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Exhibit 2.17
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CONTRACT FOR ACQUISITION BY TELEFONICA
INTERACTIVA, S.A., OF A 25% INTEREST IN GRUPO
TEKNOLAND.
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Madrid, June 14, 1999
THE FOLLOWING HAVING COME TOGETHER
MR. XXXX XXXXX XXXXX DE BURUAGA, of legal age, with domicile for these purposes
in Madrid, Gran Via 28, National Identity Card 14,601,736
and
XX. XXXXXXX XXXXXX XXXXX CANTOLLA, of legal age, married, a resident of Madrid,
with domicile at Camino de la Xxxxxx 80, Tax Identification Number 5,277,655-Y
XX. XXXXX XXXXX XXXXXX XXX, of legal age, married, a resident of Boadilla del
Monte (Madrid), with domicile at calle Isla xx Xxxx No. 6, Tax Identification
Number 11,397,309-G
XX. XXXXXXX XXXXX MUNTADAS-PRIM, of legal age, Spanish, married, a resident of
Sant Cugat (Barcelona), with domicile at calle Sant Celoni, No. 23, Tax
Identification Number 46,117,053-Y
XX. XXXXX XXXXX XXXXXXXX, of legal age, Spanish, married, a resident of Madrid,
with domicile at calle Xxxxxxx Galvache, No. 3, Tax Identification Number
50,829,685-F.
XX. XXXX XXXXXXXXX MUNTADAS, of legal age, Spanish, married, a resident of
Madrid, with domicile at calle Xxxxxx Xxxxx, No. 12, Tax Identification Number
5,343,131-R
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PARTICIPATING AS FOLLOWS
MR. XXXX XXXXX XXXXX DE BURUAGA, in the name of and on behalf of TELEFONICA
INTERACTIVA, S.A., an entity domiciled in Madrid, Gran Via 28, Tax
Identification A-82196080
His authorities are granted in a document executed by Notary Xx. Xxxx Xxxxxxx
Xxxxxxxx Ipiens of Madrid on December 14, 1998, found at number 5399 of his
registry.
XX. XXXXXXX XXXXXX XXXXX XXXXXXXX, XX. XXXXX XXXXX XXXXXX XXX, XX. XXXXXXX XXXXX
MUNTADAS-PRIM, XX. XXXXX XXXXX CANTOLLA, and XX. XXXX XXXXXXXXX MUNTADAS, in
their own names and interest, as well as in the name of and on behalf of "CENTRO
DE INVESTIGACION Y EXPERIMENTACION DE REALIDAD VIRTUAL, S.L. (hereinafter also
known as CIERV).
All participating parties being recognized in the capacities in which they are
acting, [and having] sufficient capacity and representation to execute this
contract for acquisition of interest,
THEY DECLARE
I. That XX. XXXXXXX XXXXXX XXXXX, XX. XXXXX XXXXX XXXXXX XXX, XX. XXXXXXX
XXXXX MUNTADAS-PRIM, XX. XXXXX XXXXX CANTOLLA, and XX. XXXX XXXXXXXXX
MUNTADAS are holders and full owners of all the capital of "CENTRO DE
INVESTIGACION Y EXPERIMENTACION DE REALIDAD VIRTUAL, S.L., domiciled in
Madrid, calle Almirante No. 16, constituted for an indefinite period of
time by a document executed by Notary Xx. Xxxx Xxxxxx Xxxxxxx of Bilbao on
August 19, 1994, found at number 3,666 in his registry. Entered in the
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Commercial Registry of the Province of Vizcaya, in Volume BI-833 of the
General Section on Corporations, folio 42, page number BI-11415-B. That,
in addition, CIERV owns all the shares of the companies that comprise
Grupo TEKNOLAND, and they are listed in Appendix No. 1 of this document,
CORPORACION REAL TIME TEAM, S.L., being the head company of said group of
companies.
II. - That the activities performed by the various companies that comprise
Grupo TEKNOLAND are, among others:
a) COMMM CORP. - Establish a Spanish speaking virtual community.
b) TEKNOLAND RTT. - Production of Web applications custom designed for
the company
c) TEKNOLAND E-BIZ - Development of all types of businesses on IP
networks.
