Article 1º - São Martinho S/A is a joint-stock, publicly-held company, which shall be ruled by these present Bylaws and by the applicable legal provisions and effect.
Article 2 - The Company’s headquarters and jurisdictions are located at Fazenda São Martinho, in the City of Pradópolis, State of São Paulo, CEP 14850-000, and it may establish offices and branches in the country and abroad.
Article 3 - The Company’s purposes are:
i) agroindustrial activity for the industrialization of sugarcane of own production and acquired from third parties, production and commercialization of sugar, alcohol and by-products, and co-generation of electrical energy;
ii) agriculture and cattle raising exploration;
iii) import and export of goods, products and raw material;
iv) stake in companies, upon resolution of the Board of Directors.
Article 4 - The Company’s duration is indeterminate.
Article 5 - The Company´s capital stock, subscribed and paid-up, is three hundred and sixty million reais (R$360,000,000) divided into one hundred and thirteen million (113,000,000) common, registered, book-entry shares with no par value.
Paragraph One - The shareholders shall bear the services costs related to the transfer of shares charged by the bookkeeping agent, within the limits eventually determined by the legislation in force.
Paragraph Two - Each common share gives its holder the right to one vote in the General Meeting’s resolutions.
Paragraph Three - The Company shall not issue preferred shares or participation certificates.
Paragraph Four - For reimbursement purposes, the value of the share may be determined based on the Company’s economic value, calculated through an appraisal conducted by a specialized company, nominated and chosen in compliance with the provisions in article 45 of Law #6,404/76.
Article 6 - The Company is authorized to increase its capital stock, independently from statutory amendment, up to the limit of one hundred and thirteen million (113,000,000) common shares, upon resolution by the Board of Directors, on whom it shall be incumbent to determine the issuance conditions, including the price and the term of payment.
Sole Paragraph - The Company may, within the limit of authorized capital, and upon resolution by the General Meeting, grant a call option in favor of: (a) its managers and employees, as well as managers and employees of direct or indirect subsidiaries, or (b) individuals who render services to the Company and its subsidiaries.
Article 7 - The Company may reduce or exclude the period for exercise of the preemptive right in the issuance of shares, debentures convertible into shares, or subscription bonuses whose placement is made upon sale on stock exchange, public subscription, or exchange for shares in an obligatory takeover bid, pursuant to the provisions in articles 257 to 263 of Law #6,404/76.
Article 8 - The shareholders’ General Meeting shall convene, ordinarily, within the four (4) months following the end of the fiscal year, and, extraordinarily, whenever necessary.
Article 9-The General Meetings shall be chaired by the Chairman of the Board of Directors, who, in order to compose the Table, shall invite a Secretary, who might be a shareholder or not.
Article 10 - In addition to the matters provided for by law, it shall be incumbent on the General Meeting to:
a) resolve on the Company’s delisting from the Novo Mercado and respective communication, in writing, to the São Paulo Stock Exchange - BM&F Bovespa S/A (“Novo Mercado”), thirty (30) days in advance;
b) choose, among the qualified institutions nominated in triple name list by the Board of Directors, the one that shall be responsible for preparing the appraisal report for determining the Economic value of the Company’s shares for the purpose of delisting from the Novo Mercado, or the cancellation of the registration as publicly-held company, pursuant to the provisions herein; and
c) to solve the cases not mentioned herein, pursuant to the provisions in Law #6,404/76.
Sole Paragraph - In the event of cancellation of the registration as publicly-held company, or delisting from the Novo Mercado, either so that the Company’s shares obtain registration to be traded out of the Novo Mercado, or due to corporate restructuring from which the resulting company is not admitted for trading in the Novo Mercado, the tender offer for shares held by the Company’s other shareholders to be carried out by the Controlling Shareholder or by the Company, depending on the case, shall have as minimum price to be offered the amount corresponding to the Economic value calculated, by the discounted cash flow methodology, in the appraisal report contemplated in item (b) herein, and pursuant to the provisions in the Novo Mercado Listing Rules.
Article 11 - The choice of institution or specialized company responsible for determining the Company’s Economic value, referred to in Article 10, item “b” herein, shall be made, not counting the blank votes, by the majority of votes of shareholders representing the Outstanding Shares who attend the respective General Meeting, which, if instated at first call, shall count on the attendance of the shareholders representing at least twenty percent (20%) of the total Outstanding Shares, or, if instated at second call, may count on the attendance of any number of shareholders representing the Outstanding Shares.
