According to Article 256 of the Law 6,404, dated December 15th, 1976, I present to the approval of the shareholders the following subjects:

Transcription

1 ACQUISITION OF EUROBANK Shareholders, According to Article 256 of the Law 6,404, dated December 15th, 1976, I present to the approval of the shareholders the following subjects: a) acquisition, by Banco do Brasil S.A., of 835,855 (eight hundred thirty five thousand eight hundred and fifty five) shares of Eurobank, corresponding to 100% of equity and voting capital, and b) ratification of the Share s Sales and Purchase Agreement, followed by the appraisal report of Eurobank, according to 1º of Art. 256 of LSA. The acquisition of Eurobank is justified by: a) allowing the effective entry of BB in U.S. retail banking market, especially among Hispanic and Brazilian communities in the U.S. (about 1.5 million Brazilians); b) capture benefits arising from the service platform and operating license existing; c) allowing Banco do Brasil to increase businesses and capture synergies to: I - II - expand businesses with Brazilians residents in the US in places where it has a high concentration of Brazilians; diversify the portfolio of products and services of Eurobank to enhance the treatment with its customers; III - raise the average number of customers per branch. To your appreciation, Brasilia (DF) May 16 th, Aldemir Bendine Board of Directors Vice-Chairman

2 Annex 19 Acquisition of Control 1. Describe the business: The transaction comprises the acquisition of the North American bank, EuroBank, by Banco do Brasil S.A.. The purchase price of 100% of the owner s capital ( shares) is US$ 6 million. 2. Inform the reason, statutory or legal, why the business was submitted to the Shareholder s approval: The submission of the acquisition of control of EuroBank to Banco do Brasil Shareholder s Meeting follows the legal obligation pursuant to articles 256, I, and item b of the sole paragraph of article 247, both from Law dated December 15 th, 1976, considering that the price paid for the acquisition added to the book value of other investments in affiliates and subsidiaries of Banco do Brasil surpasses 15% of BB s net equity. 3. For the company whose control has been or will be acquired a. Inform the name and qualification: EuroBank, a bank organized under the laws of the State of Florida based on 1901 Ponce de Leon Blvd, Coral Gables, Florida 33134, United States of America. b. Number of issued shares of each class or kind: c. List all controllers or members of the control block, direct or indirect, and its capital participation, in case they are related parties as defined by the accounting rules related to this subject: Shareholders Number of Shares Capital Participation Antonio Marques ,186% Ximenes Abreu ,822% José Pedro Morais ,822% Lourenço Carlos Vieira Azevedo ,888% Francisco da Costa Oliveira ,842% Olindo Reis Oliveira ,842% Joseph T. Theriaga ,352% José Oulman Bensaude Carp ,373% Maria Helena R. A. de Freitas Abilheira ,029% Maria Manuela R. A Mariz ,029%

3 Maria José Reis Azevedo ,028% Alfredo da Ressurreição Martins Gonçalves ,575% Duane &Sharon Kujawa ,077% Paulo Breda Marques ,998% Miguel Bensaude ,995% Luisa Maria do Rosário da Silva Martins Gonçalves ,508% John A. Rodriguez ,362% Jhorge Sanchez Galarraga and Cecília Galarraga ,138% Andrew Ferreira e Carmen Living Trust ,135% Total ,00% d. For each class or kind of shares whose control will be acquired, inform: i. Minimum, avarage and maximum price of each year in markets where are traded in the last 3 (three) years: The company is not publicly traded. ii. Minimum, avarage and maximum price of each quarter in markets where are traded in the last (2) two years: The company is not publicly traded. iii. Minimum, avarage and maximum quotation of each month in markets where are traded in the last (6) six months: The company is not publicly traded. iv. Avarage price in markets where are traded in the last 90 days: The company is not publicly traded. v. Net equity value at market prices, if the information is available: Not available. vi. Value of annual net income within 2 (two) last fiscal years, adjusted for inflation: 2009: (US$ million) 2010: (US$ million) 4. Main terms and conditions of the business, including: a. Sellers identification: Antonio Marques Ximenes Abreu José Pedro Morais Lourenço Carlos Vieira Azevedo Francisco da Costa Oliveira Olindo Reis Oliveira