III.- That TELEFONICA INTERACTIVA, S.A. is interested in acquiring an interest
in Grupo TEKNOLAND amounting to 25% of its capital stock through the
purchase of shares thereof and the subsequent subscription and payment of
a capital increase to be agreed upon by the head company of Grupo
TEKNOLAND.
IV. - That the parties having reached full agreement, they sign this contract
to govern the terms and conditions of the aforementioned acquisition of
interest by TELEFONICA INTERACTIVA, S.A., and the terms of the future
relationship of both contracting parties as shareholders of Grupo
TEKNOLAND and, in this regard,
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THEY AGREE
FIRST - ACQUISITION BY TELEFONICA INTERACTIVA, S.A. OF A 25% INTEREST IN
CORPORACION REAL TIME TEAM, S.L., HEAD COMPANY OF GRUPO TEKNOLAND.
TELEFONICA INTERACTIVA, S.A., shall acquire a 25% interest in CORPORACION REAL
TIME TEAM, S.L., the head company of Grupo TEKNOLAND, by carrying out the
following transactions:
1.1.- Acquisition by TELEFONICA INTERACTIVA, S.A. of 403 (four hundred three)
shares of stock in CORPORACION REAL TIME TEAM, S.L for the total price of
1,101,533,199 - (ONE BILLION ONE HUNDRED ONE MILLION FIVE HUNDRED THIRTY-THREE
THOUSAND ONE HUNDRED NINETY-NINE PESETAS), representing 13.41% of the company's
capital stock.
The number of shares to be acquired is specified in Appendix No. 2 of this
contract.
1.2 - Contribution by TELEFONICA INTERACTIVA, S.A. to CORPORACION REAL TIME
TEAM, S.L., as a capital increase, of 1,262,799,846 (ONE BILLION TWO HUNDRED
SIXTY-TWO MILLION SEVEN HUNDRED NINETY-NINE THOUSAND EIGHT HUNDRED FORTY-SIX
PESETAS).
The capital increase shall be accomplished through the issuance and placement in
circulation of 462 (FOUR HUNDRED SIXTY-TWO) shares of CORPORACION REAL TIME S.L.
which, added to the 403 acquired by TELEFONICA INTERACTIVA, S.A. under section
1.1 above, shall result in a total final interest, after the increase, of 25% of
the capital stock.
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The total amount of the capital increase shall be 1,262,799,846 (ONE BILLION TWO
HUNDRED SIXTY-TWO MILLION SEVEN HUNDRED NINETY-NINE THOUSAND EIGHT HUNDRED
FORTY-SIX) pesetas, which corresponds to 462,000 (FOUR HUNDRED SIXTY-TWO
THOUSAND) pesetas capital and the rest, issue premium.
In this regard, when the capital increase for CORPORACION REAL TIME TEAM, S.L.
has been accomplished, ownership of the company shall be divided between the
current shareholders, which shall hold 75%, and TELEFONICA INTERACTIVA, S.A.,
which shall own the remaining 25%.
SECOND. PRIOR CONDITIONS AND TIME PERIOD FOR ACCOMPLISHING THE TRANSACTION.
2.1 The following shall occur prior to execution of the transactions described
in the FIRST agreement, above:
2.1.1 Checking by the financial advisors of TELEFONICA INTERACTIVA, S.A.,
of the business plan of each member company of Grupo TEKNOLAND.
2.1.2 Performance by the auditors and legal advisors designated by
TELEFONICA INTERACTIVA, S.A., of a "due diligence" which includes
the legal, shareholders' equity, and financial aspects of Grupo
TEKNOLAND. If, as a result of the "due diligence" process,
contingencies or liabilities come to light that were not taken into
consideration or provided for in the financial statements attached
as Appendix No. 3, the respective adjustment shall be made to the
price established in Stipulation 1.1., i.e., it shall be reduced by
the amount of said contingency or liability.
2.2 The maximum time period for fulfillment of the above prior conditions and
execution of the sale of shares provided for in agreement 1.1. above,
shall be one month from the date this document is signed. The capital
increase to which
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agreement 1.2 above refers shall be carried out within one month of
formalization of the purchase of shares.