Sole Paragraph - For the purposes of provisions herein, the terms below shall have the following meaning:
“Outstanding Shares” means all the shares issued by the Company, except for the shares held by Controlling Shareholder as well as by persons bound thereby, by the Company’s managers, or those held in treasury;
“Controlling Shareholder” means the Shareholder or Group of Shareholders exercising the Company’s Power of Control;
“Group of Shareholders” means the group of two or more persons who are: a) bound by contracts or agreements of any nature, including shareholders’ agreements, oral or written, either directly or by means of Subsidiaries, Parent Companies or Companies under Common Control; or b) among whom there is a Control relationship, either directly or indirectly; or c) who are under Common Control; or d) who act representing a common interest. Examples of persons representing common interests include (i) a person holding, directly or indirectly, a corporate interest equal to or above fifteen percent (15%) of another person’s capital stock; and (ii) two persons who have a third investor in common who holds, directly or indirectly, a corporate interest equal to or above fifteen percent (15%) of the two persons’ capital stock. Any joint ventures, investment clubs or funds, foundations, associations, trusts, collective investment entities, securities portfolios, universality of rights, or any other types of organization or undertaking, incorporated in Brazil or abroad, shall be deemed as part of a same Group of Shareholders whenever two or more among such entities (ii.a) are run or managed by the same legal entity or by parties related to the same legal entity; or (ii.b) have in common the majority of their administrators;
“Power of Control” (as well as its related terms, “Parent Company”, “Controlled Company”, “under common Control” or “Control”) means the power actually employed to direct the corporate activities and guide the operation of the Company’s bodies, directly or indirectly, either in fact or in law. There is a relative presumption of control ownership in relation to the person or the Group of Shareholders holding shares that have ensured them an absolute majority of votes from the shareholders attending the last three General Meetings of the Company, even though they do not hold shares that ensure them an absolute majority of the voting capital; and
“Economic Value” means the value of the Company and its shares to be determined by a specialized company, by means of the use of a methodology acknowledged, or that may come to be defined or acknowledged, by CVM.
Article 12 - In the event of the Company’s delisting from the Novo Mercado, or the Company’s deregistering as publicly-held company, the costs incurred with the preparation of the appraisal report referred to in item (b) of Article 10 shall be fully supported by the offerer.
Article 13 - The Shareholder’s qualification shall be evidenced as provided for by law.
Article 14 - The Company may demand, within the term set forth at the call notice, the deposit of a share ownership statement, issued by the depositary financial institution.
Article 15-Except for the cases for which the law sets forth qualified “quorum”, and the provisions in article 11 herein, the Meeting’s resolutions shall be passed by absolute majority of votes, not counting the blank votes.
Article 16 - Minutes shall be drawn up from the Meeting’s work and resolutions, in the Company’s records, with the elements, nominations, requisites and signatures required by law.
Article 17 - The General Meeting shall be Annual or Extraordinary, according to the matter it discusses, and may be called cumulatively and held on the same place, date and time, and recorded in the same minutes.
Article 18 - The Company shall be managed by a Board of Directors and by a Board of Executive Officers.
Paragraph One - The Company’s managers are exempted from posting bond to guarantee their management.
Paragraph Two - The Board of Directors is a joint resolution body, and the Company’s representation is exclusive to the Board of Executive Officers.
Paragraph Three - The act practiced by any manager, attorney-in-fact, or employee of the Company involving the latter in obligations related to businesses and operations other than the ones in its corporate purpose is expressly forbidden and shall be null and void.
Paragraph Four - The investiture of the members of the Board of Directors and Board of Executive Officers shall be subject to: (a) previous signing of the Statement of Consent from Senior Managers, referred to in the Novo Mercado Listing Rules; (b) adhesion to the Manual for the Disclosure and Use of Information and Policy for Trading of Securities issued by the Company, upon signing the respective statement; (c) signing of the investiture statement in the company’s records, within up to thirty days as from their respective appointments.
Paragraph Five - The members of the Board of Directors and of the Board of Executive Officers shall remain in their posts up to their successors’ investitures.
Article 19 - The General Meeting shall set forth, annually, the global amount of compensation of the Company’s managers and of the members of the Fiscal Council, when it is instated. It shall be incumbent on the Board of Directors, in its first Meeting following the General Meeting that sets forth the managers’ compensation, to determine the criteria for the respective apportionment among the Council Members and the Executive Officers.
Board of Directors
Sub-section I - Breakdown
Article 20 - The Board of Directors shall be comprised of seven (7) members, among whom a Chairman and a Vice Chairman, all shareholders, elected or deposed at any time by the General Meeting; the unified term of office is two (2) years, and re-election is allowed.
Sole paragraph - Should there be a vacancy for the position of Board Member, a General Meeting shall be called immediately to elect the deputy.
Article 21 - The Board of Directors shall be comprised of at least twenty percent (20%) of Independent Members.
Paragraph One - Should the percentage defined herein result in a fractional number of board members, it shall be rounded off:(a) to the subsequent number if the fraction is equal to or higher than five tenths (0.5), or (b) to the previous number, if the fraction is smaller than five tenths (0.5).
