TIMB TIM SA

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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FORM 6-K

 

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the

Securities Exchange Act of 1934

 

For the month of August, 2020

Commission File Number 001-14491

 

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TIM PARTICIPAÇÕES S.A.

(Exact name of registrant as specified in its charter)

 

TIM PARTICIPAÇÕES S.A.

(Translation of Registrant's name into English)

 

Avenida João Cabral de Melo Neto, nº 850, Torre Norte, 12º andar – Sala 1212,
Barra da Tijuca - Rio de Janeiro, RJ, Brazil

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. 

Form 20-F ___X___ Form 40-F _______

 

 Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.  

Yes _______ No ___X____ 

 

TIM PARTICIPAÇÕES S.A.

Publicly-Held Company

CNPJ/ME 02.558.115/0001-21

NIRE 33.300.276.963

 

 

MINUTES OF THE EXTRAORDINARY SHAREHOLDERS’ MEETING

HELD ON AUGUST 31^ST, 2020

 

DATE, TIME AND PLACE: August 31^st, 2020, at 2.36 p.m., at TIM Participações S.A. (“Company”), located at Avenida João Cabral de Mello Neto, No. 850, South Tower, Ground Floor - Auditorium, Barra da Tijuca, in the city and State of Rio de Janeiro.

 

PRESENCE: Shareholders representing more than two thirds (2/3) of the total capital stock, including holders of the American Depositary Receipts, pursuant to (1) the signatures on the Shareholders’ Attendance Book; and (2) by the valid distance voting ballots received on the terms of the Comissão de Valores Mobiliários (“CVM”) rules. Also attended the meeting, either in person or by means of videoconference, Messrs. Pietro Labriola, Diretor Presidente (Chief Executive Officer); Adrian Calaza, Diretor Financeiro e Diretor de Relações com Investidores (Chief Financial Officer and Investor Relations Officer); Bruno Mutzenbecher Gentil, Business Support Officer; Mario Girasole, Regulatory and Institutional Affairs Officer; Maria Antonietta Russo, Director of Human Resources & Organization area; Nicandro Durante, Chairman of the Board of Directors and of the Compensation Committee; Jaques Horn, Diretor Jurídico (Legal Officer); Walmir Urbano Kesseli, Chairman of the Fiscal Council; Gesner José de Oliveira Filho, member of the Board of Directors and Coordinator of the Statutory Audit Committee; and Herculano Aníbal Alves, member of the Board of Directors and Chairman of the Control and Risks Committee. It is also registered the attendance, by videoconference, of Mr. Fernando de Magalhães, representative of the Company’s independent auditors, Ernst & Young Auditores Independentes S/S (“EY”), and Messrs. Luiz Paulo and Rodrigo Nigri, representatives of Apsis Consultoria e Avaliações Ltda. (“Apsis Avaliações”) and of Apsis Consultoria Empresarial Ltda. (“Apsis Consultoria”), to provide clarifications on issues that may be raised by shareholders.

 

BOARD: Chairman – Mr. Robson Goulart Barreto; Secretary – Mr. Jaques Horn.

 

PUBLICATIONS AND SUMMONS: (1) The information and documents provided for in CVM Instruction No. 481 of December 17^th, 2009, regarding the subjects to be resolved, as well as the other information and relevant documents to the exercise of voting rights by the shareholders were made available to the shareholders at the Company’s headquarters, at the website of the Investor Relations area of the Company (https://ri.tim.com.br/) and the website of CVM (www.cvm.gov.br). The Call Notice was published on July 30^th and 31^st and August 3^rd, 2020, on pages 10, 16 and 11/12 of the Official Gazette of the State of Rio de Janeiro, respectively; and on July 30^th and 31^st and August 3^rd, 2020, on pages C5, A10 e B3 of the Valor Econômico gazette, respectively.

 

Agenda: To examine, discuss and resolve on: (1) the approval of the “Protocol and Justification of the Merger of TIM Participações S.A. into TIM S.A.”, executed on July 29^th, 2020 by the management of the Company and of TIM S.A. (respectively, “TSA” and “Protocol”), which establishes the terms and conditions of the proposal of the merger of the Company into TSA (“Merger”); (2) the ratification of the appointment and hiring of Apsis Consultoria e Avaliações Ltda. and of Apsis Consultoria Empresarial Ltda., specialized companies responsible for preparing, respectively, the appraisal report of the Company’s equity at book value and the appraisal reports of the shareholders’ equity of the Company and TSA at market price, for the purposes of the Merger (respectively, “Appraisal Report at Book Value”, “Appraisal Reports at Market Price” and, together, “Appraisal Reports”); (3) the approval of the Appraisal Reports; (4) the approval of the Merger, under the terms of the Protocol and subject to compliance with the suspensive condition established therein; (5) the authorization for the performance, by the officers and attorneys-in-fact of the Company, of all necessary measures for the consummation of the Merger, under the terms of the Protocol; and (6) the proposal to amend the Company's Long-Term Incentive Plans, so that TSA will appear exclusively as the company responsible for the obligations arising thereon.

 

RESOLUTIONS: First, the consolidated voting map of the votes, received by the distance voting ballots, was read and distributed to the attendees and was also available for consultation, pursuant to the Section 21-W, paragraph 4 of CVM Instruction No. 481 of December 17^th, 2009. Then, the Chairman proposed: (1) the dismissal of the reading of the other documents related to the Agenda to be discussed on this Extraordinary Shareholders’ Meeting, according to the Section 134 of the Law

No. 6,404/76 (“Brazilian Corporate Law”), taking into account that the shareholders are fully aware of the contents thereof; (2) the recording of these minutes as a summary and its publication without the signatures of all shareholders, in accordance with Section 130, paragraphs 1 and 2, of Brazilian Corporate Law, respectively; and (3) the voting statements, abstentions, protests and dissidences, eventually casted, were received, numbered and certified by the Board, and be filed at the Company’s headquarters, pursuant to Section 130, paragraph 1, of Brazilian Corporate Law. Without any opposition, the attended shareholders agreed with the Chairman’s forwarding proposals. Then, after analysis and discussion of the items in the Agenda, the shareholders resolved:

 

(1) To approve, by the majority of the votes casted | unanimously, as per the consolidated voting map attached hereto, the Protocol and its terms and conditions, which becomes part of these minutes as Annex I.

 

(2) To ratify, by the majority of the votes casted | unanimously, as per the consolidated voting map attached hereto, the appointment and hiring of Apsis Avaliações and of Apsis Consultoria, specialized companies responsible for preparing, respectively, the Appraisal Report at Book Value, for the purposes of Section 227 and pursuant to Section 8^th of the Brazilian Corporate Law, and the Appraisal Reports at Market Price, for the purposes of Section 264 of the Brazilian Corporate Law;

 

(3) To approve, by the majority of the votes casted | unanimously, as per the consolidated voting map attached hereto, the Appraisal Reports, in compliance with the provisions of Sections 224, 226 and 264 of the Brazilian Corporate Law, and which are part of the Protocol.

 

(4) To approve, by the majority of the votes casted | unanimously, as per the consolidated voting map attached hereto, the Merger, subject to the suspensive condition and in the exact terms provided in the Protocol, stating that, as provided for in the Protocol:

 

(i)     the shareholders of the Company will be entitled to receive 2,420,447,019 (two billion, four hundred and twenty million, four hundred and forty-seven thousand, and nineteen) new common shares, all nominative, book-entry and with no par value, issued by TSA, applying, as substitution ratio, the attribution of one (1) common share issued by

TSA for each one (1) common share issued by the Company, held by each shareholder (excluding shares in treasury), being these shares paid up through a version of the Company’s net assets to TSA’s capital stock;

 

(ii)    Pursuant to Section 137 of the Brazilian Corporate Law, withdrawal rights may be exercised by the Company’s shareholders who have not approved the Merger, either through dissent, abstention or by not attending the Company's Extraordinary Shareholders’ Meeting, considering that the shares issued by the Company do not qualify for the exception provided for in item II of the above mentioned legal provision, and being certain that the Company's Quarterly Information Form (ITR) used as the basis for preparing the Appraisal Reports will be considered for purposes of determining the reimbursement value of the shares of dissenting shareholders. Other information regarding the exercise of the withdrawal rights will be disclosed by the Company in the form of a Material Fact;

 

(iii)  the Merger will imply the need for TSA to adhere to the special corporate governance segment of B3 S.A. - Brasil, Bolsa, Balcão, called Novo Mercado, pursuant to Section 46 of its regulation; and

 

(iv)  once the legal provisions of the Merger are completed and the satisfaction of the suspensive condition is verified, the Company will be extinguished in its own right and TSA will succeed the Company in all its rights and obligations, becoming its legal successor, for all purposes, without any solution of continuity.

