:	/s/ Shakhaf Wine
		Name:	Shakhaf Wine
		Title:	President
	By:	/s/ Pedro Guterres
		Name:	Pedro Guterres
		Title:	Director

 

 

Schedule 13D

Exhibit 2

 

DIRECTORS AND EXECUTIVE OFFICERS OF THE REPORTING PERSONS

 

PORTUGAL TELECOM, SGPS, S.A.

 

All of the following persons are citizens of the Republic of Portugal, except Shakhaf Wine and Milton Almicar Silva Vargas, who are citizens of the Federative Republic of Brazil; Rafael Luís Mora Funes, who is a citizen of Spain; and Gerald Stephen McGowan, who is a citizen of the United States of America. Unless otherwise noted below, (1) the principal occupation or employment listed below is a position with Portugal Telecom, SGPS, S.A., and (2) the business address for each of the following persons is Avenida Fontes Pereira de Melo, 40, 1069-300 Lisboa, Portugal.

 

NAME		PRINCIPAL OCCUPATION OR EMPLOYMENT		BUSINESS ADDRESS
Board of Directors
Henrique Manuel Fusco Granadeiro		Chairman of the Board of Directors Chief Executive Officer
Alfredo José Silva de Oliveira Baptista		Executive Member of the Board of Directors
Luis Miguel da Fonseca Pacheco de Melo		Chief Financial Officer and Executive Member of the Board of Directors Member of the Board of Directors, Oi S.A.
Carlos António Alves Duarte		Executive Member of the Board of Directors
Pedro Humberto Monteiro Durão Leitão		Executive Member of the Board of Directors
Manuel Rosa da Silva		Executive Member of the Board of Directors
Shakhaf Wine		Executive Member of the Board of Directors of Portugal Telecom, SGPS, S.A. Member of the Board of Directors of Oi S.A. Member of the Board of Directors of TelPart Chief Executive Officer of Bratel Vice President, Pasa Participações S.A. Vice President EDSP75 Participações S.A. Chairman and Chief Executive Officer of Portugal Telecom Brasil S.A. Vice President, AG Telecom Participações S.A.		Av. Borges de Medeiros, 633, cj. 301, Lagoa, Rio de Janeiro/RJ, Brazil
José Guilherme Xavier de Basto		Member of the Board of Directors and Audit Committee of Portugal Telecom
João Manuel de Mello Franco		Member of the Board of Directors

 

2-1

 

Schedule 13D

 

NAME		PRINCIPAL OCCUPATION OR EMPLOYMENT		BUSINESS ADDRESS
		and Chairman of the Audit Committee of Portugal Telecom; Member of the Board of Directors and Chairman of the Audit Committee of EDP Renováveis, S.A.
Joaquim Anibal Brito Freixial de Goes		Member of the Board of Directors of Banco Espírito Santo, S.A.		Avenida da Liberdade, 195, 1250-142, Lisboa, Portugal
Mário João de Matos Gomes		Member of the Board of Directors and Audit Committee of Portugal Telecom; Founding Partner and Director of the auditing firm Ascenção, Gomes, Cruz & Associado—SROC
Gerald Stephen McGowan		Member of the Board of Directors of Portugal Telecom; former Ambassador of the United States to Portugal		4903 Rock Spring Road, Arlington, Virginia 22207, United States of America
Rafael Luís Mora Funes		Vice Chairman of the Board of Directors and Chief Operating Officer of Ongoing Strategy Investments, SGPS, S.A.		Rua Vitor Cordon, 19, 1200-482, Lisboa, Portugal
Maria Helena Nazaré		Member of the Board of Directors of Portugal Telecom; Vice Chairman of the European University Association; former Principal of the University of Aveiro, Portugal		Universidade de Aveiro, Pavilhão III, Campus Universitário de Santiago, 3810-193, Aveiro, Portugal
Amílcar Carlos Ferreira de Morais Pires		Member of the Board of Directors of Banco Espírito Santo, S.A.; Chairman of the Board of Directors of Bank Espírito Santo (International) Limited; Chairman of the Board of Directors of BIC — International Bank, Ltd. (BIBL)		Avenida da Liberdade, 195, 1250-142, Lisboa, Portugal
Francisco Teixeira Pereira Soares		Chairman of the Environment Committee of CEEP — European Centre of Enterprises with Public Participation and of Enterprises of General Economic Interest, Brussels; Consultant of Parpública, S.A.		Rua Padre Antônio Vieira, nº 21, 3º Dto., 1070-195, Lisboa, Portugal
Paulo José Lopes Varela		Chairman of the Board of Directors and Chief Executive Officer of Visabeira Global, SGPS, S.A.; Chairman of the Board of Directors of Vista Alegre Atlantis, S.A.; Chairman of the Board of Directors of V.A. Grupo — Vista Alegre Participações, S.A.		Grupo Visabeira, SGPS SA, Repeses, 3504-511. Viseu, Portugal
Milton Almicar Silva Vargas		Member of the Board of Directors		Centro Empresarial Rio Negro — Al.