Paragraph Two - The Board Member shall be deemed Independent for the purposes herein when:
a) they do not have any link with the Company, except for their interest in the capital stock;
b) they are not Controlling Shareholders, spouses or relatives up to the second degree of a controlling shareholder, or when they are not or have not been, during the last three (3) years linked to a company or entity connected to a controlling shareholder (individuals linked to research and/or educational institutions are exempt from such restriction);
c) they have not been, in the last three years, an employee or executive officer of the Company, of the controlling shareholder, or of a subsidiary of the Company;
d) they are not suppliers or buyers, directly or indirectly, of the Company’s services and/or products, to such an extent that implies loss of independence;
e) they are not employees or manager of a company or entity that is offering to or requesting from the Company services and/or products;
f) they are not spouses or relatives up to the second degree of one of the Company’s managers; and
g) they do not receive any compensation from the Company other than that of board member (cash dividends originating from interest in the capital stock are exempt from this restriction).
Paragraph Three - The members of the board elected by means of the faculty provided for in paragraphs 4 and 5 of article 141 of Law #6,404/76 shall also be deemed Independent Members.
Sub-section II - Duties
Article 22 - The Board of Directors has the primary duty of setting forth fundamental guidelines for the general policy of the Company and its subsidiaries, defining and supervising the duties that will be carried out by the Board of Executive Officers, and following up on their execution. Besides the duties provided for by law, it is incumbent on the Board exclusively in relation to the Company and its subsidiaries:
i) to determine the business’ general conduct;
ii) to resolve on the issuance of debentures and subscription bonuses;
iii) to resolve on the acquisition of its own shares;
iv) to elect and deposed the Executive Officers and determine their duties, complying with the provisions in the law and in the Bylaws concerning the matter;
v) to monitor the Executive Boards’ management, examine, at any time, the Company’s books and documents, request information on agreements executed or being executed, and any other legal acts or businesses;
vi) to call the General Meetings, whenever its deems convenient to do so, and in the cases provided for by law;
vii) to express its opinion about the management report and the Board of Executive Officers’ accounts;
viii) to establish criteria for the remunaration of the compensation of each manager, respecting the global amount set forth by the General Meeting, and set forth general criteria of compensation, benefit policies and profit sharing;
ix) to previously approve the execution, amendment or termination of agreements entered into with any of its shareholders and managers, or subsidiaries or affiliated companies;
x) to approve the empowerment of attorneys-in-fact;
xi) to approve the Board of Executive Officers’ proposals for the establishment of: (a) strategic plans of medium and long term; (b) budget planning, annual budget, and each and every investment; (c) tax planning; (d) administrative and personnel structure of the Company and subsidiaries; (e) distribution of interim dividends and/or payment of interest on own capital to the accrued profits account, accumulated profit reserves, or profit reserves existing in the last yearly or half-yearly balance sheet, in compliance with the legal and statutory provisions; (f) criteria adopted in the application of available funds; (g) contracting of financings with values higher than twenty million reais (R$20,000,000.00); (h) the Company’s and its subsidiaries’ expansion programs, including acquisitions, as well as following up on their execution.
xii) to authorize the granting of guarantees, secured guarantee or personal guarantee, commercial pledge, mortgages, sureties and guarantees to the benefit of the Company itself or subsidiaries and affiliated companies, in amount higher than twenty million reais (R$20,000,000.00);
xiii) to authorize, without depending on resolution by the General Meeting, the sale, transference, assignment or other way of disposal, on any account or form, including the conferral, to another company’s capital, of assets whose values do not exceed the amount equivalent to fifty million reais (R$50,000,000.00);
xiv) to choose the independent auditors or deposed;
xv) to resolve on the creation and extinction of subsidiaries and the Company’s interest in the capital of other companies, in the country or abroad, as well as the alteration of the headquarters, opening and closing of branches, offices, agencies, warehouses, representation agencies, and any other establishments in the country or abroad;
xvi) to authorize any changes in the accounting policies or policies of presentation of the Company’s reports, except when required by the accounting principles generally accepted in the jurisdictions where it operates;
xvii) to submit to the resolution of the General Meeting the proposal for amendment of the Bylaws;
xviii) to resolve on the issuance of shares of subscription bonuses up to the limit of authorized capital, determining the issuance price, and also defining whether the shareholders will be granted preemptive rights in the case provided for in Article 7 herein;
xix) to approve long-term agreements between the Company and its clients, suppliers, service providers and other entities with which it maintains commercial relations, these are agreements or their extensions with duration over sixty (60) months, and value higher than five million reais (R$5,000,000.00), except for agreements for exploration of sugarcane plantations (partnership, leasing and supply), and resulting from investments authorized by the Board of Directors;
xx) to define the triple name list of institutions internationally renowned, specialized, with proven experience and independence as to the Company’s decision-making power, its Managers and/or Controlling Shareholder, to be submitted to the General Meeting for choosing the institution responsible for preparing the report with the appraisal of the Company’s shares, in the event of cancellation of the registration as publicly-held company, delisting from the Novo Mercado, or the conducting of a tender offer, pursuant to the provisions herein;
xxi) set forth the vote to be given by the Company’s representative in the General Meetings and meetings of the companies in which it takes direct or indirect part, as partner of shareholder;
xxii) to previously approve the amendments to the Articles of Incorporation or Bylaws of the companies in which the Company takes part, also nominating and approving the choice of managers of the subsidiaries or affiliated companies to be elected with the Company’s vote;
xxiii) to grant the stock option or subscription, in compliance with the Granting Programs for Stock Option and Subscription approved in the General Meeting, to its managers and employees, as well as the managers and employees of direct or indirect subsidiaries, without preemptive rights to the shareholders at the time of the grant of exercise of options, respecting the balance of the limit of authorized capital on the date of grant of the said stock options or subscription.
