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Exhibit 3(b)
ASSOCIATION AGREEMENT
among
GTE CORPORATION
T.I. TELEFONICA INTERNACIONAL DE ESPANA, S.A.
AT&T INTERNATIONAL INC.
C.A. LA ELECTRICIDAD DE
CARACAS, S.A.I.C.A.-S.A.C.A.
and
CONSORCIO INVERSIONISTA MERCANTIL CIMA, C.A.,
S.A.C.A., S.A.I.C.A.
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7. Operation of VENTEL and CANTV. (a) Except as specifically stated herein,
all decisions relating to the operations of VENTEL and CANTV shall be decided
by consensus of the Investors, it being understood that in the absence of
consensus, the views of Investors holding a majority of the Ownership Interests
shall prevail. Notwithstanding the foregoing, resolutions on the following
matters shall require the affirmative vote (i) of GTE-VEN and two other
Investors, for such time as VENTEL is owned by the original Investors and in
the percentages set forth in Section 3 above, and (ii) thereafter, of Investors
holding Ownership Interests of not less than 66 2/3%:
(i) dissolution or liquidation of VENTEL or the decision of
VENTEL to support the dissolution or liquidation of CANTV;
(ii) change in the corporate purpose of VENTEL or the decision
of VENTEL to support a change in the corporate purpose of CANTV;
(iii) any merger or consolidation involving VENTEL or the
decision of VENTEL to support any merger or consolidation involving CANTV;
(iv) sale or transfer of all or substantially all the assets of
VENTEL or the decision of VENTEL to support the transfer of all or
substantially all of the assets of CANTV;
(v) increase or decrease in the capital of VENTEL, or the
decision of VENTEL to support an increase or decrease in the capital of
CANTV or to subscribe to any such increase;
(vi) fixing of the general dividend policy of VENTEL, or the
decision of VENTEL to support a particular general dividend policy of
CANTV;
(vii) the incurrence by VENTEL of any indebtedness outside the
ordinary course of business, or the decision of VENTEL to support the
incurrence by CANTV of indebtedness outside the ordinary course of
business;
(viii) any amendment to the Charter and By-laws (estatutos) or
VENTEL;
(ix) investment of VENTEL's funds in another entity or business
or the decision of VENTEL to support the investment of CANTV's funds in
another entity or business;
(x) authorizing any issuance, sale, purchase or redemption of
VENTEL's equity securities or a decision of VENTEL to support CANTV's
authorizing any issuance, sale, purchase or redemption of CANTV's equity
securities;
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(xi) entry into any new line or field of business, other than
related to telecommunications, or the discontinuance of any line or field
of business, or a decision of VENTEL to support CANTV's entry into any new
line or field of business, other than related to telecommunications, or the
discontinuance of any line or field of business; and
(xii) appointment of auditors or VENTEL's decision to support a
CANTV proposal to appoint auditors.
(b) In the initial phase, and in order to receive input from all the
Investors, transition advisory committees shall be established to advise on the
functional areas related to the operation of VENTEL and CANTV. The transition
advisory committees will be recommended by the Vice Presidents of CANTV and
approved by the President of CANTV and will operate under the direction of the
functional Vice Presidents of CANTV. The committees will be formed by members
appointed by the Investors, according to their areas of interest and expertise.
Examples of transition advisory committees are the following:
- Planning and Engineering
- Construction
- Service Improvement
- International
- Finance
- Marketing and Customer Service
- Government Relations
- Human Resources
- Complementary and Value Added Services
- Logistics and Administration.
The CANTV President and the Vice Presidents as a group will approve
the need to maintain, create, or terminate the transition advisory committees
depending on the final organizational structure given to CANTV. The CANTV
President will submit to the Boards of CANTV and VENTEL his recommendations on
the functions being addressed.
(c) The VENTEL Board of Directors (junta directiva) shall be composed
of nine directors (directores). Notwithstanding any other provisions of this
Agreement or the Charter and By-laws (estatutos) of VENTEL, (i) if any Investor
has an Ownership Interest of more than 50%, such Investor shall be entitled to
elect not less than a majority of the Directors of VENTEL, and (ii) an Investor
(or group of Investors) shall be entitled to elect one director of VENTEL for
each 10% Ownership Interest that the Investor (or group of Investors) holds.
Should the foregoing not result in the election of all the directors of VENTEL
by particular
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Investors, the selection of remaining directors shall be allocated to the
Investors in an equitable manner, taking into account (i) over a period of
years the relative Ownership Interests of the Investors from time to time, and
(ii) the policy of promoting representation on the Board of Directors for each
Investor with an Ownership Interest of at least 5%. Each Investor shall vote
its shares in VENTEL in order to achieve the result contemplated in this
Section 7(c). Alternate and replacement directors will be appointed by the
Investors that had the right to appoint the corresponding directors.
(d) Should the shareholding of VENTEL in CANTV permit VENTEL to elect
one or more directors of CANTV, and should any Investor hold a majority of the
Ownership Interests, the board of directors of VENTEL shall cause VENTEL to
cast its votes in order that a majority of the CANTV directors to be elected by
VENTEL are persons nominated by the directors of VENTEL who are selected by
such Investor. Subject to the foregoing, the board of directors of VENTEL
shall cause VENTEL to cast its votes for the selection of such CANTV directors
in order that such directors are allocated over a period of years in a manner
so as to reflect the respective Ownership Interests of the Investors and to
maintain at least one CANTV director who is nominated by VENTEL directors who
are elected by one of the Venezuelan Investors and at least one CANTV director
who is nominated by the Foreign Investors (in each case other than any Investor
that owns a majority of VENTEL), if possible. Alternate and replacement CANTV
directors will be appointed by VENTEL directors that had the right to appoint
the corresponding CANTV directors.