 

(5) To authorize, as a result of the resolutions approved above, by the majority of the votes casted | unanimously, as per the consolidated voting map attached hereto, the performance, by the officers and attorneys-in-fact of the Company, of all necessary measures for the consummation of the Merger, under the terms of the Protocol.

 

(6) To approve, by the majority of the votes casted | unanimously, as per the consolidated voting map attached hereto, subject to the suspensive condition provided for in the Protocol, the Company’s management proposal of amendment of the Company's Long-Term Incentive Plans,

approved at the Company’s Shareholders’ Meetings held on April 10^th, 2014 and April 19^th, 2018, as a result of the Merger approved above, so that TSA will appear exclusively as the company responsible for the obligations arising thereon, as indicated in Annexes II and III of these minutes.

 

CLARIFICATIONS: The Board received and registered the votes and the abstentions casted by the shareholders that attended this Extraordinary Shareholders’ Meeting, which were properly presented and computed in the resolutions above, as per the consolidated voting map attached hereto. Finally, it is registered that the Company adopted the necessary care recommended by the World Health Organization related to COVID-19 for the holding of this Extraordinary Shareholders’ Meeting.

 

VOTING MAP: Pursuant to Section 30, paragraph 4, of the CVM Instruction No. 480, the consolidated voting map attached hereto, which is part of these minutes, indicates the number of votes in favor, against and the abstentions for each resolution of the Agenda, as well as the respective percentage.

 

CLOSING: With nothing further to discuss, the Chairman of the Board suspended the meeting for the necessary time to finalize these minutes. As the session was reopened, the minutes were read and approved by all the attended shareholders and then signed by the Chairman, by the Secretary of the Board and by the attended shareholders who willing to sign them.

 

I hereby certify that these minutes are the faithful copy of the original version duly recorded in the respective book.

 

Rio de Janeiro (RJ), August 31^st, 2020.

 

JAQUES HORN

Secretary of the Board

PROTOCOL AND JUSTIFICATION OF MERGER OF

TIM PARTICIPAÇÕES S.A. INTO TIM S.A.

 

This Protocol and Justification of Merger (“Protocol”) is entered into by and between the administrators of the parties below, pursuant to the applicable provisions of Law No. 6,404 of December 15, 1976, as amended (“Brazilian Corporation Law”), and in the best form of law:

 

I.       TIM S.A., a publicly-traded company, enrolled in the Brazilian Taxpayers’ Registry of Legal Entities (“CNPJ/ME”) under No. 02.421.421/0001-11, with its headquarters at Avenida João Cabral de Mello Neto, No. 850, Block 001, room 1212, Barra da Tijuca, CEP 22775-057, in the City of Rio de Janeiro, State of Rio de Janeiro, with its organizational documents registered with the Commercial Registry of the State of Rio de Janeiro (“JUCERJA”), under NIRE No. 33.300.324.6, herein represented pursuant to its Bylaws, by Mr. Adrian Calaza, Argentinean citizen, married, administrator, bearer of the Identity Card for Foreigners (“RNE”) No. V406011-M, in force until October 9, 2021, duly enrolled with the Brazilian Individual Taxpayers’ Register (“CPF/ME”) under No. 059.618.647-90, domiciled at Avenida João Cabral de Mello Neto, No. 850, Torre Sul, 13º floor, Barra da Tijuca, in the City of Rio de Janeiro, State of Rio de Janeiro (hereinafter simply referred to as “TSA” or “Surviving Company”); and

 

II.       TIM PARTICIPAÇÕES S.A., a publicly-traded company, enrolled in the CNPJ/ME under No. 02.558.115/0001-21, with its headquarters at Avenida João Cabral de Mello Neto, No. 850, Torre Norte, 12^th floor, room 1212, Barra da Tijuca, CEP 22775-057, in the City of Rio de Janeiro, State of Rio de Janeiro, with its organizational documents registered with the JUCERJA, under NIRE No. 33.300.276.963, herein represented pursuant to its Bylaws, by Mr. Jaques Horn, Brazilian citizen, lawyer, enrolled in the Brazilian Bar Association under No. 70.654 and CPF/ME under No. 846.062.237-15, domiciled at Avenida João Cabral de Mello Neto, No. 850, Torre Sul, 13^th floor, Barra da Tijuca, in the City of Rio de Janeiro, State of Rio de Janeiro (hereinafter simply referred as “TIM Participações” or “Merged Company” and, jointly with the Surviving Company, the “Companies” or “Parties”),

 

WHEREAS:

 

(i)

TIM Participações is a publicly company listed on the Novo Mercado Special Corporate Governance Segment, and is a holding company of a telecommunications group that offers mobile voice and data services, broadband internet access, value added services and related telecommunications products and services in Brazil (“Grupo TIM”);

 

(ii)

TSA is a public wholly-owned subsidiary of TIM Participações, and the operational company of Grupo TIM;

 

(iii)

as further described in this Protocol, the administrators of TIM Participações and TSA consider that the merger of TIM Participações into TSA (the “Merger”) has the potential to reduce operational costs and other expenses, simplify corporate, administrative and accounting procedures and generate tax efficiency, adding value to the Companies and their stakeholders;

 

(iv)

the Merger is one of the steps of an ongoing process of corporate restructuring that has been implemented by Grupo TIM since the privatization of the telecommunications sector in Brazil, and is aligned with the expectations for the industry development; and

 

(v)

If approved by the shareholders of the Companies in the Extraordinary General Shareholders’ Meetings held for such purpose, the Merger shall have its effectiveness subject to the fulfillment of the Condition Suspensive pursuant to this Protocol.

 

NOW, THEREFORE, THE PARTIES HAVE AGREED TO, pursuant to articles 223 to 227 and 264 of the Brazilian Corporation Law and, in compliance with the Brazilian Securities and Exchange Commission (“CVM”) Ruling No. 565 and No. 481 (respectively, “ICVM 565” and “ICVM 481”), and other applicable provisions, enter into the terms and conditions that shall govern the merger of the Merged Company into the Surviving one.

 

I.

SPECIFICATIONS AND SHARE CAPITAL OF THE INVOLVED COMPANIES

 

1.1.          Surviving Company’s Information. The Surviving Company is a public company, with a fully subscribed and paid-in share capital of BRL 13,476,171,764.87 (thirteen billion, four hundred and seventy-six million, one hundred and seventy-one thousand, seven hundred and sixty-four Brazilian Reais and eighty-seven cents), divided into 422,967,896 (four hundred and twenty-two million, nine hundred and sixty-seven thousand, eight hundred and ninety-six) common shares, all nominative, book-entry and with no par value, distributed as following:

 

Shareholder	Share	%
TIM Participações S.A.	422,967,896	100

 

 

Total

422,967,896

100%

 

1.2.          Merged Company’s Information. The Merged Company is a publicly-traded company, with its shares listed on the Novo Mercado Special Corporate Governance Segment (“Novo Mercado”) of B3 S.A. – Brasil, Bolsa, Balcão (“B3”) under the stock code TIMP3, and with its American Depositary Receipts (“ADRs”) traded on the New York Stock Exchange (“NYSE”) under the stock code TSU, with a fully subscribed and paid-in share capital of BRL 11,557,426,974.26 (eleven billion, five hundred and fifty seven million, four hundred and twenty six thousand, nine hundred and seventy four Brazilian reais and twenty six Brazilian cents)¹², distributed in 2,421,032,479 (two billion, four hundred and twenty one million, thirty two thousand, four hundred and seventy nine) common shares, all nominative, book-entry and with no par value, distributed as following:

 

Shareholder	Share	%
TIM Brasil Serviços e Participações S.A.	1,611,969,946	66,58
Minority shareholders	808,437,129	33,39
Treasury shares	585.460	0,02
Total	2,421,032,479	100%

 

II.

JUSTIFICATION AND RATIONALE OF THE MERGER

 

2.1.          Merger’s Rationale. The purpose of this Protocol is the Merger of TIM Participações into TSA, subject to the terms and conditions described herein (including the fulfillment of the Condition Suspensive), which shall result in the extinction of the Merged Company with the consequent transfer of all of its assets and liabilities to the Surviving Company, as the universal successor of all assets, rights and obligations of TIM Participações, without any continuity solution.

 

2.2.          Merger’s Justification. In addition to the above, the managements of the Companies consider that the approval of the Merger shall result in the following benefits, among others, to the Companies and its shareholders:

 

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¹ The share capital of TIM Participações duly subscribed and paid-in capital, net of funding costs, is R$ 11,510,310,661.26 (eleven billion, five hundred and ten million, three hundred and ten thousand, six hundred and sixty-one reais and twenty-six cents).