 

2-2

 

Schedule 13D

 

NAME		PRINCIPAL OCCUPATION OR EMPLOYMENT		BUSINESS ADDRESS
		of Portugal Telecom; Member of the Boards of Directors of Cielo S.A., CPM Braxis S.A. and Fleury S.A.		Rio Negro 585 — Bloco A, 10º Andar, São Paulo, SP, Brazil
Nuno Rocha dos Santos de Almeida e Vasconcellos		Chairman of the Boards of Directors of Rocha dos Santos Holding, SGPS, S.A. and Ongoing Strategy Investments, SGPS, S.A.		Rua Vitor Cordon, 19, 1200-482, Lisboa, Portugal
Executive Officers (other than those who are also members of the Board of Directors)
Nuno Manuel Teiga Luis Vieira		Manager of the Investor Relations Department

 

2-3

 

Schedule 13D

 

BRATEL B.V.

 

All of the following persons are citizens of the The Netherlands, except Ana Isabel da Cunha Gonçalves de Sequeiros and Carlos Manuel Mendes Fidalgo Moreira da Cruz, who are citizens of the Republic of Portugal.

 

NAME		PRINCIPAL OCCUPATION OR EMPLOYMENT		BUSINESS ADDRESS
Board of Directors
Carlos Manuel Mendes Fidalgo Moreira da Cruz		Manager of the Finance Department of Portugal Telecom; Managing Director A of Bratel B.V.		Avenida Fontes Pereira de Melo, 40, 1069-300, Lisboa, Portugal
Ana Isabel da Cunha Gonçalves de Sequeiros		Corporate Secretary of PT Móveis and PT II; Managing Director A of Bratel B.V.		Avenida Fontes Pereira de Melo, 40, 1069-300, Lisboa, Portugal
Clemens Cornelis van den Broek		Managing Director B of Bratel B.V.		Naritaweg 165 Telestone 8, 1043BW, Amsterdam, The Netherlands
Trust International Management (T.I.M.) B.V.		Managing Director B of Bratel B.V.		Naritaweg 165 Telestone 8, 1043BW, Amsterdam, The Netherlands

 

2-4

 

Schedule 13D

 

BRATEL BRASIL S.A.

 

All of the following persons are citizens of the Federative Republic of Brazil, except Pedro Guimarães e Melo de Oliveira Guterres, who is a citizen of the Republic of Portugal. The business address for each of the following persons is Rua Cubatão, no 320, 4o andar, Sala 03, CEP. 04013-001, São Paulo, SP, Brazil, except that the address of Pedro Guimarães e Melo de Oliveira Guterres is Av. Borges de Medeiros, 633, cj. 301, Lagoa, Rio de Janeiro, RJ, Brazil.