THIRD - MANAGEMENT OF GRUPO TEKNOLAND AND PROTECTION OF THE MINORITY
SHAREHOLDER-
3.1 Management of Grupo TEKNOLAND shall be the responsibility of the current
shareholders of Grupo in their capacity as majority shareholders thereof,
after the addition to the capital by TELEFONICA INTERACTIVA S.A.
3.2 TELEFONICA INTERACTIVA, S.A., in its capacity as minority shareholder of
Grupo, shall have the right to:
3.2.1 Designate two members of the Board of Directors of CORPORACION REAL
TIME TEAM, S.L., which shall have five members. They shall have the
same authorities with respect to the governing bodies of the various
companies that comprise Grupo TEKNOLAND. One of the members
designated by TELEFONICA INTERACTIVA, S.A. shall serve as Vice
Chairman.
3.2.2 Designate a controller with responsibility in financial matters and
the responsibility of auditing the management of the companies that
comprise Grupo TEKNOLAND.
3.2.3 Participate in the approval of certain agreements to be adopted by
the governing bodies of the companies that comprise Grupo TEKNOLAND,
agreements that may only be adopted with their express approval. The
bylaws of the various companies that comprise Grupo TEKNOLAND shall
include the list of agreements requiring the concurrence of
TELEFONICA INTERACTIVA, S.A. by providing for super majorities that
are required for their approval. The list of agreements that require
the express approval of TELEFONICA INTERACTIVA, S.A. is set forth in
Appendix
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no. 4. Also, the bylaws shall include the appropriate clause
relative to the other shareholders' preferential right to acquire
shares.
3.3- TEKNOLAND informs TELEFONICA INTERACTIVA, S.A., which indicates its
concurrence, of the TEKNOLAND project to implement a company stock option
purchase plan for its employees. Without prejudice to the final details of the
aforementioned plan, it is established as a general principle that the plan
shall involve at most 10% of the capital of each company.
3.4 Also, TELEFONICA INTERACTIVA, S.A. states that it is familiar with and
agrees to the GRUPO TEKNOLAND project to transfer up to 20% of the capital stock
of its subsidiary TEKNOLAND E-BIZ, S.L., agreeing that said transfer shall not
be made to a telecommunications company.
FOURTH - OPTION FOR PURCHASE BY TELEFONICA INTERACTIVA, S.A., OF SHARES IN
CORPORACION REAL TIME TEAM, S.L., REPRESENTING 26% OF THE CAPITAL STOCK.
TELEFONICA INTERACTIVA, S.A. shall have the right to the option to purchase
shares of CORPORACION REAL TIME TEAM, S.L. representing 26% of its capital
stock, exercising said option to have a majority interest in Grupo, in the
following:
4.1 EVENTS:
4.1.1 - At any time after 12 months following the acquisition by
TELEFONICA INTERACTIVA, S.A. of its interest in Grupo
TEKNOLAND, if there is a public offer of sale (OPV [in
Spanish]) of stock of TELEFONICA INTERACTIVA, S.A., or of the
other TELEFONICA INTERACTIVA, S.A. company with which
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the business of TEKNOLAND is integrated. In this event, and at
the seller's option, payment for the shares may be made by
turning over shares of the company which is the object of the
OPV, valued at the price of the aforementioned OPV. The
current shareholders of Grupo TEKNOLAND shall be advised by
TELEFONICA INTERACTIVA, S.A. of the prospective OPV plan as
soon as the decision is made. If the market value of Grupo
TEKNOLAND is negatively affected as a result of its
integration into the company which is the object of the OPV,
the valuation of Grupo TEKNOLAND to be made by the investment
banks pursuant to stipulation 4.3 below, shall be made
independently, without the investment banks taking into
consideration the integration of Grupo TEKNOLAND into the
company which is the object of the OPV.
4.1.2 Twenty-four months after TELEFONICA INTERACTIVA, S.A. acquires an
interest in Grupo TEKNOLAND, if Grupo TEKNOLAND has not achieved, in
the aforementioned 24 months, the cumulative sales objectives
contained in the business plans of each member company of Grupo
TEKNOLAND, that is: i) TEKNOLAND RTT, ii) COMMM Corp, and iii)
THINK-BIZ S.L., listed in Appendix No. 5.