² The share capital of TIM Participações on March 31, 2020, fully subscribed and paid in, was BRL 9,886,886,593.46 (nine billion, eight hundred and eighty-six million, eight hundred and eighty-six thousand, five hundred and ninety three Brazilian Reais and forty-six cents)

 

(a)

greater integration of administrative and financial unities, allowing a cut-off in operational costs and expenses, as well as improvement of synergies, which shall result in a more efficient operation;

 

(b)

simplification of the corporate structure of the TIM Group, with the preservation of a sole public company, which reduces administrative costs and the complexity of internal procedures; and

 

(c)

better tax efficiency related to the applicable PIS/COFINS due in the event of distribution of profits to the shareholders under the form of interest on shareholders’ equity (juros sobre capital próprio), as well as reduction of costs related to the Income Tax (Imposto de Renda de Pessoas Jurídicas) and the Social Contribution on Net Profit (Contribuição Social sobre Lucro Líquido), currently incurred by TIM Participações, which shall thereinafter be incurred by TSA and consolidated therein;

 

III.

BASE DATE, VALUATION AND PRO FORMA FINANCIAL INFORMATION

 

3.1.          Base Date. The appraisal and valuation of the assets of the Companies for the purposes of the Merger were conducted based on their respective Quarterly Information Form (“ITRs”), with a base date of March 31^st, 2020 (“Base Date”).

 

3.2.          Valuation of TIM Participações’ Assets at Book Value. Both Parties agree that the net assets of TIM Participações shall be merged into TSA based on their book value. In compliance with articles 8 and 226 of the Corporation Law, the appraisal of TIM Participações’ net equity at book value on the Base Date was conducted by Apsis Consultoria e Avaliações Ltda., a specialized company, enrolled with the CNPJ/ME under No. 08.681.365.0001/30 and with the Regional Accounting Council (“CRC”) under No. 005112/O-9, headquartered in the City and State of Rio de Janeiro, at Rua do Passeio, No. 62 – 6th floor, Centro, CEP 20021-280 (“APSIS Avaliações”).

 

3.2.1.

Based on the valuation report prepared by APSIS Avaliações, which is attached hereto as Exhibit I (“Book Value Valuation Report”), the net assets’ book value of the Merged Company on the Base Date was of BRL 22,587,455,189.65 (twenty-two billion, five hundred and eighty-seven million, four hundred and fifty-five thousand, one hundred and eighty-nine Brazilian Reais and sixty-five cents), of which: (i) BRL 22,233,749,480.96 (twenty-two billion, two hundred and thirty-three million, seven hundred and forty nine thousand, four hundred and eighty Brazilian Reais and ninety-six cents) relates

 

		to TIM Participações’ investment in TSA; and (ii) BRL 353,705,408.69 (three hundred and fifty-three million, seven hundred and five thousand, four hundred and eight Brazilian Reais and sixty-nine cents) relates to other assets and liabilities of TIM Participações.
	3.2.2.	The indication and engagement of APSIS Avaliações and the Book Value Valuation Report shall be submitted for ratification and approval, respectively, by the Companies’ shareholders.

 

3.3.          Valuation of the Net Assets of the Companies at Market Value. In compliance with article 264 of the Corporation Law and article 8 of ICVM 565, the managements of the Companies hired APSIS Consultoria Empresarial Ltda., a specialized company, enrolled with the CNPJ/ME under No. 27.281.922/0001-70, headquartered in the City and State of Rio de Janeiro, at Rua do Passeio No. 62, 6^th floor, Centro, CEP 20.021-280 (“APSIS Consultoria” and, jointly with APSIS Avaliações, “APSIS”) to appraise the net equity of the Companies, at market value, according to the same criteria and Base Date.

 

3.3.1.

According to the appraisal report of APSIS Consultoria, attached hereto as Exhibit II (“Valuation Reports at Market Value”), the market value of the net assets of TIM Participações and TSA, on the Base Date were, respectively, of BRL 33,761,000,000.00 (thirty-three billion, seven hundred and sixty-one million Brazilian Reais) and BRL 33,715,000,000.00 (thirty-three billion, seven hundred and fifteen million Brazilian Reais).

 

3.3.2.

The indication and engagement of APSIS Consultoria and the Valuation Reports at Market Value shall be submitted for ratification and approval, respectively, by the Companies’ shareholders.

 

3.4.          Pro Forma Financial Information. In compliance with article 7 of ICVM 565, the managements of the Companies prepared the pro forma financial information of the Surviving Company, on the Base Date, reflecting the effects of the Merger as if it had already been completed, which were submitted to reasonable assurance by Ernst & Young Auditores Independentes S/S, a company enrolled with the CNPJ/ME under No. 61.366.936/0002-06 and with the CRC under No. 2SP015199/O-6, with headquarters in the City and State of Rio de Janeiro, at Praia de Botafogo, 370, CEP 22250-040 ("EY"). The Pro Forma Financial Information is attached hereto as Exhibit III.

 

3.5.          APSIS and EY Statements. APSIS and EY have declared that (i) there is no current or potential conflict or conversion of interests with the Companies' shareholders, or with respect to the Merger, as the case may be; and (ii) the Companies' shareholders or administrators have not addressed, limited, hindered or practiced any acts that have or may have compromised the access, use or knowledge of information, assets, documents or work methodologies relevant to the quality of their conclusions. APSIS and EY were appointed for the work described herein considering their notorious knowledge in the development of reports and appraisals of this nature.

 

IV.             IMPACTS OF THE MERGER, SHARE CAPITAL INCREASE, EQUITY VARIATIONS AND SUBSTITUTION RATIO

 

4.1.          Impacts on the Merged Company due to the Merger. Upon approval of the Merger, and subject to the fulfillment of the Condition Suspensive, the Merged Company shall be extinguished and the 2,421,032,479 (two billion, four hundred and twenty-one million, thirty-two thousand, four hundred and seventy nine) common shares representative of its share capital shall be cancelled.

 

4.2.          Impacts on the Surviving Company due to the Merger and Share Capital Increase. Subject to the fulfillment of the Condition Suspensive, the Merger, if approved, will result in: (i) the cancellation of all shares issued by TSA, which are held by TIM Participações; and (ii) the increase of TSA's net assets by BRL 353,705,408.69 (three hundred and fifty three million, seven hundred and five thousand, four hundred and eight Brazilian reais and sixty nine cents), resulting in: (ii)(a) an increase in share capital of TSA in the amount of BRL 1,718,742.68 (one million, seven hundred and eighteen thousand, seven hundred and forty-two Brazilian Reais and sixty-eight cents); and (ii)(b) BRL 351,986,666.01 (three hundred and fifty-one million, nine hundred and eighty-six thousand, six hundred and sixty-six Brazilian Reais and one cent) being allocated to the capital reserve of TSA.

 

4.3.          Issuance of New Shares and Exchange Ratio. Subject to the approval of the Merger and the fulfillment of the Condition Suspensive, TIM Participações’ shareholders shall receive one (1) common share issued by TSA for each one (1) common share issued by TIM Participações held by them on the date of the consummation of the Merger ("Substitution Ratio"), which, considering the conservation of the same number of ex-treasury shares issued by TIM Participações, shall result in the issuance of 2,420,447,019 (two billion, four hundred and twenty

million, four hundred and forty thousand, and nineteen) common shares by TSA, all nominative, book-entry and with no par value.

 

4.3.1.             The Exchange Ratio was determined based on the principle that, as TIM Participações is the sole shareholder of TSA, once the Merger is completed, the existing shareholders of TIM Participações will hold the same number of shares and equity interest in TSA as they hold today in TIM Participações, without having their rights materially affected by the Merger.

 

4.3.2.             The new shares to be issued by the Surviving Company shall grant the same rights to their holders, as those granted by the shares of the Merged Company.

 

4.4.          Proposed Amendment to the Bylaws. As a result of the Merger, and subject to the provisions of Item 4.5 below, the article 5 of the TSA’s Bylaws shall be amended to reflect its new share capital and number of shares, and shall thenceforth have the following wording, without any other change to its Bylaws:

 

“ARTICLE 5 – The share capital, totally subscribed and paid-in, is of BRL 13,477,890,507.55 (thirteen billion, four hundred and seventy-seven million, eight hundred and ninety thousand, five hundred and seven reais and fifty-five cents), divided into 2,420,447,019 (two billion, four hundred and twenty million, four hundred and forty-seven thousand and nineteen) common shares, all registered, book-entry and with no par value.”

 

4.5.          Change in the Number of Shares to be Issued. In the event of a change in the number of ex treasury shares issued by TIM Participações, the TSA’s Board of Directors shall, on the effective date of the Merger, register the new number of shares into which the share capital of TSA is divided, with the corresponding amendment to Article 5 of the TSA's Bylaws, if required, being postponed to the first TSA’s General Shareholders’ Meeting to be held after the registration of the new number of ex treasury shares.

 

4.6.          Assets Variations. The variations in the assets of the Merged Company occurred after the Base Date shall be transferred, absorbed, and incorporated into the operational result of the Merged Company.