 

NAME		PRINCIPAL OCCUPATION OR EMPLOYMENT
Board of Directors
Shakhaf Wine		Chief Executive Officer of Bratel Member of the Board of Directors of TelPart Member of the Board of Directors of Oi S.A. Executive Member of the Board of Directors, Portugal Telecom, SGPS, S.A. Vice President, Pasa Participações S.A. Vice President EDSP75 Participações S.A. Vice President, AG Telecom Participações S.A.
Pedro Guimarães e Melo de Oliveira Guterres		Executive Director of Bratel Executive Director of TelPart
Anna Laura Baraf Svartman		Executive Director of Bratel

 

2-5

 

Schedule 13D

Exhibit 32

 

This document is a free translation only. Due to the complexities of language translation, translations are not always precise. The original document was prepared in Portuguese, and in case of any divergence, discrepancy or difference between this version and the Portuguese version, the Portuguese version shall prevail. The Portuguese version is the only valid and complete version and shall prevail for any and all purposes. There is no assurance as to the accuracy, reliability or completeness of the translation. Any person reading this translation and relying on it should do so at his or her own risk.

 

MEMORANDUM OF UNDERSTANDING

 

By private instrument and in the appropriate legal form, between:

 

1.                                     OI S.A., a Brazilian corporation (sociedade por ações) headquartered in the City and State of Rio de Janeiro, at Rua do Lavradio nº. 71, 2nd floor, Center, registered with the CNPJ/MF under n°.  76.535.764/0001-43, duly represented for the purposes hereof pursuant to its Bylaws (“Oi”);

 

2.              PORTUGAL TELECOM, SGPS S.A., a publicly held corporation governed by Portuguese law (sociedade aberta de direito português), headquartered at Avenida Fontes Pereira de Melo, n.º 40, in the district of São Jorge de Arroios, Lisbon, registered as a legal entity under n.º 503215058, with a capital stock of EUR 26,895,375 (twenty-six million, eight hundred ninety-five thousand, three hundred seventy-five Euros), duly represented for the purposes hereof pursuant to its Bylaws (“PT SGPS”);

 

Oi and PT SGPS shall also be referred to herein, individually, as a “Party” or, together, the “Parties.”

 

WHEREAS:

 

(i)                                     Among the assets contributed by PT SGPS to Oi’s capital stock in the capital increase subscribed for on April 28, 2014 and completed on May 5, 2014 (the “Capital Increase”), there were companies holding, among other assets, financial investments in securities issued by Rio Forte Investments, S.A. (“RioForte”) in the amount of 897.00 million Euros (the “Securities”);

 

(ii)                                  PT SGPS and Oi consider it to be in the best interest of the Parties and their shareholders to continue the implementation of the business combination between Oi and PT SGPS as disclosed on February 19, 2014 (the “Transaction”), subject to the provisions of this Memorandum;

 

The Parties RESOLVE to execute this Memorandum of Understanding (“Memorandum”), which will be governed by the provisions described below:

 

1.                                      The main purpose of this Memorandum is to establish in good faith the basis for a common agreement between the Parties, and in no circumstance shall it be interpreted as an acknowledgment of any act, measure or omission, by either of the Parties or any of their directors, which may be deemed contrary to applicable law or any contractual obligation.

 

2.                                      PT SGPS and Oi’s subsidiaries holding the Securities (the “Oi Subsidiaries”) will exchange 474,348,720 common shares (“ON”) and 948,697,440 preferred shares (“PN” and, together with the ON, the “Exchange Shares”) of Oi currently owned by PT

 

 

Schedule 13D

 

SGPS, free and clear of any encumbrance and without possible return, for the Securities (the “Exchange”), subject to the terms and conditions provided for in this Memorandum.

 

3.                                      The definitive agreements setting forth all the terms and conditions of the Exchange and the Option (as defined below), as well as the other acts and transactions contemplated herein (the “Definitive Agreements”) shall be agreed upon within 20 (twenty) days from the date hereof by the Parties to this Memorandum, by Oi’s subsidiaries holding the Securities (the “Oi Subsidiaries”) and by the other signatories of the Transaction documents dated February 19, 2014 (together hereafter referred to as the “Relevant Parties”), subject to the agreement of the latter.

