PROTOCOL AND JUSTIFICATION OF THE MERGER OF TELEMAR NORTE LESTE S.A. - IN JUDICIAL REORGANIZATION WITH AND INTO OI S.A. - IN JUDICIAL REORGANIZATION

TELEMAR NORTE LESTE S.A. - IN JUDICIAL REORGANIZATION, a closely-held company with head office in the city and state of Rio de Janeiro, at Rua do Lavradio, No. 71, 2º floor - Centro, Postal Code (CEP) 20230-070, taxpayer identification (CNPJ/ME) number 33.000.118/0001-79, with its corporate documents filed with the Commercial Registry of the State of Rio de Janeiro ("JUCERJA") under NIRE 33300152580, herein represented under its By-laws ("Telemar"); and

OI S.A. - IN JUDICIAL REORGANIZATION, a publicly-held company with head office in the city and state of Rio de Janeiro, at Rua do Lavradio, No. 71, 2º floor - Centro, in the City and State of Rio de Janeiro, Postal Code (CEP) 20230-070, taxpayer identification (CNPJ/ME) number 76.535.764/0001-43, with its corporate documents filed with JUCERJA under NIRE 33.3.0029520-8, herein represented under its By-laws (referred to individually as "Oi" or the "Company" and, jointly and indistinctly with Telemar, as the "Parties"),

WHEREAS:

  • (i) Telemar is a joint stock company and wholly-owned subsidiary of Oi, which, in turn, is a publicly-held company, with no defined control;

  • (ii) Both Oi and Telemar are engaged in the exploitation of telecommunications services and all activities necessary or useful for the execution of such services, in accordance with the concessions, authorizations and permits granted to it, and may also, in the pursuit of such object: (a) incorporate third party's assets and rights into its assets; (b) participate in the capital of other companies; (c) set up wholly-owned subsidiaries for the execution of activities included in its object and which are recommended to be decentralized; (d) promote the import of goods and services necessary for the performance of activities included in its object; (e) provide technical assistance services to telecommunications companies, carrying out activities of common interest; (f) carry out studies and researches activities aimed at the development of the telecommunications sector; (g) enter into contracts and agreements with other companies that exploit telecommunications services or any persons or entities, with a view to ensure the operation of the services, without prejudice to its duties and responsibilities; and (h) carry out other activities similar or related to its object;

  • (iii) the Parties are undergoing a judicial reorganization process, together with other companies directly or indirectly controlled by Oi (all, jointly, the "Companies in Judicial Reorganization"), and their Consolidated Judicial Reorganization Plan was approved by the General Creditors Meeting on December 20, 2017 and confirmed by the 7th Corporate Court of the Capital District of the State of Rio de Janeiro ("Judicial Reorganization - RJ Court") on January 8, 2018, according to the decision published on February 5, 2018 (the "Original Judicial Reorganization Plan" or the "Original JRP");

  • (iv) the Original Judicial Reorganization Plan was later amended by a resolution approved by the General Creditors Meeting on September 8, 2020, which addition was confirmed by the Judicial Reorganization - RJ Court on October 5, 2020, pursuant to the decision published on October 8, 2020 (Original JR Plan, as amended, "JR Plan");

  • (v) the JRP established the adoption of a series of measures by the Companies in Judicial Reorganization with a view to overcome its momentary economic and financial crisis, among which are the implementation of corporate reorganization operations aimed at optimizing the operations and increasing the results of the Companies in Judicial Reorganization and other direct and indirect subsidiaries of Oi (all, together with the Companies in Judicial Reorganization, the "Oi Companies"), as well as obtaining a more efficient and adequate structure to implement the proposals provided in the JRP and the continuity of the activities of Oi Companies;

  • (vi) the merger of Telemar with and into Oi is expressly mentioned in Annex 7.1 of the JRP as one of the corporate reorganization operations that may be carried out by the Companies in Judicial Reorganization and will contribute to achieve the goals mentioned in the previous item; and

  • (vii) the unification of the operations of the Parties, through the consolidation of the activities developed, will bring considerable administrative and economic benefits, with reduction of costs and generation of synergy gains for greater efficiency in the offer of services, contributing to the achievement by the Oi Companies of the objectives mentioned in item (v).