 

4.7.          U.S. federal tax treatment. The Parties agree that (i) it is intended that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the

Internal Revenue Code of 1986, as amended, (the “Code”) for U.S. federal income tax purposes and (ii) this Protocol is intended to be and constitutes a “plan of reorganization” for purposes of Section 368 of the Code and the Treasury Regulations promulgated thereunder.

 

V.

LISTING ON THE NOVO MERCADO AND CORPORATE GOVERNANCE OF THE SURVIVING COMPANY

 

5.1.           Listing on the Novo Mercado. The Merger shall require TSA to be listed on the special corporate governance segment of B3 called Novo Mercado, pursuant to article 46 of the Novo Mercado regulations. To this end, TIM Participações, as the sole shareholder of TSA, approved on the date hereof the listing of TSA on the Novo Mercado, at a TSA’s Extraordinary Shareholders’ General Meeting, with such listing’s effectiveness being conditioned to the effectiveness of the Merger.

 

5.2.           No Further Amendments to the Bylaws. The Merger will not result in any other amendment to the Bylaws of the Surviving Company, except as those provided for in Item 4.4 above. TIM Participações, as the sole shareholder of TSA, approved, on the date hereof, at an Extraordinary Shareholders General Meeting, the amendment and consolidation of the TSA’s Bylaws, substantially reflecting the same provisions of the Bylaws of TIM Participações, provided, however, that the effectiveness of certain provisions of the TSA’s Bylaws are conditioned on the fulfillment of the Condition Suspensive.

 

5.3.           Corporate Governance. Once the Merger is completed, TSA shall have the same corporate and administrative structure as the Merged Company, reflecting the entire corporate governance of TIM Participações, with the same management, corporate bodies, internal regulations, policies, areas of operation, in compliance with all the requirements and adjustments that may be required by the Novo Mercado segment of the B3.

 

VI.

DISSENTING SHAREHOLDERS’ RIGHT OF WITHDRAWAL

 

6.1.          Merged Company’s Dissenters’ Right of Withdrawal. Pursuant to article 137 of the Brazilian Corporation Law, withdrawal rights may be exercised by the Merged Company’s shareholders that (i) oppose or abstain from the Merger resolution, or do not attend the Extraordinary General Shareholder’s Meeting, and (ii) explicitly state their intention to exercise withdrawal rights within the due period, considering that

the shares issued by the Merged Company do not qualify for the exception provided for in item II of the above mentioned legal provision. The compensation related to the right of withdrawal shall only be owed to those shareholders who are provenly shareholders of the Merged Company on the date of disclosure of the material fact informing about the Merger (i.e. July 29, 2020), considering the trading on the stock exchange on such date, included. Withdrawal rights may not be exercised in regard to the shares that were acquired after such date, under the terms of paragraph 1 of article 137 of the Brazilian Corporation Law.

 

6.1.1.

In order to exercise their withdrawal rights, shareholders must necessarily exercise such right in respect of all common shares, subject to the provisions of Item 6.1 above.

 

6.1.2.

The shareholder must explicitly state his intention to exercise his withdrawal rights within thirty (30) days from the publication of the minutes of the Extraordinary Shareholders' General Meeting of the Merged Company approving the Merger ("Withdrawal Period").

 

6.2.          Reimbursement Value. Pursuant to article 45 of the Brazilian Corporation Law and article 10, sole paragraph, of the Bylaws of TIM Participações, shareholders who exercise their right to withdraw shall be entitled to receive as reimbursement for their shares in the amount of BRL 9.33 (nine Brazilian reais and thirty-three cents) per share, equivalent to the book value of the net assets of TIM Participações’ shares, in accordance with the financial statements that were used as the basis for the preparation of the Book Value Valuation Report.

 

6.2.1.

In compliance with the provisions of Article 264, paragraph 3 of the Brazilian Corporation Law, the exchange ratio calculated based on the comparison of the net assets at market value of the Companies is of 0.175 (zero point one, seven, five) shares issued by TSA for each one (1) share issued by TIM Participações.

 

6.2.2.

Considering that the Surviving Company is a wholly-owned subsidiary of the Merged Company, any Exchange Ratio that was adopted in the Merger would result in the same economic and political impact for the shareholders of TIM Participações, in such a way that is not possible to consider an exchange ratio more or less advantageous to TIM Participações’ shareholders. Nonetheless, the Exchange Ratio proposed to the shareholders of TIM Participações, pursuant to Item 4.3 above, grants the shareholders of TIM

Participações a greater number of TSA’s shares than the number that would have been granted based on the comparison of the net assets of TIM Participações and TSA at market value. Therefore, pursuant to paragraph 3 of article 264 of the Brazilian Corporation Law, shareholders who dissent from the resolution of the Extraordinary General Meeting of TIM Participações that approves the proposed Merger will not have the option to exercise their withdrawal rights based on their shares’ net assets at market value, and will only be entitled to a compensation at the book value of their shares, as indicated above.

 

6.3.          Payout of Reimbursement. The payment of the amount of the reimbursement for the shares is subject to the conclusion of the Merger, after the Condition Suspensive have been fulfilled, pursuant to article 230 of the Corporation Law.

 

6.4.          Absence of Rights of Withdrawal for the Surviving Company’s Shareholders. The Merger will not grant rights of withdrawal to the Surviving Company's shareholders.

 

VII.

CORPORATE APPROVALS AND CONDITION SUSPENSIVE TO THE MERGER ACCOMPLISHMENT

 

7.1.          Corporate Approvals. The proposal for the Merger shall be submitted to the shareholders of TIM Participações and TSA, which must resolve on, among others: (a) the approval of this Protocol; (b) the ratification of the appointment and engagement of Apsis Avaliações and Apsis Consultoria, specialized companies responsible for the preparation of the valuation reports of TIM Participações’ net assets at book value and the valuation reports of TIM Participações’ and TSA's net assets at market value, for the purposes of the Merger; (c) the approval of these valuation reports; (d) the Merger, pursuant to the Protocol; and (e) the authorization for the administrators and attorneys-in-fact to carry out all the measures necessary for the consummation of the Merger.

 

7.2.          Condition Suspensive. The conclusion of the Merger shall, pursuant to the terms of article 125 of the Brazilian Civil Code, be conditioned on the fulfillment of the approval of the listing of TSA’s shares on the Novo Mercado ("Condition Suspensive").

 

7.3.          Conclusion of the Operation. Once the Condition Suspensive is fulfilled, a material fact will be disclosed informing the market and the Companies' shareholders about the conclusion of the Merger.

 

7.4.          Share Trading. Shares issued by TIM Participações shall remain traded on the Novo Mercado until B3 grants the listing registration of TSA’s shares onto the Novo Mercado, and the Merger is concluded. After the conclusion of such milestones, on a date to be timely informed by the Companies, the shares issued by TIM Participações will be effectively replaced by common shares issued by TSA, and the shares issued by TSA will start to be traded under a new code, to be accredited with B3 and timely disclosed to the shareholders and the market in general.

 

VIII.         OTHER CONDITIONS OF THE MERGER

 

8.1.          The Surviving Company shall remain named TIM S.A.

 

8.2.          The conclusion of the Merger is subject to: (i) the corporate approval of the Merger by both Companies’ General Shareholders’ Meeting, and (ii) the fulfillment of the Condition Suspensive.

 

8.3.          After the approval of the Merger, the managers of both Companies shall publish and register all corporate acts related to the Merger, and perform any and all acts necessary to its conclusion, including, in respect to the administrators of the Merged Company, the subscription of the Surviving Company’s capital stock increase.

 

8.4.          Any legal acts that, as a result of the commitments previously entered into for administrative and/or operational reasons, are still performed on behalf of the Merged Company during the period between the effectiveness of the Merger and the filing of the respective corporate acts with JUCERJA, shall be considered valid for all legal purposes, and all rights and obligations arising therefrom shall be assumed by the Surviving Company, as the successor of the Merged Company, pursuant to Article 227 of the Brazilian Corporation Law.

 

8.5.          This Protocol must be submitted to the Surviving Company’s and the Merged Company’s Shareholder’s General Meeting to be held on August 31, 2020.

 

8.6.          Once the Merger is approved and the Condition Suspensive is fulfilled, the Merged Company shall be considered extinguished and the management of the Surviving Company shall: (i) carry out the write-off, registration, annotation,

publication and any other act necessary for the good and faithful completion of the Merger contemplated herein, including, but not limited to, the acts necessary before the competent public agencies for the implementation of the Merger; and (ii) keep the tax books of the Merged Company.

 

8.7.          The managements of both Companies, after discussions, consider that the Merger as presented in this Protocol serves the best interests of the Merged Company, of the Surviving Company, as well as the shareholders of both Companies, and therefore recommends its implementation.

 

In witness whereof, the Parties have executed this Protocol of Merger and Justification in 03 (tree) counterparts of equal content and form, to one sole effect, in the presence of two undersigned witnesses.