4 Joseph T. Theriaga José Oulman Bensaude Carp. Maria Helena R. A. de Freitas Abilheira Maria Manuele R. A Mariz Roseira Maria José Reis Azevedo Alfredo da Ressurreição Martins Gonçalves Duane &Sharon Kujawa Paulo Breda Marques Miguel Bensaude Luisa Maria do Rosário da Silva Martins Gonçalves John A. Rodriguez Jhorge Sanchez Galarraga and Cecília Galarraga Andrew Ferreira e Carmen Living Trust b. Total number of shares acquired or to be acquired: c. Total price: The acquisition price of the shares is US$ 6 million. d. Price per share of each kind or class: US$ (approximately seven dollars and eighteen cents) per share. e. Payment method: 80% of the price at closing by wire transfer by BB to a stockholder s escrow account and 20% to be delivered to the escrow agent by BB, also at the closing, in another escrow account as the business collateral/indemnity, in favor of BB. f. Suspensive and resolving condition under which the business is subjected to: Suspensive Conditions: i. Receipt of government and regulator s authorizations; ii. Receipt by Banco do Brasil of the Central Bank of Brazil s authorization; iii. Approval of Banco do Brasil s shareholders in an extraordinary shareholder s meeting in compliance with the provisions of article 256 of Law 6.404, dated December 15 th, g. Summary of statements and warranties of the sellers: EuroBank s Statements: i. Legal existence and operation permit of EuroBank. The Bank is organized, validly existing and in good condition as a bank under the laws of the State of

5 Florida. It s qualified to conduct business and has all governmental permits necessary to carry on their activity. The Bank's deposit accounts are insured by the Financial Deposit Insurance Corporate (FDIC) in accordance with applicable law; ii. iii. iv. Authorized and Issued Capital: The Bank s authorized capital consists of shares, US$ 6.00 per share value, of which are issued and outstanding shares. None of the shares was kept in the Bank s treasury; EuroBank subsidiaries and participations in other companies. The subsidiaries are organized, validly existing and in good standing as a corporation under the laws of the jurisdiction of its organization. Are qualified to conduct business, and has all the necessary permits to perform their activities. All shares issued and outstanding capital stock of the Subsidiaries have been duly authorized and validly issued and are owned by the Bank free and clear of any liens; Legal capacity. EuroBank has the legal capacity to exercise its functions and fulfill its obligations; v. Powers of representation. The Bank s Board of Directors approves and authorizes the execution of the contract by the manager of the Bank; vi. vii. viii. ix. Approvals by the regulators. The transaction is subject to approvals, among others, by the OFR (Office of Financial Regulation), the FRB (Federal Reserve Bank) and the FDIC (Federal Deposit Insurance Corporate), Brazilian Central Bank, Ministry of Planning and Budget of Brazil and the General Assembly of Shareholders of the Banco do Brasil. The completion of the legal transaction has no impact on any contract or law to which the Bank is subject (no conflicts); Credibility of the balance sheets. The audited financial statements of the Bank for the years ended December 31st, 2007, 2008 and 2009 and the unaudited consolidated financial statements of the Bank as of September 30 th, 2010 are presented properly in accordance with the applied GAAP; Lawsuits. The ongoing lawsuits appear on a list attached to the contract; Regulatory issues. Apart from regulatory orders in the agreement attached documents, EuroBank is not subject to any other order of the Regulatory Authorities;