4.1.3 Thirty-six months after TELEFONICA INTERACTIVA, S.A. acquires an
interest in Grupo TEKNOLAND.
4.2.- TIME PERIOD FOR EXERCISING THE PURCHASE OPTION:
Any of the events described in Section 4.1 above having occurred, TELEFONICA
INTERACTIVA, S.A. shall have 4 months (FOUR MONTHS) to exercise the purchase
option. After this period, the option shall expire as a matter of law.
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4.3 PURCHASE PRICE OF THE SHARES WHICH ARE THE OBJECT OF THE OPTION.-
The purchase price of the shares shall be the result of assessing the shares in
accordance with the market value of Grupo TEKNOLAND at the time this document is
signed, established by the parties at 8,200,000,000 (EIGHT BILLION TWO HUNDRED
MILLION) pesetas, plus 50% of the difference between said amount and the market
value of Grupo Teknoland at the time the purchase option is exercised, which
market value shall be calculated in accordance with the paragraph that follows.
If the market value on the date the option is exercised is less than that
established when this document is signed, the price of exercis[ing the option]
would be the market value.
The market value of Grupo TEKNOLAND when the option is exercised shall be
determined by arithmetically averaging the assessment made by two investment
banks, one designated by each party. If the difference between the respective
assessments exceeds 25%, the investment banks shall designate, by mutual
agreement, a third investment bank. If an agreement is not reached, designation
shall be made by lottery from a list of four candidates, with two being
suggested by each party. The decision of this third investment bank shall be
binding on the parties.
4.4 - METHOD OF PAYMENT
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Payment for the shares shall be in cash.
4.5 RIGHT OF THE CURRENT SHAREHOLDERS OF GRUPO TEKNOLAND TO DEMAND AN INCREASE
IN THE NUMBER OF SHARES TO BE ACQUIRED BY TELEFONICA INTERACTIVA, S.A. IF THE
PURCHASE OPTION IS EXERCISED.
If TELEFONICA INTERACTIVA, S.A. exercises the purchase option, in any of the
events provided for, the current shareholders of Grupo TEKNOLAND may demand that
TELEFONICA INTERACTIVA, S.A. acquire, under the same conditions, a higher
percentage of shares in the company, and up to 100% thereof, and TELEFONICA
INTERACTIVA, S.A. shall be required to comply.
FIFTH. - RIGHT OF THE CURRENT SHAREHOLDERS OF GRUPO TEKNOLAND TO REQUIRE
TELEFONICA INTERACTIVA, S.A. TO BUY THEIR INTEREST.-
The current shareholders of Grupo TEKNOLAND shall have the right, at any time,
to require that TELEFONICA INTERACTIVA, S.A. buy all or part of their interest
in CORPORACION REAL TIME TEAM, S.L., and TELEFONICA INTERACTIVA, S.A. shall be
obligated to acquire said shares in accordance with the following conditions:
5.1. - The minimum percentage with respect to which the purchase of shares may
be initially required shall be 26% of the total capital stock, or that lower
percentage which makes it possible for TELEFONICA INTERACTIVA, S.A. to acquire
51% of the capital stock. Subsequent exercises of the option shall involve at a
minimum 5% of the total capital stock.
5.2. - The purchase price of the shares shall be that provided for in Section
4.3 above.
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5.3. - Payment for the shares shall be in cash.