 

4.                                      The documents for the transfer of the Exchange Shares that will be transferred by PT SGPS to the Oi Subsidiaries will be executed simultaneously with the execution of the documents for the transfer of the Securities to PT SGPS (the “Closing Date”).

 

5.                                      The Definitive Agreements will also provide for a personal and non-transferrable option to purchase (the “Option”) Oi shares in the same number and of the same type as the Exchange Shares (or, as applicable, shares of CorpCo, as defined below, issued in replacement of the Exchange Shares) (the “Option Shares”) to be granted by by Oi and the Oi Subsidiaries to PT SGPS.  The Option may be exercised at any time, in whole or in part, in accordance with the following terms and conditions:

 

(i)                                    Option Shares:  the shares that are the subject of the Option correspond to the same number and type as the Exchange Shares, provided that once Oi shall have merged into Telemar Participações S.A. (“Tpart” or “CorpCo”) in the context of the Transaction (the “Merger of Shares”), the term Option Shares shall refer to the number of shares of the CorpCo that would be issued to replace the Exchange Shares if these shares were owned by PT SGPS.  The number of Option Shares shall be adjusted to reflect modifications due to stock splits or reverse splits;

 

(ii)                                 Period:  6 (six) years, provided, however, that number of Option Shares with respect to which PT SGPS will be entitled to exercise the Option shall be reduced by the percentages indicated in the table below:

 

2

 

Schedule 13D

 

Date of Reduction		% of the Option Shares that annually cease to be subject to the Option
As of the 1st anniversary of the Closing Date		10.0	%
As of the 2nd anniversary of the Closing Date		18.0	%
As of the 3rd anniversary of the Closing Date		18.0	%
As of the 4th anniversary of the Closing Date		18.0	%
As of the 5th anniversary of the Closing Date		18.0	%
As of the 6th anniversary of the Closing Date		18.0	%

 

(iii)                              Exercise Price:  the amount of 1.8529 Reais per PN and 2.0104 per ON and, as applicable, 2.0104 Reais per common share issued by CorpCo.  The amounts provided for herein will be indexed to the variation of the CDI rate plus 1.5% per year, calculated pro rata temporis, as of such time the Exchange is effected through the date of effective payment of the price of each exercise, whether partial or total, of the Option.  The exercise price of the Option shall be paid in cash in immediately available funds.

 

6.                                      The Definitive Agreements to be agreed upon and signed by the Relevant Parties shall provide, among other customary clauses and the provisions contemplated by this Memorandum, that:

 

(i)                                     Oi or its subsidiaries will not be liable for the existence, formalization, validity, solvency or any liens or encumbrances on the Securities, nor shall it be attributed any liability arising directly or indirectly from the transfer of such Securities pursuant to the Exchange.

(ii)                                  PT SGPS shall hold Oi or its subsidiaries harmless of any liability of any kind arising from holding the Securities or transferring them pursuant to the Exchange.

(iii)                               The Exchange will be implemented by the Oi Subsidiaries, in proportion to the Securities they own directly, within 3 (three) business days from the date on which all of the following have occurred: (i) communication by the Comissão de Valores Mobiliários authorizing (a) the receipt of the Exchange Shares by the Oi Subsidiaries, (b) the grant, by the Oi Subsidiaries, of the Option under the terms provided in Clause 5 above and in the Definitive Agreements and (c) the holding of Oi shares (and, upon completion of the Merger of Shares, of CorpCo shares) in treasury in a volume equivalent to the maximum number of Option Shares, during the effective period of such Option; (ii) signature of the Definitive Agreements and (iii) the Corporate Approvals.