The Parties resolve, in compliance with the provisions of articles 224, 225 and 227 of Law No. 6,404/76 (the "Brazilian Corporations Law"), to enter into this Protocol and Justification of the Merger of Telemar Norte Leste S.A. - In Judicial Reorganization into and with Oi S.A. - In Judicial Reorganization (the "Protocol and Justification"), aiming to regulate the terms and conditions applicable to the merger of Telemar into and with Oi:

CLAUSE ONE - PROPOSED TRANSACTION AND JUSTIFICATION

1.1. Proposed Transaction. The transaction consists of the merger of Telemar by Oi, with the transfer of all shareholders' equity of Telemar to Oi, which shall succeed the former universally, in all its assets, rights and obligations, so that Telemar will be terminated, pursuant to articles 227 et seq. of the Brazilian Corporation Law ("Merger").

1.2. Justification of the Merger. The purpose of the Merger is to consolidate the activities conducted by the Parties in a single company, which will bring considerable administrative and economic benefits, with rationalization of costs and gains in synergy, for greater efficiency in the offer of services, contributing to the achievement by the Oi Companies of the goals mentioned in JRP.

1.3. Telemar's account balances. The balances of Telemar's creditor and debtor accountsshall be transferred to the corresponding accounts in Oi's accounting books, with the necessary adjustments. Thus, Telemar's assets and liabilities shall be transferred to Oi's equity, and Telemar shall be terminated.

CLAUSE TWO - CRITERIA FOR THE APPRAISAL OF THE SHAREHOLDERS' EQUITY OF TELEMAR

2.1. Appraisal of the shareholders' equity of Telemar. Telemar's shareholders' equity was appraised based on its book value, according to the analytical interim balance sheet of the Parties prepared on the base date of December 31, 2020 ("Base Date"), as well as on the analytical opening of the most relevant equity items, among other documents. In compliance with the provisions of articles 226 and 227 of the Brazilian Corporation Law, the specialized company Valore Consultoria e Avaliações Ltda. ("Meden") was selected to undertake the appraisal of the net equity of Telemar, which shall be absorbed by Oi. The selection and engagement of Meden shall be ratified and approved by Oi, as the sole shareholder of Telemar, and by Oi's shareholders, at the respective General Shareholders Meeting. As provided in the appraisal report included in Exhibit 2.1 (the "Appraisal Report"), the book value of Telemar shareholders' equity, on the Base Date, is R$ 7,156,689,966.41 (seven billion, one hundred and fifty-six million, six hundred and eighty-nine thousand, nine hundred and sixty-six reais and forty-one cents).

2.2. Relation of replacement between Telemar Shares and Oi Shares that will be held in treasury. At the time of the Merger, 192,153,544 (one hundred and ninety-two million, one hundred and fifty-three thousand, five hundred and forty-four) registered common shares and 207,007,127 (two hundred and seven million, seven thousand, one hundred and twenty-seven) Class "A" preferred shares issued by Telemar will be extinguished and 30,595,616 (thirty million, five hundred and ninety-five thousand, six hundred and sixteen) remaining Class "A" preferred shares issued by Telemar will be replaced by 644,019,090 (six hundred and forty-four million, nineteen thousand and ninety) common shares issued by Oi, to be held in treasury, as provided for in article 226, paragraph 1, of the Brazilian Corporation Law and observing the limit of 10% (ten per percent) of the Oi's outstanding common shares provided for in CVM Instruction No. 567/2015. The aforementioned replacement ratio was determined based on the economic and financial valuations of Telemar and Oi, based on the discounted cash flow method, on the Base Date, object of an appraisal report prepared by Meden, according to Annex 2.2 ("Economic Valuation Report").

