Exhibit 10.4
December 6, 1995
Hearst/ABC Video Services II and
TVA Participacoes Ltda.
c/o The Hearst Corporation
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Tevecap, S.A.
Dear Sirs:
We understand that you are contemplating entering into a Stock
Purchase Agreement, dated the date hereof (the "Stock Purchase Agreement"), with
the undersigned and a Stockholders Agreement, also dated the date hereof (the
"Stockholders Agreement"), with the undersigned. Terms used herein which are not
defined herein shall have the meanings given to them in the Stockholders
Agreement. We also understand that you desire that the ownership interest in
Tevecap S.A. (the "Company") be reorganized as described below (the "Proposed
Reorganization") to the extent reasonably feasible and consistent with the terms
and conditions set forth herein.
As an inducement to each of the parties hereto entering into the
Stock Purchase Agreement and Stockholders Agreement, the undersigned hereby
agree that subject to the terms and conditions herein set forth, on or prior to
December 31, 1995, (a) each of the undersigned which is a Stockholder will
contribute all of the Shares that it owns in the Company to a newly-formed
Brazilian corporation (hereinafter called "Newco") in exchange for a
corresponding number of shares of Newco such that the undersigned which are
Stockholders will become the sole holders of shares of Newco and Newco will own
approximately 80% of the outstanding Shares of Company (it is understood that a
nominal number of shares in the Company will be held by directors, and that a
nominal number of shares in Newco will be held by you provided that your
economic interest in Newco and Tevecap will equal your economic interest in
Tevecap immediately prior to the Proposed Reorganization), and (b) each of the
undersigned will enter into (i) a new stockholders agreement (hereinafter called
the "New Stockholders Agreement") with you which will supersede the Stockholders
Agreement and which will provide the undersigned and you with functionally
equivalent rights (including, without limitation, as to valuation of ownership
interests, priority of ownership interests, and voting and governance rights)
with respect to their and your respective interests in Newco and the Company as
the undersigned and you have under the Stockholders Agreement with respect to
ownership of shares of the Company and which shall also govern the operations of
Newco and the Company and (ii) to the extent reasonably required to provide you
and the undersigned with functionally equivalent rights as provided therein,
amendments to the Stock Purchase Agreement, the "Old Stock Purchase Agreement"
and "Option Agreement" defined therein (to the extent the undersigned are
Hearst/ABC Video Services II 2 December 6, 1995
TVA Participacoes Ltda.
parties thereto) and any other agreements delivered in connection with the
Closings under the Stock Purchase Agreement and the Old Stock Purchase Agreement
(collectively, the "Transaction Documents"); provided, however, that Falcon
International Communications Ltd., Harpia Holdings Limited and Curupira Holdings
Limited shall have the option to retain some or all of their Shares as part of
the Proposed Reorganization, and not contribute such Shares to Newco; and
provided, further, that the undersigned shall not have any obligation to make
such contribution nor shall the undersigned or you have any obligation to enter
into the New Stockholders Agreement if;
(i) any of the undersigned advise you in writing that making the
contribution will have an adverse effect on it or the Company and if you
do not thereafter mutually agree with such person to compensate it for
such adverse effect (it being understood that you and the undersigned
will, during the period prior to the contribution, consult with each other
with respect to the possible effect of the Proposed Reorganization on the
future operations and structure of Newco and the Company); or
(ii) you and the undersigned, after having used reasonable good
faith efforts to do so, are unable to reach mutual agreement as to the
terms of the New Stockholders Agreement and the amendments to the other
Transaction Documents.
As to paragraph (i) above, (a) Xxxxxx Xxxxxx, Tevecap, S.A. and
Abrilcap Comercio E Participacoes Ltda acknowledge that they have considered the
possible effect on them, for Brazilian tax or regulatory purposes, of the
Proposed Reorganization and have not identified any such adverse affect on any
of them and (b) each of Harpia Holdings Limited, Curupira Holdings Limited and
Falcon International Communications, Ltd. acknowledges that, although it has not
had an opportunity to fully consider the possible effect on it of the Proposed
Reorganization, as of the date hereof it has not identified any adverse effect
on it for U.S. tax purposes.
You agree that, to the extent the Company incurs any costs or
expenses in consummating the Proposed Reorganization, you will pay or reimburse
the Company for such costs and expenses.
You agree, by your execution hereof, to reasonably cooperate with
the undersigned in connection with the matters referred to herein.
Very truly yours,
HARPIA HOLDINGS LIMITED
By:___________________________
Name: Xxxxxx X. Xxxxxxx
Title: Director
CURUPIRA HOLDINGS LIMITED
By:___________________________
Name: Xxxxxx X. Xxxxxxx
Title: Director
______________________________
XXXXXX XXXXXX
ABRILCAP COMERCIO E PARTICIPACOES
LTDA.
By:___________________________
Name:
Title:
TEVECAP S.A.
By:___________________________
Name:
Title:
You agree, by your execution hereof, to reasonably cooperate with
the undersigned in connection with the matters referred to herein.
Very truly yours,
HARPIA HOLDINGS LIMITED
By:___________________________
Name:
Title:
CURUPIRA HOLDINGS LIMITED
By:___________________________
Name:
Title:
______________________________
XXXXXX XXXXXX
ABRILCAP COMERCIO E PARTICIPACOES
LTDA.
By:___________________________
Name: Xxxxxx Xxxxxx /
Xxxx Xxxxxxx Xxxxx Xxxxxxx
Title: Presidente / Director Financeiro
TEVECAP S.A.
By:___________________________
Name: Xxxx Xxxxxxx Xxxxx Xxxxxxx /
Xxxxxxx Xxxxx D'Xxxxxx
Title: Director / Director
FALCON INTERNATIONAL
COMMUNICATIONS LTD.
By:______________________
Name:
Title:
Accepted and Agreed:
HEARST/ABC VIDEO SERVICES II
By: Hearst Brazil Inc., a partner
By: _________________________
Name:
Title:
By: Brazil Cable Investments, Inc., a partner
By: _________________________
Name:
Title:
TVA PARTICIPACOES LTDA.
By: Hearst Brazil Inc., a quotaholder
By: _________________________
Name:
Title:
By: Brazil Cable Investments, Inc., a quotaholder
By: _________________________
Name:
Title:
FALCON INTERNATIONAL
COMMUNICATIONS LTD.
By:______________________
Name:
Title:
Accepted and Agreed:
HEARST/ABC VIDEO SERVICES II
By: Hearst Brazil Inc., a partner
By: _________________________
Name:
Title:
By: Brazil Cable Investments, Inc., a partner
By: _________________________
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
TVA PARTICIPACOES LTDA.
By: Hearst Brazil Inc., a quotaholder
By: _________________________
Name:
Title:
By: Brazil Cable Investments, Inc., a quotaholder
By: _________________________
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
FALCON INTERNATIONAL
COMMUNICATIONS LTD.
By:______________________
Name: Xxxxxx Xxxxxxx
Title: Vice President
Accepted and Agreed:
HEARST/ABC VIDEO SERVICES II
By: Hearst Brazil Inc., a partner
By: _________________________
Name:
Title:
By: Brazil Cable Investments, Inc., a partner
By: _________________________
Name:
Title:
TVA PARTICIPACOES LTDA.
By: Hearst Brazil Inc., a quotaholder
By: _________________________
Name:
Title:
By: Brazil Cable Investments, Inc., a quotaholder
By: _________________________
Name:
Title:
