1.
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Issuance. The Issuance
documents shall be executed to the entire satisfaction of Inteligo Bank ("Inteligo"), Interseguro Compañía de Seguros S.A. ("Interseguro") and NWI Management LP ("NWI")
(jointly, the "Investors") and shall contain at least the following terms and conditions:
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Parties:
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Investors and Issuer
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Investors:
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Inteligo Bank, Interseguro and NWI
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Issuer:
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Graña y Montero S.A.A. (the "Issuer")
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Instrument
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Bonds convertible into shares. The bonds shall be nominal, indivisible, freely tradable and shall be represented by book entries
and registered in the accounting records held by Cavali. The shares to be converted shall be common, nominal, indivisible, with voting rights and shall represent an aliquot of the Issuer's capital stock, freely tradable and represented by
book entries in Cavali.
The Issuer must make its best efforts to register the bonds with Euroclear simultaneously or within three months after issuance. It
is stated that such obligation shall be regulated in the Issuance Documents but shall not (i) constitute a condition precedent for the subscription of the Bonds by Investors; or (ii) imply the obligation to make an international issuance.
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Type of offer:
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Private offer addressed to institutional investors without SMV authorization.
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Issuance Amount:
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Up to US$ 65,000,000. The Investors reserve the right to define in the Issuance Documents the percentage of interest that shall be
assigned to each one in the subscription of the bonds.
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Currency:
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Dollars.
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Use of Funds:
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Repayment of Debts and Contributions to Subsidiaries
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Total Term:
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7 years (Bullet)
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Compensatory Interest Rate:
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7% (fixed) annual in dollars payable semi-annually
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Default Interest Rate:
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It is the interest rate applicable upon the occurrence and during the continuance of any Event of Default consisting of
non-payment. The Default Interest Rate is applied in addition to the Compensatory Interest Rate and shall be equivalent to two percent (2.00%) effective annually.
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Conversion of bonds into common shares of the Issuer
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The nominal amount of the subordinated bonds may be converted by Investors into common shares of the Issuer,
provided the following is complied with:
1.The conversion may be exercised at the
sole option of the Investors as from the second year of the term of the Issuance.
2.The conversion price will be USD 0.6136
("starting price").
If the conversion is not exercised by the Investors, the Issuer shall repay the bonds to the Investors at
maturity.
Each Investor shall only be able to opt for the conversion of the whole of its holding; not being able to convert its Bonds into
shares of the Issuer in a partial way.
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Risk rating:
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The Issuer must, at its own cost, obtain and deliver to the Investors a risk rating of the bond made by a risk
rating agency of recognized international prestige. For such purposes, prior to issuance, the Issuer must request such rating and perform all acts reasonably necessary to obtain such rating. The Parties state that (i) a minimum rating
will not be required; and (ii) obtaining such a rating is not a condition precedent for the subscription of the Bonds by Investors. The Issuance Documents shall include reasonable time limits for obtaining rating.
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Guarantees:
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Not applicable.
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Issuance Documents:
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They include as a whole:
(i)Indenture, including the
conversion of the bonds into common shares with voting rights of the Issuer.
(ii)Subscription Agreement and other documents that may be necessary for the perfection of the Issuance.
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Conditions Precedent to Closing and/or Disbursement:
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The subscription of the bonds by Investors shall be subject to conditions precedent that are customary in this type of transactions
to the reasonable satisfaction of Investors.
In addition, such subscription shall be subject to the following conditions: (i) after completion of the pre-emptive subscription
procedure, Investors may subscribe for bonds totaling at least US$55 million, (ii) the Issuer’s management and board of directors approve the Issuance and recommend the Issuer's general shareholders meeting to approve the Issuance as
being in the best interests of the Issuer, and the Issuer's general shareholders meeting approves the Issuance, (iii) the statutory period for challenging the corporate resolutions adopted by the Issuer to perfect the issuance has
elapsed, without the Issuer's shareholders representing individually or jointly 1% or more of the total number of shares issued by the Issuer having judicially requested the challenge of said resolutions, unless, in the latter case, a
legal opinion of a Peruvian law firm of recognized prestige is presented -approved by the Investors- indicating that such legal challenge has no basis, (iv) the Issuer has perfected the "Investment"; (v) in the reasonable opinion of the
Investors, no Material Adverse Effect has occurred or may reasonably occur (as this term is defined in item 6 below) and (vi) in the reasonable opinion of the Investors, one or more circumstances, events, facts or developments have not
occurred which reasonably could cause the Issuer's legal and/or reputational situation to deteriorate materially (including but not limited to circumstances, events, facts or developments related to its subsidiaries, shareholders,
representatives, advisors, managers or officers) in relation to (a) acts of corruption, or bribery and/or similar crimes, including the expansion of ongoing investigations into new facts or allegations; and/or (b) illegal or improper acts
or practices to obtain consents, permits, licenses, approvals, authorizations, rights or privileges.