(iv)                              Oi (and, upon completion of the Merger of Shares, CorpCo) may, subject to legal and regulatory restrictions, freely use the shares held in treasury, so long as the economic effects of the Option for PT SGPS are guaranteed.

 

3

 

Schedule 13D

 

7.                                      The execution and implementation of the transactions provided for in the Definitive Agreements will be conditioned upon approval by (i) the PT SGPS General Shareholders’ Meeting, which, prior to being convened, will require the prior approval of the Board of Directors, (ii) the prior meeting of the shareholders (reunião prévia) of of Tpart and (iii) the Meeting of the Board of Directors of Oi, to be obtained by September 8, 2014 (the “Corporate Approvals”).

 

8.                                      Oi and the Oi Subsidiaries shall cooperate with PT SGPS for the full exercise of its rights relating to collection under the Securities.

 

9.                                      The Parties acknowledge that the agreements signed on February 19, 2014 and that govern the Transaction shall be amended to provide for: (i) an extension of the deadline for completing the Transaction; (ii) the necessary adjustment in the structure of incorporation of PT SGPS into CorpCo (as established at the prior meeting (reunião prévia) dated February 19, 2014), such that PT SGPS shareholders may have an opportunity to receive, as quickly as possible, shares of CorpCo, in accordance with such legally permissible structure as shall be mutually agreed by the Parties; and (iii) limiting the voting rights of PT SGPS, in CorpCo’s Bylaws, to a maximum of 7.5% (seven and a half percent).  These adjustments will be provided for in the Definitive Agreements.

 

9.1.  The Parties agree that the Definitive Agreements shall also provide that the CorpCo’s Board of Directors to be elected in preparation for its listing on the Novo Mercado and the Merger of Shares will consist of the following: Antônio Gomes Mota, Fernando Magalhães Portella, Fernando Marques dos Santos, Paulo José Lopes Varela, José Mauro Mettrau Carneiro da Cunha, Rafael Luís Mora Funes, Renato Torres de Faria, Rui Horta e Costa, Sérgio Franklin Quintella, Thomas C. Azevedo Reichenheim and Vitor da Conceição Gonçalves.

 

10.                               The Parties expressly agree that, for so long as this Memorandum is in effect, any judicial, extrajudicial or arbitral measure brought in any jurisdiction at any time against the other Party or any of its administrators (both current and in office at the time of the relevant events) in relation to the Capital Increase, the Share Subscription Agreement executed by the Parties on February 19, 2014 (the “Subscription Agreement”), the transfer of the Securities in the context of such Capital Increase, and/or the Securities, other than actions required to maintain and preserve the respective rights of the Parties, will be deemed an act contrary to good faith (“Agreement Not to Litigate”).

 

10.1.  The Parties shall cause the Definitive Agreements to include a provision by which they shall grant each other and their respective administrators (both current and in office at the time of the relevant events) an irrevocable and irreversible general discharge, declaring that neither Party shall have any claim against the other Party, nor shall they initiate any litigation, with respect to the realization of the financial investments in the Securities and their contribution to Oi.

 

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Schedule 13D

 

11.                               The Definitive Agreements will have the effect of a transaction between the Parties in relation to the investment effected in the Securities.

 

12.                               Until the Securities are transferred to PT SGPS, PT SGPS shall be responsible for instructing Oi (subject to the latter’s agreement) on any measures that, in the event of a default on the Securities, it should take to preserve rights to collect or to take a position on any proposed debt restructuring.  In such event, PT SGPS shall hold Oi harmless for the instructions given and followed by Oi in collecting on or renegotiating the Securities.  PT SGPS will advance payment of necessary costs that may be incurred for this purpose, subject to signature of the Definitive Agreements.  Notwithstanding anything to the contrary in this Clause 12, Oi shall provide PT SGPS all the documentary support for taking all measures necessary to collect any amounts under the Securities.

 

13.                               Upon execution of this Memorandum, PT SGPS and Oi shall immediately disclose material facts to the market, observing the terms of the drafts attached to this memorandum as Annex 13.