SIXTH. - CURRENT GRUPO TEKNOLAND SHAREHOLDERS' OPTION TO PURCHASE SHARES OF
CORPORACION REAL TIME TEAM, S.L. ACQUIRED BY TELEFONICA INTERACTIVA, S.A. -
The current shareholders of Grupo TEKNOLAND, as long as they represent the
majority of Grupo TEKNOLAND, shall have a purchase option right, to be exercised
on all and not part of the shares of CORPORACION REAL TIME TEAM, S.L. owned by
TELEFONICA INTERACTIVA, S.A., in the events and for the price and [under the]
conditions that follow:
6.1 - CONDITION OF EXERCISE -
6.1.1.- The purchase option may be exercised within the four months
following the occurrence of any of the following: 1) A substantial
change in the current management team of TELEFONICA INTERACTIVA,
S.A., substantial change being understood to mean a change in the
presidency of Grupo TELEFONICA; 2) the elimination of TELEFONICA
INTERACTIVA, S.A. as a line of business of Grupo TELEFONICA; 3) a
change of strategy by TELEFONICA S.A. involving the disappearance
or significant loss of importance of the business related to
Internet service provision in terms of Grupo TELEFONICA
activities, with respect to the current situation; 4) a
reorganization of Grupo TELEFONICA making TELEFONICA INTERACTIVA,
S.A. subordinate to another business unit and not the presidency
of Grupo, as is currently the case, and involving a strategic
change with respect to the business of Grupo TEKNOLAND, 5) a
change in the corporate purpose of TELEFONICA INTERACTIVA, S.A.
with the
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disappearance or significant loss of its current activity, 6)
another operator taking control of Grupo TELEFONICA, and 7) the
passage of 40 months from the time interest is acquired, without
TELEFONICA INTERACTIVA, S.A. having exercised its purchase option
provided for in the FOURTH previous agreement and without
TELEFONICA INTERACTIVA, S.A., or the company into which the
interest in Grupo TEKNOLAND is integrated, having been the object
of an OPV. The passage of the aforementioned 40 months shall not
be necessary if TELEFONICA INTERACTIVA, S.A. has firmly and
irrevocably agreed to not formulate an OPV with respect to itself
or the company into which Grupo TEKNOLAND has been integrated.
6.2 PURCHASE PRICE OF THE SHARES.
The purchase price of the shares if the option is exercised shall be that which
results from application of the provisions in stipulation 4.3 above, unless the
option is exercised under the assumption provided for in section 1) of
stipulation 6.1.1, in which case the purchase price shall increase by 50%. In
this case, the shares that are acquired may not be transferred to a third party
for 18 months from the time of acquisition without the express consent of
TELEFONICA INTERACTIVA, S.A. In case of sale without the aforementioned consent,
TELEFONICA INTERACTIVA, S.A. shall have the right to repurchase said shares.
6.3 METHOD OF PAYMENT. -
Payment shall be in cash.
SEVENTH. - CONTRIBUTION OF TELEFONICA INTERACTIVA, S.A. TO THE FUTURE
DEVELOPMENT OF GRUPO TEKNOLAND.
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The shareholders are fully convinced of the existence of significant synergies
between Grupo TEKNOLAND and Grupo TELEFONICA in general and TELEFONICA
INTERACTIVA, S.A. in particular.
TELEFONICA INTERACTIVA, S.A. shall make available to Grupo TEKNOLAND the
aforementioned potential for the purpose of maximizing, as far as possible, the
company's development. Also, Grupo TELEFONICA agrees to provide the resources
necessary for GRUPO TEKNOLAND's development by effecting the capital increases
agreed to by the shareholders, which transactions will result in the concomitant
reduction of the current shareholders' interest without the capital increase.
EIGHTH. - ADVANCE PAYMENT FOR PURCHASE OF FUTURE SHARES WITHIN THE FRAMEWORK OF
THE AGREEMENTS REACHED.
Without prejudice to the time period provided for in the SECOND agreement for
the accomplishment of all the transactions agreed upon, TELEFONICA INTERACTIVA,
S.A. provides, at this proceeding, to the shareholder of CORPORACION REAL TIME
TEAM, S.L., the sum of 250,000,000 (TWO HUNDRED FIFTY MILLION) pesetas as
payment on account for the agreed-upon purchase of shares of CORPORACION REAL
TIME TEAM, S.L.
If, for reasons imputable to CIERV or its shareholders, the acquisition of
interest provided for in the FIRST stipulation of this contract does not take
place, this contract shall be rescinded as a matter of law, and CIERV shall
return the advance payment.
NINTH. - COMMITMENT OF CIERV SHAREHOLDERS
The current shareholders of CIERV, managers of GRUPO TEKNOLAND, agree to remain
in the management of Grupo TEKNOLAND as long as they are majority shareholders
of Grupo.