Perfection of the "Investment" is understood as the obtaining of funds from third-party investors up to a total amount of US$ 42
million (including the ongoing capital increase but not including this bond issuance). In the event that any of these transactions involve an Alternative Transaction (as this term is defined in Section 3 below), the Issuer must obtain the
prior written authorization of the Investors.
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Representations; Obligations
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(a)Representations and warranties shall be included, as well as usual
obligations in this type of transactions to the satisfaction of the Investors.
Notwithstanding the foregoing, the Parties agree that the Issuance Documents shall reflect the following:
1. Sole
Restriction on Indebtedness:
The Issuer shall not allow the Consolidated Indebtedness Ratio to be greater than 3.0:1.00 at the end of each
calendar quarter (the "Measurement Date").
2. Sale or Guarantee of Assets
There shall be no restrictions on (i) the disposal of assets or rights of the Issuer or its Subsidiaries, unless
the assets or rights represent more than 50% of the capital stock of the relevant company; and (ii) the creation of liens or guarantees on assets or rights of the Issuer or its Subsidiaries, unless the assets or rights represent more than
50% of the assets of the relevant company.
3. Dividend Distributions
There shall be no restrictions on the distribution of dividends as long as it is made in accordance with the
dividend policy then in effect.
Definitions
The Parties agree to define in the Issuance Documents the concepts and terms applicable to the obligations listed above (including
but not limited to terms used in capital letters but not defined in this section), taking into general consideration the following terms:
Consolidated Debt Ratio: means the result
of dividing: (i) the Consolidated Debt by (ii) the Consolidated EBITDA.
Consolidated Debt: means, on each
Measurement Date, with respect to the Issuer and its Subsidiaries (except for Non-Recourse Subsidiaries), the indebtedness of the Issuer and its Subsidiaries, the Convertible Bond, less the indebtedness of Adexus.
Consolidated EBITDA: means, on each
Measurement Date, with respect to the Issuer and its Subsidiaries on a consolidated basis, the Net Income plus (i) the net financial (expense) income; (ii) income tax; (iii) depreciation and amortization; and, (iv) the portion
corresponding to cost of sales during such period related to the purchase of land in Viva GyM and its Subsidiaries in the ordinary course of business and in accordance with its past practice, less (A) the EBITDA of (i) any Non-Recourse
Subsidiary and (ii) Adexus; and, (B) any gain from the disposal of non-current assets or property of the Issuer or any of its Subsidiaries.
Non-Recourse Subsidiary: means Norvial,
GyM Ferrovías, Inversiones en Autopistas, Via Expresa Sur, or any other subsidiary of the Issuer incorporated or organized as of the issuance date, to the extent that such subsidiary complies with the following conditions:
a)It does not own, at any time, Tangible Assets
other than the assets related to a specific project or business or the shares of a Non-Recourse Subsidiary; and
b)It does not have, at any time, indebtedness
for financing other than Non-Recourse Debt.
Non-Recourse Indebtedness: means any
indebtedness for financing or refinancing that meets the following conditions:
a)The rights and remedies of such indebtedness
("Non-Recourse Creditors") are limited, in relation to such indebtedness, to the Capital Stock and/or any assets of the Non-Recourse Subsidiary
that is the direct or indirect owner of such assets;
b)Liens that may have been granted to
Non-Recourse Creditors to guarantee such indebtedness do not encumber any asset or right of the Issuer or its Subsidiaries, except for the assets and rights referred to in subparagraph a. above;
c)Neither the Issuer nor any of its
Subsidiaries (other than a Non-Recourse Subsidiary) has agreed to guarantee or otherwise agree to be liable for the payment of such indebtedness; provided that guarantees given by the Issuer for the benefit of Non-Recourse Subsidiaries at
the pre-operational stage shall not be considered Consolidated Debt; and,
d)The acceleration or request for payment prior to the maturity of a Non-Recourse Debt as a result of a default does not constitute a default event under any indebtedness of the Issuer and its
Subsidiaries, except for such indebtedness, any other Non-Recourse Debt and the indebtedness under the Convertible Bond Financing Documents.
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Events of Default:
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(b)Usual events of default shall be included in this type of transactions to Investors' satisfaction, including but not limited to cross default and cross acceleration.