Sole Paragraph - The amounts mentioned in this Article, in the Country’s currency, shall be restated annually as of November 24, 2006, by the General Market Price Index (IGP-M) of Fundação Getúlio Vargas or another equivalent index that may come to replace it.
Sub-section III - Functioning
Article 23 - The Board of Directors shall convene, ordinarily, each month, and, extraordinarily, whenever necessary.
Paragraph One - The Board of Directors’ meetings shall be called by the Chairman or any of its members, by means of written notice to the other members, indicating the agenda, at least five (5) days in advance; the call may be exempt in case all the Members attend the meeting.
Paragraph Two - The Board of Directors, in order to duly resolve on any matter, shall convene with at least five (5) members.
Paragraph Three - The Board of Directors’ resolutions shall be taken by majority of votes by the members attending the meeting. In the event of a tie in the voting, the matter shall be discussed in a new meeting for resolution with the participations of all the members.
Paragraph Four - The Board of Directors’ resolutions shall be recorded in minutes in the company’s records of the Board of Directors’ Meetings.
Paragraph Five - In the Board of Director´s meetings, the Members may be represented, in the Board of Directors’ meetings, by another Member to whom special powers have been granted. The Members may also take part in such meetings by means of conference call or video conference, and they shall be deemed as having attended the meeting and shall confirm their votes through a written statement to be directed to the Chairman by letter, fax or email immediately after the closing of the meeting. Once the statement is received, the Chairman shall be vested with full powers to sign the minutes of the meeting on behalf of the said Member.
Article 24 - It is incumbent to the Chairman of the Board of Directors: a) to call and chair the Shareholders’ General meetings; b) to call and chair the Board of Directors’ meetings; c) to inform the Board of Executive Officers on the decisions of the Board of Directors and see to its execution.
Article 25 - It is incumbent on the Vice Chairman of the Board of Directors to represent the Chairman in case of absence, impediment, or in activities delegated by the latter.
Board of Executive Officers
Sub-section I - Breakdown
Article 26 - The Board of Executive Officers shall be comprised of a minimum of two (2), and a maximum of seven (7) members, shareholders or not, residing in the Country, elected by the Board of Directors with a term of office of one (1) year, re-election allowed, and shall be composed of one Chief Executive Officer, one Vice Chief Executive Officer, one Chief Agroindustrial Officer, one Agroindustrial Officer, one Chief Financial and Investor Relations Officer, one Administrative Officer, and one Commercial and Logistics Officer, and these positions may be exercised cumulatively at the Board of Directors’ discretion.
Paragraph One - Among the members of the Board of Directors, a maximum of one third (1/3) may be elected to occupy positions in the Board of Executive Officers.
Paragraph Two - Should there be a vacancy for a position due to absence or definitive impediment, death, disability, or resignation of any Officer, the Board of Directors shall convene, within up to thirty (30) days, to elect a new officer or nominate a replacement, establishing, in either case, the term of office and the respective compensation.
Sub-section II - functioning
Article 27 - The Board of Executive Officers is the Company’s representative body, and it is incumbent on it to ensure, within their duties and powers, its regular functioning; it has powers to practice each and every acts related to social purposes, except for those which, by law or by the present Bylaws, are incumbent on another body or depend on previous approval.
Article 28 - The Board of Directors shall convene, ordinarily, each month, and, extraordinarily, whenever necessary.
Paragraph One - The Board of Executive Officers’ shall be called by the Chief Executive Officer, by means of written notice to the other Officers in office, at least three (3) days. The call may be exempt, if there is a calendar program for the whole semester or year.