 

Rio de Janeiro, July 29, 2020.

 

[Restante da Página Intencionalmente em Branco

Página de Assinatura A Seguir]

 

 

TIM S.A.

 

 

 

__________________________________ Adrian Calaza

 

 

 

TIM PARTICIPAÇÕES S.A.

 

 

 

__________________________________ Jaques Horn

 

 

 

Witnesses

  

 

1. _____________________________		2.___________________________
Name:		Name:
RG:		RG:
CPF:		CPF:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TIM S.A.

 

LONG-TERM INCENTIVE PLAN

 

1.       PURPOSE OF THE PLAN

 

1.1.         This Long-Term Incentive Plan (“Plan”), in accordance with article 168, §3, of Law 6404/76, has the purpose of granting purchase or subscription options (“Option”) for shares issued by TIM S.A. (“Company”) to officers and collaborators of the Company and its subsidiaries (which are included in the definition of Company for the purposes of this Plan), so as to encourage the expansion, the accomplishment and the fulfillment of the Company’s corporate purposes, and align the interests of the Company’s officers and collaborators with the interests of its shareholders..

 

 

2.

DEFINITIONS

 

2.1.         The following terms, when capitalized within this Plan, whether in the plural or singular form, will have the following definitions:

 

(i)

Plan: this Long-Term Incentive Plan, as duly approved by the Shareholders’ Meeting of the Company;

 

(ii)

Shares: common shares issued by the Company or any other type of share into which the common shares are converted;

 

(iii)

Options: the options to purchase or subscribe the Shares granted to the Beneficiaries, with a pre-determined price, during an specific period of time, according to Plan rules;

 

(iv)

Vested Options: the Options that have achieved the necessary conditions to allow the exercise of the right to subscribe the Shares;

 

(v)

Vesting Period: period when the Beneficiary cannot exercise, fully or partially, his options;

 

(vi)

Option Agreement: agreement granting the option to purchase and/or subscribe Shares, to be executed between the Company and each of the Beneficiaries;

 

(vii)

Grant Date: date when the Option Agreement is signed, formalizing the Grant to the Beneficiaries;

 

(viii)

Fair Value of the Option: monetary value of the Options, calculated according to Pricing Models for Options well known in the market;

 

(ix)

Beneficiaries: individuals selected by resolution of the Company’s Board of Directors as the titleholders of the Options under the Plan;

 

(x)

B3 S.A. – Brasil, Bolsa, Balcão (“B3”);

 

(xi)

Base Price of the Share: average of Share price, weighted according to the daily trade volume, during the Assessment Period on B3;

 

(xii)

Assessment Period of the Base Price of the Share: period, to be defined by the Board of Directors, prior to the Grant of the Options, to determinate the Base Price of the Share;

 

(xiii)

Similar Companies: companies in the telecommunications segment and other correlated segments, as defined by the Board of Directors;

 

(xiv)

Total Shareholder Return (TSR): Concept used to compare the performance of Shares of different companies in a certain time interval, combining the variation of the Share price and Dividends to demonstrate the total return to shareholders. It is calculated using the formula: (Final Share Price - Initial Share Price + Dividends) / Initial Share Price. For purposes of calculating this indicator, when a company has more than one class of Share, the result of the TSR of each one will be weighted by the total market value (Share price x volume of Shares), with reference to the period of the Initial Share Price;

 

(xv)

Initial Share Price: average of the share price, weighted by daily trade volume in B3, in the exactly same period defined as the Assessment Period of the Base Price of the Share.

 

(xvi)

Final Share Price: average of the share price, weighted by daily trade volume on the B3 in a period immediately prior to the Vesting Period and equal in size (number of days) to the Assessment Period of the Base Price of the Share;

 

(xvii)

Dividends: are a portion of the profit of a corporation that is distributed to shareholders at the end of each exercise, according to the § 2 of art. 202 of corporate law in Brazil. For the purpose of calculating the TSR, all dividends paid in the period between the reference dates of the Initial Share Price and the Final Share Price will be used;

 

(xviii)

Relative Stock Performance: is a rank of Stock Performance, including the shares of TIM S.A., Similar Companies and/or representative indexes of the securities portfolio, calculated using the concept of Total Shareholder Return. The result, in accordance to the conditions established on the Option Agreement, is used as a basis for defining the adjustment of the Base Price of the Share and the consequent definition of the Exercise Price.

 

(xix)

Exercise Price: price to be paid by the Beneficiary to the Company as a result of the exercise of the Options, as provided in Section 9 of this Plan, which will correspond to the Base Price of the Share, adjusted to more or less, according to the Relative Performance percentage;

 

(xx)

Exercise Periods: the periods stipulated by the Board of Directors in each financial year, during which the Beneficiaries may exercise the Vested Options;

 

(xxi)

Exercise of the Options: the effective subscription or purchase by the Beneficiary of the Shares related to the Options granted to him by the Option Agreement;

 

(xxii)

Compensation Committee: advisory committee of the Company’s Board of Directors, having the attributions established in the Internal Regiment of the Company’s Board of Directors and the documents attached thereto, as approved at the Meeting of the Company’s Board of Directors held on 09/30/2008;

 

 

3.

ADMINISTRATION OF THE PLAN

 

3.1.         The Plan shall be administered by the Company’s Board of Directors, which may delegate the attributions it deems fit to the Compensation Committee, subject to the terms of the Plan and the limitations established under the law and the Company’s By-laws.

 

3.2.         The Board of Directors will have authority to administer the Plan, subject to the Company’s By-laws, having powers to:

 

(i)              deliberate on any and all arrangements concerning the administration of the Plan, the interpretation, detailing and application of the general rules established herein;

 

(ii)             modify the terms and conditions of the Options granted, so as to adjust them to any requirements set forth by any statutory or regulatory change applicable to the Plan or the Option Agreement;

 

(iii)            decide about omitted cases, subject to the general guidelines of the Plan and the applicable laws;

 

(iv)           examine exceptional situations deriving from, or related with, this Plan;

 

(v)            select the Beneficiaries, at its sole discretion, as provided in Section 4 of this Plan;

 

(vi)           authorize the Executive Board to sign the Option Agreements with the Plan Beneficiaries, as well as Share Subscription Agreements and any additives, if necessary; and

.

(vii)          In case of exceptional situations that cause the impossibility of continuing the Plan, establish mechanisms and rules and / or modify the terms of the Option Agreement, including replacing it with similar instruments, in order to avoid distortion and prejudice to the Beneficiaries, the Company and its Shareholders, in strict alignment with the objectives of the Plan.

 

 

3.3.         The Board of Directors may not, save for the adjustments expressly permitted by this Plan: (i) raise the maximum number of Shares that can be granted upon the exercise of Options granted; (ii) amend the provisions governing the eligibility of Beneficiaries; or (iii) without the titleholder’s consent, change or impair any rights or obligations arising out of any Option Agreements executed with any Beneficiaries.

 

 

4.

ELIGIBLE BENEFICIARIES

 

4.1.         The Board of Directors shall determine, among the highest-ranking collaborators and officers of the Company, those who are eligible Beneficiaries (“Eligible”), who are to be arranged in different categories, so as to distinguish their rewards, according to the positions held, the relevance of their duties, and their salary range.

 

4.2.         The persons Eligible will be evaluated according to a procedure to be conducted by the People Value Management, under the supervision of the Company Chief Executive Officer, who shall, upon the completion of the evaluation, recommend the Beneficiaries to the Compensation Committee, among the Eligible persons, considering the importance and the crucial nature of the position, the performance of the Beneficiary, the latter’s involvement in strategic projects, as well as the added value offered by same to the Company.

 

4.3.         Following the evaluation referenced in the preceding item, the Compensation Committee will prepare a proposal, to be examined and decided by the Board of Directors, for the definition of the Beneficiaries, as well as the number of Shares that will comprise the Option granted to each one.

 

 

5.

SHARES INCLUDED IN THE PLAN

 

5.1.         The Options granted according to the Plan, whether or not previously exercised, and excluding the Options cancelled according to the provisions in Section 13 hereunder, may grant rights in a number of Shares not to exceed 2% (two percent) of the total number of Shares issued by the Company during the term of the Plan, as long as the total number of Shares issued or liable to be issued under the Plan falls within the limit of the Company’s authorized capital.

 

5.2.         So as to enable the exercise of Options granted under the Plan, the Company may, at the discretion of the Board of Directors: (a) issue new Shares, within the limit of the Company’s authorized capital, or (b) sell Treasury Shares to the Beneficiary.

 

5.3.         According to the provisions in article 171, §3, of Law 6404/76, the shareholders will not have a preemptive right in the grant of the Options or in the exercise thereof by the Beneficiaries.

 

 

6.