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Subordination
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The Convertible Notes shall be subordinated to any other indebtedness of the Issuer. The terms of the subordination shall include
(i) the priority in the payment of the senior debt over the Convertible Notes, (ii) the restriction for the holders of the Convertible Notes to request the insolvency of the Issuer; the right of the holder of the Convertible Bonds to
request the recognition of debt if an insolvency proceeding is initiated against the Issuer is not limited. (iii) the obligation to deliver any amount derived from an attachment or other form of enforcement - discounting reasonably
incurred costs - initiated by the holders of the Convertible Bonds for payment of any amount that is enforceable under the senior indebtedness.
The holders of the Convertible Notes must enter into subordination contracts with the Issuer's current or future financiers on
standard terms for this type of transaction, should the latter so require.
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Applicable Law and Dispute Resolution:
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The Issuance Documents shall be subject to the laws of the Republic of Peru.
The dispute resolution mechanism shall be de jure arbitration before the American Chamber of Commerce of Lima (AMCHAM), unless the intervention of the Judicial Branch is required, in which case the judges of the judicial district of Lima - Cercado will be
competent.
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2.
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Conditions. Our Offer is
subject to the following terms and conditions:
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(i)
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Definitive agreements. The
Offer is subject to negotiation and subscription by the Parties of the Issuance Documents, which must reflect the terms described in Section 1 above.
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(ii)
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Internal approvals. The
Offer is subject to the Issuer's board of directors and general meeting of shareholders expressly approving the terms of the Offer, respecting the pre-emptive subscription right of the Issuer's shareholders. It is expressly stated that
the approvals cannot be generic and must include a specific reference to the fact that the Issuance will be made with the Investors. The Parties acknowledge that, when the Issuer's shareholders exercise their pre-emptive subscription
right, they must have agreed versions of the Issuance Documents at their disposal.
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3.
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Exclusivity. By accepting
the Offer, the Issuer grants, and undertakes to cause its Affiliates to grant, in favor of Investors, exclusivity in conversations and negotiations related to transactions involving Alternative Transactions (as this term is defined in
this section). In this sense, the Issuer undertakes, and undertakes to cause its Affiliates to undertake, directly or indirectly, the following:
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(i)
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Not to enter into discussions or negotiations with, or provide information to, any person in connection with a possible
Alternative Transaction.
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(ii)
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Not to enter into any agreement, contract or other instrument in connection with an Alternative Transaction.
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(iii)
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Not to enter into any negotiations or conversations with any person relating to, or which may result in, an Alternative
Transaction.
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(iv)
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To cease and cause to be terminated any existing conversation or negotiation with any person relating to, or which may result in,
an Alternative Transaction.
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4.
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Nature of this Offer. By
accepting the Offer, the Parties declare that the present Offer will constitute a commitment to contract between the Parties to carry out the Issuance under the terms and conditions established in Section 1 above, and to execute said
Issuance under the terms and conditions established in the Issuance Documents, provided that the conditions established in Section 2 of this Offer have been complied with to the satisfaction of the Investors.
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5.
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Assignment. The Issuer
gives its consent in advance for any of the Investors to assign its rights and obligations contained herein in favor of any person related or Affiliated to the Investors. The Issuer may not assign its rights and obligations hereunder
without the prior written consent of the Investors.
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6.
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Termination
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a.
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Termination by Investors. The Parties
record that the Investors may terminate the effects of the Offer and/or terminate the transactions established in the Offer by means of written communication from the Investors to the Issuer, in the event of the occurrence of any of the
following cases:
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(i)
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In the event of the Issuer's failure to comply with any of its obligations under this Offer.
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(ii)
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If the Issuer's board of directors approves (1) a transaction with Investors on terms other than those indicated in this Offer;
or (2) an Alternative Transaction.
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(iii)
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If the Issuer's general meeting of shareholders approves (1) a transaction with the Investors on terms other than those indicated
in this Offer; or (2) an Alternative Transaction.
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(iv)
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Before the occurrence of a Material Adverse Effect on the Issuer.
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(v)
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The occurrence, at the reasonable discretion of Investors, of one or more circumstances, events, facts or developments that may
reasonably lead to the material deterioration of the Issuer's legal and/or reputational situation (including but not limited to circumstances, events, facts or developments relating to its shareholders, representatives, advisors,
administrators or officers) in relation to (i) new acts of corruption, or bribery and/or similar offences, including the extension of ongoing investigations into new facts or allegations; (ii) new illegal or improper acts or practices
to obtain consents, permits, licenses, approvals, authorizations, rights or privileges, including the extension of ongoing investigations for new facts or allegations and/or (iii) the Issuer's ability to face potential civil remedies.