Paragraph Two-The Board of Executive Officers shall function in a collective manner, resolving by absolute majority of votes, not withstanding the individual responsibility of its members. Should there be a tie, the matter shall be submitted to the Board of Directors.
Paragraph Three - The Board of Executive Officers’ meetings shall be recorded in minutes, in the Company’s records.
Sub-section III - Duties
Article 29 - It is fundamentally incumbent on each one of the Officers: a) to verify that the law and these Bylaws are complied with; b) to coordinate the progress of the Company’s activities, including the implementation of the guidelines and the compliance with the resolutions taken in General Meetings, in the Board of Directors’ meetings, and in its own meetings; c) to manage and supervise the corporate businesses; d) to issue and approve instructions and internal rules which it deems useful or necessary; e) to practice other acts that may come to be determined by the Board of Directors.
Paragraph One - The Company’s representation, in acts and operations of ordinary management of the social business, such as the execution of deeds of any kind, letters of exchange, checks, payment orders, agreements and, in general, any other documents or acts that imply in the Company’s responsibility or obligation or that releases it from obligations to third-parties, it shall be incumbent upon and be mandatorily practiced: a) by two Executive Officers, jointly, or; b) in specific cases, previously approved by the Board of Directors, through joint signature of an Executive Officer and an Attorney-in-fact, or by two (2) Attorneys-in-fact, empowered as provided for hereinafter.
Paragraph Two - The powers of attorney in fact on behalf of the Company shall be granted by two (2) Executive Officers, jointly, and the granted powers shall be specified as well as the validity period, limited to the respective fiscal year.
Paragraph Three - The powers of attorney at law on behalf of the Company shall be granted by two (2) Executive Officers, jointly, or jointly by one Director and an Attorney in fact, with no determined validity period.Substitution is allowed.
Paragraph Four - The representation of the Company in court or before governmental entities in general or federal, state or city authorities, autarchies, mixed capital companies, labor unions, the Brazilian Social Security Institute (INSS), Unemployment Compensation Fund (FGTS), and in documents related to employment relationships, as well as when receiving judicial or extrajudicial summons or notices and personal deposition, shall be incumbent upon any Executive Officer, solely, who may execute any relevant acts, or upon an Attorney-in-fact, whose powers are specified in the power of attorney, as provided for hereinafter.
Paragraph Five - The powers of attorney on behalf of the Company for the practice of the acts referred to in the previous paragraph shall be granted by two Executive Officers, jointly, or jointly by one Director and an Attorney-in-fact. The powers granted and the period of validity shall be specified in the respective instruments, and substitution is not allowed.
Article 30 - It is incumbent upon the Chief Executive Officer, separately: a) to preside the Board of Executive Officers’ meetings, defining the business guidelines, in compliance with the policies issued by the Board of Directors; b) to exercise the general supervision of the Board of Executive Officers and its departments; c) to account for the follow up of the operating results and for course corrections, if necessary; d) to keep the members of the Board of Directors dully informed on the development of the Company’s activities; e) to adjourn resolutions of the Board of Executive Officers, until pronouncement by the Board of Directors; f) to grant temporary licenses to members of the Board of Executive Officers, appointing a deputy to exercise the functions of the substituted during his/her absence; g) to approve the definitions of and amendments to the corporate structure; h) to guide the preparation of the Company’s budgets regarding its internal and external limits and conditions; i) to guide the Boards’ sector operation plans of the ; j) to represent the Board of Executive Officers in the relationships with the other corporate bodies; k) to coordinate the other directors’ activities; l) to represent the Company preferentially in General Meetings and Meetings of the Companies in which it participates as partner or shareholder, complying with the determinations of the Board of Directors, pursuant to Article 22, items “xxi” and “xxii”.
Article 31 - It is incumbent upon the Vice Chief Executive Officer: a) to assist the Chief Executive Officer in exercising his or her duties, including to represent the Company before governmental agencies, class associations and employers’ union; b) to substitute the Chief Executive Officer during his/her absences or in the event of temporary impediment.
