Exhibit 1.4
AGREEMENT
by and among
The AES Corporation,
Corporacion EDC, C.A.
and
TelCom 2 B.V.
August 29, 2001
AGREEMENT
---------
This AGREEMENT (this "Agreement"), dated August 29, 2001, is by and among
The AES Corporation, a Delaware corporation ("AES"), Corporacion EDC, C.A.,
a Venezuelan corporation ("CEDC") and TelCom 2 B.V., a Netherlands company
(the "Company" and, together with AES and CEDC, the "Parties" and individually,
a "Party").
WHEREAS, AES currently owns through an Affiliate (as defined below) 140
Common Shares (as defined below) of the Company (the "AES Original Shares"), and
CEDC currently owns through an Affiliate 60 Common Shares of the Company (the
"CEDC Original Shares");
WHEREAS, CEDC owns through an Affiliate 63,999,524 shares of common stock
of Compania Anonima Nacional Telefonos de Venezuela (CANTV), a Venezuelan
corporation ("CANTV"), representing in the aggregate approximately 6.9% of the
outstanding capital stock of CANTV (such shares of CANTV common stock, together
with any other shares of CANTV common stock received by such Affiliate from
VenWorld Telecom, C.A. as a result of such Affiliate exercising its right to
convert all or any of its remaining interest in VenWorld Telecom, C.A. into
shares of CANTV common stock, the "CEDC Equity");
WHEREAS, AES and CEDC intend to cause the Company, directly or through a
wholly owned Subsidiary, to make an offer (the "Venezuelan Offer") to purchase
shares of common stock of CANTV and an offer (the "U.S. Offer" and, together
with the Venezuelan Offer, the "Offers") to purchase American Depositary Shares
of CANTV ("ADSs") representing shares of common stock of CANTV;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements and covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
intending to be legally bound, the Parties hereby agree as follows.
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Unless otherwise defined herein, the following
terms used in this Agreement shall have the meanings specified below:
"AES Shares" shall mean such number of Common Shares as is equal to the
difference between:
(A) the product of:
(i) 1,000, and
(ii) the AES Contribution (as defined in Section 2.1 below) divided by
the sum of (x) the CEDC Contribution Value (as defined below) and (y) the AES
Contribution; and
(B) the AES Original Shares.
"Affiliate" shall mean, with respect to any Person, at any time, any other
Person that, alone or together with any other Person, directly or indirectly
through one or more intermediaries controls, or is controlled by or is under
common control with such Person. For the purpose of this definition, "control"
(including the terms "controlling," "controlled by" and "under common control
with"), as used with respect to any Person shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.
"Applicable Law" shall mean all applicable constitutions, treaties, laws,
statutes, codes, ordinances, orders, decrees, rules, regulations and by-laws of
any Governmental Authority.
"CEDC Contribution Value" shall mean the sum of (x) the price per share of
common stock of CANTV to be paid pursuant to the Venezuelan Offer multiplied by
the number of shares of common stock of CANTV forming the CEDC Equity and (y)
the amount of additional cash contributed, if any, by CEDC to the equity
capital of the Company pursuant to the terms of Section 2.2.
"CEDC Shares" shall mean such number of Common Shares as is equal to the
difference between:
(A) the product of:
(i) 1,000, and
(ii) the CEDC Contribution Value divided by the sum of (x) the CEDC
Contribution Value and (y) the AES Contribution; and
(B) the CEDC Original Shares.
"Common Shares" shall mean the shares of common stock of the Company.
"Governmental Authority" shall mean any national or local government,
governmental, regulatory or administrative authority, agency or commission or
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any court, tribunal or judicial body of Venezuela, the United States of America
or the Netherlands.
"Person" shall mean any natural person, corporation, association,
partnership, organization, business, firm, trust, joint venture, unincorporated
organization or any other entity or organization, including a government, or any
political subdivision, department or agency of any government.
"Subsidiary" shall mean any corporation, association or other entity of
which the Company, or its respective Subsidiaries (alone or together) own or
control (either directly or indirectly or through another or other Subsidiaries)
at least a majority of the issued share capital or other ownership interest, in
each case having ordinary voting power to elect directors, managers or trustees
of such corporation or other entity (whether or not any capital stock or other
ownership interests or any other class or classes shall or might have voting
power upon the occurrence of any contingency); provided that the term
"Subsidiary" shall not include CANTV or any of its subsidiaries.