GRANT OF OPTIONS

 

6.1.         In view of the grant of the Options, the Company’s Board of Directors shall determine, based on a proposal prepared by the Compensation Committee:

 

(i) the total and individual amount of the grant, whose translation in volume of Options shall respect the Fair Value at the grant date and the limit of Shares provided in Section 5.1 of this Plan;

 

(ii) the list of Similar Companies and indexes representing securities portfolios comprising the Relative Stock Performance Comparison;

 

(iii) Assessment Periods of the Base Price of Share, the Initial Share Price and the Final Share Price;

 

and

 

(iv) the conditions for the readjustment of the Base Price of the Share in accordance to the Company position on the Relative Stock Performance Rank, observing the minimum and maximum limits set out in clause 9 below;

 

6.2.         The granting of Options to the Beneficiaries must be executed within no more than 3 (three) years, counted as of the date of the approval of the Plan (“Granting Period”), provided that the Board of Directors will be responsible for determining the dates and the periodicity of the grants.

 

6.3.         The Options shall be granted upon the execution of the Option Agreement, prepared according to the Plan rules, which shall specify, without prejudice to any other conditions determined by the Board of Directors: (a) the number of Shares comprising the Option granted; (b) the conditions for the acquisition of the right to exercise the Option; (c) the deadline for the exercise of the Option, subject to the provisions in Section 8.1 of this Plan; and (d) the criteria for the definition of the Exercise Price and the payment terms..

 

6.4.         Any Option granted according to the Plan is subject to all the terms and conditions set forth herein, which shall prevail in case of inconsistency regarding the terms and conditions of any agreement or supplementary document.

 

 

7.

VESTING PERIOD

 

7.1.         The Options granted according to the Plan may be exercised by the Beneficiaries observing the minimum vesting periods established hereunder:

 

(a)            up to 1/3 (one third) of the Shares comprising the Option may be acquired or subscribed as of 1 (one) year after the execution date of the Option Agreement;

 

(b)            up to 2/3 (two thirds) of the Shares comprising the Option may be acquired or subscribed as of 2 (two) years after the execution date of the Option Agreement; and

 

(c)            the totality of the Shares comprising the Option may be acquired or subscribed as of 3 (three) years after the execution date of the Option Agreement.

 

7.2.         In any case, the exercise of the Option must be formalized within the maximum term established in Section 8.2 hereunder.

 

7.3.         The Beneficiary will forfeit the right to exercise any part of the Option not exercised according to the terms and conditions stipulated, in which case the Beneficiary will have no right to compensation.

 

 

8.

EXERCISE OF THE OPTIONS

 

8.1.         The exercise of options will be possible only during the Exercise Period.

 

8.2.         Exercise Periods should be opened by the Board of Directors at least annually and preferably after the end of each Vesting Period.

 

8.3.         After the third year, when all Options have become Vested, the Beneficiaries may request the opening of Exercise Periods to the Board of Directors, which has a deadline of 90 days to do so.

 

8.4.         The maximum term for the exercise of the Options will be 6 (six) years, counted as of the date of their grant.

 

8.5.         The People Value Management will inform the Beneficiaries, before the start of the Exercise Period, the Exercise Price, determined according to the Section 9 of this Plan.

 

8.6.         The exercise of the Options shall be formalized by the Beneficiary upon written notice to the Company, and delivered to People Value Management, provided that the Beneficiary shall inform the number of Shares to be acquired or subscribed and the total amount of the respective Exercise Price.

 

8.7.         During the Options’ term, People Value Management shall inform the Beneficiaries of the payment and general terms for the delivery of Shares comprising the Options, so as to afford the Company enough time to issue new Shares or to acquire Shares on the market aiming the physical liquidation of the Options exercised.

 

8.8.         The Board of Directors may determine the suspension of the right to exercise the Options, whenever situations are found to exist that, according to the law or the regulations in effect, restrict or prevent the negotiation of Shares by the Beneficiaries.

 

8.9.         No Beneficiary will have any of the rights and privileges of shareholders of the Company until the Options are duly exercised and the Shares comprising the Options are subscribed or acquired and paid up in full.

 

8.10.     The taxes and charges connected with the financial benefit resulting from the exercise of the Options will be incumbent exclusively upon the respective Beneficiaries.

 

 

9.

OPTION EXERCISE PRICE

 

9.1.         It will be incumbent upon the Board of Directors to stipulate the Exercise Price of the Options granted according to the terms of this Plan, based on the

recommendation of the Compensation Committee, and subject to the criteria established in this Section.

 

9.2.         The Exercise Price shall be calculated at the end of each vesting period, being only valid for the Options that become Vested at that moment. Once set the Exercise Price, it will remain valid until the end of the maximum period to exercise the Options.

 

9.3.         For the purposes of the determination of the Exercise Price, the Base Price of the Share will be adjusted positively or negatively, according to the position in the Relative Performance Rank achieved by the Shares.

 

9.4.         If the position reached by the Company's Shares is between the last position and the middle position, the Base Price of the Share shall be adjusted positively by a percentage that will be recommended by the Compensation Committee and set by the Board of Directors, limited to:

 

(a)            5% of Base Price of the Share for the 1st Vesting Period;

 

(b)            10% of Base Price of the Share for the 2nd Vesting Period;

 

(c)            15% of Base Price of the Share for the 3rd Vesting Period;

 

 

9.5.         If the Company's shares reach the last position, the Beneficiaries will lose the right over 25% of the Options that become Vested at that moment.

 

9.6.         If the position reached by the Company's shares is between the first position and the middle position, the Base Price of the Share will be negatively adjusted by a percentage that will be recommended by the Compensation Committee and set by the Board of Directors, limited to:

 

(a)            -5% of Base Price of the Share for the 1st Vesting Period;

 

(b)            -10% of Base Price of the Share for the 2nd Vesting Period;

 

(c)            -15% of Base Price of the Share for the 3rd Vesting Period;

 

 

10.

PAYMENT

 

10.1.     The payment of the Exercise Price shall be effected upon the acquisition, in cash, with the Beneficiary’s own funds.

 

10.2.     Alternately, if the legal relationship between the Beneficiary and the Company is in effect, the Board of Directors may: (i) approve the grant to the Beneficiary of a term of up to 10 (ten) days for the payment of the Exercise Price by the Beneficiary; or (ii) approve the grant of funding to the Beneficiary, which, at the discretion of and rules established by the Board of Directors, may be formalized with the issuance of a pro soluto promissory note for the full amount of the debt, issued by the Beneficiary to the benefit of the Company.

 

 

11.

RIGHT OF PREFERENCE

 

11.1.     The Board of Directors may determine that the sale of Shares by the Beneficiaries must observe the Company’s right of preference.

 

11.1.1.   When the Company is notified of the exercise by the beneficiaries, the Company will have up to 5 business days to express its preemptive right to purchase the shares, as well as the offer's validity deadline

11.1.1.1 In the case of the exercise of the preemptive right by the Company, the price per Share will correspond to the average price weighted by the volume of negotiations calculated at B3 during the last 5 trading sessions, prior to the date of the exercise notification.

 

11.1.2.   If the beneficiary does not sell all the shares within the offer's expiration date, he must notify the Company when he intends to sell his shares and wait up to 5 business days for his manifestation.

11.1.2.1. In the case of the exercise of the preemptive right by the Company, the price per Share will correspond to the average price weighted by the volume of negotiations calculated at B3 during the last 5 trading sessions, prior to the date of the notification of intention to sell”.

 

12.           CORPORATE REORGANIZATION AND CHANGE IN THE NUMBER OF SHARES

 

12.1.     The grant of Options according to the Plan will not prevent the Company from participating in any corporate reorganization processes, such as transformation, merger, consolidation or spin-off, it being incumbent upon the Board of Directors to deliberate as to the effects of the corporate reorganization on Options granted through the date of the event.

 

12.2.     In case of change in the number of shares issued by the Company, as a result of a capital increase or decrease, share grouping, share splits, share bonus, conversion of shares of a certain kind or class into another, or conversion of other securities issued by the Company into shares, the Options and the Exercise Price shall also be adjusted by the Board of Directors, so as to avoid any distortions or losses to the Company, its shareholders and the Beneficiaries.

 

 

13.           TERMINATION OR ABSENCE OF THE BENEFICIARY

 

13.1.     In the event that the Beneficiary chooses to terminate his or her employment with the Company, or if the term of office, employment contract or

service agreement of the Beneficiary is terminated by the Company, without cause (or without the occurrence of facts that would be cause for termination if the Beneficiary were an employee of the Company), the Option rights that are not exercisable on the termination date, according to the rules of the Option Agreement, will be automatically and lawfully cancelled, with no need for prior notice or indemnification.

 

13.1.1.       With regards to any Option rights that are exercisable by the Beneficiary on the termination date, according to the rules of the Option Agreement, such rights may be exercised within 6 months from the termination date, subject to their lawful cancellation, with no need for prior notice or indemnification.