Article 32 - It is incumbent upon the Directors: i) Agro industrial Executive Officer: a) to coordinate all productive activities, including agricultural and industrial ones, in compliance with the guidelines established by the Chief Executive Officer; b) to account, in any scope, especially, in the civil and environmental areas, for acts practiced on behalf of the Company and that are directly related to his/her authority ; ii) Agro industrial Officer:a) to guarantee the execution of activities related to the agricultural and industrial areas, in compliance with the guidelines established by the Agro industrial Executive Officer; b) to account, in any scope, especially, in the civil and environmental areas, for acts practiced on behalf of the Company and that are directly related to his/her authority and local operation; iii) Chief Financial Officer and Investor Relations Officer: a) to perform activities related to the financial and economic planning areas, in compliance with the guidelines of the Chief Executive Officer; b) to account, in any scope, for acts practiced on behalf of the Company and that are directly related to his/her authority; c) to provide information to investors, to the São Paulo Stock Exchange - BM&F BOVESPA S/A and to the other bodies related to the activities performed in the capital market; d) to maintain the Company’s registry up to date pursuant to the applicable regulation of the Brazilian Securities and Exchange Commission - CVM; iv) Administrative Officer: a) to perform administrative activities related to the supply and logistics, controllership, human resources, information technology and legal areas and give support to the industrial, agricultural and financial, and investor relations areas, in compliance with the guidelines established by Chief Executive Officer; b) to organize, prepare and control the Company’s economic budget; c) to account, in any scope, especially, in the civil and environmental areas, for acts practiced on behalf of the Company and that are directly related to his/her authority; v) Commercial and Logistics Officer: a) define the policies for the domestic and international markets, for customer service and for sales systems in accordance with the guidelines communicated by the Chief Executive Officer; b) formulate and implement a marketing plan to sell the goods produced by the Company; c) conduct market analyses to assess the competitiveness of products; d) prospect and develop new business; e) participate in establishing guidelines for the distribution logistics of the Companys products.
Article 33 - The Company shall have a non-permanent Fiscal Council, composed of three (3) effective members and an equal number of alternates, to be instated by the General Meeting in any of the cases provided for in the Brazilian Corporation Law.
Paragraph One - The Fiscal Council, when instated, shall have the functions and powers conferred by law, and its compensation shall be established by the General Meeting that elects it.
Paragraph Two - The period of operation of the Fiscal Council shall end at the first Ordinary General Meeting after its instatement, and its members may be re-elected.
Paragraph Three - The investiture of the members of the Fiscal Council shall be subject to previous signing of the Statement of Consent from Fiscal Council Members referred to in the Novo Mercado Listing Rules.
Paragraph Four - In their absences, impediments or in case of vacancy, the members of the Fiscal Council may be substituted by their respective alternates.
Article 34 - The Fiscal Council shall convene whenever necessary, upon call from any of its members, and its resolutions shall be drawn up in minutes.
Article 35 - The fiscal year shall end on March 31 of each calendar year, when the Company shall carry out the general balance sheet and the financial statements of the fiscal year and of the net profits eventually verified, the amortizations and regular depreciations, deducting, mandatorily: a) five percent (5%) for the Legal Reserve Fund, up to the limit established by law; b) twenty-five percent (25%) as mandatory dividends to the shareholders; c) the remaining balance’s allocation shall be determined by the General Meeting, after having heard the Board of Directors and in compliance with the applicable legal provisions.
Sole Paragraph - Upon proposal of the Board of Executive Officers and approval by the Board of Directors, interest on own capital shall be paid or credited to the shareholders, pursuant to the specific legislation, and they shall be attributed, net of withholding income tax, to interim dividends or to the annual dividend.
Article 36 - The Company, by resolution of the Board of Directors, shall carry out half-yearly, quarterly or monthly balance sheets, as well as declare dividends to the account of profits verified in these balance sheets. The Company shall, also, by resolution of the Board of Directors, declare interim dividends to the accrued profit account or to the account of profit reserve existing in the last yearly or half-yearly balance sheet.
Sole Paragraph - Dividends distributed pursuant to this Article shall be credited to the mandatory dividend.
Article 37 - The Sale of the Company’s Control (pursuant to the provisions hereinafter), direct or indirect, either by means of a single operation, or by successive operations, shall be contracted under the suspensive or resolutory condition that the buyer o control undertake to carry out, in compliance with conditions and terms provided for by the law in force and in the Novo Mercado Listing Rules, a tender offer of the other shareholders’ shares, so as to guarantee that they are treated equally to the Selling Controlling Shareholder.
Article 38 - The tender offer referred to in the previous Article shall also be ratified: a) whenever there is onerous assignment of subscription rights of shares and of other securities or rights related to securities convertible into shares that may result in the Sale of the Company’s Control; and b) in the event of sale of control of a company holding the Company’s Power of Control . In that case, the Selling Controlling Shareholder shall be obliged to declare to the São Paulo Stock Exchange - BOVESPA the amount attributed to the Company in that sale and attach the documentation evidencing such amount.
Sole Paragraph - For the purposes of the provisions herein, the terms below shall have the following meaning:
“Sale of Control” the remunerated transference to third-party of the Controlling Shares;
“Controlling Shares” the group of shares that ensures, direct or indirectly, to its holder(s) the individual and/or shared exercise of the Company’s Power of Control; and
“Selling Controlling Shareholder” the Controlling Shareholder, when selling the Company’s control.