 

14.                               This Memorandum is effective as from the date hereof and shall remain in full force and effect until the earlier of (i) the date of execution of the Definitive Agreements and (ii) September 12, 2014.

 

15.                               The Parties represent and warrant hereby that this Memorandum is a valid and binding obligation of each of the Parties and that, except as expressly provided for herein, they have obtained all the approvals needed for its execution.

 

16.                               Any notice, communication, correspondence, claim, demand, request, instruction, notice of arbitration, judicial summons or subpoena relating to this Memorandum or to any dispute, demand, doubt or controversy arising from or relating to this Memorandum shall be deemed delivered when received by the other Party (i) by registered mail, through a reputable courier company, at the time of effective receipt, (ii) at the time delivered, if delivered by hand, or (iii) on the date of confirmation of receipt of transmission issued by a fax machine, when faxed , as applicable, to the addresses and telephone/fax numbers shown below (or any other address or telephone/fax number as may be indicated by a Party, in writing, to the other Parties):

 

(i)                                      If to Oi:

OI S.A.

At.: Mr. Bayard de Paoli Gontijo

Rua do Lavradio nº. 71, 2º andar, Centro, Rio de Janeiro, Brasil

 

(ii)                                   If to Portugal Telecom SGPS:

PORTUGAL TELECOM SGPS

At.: Secretaria Geral

Avenida Fontes Pereira de Melo, n.º 40, freguesia de São Jorge de Arroios,

concelho de Lisboa, Portugal

 

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Schedule 13D

 

16.1.                      Any Party may change the address to which notice shall be sent by written notice to the other contracting Parties in accordance with this Clause 16, it being however specified that for the purposes of this provision, the notice shall be deemed to have been received only upon acknowledgement of receipt by each of the other Parties.

 

17.                               This Memorandum may only be amended, replaced, cancelled, renewed or extended and its terms may only be waived through a written instrument signed by all Parties or, in the case of a waiver, by the Party waiving the respective right.  No waiver, termination or discharge of this Memorandum, or of any of its terms or provisions, shall be binding upon any of the contracting Parties unless confirmed in writing.  Any delay in exercising a right, power or privilege provided for in this Memorandum shall not be deemed as a waiver of such right, power or recourse; nor shall a total or partial waiver of any right, power, recourse or privilege preclude any other subsequent exercise of such right, recourse, power or privilege.

 

18.                               This Memorandum shall be binding upon and benefit the Parties and their respective permitted successors and assigns.  Except as provided herein, this Memorandum (and the rights and obligations provided for herein) may not be assigned by any Party without the prior written consent of the other Parties.

 

19.                               Any term or provision of this Memorandum that is declared void, invalid or unenforceable shall be ineffective only to the extent of such invalidity or unenforceability, without affecting the validity and enforceability of the remaining terms and provisions of this Memorandum, which shall remain in full force and effect as if such void, invalid or unenforceable term or provision had not been contained in this Memorandum.  The Parties shall negotiate in good faith to replace the invalidated provisions with others that reflect, to the extent possible, their initial intentions.

 

20.                               This Memorandum shall be governed by and interpreted in accordance with the laws of the Federative Republic of Brazil.

 

21.                               The Parties shall make an effort to resolve amicably and by consensus any controversy, dispute, question, doubt or disagreement arising from this Memorandum (“Conflict”).

 

21.1.                      If, after discussing for a period of 10 (ten) Business Days, the Parties fail to reach an amicable solution and consensus in relation to the Conflict, then such Conflict shall be settled by arbitration, to be conducted before and administered by the Câmara de Arbitragem da Câmara de Comércio Brasil-Canadá (the “Chamber”).

 

21.2.                      The arbitration shall be conducted in accordance with the Chamber’s procedural standards in effect at the time of the arbitration.