Section 1.2 Other Terms. Other terms may be defined elsewhere in the text
of this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.
Section 1.3 Other Definitional Provisions. The words "hereof," "herein,"
and "hereunder" and words of similar import shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. The terms defined
in the singular shall have a comparable meaning when used in the plural and vice
versa.
ARTICLE II
CAPITAL CONTRIBUTIONS
Section 2.1 AES's Capital Contribution. On or prior to December 1, 2001,
AES shall contribute, or shall cause an Affiliate of AES to contribute, to the
equity capital of the Company, Five Hundred Million United States Dollars (U.S.
$500,000,000) in cash or such greater amount as AES shall determine (the "AES
Contribution"), and at such time, the Company shall accept the AES Contribution
in consideration for the issuance of the AES Shares.
Section 2.2 CEDC's Capital Contribution. Contemporaneously with the AES
Contribution pursuant to Section 2.1, CEDC shall contribute, or shall cause an
Affiliate of CEDC to contribute, to the equity capital of the Company, the CEDC
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Equity and other additional amounts in cash as the Parties shall determine (the
"CEDC Contribution"), and at such time, the Company shall accept the CEDC
Contribution in consideration for the issuance of the CEDC Shares.
Section 2.3 Outstanding Shares. The Parties agree that immediately after
the capital contributions set forth in Sections 2.1 and 2.2, the total Common
Shares issued and outstanding shall be 1,000.
ARTICLE III
CORPORATE GOVERNANCE
Section 3.1 Board of Directors. Each of AES and CEDC shall vote, or shall
cause each of their respective Affiliates to vote, as the case may be, all of
its Common Shares (including Common Shares acquired after the date of this
Agreement, whether by purchase or otherwise) and shall take all other necessary
actions within its control (whether in its capacity as a shareholder or
otherwise), and shall cause the Company to take all necessary action, in order
to cause:
(a) the number of directors on the Boards of Directors (each a "Board")
of the Company or any Subsidiary to be three;
(b) the election to the Board of the Company, and the Board of any
Subsidiary, of (i) 2 Persons designated by AES (the "AES Designees"), and (ii)
one Person designated by CEDC (the "CEDC Designee");
(c) at the written request of AES given at any time for the removal or
replacement of any AES Designee, the immediate removal from the Board of the
Company or any Subsidiary (with or without cause) of such AES Designee, and the
appointment of a new director designated by AES to the Board of the Company or
such Subsidiary, as the case may be, immediately upon designation of such person
by AES;
(d) at the written request of CEDC given at any time for the removal or
replacement of any CEDC Designee, the immediate removal from the Board of the
Company or any Subsidiary (with or without cause) of such CEDC Designee, and the
appointment of a new director designated by CEDC to the Board of the Company or
such Subsidiary, as the case may be, immediately upon designation of such person
by CEDC; and
(e) in the event that any AES Designee or the CEDC Designee shall for
any reason cease to serve as a member of the Board of the
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Company or any Subsidiary during his term of office, the resulting vacancy on
such Board to be filled by a Person designated by AES or CEDC, as the case may
be, immediately upon the designation of such Person by AES or CEDC, as the case
may be.
Section 3.2 Quorum and Manner of Action. The presence of a majority of the
authorized number of directors at any meeting of the Board of the Company or any
Subsidiary shall constitute a quorum. All matters shall be decided at any such
meeting, a quorum being present, by the affirmative votes of a majority of
directors present. Matters that require the approval of the shareholders of the
Company shall be decided by the affirmative vote of a majority of the issued and
outstanding Common Shares.
Section 3.3 Other Matters. The Parties agree that all matters relating to
the Offers (including, without limitation, any amendment thereof) shall be
determined by the decision of a majority of the directors of the Board of the
Company as set forth in Section 3.2 above.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Parties. Each of the
Parties represents and warrants to the other Party that (i) such Party has all
requisite right, power and authority and full legal capacity to enter into this
Agreement, to carry out its respective obligations hereunder and to consummate
the transactions contemplated hereby, (ii) the execution and delivery of this
Agreement by such Party and the consummation of the transactions contemplated
hereby has been duly authorized by all necessary action on the part of such
Party, and no other proceedings (corporate or otherwise) on the part of such
Party or their respective shareholders or any other Person are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
and (iii) this Agreement has been duly executed and delivered by such Party and
constitutes a legal, valid and binding obligation of such Party enforceable
against such Party in accordance with its terms.