Article 39 - That who already holds shares of the Company and comes to acquire the Power of Control, due to private instrument for the purchase of shares entered into with the Selling Controlling Shareholder, involving any amount of shares, shall be obliged to:
a) perform the tender offer referred to in Article 37;
b) indemnify the shareholders of whom he/she has bought shares on the stock market during the six (6) months prior to the Sale of Control date, to whom he/she shall pay the difference between the price paid by the Selling Controlling Shareholder and the price paid on stock exchanges for Company shares in the period, dully restated; and
c) take the necessary measures to recover the minimum percentage of twenty-five percent (25%) of the total shares of the Company within the six (6) months after the acquisition of the Power of Control.
Article 40 - Any buyer, who acquires or becomes holder of shares issued by the Company, in an amount equal or above ten percent (10%) of the total of shares issued by the Company, excluding for the purposes of this calculation the shares held in treasury, shall, within thirty (30) days as from the date of the acquisition or from the event which resulted in the ownership of the shares at this amount, accomplish or request the registration of a tender offer for the acquisition of the total amount of shares issued by the Company, in compliance with the provisions in CVM’s applicable regulation, with BM&F BOVESPA S/A regulations, and with the terms of this Chapter.
Paragraph One - The price to be offered for the shares issued by the Company purpose of the Tender Offer (“Tender Offer Price”) shall be the just price, that is, at least equal to the evaluation price of the Company, calculated based on the criteria, adopted in an isolated or combined manner, of net book value, of shareholders’ equity appraised at market price, of discounted cash flow, of multiples comparison, of shares’ quotation in the securities market, or based on other criteria accepted by CVM, ensuring the review of the offer price pursuant to this Article.
Paragraph Two - The tender offer for the acquisition of shares shall mandatorily comply with the following principles and procedures, in addition to, when applicable, other principles and procedures expressly provided for in Article 4 of CVM Instruction #361 of 03/05/02:
a) to be equally directed to all shareholders of the Company;
b) to be carried out in an auction to be held at BM&F BOVESPA S/A;
c) to be carried out so as to guarantee equal treatment to the addressees and provide them with the adequate information regarding the Company and the offerer, and supply them with the necessary elements to make a pondered and independent decision concerning the acceptance of the tender offer;
d) to be unchangeable and irrevocable after the publishing of the offer notice, pursuant to CVM Instruction #361/02, except for the provisions in Paragraph Four below;
e) to be issued at the price determined according to the provisions herein to this Article and paid in cash, in local currency, against the acquisition in the tender offer issued by the Company; and
f) to be supported by the Company’s appraisal report, prepared by an internationally renowned, independent institution, with proven experience in evaluating the economic and financial situation of publicly-held companies, elaborated pursuant to the provisions in Article 8 of CVM Instruction #361/02.
Paragraph Three - Shareholders owning at least 10% of the shares issued by the Company may request the managers of the Company to call a special meeting of the Company’s shareholders, to resolve on the conduction of a new appraisal of the Company aiming to revise the Price of the Tender Offer of Shares, whose report shall be prepared following the same pattern as the appraisal report referred to in item (f) of the previous paragraph, pursuant to the procedures set forth in Article 4-A of Law #4,404/76, and in compliance with the provisions in CVM’s applicable regulation, with the BM&F BOVESPA S/A rules, and with the terms of this Chapter.
Paragraph Four - Should the aforementioned special meeting rule in favor of the conduction of a new appraisal, and the appraisal report should determine a price above the initial price of the tender offer, the buyer may waive the purchase, undertaking to, in this case, comply with the procedures set forth in Articles 23 and 24 of CVM Instruction #361/02, when applicable, and to sell the excess interest within three months counting from the date of the said special meeting.
Paragraph Five - Should the CVM regulation applicable to the tender offer set forth in this Article determine the adoption of a specific calculation criterion for establishing the acquisition price of each share issued by the Company, resulting in an acquisition price above the one set forth hereunder, the acquisition price calculated pursuant to the CVM regulation shall prevail in the execution of the tender offer set forth in this Article.
Paragraph Six - The tender offer mentioned in the caput of this article shall not exclude the possibility of another shareholder of the Company or, should it be the case, the Company itself, elaborating a concurrent public offering, pursuant to the applicable regulation.
Paragraph Seven - The buyer shall be obliged to respond to eventual requests or to the CVM’s demands regarding the tender offer, within the terms set forth in the applicable regulation.
Paragraph Eight - Should the buyer not fulfill the obligations set forth in this Article, including with regards to fulfilling the terms to: a) accomplish or request the registration of the public offering; or b) comply with CVM’s eventual requests or demands ; the Company’s Board of Directors shall call an Extraordinary General Meeting, in which the Buyer cannot vote, to resolve on the suspension of the exercise of the Buyer’s rights, as set forth in Article 120 of Law #6,404/76, without prejudice to the Buyer’s responsibility regarding damages caused to the other shareholders due to the noncompliance with the obligations set forth in this Article.