6 x. Compliance with the applicable law to EuroBank. The Bank and its subsidiaries are in compliance with the laws applicable to them. It has complied with privacy policies regarding the protection of data including personal information. It s not aware of any fraud committed by a director or officer of the Bank or its subsidiaries in respect of which the Bank has not taken appropriate corrective action in accordance with applicable law; xi. xii. xiii. xiv. xv. xvi. xvii. xviii. xix. xx. Relevant contracts. There are no provisions that may harm or affect the business of EuroBank; Absence of brokers. No broker has been hired to conduct the sale of EuroBank, except for Sandler & O'Neill, who provided financial advisory services, and the hiring will not generate costs to BB and will be paid by shareholders through the Stockholder's Escrow Account; Employee benefit plan. The employee benefit plans are in accordance with applicable law; Labor Matters. EuroBank has no individual or collective labor action against him and is in accordance with the laws applicable to employment practices; Environmental Issues. EuroBank, as far as is known, complies with all environmental laws to which is subject; Tax Issues. Taxes are correctly paid; Instruments of Risk Management. EuroBank has no high-risk derivatives; Loans and Equity Portfolio. Loans were originated in accordance with applicable laws and there were no new loans to related parties; Goods (limited to equipment, furniture and real estate). EuroBank has titles for all property and assets of the Bank (except those sold by the Bank in the ordinary course of business) as reflected in the financial statements as of September 30 th, 2010, free and clear of any liens except current taxes and assessments not yet due or payable; Intellectual Property. EuroBank is licensed to use all its Intellectual Property and the bank is not in default under any contract or commitment relating to any Intellectual Property;

7 xxi. xxii. xxiii. xxiv. xxv. xxvi. xxvii. xxviii. xxix. xxx. Guaranteed Account. EuroBank manages its guaranteed accounts according to the required standards; Trade and mandatory books. The Bank's books and records are maintained in accordance with legal requirements and accounting standards; Insurance policies. The Bank maintains insurance of the types and amounts it believes to be appropriate for their businesses, as well as all movable and immovable property owned or rented; Provision for loan losses. Provisions for doubtful accounts are in accordance with the existing methodology in the Bank to determine the adequacy of its provisions, as well as with rules established by government authorities and the Financial Accounting Standards Board; Transactions with affiliates - Information on existing transaction with a related party consists of a list attached to the contract; Securities Operations. Certifies that EuroBank s shares have never been subject to registration under the Securities Exchange Act of 1933; Reports. EuroBank forward all reports required by regulators in accordance with the required standards; Bank Secrecy and Money Laundering Legislation. EuroBank is in compliance with bank secrecy and money laundering legislation; Information provided during due diligence. Compliance and accuracy of information provided in due diligence, whatever is relevant, and Accuracy of information contained in the documents attached to the contract. Statements of shareholders a) Share s ownership and the ability of free disposition; b) Agreement to transfer the shares to Banco do Brasil; c) Validity and enforceability of the Purchase Agreement; d) Absence of Conflicts as a result of signing the contract. h. Rules on indemnification of buyers: The statements and warranties assumed will remain for a period of 2 (two) years. The statements and warranties of the "g" above (Summary of statements and warranties of the sellers) will remain in force indefinitely.