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Likewise, from the time they cease to possess the majority of Grupo capital
stock, as a result of the exercise of any of the options included in this
contract, they agree to cooperate in the search for a new management team
acceptable to TELEFONICA INTERACTIVA, S.A., and to remain in the management
until said team is accepted, with a maximum of eighteen months. This commitment
to permanence in this second paragraph shall be invalid if any of the events
described in section 6.1 of this contract occurs.
Throughout the time that CIERV or its current shareholders own shares in Grupo
TEKNOLAND or during the three years after which they cease to own any interest,
the aforementioned shareholders shall not compete with Grupo TEKNOLAND by
directly or indirectly engaging in activities competing with those carried out
by Grupo TEKNOLAND.
Finally, and as long as TELEFONICA INTERACTIVA, S.A. is a minority shareholder
of CORPORACION REAL TIME TEAM, S.L., the current shareholders of CIERV agree to
not transfer their shares in the latter to third parties unrelated to the
corporation; family members up to the third degree shall not be considered third
parties for these purposes.
And thus they execute it, in the place and on the date shown above.
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XXXX XXXXX XXXXX DE BURUAGA XXXX XXXXXXXXX MUNTADAS
TELEFONICA INTERACTIVA, S.A.
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XXXXXXX XXXXX MUNTADAS-PRIM
XXXXX XXXXX CANTOLLA
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XXXXXXX XXXXXX XXXXX XXXXXXXX
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XXXXX XXXXX XXXXXX XXX
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The following annexes to this agreement have not been included:
- Annex 1 - Organizational Chart of the Teknoland Group
- Annex 3 - Consolidated Financial Statements of the Teknoland
Group as of 21/31/98
- Annex 5 - Business Plans for Teknoland, Think-Biz and Commm
Corp.
Copies of the annexes not included herein will be provided upon request.
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ATTACHMENT NO. 2
OPERATIONAL STRUCTURE
0)
Corporacion Real Time Team S.L. Initial Capital
3,000,000 pesetas
3,000 x 1,000 pesetas
1)
Acquisition by Telefonica Interactiva of 13.43% of CRTT for a total price of:
1,101,533,199 pesetas. This is 403 shares at 2,733,333 pesetas per share.
2)
Increase in capital of CRTT through the issuance of 462 shares with an issuance
premium per share of: 2,732,333 [sic] pesetas.
462 x 2,733,333 = 1,262,799,846 pesetas
3)
FINANCIAL SITUATION
Capital 3,462,000 pesetas
No. of Shares 3,462
Distribution of shares:
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Shares %
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CIERV 2,597 75.01
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TELEFONICA 865 24.99
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Total 3,462 100
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ATTACHMENT NO. 4
LIST OF RESOLUTIONS REQUIRED UNDER THE EXPRESS RESOLUTION OF
TELEFONICA INTERACTIVA S.A.
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ATTACHMENT NO. 4
* MATTERS COMING UNDER THE JURISDICTION OF THE BOARD OF DIRECTORS, WHICH MUST BE
ADOPTED BY A QUALIFIED MAJORITY:
1) Approval of the annual budgets and company plan.
2) Acquisition, alienation, or encumbrance of assets, or the placing of the
company in financial debt, unless said actions are projected in the annual
budgets.
3) Establishment of Executive Committees, Management Boards, or other similar
entities, as well as the determination of their jurisdiction and the
designation of their members.
4) Approval of stock-purchase options for company employees.
* MATTERS COMING UNDER THE JURISDICTION OF THE SHAREHOLDERS' ASSEMBLY, WHICH
MUST BE ADOPTED BY A QUALIFIED MAJORITY:
1) Increase or decrease in capital, except in such cases as are mandatory under
law.
2) Dissolution, transformation, merger, severance, or spin-offs of the company,
in whole or in part, as well as any other equivalent structural modification.
3) Changes in the corporate objective, through the introduction of new
activities or a partial or total suppression of the activities now comprising
the corporate objective, and in general any other amendment of the bylaws.
4) Distribution of profits or reserves to the stockholders.
5) Designation of Account Auditors, the extension of their terms or the
revocation of their positions.
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