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(vi)
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If (1) a meeting of the board of directors is not held for the approval and signing of this document within ten (10) calendar
days following the agreement of the terms of this Offer between the Investors and the management of the Issuer; or (2) the Offer is approved by the Board of Directors of the Issuer, a general meeting of shareholders is not held to
approve the Offer within forty days following the date of the meeting of the board of directors approving the Offer.
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b.
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Termination by operation of law. The
Parties acknowledge that this Offer and the transactions set out in this Offer shall be automatically terminated if (i) the general meeting of shareholders does not approve the terms of the Offer within ninety (90) calendar days of the
execution of this agreement; or (ii) within two (2) months of the execution of this document if the Parties do not reach an agreement with respect to the Issuance Documents.
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7.
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Law. The agreements
contained herein shall be governed by and construed in accordance with the laws of the Republic of Peru.
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8.
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Arbitration. The Parties
agree that any litigation and dispute resulting from or relating to this document shall be resolved by means of a de jure
arbitration organized and administered by the Arbitration Center of the American Chamber of Commerce of Lima (AMCHAM) in accordance with its effective regulations, to which the Parties submit freely, unless the intervention of the
Judiciary is required, in which case the judges of the judicial district of Lima - Cercado will be competent. The arbitration shall be conducted by an arbitral tribunal composed of three (3) arbitrators, of whom the Issuer shall appoint
one, the Investors shall jointly appoint another, and the arbitrators so chosen shall appoint the third arbitrator who shall preside over the arbitral tribunal. The award rendered in the arbitration proceedings shall be final and
without appeal. The place of arbitration shall be Lima, Peru, and the language shall be Spanish.
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9.
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Others
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b.
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Amendment. No amendment to this Offer
shall be effective unless made in writing and signed by each of the Parties.
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c.
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Expenses. Each Party hereto shall pay
the fees and expenses of its respective advisors, accountants and other experts and shall pay all other costs and expenses incurred in connection with the negotiation, preparation and execution of this Offer and the consummation of the
transactions contemplated thereby.
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d.
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Penalties. In addition to the break-up
fee established in Section 6 above, the Parties agree on the following penalties (for the avoidance of doubt, in no case shall the Issuer be obliged to pay cumulative penalties):
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i.
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Termination for default by the Parties.
The Parties shall automatically pay a break-up fee of US$2 million in favor of the other Party in the event that the Offer is terminated as a consequence of a breach attributable to that Party or in the event that this document is
becomes ineffective by virtue of the provisions of subsection 6.b(ii) above and this is due to causes attributable to the indemnifying party. For the avoidance of doubt, it is noted that the determination pursuant to subsections 6.a(iv)
and 6.a(v) does not constitute a determination for default.
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ii.
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Non-subscription of the Bonds due to
non-fulfillment of condition. If, having obtained the approval of the Issuance by the Issuer's general shareholders meeting and having the Parties agreed on the Issuance Documents, the Investors may not subscribe bonds
for at least a total of US$55 million, the Issuer shall automatically pay the Investors a penalty / break-up was of US$2 million.
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iii.
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Non-subscription of the Bonds by the Investors.
If, having complied with all conditions precedent and other terms and conditions of the Issuance Documents signed by the Investors, the Investors will refuse to subscribe the instruments of the Issuance (unless such subscription implies
subscribing Bonds for an amount less than US$55 million), the Investors will have to pay a penalty / break-up fee of US$2 million in favor of the Issuer.
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iv.
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Breach of the exclusivity obligation.
Failure to comply with the obligations established in Section 3 above shall automatically generate the Issuer's obligation to pay a penalty / break-up fee in favor of the Investors equivalent to US$2,000,000, without prejudice to the
Investors' power to (i) terminate the transactions contemplated in the present Offer pursuant to the provisions of Section 6 of the Offer, and/or (ii) claim compliance with any obligation established in Section 3 above.
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10.
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Term. This Offer shall
automatically terminate if we do not receive written acceptance of the Offer by March 11, 2019.
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If to Inteligo
Name: Reynaldo Roisenvit
Position: General Manager
Address: Av. Ricardo Rivera Navarrete N°501 Piso 21, San Isidro, Lima, Peru
e-mail: rroisenvit@inteligogroup.com
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If to Interseguro
Name: Gonzalo Basadre
Position: General Manager
Address: Av. Javier Prado Este N° 492, Oficina 2601, San Isidro, Lima, Peru
e-mail: gonzalo.basadre@interseguro.com.pe
If to NWI Management LP
Name:
Charge:
Address
e-mail:
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(illegible signature)
Inteligo Bank Ltd.