8 Shareholders shall indemnify Banco do Brasil in the case of any damage that occurs due to: (i) the lack of veracity of the statements of EuroBank and its stockholders, (ii) breach of any obligations of the contract, even though the operation has been carried out, in which case, shareholders will have 30 days to correct the breach. If not corrected, the parties will try to agree on the damage caused by the breach. If no agreement is made, Banco do Brasil may quit the business. The indemnification procedure sets the time and the methodology of the indemnification application, offering the opportunity for shareholders to assume the defense in any legal proceedings. Limitations: (i) within 2 (two) years or as soon after became final the last lawsuit that could result in damage related to matters of compensation liabilities under the contract, (ii) amounts held in the Escrow Account except as a result of the shareholders statements and warranties. (iii) Banco do Brasil will seek compensation only when the losses exceed US$ Even after exceeding this amount, only the losses exceeding US$ will be compensated. Escrow Account: for a period of 2 (two) years from the closing of the transaction, provided there are no procedures without becoming final, regarding matters subject to indemnification under the contract, duly notified to shareholders. Indemnity for breach of contract: if the contract is terminated by reason of default by the sellers or the Bank, the sellers should refund the buyer the expenses incurred with the contract and completion of due diligence, to the limit of $ 500,000, 00 (five hundred thousand U.S. dollars). i. Required Governmental Approvals: i. approvals by U.S. regulators - FLOFR (Florida Office of Financial Regulation), FRB (Federal Reserve Banks) and FDIC (Federal Deposit Insurance Corporate); ii. approval by the Central Bank of Brazil. j. Granted Guarantees: The operation guarantee is the value corresponding to 20% of the purchase price to be deposit into an escrow account. 5. Describe the business purpose: The operation presents itself as an opportunity for Banco do Brasil to put into practice its strategy of internationalization in the U.S. market in order to permit the effective entry of the Bank in the domestic retail banking market, especially among Brazilian

9 (estimated 1.5 million Brazilians) and Hispanic communities in the U.S. 6. Provide analysis of the benefits, costs and business risks: Benefits: a) allows to utilize the benefits from the services platform, technological solutions and existing operating license; b) can provide size and scale over time, with good management and capital; c) easy adaptation to Banco do Brasil s philosophy considering the size of EuroBank and the skill of the current employee, who are fluent in English. Costs: Costs with due diligence services, economic and financial evaluation, legal advice and fairness opinions. Risks: a) Management of the Bank and capital investment require immediate actions; b) Quality of loan portfolio - the management should be prioritized; c) Efficiency ratio - must fit through the increasing scale of business. 7. State what costs will be incurred by the company if the deal is not approved: Costs with due-diligence services, financial and economic evaluation, legal advice and fairness opinions. 8. Describe the sources of funds for the business: The payment for the acquisition of EuroBank will be supported by a combination of sources of funds from the regular activity of Banco do Brasil. 9. Describe the plans of managers for the company whose control has been or will be acquired: a) expand the business with Brazilians living in the United States in places with high concentration of Brazilians; b) diversify EuroBank s portfolio of products and services to enhance the customers service; c) increase the average number of customers per branch. 10. Provide reasoned statement of directors recommending approval of the deal: This statement is available on CVM's website on Internet. 11. Describe any existing corporate relationship, however indirect, between: a. Any of the sellers or the company whose control has been or will be

10 transferred, and There isn t. b. Parties related to the company, as defined by accounting rules related to this subject: There isn t. 12. Inform details of any business done in the last 2 (two) years by company s related parties as defined by accounting rules related to this subject, in equity or other securities or debt securities of the company whose control has been or will be acquired. There isn t. 13. Provide copies of all studies and appraisal reports, prepared by the company or by third parties that supported the negotiation of the purchase price: Copy of the appraisal report is available on CVM's website on Internet. 14. In what concerns to the third parties who have prepared appraisal reports or studies: a. Inform the name Company that conducted the assessment report: RBC Capital Markets Corporation. b. Describe your training RBC Capital Markets Corporation Acts in the U.S. market; During the last decade, he worked in almost all significant transactions in the Middle Atlantic; Since 2000, the RBC team advised on more than 50 merger transactions with a face value totaling more than $ 80 billion; Has provided previous services for Banco do Brasil satisfactorily. c. Describe how they were selected: The hiring was done by a company's unit located abroad, since the object of evaluation a North American bank - is overseas. For the selection of that company, a market research was made. The selection process was based on comparative analysis of the proposals, taking into consideration the scope of the technical proposals compared to the basic project pre-established by Banco do Brasil, the company's expertise in the target market and the price charged for the services. d. State whether they are related parties of the company, as defined by accounting rules related to this subject:

11 They are not related parties of the company.