2.3. Valuation of Shareholders' Equity at Market Prices. Bearing in mind that Oi's shares will be issued as a result of the Merger, which will be fully held in treasury, for the purposes of art. 264 of the Corporate Law, Meden was hired to prepare the appraisal report of the net assets of Telemar and Oi at market prices. The valuations of the net assets at market prices were prepared according to the same criteria and on the Base Date ("Valuation Report at Market Prices"), according to Annex 2.3, resulting in, exclusively for the purposes of article 264 of the Brazilian Corporation Law, the replacement ratio of 14.420175 (fourteen integers and four hundred and twenty thousand, one hundred and seventy-five millionths) shares of Oi for each Telemar's share that is not extinguished, which is less advantageous than the proposed replacement ratio for the Merger, according to item 2.2

above.

2.4. The Parties acknowledge and agree that the studies and evaluations prepared by Meden were hired by the management of the Parties to support the proposed replacement ratio and provide sufficient and complete information for Oi's shareholders, given that Oi holds 100% (one hundred per percent) of Telemar's shares.

2.5. Treatment of Equity Variations. The equity variations occurring in Telemar as from the Base Date shall be appropriated in Oi in the accumulated profits or loss account.

CLAUSE THREE - SHARES ISSUED BY ONE COMPANY AND HELD BY ANOTHER AND TREASURY SHARES

3.1. Treatment of Shares issued by one Company and held by the Other. Upon the approval of the Merger and the consequent termination of Telemar, 192,153,544 (one hundred and ninety-two million, one hundred and fifty-three thousand, five hundred and forty-four) registered common shares and 207,007,127 (two hundred and seven million, seven thousand, one hundred and twenty-seven) Class "A" preferred shares issued by Telemar will be extinguished and 30,595,616 (thirty million, five hundred and ninety-five thousand, six hundred and sixteen) Class "A" preferred shares issued by Telemar will be replaced by 644,019,090 (six hundred and forty-four million, nineteen thousand and ninety) common shares issued by Oi, to be held in treasury, as provided for in article 226, paragraph 1, of the Brazilian Corporation Law. There are no shares issued by Oi held by Telemar.

3.2. Telemar Shares given as Guarantee. The Parties acknowledge and agree that the 30,595,616 (thirty million, five hundred and ninety-five thousand, six hundred and sixteen)

Class "A" preferred registered shares issued by Telemar representing 7.12% (seven integers and twelve hundredths percent) of the Telemar's share capital, which will be replaced by shares issued by Oi in the Merger, correspond to shares that, on this date, are committed in favor of Pharol, SGPS S.A. ("Pharol"), in guarantee of the fulfillment of the obligation assumed by Oi when the assets were transferred by Pharol to Oi's share capital, in 2014, in the context of the strategic alliance between the companies, whereby Oi was committed to maintaining Pharol free from any loss arising from tax or anti-competitive obligations related to such assets, and must therefore replace certain legal guarantees relating to Pharol's lawsuits with the Portuguese tax authorities ("Telemar Shares given as Guarantee"). Accordingly, 644,019,090 (six hundred and forty-four million, nineteen thousand and ninety) shares issued by Oi that will be issued in the Merger to replace the Telemar Shares pledged as Guarantee will, as a result of the Merger, be pledged as collateral in compliance with the obligations of Oi that on this date are guaranteed by the Telemar Shares given in Guarantee. The Company clarifies that, if the aforementioned guarantees that will be constituted on Oi shares issued in the Merger are to be excused in the future, such shares must be sold and the proceeds of the sale must be used to pay the creditors guaranteed by such shares.

3.3. Treatment of Treasury Shares. Telemar does not have any treasury shares. As a result of the Merger, 644,019,090 (six hundred and forty-four million, nineteen thousand and ninety) Oi's common shares will be issued, which will be held in treasury, subject to the

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Oi SA em Recuperação Judicial published this content on 29 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 March 2021 18:58:02 UTC.