Reynaldo Roisenvit
Executive Director
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(illegible signature)
Interseguro Compañía de Seguros
Gonzalo Basadre
General Manager
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a)
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WHEREAS, the final amount of the capital increase, after the completion of the two Rounds of Preemptive Rights, is S/.
69'380,402.00.
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b)
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WHEREAS, after the completion of two Rounds of Preemptive Rights, the invested capital of the Company amounted to S/.
729,434,192.00, for which it was necessary to amend Article 5 of the Company's bylaws.
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c)
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WHEREAS, from the amount paid by the shareholders in exercise of their Preemptive Rights, the amount of S/. 72'766,887.17,
equivalent to the difference between the amount paid according to the placement value of US$ 0.6136 per share and the nominal value of S/. 1.00 per share, shall be accounted as capital premium. To this purpose, the exchange rate of
S/. 3.339 was established for each United States Dollar.
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Instrument: Nominative, indivisible,
freely negotiable bonds.
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Type of offer: Private offer.
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Placement value: Nominal value.
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Term: Seven years.
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Compensatory interest: 7% (fixed)
per year.
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Moratory Interest: 2% effective
annual rate, in addition to the Compensatory Interest.
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Conversion Right: (i) from the
second year of the term; (ii) conversion price of US$ 0.6136 per share; and, (iii) Investors can only convert their entire tenure.
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Guarantees: No guarantees.
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Subordination: Subordinated to any
other indebtedness, existing or future debt of the Company.
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(i)
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Issue, and allocate by Private Offer, bonds convertible into shares up to an amount (nominal value of the total issue of
convertible bonds) equivalent to US$ 65'000,000.00, in the terms proposed by the Board of Directors and established in the Offer Letter. The convertible bonds will be subordinated to any other indebtedness, existing or future debt of
the Company.
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(ii)
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Approve that the rules and forms of conversion are defined by the Board of Directors of the Company.
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(iii)
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Approve that the invested capital of the Company increases in a necessary amount, which will be determined by the Board of
Directors, or by management, in case of delegation of the Board of Directors, to attend the issuance of shares in the event that it is exercised the conversion right contemplated by the convertible bonds to be issued, as well as
approving any other corporate act that is necessary to effect the aforementioned capital increase.
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(iv)
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Approve the subscription by the Investors of the bonds, under the terms provided in the Offer Letter, and subject to compliance
with the Preemptive Right.
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(v)
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Approve the issue of Preemptive Right Certificates to subscribe the bonds convertible into shares of the Company to
comply with the legal mandate established by the aforementioned regulation. Approve that such Certificates will not be
registered nor offered in the United States of America, according to the detail explained by the Board of Directors.
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(vi)
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Approve as a condition to the issue agreement and complementary agreements that, after finished the Second Round of Preemptive
Right, the right to subscribe convertible bonds for an amount greater than US$ 10,000,000 but less than US$ 65,000,000 has been exercised. If the condition occurs, the issuance agreement and the complementary agreements will be
without effect, and the Company must return any money it may have received in relation to the exercise of the Preemptive Right.
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(vii)
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Delegate to the Board of Directors, which may delegate to the management, the negotiation, redaction and approval by
the Company of the terms and conditions of the issue, of the agreements with the Investors and of any other act, agreement or contract that is necessary to carry out the issuance, as established in the previous agreements.
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(viii) |
Delegate to the Board of Directors sufficient faculties to implement the Private Offer and the issue of convertible
bonds mentioned above, subject to the established in the proposals described in this Motion, including, but not limited to, the following: (a) establish all the terms and conditions related to the disposal, negotiation and exercise of
the Preemptive Right in accordance with what is established by the applicable laws, including the establishment of the date of registration and the date of delivery, as well as the negotiation period of the Preemptive Right
Certificates; (b) determine the terms of the conversion; (c) determine the placement price per convertible bond into shares, the form of representation of the securities to be issued, as well as their characteristics and issuance and
negotiation, in accordance with the provisions of the applicable laws; (d) implement any agreement, term or condition established in the Offer Letter or modify the terms established in the Offer Letter in agreement with the Investors;
(e) execute and formalize the issuance of shares that may be made in the event that the convertible bonds are effectively converted into shares of the Company, including the declaration of the amount of the respective capital
increase, the modification of the relevant articles of the statute, among others; and, (f) approve, fix or execute, as well as authorize the management to approve, fix or execute any additional act that is convenient or necessary in
order
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