ARTICLE V
MISCELLANEOUS
Section 5.1 Public Announcements. Each Party hereby acknowledges and agrees
that this Agreement and the transactions contemplated
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hereby are required to be disclosed promptly to the appropriate Governmental
Authority and to the appropriate securities markets in order to comply with
Applicable Law. Each Party covenants to make available to the appropriate
securities markets and to file with the appropriate Governmental Authority all
press releases, information and documentation as may be required by Applicable
Law in connection with this Agreement and the transactions contemplated hereby.
Section 5.2 Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
Section 5.3 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE GOVERNED BY, THE LAWS OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAW.
Section 5.4 Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
Parties shall negotiate in good faith with a view to the substitution therefor
of a suitable and equitable solution in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid provision;
provided, however, that the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be in any way impaired thereby, it being intended that all of
the rights and privileges of the Parties hereto shall be enforceable to the
fullest extent permitted by law.
Section 5.5 Entire Agreement. This Agreement contains the entire
understanding of the Parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, written or oral, between the
Parties with respect to such subject matter.
Section 5.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
Section 5.7 Binding Nature of Agreement. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the Parties hereto or
their successors and permitted assigns.
Section 5.8 Amendment and Waiver. Any provision of this Agreement may be
amended if, but only if, such amendment is in writing and is
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signed by the Parties hereto. Any provision may be waived if, but only if, such
waiver is in writing and is signed by or on behalf of the Party waiving such
provision.
Section 5.9 Assignment. No Party may assign any of its rights under this
Agreement without the prior written consent of the other Parties hereto, except
that AES and CEDC may assign this Agreement in whole or in part to one or more
of its Affiliates provided that such Affiliate shall agree to be bound by the
terms hereof.
Section 5.10 No Third-Party Beneficiaries. Nothing in this Agreement shall
convey any rights upon any Person which is not a Party to this Agreement.
Section 5.11 Notices. All notices and other communications given or made
pursuant hereto unless otherwise specified, shall be in writing and shall be
deemed to have been duly given or made if sent by facsimile transmission (with
confirmation in writing), delivered personally or by courier to the applicable
Party at the facsimile transmission number or address set forth below or at such
other address as shall be furnished by such Party by like notice, and such
notice or communication shall be deemed to have been given or made upon receipt:
if to AES, to:
The AES Corporation
0000 Xxxxx 00xx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to CEDC, to:
Corporacion EDC, C.A.
Xxxxxxx, San Xxxxxxxxxx
Xxxxx Xxxxxxx, xxxx 00
Xxxxxxx 0000-X-Xxxxxxxxx
Attention: Xxxxxx Xxxxxxx
Telephone: (000) 00000-000-0000
Facsimile: (000) 00000-000-0000
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if to the Company, to:
TelCom 2 B.V.
c/o The AES Corporation
0000 Xxxxx 00xx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
TelCom 2 B.V.
c/o Corporaciun EDC, C.A.
Xxxxxxx, San Xxxxxxxxxx
Xxxxx Xxxxxxx, Xxxx 00
Xxxxxxx 0000-X-Xxxxxxxxx
Attention: Xxxxxx Xxxxxxx
Telephone: (000) 00000-000-0000
Facsimile: (000) 00000-000-0000
Section 5.12 Specific Performance. Without limiting the rights of each
Party hereto to pursue all other legal and equitable rights available to such
Party for any other Party's failure to perform its obligations under this
Agreement, the Parties hereto acknowledge and agree that the remedy at law for
any failure to perform their obligations hereunder would be inadequate and that
each of them, respectively, shall be entitled to specific performance,
injunctive relief or other equitable remedies in the event of any such failure.
Section 5.13 Expenses. Each Party shall pay its own expenses incurred in
connection with the transactions contemplated by this Agreement.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
and delivered as of the date first above written.
THE AES CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: Executive Vice President
CORPORACION EDC, C.A.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Director
TELCOM 2 B.V.
By: /s/ Xxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxx
Title: Director
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