 

13.1.2.       Notwithstanding the provisions in item 13.1.1, the Board of Directors may, exceptionally, anticipate the Exercise Period pertaining to the Options granted to the Beneficiaries terminated from the Company for any of the causes listed in Section 13.1.

 

13.1.3.       In case of termination by decision of the Company within a period of up to 12 (twelve) months, counted as of the date of an event characterizing transfer of the equity control of the Company, the Beneficiary may exercise the Option in full, regarding both the rights that are exercisable and those not yet exercisable upon the termination, provided that the Board of Directors shall take the necessary actions to this end, including the definition of the conditions for the exercise of the Options.

 

13.2.     If the term of office, employment contract or service agreement of the Beneficiary is terminated by the Company with just cause (or upon the occurrence of facts that would be cause for dismissal if the Beneficiary were an employee of the Company), any and all rights resulting from the Option Agreement will be deemed automatically and lawfully cancelled, with no need for prior notice or indemnification..

 

13.3.     In case of death of the Beneficiary, his or her heirs and successors may exercise the Option in full, in regards to the rights exercisable or not yet exercisable on the date of the death, according to the provisions of the Option Agreement, within no more than 1 (one) year, counted as of the date of the death, subject to the lawful forfeiture thereof, with no need for prior notice or indemnification..

 

13.4.     In the event of long term absence of the Beneficiary, preventing it from performing his duties at the Company, the Board of Directors may authorize the full exercise of the options with respect to rights exercisable or not yet exercisable at the time.

 

13.5.     For the purposes of the provisions of this Section, the termination will not be deemed to have happened in case the Beneficiaries are transferred to another company of the same economic conglomerate as the Company, which is defined as any entity that controls the Company, directly or indirectly, any affiliate, subsidiary or a company controlled by the same organization as the Company.

 

14.

DURATION OF THE PLAN

 

14.1.     The Plan will be effective as of the date of its approval by the Shareholders’ Meeting of the Company and will remain effective until the rights stemming from the Options granted are fully exercised, within the term stipulated in Section 8.4.

 

14.2.     In case of dissolution and liquidation of the Company, the Plan and the Options based thereon will be deemed automatically terminated.

 

 

15.

DIVIDENDS

 

15.1.     The Shares acquired or subscribed by the Beneficiaries as a result of the exercise of the Options will be entitled to the dividends, interest on own capital, and other earnings declared by the Company as of the date of the physical liquidation of the exercise of the Options, with the transfer of the Shares to the Beneficiary.

 

 

16.

MISCELLANEOUS

 

16.1.     The execution of the Agreement implies the explicit acceptance of all the terms of the Plan by the Beneficiary, who undertakes to adhere to them fully and completely.

 

16.2.     No provision of the Plan or Option granted under the Plan entitles any Beneficiary to remain as a director, officer, employee or service provider of the Company.

 

16.3.     The rights and obligations resulting from the Plan and the Option Agreement may neither be assigned nor transferred, in full or in part, by either party, or given in security of any obligations, without the prior written consent of the other party.

 

16.4.     It is hereby expressly agreed that the fact that either party fails to exercise any right, power, remedy or option, ensured by law, by the Plan or the Option Agreement, will not constitute a novation, nor will any delay in the execution of any obligations by any parties, which will not prevent the other party, at its sole discretion, from exercising such rights, powers, remedies or options, at any time, which will be added to and not replace any others ensured by law.

 

16.5.     The courts in the judiciary district of the City of Rio de Janeiro are hereby elected, with the waiver of any others, no matter how privileged, to settle any disputes that arise in connection with the Plan.

 

* * *

 

TIM S.A.

LONG-TERM INCENTIVE PLAN

 

 

1.

PURPOSE OF THE PLAN

1.1.       The purpose of this Long-Term Incentive Plan ("Plan"), established in accordance with the applicable legislation and regulations, is to enable the administrators and/or employees of TIM S.A. (“Company”) or other companies under its direct or indirect control (which are included in the definition of Company for the purposes of this Plan), to receive payments on shares issued by the Company, subject to certain conditions of time and / or performance, in order to stimulate the expansion, success and achievement of the Company's corporate objectives and to align the interests of the Company’s administrators and/or employees with the interests of its shareholders.

 

2.

DEFINITIONS

2.1.          The terms below, when used in capital letters throughout this Plan, whether in the plural or in the singular, shall respect the following definitions:

(i)

Plan: the present Long-Term Incentive Plan, duly approved by the Company's Shareholders Meeting;

(ii)

Shares: common shares issued by TIM S.A. or other type of shares in which they are converted;

(iii)

Granted Shares: means the Shares granted to the Participants and subject to the regulations of this Plan and the respective Share Grant Agreement;

(iv)

Restricted Shares: Granted Shares subject to vesting conditions, the regulations of this Plan and the respective Share Grant Agreement;

(v)

Performance Shares: Granted Shares subject to vesting and performance conditions, the regulations of this Plan and the respective Share Grant Agreement;

(vi)

Vesting Period: period in which the Participant is unable to receive the Shares Granted to him or part thereof;

(vii)

Performance Factors: means the factors related to the Performance targets, established for the Performance Shares, that can modify, up or down, the volume of Granted Shares;

(viii)

Share Grant Agreement: means the particular instrument granting Shares, to be celebrated between the Company and the Eligible, through which he acquires the status of Participant, declaring that he knows and accepts all the terms and conditions of the Plan;

(ix)

Grant Date: unless otherwise stated in the Share Grant Agreement, means the date of the meeting of the Board of Directors that resolved on the granting of the Shares to the Participants;

(x)

Participants: natural persons selected by the Company's Board of Directors as eligible to the Plan, among administrators and/or employees of the TIM S.A. or companies under its control;

(xi)

Termination: means the termination of the legal relationship of an administrator or employee between the Participant and the Company or companies under its control, for any reason, including without limitation, resignation, dismissal, substitution or termination of office as administrator without reelection, application for voluntary dismissal and / or dismissal with or without cause;

(xii)

B3: B3 S.A. – Brasil, Bolsa, Balcão;

(xiii)

Base Price of the Share: average of share price, weighted by the daily financial trading volume on B3, during the Assessment Period of the Base Price of the Share;

(xiv)

Assessment Period of the Base Price of the Share: period, to be defined by the Board of Directors, prior to the Grant of the Shares, to determinate the Base Price of the Share

(xv)

Stock Ownership Guidelines: it is the policy that determines the minimum volume of Shares that a Participant must maintain on its property during its relationship with the Company;

(xvi)

Board of Directors: means the Board of Directors of the Company;

(xvii)

Compensation Committee: means the compensation advisory committee of the Company’s Board of Directors, having the attributions established in the Internal Regiment of the Company’s Board of Directors and the documents attached thereto, as approved at the Meeting of the Company’s Board of Directors held on 09/30/2008 and;

(xviii)

Eligible: as definitions stated on item 4.1 below.

 

3.

ADMINISTRATION OF THE PLAN

3.1.          The Plan shall be administered by the Company’s Board of Directors, which may delegate the attributions it deems fit to the Compensation Committee, subject to the terms of the Plan and the limitations established under the law and the Company’s By-laws.

3.2.          The Board of Directors will have authority to administer the Plan, subject to the Company’s By-laws, having powers to:

(i)

deliberate on any and all arrangements concerning the administration of the Plan, the interpretation, detailing and application of the general rules established herein;

(ii)

modify the terms and conditions of the Shares granted, so as to adjust them to any requirements set forth by any statutory or regulatory change applicable to the Plan or contract; except what is stated on item 3.3;

(iii)

decide on omitted cases, observing Plan’s regulation and applicable law;

(iv)

examine exceptional situations related with this Plan;

(v)

select the Participants, at its sole discretion;

(vi)

authorize Company’s administrators to sign Share Grant Agreement with Participants of the Plan; and

(vii)

in case of exceptional situations that cause the impossibility of Plan continuity, create mechanisms and rules and/or change the Share Grant Contract, including its substitution by similar contracts, avoiding any distortion and loss to Participants, Company, and Shareholders, in strict alignment to Plan objectives;

 

3.3.          The Board of Directors may not, save for the adjustments expressly permitted by this Plan: (i) raise the maximum number of Shares that can be granted; (ii) amend the provisions governing

the eligibility of Participants; or (iii) without the titleholder’s consent, change or impair any rights or obligations arising out of any agreements executed with any Participant.

 

4.

ELIGIBLE

4.1.          The Board of Directors shall determine, among administrators and/or employees of the Company's most senior hierarchical level, those eligible as Participants ("Eligible"), who will be classified in different categories, in order to differentiate their incentives through Granted Shares, according to the Position, the relevance of their function and their salary range.

4.2.          The Eligible should be evaluated through a procedure conducted by the Board of Human Resources and supervised by the Company's Chief Executive Officer, who, once the evaluation is completed, will recommend to the Compensation Committee, among the Eligible, the Participants, given the importance and essentiality of their function, their performance, their involvement in strategic projects and the added value that they offer to the Company.