Paragraph Nine - Any Buyer who acquires or becomes holder of other rights of partner, including through enjoyment, leasing, or any other form of ownership transference, property, or of rights over the shares issued by the Company, in an amount equal or above 10% of the total shares issued by the Company, shall be equally obliged to, within sixty (60) days as from the date of said acquisition or from the event that resulted in the holding of such rights, accomplish or request the register, as the case may be, of the tender offer, pursuant to the provisions set forth in this Article.
Paragraph Ten - The obligations set forth in Article 254-A of Law #6,404/76, and in Articles 37 and 38 herein, do not exempt the buyer from fulfilling the obligations set forth in this Article.
Paragraph Eleven - The provisions in this Article do not apply in case a person becomes holder of shares issued by the Company in an amount above 10% of the total shares issued by it, due to: a) legal succession; b) merger of another company into the Company; c) merger of shares from another company by the Company; or d) subscription of Company shares, issued in a single primary offer, which has been approved at General Meeting, called by the Board of Directors, and whose proposal of capital increase has established that the price of the shares issuance price be based on the economic value obtained through an appraisal report of the Company held by specialized institution.
Paragraph Twelve - For the purposes of calculating the percentage of 10% of the total shares issued by the Company described in the caput of this Article, the involuntary additions to share ownership resulting from the cancellation of treasury shares, redemption of shares or reduction in the capital stock of the Company by means of cancellation of shares shall not be considered.
Paragraph Thirteen - The provisions in this Article do not apply to shareholders who already own 10% or more of the total shares issued by the Company and its successors, including, and especially, to controlling shareholders of the Company, as well as their partners as of the date of the approval of these Bylaws, who may come to succeed them in the direct interest in the Company by means of corporate reorganization, thus applying only to investors who have acquired shares and become shareholders of the Company after it obtains its registration as a publicly-held company at CVM and starts trading its shares on BM&F BOVESPA S/A.
Article 41 - Notwithstanding Article 40 herein, the provisions set forth in the Novo Mercado Listing Rules shall prevail in the events of prejudice to the rights of the addressees of the offers mentioned in Article 10 and Chapter VII.
Article 42 - The Company shall not record: a) any transference of shares to the buyer of the Power of Control, or to that/those who may come to hold the Power of Control while the latter do(es) not sign the Statement of Consent from Controlling Shareholders; or b) any Shareholder Agreement that provides for the exercise of the Power of Control without its subscribers having signed the Statement of Consent from Controlling Shareholders.
Sole Paragraph - For the purposes of the provisions herein, the expression “Statement of Consent from Controlling Shareholders” means the instrument through which the new Controlling Shareholders or the shareholder(s) who may enter the controlling group of the Company personally undertake to submit to and act in compliance with the Novo Mercado Membership Agreement, with the Novo Mercado Listing Rules, with the Commitment Clause and with the Arbitration Rules, as per model set forth in the Novo Mercado Listing Rules.
Article 43 - The Company shall be liquidated in the cases provided for by law, in which case the General Meeting shall be the qualified body to establish the method of liquidation, elect the liquidator and, if instated, the members of the Audit Committee who shall work during the liquidation period, determining their respective compensation.
Article 44 - The Company and its shareholders, managers and members of the Fiscal Council undertake to resolve, through arbitration, any and all dispute or controversy that may arise among them, related to or deriving from, particularly, the application, validity, effectiveness, construal, infringement and their effects, of the provisions in Law #6,404/76, in these Bylaws, in the rules issued by the Brazilian Monetary Council, by the Brazilian Central Bank and by the Brazilian Securities and Exchange Commission, as well as in the other rules applicable to the operation of the capital market in general, in addition to those set forth in the Novo Mercado Listing Rules, in the Novo Mercado Membership Agreement and in the Market Arbitration Panel Rules.
Article 45 - The cases omitted herein shall be ruled by the provisions in the law in force that are applicable to the matter.
Article 46 - The Company shall comply with the Shareholders’ Agreement recorded pursuant to Article 118 of Law #6,404/76, and the Management shall abstain from registering the transference of shares contrary to the respective terms, and the Chairman of the General Meetings and of the Board of Directors’ meetings shall abstain from counting the votes cast in violation of said agreements.
Article 47 - Articles 1; 7; 10, items “a” and “b” and sole paragraph; 11; 12; 15; 18, paragraph 4; 22, item (xx); 33, paragraph 3; 37; 38; 39; 40; 41; 42 and 44 herein shall only be effective as from the date on which the Company publishes the Notice of Commencement of Primary and Secondary Share Distribution, related to the request of first public distribution of shares issued by the Company registered at the Brazilian Securities and Exchange Commission under the #RJ/2006-9300.