 

21.3.                      The arbitration shall be administered by an arbitral tribunal consisting of three arbitrators registered with the Ordem dos Advogados do Brasil (the “Arbitral Tribunal”).

 

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Schedule 13D

 

21.4.                      Each Party involved will appoint an arbitrator.  The third arbitrator, who will preside over the Arbitral Tribunal, will be selected by mutual agreement of the arbitrators appointed by the Parties involved.

 

21.5.                      Any omission, refusal, dispute, doubt and disagreement with respect to the appointment of the arbitrators by the Parties involved or to the choice of the third arbitrator shall be settled by the Chamber.

 

21.6.                      The procedures provided for in this provision shall also apply when replacing an arbitrator.

 

21.7.                      The arbitration shall take place in the City of Rio de Janeiro, in the State of Rio de Janeiro, and the Arbitral Tribunal may, with cause, decide to carry out certain specific actions in different locations.

 

21.8.                      The arbitration shall be conducted in Portuguese.

 

21.9.                      The arbitration shall follow the rules of law (de direito), applying the rules and principles of the legal system of the Federative Republic of Brazil.

 

21.10.               The arbitration shall have a term of 6 (six) months, which period may be extended for cause by the Arbitral Tribunal.

 

21.11.               The arbitration will be confidential.

 

21.12.               The Arbitral Tribunal shall allocate between the Parties, in accordance with criteria of succumbency (sucumbência), reasonability and proportionality, the payment and reimbursement of (i) any fees and other amounts due, paid or reimbursed to the Chamber, (ii) any fees and other amounts due, paid or reimbursed to the arbitrators, (iii) any fees and other amounts due, paid or reimbursed to the experts, translators, interpreters, stenographers and any other assistants as may have been appointed by the Arbitral Tribunal, (iv) the winning attorneys’ fees as determined by the Arbitral Tribunal and (v) any damages for litigation in bad faith.  The Arbitral Tribunal shall not condemn any of the Parties involved to pay or reimburse (i) contractual fees or any other amount due, paid or reimbursed by the opposing party to its lawyers, technical assistants, translators, interpreters and other auxiliaries and (ii) any other amount due, paid or reimbursed by the opposing party with respect to the arbitration, including for example expenses for photocopies, authentications (including by consular authorities) and travel expenses.

 

21.13.               Arbitral awards shall be final and binding, neither requiring judicial ratification nor admitting any appeal, except for requests for correction (pedidos de correção) and requests for clarification to the Arbitral Tribunal as provided for under art. 30 of Law nº 9.307/96 and any annulment action based on art. 32 of Law nº 9.307/96.

 

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Schedule 13D

 

21.14.               Before the Arbitral Tribunal is seated, any of the Parties involved may petition the Courts for preliminary injunctions and advance relief, although any such petition shall not affect the existence, validity and efficacy of this arbitration clause, nor represent a waiver of the obligation to submit the Conflict to arbitration.  After the Arbitral Tribunal is seated, any petitions for preliminary injunctions or advance relief shall be directed to the Arbitral Tribunal.

 

21.15.               For the purposes of (i) preliminary injunctions and advance relief before the Arbitral Tribunal is seated, (ii) enforcement of the decisions of the Arbitral Tribunal, including the final award and any partial award, (iii) any annulment action based on art. 32 of Law nº 9.307/96, and (iv) any Conflicts which, under Brazilian law cannot be settled through arbitration, the Forum of the Judicial District of Rio de Janeiro is elected as the sole jurisdiction, waiving all others, however special or privileged they may be.

 

IN WITNESS WHEREOF, the Parties cause 2 (two) originals of equal substance and form of this Memorandum to be signed before 2 (two) witnesses.

 

Lisbon, July 15, 2014.

 

OI S.A.

 

Name:		Name:
Position:		Position:

 

PORTUGAL TELECOM SGPS S.A.

 

Name:		Name:
Position:		Position:

 

 

Witnesses:

 

1.			2.
Name:			Name:
CPF:			CPF:

 

8