4.3.          After examining the valuation referred to in the previous clause, the Compensation Committee will prepare a proposal, to be assessed and resolved by the Board of Directors, for the definition of the Participants, as well as the maximum number of Restricted Shares and Performance Shares to be granted to them.

 

5.

SHARES INCLUDED IN THE PLAN

5.1.          The Granted Shares, may be Restricted Shares and / or Performance Shares, under the Plan, including those already transferred on behalf of the Participants or not, and discounted those canceled under Clause 11 below, may confer rights on a number of Shares that do not exceeds 2% (two percent) of the total Shares issued by the Company during the term of the Plan..

5.2.          For the purpose of satisfying the transfer of Shares granted under the Plan, the Company may, at the discretion of the Board of Directors, transfer to the Participant Shares held in treasury.

 

6.

SHARE GRANT

6.1.          For the purposes of Granting of Shares, the Company's Board of Directors will determine, based on a proposal prepared by the Compensation Committee:

(i)

the total and individual value of the Share Grant, distributed between Restricted Shares and Performance Shares, whose translation in volume of Shares shall respect the Base Price of the Share and the maximum limit set forth in Section 5.1 of this Plan;

(ii)

the Assessment Periods of the Base Price of the Share; and

(iii)

the Vesting Period for total or partial transfer of the Shares on behalf of the Participants;

(iv)

the Performance Conditions that must be achieved for full or partial transfer of the Performance Shares on behalf of the Participants

(v)

the Performance Factors that may modify the volume of Shares Granted, respecting the maximum limit provided in Clause 5.1 of this Plan; and

(vi)

the individual volume of Shares that will be subject to Share Ownership Guidelines;

 

6.2.          The Granting of Shares to the Participants shall be carried out within three (3) years as from the date of approval of the Plan, and the Board of Directors shall determine the time and periodicity of the grants.

6.3.          The Granting of Shares shall be done by means of the execution of the Share Grant Agreement, prepared in accordance with the rules of this Plan and which shall specify, without prejudice to other conditions determined by the Board of Directors: (a) the number of Shares object of the grant ; (B) the general conditions and performance and vesting period for acquiring the right to receive the Shares; (D) the performance factors and how they may modify the volume of Granted Performance Shares and (e) the volume of Shares that will be subject to Share Ownership Guidelines.

6.4.          Any Share granted under the Plan is subject to all terms and conditions set forth herein, which will prevail in the event of inconsistency with respect to regulations of any Share Grant Agreement or supplementary document.

 

7.

VESTING PERIOD

7.1.          The Shares Granted under the Plan may be transferred to the Participants in compliance with the minimum vesting periods established by the Board of Directors, observing the maximum limit of 1/3 (one third) of the volume of Shares Granted, for each year, accumulated from the Grant Date;

 

8.

SHARE TRANSFER TO THE PARTICIPANTS

8.1.          The maximum term of the Company to transfer the shares to the Participant, meeting the applicable performance and vesting conditions, is 90 days after the end of the vesting period. After this period, the Company shall pay the equivalent amount in cash, as provided in Clause 9. The restriction periods of item 8.2 are not considered for the purposes of the maximum term.

8.2.          The Board of Directors may determine the suspension of the right to receive Shares whenever there are situations that, according to the law or regulation in force, restrict or impede the trading of Shares by the Participants.

8.3.          If the Company is unable to transfer the Shares due to the refusal or inertia of the Participants, in particular considering the required formalities, the Company will be considered exempt from any liability related to the effective delivery of such Shares.

 

9.

PAYMENT IN CASH

9.1.          The Board of Directors may establish that, instead of transferring part or all of the Shares to the Participant, the Company will pay him the cash equivalent.

9.2.          The payment shall be made to the Participant, in the account under his name specified on the Share Grant Agreement, until the last working day of the subsequent month of the ending month of the vesting period.

 

10.

CORPORATE REORGANIZATION AND CHANGE IN THE NUMBER OF SHARES

10.1.       The Granting of Shares under the Plan shall not prevent the Company from participating in corporate reorganization operations, such as transformation, merger or spin-off, and the Board of Directors shall resolve on the effects of the corporate reorganization for the Shares Granted up to the date of event.

10.2.       In the event of a change in the number of shares issued by the Company, as a result of capital increase or reduction, grouping, split, bonus, conversion of shares of one kind or class into another or conversion of other securities issued by the Company into shares, The number of Granted or to be Granted Shares shall also be adjusted by the Board of Directors in order to avoid any distortions and losses to the Company, its shareholders and the Participants.

10.3.       In the event of a change in Control of the Company, all Shares Granted (considering 100% of the performance conditions for the remaining period), regardless of the fulfillment of the vesting period, shall be paid to the Participants in cash, to the value of the Share in the operation which configured the change of Control of the Company.

 

11.            TERMINATION OR ABSENCE OF THE PARTICIPANT

11.1.       In the event that the Participant voluntarily leaves the Company, the rights to receive the Granted Shares that have not yet completed the Vesting Period on the date of termination will automatically be terminated, regardless of prior notice or indemnification.

11.2.       In the event of Termination by decision of the Company and without the occurrence of just cause (or without the occurrence of facts that would constitute just cause was the Participant employee of the Company), the rights to receive the Granted Shares that have not yet completed the Vesting Period in the the date of termination shall be proportional to the Vesting Period effectively completed, dividing the total of months completed by the total of months that comprise the Vesting Period, considering the period of 30 calendar days as the "month".

11.3.       In the event of Termination by decision of the Company with the occurrence of just cause (or with the occurrence of facts that would constitute just cause was the Participant employee of the Company), the rights to receive the Granted Shares will automatically and lawfully be extinguished, regardless of notice or indemnification.

11.4.       In the event of the death of the Participant, its heirs and successors will receive in full the amounts of the Granted Shares that have not yet completed the Vesting Period (considering 100% of the performance conditions for the remaining period) in cash, regardless of the fulfillment of the Vesting Period.

11.5.       In the event of long term absence of the Participant, making it impossible for him to perform his activities in the Company, the Board of Directors may authorize the transfer of part or all of the Shares object of his Share Grant Agreement, observed the vesting period.

11.6.       For the purposes of this Clause, the Board of Directors may determine that the termination shall not have occurred in the event that the Participants are transferred to another company of the same company group (thus understood as any direct or indirect controlling entity of the Company, affiliate, subsidiary or subject to common control) and to determine specific rules for the treatment of such cases.

 

12.

DURATION OF THE PLAN

12.1.       The Plan will be effective on the date of its approval by the Company's Shareholders Meeting and will remain effective until the rights resulting from the Shares granted are fully exercised.

12.2.       In the event of dissolution and liquidation of the Company, the Plan and the Shares based thereon will be automatically terminated.

 

13.

SHAREHOLDER RIGHTS

13.1.       The shares delivered to the Participants shall have the rights established in this Plan and in the respective Contracts, provided that the Participant shall not have any of the rights and privileges of a Company's shareholder, in particular, to receive dividends and interest on own capital related to the Granted Shares, until the date of its transfer to the Participants

13.2.       Notwithstanding the provisions of Clause 13.1, the Board of Directors may establish the payment of the amount equivalent to such dividends and interest in cash or in shares, in the manner to be established in the Share Grant Agreement.

 

14.

MISCELLANEOUS

14.1.       The signature of the Share Grant Agreement will imply the express acceptance of all terms of the Plan by the Participant, which is fully bound to comply with them.

14.2.       No provision of the Plan or Share granted under the Plan shall entitle any Participant to remain as an administrator and/or employee or yet as a service provider of the Company.

14.3.       The rights and obligations resulting from the Plan and the Share Grant Agreement may neither be assigned nor transferred, in full or in part by the Participant, or given in security of any obligations, without the prior written consent of the Board of Directors.

14.4.       It is hereby expressly agreed that either party abstention to exercise any right, power, resource or faculty, ensured by law, by the Plan or the Share Grant Agreement, will not constitute a novation, nor will any eventual delay tolerance in the execution of any obligations by any of the parties. Any of the hypotheses will not prevent the other party, at its sole discretion, from exercising such rights, powers, resources or faculties, at any time, which will be added to and not replace any others ensured by law.

14.5.       The courts in the judiciary district of the City of Rio de Janeiro are hereby elected, with the waiver of any others, no matter how privileged, to settle any disputes that arise in connection with the Plan.

 

* * *

 SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TIM PARTICIPAÇÕES S.A.
Date: August 31, 2020	By:	/s/ Adrian Calaza
		Name: Adrian Calaza
		Title: Chief Financial Officer and Investor Relations Officer TIM Participações S.A.

 

 

FORWARD-LOOKING STATEMENTS

 

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will a ctually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.